Bharatiya Reserve Bank Note Mudran (P) Ltd. & Anr. vs Partha Pratim Datta & Ors.

“(a)

That the petitioner company does not have any

office at Kolkata and as such the authority at Kolkata did not have the territorial jurisdiction to decide the issue of gratuity in this case.

(b)

That the authorities concerned have granted the

benefits to the private respondent which he is not entitled to, in view of the 2 letters of appointment issued to the private respondent, who was employed on contract basis.

(c)

The third issue to be considered by this Court is

whether a person can waive his lawful right to which he is entitled.”

“Acceptance by performing conditions, or

receiving consideration – performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.”

“10. What agreements are contract:- All agreements are

contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.

Nothing herein contained shall effect any law in force in [India], and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.”

“Act to override other enactments, etc. - The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act.”

“50.

There is, I think, a three fold classification:

(1)

a right granted by an ordinary statutory enactment (2) a right granted by the Constitution;

and (3) a right guaranteed by Part III of the Constitution. With regard to an ordinary statutory right there is, I think, no difficulty. It is well recognised that a statutory right which is for the benefit of an individual can in proper circumstances be waived by the party for whose benefit the provision has been made. With regard to a constitutional right, it may be pointed out that there are several provisions in our Constitution which do not occur in Part III, but which yet relate to certain rights; take, for example, the rights relating to the services under the Union and the States in Part XIV. I do not think that it can be seriously contended that a right which is granted to a government servant for his benefit cannot be waived by him, provided no question of jurisdiction is involved. I may refer in this connection to the provisions in Part XIII which relate to trade, commerce and intercourse within the territory of India. These provisions also impose certain restrictions on the legislative powers of the Union and of the States with regard to trade and commerce. As these provisions are for the benefit of the general public and not for any particular individual, they cannot be waived, even though they do not find place in Part III of the Constitution. Therefore, the crucial question is not whether the rights or restrictions occur in one part or other of the Constitution. The crucial question is the nature of the right given is it for the benefit of individuals or is it for the general public? That, in my opinion, is the true test. I may here state that the source of the right contractual or statutory is not the determining factor. The doctrine of waiver is grounded on the principle that a right, statutory or otherwise, which is for the benefit of an individual can be waived by him. I am aware that a right which is for the benefit of the general public must in its actual operation relate to particular individuals, in the same way as a right for the benefit of individuals will in its actual operation arise in connection with individual A or individual B. The test is not whether in its operation it relates to an individual. The test is for whose benefit the right has been primarily granted for the benefit of the general public or for individuals?”

(c)

Not eligible for any superannuation benefits such as provident fund, gratuity etc. during contractual period.

(d)

Not entitled to any facility other than those indicated above.

“20.

The opposite party has not specifically disputed the date of his initial joining the organisation the termination date of the contract, or the last wages drawn as per the Salary Slip January 2024, which was Rs. 2,26,000/-(consolidated) and fixed at the end of the contract. Therefore based on the foregoing discussion, this authority has no hesitation in concluding that the applicant's continuous service is 7 years from the date of appointment, in accordance with the provisions of Section 4 of the PG Act. 1972. The gratuity amount is therefore determined as under:-

(i)	Date of appointment	:	16/09/2016
(ii)	Date of retirement	:	29/02/2024
(iii)	Total service length	:	7 years, 05 months and 14 days
(iv)	Designation at the time of retirement	:	Labour Welfare Officer
(v)	Total salary	:	Rs. 2,43,703/-
(vi)	Last wages drawn	:	Rs.226400/-(consolidated) excluding allowances.
(vii)	Gratuity paid by the OP	:	NIL
(viii)	Gratuity amount claimed	:	Rs. 914308/- along with interest.

Gratuity is payable 15 days after each completed year of service and part thereof. Hence the amount of gratuity will be ₹226400/x15x7/26=₹914308/- (Nine Lakh Fourteen Thousand Three Hundred Eight Only).”

“56.

Two subsidiary reasons have been given for holding that the position under the Indian Constitution is different. One is that ours is a nascent democracy and, therefore, the doctrine of waiver should not apply. With respect, I am unable to concur in this view. I do not think that we shall be advancing the cause of democracy by converting a fundamental right into a fetter or using it as a means for getting out of an agreement freely entered into by the parties. I appreciate that waiver is not to be light-heartedly applied, and I agree that it must be applied with the fullest rigour of all necessary safeguards and cautions. What I seriously object to is a statement in the abstract and in absolute terms that in no circumstances can a right given by any of the provisions in Part III of the Constitution be waived. Another point taken is that the provisions in Part III embody what are called “natural rights” and such rights have been retained by the people and can never be interfered with. I am unable to acquiesce in this. The expression “natural rights” is in itself somewhat vague. Sometimes, rights have been divided into “natural rights” and “civil rights”, and

“natural rights” have been stated to be those which are necessarily inherent or innate and which come from the very elementary laws of nature whereas civil rights are those which arise from the needs of civil as distinguished from barbaric communities. I am unable, however, to agree that any such distinction is apparent from the provisions in Part III of our Constitution : all the rights referred to therein appear to be created by the Constitution. I do not think that Locke's doctrine of “natural rights”, which was perhaps the authority for the American Declaration of Independence, played any part in the enactment of the provisions of Part III of our Constitution. The doctrine which has long since ceased to receive general acceptance, has been thus explained by E.W. Paterson (see Natural Law and Natural Rights, Southern Methodist University Press, Dallas, 1955, p. 61):

“The theory of natural rights, for which we are indebted to the seventeenth century English philosopher, John Locke, is essentially different from the theories of natural law just discussed in that it lacked the two important characteristics abovementioned : the concept of an immutable physical order and the concept of divine reason…. He begins with the purpose of justifying the existence of a Government with coercive powers. What inconveniences would arise if there were no Government? Men would live in a „state of nature‟; to avoid confusion with the political state I shall call this a „condition of nature‟. In such a condition man would be free to work, to enjoy the fruits of his labour, and to barter with others; he would also be free to enforce the law of nature (whose precepts Locke did not define) against every other man. Since Locke was an optimist about human nature he thought men would get along pretty well in this lawless condition. Yet the condition of nature is for Locke a fiction like the assumption of a frictionless machine in mechanics. The chief disadvantages that men in this condition would suffer were, he thought, the absence of an established law, the absence of a known and impartial Magistrate to settle disputes, the absence of a power sufficient to execute and enforce the judgment of the Magistrate. Moved by these inconveniences, men would enter into a social compact with each other whereby each would transfer to a third person, the Government, such rights over his person and property as the Government must have in order to remove these inconveniences. All other rights, privileges, and immunities he reserved, as a grantor of land conveys the fee simple to his son and reserves a life estate to himself. These reserved rights were „natural‟ rights because they had originated in the condition of nature and survived the social compact.”

There are, in my opinion, clear indications in Part III of the Constitution itself that the doctrine of “natural rights” had played no part in the formulation of the provisions therein. Take Articles 33, 34 and 35 which give Parliament power to modify the rights conferred by Part III. If they were natural rights, the Constitution could not have given power to Parliament to modify them. Therefore, I am of the view that the doctrine of “natural rights” affords nothing but a foundation of shifting sand for building up a thesis that the doctrine of waiver does not apply to the rights guaranteed in Part III of our Constitution.

57.

The true position as I conceive it is this : where a right or privilege guaranteed by the Constitution rests in the individual and is primarily intended for his benefit and does not infringe on the right of others, it can be waived provided such waiver is not forbidden by law and does not contravene public policy or public morals.

78.

The scope of the doctrine of waiver was considered by this Court in Behram Khurseed case [(1955) 1 SCR 773] . There a person was prosecuted for an offence under Section 66(b) of the Bombay Prohibition Act and he was sentenced to one month's rigorous imprisonment. One of the questions raised there was whether Section 13(b) of the Bombay Prohibition Act, having been declared to be void under Article 13(1) of the Constitution insofar as it affected the consumption or use of liquid medicinal or toilet preparation containing alcohol, the prosecution was maintainable for infringement of that section. The Court held that in India once the law has been struck down as unconstitutional by the Supreme Court, no notice can be taken of it by any court, because, after it is declared as unconstitutional, it is no longer law and is null and void. Even so, it was contended that the accused had waived his fundamental right and therefore he could not sustain his defence. Mahajan, C.J., delivering the judgment of the majority, repelled this contention with the following observations at p. 653:

“The learned Attorney-General when questioned about the doctrine did not seem to be very enthusiastic about it. Without finally expressing an opinion on this question we are not for the moment convinced that this theory has any relevancy in construing the fundamental rights conferred by Part III of our Constitution. We think that the rights described as fundamental rights are a necessary consequence of the declaration in the Preamble that the people of India have solemnly resolved to constitute India into a sovereign democratic republic and to secure to all its citizens justice, social, economic and political; liberty of thought, expression, belief, faith and worship; equality of status and of opportunity. These fundamental rights have not been put in the Constitution merely for the individual benefit though ultimately they come into operation in considering individual rights. They have been put there as a matter of public policy and the doctrine of waiver can have no application to provisions of law which have been enacted as a matter of constitutional policy. Reference to some of the articles, inter alia, Articles 15(1), 20, 21, makes the proposition quite plain. A citizen cannot get discrimination by telling the State „You can discriminate‟, or get convicted by waiving the protection given under Articles 20 and 21.”

On the question of waiver, Venkatarama Aiyar, J., in his judgment before review, considered the American decisions and was inclined to take the view that under our Constitution when a law contravenes the provisions intended for the benefit of the individual, it can be waived. But the learned Judge made it clear in his judgment that the question of waiver had no bearing to any issue of fact arising for determination in that case but only for showing the nature of the right declared under Article 19(1)(f) and the effect in law of a statute contravening it. Das, J., as he then was, in his dissenting judgment, did not state his view on this question but expressly reserved it in the following words:

“In coming to the conclusion that I have, I have in a large measure found myself in agreement with the views of Venkatarama Aiyar, J., on that part of the case. I, however, desire to guard myself against being understood to agree with the rest of the observations to be found in his judgment, particularly those relating to waiver of unconstitutionality, the fundamental rights being a mere check on the legislative power or the effect of the declaration under Article 13(1) being „relatively void‟. On those topics I prefer to express no opinion on this occasion.”

I respectfully agree with the observations of Mahajan, C.J. For the aforesaid reasons, I hold that the doctrine of waiver has no application in the case of fundamental rights under our Constitution.”

“6.

……………. The question now posed before us directly arose for decision before a Division Bench of the Calcutta High Court, consisting of Akram and Chakravartti, JJ., in Manindra Chandra v. Jagadish Chandra [(1945) 50 CWN 266, 270] . Chakaravartti, J., met the objection raised by the judgment-debtor who sought to set aside the sale on the ground of non-compliance with the provisions of Section 35 of the Act, thus:

“It (Section 35 of the Act) is a provision relating to the contents of the sale proclamation and its effect, to my mind, is to amend or supplement Order 21, Rule 66(2)(a) which directs the Court to specify in the sale proclamation „the property to be sold‟. Any objection regarding non-compliance with Section 35 in specifying the property to be sold is, in my view, a defect in the sale proclamation within the meaning of the second proviso to Order 21 Rule 90 CPC. It follows that an objection that the sale proclamation did not conform to Section 35 of the Bengal Moneylenders Act cannot avail a judgment-debtor in an application under Order 21 Rule 90, if he was present at the drawing up of the sale proclamation and did not raise any such objection at the time, nor can it avail a judgment-debtor who, after receiving notice did not attend at the drawing up of the sale proclamation at all.”

7.

Even then, the question arises whether an act done in breach of the mandatory provision is per force a nullity. In Ashutosh Sikdar v. Behari Lal Kirtania [(1908) ILR 35 Cal 61, 72] Mookerjee, J., after referring to Macnamara on „Nullity and Irregularities', observed:

“… no hard and fast line can be drawn between a nullity and an irregularity; but this much is clear, that an irregularity is a deviation from a rule of law which does not take away the foundation or authority for the proceeding, or apply to its whole operation, whereas a nullity is a proceeding that is taken without any foundation for it, or is so essentially defective as to be of no avail or effect whatever, or is void and incapable of being validated.”

Whether a provision falls under one category or the other is not easy of discernment, but in the ultimate analysis it depends upon the nature, scope and object of a particular provision. A workable test has been laid down by Justice Coleridge in Holmes v. Russell [(1841) 9 Dowl 487] which reads:

“It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection; if he can waive it, it amounts to an irregularity; if he cannot, it is a nullity.”

A waiver is an intentional relinquishment of a known right but obviously an objection to jurisdiction cannot be waived, for consent cannot give a court jurisdiction where there is none. Even if there is inherent jurisdiction, certain provisions cannot be waived. Maxwell in his book „On the Interpretation of Statutes', 11th Edn., at p. 375, describes the rule thus:

“Another maxim which sanctions the non observance of a statutory provision is that cuilibetlicet renuntiare juri pro se introducto. Everyone has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy.”

The same rule is restated in „Craies on Statute Law', 6th Edn., at p. 269, thus:

“As a general rule, the conditions imposed by statutes which authorise legal proceedings are treated as being indispensable to giving the court jurisdiction. But if it appears that the statutory conditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court.”

The Judicial Committee in AL. AR. Vellayan Chettiar v. Government of Madras [(1947) LR 74 IA 223, 228] pointed out that there was no inconsistency between the propositions that the provisions of Section 80 of the Code of Civil Procedure were mandatory and must be enforced by the court and that they might be waived by the authority for whose benefit they were provided. In that case the Judicial Committee held that Section 80 of the Code of Civil Procedure was explicit and mandatory; but still it held that it could be waived by the authority for whose benefit that was provided. This aspect of the law in the context of Section 35 of the Act was considered by a Division Bench of the Calcutta High Court in Gaya Prosad v. Seth Dhanrupwal Bhandari [(1953) 58 CWN 503, 508] . Dealing with this argument, P.N. Mookerjee, J., speaking for the court, observed:

“It is true that Section 35 of the Bengal Money-Lenders Act casts a duty upon the court but such duty is solely for the benefit the private benefit of the judgment-debtor. It is, therefore, open to him to waive this benefit, or, in other words, to waive his objection of non-observance of that statutory provision by the court…

Guha and Banerjee, JJ., expressed much to the same effect in Maniruddin Ahmed v. Umaprasanna [(1959) 64 CWN 20] thus, at p. 30:

“The Bengal Moneylenders Act, 1940 enacted for the purpose of making better provision for the control of money-lenders and for the regulation and control of money-lending, has certainly a public policy behind it. But some of its provisions, and Section 35 one of them, are intended for the benefit of the individual judgment-debtors and have no public policy behind them. Such provisions may be waived by the person for whose benefit the same were enacted.”

A Division Bench of the Patna High Court in Sheo Dayal Narain v. Musammat Moti Kuer [(1942) ILR 21 Pat 281, 286] , speaking through Meredith, J., in the context of the provisions of Section 13 of the Bihar Moneylenders (Regulation of Transactions) Act, 1939, which are pari materia with the provisions of Section 35 of the Bengal Money-Lenders Act, 1940, rejected the contention that a sale held in contravention thereof was a nullity in the following words

“Illegal the sale may have been, in the limited sense that it was held in a manner at variance with a mandatory statutory provision. That provision, however, has no reference at all to the jurisdiction of the Court. It affords no foundation for the contention that the sale was one which the Court concerned had no power at all to hold.”

Where the court acts without inherent jurisdiction, a party affected cannot by waiver confer jurisdiction on it, which it has not. Where such jurisdiction is not wanting, a directory provision can obviously be waived. But a mandatory provision can only be waived if it is not conceived in the public interests, but in the interests of the party that waives it. In the present case the executing court had inherent jurisdiction to sell the property. We have assumed that Section 35 of the Act is a mandatory provision. If so, the question is whether the said provision is conceived in the interests of the public or in the interests of the person affected by the non-observance of the provision. It is true that many provisions of the Act were conceived in the interests of the public, but the same cannot be said of Section 35 of the Act, which is really intended to protect the interests of a judgment-debtor and to see that a larger extent of his property than is necessary to discharge the debt is not sold. Many situations may be visualized when the judgment-debtor does not seek to take advantage of the benefit conferred on him under Section 35 of the Act; for instance, if the part of the property carved out by the court for sale is separated from the rest of his property, the value of the remaining property may be injuriously affected by the said carving out, in which case the judgment-debtor may prefer to have his entire property sold so that he may realize the real value of the property and pay part of the sale price towards the decretal amount. He cannot obviously be compelled to submit to the sale of a part of the property to his disadvantage. A provision intended for his benefit cannot be construed in such a way as to work to his detriment. But it is said that the proviso to Section 35 of the Act indicates a contrary intention. Under that proviso, “if the highest amount bid for the property so specified is less than the price so specified, the Court may sell such property for such amount, if the decree-holder consents in writing to forego so much of the amount decreed as is equal to the difference between the highest bid and the price so specified”. This is only an option given to the decree-holder : he may exercise this option, if he does not like to go through the entire sale proceedings over again. In one contingency this proviso also works for the benefit of the judgment-debtor, for he will be relieved of part of his indebtedness. But anyhow this does not show that the main provision is not intended for the benefit of the judgment-debtor. We are, therefore, satisfied, on a true construction of Section 35 of the Act, that it is intended only for the benefit of the judgment-debtor and, therefore, he can waive the right conferred on him under Section 35 of the Act.”

a)

It is well recognised that a statutory right which is for the benefit of an individual can in proper circumstances be waived by the party for whose benefit the provision has been made.

b)

Therefore, the crucial question is not whether the rights or restrictions occur in one part or other of the Constitution. The crucial question is the nature of the right given : is it for the benefit of individuals or is it for the general public? That, in my opinion, is the true test. I may here state that the source of the right — contractual or statutory — is not the determining factor. The doctrine of waiver is grounded on the principle that a right, statutory or otherwise, which is for the benefit of an individual can be waived by him.

c)

The test is not whether in its operation it relates to an individual. The test is — for whose benefit the right has been primarily granted for the benefit of the general public or for individuals?

57.

The true position as I conceive it is this : where a right or privilege guaranteed by the Constitution rests in the individual and is primarily intended for his benefit and does not infringe on the right of others, it can be waived provided such waiver is not forbidden by law and does not contravene public policy or public morals.

“15.

The effect of such settlement has been proved for in section 18 thereof which as follows:—

“Section 18. Persons on whom settlements and awards are binding.—

(1)

A settlement arrived at by agreement between the employer and workman otherwise than in the course of conciliation proceeding shall be binding on the parties to the agreement………………

19.

The question which would arise for consideration would be whether at this stage the workmen could be heard to say that he is not bound thereby? The answer to the said question must be rendered in negative.

21.

The definition of „employer‟ is of great significance. The liability to pay gratuity in terms of section 7 of the Act is on the employer. In terms of the said settlement the parties had agreed as to how and in what manner the gratuity shall be paid. The liability of the petitioner in relation thereto had also been fixed. The third respondent at that point of time did not state that the concerned union was not representing his case. He took advantage of the said settlement. He was re-employed. Such benefit of re-employment had been taken by him with his eyes wide open. He, therefore, is estopped from taking a different plea. He cannot be permitted to probate and reprobate at the same time.

22.

In terms of section 18 of the Industrial Disputes Act, the said settlement was binding on him. The workmen thus in a body for their own interest must be deemed to have waived their right to get compensation on terms of the proviso appended to section 25FFF of the Act.”

“31.

………………The said agreement, thus, cannot override the said Act. The only other point canvassed by the petitioner is that although, the aforesaid agreement might not partake the character of a settlement within the meaning of Section 2(p) of the Industrial Disputes Act, 1947, yet the said agreement is binding insofar as the respondent no.4 is concerned, since, the respondent no.4 is signatory to the same.

32.

I am, however, unable to accept the aforesaid contention, in as much as the aforesaid settlement/agreement only provides for a upper limit for payment of gratuity. The said agreement is directly contrary to and is in conflict with Section 4(5) of the said Act. The said agreement does not provide for any better terms, on the contrary the same provides for inferior terms than provided for in the said Act. The case of Jagdev Singh (supra), thus, does not assist the petitioner. The same is clearly distinguishable on facts and cannot assist the petitioner.

33.

Having regard to the aforesaid, I am of the view that the petitioner cannot be permitted to deny payment of gratuity in terms of the provisions contained in the said Act, by citing in the aforesaid agreement/settlement, which also is not in consonance with the provisions of Section 4(5) of the said Act. Independent of the provisions of the 2006 Act, gratuity is payable as per the said Act.”

“…………. In Dhanukudhari Singh v. Nathima Sahu (2). In Corpus Juris Secundum, Vol. 92, at p. 1068, the law as to waiver is stated as follows:-"............ a waiver in derogation of a statutory right is- not favoured, and a waiver will be inoperative and void, if it infringes on the rights of others, or would be against public policy or morals

In Bowmakers Limited v. Barnet Instruments Ltd. (3) the same rule was laid down. Mulla in his Contract Act at page 198 has stated the law as to waiver of an illegality as follows:-" Agreements which seek to waive an illegality are void on grounds of public policy. Whenever an illegality appears, whether from the evidence given by one side or the other, the disclosure is fatal to the case. A stipulation of the strongest form to waive the objection would be tainted with the vice of the original contract and void for the same reasons. Wherever the contamination reaches, it destroys ".

This, in our opinion, is a correct statement of the law and is supported by high authority. Field, J., in "The principle is indispensable to the purity of its administration. It will not enforce what it has forbidden and denounced. The maxim Ex dolo malo non oritur actio, is limited by no such qualification. The proposition to the contrary strikes us as hardly worthy of serious refutation. Wherever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case. No consent of the defendant can neutralise its effect. A stipulation in the most solemn form, to waive the objection, would be tainted with the vice of the original contract, and void for the same reasons. Wherever the contamination reaches, it destroys".

Waiver is the abandonment of a right which normally everybody is at liberty to waive. A waiver is nothing unless it amounts to a release. It signifies nothing more than an intention not to insist upon the right. It may be deduced from acquiescence or may be implied. Chitty on Contract, 21st Ed., p. 381 : Stackhouse v. Barnston (3). But an agreement to waive an illegality is void on grounds of public policy and would be unenforceable. In Mytton v. Gilbert(4) Ashurst, J., said:-"Besides, there is still further reason why the trustees should not be estopped ; for this is a public Act of Parliament, and the Courts are bound to take notice that the trustees under this Act had no power to mortgage the toll- houses. This deed therefore cannot operate in direct opposition to an Act of Parliament, which negatives the estoppel ".

Vaughan Williams, L. J., in Norwich Corporation v. Norwich Electric Tramways Company(5) said :-" The case is not like that of a provision in an agreement which is for the benefit of one of the parties and which he may waive. This is a provision in an Act of Parliament, which, though to some extent it may be for the benefit of the parties to the difference, must be regarded as inserted in the interest of the public also.

In that case there was a provision made by the Legislature that disputes mentioned in the section of the Act were to be determined by an Expert nominated by the Board of Trade and it was contended that though not in the strict technical sense estoppel, it was a waiver of the provisions introduced into the Statute for the benefit of private rights. No doubt that was a case which proceeded on a question of jurisdiction but the judgment proceeded on the principle of waiver of a statutory provision inserted in public interest. Thus the plea of waiver is unsustainable.”

“14.

Act to override other enactments, etc.-The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act.”