MADHYA PRADESH HASTA SHILPA VIKAS NIGAM LTD. versus DEVENDRA KUMAR JAIN AND ORS.

Citation: [1994] SUPP. 6 S.C.R. 344 · Decided: 07-12-1994 · Supreme Court of India · Bench: S.C. AGRAWAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

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MAD HY A PRADESH HAST A SHILPA VIKAS NIGAM LTD. 
v. 
DEVENDRA KUMAR JAIN AND ORS. 
DECEMBER 7, 1994 
[S.C. AGRA WAL AND FAIZAN UDDIN, JJ.] 
Service Law : Termination-Appointments made on temporary basis-
Termination of services-Whether necessary to follow formalities 
contemplated by Art.311 of the Constitution- Held : No-Ptojec~s not 
economically beneficial and likely to result in loss-Govt. Corporation 
justified in not giving effect to the project and in issuing instructions not to 
appoint staff for such project without prior approval. 
The Managing Director of the appellant- Company appointed the 
Respondents as Junior Managers. It was later on noticed that the 
appointments were made in contravention of Government order dated 
1.4.89, without the approval of the Government. Therefore, the 
successor Managing Director terminated the services of the 
respondents on 31. 7.89. Respondents challenged their termination 
before the High Court and it quashed the termination order. It also 
directed that the respondents would continue in service till their 
services were not validly terminated. Hence this appeal by the 
appellant company. 
Allowing the appeal, this Court 
HELD: 1.1. The order passed by the High Court quashing the 
termination of service of the respondents cannot be sustained. (349 D] 
1.2 A plain reading of the two appointment orders would show that 
the appointments were made purely on temporary basis and their 
services were liable to be terminated at any time without notice or 
assigning any reason. In the case of appointment on temporary basis a 
servant who is so appointed does not acquire any substantive right to 
the post, even though the post itself may be permanent and il is an, 
implied term of such appointment that it may be terminable at any 
time and without notice. A temporary Government servant does not 
become a permanent Government servant unless he acquires that 
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capacity by force of any rule or he is declared or appointed as a 
permanent servant. [348 B, C] 
344 
H. S. V. N. LTD. v. D. K. JAIN [FAIZAN UDDIN, J.] 
345 
1.3. In the present case there is no rule under which the A 
respondents may be deemed to have become permanent by force of 
such rule nor they were so declared by any subsequent order of the 
appellant company to have acquired that status. On the contrary the 
respondents all along continued to be temporary. In such a case it is not 
necessary to follow the formalities contemplated by Article 311 of the 
Constitution. In these facts and circumstances, the High Court was not B 
right in holding that the respondents were entitled for being heard 
before passing the said order of termination of their services and that 
the order of termination was bad in law on that account. [348 D, E] 
2. The appellant corporation is a Government company fully 
financed by the State Government and that being so the Government C 
would be very much concerned to see that any project which is not 
economically beneficial for the corporation and which is likely to result 
in any loss should not be given effect to. The Government, therefore, 
would be justified in issuing instructions that no appointments of any 
staff in connection with the said project will be made without the 
approval of the Board of Directors. It appears that the High Court D 
ignored the said order of the State Government while observing that no 
material in support of the contention that the Government has issued 
instructions not to make appointment was produced by the appellant. 
(349 A to CJ· 
3. It is noteworthy that the then Managing Director himself was E 
retiring on 31.7.89 and in hot haste he issued the orders of appointment 
of the respondents on 6. 7.89 and 8.6.89 inspite of the instructions of the 
State Government to the contrary. [349 D] 
CIVIL APPELLATE JURISDICTION 
Civil Appeal No. 8923 of 
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From the Judgment and Order dated 1.12.93. of the Madhya Pradesh 
High Court in M.P.No.3973of1989. 
Shankar Lal and B.S.Banthia for the Appellant. 
A.K.Chitale, Parkash Srivastava, Pratibha Jain and Sushil K. Jain for 
the Respondents. 
The Judgment of the Court was delivered by. 
FAIZAN UDDIN, J. I. Leave granted 
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SUPREME COURT REPORTS 
[1994] SUPP. 6 S.C.R 
2. The appellant is a Government Company within the meaning of 
Section 617 of the· Companies Act whfoh is controlled and owned by the 
State GovenuTI.ent and a subsidiary company of M. P. Laghu

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