Judgment VENKATACHALIAH, J.:- The special leave Petition. directed against the order dt. 1-2-1983 of the High Court of Punjab and Haryana in C.W.P. 5003 of 1982 and the writ petition invoking Art. 32 of the Constitution, pertain to the same subject-matter and raise the question as to the constitutional validity of Regn. 10(2)(a) of the Gurgaon Gramin Bank (Staff) Services Regulations 1980 (Regulations for short) enabling a termination-simpliciter and consequently, of the validity of the order dt. 17-8-1982 of Gurgaon Gramin Bank (Bank for short) teminating the petitioners services as Branch Manager in exertion of the said Regulation. 2. Petitioner was selected by the Gurgaon Gramin Bank as a Trainee Branch Manager and after training, appointed as Branch Manager on probation at its Mohna Branch with effect from 16-10-1978. The period of probation was one year in the first instance, with power to the Bank to extend the probation for a further period of six months at the end of which the probationer would either be confirmed if he was found suitable or if, otherwise, discharged from service. The 18 months period representing the outermost limit of the permissible period of probation expired sometime in April, 1980 Petitioner was not discharged; nor an express order of confirmation made. Petitioner continued in service. Apparently, the course of petitioners service did not run smooth. There were allegations against him - some of them quite serious - of acts of bad faith including that he was not disbursing the loans granted to the gramin borrowers the full sanctioned-amounts, but was helping himself to some portions of it. The Bank asked the Supdt. of Police, Faridabad to look into these allegations. In April, 1981, the Supdt. of Police, it would appear, reported that the allegations according to him were substantiated and commended disciplinary action against the petitioner. There was also an allegation that petitioner had refused to accept the second set of keys of the cash chest front another official who was in custody of the keys and who was not attending the Bank that day, as a result of which the cash could not be opened on a working day. However, the bank did not initiate disciplinary proceedings against the petitioner; but on 17-8-1982 the Bank terminated his services invoking and relying upon the said Regn. 10(2)(a) which enabled a termination-simpliciter. However, the bank did not initiate disciplinary proceedings against the petitioner; but on 17-8-1982 the Bank terminated his services invoking and relying upon the said Regn. 10(2)(a) which enabled a termination-simpliciter. Petitioners appeal to the Board of Directors of the Bank was turned down on 28-8-1982. Thereafter, petitioner moved the High Court in CWP No. 5003 of 1982. The High Court dismissed the writ petition by its order dt.1-2-1983, now under appeal. 3. Special Leave is granted and both the appeal and the writ petition are taken up for final hearing and disposed of by this judgment. We have heard Dr. Chitale learned senior counsel for the petitioner and Shri K. N. Bhat learned senior counsel for the Bank. On the contentions urged at the hearing, the questions that fall for consideration are. first, whether petitioner become a full member of the service upon the expiry of the period of probation secondly, whether the impugned Regn. 10(2)(a) is unconstitutional as granting an arbitrary and unregulated power and therefore violative of Art. 14 of the Constitution and that, consequently, the purported termination of the services of the petitioner must be held to be void and non est; and thirdly, if the first two questions are held in his favour, whether petitioner is entitled to be reinstated in service with full back-salary. The point last-mentioned, arises in the conext of the submissions of Shri Bhat that, at all events, even if the termination is held to be invalid, the petitioner who works in a managerial cadre should not be thrust on the Administration as the petitioner had forfeited its confidence and that the award of such monetary-compensation as this court might deem fit would be appropriate relief in lieu of reinstatement. 4. The first point need not detain us. The period of the probation was one year, in the first instance. The employer could extend it only for a further period of six more months. 4. The first point need not detain us. The period of the probation was one year, in the first instance. The employer could extend it only for a further period of six more months. The limitation on the power of the employer to extend the probation beyond 18 months coupled with the further requirement that at the end of it the services of the probationer should either be confirmed or discharged render the inference inescapable that if the probationer was not discharged at or before the expiry of the maximum period of probation, then there would be an implied confirmation as there was no statutory indication as to what should follow in the absence of express confirmation at the end of even the maximum permissible period of probation. In cases where, as here, these conditions coalesce, it has been held, there would be confirmation by implication. (See : State of Punjab v. Dharam Singh, AIR 1968 SC 1210 , Om Prakash Maurya v. U. P. Cooperative Sugar Factories Federation Lucknow, AIR 1986 SC 1844 . 5. Now to the second point. The bank is constituted under the Regional Rural Banks Act 1976. Having regard to its constitution and nature of its legal entity and the measure of State control, it is an Instrumentality of the State and is made of latters own flesh and bones and is, accordingly, State within the meaning, and for purposes, of Art. 12 of the Constitution. The said Regn. 10(2)(a) provides : 10. Termination of service by notice : (2)(a) The Bank may terminate the service of an - (i) Officer after giving him three months notice or pay in lieu thereof; (ii) employee after giving him one months notice or pay in lieu thereof; (b) The power to terminate the service of an officer or employee shall be exercised by the Chairman." This court dealing with the constitutionality of similar provisions which enabled governmental authorities such terminations-simpliciter has held that the constitutional pledge of equality and the constitutional guarantee against arbitrary action contained in Art. 14, frown upon conferment on the State or its instrumentalities such arbitrary power. See West Bengal State Electricity Board v. D. B. Ghosh, (1985) 2 SCR 1014 ; Central Inland Water Transport Corpn. Ltd. v. Brojo Nath, AIR 1986 SC 1571 , O. P. Bhandari v. Indian Tourism Development Corpn. Ltd., AIR 1987 SC 111 . See West Bengal State Electricity Board v. D. B. Ghosh, (1985) 2 SCR 1014 ; Central Inland Water Transport Corpn. Ltd. v. Brojo Nath, AIR 1986 SC 1571 , O. P. Bhandari v. Indian Tourism Development Corpn. Ltd., AIR 1987 SC 111 . It requires, therefore, to be held that impugned Regn. 10(2)(a) conferring as it does, on the Bank an arbitrary and unguided power is unconstitutional. Consequently, the order dt. 17-8-1982 of purported termination (Annex. 10) of petitioners services, which has for its foundation a provision which is unconstitutional would require to be and is hereby quashed. 6. We now come to the third question, pertaining to the relief to be granted to the petitioner. Shri Bhat strenuously urged that petitioner is not some ordinary workman but holds a Managerial-post, pivotal to the successful implementation of the policies of Rural Banking undertaken to be achieved by the Bank, that for a satisfactory discharge of his offices and duties the trust and confidence of the Administration are essential and that as petitioner had a broken-image in view of the serious and legitimate suspicions as to his integrity, shaking the very foundations of that trust and confidence, it is only appropriate that in the interest of both the parties and in the larger-interests of the cause of rural banking, this court should, in exercise of its discretion, decline reinstatement and grant compensation in lieu thereof. This would, it is said, avoid the otherwise unavoidable and unpleasant prospects of the Bank having to consider the initiation of appropriate disciplinary proceedings against the petitioner. Shri Bhat drew our attention to one other circumstance. He pointed out that though the special lead petition and the writ petition, along with applications containing inter locutory prayers, were lodged as far back as April. 1983, the petitioner did not bestir himself to move this Court to have those matters brought-up for consideration expeditiously and that consequently it was only February 1987 that the bank was notified of these proceedings for the first time. The suggestion is that petitioner deliberately bided his time till the evidences of his past misconduct were lost with the passage of time. Learned Counsel also commended to us the considerations that weighed with this Court in Bhandaris case AIR 1987 SC 111 where in respect of a person holding a managerial-post, this Court declined reinstatement and granted monetary compensation instead. Learned Counsel also commended to us the considerations that weighed with this Court in Bhandaris case AIR 1987 SC 111 where in respect of a person holding a managerial-post, this Court declined reinstatement and granted monetary compensation instead. The learned counsel relied upon the following observations of Thakkar J. (at p. 113). "5.... Public sector undertakings may under the circumstances be exposed to irreversible damage at the hands of a gold collar employee (belonging to a high managerial cadre) on account of the faulty policy decisions or on account of lack of efficiency or probity of such an employee. The very existence of the undertaking may be endangered beyond recall ......" "6. Time is now ripe to turn to the next question as to whether it is obligatory to direct reinstatement when the concerned regulation be void ......" "....In so far as the high level managerial cadre is concerned, the matter deserves to be viewed from an altogether different perspective, a larger perspective which must take into account the demands of National Interest and the resultant compulsion to ensure the success of the public sector in its competitive co-existence with the private sector. The public sector can never fulfil its life-aim or successfully vie with the private sector if it is not managed by capable and efficient personnel with unimpeachable integrity and the requisite vision, who enjoy the fullest confidence of the policy-makers of such undertakings..." "8. So far as the facts of this case are concerned, we are satisfied that this is a fit case for granting compensation in lieu of reinstatement, instead of granting reinstatement......." Dr. Chitale submitted that the analogy of Bhandaris case is not apposite in the present context and said that to refuse reinstatement in the case of the petitioner who was just 32 years old and has a long career of service ahead of him would be unfair. 7. The principle is well-settled that this court can in appropriate case, decline reinstatement. The principle is in no doubt. But its application in a given case would require the balancing of diverse and conflicting interests and claims. However, in the present case, on a consideration of the entire matter, we think we should not refuse reinstatement. But we think we should restrict the back salary to 50 percent of what would otherwise be payable. But its application in a given case would require the balancing of diverse and conflicting interests and claims. However, in the present case, on a consideration of the entire matter, we think we should not refuse reinstatement. But we think we should restrict the back salary to 50 percent of what would otherwise be payable. It will also be open to the bank, if it still thinks it necessary and worthwhile, to hold such disciplinary enquiry as it may deem fit in regard to the acts of misconduct alleged against the petitioner. 8. In the result, both the appeal and the writ petition are allowed in part, the order of the High Court under appeal set aside; the impugned order of the Bank dt. 17-8-1982 terminating the services of the petitioner quashed and the respondent-Bank directed to reinstate petitioner in service together with the monetary benefits of past salary limited to 50 per cent as aforesaid. The appeal and the writ petition are disposed of accordingly. In the circumstances, there will be no order as to the costs. Order accordingly. For Citation : AIR 1988 SC 286 = 1988 Lab.I.C. 380=1987 Supp. SCC 643=(1988) I UJ (SC) 40 = 1988 Bank J. 198 = 1988(1) Bank LR 81 = 1987(4) JT 511 = 1988(1) LLN 298 = 1988(1) SLJ 75 = 1988(1) SLR 799 = 1987(2) Scale 1073 = 1988 (72) FJR 1. Vikas Info Solutions Pvt. Ltd.