Madras High Court
H. Omkarappa vs Brigadier Chaitanya Prakash, ... on 11 August, 2004
ORDER K.P. Sivasubramaniam, J.
1. In W.P. No. 19169 of 1999, the petitioner, who was the erstwhile Executive Director - Marketing on probation in Hindustan Photo Films Manufacturing Company Limited (H.P.F.), seeks for a Certiorari to quash the impugned order dated 29.11.1999, terminating the probationary services of the petitioner. Subsequent to the impugned order, he responded to the circular issued by the Public Enterprises Selection Board for the post of Managing Director of M/s. Spices Trading Corporation Ltd. He was called for the interview. But as a result of the information received by the Public Enterprises Selection Board and Spices Trading Corporation from H.P.F. regarding the termination of probationary services of the petitioner, he was informed not to appear for interview. As a result, in W.P. No. 9842 of 2000, the petitioner has prayed for a declaration to declare the exclusion of the petitioner from the selection process for the post of Managing Director of M/s. Spices Trading Corporation Limited as illegal and void and to direct the respondents to hold a fresh selection for the post of Managing Director by also considering the petitioner's claims.
2. In W.P. No. 19169 of 1999, the crucial issue being the legality or otherwise of the order of termination of the petitioner's probation and in view of my ultimate conclusion that the impugned order is stigmatic and hence liable to be set aside, I feel that it will not be necessary to deal with the elaborate pleadings by both parties on issues which do not have much relevance to the validity of the impugned order.
3. Detailed pleadings have been submitted and elaborate arguments were made on the circumstances relating to the petitioner's appointment, how he was functioning and how he was treated by the Management during the period of probation.
4. Mr. Prakash, learned counsel for the petitioner, contends that the petitioner belongs to Adi Karnataka community and from the beginning, he was treated very badly, not given proper treatment or facilities which are normally available to the post to which he was appointed. Even the basic facilities were denied to him and the Chairman and Managing Director, who has been impleaded by name as the first respondent, was, from the beginning, treating the petitioner very badly and deliberately in a manner not permitting the petitioner to function in an effective manner. He would also explain in detail that the commissions or omissions or shortcomings attributed to the petitioner were not only false, but arose only out of circumstances designed by the C.M.D., not permitting the petitioner to discharge his duties in an effective manner. Learned counsel also took me through the records in support of his contention that the termination was not a simpliciter termination of probation, but highly stigmatic.
5. Per contra, Mrs. Rita Chandrasekaran, appearing for respondents-1 and 2 in W.P. No. 19169 of 1999, would state in detail that the performance of the petitioner was not only very much below expectations, but also that the attitude of the petitioner was always confrontational and indulging in a series of intemperate and disrespectful behaviour. In spite of such behaviour, the petitioner was afforded an opportunity to improve himself by granting one extension of the probationary period with the hope that he would improve himself. If the C.M.D. really wanted to do away with the petitioner, such an extension need not have been given. But, as the petitioner did not register any improvement during the extended period also, there was no other alternative except to terminate the probation. Learned counsel also contends that the impugned order is a simpliciter order of termination and no stigma is attached to the said order. Though elaborate submissions have been made, I intend to avoid dealing with such factual contentions inasmuch as this case may be disposed of on the short ground that the impugned order is stigmatic and hence, as it was not preceded by any enquiry, it is liable to be set aside.
6. In the context as to whether the impugned order can be characterised as stigmatic or not, both the learned counsel relied on the observations contained in some of the rulings of the Supreme Court.
7. It is a settled proposition that the issue as to whether an order of termination is stigmatic or not is to be decided on the facts and circumstances of each case and also even if the termination order may be simple and innocuous, if the real intention behind it is to get rid of the employee for any misconduct on ulterior reasons, it would be necessary for the Court to travel beyond the order of termination and find out what in reality is the background to terminate the services of a probationer. In RADHE SHYAM GUPTA V. U.P. STATE AGRO INDUSTRIES CORPN. LTD. , after analysing previous decisions, the Supreme Court referred to the expression of Justice Gajendragadkar in JAGDISH MITTER V. UNION OF INDIA that "the form in which the order terminating his services is expressed will not be decisive" and proceeded further to hold that the substance was more important than the form. In Paragraphs 33 and 34, the Supreme Court has held as follows:
"33. It will be noticed from the above decisions that the termination of the services of a temporary servant or one on probation, on the basis of adverse entries or on the basis of an assessment that his work is not satisfactory will not be punitive inasmuch as the above facts are merely the motive and not the foundation. The reason why they are the motive is that the assessment is not done with the object of finding out any misconduct on the part of the officer, as stated by Shah, J. (as he then was) in Ram Narayan Das case. It is done only with a view to decide whether he is to be retained or continued in service. The position is not different even if a preliminary enquiry is held because the purpose of a preliminary enquiry is to find out if there is prima facie evidence or material to initiate a regular departmental enquiry. It has been so decided in Champaklal case. The purpose of the preliminary enquiry is not to find out misconduct on the part of the officer and if a termination follows without giving an opportunity, it will not be bad. Even in a case where a regular departmental enquiry is started, a charge-memo issued, reply obtained, and an enquiry officer is appointed - if at that point of time, the enquiry is dropped and a simple notice of termination is passed, the same will not be punitive because the enquiry officer has not recorded evidence nor given any findings on the charges. This is what is held in Sukh Raj Bahadur case and in Benjamin case. In the latter case, the departmental enquiry was stopped because the employer was not sure of establishing the guilt of the employee. In all these cases, the allegations against the employee merely raised a cloud on his conduct and as pointed by Krishna Iyer, J. in Gujarat Steel Tubes case the employer was entitled to say that he would not continue an employee against whom allegations were made the truth of which the employer was not interested to ascertain. In fact, the employer by opting to pass a simple order of termination as permitted by the terms of appointment or as permitted by the rules was conferring a benefit on the employee by passing a simple order of termination so that the employee would not suffer from any stigma which would attach to the rest of his career if a dismissal or other punitive order was passed. The above are all examples where the allegations whose truth has not been found, and were merely the motive.
34. But in cases where the termination is preceded by an enquiry and evidence is received and findings as to misconduct of a definitive nature are arrived at behind the back of the officer and where on the basis of such a report, the termination order is issued, such an order will be violative of the principles of natural justice inasmuch as the purpose of the enquiry is to find out the truth of the allegations with a view to punish him and not merely to gather evidence for a future regular departmental enquiry. In such cases, the termination is to be treated as based or founded upon misconduct and will be punitive. These are obviously not cases where the employer feels that there is a mere cloud against the employee's conduct but are cases where the employer has virtually accepted the definitive and clear findings of the enquiry officer, which are all arrived at behind the back of the employee even though such acceptance of findings is not recorded in the order of termination. That is why the misconduct is the foundation and not merely the motive in such cases. "
8. In DIPTHI PRAKASH BANERJEE V. SATYENDRA NATH BOSE NATIONAL CENTRE FOR BASIC SCIENCES, CALCUTTA & OTHERS (1999 (I) LLJ 1054, the Supreme Court dealt with a case of simple and innocuous order of termination on the ground of unsatisfactory performance and also a reference was made to few earlier communications of extending the period of probation. After referring to the earlier judgment in INDRAPAL GUPTA V. MANAGING COMMITTEE , the Supreme Court has held as follows:
"35. The above decision is, in our view, clear authority for the proposition that the material which amounts to stigma need not be contained in the order of termination of the probationer but might be contained in any document referred to in the termination order or in its Annexures. Obviously, such a document could be asked for or called for by any future employer of the probationer. In such a case, the order of termination would stand vitiated on the ground that no regular inquiry was conducted. We shall presently consider whether, on the facts of the case before us, the documents referred to in the impugned order contain any stigma. "
9. The above two decisions clearly bring out that each case has to be decided on the factual background in which the order came to be issued and even if the order is a simple one mentioning only the unsatisfactory performance as being the ground of termination, if there are materials to show that the order was really the result of the perception by the Management regarding any misconduct of the employee, then if such termination was not preceded by any enquiry, the order would be bad. Even in the latest judgment which was in fact relied on behalf of the respondents themselves, namely, MATHEW P. THOMAS Vs. KERALA STATE CIVIL SUPPLY CORPORATION LTD. , the Supreme Court has expressed as follows:
" ... From a long line of decisions it appears to us that whether an order of termination is simpliciter or punitive has ultimately to be decided having due regard to the facts and circumstances of each case. Many a times the distinction between the foundation and motive in relation to an order of termination either is thin or overlapping. It may be difficult either to categorize or classify strictly orders of termination simpliciter falling in one or the other category, based on misconduct as foundation for passing the order of termination simpliciter or on motive on the ground of unsuitability to continue in service. If the form and language of the so-called order of termination simpliciter of a probationer clearly indicate that it is punitive in nature or/and it is stigmatic there may not be any need to go into the details of the background and surrounding circumstances in testing whether the order of termination is simpliciter or punitive. In cases where the services of a probationer are terminated by an order of termination simpliciter and the language and form of it do not show that either it is punitive or stigmatic on the face of it but in some cases there may be a background and attending circumstances to show that misconduct was the real basis and design to terminate the services of a probationer. In other words, the facade of the termination order may be simpliciter, but the real face behind it is to get rid of the services of a probationer on the basis of misconduct. In such cases it becomes necessary to travel beyond the order of termination simpliciter to find out what in reality is the background and what weighed with the employer to terminate the services of a probationer. In that process it also becomes necessary to find out whether efforts were made to find out the suitability of the person to continue in service or he is in reality removed from service on the foundation of his misconduct. "
10. In the background of the statement of law as above, we may examine the peculiar features of this case. Undoubtedly, the order which was communicated to the petitioner dated 29.11.1999 is a simple order of termination citing the ground of unsatisfactory performance. The order is also passed by the Chairman-cum-Managing Director, who is the competent authority. But a reading of the impugned order as well as the facts stated in the counter affidavit disclose that the decision to terminate was actually taken by the Board of Directors (B.O.D.). In the impugned order itself, it is stated that the Management was not satisfied with the overall performance of the work by the employee. Apparently, due to the personal friction developed between the two and allegations against the C.M.D. by the employee, the C.M.D. had rightly taken a decision to leave it to the B.O.D. to take the ultimate decision as could be seen from paragraph 7 of the counter affidavit of the first respondent which reads as follows:
"It is submitted that to the utmost dismay of the respondents, the petitioner did not improve his performance inspite of extending the probation by three months period to get over his shortcomings and non-performance. It is further submitted that as per the terms of appointment of the petitioner and service rules of the company, he is liable to be terminated from the services of the company during or after the completion of his probation period or during the extended period or the completion of the extended period of probation. Though the first respondent, as the appointing authority of the petitioner, has the authority to do away with the services of the petitioner by terminating the services of the petitioner at any point of time during the above mentioned period, the first respondent before taking recourse to such an action, had chosen to place the entire assessment records before the Board of Directors of the second respondent company. In the meeting of the Board of Directors of the Company on 27.11.99 the performance assessment report of the petitioner was placed as agenda No. 225.a.3 and the performance assessment report of the petitioner was reviewed by the Board of Directors. Consequently, the Board passed the resolution to terminate the petitioner's services. "
11. It is therefore clear that the decision was actually taken only by the B.O.D., and in turn, the Board had relied upon and have been fully guided by the Performance Assessment Report (P.A.R.) prepared by the Managing Director. It therefore becomes necessary to scan the Board's proceedings. The following is the extract of the minutes of the 225th meeting of the Board of Directors held on 27th November 1999:
"Review of Performance of Shri H. Omkarappa, Executive Director (Marketing) (Officer on Probation) during probation and extended period of probation.
The Board considered the performance of Shri H. Omkarappa, Executive Director (Marketing) who was appointed on probation with effect from 3.9.1998. It was noted that he was initially placed on probation for a period of one year upto 2.9.99. Due to unsatisfactory performance during this period, his probation was extended by CMD for a period of 3 months. The extended period of probation is expiring on 2nd December 1999. Accordingly, the Board reviewed the performance of Shri H. Omkarappa during the probation period (including the extended period).
In making an assessment of the performance of the Officer, the Performance Assessment Report dated 26.11.1999 submitted to the Board along with the various Annexures were carefully considered and discussed. In particular, the Board also carefully considered each of the points made by Shri H. Omkarappa in his letter dated 13th November 1999 in response to the CMD's letters dated 4th November 1999 and 8th November 1999. While scrutinising the Performance Assessment Report placed before the Board and the letter dated 13th November 1999 of Shri H. Omkarappa, the Board requisitioned all connected papers relating to the various issues to arrive at an objective assessment on the performance of Shri H. Omkarappa.
On a careful consideration of the facts as revealed by the material placed before the Board, it was of the opinion that:
(a) The overall performance of Shri H. Omkarappa was not commensurate with the senior post of Executive Director (Marketing), to which he was appointed;
(b) He was unable to show any improvement in the area of Marketing of HPF's products, for which purpose he was specifically appointed (in view of the requirements of the Company at the present juncture);
(c) He did not exhibit any professional competence, leadership qualities and qualities of working as a member of a cohesive team.
The Board was also of the view, after reviewing the overall performance of Shri H. Omkarappa, that no useful purpose will be served by granting any further extension of his probation.
In view of the reasons indicated earlier, the Board decided that his services be terminated on or before 2nd December 1999 in accordance with Rule 3 of the Service Rules of HPF.
The following Resolutions were adopted:
"RESOLVED THAT the services of Shri H. Omkarappa, Executive Director (Marketing) be terminated on or before 2nd December 1999".
"RESOLVED FURTHER THAT the Chairman-cum-Managing Director be and is hereby authorised to take all necessary steps in the matter". "
12. The minutes, as extracted above, bring out that the B.O.D. had taken into consideration three materials for coming to the conclusion that the petitioner's overall performance was not satisfactory, that he was unable to show any improvement in the area of marketing and that he did not exhibit any professional competency, leadership qualities and qualities of working as a member of a cohesive team. The materials thus relied upon by the B.O.D. are as follows:
(1) The letter of the C.M.D. dated 4.11.1999;
(2) Response by the petitioner dated 13.11.1999;
(3) Performance Assessment Report (P.A.R.) by C.M.D. dated 26.11.1999 and the annexures thereon.
13. It follows that the above three materials have to be scrutinised considering that the Board had been guided by those materials. The first is the letter of the C.M.D. dated 4.11.1999, which is a confidential letter to the petitioner containing the review of his performance during the probation period. It has enlisted the alleged defective performance in marketing strategy, pricing strategy, identification and coordination of the sales, disposal of unsaleable items and ignorance of rules and regulations. The petitioner was also accused of misquoting and misrepresenting facts which reflected poorly on his integrity on personal qualities. To this letter, the petitioner responds by his letter dated 13.11.1999 in a very detailed manner. Apart from denying the allegation of non-performance, he has also stated that from the beginning, he was restrained from performing with his full capacity by the C.M.D. He has also listed several details which also, according to him, were purposeful harassment to demoralise him. In paragraph 6, he has also given details of transactions with third parties, which, according to him, were not handled properly by the C.M.D. It is not necessary to deal with the said letter in a detailed manner and it is sufficient to mention that he has given details denying the allegations of non-performance by him and also certain accusations against the C.M.D. as having been responsible for the situation.
14. Pursuant to this reply, the P.A.R. dated 26.11.1999 is prepared by the C.M.D., which is very heavily relied on by the B.O.D. A perusal of the P.A.R. also discloses previous reference not only to the alleged unsatisfactory performance of the petitioner, but also several damaging comments and conclusions by the C.M.D. regarding the character as well as the integrity of the petitioner. The following are some of the remarks contained in the P.A.R.:
(I) In the report, it is stated that the petitioner was given enough counselling about his drawbacks. It is however denied by the petitioner and in Page 2 of the report, it is stated that the weaknesses and shortcomings of the petitioner were communicated to him orally.
(II) Paragraph II(b) dealing with "pace of work" contains as many as 28 references of various commissions and omissions alleged as against the petitioner and recording the same in the minutes of the meetings of the Head of the Department. But it is not stated clearly as to whether the same had been communicated to the petitioner or not.
(III) While dealing with the personal conduct, in Paragraph (III), it is stated that the petitioner was making totally baseless allegations against his superiors, instigating other persons to write to external agencies, making malicious statements which are defamatory. He was also accustomed to throw threats on the colleagues and officers and also used abusive language. He is also accused of furnishing wrong figures misguiding the C.M.D. and the Director of Finance, and as such, lacks qualities of working as a member of a cohesive team.
(IV) While dealing with "Honesty/Integrity", it is stated that he had made malicious and disparaging statements against the C.M.D. and Director of Finance. His complaints against the C.M.D. are analysed and concluded that such statements are proved to be false. His action and complaints are stated to be highly perverse in nature. His complaints are also stated to be far from truth and that his action actually deserves disciplinary action in the normal course.
(V) At page 10, there are further allegations dealing with his objections for having stripped of his responsibilities as the head of the Security Department. It is stated that the petitioner, while functioning as the head of the Security Branch, is alleged to have acted with highhandedness and ruthlessly harassing his subordinate officers and that he was in the habit of utilising the security guards for his personal works and that his authoritarian behaviour has led to unhappiness among his subordinate officers.
(VI) He had made an unreasonable financial claim of Rs. 70,000/- towards transportation without any material. The said conduct amounts to financial impropriety.
(VII) The claim of arbitrary charges in his official tour to Chickmagalore is stated to reflect his questionable integrity.
(VIII) Under Part IV, "Loyalty", it is stated that he had become perennially disloyal to the company throughout his period of probation.
(IX) Under Part VII dealing with personal conduct, it is stated that he has made several allegations against the C.M.D. which were totally baseless and bereft of truth. After stating so, it is further recorded that the observations which are to follow are not connected with the assessment of his performance, but "intended to answer his allegations with a view to erase the misgivings he has developed in him." This is followed by a detailed analysis of the contentions raised by the petitioner and the reply/comments by the C.M.D.
15. The above are only references to some of the observations contained in the P.A.R., which has been the sole basis for the decision of the B.O.D. They contain not only the comments on the unsatisfactory nature of performance by the petitioner which may be within the absolute, unquestionable and unreviewable discretion of the B.O.D. But the conclusions as in the present case to the effect that the petitioner was misbehaving, misguiding the C.M.D. and the Director of Finance by furnishing wrong figures, being highly perverse in nature which deserves disciplinary action, acting highhandedly and ruthlessly with his subordinate officers, having committed financial impropriety, exhibiting questionable integrity, being perennially disloyal to the company etc., are remarks which are very grave and undoubtedly stigmatic. If such comments have weighed with the B.O.D., it is needless to emphasise that the said allegations are highly damaging and as such, the petitioner ought to have been subjected to an enquiry.
16. We may even assume for the sake of discussion that every word of what the C.M.D. had stated against the petitioner is true and can be substantiated. But justice should not only be done but should also appear to have been done is the basic philosophy underlying the requirement that in the event of a probationer being ousted on any stigmatic ground, then he should be heard, failing which, he would be unfairly prejudiced. In fact, in the case of the petitioner, it has become true, as could be seen from the subsequent event of having been denied consideration for appointment in Spices Trading Corporation Ltd. and the Public Enterprises Selection Board, treating him as unfit for appointment in any of the institutions under its fold (subject matter in W.P. No. 9842 of 2000).
17. Admittedly, the petitioner had been deprived of being considered for appointment in Spices Trading Corporation Ltd., only because of the circumstances under which H.P.F. had terminated the probation of the petitioner. Though the impugned order of the petitioner was issued by the C.M.D. and is, on the face of it, innocuous, it is also clear from the impugned order itself as well as from the counter affidavit that the decision was taken only by the Management/B.O.D. The minutes of the B.O.D. referred to the letters of the C.M.D. and the reply of the petitioner. The allegations and the reply thereon are very serious in nature, but considering the fact that serious allegations have been made against the C.M.D., the B.O.D. must have gone into the issue in detail by giving a proper opportunity to the petitioner. The B.O.D. should not have blindly accepted the P.A.R. which is prepared only by the C.M.D. The P.A.R. is nothing more than a counter to the letter of the petitioner dated 13.11.1999. The comments made by the C.M.D. may be fully justified and proved, but he cannot render a final verdict on the various allegations against himself. He had dealt with the allegations against him in a very detailed manner and had finally concluded that the allegations against him are baseless. It is true that he has a right to express his views on the allegations. But the B.O.D., as an independent body, should have considered the merits of the allegations and counter allegations. The C.M.D. had rightly placed it before the B.O.D. for its decision even though he was himself the competent authority, bearing in mind that the petitioner had made serious allegations against the C.M.D. However, the B.O.D. had chosen to blindly accept the P.A.R. without providing any opportunity to the petitioner, ignoring that the report contains several damaging and stigmatic comments about the petitioner. The fact that the P.A.R. had weighed with the B.O.D. is admitted in the minutes as well as in the counter affidavit. It has been stated positively in the counter affidavit that the P.A.R. of the petitioner was reviewed by the Board and consequently, the Board of Directors passed the resolution to terminate the services of the petitioner.
18. I am inclined to summarise my conclusions as follows:
Though the impugned order by the competent authority is innocuous, the actual decision is only by the B.O.D. The minutes of the B.O.D. refers to and relies on the P.A.R. dated 26.11.1999, which contain many serious/damaging and stigmatic comments not only on the performance, but also on the integrity, conduct and loyalty of the petitioner. Therefore, the conclusions of the B.O.D. could not have been validly arrived at without giving a proper opportunity to the petitioner. The Board of Directors had no means of direct contact with the petitioner and his functioning and therefore, the B.O.D. ought to have given proper opportunity to the petitioner. As stated earlier, the harmful effect of the impugned action against the petitioner is proved by the subsequent fact of denial of employment by Spices Trading Corporation Ltd. Hence, the impugned order is liable to be quashed.
19. Though in W.P. No. 9842 of 2000 I have heard Mr. Prakash as well as Mr. V.T. Gopalan, learned Additional Solicitor General of India appearing for the first respondent-Public Enterprises Selection Board and Mr. Sanjay Mohan for Spices Trading Corporation Ltd. in detail as regards the correctness or otherwise of the denial of consideration of the petitioner's claims for being appointed as the Managing Director of Spices Trading Corporation Ltd., no purpose would be served in dealing with the said writ petition for at least two reasons. Firstly, as the petitioner succeeds in W.P. No. 19169 of 1999, his services with H.P.F. should continue and hence, his right to be considered for appointment in Spices Trading Corporation Ltd. does not survive for consideration. Consequently, for the post of Managing Director, being a selection post, the petitioner can only stake a claim for being considered along with others. Secondly, the appointment itself is only for five years and as on date, a period of more than four years have passed by from 28.6.2000, on which date, the fourth respondent took charge. Therefore, no useful purpose would be served in adjudicating the issues raised in W.P. No. 9842 of 2000.
With the result, W.P. No. 19169 of 1999 is allowed and the impugned order dated 29.11.1999 is quashed. W.P. No. 9842 of 2000 is closed as unnecessary. No costs.