Uncommunicated Adverse Remarks Cannot Form Basis To Terminate Probationer; Violates Natural Justice: Supreme Court

"It is well-settled that uncommunicated adverse remarks or charges should not be read to the prejudice of an employee. Consequently, the memo dated 31.10.2005 also contains no value in the eyes of law," Supreme Court, in a significant judgment dated May 29, 2026, held that an employer cannot terminate a probationer based on uncommunicated adverse remarks, as such an action violates the fundamental principles of natural justice.

A bench of Justice J.K. Maheshwari and Justice Atul S. Chandurkar observed that while an employer has the discretion to assess a probationer’s suitability, such discretion must be rooted in objective facts and not used as a facade to bypass formal disciplinary proceedings for alleged misconduct.

The dispute involved the Respondent No. 1, who was appointed as an Assistant General Manager (Networking) on probation by the Bank of Baroda (erstwhile Vijaya Bank). Following an allegation of unauthorizedly removing confidential files, his probation was extended twice before he was ultimately terminated under Regulation 16(3)(a) of the Vijaya Bank (Officers’) Regulations, 1982. The High Court of Calcutta had quashed the termination, leading the Bank to appeal before the Apex Court.

The primary question before the court was whether the termination of the probationer was a termination simpliciter due to unsuitability or a punitive and stigmatic termination founded on alleged misconduct. The court was also called upon to determine the legal validity of relying on uncommunicated performance memos to form an opinion against the confirmation of a senior officer.

Discretion To Terminate Probationer Must Be Rooted In Objective Material

The Court emphasized that even in the realm of service law where contractual language might appear absolute, the discretion of the State or its instrumentalities is not unchecked. The bench noted that the subjective satisfaction of the Authority must be rooted in objective facts, such as performance appraisals or specific assessments of work, and must not suffer from the vice of arbitrariness.

The bench highlighted that withholding constructive or adverse feedback deprives an officer of a meaningful opportunity for improvement. This undermines the very object of a probationary period, which is designed to be a time of learning and alignment. When critical feedback is withheld, it sets the probationer up for failure and undermines the fairness of the evaluation process.

"The subjective satisfaction of the Authority must be rooted in objective facts, such as performance appraisals, caveat, or specific assessments of the probationer’s work. It shall not suffer from the vice of arbitrariness."

Foundation vs Motive: When Termination Becomes Stigmatic

The Supreme Court drew a sharp distinction between a routine non-stigmatic termination for unsuitability and a disguised punitive termination. It held that if the employer’s decision is founded on allegations of misconduct rather than a general assessment of performance, the termination is stigmatic. In such cases, the probationer must be afforded an opportunity of hearing to defend their case.

The Court referred to the "motive" and "foundation" test, noting that while misconduct can be a motive for termination simpliciter, it cannot be the foundation if the employer bypasses due process. If the real face behind the termination is to get rid of an employee on the basis of misconduct without a regular enquiry, the order stands vitiated in law.

Uncommunicated Adverse Remarks Violate Natural Justice

A critical aspect of the case was a memo dated October 31, 2005, which contained serious allegations of misdemeanor, including lack of courtesy and failure to observe security measures. The Court found that the Bank failed to demonstrate that this memo was ever communicated to the Respondent, effectively depriving him of his right to put up a defense.

The bench reiterated that any reliance placed on uncommunicated memos amounts to a violation of the principles of natural justice. It noted that the Bank’s failure to serve the memo rendered it valueless in the eyes of law. The Court stressed that an employee’s career prospects and reputation are at stake, making fairness and transparency imperative.

"Now, admittedly, the Bank has failed to demonstrate that aforesaid memo was ever communicated to Respondent No. 1, effectively depriving him of an opportunity to put his defense. Therefore, any reliance placed on this uncommunicated memo would amount to violation of the principles of natural justice."

Employer Cannot Bypass Disciplinary Enquiry Under Guise Of Simpliciter Termination

The bench observed that the Bank had initially contemplated major penalty proceedings against the Respondent based on advice from the Central Vigilance Commission. However, finding the process of a formal enquiry "onerous," the Bank chose to terminate him under the guise of "unsatisfactory performance" using Regulation 16(3)(a).

The Court applied the settled legal maxim that "what cannot be done directly cannot be done indirectly." It held that the Bank used 'unsatisfactory performance' as a disguise to bypass a formal disciplinary proceeding for alleged misconduct. This calculated intent to orchestrate a pretextual termination rendered the order legally unsustainable.

"The law does not permit the use of ‘unsatisfactory performance’ as a disguise to bypass formal disciplinary proceeding. It is a settled proposition of law that what cannot be directly cannot be done indirectly."

Relief Modified To 50% Backwages

While upholding the findings of the High Court that the termination was illegal, the Supreme Court considered the peculiar facts of the case and the passage of time. The Court directed that the Respondent shall be entitled to 50% backwages from the date of his termination up to the date of his superannuation, including all consequential benefits notionally.

The Supreme Court concluded that since Vijaya Bank had been amalgamated with the Bank of Baroda, the directions must be complied with by the successor entity. The Court dismissed the Bank's appeal and ordered that all benefits be settled within a period of three months.

Date of Decision: May 29, 2026