Reinstatement is unavailable for breach of private contractual employment; the employee’s remedy is damages.

The Appellant was appointed by the Respondent as Regional Head at Delhi on 23 September 2010, at a gross annual salary of ₹18,00,000.

Her services were confirmed with effect from 1 April 2011, and her performance was rated “Good” in June and July 2011.

In November 2011, she informed the Respondent of her pregnancy and, by email dated 12 December 2011, sought maternity leave.

Her services were terminated by letter dated 24 January 2012, with effect from 30 January 2012, purportedly for non-performance; she gave birth on 2 March 2012.

The Appellant instituted a suit seeking mandatory injunction for reinstatement, recovery of salary from February 2012 until reinstatement, interest and compensation.

The Trial Court found that the Respondent had failed to prove non-performance and that the termination was intended to deprive the Appellant of maternity benefits.

However, it declined reinstatement and awarded salary for seven months and fifteen days—45 days’ salary in lieu of notice and six months’ salary towards maternity-related compensation—with interest at 7% per annum.

The Appellant challenged the refusal of reinstatement, the quantum of compensation, denial of damages for career and reputational loss, and the rate of interest.

Whether the Appellant, whose contractual employment was found to have been wrongfully terminated, was entitled to reinstatement in service through a decree of mandatory injunction?

Whether the monetary relief awarded by the Trial Court—comprising 45 days’ salary and six months’ salary with 7% interest—required enhancement, including on account of loss of career, reputation or the claimed rate of interest?

Section 14 of the Specific Relief Act, 1963 bars specific enforcement of contracts that are determinable or depend upon the personal qualifications of the parties; contracts of personal service ordinarily cannot therefore be specifically enforced.

Reinstatement is generally unavailable in purely contractual private employment, subject to the recognised exceptions involving public servants protected by Article 311, workmen under the Industrial Disputes Act, 1947, and employees of statutory bodies governed by statutory service conditions.

The Court relied on Maharashtra State Cooperative Housing Finance Corporation Ltd. v. Prabhakar Sitaram Bhadange, (2017) 5 SCC 623, and State Bank of India v. S.N. Goyal, (2008) 8 SCC 92, for this principle.

Under Section 73 of the Indian Contract Act, 1872, damages for wrongful termination are ordinarily measured by the salary payable during the contractual notice period; S.S. Shetty v. Bharat Nidhi Ltd., AIR 1958 SC 12, supports this limitation.

Damages for loss of career and reputation constitute special damages and must be specifically pleaded and proved.

Interest under Section 34 of the Code of Civil Procedure, 1908 is discretionary and must be determined according to the circumstances of the case.

The Court held that the Appellant’s employment was purely contractual and private.

Her managerial positions as Regional Head and Assistant Vice President did not make her a “workman” under Section 2(s) of the Industrial Disputes Act, and the Respondent was not a statutory body; consequently, none of the exceptions to the bar against specific enforcement applied.

Reinstatement would amount in substance to specific enforcement of a contract of personal service and was therefore impermissible, even though the finding that the termination breached the employment contract had attained finality between the parties because the Respondent filed no cross-objections.

As to compensation, Clause 8(d) of the appointment letter required 45 days’ notice or salary in lieu thereof, justifying the notice-period component.

The Court further upheld the Trial Court’s discretionary award of six months’ salary because the termination had been found to have been effected to deprive the Appellant of maternity benefits.

The Court rejected calculation based on the annual Cost to Company of ₹18,84,300, relying on the Appellant’s admission that her actual monthly salary was ₹1,57,000.

The claim for career and reputational loss failed because it was neither specifically pleaded nor proved, and the Appellant admitted that she had subsequently been working for her livelihood and was associated with Globe Capital Markets Ltd.

The claim for 18% interest also failed because it had no contractual foundation; the 7% rate awarded by the Trial Court was a proper exercise of discretion under Section 34 CPC.

It also declined to enhance the monetary relief, holding that the award of seven months and fifteen days’ salary—45 days’ salary in lieu of notice and six months’ salary as additional compensation—calculated on the basis of the last drawn salary, together with 7% per annum interest, was appropriate.

The Trial Court’s judgment and decree dated 11 October 2023 were upheld, the appeal was dismissed, and no order as to costs was made.