DELHI HIGH COURT QUASHES TERMINATION ORDERS OF PILOTS BY AN AIRLINE

Hon’ble Delhi High Court in a recent common judgment passed on June 01, 2021, in “Arjun Ahluwalia Vs. Air India Limited” and other similar forty (40) other petitions involving pilots of Air India Ltd. (‘Airline’), allowed the writ petitions in favour of the employee pilots who sought withdrawal of their resignation letters tendered pre-Covid-19 time, which were accepted by the Airline amid Covid-19 pandemic, even after withdrawal of tendered resignations primarily on ground of severe financial strain and financial impact of global Pandemic Covid-19.

In the leading case, the Petitioner (a Pilot) joined Air India Limited in 2008, as Trainee Pilot, and on completion of training and after several promotions, he was designated as Pilot Commander.

The Petitioner tendered his resignation vide letter dated January 15, 2020 giving six (6) months’ notice, commencing from January 15, 2020, and requested for clearance of all his dues towards salary, flying allowances, etc., credit of contribution into his provident fund account and issuance of a “No objection Certificate‟, issued by Directorate General of Civil Aviation (DGCA). In the resignation letter, Petitioner pointed out that his Bond Period was ending on May 01, 2020 and thus, he be relieved with effect from July 15, 2020 [expiry of six (6) months’ notice period]. Vide letter dated March 18, 2020, on account of compelling personal reasons, Petitioner withdrew his resignation.

Airline vide an e-mail dated March 23, 2020 informed the Petitioner that the withdrawal of his resignation would be examined at a later date. On July 04, 2020, Petitioner sent an e-mail inquiring about the status of the withdrawal of his resignation, but no response was received. Vide order dated August 13, 2020 i.e. seven (7) months after the date of resignation and five (5) months after its withdrawal, Airline accepted the resignation of the Petitioner, overlooking the fact that the resignation stood withdrawn.

A Writ Petition was initiated by the Petitioner before Hon’ble Delhi High Court seeking Court’s direction to the Airline to accept the request for withdrawal and allow the Petitioner to continue in service. Similar reliefs were sought by other forty (40) pilots who approached the Hon’ble Court by filing other writ petitions.

Questions Framed By Hon’ble Delhi High Court

The following questions arose for consideration before the Hon’ble Delhi High Court:

A. Whether the Petitioners were entitled to withdraw their resignations prior to their acceptance by the Respondent Airlines?

B. If the answer to the above question was in the affirmative, whether it was open to the Respondent Airlines to accept resignations which stood withdrawn by the Petitioners prior to their acceptance?

C. Whether financial crisis/distress/crunch of the Respondent Airlines can be a relevant consideration for accepting resignations of the Petitioners in view of the provisions of CAR?

D. Whether the Petitioners whose terms and conditions of service were governed by Fixed Term Contracts (‘FTC’) can enforce their contracts of employment and/or seek extension/renewal of the FTCs by invoking the writ jurisdiction of this Court under Article 226 of the Constitution of India?

Hon’ble Delhi High Court’s Decision

The Court observed that the Petitioners in the batch of petitions were Pilots who could be broadly categorized under two heads : (a) Permanent Employees (hereinafter referred to as ‘PEs’) and (b) Fixed Term Contract Employees (hereinafter referred to as “FTCEs‟)

After analyzing the judgements passed by the other courts and Service Regulations of the Airline, the Hon’ble Delhi High Court arrived at the conclusion that a resignation tendered by an employee indicating a prospective or a future date from when the resignation is to take effect, can be withdrawn at any time before it is accepted, in the absence of anything to the contrary in the applicable Rules or terms and conditions of service. It also observed that it may be a different matter where the withdrawal of resignation can be made only with the prior permission of the employer or where the withdrawal needs acceptance underthe given set of Rules, but it found no Rule prescribing any of the two conditions. It also observed that if the resignation is withdrawn prior to its acceptance, it is not open to an employer to
accept the resignation, as the same is non-existent and non-est factum in the eyes of law.

The Hon’ble Court held that the Rules applicable to the relevant parties (petitioners) manifest that resignation could only be tendered with a mandatory six (6) months’ notice period and was thus prospective and it cannot be said that offer to resign was in praesenti. Therefore, the inevitable position that emerges is that the petitioners (including the Petitioner) had a right to withdraw the resignations on various dates that they did, prior to their acceptance. Accordingly, it held that the position adopted by the Airline, to the contrary was unacceptable.

The Hon’ble Court also stated that the petitioners (including the Petitioner) were entitled under the Rules to withdraw the resignations and had so withdrawn validly. The next question that arose before the Hon’ble Court was whether it was open to the Airline to accept the resignations. Hon’ble Court answered the said question in the negative, as the moment the resignations were withdrawn during the notice period and prior to their acceptance, they were non-est and non-existent in the eyes of law on the dates the respective decisions were taken to accept them.

Acceptance Of Resignation Before Its Withdrawal

Thus, applying the law propounded by the Hon’ble Supreme Court (of India) in several judgements, the first two questions (A & B) were answered in favour of the petitioners (including the Petitioner). It was held that the petitioners (including the Petitioner) could validly withdraw their resignations before acceptance and during the notice period and that the Airline had no jurisdiction to accept the resignations after the same stood withdrawn.

Question C- Financial Constraints

On the third query (C above), the Court observed that the financial distress in the Airline was not a creation of the Pandemic Covid-19 but existed from the year 2007.Upon enquiry made, it was admitted by the Airline that no other employee of the Airline be it the Cabin Crew, Ground Staff, Administrative Staff, etc., had been retrenched or laid off barring the petitioners (including the Petitioner) and no explanation was there as to why they alone had been discriminated in as much as the financial constraint would equally apply to all classes of employees.

The Hon’ble Court observed that in the garb and guise of accepting resignations, quite clearly Airline had found an easy path to dispense with the services of the petitioners, without following any procedure known to law and without having to bear the monetary consequences and liabilities thereto. If the action of an employer is found to be wrongful in law and the employee is entitled to certain monetary benefits, the employer cannot be heard to set up a defense of financial constraints.

The Hon’ble Court also rejected the ground taken by the Airline on the reasons which motivated most of the Petitioners to tender resignations, being, lucrative job offers in private sectors by holding that when an employee tenders resignation, it is either on account of personal or domestic reasons or for better career prospects. It also held that there are several cases where employees had tendered resignations for any of these reasons and subsequently withdrawn them. Reason for tendering resignation cannot be something that an employer can take a grudge with. The Hon’ble Court condemned the circuitous ways “to ease out” uncomfortable employees. As a model employer the government must conduct itself with high probity and candour with its employees.

Question D- Fixed Term Contract Employees (FTCE)

In response to the fourth query (D above) about FTCEs (pilots), the Hon’ble Court held that they could enforce their contracts of employment and/or seek extension/renewal of the fixed term contract by invoking the writ jurisdiction of Hon’ble Delhi High Court under Article 226 of the Constitution of India. Once the State or an instrumentality of the State is a party of the contract, it has an obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India. The Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity. It would be alien to the Constitutional scheme to accept the argument of exclusion of Article 14 in contractual matters.

There is an obvious difference in the contracts between private parties and contracts to which State is a party.

Hon’ble Court And Payment of Back Wages to Permanent Employees and Fixed Term Contract Employees

On the issue of payment of back wages to the petitioners, the Hon’ble Court observed that petitioners are entitled to back wages relying upon Supreme Court’s judgments that the normal rule of “no work no pay” is not applicable to cases wherein an employee is available to work but is kept away by the authorities for no fault of his. This is not a case where the employee remains away from work for his own reasons, although an employer has assigned or could assign work.

The Hon’ble Court thus allowed the writ petitions and Airline was directed to reinstate the petitioners who were PEs (permanent employees) with continuity of service from the date of expiry of the six (6) months’ notice period. Petitioners, who were employed under the fixed term contract (FTC) and the five (5) years period had not expired, were directed to be reinstated and continued in service till the expiry of remaining period of their respective contracts. Petitioners were entitled to back wages commencing from the date of expiry of their respective notice periods of six (6) months and up to the date of reinstatement. The entire exercise including grant of arrears of salary and other emoluments was directed to be carried out and completed by the Airline within a period of six (6) weeks from the date of receipt of copy of the judgement.

Anhad Law’s Perspective

The judgment is significant as the Hon’ble Delhi High Court has held that though it is not for the Court to substitute its own decision for administrative decision taken by the executive even if it is open to two different constructions, however, it is equally well-settled that the decision-making process is open to judicial review on the well-guided principles which are: (a) illegality i.e. the decision maker has not corrected applied the law that regulates the decision making process; (b) decision is vitiated by irrationality tested on the principle of ‘Wednesbury unreasonableness’; and (c) procedural impropriety.

The Wednesbury’s principle is a principle of administrative law where the court sits as a judicial authority over the local authority to see if the local authority has acted in a manner that exceeded its powers, and not as an appellate authority to override a decision of a local authority.₁

The Hon’ble Court held that it is entitled to investigate and examine the decision-making process with a view to see whether the concerned Authority has, taken into account irrelevant factors which it ought not to have taken into account or, conversely has failed to take into account or neglected to take into account relevant factors which it ought to have taken. Applying the said principles to the case, the Hon’ble Court held that the impugned decision, when tested on the Wednesbury’s principle clearly reflects that the Airline has taken into consideration the irrelevant factor of financial crunch and has failed to take into consideration the relevant law of resignation while engaging itself in the decision-making process.

The judgment also takes into account the requirement of fairness and uniformity in accepting resignation of employees and to be acted upon before withdrawal of such resignation. The Hon’ble Court further mandated that the Airline to comply with non-discrimination amongst employees and held that financial stress cannot be a ground for termination of services of employees.

Public or Private Employer
It may, however, be mentioned that the aforesaid judgment was passed in case of public employment with the Airline, which is a Government Company. Principles of administrative law or public policy are applicable in the case of government actions and public employment only. A contract of private employment is not similar to public employment and as such in private employment there is no scope of applicability of the principles of administrative law/public law.

Employment in a private sector is governed by the terms and conditions of employment (not being inconsistent with relevant applicable laws), and unless the termination is shown to be violation of the terms and conditions of employment (and/or applicable laws), it cannot be said that the termination is illegal.

Nonetheless, the above judgement of Hon’ble Delhi High Court has once again established the earlier principle that if an employee, who had resigned, but withdrawn his resignation prior to its acceptance by an employer, would continue to remain in service.

-Manishi Pathak, Founding Partner and Ranjan Jha, Partner.

Disclaimer: The contents of the above publication are based on easier understanding of relevant contents of a government notification/ guidelines/ publication and a reader should refer to such a notification/guidelines/ publication for further or specific details/ information, which will override the contents hereof. These are personal views of authors and do not constitute a legal opinion, analysis or interpretation. This is an initiative to share developments in the world of law or as may be relevant for a reader. No reader should act on the basis of any statement above without seeking professional legal advice.

₁The Wednesbury principle of unreasonableness or irrationality has its genesis in the judgment of ‘Associated provincial Picture Houses Ltd. Vs. WednesburyCorpn.’, reported in (1947) 2 All ER 680 laid down by Lord Greene which lays down various basic principle relating to judicial review of administrative or statutory discretion. Thep rinciple of “Wednesbury unreasonableness” or irrationality, as one of the grounds for intervention in judicial review, was lucidly summarised as follows:
“…the court is entitled to investigate the action of the local authority with a view of seeing whether it has taken into account matters which it ought not to take into account, or conversely, has refused to take into account or neglected to take into account matters which it ought to take into account. Once that question is answered in favour of the local authority, it may still be possible to say that the local authority, nevertheless, have come to a conclusion so unreasonable that no reasonable authority could ever have come to it. In such a case, again, I think he court can interfere.”