Appraisal of trainee’s performance is the function of the employer, judicial review not warranted unless arbitrary and capricious: Delhi High Court

The evaluation of a trainee’s work and performance is the function of the employer and the court should invoke its power of judicial review only where such action is tainted with arbitrariness and caprice and the courts should keep from substituting their opinion on such matters, Delhi High Court noted.

Justice Yashwant Varma, in a case relating to the alleged unlawful termination of an intern’s services as a director (HRD) of Damodar Valley Corporation, further noted that even the Union government can only intervene in the areas which are not provided for in the regulations framed by the company and where the regulations clearly provide for the stipulation of work and the evaluation of such work and do not envisage any role for the Union Government to play in this respect, only society itself has the mandate to govern on these matters.

The undisputed facts of the case are that the Applicant was engaged as a Director (HRD) in the Damodar Valley Internship Corporation in July 2003 and his appointment was terminated with immediate effect in January 2004. The Applicant then appealed of this termination order with the President. of the Company on February 17, 2004 and while awaiting this appeal, he was offered another role, in Bokaro Power Supply Company Private limited (BPSCL) in June 2004 as Head of Personnel and Administration . The petitioner then made a representation to the Department of Energy and, after learning of the matter, the Department referred it back to the company for comment. The Company Secretary then informed the Ministry that the Claimant had been deemed ineffective in the performance of his duties as a Director (HRD) and that he had disregarded the extensive advice and warnings given to him by the Chairman and the Secretary to improve his performance, during his six-month probationary period and therefore, in view of the general interest of the Company, the Applicant could not be allowed to continue as a Director (HRD). The issue was also being considered simultaneously by the board of directors of the company and even the chairman admitted that it would be inappropriate to allow the extension of the applicant’s probationary period, which would be detrimental to the interests of the company. The petitioner challenged by a written petition filed in this court, his termination order, his reappointment to a subordinate position and the order of the Union government not to interfere in the matter, considering that the company is an independent statutory body.

Mr. Jatin Mongia, the applicant’s learned lawyer, argued that

  • According to the terms of the letter of appointment, the complainant should have received three months’ notice or compensation in lieu thereof before his dismissal. This has also been mandated in the regulations developed by the Society itself. Counsel further argued that since the Rules (specifically Rule 18) require the probationer to give three months’ notice if he chooses to resign, it is illogical, ultra vires and arbitrary that the same requirement not not be imposed on the employer.
  • The learned lawyer then argued that according to Article 6 of the Regulations, if a matter is not provided for in the Regulations, it must be governed by the Union Government. The learned barrister relied on the office memorandum issued by the Department for Personnel, PG and Pensions in March 2019 regarding the engagement of trainees and the assessment of their performance and relevant factors for the termination of their services.
  • The learned lawyer further asserted that the Company was required by law (referring to the OM) to undertake a proper evaluation of the Claimant’s work and performance and to inform the Claimant of his shortcomings prior to the expiry of the initial probationary period, giving him the opportunity to make efforts towards self-improvement and that no written communication was made to the petitioner during the reading thereof.
  • The last claim presented by the learned lawyer was that the services of the applicant were terminated by the secretary instead of the president, who was the competent authority for the appointment and termination of the internship services of a director.

On the other hand, the arguments presented by the learned lawyer for the respondents, Me JK Das, were that

  • The OM is limited in its application to ministries and departments of the Union Government and does not apply to corporations and self-governing bodies and since the Society is a self-governing body and the terms of service of its officers and employees are governed solely by the provisions of the 1957 Regulations, the MO would not apply in this case.
  • The President, Secretary had independently assessed and assessed the Applicant’s work and conduct and found him unable to perform the duties attached to the post given to him and only then would such a recommendation of his dismissal was made to the board. The offer of an alternative position to the Applicant (which he rejected) was made free of charge and establishes the good faith of the Company.
  • The learned lawyer further asserted that as Director (HRD) the Applicant reported to both the Secretary and the President of the company and therefore both had ample opportunity and provided an unbiased opinion regarding the end of his probation and, therefore, the assertion that the actions taken by the Company were arbitrary and based on malice is incorrect. The learned lawyer also argued that since the Applicant’s offer of appointment was drafted by the Secretary and in this context, it is not correct to state now that the Applicant’s services can only be terminated by the President .
  • Regarding the lack of written warnings to the Applicant about his nonchalant performance, Mr. Das argued that the Applicant was verbally informed of this on numerous occasions and made aware of the serious breaches of duty by the secretary and the president and, consequently, the absence of written warnings. would not invalidate the impugned orders.

The Court first considered the applicant’s argument that, since he had not received three months’ notice in accordance with the regulations, his dismissal was liable to be annulled. The court referred to the paragraph relating to the nature of the appointment in the applicant’s letter of appointment in conjunction with Regulation 12 which clearly stated that “the services of an intern are subject to determination by the Company at any time without notice and the rules leave the Company free to determine the terms of probation and confer the absolute right to terminate their services at any time during this period without notice.” And so, the argument that Regulation 12 is ultra vires deserves to be rejected, the Court ruled.

The Court then assessed the applicability of OM to the current situation and reading Section 59 of the Damodar Valley Society Act 1948 which speaks of the power to make rules by the central government regarding salaries and allowances and other functions and duties of members and S.60 the Damodar Valley Society Act which talks about the power to make regulations by the society, the Court found that if the government of the Union had the power to make provisions respecting the salaries, allowances and conditions of service of the members, the power to specify the conditions of such service of the officers and servants and their appointments were within the exclusive jurisdiction of the corporation. The Court further observed that

“Rules and ordinances which might have been made by the Union Government would only be drawn for matters which are not independently provided for in the regulations and since it is clear that the engagement/appointment of officers and officials on probation is not a matter which is not affected by the 1957 Regulations”, they will come under the direct jurisdiction of the Company in accordance with Regulation 6 read in conjunction with Regulation 12.

Turning to the main issue in the case regarding whether the applicant’s termination of probation was arbitrary and capricious as requested by the applicant, the Court carefully analyzed the report of the secretary evaluating the applicant’s work and the report of the president regarding his dismissal and the minutes of the board meeting regarding the same, which clearly indicated that the petitioner had frequent interactions with the secretary and the president and after alluding to specific cases, they had come to believe that the petitioner was performing his duties inadequately and that the department under his control and supervision had become the most “non-functional” department in the Company and therefore, on the petitioner’s failure to attend priority work, and his failure to heed the advice and direction of the President, his performance was declared “e xtremely and unacceptably poor” and there was no justification found for even considering reinstatement of the Applicant.

The Court further affirmed that “the evaluation of a trainee’s work and performance is a function primarily incumbent upon the employer, the Court invoking its powers of judicial review only where such action may be considered to be tainted with manifest arbitrariness and a lack of probity.” Furthermore, finding that only the question of whether the performance and suitability of the internship was fairly assessed and evaluated by the employer and not in an arbitrary and capricious manner, would require judicial review.

Thus, considering that the Secretary and the Director were right in their opinion to terminate the services of the Applicant, which was also unequivocally approved by the Board after fairly assessing the suitability of the Applicant for the position of Director (HRD) and that it was in no way capricious, biased or unfair. The court also noted that the claimant was not offered a permanent placement in the BPSCL subsidiary, and was also subject to the claimant’s work and performance being assessed for a period of six months, demolishing the assertion of the applicant’s lawyer that the second offer of appointment was an acknowledgment of the applicant’s merit. With regard to the invalidity of the impugned order due to the absence of a written warning which had to be issued to the petitioner, the court referred to the cases of Dr. Mrs. Sumati P. Shere c. Union of India & Ors., Orissa State vs. Ram Narayan Das & Ors. and VP Ahuja c. State of Punjab and Anr. and concluded that it is not a principle of law to warn the intern in writing before performing his services and in this case, since the applicant was continually warned orally of his failure to perform, the validity of the The contested order is not open to question on this ground.

Further considering that the Syndicate (which was also a respondent in this case) had been right not to interfere in matters relating to the directors and employees of autonomous bodies and that it would have been completely inappropriate, even inadmissible , that the Syndicate do the same.

For the above reasons, the motion in writ was dismissed.

Case title: JS Arora v. DVC & Ors.

Citation: 2022 LiveLaw (Deleted) 47