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PETITIONER: LIFE INSURANCE CORPORATION OF INDIA & ANR.

       Vs.

RESPONDENT: SHRI RAGHAVENDRA SESHAGIRI RAO KULKARNI

DATE OF JUDGMENT:       14/10/1997

BENCH: M.K. MUKHERJEE, K.T. THOMAS

ACT:

HEADNOTE:

JUDGMENT:               THE 23RD DAY OF SEPTEMBER, 1997 Present:                Hon’ble Mr. Justice S. Saghir Ahmad                Hon’ble Mr. Justice D.P. Wadwa Harish N. Salve, Sr. Adv., C.K. Sasi, K.K. Sharma, Kailash Vasdev, Advs. with him for the appellants S.S. Javali,  Sr. Adv.,  R.Jaganath Goulay,  M.K. Dua, Advs. with him for the Respondent                          O R D E R      The following Order of the Court was delivered:                          O R D E R      Respondent  was   appointed  as  Assistant  Development Officer or  4th September,  1985.  After  completion  of  he period of  Apprenticeship, he  was placed  on  probation  as Development officer  with effect  from  4th  December  1985. While  he   was  still  a  probationer.  his  services  were terminated by  order dated 22.5.1986 which was challenged in a writ petition before the High Court of Karnataka.      Relying upon  the decision  of this  Court  in  Central Inland water  transport corporation  Ltd. &  Anr. Vs.  Brojo Nath Ganguly  & Anr. etc. (1986) 3 SCC 156, a learned single judge of  the High Court by judgment dated 12.8.1986 allowed the writ  petition and quashed the order of termination. The judgment was  upheld by  the Division  Bench in appeal. Now, the matter is in this Court.      We have heard learned counsel for the parties.      Reliance placed  by the  High Court  on the decision of this Court  in Central  Inland Water  Transport  Corporation Ltd. (Supra) was wholly out o place as that decision related to a  permanent employee  whose services could be terminated at any  time by giving three months’ notice. This Court held that such  a provision  for terminating  the services  of  a permanent  employee   was  wholly  arbitrary  and  that  the services of  the permanent  employee could not be terminated except by  giving him  an opportunity  of hearing.  The High Court was of the view, and in our opinion, wrongly, that the case of  the probationer  was not different from that of the permanent employee and, therefore, applied the law laid down by this  Court in Central Inland Water Transport Corporation Ltd.’s case  (supra) to the case of the respondent who was a

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mere probationer,  and held  that the  termination order was bad.      Clause  2  of  the  Letter  of  Appointment  issued  to respondent reads as under:      "You  shall   be     on   probation      initially for  a period  of  twelve      months  from   the  date   of  your      joining duties  as  a  probationer,      but the  extend  your  probationary      period  provided   that  the  total      probationary period  including  the      extended period shall not exceed 24      months     counted     from     the      commencement  of  the  probationary      appointment.       During       the      probationary  appointment.   During      the  probationary   period   (which      includes   extended    probationary      period ,  if applicable)  you shall      be liable to discharge from service      of  the   corporation  without  any      notice and  without any cause being      assigned."      This Clause  clearly  stipulates  that  the  respondent could be  discharged from  service at  any time  during  the period of probation or extended period of probation, without any notice or without assigning any cause.      The period  of probation  is a  period of  test  during which  the   work  and  conduct  of  an  employee  is  under scrutiny.. If  on an  assessment of  his  work  and  conduct during this  period it is found that he was not suitable for the post  it would  be open to the employer to terminate his services. His  services can  not be  equated with  that of a permanent  employee  who,  on  account  of  his  status,  is entitled to  be retained  in service and his services cannot be terminated  abruptly  without  any  notice  or  plausible cause. This  is based  on the  principle that  a substantive appointment to  a permanent post in a public service confers substantive right  to the  post and  the person appointed on that post  becomes entitled  to hold  a lien on the post. He gets the  right to  continue on the post till he attains the age of  superannuation  or  is  dismissed  or  removed  from service for  misconduct etc.  after disciplinary proceedings in accordance with the Rules at which he is given a fair and reasonable opportunity  of being  heard. He may also come to lose the post on compulsory retirement.      In Moti  Ram Deka  etc.  vs.  General  Manager,  N.E.F. Railways, Maligaon, Pandu, etc. 1964 (5) SCR 683, a majority of  seven   judges  held   that  a  permanent  employee  who substantively holds a permanent post has a right to hold the post till he reaches the age of superannuation or till he is compulsorily retired under the relevant Rule. Termination of his service  in any other manner would amount to invasion of his right  to hold  the post  and would amount to penalty of removal. It was for this reason that the Court held Rule 148 (3) or  Rule 149(3)  of the Railway Establishment code to be violative of  the right  guaranteed under  Article 311(2) of the  constitution.   It  was   observed  that   a  permanent employment assures security of tenure which is essential for the    efficiency    and    incorruptibility    of    public administration.      Similar view  was expressed  in Gurdev  Singh Sidhu vs. State of Punjab & Anr. 1964 (7) SCR 587 = AIR 1964 SC 1585.      Central  Inland  water  Transport  Corporation  Ltd.  & Anr.’s case  was not  correctly  understood  either  by  the

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single juice or by the Division Bench of the High Court. The High court  also did  not notice  that  apart  from  Central Inland water Transport corporation Ltd. & Anr.’s case, there ware other  judgments of  this Court in which a similar view was expressed.      In West  Bengal State Electricity Board & Ors. Vs. D.B. Ghosh &  Ors. 1985  (2) SCR 1014= AIR 1985 SC 722, a similar provision which  enabled the  Broad  to  dispense  with  the services of  a permanent employee by a mere notice or pay in lieu thereof  was held  to be  bad. it  was  held  that  the offending Regulation  which had developed the notoriety as " Henry VIII Clause" was ultra Hindustan Steel Ltd. & Anr. vs. Hindustan Steel  Ltd. &  Ors. 1985 (2) SCR 428 = AIR 1985 SC 251 as  also in O.P. Bhandari vs. Indian Tourist Development Corporation (1984) 4 SCC 337, the Rule based on the doctrine of hire  and fire" was held to be bad as being impermissible under the constitutional scheme to sustain the doctrine as a permanent employee could not be removed in that fashion.      This question  was re-examined  and the entire case law was reviewed  by this  Court in  Delhi Transport Corporation vs. D.T.C  Mazdoor Congress and others AIR 1991 SC 101= 1990 Supp. (1)  SCR 142  = (1991)  SCC Supp.  (1) 600  and it was again reiterated by the majority of judges that a Rule which gave unbridled  or arbitrary  powers to  the  management  to dispense  with   the  services   of  regular  and  permanent employees by a mere notice or, pay in lieu thereof, would be bad. The  principles laid down in the case of central Inland Water Transport Corporation Ltd. & Anr. were reiterated.      The requirement  to hold a regular departmental enquiry before dispensing  with the  services  dispensing  with  the services of a probationer cannot be invoked in the case of a probationer specially when his services are terminated by an innoduous order  which does  not case any stigma on him. But it cannot be laid down as a general rule that in no case can an enquiry be held. If the termination is punitive in nature and is brought about on the ground of misconduct.      Article 311(2) would be attracted and in that situation it would  be incumbent  upon the  employer, in  the case  of Government service,  to hold a regular departmental enquiry. In  any   other  case  also,  specially  those  relating  to statutory corporations  or Government  instrumentalities,  a termination which  is punitive  in nature  cannot be brought about unless  an opportunity  of hearing  is  given  to  the person whose  services, even during the period of probation, or extended  period, are  sought  to  be  terminated.  (See: Parshotam Lal  Dhingra vs. Union of India  (1958) SCR 328 in which it  was held  that appointment  to a permanent post on probation means  that the servant is taken on trial, such an appointment comes  to an  end if during or at the end of the probation, the person so appointed is found to be unsuitable and his services are terminated by notice. An appointment on probation or  on an  officiating basis  is of  a  transitory character with an implied condition that such an appointment is terminable  at any  time: see also: Shamsher Singh & Anr. vs. State of Punjab 19756 (1) SCR 814 = (1974) 2 SCC 831).      To bring  home the  point, we  may refer to a few other cases  relating   to  the   termination  of   service  of  a probationer. They  are: State of Maharashtra vs. Veerappa R. Saboji & Another Air 1980 SC 42 = 1980 (1) SCR 551= (1979) 4 SCC 466.  In the  same volume, another case, namely, oil and Natural Gas  commission and  others vs.  Dr. Md. s. Iskander Ali AIR 1980 SC 1242= 1980 (3) SCR 603 = (1980) 3 SCC 428 is reported in which the same principles have been reitereated. In The  Union of India and others vs. P.S. Bhatt AIR 1981 SC 957 =  (1981) 2  SCC 761 promotion was made to a higher post

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on probation  which was  ultimately terminated.  It was held that a  person who  is placed on probation does not have the right to  hold the  post and  if it is found that he was not suitable for  the post,  his probation  can be terminated at any time and he can be reverted to his original post.      A distinction  was drawn  again as  between a permanent employee and  an employee  appointed on  probation in Bishan Lal Gupta  vs. The  State of  Haryana and others AIR 1978 SC 363= 1978  (20 SCR  513= (1978)  1 SCC  202. In this case, a formal enquiry  was held  merely  to  assess  the  work  and conduct of  an employee  who was  appointed on probation. It was held  that there was no need either to give notice or to hold the regular departmental enquiry.      In the instant case, the respondent was discharged from service during probation in terms of Regulation 14(4) of the Life Insurance Corporation of India (Staff) Regulation 1960. Such termination  has already been upheld been a Three judge Bench of  this Court in M. Venugopal vs. Divisional Manager. Life Insurance  Corporation of  India, Machilipatnam, A.P. & Anr. (1994)  2 SCC  323. This decision also meets the ground raised  by   the  counsel   for  the   respondent  that  the termination of  respondent’s  services  would  amount  to  " RETRENCHMENT"  as   defined  in  Section  on  2(00)  of  the Industrial  disputes  Act  and  since  the  requirements  of section  25-F  of  the  Act  were  not  complied  with,  the termination would  be bad.  It may  be pointed out that Life Insurance Corporation  (Amendment) Act, 1981 (act 1 of 1981) which came into force on 31st of January, 1981 provided that under Sub-section  A of  section 48  of the  Life  Insurance Corporation Act, 1956. the Regulations which were already in force immediately  before the  commencement of the Amendment Act shall  be  deemed  to  be  Rules  made  by  the  Central Government  and   they  shall   be  deemed  to  have  effect notwithstanding  anything   contained  in   the   Industrial Disputes Act,  1947. The  validity of  the Amendment Act was upheld by  this Court  in A.V. Nachane and another vs. Union of India  and another  AIR 1982  SC 1126 = 1982 (2) SCR 246= (1982) 1  SCC 205.  For this  reason also,  the ground  that termination would  amount to retrenchment within the meaning of section  2(00) of  the Industrial  Disputes Act cannot be entertained.      For the  reasons stated  above, the  judgment passed by the Single  Judge of  the  High  Court  and  upheld  by  the Division Bench cannot be sustained. Consequently, the appeal is allowed.  the judgments  passed by the High Court (by the Single judge  as also  by the Division Bench ) are set aside and the  order of discharge dated 22.5.1986 is upheld. There will be no order as to costs.