The Supreme Court has held that an employer (Bank) cannot use “unsatisfactory performance” as a pretext to avoid disciplinary proceedings when the real basis of termination is alleged misconduct. 

The bench of Justice J.K. Maheshwari and Justice Atul S. Chandurkar has dismissed the appeal filed by the General Manager of Bank of Baroda (successor to Vijaya Bank) and upheld the Calcutta High Court’s decision quashing the termination of an Assistant General Manager (Networking). 

The dispute arose from the appointment of Ashok Kumar Singh as Assistant General Manager (Networking) in Vijaya Bank on probation. His appointment was initially subject to a one-year probation period, extendable by another year. During his probation, he was suspended on allegations that he attempted to remove four boxes of confidential tender documents from the bank premises through his driver. 

Although the suspension was later revoked, the bank reserved its right to initiate disciplinary proceedings. However, no such proceedings were ever commenced. Instead, the bank extended his probation twice and ultimately terminated his services in November 2005 on the ground that his performance during probation was not satisfactory. 

The employee challenged the termination before the Calcutta High Court. A Single Judge quashed the termination order, finding that the bank had relied upon irrelevant considerations and ignored relevant material while assessing his suitability for confirmation. The Division Bench subsequently affirmed that decision, prompting the bank to approach the Supreme Court. 

Before the Supreme Court, the bank argued that a probationer has no vested right to continue in service and that an employer is entitled to terminate a probationary employee simpliciter without assigning reasons. It contended that the allegations concerning confidential documents merely formed the motive for termination and not its foundation. The bank also relied upon internal reports and memos alleging deficiencies in the employee’s work performance to justify the action. 

The Supreme Court, however, undertook a detailed examination of the record and found serious inconsistencies in the material relied upon by the bank. One of the principal documents cited against the employee was a memo dated 23 July 2005 concerning implementation of the Online Tax Accounting System (OLTAS). The Court noted that this criticism stood in stark contrast to a communication issued only days earlier by the Central Board of Direct Taxes, which had praised Vijaya Bank’s implementation of OLTAS and specifically advised other banks to approach the employee for guidance if they encountered difficulties. The Court observed that the inconsistency was so glaring that the adverse memo appeared to have been issued on extraneous considerations. 

The Court also examined another memo relating to a delay in crediting Rs. 66 crore through a telegraphic transfer. It found that the delay had occurred because of a technical issue at State Bank of India and not because of any lapse attributable to the employee. On the contrary, the employee had actively pursued the matter and sought compensation for the delay. Consequently, the Court held that no adverse inference regarding his performance could be drawn from that incident. 

The third memo relied upon by the bank alleged several instances of misconduct and improper behaviour. However, the Supreme Court found that the memo had never been communicated to the employee. Since he was denied an opportunity to respond to the allegations, the Court held that reliance on such an uncommunicated document violated principles of natural justice and could not legally support the termination. 

The Supreme Court then turned to the broader legal issue of termination of probationary employees. It emphasized that although employers possess discretion to assess the suitability of probationers, such discretion is not absolute. The opinion regarding a probationer’s suitability must be based on objective material and cannot be arbitrary, mala fide, or founded on irrelevant considerations.

The Court observed that probation serves as a structured period for evaluating performance and conduct, and adverse assessments affecting a probationer’s future career should not be concealed or withheld. 

A crucial aspect of the judgment was the Court’s finding that the alleged misconduct relating to confidential tender documents was not merely a background factor but the real foundation of the bank’s action. Internal records revealed that the matter had been referred to vigilance authorities and that the Central Vigilance Commission had advised initiation of major penalty proceedings. Instead of conducting a disciplinary inquiry, the bank chose to terminate the employee under the probation clause after concluding that formal proceedings were unnecessary because he had not yet been confirmed.

 The Court found this sequence highly revealing and held that the bank had effectively sought to achieve indirectly what it could not do directly. 

The Bench observed that while employers are free to terminate probationers for genuine unsuitability, they cannot disguise punitive action as a routine termination. If misconduct forms the foundation of the decision, due process and disciplinary proceedings become mandatory. The Court stressed that termination on the basis of alleged misconduct without a proper inquiry cannot be sustained merely because the employee was on probation. 

Concluding that the termination order was legally unsustainable, the Supreme Court refused to interfere with the concurrent findings of the Single Judge and Division Bench of the Calcutta High Court. However, taking into account the peculiar facts of the case, the Court directed that the employee would be entitled to 50% back wages from the date of termination until the date of superannuation, along with all consequential benefits on a notional basis. The Court further directed that these benefits be settled within three months by Bank of Baroda, which had become the successor entity following the amalgamation of Vijaya Bank. 

Case Details

Case Title: General Manager, Bank Of Baroda And Others  Versus Ashok Kumar Singh And Others 

Citation: JURISHOUR-1470-SC-2026

Case No.: CIVIL APPEAL NO. 4814 OF 2017

Date: 29/05/2026

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