Stigmatic termination of contractual employee without full-fledged disciplinary inquiry violates principles of natural justice.

The petitioner was appointed as a Gram Rozgar Sahayak under the MNREGA Scheme on a contractual basis in Gram Panchayat Pisnawal, Barwani.

Following a complaint by the Gram Panchayat regarding alleged work irregularities and negligence, Respondent No. 3 issued a show-cause notice and subsequently terminated the petitioner’s services on 31.08.2022.

This termination was upheld by Respondent No. 2 via an order dated 28.02.2023.

The petitioner challenged these orders under Article 226 of the Constitution, contending they were arbitrary, lacked a proper inquiry, and violated principles of natural justice.

1. Whether the termination of a contractual Gram Rozgar Sahayak based on allegations of misconduct remains valid if a full-fledged disciplinary inquiry is not conducted.

2. Whether the impugned orders violated the principles of natural justice by denying the petitioner an opportunity to cross-examine witnesses or access the complete complaint.

The court applied Article 226 of the Constitution regarding judicial review of administrative actions.

It relied heavily on the precedent set by the Division Bench in Malkhan Singh Malviya vs. State of Madhya Pradesh (Writ Appeal No. 1166 of 2017), which establishes that even contractual employees are entitled to a reasonable opportunity of being heard—including the supply of adverse material and an effective opportunity to adduce evidence—before a stigmatic order of termination is passed.

The court further applied the principle that if termination is founded on misconduct rather than simple non-renewal, it is "stigmatic and punitive," requiring adherence to the principles of natural justice and fair procedure.

The Court observed that the petitioner’s termination was not a simple expiration of a contract but was explicitly founded on an inquiry report alleging misconduct.

Consequently, the "foundation" of the order was punitive, which necessitated a full-fledged departmental inquiry.

The Court found the existing procedure deficient because the petitioner was denied the right to cross-examine witnesses despite the inquiry officer relying on witness statements.

By applying the Malkhan Singh Malviya precedent, the Court reasoned that merely issuing a show-cause notice is insufficient when the employer intends to cast a stigma; a "fair procedure" must include the supply of all relied-upon materials and a quasi-judicial inquiry, which was "conspicuously absent" here.

The Court quashed the orders dated 31.08.2022 and 28.02.2023.

It directed the respondents to reinstate the petitioner forthwith and awarded 25% back wages, noting the absence of specific pleadings regarding alternative gainful employment.

The court granted the respondents liberty to conduct a fresh, full-fledged inquiry in accordance with the law within 60 days.