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The Supreme Court has held that a public sector undertaking or government company has a right to compulsorily retire an employee whose retention is detrimental to the interest of the institution without giving any reason for doing so.

A bench comprising Justices R V Raveendran and Markandey Katju handed down the ruling while upholding the action of National Aviation Company of India Ltd, a successor of Indian Airlines, compulsorily retiring its security assistant SMK Khan on the grounds of indiscipline, negligence, insubordination, sleeping on duty and unauthorised absence from office.

The apex court in its judgment noted, ‘The concept of public interest would get replaced by institutional interest or utility to the employer where the employer is statutory authority or a government company and not the government when the performance of an employee is inefficient or his service is unsatisfactory, prejudicial or detrimental to the interest of the institution and is of no utility to the employer’.

‘Therefore compulsory retirement can be resorted to (On a review of the service on completion of specified years of service or reaching specified age) in terms of relevant rules or regulations, where retention is not in the interest of the institution or of utility to the employer,’ the Supreme Court said.

‘It is however not necessary to use the word not in the interest of the institution or service not of the utility to the employer in the order of compulsory retirement as the regulation provide that no reasons need be assign.’ Khan was demoted from security assistant to chowkidar on May 26, 1971 but was later re-promoted to the same rank. But when he did not mend his ways he was compulsory retired from service on August 26, 1999.

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