Case: Chaitanya Prakash &amp; Another Vs. H. Omkarappa

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 postii. 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 post3.2 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 period3.5 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 05.10.19994. 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 remarks5. 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, 1999RESOLVED 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 29.11.19997. 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 service8. 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.

Court's reasoning:
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 termination17. 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 case18. 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