Holding

An employee who is suspended because of pending criminal proceedings must be reinstated upon acquittal, and any termination order issued during such suspension is illegal and constitutes a penal dismissal that must be set aside.

Summary

The appellant, Babu Lal, was appointed on an ad‑hoc basis as Sub‑Inspector, Food & Supplies in Haryana in 1975. He was suspended on 15 April 1980 because criminal proceedings under IPC s.420 were pending, and his services were terminated on 17 November 1980 while the suspension was still in force. He was acquitted of the charge on 21 October 1981 and thereafter filed suit seeking declaration that the suspension and termination were illegal and that he be reinstated and regularised under a 1 January 1980 government notification covering ad‑hoc employees with two years of service. The trial court and the Additional District Judge held in his favour, but the High Court set aside those orders, holding that regularisation was not automatic and that the department had found his conduct unsatisfactory. The Supreme Court held that an employee suspended on the ground of pending criminal proceedings must be reinstated upon acquittal, and that the termination order issued during suspension was illegal, amounting to a penal dismissal without due process, and therefore must be quashed. Consequently, the Court ordered the appellant’s reinstatement with back‑pay from the date of suspension and directed the department to consider his regularisation in accordance with the executive notification.

Issues considered

Whether a termination order passed during the pendency of a suspension on the ground of pending criminal proceedings, and before the employee’s acquittal, is valid.
Whether acquittal of the criminal charge obliges the employer to revoke the suspension and reinstate the employee.
Whether the termination order, though framed as per the terms of appointment, is in substance a penal dismissal requiring compliance with Article 311(2) of the Constitution.
Whether the appellant is entitled to regularisation under the 1 January 1980 government notification after completing two years of service.

Legislation cited

Constitution of Indias. Article 311(2)
Indian Penal Code, 1860s. 420
Punjab Police Rules, 1934s. Rule 12.21
Punjab Police Rules, 1984s. Rule 16.24(IX)(b)

Subjects

ad hoc appointmentsuspensiontermination of serviceregularisationacquittaldisciplinary proceedingsArticle 311(2)civil service lawpenal dismissalemployment law

Judgment

BABU LAL
A
v.
STATE OF HARYANA AND ORS.
I
,.;., JANUARY 16, 1991

[B.C. RAY AND J.S. VERMA, JJ.] B

Food Supplies Department-Sub-lnspector-'-Appointed on ad-hoc
temporary basis-Service terminated b~cause of pendency of criminal
proceedings-Later acquitted-Order terminating services held illegal-
,__/ Entitled to regularisation of service.

The appellant was appointed as Sub-Inspector, Food & Supplies c
by respondent No. 2 on 13.4.1975 on ad-hoc basis ~gainst service-man
quota; the post being purely temporary liable to be terminated without
notice and without assigning any reasons or on arrival of a regular
candidate. The appellant continued in service on that post till
November 17, 1980, when bis services were terminated. Prior to the D
y-" termination of bis service be was placed under suspension on April IS,
1980 in view of the criminal proceedings under Section 420, IPC pend-
ing against him and before the culmination of criminal proceedings, his
services were terminated by order dated November 17, 1980~ as afore-
said. Criminal case against the appellant was decided on October
21, 1981 wherein be was acquitted of the charge. The appellant on E
receiving the order of termination of his services filed Civil Suit 453 of
1981 in the court of Senior Sub-Judge, Narnaul praying for a declara-
~
tion that the orders of suspension as also termination were illegal,
wrong, arbitrary and without jurisdiction and that the appellant was
entitled to reinstatement and regularisation of his service under the
- Government notification dated 1.1.1980 issued by the Chief Secretary F
to the Government of Haryana authorising regularisation of such
. ad-hoc e~pI~rees who held the Class m pos.!S for a minimum period of
two· years. According to the appellant bis case was covered by the said
""'
notification and as such be was entitled to all the benefits of service. The
,~
Senior Sub Judge held that as the appellant was acquitted of the
offence, the authorities should have revoked the suspension order and G
have paid the pay for the period for which the appellant remained
under suspension and thus allowed to the appellant all the benefits. An
appeal was taken by the respondents to the Addi . .Disttict Judge who
affirmed the order of the trial court holding that no enquiry was con-
/

-{ ducted before termination of the service of the appellant. Against the
order of the Addi. District Judge, the respondents preferred an appea( H

7'\
74 SUPREME COURT REPORTS [1991] 1 S.C.R.

before the High Court and the High Court allowed the appeal holding
A that the appellant was not entitled to be regularised automatically
unless he fulfilled all the conditions given in the notification. It was also A
- held that the case of the appellant was considered for regularisation by
the Department but the same was not found suitable; the services of the
appellant were terminated in accordance with the terms of his appoint-
B ment. The appellant has rded this appeal against that order in this court
after obtaining special leave.

Allowing the appeal, this Court, ~

HELD: The order of suspension made by the respondent No. 2 is
admittedly on the sole ground that criminal proceeding was pending
against the appellant. The order of termination had been made illegally
during the pendency of the order of suspension and also during the
pendency of the criminal proceeding which ultimately ended with the
acquittal of the appellant. The settled position in law is that the appel-
lant whp was suspended on the ground of pendency of criminal proceed-
D ing against him, on being acquitted of the criminal charge is entitled to
be reinstated in service. His acquittal from the criminal charge does not
debar the disciplinary authorities to initiate disciplinary proceedings
and after giving an opportunity of hearing to the appellant pass an
order of termination on the basis of the terms and conditions of the
order of his_ appointment. [78C-E]
E
As the appellant whose name was sent through Employment
Exchange and who was appointed and bas completed two years service
on 31.12.1~79, he is entitled to be con8idered for regularisation in the
post
'
of Sub-hispector,
....,_............_

--
Food and Supplies. [78E] --
F Smt. Rajinder Kaur v. State of Punjab and Anr., [1986] 4 S.C.C.
141; Anoop Jaiswal v. Government of India, [1984] 2 S.C.R. 453;
Hardeep Singh v. State of Haryana and Ors., [1987] 4 S.L.R. 576~
refeited to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No.
G 1309 of 1986.
.
From the Judgment and Order dated 8.8.1985 of the Punjab and
Haryana High Court in Regular' Second Appeal No. 307 of 1985. ':>--

A.B. Rohtagi, Ranbir Singh Yadav and H.M. Singh for the
H Appellant.
BABU LAL v. STATE OF HARYANA [RAY, J.] 75

A.G. Prasad and Mahabir Singh for the Respondents.
A
I
,.J., The Judgment of the Court was delivered by

RAY, J. This appeal on special leave is against the judgment and
order passed by the High Court of Punjab & Haryana in Regular
Second Appeal No. 307 of 1985 whereby the High Court upheld the B
order of termination of services of the appellant made on November
17, 1980 passed by the respondent No. 2, the Director of Food and
~ Supplies and Deputy Secretary to Government of Haryana, Chandigarh.

The salient facts that gave rise to the instant appeal are as
follows:
c
The appellant was appointed as Sub-Inspector, ·Food and Sup-
plies in the Department of Food and Supplies by the Respondent No. 2
by order dated April 13, 1975 on ad hoc basis against the ex-ser-
vicemen quota. Asper the service rules the· terms and conditions of the
said appointment are as hereunder: D

"(i) The post is purely temporary. Your appointment is
purely on ad hoc basis and shall not exceed six months.
Your services are liable to be terminated at any time during
this period without any notice and without assigning any
reason. Your services are also liable to be terminated at E
any time without notice on arrival of regular candidates
from the Haryana Subordinate Services Selection Board."

- The appellant had been continuing in the said post of Sub-
Inspector without any break till November 17, 1980 i.e. the date of
termination of his services. The appellant, however, was served with F ,
an order of suspension made by the Respondent No. 2 on April
15, 1980 in view of the criminal proceedings pending against the appel-
lant u/s 420 of the Indian Penal Code during the pendency of which the
order of termination was made on November 17, 1980. The said crimi-
nal proceeding being Criminal Case No. 1413 of 1981 was decided on
October 21, 1981 wherein he has been acquitted of th.e said charge. G
The Additional Chief Judicial Magistrate, Narnual had found that:-
•
" ..... Babu Ram accused was not present at the spot and
he h.ad no role to play in the distribution of the cement. The Ap- -
pellant could not JX>int out even a single factor from the file
by which the p_articipation of this accused can be said to H
SUPREME COURT REPORTS [1991] 1 S.C.R.

have been proved by the prosecution. As such, accused,
A Babu Ram cannot be held guilty of the offence charged and
he is acquitted of the same."

The plaintiff-appellant immediately on receiving the order of
termination after giving the requisite notice brought an action being
B Civil Suit No. 453 of 1981 in the court of Senior Sub Judge, Narnual
praying for a declaration to the effect that the order of suspension
dated 15.4.1980 and the order of termination dated 17.11.1980 passed
by the respondent No. 2 were illegal, wrong, arbitrary and without
jurisdiction and the appellant is entitled to reinstatement with effect
from the date of his suspension and so further entitled to be regula-
rised and to all the benefits of the serviee. It had been stated in the
c pleadings of the appellant that a notification dated 1st January, 1980
issued by the Chief Secretary to the Government of 1-!ai:y_ana addres-
sed to all the Head of the Departments vide memo No. G .S.R./Const./
Art. 309/80 stating that such ad hoc employees who hold the class III
-
posts for a minimum period of two years on 31.12. 1979 are to be
D regularised if they fulfil the following conditions:

(a) Only such ad hoc employees as have completed a minimum
of two years service on 31.12.1979 should be made regular. How-
ever, break in service rendered on ad hoc basis up to a period of
one month may be condoned but break accruing because the
E concerned employee had left service of his own volition or where
the ad hoc appointment was against a post/vacancy for which no
regular recruitment was required/intended to be made, i.e. leave
arrangements or filling up of other short-time vacancies, may not
be condoned.

F (b) Only such ad hoc employees as have been recruited through
the Employment Exchange should be made regular.

(c) The work and conduct of the ad hoc employees proposed to
be reguiarised should be of an overall good category.

G The plaintiff-appellant pleaded that he having put in the minimum
period of two years of service on 31.12.1979 became entitled to have
his service regularised in view of the. said Notification. He further
pleaded that the alleged order of termination was in fact an order of
dismissal 'ao,d so it amounts to punishment and the same being penal in
nature is null aµd void because it contravened the provisions of Con-
H stitution of India. The Senior Sub Judge, Narnaul after hearing the
BABU LAL v. STATE OF HARYANA [RAY, J.] 77

parties held that as the petitioner-appellant was acquitted of the said
A
offence, the authorities should have revoked the suspension order and
j
~'
have paid the pay for the period for which the appellant remained
under suspension. The Court further held that the appellant will be
entitled to all the benefits of his service.

Against this judgment and decree, an appeal was filed being B
C.A. No. 129 of 1983 in the Court-of Addi. Di~trict Ju_£1ge, Namaui by
the State. The Addi. District Judge by his judgment dated 18.10.1984
affirmed'the judgment and decree of the learned Sub-Judge holding
--'.. that no enquiry was conducted before termination of the servic~ of the
appellant. The Addi. District Judge also held that:

" ........ the plaintiff had completed two years of service c
and according to executive instructions his services were
bound to be regularised. Reasonable opportunity to defend
was not given to the plaintiff before termination of his
'(
services. Or~er of termination of services was merely a
I camouflage for an order of dismissal for mis~nduct. He was · D
still under suspension wht::n he was terminated. All these
facts lead only to one conclusion that the impugned order
of termination of the services of the plaintiff is bad in law
"

Against this judgment and order R.S.A. No. 307 of 1985 was E
~~·~
filed by.the said respondents in the High Court of Punjab and Haryana
at Chandigarh. The High ~ourt allowed the appeal on setting aside the
judgment and -decree of the courts below holding that the appellant
- was not entitled to be regularised automatically unless he fulfilled all
the conditions given in the Notification. It was further held that when
the case of the appellant came up for regularisation the Department F
-c found that the appellant's work and conduct was not of the required
t,
standard so as to justify his regularisation and consequently his
services were not regularised. It was further held that since the appel-
!ant was ad hoc employee therefore, the Department instead of wait-
ing for the result of the criminal proceedings thought it fit under the
circumstances to dispense with the services of the appellant in accor- G
dance with the terms of his appointment.

This judgment is under challenge in this appeal. The pivotal
---<
question that poses itself for consideration before this Court is firstly
whether during the period of suspension in view of the criminal pro-
ceeding which ultimately ended with the acquittal, an order of termi- H
78 SUPREME COURT REPORTS (1991] 1 S.C.R.

nation can be made against the appellant by the respondent No. 2
A terminating his ad hoc services without reinstating him as he was
acquitted from the charge u/s 420 I.P.C. and secondly whether. the
impugned order of termination from his service can be made straight
away without reinstating him in the' ser\rice after he earned acquittal
;jn the criminal case and thereafter without initiating any proceeding for
B termination of his service as the impugned order of termination was of
penal nature having civil consequences. It has also to be considered in
this connection that the respondent No. 2 has also not considered the
case of the appellant for regularisation of his services even though he
had completed two years of service as on 31.12.1979 fulfilling all the
requisite terms and conditions mentioned in the said Notification. The
order of suspension made by the ~espondent No. 2 is admittedly on the
c sole ground that criminal proceeding was pending against the appel-
lant. The order of termination had been made illegally during the
pendency of the order of suspension and also during the pendency of
the crimina.I proceeding which ultimately ended. with the acquittal of
the appellant. It is the settled position in law that the appellant who rI
o was suspended on the ground of pendency of criminal proceeding
against him, on being acquitted of the criminal charge is.entitled to be
reinstated in service. His acquittal from the. criminal charge do.es not
debar the disciplinary authorities to initiate disciplinary proce·edings
and after giving an opportunity of hearing to the appellant pass an
order of termination on the basis of the terms and conditions of the
· · 'E order of his appointment. Furthermore .as the appellant whose name
was sent through Employment Exchange and who was appointed and
has completed two years service on 31.12.1979 is entitled to be
considered for regularisation in the post Sub-Inspector, Food and Sup-
plies. The High Court had observed that:
" ... In these circumstances, when his case came up for
-
F regufarisation, the Department found that the .plaintiff's
work and conduct was not of the required standard so as to
)
justify his regularisation and consequently his services were
not .regularised."
This finding of the High Court is totally baseless in as much as the
G counsel for the said respondent could. not produce any order or
documentary evidence to show that the respondents considered the
~ase of the appellant for the purpose of regularisation in accordance
with the Notification dated 1st January, 1980. As such the finding of )-
the High Court is wholly bad and illegal. The other finding of the High
Court that the acquittal of the appellant by the criminal court was of
H no consequence as his services were terminated before the order of
acquitt~l was made because the appellant was no more in service is als?
BABU LAL v. STATE OF HARYANA [RAY, J.] 79

against the well settled legal position. It has also to be borne in mind
that under the Notification dated 1st January, 198(} i.ssueu by the A
) Government, the appellant having fulfilled the condition of. two years
of service is entitled to be considered by the Government for regulari-
sation of his service in accordance with the said execJ!tive instructions
issued by the Qovernment. As we have said hereinbef9re that there is
nothing on r.ecord to show that the Government has ever considered B
the case of the appellant for regularisation of his service in the light of
the instructions contained in the said Notification dated 1st January,
--/. 1980, the impugned order of termination of service made by the
Government is illegal and arbitrary and so it is liable to be quashed
·and set aside.

is
Moreover, from the sequences of facts of this case the inference
irresistible that the impugned order of termination of the service of
c
, I

the appellant is of penal nature having civil consequence. It is well
settled by several decisions of this Court that though the order is
innocuous on the face of it still then the Court if necessary, for the
i', ends of fair play and justice can lift the veil and find out the real nature
of the order and if it is found that the impugned order is penal in D
nature even though it is couched with the order of termination in
accordance with the terms and conditions of the orqer of appointment,
the order will be set aside. Reference may be made in this connection
to the deciSlon of this Court in Smt. RajinderKaur v. State~of Punjab
and Another, (1989) 4 SCC 181 in which one of us is a party. It has
-'- E
been held that:

-
"The impugned order of discharge though stated to be
made in accordance with the provisions of Rule 12 .21 of the
Punjab Police Rules, 1934, was really made on the basis of
the misconduct as found on enquiry into the allegation

- l
behind her back. Though couched in innocuous terms, the
order was merely a camouflage for an order of dismissal
from service on the ground of misconduct. This order had
F

been made without serving the appellant any charge-sheet,
without asking for any explanation from her and without
giving any opp~rtunity to show cause against the purported
order of dismissal from service and without giving any G
opportunity to cross-_examine the wit~esses examined. The
order was thus, made in total contravention of the provi-
--< sions of Article 311(2) and was therefore, liable to be
quashed and set aside."
This case relied on the observations made by this Court in the
.·H
case o_f Anoop.JqJswalv. Government~[ India, (1984) 2 S.C.R. 453 ·
80 SUPREME COURT REPORTS (1991] 1 S.C.R.

wherein it has been observed that:
A
" .... Where the form of the order is merely a camouflage
for an order of dismissal for misconduct it is always open to
the court before which the order is challenged to go behind
the form and ascertain the true character of the order. If
B the court holds that the order though in the form is merely
a determination of employment is in reality a cloak for an
order of punishment, the court would not be debarred,
merely because of the form of the order, in giving effect to
the rights conferred by law upon the employee."
Similar observation has been made by this Court in th~ case of
C Hardeep Singh v. State of Haryana and Ors., (1987] 4 S.L.R. 576. It
has been held in this case as under:
"In the instant case, it is clear and evident from the aver-
ments made in paragraph 3, sub-para (i) to (iii) and
paragraph (v) of the counter-affidavit that the impugned
D order of removal/dismissal from service was in substance
and in effect an order made by way of punishment after
considering the service conduct of petitioner. There is no
doubt ~he impugned order casts a stigma on the service
career of the petitioner and the order being made by way of
punishment, the petitioner is entitled to the protection
E afforded by the provisions of Article 311(2) of the COn-
stitution as well as by the provisions of Rule 16.24 (IX)(b)
of the Punjab Police Rules, 1984 ..... "
In the premises aforesaid, we are constrained to hold that the
judgment rendered by the High Court is wholly illegal and unwar-
ranted and as such we quash and set aside the same and affirm the
F
judgment of the courts below. We direct that the appellant be rein-
stated in the service immediately and be paid all his emoluments i.e.
)
pay and allowances from the date of the order ·of his suspension i.e.
15.4.1980 till the date of reinstatement into service minus the suspen-
sion allowance that had been received by the appellant during the
period of his suspension (if any). The respondents are at liberty to
G consider the case of the appellant for regularisation in the light of the
norms laid down in t~e executive instructions issued on 1st January,
1980 by Notification No. G.S.R./Const./Art. 309/80. The appeal is
allowed. There will be no order as to costs in the facts the circums-
tances of the case.

Y. Lal . /
Appeal ailowed .