JUDGMENT A.N. Dikshita, J. - By means of this petition under Article 226 of the Constitution the petitioner has prayed for (1) a writ of certiorari quashing the order dated 2-11-1981 terminating the petitioner's services and the order dated 24-4-1982 rejecting the petitioner's appeal against the aforesaid order, and, (2) a writ of mandamus commanding the respondents to pay his entire arrears of salary and allowances in accordance with law. 2. The facts as emerge from the records arc : The petitioner was appointed as an Assistant Manager (Technical) in U.P. Financial Corporation, Kanpur, respondent No. 1, and posted at Bareilly, by an order of appointment dated 17-11-1977 passed by the Managing Director of the U.P. Financial Corporation, respondent No. 2, which is filed as Annexure 1 to the writ petition. The appointment order dated 17-11-1977 contains clauses (2) and (5) which are relevant and are reproduced below "That they should understand that appointments on the year's probation from the date of joining their duties and may be terminated at any time without notice. Their appointments are further subject to their character and antecedents being found satisfactory." "5, Please also note that the appointments shall be subject to the terms and conditions laid down in the Stall' Regulations of the Corporation." In terms of clause (2) of the appointment letter the petitioner was to remain on probation for a period of one year from the date of his joining. The petitioner joined the services of the Corporation on 29-11-1977. The probationary period of the petitioner expired on 28-11-1978. After the expiry of the period of probation the respondents, did not pass any order either extending the period of his probation or terminating his services in terms of clause (2) of the appointment letter and the petitioner continued in service. However, by an order dated 7-12-1979 communicated vide letter No. FCA. Estt 71-80 dated 7/10-12-1979 the period of probation of the petitioner was extended by respondent No. 2 for a further period of one year. Nothing was done after the expiry of this period as well and the respondent No. 2 by an order dated 2-11-1981 terminated the services of the petitioner with immediate effect. Estt 71-80 dated 7/10-12-1979 the period of probation of the petitioner was extended by respondent No. 2 for a further period of one year. Nothing was done after the expiry of this period as well and the respondent No. 2 by an order dated 2-11-1981 terminated the services of the petitioner with immediate effect. The order further stated that the petitioner will be paid one month's pay in lieu of the notice as per U.P. Financial Corporation Staff Regulations 1961 (herein, after called the Staff Regulations) against this order dated 2-11-1911 terminating the services of the petitioner an appeal was preferred by the petitioner to the Board of Directors of respondent No. 1 under staff Regulation 41 read with Staff Regulation 42 (I )(b) on 30-11-1981. The petitioner was informed vide communication dated 24-4-1982 that the appeal had been rejected by the Chairman. Hence this petition. 4. The case of the petitioner is that the impugned order of termination as passed by respondent No. 2 vide order dated 2-11-1981 is invalid, illegal and beyond the jurisdiction of respondent No. 2 as it has been passed in contravention of the Staff Regulations so framed by respondent No. 1. The contention of the petitioner is that in terms of] the appointment order the services of the petitioner could be terminated without notice only during the continuance of his probationary period but his services could not be terminated after the completion of the probationary period which came to an end on 28-11-1978 and in the absence of any order extending the period of his probation he automatically became permanent. It has also been stressed that clause (5) of the appointment letter dated 17-11-1977 provided that the appointment of the petitioner shall be subject to the terms and conditions laid down in the Staff Regulations, but the respondent No. 2 in breach and in violation of the Staff Regulations acted illegally and without jurisdiction in dispensing with the services of the petitioner as a termination simplicities. The petitioner has also stated that the respondent No. 2 passed the order of termination without the prior approval of the Board of Directors of respondent No. 1 as enjoined in the Staff Regulations. It is also alleged that no pay was ever given to him in lieu of the notice which was a mandatory requirement. The petitioner has also stated that the respondent No. 2 passed the order of termination without the prior approval of the Board of Directors of respondent No. 1 as enjoined in the Staff Regulations. It is also alleged that no pay was ever given to him in lieu of the notice which was a mandatory requirement. Further it has been alleged that persons junior to the petitioner have been retained in service while the services of the petitioner have been terminated illegally and in an arbitrary manner. The petitioner has also averred that his services have been terminated as his work was found to be not satisfactory but no opportunity whatsoever was afforded to him to meet the charge of unsuitability. It has further been stated that the Board of Directors of respondent No. 1 have not given any reasons for dismissing the appeal which was seemingly done without the application of mind and, in any case, the communication as sent to the petitioner does not either disclose the reasons or such application of mind. Lastly it has been stressed by the petitioner that the respondent No. 1 is a body corporate and the Staff Regulations framed by it are statutory. 5. On behalf of the respondents a counter-affidavit has been fixed. The contention on behalf of the respondents is that after the expiry of the period of probation the status of the petitioner would be deemed to be that of a temporary employee whose services were liable to be terminated at any time even without notice after payment of one month's salary in lieu of notice. It is stated that the petitioner's one month's salary was adjusted towards some dues against him. There is no straight forward denial on behalf of the respondents to the allegation of the petitioner that persons junior to him had been retained in service. The stand of the respondents is that respondent No. 2 himself was competent to terminate the services of the petitioner as the maximum of his pay scale was below Rs. 1000. The termination of the services of the petitioner on the ground of unsuitability is admitted to the respondents. 6. Before dwelling upon the merits of the controversy it would be appropriate to find the status of respondent No. 1. The State Financial Corporation Act, 1951, as amended was enacted to provide for the establishment of State Financial Corporations. 1000. The termination of the services of the petitioner on the ground of unsuitability is admitted to the respondents. 6. Before dwelling upon the merits of the controversy it would be appropriate to find the status of respondent No. 1. The State Financial Corporation Act, 1951, as amended was enacted to provide for the establishment of State Financial Corporations. Section 3 of the State Financial Corporation Act, 1951 (Hereafter called the Act) provides for the establishment of a Financial Corporation for the State. It has further been provided in Section 3 of the Act that the Financial Corporation shall be a body corporate. The U.P. Financial Corporation was thus established as per the provisions of the Act. Respondent No. 1 having thus been established under the Act made the U.P. Financial Corporation Staff Regulations, 1961. The said Stall' Regulations have thus statutory force. 7. It is admitted between the parties that the services of the petitioner were governed by the Staff Regulations framed under the Act. For a fair appraisal of the respective contentions of the parties it would be appropriate to refer to the relevant Regulations providing for the period of probation, discharge during probation and the Managing Director's .power to extend the probationary period as provided in Regulations 15, 16, and 17 which are as under : "15(1). An Officer directly recruited to the Corporation service shall be required to be on probation for period which shall not be less than one year and more than two years as may be fixed at the time of appointment. (2). Employees not included in sub-regulation (1) of this Regulation shall on their first appointment in the Corporation's service, be required to be on probation for six months." "16. An employee of the Corporation on probation may be discharged by the Managing Director after one month's notice in that behalf or by payment of substantive pay for one month in lieu thereof, provided that in case of officers no such notice of discharge issued by the Managing Director without the prior approval of the Board." "17(1). The period of probation of an employee may be extended at the discretion of the Managing Director but in no case shall the total period of probation exceed three years. The period of probation of an employee may be extended at the discretion of the Managing Director but in no case shall the total period of probation exceed three years. (2) The power to extend the period of probation of an officer shall be exercised by the Managing Director subject to the approval of the Board." 8. Regulation 15(1) provides for the period of probation. It lays down that an officer directly recruited to the Corporation shall be required to be on probation for a period which shall not be less than one year and more than two years. This probationary period of one year or two years is to be fixed at the time of appointment and is applicable to an officer who is directly recruited. Regulation 15(2) provides that the employees not included in sub-regulation (1) of Regulation 15 shall be required to be on probation for six months at the time of their first appointment in the services of the Corporation. Regulation 16 provides for the discharge of the employees during the period of probation. This Regulation further provides that an employee of the Corporation may be discharged by the Managing Director after one month's notice in that behalf or on payment of substantive pay for one month in lieu thereof. The Managing Director has been given the power to discharge an employee on probation inclusive of an officer by giving him one month's notice or one month's pay in lieu thereof. However, it has been provided that in the case of officers no such notice of discharge shall be issued by the Managing Director without the prior approval of the Board. Stall-Regulation 17(1) enjoins that the period of probation of an employee may be extended at the discretion of the Managing Director but in no case the total period of probation shall exceed three years. Here a ceiling on the period of probation has been for an employee. No doubt an officer will also be deemed to be an employee of the Corporation. Sub-regulation (2) of Staff Regulation 17 provides that the power to extend the period of probation of an officer shall be exercised by the Managing Director subject to the approval of the Board. No doubt an officer will also be deemed to be an employee of the Corporation. Sub-regulation (2) of Staff Regulation 17 provides that the power to extend the period of probation of an officer shall be exercised by the Managing Director subject to the approval of the Board. Staff Regulation 16 as well as Staff Regulation 17 have to be read harmoniously and the construction as found in Stall Regulation 16 indicates that the power of the Managing Director to issue a notice of discharge shall not be exercised without prior approval of the Board in the case of an officer. 9. Publication connotes of a period of trial. On successful competition of probation the incumbent is entitled to be confirmed to the post held by him. Obviously the purpose of putting an employee on probation is to find out his suitability for the post. The intention of the framers of the Staff Regulations seemed to be that after the expiry of the period of probation the incumbent of the post should acquire right of a permanent employee. In the case of a temporary employee unless an order of confirmation is passed he remains temporary. Since the Regulations do not provide for passing any positive order of confirmation the Legislative intention is clear that after the expiry of the maximum period of probation the officer would acquire the status of a permanent employee. 10. Now a question may arise as to whether the employee is to be given the status of a permanent employee immediately after the expiry of the initial period of probation or the law presumes extension of his probationary by implication up to the maximum limit fixed in the Rules or Regulations. As shown above Regulation 17 provides the period of probation up to a maximum period of three years and as such the petitioner after the expiry of the period of three years automatically became permanent. In State of Punjab v. Dharam Singh, AIR 1968 SC 1210 . As shown above Regulation 17 provides the period of probation up to a maximum period of three years and as such the petitioner after the expiry of the period of three years automatically became permanent. In State of Punjab v. Dharam Singh, AIR 1968 SC 1210 . the Supreme Court laid down that since the rule governing the services of the employee fixed a maximum period of three years, in the absence of any formal order of confirmation, the authorities would be presumed to have extended the period of probation of the employee by implication up to the maximum period of three years but after the lapse of three years the employee by implication became permanent and his services could not be terminated by giving him one month's notice or one month's pay in lieu of notice. The petitioner having joined the services of the respondents on 29-11-1977 thus completed the maximum period of his probation on 28-11-1980 after which date he acquired the status of a permanent employee. 11. As already mentioned above the impugned order of termination is also assailed on the ground of it being violative of the principles of natural justice and non-observance of the provisions of Articles 14 and 16 of the Constitution. Plea of discrimination has also been raised on behalf of the petitioner. In the petition the allegation was that persons junior to the petitioner had been retained in service while the services of the petitioner were terminated. The respondents did not categorically deny his allegation in their counter-affidavit. In the rejoinder-affidavit the petitioner has given the names of 14 persons who though junior to him have been retained in the service of the respondents. In the counter-affidavit filed on behalf of the respondents it is alleged that the services of the petitioner were terminated as he was not found suitable for holding the post. If in spite of all this the petitioner was not afforded an opportunity to meet the charge of unsuitability against him and persons junior to him were retained in service the impugned order would also be held to be violative of the principles of natural justice and being discriminatory in nature. 12. In K. C. Joshi v. Union of India, AIR 1985 SC 1046 . the Supreme Court observed as under : "Mr. 12. In K. C. Joshi v. Union of India, AIR 1985 SC 1046 . the Supreme Court observed as under : "Mr. Datta, however, contended that the earlier order dated December 7, 1963, recites that the appointment could be terminated by either side by one month's notice and that was the power invoked in terminating the service of the appellant. The order dated December 7, 1963 was at the time when the appellant was appointed on probation. On successful competition of the probation, the appellant became a member of the regular establishment. The contract of service, if any, has to be in tune with Articles 14 and 16 and such unilateral power of termination of service without giving reasons is so abhorrent that it smacks of discrimination and therefore violative of Article 14. The High Court brushed aside this aspect by merely observing that in order to dismiss one employee on the ground of unsuitability, the Government or the Corporation is not required to dismiss all. If it is suggested that you can dismiss anyone without a semblance of an enquiry or without whisper of the principles of natural justice, then such an approach overlooks the well established principle that where State action affects livelihood or attached stigma, the punitive action can be taken after holding an enquiry according to the principles of natural justice. In other words, an unbiased Judge and an opportunity to controvert the allegation and to clear oneself are the minimum principles of natural justice which must inform such drastic power of dismissal affecting (livelihood of an employee." It was further observed in the said case by the Supreme Court as under :- "At any rate the action appears to be thoroughly arbitrary. If the facts are properly viewed this public sector corporation has disclosed the typical private employer's unconcealed dislike and detestation of an active trade unionist. Applying the law laid down in the case of K.C. Joshi v. Union of India (supra) it would be found that the respondents in fact punished the petitioner without affording an opportunity to him to controvert the allegation of unsuitability. A stigma has thus been attached denying him continuance in service. The rules of natural justice were thus honoured in total breach. In Nepal Singh v. State of U, P., AIR 1985 SC 84 . A stigma has thus been attached denying him continuance in service. The rules of natural justice were thus honoured in total breach. In Nepal Singh v. State of U, P., AIR 1985 SC 84 . it was held as under: "It is well settled that in dealing with a Government servant the State must conform to the constitutional requirements of Articles 14 and 16 of the Constitution. An arbitrary exercise of power by the State violates those constitutional guarantees, for a fundamental implication in the guarantee of equality and of protection against discrimination is that fair and just treatment will be accorded to all, whether individually or jointly as a class. When a Government servant satisfies the Court prima facie that an order terminating his services violates Articles 14 and 16, the Competent authority must discharge the burden of showing that the power to terminate the service was exercised honestly and in good faith, on valid consideration, fairly and without discrimination." "...it is not open to the competent authority to take the view that holding the enquiry contemplated by that clause would be a bother or a nuisance and that therefore it is entitled to avoid the mandate of that provision and resort to the guise of an ex facie innocuous termination order. The Court will view with great disfavour any attempt to circumvent the constitutional provision of Article 311(2) in a case where that provision comes into play." 13. It is thus clear that the petitioner was entitled to an opportunity to controvert the allegation of unsuitability which the respondents failed to at Yord rendering their impugned action illegal. It is true that the petitioner was not in Government servant but still he was entitled to protection under Articles 14 and 16 of the Constitution. 14. The petitioner has been discriminated as 14 persons junior to him were retained in the service of the respondents. It is true that the petitioner was not in Government servant but still he was entitled to protection under Articles 14 and 16 of the Constitution. 14. The petitioner has been discriminated as 14 persons junior to him were retained in the service of the respondents. The Supreme Court in the case of K. C. Joshi v. Union of India(supra) observed as under : - "Even if the employees of the Corporation which is an instrumentality of the State cannot be said to be the members of a civil service of the Union or an All India Service or hold any civil post under the Union, for the purpose of Articles 3It) and 311 and, therefore, no entitled to the protection of Article 311 they would nonetheless be entitled to protection of the fundamental rights enshrined in Articles 14 and 16 of the Constitution. In other words, they would be entitled to the protection of equality in the matter of employment in public service and they cannot be dealt with in an arbitrary manner." 15. There cannot be any dispute that punitive action can be taken against permanent employees of the State or the Corporations but the law certainly prescribes an enquiry conforming to the principles of natural justice. In the instant case resort ought to have been taken to Regulation 40(2) of the Regulations if the petitioner was found unsuitable. That being lacking the impugned order of termination is liable to be set aside. 16. Now taking up the contention that the order of the appellate authority is not a speaking one find that it has force. The outcome of the appeal having been rejected by the Chairman has only been communicated to the petitioner by an officer of respondent No. 1. On what basis and for what reasons the appeal has been rejected has not been disclosed to the petitioner. The original order of the Chairman has not been produced before the Court. The principle enjoining the communication of reasons in a particular order affecting pre-judicially the interests of any person is that he may challenge the said order in Court. It ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated. In Mrs. Ajantha Industries v. Central Board of Direct 'Faxes, AIR 1976 SC 437 . It ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated. In Mrs. Ajantha Industries v. Central Board of Direct 'Faxes, AIR 1976 SC 437 . the order was struck down on the ground that reasons were not communicated to the person affected pre-judicially by the order. The order dismissing the appeal of the petitioner is a quasi judicial order and every quasi judicial order must be supported by reasons. In the Siemens Engineering and Manufacturing Co. of India Ltd. v. Union of India, AIR 1976 SC 1785 . The Supreme Court held : "It is now settled law that where an authority makes an order in exercise of a quasi judicial function, it must record its reasons in support of the order it makes. Every quasi judicial order must be supported by reasons. That has been held down by a long line of decisions of this Court ending with N. M. Desai v. Testeels Ltd., C. A. No. 245 of 1970 decided on 17-12-1975 (SC). 17. The order of the Chairman dismissing the appeal of tire petitioner not being a reasoned order is illegal. 18. In view of the above discussion this petition succeeds and is hereby allowed with costs and the impugned orders dated 2-11-1981 terminating the petitioner's services, and, dated 24-4-1982 rejecting the petitioner's appeal, are quashed. The petitioner would be deemed to be in service with all its benefits.