Private Institutions Are Not Bound by Civil Service Protections: Delhi High Court Rules Termination of Deputy Registrar Lawful Under ‘Hire and Fire’ Contractual Clause

"The contract of personal service cannot be specifically enforced... Private institutions are governed by the principle of hire and fire" – In a significant judgment dealing with the contractual rights of employees in private unaided institutions, the Delhi High Court upheld the legality of the termination of a former Deputy Registrar from the Apeejay School of Marketing and Management, ruling that no principles of natural justice were violated when the termination was executed in line with service rules.

Justice Anup Jairam Bhambhani dismissed the second appeal filed under Section 100 CPC, holding that no substantial question of law had been raised, and emphasized that private unaided institutions are not required to follow civil service disciplinary procedures unless there is a statutory requirement or a breach of contract.

“A Contractual Term of Termination Without Cause Cannot Be Invalidated Merely for Lack of Personal Hearing”

The appellant, Dr. R.N. Singh, was appointed in 1995 and terminated in 1999 by the institution via a letter that enclosed three months’ salary in lieu of notice. He challenged the termination as being arbitrary, unjust, and in violation of natural justice, contending that he had not been issued a show-cause notice nor given a personal hearing.

The Court, however, found no fault in the termination, stating unequivocally:

“It is settled law that a contract of personal service cannot be specifically enforced. All such contracts are governed by their terms and conditions… Private unaided educational institutions are governed by the principle of hire and fire.”

Referring to Clause 21 of the Service Rules, which permitted termination without assigning any reason upon payment of notice salary, the Court held:

“Termination of the plaintiff was not illegal as it was not required that he had to be heard personally… the letter dated 30.09.1999 cannot be declared as bad in the eyes of law.”

“Civil Courts Cannot Interfere in Private Employment Unless Contractual or Statutory Breach is Established”

Dr. Singh’s grievance also included a claim that his termination was a retaliation for seeking implementation of the 5th Pay Commission recommendations. He alleged that the institution failed to pay him arrears with retrospective effect from 01.01.1996.

The Court categorically rejected this line of argument, observing: “It was the employer’s prerogative to decide the date of implementation. If the institution decided to apply the revised pay scales from 01.01.1999 instead of 01.01.1996, that by itself cannot give rise to a valid cause of action.”

Further, the Court found the claim for arrears filed in 2002 was barred by limitation, reinforcing that even if monetary dues were hypothetically owed, the right to sue was extinguished by time.

“Second Appeal Under Section 100 CPC Not Maintainable in Absence of Substantial Question of Law”

Justice Bhambhani emphasized that appellate intervention under Section 100 of the Code of Civil Procedure requires the presence of a substantial question of law, a threshold that Dr. Singh’s appeal failed to meet.

Quoting the Supreme Court’s guidance in Santosh Hazari v. Purushottam Tiwari, the Court stated: “A second appeal cannot lie only on the basis of re-appreciation of evidence or facts… there must be a question of law that is both substantial and involved in the case.”

Summarily rejecting the appeal at the admission stage, the Court said:

“There is no question of law, let alone a substantial one, that arises from the judgments of the trial and first appellate courts. This Court finds no legal error that warrants interference.”

Private Employment Cannot Be Enforced Through Civil Litigation

The ruling firmly reinforces the principle that contracts of personal service are not enforceable in civil courts, particularly when they arise from private, unaided institutions operating under contractual frameworks.

Concluding the matter, the Court observed:

“Since the appellant is not a government servant nor a ‘workman’ under the Industrial Disputes Act, and since there is no statutory protection pleaded or proved, the suit seeking declaration and reinstatement is not maintainable.”

With this, the High Court reiterated that civil suits seeking reinstatement or declarations of illegality in cases of private employment can only succeed where there is a breach of express contract or statutory obligation, neither of which was shown in this case.

Date of Decision: 15 May 2025