The Supreme Court has held that termination of a probationer under a regulation permitting discharge for non-suitability is valid only where the employer’s opinion is founded on objective and relevant material relating to suitability or performance, and is not arbitrary, mala fide, or based on uncommunicated adverse material. If, however, the purported termination simpliciter is in substance founded on allegations of misconduct, stigma, or adverse material capable of prejudicing future employment, the employer cannot bypass disciplinary proceedings by merely couching the order in innocuous language such as “unsatisfactory performance.” In such a case, the Court is entitled to look beyond the form of the order to its background and attending circumstances, and if misconduct is found to be the real basis, the termination is punitive and invalid in law absent due process.
Applying that principle, the Supreme Court refused to interfere with the High Court’s orders quashing the termination and additionally directed that the employee be paid 50% back wages from the date of termination until superannuation, with consequential notional benefits, to be settled within three months by the substituted appellant, Bank of Baroda.
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A Two-Judge Bench comprising Justice J.K. Maheshwari and Justice Atul S. Chandurkar observed that although Regulation 16(3)(a) permits termination of a direct appointee during probation if the competent authority forms the opinion that he is not fit for confirmation, that discretion is not absolute. The Bench observed that where the employer is the State, such satisfaction must rest on some objective material and cannot be based on whims, arbitrariness, mala fides, or extraneous considerations. It further observed that probation is meant to be a structured period for testing performance, conduct and suitability, and fairness requires that material adverse to the probationer, especially remarks akin to misconduct or lack of integrity, should not be used to his prejudice without communication, since such material may affect future employment prospects.
On facts, the Bench found that the three memos relied upon by the Bank did not establish genuine unsatisfactory performance. As regards the memo concerning OLTAS implementation, the Bench found it contradicted by a contemporaneous appreciation letter from the Central Board of Direct Taxes praising the Bank’s implementation and advising other banks to approach the employee for assistance. Accordingly, the Bank considered the memo to reflect extraneous considerations. As regards another memo dated Sep 14, 2005 concerning delayed credit of Rs. 66 crores, the Bench found that the delay was attributable to a technical problem on SBI’s part and that the employee had pursued the matter diligently, including seeking interest for the one-day delay. As regards the memo dated Oct 31, 2005, the Bench noted that the Bank failed to show that it had ever been communicated to the employee; therefore, reliance on it violated natural justice and it had no legal value against him.
The Bench also examined the background circumstances and found that the Bank had initially treated the January 2005 incident involving alleged removal of confidential documents as misconduct warranting disciplinary proceedings, and had even acted on vigilance advice indicating major penalty proceedings. However, because the employee was still on probation, the Bank sought advice on terminating him under Regulation 16(3)(a) instead. The Bench considered the office note dated 05.11.2005 significant in showing that the alleged misconduct remained the primary issue and foundation of the action. It therefore concluded that the formal language of “unsatisfactory performance” was only a facade, and that in substance the termination was founded on misconduct without the Bank undertaking the disciplinary route that such misconduct would require. On that basis, the Bench held the termination legally unsustainable.
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Briefly, the appeal arose from the Calcutta High Court’s judgment upholding the quashing of the termination of Respondent No. 1, an Assistant General Manager (Networking), whose services had been terminated during probation by the Bank under Regulation 16(3)(a) of the Vijaya Bank (Officers’) Regulations, 1982. He had joined on Jan 05, 2004 on probation for one year, extendable by a further year, with confirmation being subject to satisfactory performance and conduct. After one year, he was not confirmed; instead, his probation was extended. In January 2005, he was suspended on allegations that he had attempted to remove four boxes of confidential tender documents from his office through his driver, and the Bank indicated that disciplinary proceedings could be initiated. His suspension was later revoked without prejudice to the Bank’s right to proceed departmentally, but no disciplinary enquiry was actually commenced. He was thereafter transferred to Kolkata, his probation was again extended, and ultimately his services were terminated on Nov 05, 2005 on the stated ground that his performance during the probationary period was unsatisfactory.
The Bank sought to justify the termination primarily on the basis of three memos said to reflect deficiencies in the employee’s work. The employee challenged the termination before the High Court, which found the decision-making process arbitrary and based on irrelevant considerations, including reliance on matters having no real nexus with his assessment for confirmation. The High Court noted, among other things, that the suspension and show-cause notice had not culminated in disciplinary proceedings, that appreciation for his work on core banking/OLTAS implementation had not been properly considered, and that at least one of the relied-upon communications had not even been served on him. The Single Judge quashed the termination, and the Division Bench dismissed the Bank’s appeal, while granting liberty to proceed in accordance with law if so advised.
