Supreme Court overturns High Court order on regularization of contractual employees: State of Gujarat vs. R.J. Pathan (24 March 2022)

Introduction

Date of the Judgment: 24 March 2022
Citation: 2022 INSC 204
Judges: M.R. Shah, J. and B.V. Nagarathna, J.

Can a High Court direct a State government to regularize the services of employees who were initially appointed on a contractual basis for a specific project, merely because they have worked for a long period? The Supreme Court of India recently addressed this question, overturning a decision of the High Court of Gujarat. The case revolves around the regularization of drivers initially appointed for a fixed term in a temporary project. The Supreme Court held that such employees cannot claim regularization solely based on the length of their service, especially when their appointments were for a specific project and not against sanctioned posts in a regular establishment. The judgment was delivered by a two-judge bench comprising Justices M.R. Shah and B.V. Nagarathna, with Justice M.R. Shah authoring the opinion.

Case Background

The respondents were initially appointed on a contractual basis for eleven months as drivers for the “Post-Earthquake Redevelopment Programme” of the Government of Gujarat in 2004. This project was a temporary initiative to address the aftermath of an earthquake. Upon the closure of the project, instead of terminating their services, the State Government decided to place them with the Indian Red Cross Society. However, the respondents did not join the Indian Red Cross Society. Instead, they filed a writ petition in the High Court of Gujarat, seeking regularization of their services and absorption into government service. They also challenged their placement with the Indian Red Cross Society.

Timeline:

Course of Proceedings

The learned Single Judge of the High Court dismissed the writ petition, observing that the appointments were for a fixed term of eleven months in a temporary “Project Implementation Unit” and not against any permanent sanctioned posts. The respondents then filed a Letters Patent Appeal (LPA) before the Division Bench of the High Court. The Division Bench initially granted an interim order, allowing the respondents to continue in service with the State Government. In 2021, the Division Bench directed the State to consider the respondents’ cases for regularization, citing their long service of seventeen years. The State challenged this order before the Supreme Court.

Legal Framework

The case primarily deals with the principles governing temporary or contractual appointments and the conditions under which such employees can claim regularization. The Supreme Court referred to the precedent set in *State of Karnataka v. Umadevi (3)*, [(2006) 4 SCC 1], which outlines the conditions under which irregular appointments can be regularized. The Court also considered the case of *Narendra Kumar Tiwari v. State of Jharkhand*, [(2018) 8 SCC 238], which dealt with regularization of irregularly appointed employees. The core issue revolves around whether the respondents, who were appointed on a fixed-term basis for a specific project, can claim regularization based on their length of service, especially when their appointments were not against sanctioned posts in a regular establishment.

Arguments

Arguments by the State of Gujarat:

• The respondents were appointed for a fixed period of eleven months as drivers for a temporary project, namely, the “Post-Earthquake Redevelopment Programme”.
• The appointments were not made against any sanctioned posts in a regular establishment.
• The respondents were continued in service after 2011 due to an interim order of the High Court, and this period should not be considered for regularization.
• The High Court erred in directing the State to consider regularization and creation of supernumerary posts.

Arguments by the Respondents:

• The respondents have worked for more than seventeen years as drivers with the State Government.
• Relying on *State of Karnataka v. Umadevi (3)*, [(2006) 4 SCC 1], and *Narendra Kumar Tiwari v. State of Jharkhand*, [(2018) 8 SCC 238], they argued that their long service entitled them to regularization.
• The Division Bench of the High Court rightly directed the State to consider their cases for regularization.

[TABLE] of Submissions

Issues Framed by the Supreme Court

The Supreme Court considered the following issue:

1. Whether the High Court was justified in directing the State to consider the cases of the respondents for regularization and absorption, and if necessary, by creating supernumerary posts, solely based on the fact that they have worked for a long period of seventeen years.

Treatment of the Issue by the Court

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

Authorities

The Supreme Court considered the following authorities:

Cases:

• State of Karnataka v. Umadevi (3), [(2006) 4 SCC 1] – Supreme Court of India. This case was referred to for the principles governing regularization of irregular appointments.
• Narendra Kumar Tiwari v. State of Jharkhand, [(2018) 8 SCC 238] – Supreme Court of India. This case was referred to regarding the regularization of irregularly appointed employees.

Legal Provisions:

There are no legal provisions mentioned in the judgment.

[TABLE] of Authorities

Judgment

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

How each authority was viewed by the Court?

• State of Karnataka v. Umadevi (3), [(2006) 4 SCC 1]: The Court distinguished this case, stating that the principles of *Umadevi* apply to irregular appointments on sanctioned posts in regular establishments, and not to temporary appointments in a project.
• Narendra Kumar Tiwari v. State of Jharkhand, [(2018) 8 SCC 238]: The Court distinguished this case as well, noting that it pertained to irregularly appointed employees in a different context.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the nature of the respondents’ appointments. The Court emphasized that the respondents were appointed for a fixed term in a temporary project, and not against any sanctioned posts in a regular establishment. The Court also highlighted that the respondents’ continuation in service for a significant period was largely due to an interim order of the High Court, which should not be considered for regularization. The Court reiterated that the principles of regularization laid down in *Umadevi* are applicable to irregular appointments made against sanctioned posts in regular establishments and not to temporary appointments on a project basis.

[TABLE] of Sentiment Analysis

Fact:Law Ratio

Logical Reasoning:

The Court considered alternative interpretations, but rejected them, stating that the facts of the case did not warrant regularization. The Court emphasized that the respondents were appointed for a specific project, and their continuation in service was primarily due to an interim order. The Court held that the principles of *Umadevi* were not applicable to such appointments. The Court concluded that the High Court’s direction for regularization was unsustainable and set aside the High Court’s order.

The Supreme Court reasoned that the High Court had erred in directing the State to consider regularization of the respondents’ services and creation of supernumerary posts. The Court noted that the respondents were initially appointed for a fixed term of eleven months on a fixed salary in a temporary project. The Court also observed that the respondents’ continuation in service was largely due to an interim order of the High Court. The Court reiterated that the principles of regularization laid down in *Umadevi* are applicable to irregular appointments made against sanctioned posts in regular establishments and not to temporary appointments on a project basis. The Court stated that the High Court’s direction to create supernumerary posts was wholly without jurisdiction. The Court set aside the order of the Division Bench of the High Court and restored the order of the Single Judge dismissing the writ petition.

“The purpose and intent of the decision in Umadevi (supra) was, (1) to prevent irregular or illegal appointments in the future, and (2) to confer a benefit on those who had been irregularly appointed in the past and who have continued for a very long time.”

“The decision of Umadevi (supra) may be applicable in a case where the appointments are irregular on the sanctioned posts in regular establishment. The same does not apply to temporary appointments made in a project/programme.”

“No such order of absorption and/or regularisation even if required for creating supernumerary posts and not to treat the same as precedent could have been passed by the High Court in exercise of powers under Article 226 of the Constitution of India.”

Key Takeaways

• Contractual employees appointed for a fixed term in a temporary project cannot claim regularization based solely on the length of their service.
• The period of service under an interim order of the High Court should not be considered for regularization.
• The principles of regularization laid down in *Umadevi* apply to irregular appointments against sanctioned posts in regular establishments, and not to temporary appointments on a project basis.
• High Courts cannot direct the creation of supernumerary posts for the purpose of regularization.

The judgment clarifies that the length of service in a temporary project does not automatically entitle employees to regularization. It emphasizes the importance of the nature of the appointment and whether it was against a sanctioned post in a regular establishment. The judgment will have implications for similar cases involving contractual employees in temporary projects, limiting their chances of regularization based on length of service alone.

Directions

The Supreme Court did not issue any specific directions, other than setting aside the High Court’s order and restoring the Single Judge’s order dismissing the writ petition.

Specific Amendments Analysis

There are no specific amendments discussed in the judgment.

Development of Law

The ratio decidendi of this case is that contractual employees appointed for a fixed term in a temporary project cannot claim regularization based solely on the length of their service. This judgment reinforces the principles laid down in *Umadevi* and clarifies that these principles do not apply to temporary appointments in a project. There is no change in the previous position of law, but the judgment clarifies its application in cases of temporary project-based appointments.

Conclusion

The Supreme Court overturned the High Court’s order directing the State of Gujarat to consider the regularization of contractual employees who were initially appointed for a fixed term in a temporary project. The Court held that the length of service in a temporary project does not automatically entitle employees to regularization, especially when the appointments were not against sanctioned posts in a regular establishment. The Court emphasized that the principles of *Umadevi* are not applicable to such appointments. The judgment reinforces the distinction between irregular appointments against sanctioned posts and temporary appointments in projects, limiting the scope for regularization based on length of service alone.