Termination of a probationer for unsatisfactory performance is valid without a disciplinary enquiry absent stigma or misconduct foundation.

The petitioner appointed Respondent No. 2 as a Chemist with effect from 10 October 2000, initially on probation for either six months or one year, under disputed appointment letters.

The appointment terms permitted termination during probation without assigning reasons, subject to payment of notice pay in the applicable circumstances, and provided that permanency would arise only upon written confirmation.

The petitioner found the respondent’s performance unsatisfactory, attempted to accommodate him in alternative departments, and ultimately terminated his services by letter dated 18 April 2001, after paying one month’s salary in lieu of notice.

The respondent challenged the termination under Section 10(1B)(d) of the Industrial Disputes Act, 1947.

The 1st Labour Court held that the termination was illegal, mala fide and stigmatic, and directed payment of back wages from 18 April 2001 until the respondent joined another institution, with interest at 8% per annum in default of payment.

The employer challenged that award under Article 226 of the Constitution.

1. Whether the termination of the respondent during probation, on the ground of unsatisfactory performance, was punitive or stigmatic and therefore invalid for want of a prior disciplinary enquiry?

2. Whether the Labour Court erred in applying principles governing termination of regular employees to the termination of a probationer?

3. Whether the respondent was entitled to back wages from the date of termination until joining subsequent employment?

The Court applied Section 10(1B)(d) of the Industrial Disputes Act, 1947, under which the respondent’s termination dispute had been adjudicated.

It relied on the principle that a probationer’s service may ordinarily be terminated simpliciter for unsuitability without a disciplinary enquiry, provided the order is neither ex facie stigmatic nor founded on misconduct.

Under Pavanendra Narayan Verma v. Sanjay Gandhi PGI of Medical Sciences, the Court applied the “form” and “substance” tests: a termination is punitive where it expressly imputes misconduct or where misconduct is the foundation of the order, but not where unsatisfactory performance is merely the employer’s motive.

Dipti Prakash Banerjee v. S.N. Bose National Centre for Basic Sciences distinguishes permissible references to unsatisfactory work or conduct from stigmatic findings involving moral turpitude, dishonesty, corruption or specific misconduct.

A.P. State Federation of Cooperative Spinning Mills Ltd. v. P.V. Swaminathan further holds that the Court may examine surrounding circumstances to determine whether inefficiency was merely the motive or the actual foundation of termination.

The Court also relied on U.P. State Textile Corporation Ltd. v. Suresh Kumar for the principle that back wages are discretionary and that the employee’s conduct and the contractual or probationary tenure are relevant.

The Court found that the respondent remained a probationer when his services were terminated, irrespective of whether the applicable probationary period was six months or one year.

The termination was based principally on the petitioner’s assessment that the respondent’s performance was below the required standard, after attempts had been made to place him in alternative assignments.

Although the termination letter referred to the respondent’s “bad mental attitude” and his description of himself as a “worker,” the Court held that these observations were general and arose from the respondent’s correspondence and status-related claim; they were not findings of established misconduct and did not constitute the foundation of the termination.

Applying Pavanendra Narayan Verma and Dipti Prakash Banerjee, the Court concluded that the language used did not impute anything beyond unsuitability for the job and was therefore not stigmatic.

The Labour Court had incorrectly relied on authorities concerning regular employees and had failed to give effect to the respondent’s probationary status.

Consequently, its finding that a disciplinary enquiry was mandatory, and its consequential award of extensive back wages, were held to be legally unsustainable.

A prior disciplinary enquiry was therefore unnecessary.

The Labour Court’s award dated 28 June 2024, directing payment of back wages with interest, was found to be perverse and was quashed and set aside.

The writ petition, WPO/82/2025, was allowed, and any connected applications were disposed of.