Bank of Baroda – India’s leading public sector Bank, had suspended an AGM from service on account of unsatisfactory performance. An AGM is a senior executive of Bank and the suspension news of a senior executive is considered a big update in the banking industry.
The case relates to Ashok Kumar Singh, who joined Vijaya Bank as an Assistant General Manager (Networking) on probation in January 2004. His probation was extended twice after the bank said that his performance was unsatisfactory.
In January 2005, Singh was suspended over allegations that he had tried to remove confidential tender-related documents from the bank premises through his driver.
The suspension was later revoked. However, the bank reserved its right to start disciplinary proceedings against him. Despite this, no disciplinary inquiry was ever conducted.
In November 2005, the bank terminated Singh’s services under Regulation 16(3)(a) of the Vijaya Bank (Officers’) Regulations, 1982. The bank cited unsatisfactory performance during the probation period as the reason for his termination.
The employee approached Calcutta High Court and the Court later set aside the termination order. The bank then challenged the High Court’s decision before the Supreme Court.
The Supreme Court has also dismissed the appeal filed by Bank of Baroda and upheld the Calcutta High Court decision. The Court said that an employer cannot use “unsatisfactory performance” as a reason to remove an employee when the real basis of the action is alleged misconduct that was never examined through a formal disciplinary inquiry.
A bench of Justice J.K. Maheshwari and Justice Atul S. Chandurkar delivered the judgment on May 29, 2026. The Court directed the bank to pay the employee 50% back wages along with consequential benefits.
Bank Says Probationer Has No Right to Continue in Service
The bank argued that a probationary employee has no vested right to continue in service. It said that an employer has the right to terminate a probationer if the employee is found unsuitable for confirmation.
The bank claimed that Singh’s work and conduct had been reviewed several times and were found unsatisfactory. It further argued that the misconduct allegations were only the motive behind the decision and were not the legal basis of the termination order.
Employer’s Decision Cannot Be Arbitrary: Supreme Court
The Supreme Court agreed that employers have the authority to assess the performance of probationary employees and terminate their services if they are found unsuitable.
However, the Court clarified that this power cannot be exercised arbitrarily.
“The subjective satisfaction of the Authority must be rooted in objective facts,” the bench observed.
The Court said that administrative decisions affecting employees must be based on relevant material and should not be arbitrary. The Court also said that probation is not merely a formality. It is a period during which an employee’s suitability for the job must be assessed fairly.
The bench further observed that adverse remarks, particularly those related to integrity or misconduct, should be communicated to the employee. This gives the employee an opportunity to respond or improve.
Supreme Court Examines Three Internal Memos
The Supreme Court closely examined three internal memos relied upon by the bank to support its claim that Singh’s performance was unsatisfactory.
The first memo, issued in July 2005, related to the implementation of the Online Tax Accounting System (OLTAS).
The Court noted that the memo contradicted a letter issued by the Central Board of Direct Taxes. The letter had praised the bank’s performance and specifically recommended that other banks seek Singh’s guidance in implementing the system.
The Supreme Court found this contradiction significant. It said that the memo could not reasonably be treated as evidence of unsatisfactory performance.
₹66 Crore Transfer Delay Was Due to Technical Issues
The second memo related to a delay in the transfer of ₹66 crore.
However, the Court found that the allegation was not supported by the records. The documents showed that the delay was caused by technical issues at another bank and not because of any failure on Singh’s part.
The third memo was never communicated to Singh. The Supreme Court held that relying on an adverse memo that was never communicated to the employee violated the principles of natural justice. Therefore, the memo could not be used against him.
Bank Had Initially Considered Disciplinary Proceedings
A key factor considered by the Supreme Court was an internal office note. The note showed that the bank had initially considered starting disciplinary proceedings against Singh over the allegations involving confidential documents. The bank had also sought vigilance advice in the matter.
However, the records showed that the bank later abandoned the disciplinary process and instead decided to terminate Singh under the probation regulations.
“The law does not permit the use of ‘unsatisfactory performance’ as a disguise to bypass formal disciplinary proceeding,” the Court observed.
Misconduct Allegations Were the Real Basis of Termination
The Supreme Court concluded that the alleged misconduct was not merely a background factor. According to the Court, the misconduct allegations effectively formed the foundation of the decision to terminate Singh.
Since the bank did not conduct a disciplinary inquiry into the allegations, the termination could not be sustained in law. The Supreme Court dismissed the bank’s appeal and upheld the orders passed by the Single Judge and Division Bench of the Calcutta High Court.
Supreme Court Awards 50% Back Wages
The Court held that the termination order was legally unsustainable. It directed the bank to pay the employee 50% back wages from the date of his termination until the date of his superannuation. The Court also granted him all consequential benefits on a notional basis. The bank has been directed to settle all dues within three months.
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