Important Point
Where under Service Rules the period of Probation cannot be extended beyond the maximum period there will be a deemed confirmation at the end of the probationary period unless there is anything to the contrary in the Rules.

Headnote:Service Jurisprudence -Status of employee after end of probationary period-Whether remains a probationer or becomes confirmed employee?-Model Service Rules for State Enterprises initially adopted by respondent-Corporation-Subsequently U.P. State Leather Development and Marketing Corporation Ltd. General Rules were adopted w.e.f. 1.1.1981-Rule about Appointment on Probation and confirmation-Appellant appointed on probation-No time limit in Rules upto which probation can be extended-Confirmation on issuance of certificate-No certificate issued-Whether a probationer or confirmed employee-High Court holding him a probationer-Whether correct? (No)-Discharge as probationer whether can be upheld? (No) - Effect - Reinstatement or compensation-(The latter)-How much - Rs. two lacs-Appeal allowed accordingly. (Paras 12, 18, 20 & 21)
       Held : Whether an employee at the end of the probationary period automatically gets confirmation in the post or whether an order of confirmation or any specific act on the part of the employer confirming the employee is necessary, will depend upon the provisions in the relevant Service Rules relating to probation and confirmation. There are broadly two sets of authorities of this Court dealing with this question. (Para 15)
       Where the Rules provide that the period of probation cannot be extended beyond the maximum period there will be a deemed confirmation at the end of the maximum probationary period unless there is anything to the contrary in the Rules. (Para 17)
       In the present case under the Service Rules in force at the time when the appellant was appointed on probation, there was no time-limit on the period up to which probation can be extended. The appointing authority was required to issue a certificate of the appellant having satisfactorily completed the period of probation. The provision relating to deemed confirmation would come into effect on his satisfactorily completing probationary period. From the affidavit filed by the respondent-Corporation as also looking to the report which was submitted by the Managing Director to the Board of Directors on 8.2.1985, it is clear that the appellant was considered by the respondents as having satisfactorily completed his period of probation on 9.1.1979, and he was considered as a regular employee from 10.1.1979. In the affidavit of the respondent-Corporation before the High Court also it has been very fairly stated that the services of the appellant were satisfactory for the first few years and his work was very good. It was only thereafter that serious problems arose regarding his work and the corporation suffered losses on that account. It is, therefore, not possible to hold that the appellant remained a probationer till his discharge. (Para 18)
       Apart from anything else, when the Rules specifically require that an opportunity of explaining himself should be given to the employee, the denial of such opportunity is a serious violation of the principles of natural justice and vitiates the decision. The order of termination, therefore, cannot be sustained looking to the relevant Rules, and applying the principles of natural justice when the employee who is being discharged is a confirmed employee and is not a probationer. The impugned order of termination is, therefore, set aside. (Para 20)
       We are informed that the appellant would otherwise retire on superannuation in June 1998. The respondent-Corporation has also stated that the financial condition of the Corporation is very poor as it has already incurred accumulated losses of Rs. 669.65 lakhs against the total paid-up capital of Rs. 573.94 lakhs. The activities of the Corporation have been partially closed down by Government Order dated 20.1.1994 and the Corporation has already resorted to the process of retrenchment of a large number of employees. Looking to all the facts and circumstances monetary compensation to the appellant for wrongful termination would serve the ends of justice. (Para 21)
       The appellant has thus not worked in the respondent-Corporation since the date of his termination. His salary upto to October, 1985 has been paid to him as directed by the High Court. The record which is before us does not show what the appellant has earned from October, 1985 upto date. But looking to the fact that he has not worked with the respondent-Corporation and that the stay order which enabled him to work in the Corporation had to be vacated on account of the appellant’s conduct which shows that he was not desirous of working in the respondent’s organisation, in the totality of circumstances of the present case, a monetary compensation of Rs. 2 lakhs would be adequate to compensate the appellant. The respondents are, therefore, directed to pay to the appellant the sum of Rs. 2 lakhs within a period of three months from today. (Para 21)
       The appeal is accordingly allowed with costs. (Para 22)

Judgment

Mrs. Sujata V. Manohar, J.-Leave granted.

2. The appellant was appointed as Assistant Manager in the respondent-U.P. State Leather Development and Marketing Corporation on 22.11.1974.

3. On 10th of January, 1978 the appellant was selected and appointed as Divisional Manager in the respondent-Corporation. The letter of appointment which is dated 10th of January, 1978 states as follows:-

“...............

His appointment will be on probation for a period of one year which can be extended at the discretion of the Managing Director. His services are liable to be terminated on one month’s notice or salary in lieu thereof. He will be governed by the Service Rules of the Corporation........”

4. The appellant continued to work as Divisional Manager of the respondent-Corporation till 21st of April, 1981 when he was re-designated as Works Manager. He continued thereafter in the said post. In April 1983 he was allowed to cross the Efficiency Bar.

5. It is the contention of the respondent that initially the work of the appellant was good but subsequently his work and performance deteriorated as a result of which the Corporation had to suffer losses. The appellant was given several warnings but his performance did not improve. At the meeting of the Board of Directors of the respondent-Corporation held on 8th of February, 1985, the entire service record of the appellant together with the report of the Managing Director was placed before the Board. After perusing the report and the service record of the appellant, the Board took a decision to terminate the services of the appellant. This decision was confirmed at the next meeting of the Board of Directors held on 31st of March, 1985.

6. Thereupon, an order dated 31st of March, 1985 was issued terminating the services of the appellant. The order stated that the appellant was discharged from the service of the Corporation with immediate effect and that in lieu of three months’ notice he will be paid three months pay. The pay for three months was deposited in the account of the appellant by the respondents.

7. From 31st of March, 1985 the appellant absented himself from work and his whereabouts were not known. As the order of termination could not be served on him, ultimately the respondent-Corporation published a notice dated 12th of April, 1985 in Hindi newspaper ‘Amar Ujala’ published from Agra to the effect that the services of the appellant had been terminated as per Board’s Resolution No. 57.19 and the registered order dated 31.3.1985 and that in lieu of three months’ notice three months’ pay had been deposited in the appellant’s personal savings account.

8. The appellant filed a writ petition against the order of termination in the High Court of Allahabad on 18th the April, 1985 being Writ Petition No. 5464 of 1985. In this writ petition the High Court granted on 19th of April, 1985, an interim stay of the order of termination. However, since the appellant did not join service after the stay order, the High Court vacated the stay order on 6th of November, 1985 observing that the appellant would be entitled to full salary in case he succeeds.

9. The writ petition has been ultimately dismissed by the High Court by its impugned order dated 29.4.1997. The High Court has upheld the order of termination on the ground that the appellant was a probationer on the date of termination of his services on 31st of March, 1985. Hence termination by three months’ notice was a valid termination.

10. The Service Rules which were in force at the time of the appellant’s appointment as Divisional Manager were Model Service Rules for State Enterprises which were adopted by the respondent-Corporation by a resolution dated 30th of July, 1976. The relevant Rule relating to appointment on probation was as follows:-

“An employee regularly appointed for the first time or promoted to any post in the corporation shall be placed on probation for a period of one year from the date of joining the new post.

The per

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1998 Supreme(SC) 321

Important PointWhere under Service Rules the period of Probation cannot be extended beyond the maximum period there will be a deemed confirmation at the end of the probationary period unless there is anything to the con­trary in the Rules.

Cases Referred (12)

Important Point
Where under Service Rules the period of Probation cannot be extended beyond the maximum period there will be a deemed confirmation at the end of the probationary period unless there is anything to the contrary in the Rules.