01 May 1996
Supreme Court


Bench: NANAVATI G.T. (J)
Case number: C.A. No.-005291-005291 / 1990
Diary number: 74358 / 1990






DATE OF JUDGMENT:       01/05/1996


CITATION:  1996 AIR 2030            1996 SCC  (4) 504  JT 1996 (5)   275        1996 SCALE  (4)150



JUDGMENT:                        J U D G M E N T NANAVATI, J.      Appellant No.2, Dayal Dass Khanna, joined the Allahabad Bank (Respondent  No.1) as  a Clerk  on  24.7.1946.  He  was promoted  as   an  Officer  on  15.9.1967  and  his  further promotions from  Scale I  to Scale  II and  from Scale II to Scale III  in the  Officer’s  Cadre  were  on  1.1.1976  and 1.10.1977  respectively.  On  15.8.1979  was  elected  as  a General Secretary  of Allahabad  Bank  Officers  Association (Appellant No.1),  a registered  trade union duly recognised by the  Bank. In November 1982 he was considered for further promotion  from  Scale  III  to  Scale  IV  but  was  denied promotion because  he was  found lacking  in  potential.  In March  1984   a  Special  Committee  was  constituted  under Regulation 19  of  the  Allahabad  Bank  (Officers)  Service Regulations, 1979  to  reivew  the  cases  of  20  Officers, including Appellant  No.2,  for  recommending  whether  they should be  retired earlier  or allowed to serve till the age of superannuation.  The  Committee  unanimously  recommended compulsory retirement of Appellant No.2 and the Chairman and Managing  Director  of  the  Bank  agreeing  with  the  said recommendation  passed   an  order   on  May  18,  1984  for compulsorily retiring  Appellant No.2.  By an  order of  the same date passed by the Bank Appellant No.2 was retired with effect from 24.5.1984.      The appellants  challenged that  order by filing a writ petition in the Madhya Pradesh High Court. It was challenged mainly on the ground that it casts a stigma on the character and dignity  of Appellant No.2 and, therefore, in reality it is an order of punishment which could have been passed under the  Allahabad   Bank  Officers  Employees  (Discipline  and Appeal)  Regulations,   1976   after   holding   a   regular departmental enquiry  and as  no such enquiry was held it is illegal and  void. The  order was  also  challenged  on  the ground that  it was  arbitrary and mala fide. The High Court



rejected  all   the  contentions   and  dismissed  the  writ petition.      In view  of the findings recorded by the High Court and the reasons given in support thereof the learned counsel for the appellants has rightly not pressed the other contentions which were  raised before the High Court and, therefore, the only question  which we  have to  consider in this appeal is whether the order of compulsory retirement casts a stigma on Appellant No.2.  The learned counsel submitted that the High Court has committed an error in holding that it does not. It is not  in dispute that the letter dated May 18, 1984 is the only order  of compulsory  retirement served  upon appellant no. 2. The material part of it reads as under: rt. We will refer to those decisions only which are relevant and useful for deciding this appeal.           "In terms of the first proviso      of  Regulation  19.1  of  Allahabad      Bank Officers’  Service Regulation,      1979 followed  by the guidelines of      Government of  India,  Ministry  of      Finance, Banking  Division, on  the      said    Regulation,    a    Special      Committee in terms of Rule 2 of the      aforesaid      Regulation       was      constituted fore  the review of our      case fore  your retirement from the      Bank’s service  or  otherwise.  The      special    committee    unanimously      recommended  fore  your  retirement      from Bank’s  service.  Accordingly,      the Chairman and Managing Director,      who is  the Competent  Authority in      this   respect   has   passed   the      following order:                "I  agree,  particularly,           on   the    views    expressed           regarding    his    want    of           application to Bank’s work and           lack of potential. He has also           been  found   not  dependable.           Hence retire  him  immediately           as  recommended".           The Bank,  therefore,  retires      you from  its service  with  effect      from   24th   May,   1984.   Please      handover  charge   to   Shri   C.L.      Malhotra  as   at  the   close   of      business on 23rd May, 1984 on which      date you stand relieved from bank’s      service."      It was  submitted by  the learned counsel that recitals in the impugned order that there was "want of application to Bank’s work  and lack  of potential"  and "He  has also been found not  dependable" are stigmatic as they cast aspersions on the  conduct, character  and integrity of Appellant No.2. The High  Court rejected  this contention  by observing that "According to  us, this  casts no  stigma, but only assesses the work  of petitioner  No.2 for determining his compulsory retirement." It  was submitted  that this  view of  the High Court is  wrong as  it did  not apply   the  right test  for finding out  whether those  statements are stigmatic or not. It was  further submitted  that whoever  reads the  order of compulsory retirement would consider that there is something wrong with  the conduct of appellant No.2 or his capacity to work. Therefore, the High Court should have held that though



the impugned  order purports  to be  an order  of compulsory retirement it  is really  an order of punishment. In support of his  submission the  learned counsel  relied upon several decisions of  this Court.  We will  refer to those decisions only which are relevant and useful for deciding this appeal.      The power  to compulsorily  retire a Government servant is one of the facets of doctrine of pleasure incorporated in Article 310  of the  Constitution. The  object of compulsory retirement is to weed out the dead wood in order to maintain efficiency  and  initiative  in  the  service  and  also  to dispense with  the services  of  those  whose  integrity  is doubtful so  as to  preserve purity  in the  administration. Generally speaking,  Service Rules  provide  for  compulsory retirement of a Government servant on his completing certain number of  years of service or attaining the prescribed age. His service  record is reviewed at that stage and a decision is taken  whether  he  should  be  compulsorily  retired  or continued further  in service.  There is  no levelling  of a charge or  imputation  requiring  an  explanation  from  the Government servant.  While misconduct  and inefficiency  are factors that  enter into  the account where the order is one of the  dismissal or removal or of retirement, there is this difference that  while in the case of retirement they merely furnish the  background and the enquiry, if held - and there is no duty to hold an enquiry - is only for the satisfaction of the  authorities who  have to take action, in the case of dismissal or  removal they  form the very basis on which the order is  made, as pointed out by this Court in Shyamlal vs. S.M. Doshi  AIR 1957  SC 892.  Thus, by  its very nature the power  to   compulsorily  retire  a  Government  servant  is distinct and separate from the power to punish him by way of removal, dismissal etc. for misconduct. A Government servant who is  compulsorily retired  does not  lose any part of the benefit that  he has earned during service. Thus, compulsory retirement differs  both from  dismissal and  removal as  it involves no penal consequences. Though compulsory retirement deprives a  Government servant  of the chance of serving and getting his  pay till  he attains  the age of superannuation and thereafter to get pension that cannot be regarded in the eye of  law as  punishment as  pointed out  in the  case  of Shyamlal (supra)  and Union of India vs. M.E. Reddy 1980 (2) SCC 15.  Thus, compulsory  retirement differs from dismissal and removal  both in  its nature  and incidence  or effects. Therefore, compulsory  retirement is  not  considered  prima facie and  per se  a punishment  and does  not  attract  the provisions of  Article  311.  This  Court  in  a  series  of decisions starting  with Shyamlal’s  case (supra)  has  held that compulsory  retirement is  neither a  punishment nor  a stigma; and,  that can now well be regarded as settled legal position. But,  if any  stigma is  attached to  the order of compulsory retirement  then it may be treated as an order of punishment in  reality. So also, if a formal enquiry is made on an  allegation of  misconduct and  a finding  holding him guilty is  recorded and  thereafter the  order of compulsory retirement is  passed then  such an  order even when it does not contain  any allegation  or a stigmatic statement may be regarded as an order of punishment, attracting provisions of Article 311.  The reason  is that  the court  would infer in such cases that the real intention of the Government was not to compulsorily retire its employee but to punish him.      In this  case, there  was no  completion  of  a  formal enquiry against  Appellant No.2  before passing the order of compulsory retirement  nor  he  has  been  deprived  of  the service benefits  already earned  by him  while in  service. Therefore, what is to be considered is whether any stigma is



attached to  the order  of compulsory  retirement. In  other words what  has to be seen is whether the order contains any charge or  imputation against Appellant No.2 with respect to his character  suggesting moral  turpitude or unsatisfactory conduct.      It will, therefore, be necessary to first consider what is meant  by stigma  and also  the cases  wherein the orders have been  regarded as  stigmatic. Stigma,  according to the dictionary meaning,  is something  that  detracts  from  the character or  reputation of  a person,  a  mark,  sign  etc. indicating  that  something  is  not  considered  normal  or standard. It  is a  blemish,  defect,  disgrace,  disrepute, imputation, mark  of disgrace  or shame  and mark  or  label indicating deviation from a norm. In the context of an order of termination  or compulsory  retirement  of  a  Government servant  stigma   would  mean   a  statement  in  the  order indicating his misconduct or lack of integrity.      In Chandu  Lal Management  of M/s  Pan  American  World Airways Inc.  1985 (2)  SCC 727 services of the workman were terminated on  the ground of "loss of confidence in him". It was held  that the order attached a stigma on the workman as want  of  confidence  indicated  an  adverse  facet  in  his character, namely,  that he  had failed  to behave  upto the expected standard of conduct. In other words, it amounted to a dereliction on the part of the workman.      In Kamal  Kishore Lakshman  vs. Management  of M/s  Pan American World Airways Inc. and others 1987 (1) SCC 146 this Court  reiterated  the  view  taken  in  Chandu  Lal’s  case (supra). In Jagdish Prasad vs. Sachiv, Zila Ganna Committee, Muzaffarnagar and  another 1986(2)  SCC 338  this Court held that as  the order  of termination  was passed on charges of concealment of  the fact  that the employee was removed from his  earlier  service  on  charge  of  corruption  and  was, therefore, not suitable for employment, it did cast a stigma on his  service career. In Jagdish Mitter vs. Union of India AIR 1964  SC 449  the order  of discharge  stated  that  the employee was  found undesirable to be retained in Government service. This  Court held  that it  did cast a stigma on the employee  and,  therefore,  it  was  not  a  mere  order  of discharge but an order of dismissal.      In State of U.P. vs. Madan Mohan Nagar AIR 1967 SC 1260 this Court  quoted the  following observations  from Jagdish Mitter’s case  and held that the same test must apply in the case of compulsory retirement also:           "No doubt  the order  purports      to be  one of discharge and as such      can be referred to the power of the      authority    to    terminate    the      temporary  appointment   with   one      month’s notice.  But it seems to us      that when  the order  refers to the      fact that  the appellant  was found      undesirable  to   be  retained   in      Government  service,  it  expressly      casts a stigma on the appellant and      in that sense must be held to be an      order of  dismissal and  not a mere      order of discharge."           "It  seems   that  anyone  who      reads the  order  in  a  reasonable      way, would  naturally conclude that      the  appellant   was  found  to  be      undesirable,    and    that    must      necessarily import  an  element  of      punishment which  is the  basis  of



    the order and is its integral part.      When   an    authority   wants   to      terminate   the   services   of   a      temporary servant,  it can  pass  a      simple order  of discharge  without      casting or  attaching any stigma to      his character.  As soon  as  it  is      shown that  the order  purports  to      cast an  aspersion on the temporary      servant,  it   would  be   idle  to      suggest that  the order is a simple      order of  discharge.  The  test  in      such cases  must be: does the order      cast aspersion  or attach stigma to      the officer  when  it  purports  to      discharge him?  If  the  answer  to      this    question    is    in    the      affirmative,  then  notwithstanding      the  form   of   the   order,   the      termination  of   service  must  be      held, in  substance, to  amount  to      dismissal." "      In Madan  Mohan’s case (supra),intheorderit was stated: ‘he  has   outlived  his  utility’;  and  these  words  were considered as  stigmatic as they indicated that the employee had incapacitated  himself from  holding the  post  and  any person who read that order would have immediately considered that there  was something  wrong with him or his capacity to work. This  decision was  heavily relied upon by the learned counsel for the appellant and on its basis he submitted that if the order of compulsory retirement contains any statement adversely reflecting  upon the  capacity to work then such a statement should be regarded as  stigmatic.      In The  State of Orissa vs. Ram Narayan Das AIR 1961 SC 177  a   Probationer  was   discharged  from   service  "for unsatisfactory work  and conduct"  in the manner provided by Rule 55-B of the Civil Services (Classification, Control and Appeal), Rules.  The High  Court  held  that  the  order  of discharge  amounted  to  imposing  punishment,  because  the respondent had  been "visited with evil consequences leaving an indelible  stigma on  his affecting  his future  career". This Court  did not  construe that order as stigmatic and by way of punishment.      In Union  of India  vs. R.S.  Dhaba 1969(3) SCC 603, in the order  of reversion it was stated that the officer ".... having been found unsuitable after trial to hold the post of Income Tax  Officer, Class  II is hereby reverted....". This Court held  that there was nothing in the order to show that a stigma  was attached to the respondent. It was pointed out that the  only reason  in the  order was  that he  was found unsuitable to  hold the  post and there was no imputation on the integrity  of the respondent. Construing that order this Court observed  that the  order did  not contain any express words of  stigma attributed  to the  conduct of the employee and, therefore,  it could  not be  held that  the  order  of reversion was made by way of punishment.      In Hari Singh Mann vs. State of Punjab AIR 1974 SC 2263 service of  a Probationary  Deputy Superintendent  of Police was terminated  by an order, the relevant part of which read as under:           "The  President  of  India  is      pleased  to   dispense   with   the      service of  ..... having considered      him unfit  for appointment  to  the      State Police Service...."



    The case  was governed  by the  Punjab  Police  Service Rules, 1959.  This Court  referred to Rule 8(b) which states that  the   services  of   a  member   recruited  by  direct appointment may  be dispensed  with by the Government on his failing to  pass the  final examination  at the  end of  his period of training, or on his being reported on during or at the  end   of  his  period  of  probation,  as    unfit  for appointment. It  also referred to Rule 9 which requires that the Probationer  should be  apprised of  the grounds  on the basis of which termination of his service is proposed and to give him  an opportunity to show cause against the proposal. This Court then held as under:           "It is  obvious  that  at  the      time of  confirmation fitness  is a      matter to  be considered. The order      terminating   the    services    is      unfitness for  appointment  at  the      time of  confirmation,  it  is  not      passed  on   the  ground   of   any      turpitude   like    misconduct   or      inefficiency.  To   hold  that  the      words "unfit to be appointed" are a      stigma would rob the authorities of      the power to judge fitness for work      or suitability  to the  post at the      time of  confirmation.  Termination      of   services    on   account    of      inadequacy for  the job  or for any      temperamental or  other defect  not      involving moral  turpitude is not a      stigma   which    can   be   called      discharge by punishment."      In State of Gujarat vs. Akhilesh C. Bhargav AIR 1987 SC 2135 a  Probationary  I.P.S.  Officer  was  discharged  from service under  clause (bb)  of Rule  12 of the Indian Police Service (Probation)  Rules, 1954.  It was contended that the reference  to   Rule  12(bb)   brought  into  the  otherwise innocuous order  stigma in  sufficient measure  warranting a proceeding of  the nature  contemplated under Article 311(2) of the Constitution. This Court referred to the Constitution Bench decision  in Ram  Narayan Das’s  case (supra)  wherein this Court  has held  that in  the  case  of  a  probationer observation like ‘unsatisfactory work and conduct’ would not amount to  attaching stigma  to the order, and following the same rejected  the contention  that reference to Rule 12(bb) in the order made it stigmatic.      The above discussion of case law makes it clear that if the order  of compulsory  retirement casts  a stigma  on the Government servant in the sense that it contains a statement casting aspersion  on his  conduct or  character,  then  the court will  treat that  order as  an  order  of  punishment, attracting provisions of Article 311(2) of the Constitution. The reason  is that  as a  charge or  imputation is made the condition for  passing  the  order  the  court  would  infer therefrom that  the real  intention of the Government was to punish the Government servant on the basis of that charge or imputation and  not to  exercise  the  power  of  compulsory retirement. But  mere reference  to the  rule,  even  if  it mentions  grounds   for  compulsory  retirement,  cannot  be regarded as  sufficient for treating the order of compulsory retirement as  an order  of punishment.  In such a case, the order can  be said  to have been passed in terms of the rule and, therefore, a different intention cannot be inferred. So also, if  the statement  in the  order refers  only  to  the assessment of his work and does not at the same time cast an



aspersion on  the conduct  or character  of  the  Government servant, then  it will  not be proper to hold that the order of  compulsory   retirement  is   in  reality  an  order  of punishment. Whether  the statement in the order is stigmatic or not will have to be judged  by adopting the test of how a reasonable person would read or understand it.      In this  case the  order was passed by the Chairman and Managing Director of the Bank. It is contained in the Bank’s letter dated  May 18,  1984 addressed to Appellant No.2. The letter first  refers to  constitution of a Special Committee as  required by the Service Regulations and consideration of the case  of Appellant No.2 by it. Then it mentions that the Special   Committee   unanimously   recommended   compulsory retirement of Appellant No.2. Thereafter it quotes the order passed by  the Chairman and Managing Director. Lastly, it is stated that  pursuant to  the said order of the Chairman and Managing Director  the Bank  has retired Appellant No.2 from service with  effect from  24.5.1984. What  the Chairman and the Managing Director has stated in his order is that he was agreeing with  the views  expressed by the Special Committee regarding his want of application to Bank’s work and lack of potential and  his dependability. He has further stated that he was  retiring Appellant No.2 as per the recommendation of the Special Committee.      According to  Regulation 19, the Bank can, on review by the Special  Committee retire  an officer  employee on or at any time after the completion of 55 years of age or on or at any time  after the  completion of 30 years of total service as an  officer employee  or otherwise, whichever is earlier. Under the said Regulation the Bank is required to constitute a Special  Committee  consisting  of  not  less  than  three members, to  review, whether  an officer-employee  should be retired. Moreover, no order of retirement can be made unless the Special  Committee recommends  in writing  to  competent authority the  retirement of  the officer-employee.  In  the said letter  the Bank has tried to convey  to Appellant No.2 that the  order of  compulsory retirement has been passed in terms of Regulation 19. The order passed by the Chairman and Managing Director  merely states that he has agreed with the view of the Special Committee and has, therefore, thought it fit to accept its recommendation also. The Special Committee was not  examining any  allegation against Appellant No.2 in the nature  of misconduct  but had  considered  his  service record and   expressed  its  opinion  with  respect  to  the assessment of  his work.  Therefore, it  can be said without any doubt  that the  remarks want  of application  to Bank’s work", "lack  of potential"  and "found not dependable" have been made  in relation  to his  work and  not for  any other purpose. Even the dependability which is referred to is also in connection  with the  Bank’s work. Any person reading the letter or  the order  of compulsory  retirement would not be led to believe that there was something wrong with Appellant No.2 as  regards his  conduct or  character. They would only indicate that  he had ceased to be useful to the Bank in his capacity as  a Manager. Therefore, no inference can be drawn from  the  said  statements  that  they  cast  a  stigma  on Appellant No.2  and that  the real intention of the Bank was to punish  him  for  some  act  of  misconduct  or  lack  of integrity.  Whether   the  order  of  compulsory  retirement attaches a  stigma to  the employee or not would depend upon the facts  and circumstances of each case. In the context of the facts  and circumstances  of this case it cannot be said that by  including the  aforesaid statements in the order of compulsory retirement  any stigma  has been  attached to it. The view  taken by  the High Court in this behalf appears to



be correct.      The appeal  is, therefore,  dismissed. No.  order as to costs.