Contractual Employees Can't Be Terminated Without A Fair Hearing When Dismissal Order Is Stigmatic: J&K High Court

“If an order is founded on allegations, the order is stigmatic and punitive and services of an employee cannot be dispensed with without affording him an opportunity of defending the accusations/allegations made against him in a full-fledged inquiry”.

The case involved petitioners engaged on a contingency basis in the J&K Handicrafts Corporation. Their services were abruptly terminated following an 'Alert Note' issued by the Anti-Corruption Bureau (ACB) alleging irregularities in their appointments.

Challenging their termination the petitioners represented by Mr. Z.A. Qureshi, Senior Advocate, argued that the disengagement occurred without affording them an opportunity to be heard, violating the principles of natural justice. It was contended that the Managing Director was aware of a committee being constituted to formulate a policy regarding contractual staff appointments.

The disengagement, allegedly punitive in nature, was based on ACB's recommendations without conducting a proper inquiry, the petitioners submitted.

Contesting the plea the respondents submitted that the petitioners were contractual employees with no vested right to continued employment. The Corporation acted upon the recommendations of the ACB, a credible anti-corruption body and hence ordered these terminations.

Justice Chowdhary, presiding over the case, noted that the impugned order of termination was based on allegations levelled against the then Managing Director of the Corporation, not the petitioners themselves. He observed that the termination order effectively cast a stigma on the petitioners, impacting their reputation and future prospects.

Emphasising the importance of fair hearing, even in cases involving contractual appointments the bench explained that terminating employment based on accusations, without affording a chance to defend oneself, is contrary to the principles of natural justice and can unfairly damage the employee's reputation.

The court acknowledged that the ACB report raised concerns about irregularities in the petitioners' appointments. However, it held that the Corporation could not simply rely on the report to terminate their services without conducting its own inquiry and providing the petitioners with an opportunity to be heard.

Referencing “K.C. Joshi v. Union of India & Ors”, reported as (1985) the bench reproduced,

“contract of service has to be in tune with Articles 14 and 16 of the Constitution of India and if it is to be suggested that one can dismiss anyone without a semblance of inquiry or whisper of principles of natural justice, such an approach overlooks the well-settled principle that if State action affects livelihood or attaches stigma, punitive action can be taken only after an inquiry, in keeping with the principles of natural justice”.

Accordingly, the Court quashed the termination order and directed the Corporation to reinstate the petitioners.

The court also ordered the Corporation to release the withheld wages of the petitioners and consider their cases for regularisation as per the proposed policy submitted by the Managing Director.

Case Title: Feroz Ahmed Sheikh Vs Union Territory of J&K

Citation: 2023 LiveLaw (JKL) 327

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