Supreme Court clarifies continuity of service for re-engaged contract employees in APSRTC vs. A. Sanjeev Reddy (2018)

Introduction

Date of the Judgment: December 7, 2018

Citation: 2018 INSC 1082

Judges: Dr. Dhananjaya Y. Chandrachud, J., M.R. Shah, J.

Can a contract employee, who was terminated and then re-engaged, claim continuity of service for regularization? The Supreme Court of India addressed this question in a case involving the Andhra Pradesh State Road Transport Corporation (APSRTC). The core issue revolved around whether a re-engaged employee is entitled to have their past service counted for regularization, even after a break in service due to termination. This judgment clarifies the position on continuity of service in such cases. The bench comprised of Justice Dr. Dhananjaya Y. Chandrachud and Justice M.R. Shah, with the judgment authored by Justice M.R. Shah.

Case Background

The respondent, Sri A. Sanjeev Reddy, was initially appointed as a contract conductor with the APSRTC in Nizamabad District. A departmental inquiry was initiated against him, which led to the termination of his services. Subsequently, his departmental appeal against the termination was dismissed. However, during a departmental review, the Regional Manager ordered his re-engagement on a contract basis on February 21, 2011. Following his re-engagement, the respondent sought continuity of service from the date of his termination until his re-engagement, along with consequential service benefits, by filing a writ petition before the High Court.

Timeline:

Course of Proceedings

The learned Single Judge of the High Court allowed the respondent’s writ petition, relying on a previous judgment dated 29.02.2012 in Writ Petition No. 2786 of 2012. The High Court held that the issue was not res integra and was covered by the earlier judgment. The Single Judge directed the APSRTC to extend the benefit of continuity of service to the respondent from the date of termination until the date of re-engagement, excluding the period of absence, without any monetary benefits, solely for regularization purposes. The Division Bench of the High Court affirmed the order of the learned Single Judge in a Writ Appeal.

Legal Framework

The case primarily revolves around the interpretation of service rules and the principles of natural justice in the context of contract employment and subsequent re-engagement. The judgment refers to the earlier order of the learned Single Judge dated 29.02.2012 which laid down the following directions:

• “(1) In cases where the appellate/revisional authority has directed re-engagement of the contract employees as fresh employees, such employees shall be entitled to benefit of continuity of service from the date of termination till the date of re-engagement, except for the period during which they were absent, and the said continuity of service granted to the employees shall be without any monetary benefit and shall be counted only for the purpose of regularization at a future date.”
• “(2) The continuity of service so ordered in para (1) shall not, however, be counted for the purpose of seniority and shall not be allowed to affect the seniority of regularly working employees or for other benefits, but shall be counted only for the purpose of considering their cases for regularization.”
• “(3) There are also cases where the orders of termination are challenged, either before the appellate/revisional authorities or before this Court, after six or seven years of date of termination. In all such cases the benefit of continuity of service without any monetary benefit and re-engagement so ordered in para (1) shall be available to only to such of those employees who have approached the appellate/revisional authorities or this Court within three years from the date of termination.”
• “(4) In cases where appeals/revisions or writ petitions are filed after three years of the orders of termination, it is directed that the such petitioner/s shall be considered for re-engagement as fresh contract employee/s, subject to medical fitness and other formalities, but he/they shall not be entitled to continuity of past service as under para (1) above.”
• “(5) In cases where contract employees have preferred appeals/revisions, but no orders have been passed therein, the appellate/revisional authorities shall entertain and dispose of those appeals/revisions in the light of the directions referred to above, preferably on or before 31st March, 2012.”
• “(6) In cases where no enquiry was conducted, the respondent Corporation shall be free to conduct enquiry as per law into the allegations of unauthorised absence of its employees from duty or other allegations of misconduct.”

Arguments

Appellant’s Arguments (APSRTC):

• The appellant argued that the High Court erred in granting continuity of service without the respondent challenging his termination or fresh appointment.
• It was submitted that a disciplinary enquiry was conducted against the respondent, leading to his termination, after which he was given a fresh appointment.
• The appellant contended that the respondent did not challenge the termination order or the fresh appointment, and therefore, the grant of continuity of service was not justified.
• The appellant highlighted that in other similar cases, workmen had approached the Industrial Court, but the respondent did not.
• The appellant argued that the learned Single Judge and the Division Bench failed to consider the individual facts of each case and relied on a common order.

Respondent’s Arguments (Sri A. Sanjeev Reddy):

• The respondent sought continuity of service from the date of his termination until his re-engagement, based on the directions issued in the earlier judgment.
• The respondent argued that since he was re-engaged, he should not be deprived of the benefit of continuity of service for regularization purposes.
• The respondent relied on the earlier judgment of the learned Single Judge, which granted continuity of service to similarly situated contract employees.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue before the court was:

• Whether the High Court was correct in directing the appellant to grant continuity of service to the respondent from the date of termination until the date of re-engagement, without the termination order being challenged.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court did not cite any specific cases or books in this judgment. However, it discussed the earlier order of the learned Single Judge dated 29.02.2012 and the directions contained therein. The Court also considered the fact that the respondent was a contract employee who was re-engaged after a disciplinary enquiry.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The order of the learned Single Judge dated 29.02.2012 was not followed by the Court. The Court held that the directions in the earlier order were not applicable to the facts of the present case, as the earlier order was passed in a batch of cases where termination orders were issued without enquiry or in violation of natural justice, whereas in the present case, the termination was after an enquiry.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that continuity of service can only be granted when an order of termination is set aside. The Court emphasized that since the respondent did not challenge his termination or fresh appointment, the High Court’s direction to grant continuity was unsustainable. The Court also noted that granting continuity of service to an employee who was terminated for misconduct would place him on the same footing as employees with unblemished records, which was not justified.

Logical Reasoning:

The Court considered that the High Court’s direction to grant continuity of service was not sustainable because the respondent did not challenge his termination or fresh appointment. The Court also noted that the earlier order of the learned Single Judge was in a batch of cases where termination orders were issued without enquiry or in violation of natural justice, whereas in the present case, the termination was after an enquiry.

The Supreme Court stated, “Such a direction could not have been issued by the learned Single Judge without the termination being put into question. The grant of continuity was not sustainable for the simple reason that unless the order of termination and/or the fresh appointment were challenged and adjudicated upon, seniority would necessarily have to count with effect from the date of the fresh appointment.”

The Court further observed, “Granting continuity of service to a person such as the respondent, who was found to have committed misconduct, would place him on the same footing as other contractual employees who have a record without blemish.”

The Court also noted, “We find a considerable degree of merit in the submission of learned senior counsel appearing on behalf of the Corporation that in deciding the entire batch of cases by a common order, the learned Single Judge as well as the Division Bench unfortunately lost sight of the facts of each individual case.”

Key Takeaways

• Continuity of service can only be granted when an order of termination is set aside.
• If a terminated employee is re-engaged, their seniority will be counted from the date of re-engagement, unless the termination order is challenged and set aside.
• Granting continuity of service to an employee terminated for misconduct would place them on the same footing as employees with unblemished records, which is not justified.
• High Courts should consider the individual facts of each case and not rely on common orders to decide the entire batch of cases.

Directions

The Supreme Court directed that the seniority of the respondent workman shall be counted with effect from the date of his fresh appointment in the service of the Corporation.

Development of Law

The ratio decidendi of this case is that continuity of service can only be granted when an order of termination is set aside. This judgment clarifies that re-engagement after termination does not automatically entitle an employee to continuity of past service for regularization purposes, unless the termination order is challenged and set aside. This is a change from the position taken by the High Court, which had granted continuity of service based on an earlier order, without considering the individual facts of the case.

Conclusion

The Supreme Court allowed the appeal filed by APSRTC, setting aside the High Court’s order. The Court held that the respondent was not entitled to continuity of service from the date of termination until the date of re-engagement, as his termination order was not challenged. The Court clarified that seniority would be counted from the date of his fresh appointment. This judgment emphasizes the importance of challenging termination orders to claim continuity of service and highlights the need for courts to consider the individual facts of each case.