A stigmatic termination order against a contractual employee requires a regular departmental inquiry to satisfy natural justice.

The petitioner was appointed as a Sub Engineer on a contractual basis, with his last attachment at the Zila Panchayat, Shivpuri

Following a complaint, a fact-finding enquiry was conducted ex parte, during which the petitioner was held guilty of financial irregularities without being given an opportunity to cross-examine witnesses

A show-cause notice was issued on March 11, 2024, and despite the petitioner’s detailed reply, the respondents terminated his services via a stigmatic order dated March 27, 2024

Crucially, three other individuals facing similar allegations were reinstated, but the petitioner’s appeal to the appellate authority was rejected

The petitioner subsequently challenged the termination and the appellate order under Article 226 of the Constitution

1. Whether a contractual employee’s services can be terminated through a stigmatic order without conducting a regular departmental enquiry

2. Whether the termination order violated the principles of natural justice and the state's own policy regarding contractual service evaluations

The Court applied the settled legal principle that a stigmatic termination order entails serious consequences for future prospects and cannot be passed without a regular departmental enquiry

It relied on Rahul Tripathi v. Rajeev Gandhi Shiksha Mission [2001 (3) MPLJ 616] and Jitendra v. State of M.P. [2008 (4) MPLJ 670], which mandate an enquiry for stigmatic removals

The Court further invoked the concept of "reasonable opportunity" as summarized in Khem Chand v. Union of India [1958 SC 300], emphasizing the right to deny guilt and cross-examine witnesses

Additionally, the Court cited Clause 9.2 of the State Policy dated July 22, 2023, which requires a formal enquiry for serious allegations against contractual employees

The Court examined the termination order (Annexure P/5) and found it explicitly stigmatic, as it branded the petitioner’s conduct as "serious financial irregularity, negligence, and misconduct"

The Court reasoned that since the order carried a stigma, a mere fact-finding enquiry followed by a show-cause notice was insufficient

By denying the petitioner the right to cross-examine witnesses and by failing to hold a regular departmental enquiry, the respondents violated the principles of natural justice and the specific mandates of the 2023 Policy

Furthermore, the Court noted that the respondents had unfairly singled out the petitioner while reinstating others similarly situated, thereby failing to provide equal treatment

The Court quashed the termination order dated March 27, 2024, and the appellate order dated July 22, 2025. The respondents were directed to reinstate the petitioner with all consequential benefits as granted to similarly situated persons within two months. However, back wages were denied on the principle of "no work, no pay," and the state was granted liberty to initiate a fresh enquiry in accordance with the law if deemed necessary