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Supreme Court: Non-renewal of contract without notice or inquiry violates service rules and constitutional protections

Neutral Citation: 2024 INSC 620

Cause Title: Swati Priyadarshini vs. The State of Madhya Pradesh & Ors.

Case Number: Civil Appeal No. 9758 of 2024

Judgment Date: August 22, 2024

Quorum/Bench: Justice Hima Kohli and Justice Ahsanuddin Amanullah



The Court referred to Clause 4 of the RGPSM's General Service Conditions, which requires one month's notice for termination due to inefficiency, and immediate termination for undesirable activities. The Court noted that the respondents failed to comply with either part of this clause, placing them in a dilemma.
The Court cited Parshotam Lal Dhingra v Union of India, emphasizing that the real test for determining whether a reduction is punitive is to find out if the order visits the servant with penal consequences, such as forfeiture of pay, loss of seniority, or stoppage of future promotion chances.

Appellant's submission

The appellant argued that the termination order was stigmatic, violated service rules, and was a result of malafide action due to her reporting misconduct at a hostel.

Respondent's submission

The respondents contended that the order was a non-stigmatic, simpliciter non-renewal of contract based on unsatisfactory performance, and the appellant had no right to continuation of service.

Decision

The Supreme Court allowed the appeal, setting aside the Division Bench's judgment and reviving the Single Judge's order with modifications. The Court held that the termination order was stigmatic and violated service rules, entitling the appellant to reinstatement with 50% back wages and other benefits.

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