Stigmatic termination of a contractual employee without departmental inquiry violates natural justice.

The petitioner was appointed as a contractual Accountant (Janpad Level) on 12 December 2007 and was subsequently transferred from Gwalior to Gohad.

In 2017, his designation was changed to Assistant Accounts Officer (Contractual), and his contractual engagement was extended from time to time.

Show-cause notices were issued to him on 12 October 2023, 8 January 2024, and 16 January 2025, to which he submitted replies.

The respondents thereafter terminated his contractual services by order dated 30 September 2025, alleging, inter alia, failure to prevent irregular payments and negligence in the discharge of his official duties.

The termination order recorded allegations concerning irregular payments of approximately ₹716.99 lakh and other disputed amounts.

The petitioner’s appeal was rejected by order dated 11 August 2026.

He challenged both orders under Article 226 of the Constitution, contending that the termination was stigmatic, non-speaking, and passed without a charge-sheet or regular departmental inquiry, contrary to Clause 7.2 of the MGNREGA Policy.

Whether the termination order, which attributed serious dereliction of duty and involvement in irregular payments to the petitioner, was stigmatic in nature and could lawfully be passed without a regular departmental inquiry?

Whether the respondents’ failure to consider the petitioner’s reply and to provide a proper inquiry and reasoned decision violated the principles of natural justice and Clause 7.2 of the MGNREGA Policy?

Whether the appellate order could cure the defects in the original termination order?

The Court applied Clause 7.2 of the MGNREGA Policy, under which allegations of a serious nature against a contractual officer or employee require an inquiry, an opportunity of hearing, and a decision in accordance with the prescribed disciplinary procedure.

It relied on the principle that a termination order based on allegations of misconduct, negligence, or dereliction of duty is stigmatic and cannot ordinarily be made without a proper departmental inquiry and reasonable opportunity of defence, as recognized in Rahul Tripathi v. Rajeev Gandhi Shiksha Mission, Jitendra v. State of M.P., Malkhan Singh Malviya v. State of M.P., and Rajesh Kumar Rathore v. High Court of M.P.

The Court also relied on Khem Chand v. Union of India, which identified the components of reasonable opportunity, including notice of charges, an opportunity to contest the allegations and cross-examine witnesses, and an opportunity to make a representation against the proposed punishment.

Further, under State of Punjab v. Bandip Singh, Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan, and Oryx Fisheries Pvt. Ltd. v. Union of India, administrative orders affecting rights must contain clear, cogent, and self-sustaining reasons; defects in the original order cannot be cured merely by reasons supplied in appeal.

The Court held that the termination order did not merely bring the petitioner’s contractual engagement to an end simpliciter.

It expressly attributed to him failure to perform his official duties and responsibility for permitting irregular payments of substantial amounts, thereby casting a stigma on his conduct and professional record.

Since the allegations were treated as misconduct and were relied upon as the basis for termination, Clause 7.2 required a proper inquiry after affording the petitioner a meaningful opportunity of defence.

The issuance of show-cause notices and receipt of the petitioner’s replies did not substitute for a charge-sheeted departmental inquiry, particularly when the allegations were disputed and the termination order stated only that the petitioner’s reply did not satisfactorily answer them.

The order was therefore stigmatic, non-speaking, and contrary to natural justice.

The appellate authority’s rejection of the appeal could not cure the fundamental defect in the original decision-making process, because an appellate order cannot serve as a substitute for the legally required initial inquiry and reasoned determination.

The respondents were directed to reinstate the petitioner forthwith with all consequential benefits, except back wages, on the principle of “no work, no pay”.

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

All pending interlocutory applications were disposed of.