REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2786 OF 2007

CHAITANYA PRAKASH & ANR.             ……. Appellants

Versus

H. OMKARAPPA                         ...... Respondent   

JUDGMENT

Dr. Mukundakam Sharma, J.

1. 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 misconduct.

2. 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:

“i. You will be on probation in the above post for a period of one year from  the date of joining the post.

ii.  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  to time.”

Clause-3 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:

“3.1 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.

3.2    The 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 probation period.

3.3    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.

……..

3.5    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….”

3. 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.   

4. The 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 adverse remarks.   

5. That 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.  

The Board 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 following effect:

“……RESOLVED  THAT  the  services  of  Shri  H.  Omkarappa,  Executive  Director   (Marketing) be terminated on or before 2nd December, 1999.

RESOLVED  FURTHER  THAT  the  Chairman-cum-Managing  Director  be  and  is  hereby authorized to take all necessary steps in the matter”.

6. 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.   

7. 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.  

but he 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.  

It was, therefore, directed that the respondent herein would be allowed to  

continue in his service.   

8. Being 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 parties.

9. Mr. 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.  

National 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.

10.Mr.  P.  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.   

11.In 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.  

It was 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.   

12.We  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.   

14.After 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.   

15.Our 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:

“…………….. I  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 merits” ……………..

“Sir, 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.” ……………..

“Alas,  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 them.” …………….. “Thus, 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.  

In the 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.   

17.In 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.  

18.In 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.”

19.In 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 service.”

20.In our 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.  

But such 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.  

The 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.   

21.It 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.  

Referring  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.  

We have 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.

22.In 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 appellant.

23.As a result, the appeal is allowed.  There will be no orders as to costs.

…...........………………...J.      [V.S. Sirpurkar]

                    ……………… …...……J.     

[Dr. Mukundakam Sharma]

New Delhi, January 12, 2010.