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SERVICE MATTER = 1. What was the true nature of the appointment of the respondent? In particular, was the appointment regular or simply contractual in nature? and 2. If the appointment was contractual, was the termination thereof vitiated by any legal infirmity to call for interference under Article 226 of the Constitution?=in the modern commercial world, executives are engaged on account of their expertise in a particular field and those who are so employed are free to leave or be asked to leave by the employer. Contractual appointments work only if the same are mutually beneficial to both the contracting parties and not otherwise. 29. In the result, we allow this appeal, set aside the impugned judgment and order passed by the Division Bench of the High Court of Orissa dismissing the Writ Appeal No.11 of 2003. We, however, direct that the salary and allowances if any paid to respondent No.1 pursuant to the impugned judgment shall not be recovered from him. Parties shall bear their own costs in this Court as also in the courts below.

REPORTABLE

ORISSA SECRETARIAT, BHUBANESWAR

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IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.11303 OF 2011

(Arising out of SLP (C) No.10164 of 2008)
GRIDCO Limited & Anr. …Appellants

Versus

Sri Sadananda Doloi & Ors. …Respondents

J U D G M E N T

T.S. THAKUR, J.

1. Leave granted.

2. Two questions fall for our determination in this appeal
by special leave, which arises out of a judgment and order
dated 2nd April, 2008, passed by a Division Bench of the
High Court of Orissa whereby Writ Appeal No.11 of 2003
filed by respondent No.1 has been allowed, order dated 26th
September, 2003, passed by a Single Judge of the High

1
Court in O.J.C. No.2225 of 2001 set aside and order of
termination of the services of respondent No.1. quashed.

3. The questions are:

1. What was the true nature of the appointment of the
respondent? In particular, was the appointment
regular or simply contractual in nature? and

2. If the appointment was contractual, was the
termination thereof vitiated by any legal infirmity to
call for interference under Article 226 of the
Constitution?

4. Before we advert to the questions and possible
answers to the same, we may briefly set out the facts in
the backdrop:

5. The appellant-Grid Corporation of Orissa Ltd.
(`GRIDCO’ for short) is a company wholly owned by the
Government of Orissa. By an advertisement notice dated
28th May, 1996, issued by the appellant, applications were
invited from eligible candidates for appointment against the
post of Senior General Manager: HR Policy, Job Evaluation,

2
Appraisal, Remuneration. Respondent No.1 was one among
several others who applied for selection and appointment
against the said post. A Selection Committee constituted
by the appellant short-listed three candidates including
respondent No.1-Shri Sadananda Doloi for an appointment.
The Corporation eventually issued a letter dated 8th
January, 1997, by which it offered to the respondent,
appointment as Senior General Manager on contract basis
for a period of three years subject to renewal on the basis
of his performance. Clause (3) of the letter stipulated the
tenure of the proposed appointment as under:

“(3) Period:- The tenure of appointment as Sr. General

Manager (HRD) is for a period of three years on

contract basis subject to renewal on the basis of your

performance. This contract of employment is, however

terminable even during this three year term on three

months’ notice or on payment of three months salary in

lieu thereof by either side.”
6. A formal order of appointment dated 6th February,
1997, was, in due course, issued in favour of respondent
No.1 by the appellant-Corporation, which embodied the
condition regarding the tenure of his appointment as
contained in the initial offer. Clause (12) of the
3
appointment letter further stipulated that the respondent
shall be governed by the Grid Corporation Officers Service
Regulations, 1996.

7. The respondent joined the appellant-Corporation as
Senior General Manager (HRD) on 30th April, 1997. With
the coming into force of the Grid Corporation Officers
Service Regulations, 1996, the Officers working in the
Corporate Office of GRIDCO were re-designated including
respondent No.1, whom the Corporation re-designated as
Chief General Manager (HR). Respondent No.1 soon after
re-designation wrote a letter dated 29th October, 1997,
requesting for an amendment of Clause (2) of the
appointment letter to bring the same in conformity with the
Para 13(3) of the GRIDCO Officers Regulations. That
request of the respondent was accepted and Clause (2) of
the Appointment Order dated 6th February, 1997, amended
to read as under:

“(2) Period:- Your tenure of appointment shall be on a

contract basis initially for a period of three years &

renewable thereafter for such period(s) as the Board or

the Committee of the Board may prescribe until you

attain the age of superannuation as provided in

GRIDCO Officers Service Regulations. This contract of

4
employment is, however, terminable even during this

three year term on three months’ notice or on payment

of three months’ salary in lieu thereof by either side.”

8. On the expiry of the contractual period of three years
stipulated in the appointment letter the appellant-
Corporation extended the employment of the respondent
upto 3rd November, 2000, by a letter dated 29th March,
2000, on the same terms and conditions as were stipulated
in the appointment letter. Respondent No.1, however,
made a representation to the Chairman-cum-Managing
Director of the appellant on 3rd June, 2000, seeking
extension of his tenure till superannuation. In the
meantime, the extended period of his employment also
expired whereupon the Corporation granted to the
respondent a further extension of one year upto 3rd
November, 2001, on the same terms and conditions as
stipulated in the letters dated 6th February, 1997, and 29th
October, 1997. Two further representations dated 22nd
November, 2000, and 13th February, 2001, to the
appellant-Corporation for extension of the tenure of
appointment till superannuation did not find favour with the

5
appellant. Instead the appointment of the respondent was
terminated in terms of an order dated 19th February, 2001
with three months’ salary in lieu of notice paid to him.

9. Aggrieved by the termination of his services,
respondent no.1 filed a writ petition in the High Court of
Orissa for issue of a Writ of Certiorari quashing the same on
several grounds. A learned Single Bench of the High Court,
however, dismissed the said petition holding that the
appointment of the writ petitioner, respondent herein,
being purely temporary and contractual in nature and the
termination being in no way stigmatic, the respondent had
no legal right to claim continuance in service. The writ
petition was, on that basis, dismissed.

10. Respondent No.1 then filed Writ Appeal No.11 of 2003
which was heard and allowed by a Division Bench of the
High Court of Orissa in terms of the impugned judgment
and order. The Division Bench held that `introduction of a
contractual condition’ in a regular appointment under the
State was opposed to the principles of Articles 14 and 16 of
the Constitution, and that the freedom of contract was

6
rendered illusory by an unequal bargaining power between
a citizen seeking appointment to public service on the one
hand and a giant employer like a State Corporation on the
other. The order passed by the learned Single Judge was on
that reasoning set aside by the High Court and the order
terminating the services of respondent No.1 quashed.

11. We have heard learned counsel for the parties at
considerable length and propose to take up the two
questions that we have formulated for determination ad-
seriatim.

Re: Question No.1

12. As noticed earlier, while the learned Single Judge has
held the appointment of the respondent to be contractual in
nature and termination thereof to be valid and permissible
in terms of the contract, the Division Bench has in appeal
taken the view that the appointment was a regular
appointment that could not be terminated summarily by
issuing a notice or paying three months’ salary in lieu
thereof. It is trite that the power to make a contractual
employment is implicit in the power to make a regular
7
permanent appointment unless the statute under which the
authority exercises its powers and discharges its functions
or the Rules & Regulations governing recruitment under the
authority specifically forbid the making of such an
appointment. No such prohibition has been pointed out to
us in the present case. All that was argued was that the
Rules did not at the relevant time specifically provide for
making a contractual employment. That is, in our opinion,
no reason to hold that an appointment made on contractual
basis would constitute a breach of the Rules or that such an
appointment had to be necessarily treated as a regular
appointment. Having said that, let us now see the
background in which the appointment was made in the
present case. As seen above, the selection process
culminating in the appointment of the respondent started
with the publication of an advertisement to fill up two
vacancies of human resource professionals at senior
management level. The advertisement, it is common
ground, did not indicate the nature of appointment
(whether regular or contractual) that may be offered to the
selected candidates. The absence of any such indication in
8
the advertisement notice did not, in our opinion, make any
material difference having regard to the fact that the offer
of appointment made to respondent No.1 in terms of
appellant-Corporation’s letter dated 8th January, 1997,
specifically described the appointment to be a tenure
appointment. A careful reading of paragraph 3 of the offer
letter leaves no manner of doubt that the tenure of
appointment offered to the respondent No.1 as Senior
General Manager, HRD was limited to a period of three
years subject to renewal on the basis of his performance. It
also made it abundantly clear that the contract of
employment was terminable even during the currency of
the three years term on three months’ notice or on
payment of three months’ salary in lieu thereof by either
side. We find it difficult to read any element of regular
appointment in the offer made to the respondent or any
assurance that the appointment is in the nature of a regular
appointment or that the respondent was on probation to be
regularised on satisfactory completion of his probation
period. That apart, appointment order issued on 6th
February, 1997, also specifically embodied the stipulation
9
regarding the tenure as it was in clause (3) of the offer
letter.
13. It is not the case of the respondent that there was any
uncertainty or ambiguity in the appointment made by the
respondent in so far as the tenure on the post to which he
was appointed, was concerned. What puts the matter
beyond any shadow of doubt is the understanding of the
respondent evident from his letter dated 29th October 1997
asking for an amendment of clause (2) of the appointment
order so as to bring the same in conformity with para 13 of
the GRIDCO Officers’ Regulation. The request manifestly
demonstrated that the parties were ad idem regarding the
tenure of appointment given to the respondent and that
while the initial contract period was limited to three years
the same could be renewed by the Board or the Committee
of the Board until the respondent attained the age of
superannuation as provided in the GRIDCO Service Officers
Regulations. It is quite evident that reference to the
superannuation of the respondent in this appointment letter
was only in the nature of providing an outer limit to which

10
the employment on contract could have been extended. It
did not suggest that there was any specific or implied
condition of employment that the respondent would
continue to serve till he attains the age of superannuation.
Even after the amendment of clause (2) of the appointment
letter, the condition that the contract of employment could
be terminated at any time during the period of three years
on three months’ notice or payment of three months’ salary
in lieu thereof by either side continued to be operative
between the parties. The fact that the appellant-
Corporation extended the tenure upto 3rd November, 2000,
in the first place and upto 3rd November, 2001 later, is also
suggestive of the parties having clearly understood that the
appointment was a tenure appointment, extendable at the
discretion of the Board of Directors/Corporation. These
extensions, it is noteworthy, were themselves subject to
the terms and conditions stipulated in the appointment
letter which, inter-alia, provided that the arrangement
could be terminated by either party on three months’ notice
or on payment of three months’ salary in lieu thereof. In
the totality of the above circumstances, we are of the
11
opinion that the nature of appointment made by the
appellant-Corporation was contractual and not regular as
held by the Division Bench of the High Court.

14. There is one other aspect to which we must advert
before we part with the question of nature of appointment
offered to the respondent. The appointment order issued in
favour of the respondent specifically stated that the
respondent will be governed by the GRIDCO Officers
Service Regulations, 1996. With the coming into force of
the said Regulations, the respondent was re-designated as
Chief General Manager, HR which was in terms of the
Regulations, a post in the Executive Grade of E-10. This re-
designation was not at any stage questioned by the
respondent. On the contrary it was he who had prayed for
amendment of clause (2) of the appointment letter to bring
the same in tune with para 13(3) of the GRIDCO Officers
Service Regulation. Para 13(3) of the Regulations reads as:

“13(3): The appointment to grades above E-9 shall be

on a contract basis initially for a period of 3 years and

renewable thereafter for such period(s) as the Board or

the Committee of the Board may prescribe until the

Officer attains the age of superannuation as provided in

these Regulations.”

12
15. The above makes it manifest that an appointment to
the post in category E-10 could be made only on a
contractual basis. The Regulations do not envisage a
regular appointment at E-10 level to which the respondent
stands appointed on the terms of the contract of
employment. That being the case it is difficult to see how
the said appointment could be treated to be a regular
appointment when the Rules did not permit any such
appointment. We may mention to the credit of learned
senior counsel who appeared for the respondent that
although at one stage an attempt was made to argue that
the appointment of the respondent was regular in nature,
that line of argument was not pursued further and in our
opinion, rightly so having regard to what we have said
above. Such being the case the question of the so called
unequal bargaining power of the parties did not have any
relevance or role to play in the facts and circumstances of
the case. Question No.1 is answered accordingly.

Re: Question No.2

13
16. This question has to be answered in two distinct parts.
The first part relates to the aspect whether the order
passed by the appellant-Corporation is amenable to judicial
review and if so what is the scope of such review. The
second part of the question is whether on the standards of
judicial review applicable to it, the order of termination is
seen to be suffering from any legal infirmity. Before we
refer to certain decisions of this Court that have dealt with
similar issues in the past we may at the outset say that
there was no challenge either before the High Court or
before us as to the competence of the authority that passed
the termination order. There was indeed a feeble argument
that the order was mala fide in character but having regard
to the settled legal position regarding the proof of mala
fides and the need for providing particulars to substantiate
any such plea, we are of the view that the charge of mala
fide does not stand scrutiny. Neither before the learned
Single Judge nor before the Division Bench was the ground
based on mala fides seriously argued by the respondent.
What was contended on behalf of the respondent was that
the appellant-Corporation did not act fairly and objectively
14
in taking the decision to terminate the arrangement. It was
contended that the decision to terminate the contractual
employment was not a fair and reasonable decision having
regard to the fact that the respondent had performed well
during his tenure and the requirement of the Corporation to
have a Chief General Manager (HR) continued to subsist. In
substance, the contention urged on behalf of the
respondent was that this Court should reappraise and
review the material touching the question of performance
of the respondent as Chief General Manager (HR) as also
the question whether the Corporation’s need for a General
Manager (HR) had continued to subsist. We regret our
inability to do so. It is true that judicial review of matters
that fall in the realm of contracts is also available before
the superior courts, but the scope of any such review is not
all pervasive. It does not extend to the Court substituting
its own view for that taken by the decision-making
authority. Judicial review and resultant interference is
permissible where the action of the authority is mala fide,
arbitrary, irrational, disproportionate or unreasonable but
impermissible if the petitioner’s challenge is based only on
15
the ground that the view taken by the authority may be
less reasonable than what is a possible alternative. The
legal position is settled that judicial review is not so much
concerned with the correctness of the ultimate decision as
it is with the decision-making process unless of course the
decision itself is so perverse or irrational or in such
outrageous defiance of logic that the person taking the
decision can be said to have taken leave of his senses.

17. In Shrilekha Vidyarthi & Ors. v. State of U.P. &
Ors. (1991) 1 SCC 212, the State Government had by a
circular terminated the engagement of all the government
counsels engaged throughout the State and sought to
defend the same on the ground that such appointments
being contractual in nature were terminable at the will of
the government. The question of reviewability of
administrative action in the realm of contract was in that
backdrop examined by this Court. The Court also examined
whether the personality of the State Government
undergoes a change after the initial appointment of
government counsels so as to render its action immune
16
from judicial scrutiny. The answer was in the negative. The
Court held that even after the initial appointment had been
made and even when the matter is in the realm of contract,
the State could not cast off its personality and exercise a
power unfettered by the requirements of Article 14 or claim
to be governed only by private law principles applicable to
private individuals. The Court observed:

“… we are also clearly of the view that this power is

available even without that element on the premise

that after the initial appointment, the matter is purely

contractual. Applicability of Article 14 to all executive

actions of the State being settled and for the same

reason its applicability at the threshold to the making

of a contract in exercise of the executive power being

beyond dispute, can it be said that the State can

thereafter cast off its personality and exercise unbridled

power unfettered by the requirements of Article 14 in

the sphere of contractual matters and claim to be

governed therein only by private law principles

applicable to private individuals whose rights flow only

from the terms of the contract without anything more?

We have no hesitation in saying that the personality of

the State, requiring regulation of its conduct in all

spheres by requirements of Article 14, does not

undergo such a radical change after the making of a

contract merely because some contractual rights accrue

to the other party in addition. It is not as if the

requirements of Article 14 and contractual obligations

are alien concepts, which cannot co-exist.”

18. Recognizing the difference between public and private
law activities of the State, this Court reasoned that unlike
17
private individuals, the State while exercising its powers
and discharging its functions, acts for public good and in
public interest. Consequently every State action has an
impact on the public interest which would in turn bring in
the minimal requirements of public law obligations in the
discharge of such functions. The Court declared that to the
extent, the challenge to State action is made on the ground
of being arbitrary, unfair and unreasonable hence offensive
to Article 14 of the Constitution, judicial review is
permissible. The fact that the dispute fell within the domain
of contractual obligations did not, declared this Court,
relieve the State of its obligation to comply with the basic
requirements of Article 14. The court said :

“This factor alone is sufficient to import at least the

minimal requirements of public law obligations and

impress with this character the contracts made by the

State or its instrumentality. It is a different matter that

the scope of judicial review in respect of disputes

falling within the domain of contractual obligations may

be more limited and in doubtful cases the parties may

be relegated to adjudication of their rights by resort to

remedies provided for adjudication of purely

contractual disputes. However, to the extent,

challenge is made on the ground of violation of

Article 14 by alleging that the impugned act is

arbitrary, unfair or unreasonable, the fact that

the dispute also falls within the domain of

contractual obligations would not relieve the
18
State of its obligation to comply with the basic

requirements of Article 14. To this extent, the

obligation is of a public character invariably in every

case irrespective of there being any other right or

obligation in addition thereto. An additional contractual

obligation cannot divest the claimant of the guarantee

under Article 14 of non-arbitrariness at the hands of

the State in any of its actions.”

(emphasis

supplied)
19. In Assistant Excise Commissioner & Ors. v. Issac
Peter & Ors. (1994) 4 SCC 104, the dispute related to
supply of additional quantities of arrack demanded by the
license-holder. Supply of arrack was, however, controlled
by the Government and the entire transaction relating to
the supply and sale of arrack was based on licenses
granted under the relevant rules to persons who emerged
successful in a public auction. The Government claimed
that the only obligation cast upon it under the Rules was to
provide the monthly quota of arrack to each license-holder,
supply of additional quantity being discretionary with the
authorities. The license-holders, on the other hand, argued
that supply of additional quantity was implicit in the
conditions of the license. In support they relied upon the

19
past practice and argued that if the supply is limited to the
monthly quota only it would not be possible for the license
holder to pay even the license fee. The license-holders
questioned the refusal of the State Government to issue
additional quantities of arrack as unfair and unreasonable.
This court, however, rejected that contention and held :

“Doctrine of fairness or the duty to act fairly and

reasonably is a doctrine developed in the administrative

law field to ensure the Rule of Law and to prevent

failure of justice where the action is administrative in

nature. Just as principles of natural justice ensure fair

decision where the function is quasi-judicial, the

doctrine of fairness is evolved to ensure fair action

where the function is administrative. But it can

certainly not be invoked to amend, alter or vary

the express terms of the contract between the

parties. This is so, even if the contract is governed by

statutory provisions, i.e., where it is a statutory

contract – or rather more so.”

(emphasis supplied)
20. Taking note of the decision of this Court in Shrilekha
Vidyarthi’s case (supra), this court held that there was no
room for invoking the doctrine of fairness and
reasonableness against one party to the contract, for the
purpose of altering or adding to the terms and conditions of

20
the contract merely because it happens to be the State.
The Court said :

“It was a case of termination from a post involving

public element. It was a case of non-government

servant holding a public office, on account of which it

was held to be a matter within the public law field. This

decision too does not affirm the principle now

canvassed by the learned Counsel (that being of

incorporating the doctrine of fairness in contracts where

State is a party). We are, therefore, of the opinion

that in case of contracts freely entered into with

the State, like the present ones, there is no room

for invoking the doctrine of fairness and

reasonableness against one party to the contract

(State), for the purpose of altering or adding to

the terms and conditions of the contract, merely

because it happens to be the State. In such cases,

the mutual rights and liabilities of the parties are

governed by the terms of the contracts (which may be

statutory in some cases) and the laws relating to

contracts. It must be remembered that these contracts

are entered into pursuant to public auction, floating of

tenders or by negotiation. There is no compulsion on

anyone to enter into these contracts. It is voluntary on

both sides.”

(emphasis supplied)
21. In conclusion, the Court made it clear that the opinion
expressed by it was only in the context of contracts entered
into between the State and its citizens pursuant to public
auction, floating of tenders or by negotiation. The court
considered it unnecessary to express any opinion about the

21
legal position applicable to contracts entered into otherwise
than by public auction, floating of tenders or negotiation.

22. In State of Orissa v. Chandra Sekhar Mishra
(2002) 10 SCC 583, the respondent had been appointed
as a Homeopathic Medical Officer whose services were
subsequently terminated by issue of a notice. While
rejecting the challenge to the termination order, the Court
observed “when the respondent was only a contractual
employee, there could be no question of his being granted
the relief of being directed to be appointed as a regular
employee.”

23. We may also refer to the decision of this court in
Satish Chandra Anand v. Union of India (AIR 1953
SC 250), where the petitioner, an employee of the
Directorate General of Resettlement and Employment, was
removed from contractual employment after being served a
notice of termination. The contract of service in that case
was initially for a period of five years which was later
extended. A five-Judge Bench hearing the matter,
dismissed the petition, challenging the termination

22
primarily on the ground that the petitioner could not prove
a breach of a fundamental right since no right accrued to
him as the whole matter rested in contract and termination
of the contract did not amount to dismissal, or removal
from service nor was it a reduction in rank. The Court
found it to be an ordinary case of a contract being
terminated by notice under one of its clauses. The Court
observed :

“10. There was no compulsion on the Petitioner to

enter into the contract he did. He was as free under the

law as any other person to accept or reject the offer

which was made to him. Having accepted, he still had

open to him all the rights and remedies available to

other persons similarly situated to enforce any rights

under his contract, which has been denied to him,

assuming there are any, and to pursue in the ordinary

Courts of the land, such remedies for a breach as are

open to him to exactly the same extent as other

persons similarly situated. He has not been

discriminated against and he has not been denied the

protection of any laws which others similarly situated

could claim…
11. …
………
The Petitioner has not been denied any opportunity of

employment or of appointment. He has been treated

just like any other person to whom an offer of

temporary employment under these conditions was

made. His grievance when analysed, not one of

personal differentiation but is against an offer of

temporary employment on special terms as opposed to

23
permanent employment. But of course the State can

enter into contracts of temporary employment

and impose special terms in each case, provided

they are not inconsistent with the Constitution,

and those who chose to accept those terms and

enter into the contract are bound by them, even as

the State is bound.”
(emphasis supplied)

24. In Parshotam Lal Dhingra v. Union of India (AIR
1958 SC 36), this court followed the view taken in Satish
Chandra’s case (supra). Any reference to the case law on
the subject would remain incomplete unless we also refer to
the decision of the Constitution Bench of this court in Delhi
Transport Corporation v. D.T.C. Mazdoor Congress &
Ors. (1991) supp (1) SCC 600, where this Court was
dealing with the constitutional validity of Regulation 9 (b)
that authorized termination on account of reduction in the
establishment or in circumstances other than those
mentioned in clause (a) to Regulation 9 (b) by service of
one month’s notice or pay in lieu thereof. Sawant, J. in his
concurring opinion held that the provision contained the
much hated rules of hire and fire reminiscent of the days of

24
laissez faire and unrestrained freedom of contract and that
any such rule would have no place in service conditions.

25. To the same effect was an earlier decision of this
Court in Central Inland Water Transport Corporation
Ltd. & Anr. v. Brojo Nath Ganguly & Anr. (1986) 3
SCC 156, where the Court had refused to enforce an unfair
and unreasonable contract or an unfair and unreasonable
clause in a contract entered into between parties who did
not have equal bargaining power.

26. A conspectus of the pronouncements of this court and
the development of law over the past few decades thus
show that there has been a notable shift from the stated
legal position settled in earlier decisions, that termination
of a contractual employment in accordance with the terms
of the contract was permissible and the employee could
claim no protection against such termination even when
one of the contracting parties happened to be the State.
Remedy for a breach of a contractual condition was also by
way of civil action for damages/compensation. With the
25
development of law relating to judicial review of
administrative actions, a writ Court can now examine the
validity of a termination order passed by public authority.
It is no longer open to the authority passing the order to
argue that its action being in the realm of contract is not
open to judicial review. A writ Court is entitled to judicially
review the action and determine whether there was any
illegality, perversity, unreasonableness, unfairness or
irrationality that would vitiate the action, no matter the
action is in the realm of contract. Having said that we
must add that judicial review cannot extend to the Court
acting as an appellate authority sitting in judgment over
the decision. The Court cannot sit in the arm chair of the
Administrator to decide whether a more reasonable
decision or course of action could have been taken in the
circumstances. So long as the action taken by the authority
is not shown to be vitiated by the infirmities referred to
above and so long as the action is not demonstrably in
outrageous defiance of logic, the writ Court would do well
to respect the decision under challenge.

26
27. Applying the above principles to the case at hand, we
have no hesitation in saying that there is no material to
show that there is any unreasonableness, unfairness,
perversity or irrationality in the action taken by the
Corporation. The Regulations governing the service
conditions of the employees of the Corporation, make it
clear that officers in the category above E-9 had to be
appointed only on contractual basis.

28. It is also evident that the renewal of the contract of
employment depended upon the perception of the
management as to the usefulness of the respondent and
the need for an incumbent in the position held by him.
Both these aspects rested entirely in the discretion of the
Corporation. The respondent was in the service of another
employer before he chose to accept a contractual
employment offered to him by the Corporation which was
limited in tenure and terminable by three months’ notice on
either side. In that view, therefore, there was no element
of any unfair treatment or unequal bargaining power
27
between the appellant and the respondent to call for an
over-sympathetic or protective approach towards the
latter. We need to remind ourselves that in the modern
commercial world, executives are engaged on account of
their expertise in a particular field and those who are so
employed are free to leave or be asked to leave by the
employer. Contractual appointments work only if the same
are mutually beneficial to both the contracting parties and
not otherwise.

29. In the result, we allow this appeal, set aside the
impugned judgment and order passed by the Division
Bench of the High Court of Orissa dismissing the Writ
Appeal No.11 of 2003. We, however, direct that the salary
and allowances if any paid to respondent No.1 pursuant to
the impugned judgment shall not be recovered from him.
Parties shall bear their own costs in this Court as also in
the courts below.
…………………………………….J.

(CYRIAC JOSEPH)

28
…………………………………….J.

(T.S. THAKUR)

New Delhi

December 16, 2011

29

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