Wasim
Beg Vs. State of Uttar
Pradesh & Ors
[1998] INSC 154 (5
March 1998)
Sujata
V. Manohar, D.P. Wadhwa. Mrs. Sujata V. Manohar, J.
ACT:
HEAD NOTE:
Leave
Granted.
The
appellant was appointed as Assistant Manager in the respondent-U.P. State
Leather Development and Marketing Corporation on 22.11.1974.
On
10th of January, 1978 the appellant was selected and appointed as Divisional
Manager in the respondent- Corporation. The letter of appointment which is
dated 10th of January, 1978 states as follows :- "...........
His
appointment will be on probation for a period of one year which can be extended
at the discretion of the Managing Director. His services are liable to be
terminated on one month's notice or salary in lieu thereof.
He
will be governed by the Service Rules of the Corporation........." The
appellant continued to work as Divisional Manager of the respondent-Corporation
till 21st of April, 1981 when he was re-designated as Works Manager. He
continued thereafter in the said post. In April 1983 he was allowed to cross
the Efficiency Bar.
It is
the contention of the respondent that initially the work of the appellant was
good but subsequently his work and performance deteriorated as a result of
which the Corporation had to suffer losses. The appellant was given several
warnings but his performance did not improve. At the meeting of the Board of
Directors of the respondent- Corporation held on 8th of February, 1985, the
entire service record of the appellant together with the report of the Managing
Director was placed before the Board. After perusing the report and the service
record of the appellant, the Board took a decision to terminate the services of
the appellant. This decision was confirmed at the next meeting of the Board of
Directors held on 31st of March, 1985.
Thereupon,
an order dated 31st of March, 1985 was issued terminating the services of the
appellant. The order stated that the appellant was discharged from the service
of the Corporation with immediate effect and that in lieu of three months'
notice he will be paid three months pay. The pay for three months was deposited
in the account of the appellant by the respondents.
From
31st of March, 1985 the appellant absented himself from work and his
whereabouts were not known. As the order of termination could not be served on
him, ultimately the respondent-Corporation published a notice dated 12th of
April, 1985 in Hindi newspaper 'Amar Ujala' published from Agra to the effect
that the services of the appellant had been terminated as per Board's Resolution
No, 57.19 and the registered order dated 31.3.1985 and that in lieu of three
months' notice three months' pay had been deposited in the appellant's personal
savings account.
The
appellant filed a writ petition against the order of termination in the High
Court of Allahabad on 18th the April, 1985 being Writ Petition No. 5464 of
1985. In this writ petition the High Court granted on 19th of April, 1985, an
interim stay of the order of termination. However, since the appellant did not
join service after the stay order, the High Court vacated the stay order on 6th
of November, 1985 observing that the appellant would be entitled to full salary
in case he succeeds.
The
writ petition has been ultimately dismissed by the High Court by its impugned
order dated 29.4.1997. The High Court has upheld the order of termination on
the ground that the appellant was a probationer on the date of termination of
his services n 31st of March, 1985. Hence termination by three months' notice
was a valid termination.
The Service
Rules which were in force at the time of the appellant's appointment as
Divisional Manager were Model Service Rules for State Enterprises which were
adopted by the respondent-Corporation by a resolution dated 30th of July, 1976.
The relevant Rule relating to appointment on probation was as follows :-
"Any employee regularly appointed for the first time or promoted to any
post in the corporation shall be placed on probation for a period of one year
from the date of joining the new post.
The
performance of the employee in the new post will be watched during the
probation and the appointing authority will issue a certificate of having
satisfactorily completed the probation at the end of the period. The appointing
authority has discretion to appointing authority has discretion to extend the
period of probation without assigning any reason therefore." The relevant
Rule relating to confirmation was as follows :- "Confirmation:
An
employee directly appointed or promoted to any post in the Corporation shall be
deemed to have become a confirmed employee in that grade after he has
successfully completed the period of probation.
A
confirmed employee may be discharged from the service of the corporation under
the orders of the competent authority on three months notice or by giving 3
months salary in lieu thereof. The competent authority for purposes of this
Rule will be the next higher level than the appointing authority for that
category of post. The competent authority on getting a recommendation from the
appointing authority for the discharge of a confirmed employee with reasons
therefore, may give an opportunity to the employee concerned for explaining
himself before coming to a decision.
This
provision in the Rules should obviously be sparingly and discreetly used only
top weed out inefficient employees who is spite of a number of warnings and
admonition have failed to correct themselves or employees who are in the
opinion of the Board of Directors or the Managing Directors as the case may be
not suitable for continued employment of the Corporation. The discharge shall
be only on grounds of continued inefficiency or dishonestly, serious
dereliction of duty or moral turpitude and is not to be considered as a
punishment under the disciplinary proceedings............" A confirmed
employee could be discharged by giving three months' notice or by giving three
months salary in lieu thereof under the circumstances set out in the Rule
relating to confirmation. However, in the case of he discharge of an employee
during the period of probation the notice required is 30 days of notice in
writing or a sum equal to 30 days' substantive pay plus dearness allowance.
The
discharge of a confirmed employed is permissible on the grounds set out in the
said Rule after hearing the employee.
With
effect from 1st of January, 1981, the U.P.
State Leather Development and Marketing
Corporation Limited General Rules came into force replacing the earlier Service
Rules. Under the new Rules of 1981 also there were Rules which provided for
probation and confirmation. The relevant Rule relating to appointment on
probation was as follows :- "Any employee regularly appointed for the
first time or promoted to any post in the Corporation shall be placed on
probation for a period of one year from the date of joining the new post. The
performance of the employee in the new post will be watched during the
probation and the appointing authority will issue a certificate of having
satisfactorily completed the probation at the end of the period. The appointing
authority has discretion to extend the period of probation for two years
without assigning any reason therefor.
After
the expiry of three years' probationary period if the employee is not
confirmed, he will have a right to represent his case to the Board whose
decision shall be final." Discharge during the period of probation as
under the earlier Rules was by 30 days notice in writing or sum equal to one
month's substantive pay plus dearness allowance. The Rule relating to
confirmation under these Rules was as follows :- "An employee directly
appointed or promoted to any post in the Corporation shall be deemed to have
become a confirmed employee in that grade after he has successfully completed
the period of probation.
A
confirmed employee may be discharged from the service of the Corporation under
the orders of the competent authority on three months' notice or by giving 3
months salary in lieu thereof. The competent authority for purposes of this
Rule will be next higher level than the appointing authority for that category
of post. The competent authority of getting a recommendation from the
appointing authority for the discharge of a confirmed employee with reasons
thereof, may give an opportunity to the employee concerned for explaining
himself before coming to a decision.
This
provision in the Rule should obviously be sparingly and discreetly used only to
weed out inefficient employees who in spite of a number of warnings and
admonition have failed to correct themselves or employees who are in the opinion
of the Board of Directors or the Managing Directors, as the case may be, not
suitable for continued employment of the Corporation.
The
discharge shall be only on grounds of continued inefficiency or dishonesty,
serious dereliction of duty or conviction by a court involving moral turpitude
and is not be considered as a punishment under the disciplinary proceedings.
........................"
The appellant was appointed on probation as Divisional Manager on 10.1.1978.
The letter of appointment mentioned that his probation was for a period of one
year. under the earlier Service Rules then in force, the respondents had the
discretion to extend the period of probation without assigning any reason therefor.
But there was no such order extending the period of probation of he appellant. A
s per the Rule relating to probation, the appointing authority was required to
issue tot he appellant a certificate of having satisfactorily completed
probation at the end of the probationary period. No such certificate has been
issued.
The
Rule relating to Confirmation states that the employee shall be deemed to have
become confirmed employee after he has successfully completed the period of
probation. The deemed confirmation depends on satisfactory completion of
probation. The High Court has taken the view that since no certificate has been
issued by the respondents at the end of one year about the appellant having
satisfactorily completed his period of probation, he remained on probation for
a period of seven years till 1985 when his services were terminated by the
order of 31st of March, 1985.
We
find from the affidavit in reply which was filed by the respondents in the writ
petition before the High Court, that the respondents have nowhere contended
that the appellant was on probation or that his order of discharge is on the
basis that he was a probationer. On the contrary, in paragraph 8 of the
affidavit of Shri N.D. Singhal, Assistant Secretary of the
respondent-Corporation, which was filed before the High Court, it is stated that
an employee of the Corporation first placed on probation and before the expiry
of the probationary period no notice or pay in lieu of notice is required to be
given (sic.). This (i.e. notice or pay in lieu of notice) is required to be
given only when the services of the employee concerned are confirmed.
In the
said affidavit the respondent-Corporation has also reproduced extracts from the
report submitted by the Managing Director in the meeting of the Board of
Directors held on 8th of April, 1985. The Managing Director has stated in the
report, inter alia, as follows :- "Shri Wasim Beg who had joined this
Corporation of 24.11.1974 as Asstt. Manager and was promoted to the post of
Divisional Manager in the scale of pay Rs. 800-1450 (revised Rs. 1350-3100) per
month w.e.f. 10.1.79 on a regular basis. He was put in charge on regular
basis..................." The date 10.1.1979, as the date from which the
appellant worked on regular basis, is significant because it shows the end of
the probationary period of one year from the date of hi appointment on
10.1.1978. The respondent- Corporation, therefore, did not contend before the
High Court, however, has held that the appellant was a probationer on the basis
of the Service Rule which was then in force.
Whether
an employee at the end of probationary period automatically gets confirmation
in the post or whether an order of confirmation or any specific act on the part
of the employer confirming the employee is necessary, will depend upon the
provisions in the relevant Service Rules relating to probation and
confirmation. There are broadly two sets of authorities of this Court dealing
with this question. In those cases where the Rules provide for a maximum period
of probation beyond which probation cannot be extended, this Court had held
that at the end of the maximum probationary period there will be deemed
confirmation of the employee unless Rules provide to the contrary. This is the
line of cases starting with State of Punjab v. Dharam Singh (1968 [3] SCR 1), M.K. Agarwal v. Gurgaon Gramin Bank
& Ors. (1987) Supp. SCC 643), Om Prakash
Maurya v. U.P. Cooperative Sugar Factories Federation, Lucknow & Ors. (1986 Supp. SCC 95),
State of Gujarat v. Akhilesh C. Bhargav & Ors. (1987
[4] SCC 482).
However,
even when the Rules prescribe a maximum period of probation, if there is a
further provision in the Rules for continuation of such probation beyond the
maximum period, the courts have made an exception and said that there will be
no deemed confirmation in such cases and the probation period will be deemed to
be extended. In this category of cases we can place Samsher Singh v. State of
Punjab & Anr. (1974 [2] SCC 831) which was the decision of a Bench of seven
judges where the principle of probation not going beyond the maximum period
fixed was reiterated but on the basis of the Rules which were before the Court,
this Court said that the probation was deemed to have been extended. A similar
view was taken in the case of Municipal Corporation, Raipur v. Ashok Kumar Misra (1991 [3] SCC
325).
In Satya
Narayan Athya v. High Court of Madhya Pradesh & Anr. (1996 [1] SCC 560),
although the Rules prescribed that the probationary period should not exceed
two years, and an order of confirmation was also necessary, the termination
order was issued within the extended period of probation.
Hence
the termination was upheld.
The
other line of cases deals with Rules where there is no maximum period
prescribed for probation and either there is a Rule providing for extension of
probation or there is a Rule which requires a specific act, on the part of the
employer (either by issuing an order of confirmation or any similar act) which
would result in confirmation of the employee. In these cases unless there is
such an order of confirmation, the period of probation would continue and there
would be no deemed confirmation at the end of the prescribed probationary
period. In this line of cases one can put Sukhbans Singh v. State of Punjab (1963 [1] SCR 416), State of Uttar
Pradesh v. Akbar Ali Khan (1966 [3] SCR 821), Shri Kedar Nath Bahl v. The State
of Punjab & Ors. (1974 [3] SCC 21), Dhanjibhai
Ramjibhai v. State of Gujarat (1985 [2] SCC 5) and Tarsem Lal Verma
v. Union of India and Ors. (1997 [9] SCC 243), Municipal Corporation, Raipur v. Ashok Kumar Misra (supra) and
State of Punjab v. Baldev Singh Khosla (1996 [9] SCC 190). In the recent case
of Dayaram Dayal v. State of M.P. and Anr.
(AIR 1997 SC 3269) (to which one of us was a party) all these cases have been analysed
and it has been held that where the Rules provide that the period of probation
cannot be extended beyond the maximum period there will be a deemed
confirmation at the end of the maximum probationary period unless there is
anything to the contrary in the Rules.
In the
present case under the Service Rules in force at the time when the appellant
was appointed on probation, there was no time-limit on the period up to which
probation can be extended. The appointing authority was required to issue a
certificate of the appellant having satisfactorily completed the period of
probation. The provision relating to deemed confirmation would come into effect
on his satisfactorily completing probationary period. From the affidavit filed
by the respondent-Corporation as also looking to the report which was submitted
by the Managing Director to the Board of Directors on 8.2.1985, it is clear
that the appellant was considered by the respondents as having satisfactorily
completed his period of probation on 9.1.1979, an d he was considered as a
regular employee form 10.1.1979. In the affidavit of the respondent-Corporation
before the High Court also it has been very fairly stated that the services of
the appellant were satisfactory for the first few years and his work was very
good. It was only thereafter that serious problems arose regarding his work and
the corporation suffered losses on that account. It is, therefore, not possible
to hold that the appellant remained a probationer till his discharge.
The
respondents, however, contend that the services of the appellant have been
terminated validly in accordance with the provisions relating to discharge of
employees. On 31.3.1985 when the appellant was discharged the new Service Rules
framed by the respondent-Corporation were in force which have been set out hereinabove.
Under those Service Rules a confirmed employee can be discharged form service
on three months' notice or giving three months' notice or giving three months'
salary in lieu thereof. In the present case, the fact that such three months'
notice or three months' salary in lieu thereof was given to the appellant would
also indicate that he was treated as a confirmed employee. As a probationer he
would have been entitled only to 30 days' notice. The relevant Service Rule set
out earlier further provides that discharge in the case of a confirmed employee
should be only on the grounds of continued inefficiency or dishonesty, serious
dereliction of duty or conviction by a court. It should be used to weed out
inefficient employees who, in spite of a number of warnings, have failed to
correct themselves or employees who are not, in the opinion of the Board,
suitable for continued employment. The report of the Managing Director which
was placed before the Board of Directors gives cogent reasons for his discharge.
His conduct in connection with several contracts has been set out in detail in
the report and the loss occasioned thereby to the respondent-Corporation has
also been set out in detail. It was on the basis of this report that the Board
of Directors decided to terminate the services of the appellant. The appellant
had also been earlier warned by the Managing Director. Therefore, there is no
breach of this part of the Rule relating to discharge.
However,
there is an important safeguard in this Rule relating to discharge of a
confirmed employee. The competent authority under the Rule is required to give
an opportunity to the employee concerned for explaining himself before coming
to a decision regarding his discharge. The Rule provides that the competent authority
on getting a recommendation from the appointing authority for the discharge of
a confirmed employee with reasons thereof, may give an opportunity to the
employee concerned for explaining himself before coming to a decision. Although
the word used is 'may', in the context it has to be construed as 'shall' so
that the principles of natural justice are complied with when the principles of
natural justice are complied with when the competent authority considers the
question of discharge of an employee for reasons which are set out in the Rule.
Even if one assumes that the earlier service Rules apply to the appellant, the
earlier service Rules are also similar and they also require that the employee
should be heard before taking a decision on the discharge of an employee. This
was not done in the present case although very serious allegations were levelled
against the appellant in the report of the Managing Director, and the
appellant's conduct in respect of a number of contracts had been seriously
questioned in the report. Apart from anything else, when the Rules specifically
require that an opportunity of explaining himself should be given to the
employee, the denial of such opportunity is a serious violation of the
principles of natural justice and vitiates the decision. The order of
termination, therefore, cannot be sustained looking to the relevant Rules, and
applying the e principles of natural justice when the employee and is not a
probationer. The impugned order of termination is, therefore, set aside.
We are
informed that the appellant would otherwise retire on superannuation in June
1998. The respondent- Corporation has also stated that the financial condition
of the Corporation is very poor as it has already incurred accumulated losses
of Rs.669-65 lakhs against the total paid-up capital of Rs. 573.94 lakhs. The
activities of the Corporation have been partially closed down by Government
Order dated 20.1.1994 and the Corporation has already resorted to the process
of retrenchment of a large number of employees. Looking to all the facts and
circumstances monetary compensation to the appellant for wrongful termination
would serve the ends of justice. In this connection, the respondent-
Corporation has pointed out that on 19th of April, 1985, within a forthright of
the order of termination, the appellant moved the High Court obtained an ad
interim order of stay of the impugned order. Despite obtaining a stay of the
impugned order, the appellant did not work in the respondent-Corporation. The
respondents have stated in their affidavit before the High Court that even when
the appellant came for work after the order of stay, he did not do any work. He
tried to influence the bulk customers of the respondent-Corporation and
insisted that they break their dealings with the Corporation. The respondents
alleged t hat the appellant tried his best to create a situation in which the
respondent-Corporation would be compelled to accept him or suffer huge losses.
The appellant was in a senior managerial position. The High Court, relying upon
this affidavit of the respondent as also after noting that the appellant had
not joined the respondent-Corporation after obtaining the order of stay,
vacated the order of stay on 6.11.1985. The order vacating stay states, inter
Ala, as follows :- "It has been alleged in paragraph 11 of the
counter-affidavit that the petitioner did not attend the office soon after the
passing of he termination order dated 31st of March, 1985. No re-joinder
affidavit has been filed. Taking all the facts and circumstances stated in the
counter-affidavit, we are of opinion that the present case is not fit for
granting any injunction. In the event of success of the writ petition, the
petitioner will be entitled to salary for the period his services remain terminated.
We reject the application and the interim order of stay dated 19.4.1985 is vacated
." The appellant has thus not worked in the respondent- Corporation since
the date of his termination. His salary upto to October, 1985 has been paid to
him as directed by the High Court. The record which is before us does not show
what the appellant has earned from October, 1985 upto date.
But
looking to the fact that he has not worked with the respondent-Corporation and
that they stay order which enabled him to work in the Corporation had to be
vacated on account of the appellant's conduct which shows that he was not
desirous of working in the respondent's organisation, in the totality of
circumstances of the present case, a monetary compesation of Rs. 2 lakhs would
be adequate to compensate the appellant. The respondents are, therefore,
directed to pay to the appellant the sum of Rs.2 lakhs within a period of three
months from today.
The
appeal is accordingly allowed with costs.
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