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High Court Of Calcutta
PARITOSH KUMAR MUKHERJEE
SHYAM SUNDAR PAL - Appellant
Versus
UNION OF INDIA - Respondent
F. M. A. 132 Of 1983
Decided On : 12/19/1986
GENERAL INSURANCE - Termination of Service - Categorisation as Development Inspector - Employer's Right to Terminate - Performance Evaluation - Unfair Termination - Reinstatement.
Fact of the Case:
Appellant, an employee of Howrah Insurance Co. Ltd., was categorized as a Development Inspector after the merger of Howrah Insurance with New India Assurance Co. Ltd. Appellant's service was terminated due to unsatisfactory performance based on a Screening Committee's recommendation. Appellant challenged the termination and categorization.
Finding of the Court:
1. Appellant's categorization as a Development Inspector was unilateral and without consultation, but it was not discriminatory as others were also categorized similarly. 2. Appellant's service was governed by the terms of his initial appointment with Howrah Insurance, as no statutory rules applied at the time of termination. 3. The termination was based on the Screening Committee's recommendation, which was not uniform and objective in its assessment of employees' performance. 4. The appellant's contract did not expressly provide for termination due to failure to procure a minimum premium, and the deduction of allowances was the stipulated consequence for such failure. 5. The termination was harsh and unconscionable, considering the appellant's long service and the lack of opportunity to improve performance.
Issues: 1. Whether the appellant's categorization as a Development Inspector was justified and lawful. 2. Whether the termination of appellant's service was valid and justified based on the Screening Committee's recommendation. 3. Whether the appellant's contract of service permitted termination for failure to procure a minimum premium.
Ratio Decidendi: 1. The employer's right to terminate an employee's service is inherent but must be exercised reasonably and not arbitrarily. 2. In the absence of statutory rules governing service conditions, the terms of the initial appointment govern the employee's service. 3. Termination of service must be based on objective and uniform criteria, and the employee should be given a chance to improve performance before termination. 4. A performance-based contract must explicitly state the consequences of failing to meet performance targets, and termination cannot be implied.
Final Decision: 1. The termination of appellant's service was set aside, and the appellant was deemed to be in service all along. 2. The respondents were directed to pay the appellant's salary and allowances within three months. 3. The court declined to comment on the propriety of the appellant's categorization as a Development Inspector, leaving it to the appellant to pursue appropriate legal action if necessary.
( 1 ) THIS appeal is directed against the dismissal of the writ petition of the appellant challenging the termination of his service by the General Manager, New India Assurance Company Ltd.
( 2 ) THE appellant's case may be stated as follows: -the appellant was appointed as Assistant Manager effective from 20th September, 1959 by the Howrah Insurance Co, Ltd. The said letter of appointment is Annexure 'a' to the writ petition. The appellant has contended that matter the completion of i. e. probationary period, the appellant became a permanent employee of the said Howrah Insurance Co. Ltd. , in September, 1972, the General Assurance business (Nationalisation) Act, 1972 came into force and the said Howrah insurance Co. Ltd. was amalgamated with some other Insurance Companies and such Insurance Companies including the said Howrah Insurance Co. Ltd. were merged with the New India Assurance Co. Ltd. The said New India Assurance Co. Ltd. is a Government of India Undertaking and as such 'state' within the meaning of Article 12 of the Constitution of India, Under the provisions of the said General Assurance Business (Nationalisation) Act, 1972, the appellant became an employee of the said New India Assurance Co. Ltd. under the same terms and conditions under which he had been serving at the time of merger of the said Howrah Insurance Co. Ltd. with the New India Assurance Co. Ltd. It was provided for in the said Nationalisation Act of 1972 that so long the conditions of service were not framed and/or changed, the employees would enjoy the conditions of service under which they had been acting prior to merger on 17th September 1975. A scheme being General Assurance (Rationalisation of Pay Scales and other conditions of Service of 0fficers) Scheme 1975 was framed and the said scheme came into force with effect from 1st October 1975. The appellant thereafter wrote to the Chairman, New India Assurance Co. Ltd. claiming his categorisation under the scheme as an Officer after giving the bio-data. It appears that, a Committee was formed for categorization of the employees of the said New India Assurance Co. Ltd. and considering, the bio-data of the appellant the said Committee categorised the appellant as Field Inspector and not as an Officer. The appellant thereafter made a protest against him categorisation as Class II staff and had contended, that he was initially appointed by the Howrah Insurance Co. Ltd. as an Assistant Branch Manager and in managerial capacity be had worked all along and as such by the categorisation of the appellant as the Class II staff there had been a demotion of the appellant. It appears that a Screening Committee was formed. for the interview of Grade II employees including the appellant between 11th March to 13th March 1976. The said Screening Committee on review of the performance remarked that the appellant was not fit to continue his service. In view of such report, the General Manager by his Memo, dated 27th March 1976 informed the appellant that in view of his unsatisfactory performance, the management had decided to terminate his service with immediate effect. The appellant was informed that he would be paid one month's salary in lieu of notice. It was also mentioned in the letter of termination that the said letter was without prejudice to the company's right to take any action against the appellant, if warranted, under such circumstances as would come to light hereafter.
( 3 ) AFTER a contested hearing the writ petition of the appellant, challenging the said termination of his service was dismissed by the learned Trial Judge. The learned Trial Judge has noted that the appellant was an Assistant Branch Manager of the Howrah Insurance Co. Ltd. , which was comparatively a small company and 21 companies carrying on business m general insurance were merged with the New India Assurance Co. Ltd. which will appear from the list of the merged companies mentioned in the First Schedule of the New
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