Supreme Court Denies Continuity of Service to Re-engaged Contract Employee: APSRTC vs. K. Sathaiah (2018)

Date of the Judgment: 07 December 2018

Citation: 2018 INSC 1036

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

Can a contract employee, who was terminated after a disciplinary enquiry and subsequently re-engaged, claim continuity of service from the date of termination to the date of re-engagement? The Supreme Court of India recently addressed this question in a service law matter. The core issue was whether a re-engaged contract employee is entitled to the benefit of continuity of service for the purpose of regularization, despite having been terminated earlier for misconduct. 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 K. Sathaiah, was initially appointed as a contract driver with the Andhra Pradesh State Road Transport Corporation (APSRTC). A departmental enquiry was initiated against him for unauthorized absence. Following the enquiry, his services were terminated. After the dismissal of his departmental appeal, the Divisional Manager issued an order for his re-engagement on contract on 06 July 2012. Subsequently, the respondent filed a writ petition before the High Court of Judicature of Andhra Pradesh, seeking continuity of service with consequential benefits from the date of his termination until his re-engagement.

Timeline

Course of Proceedings

The learned Single Judge of the High Court allowed the writ petition, relying on an earlier judgment dated 29 February 2012 in Writ Petition No. 2786 of 2012. The Single Judge held that since the Corporation had re-engaged the workman, he should not be deprived of the benefit of continuity of service for the purpose of regularization. The learned Single Judge directed the Corporation to extend the benefit of continuity of service from the date of termination until the date of re-engagement, excluding the period of absence, without any monetary benefit, solely for the purpose of regularization. The Division Bench of the High Court dismissed the appeal, affirming the order of the Single Judge.

Legal Framework

The case primarily revolves around the concept of ‘continuity of service’ in the context of employment law. Generally, continuity of service implies that an employee’s tenure is treated as uninterrupted, especially when an order of termination is set aside. The High Court had relied on a previous judgment to grant continuity of service to the respondent. The Supreme Court examined whether such continuity could be granted when the termination order was not challenged and a fresh appointment was given.

Arguments

Arguments by the Appellant (APSRTC):

• The learned senior counsel appearing on behalf of the appellants submitted that the High Court erred in granting continuity of service because a disciplinary enquiry was conducted against the workman, and he was terminated.
• The counsel argued that the workman was granted a fresh appointment after a departmental review.
• It was contended that neither the termination order nor the order granting fresh appointment was challenged by the respondent.
• The appellant argued that the learned Single Judge relied on an earlier decision without considering the facts of the individual case.
• The appellant contended that the termination order was not challenged, and therefore, continuity of service could not be granted.
• The appellant submitted that granting continuity of service to an employee who was terminated for misconduct would place him on the same footing as those with an unblemished record.

Arguments by the Respondent (Sri K. Sathaiah):

• The respondent sought continuity of service from the date of his earlier termination until his re-engagement.
• The respondent relied on the High Court’s decision, which was based on an earlier judgment that granted continuity of service to similarly situated employees.

Submissions

Issues Framed by the Supreme Court

The Supreme Court considered the following issue:

1. Whether the High Court was correct in granting continuity of service to the respondent from the date of termination until the date of re-engagement, despite the respondent’s termination following a disciplinary enquiry and subsequent fresh appointment?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following:

• The earlier order of the learned Single Judge dated 29.02.2012 in Writ Petition No. 2786 of 2012, which was the basis for the High Court’s decision.

Authorities Considered by the Court

Judgment

Treatment of Submissions

Treatment of Authorities

The Court specifically addressed the earlier order of the learned Single Judge dated 29.02.2012 in Writ Petition No. 2786 of 2012. The Court noted that the earlier order was passed in a batch of cases where termination orders were issued without an enquiry or in violation of the principles of natural justice. In the present case, a proper enquiry was conducted before the termination. Therefore, the Court held that the High Court erred in applying the earlier order to the present case.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the respondent’s termination was a result of a disciplinary enquiry, and this termination was never challenged. The subsequent re-engagement was considered a fresh appointment. The Court emphasized that continuity of service is generally granted when a termination order is set aside to ensure that there is no break in service. Granting continuity in this case would have placed the respondent, who was terminated for misconduct, on par with other contract employees with a clean record. The Court also noted that the High Court had failed to consider the specific facts of the case and had instead applied a general order from a previous case without proper scrutiny.

Sentiment Analysis of Reasons

Fact:Law Ratio

Logical Reasoning

The Supreme Court’s reasoning was based on the principle that continuity of service is generally granted when a termination order is set aside to ensure that there is no break in service. In this case, the termination order was not challenged, and the re-engagement was considered a fresh appointment. Therefore, the Court concluded that the High Court erred in granting continuity of service.

The Court considered the argument that granting continuity would place the respondent on par with other employees who had not been terminated for misconduct. The Court rejected this argument, stating that it would be unfair to grant continuity to an employee who was terminated for misconduct.

The Court also considered the High Court’s reliance on an earlier judgment. The Court distinguished the present case from the earlier case, noting that the earlier case involved situations where termination orders were issued without an enquiry or in violation of natural justice, which was not the case here.

The Supreme Court quoted the following from the judgment:

• “Such a direction could not have been issued by the learned Single Judge without the termination being put into question.”
• “As a matter of first principle, continuity can be granted when an order of termination is set aside, to ensure that there is no hiatus in service.”
• “Hence, once a fresh appointment was given to the respondent and neither the termination nor the fresh engagement was placed in issue, the grant of continuity of service by the High Court was manifestly misconceived.”

Key Takeaways

• A re-engaged contract employee is not automatically entitled to continuity of service from the date of termination to the date of re-engagement.
• Continuity of service is generally granted when an order of termination is set aside.
• If a termination order is not challenged and a fresh appointment is given, the employee’s seniority will count from the date of the fresh appointment.
• Courts must consider the facts of each individual case and not apply general orders without proper scrutiny.
• Granting continuity of service to an employee terminated for misconduct would place him on the same footing as those with an unblemished record, which is not permissible.

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.

Specific Amendments Analysis

There were no specific amendments discussed in the judgment.

Development of Law

The ratio decidendi of this case is that continuity of service cannot be granted to a re-engaged employee if the initial termination was not challenged and a fresh appointment was given. This clarifies that continuity of service is not an automatic entitlement upon re-engagement; rather, it is contingent upon the setting aside of the termination order. This judgment reinforces the principle that seniority should be counted from the date of fresh appointment in such cases.

Conclusion

The Supreme Court allowed the appeal filed by APSRTC, setting aside the High Court’s order that had granted continuity of service to the re-engaged contract employee. The Court held that since the termination order was not challenged and a fresh appointment was given, the employee’s seniority would be counted from the date of the fresh appointment. This decision clarifies the conditions under which continuity of service can be granted and emphasizes the importance of considering the facts of each individual case.