Stigmatic termination of a contractual employee without departmental inquiry is legally unsustainable.

The petitioner was appointed as an Accountant on a contractual basis on 26 February 2008 and his contractual engagement was extended periodically.

In 2017, his designation was changed to Assistant Accounts Officer (Contractual).

The respondents issued show-cause notices alleging, inter alia, failure to prevent or report substantial irregular and allegedly impermissible payments under MGNREGA.

The petitioner submitted replies to the notices, including his reply dated 28 January 2025.

Without issuing a charge-sheet or conducting a regular departmental inquiry, the respondents terminated his services by order dated 30 September 2025.

The petitioner’s appeal was rejected on 5 May 2026.

He therefore invoked Article 226 of the Constitution seeking quashing of both orders, reinstatement, consequential benefits and back wages.

1. Whether the termination of a contractual employee, founded on allegations of serious dereliction of duty and financial irregularities, was stigmatic and could lawfully be effected without a charge-sheet and regular departmental inquiry?

2. Whether the termination order was legally unsustainable for being non-speaking, unreasoned and for failing to consider the petitioner’s reply to the show-cause notice?

3. Whether the petitioner was entitled to reinstatement and consequential benefits, and whether the respondents could be granted liberty to initiate fresh proceedings in accordance with law?

Clause 7.2 of the MGNREGA Policy requires disciplinary proceedings in serious cases and contemplates an opportunity of hearing and inquiry before disciplinary action, including termination, is taken.

A termination order that is founded on allegations of misconduct, dereliction of duty or financial irregularity and thereby casts stigma on the employee cannot ordinarily be passed without following the principles of natural justice and conducting an appropriate inquiry; an innocuous termination simpliciter stands on a different footing.

The Court relied on Rahul Tripathi v. Rajeev Gandhi Shiksha Mission, 2001 (3) MPLJ 616; Jitendra v. State of M.P., 2008 (4) MPLJ 670; Malkhan Singh Malviya v. State of M.P., ILR (2018) MP 660; and Rajesh Kumar Rathore v. High Court of M.P., W.P. No. 18657 of 2018, for the rule that a stigmatic termination requires observance of natural justice and inquiry.

The Court further applied the principles in Khem Chand v. Union of India, AIR 1958 SC 300, requiring an effective opportunity to deny the charges, defend oneself through evidence and representation, and contest the proposed punishment.

Administrative orders affecting rights must contain clear, cogent and self-sustaining reasons; reasons cannot be supplied for the first time in appeal, as explained in State of Punjab v. Bandeep Singh, (2016) 1 SCC 724, Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496, and Oryx Fisheries Pvt. Ltd. v. Union of India, (2010) 13 SCC 427.

The termination order did not merely bring the petitioner’s contractual engagement to an end in an innocuous manner; it recorded specific allegations that he had failed to discharge his official duties, had not prevented or reported impermissible works and had facilitated or failed to prevent irregular payments amounting to substantial sums.

These findings directly attributed misconduct and dereliction of duty to the petitioner and therefore rendered the order stigmatic.

Although the petitioner had submitted a reply to the show-cause notice, the respondents neither issued a formal charge-sheet nor conducted a regular inquiry in which the allegations could be tested and the petitioner could present his defence.

The authority’s statement that the petitioner’s reply did not satisfactorily answer the allegations could not substitute for an inquiry or a reasoned adjudication.

Further, the order failed to demonstrate proper consideration of the petitioner’s defence and was consequently non-speaking and unreasoned.

Applying the cited precedents and Clause 7.2 of the MGNREGA Policy, the Court held that the impugned termination and the consequential appellate order could not be sustained.

The termination order and the appellate rejection order dated 5 May 2026 were accordingly set aside.

The respondents were directed to reinstate the petitioner forthwith with all consequential benefits, but without back wages on the principle of “no work, no pay”.

The respondents were granted liberty to take fresh action against the petitioner in accordance with law, if so advised.