PETITIONER: <ORG>. Vs. RESPONDENT: UNION Of INDIA & ORS. DATE OF JUDGMENT04/03/1986 BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, <NAME>, M.P. (J) CITATION: 1986 AIR 856 1986 SCR (1) 440 1986 SCC (2) 288 1986 SCALE (1)293 ACT: <ORG> & Salt Act , 1944, s.4 - Excise Duty Wholesale Cost price forming basis of assessment - Determination of - Maximum price of commodity fixed statutorily under Control Order - Whether conclusive. HEADNOTE: During the period between May 4, 1971 ant July 22, 1971 owing to the depression in the market, the appellant had to sell on wholesale basis its vegetable products known as "Panghat" and "Roshni" brands at Rs.78.66 and Rs.71.62 per tin in order to clear the accumulated stock and to avoid huge loss. These prices were lower than the maximum prices prescribed by the Notification issued under the Vegetable Oil Products Central Order, 1947. The appellant submitted a price list containing the aforesaid wholesale cash price in respect of these two products to the Superintendent, <ORG>, Delhi as required by rule 173-C of the <ORG> Rules, 1974 and sought his approval therefor. me Superintendent, <ORG> rejected the prayer of the appellant and directed that the central excise duty under 8.4 of the <ORG> JUDGMENT:

prices fixed under the above Notification. me appellant's appeal before the deputy Collector (Technical), <ORG> also failed.

Aggrieved by the decision of the Deputy Collector (Technical), the appellant filed a writ petition before <ORG> on the ground that the maximum price fixed by <ORG> should not be taken as the basis for levying excise duty under the Act when the appellant had to sell the goods In question at a lower rate owing to bona fide commercial reasons. <ORG> dismissed the petition in limine.

Allowing the appeal, ^ HELD : 1. The Order of the High Court and the orders passed by <ORG> are set aside and the case is remanded to the Superintendent of Central Excise to redetermine the wholesale cash price in respect of the goods in question on the basis of the relevant principles. [447 A-B] 2.1 Section 4 of the Central Excise & Salt Act 1944 toes not refer to any notification issued under the Essential Commodities Act , 1955 fixing the maximum price of any essential commodity. Hence the maximum price fixed thereunder cannot control the determination of the value of the goods under 8.4 of the Act for the purpose of levy of excise duty. In appropriate cases the assessing authorities may while determining the wholesale cash price under section 4 of the Act take into consideration the maximum price fixed under the Essential Commodities Act , 1955 to decide whether the goods are sold by a dealer bona fide at the prices quoted by him. It cannot. however, be conclusive. [446 B-D] 2.2 The provisions contained in 8.4 of the Act are intended for the purpose of determining the excise duty payable by a manufacturer. They are intended for ascertaining the wholesale cash price realised or realisable by the manufacturer in respect of the goods in question. Such price should ordinarily be fixed at arms length and in the usual course of business. It should be fixed bonafide without showing any kind of favour to the buyer. [445 F-G] In the instant case, the excise authorities have not made any attempt to determine the whole-sale cash price of the goods in question in accordance with law. It appears that both the authorities felt that they were bound by the maximum prices notified by <ORG> and the excise duty was payable on that basis of the wholesale prices fetched by the goods even if they were lower than the controlled prices. They have not given any valid reason for rejecting the price list submitted by the appellant. [446 G- H]

3. The purpose of fixing the maximum price beyond which essential commodities cannot be sold is different from the purpose of the provisions contained in 8.4 of the Act. Under the provisions of the Essential Commodities Act 1955 and the various orders and notifications issued thereunder when a maximum price of an essential commodity is fixed, a dealer is prohibited from selling the commodity beyond that price. The said restriction is imposed in the interest of the consumers. The object of such notifications is to see that the prices of essential commodities do not go beyond the maximum price fixed thereunder. Those notifications do not prohibit a manufacturer or a dealer from selling the essential commodities in question at rates lower than the maximum rates fixed under the notifications and such sales would not be contrary to the provisions of the Essential Commodities Act , 1955 or orders and notifications issued thereunder. [445 D-F] & CIVIL APPELLATE JURISDICTION : Civil Appeal No. 626 of 1972.

From the Judgment and Order dated 4.11.1971 of <ORG> in Civil Writ No. 1159 of 1971.

<NAME> for the Appellant.

<NAME>, Additional Solicitor General, <NAME>, <NAME> and <NAME> for the Respondents.

The Judgment of the Court was delivered by <NAME>, J. This is an appeal by special leave filed against the order dated November 4, 1971 in Civil Writ No. 1159 of 1971 on the file of <ORG> dismissing the said petition in limine. The appellant is a manufacturer engaged in the business of manufacturing certain vegetable oil products (hydrogenated oil) at its factory in Delhi. Vegetable oil product was an essential commodity under <CITATION> of the Essential Commodities Act, 1955. On February 22, 1971 the Director (<NAME>), who had been authorised by the Vegetable Oil Products Controller of India under sub-clause (a) of clause (ii) of the Vegetable Oil Products Control Order, 1947 to exercise the powers of the Controller under the said Order issued a notification in exercise of the powers conferred by subclause (i) of clause 6 thereof read with the notification of <ORG> in <ORG> dated September 24, 1958 and in supersession of the notification of <ORG> issued on the above subject earlier fixing maximum prices at which the vegetable oil products might be sold in the various zones specified therein with effect from February 23, 1971. Delhi cane within zone 'A'. Under that notification the maximum price at which the appellant might sell its vegetable product known as 'Panghat' in bulk pack was Rs.81.04 per tin of 16.5 Kilograms and the maximum price at which it could sell the vegetable product manufactured by it known as 'Roshni' in bulk pack was Rs. 74.00 per tin of 15 Kilograms. The excise duty payable on the said products under the provisions of <ORG> and Salt Act , 1944 (hereinafter referred to as 'the Act') was 5 per cent ad valorem, but during the period between May 4, 1971 and July 22, 1971 owing to the depression in the market the appellant had to sell on wholesale basis 'Panghat' brand vegetable product at Rs. 78.66 per tin and 'Roshni' brand vegetable product at Rs. 71.62 per tin in order to clear the accumulated stock and to avoid huge loss These prices were lower than the maximum prices prescribed by the notification, referred to above. On May 4, 1971 the appellant submitted a price list in respect of 'Panghat' and 'Roshni' bulk packs showing the wholesale cash price of these products at Rs.78.66 and Rs. 71.62 per tin respectively as stated above to the Superintendent, <ORG>, Sabzi Mandi, Delhi as required by rule 173-C of the <ORG> Rules, 1944 and sought his approval therefor. The Superintendent, <ORG> rejected the prayer of the appellant and directed that the <ORG> duty was payable on the basis of the maximum prices fixed by <ORG> under the notification referred to above. Aggrieved by the said order, the appellant filed an appeal under section 35 of the Act before the Deputy Collector (Technical) of <ORG>, Bahadurshah Zafar Marg, New Delhi which was rejected by him. The short order dated August 28, 1971 passed by the Deputy Collector (Technical) on that appeal read as follows:

"I have carefully considered all the points raised by the appellants in their appeal and those made by them at the time of personal hearing.

2. The appellant's main contention is that the price of the vegetable product fixed by the <ORG> in <ORG> would form the basis of assessment of <ORG> duty only if the statutory price and their wholesale price at which the goods are sold are the same, but if their wholesale price is less than the statutorily fixed price, it was not justifiable to assess <ORG> duty on the <ORG> fixed price.

3. I do not accept the above contention of the appellants. Since in the case of Vegetable Product, the wholesale price is controlled under Vegetable Oil Control Order by the Govt. in <ORG>, only such controlled price should be made the basis of assessment of duty for the purpose of section 4 of the Central Excise and Salt Act , 1944. I, therefore, do not see any reason to interfere with the price approved by the Superintendent of Central Excise."

Aggrieved by the decision of the Deputy Collector (Technical) the appellant filed the writ petition before <ORG> out of which this appeal arises contending that the maximum price fixed by <ORG> above which the goods in question could not be sold should not be taken as the basis for levying excise duty under the Act when the appellant had to sell the goods in question at a lower rate owing to bona fide commercial reasons. That petition was rejected in limine by <ORG> and this appeal is filed against the order of <ORG>.

The material part of section 4 of the Act, as it stood at the relevant time, read as follows:

"Determination of value for the purpose of duty: Where under this Act, any article is chargeable with duty at a rate dependent on the value of the article, such value shall be deemed to be -

(a) the wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold at the time of removal of the article chargeable with duty from the factory or any other premises of manufacture or production for delivery at the place of manufacture or production, or if a wholesale market does not exist for such article at such place, at the nearest place where such market exists, or............... "

Neither the Superintendent of <ORG> nor the Deputy Collector (Technical) has recorded a finding in this case that the appellant had sold the goods in question during the relevant period at a price higher than the prices mentioned by the appellant in the price list. The <ORG> authorities were guided mainly by the maximum price fixed by <ORG> by its notification in arriving at the 'wholesale cash price' which formed the basis of assessment of excise duty in respect of the two types of vegetable oil products with which we are concerned in this case. me purpose of fixing the maximum price beyond which essential commodities cannot be sold is different from the purpose of the provisions contained in section 4 of the Act. Under the provisions of the Essential Commodities Act , 1955 and the various Orders and Notifications issued thereunder when a maximum price of an essential commodity is fixed a dealer is prohibited from selling the commodity beyond that price. The said restriction is imposed in the interests of the consumers. me object of such notifications is to see that the prices of essential commodities do not go beyond the maximum price fixed thereunder. A contravention of that rule would expose a dealer to penal consequences. Those notifications do not prohibit a manufacturer or a dealer from selling the essential commodities in question at rates lower than the maximum rates fixed under the notifications and such sales would not be contrary to the provisions of the Essential Commodities Act , 1955 or Orders and Notifications issued thereunder. me provisions contained in section 4 of the Act are intended for the purpose of determining the excise duty payable by a manufacturer. They are intended for ascertaining the wholesale cash price realised or realisable by the manufacturer in respect of the goods in question. Such price should ordinarily be fixed at arms length and in the usual course of business. It should be fixed bona fide without showing any kind of favour to the buyer. me wholesale cash prices of goods are bound to vary depending upon various economic factors such as supply, demand etc. etc. m ere is no guarantee that the goods in respect of which the maximum price is fixed under a notification issued under the Essential Commodities Act , 1955 and Orders made thereunder would actually be sold at the maximum price mentioned in the notification. The wholesale cash price realised by the manufacturers may fall below such maximum price on many occasions as it has happened in the instant case. Section 4 of the Act does not refer to any notification issued under the Essential Commodities Act , 1955 fixing the maximum price of any essential commodity. Hence the maximum price fixed thereunder cannot control the determination of the value of the goods under section 4 of the Act for the purpose of levy of excise duty. In appropriate cases the assessing authority may while determining the wholesale cash price under section 4 of the Act take into consideration the maximum price fixed under the Essential Commodities Act , 1955 to decide whether the goods are sold by a dealer bona fide at the prices quoted by him. It cannot, however, be conclusive. The proposition becomes clear if a converse case is taken. Let us assume that the manufacturer taking advantage of conditions of scarcity of certain goods sells the goods for which maximum price is fixed at wholesale cash prices which are higher than the maximum price. In that event he would suffer the penal consequences under the Essential Commodities Act , 1955 and also would be liable to pay excise duty on the basis of the higher wholesale cash price realised by him. He would not be taxed under the Act on the basis of the maximum price which is lower but on the actual price at which the goods were sold. Hence it is the duty of the authorities under the Act to determine the wholesale cash price in accordance with the well-settled principles, of course, keeping also in view the maximum price fixed by <ORG> under the Essential Commodities Act , 1955. But in the orders of the excise authorities which are impugned in this appeal we find that they have not made any attempt to determine the wholesale cash price of the goods in question in accordance with law. It appears that both the authorities felt that they were bound by the maximum prices notified by <ORG> and the excise duty was payable on that basis and not on the basis of the wholesale prices fetched by the goods even if they were lower than the controlled prices. They have not given any valid reason for rejecting the price list submitted by the appellant. The decisions of the Superintendent of Central <ORG> and the Deputy Collector (Technical) which are impugned in these proceedings are, therefore, liable to be set aside. We accordingly set aside the order of <ORG> and the orders passed by <ORG> authorities and remand the case to the Superintendent of Central <ORG> (Respondent No.2 herein) to re-determine the wholesale cash price in respect of the goods in question on the basis of the relevant principles and in the light of the above decision again and to pass a fresh order of assessment for the period in question. We direct that the fresh assessment proceedings shall be concluded by the assessing authorities within three months from today. We are informed that the appellant has paid excise duty on the basis of the orders of <ORG> authorities which are set aside by this judgment. If on reassessment it is found that the appellant is entitled to the refund of any excess amount paid by it <ORG> authorities shall refund such excess amount within two months from the date of reassessment. This appeal is accordingly allowed. No costs.

M.L.A. Appeal allowed.


<NAME>, J.

1. The plaintiff's case was that he purchased the plaint house at a court sale for Rs. 360, benami in the name of the defendants. He sued to recover possession from the defendant or, in the alternative, for the purchase-money paid by him for the house. The District Munsif gave the plaintiff a decree for possession. On appeal, the District Judge held that the plaintiff's suit for possession was barred by Section 317, C.P.C. He found, however, that the purchase-money had been paid by the plaintiff and gave him a decree for Rs. 360. In second appeal by the defendant it is contended that he should not have granted the alternative felief inasmuch as the plaintiff did not put in any memorandum of objections under Section 561, C.P.C. In support of this contention <CITATION> (1904) I.L.R. 28 M. 229 is cited.

2. I am of opinion that the decree of the District Judge is right. The primary or major relief asked for. by the plaintiff was delivery of the property. Having obtained this relief in the fifst Court he had no ground for appealing and therefore no ground for putting in a memorandum of objections under Section 561, C.P.C. The District Judge found that the plaintiff was not entitled to the major relief granted him by the District Munsif. There was nothing my opinion, to prevent him from giving a decree for. the minor relief on finding that the plaintiff was entitled to it. The case would have been different if the District Munsif had refused the prayer for possession and had given a decree for the purchase-money. Had the defendant then appealed, the plaintiff, if he wished to have the decree altered to one for possession, would have been bound to put in a memorandum of objections regarding the refusal of his prayer for possession; for the rejection of that, his major prayer, gave him good ground for. appealing.

3. The case <CITATION> (1904) I.L.R. 28 M. 229 is clearly distinguishable. In that case the plaintiff claiming, title linger a sale from the 3rd defendant who was a vendee from the widow of a brother of the 1st and 2nd defendants sued all these defendants for possession and in the alternative for return by the 3rd defendant of the purchase-money. The District. <NAME> held that the claim for possession was barred by the adverse possession of the 1st and 2nd defendants, and gave a decree for the purchase money against the 3rd defendant. The 3rd defendant appealed, making defendants Nos. 1 and 2 and the plaintiff, respondents. The Subordinate Judge found that there was no bar by the adverse possession on the part of the defendants Nos. 1 and 2 and, although the plaintiff had put in no memorandum of objections, dismissed the suit for purchase-money against the 3rd defendant, and gave the plaintiff a decree for possession. The 1st and 2nd defendants then appealed to <ORG> objecting to the reversal of the decree of the District <NAME>, so far as it was in their favour. From the above it is clear that the plaintiff could have objected in appeal to the decree of the District <NAME> in-as much as it refused him the major relief he had claimed, namely, possession. He was, therefore, bound if he wanted to obtain that relief in the appeal filed by the 3rd defendant to put in a memorandum of objections I, therefore, dismiss this second appeal with costs.

<NAME>, J.

4. I think the contention of the appellant is untenable on the face of it. The plaintiff, who is the respondent in this second appeal obtained a decree in the District Munsif's Court for the delivery of possession of the property which he had knight, the very relief which he sought by his suit. He was quite content with what he got, but the defendant appealed, and the appellate Court held that the plaintiff was not entitled to recover the property but only its value as alternatively prayed for in the plaint. It seems difficult to comprehend that the plaintiff should be required by law, as contended for by the learned pleader for the appellant, to file a special memorandum of objections against a decree which he had sought and obtained. He did not relavant to take any objection to that decree, and, therefore, Section 561, C.P.C., can have no-application. The order of the appellate Court varying that decree was quite within its pompetence under Section 577, C.P.C.

5. I, therefore, agree that this appeal should be dismissed with costs.


ORDER

1. Two learned Judges of this Court in CST v. <NAME>, held that Explanation II to <CITATION> of the UP. Sales Tax Act, 1948 could not be given retrospective effect. The attention of the Bench was not drawn to the earlier judgment of a Bench of four learned Judges of this Court in <CITATION> ., where this provision was held to be retrospective. For the purposes of these appeals, it is relevant to consider whether or not the said Explanation has retrospective effect. It is appropriate, in the circumstances, that the appeals should be heard by a Bench of five learned Judges. The papers shall be placed before the Hon'ble the Chief Justice for appropriate directions.


JUDGMENT <NAME>, J.

1. This is a second appeal from the decree passed by the Joint Judge of Ahmedabad reversing the decree of the Joint Subordinate Judge, at Ahmedabad, in Suit No. 463 of 1903 and awarding the claim of the respondent (plaintiff).

2. The plaintiff sued in <ORG> instance to recover Rs. 2,217 as being due upon a document executed by the appellant <NAME> on the 25th January 1902.

3. The defence of the appellant was, that no cash was paid on the document as stated in it, but that the real consideration for it was, that the plaintiff who was then assisting one <NAME> in a litigation between her and the said <NAME>, should not assist him or render him any service.

4. In the Court of first instance three issues were raised; one of which, the material one, was this :-

Is the bond in suit without consideration? Is its consideration unlawful?

5. The burden of proof that the bond was without consideration or that the consideration was unlawful no doubt in the first instance lay upon the defendant. Accordingly the defendant led evidence at the outset before the Subordinate Judge. In rebuttal of all that evidence the plaintiff did not himself go into the witness-box, but called certain witnesses. The Subordinate Judge came to the conclusion after a careful consideration of both the oral and documentary evidence and after noting the demeanour of the witnesses, examined before him for either party that the appellant's case was true; and that the consideration was not that stated in the bond but it was that the respondent should not assist <NAME> in the litigation which was then going on between the latter and the appellant. The Subordinate Judge rejected the claim of the respondent.

6. The respondent appealed. On that appeal the Joint Judge, dealing with the question whether the bond in suit was without consideration and whether its consideration was unlawful or not, has found that the transaction was a cash transaction as stated in the bond in suit and that the defendant's case is false. That is a finding of fact.

7. We are asked on second appeal to upset that finding of fact, upon the ground that the Joint Judge has in several respects mis-stated the evidence and that he has ignored material evidence in the case. Before we deal with the questions thus raised before us in second appeal, we must observe that where a <ORG> of first instance has upon the evidence of witnesses examined before it come to a conclusion of fact, the <ORG> of appeal ought not to disturb that finding unless it is satisfied that the lower <ORG> had either omitted to consider material evidence or some cardinal fact or had given undue weight to some evidence or fact which is of little or no importance. That is a rule of practice. See <NAME> v. <NAME> (1876) L.B.2 Sc. H.L. 53, where it was held that the <ORG> of appeal ought to abide by the original decision on a question of fact where the evidence is nearly balanced, unless it be shown to be irresist-ably erroneous. Where however the legislature has constituted a particular tribunal the final <ORG> of facts, this <ORG> sitting in second appeal can only interfere under the provisions of Section 584 of the Code of Civil Procedure. (See the decision of <ORG> in <NAME> v. <NAME> (1890) I.L.R. 18 Cal, 23. Exhibit 33, which, according to the appellant's case, has a material bearing on her defence, is, in the opinion of the learned Joint Judge, inadmissible in evidence under Section 92 of the Evidence Act, because it required registration as a document purporting to extinguish certain rights in immoveable property. But the appellant does not seek to rely upon Exhibit 33 for the purpose of creating or extinguishing any rights to immoveable property so as to invite the application of the sections of the Registration Act referred to by the learned Joint Judge. A document of which registration is compulsory under the Act may be used as evidence for any collateral purpose for any purpose other than that of creating or extinguishing a right to immoveable property. The defendant relied upon Exhibit 33 as showing that the consideration for the bond in suit was different from the consideration of cash payment alleged in the bond. In other words, her case is that the respondent never paid her the amount sued on and she seeks to prove it by the recitals in Exhibit 33. If Exhibit 33 was passed for the purpose of showing that the consideration stated in the bond in suit was not real but that the consideration was different, Section 92 has no application and it is admissible in evidence. <NAME> v. <NAME> (1876) I.L.R. 3 Bom. 159.

8. It is true that alt<NAME>ugh the learned Joint Judge held Exhibit 33 to be inadmissible in evidence yet he has considered the evidence bearing on the question of its genuineness and found that it is a "suspicious" document. That no doubt is a finding of fact and under ordinary circumstances we s<NAME>uld have accepted it as a finding binding upon us in second appeal but the finding of the learned Judge that Exhibit 33 is a suspicious document appears to have been influenced by his view as to its admissibility. That his view of the inadmissibility of the document has influenced his appreciation of the evidence, is apparent from the fact that <NAME> treats Exhibit 33 as a suspicious document, because, among other reasons, that document was not, whereas the bond upon which the suit was brought was, registered. Such a finding of fact is based upon an error of law as to an important document in the case. Again, that finding has been arrived at on the ground stated by the learned Joint Judge in his judgment that he does not "believe the evidence for the defendant, both oral and documentary." But it was not on that evidence alone that the defendant relied or was entitled to rely in support of her case. There was the undisputed fact, apparent upon the record, that whereas the defendant had affirmed on oath that the plaintiff had executed Exhibit 33 the plaintiff did not go into the witness-box and contradict the defendant's sworn testimony ; that he produced no accounts alt<NAME>ugh he had on a previous occasion admitted that he had accounts ; and that there was no cross-examination of the defendant's witnesses so far as they swore that the plaintiff had executed Exhibit 33. Whether on a consideration of these circumstances the defendant's case must be held to be proved or not, it is not our province to say. That is for the <ORG> which has to appreciate the evidence. But all we are concerned to point out is that the learned Judge has decided the appeal under the erroneous impression that beyond the oral and documentary evidence pro- duced by her the defendant had no evidence to support her case. The omission to consider this evidence coupled with the erro. neous supposition that the defendant's case solely rested on the evidence of the oral and documentary evidence adduced by her, is an error or defect in procedure which amounts to a substantial error of law affecting the merits of the case. Further, it is admitted that <NAME> is plaintiff's gumasta and that he managed the present suit for the plaintiff. It is also admitted and the record s<NAME>ws that he was cited as a witness both by the plaintiff and the defendant. But the defendant examined him as her witness. He swore that the plaintiff had executed Exhibit 33 ; and there was no attempt made for the plaintiff to cross-examine his evidence on that point. The Subordinate Judge, w<NAME> heard his evidence, found that <NAME> "was very reluctant in giving evidence in favour of the defendant and was inclined to favour the plaintff."

9. Of course it was open to the learned Joint Judge to disbelieve the witness in the face of these facts. But the ground he gives for disbelieving him is that his evidence is favourable to the defendant. To disbelieve a witness because his evidence tells in favour of the party who has called and examined him and against the adverse party is, in the language of <ORG> in <NAME> v. <NAME> (1884) L.R. 12 I.A. 83, " to beg the question in dispute." That, we think, is also an error of law.

10. We think, then, that there are three substantial errors of law in the judgment of the learned Joint Judge which vitiate his finding of fact. We must, therefore, send the case back to him for a re-hearing of the appeal upon the following points which arise for determination:-

(1) Did the plaintiff execute the document, Exhibit 331 (2) If the first point is found in the affirmative, has the plaintiff performed his part of that agreement?

11. The findings on these points must be on the evidence already on the record.

12. No fresh evidence shall be allowed.

13. Findings to be returned within two months.


PETITIONER: OIL AND NATURAL GAS COMMISSION AND ORS. Vs. RESPONDENT: DR. MOHD. S. ISKENDER ALI DATE OF JUDGMENT14/04/1980 BENCH: FAZALALI, SYED MURTAZA BENCH: FAZALALI, SYED MURTAZA GUPTA, A.C. KAILASAM, P.S. CITATION: 1980 AIR 1242 1980 SCR (3) 603 1980 SCC (3) 428 CITATOR INFO : R 1981 SC 957 (5,9) R 1981 SC 965 (8) D 1989 SC1431 (6) D 1992 SC1020 (20) ACT: Termination of Services-Termination Simpliciter- Services of a probationer terminated without further proceedings against the departmental enquiry-Whether offends Art. 311(2) of the Constitution and attaches any stigma. HEADNOTE: The respondent was appointed on a purely temporary basis to the post of a medical Officer in <ORG>. Under the terms and conditions of service, he was to remain on probation for a period of one year which could be extended that the discretion of the appointing authority He was appointed on October 15, 1965. During the period of his probation, on a report against him for negligence and dereliction of duty, a departmental enquiry was held against him but that was not proceeded with, nor was any punishment imposed on him. His period of probation was extended for six months from 15-10-1966 and before his services were terminated, there was no express order either confirming him or extending the period of probation. His services were terminated with effect from 28th July 1967. The respondent filed a writ petition in the High court on the ground that the order terminating his services was malafide and was in fact passed by way of penalty entailing evil consequences The plea taken by the respondent found favour with the High <ORG> which allowed the petition and quashed the order of the appellant terminating the services of the respondent. Hence the appeal by special leave by the State. Allowing the appeal the <ORG> ^ HELD: l. A temporary employee is appointed on probation for a particular period only in order to test whether his conduct is good and satisfactory so that he may be retained. The remarks, the assessment roll merely indicate the nature of the performance put in by the officer for the limited purpose of determining whether or not his probation should be extended. These remarks were not intended to cast any stigma. [607G-H. 608A] <CITATION>  2 S.C.R. 55. followed 2. The contention that the real motive behind the termination of the service of the respondent was to inflict a punishment on him and as the appellants did not comply with the requirements of Article 311 of the Constitution, the order impugned was illegal is not correct. In the first place, it was clearly pleaded by the Government in its counter-affidavit that although an enquiry was held it was not continued and no punishment was imposed on the respondent. As the respondent was merely a probationer the appointing, authority did not consider it necessary to continue the enquiry but decided to terminate the services of the respondent as he was not found suitable for the job. In the case of n probationer or a temporary employee. who has no right to the post, such a termina- 604 tion of his service is valid and does not attract the provisions of Article 311 of the Constitution [608C-E, G-H, 609A] Even if misconduct, negligence, inefficiency may be the motive or the inducing factor which influences the employer to terminate the services of the employee, a power which the appellants undoubtedly possessed, even so as under the terms of appointment of the respondent such power flowed from the R contract of service it could not be termed as penalty or Punishment. [611C- <CITATION>  1 SCR 814; <CITATION>  SCR 828; <CITATION>  1 SCR 462; <CITATION> .  1 SCR 551, followed. 3. The order impugned is prima facie an order of termination simpliciter without involving any stigma. The order does not in any way involve any evil consequences and is an order of discharge simpliciter of the respondent who was a probationer and had no right to the service. The respondent has not been able to make out any strong case for this <ORG> to delve into the documents, materials in order to determine a case of victimisation or one of punishment The short history of the service of the respondent clearly showed that his work had never been satisfactory and he was not found suitable for being retained in service and that is why even though some sort of an enquiry was started, it was not proceeded with and no punishment was inflicted on him. In these circumstances therefore, if the appointing authority considered it expedient to terminate the services of the respondent-a probationer-it cannot be said that the order of termination attracted the provisions of Art. 311 of the Constitution. Thus, if the appellant found that the respondent was not suitable for being retained in service that will not vitiate the order impugned. [611G-H, 612B-D] State of Bihar v. <NAME> A.I.R. 1960, 689; distinguished. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1385 of 1979.

Appeal by Special Leave from the judgment and Order dated 10-7-1969 of <ORG> in Civil Rule No. 249 of 1967.

<NAME> for the Appellant.

<NAME>, <NAME> and <NAME> for the Respondent.

The Judgment of the Court was delivered by <NAME> J. This appeal by special leave is directed against a judgment and order dated 10th JULY 1969 of <ORG>. The facts giving rise to the appeal lie within a very narrow compass. The respondent, Dr. Md. <NAME>, was appointed on a purely temporary basis to the post of a medical officer in <ORG>. Under the terms and conditions of his service, he was to remain on probation for a period of One year which could be extended at the discretion of the appointing authority. The respondent was appointed on October 15, 1965 and the order of his appointment may be extracted thus:

"No. 52/35/65-ENT Dated the 15th October 1965 MEMORANDUM With reference to his interview on the 18th August 1965 held at Sibsagar, Shri Dr. Md. S. Iskender Ali is hereby informed that he/she has been selected for a temporary post of Medical officer in <ORG> on an initial pay of Rs. 325/- p.m. in the scale of pay of Rs. 325-25-500-31-EB-30-800 (plus non practising allowance @ 25% of basic pay subject to minimum of Rs. 150/-). He will be entitled to draw dearness and other allowances at such rates and subject to such conditions as may be laid down in the rules and orders governing the grant of such allowances from time to time."

The order of appointment was accompanied by conditions regulating his appointment and two of them may be extracted below, as they appear to be very relevant for the purpose of deciding the question at issue :-

"(ii) The appointment may be terminated at any time by one month's notice to be given by either side, viz., the appointee or the appointing authority, without assigning any reasons. The appointing authority, however, reserves the right of terminating the services or the appointee without notice or before expiration of the stipulated period of notice by making payment to him of a sum equivalent to the pay and allowances for the period of notice or the unexpired portion thereof;

(iii) He will be on probation for a period of one year from the date of appointment. This period may be extended at the discretion of the appointing authority, if necessary. During the period of probation, the services are liable to be terminated at any time without notice, and/or assigning any reasons whatsoever."

It appears that during the period of his probation there were some reports against the respondent as a result of which a departmental enquiry was held against him but which does not appear to have been proceeded with nor was any punishment imposed on him. After he had completed the period of one year on 15-10-1966 his probation was extended for another six months and before his services were terminated, there was no express order either confirming him or extending the period of probation. Ultimately, by an order dated 28th July 1967 the services of the respondent were terminated with effect from 28th July 1967. The order of termination runs thus:-

"No. 57/191/67-ENT Dated July 28, 1967 OFFICE ORDER

Under para 2(iii) of offer of appointment No. 52/35/65-ENT dated October 16, 1965 the service of Dr. Md. <NAME>, Medical officer (still on probation), is hereby terminated with effect from the date of the service of this order on him."

The respondent felt aggrieved by the termination of his services and filed a writ petition in <ORG> on the ground that the order terminating his services was mala fide and was in fact passed by way of penalty entailing evil consequences. The plea taken by the respondent found favour with <ORG> which allowed the petition and quashed the order of the appellant terminating the services of the respondent. The appellant obtained special leave to appeal from this Court: hence the appeal has now been posted before us for hearing.

The only point raised before us by the appellants was that as the respondent was a mere Probationer and the order terminating his services was all order of termination simpliciter without involving any stigma or penalty, <ORG> was in error in quashing the order or termination and directing the reinstatement of the respondent. The counsel for the appellants submitted that reading the order per se there is nothing to indicate that it was passed by way of punishment. As the respondent was a temporary employee on probation, it was open to the employer to terminate his services at any time before he was confirmed. If the employer was satisfied that he was not suitable for being retained in service. The counsel for the respondent. On the other hand, submitted that the order, though per se innocuous? was really a cloak to conceal the real mischief which the order purported to perpetuate as the order of termination was preceded by a full-fledged departmental inquiry and a regular charge-sheet was submitted against the respondent, it was because the respondent was found guilty that he was punished by way of dismissal from service. In other words, the argument of the respondent was that the order of termination of the services passed by the appellant was an order which amounted to A. dismissal from service involving a clear stigma and would, therefore, attract the provisions of Art. 311 of the Constitution and was rightly quashed by <ORG> Before examining the respective contentions of the parties it may be necessary to mention a few admitted facts (1) It is not disputed that the respondent was appointed in a temporary post of Medical Officer and on probation of one year.

(2) Being a probationer, the respondent had no right to the service.

(3) Under the terms of his appointment particularly clauses (ii) and (iii), extracted above, the appointing authority could terminate the services without assigning any reasons.

(4) Under clause (iii) of the conditions of appointment, the appointing authority had a discretion to extend the period of probation and to terminate the services of the respondent without any notice and without giving any reasons whatsoever.

(5) After the respondent had put in one year's probation, his period of probation was extended for a further period of six months which is a clear pointer to the fact that the appointing authority was not convinced that the respondent had satisfactorily completed the period of his probation.

The confidential roll reflecting the assessment of the work of the respondent during the period 31-12-1965 to 30- 12-1966 clearly shows that the officer was careless and lacking in sense of responsibility. The report also shows that the reporting officer recommended that the period of probation should be extended. In accordance with the recommendation, the period of probation was further extended by six months. The learned counsel for the respondent submitted that the remarks made in the assessment roll went to show that the intention of the appointing authority was to proceed against the respondent by way of punishment. We are, However, unable to agree with this submission. It is obvious that a temporary employee is appointed on probation for a particular period only in order to test whether his conduct is good and satisfactory so that he may be retained. The remarks, in the assessment roll, merely indicate the nature of the performance put in by the officer for the limited purpose of determining whether or not his probation should be extended. These remarks were not intended to cast any stigma. In the case of <CITATION> this Court while indicating the nature of assessment made by the reporting officer observed as follows:-

"These rules abundantly show that a confidential report is intended to be a general assessment of work performed by a Government servant subordinate to the reporting authority, that such reports are maintained for the purpose of serving as data of comperative merit when questions of promotion, confirmation, etc., arise."

It was then vehemently contended by the respondent that as the appointing authority chose to institute a departmental inquiry against the respondent for dereliction of duty and negligence in not attending to a baby who died due to his carelessness, the enquiry should have been carried to its logical end and charge-sheet having been framed, the provisions of Art. 311 of the Constitution were clearly attracted and therefore it was not open to the appellants to have terminated the services by giving the order a cover of termination simpliciter. In other words, the contention was that the real motive behind the termination of the service of the respondent was to inflict a punishment on him and as the appellants did not comply with the requirements of Art. 311 of the Constitution, the order impugned was illegal. We are, however, unable to agree with this argument. In the first place, it has been clearly pleaded by the <ORG> in its counter-affidavit that although an enquiry was held yet it was not continued and no punishment was imposed on the respondent. In this connection, relevant portion of paragraph 11 of the counter- affidavit before <ORG> may be extracted:-

"A preliminary enquiry was made before the charge was framed and on the enquiry report a prima facie case having been found against the petitioner due charge was framed against him. No punishment under Regulation 28 of oil and Natural Gas Commission (Conduct, Discipline and Appeal) Regulation was inflicted on the petitioner."

In these circumstances, therefore, it is obvious that as the respondent was merely a probationer, the appointing authority did not consider it necessary to continue the enquiry but decided to terminate the services of the respondent as he was not found suitable for the job. It is well settled by a long course of decisions of this <ORG> that in the case of a probationer or a temporary employee, who has no right to the post, such a termination of his services is valid and does not attract the provisions of Art. 311 of the Constitution. In the case of <CITATION> , the matter was considered in all its aspects by a Constitution Bench comprising seven Judges of this <ORG> and the <ORG> adumbrated the following pro- positions:-

"Before a probationer is confirmed the authority concerned is under an obligation to consider whether the work of the probationer is satisfactory or whether he is suitable for the post. In the absence of any Rules governing a probationer in this respect the authority may come to the conclusion that on account of inadequacy for the job or for any temperamental or other object not involving moral turpitude the probationer is unsuitable for the job and hence must be discharged. No punishment is involved in this. The fact of holding an inquiry is not always conclusive. What is decisive is whether the order is really by way of punishment. A probationer whose terms of service provided that it could be terminated without any notice and without any cause being assigned could hot claim the protection of Article 311 (2) ....

An order terminating the services of a temporary servant or probationer under the Rules of Employment and without anything more will not attract Article 311. Where a departmental enquiry is contemplated and if an enquiry is not in Act proceeded with Article 311 will not be attracted unless it can he shown that the order though unexceptionable in form is made following a report based on misconduct."

Similarly, the matter was previously considered in <CITATION> where the following observations were "Shortly put, the principle is that when a servant has right to a post or to a rank either under the terms of the contract of employment, express or implied, or under the rules governing the conditions of his service, the termination of the service of such a servant or his reduction to a lower post is by itself and prima facie a punishment, for it operates as a forfeiture of his right to hold that post or that rank and to get the emoluments and other benefits attached thereto. But if the servant has no right to the post, as where he is appointed to a post, permanent or temporary either on probation or on an officiating basis and whose temporary service has not ripened into a quasi permanent service as defined in the Temporary Service Rules, the termination of his employment does not deprive him of any right and can not, therefore, by itself be a punishment. One test for deter mining whether the termination of the service of a Govern men servant is by way of punishment is to ascertain whether the servant, but for such termination, had the right to hold the post. If he had a right to the post as in the three cases hereinbefore mentioned, the termination of his service will by itself be a punishment and he will be entitled to the protection of Article 311. In other words and broadly speaking Art. 311(2) will apply to those cases where the Government servant, had he been employed by a private employer, will be entitled to maintain an action for wrongful dismissal, removal or reduction in rank. To put it in another way, if the Government has, by contract, express or implied, or, under the rules, the right to terminate the employment at any time, then such termination in the manner provided by the contract or the rules, is, prima facie and per se, not a punishment and does not attract the provisions of Art. 311."

All these decisions were reviewed in the case of <CITATION> where this Court observed as follows:-

"Keeping in view the principles extracted above, the respondent's suit could not be decreed in his favour. He was a temporary hand and had no right to post. It is also not denied that both under the contract of service and the service rules governing the respondent, the <ORG> had a right to terminate his services by giving him one month's notice. The order to which exception is taken is ex facie an order of termination of service simpliciter. It does not cast any stigma on the respondent nor does it visit him with evil consequences, nor is it founded on misconduct. In the circumstances, the respondent could not invite the <ORG> to go into the motive behind the order and claim the protection of Article 311(2) of the Constitution. We, therefore, agree with the submission made on be half of the appellant that the High <ORG> was in error in arriv-

ing at the finding that the impugned order was passed by way of punishment by probing into the departmental correspondence that passed between the superiors of the respondent overlooking the observations made by this <ORG> in <CITATION> [1967 (2) S.C.R. 496] that when there are no express words in the impugned order itself which throw a stigma on the Government servant, the <ORG> would not delve into <ORG> files to discover whether some kind of stigma could be inferred on such research."

The facts of the present case appear to be on all fours with those of the aforesaid decision. From the undisputed facts detailed by us in an earlier part of the judgment, it is manifest that even if misconduct, negligence, inefficiency may be the motive or the inducing factor which influences the employer to terminate the services of the employee, a power which the appellants undoubtedly possessed, even so as under the terms of appointment of the respondent such a power flowed from the contract of service it could not be termed as penalty or punishment.

The matter was again considered at great length by a recent decision of this Court in the case of <CITATION> ., where <NAME>, J., observed thus:

"Ordinarily and generally the rule laid down in most of the cases by this <ORG> is that you have to look to the order on the face of it and find whether it casts any stigma on the <ORG> servant. In such a case there is no presumption that the order is arbitrary or mala fide unless a very strong case is made out and proved by the <ORG> servant who challenges such an order."

Applying the principles enunciated by this <ORG> in various cases to the facts of the present case, the position is that the order impugned is prima facie an order of termination simpliciter without involving any stigma. The order does not in any way involve any evil consequences and is an order of discharge simpliciter of the respondent who was a probationer and had no right to the service. The respondent has not been able to make out any strong case for this <ORG> to delve into the documents, materials in order to determine a case of victimisation or one of punishment.

Reliance was, however, placed by the respondent on a decision of this <ORG> in the case of <CITATION> , where it was held that although termination of the service of a person holding the post on probation cannot be said to deprive him of any right to the post and is no punishment but where instead of terminating a person's service the employer choose to hold an enquiry into his alleged misconduct and proceeds by way of a punishment, such a course involves a stigma and an order of termination is bad. Such, however, is not the case here. The short history of the service of the respondent clearly shows that his work had never been satisfactory and he was not found suitable for being retained in service and that is why even e though some sort of an enquiry was started, it was not proceeded with and no punishment was inflicted on him. In these circumstances, therefore, if the appointing authority considered it expedient to terminate the services of the respondent-a probationer-it cannot be said that the order of termination attracted the provisions of Art. 311 of the Constitution. Thus, if the appellant found that the respondent was not suitable for being retained in service that will not vitiate the order impugned as held and observed by this <ORG> in the cases cited above.

For these reasons, therefore, we are satisfied that the order terminating the services of the respondent was valid and did not involve any stigma and was fully justified in the facts and circumstances of the present case. <ORG>, therefore, erred in law in quashing the. impugned order. For these reasons, we allow this appeal, set aside the. judgment and decree of <ORG> and hold that the order terminating the services of the respondent was valid in law. In the circumstances of the case, there will be no order as to costs.

S.R. Appeal allowed.