Termination of top employee of government company upheld


In Jaiveer Srivastava v Union of India & Ors, Delhi High Court examined the legal validity of the termination of services of the chairman and managing director of Fertilisers and Chemicals Travancore Limited (FACT), a government-owned company.

Srivastava had filed a writ petition challenging an order dated 2 November 2016 by which he was removed with immediate effect from his posts at FACT. Srivastava had been appointed as chairman and managing director on a contractual basis for five years by an order dated 12 February 2013. Aggrieved by the manner in which he was removed Srivastava argued that there had been a breach of the principles of natural justice and that his removal was stigmatic. He further argued that as the conduct, discipline and appeal rules were applicable to him, he should had been given a show cause notice and removed only after an inquiry.

Fired_employee,_job_terminationFACT told the court that the terms of Srivastava’s contract had been complied with insofar as it provided both parties the right to terminate the contractual employment by service of three months’ notice or on payment of three months’ salary in lieu of notice. It was submitted that mentioning any reason in the termination letter could have been detrimental to Srivastava’s reputation. The court was also informed that an inquiry was instituted against Srivastava following allegations of cartelization for a tender bid for the sale of gypsum and that after a preliminary inquiry the investigative agency responsible had filed a first information report.

Dismissing Srivastava’s petition, Delhi High Court said employment is governed by the terms of the employment contract between the parties. The five-year tenure of employment could be ended by the employer for any reason with three months’ notice or salary in lieu of notice. That the payment had been duly effected was not in dispute. Hence, the termination of employment was as per the contract and there was no illegality in it.

The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.