N Darahasa Lahari S/o. Sri Ranga Rao Vs Star Union Dai-Ichi Life Insurance Company Limited

1 Star Union Dai-lchi Life lnsurance^Co pany Limited, ( a Joint Venture of Bank of lndia, Union Bank of lndia),^Co rate Office^'1 1th Floor, Vishwaroop^lT Park, Sector 30-A, Vashi, Navi^Mu bai -^{400 703,represented bY its} Managing Director and Chief Executi Officer

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Star Union Dai-lchi Life lnsurance mpany L mited Res o na Head office South-ll, Flat No.20'l , 2nd^Floor, a ks aya S re N aS S reet No 1 Begumpet, Hyderabad^-500 016.

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...RESPONDENTS

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Petition under Article 226 ot the nstitution of lndia^praying that^{in the} circumstances stated in the affidavit^file therewith, the High Court^{maY be} pleased to issue a Writ, order or direction, ne more particularly in the nature of^a writ of Mandamus or appropriate^writ (i) declare the proceedings dated29.O4.2015 issued by the^{2nd respondent} ccepting the resignation^is illegal^and arbitrary and⁽ⁱⁱ⁾ direct the^{respondentsto} continue the^petitioner in service^with all consequential benefits^{w.e.f.28.06.2015}

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l.A. NO:'l OF2015 MP. NO: 44297 OF 15

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Petition under Section^{151 CPC} Pra^{ing that in the circumstances statedin} the affidavit filed^{in support of the petiti} ,^{the High Court may be} Pleased^to direct the respondents^{to continue the petiionerin serive by suspending the letter} of resignation daled:^{29.04.2015 and pass} such other order or other orders^{in the}

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circumslances of the case and in the interest of^{justice pending} disposal of the above writ petition.

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Counsel for the Petitioner : M/s.SMT.K.UDAYA SRI

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Counsel for the Respondents: SRI V.HARISH KUMAR

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The Court made the following: ORDER

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ORDER

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The petitioner-N.Darahasa^Laha joined the respondent-Star Union Dai-lchi Life Insurance^{Company (} UD Life, for short] as Assistant Vice President on 01.03.2072,^{after de selectionprocess. He was} confirmed in the employment^with effect from L1.09.201.2.^ln Decembe4 2012, he was transferred^{to Vakhapatnam as AreaHead. On} the ground of consistent^under-perfor ance and non-achieving^{of set} targets, he was issued a^{Show Cause N} tice dated 15.04.2015 seeking response. Petitioner submitted^{his respose on17.04.2015 detailing his} achievements even during^{the period of} risis in the wake of cyclone-hit in Visakhapatnam. He was^issuedan ther letter dated^22.04.2075 proposing to take further action^{on th} ground that only 65% of the target was achieved under^the Peti oner's leadership. Petitioner submitted his resPonse on^27.04.2 15. However; the Petitioner tendered his resignation^{on 29'04.2015} allegedly under^{pressure, and} specifying his last working^{day woul} be 28.06.2015. The Regional Head, vide e-mail dated^29.04.2075c mmunicated to the Petitioner th immediate effect and^that that his resignation has been^accepted he would be relieved from services^{on 2} .06.2075 subiect to comPletion of relieving formalities.^Thereafterl n 13.06.2015, the Petitioner addressed a letter requesting^permissi n to withdraw his^resignation dated 29.04.2015.^{The petitionerwas} ssued a response^{e-mail dated} 27.06.2075 stating that^{his resignati} n was accepted and a^reply communicating^acceptance of^resig ation was sent to him^on 29.04.2075. Petitioner's^{salary for the} months of May and fune²⁰¹⁵

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have not been credited to his account within time, and he has been making representations for release ofsalary and the respondents have issued Proceedings dated 17.07.2075 stating that Full and Final settlement of accounts is being^processed. It is the^grievance of the petitioner that he had performed well and achieved targets and his pay was also raised year on yea[ as can be seen from^{the pay} statements filed as material papers with the writ^petition, and that he tendered his resignation under forced circumstances, and later he made a request to permit him to withdraw his resignation, but his request was not acceded to. Petitioner assails the Proceedings dated,29.04.2015 issued by the lna respondent accepting the resignation as illegal and arbitrary, and seeks a direction to the respondents to continue the petitioner in service with all consequential benefits with effect from 28.06.2015.

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V. Harish Kuma4 learned counsel forthe respondents-SUD Life. Perused the record.

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Learned counsel for the petitione4 while making submissions on the lines of writ affidavit, would contend that that SUD Life is a joint venture of Bank of India, Union Bank of Indiaand Dai-lchi Life lnsurance Company of f apan, and as on the date of filing the writ petition, the total combined share of the Bank of India and Union Bank of India was around 7 4o/o, however; due to efflux of time, the share of Bank of India has come down to 28.960/o and that of Union Bank of India to 25.100/o, howeveq, in any event, the cumulative share of the two banks is still over 54olo which effectively places the Banks holding (and thereby Government's holding) at majority and therefore the Government has a

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deep and^{pervasive controloverrespond} nt-joint venture i.e.,^{SUD Life} of State under Article^{12 of} can effectively be^{called an instrumentali} the Constitution,^{bringing it within the} ld of writ^{jurisdictionunder} Article 226. Learned^{counsel drawsthe} ttention of the Court^to Page No.33 of the Reply^{affidavit whereinSU} Life is stated to^{be a deemed} Government Company^{under Section 6} 9(2) of the Companies^Act, 1956, for the^{purposeoIComptrollerand} uditor General of^India [CAG) Audit, and therefore^{the respondent, a} d consequentlY the^{action of} respondents in accepting^{the resignation} of the petitioner^{and relieving} him from services, is liable^{be set asid} under Article^{226. Learned} counsel further^{submits that the petiti} ner has achieved^significant results in comparison^{to other insurance} players, and even during^crisis period during cyclone^{in Visakhapatn} m, the petitioner^{has shown} results and the^{pay raisesgiven to the} etitioner during^{2012-13 and} 2Ol3-14 are testimonial^{to the perform} nce of the^{petitione4and the} petitioner had to resign^{due to pressures} and later he sought Permission was not^{permitted to resume} to withdraw his^{resignation,howeve(,h} his position in the^{company, and therefo} e the impugned action^{is liable} to be set aside.^{Learned counselsub} its that the Petitioner^though submitted resignation^{letteron 19.04.2} 15 due to^{pressures,howeve4,} he later submitted^{a letter dated 13.06.} 015 requesting^to Permit^him to withdraw the^{resignation.It is co} ended that earlier^{this Court} dismissed the writ^{petitionon the gro} nd of maintainabilitY,^howeve6, later in writ^{appeal was allowed rema} ding the matter^{to the learned} It is contended^{that the} Single Judge^{forfresh consideratio} respondents^{filed counter affidavito} 04.10.2023 and therefore^the counter is^{ilable to be refused as the s} me was filed beyond^{120 daYs}

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from the date of service of notice. It is also contended that the respondents are aware ofthe proceedings at the earlier stage when the writ petition was dismissed, and the respondents have even contested the matte; but they did not choose to file counter until after it was remanded and restored to the file. It is contended that the respondent is trying to evade constitutional responsibilities in spite of Government holding majority share in the company. Learned counsel contends that the Hon'ble Supreme Court in Federal Bank v. Sagar Thomasl enumerated as to when a writ petition is maintainable, and a perusal of paragraph 18 of the said judgment disclose that even a private body discharging public duty or positive obligation, is after remanding the matter on for Learned counsel relies on the following judgments in support of her contentions:

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i) Shambhu Murari Sinha v. Proiect & Development Indiaz (wherein reference was made to Balram Gupta v. Union of India3, f .N. Srivastava v. Union of Indiaa, Power Finance Corpn. Ltd. v. Pramod Kumar Bhatias to contend that resignation request, in spite of its acceptance, can be withdrawn before the effective date.

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iil xxxxxxx

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+. Learned counsel for the respondents, basing on the counter affidavit filed on behalf of respondent Nos.1 and 2, would submit that suD Life though a joint venture of Bank of India and union Bank of India

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'AtR^{1957sc 529}

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, (2000) 5 scc 621

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r (1987) 5upp sCC 228

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4 (1998) 9 SCC 5s9

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5 (1997)4 SCC 280

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(which are Government of India contr lledJ, and Dai-lchi^Insurance Company of |apan,^{and is registered un} er Companies Act, 1956,^and the CIN Number contains^alphabeticC de "PLC" which means^Public Limited Company, and^therefore he respondent is not a Government/State^{enterprise, and even} the information found^{on the} Official Website of the^{Ministry of Cor} orate Affiirs also shows^the respondent company^{as a "Non-govtco} pany". It is also contended that as per Section 2@5)^{of Companies Act,} 013,^{"GovernmentComPanY"} means a company^{in which51%of} Pai up share capital^{is heldbY the} Central Government,^{or by State Govern} ent, or Governments,^or Partly Central and^{partY one or more State} Governments, and^includesa nt company, howevet in^the subsidiary company of^{the Governm} instant case, neither^{the Central Govern} ent nor State Government^nor both^jointly hold^{51% paid up share ca} tal in respondent^{SUD Life and} therefore the^{respondent is not a Gov} rnment company. It^{is further} contended that^{evenas per subsidiary} definition, neither^{the Bankof} India nor Union Bank of^Indiahold5 % paid-up share^{caPitalin the} respondent company,^{and further the} respondent is^{neithera local} authoriry of the^{Governmentnor a} entity operating under^the e situated within the territorial authority of the Government^{of India or} limits of India to be considered^{as Sta} It is contended that^{neither the} Government of India,^{nor the State Go} rnment provides^{anY funds or} further the Bank^{of India or the} grants to the respondent company,^an Union Bank of^{India,apart from ho} ing shares in the^resPondent or grants to the^resPondent company, do not Provide^{anY fund} company, and that the^{Government of I} dia or the State Government^do noih)v" any administrative^or upervisory control over^the

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management and affairs of the respondent company. Learned counsel submits that as per the mandate under the Companies Act, the accounts of SUD Life are audited by the Office of Comptroller and Auditor General of India, howevel merely because the accounts are audited, the respondent does not become Government company or State instrumentality under Article 12 of the Constitution. Learned counsel contends that respondent-SUD Life is a private company with no public duty element involved, and therefore, not amenable to writ iurisdiction. It is contended that the grievance of the petitioner relates to employment, which is primarily contractual in nature, and even admitting that private organizations discharging public function are amenable to writ jurisdiction, the matters of entployment, being contractual in nature, are governed by the employment offer which is a contract document, and a contract document between two private individuals cannot invoke writ jurisdiction. Learned counsel, while strongly contending that the respondent company is a Private Insurance Company, relies on the following iudgments:

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1J foshi Technologies v. Union of lndia6 to contend that writ remedy under Article 226 or Article 32 cannot be invoked in pure contractual matters.

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Andi Mukta Sadguru Shree Muktaiee Vandas Swami Suvarna fayanti Mahotsav Smarak Trust v. R. Rudaniz to contend that mandamus cannot be issued if the rights are purely of private character even if there is an element of public duty

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6 (2015) 7 SCC 728

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? (1989) 2 SCC 69

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Learned^{counsel drawsthe} involved^{in the private organization} ng ratioⁱⁿ ParagraPh^{12 of} attention^{of the Court to the follo}

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Andi^{Mukta (suPra)'}

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e maintainabilitY^of "The^{essence of the attackon} 226 maY^{now be} the writ Petition^underArtic management^{of the} examined.^{lt is arguedthat th} under^{the Public} college^{being a trust registe} writ^{jurisdiction of} Trust Act^{is not amenable to} in other^{words,is that} the High^{Court- The contentio} against^{whichno writ} the: trust^{is a} Private^institutio ln support^{of the} of mandamus^{can be issu} upon two^{decisions of} contention,^{the counsel relied} ittee of^{Vaish Degree} this Court:^{(a) ExecutiveCom} akshmi^{Narain & Ors''} College,^{Shamli and Othersv'} ak Kumar^{Biswas v'} t19761^{2 SCR1006 and (b)} , t1984^2scc252-1n Director^{of Public lnstructio} respondent^institution the first^{of the two cases' th} ed bY a^{registeredco'} was a^{Degree Collegemana} led against^{the college} operative^{societY.A suit was} r reinstatement'^{lt was} by the^{dismissed PrinciPal} ve Committee^{of the} contended^{thatthe Exec} under the^CooPerative college^{which was registere} to the^{AgraUniversitY} Societies^{Act and affilia} a M rut University)^was (and subsequently^to ce of this^{contention lies} statutory^{bodY'The imPorta} ,^{reinstatement couldbe} in the^{fact that in sucha cas} in violation^{of statutory} ordered^{if the dismissal is} refused^{to accePtthe} obligation.^{But this Cou} that the^managementof contention.^{lt was observ} tutory^{body since not} the college^{wasnot a} . lt was^{emPhasised that} created^{bY or undera sta}

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an institution which adopts certain statutory provisions will not become a statutory body and the dismissed employee cannot enforce a contract of personal service against a non-statutory body.

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The decision in Vaish Degree College was followed in Deepak Kumar Biswas case. There again a dismissed lecturer of a private college was seeking reinstatement in service. The Court refused to grant the relief although it was found that the dismissal was wrongful. This Court instead granted substantial monetary benefits to the lecturer. This appears to be the preponderant judicial opinion because of the common law principle that a service contract cannot be specifically enforced."

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3l Secy., Technical Education, U.P v. Lalit Mohan Upadhyays, to contend that a resignation request can be withdrawn prior to its acceptance by the employe[ but in the instant case, the resignation letter was accepted by the employer on the same day it was given by the petitioner.

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S. Having considered the respective submissions, and perusing the record, it may be noted that the issue that falls for consideration is whether a writ petition is maintainable by or against the respondentStar Union Dai-lchi Life Insurance Company ISUD Life, fbr shortJ under Article 226 of the Constitution in the capaciry of a State or instrumentality of the State; if so, does the grievance of the petitioneremployee fall within the scope of adludication under Article 226.

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e l2ooi) 4 scc 492 ,1 /

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It may be noted that the^Hon'bleS preme Court in Federal Bank Ltd. v. Sagar Thomase held as^follows:

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"18. From^{the decisionsreferred} above, the^position that emerges is that a writ Petition nder Article 226 ot the Constitution of lndia may^{be mainta} able against (i) the State (Government); (ii) an authority;⁽ⁱⁱⁱ⁾ a statutoni body;^(iv) an instrumentality or agency^{of the Sta} ;^{(v) a companywhichis} financed and owned by^{the State} (vi) a private body run substantially on State^{funding; (vii)} private body discharging public duty or positive obligation o public nature; and (viii) a person or a body under liabilitY discharge any function under any statute, to comPel^{it to} perform such a statutory function.

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A company registered^under e Companies Act for the purposes of carrying on any tra or business is a Private enterprise to earn^{livelihood and} make^profits out of such activities. Banking is also a^ki d of profession and a commercial activity,^the Primary^m tive behind it can^{well be} said to earn returns^{and profits.Si} ce time immemorial,^such activities have been^{carried on byi} dividuals^generally. lt^{is a} private affair of the comPanY thou h the case of nationalized banks stands on a^differentfo ting. There may well^be companies, in which^majoritYof the share capital maY^be contributed out of^{the State fun} s and in that view of^the matter there maY be^more rticipation or^dominant participation of the State in^m naging the affairs of^the we are concerned^{with a} company. But in the Present^ca banking company^{whichhas its} n resources to raise its

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e (2003) 10 scc 733

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funds without any contribution or shareholding by the State. It has its own Board of Directors elected by its shareholders. It works like any other private company in the banking business having no monopoly status at all. Any company carrying on banking business with a capital of five lakhs will become a scheduled bank. All the same, banking activity as a whole carried on by various banks undoubtedly has an impact and effect on the economy of the country in general. Money of the shareholders and the depositors is with such companies, carrying on banking activity. The banks finance the borrowers on any given rate of interest at a particular time. They advance loans as against securities. Therefore, it is obviously necessary to have regulatory check over such activities in the interest of the company itself, the shareholders, the depositors as well as to maintain the proper financial equilibrium of the national economy. The banking companies have not been set up for the purposes of building the economy of the State; on the other hand such private companies have been voluntarily established for their own purposes and interest but their activities are kept under check so that their activities may not go wayward and harm the economy in general. A private banking company with all freedom that it has, has to act in a manner that it may not be in conflict with or against the fiscal policies of the State and for such purposes, guidelines are provided by Reserve Bank so that a proper fiscal discipline, to conduct its affairs in carrying on its business, is maintained. So as to ensure adherence to such fiscal discipline, if need be, at times even the management of the company can be taken over. Nonetheless, as observed earlier, these are all regulatory measures to keep a check and provide guidelines and not a participatory dominance or controJ 6ver the affairs of the company. For other companies

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in general carrying on other^b iness activities,^maYbe manufacturing, other industries^{or a} y business, such checks are provided under the Provisions f the Companies Act, as indicated earlier. There^{also, the mai} consideration is that the company itself may not^sink because of its own mismanagement or the^{interest of} e shareholders or PeoPle generally may not be^jeoPardized for that reason. Besides taking care of such interest^{as in} icated above, there is no other interest of the State,^to control the affairs^and management of the Private^compan es. Care is taken in^regard to the industries covered^{under th} lndustries (Development and Regulation) Act,¹⁹⁵¹ that^t eir production, which is important for the economY,^mayno go down, yet the business activity 12 is carried^{on bY suchc} mpanies or corporations which only remains a Pr ate activity of the entrepreneurs/companies.

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Such private comPanies^would normally not be amenable to the writ^jurisdiction under^Arti e 226 ol the Constitution. But in certain circumstances^a may issue to such Private bodies or^persons as^{theremaY b} statutes which need to^be complied with by all^concern including the^private companies. For examPle,^{there are} certain legislations like the lndustrial Disputes Act, the^Minim m Wages Act, the Factories Act or for maintaining Proper nvironment, say the Air (Prevention and Control of^Pollu on) Act, 1981 or the^Water (Prevention and Control of Polluti n) Act, 1974 etc. or statutes of the like nature^which ten certain duties^and responsibilities statutorily^upon uch private bodies^which they are bound.to^{comPlYwith. lf} ey violate such a statutory issued for comPliance^with provision a writ would certainlY instanc those^{provisions.For} , if^{aprivateemployer} dispenses with the^{service of its} mployee^{in violation of the}

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provisions contained under the lndustrial Disputes Act, in innumerable cases the High Court interfered and has issued the writ to the private bodies and the companies in that regard. But the difficulty in issuing a writ may arise where there may not be any non-compliance with or violation of any statutory provision by the private body. ln that event a writ may not be issued at all. Other remedies, as may be available, may have to be resorted to."

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A perusal of Sagar Thomas (supral would show that a writ is maintainable under Article 226 even against a private entity provided that the grievance is with regard to discharging of a public function. Howeve4 conversely, the very maintainability of a writ under Article 226 against an entity with regard to a public function does not necessarily make such an entity a State or an instrumentality of the State. Be that as it may, in the instant case, the combined share-holding o[ the two Banks of India is not material to maintain a writ against respondent-SUD Life as the respondent-SUD Life is mandated under the Statute, both under Companies Act, 1956 (now Companies Act, 2013J, as well as the Regulations prescribed by the Insurance Regulatory and Development Authority of India IIRDAIJ to conduct the insurance business in accordance with the Statute. Thus, the Statute effectively compels the respondent to be amenable to the provisions under the Companies Act, and also conduct insurance business within the regulatory parameters promulgated by the IRDAI. That being so, any deviation that has a character of violating the provisions mandated under Companies Act, or IRDAI regulations may invite jurisdiction under Article 226.The element of public duty is the ingredient common

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for both State/instrumentality of the^S te, and a private entity that renders the entity amenable to writ jurisdiction of Constitutional Courts. It may further be noted that in tters relating to employment in private industries governed under e Industrial Dispute Act, writ petitions under Article 226 were enter ined as, primarily, recourse to such disputes is provided under the Ind trial Dispute Act.

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In the instant case, the employ ent of the petitioner with the respondent-SUD Life is^purely a contra al matter arising out of the employment offer which is a docu nt of contract between the rnanagement of respondent-SUD Life a the petitioner. Therefore, the acceptance of resignation of the^petitio er is a matter governed by the terms of contract. The petitioner cannot aintain a writ petition against the respondent-SUD Life on the^mere und that it is a ioint venture with two Indian^{public-sector} banks, as ssentially the grievance ofthe petitioner is not about illegality in discharge of public function finsurance^{business) by the responde} -SUD Life, or deviation of any mandatory statutory processes or^pro cols under Companies Act, or IRDAI Act, while discharging such^publi function.

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3.^{Accordingly, the writ petition is} ismissed as not maintainable, leaving it open to the petitioner to^pur ue remedies as available under law. No costs. Miscellaneous petitions^p nding, ifany, shall stand closed.

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SD/.V.KAVITHA D PUTY REGISTRAR //TRUE C PYII SECTION OFFICER To, '1. One CCto SMT.K.UDAyA SRt, Advo te. IOPUCI\ z One CC to SRI V.HAR|SH KUMAR, vocate. [OPUC] .l Two CD Copies. o BSK GJP

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ORDER

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WP.No.34468 of 2015