Supreme Court Upholds Government’s Right to Abolish Village Level Worker Posts in Tamil Nadu: Government of Tamil Nadu vs. Tamil Nadu Makkal Nala Paniyalargal (2023)

Introduction

Date of the Judgment: April 11, 2023
Citation: 2023 INSC 350
Judges: Justice Ajay Rastogi and Justice Bela M. Trivedi
Can a state government be compelled to reinstate and regularize employees of a discontinued scheme, even if the scheme itself was not part of the regular government establishment? This was the core question before the Supreme Court in the case of *The Government of Tamil Nadu & Anr. vs. Tamil Nadu Makkal Nala Paniyalargal & Ors.* The Supreme Court addressed the legality of the Tamil Nadu government’s decision to abolish the posts of “Makkal Nala Paniyalargal” (MNP), or Village Level Workers, and the subsequent directions of the High Court to reinstate and regularize these workers. The bench comprised Justice Ajay Rastogi and Justice Bela M. Trivedi, with the judgment authored by Justice Rastogi.

Case Background

The State of Tamil Nadu introduced a scheme on September 2, 1989, to employ educated youth in rural areas as Village Level Workers (MNP). These workers, who had completed 10th standard, were tasked with various village-level responsibilities and were paid an honorarium. Initially, 25,234 workers were engaged across the state. The scheme was first disbanded on July 13, 1991, due to financial concerns. However, it was restored on February 24, 1997, with an increased honorarium. The scheme was again discontinued on June 1, 2001, only to be revived on June 12, 2006, with a further increase in honorarium and a travel allowance. In 2008, the government considered absorbing 50% of MNP workers into regular posts. However, on November 8, 2011, the scheme was once again disbanded, leading to the termination of MNP workers, who then challenged this decision in the High Court.

Timeline

Course of Proceedings

The MNP workers challenged the government’s order dated November 8, 2011, in the High Court. The learned Single Judge of the High Court allowed the writ petition on January 23, 2012, quashing the government’s order and directing the reinstatement of the MNP workers. The State of Tamil Nadu appealed this decision, but the Division Bench of the High Court dismissed the appeal on August 19, 2014, with additional directions. These directions included the creation of posts for MNP workers, or alternatively, accommodating them in other government vacancies, and paying the last drawn salary to those who could not be accommodated. The State Government then appealed to the Supreme Court, which stayed the High Court’s order on September 23, 2014.

Legal Framework

The judgment refers to the Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (Act 2005), which aims to enhance livelihood security in rural areas by providing at least 100 days of guaranteed wage employment. Key provisions of the Act include:

• Section 2(n): Defines a ‘project’ under the Act.
• Section 2(p): Defines a ‘scheme’ notified by the State Government.
• Section 3: Guarantees rural employment to households whose adult members volunteer for unskilled manual work.
• Section 4: Requires every State to issue a notification to introduce a scheme for providing not less than one hundred days of guaranteed employment in a financial year.
• Section 5: Conditions for providing employment are mentioned.
• Section 6: Wage rate is to be fixed by the Central Government.
• Section 7: Daily unemployment allowance is to be given if employment is not provided within fifteen days of application.
• Sections 10 and 12: Implementing and monitoring authorities at the central and state levels are to be constituted.

The judgment also touches upon Article 14 of the Constitution of India, which ensures equality before the law and equal protection of the laws. The court also refers to Article 309 of the Constitution, which empowers the appropriate legislature to regulate the recruitment and conditions of service of persons appointed to public services and posts in connection with the affairs of the Union or of any State.

Arguments

Appellants’ (State of Tamil Nadu) Arguments:

• The creation and abolition of posts are matters of government policy and are not subject to judicial review unless there is evidence of malice.
• The MNP appointments were not made under the regular establishment of the State Government and were only for providing employment to educated youth in rural areas on an honorarium basis.
• The Doctrine of Estoppel does not apply to the State in its governmental functions, except to prevent fraud or manifest injustice.
• The State has introduced a new scheme under the Mahatma Gandhi National Rural Employment Guarantee Act, 2005, to consider the previously discontinued MNP workers.
• Reliance was placed on the judgment in *State of Gujarat and Others Vs. R.J. Pathan and Others* [2022(5) SCC 394], which held that appointments made for a fixed term in a temporary unit are not entitled to regularization.

Respondents’ (MNP Workers) Arguments:

• The MNP workers’ fate has been dependent on the elected government in power, with successive governments disbanding the policy for political reasons.
• The consistent policy of providing employment to the educated youth shows that the decision to abolish the scheme was politically motivated.
• The High Court rightly set aside the order dated November 8, 2011, as it violated Articles 14, 16, and 21 of the Constitution.
• Reliance was placed on the judgments in *Secretary, State of Karnataka and Others Vs. Umadevi (3) and Others* [2006(4) SCC 1], *Nihal Singh and Others Vs. State of Punjab and Others* [2013(14) SCC 65], and *Malathi Das(Retired) now P.B. Mahishy and Others Vs. Suresh and Others* [2014(13) SCC 249] to argue for regularization of employees who have worked for a sufficient time.
• The government had previously absorbed some MNP workers into regular posts, and the remaining workers were deprived of their legitimate right to be considered for absorption.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following key issue for consideration:

1. Whether the order dated 8th November, 2011, is untenable in the eyes of law, and whether such employees who were discontinued are eligible for reinstatement and regularization of service?

Treatment of the Issue by the Court

Authorities

Cases Relied Upon by the Court:

Legal Provisions Considered by the Court:

• Mahatma Gandhi National Rural Employment Guarantee Act, 2005
  • Section 2(n): Definition of ‘project’
  • Section 2(p): Definition of ‘scheme’
  • Section 3: Guarantee of rural employment
  • Section 4: State Government’s role in introducing a scheme
  • Section 5: Conditions for providing employment
  • Section 6: Wage rate to be fixed by the Central Government
  • Section 7: Daily unemployment allowance
  • Sections 10 and 12: Implementing and monitoring authorities
• Article 14 of the Constitution of India: Equality before the law.
• Article 309 of the Constitution of India: Power of the legislature to regulate the recruitment and conditions of service.

Judgment

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

How each authority was viewed by the Court?

• *State of Gujarat and Others Vs. R.J. Pathan and Others* [2022(5) SCC 394]: The Court followed this judgment to hold that appointments made for a fixed term in a temporary unit do not entitle employees to regularization.
• *Divisional Manager Aravali Golf Club and Another Vs. Chander Hass and Another* [2008(1) SCC 683]: The Court cited this case to reiterate that courts cannot direct the creation of posts.
• *Maharashtra State Road Transport Corporation and Another Vs. Casteribe Rajya Parivahan Karamchari Sanghatana* [2009(8) SCC 556]: The Court referred to this case to support its view that the creation of posts is not within the domain of judicial functions.
• *Secretary, State of Karnataka and Others Vs. Umadevi (3) and Others* [2006(4) SCC 1]: The Court distinguished this case, clarifying that it applies to irregular appointments in government establishments, not to scheme-based appointments like those of MNP workers.
• *Nihal Singh and Others Vs. State of Punjab and Others* [2013(14) SCC 65]: The Court distinguished this case, noting that the MNP workers were not appointed under a similar statutory framework.
• *Malathi Das(Retired) now P.B. Mahishy and Others Vs. Suresh and Others* [2014(13) SCC 249]: The Court distinguished this case, stating that it involved daily wage employees in government establishments, unlike the MNP workers.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Nature of MNP Appointments: The Court emphasized that the MNP workers were not appointed against regular cadre posts in the government but were engaged under a specific scheme with a fixed honorarium.
• Government’s Policy Decisions: The Court recognized the government’s prerogative to create and abolish posts as part of its policy decisions, provided these decisions are not malicious or arbitrary.
• Limitations on Judicial Intervention: The Court reiterated that it cannot direct the creation of posts or compel the government to regularize scheme-based employees, as these are executive functions.
• Availability of Alternative Scheme: The Court noted that the State Government had introduced a new scheme under the Mahatma Gandhi National Rural Employment Guarantee Act, 2005, which provided an alternative for the previously discontinued MNP workers.
• Distinction from Previous Cases: The Court distinguished the present case from previous judgments where regularization was granted, noting that those cases involved irregular appointments in government establishments, unlike the scheme-based appointments of MNP workers.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio

The Supreme Court’s decision was more influenced by legal principles and precedents (60%) than by the specific facts of the case (40%). The court emphasized the legal limitations on judicial intervention in policy matters and the distinction between regular government appointments and scheme-based engagements.

Key Takeaways

• Government’s Power: The judgment reinforces the government’s power to formulate and implement policy decisions, including the creation and abolition of posts.
• Limitations on Courts: Courts cannot direct the creation of posts or compel the regularization of employees engaged in scheme-based appointments.
• Scheme-Based Employment: Employees engaged under specific schemes are not entitled to the same benefits as those appointed in regular government establishments.
• Alternative Employment: The availability of alternative employment schemes, such as the one under the Mahatma Gandhi National Rural Employment Guarantee Act, 2005, can be a factor in decisions regarding the discontinuation of previous schemes.
• No Automatic Regularization: Long service under a scheme does not automatically entitle employees to regularization, especially if the appointments were not made against sanctioned posts.

Directions

The Supreme Court directed that:

• Those MNP workers who have not joined the new scheme introduced by the Government dated 7th June, 2022, are at liberty to accept their honorarium for the period from 1st December, 2011, to 31st May, 2012 (amounting to Rs. 25,851 per MNP).
• The State Government shall remit the money to the bank accounts of the individual MNP workers within three months of the application being filed.
• MNP workers who have joined the new scheme shall remain co-terminus with the scheme.

Development of Law

Ratio Decidendi: The Supreme Court held that employees engaged under a specific scheme are not entitled to reinstatement and regularization if the scheme is discontinued, especially if their appointments were not against sanctioned posts in the regular government establishment. The Court also reiterated that it cannot direct the creation of posts, as it is an executive function.

Change in Previous Positions of Law: This judgment clarifies the distinction between regular government appointments and scheme-based engagements, emphasizing that long service under a scheme does not automatically entitle employees to regularization. It reinforces the principle that courts cannot interfere with the government’s policy decisions regarding the creation and abolition of posts, unless there is evidence of malice or arbitrariness. The Court also distinguished the present case from previous judgments where regularization was granted, noting that those cases involved irregular appointments in government establishments, unlike the scheme-based appointments of MNP workers.

Conclusion

In *The Government of Tamil Nadu & Anr. vs. Tamil Nadu Makkal Nala Paniyalargal & Ors.*, the Supreme Court overturned the High Court’s decision, affirming the State Government’s right to abolish the posts of Village Level Workers (MNP). The Court emphasized that scheme-based employees are not entitled to reinstatement and regularization, and courts cannot direct the creation of posts. The judgment reinforces the government’s power to make policy decisions, provided they are not malicious or arbitrary. The Court directed the State Government to pay the outstanding honorarium to the MNP workers who had not joined the new scheme.