Stigmatic termination of contractual employees without a full enquiry violates the principles of natural justice.

The petitioner was appointed as a Gram Rojgar Sahayak on a contractual basis in 2010 and served for approximately 12 years.

On 06.04.2022, his services were terminated following a show-cause notice dated 23.03.2022 regarding allegations of irregularities in labor employment and incomplete housing under the "Prime Minister Aawas Yojna".

The petitioner challenged the termination and subsequent appellate orders dated 28.02.2023 and 18.12.2023, contending that the termination was punitive and stigmatic, passed without a full-fledged departmental enquiry or a proper opportunity for a hearing.

The respondents maintained that as a contractual employee with unsatisfactory performance and an alleged admission of lapses, a show-cause notice was sufficient procedure.

1. Whether the termination of a contractual employee based on allegations of misconduct and irregularities is "stigmatic" in nature, requiring a full-fledged departmental enquiry.

2. Whether the issuance of a show-cause notice and consideration of a reply, without a formal inquiry or cross-examination of witnesses, satisfies the principles of natural justice for a contractual employee facing punitive action.

The Court primarily applied the principles of Natural Justice, which mandate that if a termination order is founded on allegations of misconduct casting a stigma, the employer must follow a fair procedure regardless of the employee's contractual status.

It relied on the doctrine established in Malkhan Singh Malviya v. State of M.P. (W.A. No. 1166/2017), which holds that even for contractual staff, a fair hearing—including the supply of material evidence and the right to cross-examine witnesses—is mandatory if the dismissal is punitive.

The Court further referenced Tufan Singh Narban v. Panchayat and Rural Development Department (WP No. 4499/2019) and Lokesh Sharma v. Panchayat and Rural Development Department (WP No. 18455/2022) to support the requirement of a formal inquiry.

The Court determined that the termination was not a simple case of non-renewal of a contract but was explicitly "rooted in allegations of misconduct and gross irregularities".

Consequently, the order was characterized as stigmatic and punitive rather than administrative.

The Court reasoned that a mere preliminary consideration of a reply to a show-cause notice is insufficient to discharge the employer's liability to provide a proper hearing.

By failing to issue a formal charge sheet or conduct an inquiry where the petitioner could cross-examine witnesses and challenge evidence, the respondents violated the petitioner's constitutional rights and the settled principles of law governing even contractual employment.

The Court found the lack of specific detail regarding the alleged deficiencies further evidenced the arbitrary nature of the administrative action.

The High Court quashed the termination order dated 06.04.2022 and the appellate orders dated 28.02.2023 and 18.12.2023.

The respondents were directed to reinstate the petitioner as Gram Rojgar Sahayak forthwith and pay 25% back wages for the period he remained out of service, with the process to be completed within 60 days.

The Court granted the respondents liberty to conduct a full-fledged enquiry in accordance with the law.