Madras High Court
D.Raja vs The Chief General Manager on 28 August, 2014
Author: N.Paul Vasanthakumar
Bench: N.Paul Vasanthakumar, K.Ravichandrabaabu
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 28 .08.2014 Coram THE HONOURABLE MR.JUSTICE N.PAUL VASANTHAKUMAR AND THE HONOURABLE MR.JUSTICE K.RAVICHANDRABAABU W.A. No.1902 of 2012 D.Raja ... Appellant Vs 1.The Chief General Manager, (Appellate Authority for OMRs) State Bank of India, Local Head Office, Nungambakkam, Chennai. 2.General Manager (Appointing Authority, Human Resources Department, Local Head Office, Circle Top House, Post Box No.737, 16 College Lane, Chennai 600 006. 3.Chief General Manager (Rural Business), State Bank of India, Rural Business Group, Rural Business (Alternate Channels), Corporate Centre, 8th Floor, State Bank Bhavan, Madams Cama Road, Mumbai 400 021. ... Respondents Prayer:-Writ Appeals filed under Section 15 of the Letters patent against the orders dated 27.07.2012, made in W.P.No.11880 of 2011. For Appellants : Mr.N.G.R.Prasad for M/s.Row and Reddy For Respondents : Mr.P.D.Audikesavalu for RR1 to 3 J U D G M E N T
This Writ Appeal is filed challenging the order made in W.P.No.11880 of 2011, dated 27.07.2012, in dismissing the Writ Petition filed by the appellant herein.
2. In the said Writ Petition, the appellant herein has challenged the order of discharge and consequently sought for a direction to the respondents 1 & 2 to reinstate him in service as Officer Marketing and Recovery (Rural) (OMR) as per the appointment order, dated 10.03.2008, read with State Bank of India Officers - Marketing and Recovery (Rural) Service Conduct Rules with backwages, continuity of service, annual increments, promotion to the higher grade and all other attendant benefits.
3. The case of the appellant as the writ petitioner before the Writ Court is as follows:-
(i) He was appointed as Officer-Marketing and Recovery (Rural) and Technical Officer Rural (OMR) on 10.03.2008, initially for a period of two years which was subject to renewal for further period depending on performance, suitability and need of the Bank. The respondent Bank framed Service Rules called Officer Marketing and Recovery (Rural) Service and Conduct Rules, dated 06.09.2004 (hereinafter referred to as 'OMR Rules'). As per the said OMR Rules, after three years as Officer-Marketing and Recovery, the appellant will get the benefit of S-1 Grade and after four years from then on, he would be given S-2 Grade and after another four years from then on, he should get S-3 Grade. It all depends upon his performance and suitability. As per Rule 20, if the Bank wants to terminate his service during the first year, one month's notice is necessary and if the service is sought to be terminated after one year, three months notice or pay in lieu thereof, is necessary.
(ii) During the first year of the appellant's appointment i.e., financial year 2008-09, he had brought in deposits of Rs.59.26 lakhs accounting for 79% achievement. As regards Non-Performing Assets, recovery rate was 125%, but with regard to the advances, the appellant's achievement was only 29%. The Bank called for his explanation through show cause notice dated 18.11.2009 and he gave his explanation on 24.11.2009. His explanation was accepted and the employment was not terminated. The Bank shifted the control of processing the proposals given by OMR's like the appellant Rural Centre Processing Centre and consequently, the appellant's performance improved vastly. His achievement as far as the advances itself was 83%, Deposits was 167% and Non-Performing Assets Recovery was 133%. Thus, during the financial year 2009-10, the appellant achieved the targets and was paid increment. Despite such achievement, the service of the appellant was terminated by order dated 30.03.2010, without giving an opportunity and without considering his achievement for the budget year 2009-10.
(iii) As per circular dated 18.08.2010, which refers to an earlier circular dated 28.07.2010, if an employee achieved 60% of the target for the year 2009-10, he could be permanently absorbed. Even this 60% of the target can be relaxed and the employee could still be considered for absorption on the basis of some satisfactory reasons. The appellant has achieved 83% of the target during the year 2009-10. Thus, he was entitled for permanent absorption, which was not considered and on the other hand he was discharged. Aggrieved against the order of discharge, the appellant filed an appeal before the first respondent. As the said appeal was not disposed of, the appellant approached this Court and filed W.P.No.13991 of 2010, wherein this Court directed the first respondent to dispose of the appeal, within a period of one month. Thereafter, the appeal was rejected by the first respondent by order dated 17.03.2011. Challenging those proceedings, the above said Writ Petition was filed.
4. The following are the averments made in short in the counter affidavit filed by the respondent Bank before the Writ Court:-
(i) The appellant was appointed as Officer (Marketing and Recovery) on contract basis for a period of two years from 31.03.2008 to 30.03.2010. He did not achieve the stipulated target of 60% for the budget year 2009-2010 and therefore, he was not eligible for renewal of the contract of service. Consequently, the order dated 30.03.2010, was issued informing that his contract ended on 30.03.2010 and he was not required to attend the office from 31.03.2010 onwards. Though the appellant was appointed on contract basis for two years, the same could be extended depending upon the performance of the Officer and need of the Bank. The appellant is not having any right to continue in employment, after expiry of the contract period. When the performance of the appellant was reviewed, it was found that he had achieved only 23.56% as against required target for the year ended 31.03.2009 and therefore, he failed to qualify for renewal. In terms of the scheme for appointment and extension of service and as per the circular letter issued by the Corporate Centre of the respondent, extension of the contract was considered only to those officers who had achieved minimum 60% of the target for each year. The appellant had ceased to be in service from 30.03.2010 onwards and hence, he could not claim any benefits from the circulars dated 20.07.2010, 26.07.2010 and 18.08.2010, issued subsequently.
5. The learned Single Judge after considering the rival pleadings and also the submissions of the learned counsels appearing on either side, dismissed the Writ Petition by holding that it is for the parties to fix the duration of the contractual appointment and this Court cannot interfere and to make appointment to run beyond the period postulated in the contract, especially when, such period of contract comes to an end by efflux of time. The learned Single Judge also pointed out that the subsequent circulars, which do not have any retrospective operation, cannot be made applicable to the appellant, who was discharged on 30.03.2010. The learned Single Judge further held that the Writ Court cannot sit in the arm chair of the Administrator to decide whether a more reasonable decision or course of action could have been taken in the given circumstances.
6. Mr.N.G.R.Prasad, the learned counsel appearing for the appellant submitted as follows:-
The termination was not in conformity with Rule 20 of the above said Rules. The appellant was paid a sum of Rs.52,770/- being the variable pay from April 2009 to March 2010 through proceedings dated 01.02.2011 of the respondent Bank and the said payment would show that the appellant's performance was about 83%, which was more than the required target. When the performance was good and the appellant was paid the variable pay, his service ought not to have been terminated or discharged without absorbing him into regular employment. Though the appointment would show that it was a tenure appointment, in effect, it is not so, in view of the clause contained therein permitting continuance of the employment after the period of two years. Even if the performance of the appellant was not above the target during the first year, admittedly the appellant achieved the target and reached 83% during the second year and the same was sufficient to extend the benefit of absorption. The order of discharge causes stigma on the appellant, since the same was admittedly made based on the alleged poor performance of the appellant, without hearing him. Therefore, the said order, having been passed in violation of principles of natural justice, cannot be sustained. The order of discharge is not sustainable also on the ground of discrimination, since some of the juniors of the appellant were given absorption to the regular employment, even though their performances were on par with the appellant even for year or less than one year.
7. Per contra, Mr.P.D.Audikesavalu, learned counsel appearing for the respondent Bank submitted as follows:-
The appointment of the appellant was purely on contract basis for a period of two years and the same is renewable subject to the condition that he performs to the satisfaction of the Bank by achieving required targets. Such achievement of the target and performance must exist in both years. Achievement of the target for any one of the years will not entitle the appellant for continuation of service or absorption. The circulars relied on by the appellant, which were issued subsequently to the order of discharge, do not have the retrospective operation. In support of his submission, the learned counsel placed reliance on the decision of the Hon'ble Supreme Court in the case of Gridco Ltd., & Anr., vs. Sadananda Doloi & Ors., reported in AIR 2012 SC 729, and the unreported decision of this Court in W.P.No.22698 of 2009, dated 08.06.2011, made by one of us (N.PAUL VASANATHAKUMAR,J.).
8. We have heard the rival submissions made by the learned counsels appearing on either side and perused the materials placed before us.
9. In this case, the appellant was appointed as Officer-Marketing and Recovery (Rural) and Technical Officer Rural through proceedings dated 10.03.2008, issued by the respondent Bank. Clause 2 of the appointment order reads as follows:-
2. Your appointment in the Bank will be purely contractual in nature, initially for 2 (two) years from the date of joining and the contract of appointment will be renewable on completion of contractual period depending on your performance, suitability and need of the Bank. Please note that you will be posted at rural branch (es) of the Bank and request for posting at any particular centre will not be entertained. However, your services are liable to be transferred to any branch/offices of the bank depending on the needs and exigencies of service and may not be restricted to any Circle/State.
(emphasis supplied)
10. From the perusal of the said appointment order, it is evident that though the Bank appointed the appellant for a period of two years purely on contract basis, however made a provision for renewal of such appointment on completion of contractual period, depending on the performance, suitability of the appellant and need of the Bank. In other words, if the performance and suitability of the appellant were upto the expected target and mark, he would be entitled for renewal of the appointment on completion of the contractual period.
11. It is not the case of the respondent Bank that there was no need of the said post or service attached to the said post to the Bank. Therefore, it is crystal clear that the performance and suitability of the appellant are the only criteria required for considering renewal of the service. At this juncture, it is to be noted that such entitlement of renewal was not made at the discretion of the Bank. On the other hand, the phrase will be renewable used in clause 2 of the appointment order would show that it is mandatory on the part of the respondent Bank to renew the service period, if the appellant satisfies the performance and suitability criteria, even though the initial appointment was purely on contract basis. Clause 10 of the Conduct Rules of the respondent Bank which deals with 'Increments', states that amount of annual increments shall be fixed strictly on performance based in each case. In the very same clause, it is further contemplated that in case, an Officer does not get the annual increments/ raise consecutively for the second year as well, his contractual service may be terminated at Bank's discretion. Clause 10 of the said Conduct Rules reads as follows:-
10. Increments The amount of annual increments shall be fixed by the Central Office Human Resources Committee and its sanction shall be strictly performance based and hence it could vary from 100% to nil depending on performance in each case. The quantum of increment will be decided based on the achievement of Key Responsibility Areas (KRA). The increment amount may vary from case to case.
An Evaluation Committee will be specifically designated for this purpose and its constitution will be as under:-
Designated Members of the Committee Competent Authority to sanction quantum of increment OMR (Rural) Posted in Branches/ Regional Offices CM (Agri/Rural/CSC) CM (GB) CM (HR) AGM in-charge of Region OMR (Rural) Posted in LHOs AGM (BPMM) AGM (ABU/Rural) AGM (HR) DGM & CirDO The aforesaid Committee will also be empowered to decide the quantum of variable pay in terms of Rule(8) ibid.
Composition of Evaluation Committee can be changed by the Central Office Human Resources Committee at its discretion. Based on the recommendations of the Committee, the Competent Authority as mentioned above will take a decision in regard to the quantum of increment to be sanctioned.
In cases, where the Evaluation Committee has decided, after recording reasons therefor, to deny annual raise/increment, the concerned officer will be advised in writing, to improve his performance as non grant of annual raise/increment will be deemed to be non-satisfactory performance and he/she will be put to notice to improve upon the same. In case an officer does not get the annual increment/raise consecutively for the second year as well, his contractual service may be terminated at Bank's discretion.
12. For better appreciation Rule 20 of the OMR Rules, which deals with 'Termination of Appointment', reads as follows:-
20.Termination of Appointment 20.1 These Officers are being recruited by the Bank for skilled/identified jobs and, therefore, their continuance in the Bank's service on contract inter alia will be incumbent upon the needs of the Bank. As such their service can be terminated at any time by giving due notice/pay in lieu thereof.
20.2 The Bank may at its sole discretion terminate the contractual appointment by giving one months' notice or one months gross emoluments in lieu thereof to the Officers during the first year of contract of service and thereafter by giving 3 months notice or 3 months gross emoluments in lieu thereof. The gross monthly emoluments would mean the total monthly emoluments on Cost to Bank basis.
The decision in this respect would be taken by the Appointing Authority on the recommendations of the Departmental Head under whom the Officer is working. The Officer has the option to appeal against the order to the Appellate Authority within 15 days of passing the order.
The option to terminate the contract of service of the Officer would be exercised whenever the Appointing Authority is satisfied by record and recommendations that it is not in the interest of the Bank to continue the appointee on Bank's contractual service and would interalia include the following circumstances.
The Officer has not been attending to his/her duties in the Bank for a continuous period of 30 days after exhausting all leave due to him/her or is unauthorizedly absent for a continuous period of 30 days, without any sanctioned leave, or after his/her request for leave or extension of leave has been refused in writing.
In case any officer is not sanctioned annual increment/ raise consecutively for 2 years his contractual appointment may be terminated at Bank's discretion as it will be deemed that he has not rendered satisfactory performance.
13. In this case, it is not in dispute that the appellant was given the increment of Rs.52,770/- for the period from April 2009 to March 2010 through proceedings dated 01.02.2011. With this factual background, if we look into the order of discharge, dated 30.03.2010, it reads as if the appellant was discharged from service with effect from 31.03.2010, only because his contract period came to an end on 30.03.2010. For better appreciation, the above order of discharge is extracted hereunder:-
You were appointed in the bank as Officer Marketing & Recovery (Rural) on contract basis.
2. Your appointment was contractual in nature for a period of 2 (two) years from 31.03.2008 to 30.03.2010. The period of your contract will end on 30.03.2010. Since the period of your contract will come to an end on 30.03.2010, at the close of business hours, you will stand discharged from the Bank with effect from 31.03.2010. You are not required to attend the office from the said date i.e., 31.03.2010. This communication is discharge certificate/letter from the bank as regards your service on contractual basis.
14. No doubt that the Bank is entitled to discharge the appellant on the expiry of the two years of contract period, provided the terms of appointment were to that effect. But the terms of appointment were otherwise, as we dismissed supra. Hence the stand of the Bank taken in the discharge order may be right, but for the renewal clause made in the order of appointment itself followed by the counter statement made by the Bank before this Court stating that the discharge was made only due to poor performance of the appellant. As per Rules, in case any officer is not sanctioned annual increment/raise consecutively for two years, his contractual appointment may be terminated as if the person has not rendered satisfactory performance. Since the performance of the appellant for the second year was upto the mark, admittedly increment was sanctioned to him. Therefore, it is crystal clear that discharge was not due efflux of time, but on the reason of poor performance only for one year (first year). Thus, the order is not discharge simplicitor and on the other hand, it undoubtedly causes stigma on the service of the appellant. Such stigmatic order cannot be passed without affording an opportunity of hearing to the appellant. If the discharge was made simply on the reason of efflux of time and if there is no rule to give continuance, then there is no necessity for issuing any notice to the appellant, as it does not cause any stigma. But in this case, a combined reading of the order of appointment dated 10.03.2008 as well as the Service Rule as referred supra and the discharge order dated 30.03.2010, would show that the discharge cannot be made simply on the reason of efflux of time, unless it is also stated that the performance and suitability of the appellant was not upto the expected mark consecutively for two years or within the required target percentage. Needless to say that before assigning such reason, the affected party namely, the appellant should be put on notice and sufficient opportunity be given to him to explain. Admittedly, the performance of the second year was not considered, which vitiated the order of discharge.
(i) In Jagadish Mitter vs. Union of India reported in AIR 1964 SC 449, the Hon'ble Supreme Court in para 9 has held as follows:-
9. It is also now settled that the protection of Article 311 can be invoked not only by permanent public servants, but also by public servants who are employed as temporary servants, or probationers, [vide Parshotam Lal Dhingra case1 (p. 858)], and so, there can be no difficulty in holding that if a temporary public servant or a probationer is served with an order by which his services are terminated, and the order unambiguously indicates that the said termination is the result of punishment sought to be imposed on him, he can legitimately invoke the protection of Article 311 and challenge the validity of the said termination on the ground that the mandatory provisions of Article 311(2) have not been complied with. In other words, a temporary public servant or a probationer cannot be dismissed or removed from service without affording him the protection guaranteed by Article 311(2)."
(ii) In Babulal vs. State of Haryana reported in AIR 1991 SC 1310, the Hon'ble Supreme Court in para 8, has stated as herein below:-
"8. Moreover, from the sequences of facts of this case the inference is irresistible that the impugned order of termination of the service of the appellant is of penal nature having civil consequences. It is well settled by several decisions of this Court that though the order is innocuous on the face of it still then the court if necessary, for the ends of fair play and justice can lift the veil and find out the real nature of the order and if it is found that the impugned order is penal in nature even though it is couched with the order of termination in accordance with the terms and conditions of the order of appointment, the order will be set aside. Reference may be made in this connection to the decision of this Court in Rajinder Kaur v. State of Punjab1 in which one of us is a party. It has been held that: (SCC HN) "The impugned order of discharge though stated to be made in accordance with the provisions of Rule 12.21 of the Punjab Police Rules, 1934, was really made on the basis of the misconduct as found on enquiry into the allegation behind her back. Though couched in innocuous terms, the order was merely a camouflage for an order of dismissal from service on the ground of misconduct. This order had been made without serving the appellant any charge-sheet, without asking for any explanation from her and without giving any opportunity to show cause against the purported order of dismissal from service and without giving any opportunity to cross-examine the witnesses examined. The order was thus, made in total contravention of the provisions of Article 311(2) and was therefore, liable to be quashed and set aside."
(iii) The Unreported decision of this Court in W.A.(MD).No.240 of 2007, dated 24.09.2007, this Court at para 7 has held as follows:-
"7.On the other hand, since the order of termination was passed casting stigma, it was necessary for the University to hold enquiry. That apart, the order which was purportedly passed by the Vice Chancellor had not been placed before the Syndicate within the stipulated time.
(iv) In C.Santhini vs. The Director of School Education reported in 2013-1-TNLJ 259 (DB), this Court at paragraphs 11 to 14 has held as follows:-
11.The Learned Special Government Pleader for the respondents contends that the second respondent in his proceedings RC.No.15168/B.1/82 dated 10.09.1982 placed the Appellant/Petitioner under suspension with immediate effect and the said order was sent to her through the Headmaster, Government Girls High School, Alangayam to her address at Thiru Nelananda Kulalar Vidhuthi, Jayalakshmi Vilas, Kutralam, Tenkasi Taluk, Tirunelveli District, on 13.09.1982 through the registered post and that, the Headmaster in his letter dated 21.09.1982 informed that the cover was returned with an endorsement 'No such addressee'.
12.The Learned Special Government Pleader for the respondents draws the attention of this Court that the Appellant/Petitioner was once again served with the copy of the suspension order to her address at 62-63 Madurai Road, Tirunelveli and also to her address at 43 Town Police Line, Villupuram Post, South Arcot District (through proper channel) and the same was returned with an endorsement ' left', returned to the 'sender'.
13.Added further, the Learned Special Government Pleader for the respondents brought to the notice of this Court that in continuation of the suspension orders, specific charges were also framed against the Appellant/Petitioner, for various irregularities committed by her in the capacity of Headmistress as per the Proceedings Rc.No.15168/B.1/82 dated 27.11.1982 of the second respondent (served through the Inspector of Girls Schools, Tirunelveli) and the same was sent by Registered post with Acknowledgement Due. However, the said envelope was returned with an endorsement 'party was not available' in the place of address for a long time and the present whereabouts were not known.
14.Apart from the above, as per letter in Rc.No.18464/C.1/81 dated 21.03.1983, the Chief Educational Officer, Tirunelveli framed specific charges against the Appellant/Petitioner in regard to various irregularities pertaining to financial transactions committed during her service as Headmaster at Government High School, Nanguneri and Villicheri, Tirunelveli District and that, she failed to submit her defence statement.
15. Considering all the above facts, circumstances and case laws, we are of the view that the respondent Bank is not justified in passing the order of discharge without affording an opportunity of hearing to the appellant, more particularly, in the light of the existence of the mandatory renewal clause in the order of appointment itself. If an order was passed in violation of principles of natural justice and such order is found to be illegal, unreasonable and unfair, Writ Court, by exercising its jurisdiction under Article 226 of the Constitution of India, can interfere with the same for rendering substantial justice between the parties. The Hon'ble Supreme Court in the case of Gridco Limited and Anr., referred supra, has held that this Court is entitled to the judicial review of the action even in contract matter to determine whether there was any illegality, perversity, unreasonableness, unfairness and irrationality. The relevant para 26 of this said decision is extracted hereunder:-
26...... Remedy for a breach of a contractual condition was also by way of civil action for damages/compensation. With the development of law relating to judicial review of administrative actions, a writ Court can now examine the validity of a termination order passed by public authority. It is no longer open to the authority passing the order to argue that its action being in the realm of contract is not open to judicial review. A writ Court is entitled to judicially review the action and determine whether there was any illegality, perversity, unreasonableness, unfairness or irrationality that would vitiate the action, no matter the action is in the realm of contract.
16. The learned counsel for the respondents relied on an unreported decision made in W.P.No.22698 of 2008 dated 08.06.2011, rendered by one of us ((N.PAUL VASANATHAKUMAR,J.). We are of the view that the said decision is distinguishable on facts. In that case, the renewal was contemplated as discretionary action of the Bank as per Rule 4 of the State Bank of India Service Rules for Customer Relation Executives (Personal Banking), 2007, wherein it was stated that the contract may be renewed on condition of contract period. Whereas in the present case, the Rule 4.1 of State Bank of India Officers Marketing and Recovery (Rural) Service and Conduct Rules contemplates that the contract will be renewable on completion of contract period, which reads as follows:-
4.1 The appointment of Officers Marketing & Recovery (Rural) will be purely contractual in nature for a specified period. The contract will be renewable on completion of contractual period depending on the performance and suitability of the Officers Marketing & Recovery (Rural) at the Bank's discretion and need of the Bank.
17. Therefore, we find that the above said unreported decision does not lend any support to the present case. At any event, as we find that the order is stigmatic in nature and passed without considering Rule 20 of the OMR Rules, the said decision cannot be pressed into service, since that issue was not at all raised and decided therein.
18. Since we are convinced that the impugned order of discharge was made in violation of principles of natural justice and without referring to Rule 20.2 of the OMR Rules, we are not going into the other issues raised by the appellant before this Court, more particularly, with regard to his claim that the Bank has discriminated him even though some of the juniors were given the benefit of absorption, who have got lessor percentage than the appellant and that one year performance is sufficient to grant the benefit of extension of service or absorption. As we propose to remit the matter back to the respondents, more particularly, the third respondent for considering the matter afresh after affording an opportunity of personal hearing to the appellant, all those issues can be raised by the appellant before the third respondent who in turn will consider the same and decide it on merits.
19. Accordingly, the Writ Appeal is allowed and the impugned orders challenged in the Writ Petition are set aside and the matter is remitted back to the third respondent for fresh consideration after affording an opportunity of hearing to the appellant. Though we have set aside the order of discharge, we make it clear that the same will not entitle the appellant to continue in service in view of the fact that the two years of contract period has come to an end on 30.03.2010 itself. The issue which has to be considered and decided by the third respondent after hearing the appellant is as to whether he has satisfied the required norms for seeking absorption or extension of service based on his performance and suitability in terms of Rule 20.2 of the OMR Rules. Needless to say that while considering the said issue, the third respondent will also look into all the relevant Rules and circulars and also the grievance of the appellant on the ground of discrimination etc., and pass appropriate orders on merits, within a period of eight weeks from the date of receipt of a copy of this order. No costs. Consequently, connected miscellaneous petition is closed.
(N.P.V.,J) (K.R.C.B.,J)
28.08.2014
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Index :Yes
Internet:Yes
To
1.The Chief General Manager,
(Appellate Authority for OMRs)
State Bank of India,
Local Head Office,
Nungambakkam, Chennai.
2.General Manager (Appointing Authority,
Human Resources Department,
Local Head Office, Circle Top House,
Post Box No.737, 16 College Lane,
Chennai 600 006.
3.Chief General Manager (Rural Business),
State Bank of India,
Rural Business Group,
Rural Business (Alternate Channels),
Corporate Centre, 8th Floor,
State Bank Bhavan,
Madams Cama Road,
Mumbai 400 021.
N.PAUL VASANTHAKUMAR,J.
AND K.RAVICHANDRABAABU,J.
Pbn
Pre-Delivery Judgment in
W.A. No.1902 of 2012
28.08.2014