Holding

A termination that is punitive in nature requires a regular departmental enquiry; payment of retrenchment compensation does not bar a temporary employee from challenging the dismissal, and an acquittal removes the stigma of criminal involvement, rendering the termination under Section 25‑F invalid.

Summary

Nar Singh Pal, a casual labourer who had acquired temporary status in the Telecom Department, was terminated in May 1992 on the basis of alleged assault and pending criminal charges under the IPC. The termination was effected by paying retrenchment compensation without a regular departmental enquiry. Pal was later acquitted of the criminal charges, but the termination order was upheld by the Tribunal and the Delhi High Court. The Supreme Court held that a punitive termination requires a regular departmental enquiry, that acceptance of retrenchment compensation does not bar a challenge, and that an acquittal removes the stigma of criminal involvement, rendering the termination under Section 25‑F of the Industrial Disputes Act invalid. Consequently, the termination order was quashed, Pal was reinstated with full arrears and benefits, and the appeal was allowed.

Issues considered

Whether termination of a temporary employee under Section 25‑F without a regular departmental enquiry is valid when the termination is punitive.
Whether acceptance of retrenchment compensation bars the employee from challenging the termination.
Whether involvement in a criminal case, later resulting in acquittal, can be a ground for termination under the Industrial Disputes Act.
Whether a temporary employee is entitled to constitutional protection under Article 311 of the Constitution.
Whether a preliminary enquiry suffices for termination or a regular departmental enquiry is required.

Legislation cited

Constitution of Indias. 311
Indian Penal Code, 1860s. 324, s. 427, s. 504
Industrial Disputes Act, 1947s. 25-F

Subjects

labour lawindustrial disputestermination of serviceretrenchmenttemporary employeeprocedural fairnessnatural justiceconstitutional protectionArticle 311criminal acquittalpunitive dismissal

Judgment

A NAR SINGH PAL
v.
•
UNION OF INDIA AND ORS.

MARCH 29, 2000

B [S. SAGHIR AHMAD AND R.P. SETHI, JJ.]

Labour Laws :

Industrial Disputes Act, 1947-Section 25-F-Tennination of Service-
Carnal Labour acquired temporary status-Involvement in criminal case-
c Order of tennination passed pending trial-Trial resulting in clear acquittal-
Order of tennination upheld by High Court and Tribunal-On appeal Held,
order of tennination being punitive regular departmental enquiry was neces-
smy-Stigma of involvement in a criminal case disappears after acquittal-
Order pafsed on the basis of mere preliminary enquiry without issuing charge
D sheet and giving opportunity of being heard cannot be sustained-Reinstate-
ment ordered with payment of all arrears and consequential benefits.

Retrenchment-Payment of retrenchment compensation after tennina-
tion-Acc~ptance of payment does not disentitle workman from challenging
retrenchment-No constitutional rights or Fundamental rights surrendered-
E
No estoppel against exercise of Fundamental Rights.

Constitution ofIndia-Article 311-Retrenchment-Workmen entitled to
certain benefits and constitutional protection after acquiring temporary status.

F Appellant, initially a casual labour had acquired the status of a
temporary employee in the telephone department, was prosecuted under
Sections 324, 427, 504 iPc. His services were terminated without holding a
regular departmental enquiry after paying retrenchment compensation
during the trial, in which he was ultimately acquitted. He accepted the
amount and filed a petition before the Administrative Tribunal challenging
G the order of termination, which was dismissed. High Court dismissed his
writ petition challenging the order of the Tribunal. Hence this appeal.

The appellant contended before this Court that as the order of
termination was punitive in nature a regular departmental enquiry was
H mandatory.
752
.
N.S. PAL v. U.0.1.

The respondents contended before this Court that the appellant was
753
A
involved in a criminal case so his services could be terminated under
Section 25-F of the Industrial Disputes Act by a written notice along with
retrenchment compensation.

Allowing the appeal, this Court
B
HELD : 1. If an order had been passed by way of punishment and
was punitive in nature, holding of a regular departmental enquiry be-
comes necessary and the services of the appellant could not have been
terminated arbitrarily by paying retrenchment compensation. It is wholly
incorrect that there is a choice between holding a regular departmental
enquiry and termination of services by payment of retrenchment compen-
c
sation. The order having been passed on the basis of a preliminary
enquiry and not on the basis of any regular departmental enquiry without
issuing a charge sheet or giving an opportunity of hearing to the appel-
lant, cannot be sustained. (756-C-E; 757-H)
D'
Gujarat Steel Tubes /Jd. v. Gujarat Steel Tubes Mazdoor Sabha, [1980] 2
sec 593, relied on.
2. The appellant had acquired temporary status, entitling him to
certain benefits and the constitutional protection envisaged by Article 311
of the Constitution and other Articles dealing with services under the E
Union of India. (756-F]

3. It is not a correct approach that once retrenchment compensation
was accepted, the appellant could not challenge his retrenchment. He had
to sustain himself and his family and had no option except utilizing the said
amount as there was_ no hope left for payment of salary in future. He never F
surrendered his Constitutional rights and Fundamental Rights, as they
cannot be bartered away. They cannot be compromised nor can there be
any estoppel against the exercise of Fundamental Rights available under
the Constitution. (759-D-F]

4. The involvement of the appellant in a criminal case could not have G
been made the basis for terminating his services. Since he was acquitted,
and it was a clear acquittal, the stigma atfuched to him should have been
treated to have disappeared. [759-B-C] \

5. The order of termination is quashed.\The appellant shall be put
back in service with payment of all arrears up to date and other consequen· H
754 SUPREME COURT REPORTS [2000) 2 S.C.R.
A tial benefits under the rules. [760-A]

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2280 of
2000.

From the Judgment and Order dated 30.10.98 of the Delhi High Court
B in C.W. No. 5534 of 1998.

R.C. Pandey, R.D. Rathore and K.K. Gupta for the Appellant.

Altaf Allmad, Additional Solicitor General, Ms. Halida Khatun and P.
Parmeswaran for the Respondents.
c The Judgment of the Court was delivered by

S. SAGHIR AHMAD, J. Leave granted.

The appellant, who was engaged as casual labour in October, 1982 by
the Telecom Department at Agra, had worked continuously as such for more
D
than ten years and had also acquired 'temporary'. status, was prosecuted for
an offence, under Sections 324, 427 and 504 IPC, said to have been committed
on 20.4.1992. The trial dragged on for many years and ultimately by judgment
and order dated 27.2.1998 passed by the Chief Judicial Magistrate, Agra, he
was acquitted, but in the meantime, by order dated 20.5.1992, his services
E were terminated against which he made a representation to the General
Manager, Telecom Department, G.M.T. Office, Lucknow, on 21.7.1992 but the
representation was not heeded to and, therefore, the appellant filed a petition
before the Central Administrative Tribunal, Principal Bench, New Delhi (for
short, 'the Tribunal'), on 25.8.1992 which was dismissed on 4.12.1997. The.
F order of the Tribunal was challenged in a Writ Petition filed in the Delhi High
Court but the High Court, by its order dated October 30, 1998, dismissed the
Writ Petition.

The order dated 20.5.1992 by which the services of the appellant were
terminated reads as under:-
G
"To
Shri Nar Singh Pal,
Casual Employee,
S/o Shri Hari Prasad,
Village Sarai Jairam,
H PIO Barhan, Distt. Agra.
N.S. PAL v. U.0.1. [S. SAGHIR AHMAD, J.] 755
Letter - D.E. Planning (Admn) N.S. Pal/92-93/5 dated 20.5.92. A
Dear,

You had beaten with iron article and had bitten with teeth to Shri
Mahender Singh, son of Shri Ratan Singh, gateman, Tax Bhawan,
Agra on 20.4.92 in the evening at 8.00 P.M. who was on duty. Due B
to the above-said conduct, you are not deserved/competent to be in
the Govt. service any more and you are casual employee. Therefore,
your services are terminated with immediate effect. Nevertheless, you
are being paid Retrenchment benefit. The under-mentioned cheque is
being annexed with this letter:
c
Sd/-
D.E. PHONE (ADM)
TELECOM DISTT.
AGRA - 282001.
D
ANNEXURE- ONE CHEQUE

Cheque No.13 425777
Dt. 19.5.92
Bank - State Bank of India, Agra.
Rs.6350 E
(Six thousand three hundred fifty only)"

This order, ex .facie, is punitive in nature. It was, therefore, contended
before the Tribunal that the services of the appellant could not be terminated
without holding a regular departmental enquiry. The question was dealt with
by the Tribunal as follows:- F

"4. After perusing the record and considering the rival argu-
ments, we are of the view that the respondents could either initiate
departmental enquiry against the applicant for the alleged miscon-
duct, or terminate his services by payment of retrenchment compen-
sation, overlooking the misconduct alleged against him. In the G
present case, the retrenchment compensation was paid and it appears
that the same was accepted by encashing the cheque by the
applicant. Accordingly, he cannot now be allowed to urge that the
termination was bad because there was no enquiry into the alleged
misconduct against him. H
756 SUPREME COURT REPORTS .(2000)'2 S.C.R.
..
A 5. From the allegations made in para 4 of the application, we
find that a report was also lodged against the applicant with the
Police in respect of the same incident and a case was registered
against him for offences under Sections 324, 427 and 504 IPC. The
applicant was also arrested and a chargesheet was filed against him
B in the court. The case was pending on the date of the application
and we do not know what happened to the prosecution thereafter,
but it appears that there was prima facie some material against the
applicant to hold that his services were not satisfactory and to
retrench his services on that basis. Accordingly for the aforesaid
reasons, we find no merit in this OA and it deserves to be
c dismissed."

The reasoning of the Tribunal is fallacious. If an order had been passed
by way of punishment and was punitive in nature, it was the duty of the
respondents to hold a regular departmental enquiry and they could not have
D terminated the services of the appellant arbitrarily by paying him the
retrenchment compensation. The observation of the Tribunal that the re-
spondents had a choice either to hold a regular departmental enquiry or to
terminate the services by payment of retrenchment compensation is wholly
incorrect.
E
The appellant, no doubt, was a casual labour but as observed by the
Tribunal, he had acquired temporary status with effect from 1.10.1989. Once
an employee attains the 'temporary' status, he becomes entitled to certain
benefits one of which is that he becomes entitled to the cbnstitutional
I

protection envisaged by Article 311 of the Constitution and other Articles
F
dealing with services under the Union of India. A perusal of the impugned
order by which the services of the appellant were terminated indicates that
since the appellant bad beaten one Mabender Singh with iron rod and had
also bitten him with teeth on 20.4.1992 at 8.00 P.M. while the said Mahender
Singh was on duty as Gateman, Tax Bhawan, Agra, therefore, his services
G were terminated with immediate effect. Thus the services were terminated on
account of the allegation of assault made against the appellant. This Court
on 24.1.2000 passed the following Order:-

"Learned counsel appearing for the respondents is granted six weeks'
H time to seek instructions whether regular departmental proceedings
N.S. PAL v. U.O.I. [S. SAGHIR AHMAD, J.] 757
were taken in this matter or not." A
When the case was next taken up, the entire papers relating to the
enquiry were placed before us by the counsel for the respondents which
indicate that a regular departmental enquiry was not held and only a prelimi-
nary enquiry was held against the appellant on the basis of which his services
were te1minated. The letter dated 21st of April, 1992, from Assistant Engineer B
Trunks, T.M.X. Tax Bhawan, Agra-3, to Shri Shital Din, Divisional Engineer,
Phones (Planning & Administration), Agra, recites, inter alia, as under:-

"Shri Nar Singh Pal, Ty. Mazdoor of this unit assaulted on Shri
Mahendra Singh, Gate Man who was on duty at Main gate of Tax C
Bhawan, Agra and was performing 14.00 to 22.00 hrs duty on
20.4.92. This rnishappening occurred at 20.00 hrs. on 20.4.92. At the
time of incident, I was in Trunk Exchange, Agra, when Shri Mahendra
Singh, Gate Man approached to the undersigned in injured condition
for help. I rushed to the gate of Tax Bhawan for spot verification and
making detailed enquiry of the case. I found that the culprit Shri Nar D
Singh Pal was abusing Shri Mahendra Singh, Gateman. Shri Nar
Singh Pal, Ty. Mazdoor not only assaulted on Shri Mahendra Singh,
Gateman but he also threatened to kill me when I was making spot
enquiry. As per my observation Shri Nar Singh Pal, Ty. Mazdoor was
under drunk condition. I immediately informed to you and thereafter E
S.O. Rakabga Police Station on phone regarding this incidence."

The letter further recites as under:-

"I shall be grateful if you may kindly take a suitable action
against Shri Nar Singh Pal, Ty. Mazdoor who has created hindrance F
in government work. damages of the government property and
created the terror and horror amongst the staff due to his gunda .
activities and has threatened the undersinged."

The documents which have been placed before us pertain to the
preliminary enquiry made against the appellant in which the statement of G
certain persons who had seen the incident was recorded. The services of the
appellant were, thereafter, terminated by paying him the retrenchment
compensation through a cheque along with the order dated 20.5.1992. The
order having been passed on the basis of preliminary enquiry and not on the
basis of regular departmental enquiry without issuing a chargesheet or giving H
~-

758 SUPREME COURT REPORTS (2000) 2 S.C.R.
A .an opportunity of hearing to the appellant, cannot be sustained.
We may, at this stage, refer to the observations of Krishna Iyer, J. in
Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Mazdoor Sabha, (1980) 2 SCC
593, in which the learned Judge observed as under:-

B "53. Masters and servants cannot be permitted to play hide and
seek with the law of dismissals and the plain and proper criteria are
not to be misdirected by terminological cover-ups or by appeal to
psychic processes but must be grounded on the substantive reason for
the order, whether disclosed or undisclosed. The Court will find out
c from other proceedings or documents connected with the formal order
of termination what the true ground. for the termination is. If, thus
scrutinised, the order has a punitive flavour in cause or consequence,
it is dismissal. If it falls short of this test, it cannot be called a
punishment. To put it slightly differently; a termination effected
because the master is satisfied of the misconduct and of the conse-
D quent desirability of terminating the service of the delinquent servant,
is a dismissal, even if he had the right in law to terminate with an
innocent order under the standing order or otherwise. Whether, in
such a case the grounds are recorded in a different proceeding from
the formal order does not detract from its nature. Nor the fact that,
E after being satisfied of the guilt, the master abandons the enquiry and
proceeds to terminate. Given an alleged misconduct and a live nexus
between it and the termination of service the conclusion is dismissal,
even if full benefits as on simple tennination, are given and non-
injurious tenninology is used."

F (Emphasis supplied)

Applying the above principles, the order in the instant case, cannot be
treated to be a simple order of r~trenchment. It was an order passed by way
of punishment and, therefore, was an order of dismissal which, having been
passed without holding a regular departmental enquiry, cannot be sustained.
G
Learned counsel for the respondents contended that the appellant was
involved in a criminal case having assaulted Mahendra Singh, Gateman, at the
Tax Bhawan, Agra and, therefore, his services could be terminated in terms
of Section 25-F of the Industrial Disputes Act by a notice in writing together
H with retrenchment compensation which admittedly was paid to him through
N.S. PAL v. U.0.1. [S. SAGHIR AHMAD, J.] 759
the cheque regarding which the Tribunal has recorded a finding that it was A
encashed by the appellant.

The fact that the appellant was involved in a criminal case is not
disputed by the appellant. What is contended by him is that he was ultimately
acquitted by the court of Chief Judicial Magistrate, Agra and, therefore,
B
involvement of the appellant in a criminal case could not have been made
the basis for terminating his services. Since the appellant was acquitted, and
it was a clean acquittal, the stigma attached to him of having been prosecuted
in a criminal case should have been treated to have disappeared and no
argument can be allowed to be raised for justifying the order of dismissal
on the ground of appellant's involvement in a criminal case. c
The Tribunal as also the High Court, both appear to have been moved
by the fact that the appellant had encashed the cheque through which
retrenchment compensation was paid to him. They intended to say that once
retrenchment compensation was accepted by the appellant, the chapter stands D
closed and it is no longer open to the appellant to challenge his retrenchment.
This, we are constrained to observe, was wholly erroneous and was not the
correct approach. The appellant was a casual labour who had attained the
'temporary' status after having put in ten years' of service. Like any other
employee, he had to sustain himself, or, may be, his family meni.bers on the E
wages he got. On the termination of his services, there was no hope left for

-
...... payment of salary in future. The retrenchment compensation paid to him,
which was only a meagre amount of Rs.6,350, was utilised by him to sustain
himself. This dods not mean that he had surrendered all his constitutional
rights in favour of the respondents. Fundamental Rights under the Consti- ·p
tution cannot be bartered away. They cannot be compromised Il<lr can there
be any estoppel against the exercise of Fundamental Rights available under
the Constitution. As pointed out earlier, the termination of the appellant from
service was punitive in nature and was in violation of the principles of
natural justice and his Constitutional rights. Such an order cannot be
sustained. G

For the reasons stated above, the appeal is allowed. The judgment
dated 4.12.1997, passed by the Tribunal as also the judgment dated 30.10.1998,
passed by the High Court, are set aside and the claim petition of the appellant
is allowed with costs throughout. The order dated 20.5.1992, by which the H
760 SUPREME COURT REPORTS [2000] 2 S.C.R.
A services of the appellant were terminated, is quashed with ~e direction that
the appellant shall be put back on duty on the post which he' held on
20.5.1992 and shall be paid all the arrears upto date and other consequential
benefits admissible under the rule.

A.Q. Appeal allowed.
B

r•,