Holding

The order of termination was an innocuous exercise of contractual rights, not a punitive dismissal, and therefore did not require a disciplinary enquiry or invoke Article 311(2).

Summary

R.K. Misra, a temporary employee of the Uttar Pradesh State Handloom Corporation, was suspended in 1982 on allegations of misconduct and later had his services terminated by notice with one month's salary in lieu, as permitted by Rule 63 of the Corporation's service rules. He challenged the termination, claiming it was punitive, violated Articles 14 and 16 of the Constitution, and denied him a hearing under natural‑justice requirements of Rule 68. The Supreme Court held that the termination was an innocuous exercise of the contractual right to end temporary service, not a dismissal founded on misconduct, and therefore did not attract the protections of Article 311(2) or the need for a disciplinary enquiry. The Court distinguished between "motive" and "foundation" of termination, finding the adverse feature remained a motive, not a foundation. Consequently, the appeal was dismissed, though the Court directed the corporation to pay a modest compensation of Rs. 25,000 due to the appellant’s advanced age.

Issues considered

The termination of a temporary employee under Rule 63 amounts to a dismissal requiring compliance with Article 311(2) and natural‑justice procedures.
Whether Articles 14 and 16 of the Constitution apply to a temporary employee in this context.

Legislation cited

Constitution of Indias. Article 12, s. Article 14, s. Article 16, s. Article 311(2)

Subjects

temporary employeetermination of servicedismissalnatural justiceArticle 311Article 14Article 16punitive dismissalservice rulesnotice periodsuspensionconstitutional law

Judgment

RA VIND RA KUMAR MISRA
A
v.
U.P. STATE HANDLOOM CORPORATION LTD. & ANR.

OCTOBER 15, 1987.

[RANGANATH MISRA & MURART MORON DUTT, JJ.] ll

U.P. State Handloom Corporation Rules: Rules 63 & 68-
Temporary emplpyee-Termination of service-Whether termination
simpliciter or dismissal.

. Rule 63 ofthe U.P. State Handloom Corporation Rules stipulates
,.._ termination of temporary service on one month's notice on either side. C
' Rule 68 provides that if the punishment of discharge or dismissal is
imposed, an enquiry commensurate with requirements of natural
justice is a condition precedent.

The appellant was employed in the aforesaid Corporation on D
temporary basis. The order of appointment stated that his services were
liable for termination with one month's notice or one month's pay in
lieu of notice on either side. He was placed under suspension in
November 1982 on charges of misconduct, dereliction of duty, mis-
_., management and showing fictitious production entries. That order,
however, was revoked in November 1983 and his services terminated E
forthwith by notice entitling him to one month's salary. The High Court
... held that the termination was not punitive and the question of breach of
principles of natural justice did not arise.

In this appeal by special leave it was contended that the appellant
was entitled to the protection of Articles 14 and 16 of the Constitution, F
that though his order of termination was innocuous, the setting in which
it has been made clearly makes it an order of dismissal punitive in
character and that as his service was determined by the order attaching
stigma the appellant was entitled to a hea~ing commensurate with rules
of natural justice and in the absence of the opportunity of being heard
the order was liable to be quashed. G

...,. Dismissing the appeal,

HELD: As long as the adverse feature of the employee remains
the motive and does not become transferred as the foundation of the
order of termination, it is unexceptionable. Whether 'motive' has be- H
501
502 SUPREME COURT REPORTS [.1988] 1 S.C.R.

A come the foundation has to be decided by the Court with reference to . ).,
the facts of a given case. [SJ OF-GI

It is necessary for every employer to assess the service of the
temporary incumbent in order to find out a~ to whether he should be
confirmed in his appointment or his services should be terminated. It
B may also be necessary to find out whether the officer should be tried for
some more time on temporary basis. Since both in regard to a tern- '1
porary employee or an officiating employee in a higher post such an
assessment would be necessary, merely because the appropriate author-
ity proceeds to make an assessment and leaves a record of its views the
same would not be available to be utilised to make the order of termina-
C lion following such assessment punitive in character. [S09G-H; SlOA-B] !
There may be cases where an enquiry is undertaken and prima --1
facie material for serious charges are found; by diclosing the result
of such preliminary enquiry, the officer concerned is put under sus-
pension in contemplation of disciplinary action. After such steps have
D been taken, the employer/appropriate authority decides not to continue
the departmental proceedings but makes an order terminating the
service. [SlOC-Dl

In the instant case the appellant was a temporary servant and had
no right to the post. Both under the contract of service as also the
Service Rules governing him the employer had the right to terminate his '-
E services by giving him one month's notice. The order of termination
was in innocuous terms. It did not cast any stigma on him nor did it visit
him with any evil .consequences. The order was, therefore, not open to .._
challenge. [SIIC-D]
The appellant is not entitled to compensation under the law. But
F since he has been put out of employment at an advanced age and it may
be difficult for him to get an alternate employment, the Corporation to "'-·
pay him a consolidated amount of Rs.25,000. [SUFI

Purshotam Lal Dhingra v. Union of India, 11958] SCR 828;
Champaklal Chimanlal Shah v. The Union of India, 11964] S SCR 190;
G Shamsher Singh & Anr. v. State of Punjab, 1197511SCR814; Regional
Manager & Anr. v. Pawan Kumar Dubey; 11976] 3 SCR 540; State of
U.P. v. Ram Chandra Trivedi, 1197711 SCR 452 and State of Orissa & _\,..
Anr. v. Ram Narayan Dass, 1196111SCR606, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4438
H of !985.
R.K. MISRA v. U.P. STATE HANDLOOM CORPN. [MISRA, J.) 503

From the Judgment and Order dated 6.5.1985 of the Allahabad A
High Court in C.M.W.P. No. 2822 of 1983.
Dr. Y.S. Chitale, Mrs. Rekha Pandey, S.P. Pandey, Atul Tiwari,
Pinaki Misra, Mrs. Mamta Kachawala and Miss Bina Gupta for the
Appellant.
M.K. Banerjee, Solicitor General, A.K. Ganguli, Gopala Sub- B
ramaniam, K.J. John, M.M. John, Harish N. Salve and Miss Nisha
Srivastava for the Respondents.

: The Judgment of the Court was delivered by

RANGANATH MISRA, J. This is an appeal by special leave.
The appellant was employed on the production side of the Uttar C
f-- Pradesh State Handloom Corporation, a public sector undertaking-
(hereinafter referred to as 'Corporation' for short) on temporary basis.
Having been appointed on 30th of October, 1976 as Bunker Sew a he
obtained two promotions while still working in temporary status and
by 1983 was working as Deputy Production Manager. The appellant's D
letter of appointment, as far as material, stated:-
"With effect from the date of taking over charge Shri
Rabindra Kumar Mishra ............. is hereby appoin-
ted as Bunker Sewa . . . . . . . . . . . . . . . on the following
terms and conditions:-
E
( 1) That his appointment is temporary and his

- services are liable for termination with one month's notice
or one month's pay in lieu of notice from either side

F
. On November 22, 1982 the appellant was placed under suspension and
1
--"'\ that order read as follows:-
"As a result of preliminary enquiries made by the
Central Manager on 13.11.1982 of the Production Centre,
Kunda and other Centres under the same, it has come to
notice that Sri R.K. Misra, former Dy. Production G
Manager, Kunda, is responsible for misconduct, dereliction
of duty, mismanagement and showing fictitious production
of terrycot cloth. He is, therefore, placed under suspension
with immediate effect ................ "

(Underlinings are ours) H

/
504 SUPREME COURT REPORTS [1988] 1 S.C.R.

A On the 1st of February, 1983 the order of suspension was )..
revoked and on 10th of February, 1983 the impugned order termi- ·
nating his services being to the following effect was passed:-

"The undersigned hereby gives notice to Shri R.K.
Misra, Deputy Production Manager, Production Centre,
B Kunda, Prataapgarh, Salon Rai Bareilly that his services
are no more required and his service will be deemed to be
terminated from receipt of this notice by him. It is directed
that he wili be entitled to receive one month's salary in lieu
of notice period on the same rate on which he was receiving
salary before termination of his service."
c The appellant challenged the order of termination of his service ~
before the Allahabad High Court but the High Court declined to .
interfere by holding that the termination was not punitive and the
question of breach of principles of natural justice did not arise.

D It is not disputed that the employer-Corporation is 'State' within
the meaning of Article 12; yet it has not been contended-and
rightly-that the protection of Article 311(2) of the Constitution is
avilable to the employees of the Corporation. The appellant has how-
ever, claimed that he is entitled to the protection of Article 14 and 16 .
of the Constitution; though his order of termination is innocuous the
E setting in which it has been made clearly makes it an order of dismissal ,...
and the High Court has gone wrong in holding that the order of termi-
nation was not punitive; as service was determined by the order of
termination attaching stigma the appellant was entitled to a hearing
commensurate with rules of natural justice and in the absence of that
..
opportunity of being heard the order is iiable to be quashed.
F
It cannot be disputed that temporary service can be terminated I
by notice. The order of appointment in the appellant's case made it . r
abundantly clear that with a month's notice or payment of salary in
lieu of notice such termination could be effected by either side Rule
63 of the Corporation Rules made in exercise of Article 127 of the
G Articles of Association of the Uttar Pradesh State Handloom Corpora-
tion Limited recognised such a power. That Rule provides:-

"!. The appointing authority may, at any time, dur- ,)_
ing the pendency of the temporary tenure terminate the
services of a temporary employee by giving him one
H month's notice or emoluments for such lesser period by
R.K. MISRA v. U.P. STATE HANDLOOM CORPN. (MISRA, J.] sos
which the notice falls short of one month.
-~ A
2. The temporary employee, on his part, shall have
the option of quitting service by giving one month's notice
to the appointing authority or paying to the Corporation an
amount equal to his one month's pay ....... "
B
The order of termination of service in this case is indeed innocuous.
r The appellant is not entitled to the protection of Article 311(2) of the
Constitution not being a member of a civil service of the Union or a
.,: State nor holder of a civil post under the State but his own Service
Rules provide under Rule 68 that if the punishment of discharge or
dismissal is imposed, an enquiry commensurate with requirements of
natural justice is a condition precedent. Admittedly no such enquiry c
'
~- has been held. The question that crops up here for determination,
therefore, is whether the impugned order was an order of termination
simpliciter or really amounted to an order of dismissal. In Purshotam
Lal Dhingra v. Union of India, [19S8] SCR 828. a Constitution Bench
of this Court stated:- D

"This use of expression 'terminate' or 'discharge' is
not conclusive. In spite of the use of such innocuous expres-
sions, the Court has to apply the two tests mentioned
above, namely. ( !) whether the servant had a right to the
-'( post or the rank or (2) whether he has been visited with evil E
consequences of the kind hereinbefore referred to? If the
case satisfied either of the two tests then it must be held
-~
that the servant has been punished and the termination of
his service must be taken as a dismissal or removal from
service or the reversion to his substantive rank must be
regarded as a reduction in rank and if the requirements of F

-~
the rules and Article 311, which give protection to Govern-
ment servant have not been complied with, the termination
of the service or the reduction in rank must be held to be
wrongful and in violation of the constitutional right of the
servant."
G
This view has been approved by another Constitution Bench of this
Court in Champaklal Chiman/al Shah v. The Union of India, [ 1964] S
J.. SCR 190. After indicating approval, Wanchoo, J. as he then was,
spoke for the Constitution Bench thus:-

"It is well-known that Government does not termi- H
506 SUPREME CEJURT REPORTS [1988] 1 S.C.R.·

nate the services of a public servant, be he even a tern-
A
porary servant without reason; nor is it usual for Govern-
A
ment to reduce a public servant in rank wit\lout reason
even though he may be holding_ the higher rank only
temporarily. One reason for terminating the services of a
temporary servant may be that the post that he is holding
B comes to an end. In that case, there is nothing.further to be
said and his services terminate when the post comes to an
end. Similarly a Government servant temporarily official- ""(
ing in a higher rank may have to be reverted to his substan-
tive post where the incumbent of the higher post comes ~
back to duty or where the higher post created for a tern-
porary period comes to an end. But besides the above, the
c Government may find it necessary to terminate the services
of a temporary servant if it is not satisfied with his conduct ·~
or his suitability for the job and/or his work. The same may
apply to the reversion of a public servant from a higher post
to a lower post where the post is held as a temporary mea-
D sure. This dissatisfaction with the work and/or conduct of a
temporary servant may arise on complaint against him. In
such cases two courses are open to Government. It may
decide to dispense with the services of the servant or
revert him to his substantive post without any action being
taken to punish him for his bad work and/or conduct. Or
the Government may decide to punish such a servant for )'-.
E
his bad work or misconduct, in which case even though the
servant may be temporary, he will have the protection of
Article 311(2). But even where it is intended to take action
by way of punishment what usually happens is that some-
•
thing in the nature of what may be called a preliminary
F enquiry is first held in connection with the alleged miscon-
duct or unsatisfactory work. In this preliminary enquiry the
explanation of the government servant may be taken and >--
documentary and even oral evidence may be considered. It
is usual when such a preliminary enquiry makes out a prima
facie case against the servant concerned that charges are
G then framed against him and he is asked to show cause why
disciplinary action be not taken against him. An enquiry
officer (who may be himself in the case where the appoint-
ing authority is other than the Government) is appointed _A.
who holds enquiry into the charges communicated to the
servant concerned after taking his explanation and his en-
H quiry is held in accordance with the principles of natural
R.K. MISRA v. U.P. STATE HANDLOOM CORPN. [MISRA, l.I 507

justice. This is what is known as a formal departmental
A enquiry into the conduct of a public servant .......
A
.......... "
.
"Generally therefore a preliminary enquiry is usually
held to determine whether a prima facie case for a formal
departmental enquiry is made out, and it is very necessary l3
that the 1wo should not be confused. Even where Govern-
'r ment does not intend to take action by way of punishment
against a temporary servant on a report of bad work or
: misconduct a preliminary enquiry is usually is held to
satisfy Government that there is reason to dispense with
the services of a temporary employee or to revert him to his
substantive post, for as we have said already, Government
c

"· does not usually take action of this kind without any
reason. Therefore when a preliminary enquiry of this
nature is held in the case of a temporary employee or a
Government servant holding a higher rank temporarily it
must not be confused with the regular departmental en- D
quiry (which generally follows such a preliminary enquiry)
when the Government decides to frame charges and get a
departmental enquiry made in order that one of the three
major punishments already indicated may be inflicted on
the government servant. Therefore, so far as the prelimi-
-~. nary enquiry is concerned, there is no question of its being E
governed by Article 311(2) for that enquiry is really for the

- satisfaction of government to decide whether punitive
action should be taken or action should be taken under the
contract or the rules in the case of a temporary government
servant or a servant holding higher rank temporary to
which he has no right. In short a preliminary enquiry is for F
the purpose of collection of facts in regard to the conduct
and work of a government servant in which he may or may
not be associated so that the authority concerned may de-
cide whether or not to subject the servant concerned to the
enquiry necessary under Article 311 for inflicting one of the
three major punishments mentioned therein. Such a pre- G
liminary enquiry may even be held ex parte, for it is merely
for the satisfaction of Government, though usually for the
sake of fairness, explanation is taken from the servant con-
cerned even at such an enquiry."

Both Pershotam Lal Dhingra's case (supra) and Champaklal's case H
--...;,_··

508 SUPREME COURT REPORTS [1988) 1 S.C.R.

(supra) were referred to and relied upon in Shamsher Singh & Anr. v. ).,
A
State of Punjab, [1975] 1SCR814. This is a case which was heard by a
7-Judge Bench. Ray, CJ., who spoke for the majority of five con-
sidered all the cases rendered b~this Court till then touching on the
point and at page 841 of the Reports stated as follows:-

B "The form of the order is not decisive as to whether
the order is by way of punishment. Even an innocuously
worded order terminating the service may in the facts and ~
circumstances of the case establish that an enquiry into
allegations of serious and grave character of misconduct
involving stigma has been made in infraction of the provi- '
sion of Article 31 I. In such a case the simplicity of the form
c of the order will not give any sanctity."

In Shamsher Singh's case (supra) the ratio of the two earlier Constitu-
~
tion Bench judgment was approved. On facts it was found that the
order of termination though innocuous in form was really an order by
D way of punishment removing the appellant from service on the basis of
charges of gross misconduct found to have been established by an ex
parte enquiry conducted by the S.P. Vigilance Department with the
only object of ascertaining truth of the alleged misconduct and for the
purpose of dismissing or removing the appellant, if charges were found
established. It was ultimately on the basis of specific findings recorded
E by the S.P. Vigilance that the appellant's services were terminated. 1~
The Court found that the enquiry by the S.P. Vigilance was essentially
and in character and object different from the informal enquiry into
the and in object different from the informal enquiry into the suitabi-
lity of the appellant. Ray, CJ. in Shamsber Singh's case (supra) further
pointed out:-
-
F
"The fact of holding an enquiry is not always conclu- ,__
sive. What is decisive is whether the order is really by way
of punishment .............. A probationer whose terms
of services provided that it could be terminated without any
notice and without any cause being assigned could not
G claim the protection of Article 311(2).

An order terminating the services of a temporary
servant or probationer under the Rules of employment and A
without anything more will not attract Article 311. Where a
departmental enquiry is contemplated and if an enquiry is
H not in fact proceeded with Article 311 will not be attracted
R.K. MISRA v. U.P. STATE HANDLOOM CORPN. [MISRA, J.] 509

unless it can be shown that the order though unexception-
A
able in form is made following a report based on mis-
conduct."

In Regional Manager & Anr. v. Pawan Kumar Dubey, (1976] 3 SCR
540 it was observed by this Court thus:
B
"We think that the principles involved in applying
y Article 311(2) having been substantially explained in
Shamsher Singh's case (supra) it should not no longer be
... possible to urge that Sughar Singh's case could give rise to
some misapprehension of the law. Indeed we do not think
that the principles of law declared and applied so often
have really changed. But the application of the s.1m 0 law to c
~- the differing circumstances and facts of various cases which
have come up to this court could create the impression
some times that there is some conflict between decisions of
this Court. Even where there appears to be some conflict,
it would, we think, vanish when the ratio decidendi of each D
case is correctly understood. It is the rule deducible from
the application of law to the facts and circumstances of a
case which constitutes its ratio decidendi and not some con-
clusion based upon facts which may appear to be similar.
One additional or different fact can make a word of differ-
~ ence between conclusions in tfo cases even when the same E
principles are applied in each case to similar facts ..... ".

- As we have already observed, though the provisions of Article
311(2) of the Constitution do not apply, the Service Rules which are
almost at par make the decisions of this Court relevant in disposing of
the present appeal. In several authoritative pronouncements of this F
Court, the concept of 'motive' and 'foundation' has been brought in
---\. for finding out the effect of the order of termination. If the delin-
quency of the officer in temporary service is taken as the operative
motive in terminating the service, the order is not considered as puni-
live while if the order of termination is founded upon it, the termina-
tion is considered to be a punitive action. This is so on account of the G
fact that it is necessary for every employer to assess the service of the
temporary incumbent in order to find out as to whether he should be
)_ contlrmed in his appointment or his services should be terminated. It
may also be necessary to find out whether the officer should be tried
for some more time on temporary basis. Since both in regard to a
temporary employee or an officiating employee in a higher post such H
510 SUPREME COURT REPORTS [1988] 1 S.C.R.

A an assessment would be necessary merely because the appropriate
authority proceeds to make an assessment and leaves a record of its
views the same would not be available to be utilised to make the order
of termination following such assessment punitive in character. In a
large democracy as ours, administration is bound to be impersonal and
in regard to public officers whether in Government or public Corpora-
B tions, assessments have got to be in writing for purposes of record. We
do not think there is any justification in the contention of the appellant
that once such an assesment is recorded, the order of termination ~
made soon thereafter must take the punitive character.

There may be cases where an enquiry is undertaken and prima
facie material for serious charges are found; by disclosing the result of
C such preliminary enquiry, the officer concerned is put under suspen- (
sion in contemplation of disciplinary action. After such steps have --4\
been taken, the employer/appropriate authority decides not to con-
tinue the departmental proceedings but makes an order terminating
the service, as has been done in this case.
D
Counsel for the respondents pointed that that in the matter of
ordering termination of service of a temporary employee, the order
follows a review of his working. Unless the termination is ordered
because there is no need for the post, in the absence of reasons for
termination, the action is open to challenge as arbitrary, particulary
£ when other similarly situa~d employees are continued in service.
When reasons are given, they are bound to disclose adverse features of
the employee and disclosure of such features become the ground of
challenge of the order on the plea that termination is not innocuous.
To meet this position, the distinction between 'motive' and 'founda-
tion' has been adopted by the courts. As long as the adverse feature of
-
F the employee remains the motive and does not become transformed as
the foundation of the order of termination it is unexceptionable. No
straight jacket test can be laid down to distinguish the two and whether
'motive' has become the foundation has to be decided by the court
with reference to the facts of a given case. The two are certainly two
points of one line-ordinarily apart but when they come together
G 'motive' does get transformed and merges into foundation.

As has been held by a three-Judge Bench in State of U.P. v. Ram
Chandra Trivedi, [ 1977] 1 SCR 462 the position in regard to cases of
the present nature is clear and the examination of the decisions of this
court shows that there is no real conflict in their ratio decidendi. On
H facts as established in different cases, courts have applied the known
R.K. MISRA v. U.P. STATE HANDLOOM CORPN. [MISRA, J.] 511

tests and in order that complete justice may be done on the facts A
found, there have been punishable deviations.

We may point out that this Court in a Consitution Bench judg-
ment in the case of State of Orissa & Anr. v. Ram Narayan Dass,
{1961] 1SCR606, indicated:-
B

r "The fact of the holding of an enquiry is not decisive·
of the question. What is decisive is whether the order in the
light of the decisions laid down in Parshotam Lal Dhingra's
... case.

Keeping in view the principles indicated above, it is difficult to c
accept the claim of the appellant. He was a temporary servant and had
~ no right to the post. It has also not been denied that both under the
contract of service as also the Service Rules governing him the emp-
loyer had the right to terminate his services by giving him one month's
notice. The order to which exception is taken is expressly an order of
termination in innocuous terms and does not cast any stigma on the D
appellant nor does it visit him with any evil consequences. It is also not
founded on misconduct. In the circumstances, the order is not open to
challenge.

We may point out that the learned Solicitor General appearing
~ E
for the Corporation had at the commencement of the arguments
suggested that the appellant could be given some compensation for

- termination. Ordinarily, under the law he would not be entitled to
compensation in a case of this type, but sine he has been put out of
employment at an advanced age and it may be difficult for him to get
an alternate employment, while dismissing his appeal we think it
reasonable to call upon the Corporation to pay a consolidated amount F

·-\ of Rs.25,000 (Rupees Twenty-five Thousand only).

Accordingly the appeal is dismissed. The amount of Rs.25,000 as
indicated above may be paid to the appellant within one month from
today. There would be no order for costs.
G
P.S.S. Appeal dismissed.