CPC Hindustan Auaeronautics Vs. Ajit Prasad AIR 1973, SC 76

 

Hindustan Aeronautics Ltd. vs. Ajit Prasad (AIR 1973 SC 76)

Facts of the Case

Ajit Prasad was an employee of Hindustan Aeronautics Limited (HAL), a public sector company. The company terminated his services, which led him to file a suit challenging his termination. The key question before the court was whether the suit was maintainable under the Code of Civil Procedure, 1908 (CPC), given that HAL was a public corporation and not a statutory body.

Issues

1. Whether a civil suit was maintainable against Hindustan Aeronautics Limited (HAL) for termination of employment?
2. Whether HAL, being a government company, was amenable to writ jurisdiction?
3. Whether the termination of employment gave rise to a cause of action under contract law or public law?

Judgment and Law Laid Down

The Supreme Court of India held that Hindustan Aeronautics Limited was not a statutory body but rather a government company incorporated under the Companies Act. The Court emphasized the distinction between a statutory corporation and a company incorporated under company law, holding that only the former is subject to writ jurisdiction.

The following principles were laid down:

1. Applicability of Writ Jurisdiction

   • A company registered under the Companies Act does not become a statutory body merely because the government owns its shares.
   • Since HAL was not created by a statute and only functioned under the Companies Act, its actions were not subject to writ jurisdiction under Article 226 of the Constitution.

2. Maintainability of Civil Suit

   • The Court held that employment in a government company was purely contractual, and an employee whose services were terminated could seek redress in a civil court but not by way of a writ petition.
   • In case of wrongful termination, remedies were available under contract law, not public law.

3. Government Control vs. Statutory Authority

   • Even if the government owned a company, that did not make it an instrumentality of the State for all purposes.
   • The employees of such a company do not get the protection available to government servants under Article 311 of the Constitution.

Significance of the Judgment

• The case clarified the distinction between government-owned companies and statutory bodies, which has implications for employment disputes.
• It reinforced that civil courts remain the proper forum for contractual employment disputes, whereas writ jurisdiction is reserved for cases involving public law elements.
• This case became a leading precedent in determining the legal status of public sector enterprises in relation to fundamental rights and employment matters.

Relation to the Code of Civil Procedure (CPC)

• The case reaffirmed Section 9 of CPC, which states that civil courts have jurisdiction unless barred by law.
• Since there was no statutory bar on the jurisdiction of civil courts in employment matters concerning HAL, the suit was maintainable.
• However, a writ petition was not an appropriate remedy since HAL was not a statutory corporation.

Conclusion

The Supreme Court's ruling in Hindustan Aeronautics Ltd. vs. Ajit Prasad settled key principles about writ jurisdiction, maintainability of civil suits, and the status of government-owned corporations. It remains an important judgment in Indian civil and constitutional law, especially concerning employment in public sector undertakings (PSUs).