Constitutional reading of service rules upheld, but termination without genuine abolition of post was held invalid.

A service rule was upheld as constitutionally valid because a statutory provision is presumed constitutional and, where possible, must be read consistently with Part III; construed that way, the rule authorised an objective decision that a post was no longer needed and effectively abolished. However, the employee's termination failed on the facts because the post was not truly abolished and the misconduct procedure under the service rules was not used. The termination was therefore illegal, and due to the long lapse of time, compensation was ordered in lieu of reinstatement.

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Issues: (i) Whether Rule 5 of the Orissa Insurance Co-operative Society Ltd. Service Rules was unconstitutional and void as offending Article 14 of the Constitution of India. (ii) Whether the appellant's termination under Rule 5 was lawful, and what relief should follow.

Issue (i): Whether Rule 5 of the Orissa Insurance Co-operative Society Ltd. Service Rules was unconstitutional and void as offending Article 14 of the Constitution of India.

Analysis: The rule was capable of being construed in a constitutional manner. A statutory rule carries a presumption of constitutionality, and where two interpretations are possible, the one consistent with Part III must be preferred. On that construction, the Board's decision under Rule 5 was understood as an objective decision that the post itself was no longer needed and had, in effect, been abolished. Such a policy decision, if genuinely taken on relevant material, would not be arbitrary. Only a sham or colourable exercise to remove an inconvenient employee would be vulnerable under Article 14.

Conclusion: Rule 5 was held valid and not violative of Article 14.

Issue (ii): Whether the appellant's termination under Rule 5 was lawful, and what relief should follow.

Analysis: On the facts, the Board had not abolished the post. The appellant's service was brought to an end because his continuance was felt to be undesirable, while the misconduct procedure available under Rule 8 was not invoked. The termination was therefore not supported by the basis on which Rule 5 had been upheld and was illegal. Although reinstatement would ordinarily follow, the long lapse of time justified monetary compensation instead of restoration to service.

Conclusion: The termination was held illegal, and compensation was directed in lieu of reinstatement.

Final Conclusion: The appeal succeeded, the impugned termination was set aside in substance, and the appellant was awarded compensation instead of reinstatement.

Ratio Decidendi: A termination rule that is reasonably capable of being read as authorising abolition of a post on objective grounds is not unconstitutional under Article 14, but a termination made without truly abolishing the post or without following the misconduct route available under the rules is invalid; in such cases, compensation may be awarded instead of reinstatement where justice so requires.

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