Central Inland Water Transport Corporation v Brojo Nath Ganguly
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| Central Inland Water Transport Corporation v Brojo Nath Ganguly | |
|---|---|
 | |
| Court | Supreme Court of India |
| Full case name | Central Inland Water Transport Corporation Limited and Another v Brojo Nath Ganguly and Another |
| Decided | 6 April 1986 |
| Citation(s) | [1986] INSC 64; AIR 1986 SC 1571; 1986 (2) SCR 278; (1986) 3 SCC 156 |
| Transcript(s) | LII of India |
| Case history | |
| Appealed from | Calcutta High Court |
| Court membership | |
| Judges sitting | Justice Madon Justice A. P. Sen |
| Case opinions | |
| Decision by | Justice Madon |
| Keywords | |
| Contract law, unconscionability | |
Central Inland Water Transport Corporation v Brojo Nath Ganguly is a landmark Indian contract law case, decided by the Supreme Court of India in 1986. It deals with unconscionability of bargain, in cases where a contract is entered into between two parties of unequal bargaining power.[1] The case additionally deals with whether a public enterprise can act in violation of the Constitution of India.
Facts[edit]
Central Inland Water Transport Corporation was a company owned by the Government of India and the State Governments of West Bengal and Assam. It took over Rivers Steam Navigation Company Limited, a private company that went insolvent. Brojo Nath Ganguly, a Rivers Steam Navigation accountant, joined Central Inland after the takeover. His appointment letter with Central Inland mentioned that his employment would be governed by Central Inland's service rules. Ganguly was accused of negligence and Central Inland terminated his appointment under Rule 9(i) of the service rules. Ganguly challenged the validity of Rule 9(i) before the Calcutta High Court, invoking Article 226 of the Constitution of India.
Another Central Inland employee, Tarun Kanti Sengupta, was a chief engineer on one of its ships. He had been similarly dismissed under Rule 9(i), after an allegedly prejudicial disciplinary inquiry. Like Ganguly, Sengupta challenged the validity of the rule in a writ petition.
Calcutta High Court[edit]
A Single Judge of the High Court passed an interim order, staying Ganguly and Sengupta's termination. Central Inland challenged the order before a division bench. The division bench ordered both petitions before itself and delivered a common judgment. It decided that:
- Central Inland was within the ambit of the word "state" under the Article 12 of the Indian Constitution. Central Inland was a state-owned enterprise and therefore, it had to adhere to equality rights under the Indian Constitution.
- Rule 9(i) was unreasonable and unconscionable, and being part of employment terms of a state corporation, was violative of the Constitution.
Supreme Court[edit]
Central Inland appealed the High Court's judgment before the Supreme Court. The Supreme Court dismissed the appeals. The Court first held that the meaning of the word "state" changes according to where it is used in the Constitution. In Article 12, the word means trading and business activities of the Governments of India and of the states. This includes public enterprises, such as Central Inland.
Rule 9(i) was therefore not only unreasonable and unconscionable, but also violated the Constitution. Central Inland, being "state" under Article 12, could not use an employment contract that violated the Constitution.
References[edit]
- ↑ Central Inland Water Transport Corporation v Brojo Nath Ganguly, [1986 INSC 64] (Supreme Court of India 6 April 1986).
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