Allahabad High Court Rules Bank Clerk's Termination Under Void Regulation Retroactively Illegal

In a landmark ruling, the Allahabad High Court has quashed the 1983 termination of a Gramin Bank clerk, holding that the regulation under which he was dismissed was unconstitutional from its inception and that the termination therefore cannot stand. The Division Bench of Justice J.J. Munir and Justice Indrajeet Shukla also ruled that the clerk was deemed confirmed in service after the expiry of his maximum probation period, making him a permanent employee at the time of the impugned order.

A Clerk's Long Struggle for Justice

Sachindra Kumar Pandey was appointed as a clerk with the Gorakhpur Kshetriya Gramin Bank on 4 June 1981 on a one-year probation. His probation was extended by six months in July 1982. On 11 March 1983, the bank terminated his services with immediate effect under Regulation 10 of the Gorakhpur Kshetriya Gramin Bank (Staff) Service Regulations, 1980, citing unsatisfactory performance.

Pandey promptly filed a civil suit challenging the termination. The trial court decreed the suit in 1985, but the bank's appeal was allowed in 1989. His second appeal was dismissed in 2000 with liberty to pursue remedies under the Industrial Disputes Act or by writ petition. When his subsequent writ petition was dismissed by a Single Judge in 2004, Pandey filed the present special appeal.

The Probation Conundrum: When Continuation Becomes Confirmation

The central question before the Division Bench was whether Pandey had ceased to be a probationer by the time of his termination. Regulation 8(2) of the Service Regulations placed employees on probation for one year, extendable by up to six months. The maximum permissible probation period thus ended on 19 January 1983.

Drawing parallels with M.K. Agarwal v. Gurgaon Gramin Bank (1987), the court held that where the employer's power to extend probation is capped and the regulation requires confirmation or discharge at the end of that period, failure to discharge leads to an implied confirmation . "The result is that it must be held that after the extended period of probation came to an end for the appellant on 19.01.1983 , he would be deemed to have been confirmed in service, and, a fortiori , a permanent employee when the impugned order of termination dated 11.03.1983 was passed," the court observed.

A Regulation Void at Birth: Retrospective Effect of Unconstitutionality

More significantly, the court addressed the validity of Regulation 10(2), the provision under which Pandey was terminated. This regulation had been declared unconstitutional by the Allahabad High Court in Rudra Kumar Pal v. Chairman, Gorakhpur Kshetriya Gramin Bank (1994), following the Supreme Court's holding in M.K. Agarwal that an identically worded clause conferred arbitrary and unguided power.

The bank argued that because the declaration of unconstitutionality came in 1994—years after Pandey's 1983 termination—the regulation was valid when the order was passed. The court emphatically rejected this, explaining that for post-constitutional laws found to violate Part III of the Constitution, the declaration of invalidity is declaratory and thus fully retrospective. Relying on the Constitution Bench decision in Central Bureau of Investigation v. R.R. Kishore ( 2023 ), the court stated: "If a statute, or for that matter a statutory regulation, is declared unconstitutional by a Court of law on ground that it offends Part III of the Constitution as in the present case, the pronouncement is declaratory , and, therefore, always retrospective ."

"A post-constitutional law found void for violating Part III is destroyed at birth and can never be imbued with life again," the court elaborated. "The rule, under which the Bank have acted to terminate the appellant's services, as a perusal of the impugned order would show, having been held unconstitutional by this Court, there is nothing that can save the order impugned from perishing."

Balancing Justice After Four Decades

While the court quashed the termination order, it acknowledged that reinstatement was no longer feasible, as Pandey would now be around 70 years old. Noting that he had "prosecuted his remedies with promptitude and diligence," the court awarded 50% back wages from the date of termination until superannuation, along with all consequential benefits including post-retiral dues.

The court ordered the Uttar Pradesh Gramin Bank—the successor entity—to make payment within one month from receipt of the judgment, and imposed costs of Rs. 10,000 on the bank. The appeal was allowed, setting aside the Single Judge's order of 2004 and the termination order of 1983.

The judgment reaffirms that employment actions founded on unconstitutional provisions cannot be salvaged by delay in judicial declaration, and that probationary employees must be confirmed once the maximum permitted probation period expires.