MADHYA PRADESH HASTA SHILPA VIKAS NIGAM LTD.versusDEVENDRA KUMAR JAIN AND ORS.

A         MAD HYA PRADESH HASTA SHILPA VIKAS NIGAM LTD.
                                             v.
                      DEVENDRA KUMAR JAIN AND ORS.

                                DECEMBER 7, 1994

B                  [S.C. AGRA WAL AND FAIZAN UDDIN, JJ.]

         Service Law : Termination-Appointments made on temporary basis-
     Termination of services-Whether necessary to follow formalities
    contemplated by Art.311 of the Constitution- Held : No-Ptojec~s not
    economically beneficial and likely to result in loss-Govt. Corporation
c   justified in not giving effect to the project and in issuing instructions not to
    appoint stafffor such project without prior approval.

         The Managing Director of the appellant- Company appointed the
    Respondents as Junior Managers. It was later on noticed that the
    appointments were made in contravention of Government order dated
D   1.4.89, without the approval of the Government. Therefore, the
    successor Managing Director terminated the services of the
    respondents on 31. 7.89. Respondents challenged their termination
    before the High Court and it quashed the termination order. It also
    directed that the respondents would continue in service till their
    services were not validly terminated. Hence this appeal by the
E   appellant company.

        Allowing the appeal, this Court

        HELD: 1.1. The order passed by the High Court quashing the
    termination of service of the respondents cannot be sustained. (349 D]
F
        1.2 A plain reading of the two appointment orders would show that
    the appointments were made purely on temporary basis and their
    services were liable to be terminated at any time without notice or
    assigning any reason. In the case of appointment on temporary basis a
    servant who is so appointed does not acquire any substantive right to
G
    the post, even though the post itself may be permanent and il is an,
    implied term of such appointment that it may be terminable at any
    time and without notice. A temporary Government servant does not
    become a permanent Government servant unless he acquires      I
                                                                     that
    capacity by force of any rule or he is declared or appointed as a
H   permanent servant. [348 B, C]
                                       344
             H. S. V. N. LTD. v. D. K. JAIN [FAIZAN UDDIN, J.]        345

    1.3. In the present case there is no rule under which the A
respondents may be deemed to have become permanent by force of
such rule nor they were so declared by any subsequent order of the
appellant company to have acquired that status. On the contrary the
respondents all along continued to be temporary. In such a case it is not
necessary to follow the formalities contemplated by Article 311 of the
Constitution. In these facts and circumstances, the High Court was not B
right in holding that the respondents were entitled for being heard
before passing the said order of termination of their services and that
the order of termination was bad in law on that account. [348 D, E]

     2. The appellant corporation is a Government company fully
financed by the State Government and that being so the Government C
would be very much concerned to see that any project which is not
economically beneficial for the corporation and which is likely to result
in any loss should not be given effect to. The Government, therefore,
would be justified in issuing instructions that no appointments of any
staff in connection with the said project will be made without the
approval of the Board of Directors. It appears that the High Court D
ignored the said order of the State Government while observing that no
material in support of the contention that the Government has issued
instructions not to make appointment was produced by the appellant.
                                                            (349 A to CJ·

     3. It is noteworthy that the then Managing Director himself was E
retiring on 31.7.89 and in hot haste he issued the orders of appointment
of the respondents on 6. 7.89 and 8.6.89 inspite of the instructions of the
State Government to the contrary. [349 D]

    CIVIL APPELLATE JURISDICTION              Civil Appeal No. 8923 of
I~~                                                                         F
    From the Judgment and Order dated 1.12.93. of the Madhya Pradesh
High Court in M.P.No.3973of1989.

    Shankar Lal and B.S.Banthia for the Appellant.
                                                                            G
    A.K.Chitale, Parkash Srivastava, Pratibha Jain and Sushil K. Jain for
the Respondents.

    The Judgment of the Court was delivered by.

    FAIZAN UDDIN, J. I. Leave granted                                       H
     346                   SUPREME COURT REPORTS              [1994] SUPP. 6 S.C.R

A         2. The appellant is a Government Company within the meaning of
     Section 617 of the· Companies Act whfoh is controlled and owned by the
     State GovenuTI.ent and a subsidiary company of M. P. Laghu Udhyog
     Nigam Limited which is carrying on business activities of development of
     handicrafts and handloom products. At the relevant time one Shri K. P.
     Thakur was the Managing Director of the appellant Company who by an
B    order dated 6.7.89 Annexure -D appointed the respondents No.l to 3,
     namely, Devendra Kumar Jain, Dilip Goel and Promod Mishra as
     temporary Jr. Manager and by subsequent two orders both dated 8.6.89
     (Annexure-E/l and 2) appointed the respondents No. 4 and 5, namely,
     Mehboob Hussain and Liaquat Mohd. Khilzi as temporary Junior Managers
     in the appellant company. Soon after their appointment the appellant
c    company noticed that the aforesaid appointments of respondent No. l to 5
     were made by the then Managing Director, Shri K. P. Thakur in
     contravention of the Government of the State Government and therefore,
     another managing Director successor Shri K. P. Thakur by order dated
     31.7.89 terminated the services of the respondents No.l to 5. The
     respondents challenged the aforesaid order of termination in the High Court
D    of Madhya Pradesh in Miscellaneous Petition No. 3973/83 which was
     allowed by judgement dated 1.12.93 where by the order of termination of
     the respondents was quashed. It has been directed that the respondents will
     continue in service till their services are not validly terminated. It is this
     order which has been challenged in this appeal.
E        3. The High Court quashed the order of termination of service of
    respondents mainly on two grounds. Firstly, the High Court took the view
    that the respondents services were terminated without giving them any
    opportunity of hearing in consonance with the rules of natural justice and,
    therefore, the order of termination of service was ccntrary to law and
    violative of Article 14 of the Constitution and ; secondly Government
F approval was not necessary for the appointment as conten~ed by the
    appellant and that in any case no material was placed to show that the
  . appointment was contrary to the Govenment instructions. In our considered
    opinion the High Court fell in serious error in taking the aforesaid view
    and, therefore, the order of the High Court could not be sustained in law.
G
          4. Admittedly the appointment of the respondents was made purely on
    temporary basis which is evident from the order of their appointment. The
    first order dated 6.7.89 Annexure-D by which the respondents No. l to 3
    were appointed reads as follows :

                                                                  Bhopal: 6.7.89
             H. S. V. N. LTD. v. D. K. JAIN [FAIZAN UDDIN, J.]       347

                                 ORDER                                      A
             "The following persons are appointed to the post of Junior
             Manager in the Pay Scale of 1290-30-1560-40-2040 from the
             date of taking over, till further orders temporarily and are
             posted to the Headquarters :-
                                                                            B
   1.   Shri D. K. Jain

   2.   Shri Pramod Mishra

   3.   Shri Dilip Kumar Goyal

   2.   Employee has to submit Medical Fitness Certificate from Civil       C
        Surgeon of the District.

   3.   Dearness Allowance and other facilities according to the rules of
        the Corporation shall be payable.

    Above appointments are purely temporary and are liable to termination D
without notice or assigning any reason.

                                           By order of Managing Director

                                                 GENERAL MANAGER

                                    Hastashilp Vikas Nigam Ltd., Bhopal" E

                                                                  6.7.89

    The Subsequent two orders both dated 8.6.89 ·with regard to the
appointment of respondents No. 4 and 5 are identical one of which is
reproduced here in below:-                                    6.7.89 F

                                 ORDER

             "Shri Mohammad Hussain is appointed to the post of Junior
             Manager in the Pay Scale of 1290-30-1560-40-2040- from
             the date of taking over, termorarily and posted at
             Headquarters.                                                  G
             Employee has to obtain Medical Fitness Certificate from
             Civil Surgeon and submit to office.

             Dearness Allowance and other facilities according to the
             rules of the Corporation shall be payable.                     H
    348                  SUPREME COURT REPORTS              [1994) SUPP. 6 S.C.R

A                 Above appointment is purely temporary and is liable to
                  termination at any time without notice or assigning a reason.

                                                      GENERAL MANAGER"

         5. A plain reading of these two order will go to show that the
B   appointments were made purely on temporary basis and their services were
    liable to be terminated at any time without notice or assigning any reason.
    In the case of appointment on temporary basis a servant who is so
    appointed does not acquire any substantive right to the post, even though
    the post itself may be permanent and it is an implied term of such
    appointment that it may be terminable at any time and without notice. A
c   temporary Government servant does not become a permanent Government
    servant unless he acquires that capacity by force of any rule or he is
    declared or appointed as a permanent servant. In the present case there is no
    rule under which the respondents may be d~emed to have become
    permanent by force of such rule nor they were so declared by any
D   subsequent order of the appellant company to have acquired that status. On
    the contrary the respondents all along continued to be temporary and
    according to the terms of the order of appointment their services could be
    terminated at any time without any notice or assigning any reasons. In such
    a case it is not necessary to follow the formalities contemplated by Article
    311 of the Constitution. In these facts and circumstances the High Court
E   was not right in holding that the respondents were entitled for being heard
    before passing the said order of termination of their services and that the
    order of termination was bad in law on that account.

         6. As regards the second ground the learned counsel appearing for the
F   appellant contended that the appellant-corporation had prepared a project in
    January 1980 (a copy of which is filed as Annexure-A in this appeal) for
    the development of handicrafts through Exhibitions and proposed that five
    officer's of junior manager rank and some sales-girls/sales-men be
    appointed in that connection. But when the Government came to know
    about the said project it disapproved the same by order dated 1.4.89
G   (Annexure-B) and directed that no appointments shall be made to the s.aid
    post without obtaining prior approval of the State Government. The learned
    counsel for the appellant, therefore, contended that the appointment of the
    respondents was made against the directions of the State Government and
    while quashing the order of the termination the High Court did not take into
H   consideration the said directions of the State Government.
                   H. S. V. N. LTD. v. D. K. JAIN [FAIZAN UDDIN, J.]           349

           7. It may be pointed out here that the appellant-corporation is a          A
     Government company fully financed by the State Government and that
     being so the Government would be very much concerned to see that any
     project which is not economically beneficial for the corporation and which
     is likely to result in any loss should not be given effect to. The Government,
     therefore, would be justified in issuing instructions that no appointments of
     any staff in connection with the said project will be made without the           B
     approval of the Board of Directors of M. P. Hasta Shilpa Vikas Nigam
     Limited and passed the order to that effect which has been filed as
     Annexure-B in this appeal. But it appears that the High Court ignored the
     said order of the State Government while observing that no material in
     support of the contention that the Government has issued instructions not to
     make appointment was produced by the appellant.                                  C
          8. It is noteworthy that Shri K. P. Thakur, the then Managing Director
     himself was retiring on 31. 7.89 and in hot haste he issued the orders of
     appointment of the respondents on 6.7.89 and 8.6.89 inspite of the
     instructions of the State Government to the contrary. In these facts and
     circumstances the impugned order passed by the High Court quashing the           D
     termination of service of the respondents can not be sustained.

         9. In the result the appeal succeeds and is hereby allowed. The
     impugned order dated 1.12. 93 passed by the High Court in Misc. Petition
     No. 3973/89 is set aside and the said writ petition is dismissed but without
     any order as to costs.                                                           E
     G.N .                                                       Appeal allowed.




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