INTRODUCTION:

In this decision, the Delhi High Court has explained the concept of determinable contracts qua private employment agreements and has also delved into the contours of the tort of defamation, specifically in the context of publication in the current digital era.

FACTS:

Mr. Abhijit Mishra (“Plaintiff”) was working as a Principal Consultant with Wipro Limited (“Defendant”) from 14.03.2018 to 05.06.2020. The terms of employment were governed by a contract (“Employment Contract”). On 05.06.2020, the Plaintiff was issued a termination/relieving letter by the Defendant. The said termination/relieving letter contained remarks such as the conduct of the Plaintiff was malicious and his actions had led to an irretrievable breakdown of employer-employee relationship.

Aggrieved by the aforesaid actions of the Defendant, the Plaintiff approached the Court seeking:

• The Defendant be made liable for tort of defamation and injuria sine damnum;
• Issuance of new discharge letter expunging the negative remarks;
• Rs.2,10,00,000/- as damages caused by tortious conduct of the Defendant and for violation of Right to Dignity under Article 21 of the Constitution.

CONTENTIONS:

• On behalf of the Plaintiff:

• The termination/relieving letter is full of defamatory and derogatory unsubstantiated assertions such as “malicious conduct” and “complete loss of trust”, which maligns his character. Such allegations are in violation of Clause 10 of the Employment Contract.
• The Plaintiff was denied the opportunity to defend himself against the spurious claims made against him in the termination letter.
• The actions of the Defendant violate the Plaintiff’s right to live with dignity as enshrined under Article 21 of the Constitution and also constitute a breach of contractual obligations.
• The conduct of the Defendant displayed deliberate disregard for the principles of natural justice and contractual fairness, which entitles the Defendant to seek damages for injuries caused to his reputation and livelihood.

• On behalf of the Defendant:

• No cause of action has been disclosed on behalf of the Plaintiff. Additionally, no instance of offending statements being broadcast or transmitted to the general public other than the Plaintiff has been shown on behalf of the Plaintiff.
• Being in a senior managerial position, the Plaintiff was engaged in activities not related to work and even admitted to his inability to discharge his professional duties while requesting a transfer in an email.
• Rather than improving performance, the Plaintiff engaged in insubordination and wrote several complaints against various individuals.
• The termination of the services of the Plaintiff was duly communicated to hm in accordance with the Employment Contract and two months’ notice pay was credited to his account as well.
• The employment was entirely contractual, and the Defendant had the right to terminate the services of the Plaintiff due to unsuitability.
• The termination letter was a factual account of the conduct of the Plaintiff and no loss of reputation and livelihood can be attributed to the Plaintiff as he is currently practicing as an advocate before various courts in Delhi.

ISSUES:

1. Whether the employment of the Plaintiff was wrongly terminated by the Defendant in violation of the Employment Contract?
2. Whether the statement in the termination/relieving letter, as issued by the Defendant has resulted in the defamation of the Plaintiff?
3. In case Issue No. 1 is decided in favour of the Plaintiff, whether the Defendant’s action of termination of the plaintiff’s service has caused damage to the Plaintiff?

PROVISION OF LAW UNDER DISCUSSION:

• Specific Relief Act, 1963 –

14. Contracts not specifically enforceable.—The following contracts cannot be specifically enforced, namely:—

(a) where a party to the contract has obtained substituted performance of contract in accordance with the provisions of section 20;

(b) a contract, the performance of which involves the performance of a continuous duty which the court cannot supervise;

(c) a contract which is so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms;

(d) a contract which is in its nature determinable.

CLAUSE UNDER DISCUSSION:

• Clause 10 of the Employment Contract:
• “10. NOTICE PERIOD

This contract of employment is terminable, without reasons, by either party giving one month notice during probationary period and two months’ notice on confirmation. Wipro reserves the right to pay or recover salary in lieu of notice period. Further, the Company may at its discretion relieve you from such date as it may deem fit even prior to the expiry of the notice period.”

ANALYSIS & FINDINGS

• Issue No. 1 & 3 (Since Issue No. 3 was dependent on the outcome of Issue No. 1, hence, both were dealt with together)

• S.14(d) of the Specific Relief Act provides that a contract which is determinable in nature cannot be specifically enforced.
• A determinable contract is one that confers upon either party an unfettered right to terminate the contractual arrangement unilaterally, whether at will or upon service of notice, without the presence or requirement of any breach or default. Even if pre-condition of reasoning is there, it does not ipso facto alter the determinable nature of the contract. Clause 10, which is the bone of contention here, fits in this definition and unequivocally renders the nature of the contract to be determinable. (Para. 33,34 – Pg. 13)
• In determinable contracts, the only remedy available to the aggrieved person is damages/monetary compensation limited to the contractual notice period and remedy of specific performance or injunction does not lie. S. 14 (d) acts as a statutory bar to specific enforcement of determinable contracts. (Para. 35 – Pg. 14)
• In Executive Committee of Vaish Degree College, Shamli v. Lakshmi Narain (1976) 2 SCC 58, the Supreme Court ruled that ordinarily contracts of personal service are not specifically enforceable except:

1. where a public servant is dismissed in contravention of Article 311;
2. where a worker seeks reinstatement under Industrial Law; and
3. where dismissal contravenes a statutory obligation imposed on a statutory body. (Para. 39,40 – Pg. 15,16)

• As per settled law, in cases of private employment disputes, scope of judicial review is limited, and the remedies are solely governed by contract law principles. Principles of administrative law and public law, including the doctrine of natural justice, do not extend to private employment contracts. (Para. 41 to 45 – Pg. 18 to 20)
• In L.M. Khosla v. Thai Airways International Public Co. Ltd. 2012 SCC OnLine Del 4019, relying on the decisions in Vaish Degree College (supra) and other precedents, the Delhi High Court summarised the applicable legal principles qua private employment contracts holding that:

1. employment contracts of a private nature do not attract public law remedies;
2. where a contract provides for termination by notice, only monetary compensation limited to the notice period is recoverable in law; and
3. under Section 14 of SRA, determinable contracts are statutorily exempted from specific performance. (Para. 42, Pg. 18)

• Domain of private employment falls exclusively in the realm of the contract between the parties. Such contracts based on mutual volition fall outside the scope of judicial enforcement. (Para. 46 – Pg. 21)
• While Clause 10 does provide for termination without any reason, it does not prohibit termination with reasons. Merely furnishing reasons for the termination would not render the employer to a heightened judicial scrutiny. Clause 10, which is agreed between both the parties, itself restricts the compensation to the salary of the prescribed time period.(Para. 50 – Pg. 22)
• The sanctity of the private contractual arrangement shall take precedence. To import administrative yardsticks into private engagements would result in dilution of the doctrine of contractual autonomy. (Para. 52 – Pg. 23)
• Hence, Issues 1 and 3 go against the Plaintiff.

• On Issue No. 2:

• Every individual holds an intrinsic right to reputation, which has been recognized as integral facet of the right to life under Article 21 of the Constitution. The concept of defamation is present as an exception under A.19(2) to the freedom of speech and expression envisaged under A.19(1)(a). (Para. 55 – Pg. 24)
• Civil defamation is governed by common law principles derived from English jurisprudence and still remains uncodified. (Para. 56 – Pg. 25)
• Civil defamation refers to a tortious wrong whereby a person makes a false imputation having the tendency to diminish another’s reputation in the estimation of right-minded members of society. (Para. 56 – Pg. 25)
• The essential constituents of civil defamation along with legal observations are as follows:

1. a false statement, whether written (libel) or spoken (slander); and defamatory in nature i.e., it must have the effect of lowering the reputation in the eyes of others (right-thinking members of the society)

• Statement must be such that it exposes the Plaintiff to hatred, ridicule, or to cause them to be shunned or avoided by society, thereby lowering their moral or intellectual character in public estimation. (Para. 57, Pg. 25,26)
• The statement shall carry a false and defamatory imputation when viewed through a lens of a reasonable person. (Para. 57, Pg. 25,26)

2. publication of such statement to at least one person other than the plaintiff

• Publication refers to communication of the defamatory content to at least one person other than the person defamed. (Para. 58, Pg. 26, 27)
• The act of publication does not have to be explicit; it is enough if the person by act or omission causes someone to read, see, or hear the defamatory material other than the person against whom the remarks are made. The doctrine of foreseeability applies. (Para. 58, Pg. 26, 27)

3. identifiability, i.e., the statement must refer to the plaintiff either expressly or by implication

• Defamatory statement must refer to the Plaintiff directly or by necessary implication, such that an ordinary, reasonable person acquainted with the Plaintiff would understand that the statement pertains to whom. (Para. 59, Pg. 29)
• Based on doctrine of certum est quod certum redid protest i.e., that is certain which can be made certain. (Para. 59, Pg. 29)

4. Absence of a valid defence such as justification, truth, or privilege

• Defences such as truth, fair comment/honest opinion, privilege (be it absolute or qualified) are available to the seeker, however, the absence of these constitutes an essential for the tort of defamation. (Para. 60, Pg. 29)
• It is settled law that termination letters containing adverse remarks about the conduct and performance of the employee are stigmatic and inherently defamatory. (Para. 67 – Pg. 32)

• A perusal of the record shows that the Plaintiff’s performance was rated high and his contributions were duly valued. The observations made in the termination letter were in stark contrast with material on record. Hence, there was no substantiation or backing for making remarks such as “malicious conduct” and “loss of trust” in the termination letter. During cross examination, even the Defendant acknowledged the importance of termination letter for background checks. (Para. 63,64,65,66,68,69 – Pg. 30 to 34)
• The statements, therefore, are false and defamatory in nature. Moreover, no doubt that the statements were referring to the Plaintiff and there is no valid defense as well to justify the remarks, therefore essentials (i), (iii) and (iv) stand satisfied. (Para. 70,71 – Pg. 34, 35)
• The liability for publication in civil defamation cases, rather than intent, is premised on the role of the originator in triggering a foreseeable chain of events that results in the dissemination of defamatory material. (Para. 84 – Pg. 40)
• It is enough to establish that an act or omission caused the defamatory statement to be read by someone other than the plaintiff, either due to compulsive self-disclosure of the defamed person or foreseeable disclosure. (Para. 84 – Pg. 40)
• In case involving employer-employee libel, the basis of judicial scrutiny, therefore, rests upon a dual inquiry:

1. did the defendant have actual knowledge that third-party access was probable; or
2. would a reasonable person, similarly circumstanced, have anticipated or foreseen that such access would occur. (Para. 85 – Pg. 41)

• The doctrine of compelled self-publication, though an exception to traditional principles, represents a reasoned and equitable development in defamation law. It ensures that employers cannot evade liability by using confidential correspondence as a shield when, in substance, their actions set in motion the very harm the law seeks to redress. (Para. 86 – Pg. 41)
• The traditional concept of publication, by way of an explicit act, does not find any application to confidential communications between employers and employees. However, without being so, the employee may end up facing serious reputational stigma owing to an expression of the employer, even if the expression was not communicated explicitly to any third person. The underlying prerequisite is that the employer ought to have foreseen the possibility of disclosure of confidential communication to any third person or the self-compulsion of the employee to disclose the same to any third person, such as for seeking subsequent employment. (Para. 85 – Pg. 41)
• When plaintiff has no meaningful choice but to disclose the defamatory rationale to prospective employers, the chain of causation remains unbroken. The foreseeability of such compelled republication imposes continuing responsibility upon the defendant, especially where the employment ecosystem necessitates full transparency during background verification processes. (Para. 89– Pg. 42,43)
• The mode and manner of dissemination in the current digital landscape necessitates a more nuanced application of the doctrine of foreseeability of publication, particularly in cases where reputational harm may be reasonably anticipated as a natural consequence of documented communications. When something is put on social media, the foreseeability of access by multiple third parties is not merely probable but inevitable. (Para. 87, Pg. 42)

The viral nature of social media further compounds this foreseeability. The originator, by utilising such a public or quasi-public forum, is deemed to have constructively accepted the consequential risk of widespread circulation. The reputational harm emanating from such platforms flows directly from the communicative choice of the defendant. (Para. 88, Pg. 42)

(Though the mode of communication in the present case was not any social media platform, the aforesaid observations bear relevance for the application of the doctrine of foreseeability of publication.)

• The legal position that, therefore, emerges is that the requirement of publication in defamation encompasses not only direct dissemination to third parties but also indirect transmission arising from foreseeable consequences. The inquiry is not centered on the subjective intent of the defendant but on whether, in the circumstances, a reasonable person in the defendant’s position would have foreseen the likelihood of third-party access. (Para. 90 – Pg. 43)
• The foreseeable circulation of the impugned termination letter, through compelled disclosure by the plaintiff, satisfies the requirement of publication and thereby fulfils the second essential element required to constitute defamation. (Para. 91 – Pg. 43)
• Hence, Issue No. 2 is decided in favour of the Plaintiff.
• Reliefs granted in cases such as the present one are compensatory in nature. In England or America, the damages are both compensatory and punitive. However, here, the computation must restrict itself to the overall impact of the reputational harm on the mind and life of the defamed person, insofar as it could be inferred from the circumstances on record. Court must be mindful that the award of damages or compensation on account of reputational loss is not a means to unjustly enrich a Plaintiff. (Para. 98, Pg. 47,48)
• General compensatory damages in defamation serve a tripartite function:

1. console the plaintiff for the emotional distress suffered;
2. repair the damage to personal and professional reputation; and
3. vindicate the injured person’s standing in society. (Para. 101, Pg. 49,50)

DECISION:

Following the above discussion, the following reliefs were granted to the Plaintiff:

• Rs. 2,00,000/- granted as general compensatory damages; and
• Direction to the Defendant to expunge the defamatory remarks in the present termination letter and for issuance of a fresh termination letter.

Analysis done by: Saksham Singh (Associate)