Supreme Court overturns High Court order on regularization of contractual employee: Zila Parishad vs. Santosh Tukaram Tiware (2022)

Introduction

Date of the Judgment: 24 November 2022

Citation: 2022 INSC 1027

Judges: M. R. Shah, J. and M.M. Sundresh, J.

Can a contractual employee, who has worked for an extended period, claim a right to be made permanent? The Supreme Court of India recently addressed this question in a case where a contractual driver sought regularization. The core issue revolved around whether long service on a contractual basis automatically translates to a right to permanent employment. The judgment was delivered by a bench of Justices M. R. Shah and M.M. Sundresh, with Justice M. R. Shah authoring the opinion.

Case Background

The Zila Parishad, Thane, needed ambulance drivers at primary health centers. On March 29, 2010, they requested the Block Development Officer to recruit drivers on a contractual basis until a tender process for a contract was completed. The Block Development Officer then appointed Santosh Tukaram Tiware (Respondent No. 1) as a driver on a temporary, contractual basis for two months, starting May 24, 2010. An agreement was signed, explicitly stating the temporary nature of the appointment and that his service would be terminated upon the appointment of a regular Zila Parishad driver.

The tender process took time, and Tiware’s contract was extended every two months on the same terms. In 2019, he requested permanency. The Taluka Health Officer re-employed him temporarily from November 1, 2019, to September 30, 2020, and again for 11 months in 2020. Tiware again requested permanency, claiming nine years of service. On July 31, 2021, he filed a Writ Petition before the High Court seeking regularization. However, before that, on July 15, 2021, the Taluka Health Department terminated his services as the tender process was completed and a contract was awarded to M/s Rakshak Security Services and Systems Pvt. Ltd.

The High Court initially allowed Tiware to continue working via an interim order. Subsequently, the High Court set aside the termination order and ordered his regularization, citing his long service. The Zila Parishad appealed this order to the Supreme Court.

Timeline:

Legal Framework

The primary legal issue revolves around the nature of contractual employment versus regular employment. The Zila Parishad’s initial communication dated 29.03.2010 stated that the appointment of drivers was on a contractual basis until the tender process was completed. The appointment order of the respondent also stated that the appointment was temporary and would be terminated upon the appointment of a Zila Parishad driver. The court noted that the regular appointments were banned after a Government Order and the services of the driver were to be provided by a contractor/agency.

Arguments

Appellant (Zila Parishad) Arguments:

• The initial appointment of the respondent was on a contractual basis, explicitly stated to be temporary until the tender process was completed.
• The respondent was not appointed through a regular selection process, but as a stopgap arrangement.
• The respondent’s long service on a contractual basis does not grant him a right to regularization.
• The post of driver was temporarily required for emergency services, and the respondent was appointed on a temporary contract basis.
• The services of the respondent were terminated after the tender process was completed and a contract was awarded to a third party.
• The High Court erred in setting aside the termination order as it was not specifically challenged.

Respondent (Santosh Tukaram Tiware) Arguments:

• The respondent was continued in service for more than ten years, and therefore, the High Court was correct in ordering regularization.
• The respondent’s appointment followed an invitation for applications by the District Health Officer.
• The respondent’s service was continuous, with artificial breaks, until July 2021.
• The respondent relied on the decisions of the Supreme Court in Pandurang Sitaram Jadhav and Ors. Vs. State of Maharashtra; (2020) 17 SCC 393 and Sheo Narain Nagar and Ors. Vs. State of Uttar Pradesh and Anr.; (2018) 13 SCC 432, to support his claim for regularization.

Issues Framed by the Supreme Court

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

1. Whether the High Court was correct in ordering regularization of the respondent’s services based on his long service on a contractual basis, and in setting aside the termination order dated 15.07.2021.

Treatment of the Issue by the Court

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

Authorities

The following authorities were considered by the Court:

Cases:

• Pandurang Sitaram Jadhav and Ors. Vs. State of Maharashtra; (2020) 17 SCC 393 – The respondent relied on this case, but the Supreme Court distinguished it, stating that it was a case of unfair labour practice where similarly situated employees were granted regularization.
• Sheo Narain Nagar and Ors. Vs. State of Uttar Pradesh and Anr.; (2018) 13 SCC 432 – The respondent relied on this case, but the Supreme Court distinguished it, stating that it was a case where temporary status was conferred and the court found that there was a requirement of work and availability of posts.

Legal Provisions:

• The court considered the initial communication dated 29.03.2010 of the Zila Parishad, which stated that the appointment of drivers was on a contractual basis until the tender process was completed.
• The court also considered the appointment order of the respondent, which stated that the appointment was temporary and would be terminated upon the appointment of a Zila Parishad driver.

Judgment

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

How each authority was viewed by the Court?

• The Supreme Court distinguished Pandurang Sitaram Jadhav and Ors. Vs. State of Maharashtra; (2020) 17 SCC 393, stating that it was a case of unfair labor practice, and not applicable to the present case.
• The Supreme Court distinguished Sheo Narain Nagar and Ors. Vs. State of Uttar Pradesh and Anr.; (2018) 13 SCC 432, stating that it was a case where temporary status was conferred, and not applicable to the present case.
• The Zila Parishad’s communication dated 29.03.2010 was considered by the court to understand that the appointments were contractual till the tender process was completed.
• The respondent’s appointment order was considered by the court to understand that the appointment was temporary and would be terminated upon the appointment of a Zila Parishad driver.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the following factors:

• The contractual and temporary nature of the respondent’s appointment, which was explicitly stated in the appointment order and the Zila Parishad’s communication.
• The fact that the respondent was not appointed through a regular selection process.
• The policy decision to avail services of drivers through a contractor/agency, which led to the termination of the respondent’s services after the tender process was completed.
• The fact that the High Court set aside the termination order without it being specifically challenged.
• The principle that long service on a contractual basis does not automatically grant a right to regularization.

The court’s reasoning was based on a combination of factual aspects of the case and legal principles. The factual aspects included the terms of the respondent’s appointment, the circumstances leading to his termination, and the policy decision of the Zila Parishad. The legal principles included the distinction between contractual and regular employment, and the principle that long service on a contractual basis does not automatically grant a right to regularization.

Logical Reasoning:

The court considered the argument that the respondent had served for a long period, but rejected it, emphasizing that the appointment was contractual and temporary. The court also considered the policy decision of the Zila Parishad to avail services of drivers through a contractor/agency. The court emphasized that the High Court should not have set aside the termination order without it being specifically challenged.

The Supreme Court quoted the following from the judgment:

“In the appointment order itself it was specifically provided that if at the said place appointment of Zila Parishad driver is done then the appointment of concerned driver will be terminated.”

“Merely because respondent No. 1 continued in service for longer period on contractual basis the High Court ought not to have passed the order of regularization more particularly, when a policy decision was taken to avail the services of the driver by the agency/contractor and that the appointment of respondent No. 1 and other similarly situated drivers was not made after any selection procedure.”

“Under the circumstances, the High Court has committed a very serious error in ordering regularization as well as quashing and setting aside order dated 15.07.2021 by which on the contract being awarded to M/s Rakshak Security Services and Systems Pvt. Ltd., the services of respondent No. 1 was put to an end.”

There were no majority or minority opinions in this case. The decision was unanimous.

Key Takeaways

• Long service on a contractual basis does not automatically grant a right to regularization.
• Contractual employees are not entitled to regularization simply because they have worked for an extended period.
• Policy decisions to avail services through contractors/agencies are valid and can lead to the termination of contractual employees.
• High Courts should not set aside termination orders without a specific challenge.
• Appointments made as stopgap arrangements do not create a right to regularization.

This judgment reinforces the distinction between contractual and regular employment. It clarifies that long service alone does not grant a right to regularization, especially when the initial appointment was explicitly contractual and temporary. This decision may impact future cases involving contractual employees seeking regularization.

Directions

The Supreme Court set aside the High Court’s order and dismissed the writ petition filed by the respondent. The court did not issue any further directions.

Development of Law

The ratio decidendi of this case is that long service on a contractual basis does not automatically grant a right to regularization. This judgment clarifies the legal position on the rights of contractual employees and reinforces the distinction between contractual and regular employment. There is no change in the previous position of law, but it reinforces the existing legal principles.

Conclusion

The Supreme Court allowed the appeal of the Zila Parishad, setting aside the High Court’s order to regularize the services of the contractual driver, Santosh Tukaram Tiware. The court emphasized that the initial appointment was contractual and temporary, and long service on a contractual basis does not automatically grant a right to regularization. This judgment reinforces the distinction between contractual and regular employment and provides clarity on the rights of contractual employees.