Termination of a contractual employee for misconduct without a departmental inquiry is stigmatic and legally unsustainable.

The petitioner was appointed as a Town Planner by the Mehsana Municipality on December 2, 2015, following a regular selection process.

His appointment was for a fixed five-year term on a fixed pay basis.

On September 9, 2019, the Municipality issued a show-cause notice alleging serious misconduct and non-cooperation.

Finding the petitioner’s explanation unsatisfactory, the Municipality terminated his services via an order dated October 10, 2019, without conducting a formal departmental inquiry.

The petitioner challenged this termination, along with a subsequent resolution and appellate order, as being illegal and stigmatic.

Whether the termination of a fixed-pay employee (appointed through regular selection) on grounds of misconduct is legally sustainable without conducting a full-scale disciplinary inquiry.

Whether the impugned termination order is stigmatic in nature, thereby necessitating compliance with the principles of natural justice.

Article 311(2) of the Constitution of India, which protects government servants against arbitrary dismissal.

The principle established in Parshotam Lal Dhingra v. Union of India, asserting that if termination is founded on misconduct or negligence, it constitutes punishment and requires a formal inquiry.

The ruling in Swati Priyadarshini v. State of Madhya Pradesh and U.P. State Road Transport Corporation v. Brijesh Kumar, holding that even for contractual or temporary employees, a stigmatic termination order passed without following the principles of natural justice is void.

The precedent of Chetan Jayantilal Rajgor v. State of Gujarat, which mandates a full-scale inquiry when an order is founded on misconduct for fixed-pay employees selected through regular modes.

The Court observed that while the petitioner was on a fixed-pay contract, his entry into service was through a regular selection process.

The Municipality’s decision to terminate him was explicitly based on "serious misconduct," making the order "stigmatic" on its face.

Applying the "real test" from Parshotam Lal Dhingra, the Court reasoned that because the termination visited the petitioner with evil consequences and an "indelible stigma" affecting his future career, it could not be treated as a simple contractual termination.

The Court found that merely issuing a show-cause notice was insufficient; the Municipality was required to frame specific charges and conduct a regular departmental inquiry to satisfy the principles of natural justice.

Consequently, the failure to hold such an inquiry rendered the termination order unsustainable in law.

The Court held that the termination was in violation of natural justice.

It directed the Mehsana Municipality to reinstate the petitioner to his original post with continuity of service and 50% back-wages from the date of dismissal until reinstatement.

The Municipality was ordered to pay these benefits by May 31, 2026, or face a 6% interest penalty.

However, the Court granted the Municipality liberty to initiate fresh departmental proceedings against the petitioner based on the original show-cause notice.