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Madhya Pradesh Hasta Shilpa Vikas Nigam Ltd. v. Devendra Kumar Jain And Others
Factual and Procedural Background
The appellant, M.P. Hastashilp Vikas Nigam Ltd., a government company under Section 617 of the Companies Act and a subsidiary of M.P. Laghu Udhyog Nigam Ltd., is engaged in the development of handicrafts and handloom products. On 6-7-1989 and 8-6-1989, the then Managing Director, Shri K.P. Thakur, appointed Respondents 1-5 as temporary Junior Managers.
Shortly thereafter, a succeeding Managing Director terminated those appointments on 31-7-1989, citing contravention of a State Government directive dated 1-4-1989 that required prior governmental approval for such posts. The respondents challenged the termination in Miscellaneous Petition No. 3973/1989 before the Madhya Pradesh High Court. By judgment dated 1-12-1993, the High Court quashed the termination, ordering that the respondents continue in service until validly discharged. The present appeal to the Supreme Court was filed by the Corporation, and leave to appeal was granted.
Legal Issues Presented
- Whether temporary employees whose appointment letters permit termination “without notice or assigning any reason” are entitled to a pre-termination hearing under the principles of natural justice and Article 14 of the Constitution.
- Whether the appointments were invalid because they were made without the prior approval mandated by the State Government’s order dated 1-4-1989, and, if so, whether the High Court erred in ignoring that directive.
Arguments of the Parties
Appellant's Arguments
- The respondents were appointed purely on a temporary basis; their appointment orders expressly allowed termination at any time without notice, so no hearing was required.
- A government directive (Annexure B) expressly prohibited appointments to the project without prior State approval. The impugned appointments, made in haste days before the Managing Director’s retirement, violated that directive.
Respondents' Arguments
The opinion does not contain a detailed account of the respondents’ legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
1. Nature of Appointment: The Court examined the text of the appointment orders, which labeled the posts “purely temporary” and “liable to termination without notice or assigning any reason.” Under established principles, a temporary servant acquires no substantive right to the post unless a rule or subsequent order confers permanence. None existed here. Consequently, Article 311 procedures and a prior opportunity of hearing were deemed unnecessary.
2. Natural Justice and Article 14: Because the appointments themselves incorporated an unconditional power of termination, the absence of a hearing did not offend natural justice or Article 14. The High Court’s contrary view was therefore erroneous.
3. Government Directive: The State Government, as sole financier of the Corporation, had directed that no staff be appointed for the handicrafts-exhibition project without prior approval. The Court found that the High Court ignored this material document (Annexure B) when it held there was “no material” proving governmental restriction. The impugned appointments, made in defiance of that directive, lacked legal foundation.
4. Conduct of the Managing Director: Emphasis was placed on the fact that Shri K.P. Thakur issued the appointments in “hot haste” shortly before his own retirement, reinforcing the inference that the appointments were irregular.
Holding and Implications
Appeal Allowed; High Court judgment dated 1-12-1993 set aside; Miscellaneous Petition No. 3973/1989 dismissed.
Direct Consequence: The respondents’ services remain validly terminated, and they cannot claim continuation in employment. Broader Implication: The judgment reiterates that temporary employees whose contracts expressly permit termination without notice are not entitled to a pre-termination hearing, especially where appointments violate governmental directives. No new precedent of wider application was articulated.
Faizan Uddin, J.— Leave granted.
2. The appellant is a government company within the meaning of Section 617 of the Companies Act which is controlled and owned by the State Government and a subsidiary company of M.P Laghu Udhyog Nigam Limited which is carrying on business activities of development of handicrafts and handloom products. At the relevant time one Shri K.P Thakur was the Managing Director of the appellant-company who by an order dated 6-7-1989 Annexure-D appointed Respondents 1 to 3, namely, Devendra Kumar Jain, Dilip Goel and Promod Mishra as temporary Junior Managers and by two subsequent orders both dated 8-6-1989 (Annexure E/1 and 2) appointed Respondents 4 and 5, namely, Mehboob Hussain and Liaquat Mohd. Khilzi as temporary Junior Managers in the appellant Company. Soon after their appointment the appellant-Company noticed that the aforesaid appointments of Respondents 1 to 5 were made by the then Managing Director, Shri K.P Thakur in contravention of the Government Order dated 1-4-1989 Annexure B without the approval of the State Government and therefore, another Managing Director successor of Shri K.P Thakur by order dated 31-7-1989 terminated the services of Respondents 1 to 5. The respondents challenged the aforesaid order of termination in the High Court of Madhya Pradesh in Miscellaneous Petition No. 3973/83 which was allowed by judgment dated 1-12-1993 whereby the order of termination of the respondents was quashed. It has been directed that the respondents will continue in service till their services are not validly terminated. It is this order which has been challenged in this appeal.
3. The High Court quashed the order of termination of service of respondents mainly on two grounds. Firstly, the High Court took the view that the respondents' services were terminated without giving them any opportunity of hearing in consonance with the rules of natural justice and, therefore, the order of termination of service was contrary to law and violative of Article 14 of the Constitution and; secondly, Government approval was not necessary for the appointment as contended by the appellant and that in any case no material was placed to show that the appointment was contrary to the Government instructions. In our considered opinion the High Court fell in serious error in taking the aforesaid view and, therefore, the order of the High Court could not be sustained in law.
4. Admittedly the appointment of the respondents was made purely on temporary basis which is evident from the order of their appointment. The first order dated 6-7-1989 Annexure D by which Respondents 1 to 3 were appointed reads as follows:
“Bhopal, 6-7-1989
The following persons are appointed to the post of Junior Manager in the pay scale of 1290-30-1560-40-2040 from the date of taking over, till further orders temporarily and are posted to the Headquarters:
(1) Shri D.K Jain
(2) Shri Pramod Mishra
(3) Shri Dilip Kumar Goyal
2. Employee has to submit Medical Fitness Certificate from Civil Surgeon of the District.
3. Dearness Allowance and other facilities according to the rules of the Corporation shall be payable.
Above appointments are purely temporary and are liable to termination without notice or assigning any reason.
By order of Managing Director
General Manager
Hastashilp Vikas Nigam Ltd., Bhopal”
6-7-1989
The subsequent two orders both dated 8-6-1989 with regard to the appointment of Respondents 4 and 5 are identical one of which is reproduced herein below:
“6-7-1989
Shri Mohammad Hussain is appointed to the post of Junior Manager in the pay scale of 1290-30-1560-40-2040 from the date of taking over, temporarily and posted at Headquarters.
Employee has to obtain Medical Fitness Certificate from Civil Surgeon and submit to office.
Dearness Allowance and other facilities according to the rules of the Corporation shall be payable.
Above appointment is purely temporary and is liable to termination at any time without notice or assigning a reason.
General Manager”
5. A plain reading of these two orders will go to show that the appointments were made purely on temporary basis and their services were liable to be terminated at any time without notice or assigning any reason. In the case of appointment on temporary basis a servant who is so appointed does not acquire any substantive right to the post, even though the post itself may be permanent and it is an implied term of such appointment that it may be terminable at any time and without notice. A temporary government servant does not become a permanent government servant unless he acquires that capacity by force of any rule or he is declared or appointed as a permanent servant. In the present case there is no rule under which the respondents may be deemed to have become permanent by force of such rule nor they were so declared by any subsequent order of the appellant-Company to have acquired that status. On the contrary the respondents all along continued to be temporary and according to the terms of the order of appointment their services could be terminated at any time without any notice or assigning any reasons. In such a case it is not necessary to follow the formalities contemplated by Article 311 of the Constitution. In these facts and circumstances the High Court was not right in holding that the respondents were entitled for being heard before passing the said order of termination of their services and that the order of termination was bad in law on that account.
6. As regards the second ground the learned counsel appearing for the appellant contended that the appellant-Corporation had prepared a project in January 1980 (a copy of which is filed as Annexure A in this appeal) for the development of handicrafts through exhibitions and proposed that five officers of junior manager rank and some salesgirls/salesmen be appointed in that connection. But when the Government came to know about the said project it disapproved the same by order dated 1-4-1989 (Annexure B) and directed that no appointments shall be made to the said post without obtaining prior approval of the State Government. The learned counsel for the appellant, therefore, contended that the appointment of the respondents was made against the directions of the State Government and while quashing the order of the termination the High Court did not take into consideration the said directions of the State Government.
7. It may be pointed out here that the appellant-Corporation is a government company fully financed by the State Government and that being so the Government would be very much concerned to see that any project which is not economically beneficial for the Corporation and which is likely to result in any loss should not be given effect to. The Government, therefore, would be justified in issuing instructions that no appointments of any staff in connection with the said project will be made without the approval of the Board of Directors of M.P Hasta Shilpa Vikas Nigam Limited and passed the order to that effect which has been filed as Annexure B in this appeal. But it appears that the High Court ignored the said order of the State Government while observing that no material in support of the contention that the Government has issued instructions not to make appointment was produced by the appellant.
8. It is noteworthy that Shri K.P Thakur, the then Managing Director himself was retiring on 31-7-1989 and in hot haste he issued the orders of appointment of the respondents on 6-7-1989 and 8-6-1989 in spite of the instructions of the State Government to the contrary. In these facts and circumstances the impugned order passed by the High Court quashing the termination of service of the respondents cannot be sustained.
9. In the result the appeal succeeds and is hereby allowed. The impugned order dated 1-12-1993 passed by the High Court in Miscellaneous Petition No. 3973 of 1989 is set aside and the said writ petition is dismissed but without any order as to costs.
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