LIFE INSURANCE CORPORATION OF INDIA AND ANR.versusSHRI RAG HA VENDRA SESHAGIRI RAO KULKARNI

      LIFE INSURANCE CORPORATION OF INDIA AND ANR.                               A
                             v.
        SHRI RAG HA VENDRA SESHAGIRI RAO KULKARNI

                          SEPTEMBER 23, 1997

            [S. SAGHIR AHMAD AND D.P. WADHWA, JJ.]                               B


      Life Insurance Corporation of India (Stajj) Regulations, 1960 .

       Regulation 14 (4)-Probationer-Termination of service-Writ
Petition-High Court quashed the order relying on a judgment of this Court*-      C
Held, High Court erred in taking the view that case of probationer was not
different from that of the permanent employee; and it wrongly applied the law
laid down by this Court*-Services of a probationer cannot be equated with
that of a permanent employee-Appointment letter issued to the probationer
clearly stipulates that he could be discharged from service at any time during   D
the period of probation or extended period of probation, without any notice
or without assigning any cause-The requirement to hold a regular
departmental inquiry before dispensing with the services of a person cannot
be invoked in the case of a probationer especiaily when his services are
terminated by an innocuous order which does not cast any stigma on him-          E
However, if the termination is punitive in nature and is brought about on the
ground of misconduct. Article 311 (2) of the Constitution would be attracted
and in that situation it would be incumbent upon the employer to hold a
regular departmental inquiry-Termination would not amount to retrenchment
within the meaning ofs.2 (oo) of the Industrial Disputes Act. The Regulations
would be deemed to be Rules made by the Central Government and shall be          F
deemed lo have effect notwithstanding anything contained in the Industrial
Disputes Act-Constitution of India, 1950-Article 311 (2)-life Insurance
Corporation Act, 1956-S. 48-Jndustrial Disputes Act, 1947-S. 2(00)-
Retrenchment.
                                                                                 G
    *Central Inland Water Transport Corporation Ltd & Anr. v. Brojo Nath
Gangu/y & Anr. etc., [1986) 3 SCC 156, explained and held inapplicable.

     A. V Nachane and Anr. v. Union ofIndia and Anr., AIR (1982 ) SC 1126
= [1982) 2 SCR 246 = [1982) 1 SCC 205; Moti Ram Deka etc. v. General
                                    207                                          H
    208                     SUPREME COURT REPORTS [1997] SUPP. 4 S.C.R.

A Manager N.E.F. Railways, Maligaon, Pandu etc., (1964) 5 SCR 683; Gurdev ·
    Singh Sidhu v. State ofPunjab and Anr., [1964] 7 SCR 587 =AIR (1964) SC
    1585; West Bengal State Electricity Board & Ors. v. D.B. Ghosh & Ors.,
    [1985[ 2 SCR 1014 =AIR (1985) SC 722; Workmen of Hindustan Steel Ltd,
    & Anr. v. Hindustan Steel Ltd & Ors., [1985] 2 SCR 428 =AIR (1985) SC
B   251; O.P. Bhandari v. Indian Tourist Development Corporation, (1984) 4
    SCC 337; Delhi Transport Corporation v. D.T.C. Mazdoor Congress and
    Ors., AIR (1991) SC= 10 (1990) Supp. 1 SCR 142 = (1991) SCC Supp. 1
    600; Parshotam Lal Dhingra v. Union of India, [1958) SCR 828; Shamsher
    Singh & Anr. v. State of Punjab, [1975) 1SCR814 = [1974) 2 SCC 831; State
    of Maharashtra v. Veerappa R.. Sacoji & Anr., AIR (1980) SC 42 = [1980)
C   1 SCR·551 = [1979) 4 SCC 466; Oil & Natural Gas Commission and Ors.
    v. Dr. Md. S. lskander Ali, AIR [1980) SC 1242 = [1980) 3 SCR 603 = (1980]
    3 SCC 428; The Union of India and Ors. v. P.S. Bhatt, AIR [1981[ SC 957
    = [1981) 2 SCC 761; Bishan Lal Gupta v. The State ofHaryana and Ors., AIR,
    [1978] SC 363 = [1978) 2 SCR 513 = [1978) 1 SCC 202 and M Venugopal
D   v. Divisional Manager, Life Insurance Corporation of India Machi/ipatnam
    A.P. & Anr., [1994) 2 SCC 323, referred to.

          CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1345 of 1988.

         From the Judgment and Order dated 5.2.87 of the Karnataka High Court
E   in W.A. No 3141of1986.

         Harish N. Salve, C.K. Sasi, K.K. Sharma and Kailash Vasdev for the
    Appellants.

          S.S. Javali, R. Jaganath Goulay and M.K. Dua for the Respondent.
F
          ·The following Order of the Court was delivered :

          Respondent was appointed as Assistant Development Officer on 4th
    September, 1985. After completion of the period of Apprenticeship, he was
G   placed on probation as Development Officer with effect from 4th December,
    1985. While he was still a probationer, his services were tenninated by order
    dated 22.5.1986 which was challenged in a writ petition before the High Court   f-
    of Kamataka.

          Relying upon the decision of this Court in Central Inland Water
H Transport Corporation Ltd, & Anr. v. Brojo Nath Ganguly & Anr. etc., [1986]
                   L.I.C. OF INDIA v. R.S.R. KULKARNI                      209
3 SCC 156, a learned Single Judge of the High Court by judgment dated             A
 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.
                                                                                  B
       Reliance placed by the High Court on the decision of this Court in
Central Inland Water Transport Corporation Ltd., (supra) was wholly out of
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         C
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     D
Ltd. 's Case (supra) to the case of the respondent who was a mere probationer,
and held that the termination order was bad.

     Clause 2 of the Letter of Appointment issued to respopdent reads as
under :

        "You shali be on probation initially for a period of twelve months from
                                                                                  E
        the date of your joining duties as a probationer, but the Corporation
        may, in its sole discretion, 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 period (which           F
        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       G
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 H
    210                       SUPREME COURT REPORTS [1997] SUPP. 4 S.C.R.

A post it would be open to the employer to terminate his services. His services
    cannot 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
B   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.
c
           In Moti Ram Deka Etc. v. 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
D   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 thatthe 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
E   employment assures security of tenure which is essential for the efficiency
    and incorruptibility of public administration.

         Similar view was expressed in Gurdev Singh Sidhu v. State of Punjab
    & Anr., [1964] 7 SCR587=AIR(1964) SC 1585.

          Central Inland Water Transport Corporation Ltd. & Anr. 's, case was
F   not correctly understood either by the Single Judge 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 were other
    Judgments of this Court in which a similar view was expressed.

           In West Bengal State Electricity Board & Ors. v. D.B. Ghosh & Ors.,
G   [1985] 2 SCR 1014 =AIR (1985) SC 722, a similar provision which enabled the
    Board 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 vires the Article 14 of the Constitution. In Workmen of Hindustan Steel
H   Ltd. & Anr. v. Hindustan Steel Ltd. & Ors., [1985] 2 SCR 428 =AIR (1985)
                    L.l.C. OF INDIA v. R.S.R. KULKARNI                       211
SC 251, as also in O.P. Bhandari v. Jndian Tourist Development Corporation,         A
[ 1984] 4 SCC 3 37, 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 v. D. T. C. Mazdoor Congress and          B
others, AIR (1991) SC 101 = (1990) Supp. I 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       C
Water Transport Corporation Ltd. & Anr., were reiterated.

       The requirement to hold a regular departmental enquiry before dispensing
with the services of a probationer cannot be invoked in the case of a probationer
especially when his services are terminated by an innocuous order which             D
does not cast 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, specialiy those relating to statutory corporations or          E
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 v. Union Of India,
(1958] SCR 828 in which it was held that appointment to a permanent post            p
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       G
any time; See also: Shamsher Singh & Anr. v. State of Punjab, (1975] 1 SCR
814 = (1974] 2 sec 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
v. Veerappa R. Saboji & Another, AIR (1980) SC 42 = (1980] 1 SCR 551 =              H
    212                     SUPREME COURT REPORTS [1997] SUPP. 4 S.C.R.

A   [1979) 4 SCC 466. In the same volume, another case, namely, Oil and Natural
    Gas Commission and Others v. Dr. Md S. !skander Ali, AIR (1980) SC 1242
    = [1980) 3 SCR 603 = [1980) 3 SCC 428, is reported in which the same principles
    have been reiterated. In The Union of India and others v. P.S. Bhatt, AIR
    (1981) SC 957 = [1981) 2 SCC 761, promotion was made to a higher post on
B   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
C ·an employee appointed on probation in Bishan Lal Gupta v. The State of
   Haryana and others, AIR (1973) SC 363 = [1978] 2 SCR 513 = [1978] l 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
D   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) Regulations, 1960. Such termination has already been upheld by
    a Three Judge Bench of this Court in M Venugopal v. Divisional Manager,
E   Life Insurance Corporation of India, Machilipatnam, A.P. & Anr., (1994] 2
    sec 323. This decision also meets the ground raised by the counsel for the
    respondent that the tennination of respondent's services would amount to
    "RETRENCHMENT" as defined in Section 2(oo) of the Industrial Disputes
    Act and since the requirements of section 25-F of that Act were not complied
p   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 (2A) 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
G   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 v. Union of India and another, AIR (I 982)
    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
H   Section 2(oo) of the Industrial Disputes Act cannot be entertained.
                  L.I.C. OF INDIA v. R.S.R. KULKARNI                   213
      For the reasons stated above, the judgment passed by the Single Judge   A
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.
                                                                              B
RP.                                                        Appeal allowed.