Insurance Corporation of India & ANR Vs. Shri Raghavendra Seshagiri Rao Kulkarni
 INSC 767 (14
MUKHERJEE, K.T. THOMAS
23RD DAY OF SEPTEMBER, 1997 Present:
Mr. Justice S. Saghir Ahmad Hon'ble Mr. Justice D.P. Wadwa Harish N. Salve, Sr.
Adv., C.K. Sasi, K.K. Sharma, Kailash Vasdev, Advs. with him for the appellants
S.S. Javali, Sr. Adv., R.Jaganath Goulay, M.K. Dua, Advs.
him for the Respondent O R D E R The following Order of the Court was delivered:
O R D
E R Respondent was appointed as Assistant Development Officer or 4th September, 1985. After completion of he period of
Apprenticeship, he was placed on probation as Development officer with effect
from 4th December 1985.
he was still a probationer. his services were terminated by order dated
22.5.1986 which was challenged in a writ petition before the High Court of
upon the decision of this Court in Central Nath Ganguly & Anr. etc. (1986)
3 SCC 156, a learned single judge of the High Court by judgment dated 12.8.1986
allowed the writ petition and quashed the order of termination. The judgment
was upheld by the Division Bench in appeal. Now, the matter is in this Court.
have heard learned counsel for the parties.
placed by the High Court on the decision of this Court in Central Inland Water
Transport Corporation Ltd. (Supra) was wholly out o place as that decision
related to a permanent employee whose services could be terminated at any time
by giving three months' notice. This Court held that such a provision for
terminating the services of a permanent employee was wholly arbitrary and that
the services of the permanent employee could not be terminated except by giving
him an opportunity of hearing. The High Court was of the view, and in our
opinion, wrongly, that the case of the probationer was not different from that
of the permanent employee and, therefore, applied the law laid down by this
Court in Central Inland Water Transport Corporation Ltd.'s case (supra) to the
case of the respondent who was a mere probationer, and held that the
termination order was bad.
2 of the Letter of Appointment issued to respondent reads as under:
shall be on probation initially for a period of twelve months from the date of
your joining duties as a probationer, but the extend your probationary period
provided that the total probationary period including the extended period shall
not exceed 24 months counted from the commencement of the probationary
appointment. During the probationary appointment. During the probationary
period (which includes extended probationary period , if applicable) you shall
be liable to discharge from service of the corporation without any notice and
without any cause being assigned." This Clause clearly stipulates that the
respondent could be discharged from service at any time during the period of
probation or extended period of probation, without any notice or without
assigning any cause.
period of probation is a period of test during which the work and conduct of an
employee is under scrutiny.. If on an assessment of his work and conduct during
this period it is found that he was not suitable for the post it would be open
to the employer to terminate his services. His services can not be equated with
that of a permanent employee who, on account of his status, is entitled to be
retained in service and his services cannot be terminated abruptly without any
notice or plausible cause. This is based on the principle that a substantive
appointment to a permanent post in a public service confers substantive right
to the post and the person appointed on that post becomes entitled to hold a
lien on the post. He gets the right to continue on the post till he attains the
age of superannuation or is dismissed or removed from service for misconduct
etc. after disciplinary proceedings in accordance with the Rules at which he is
given a fair and reasonable opportunity of being heard. He may also come to
lose the post on compulsory retirement.
Ram Deka etc. vs. General Manager, N.E.F. Railways, Maligaon, Pandu, etc. 1964
(5) SCR 683, a majority of seven judges held that a permanent employee who
substantively holds a permanent post has a right to hold the post till he
reaches the age of superannuation or till he is compulsorily retired under the
relevant Rule. Termination of his service in any other manner would amount to
invasion of his right to hold the post and would amount to penalty of removal.
It was for this reason that the Court held Rule 148 (3) or Rule 149(3) of the
Railway Establishment code to be violative of the right guaranteed under
Article 311(2) of the constitution. It was observed that a permanent employment
assures security of tenure which is essential for the efficiency and incorruptibility
of public administration.
view was expressed in Gurdev Singh Sidhu vs. State of Punjab & Anr. 1964
(7) SCR 587 = AIR 1964 SC 1585.
Inland water Transport Corporation Ltd. & Anr.'s case was not correctly
understood either by the single juice or by the Division Bench of the High
Court. The High court also did not notice that apart from Central Inland water
Transport corporation Ltd. & Anr.'s case, there ware other judgments of
this Court in which a similar view was expressed.
& Ors. 1985 (2) SCR 1014= AIR 1985 SC 722, a similar provision which
enabled the Broad to dispense with the services of a permanent employee by a
mere notice or pay in lieu thereof was held to be bad. it was held that the
offending Regulation which had developed the notoriety as " Henry VIII
Clause" was ultra Hindustan Steel Ltd. & Anr. vs.
Steel Ltd. & Ors. 1985 (2) SCR 428 = AIR 1985 SC 251 as also in O.P. Bhandari
vs. Indian Tourist Development Corporation (1984) 4 SCC 337, the Rule based on
the doctrine of hire and fire" was held to be bad as being impermissible
under the constitutional scheme to sustain the doctrine as a permanent employee
could not be removed in that fashion.
question was re-examined and the entire case law was reviewed by this Court in
Delhi Transport Corporation vs. D.T.C Mazdoor Congress and others AIR 1991 SC
101= 1990 Supp. (1) SCR 142 = (1991) SCC Supp. (1) 600 and it was again
reiterated by the majority of judges that a Rule which gave unbridled or
arbitrary powers to the management to dispense with the services of regular and
permanent employees by a mere notice or, pay in lieu thereof, would be bad. The
principles laid down in the case of central Inland Water Transport Corporation
Ltd. & Anr. were reiterated.
requirement to hold a regular departmental enquiry before dispensing with the
services dispensing with the services of a probationer cannot be invoked in the
case of a probationer specially when his services are terminated by an innoduous
order which does not case any stigma on him. But it cannot be laid down as a
general rule that in no case can an enquiry be held. If the termination is
punitive in nature and is brought about on the ground of misconduct.
311(2) would be attracted and in that situation it would be incumbent upon the
employer, in the case of Government service, to hold a regular departmental
other case also, specially those relating to statutory corporations or
Government instrumentalities, a termination which is punitive in nature cannot
be brought about unless an opportunity of hearing is given to the person whose
services, even during the period of probation, or extended period, are sought
to be terminated. (See: Parshotam Lal Dhingra vs. Union of India (1958) SCR 328
in which it was held that appointment to a permanent post on probation means
that the servant is taken on trial, such an appointment comes to an end if
during or at the end of the probation, the person so appointed is found to be
unsuitable and his services are terminated by notice. An appointment on
probation or on an officiating basis is of a transitory character with an
implied condition that such an appointment is terminable at any time: see also:
Shamsher Singh & Anr.
vs. State of Punjab 19756 (1) SCR 814 = (1974) 2 SCC 831).
bring home the point, we may refer to a few other cases relating to the
termination of service of a probationer. They are: State of Maharashtra vs. Veerappa R.
& Another Air 1980 SC 42 = 1980 (1) SCR 551= (1979) 4 SCC 466. In the same
volume, another case, namely, oil and Natural Gas commission and others vs. Dr.
Md. s. Iskander Ali AIR 1980 SC 1242= 1980 (3) SCR 603 = (1980) 3 SCC 428 is
reported in which the same principles have been reitereated.
Union of India and others vs. P.S. Bhatt AIR 1981 SC 957 = (1981) 2 SCC 761
promotion was made to a higher post on probation which was ultimately
terminated. It was held that a person who is placed on probation does not have
the right to hold the post and if it is found that he was not suitable for the
post, his probation can be terminated at any time and he can be reverted to his
distinction was drawn again as between a permanent employee and an employee
appointed on probation in Bishan Lal Gupta vs. The State of Haryana and others
AIR 1978 SC 363= 1978 (20 SCR 513= (1978) 1 SCC 202. In this case, a formal
enquiry was held merely to assess the work and conduct of an employee who was
appointed on probation. It was held that there was no need either to give notice
or to hold the regular departmental enquiry.
instant case, the respondent was discharged from service during probation in
terms of Regulation 14(4) of the Life Insurance Corporation of India (Staff) Regulation 1960.
termination has already been upheld been a Three judge Bench of this Court in
M. Venugopal vs. Divisional Manager.
Insurance Corporation of India, Machilipatnam, A.P. & Anr. (1994)
2 SCC 323. This decision also meets the ground raised by the counsel for the
respondent that the termination of respondent's services would amount to "
RETRENCHMENT" as defined in Section on 2(00) of the Industrial disputes
Act and since the requirements of section 25-F of the Act were not complied
with, the termination would be bad. It may be pointed out that Life Insurance
Corporation (Amendment) Act, 1981 (act 1 of 1981) which came into force on 31st
of January, 1981 provided that under Sub-section A of section 48 of the Life
Insurance Corporation Act, 1956. the Regulations which were already in force
immediately before the commencement of the Amendment Act shall be deemed to be
Rules made by the Central Government and they shall be deemed to have effect
notwithstanding anything contained in the Industrial Disputes Act, 1947. The
validity of the Amendment Act was upheld by this Court in A.V. Nachane and
another vs. Union of India and another AIR 1982 SC 1126 = 1982 (2) SCR 246=
(1982) 1 SCC 205. For this reason also, the ground that termination would
amount to retrenchment within the meaning of section 2(00) of the Industrial
Disputes Act cannot be entertained.
the reasons stated above, the judgment passed by the Single Judge of the High
Court and upheld by the Division Bench cannot be sustained. Consequently, the
appeal is allowed. the judgments passed by the High Court (by the Single judge
as also by the Division Bench ) are set aside and the order of discharge dated
22.5.1986 is upheld. There will be no order as to costs.