Author: Riya Verma, 1st year, Hidayatullah National Law University.
Citation: 2021 SCC OnLine Del 3035
Date of Decision: 1 June 2021
Bench: Jyoti Singh
Original copy: N/A
Statute Involved: Indian Contract Act, 1872
In “Arjun Ahluwalia Vs. Air India Limited” and other similar forty (40) other petitions involving pilots of Air India Ltd. (‘Airline’), the Hon’ble Delhi High Court allowed writ petitions in favour of employee pilots who sought withdrawal of their resignation letters tendered prior to the Covid-19 pandemic, which were accepted by the Airline during the pandemic.
BACKGROUND OF CASE
- In the case at hand, the petitioner (a pilot) began his career with Air India Limited as a Trainee Pilot in 2008 and was promoted to Pilot Commander after completing his training and obtaining many promotions.
- The petitioner applied for the cancellation of all outstanding debts including payments of salary, flying allowances and provisional fund contributions by a notice of 6 months, with effect from 15 January 2020, together with a request for a “no objection certificate” issued by the Civil Aviation Directorate General. The petitioner applied by letter dated 15 January 2020 (DGCA).
- In his resignation letter, the petitioner said that he will terminate the bond period on 1 May 2020 and be freed on 15 July 2020 [six (6) months notice time].
- A letter of 18 March 2020, alleging urgent personal circumstances, the petitioner reversed his resignation. In an e-mail dated March 23, 2020, the airline informed the petitioner that his resignation will be considered at a later date. Petitioner sent an e-mail on July 4, 2020, inquiring about the status of his resignation withdrawal, but received no response.
- Despite the fact that the resignation was withdrawn, the airline acknowledged the petitioner’s resignation on August 13, 2020, seven (7) months after the date of resignation and five (5) months after its withdrawal. Air India accepted the employees’ retracted resignations and terminated their employment/contracts in the Arjun v Air India case.
- In addition, Air India had paid out Bank Guarantees (“BGs”) granted to Fixed Term Employees (FTE) in order to recoup the amount spent on FTE training fees.
- The petitioner filed a Writ Petition in the Hon’ble Delhi High Court, requesting that the court order the airline to accept the withdrawal request and enable the petitioner to continue working. Another forty (40) pilots wrote to the Honorable Court requesting the same remedies.
- According to Article 226 of the Indian Constitution, the employees demanded re-establishment, wage arrears, and recovery of BG excesses encashed by Air India by the Higher Court of Delhi.
CONTENTION OF PARTIES
Employees claimed that because their resignations were retracted during the notice period and before Air India accepted them, the resignation applications were null and void, and they were permitted to continue working. They claimed that, under Article 21 of the Constitution, the capacity to continue working was a fundamental right that could not be revoked unless done in accordance with the law.
Air India, on the other hand, stated that they were forced to terminate the staff due to financial difficulties caused by the aviation industry’s collapse as a result of Covid-19. Air India primarily relied on the case of Air India Express Limited & Ors. v Capt. Gurdarshan Kaur Sandu, in which the Supreme Court of India (“SC”) rejected an ex-petition employee’s application for reinstatement, stating that the notice period for pilots may be reduced by the employer issuing a no-objection certificate (“NOC”) prior to the notice period in accordance with the CAR.
ISSUES AT HAND:
- Whether the petitioners were allowed to withdraw their resignations prior to their acceptance by the respondent Airlines?
- If the answer to the above question was positive, was it permissible for the respondent Airlines to accept resignations that had been retracted by the petitioners prior to their acceptance?
- Whether the respondent Airlines’ financial crisis/distress/crunch can be a significant reason for accepting the petitioners’ resignations in light of the requirements of CAR?
- Whether the petitioners, whose terms and conditions of service were regulated by Fixed Term Contracts (‘FTC’), can enforce their employment contracts and/or seek extension/renewal of the FTCs by using the writ authority of this Court under Article 226 of the Indian Constitution?
- The petitioners in this batch of petitions were pilots who may be generally classified into two categories: (a) Permanent Employees (hereinafter referred to as “PEs”) and (b) Fixed Term Contract Employees (hence referred to as “FTCEs”).
- In the absence of anything to the contrary in the applicable Rule, the Hon’ble Delhi High Court concluded that a resignation tendered by an employee indicating a prospective or future date from when the resignation is to take effect can be withdrawn at any time before it is accepted, based on the decisions of other courts and the Airline’s Service Regulations. It also noted that it may be a different problem if a resignation can only be withdrawn with the employer’s consent or if the resignation must be accepted under a set of rules, but it found no rule stating either of these criteria.
- It further said that if a resignation is retracted before it is accepted, an employer is not permitted to accept it since it is non-existent and non-est factum in the eyes of the law.
- The Hon’ble Court found that the Rules applicable to the relevant parties (petitioners) clearly state that resignation may only be offered with an obligatory six (6) month notice period, and that it is therefore prospective, and that the offer to quit cannot be claimed to be in praesenti. As a result, the unavoidable conclusion is that the petitioners (including the Petitioner) had the right to retract their resignations on various days before they were accepted.
- As a result, it concluded that the Airline’s stance, on the contrary, was unacceptable. The petitioners (including the Petitioner) were likewise allowed to withdraw their resignations under the Rules and had done so legally, according to the Hon’ble Court.
- The next issue before the Hon’ble Court was whether the Airline was allowed to accept the resignations. As the resignations were retracted during the notice period and before their acceptance, they were non-est and non-existent in the eyes of law on the dates the separate decisions to accept them were made, the Hon’ble Court replied in the negative.
- The decision is significant because the Hon’ble Delhi High Court has held that, while it is not for the Court to substitute its own decision for an administrative decision made by the executive, even if it is open to two different constructions, it is equally well-settled that the decision-making process is open to judicial review on the well-guided principles of: (a) Illegality, i.e., the decision maker has not followed the legislation that governs the decision-making process; (b) irrationality, as measured by the ‘Wednesbury unreasonableness’ criterion; and (c) procedural impropriety.
- The Wednesbury principle is an administrative law theory in which the court sits as a judicial authority over the local authority to determine whether it has acted in a manner that exceeds its powers, rather than as an appellate authority to overturn a local body’s decision.
- The Hon’ble Court held that it has the authority to investigate and examine the decision-making process in order to determine whether the relevant Authority has taken into account irrelevant factors that it should not have taken into account, or has failed to take into account or neglected to take into account relevant factors that it should have taken into account. When tested on the Wednesbury principle, the Hon’ble Court held that the impugned decision clearly reflects that the Airline took into account the irrelevant factor of financial crunch while engaging in the decision-making process and failed to take into account the relevant law of resignation.
- The ruling also considers the necessity of fairness and consistency in accepting employee resignations and acting on such resignations before withdrawing them.
- The Hon’ble Court also ordered the airline to follow non-discrimination policies for employees and ruled that financial hardship cannot be used to terminate employees’ employment.