# STATE BANK OF INDIA AND OTHERS v. PALAK MODI AND ANOTHER

- **Citation:** [2012] 12 S.C.R. 628
- **Court:** Supreme Court of India
- **Decided:** 2012-12-03
- **Case number:** Civil Appeal Nos. 7841-7842 of 2012
- **Bench:** G.S. Singhvi, Sudhansu Jyoti Mukhopadhaya
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-bank-of-india-and-others-v-palak-modi-and-another-28275
- **Pages:** 55

## Headnote

Service Law - Termination - Of Bank Probationary
C
Officers (private respondents) - Challenge to - Held: If the
competent authority holds an inquiry for judging the suitability
of the probationer or for his further continuance in service or
for confirmation and such inquiry is the basis for taking
decision to terminate his service, then the action of the
D competent authority cannot be castigated as punitive -
However, if an allegation of misconduct constitutes the
foundation of the action taken, the ultimate decision taken by
the competent authority can be nullified on the ground of
violation of the rules of natural justice - On facts, the decision
E to dispense with the services of the private respondents was
taken solely on the ground that they were guilty of using unfair
means in the confirmation test which constituted a misconduct
- However, this exercise was not preceded by an inquiry
involving the private respondents and no opportunity was
F
given to them to defend themselves against the charge of use
of unfair means - They were condemned unheard which was
legally impermissible - Appellants to reinstate the private
respondents and give them all consequential benefits -
However, competent authority not precluded from taking fresh
decision in the matter of confirmation of the private
G respondents after giving them effective opportunity of hearing
against the allegation of use of unfair means in the
confirmation test - State Bank of India (Officers' Service)
Rules, 1992 - rr.15(1) and 16.
H
628
STATE BANK OF INDIA v. PALAK MODI
629
The private respondents were appointed as A
Probationary Officers in the appellant-bank in the year
2006. In 2010, they were informed that they are due for
confirmation and, were therefore, required to appear in a
confirmation test. The private respondents appeared in
the test, and subsequently the result thereof was
B
declared. The names of the private respondents did not
figure in the result apparently because the Institute of
Banking Personnel Selection ('IBPS'}, an independent
expert body engaged in conducting recruitment for
various services, which was entrusted with the task of c
preparing the examination papers and evaluating the
answer sheets sent a report to the Bank that some
candidates including the private respondents were
suspected to have used unfair means.
The probation of the private respondents was D
extended for three months by invoking Rule 16(2) of the
State Bank of India (Officers' Service) Rules, 1992.
However, prior to expiry of the extended period of
probation, the services of the private respondents was
terminated under Rule 16(3) of the State Bank of India
E
(Officers' Service) Rules, 1992. The private respondents
challenged the termination of their services by filing writ
petitions mainly on the grounds that the action taken by
the concerned authorities of the Bank was arbitrary and
violative of the rules of natural justice. They pleaded that
F
,during the period of probation, no one had informe,d them
about any shortcoming, deficiency or defect in their work
and yet their services were terminated without giving
them notice and opportunity of hearing. The private
respondents further pleaded that even though they had
G
requested the concerned officers of the Bank to disclose
the reasons for extension of probation and termination
of their services but no response was received from
them.
H
630
SUPREME COURT REPORTS
[2012] 12 S.C.R.
A
The High Court did not directly deal with the question
whether the action taken by the General Manager was
arbitrary, unfair and unjustified and whether in the garb
of termination simpliciter, the concerned authority had
penalized the private respondents on the charge of their
B having indulged in malpractices in the confirmation test
but held that the action taken by the appellants was
contrary to the guidelines framed by the IBPS for
detecting cases of use of unfair means. The High Court
referred to paragraph 4 of the guidelines framed by

## Text

_Characters 0–39,987 of 100,196. This is a partial read: ask again with offset=39987 for what follows._

A
B
•
[2012] 12 S.C.R. 628
STATE BANK OF INDIA AND OTHERS
v.
PALAK MODI AND ANOTHER
(Civil Appeal Nos. 7841-7842 of 2012)
DECEMBER 03, 2012
[G.S. SINGHVI AND SUDHANSU JYOTI
MUKHOPADHAYA, JJ.]
Service Law - Termination - Of Bank Probationary
C
Officers (private respondents) - Challenge to - Held: If the
competent authority holds an inquiry for judging the suitability
of the probationer or for his further continuance in service or
for confirmation and such inquiry is the basis for taking
decision to terminate his service, then the action of the
D competent authority cannot be castigated as punitive -
However, if an allegation of misconduct constitutes the
foundation of the action taken, the ultimate decision taken by
the competent authority can be nullified on the ground of
violation of the rules of natural justice - On facts, the decision
E to dispense with the services of the private respondents was
taken solely on the ground that they were guilty of using unfair
means in the confirmation test which constituted a misconduct
- However, this exercise was not preceded by an inquiry
involving the private respondents and no opportunity was
F
given to them to defend themselves against the charge of use
of unfair means - They were condemned unheard which was
legally impermissible - Appellants to reinstate the private
respondents and give them all consequential benefits -
However, competent authority not precluded from taking fresh
decision in the matter of confirmation of the private
G respondents after giving them effective opportunity of hearing
against the allegation of use of unfair means in the
confirmation test - State Bank of India (Officers' Service)
Rules, 1992 - rr.15(1) and 16.
H
628
STATE BANK OF INDIA v. PALAK MODI
629
The private respondents were appointed as A
Probationary Officers in the appellant-bank in the year
2006. In 2010, they were informed that they are due for
confirmation and, were therefore, required to appear in a
confirmation test. The private respondents appeared in
the test, and subsequently the result thereof was
B
declared. The names of the private respondents did not
figure in the result apparently because the Institute of
Banking Personnel Selection ('IBPS'}, an independent
expert body engaged in conducting recruitment for
various services, which was entrusted with the task of c
preparing the examination papers and evaluating the
answer sheets sent a report to the Bank that some
candidates including the private respondents were
suspected to have used unfair means.
The probation of the private respondents was D
extended for three months by invoking Rule 16(2) of the
State Bank of India (Officers' Service) Rules, 1992.
However, prior to expiry of the extended period of
probation, the services of the private respondents was
terminated under Rule 16(3) of the State Bank of India
E
(Officers' Service) Rules, 1992. The private respondents
challenged the termination of their services by filing writ
petitions mainly on the grounds that the action taken by
the concerned authorities of the Bank was arbitrary and
violative of the rules of natural justice. They pleaded that
F
,during the period of probation, no one had informe,d them
about any shortcoming, deficiency or defect in their work
and yet their services were terminated without giving
them notice and opportunity of hearing. The private
respondents further pleaded that even though they had
G
requested the concerned officers of the Bank to disclose
the reasons for extension of probation and termination
of their services but no response was received from
them.
H
630
SUPREME COURT REPORTS
[2012] 12 S.C.R.
A
The High Court did not directly deal with the question
whether the action taken by the General Manager was
arbitrary, unfair and unjustified and whether in the garb
of termination simpliciter, the concerned authority had
penalized the private respondents on the charge of their
B having indulged in malpractices in the confirmation test
but held that the action taken by the appellants was
contrary to the guidelines framed by the IBPS for
detecting cases of use of unfair means. The High Court
referred to paragraph 4 of the guidelines framed by the
c IBPS and opined that after considering the report
suggesting 'that the private respondents were suspected
to have used unfair means in the examination, the Bank
should have scrutinized their cases on the basis of their
performance in the descriptive papers and then taken a
0 final decision. The High Court held that the Bank could
not have discharged the private respondents from service
by assuming that they had used unfair means in the
objective type papers.
Whether the alleged use of unfair means by the
E private respondents in the confirmation test held by
appellant-Bank constituted the foundation of the
decision taken to terminate their services under Rule
16(3) of the State Bank of India (Officers' Service) Rules,
1992 is the question which arose for consideration in the
F instant appeals.
·
Dismissing the appeals, the Court
HELD: 1.1. A probationer has no right to hold the
post and his service can be terminated at any time during
G or at the end of the period of probation on account of
general unsuitability for the post held by him. If the
competent authority holds an inquiry for judging the
suitability of the probationer or for his further continuance
in service or for confirmation and such inquiry is the
H
STATE BANK OF INDIA v. PALAK MODI
631
basis for taking decision to terminate his service, then the A
·· action of the competent authority cannot be castigated
as punitive. However, if the allegation of misconduct
constitutes the foundation of the action taken, the
ultimate decision taken by the competent authority can
be nullified on the ground of violation of the rules of. B
natural justice. [Para 20] [656-A-C]
1.2. A combined reading of Rules 15(1) and 16 of the
State Bank of India (Officers' Service) Rules, 1992 and
paragraph 5 of the conditions of appointment makes it C
clear that a person appointed as a Probationary Officer
remains on probation for a minimum period of two years
at the end of which he is entitled to be confirmed if the
competent authority is of the opinion that he has
satisfactorily completed the training in any institution to
which he may have been deputed and the in-service D
·. training in the Bank. The Probationary Officer can also be
subjected to screening for judging his merit and
suitability. If the Probationary Officer fails to satisfactorily
complete the training(s) or fails to pass the screening test
or his service is not satisfactory, then the Bank can E
extend the period of probation by a further period of
which the outer limit is one year. In a given case, the
competent authority can, if it is of the opinion that the
Probationary Officer is not fit for confirmation, terminate
his service by one month's notice or payment of one F
month's emoluments. It is thus evident that satisfactory
performance during the period of probation, successful
completion of training{s) and passing of the test
conducted by the Bank for judging his suitability for the
post constitute the touchstone for his confirmation. G
[Paras 22, 23] [669-G-H; 670-A-D]
1.3. The primary object of the confirmation test held
on 27 .2.2011, which could also be termed as evaluation
test within the meaning of paragraph 5(c) of the H
632
SUPREME COURT REPORTS
(2012] 12 S.C.R.
A appointment letter was to decide whether the officer has
made use of the opportunities made available to him by
the Bank to prove his worth for the job for which he was
recruited and whether he has acquired sufficient
knowledge about the functional requirements of the
B .Bank. The test also gave an opportunity to the
Probationary Officer to demonstrate that he was
meritorious enough to be placed in the higher grade.
[Para 25] [670-G-H; 671-A-B]
1.4. There is a marked distinction between the
C concepts of satisfactory completion of probation and
successful passing of the training/test held during or at
the end of the period of probation, which are sine qua
non for confirmation of a probationer and the Bank's right
to punish a probationer for any defined misconduct,
D misbehaviour or misdemeanor. In a given case, the
competent authority may, while deciding the issue of
suitability of probationer to be confirmed, ignore the .
act(s) of misconduct and terminate his service without
casting any aspersion or stigma which may adversely
E affect his future prospects but, if the misconduct/
misdemeanor constitutes the basis of the final decision
taken by the competent authority to dispense with the
service of the probationer albeit by a non stigmatic order,
the Court can lift the veil and declare that in the garb of
F termination simpliciter, the employer has punished the
empll;>yee for an act of misconduct. [Para 26] [671-B·E]
1.5. The use of unfair means in the evaluation test/
confirmation test held by the Bank certainly constitutes
G a misconduct. The Bank itself had treated such an act to
be a misconduct (paragraph 10 of advertisement dated
1.7.2008). The services of the private respondents were
not terminated on the ground that there was any
deficiency or shortcoming in their work or performance
during probation or that they had failed to satisfactorily
H
STATE BANK OF INDIA v. PALAK MODI
633
· · complete the training or had failed to secure the qualifying A
marks in the test held on 27.2.2011. The note prepared by
the Deputy General Manager, which was approved by the
General Manager makes it crystal clear that the decision
to dispense with the services of the private respondents
was taken solely on the ground that they were guilty of B
using unfair means in the test held on 27.2.2011. The
foundation of the action taken by the General Manager
was the accusation that while appearing in the objective
test, the private respondents had resorted to copying.
IBPS had relied upon the analysis made by the computer c
and sent report to the Bank that 18 candidates were
suspected to have used unfair means. The concerned
authority then sent for the chart of seating arrangement
and treated the same as a piece of evidence for coming
to the conclusion that the private respondents had 0
indeed used unfair means in the examination. This
exercise was not preceded by an inquiry involving the
private respondents and no opportunity was given to
them to defend themselves against the charge of use of
unfair means. In other words, they were condemned
unheard which was legally impermissible. [Para 27] [671E
F-H; 672-A-D]
Ajit Singh v. State of Punjab (1983) 2 SCC 217: 1983
(2) SCR 517; Krishnadevaraya Education Trust v. L.A.
Balakrishna (2001) 9 SCC 319: 2001 (1) SCR 387; F
Pavanendra Narayan Verma v. Sanjay Gandhi PG/ of Medical
Sciences (2002) 1 SCC 520: 2001 (5) Suppl. SCR 41;
Progressive Education Society v. Rajendra (2008) 3 SCC
310: 2008 (2) SCR 1005 and Rajesh Kumar Srivastava v.
State of Jharkhand (2011) 4 SCC 447: 2011 (3) SCR 823 -
G
held inapplicable.
Parshotam Lal Dhingra v. Union of India 1958 SCR 828;
State· of Punjab and Another v. Sukh Raj Bahadur (1968) 3
SCR 234; State of Bihar v. Shiva Bhikshuk Mishra (1970) 2 H
634
SUPREME COURT REPORTS
[2012] 12 S.C.R.
A SCC 871: 1971 (2) SCR 191; Union of India v. R.S. Dhaba,
Income Tax Officer, Hoshiarpur, 1969 (3) SCC 603; Samsher
Singh v. State of Punjab (1975) 1 SCR 814; Gujarat Steel
Tubes Ltd. v. Gujarat Steel Tubes Mazdoor Sabha (1980) 2
SCC 593: 1980 (2) SCR 146; Anoop Jaiswa/ v. Government
B of India (1984) 2 SCC 369: 1984 (2) SCR 453; R.S. Sia/ v.
State of U.P. (1974) 3 SCR 754; State of U.P. v. Ram Chandra
Trivedi (1976) 4 SCC 52: 1977 (1) SCR 462; l.N. Saksena
v. State of M.P. (1967) 2 SCR 496; Dipti Prakash Banerjee
v. Satyendra Nath Bose National Centre for Basic Sciences
C (1999) 3 SCC 60: 1999 (1) SCR 532; Chandra Prakash
Shahi v. State of U.P. (2000) 5 sec 152: 2000 (3) SCR 529
and Union of India v. Mahaveer C. Singhvi (2010) 8 SCC
220: 2010 (9) SCR 246 - referred to.
2. The appellants shall reinstate the private
D respondents and give them all consequential benefits like
pay, allowances, etc. However, this judgment shall not
preclude the competent authority from taking fresh
decision in the matter of confirmation of the private
respondents after giving them effective opportunity of
E hearing against the allegation of use of unfair means in
the test held on 27 .2.2011. [Para 34] [681-B-D]
Case Law Reference:
1983 (2) SCR 517
held inapplicable Para 8
F
2001 (1) SCR 387
held inapplicable Para 8
2001 (5) Suppl. SCR 41 held inapplicable Para 8
2008 (2) SCR 1005
held inapplicable Para 8
G
2011 (3) SCR 823
held inapplicable Para 8
1958 SCR 828
referred to
Paras 11, 16
(1968) 3 SCR 234
referred to
Paras 12, 13,
16
H
STATE BANK OF INDIA v. PALAK MODI
635
1971 (2) SCR 191
referred to
Paras 13, 16
A
1969 (3) sec 603
referred to
Paras 13, 16
(1975) 1 SCR 814
referred to
Paras 14, 16
1980 (2) SCR 146
referred to
Para 15
B
1984 (2) SCR 453
referred to
Para 16
(1974) 3 SCR 754
referred to
Para 16
1977 (1) SCR 462
referred to
Para 16
(1967) 2 SCR 496
referred to
c
Para 16
1999 (1) SCR 532
referred to
Para 17
2000 (3) SCR 529
referred to
Para 18
2010 (9) SCR 246
referred to
Para 19
D
CIVIL APPEl,.LATE JURISDICTION : Civil Appeal Nos ..
7841-7842 of 2012.
From the Judgment & Order dated 17 .11.2011 of the High E
Court of Judicature at Allahabad, Lucknow Bench in WP No.
1298 of 2011 and WP No. 1512 of 2011.
WITH
C.A. No.7843 of 2012.
F
U.U. Lalit, Harish N. Salve, Pallav Shishodia, Vikas Singh,
Shobha Dixit, Sanjay Kapur, Deven Khanna, Tara V. Ganju,
Praveena, Gautam, Preeti Gupta, Ashmi Mohan, Arti Singh,
Pradeep Misra, Daleep Dhyani, Suraj Singh and Yatish Mohan, G
R.K. Bachchan for the appearing parties.
The Judgment of the Court was delivered by
G.S. SINGHVI, J. 1. Whether the alleged use of unfair
means by Palak Modi and Prabhat Dixit (hereinafter described H
636
SUPREME COURT REPORTS
[2012] 12 S.C.R.
A as 'the private respondents') in the test held by appellant No.1
- State Bank of India (for short, 'the Bank') constituted the
foundation of the decision taken by General Manager (NW-I),
State Bank of India, Human Resource Department (respondent
No.3) to terminate their services under Rule 16(3) of the State
B Bank of India (Officers' Service) Rules, 1992 (for short, 'the
Rules') is the pivotal question which arises for consideration
in these appeals filed against order dated 17.11.2011 passed
by the Allahabad High Court in Writ Petition Nos.1298/2011
and 1512/2011.
c
2. In response to an advertisement issued by appellant
No.1, which was published on 1. 7 .2008, the private
respondents applied for appointment as Probationary Officers.
They appeared in the two-tier examination held by the Bank,
which was followed by group discussion and interview. On
D being declared successful, the private respondents were
appointed as Probationary Officers vide letters dated 5.5.2006,
paragraph 5 of which reads as under:
"5. You will be on probation for a period of two years from
•
E
the date of appointment. Your confirmation in the Bank shall
F
G
H
be subject to:
(a) Satisfactory reports from our own sources as well as
from District Authorities regarding your character and
antecedents.
(b) Satisfactory completion of the in-service training during
probation.
(c) Satisfactory performance in the evaluation tests to be
conducted by the Bank during the probation period. Your
failure in evaluation tests twice will make you unfit for
continuing in Bank's service and in that eventuality, your
appointment will be cancelled and your services terminated
by the Bank."
3. Vide letter dated 22.12.2010 of Deputy Managing
STATE BANK OF INDIA v. PALAK MODI
637
[GS. SINGHVI, J.]
Director and Corporate Development Officer of the Bank, the
A
Probationary Officers of 2009-10 batch were informed that they
are due for confirmation on 15.5.2011 and, therefore, they may
appear in the test proposed to be conducted on 27 .2.2011.
Paragraph 2 of that letter which has bearing on the decision of
these appeals reads as under:
B
"2. The relative extract from the extant policy for
confirmation of probationary officers is reproduced below:-
(i)
The confirmation test shall be held after 21 months
from
0 the date of appointment of the probationary
officers (during the probation period)
(ii)
Candidates scoring a minimum of 75% marks in the
written test would qualify for the further process that
will include group discussion and interview.
Candidates scoring minimum 75% marks in-group
discussion/interview also shall be confirmed and
placed in the grade of MMGS-11. Those scoring less
than 75% marks but minimum 50% (45% for SCI
ST/PWD) marks in the written test shall be
confirmed in the grade of JMGS-1. Candidates
scoring less than 50% (45% for SC/ST/PWD)
marks will be given two options as under:
OPTION-I
Candidate will be required to appear in another
confirmation test on or before completion of 24th
month of his/her probation and in the event of not
qualifying in the re-test his/her services will be
terminated with immediate effect and he/she will be
paid one month's emoluments in lieu of one month's
notice in terms of Rule 16(3)(a) of SBI Officer's
Service Rule read with the present policy of
confirmation of Probationary officers as application
hitherto.
c
D
E
F
G
H
A
B
c
D
E
F
G
H
638
SUPREME COURT REPORTS
[2012] 12 S.C.R.
OPTION-II
Candidate's probation will be extended by a further ·
period of maximum one year in terms of two
periods of six months each (extending the total
probation period to a maximum of 36 months) with
the provision to appear in 02 more confirmation
tests at 06 monthly intervals i.e. 02nd test in 27th
month & 03rd test in 33rd month of his/her
probation respectively with the following
conditions:-
In the event of:
Passing the proposed 02nd test after 27th month
of probation candidate will be confirmed as JMGS1 on completion of 30th month of probation including
extended period of probation of 06 months. The
extended period of probation of six months will,
however, not to be counted for service seniority.
Failing in the 02nd test put passing the proposed
03rd test after 33rd month of his/her probation he/
she will be confirmed as JMGS-1 on completion of
36th month of probation including the extended
period of probation of one year. The extended
period of probation of one-year will, however, not
be counted for serv!ce seniority.
Failing in the proposed 03rd test administered in
33rd month of his/her probation, 04 increments in
basic salary given to him/her on appointment, as
Probationary Officer will be withdrawn and he/she
will be absorbed as Officer JMGS-1 on completion
of 36th month of probation period including the
extended period of probation of one year. The
extended period of probation of one year will not
STATE BANK OF INDIA v. PALAK MODI
639
[G.S. SINGHVI, J.]
be counted for service seniority. In all the above A
cases, as mentioned in Option 11, where probation
period is extended, the annual increment date will
be shifted by skipping the extended probation
period of six or twelve months, as the case may be.
B
"Further, the service rendered by him/her
during extended probation period of six or
twelve months will also not be counted as
eligible service for seniority as well as for next
promotion."
The committed for the Group Discussion /Interview will
comprise of a Chief General Manager, a General Manager
and a Deputy General Manager besides one SC/ST
representative who should at least be of SMGS IV
c
incumbency."
D
4. The private respondents appeared in the test held on
27.2.2011, the result whereof was declared on 10.5.2011. Their
names did not figure in the result apparently because Institute
of Banking Personnel Selection (for short, 'IBPS'), an
E
independent expert body engaged in conducting recruitment for
various services, which was entrusted with the task of preparing .
the examination papers and evaluating the answer sheets sent
a report to the Bank that some candidates including the private
respondents are suspected to have used unfair means. After
four days, respondent No.3 issued letters dated 14.5.2011 and
F
extended the probation of the private respondents for three
months by invoking Rule 16(2) of the Rules. However, without
waiting for expiry of the extended period of probation,
respondent No.3 terminated their services vide letters dated
27.6.2011 by indicating that this was being done under Rule G
16(3) of the Rules.
5. The private respondents challenged the termination of
their services by filing writ petitions mainly on the grounds that
the action taken by the concerned authorities of the Bank was H
640
SUPREME COURT REPORTS
[2012] 12 S.C.R.
A arbitrary and violative of the rules of natural justice. They
pleaded that during the period of probation, no one had
informed them about any shortcoming, deficiency or defect in
their work and yet their services were terminated without giving
them notice and opportunity of hearing. The private respondents
B further pleaded that even though they had requested the
concerned officers of the Bank to disclose the reasons for
extension of probation and termination of their services but no
response was received from them.
6. In the counter affidavits filed on behalf of the appellants,
C it was pleaded that the decision to extend the probation of the
private respondents and to terminate their services was taken
after considering the report sent by IBPS about suspected use
of unfair means by the candidates. It was further pleaded that
on checking the record of seating arrangement, it was revealed
D that the private respondents and other candidates were seating
in close proximity with each other and that was considered as
a corroborative evidence of their having used unfair means,
namely, copying answers from one another. According to the
appellants, action was taken against the private respondents
E strictly in accordance with the conditions of appointment without
holding any formal inquiry into the allegation involving
misconduct.
7. The Division Bench of the High Court did not directly
F deal with the question whether the action taken by the General
Manager was arbitrary, unfair and unjustified and whether in the
garb of termination simpliciter, the concerned authority had
penalized the private respondents on the charge of their having
indulged in malpractices in the confirmation test but held that
G the action taken by the appellants was contrary to the guidelines
framed by the IBPS for detecting cases of use of unfair means.
The Division Bench referred to paragraph 4 of the guidelines
framed by the IBPS and opined that after considering the report
suggesting that the private respondents were suspected to
have used unfair means in the examination, the Bank should
H
STATE BANK OF INDIA v. PALAK MODI
641
[G.S. SINGHVI, J.]
have scrutinized their cases on the basis of their performance A
in the descriptive papers and then taken a final decision. The
Division Bench took cognizance of the statement of the senior
counsel appearing for the Bank that performance of the private
respondents in the descriptive papers was not evaluated and
held that the Bank could not have discharged them from service B
by assuming that they had used unfair means in the objective
type papers.
8. Shri U. U. Lalit, learned senior counsel appearing for the
appellants argued that the impugned order is liable to be set C
aside because the view taken by the High Court on the legality
and propriety of the decision taken by respondent No.3 in
consonance with the terms of appointment of the private
respondents and Rule 16(3) of the Rules is ex facie erroneous
and is contrary to the terms and conditions of their appointment.
Shri Lalit emphasized that officers and employees of D
unquestionable integrity are required by the Bank because their
work involves high degree of responsibility and any compromise
in that regard would be detrimental to larger public interest.
Learned senior counsel then argued that the assessment made
by the appointing authority on the issue of suitability of the E
private respondents for confirmation was based on an objective
consideration of the report received from IBPS and in the
absence of any express stigma in the order of termination/
discharge, the respondents were not entitled to complain of
violation of the rules of natural justice. Shri Lalit submitted that F
holding of regular inquiry is not sine qua non for discharging a
probationer and the High Court committed grave error by
nullifying the decision taken by respondent No.3 on the ground
of violation of the guidelines/policy framed by IBPS for
evaluation of the answer sheets. Shri Lalit produced before the G
Court xerox copy of the proceedings which culminated in the
issue of letters dated 27 .6.2011 to show that respondent No.3
approved the note prepared by Deputy General Manager,
Central Recruitment and Promotion Department, who had
examined the report sent ·by !BPS and checked the record H
642
SUPREME COURT REPORTS
(2012] 12 S.C.R.
A relating to seating arrangement which conclusively established
that the private respondents had used unfair means in the
confirmation test. Shri Lalit finally argued that discharge of a
probationer on the ground of unsuitability cannot be termed as
punitive and respondent No.3 was not required to give notice
s and opportunity of hearing to the private respondents. In support
of this argument, Shri Lalit relied upon the judgments of this
Court in Ajit Singh v. State of Punjab (1983) 2 SCC 217,
Krishnadevaraya Education Trust v. L.A. Balakrishna (2001)
9 SCC 319, Pavanendra Narayan Verma v. Sanjay Gandhi
C PG/ of Medical Sciences (2002) 1 SCC 520, Progressive
Education Society v. Rajendra (2008) 3 SCC 310 and Rajesh
Kumar Srivastava v. State of Jharkhand (2011) 4 SCC_ 447.
9. Shri Vikas Singh, learned senior counsel appearing for
IBPS submitted that the institute is an expert body which has
D been conducting examinations for the officers and employees
of various organizations and financial institutions. Shri Singh
submitted that IBPS has developed a software of its own for
identifying the cases of use of unfair means and the software
generates report of all pairs of cases which have identical
E responses. The report of the software is then reviewed by a
group of experts and then and then only a conclusion is reached
about suspected use of unfair means. Learned senior counsel
then argued that the interpretation placed by the High Court on
para 4(8) of the guidelines framed by IBPS is wholly erroneous
F and the word 'may' used in that paragraph cannot be construed
as 'shall' so as to make evaluation of the descriptive papers
as mandatory even in the cases of suspected use of unfair
means. He submitted that IBPS had sent report regarding
suspected use of unfair means because the candidates had
G given 11 identical wrong answers and 44 identical correct
answers, which was highly improbable and the appellant did
not commit any error by relying upon that report. Learned senior
counsel referred to the revised guidelines issued by IBPS for
detecting the cases of use of unfair means and submitted that
H the report sent to the Bank was based on evaluation of the
STATE BANK OF INDIA v. PALAK MODI
643
[G.S. SINGHVI, J.]
papers of objective test in consonance with the revised A
· guidelines and the concerned officers of the Bank took decision
after fully satisfying themselves that the private respondents had
used unfair means in the examination. Shri Vikas Singh
emphasized that the action taken against the private
respondents had salutary and sobering effects on other B
candidates and not a single case of unfair means was detected
by IBPS in the tests held between 17.7.2011 and 24.6.2012
for various batches of new recruits.
10. Shri Pallav Shishodia, Mrs. Shobha Dixit, Senior C
Advocates and other learned counsel appearing for the·
respondents argued that even though the High Court did not
specifically dealt with the question whether the action taken by
respondent No.3 was vitiated due to violation of the rules of
natural justice, the material produced before the High Court and
· this Court unmistakably shows that the decision contained in
D
letters dated 27.6.2011 was founded on the conclusion reached
by the officers of the Bank that the private respondents were
guilty of using unfair means in the confirmation test and this
could not have been done without giving them action oriented
notice and fair opportunity of hearing. Shri Shishodia pointed
E
out that the report prepared by IBPS was based on computer
scanning of the answer sheets of the objective papers and the
appellants could not have relied upon such report for
jeopardizing the career of the private respondents without
holding an inquiry and without giving them opportunity to
F
controvert the allegation of use of unfair means. Learned senior
counsel submitted that there was no deficiency or defect or
shortcoming in the work or performance of the private
respondents as Probationary Officers and in the guise of
discharging their services under Rule 16(3), the Bank had G
penalized them on the specific allegation of using unfair means
in the confirmation test without complying with the basics of the
natural justice.
11. The question whether termination of the service of a H
644
SUPREME COURT REPORTS
[2012] 12 S.C.R.
A
temporary employee or a probationer can be treated as punitive
even though the order passed by the competent authority does
not contain any stigma has been considered in a series of
judgments. In Parshotam Lal Dhingta v. Union of India, 1958
SCR 828, which can be considered as an important milestone
B in the development of one facet of service jurisprudence in the
country, the Constitution Bench was called upon to decide
whether the order of reversion of an official holding a higher
post in an officiating capacity could be treated as punitive. After
elaborate consideration of the relevant provisions of the
c Constitution and judicial decisions on the subject, the
Constitution Bench observed:
D
E
F
G
H
" ... In short, if the termination of service is founded on the
right flowing from contract or the service rules then, prima ,
facie, the termination is not a punishment and carries with
it no evil consequences and so Article 311 is not attracted.
But even if the Government has, by contract or under the
rules, the right to terminate the employment without going
through the procedure prescribed for inflicting the
punishment of dismissal or removal or reduction in rank,
the Government may, nevertheless, choose to punish the
servant and if the termination of service is sought to be
founded on misconduct, negligence, inefficiency or other
disqualification, then it is a punishment and the
requirements of Article 311 must be complied with ... ."
12. In State of Punjab and Another v. Sukh Raj Bahadur
(1968) 3 SCR 234, Mitter, J. considered several precedents
and culled out the following propositions:
"1. The services of a temporary servant or a probationer
can be terminated under the rules of his employment and
such termination without anything more would not attract
the operation of Article 311 of the Constitution.
2. The circumstances preceding or attendant on the order
of termination have to be examined in each case, the
. STATE BANK OF INDIA v. PALAK MODI
645
(G.S. SfNGHVI, J.]
motive behind it being immaterial.
A
3. If the order visits the public servant with any evil
consequences or casts an aspersion against his character
or integrity, it must be considered to be one by way of
punishment, no matter whether he was a mere probationer
B
or a temporary servant.
4. An order of termination of service in unexceptionable
form preceded by an enquiry launched by the superior
authorities only to ascertain whether the public servant
should be retained in service does not attract the operation c
of Article 311 of the Constitution.
5. lf there be a full-scale departmental enquiry envisaged
,
by Article 311 i.e. an Enquiry Officer is appointed, a
I
charge-sheet submitted, explanation called for and
D
considered, any -order of termination of service made
thereafter wilt attract the operation of the said article."
13. In State of Bihar v. Shiva Bhikshuk Mishra (1970) 2
SCC 871, the three Judge Bench considered the question
E
whether the respondent's reversion from the post of SubedarMajor to that of Sergeant in the backdrop of an inquiry made
into the allegation of assault on his subordinate was punitive.
On behalf of the appellant, reliance was also placed on the
judgments in State of Punjab v. Sukh Raj Bahadur {supra) and
Union of India v. R. S. Dhaba, Income-tax Officer, Hoshiarpur,
F
1969 (3) sec 603 and it was argued that the order of reversion
cannot be treated as punitive because it did not contain any
word of stigma and the High Court committed an error by
relying upon the inquiry conducted by the Commandant for
coming to the conclusion that the order of reversion was G
punitive. While rejecting the contention, this Court observed:
"We are unable to accede to the contention of the
appellant that the ratio of the above decision is that so long
as there are no express words of stigma attributed to the
H
·,· ' '
A
B
c
D
E
F
646
SUPREME COURT REPORTS
[2012] 12 S.C.R.
conduct of a Government Officer in the impugned order it
cannot be held to have been made by way of punishment.
The test as previously laid and which was relied on was
whether the misconduct or negligence was a mere motive
for the order of reversion or whether it was the very
foundation of that order. In Dhaba case, it was not found
that the order of reversion was based on misconduct or
negligence of the officer. So far as we are aware no such
rigid principle has ever been laid down by this court that
one has only to look to the order and if it does not contain
any imputation of misconduct or words attaching a stigma
to the character or reputation of a Government Officer it
must be held to have been made in the ordinary course of
administrative routine and the court is debarred from
looking at all the attendant circumstances to discover
whether the order had been made by way of punishment.
The form of the order is not conclusive of its true nature
and it might merely be a cloak or camouflage for an order
founded on misconduct. It may be that an order which is
innocuous on the face and does not contain any imputation
of misconduct is a circumstance or a piece of evidence
for finding whether it was made by way of punishment or
administrative routine. But the entirety of circumstances
preceding or attendant on the impugned order must be
examined and the overriding test will always be whether
the misconduct is a mere motive or is the very foundation
of the order."
'
(emphasis supplied)
14. In Samsher Singh v. State of Punjab (1975) 1 SCR
G 814, a seven-Judge Bench considered the legality of the
discharge of two judicial officers of the Punjab Judicial Service,
who were serving as probationers. A. N. Ray, CJ, who wrote
opinion for himself and five other Judges made the following
observations:
H
"No abstract proposition can be laid down that where the
STATE BANK OF INDIA v. PALAK MODI
647
[G.S. SINGHVI, J.]
services of a probationer are terminated without saying A
anything more in the order of termination than that the
services are terminated it can never amount to a
punishment in the facts and circumstances of the case. If
a probationer is discharged on the ground of misconduct,
or inefficiency or for similar reason without a proper B
enquiry and without his getting a reasonable opportunity
of showing cause against his discharge it may in a given
case amount to removal from service within the meaning
of Article 311 (2) of the Constitution.
c
The form of the order is not decisive as to whether the order
is by way of punishment. Even an innocuously worded
order terminating the service may, in the facts and
circumstances of the case establish that an enquiry into
allegations of serious and grave character of misconduct 0
involving stigma has been made in infraction of the
provision of Article 311. In such a case, the simplicity of
the form of the order will not give any sanctity. That is
exactly what has happened in the case of lshwar Chand
Agarwal. The order of termination is illegal and must be
~~~-
E
Krishna Iyer, J, who agreed with the learned Chief Justice,
made the following concluding observations:
"Again, could it be that if you summarily pack off a F
probationer, the order is judicially unscrutable and
immune? If you conscientiously seek to satisfy yourself
about allegations by some sort of enquiry you get caught
in the coils of law, however harmlessly the order may be
phrased? And so, this sphinx-complex has had to give way G
in later cases. In some cases the rule of guidance has been
stated to be 'the substance of the matter' and the
'foundation' of the order. When does 'motive' trespass into
'foundation'? When do we lift the veil of 'form' to touch the
'substance'? When the Court says so. These 'Freudian'
H
648
SUPREME COURT REPORTS
[2012] 12 S.C.R.
A
frontiers obviously fail in the work-a-day world and Dr
Tripathi's observations in this context are not without force."
15. In Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes
Mazdoor Sabha (1980) 2 SCC 593, Krishna Iyer, J. considered
8
as to when the termination simpliciter can be termed as punitive
and observed:
c
.D
E
F
G
•A termination effected because the master is satisfied of
the misconduct and of the consequent desirability of
terminating the service of the delinquent servant, is a
dismissal, even if he had the right in law to terminate with
an innocent order under the standing order or otherwise.
Whether, in such a case, the grounds are recorded in
different proceedings from the formal order, does not
detract from its nature. Nor the fact that, after being
satisfied of the guilt, the master abandons the enquiry and
proceeds to terminate. Given an alleged misconduct and
a live nexus between it and the termination of service, the
conclusion is dismissal, even if full benefits as on simple
termination, are given and non-injurious terminology is
used.
On the contrary, even if there is suspicion of misconduct,
the master may say that he does not wish to bother about
it and may not go into his guilt but may feel like not
keeping a man he is not happy with. He may not like to
investigate nor take the risk of continuing a dubious
servant. Then it is not dismissal but termination simpliciter,
if no injurious record of reasons or punitive cut-back on his
full terminal benefits is found. For, in fact, misconduct is
not then the moving factor in the discharge."
16. In Anoop Jaiswal v. Government of India (1984) 2
SCC 369, this Court considered the question whether
termination of the appellant's service, who was appointed to
Indian Police Service and was on probation, by invoking Rule
H
12(b) of the Indian Police Service (Probation) Rules, 1954 was
STATE BANK OF INDIA v. PALAK MODI
649
[G.S. SINGHVI, J.]
punitive in nature. The facts found by the Court were that while
A
undergoing training at National Police Academy, Hyderabad,
the Probationary Officers had delayed attending the
ceremonial drill practice. The Director of the Academy called
explanation from all the probationers. The appellant was
accused of having instigated others not to join ceremonial drill
B
practice on time. He denied the allegation. Thereafter, his
service was terminated by a non-stigmatic order. The appellant
challenged the termination of his service on the ground of
violation of Articles 14 and 311(2) of the Constitution. The writ
petition filed by him was summarily dismissed by the Delhi High c
Court. This Court referred to the averments contained in the
pleadings of the parties, the judgments in Parshotam Lal
Dhingra v. Union of India (supra), Samsher Singh v.