Whether the employment contract would be "determinable nature" within the meaning of Section 14(d) of the Specific Relief Act.

 1. Brief Facts

The case concerns Mr. Gaurav Rajgaria (Plaintiff) who was employed in a managerial capacity with Maruti Suzuki India Limited (Defendant No. 1). The Plaintiff instituted a civil suit alleging that his termination from service, effected through a termination letter dated 13.02.2023, was unlawful . The Plaintiff sought a declaration to that effect, along with prayers for reinstatement to service and compensation amounting to Rs. 2,00,00,000/- for loss of income, harassment, and undue hardship allegedly resulting from the termination  .

It remained undisputed that the Plaintiff's employment was governed by the terms of an appointment letter dated 06.02.2006, which unequivocally permitted either party to terminate the contract upon giving three months' prior notice or by payment in lieu thereof . The Plaintiff did not dispute having received his contractual dues pursuant to the termination .

In view of this admitted contractual framework, Defendant No. 1 moved an application under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC), seeking rejection of the plaint in limine . 

2. Arguments of the Parties

(a) Arguments of the Defendant/Applicant

Mr. Sanjeev Sindhwani, learned senior counsel for Defendant No. 1, submitted that the suit was liable to be rejected under Order VII Rule 11(a) and (d) CPC, as it disclosed no cause of action and was barred by law . He contended that the relationship between the parties was purely contractual, governed exclusively by the terms of the appointment letter dated 06.02.2006, which permitted termination by either party upon giving three months' notice or salary in lieu thereof  .

He further argued that the Plaintiff had neither pleaded any breach of these terms nor denied receiving his contractual dues. Therefore, in the absence of any actionable breach, the plaint was fundamentally devoid of any cause of action .

The senior counsel also submitted that the termination was occasioned by repeated breaches of the employment contract and the Employee Governing Policy by the Plaintiff, who was afforded due opportunity to respond to the allegations. He emphasized that even without such violations, Defendant No. 1 was legally entitled to terminate the employment, as the contract permitted "termination simpliciter" without assigning cause, upon compliance with the prescribed notice requirements .

Additionally, he argued that the reliefs sought by the Plaintiff were ex facie barred under Section 14(d) of the Specific Relief Act, 1963 (SRA), as the Plaintiff was seeking specific performance of a "determinable contract" and a "contract of personal service," both of which are statutorily prohibited .

The senior counsel further submitted that the Plaintiff's claim for Rs. 2 Crores was excessive, unsubstantiated, and contrary to the terms of the appointment letter, which limited Defendant No. 1's liability to three months' notice pay  . He also argued that the claim for distress and emotional hardship was barred by limitation under Article 79 of Part VII of the Schedule to the Limitation Act, 1963 .

To support his submissions, he relied on decisions including Pearlite Liners (P) Ltd. v. Manorama Sirsi, J. Tiwari v. Jwala Devi Vidya Mandir, Army Welfare Education Society v. Sunil Kumar Sharma, S.S. Shetty v. Bharat Nidhi Ltd., Pawan Kumar Dalmia v. HCL Infosystems Ltd., Satya Narain Garg v. DCM Ltd., and Naresh Kumar v. Hiroshi Maniwas .

(b) Arguments of the Plaintiff/Non-Applicant

Ms. Avshreya Pratap Singh Rudy, learned counsel for the Plaintiff, argued that the application under Order VII Rule 11 CPC was misconceived and devoid of merit . She submitted that the plaint clearly disclosed a valid cause of action arising from events culminating in the alleged illegal and arbitrary termination of the Plaintiff's employment, in contravention of principles of natural justice  .

She emphasized that the Plaintiff had rendered over 18 years of unblemished service with Defendant No. 1, during which he received multiple fast-track promotions on merit . She contended that the termination was not a "simpliciter disengagement" in accordance with the terms of appointment, but a "punitive measure" undertaken pursuant to disciplinary proceedings allegedly vitiated by procedural infirmities  .

The counsel further submitted that no genuine opportunity was afforded to the Plaintiff to respond prior to the issuance of the chargesheet and termination letter . She argued that the abrupt manner in which the Plaintiff was terminated exemplified the arbitrary character of the impugned action  .

Regarding the limitation issue, she contended that the Plaintiff's claim for compensation and damages fell within Articles 58 and 113 of the Schedule to the Limitation Act, both prescribing a limitation period of three years, rather than Article 79 as alleged by Defendant No. 1  . She argued that the issue of limitation raised mixed questions of law and fact, which could not be conclusively determined at the threshold stage under Order VII Rule 11 CPC .

She placed reliance on Hema Gusain v. India International Centre to argue that a cause of action arising from forced resignation amounting to illegal termination, and a corresponding claim for compensation, could not be decided at the stage of Order VII Rule 11 CPC, as it necessitated the production of evidence. 

3. Reasoning and Findings of the Court

The Court identified four key issues for consideration: (1) whether the plaint was maintainable or barred by law; (2) whether the employment contract was of a "determinable nature" within the meaning of Section 14(d) of the SRA; (3) whether the relief of reinstatement could be granted or the plaint was liable to be rejected under Order VII Rule 11 CPC; and (4) whether the termination was unlawful and the claim for compensation was legally sustainable .

The Court first clarified the scope of Order VII Rule 11 CPC, noting that at this stage, the Court is required to examine only the averments made in the plaint to determine whether a cause of action is disclosed or if the suit is barred by law  . No reference can be made to the written statement or any defense raised .

The Court then examined whether the employment contract was "determinable" in nature. After analyzing Clause 18 of the contract, which stated that "services may be terminated by giving three months' notice by either party or pay plus Dearness Allowance in lieu of such notice," the Court concluded that the contract was clearly of a determinable nature, at the behest of either party, without any conditions attached  . Consequently, the Court held that the contract was not specifically enforceable as per Section 14 of the SRA .

The Court explained the rationale behind denying specific performance of determinable contracts, stating: "An obvious reason to deny the specific performance of a contract which is determinable can be that even if the Court were to grant specific performance, one or both of the parties will still be entitled to terminate the contract without cause thereafter." 

Regarding contracts of personal service, the Court referred to established legal principles, noting that such contracts cannot ordinarily be specifically enforced . While acknowledging three exceptions to this rule—(1) cases involving removal of public servants in contravention of Article 311 of the Constitution, (2) reinstatement of workers under Industrial Law, and (3) statutory bodies acting in breach of mandatory statutory obligations—the Court found that the present case did not fall within any of these exceptions   .

The Court emphasized that the rights and obligations of employees in private institutions are governed by the terms of the employment contract . Citing S.S. Shetty, the Court reaffirmed that where a master wrongfully dismisses a servant, the servant is entitled only to damages compensating for loss of income during the notice period or until alternative employment is secured, whichever is earlier .

The Court further clarified that compensation cannot be awarded for emotional distress, injury to reputation, or difficulty in obtaining new employment resulting from dismissal . It noted that in J. Tiwari, the Supreme Court had reaffirmed that where an employment contract is terminable by notice, the only remedy available even in cases of wrongful termination is compensation by way of damages, not reinstatement  .

The Court also referred to Binny Ltd. v. V. Sadasivan and subsequent decisions to reinforce that principles of public law and administrative law do not apply to private employment . It cited L.M. Khosla v. Thai Airways International Public Co. Ltd. for the clear legal principles that: (i) contracts of private employment are distinct from public employment and do not invoke public law principles; (ii) where a contract provides for termination by notice, only the pay corresponding to that notice period is recoverable; and (iii) under Section 14(1)(c) of the SRA, determinable contracts cannot be specifically enforced  .

The Court distinguished the case of Hema Gusain relied upon by the Plaintiff, noting that unlike that case, the present matter did not involve a well-pleaded claim for damages directly linked to alleged wrongful termination . Instead, it sought a decree of Rs. 2 Crores for alleged harassment, hardship, and victimization—claims that lacked the requisite pleadings and were not legally tenable in the context of a determinable contract .

The Court concluded that any alleged loss of income or suffering resulting from harassment, hardship, or victimization is not independently compensable when the underlying employment contract is determinable by notice. 

4. Final Conclusion / Operative Part

Based on the analysis of legal principles established in S.S. Shetty and consistent precedents, the Court held that in matters involving determinable contracts, the only permissible remedy, if any, is compensation strictly in accordance with the terms of the contract . The Court concluded that reinstatement or damages beyond what the contract expressly provides are impermissible .

Accordingly, the Court allowed the application under Order VII Rule 11 CPC and rejected the plaint as the reliefs sought by the Plaintiff were contrary to the established legal framework and not maintainable . The civil suit bearing CS(OS) 208/2024 was disposed of along with all pending applications .