Supreme Court clarifies compassionate appointment scope: No automatic jobs for retirees’ heirs in Ahmednagar Mahanagar Palika case (2022)

Introduction

Date of the Judgment: September 5, 2022

Citation: Not Available

Judges: M.R. Shah, J. and B.V. Nagarathna, J.

Can a municipal corporation be compelled to provide jobs to the children or relatives of retiring employees? The Supreme Court of India recently tackled this question, examining whether an old agreement for such appointments still holds true. This case revolves around the Ahmednagar Mahanagar Palika (Municipal Corporation) and its employees’ union, focusing on the interpretation of a decades-old industrial award concerning appointments for the heirs of retiring employees. The Court had to determine if this agreement was still valid and enforceable in light of changing circumstances and government policies.

Case Background

In 2003, the Ahmednagar Municipal Council was converted into the Ahmednagar Mahanagar Palika (Municipal Corporation). Earlier, when it was a Municipal Council, an industrial dispute was raised by the Union, known as Reference IT No. 51 of 1979. One of the demands was regarding employment for the heirs of employees. At that time, the Municipal Council agreed that the heirs of Class-IV employees (excluding those in the Health Department) would be given jobs if the employee died before retirement, became invalid, or retired. This agreement was formalized in an award by the Industrial Court on March 30, 1981.

Later, further demands were raised, and the 1981 award was sought to be modified. This led to References IT No. 2 of 1993 to 4 of 1993. The Mahanagar Palika (Municipal Corporation) also gave a notice of change regarding employment for heirs, which was referred for adjudication as Reference IT No. 2 of 1993. On February 21, 2005, the Industrial Court modified the 1981 award, directing that compassionate appointments be given only to the heirs of deceased Class-IV employees in the health department and to the heirs of all categories on compassionate grounds as per government rules. This modification meant that compassionate appointments were no longer provided to the heirs of employees upon retirement.

In 2005, the Ahmednagar Mahanagar Palika Kamgar Union raised two more industrial disputes, Complaint (ULP) No. 55 of 2005 and Complaint (ULP) No. 83 of 2005, seeking employment for the heirs of retired employees as per the 1981 award. On September 16, 2016, and September 21, 2016, the Industrial Court directed the Mahanagar Palika to provide employment to the eligible heirs as per the 1981 award. This meant that the Industrial Court directed the Municipal Corporation to provide employment to the heirs of employees on their retirement. The Mahanagar Palika challenged these orders in the High Court, which were dismissed.

Timeline:

Course of Proceedings

The Industrial Court, in its judgments dated September 16, 2016, and September 21, 2016, directed the Ahmednagar Mahanagar Palika to provide employment to the eligible heirs of employees as per the 1981 award, which included employment for heirs upon the retirement of the employees. The High Court of Judicature at Bombay, Bench at Aurangabad, dismissed the writ petitions filed by the Ahmednagar Mahanagar Palika, upholding the Industrial Court’s decision. The High Court directed that candidates who had not completed 45 years of age as of March 1, 2022, be given compassionate appointments, and those who had completed 45 years of age would receive a lump sum compensation of Rs. 5 lacs.

Legal Framework

The case primarily revolves around the interpretation and applicability of the industrial award dated March 30, 1981, passed in Reference IT No. 51 of 1979. This award initially mandated that the heirs of Class-IV employees would be given jobs if the employee died before retirement, became invalid, or retired. However, this was modified by the Industrial Court in its award dated February 21, 2005, in Reference IT No. 2/1993, which limited compassionate appointments to the heirs of deceased employees.

The Supreme Court also considered the implications of Article 14 of the Constitution of India, which guarantees equality before the law, and the principles governing compassionate appointments. The Court noted that compassionate appointments are an exception to the normal recruitment process and are meant to provide immediate relief to families in financial distress due to the death of an earning member.

Arguments

Appellant (Ahmednagar Mahanagar Palika) Arguments:

• The Mahanagar Palika argued that the 1981 award was passed when it was a Municipal Council, not a Municipal Corporation. After the conversion in 2003, the employees are governed by the rules and schemes framed by the State Government, which do not provide for appointments to the heirs of retiring employees.
• The Mahanagar Palika contended that the Industrial Court’s award dated February 21, 2005, in Reference (IT) No. 2/1993, modified the earlier award, limiting compassionate appointments to the heirs of deceased employees.
• Relying on The Secretary to Govt. Department of Education (Primary) & Others v. Bheemesh alias Bheemappa, 2021 SCC OnLine SC 1264, it was argued that compassionate appointments should be made as per the modified scheme.
• The Mahanagar Palika submitted that providing appointments to the heirs of retiring employees is against the principles of compassionate appointment and violates Article 14 of the Constitution of India.
• The Mahanagar Palika argued that compassionate appointments are not automatic and depend on various factors like the family’s financial position and economic dependence on the deceased employee.
• The direction by the High Court to pay a lump sum compensation of Rs. 5 lacs to those who have completed 45 years of age was also challenged.

Respondent (Ahmednagar Mahanagar Palika Kamgar Union) Arguments:

• The Union argued that the 1981 award is binding, and the heirs of the employees are entitled to appointments upon the superannuation or retirement of the employees.
• The Union contended that the case is governed by the terms of the Bipartite Agreement resulting in the 1981 award and there is no scope for discretion.
• Relying on Subhadra v. Ministry of Coal and another, (2018) 11 SCC 201, the Union argued that the heirs have a right to appointment under the 1981 award.
• The Union argued that the appointment to the heirs of the employees on their superannuation and/or retirement is not a compassionate appointment but a “varas hakka” (right of inheritance), and therefore, the judgments on compassionate appointments do not apply.

Submissions of Parties

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether the Industrial Court and the High Court were correct in directing the Mahanagar Palika to give appointments to the heirs of the employees on their superannuation/retirement as per the 1981 award.
2. Whether the direction to provide employment to the heirs of the employees on their retirement/superannuation is valid in light of the modification of the 1981 award in 2005.
3. Whether such appointments are consistent with the principles of compassionate appointment and Article 14 of the Constitution of India.

Treatment of the Issue by the Court

Authorities

Cases Considered by the Court:

• The Secretary to Govt. Department of Education (Primary) & Others v. Bheemesh alias Bheemappa, 2021 SCC OnLine SC 1264 – The Supreme Court of India stated that the appointment on compassionate ground shall be as per the modified scheme.
• Subhadra v. Ministry of Coal and another, (2018) 11 SCC 201 – The Supreme Court of India was cited by the respondent to argue that the heirs have a right to appointment under the 1981 award.

Legal Provisions Considered by the Court:

• Article 14 of the Constitution of India – Guarantees equality before the law.

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Change in the Entity: The transformation of the Municipal Council into a Municipal Corporation meant that the employees were now governed by the rules and regulations framed by the State Government, which did not include the provision for appointment of heirs of retiring employees.
• Modification of the 1981 Award: The Industrial Court’s modification in 2005, limiting compassionate appointments to the heirs of deceased employees, was a crucial factor.
• Principles of Compassionate Appointment: The Court emphasized that compassionate appointments are meant to provide relief to families in distress due to the death of an earning member, not to provide jobs to the heirs of retiring employees.
• Constitutional Validity: The Court held that providing appointments to the heirs of retiring employees would violate Article 14 of the Constitution, which guarantees equality before the law.
• Unemployment Problem: The Court considered the larger issue of unemployment and the need to provide opportunities for qualified individuals rather than limiting jobs to the heirs of employees.

Logical Reasoning:

The Supreme Court rejected the argument that the appointment to the heirs of the employees on their superannuation and/or retirement is not a compassionate appointment but a “varas hakka”. The Court stated that even if it is called “varas hakka,” it is not supported by any scheme and violates Article 14 and 15 of the Constitution of India.

The Court emphasized that compassionate appointment is an exception to the normal method of recruitment and is not an automatic right. It is subject to strict scrutiny of various parameters, including the financial position of the family and the economic dependence of the family upon the deceased employee.

The Court also highlighted the importance of providing equal opportunities to all qualified candidates and not limiting jobs to the heirs of employees.

The Court observed that the Industrial Court itself had recognized in 2005 that the demand for providing employment to the legal heirs of employees on superannuation was not reasonable in the current situation due to the widespread unemployment problem.

The Supreme Court quoted the Industrial Court’s observations from the 2005 award:

“It seems from the oral submissions of the parties that, at the time of passing earlier award in Ref. (IT) No. 51/1979 i.e., in the year 1979 the demand for providing the employment to the legal heir of employee was reasonable however in present situation the said demand does not appears to be good and reasonable. Needless to say, that nowadays the unemployment problems is very major. In spite of high qualifications, the qualified persons are not getting job and they are unemployed.”

The Court also noted the misuse of the demand for employment to the legal heirs of the employees, where employment was being claimed for distant relatives based on adoption or affidavits.

The Supreme Court concluded that the direction to provide employment to the heirs of the employees on their superannuation and/or retirement is unsustainable and deserves to be quashed and set aside.

The Supreme Court quoted the reasoning for the decision:

“Even otherwise, such an appointment to the heirs of the employees on their retirement and/or superannuation shall be contrary to the object and purpose of appointment on compassionate grounds and is hit by Article 14 of the Constitution of India.”

The Supreme Court also observed:

“No one can claim to have a vested right for appointment on compassionate grounds. Therefore, appointment on compassionate grounds cannot be extended to the heirs of the employees on their superannuation and/or retirement.”

Key Takeaways

• Compassionate appointments are not a right but an exception to the normal recruitment process.
• The heirs of retiring employees are not entitled to automatic appointments.
• Municipal Corporations and similar bodies are governed by the rules and regulations framed by the State Government, which may not include provisions for appointments to the heirs of retiring employees.
• Compassionate appointments are meant to provide relief to families in financial distress due to the death of an earning member, not to provide jobs to the heirs of retiring employees.
• The judgment upholds the principle of equal opportunity for all qualified candidates and prevents the misuse of compassionate appointment schemes.

Directions

The Supreme Court quashed and set aside the impugned common judgment and order passed by the High Court, as well as the judgment(s) and award(s) passed by the Industrial Court, which directed the Mahanagar Palika/Municipal Corporation to appoint the heirs of the employees on their retirement/superannuation.

Specific Amendments Analysis

Not Applicable

Development of Law

The ratio decidendi of this case is that the heirs of retiring employees are not entitled to automatic compassionate appointments, and such appointments are contrary to the principles of compassionate appointment and Article 14 of the Constitution of India. This judgment clarifies that compassionate appointments are an exception to the normal recruitment process and are meant to provide relief to families in financial distress due to the death of an earning member, not to provide jobs to the heirs of retiring employees.

This judgment also reinforces that the rules and regulations of the State Government will apply to Municipal Corporations and similar bodies, and any previous awards or agreements that are inconsistent with these rules will not be valid.

Conclusion

In conclusion, the Supreme Court’s decision in the Ahmednagar Mahanagar Palika case clarifies that the heirs of retiring employees are not entitled to automatic compassionate appointments. The Court emphasized that compassionate appointments are an exception to the normal recruitment process and are meant to provide relief to families in financial distress due to the death of an earning member. The judgment also reinforces the principle of equal opportunity for all qualified candidates and prevents the misuse of compassionate appointment schemes. The Court set aside the orders of the Industrial Court and the High Court, which had directed the Mahanagar Palika to provide appointments to the heirs of retiring employees.