Prakash & ANR. Vs. H.Omkarappa  INSC 36 (12 January 2010)
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 2786 OF
2007 CHAITANYA PRAKASH & ANR. ....... Appellants Versus H. OMKARAPPA ......
Mukundakam Sharma, J.
The issue that falls for consideration in this appeal is whether
the impugned order passed by the appellants against the respondent terminating
his service during the period of probation was an order of termination
simpliciter due to unsatisfactory service or "stigmatic" due to
The respondent herein was offered an appointment to the post of
Executive Director [Marketing] by the Appellant No. 2, namely, M/s. Hindustan
Photo Films Manufacturing Company Ltd. by issuing an offer of appointment dated
03.06.1998. The said offer of appointment was accompanied with terms and
conditions of appointment, one of which was that the respondent was to undergo
probation for a period of one year, which is extendable. Those terms and
conditions mentioned in the said offer of appointment are relevant for the
purpose of deciding the present case. Few important passages from the aforesaid
terms and conditions are extracted hereunder:
You will be on probation in the above post for a period of one year from the
date of joining the post.
During the period of your employment in the Company, you will be governed by
the Service Rules of Hindustan Photo Films Service Rules for Officers, which
would be applicable to the officers of the company as may be in force from time
of the Hindustan Photo Films Service Rules for Officers which came into effect
on 1st March, 1974 deals with matter of probation. The relevant sub- clauses
within clause-3, read as follows:
An Officer appointed by direct recruitment or promotion shall be on probation
for a period of one year from the date of joining the post.
performance during the period of probation shall be reviewed by the Company and
the Company may extend the period of probation or terminate the services of the
probationer recruited from outside at any time during or at the time of the
Management would try to communicate the orders of confirmation to the Officer
concerned as early as possible after the end of the period of probation.
However, any delay in such communication does not mean the automatic
confirmation of the Officer.
During the period of probation, an Officer directly recruited shall be liable
to be discharged from the services of the company after being suitably advised
about his unsatisfactory performance or other reasons, if any...."
Pursuant to the aforesaid offer of appointment, the respondent expressed his
willingness to join on the said post and consequently joined as Executive
Director [Marketing] on 03.09.1998. At the time of joining, the respondent gave
a declaration that he would abide by all the rules and regulations of the
appellant No. 2 - Company. It is the specific case of the appellants that as
the performance of the respondent was not found to be satisfactory during the
period of probation his service was not confirmed and his probation was
extended by another three months, in terms of Clauses 3.2 and 3.3 of the
Service Rules. The aforesaid letter intimating the respondent that his
probation had been extended by three months also mentioned that during the
extended period of probation of three months he was expected to show concrete
results in his performance which had been intimated to him from time to time
and that his performance would be reviewed again on 05.10.1999.
respondent addressed a letter dated 05.10.1999 in reply to the letter issued by
the company dated 20.09.1999, wherein he had stated that his performance during
the period of probation was excellent as his service records did not carry any
there are several letters on record wherein the appellant no. 1 advised the
respondent to improve his performance. The appellants prepared a detailed
report dated 25.11.1999 regarding his performance which was in the nature of an
assessment of the respondent during the period of probation and the same was
placed before the Board of Directors of the appellant company in its 225th
meeting, which was held on 27.11.1999.
of Directors considered the performance and suitability of the respondent on
the basis of his entire service records including the Performance and
Assessment Report prepared by the office and passed a resolution to the
THAT the services of Shri H. Omkarappa, Executive Director (Marketing) be
terminated on or before 2nd December, 1999.
FURTHER THAT the Chairman-cum-Managing Director be and is hereby authorized to
take all necessary steps in the matter".
Consequent upon the said decision of the Board of Directors, the appellant no.
1 issued a letter dated 29.11.1999 to the respondent terminating his services
as Executive Director [Marketing] with effect from 29.11.1999.
Immediately thereafter, the respondent herein preferred a writ petition in the
Madras High Court praying for setting aside and quashing the order dated
29.11.1999 issued by the appellant. Notice having been issued in the said writ
petition, the appellants filed a detailed counter affidavit. The Division Bench
of the High Court heard the writ petition after completion of pleadings. In the
said writ petition it was also brought to the notice of the court that
subsequent to the order of termination, the respondent applied for the post of
Managing Director of M/s. Spices Trading Corporation Ltd.
was not called for interview held during the selection process in view of the
letter dated 29.02.2000 sent by the appellants bringing to their notice the
misconduct of the respondent. The said writ petition was heard by the Division
Bench of the High Court of Madras and by the impugned Judgment and Order dated
11.04.2007, the High Court allowed the writ petition holding that the order of
termination passed by the appellants against respondent was stigmatic, and
therefore, the said order could not have been given effect to without giving an
opportunity to the respondent.
therefore, directed that the respondent herein would be allowed to continue in
aggrieved by the Judgment and Order dated 11.04.2007 passed by the Division
Bench of the High Court, the present appeal was preferred by the appellants
herein on which we have heard the learned counsel appearing for the respective
E.R. Kumar, Advocate for the appellants has drawn our attention to the terms
and conditions of the appointment, the Rules position with regard to the
service conditions of the respondent and also to the communications between the
appellant no. 1 and the respondent. The counsel appearing for the appellants
submitted before us that the High Court was wrong and incorrect in holding that
the order terminating the services of the respondent was stigmatic. It was also
submitted that it cannot be said that the appellant no. 1 was biased against
the respondent in taking the decision to terminate his services as the Board of
Directors was responsible for passing a resolution to the effect of termination
of the services of the respondent after considering the entire records and
Performance and Assessment Report of the respondent. The Counsel also relied
upon the decision of the Supreme Court in Abhijit Gupta v. S.N.B.
Centre, Basic Sciences reported in (2006) 4 SCC 469 and also the decision of
the Supreme Court in Mathew P. Thomas v. Kerala State Civil Supply Corpn. Ltd.,
reported in (2003) 3 SCC 263.
Vishwanatha Shetty, learned Senior Advocate appearing for the respondent, on
the other hand, submitted that a bare perusal of the order of termination dated
29.11.1999 would indicate that the same was stigmatic, and therefore, the High
Court was justified in setting aside the same as the same was issued without
giving any opportunity to the respondent and without conducting any enquiry in
that regard. It was also submitted that the decision of the Board of Directors
to terminate the services of the respondent was the result of bias of appellant
No. 1 and also influenced by him as he was very much present in the meeting of
the Board of Directors in which the decision to terminate the services of the
respondent was taken.
light of the submissions made by the counsel appearing for the parties, we have
perused the entire records. The respondent was appointed as Executive Director
[Marketing] vide letter dated 03.06.1998 on specific terms and conditions, one
of which was that he would be on probation in the aforesaid post for a period
of one year from the date of joining the post.
also stated in para 3 of the letter of appointment that if the aforesaid terms
and conditions are acceptable to the respondent he may indicate the date of
joining within 10 days. The respondent accepted the aforesaid offer of
appointment along with terms and conditions appended thereto and also
specifically accepted the position that he would be guided by the rules and
regulations applicable to the appellant no. 2 - Company.
have already extracted the rule position governing the service conditions of
the respondent. The respondent was ordered to be on probation for a period of
one year and as per clause 3.2 of Service Rules his performance during the
period of probation was to be reviewed by the company and that the company
could extend the period of probation or terminate the service of the respondent
at any time during or at the time of probation period. On the other hand,
clause 3.3 of Service Rules stated there has to be an order communicating the
order of confirmation to the officers concerned after the end of the period of
probation. In the present case, no such order of confirmation was passed by the
appellant no. 2 confirming the service of the respondent. There is no dispute
with regard to the fact that the respondent continued to be on probation, which
was extended for a period of three months.
13. A letter
dated 20.09.1999 was issued to the respondent communicating to him that his
probation period has been extended by another three months and that during the
aforesaid period of probation he is expected to show concrete results in his
performance which was being communicated to him from time to time and that his
performance would be viewed during the period of probation and the said fact
was communicated to him. There are communications on the record communicating
to the respondent that the appellants were not satisfied with the performance
of the respondent. It was communicated to him in one of such communications
that it was very disheartening to note that the respondent did not improve his
deficiencies and show any improvement in his conduct and behaviour. The
appellant no. 1 in his communications dated 20.09.1999, 04.11.1999 and
08.11.1999 apprised the respondent about his deficiencies. He was advised that
if a significant improvement was not shown, the appellants would be constrained
to initiate further action, as per Company Rules in that regard.
making a total appraisal of his performance, a report was submitted to the
Board of Directors by appellant No. 1. The record also discloses that the Board
of Directors held a meeting and in that meeting they not only considered the
Performance Assessment Report prepared by the appellant no. 1 but also perused
the entire service record of the respondent, and thereafter took a conscious
and considered decision of terminating his service due to unsatisfactory work.
The aforesaid decision of the Board of Directors of appellant no. 2 was
communicated to the respondent under the impugned order dated 29.11.1999. The
respondent was not confirmed in the post of Executive Director (Marketing) and
he continued to be on probation during which period his service could be
terminated for unsatisfactory work and for doing so it was not necessary for
the appellants to institute departmental proceedings or to give an opportunity
of hearing to the respondent. But the fact remains that a number of
communications were issued to the respondent by the appellant no. 1 bringing to
his notice his dismal performance and unsatisfactory work with an advise to
improve his performance.
attention was also drawn to a letter written by the respondent to the appellant
no. 1, who was the Managing Director of the company. If a subordinate officer
like the respondent is in the habit of using an intemperate language against
his superior like the appellant No. 1 the decision taken by the appellant
company cannot be said to be in any manner vitiated. Letter dated 13.11.1999
written by the respondent to the appellant no. 1 would support the said
position and would speak volume about his behaviour and conduct. The relevant
paragraphs of the said letter are extracted hereunder:
acknowledge the receipt of the above letters. I have also gone through the
contents of the letters carefully. I respectfully submit to the respected CMD,
that you have spent enough of your intellectual faculty to bring out a picture
of non- performance by me, for which I must appreciate your efforts. However, I
feel sad that you have wasted your energy in manipulating the facts through
figures. As my Senior Officer & elderly person, I must also thank you for
numerous advices given to me in the letter, which I must consider on their
I must refer here that unlike my above explained case, yourself and Director
Finance have joined this company only to enjoy better benefits which include
status, good pay, perquisites and other facilities."
I am unable to comprehend from the fact that from the beginning of my career in
HPF, I found that I have been restrained to perform with my full capacity by
CMD and DF, by their non congenial attitude and acts, which gradually
concentrated to the extent of suffocating me, affecting my efficiency to a
great extent. Sir, it is not out of pen to mention here that under various acts
of commissions and omissions of CMD and DF, I have been totally restricted from
functioning as EDM, with even small part of my capacity. I give below some of
them for your kind knowledge and perusal, even though you are quite aware of
it is not EDM's inefficiency/non performance that has affected the efficiency
of Marketing Division, but the callous act of CMD/DF which prevented EDM from
functioning normally and also affected his efficiency and credibility."
16. It is
no longer res integra that even if an order of termination refers to
unsatisfactory service of the person concerned, the same cannot be said to be
stigmatic. In this connection, we make a reference to the decision of the
decision of the Supreme Court in Abhijit Gupta v. S.N.B. National Centre, Basic
Sciences (supra), wherein also a similar letter was issued to the concerned
employee intimating him that his performance was unsatisfactory and, therefore,
he is not suitable for confirmation. We have considered the ratio in light of
the facts of the said case and we are of the considered opinion that the basic
facts of the said case are almost similar to the one in hand. There also,
letters were issued to the concerned employee to improve his performance in the
areas of his duties and that despite such communications the service was found
to be unsatisfactory.
result, a letter was issued to him pointing out that his service was found to
be unsatisfactory and that he was not suitable for confirmation, and,
therefore, his probation period was not extended and his service was
terminated, which was challenged on the ground that the same was stigmatic for
alleged misconduct. The Supreme Court negatived the said contention and upheld
the order of termination.
Mathew P. Thomas v. Kerala State Civil Supply Corpn. Ltd., (supra) also the
concerned employee was kept on probation for a period of two years. During the
course of his employment he was also informed that despite being told to
improve his performance time and again there is no such improvement. His
shortfalls were brought to his notice and consequently by order dated
16.01.1997 his services were terminated, wherein also a reference was made to
his unsatisfactory service. In the said decision, the Supreme Court has held
that on the basis of long line of decisions it appears that whether an order of
termination is simpliciter or punitive has ultimately to be decided having due
regard to the facts and circumstances of each case.
Pavanendra Narayan verma v. Sanjay Gandhi PGI of Medical Sciences, (2002) 1 SCC
520; this court had the occasion to determine as to whether the impugned order
therein was a letter of termination of services simpliciter or stigmatic
termination. After considering various earlier decisions of this court in paragraph
21 of the aforesaid decision it was stated by this Court thus :- "21. One
of the judicially evolved tests to determine whether in substance an order of
termination is punitive is to see whether prior to the termination there was
(a) a full-scale formal enquiry (b) into allegations involving moral turpitude
or misconduct which (c) culminated in a finding of guilt. If all three factors
are present the termination has been held to be punitive irrespective of the
form of the termination order. Conversely if any one of the three factors is
missing, the termination has been upheld."
Abhijit Gupta (Supra.), this Court considered as to what will be the real test
to be applied in a situation where an employee is removed by an innocuous order
of termination i.e whether he is discharged as unsuitable or he is punished for
his misconduct. In order to answer the said question, the Court relied and
referred to the decision of this Court in Allahabad Bank Officers Assn. V.
Allahabad Bank (1996) 4 SCC 504; where it is stated thus :- "14.......As
pointed out in this judgment, expressions like "want of application",
"lack of potential" and "found not dependable" when made in
relation to the work of the employee would not be sufficient to attract the
charge that they are stigmatic and intended to dismiss the employee from
considered opinion, the ratio of the above-referred decisions are squarely
applicable to the facts of the present case. The respondent was time and again
informed during the probation period about his deficiencies and was given ample
opportunities to improve them. Therefore, enough precautions were taken by the
appellants to see that the respondent improved his performance and such an
opportunity was provided to him.
advices and opportunity were totally misplaced as the respondent considered the
same as unnecessary encroachment and interference in his work and wrote back
rudely in an intemperate language. Whether or not a person is suitable to be
retained and confirmed in service could be considered and assessed by the
Managing Director, namely, appellant no.
1, but he
after making an appraisal submitted his report along with all other records of
the respondent before the Board of Directors, who finally took the decision.
The Board of Directors constituted of responsible persons and they while
deciding the suitability of the respondent not only considered the Performance
Assessment Report but also considered all other records, and thereafter they
took a considered and conscious decision that the respondent was not suitable
for confirmation and terminate his service. The said decision of the Board of
Directors appears to be in parity with the ratio of the aforesaid decisions of
this Court (supra). The reasons mentioned in the letter dated 29.11.1999 -
terminating the services of the respondent cannot be said to be stigmatic.
appellant had time and again specifically brought to the notice of the
respondent his short comings and no misconduct as such is alleged against the
respondent by the appellant and therefore the present case is a case of
termination simpliciter due to unsuitability of the respondent and not a case
of punishment for misconduct.
was brought to our notice during the course of argument by the counsel
appearing for the respondent that the order of dismissal of the respondent
dated 29.11.1999 was stigmatic is also proved from the fact that subsequent to
his termination, the respondent was called for interview for the post of
Managing Director of M/s Spices Trading Corporation Ltd. and that when he
reached the venue of interview, he was informed by the Selection Board that he
was not required to attend the interview because the appellants informed the
said company that the service of the respondent was terminated due to his
unsatisfactory service performance.
to and relying on the same, it was submitted by the counsel appearing for the
respondent that it indicated and fortified the vindictive attitude of the 1st
appellant herein from issuance of the aforesaid letter.
perused the relevant records and on the basis of the same we are of considered
opinion that the appellants informed M/s Spices Trading Corporation Ltd.
company on being specifically asked by the said company about the performance
of the respondent and consequently it was informed that his service was
terminated due to unsuitability, which is a fact. If, they would have not
intimated the same to the company despite their specific query then they would
have been suppressing the material fact. In our considered opinion the
aforesaid aspect does not in any manner support the case of the respondent.
view of the above, we hold that the impugned order is not stigmatic and as such
the decision of the High Court is erroneous and vitiated. We accordingly,
hereby set aside the same and restore the order dated 29.11.1999 passed by the
result, the appeal is allowed. There will be no orders as to costs.
...................................J. [V.S. Sirpurkar]
.................. ............J. [Dr. Mukundakam Sharma]
January 12, 2010.