Supreme Court Upholds State’s Power to Abolish Temporary Posts: Tamil Nadu Makkal Nala Paniyalargal Case (2023)

Introduction

Date of the Judgment: April 11, 2023

Citation: 2023 INSC 329

Judges: Justice Ajay Rastogi and Justice Bela M. Trivedi

Can a state government abolish temporary posts created under a specific scheme, thereby terminating the services of those employed under it? The Supreme Court of India recently addressed this question in a case involving the Tamil Nadu Makkal Nala Paniyalargal (MNP), clarifying the extent of the government’s power in such matters. This judgment examines the balance between the state’s policy decisions and the rights of temporary employees.

The Supreme Court, in this case, was hearing an appeal against a High Court order that had directed the Tamil Nadu government to reinstate and regularize the services of MNP workers whose posts had been abolished. The Supreme Court bench, comprising Justice Ajay Rastogi and Justice Bela M. Trivedi, delivered the judgment, with Justice Rastogi authoring the opinion.

Case Background

The Government of Tamil Nadu introduced a scheme on 2nd September, 1989, to provide employment to educated youth in rural areas. This scheme engaged individuals, known as Makkal Nala Paniyalargal (MNP), in village panchayats, with at least two workers (one male and one female) in each panchayat. Initially, these workers were paid a monthly honorarium of Rs. 200.

The scheme was first disbanded on 13th July, 1991, but was later restored on 24th February, 1997, with an increased honorarium of Rs. 500 per month. The scheme was again discontinued on 1st June, 2001, only to be revived on 12th June, 2006, with a further increase in honorarium to Rs. 750 per month plus Rs. 50 as a traveling allowance. The services of the MNP were extended till 31st May, 2012, by an order dated 21st May, 2010.

However, on 8th November, 2011, the government once again disbanded the MNP scheme, citing surplus staff in panchayat units. This decision led to the termination of the services of the MNP workers, who then challenged this order in the High Court.

Timeline

Course of Proceedings

The MNP workers challenged the government’s order dated 8th November, 2011, in the High Court of Judicature at Madras. A single judge of the High Court allowed the writ petition on 23rd January, 2012, quashing the government’s order and directing the reinstatement of the MNP workers.

The State Government appealed this decision, but the Division Bench of the High Court dismissed the appeal on 19th August, 2014, with directions to create posts for MNP workers or accommodate them in other government positions. The High Court also directed that those who could not be accommodated be paid their last drawn salary from 1st November, 2014, until they were accommodated.

The State Government then appealed to the Supreme Court, which stayed the High Court’s order on 23rd September, 2014.

Legal Framework

The judgment refers to the following key legal provisions:

• Article 47 of the Constitution of India: This article directs the State to endeavor to bring about prohibition of the consumption of intoxicating drinks and of drugs which are injurious to health.
• Rule 10(5) of the Tamil Nadu Liquor Retail Vending (in Shops and Bars) Rules, 2003: This rule pertains to measures to be taken for propagating the evils of consumption of liquor.
• Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA): This Act aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.
• Section 2(n) of MGNREGA: Defines “project” under the Act.
• Section 2(p) of MGNREGA: Defines “scheme” under the Act.
• Section 3 of MGNREGA: Guarantees rural employment to households.
• Section 4 of MGNREGA: Requires every State to issue a notification to introduce a scheme for providing not less than one hundred days of guaranteed employment.
• Section 5 of MGNREGA: Specifies the conditions for providing employment.
• Section 6 of MGNREGA: Specifies the wage rate fixed by the Central Government.
• Section 7 of MGNREGA: Specifies the daily unemployment allowance.
• Sections 10 and 12 of MGNREGA: Notifies implementing and monitoring authorities.

The court also considered the constitutional framework related to the creation and abolition of posts, and the scope of judicial review in policy matters.

Arguments

Appellants’ Arguments (Tamil Nadu Government):

• The creation and abolition of posts are matters of government policy and should not be interfered with by the courts unless there is a clear case of mala fide.
• The MNP appointments were not made against regular cadre posts and were only for providing employment to educated youth on an honorarium basis.
• The government has introduced a new scheme under the MGNREGA, offering employment to those who were discontinued as MNPs, and most have already joined.
• The doctrine of estoppel does not apply against the State in its governmental functions, except to prevent fraud or manifest injustice.
• The High Court’s direction to create posts and regularize services is not sustainable, as the creation of posts is an executive function.

Respondents’ Arguments (MNP Workers):

• The MNP workers’ fate has been dependent on the political party in power, with successive governments disbanding and restoring the scheme for political reasons.
• The consistent policy of providing employment to educated youth shows that the decision to abolish the scheme was not based on valid reasons.
• The High Court rightly set aside the order dated 8th November, 2011, as it violated Articles 14, 16, and 21 of the Constitution.
• The employees should be regularized, citing previous judgments where employees who worked for a long time were allowed to continue.
• The government had earlier considered absorbing MNPs into regular posts, and the discontinuation deprived them of their legitimate right to fair consideration.

[TABLE] of Submissions

Issues Framed by the Supreme Court

The Supreme Court considered the following key issue:

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

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:

• Divisional Manager Aravali Golf Club and Another vs. Chander Hass and Another [2008(1) SCC 683] (Supreme Court of India): This case held that courts cannot direct the creation of posts, as it is an executive or legislative function.
• Maharashtra State Road Transport Corporation and Another vs. Casteribe Rajya Parivahan Karamchari Sanghatana [2009(8) SCC 556] (Supreme Court of India): This case reiterated that the creation of posts is not within the domain of judicial functions and that the status of permanency cannot be granted by the Court where no such posts exist.
• Secretary, State of Karnataka and Others vs. Umadevi (3) and Others [2006(4) SCC 1] (Supreme Court of India): This case dealt with the regularization of irregularly appointed employees in government establishments. It was clarified that regularization is a one-time measure for those who have worked for ten years or more in sanctioned posts but not under court orders.
• Nihal Singh and Others vs. State of Punjab and Others [2013(14) SCC 65] (Supreme Court of India): This case involved appointments made under the Police Act, 1861, and the court held that employees allowed to continue for a long time deserve regularization.
• Malathi Das(Retired) now P.B. Mahishy and Others vs. Suresh and Others [2014(13) SCC 249] (Supreme Court of India): This case involved daily wage employees in government departments who were regularized following a High Court order.
• State of Gujarat and Others Vs. R.J. Pathan and Others [2022(5) SCC 394] (Supreme Court of India): This case held that employees appointed for a fixed term and salary in a temporary unit created for a specific project are not entitled to regularization.

Legal Provisions:

• Article 47 of the Constitution of India: Directs the State to endeavor to bring about prohibition of the consumption of intoxicating drinks and of drugs which are injurious to health.
• Rule 10(5) of the Tamil Nadu Liquor Retail Vending (in Shops and Bars) Rules, 2003: Pertains to measures to be taken for propagating the evils of consumption of liquor.
• Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA): Aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year.

[TABLE] of Authorities and their Treatment

Judgment

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

How each authority was viewed by the Court?

• The Court relied on Divisional Manager Aravali Golf Club and Another vs. Chander Hass and Another [2008(1) SCC 683]* and Maharashtra State Road Transport Corporation and Another vs. Casteribe Rajya Parivahan Karamchari Sanghatana [2009(8) SCC 556]* to emphasize that courts cannot direct the creation of posts and that it is an executive function.
• The Court distinguished Secretary, State of Karnataka and Others vs. Umadevi (3) and Others [2006(4) SCC 1]*, stating that it applies to irregularly appointed employees in government establishments, not scheme-based appointments like the MNPs.
• The Court distinguished 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]*, as those cases involved different circumstances and did not apply to the MNP workers.
• The Court followed State of Gujarat and Others Vs. R.J. Pathan and Others [2022(5) SCC 394]* to emphasize that employees appointed for a fixed term and salary in a temporary unit for a specific project are not entitled to regularization.

What weighed in the mind of the Court?

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

• The court recognized the government’s prerogative to make policy decisions, including the creation and abolition of posts.
• The court emphasized that the MNP workers were engaged in a scheme and were not appointed against regular cadre posts.
• The court acknowledged that the government had introduced a new scheme under the MGNREGA, offering employment to those who were discontinued as MNPs.
• The court distinguished the case from previous judgments on regularization, noting that the MNP workers did not meet the criteria for regularization as they were not appointed against sanctioned posts.

Sentiment Analysis of Reasons Given by the Supreme Court

Fact:Law Ratio

The court’s reasoning was a mix of factual considerations and legal interpretations, with a slightly higher emphasis on legal principles and precedents.

Logical Reasoning

The Supreme Court’s reasoning was based on a step-by-step analysis of the facts, the nature of the appointments, and the relevant legal precedents. The court emphasized the government’s policy-making power and the limitations on judicial intervention in such matters.

The court considered alternative interpretations but rejected them, stating that the MNP workers were not entitled to regularization as they were not appointed against sanctioned posts. The court also noted that the government had introduced a new scheme under the MGNREGA, offering employment to those who were discontinued as MNPs.

The court’s decision was clear: the MNP workers were not entitled to reinstatement and regularization. The court allowed the workers to accept their honorarium for the period from 1st December, 2011, to 31st May, 2012, without any interest.

The Supreme Court quoted the following from the judgment:

“The court cannot direct the creation of posts. Creation and sanction of posts is a prerogative of the executive or legislative authorities and the court cannot arrogate to itself this purely executive or legislative function, and direct creation of posts in any organisation.”

“The respondents were not in employment of the Government or holding a civil post and also not appointed against the cadre post in any of the Government establishment where the service conditions are governed/regulated by the statutory rules framed under the proviso to Article 309 of the Constitution.”

“But as already observed, such employees are not entitled for reinstatement and for regularization of service for the reason that if the order passed on 8th November, 2011 is not sustainable, the respondents and other similarly situated persons engaged could be restored on the same terms as they were placed before passing of the order dated 8th November, 2011.”

Key Takeaways

• The Supreme Court upheld the State Government’s power to abolish temporary posts created under specific schemes.
• Employees engaged in such schemes are not entitled to regularization or reinstatement if the scheme is discontinued, unless there is a specific legal provision or agreement to the contrary.
• The creation and abolition of posts are matters of government policy and are not subject to judicial interference unless there is a clear case of mala fide.
• The court distinguished between appointments made against sanctioned posts in government establishments and those made under specific schemes on an honorarium basis.
• The court acknowledged the government’s efforts to provide alternative employment opportunities to those affected by the discontinuation of the scheme.

Potential Future Impact: This judgment reinforces the principle that temporary employees engaged under specific schemes do not have the same rights as regular government employees. It also clarifies the limitations on judicial intervention in policy matters related to the creation and abolition of posts. This could lead to more caution in creating temporary posts and a greater emphasis on providing alternative employment opportunities.

Directions

The Supreme Court directed that such of the employees 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 of six months from 1st December, 2011, to 31st May, 2012, which amounts to Rs. 25,851 per MNP. The State Government was directed to remit the money into the bank account of the individual within three months of the application being filed.

Specific Amendments Analysis

There is no specific amendment discussed in the judgment.

Development of Law

The ratio decidendi of this case is that the State Government has the power to abolish temporary posts created under specific schemes, and employees engaged in such schemes are not entitled to regularization or reinstatement. This judgment reinforces the existing legal position on the powers of the government in matters of policy and the limitations on judicial intervention. There is no change in the previous position of law.

Conclusion

In conclusion, the Supreme Court allowed the appeals filed by the Tamil Nadu Government, setting aside the High Court’s order. The court held that the government’s decision to abolish the MNP scheme was a valid policy decision, and the MNP workers were not entitled to reinstatement or regularization. The court clarified that the creation and abolition of posts are executive functions, and that the courts cannot interfere unless there is a clear case of mala fide. The court also acknowledged the government’s efforts to provide alternative employment opportunities to the affected workers.