JUDGMENT
G.N. Ray, J.
1. This appeal is directed against the dismissal of the writ petition of the appellant challenging the termination of his service by the General Manager, New India Assurance Company Ltd.
2. The appellant’s case may be stated as follows :–
The appellant was appointed as Assistant Manager effective from 20th September, 1969 by me Howran Insurance Co. Ltd. The said letter of appointment is Annexure ‘A’ to the writ petition. The appellant has contended that after the completion of the probationary period, the appellant became a permanent employee of the said Howrah Insurance Co. Ltd. In September, 1972, the General Assurance business (Nationalisation) Act, 1972 came into force and the said Howrah Insurance Co. Ltd. was amalgamated with some other Insurance Companies and such Insurance Companies including the said Howrah Insurance Co. Ltd. were merged with the New India Assurance Co. Ltd. The said New India Assurance Co. Ltd. is a Government of India Undertaking and as such ‘State’ within the meaning of Article 12 of the Constitution of India. Under the provisions of the said General Assurance Business (Nationalisation) Act, 1972, the appellant became an employee of the said New India Assurance Co. Ltd. under the same terms and conditions under which he had been serving at the time of merger of the said Howrah Insurance Co. Ltd. with the New India Assurance Co. Ltd. It was provided for in the said Nationalisation Act of 1972 that so long the conditions of service were not framed and/or changed, the employees would enjoy the conditions of service under which they had been acting prior to merger on 17th September, 1975. A scheme being General Assurance (Rationalisation of Pay Scales and other conditions of Service of Officers) Scheme 1975 was framed and the said scheme came into force with effect from 1st October, 1975. The appellant thereafter wrote to the Chairman, New India Assurance Co. Ltd. claiming his categorisation under the scheme as an Officer after giving the bio-data. It appears that a Committee was formed for categorisation of the employees of the said New India Assurance Co. Ltd. and considering the bio-data of the appellant the said Committee categorised the appellant as Field Inspector and not as an Officer. The appellant thereafter made a protest against him categorisation as Class II staff and had contended that he was initially appointed by the Howrah Insurance Co. Ltd. as an Assistant Branch Manager and in managerial capacity he had worked all along and as such by the categorisation of the appellant as the Class II staff there had been a demotion of the appellant. It appears that a Screening Committee was formed for the interview of Grade II employees including the appellant between 11th March to 13th March, 1976. The said Scheening Committee on review of the performance remarked that the appellant was not fit to continue his service. In view of such report, the General Manager by his Memo, dated 27th March, 1976 informed the appellant that in view of his unsatisfactory performance, the management had decided to terminate his service with immediate effect. The appellant was informed that he would be paid one month’s salary in lieu of notice. It was also mentioned in the letter of termination that the said letter was without prejudice to the company’s right to take any action against the appellant, if warranted, under such circumstances as would come to light hereafter.
3. After a contested hearing the writ petition of the appellant challenging the said termination of his service was dismissed by the learned Trial Judge. The learned Trial Judge has noted that the appellant was an Assistant Branch Manager of the Howrah Insurance Co. Ltd., which was comparatively a small company and 21 companies carrying on business in general insurance were merged with the New India Assurance Co. Ltd. which will appear from the list of the merged companies mentioned in the First Schedule of the New India Assurance Co. Ltd. (Merger) Scheme, 1973. The learned Trial Judge was of the view that as employees of the different merged Companies holding different designations and doing different types of works became employees of the New India Assurance Co. Ltd. because of the merger of such companies, there was a necessity of categorisation of the employees of such different companies since merged with the said New India Assurance Co. Ltd. On a review of the performance of the appellant he was categorised as a Development Inspector and the learned Trial Judge has noted that such categorisation was in conformity with the nature of the work entrusted to the appellant under Clauses 3 and 4 of the letter of appointment. The learned Trial Judge has also came to the finding that the categorisation of the appellant as Development Inspector was unilateral and the appellant was not consulted before such categorisation but there was no discrimination against the appellant because many other persons were also categorised as Development Inspectors along with the appellant. As the Appellant became a Development Inspector with effect from August 25, 1975, the General Insurance (Rationalisation of Pay Scales and other conditions of services of Officers) Scheme, 1975 was not applicable to the appellant because under paragraph 3(1) of the said Scheme, any employee who has been declared as a member of the Development Staff by the Committee appointed by the Board would not be considered as an Officer. Another scheme known as General Insurance (Rationalisation of Pay Scales and other conditions of service of Development Staff) Scheme, 1976 was enforced but since the said scheme came into force from May 1, 1976, the said scheme also did not apply to the appellant in view of the fact that his services were terminated with effect from March 27, 1976. The learned Trial Judge was, therefore, of the view that the appellant at the relevant time was enjoying the terms and conditions of his initial appointment by the Howrah Insurance Co.. Ltd. in view of the provisions of Section 7(1) of the General Insurance Business (Nationalisation) Act, 1972. The learned Trial Judge was of the view that the appellant failed to fulfil the terms and conditions of his employment in the matter of securing the required quantum of premium for the New India Assurance Co. Ltd. The learned Trial Judge has noted that from the bio-data submitted by the appellant, it will appear that his performances in the years 1969, 1970 and 1971 were not satisfactory and he failed to collect the guaranteed premium. The learned Trial Judge has held that an employer is under no obligation to retain an employee in service if the employee was found unsuitable or he was unsuited for the post he is holding. It has been held that the New India Assurance Co. Ltd. had a right inherent in every employer to terminate the service of the employer because his performance as Development Inspector was found to be unsatisfactory. The learned Judge has also held that the use of the expression “Unsatisfactory performance” in the letter of termination, therefore, cannot be termed as a blamish or stigma and no aspersion can be said to have been cast upon the appellant by using the said expression in the letter of termination. The learned Trial Judge has also held that the said letter of termination was issued on the basis of recommendation of the Screening Committee and as such it cannot be held that such letter of termination was issued mala fide. It has also been held that as the said termination of service of the appellant was in accordance with the terms of contract of agreement of service, such termination did not amount to penalty within the meaning of General Insurance (Conduct, Discipline & Appeal) Rules, 1975 and as such there was no occasion to consider the breach of provisions of the said Discipline & Appeal Rules. The learned Trial Judge has held that at the relevant time the terms and conditions of the appellant’s service even after merger were not controlled by any statutory rules and as such there was no question of infringement of any statutory rules in terminating the service of the appellant. The learned Trial Judge has also held that the appellant has been trying to enforce certain rights or obligations arising from a contract of service in the writ petition, but such enforcement of contractual right in writ jurisdiction is not warranted.
4. Mr. Sengupta, the learned counsel appearing for the appellant, has contended that the categorisation of the appellant as a Class-II employee was wholly illegal and without justification. The appellant was appointed as Assistant Branch Manager by the Howrah Insurance Co. Ltd. and until the nationalisation of the General Insurance business and merger of the said company with the New India Assurance Co. Ltd., the appellant had been working in the capacity of Assistant Branch Manager. Mr. Sengupta has contended that it is immaterial as to what was the size and staff pattern of the said constituent Insurance Company, viz., Howrah Insurance Co. Ltd. Mr. Sengupta has contended that an employee who was appointed expressly as a Branch Manager cannot be categorised as Development Inspector not belonging to the managerial cadre. Mr. Sengupta has contended that the appellant is entitled to be treated as an employee belonging to an Officer’s cadre and even if the New India Assurance Co. Ltd. was not inclined to categorise the appellant as Manager or Assistant Manager, they were bound to treat the appellant as belonging to the managerial cadre under any other appropriate designation. Mr. Sengupta has contended that the said categorisation was made unilaterally as found by the learned Trial Judge without giving the appellant any opportunity of being heard and place relevant materials germane for such consideration and as such the said categorisation should not be given effect to. Mr. Sengupta has next contended that until the impugned letter of termination of the appellant’s service was issued, there was no rule framed for governing the service conditions of the appellant. Accordingly, the appellant was entitled to be governed by the conditions of service under which he was initially employed by the Howrah Insurance Co. Ltd. Mr. Sengupta has contended that under the terms of appointment of the appellant by the said Howrah Insurance Co. Ltd., the service of the appellant could not be terminated on the score of failure to procure the minimum quantity of premium. Mr. Sengupta has referred to the terms and conditions of service which appear from the letter of appointment of the Howrah Insurance Co. Ltd. For the purpose of appreciating the contention of the appellant, the relevant provisions of the terms of appointment as contained in Annexure ‘A’ to the writ petition may be stated as follows :–
“With reference to the personal discussion that you had with the undersigned and your application, dated 12th August, 1969 we have pleasure in appointing you as Assistant Branch Manager of the Company, on the following terms and conditions :–
1. Your appointment is effective from 20th September, 1969 ;
2. You will work as Assistant Manager in the Sadar of Burdwan;
3. You are required to introduce Development Officers and licensed agents to Work strictly on Tariff Commission and in terms of the current provisions of the Code of Conduct so that a good volume of quality premium may be secured to the company through your organisation ;
4. You are to collect to the tune of Rs. 1,00,000 direct from Burdwan Office–for the first year with the composition of premium of all classes of general insurance and initially a monthly premium of Rs. 8,000 must be guaranteed to the company. The failure to collect the stipulated amount as mentioned above for the subsequent period may entitle the company to cut down your allowances to maintain the cost of your organisation within the allowable limit;
5. You are to submit report regularly to the Manager, Head Office through Branch Manager, Asansol about the working of Burdwan Office ;
6. You will be on probation for six months from the date of your joining and the same may be extended for a further period of three months, making in all nine months, unless intimated by the Company either in writing or verbally at expiry of the initial probationary period of six months ;
7. During the probationary period, your services will be liable to termination without notice and without any reason being given by the company for such termination and the Company’s decision will be final and binding;
8. During the period of your services including the period of probation you will devote full time and attention to the services of the company and discharge faithfully and honestly the duties that may be assigned to you from time to time.
9. The question of all the unites will be revised quarterly.
10. You will give one calendar month notice to the company in writing for resigning or leaving the services of the company at any time and the breach of this condition will entitle the company to claim damages on the ground from you without prejudice to the Company’s other rights ; rights;
11. You are liable to transfer at any time to any of the Company’s Branches according to the convenience of the company and subject to the rules and regulations in force governing such transfer or posting.
12. Whilst on probation, you will receive a monthly;
Basic Salary -- D. A. -- Amount not quoted. Local conveyance -- We hope, this appointment will continue to our mutual interest and with your splendid success. 13. You will be paid the actual cost of your travelling and entertainment expenses."
5. Mr. Sengupta has contended that the aforesaid letter of appointment makes it abundantly clear that the appellant was appointed on permanent basis as Assistant Branch Manager and he was given the duties and responsibilities of a Branch Manager to organise his own Branch by introducing Development Officers and licensed agents. Referring to Clause 4 of the terms of appointment of the appellant, Mr. Sengupta contended that there was a requirement of the appellant to collect to the tune of Rs. 1,00,000 direct from Burdwan Office for the first year with the composition of premium of all classess of general-insurance and initially a monthly premium of Rs. 8,000 was required to be guaranteed to the Company. It has been stipulated in Clause 4 that the failure to collect the stipulated amount as mentioned above for the subsequent period will entitle the Company to cut down the allowances of the appellant to maintain the cost of his organisation. It is nobody’s case that in 1969 or in subsequent years the appellant failed to collect the required amount in terms of the said agreement. From the report of the Screening Committee, which is the alleged basis of the termination of the appellant’s service it transpires that the said Committee had taken into consideration the premium collected by the appellant for the years 1975 and 1976. It will also appear that the total unit premium collected by the appellant through other agents was about Rs. 1.23 lacs. Mr. Sengupta has contended that if the appellant had failed to collect the stipulated amount for the subsequent period, the company was entitled to cut down the appellant’s allowances to maintain the cost of his organisation within the allowable limit. But under the terms and conditions of his service there was no stipulation that simply for the failure to collect the stipulated amount, his service was liable to be terminated. In the aforesaid circumstances, Mr. Sengupta contends that there was no occasion to terminate the service when the appellant had rendered long seven years of service. Mr. Sengupta has also submitted that it is only unfortunate that the appellant had not been given any opportunity to explain the reasons for collecting lesser quantity of premium through his efforts for two years and for a Public Undertaking like the New India Assurance Co. Ltd., it was only desirable and was also reasonably expected that the Review Committee’s report should have been brought to the notice of the appellant and he should have been given chances to explain reasons for the alleged lapse, if any, and to improve his performance. Mr. Sengupta has contended that the New India Assurance Co. Ltd. is not permitted to terminate the service of the appellant simply on the basis of recommendation of the Screening Committee that the appellant’s performance was unsatisfactory. The unrestricted power of hire and fire by the employer is not applicable to a public undertaking. In this connection, Mr. Sengupta has referred to a Bench decision of this Court made in the case of Gour Chandra Sarkar v. West Bengal State Electricity Board reported in 1985(1) High Court Notes, page 295. Under Regulation 34 of the West Bengal State Electricity Board, the State Electricity Board had power to terminate the service of an employee of the Board by mere serving three months’ notice or by paying the salaries for such period in lieu of notice without assigning any reason. It has been held by the Division Bench of this Court in the said decision that the said Regulation 34 suffers from the vice of arbitrariness and should be struck down as ultra vires Article 14 of the Constitution. Mr. Sengupta has also referred to a decision of the Supreme Court made in the case of West Bengal State Electricity Board v. Desh Bandhu Ghosh . The Supreme Court has held that the said Regulation 34 is ultra vires the Constitution because of uncanalised and uncontrolled power to terminate the service of an employee by merely issuing a notice. Mr. Sengupta has, therefore, contended that if a statutory authority is not permitted to frame any service condition by which the employer is permitted to terminate the service of an employee merely on asking on the basis of the inherent right of the employer to terminate the service of employee, it cannot be contended that such power can be exercised on the footing that in the absence of the statutory rules the same inherent power of the employer to hire and fire can be resorted to. Mr. Sengupta has also submitted that a reference to the report of the Screening Committee reveals that no uniform policy or standard has been followed by the members of the Screening Committee and in a good number of eases the Review Committee although noted that the cost factor was high and the service was not satisfactory, did not recommend for termination of service. The appellant according to Mr. Sengupta has been treated with gross discrimination. Mr. Sengupta has, therefore, contended that the order of termination should be set aside and the petitioner’s contention for proper categorisation should be taken into consideration by the appropriate authority.
6. Mr. Ghosh, the learned Counsel appearing for the respondent Insurance Company has, however, contended that unless controlled by any statutory rule, the employer has inherent right to terminate the service of the employee on the ground of unsuitability. In the instant case, the performance of the appellant along with other employees had been taken into consideration by a “Screening Committee” and on the basis of the account of performance given by the appellant for the last two years, the “Screening Committee” was of the view that his performance was poor and he was unsuitable to be retained in service. Mr. Ghosh has contended that the employer had every right to assess the performance of its employees and in the instant case such assessment had been made by a “Screening Committee” appointed for the purpose. The “Screening Committee” had not taken into consideration the perfomance of the appellant alone but the “Screening Committee” had considered the performance of the appellant and other employees similarly circumstances. Hence, there was no question of any mala fide on the part of the employer in relying on the said assessment of the “Screening Committee”. Mr. Ghosh has contended that although the appellant was appointed as Assistant Branch Manager, by the Howrah Insurance Co. Ltd., it is quite apparent from the said letter of appointment that the appellant was given appointment in the Development Wing and not in the Administrative Wing of the said Company. The service of the employee of a Development Wing is result oriented and he is required to procure a minimum target of premium so that the insurance business is viable and remunerative. If a member of the Development Wing fails to procure the minimum work covering the cost of his establishment, the continuance of such employee in service is not desirable and the Insurance Company, in such circumstances, will be justified in terminating the service on the score of unsuitability. Mr. Ghosh has contended that in result oriented contract of service, termination of service on the failure to procure desired result is implicit and it is not necessary to in elude such term expressly. He has further submitted that the use of the expression ‘unsuitable performance’ in the letter of termination is not any aspersion of misconduct against him but the same refers to the assessment of the employer about his performance. Hence such expression is not a stigma against the employee thereby rendering the letter of termination invalid. Mr. Ghosh has referred to a decision of this court made in the case of Nikhil Kumar Roy v. Union of India reported in 1980(2) Calcutta High Court Notes, page 162. He has submitted that the service of an employee of Oriental Fire and General Insurance Co. Ltd. in the said case was terminated on the ground of unsuitability and such termination has been upheld by this court. It may, however, be noted that the said employee was appointed on condition that his appointment will be in force as long as he will show satisfactory result at the assessment made from time to time. The Company has reserved the right to make suitable revisions in his remuneration and the appointment was subject to termination by either party by giving 30 day’s notice in writing. Mr. Ghosh has, therefore, submitted that the learned Trial Judge is quite justified in holding that in the instant case because of the unsatisfactory service rendered by the appellant, the employer within its inherent right to terminate the service, had lawfully terminated the service of the appellant and such termination did not suffer from any infirmity. He has, therefore, contended that the appeal should be dismissed.
7. Mr. Sengupta, however, in reply to the aforesaid contention of Mr. Ghosh, has contended that the letter of appointment of the appellant does not show that the appointment was a performance contract or result oriented contract of service. There is no express provision in the letter of appointment that termination can be effected on the ground of poor service by the appellant. On the contrary, it clearly shows that in the event of poor performance, the deduction from his allowances should be resorted to. The said clause, therefore, clearly points out that termination on the score of performance is neither express nor implicit in the said terms and conditions of appointment. Accordingly, the contention of Mr. Ghosh cannot be accepted.
8. After considering the respective contentions of the learned counsels for the parties it appears to us that at the relevant time, there was no statutory rules framed for governing the service conditions of the appellant. The appellant was not categorised as an ‘Officer’ within the meaning of ‘Officer’ under the General Insurance (Rationalisation of Pay Scales and other Conditions of Service of the Officers) Scheme, 1975. The learned Trial Judge was, therefore, justified in holding that the appellant was then governed by the terms and conditions of service under which he was initially appointed by the Howrah Insurance Co. Ltd. It, however, appears to us that from the service condition which is Annexure ‘A’ in the Paper Book, it does not appear that there was any stipulation to the effect that failure to collect stipulated amount of premium for the subsequent period would entitle the Company to terminate the service of the appellant. It was Only mentioned in Clause 4 of the terms of the contract that “….The failure to collect the stipulated amount as mentioned above for the subsequent period may entitle the Company to cut down your allowances to maintain the cost of your organisation within the allowable unit.” The petitioner was appointed with effect from September, 1969 and it was nobody’s case that in 1969 or subsequent years the petitioners failed to procure premium as stipulated. It appears to us from the report of the ‘Screening Committee’ which is Annexure ‘E’ to the Paper Book that only two years’ premium were taken into consideration so far as the appellant is concerned, viz., the premium for 1975 and 1976. It also transpires that his total unit premium was 1.27 lacs and the unit cost was assessed by the “Screening Committee” at 35%. The “Screening Committee” did not recommend for termination of service in all cases where such cost was assessed at 30% or above. It has also not been stated by the respondents that the service of all the employees whose cost had exceeded a particular limit had been terminated. For example, we may refer to Serial No. 47 of the report of the “Screening Committee” at page 139 of the Paper Book. Mr. P. K. Ganguly’s case was referred to in Serial No. 47 and the cost concerning Mr. Ganguly was assessed at 75.14%,” but the “Screening Committee” remarked “Working is not satisfactory. He expects to improve. He should try to sell Janata Policy,” Similarly, we may refer to Serial No. 28 concerning Mr. J. K. Pal Chowdhury whose cost was assessed at 44.7% and the “Screening Committee” remarked in his case “He has long experience but he does not appear to be keen to do well. His remuneration is “too high compared to the premium. The area has potentiality but effort is necessary. He is likely to be transferred to Gauhati by the Area Manager.” Reference may be made to Serial No. 18 concerning Mr. V.D. Sharma. His cost was assessed at 67.5% and it was remarked by the Screening Committee “Unless he improves, his service may be terminated.” Similarly, if a reference is made to Serial No. 60 concerning Mr. R. J. Saha, it appears that the cost concerning Mr. Saha was assessed at 30% and the Screening Committee remarked “His business must increase, otherwise his services may have to be discontinued.” It, therefore, appears to us that no uniform principle had been applied by the “Screening Committee” in recommending termination of service of the employees whose unit cost was assessed as high. It appears to us that expressly there was no provision in the contract that if the unit cost is high in case of any employee than the allowable limit, his service was liable to be terminated. On the contrary, as indicated hereinabove, it appears that in the case of the appellant there was a specific stipulation that the remuneration of the appellant would be reduced if he failed to procure the premium less than the stipulated amount. We are unable to read in the contract of service of the appellant that the said contract being a performance contract, satisfactory performance was the condition of service and it was implicit in the said contract that for the failure to procure premium less than the target amount, the service is liable to be terminated. As aforesaid, recommendation for termination of service on the score of high unit cost has not been made by the “Screening Committee” in all cases but it made different recommendations in case of other employees even though the unit cost was assessed even higher than that of the appellant. We are unable to accept the contention of Mr. Ghosh that in the absence of any statutory rule governing the service condition of the appellant at the relevant time, the respondents were at liberty to exercise the inherent power of an employer to terminate the service of an employee simply on the basis of pleasure doctrine. In a public undertaking, the pleasure doctrine, in our view, is not applicable. Precisely for this reason the Supreme Court in the case of West Bengal State Electricity Board v. Desh Bandhu Ghosh has held that Regulation 34 of the Service Regulations framed by the West Bengal State Electricity Board which permits the Board to terminate the service of an employee by merely issuing a notice for three months is ultra vires the Constitution because the Supreme Court has noted that such provision of terminating service without any guideline whatsoever on the mere whim or pleasure of the concerned authority is arbitrary and opposed to Rule of Law. If the statutory authority is not empowered to frame a service regulation without any guideline whatsoever by which service can be terminated merely on the decision of the employer by serving a notice, we fail to appreciate how the service of the appellant in a public undertaking can be terminated on the plea that in the absence of any condition of service, the employer had an inherent right to terminate the service of an employee. It appears to us that an unreasonably harsh and unconscionable decision to terminate the service of the appellant was taken simply because the “Screening Committee” had taken into consideration the performance of last two or three years and had recommended for termination of service of the appellant ignoring the fact that the appellant was a permanent employee and had rendered long seven years of service and it was nobody’s case that there was no chance for improving his performance. Was it not desirable that warning should have been issued to the appellant to improve his performance and to give him a chance to improve his performance ? If inspite of such warning and giving chance to improve the performance, an employee fails and neglects to improve his performance and his retention in the organisation becomes unremunerative, there may be justification in terminating the service if such termination is not otherwise opposed to any express condition of service. But in the instant case, it appears to us that the respondents had taken a very drastic step on the alleged assessment of the “Screening Committee” which, according to us, has not been made uniformly and objectively. In the circumstances, the order of termination cannot be justified and the same is, therefore, set aside and it is directed that the appellant must be deemed to be in service all along. The respondents are, therefore, directed to pay to the appellant the salary and all other allowances as would have been available to him if he had continued in service within three months from today.
9. So far as the categorisation of the appellant is concerned as a Development Inspector, we do not intend to make any observation on the justification and/or propriety of such categorisation at this stage. As the termination of service of the appellant has been set aside, the appellant will be entitled to make appropriate representation to the concerned authorities for his proper categorisation by giving relevant facts and circumstances in justification of such claim and if his representation is not accepted by the respondents and/or the respondents fail to consider the same, the appellant will be free to take such action against his categorisation as may be available to him in law. This appeal is accordingly disposed of but there will be no order as to costs.
Paritosh Mukherjee, J.
10. I agree.