H.L. Trehan and Ors. Vs. Union of India (UOI) and Ors.

Facts

Three Civil Appeals directed against the judgment of the Delhi High Court whereby the High Court has quashed a circular dated March 8, 1978 issued by the Board of Directors of Caltex Oil Refinery (India) Ltd. (for short 'CORIL'), a Government Company.

The Caltex (Acquisition of Shares of Caltex Refining (India) Ltd. and of the undertakings in India of Caltex (India) Ltd.) Act 17 of 1977 (the Act) was enacted by the Union Parliament and came into force with effect from April 23, 1977. The Act provides for the acquisition of shares of CORIL and for the acquisition and transfer of the right, title and interest of Caltex (India) Ltd. in relation to its Undertakings in India with a view to ensuring co-ordinated distribution and utilisation of petroleum products.

Under Section 3 of the Act, shares in CORIL's capital transferred to and vested in the Central Government on December 30, 1976. Section 5 transferred Caltex (India) Ltd.'s rights, titles, and interests in its Indian undertakings to the Central Government on the same date. Section 9 allows the Central Government to notify that these rights, titles, interests, and liabilities vest in a Government Company from a specified date. Section 11(2) ensures that CORIL's whole-time officers and employees retain their roles, terms, and benefits as of the appointed day unless terminated or altered by the company.

On March 8, 1978, the Chairman of CORIL's Board issued a circular announcing the rationalization of perquisites and allowances for Management Staff following the government's takeover of Caltex (India) Ltd. Subsequently, under the Caltex Oil Refinery (India) Ltd. and Hindustan Petroleum Corporation Ltd. Amalgamation Order, 1978 (published on May 9, 1978), CORIL's undertaking was transferred to Hindustan Petroleum Corporation Ltd., a Government Company under Section 9 of the Act. Employees of CORIL (respondents 1–4) filed Civil Writ Petition No. 426 of 1978 in the Delhi High Court, challenging the circular as it allegedly altered their terms of service to their detriment.

Key Takeaways for Students

Legal Issue

Whether the circular issued by Caltex Oil Refinery (India) Ltd. (CORIL) altering employee service conditions without a prior hearing violated principles of natural justice.

Holding

The Court observed after taking into consideration the case of K.I. Shephard and Ors. v. Union of India and Ors. (MANU/SC/0643/1987), observed that once a decision has been taken, there is a tendency to uphold it and a representation may not yield any fruitful purpose. Thus, even if any hearing was given to the employees of CORIL after the issuance of the impugned circular, that would not be any compliance with the rules of natural justice or avoid the mischief of arbitrariness as contemplated by Article 14 of the Constitution. Therefore, the High was as perfectly justified in quashing the impugned circular.

Final Decision Appeal Dismissed.

Ratio

The post-decisional opportunity of hearing does not subserve the rules of natural justice. The authority who embarks upon a post-decisional hearing will naturally proceed with a closed mind and there is hardly any chance of getting a proper consideration of the representation at such a post-decisional opportunity.

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