Supreme Court quashes regularization obtained by fraud: Punjab Urban Planning vs. Karamjit Singh (2019)

Date of the Judgment: April 15, 2019

Citation: 2019 INSC 374

Judges: Uday Umesh Lalit, J., Indu Malhotra, J.

Can an employee, who fraudulently secures regularization, claim the right to a disciplinary inquiry before being terminated? The Supreme Court of India addressed this question in a case involving the Punjab Urban Planning and Development Authority. The court held that an employee whose regularization was based on fraud is not entitled to the protection of a disciplinary inquiry before termination. This judgment clarifies the position of employees who obtain regularization through misrepresentation or collusion.

The bench comprised Justices Uday Umesh Lalit and Indu Malhotra, with Justice Indu Malhotra authoring the judgment.

Case Background

The case revolves around Karamjit Singh, who was initially employed as a daily wage Chowkidar by the Punjab Urban Planning and Development Authority (the Authority) on December 1, 1995. His name was on the muster rolls until March 31, 1997. In 2001, the Punjab Government revised its policy for regularizing daily wage employees, requiring them to have completed three years of service. Karamjit Singh’s services were regularized on November 6, 2001, following an office order dated December 26, 2001. However, this regularization was challenged by other employees, leading to an inquiry that revealed Karamjit Singh had not completed the required three years of service before the cut-off date of January 22, 2001. Consequently, his regularization was annulled on May 22, 2003. He then raised an industrial dispute, claiming illegal termination, which was dismissed by the Industrial Tribunal. The High Court, however, ruled in his favor, stating that since he was regularized, he was entitled to a disciplinary inquiry before termination, which was challenged in the present appeal before the Supreme Court.

Timeline:

Course of Proceedings

Initially, the High Court directed the Authority to treat a writ petition challenging the regularization as a representation and pass a speaking order. Following this, the Authority found that Karamjit Singh did not meet the service requirement for regularization. The Authority then annulled his regularization, which was challenged by Karamjit Singh in the High Court. The High Court initially dismissed his petition, allowing him to approach the Labour Court. The Industrial Tribunal also dismissed his claim. However, a Single Judge of the High Court reversed the Tribunal’s decision, stating that since Karamjit Singh was regularized, he was entitled to a disciplinary inquiry before termination. This decision was upheld by a Division Bench of the High Court, which led to the present appeal before the Supreme Court.

Legal Framework

The case primarily revolves around the interpretation and application of the Punjab Government’s revised policy for regularization of work-charged/daily wage employees, issued on January 23, 2001. This policy mandated that employees must have completed three years of service to be eligible for regularization. The Industrial Disputes Act, 1947, particularly Sections 25-F, 25-G, and 25-H, was also invoked by the Respondent, which deals with the conditions precedent to retrenchment of workmen. Additionally, the Punjab Urban Planning & Development Authority Employees (Punishment and Appeal) Regulations, 1997, which outlines the procedure for disciplinary action against regular employees, was also a point of contention.

Arguments

Appellant’s Arguments:

• The Appellant argued that Karamjit Singh was a daily wager whose name was on the muster rolls from 01.12.1995 to 31.03.1997, and he had only worked for six months. He was not in service after that. Therefore, he did not meet the criteria of three years of continuous service before 22.01.2001 as required by the revised policy for regularization.
• The Appellant contended that Karamjit Singh fraudulently got his name included in the final list of employees recommended for regularization by colluding with some officials of the Authority.
• The Appellant submitted that an inquiry was conducted against the officials who recommended Karamjit Singh’s name for regularization, and they were found guilty of providing wrong information.
• The Appellant argued that since the appointment of Karamjit Singh was void due to fraud, he was not entitled to protection under the Industrial Disputes Act, 1947.

Respondent’s Arguments:

• The Respondent argued that the orders passed by the Single Judge and Division Bench of the High Court were correct.
• The Respondent contended that his case was covered by the decision in Managing Director, ECIL, Hyderabad & Ors. v. B. Karunakar & Ors., which mandates that a disciplinary inquiry is required before terminating a regular employee.

Innovativeness of the argument: The Appellant innovatively argued that the Respondent’s appointment was void due to fraud, and therefore, he could not claim the benefits of a regular employee, including the right to a disciplinary inquiry. This argument challenged the conventional view that once an employee is regularized, they are entitled to a disciplinary inquiry before termination.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the Respondent, who had obtained regularization by fraudulent means, was entitled to a disciplinary inquiry before termination.

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 cases and legal provisions:

Judgment

How each authority was viewed by the Court?

• The Court distinguished Managing Director, ECIL, Hyderabad & Ors. v. B. Karunakar & Ors. [(1993) 4 SCC 727], stating that it applies to regular employees, not those whose appointments are void due to fraud.
• The Court followed Rajasthan Tourism Development Corporation & Anr. v. Intejam Ali Zafri [(2006) 6 SCC 275], reiterating that if the initial appointment is void, the provisions of the Industrial Disputes Act, 1947, are not applicable.
• The Court followed Bank of India v. Avinash D. Mandivikar [(2005) 7 SCC 690], holding that an employee who obtained appointment by fraud cannot be allowed to get the benefits thereof.
• The Court followed Devendra Kumar v. State of Uttaranchal & Ors. [(2013) 9 SCC 363], reiterating that an order of regularization obtained by misrepresenting facts cannot be sustained.
• The Court followed Rupa Rani Rakshit & Ors. v. Jharkhand Gramin Bank & Ors. [(2010) 1 SCC 345], holding that service rendered in pursuance of an illegal appointment cannot be equated to service rendered in pursuance of a valid appointment.
• The Court followed The State of Bihar & Ors. v. Kirti Narayan Prasad [2018 (15) SCALE 352], and Superintendent of Post Offices & Ors. v. R. Valasina Babu [(2007) 2 SCC 335], holding that a daily wager does not hold a civil post under the State Government.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the Respondent’s regularization was obtained through fraudulent means. The Court emphasized that an appointment secured through misrepresentation or collusion is void from the beginning and does not confer any rights on the employee. The Court also noted that the Respondent failed to provide any evidence to support his claim of having completed three years of service before the cut-off date. The Court considered the fact that the Authority had conducted an inquiry and found that the Respondent’s name was interpolated in the final list for regularization, further substantiating the fraud. The Court also distinguished the case of Managing Director, ECIL, Hyderabad & Ors. v. B. Karunakar & Ors., which the High Court had relied upon, stating that it applies to regular employees and not those whose appointments are void due to fraud.

Logical Reasoning

Key Takeaways

• Regularization obtained through fraud or misrepresentation is void from the beginning.
• Employees who fraudulently secure regularization are not entitled to the benefits of a regular employee, including the right to a disciplinary inquiry before termination.
• Authorities are empowered to terminate the services of such employees without a formal disciplinary process.
• This judgment sets a precedent for dealing with cases of fraudulent regularization in government service, emphasizing the importance of integrity and transparency in the appointment process.

Directions

The Supreme Court directed that the Respondent is entitled to withdraw the amount of Rs. 25,000/- towards costs, deposited by the Appellant Authority, pursuant to an earlier order of the Court.

Development of Law

The Supreme Court’s judgment clarifies that regularization obtained through fraudulent means is void ab initio and does not confer any rights on the employee. The Court reiterated the principle that an appointment secured through misrepresentation or collusion is invalid from the start and does not entitle the employee to the benefits of a regular employee, including the right to a disciplinary inquiry. This ruling reinforces the legal position against fraudulent practices in employment and provides a clear guideline for dealing with such cases.

Conclusion

The Supreme Court allowed the appeal filed by the Punjab Urban Planning and Development Authority, setting aside the High Court’s judgment. The Court held that Karamjit Singh’s regularization was invalid due to fraud and that he was not entitled to a disciplinary inquiry before termination. This ruling emphasizes that an appointment obtained through misrepresentation or collusion is void from the beginning, and the employee cannot claim the benefits of a regular employee. The Court’s decision reinforces the importance of integrity and transparency in the employment process.