Supreme Court overturns High Court order on continuity of service for re-engaged contract employees: APSRTC vs. B. Venkataiah (2018)

Date of the Judgment: 07 December 2018

Citation: 2018 INSC 1081

Judges: Dr. Dhananjaya Y. Chandrachud, J. and 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 for regularization purposes? The Supreme Court of India addressed this question in a recent judgment, overturning a decision of the High Court of Judicature at Andhra Pradesh. This case explores the nuances of service law, specifically concerning the rights of contract employees and the implications of disciplinary actions. The bench comprised Justices Dr. Dhananjaya Y. Chandrachud and M.R. Shah, with the judgment authored by Justice M.R. Shah.

Case Background

The respondent, B. Venkataiah, was initially appointed as a driver on contract with the Andhra Pradesh State Road Transport Corporation (APSRTC). Following a departmental enquiry, his services were terminated. Subsequently, in a departmental review, he was re-engaged on contract on 27.04.2011.

B. Venkataiah then filed a writ petition before the High Court of Judicature at Andhra Pradesh, seeking continuity of service from the date of his termination until his re-engagement, along with all consequential benefits, including regularization.

Timeline:

Course of Proceedings

The learned Single Judge of the High Court allowed the writ petition, relying on a previous judgment dated 29.02.2012 in Writ Petition No. 2786 of 2012. The Single Judge held that the issue was not res integra (a new issue) and was covered by the earlier judgment. The High Court noted that the earlier case had found that the enquiry was not in keeping with the principles of natural justice. The Single Judge also reasoned that since the Corporation had re-engaged the employee, he should not be deprived of the benefit of continuity of service for regularization purposes. The Single Judge directed the Corporation to extend the benefit of continuity of service from the date of termination until the date of re-engagement, without any monetary benefits, and only for the purpose of regularization.

The Division Bench of the High Court affirmed the order of the Single Judge in a Writ Appeal.

Legal Framework

The judgment primarily revolves around the interpretation of service law principles concerning contract employees and the implications of disciplinary actions. The core issue is whether a re-engaged employee can claim continuity of service despite a previous termination. The judgment does not explicitly cite any specific sections of a statute but discusses the general principles of service law and natural justice.

Arguments

Appellant’s (APSRTC) Arguments:

• The appellant’s counsel argued that the High Court erred in granting continuity of service.
• A disciplinary enquiry was conducted against the respondent, leading to his termination.
• The respondent was subsequently granted a fresh appointment as a contract driver.
• Neither the initial termination nor the fresh appointment was challenged by the respondent.
• The High Court’s decision was based on an earlier judgment, without considering the specific facts of the present case.
• Granting continuity of service to an employee who was terminated for misconduct would place him on the same footing as those with unblemished records.

Respondent’s (B. Venkataiah) Arguments:

• The respondent sought continuity of service from the date of his termination until his re-engagement.
• The respondent relied on the earlier judgment of the High Court which granted similar relief to other contract employees.

The innovativeness of the argument by the respondent is that he sought to rely on the earlier judgement of the High Court to get the benefit of continuity of service.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a numbered format. However, the core issue that the court addressed was:

• Whether the High Court was correct in granting continuity of service to the respondent from the date of his termination until his re-engagement, especially when the termination was not 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 statutes in its judgment. The court primarily relied on general principles of service law and the concept of natural justice.

Judgment

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

How each authority was viewed by the Court?

The earlier order of the learned Single Judge dated 29.02.2012 was distinguished by the Supreme Court. The Supreme Court noted that the earlier order was in a batch of cases where termination orders were issued without holding an enquiry or after holding an enquiry in violation of the principles of natural justice. The Supreme Court held that the High Court had lost sight of the facts of each individual case.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that continuity of service cannot be granted when the termination order is not challenged. The Court emphasized that seniority must be counted from the date of fresh appointment when a new appointment is given after a termination. The court also highlighted that granting continuity of service to an employee who was terminated for misconduct would be unfair to other employees with unblemished records.

Fact:Law

Logical Reasoning:

The Supreme Court considered the alternative interpretation that the re-engagement of the employee could imply a condonation of the misconduct. However, the court rejected this interpretation, emphasizing that the termination order was not challenged and that granting continuity of service would be improper without setting aside the termination order.

The court’s decision was based on the principle that a fresh appointment, without challenging the earlier termination, implies a new beginning for the employee. The court also reasoned that granting continuity of service would be unfair to other employees with unblemished records.

The Supreme Court’s decision was as follows:

• The High Court’s order granting continuity of service was set aside.
• The seniority of the respondent was to be counted from the date of his fresh appointment.

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 of the fresh appointment were challenged and adjudicated upon, seniority would necessarily have to count with effect from the date of the fresh appointment.”

“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.”

There was no minority opinion in this case. The judgment was authored by Justice M.R. Shah.

Key Takeaways

• A contract employee who is terminated and subsequently re-engaged cannot claim continuity of service from the date of termination to the date of re-engagement for regularization purposes, unless the termination order is challenged and set aside.
• Seniority for re-engaged employees will be counted from the date of their fresh appointment, not from the date of their initial appointment.
• Granting continuity of service to an employee terminated for misconduct would be unfair to other employees with unblemished records.
• High Courts should consider the facts of each individual case and not apply a common order to an entire batch of cases.

This judgment clarifies the position of law regarding the continuity of service for re-engaged contract employees. It emphasizes the importance of challenging termination orders to claim continuity of service. This decision has implications for all contract employees who have been terminated and re-engaged in similar circumstances.

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 this judgment.

Development of Law

The ratio decidendi of this case is that an employee cannot claim continuity of service from the date of termination to the date of re-engagement, unless the termination order is challenged and set aside. This judgment clarifies the position of law and also sets aside the earlier position taken by the High Court.

Conclusion

The Supreme Court overturned the High Court’s decision, holding that a re-engaged contract employee cannot claim continuity of service from the date of termination to the date of re-engagement for regularization purposes, unless the termination order is challenged. The court emphasized that seniority should be counted from the date of fresh appointment. This judgment provides clarity on the rights of contract employees and the implications of disciplinary actions.