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Saturday, August 15, 2009

Contract Staff need not be regularised and cannot claim regularisation

CASE NO.:
Appeal (civil) 6337 of 2003

PETITIONER:
National Fertilizers Ltd. & Ors.

RESPONDENT:
Somvir Singh

DATE OF JUDGMENT: 12/05/2006

BENCH:
S.B. Sinha & P.P. Naolekar

JUDGMENT:
J U D G M E N T

W I T H
CIVIL APPEAL NOS. 464, 465, 466, 467 of 2004 AND 7575 of 2005


S.B. SINHA, J :

The Appellant is a Government Company. It is a public sector
undertaking. It is a 'State' within the meaning of Article 12 of the
Constitution of India. A policy decision was taken by the Appellant not
to make any further recruitment in Marketing Division in any category of
post stating:

"It has been decided that with immediate effect the
strength of the Marketing Division be pagged to the
number of individuals in position in the Marketing
Division as on 31.03.1998. It has also been decided
that no further recruitment be made in the Marketing
Division in any category of post. However, as and
when if any post is required to be filled up in any
category due to exigencies of work, the approval of
D(F)/MD be obtained and the paper routed through
the Corporate Office Personnel Department."

Despite such ban the Respondents had been appointed. Before
such appointment the employment exchange was not intimated about the
vacancy in terms of the provisions of Employment Exchange
(Compulsory Notification of Vacancies) Act, 1959 (for short "the 1959
Act"). Admittedly, no advertisement was also issued. According to the
Respondent, he worked at the Shimla Office of the Appellant for a period
of six months and, thus, he was entitled for recruitment in terms of Rule
1.5(g) of the Recruitment and Promotion Rules. Rule 1.5(g) of the Rules
does not envisage regular recruitment but a recruitment on a contractual
basis. The Respondent, thus, on his own showing was appointed on a
contractual basis. It is trite that a person who obtained recruitment on
contractual basis cannot claim regularisation in service. The
Respondents herein filed applications for their recruitment without any
vacancy having been notified. They were said to have been interviewed
on 24.3.1991 by a purported Committee constituted by the General
Manager. Appointment letters were issued on or about 9.4.1991. An
advertisement was admittedly issued only on 30.11.1993 for the post of
Peon-cum-Messenger.

The Appellant in the year 1994, however, took a decision to fill up
the posts in the Marketing Division inter alia stating:

"During the coordination committee meeting held in
October 1994, at C.O. the recognized union of
marketing division requested for removal of ban in
filling up vacant posts in marketing division. It was
agreed that action to fill up the vacant posts in
marketing division will be taken by marketing
division, keeping in view the recruitments within the
overall manpower strength."

Actions were initiated to fill up the vacant posts on permanent
status by following the recruitment procedure. The Respondents were
also granted an opportunity to file applications thereagainst. Relaxation
of age to the extent of their services as temporary employees had also
been granted.

The Appellant has framed its own Recruitment and Promotion
Rules. The recruitment of an employee is governed by the said Rules.
The terms and conditions of services are also governed by the same
Rules. In terms of Rule 1.5 of the said Rules, recruitment of various
posts were to be made inter alia from the following sources:

(a) Employment Exchange as per the provisions of the 1959 Act.
(b) Zila Saink Boards Director General Resettlement.
(c) Direct Recruitment by advertisement.

Rule 1.6.1 provides for method and procedure for recruitment in
terms whereof all posts in the scale of pay of Rs. 1560-2160 is required to
be considered as 'corporate level'. Direct recruitment can be resorted to
only when no suitable candidate for promotion was available in the
appropriate rank. Rule 1.6.8 provides for the mode and manner in which
the advertisement is to be issued. Rule 1.6.9 provides for reservation.
The manner in which Selection Committee has to be constituted has been
laid down in paragraph 1.11. Such Selection Committee inter alia must
consist of two members from the discipline for which recruitment is to be
made apart from an officer from the Personnel Department as Member
Secretary. In the event, a selection is to be made for reserved category,
an officer of appropriate status belonging to SC/ST will be included as a
member. In a case of recruitment to Group C & D posts, a member
representing minority community will also be associated in the selection
committee. The matter relating to interview is provided for in paragraph
12.1. Appointments are to be made in terms of paragraph 1.13.

The said Rules, therefore, lay down in great details as to how and
in what manner the selection process was to be initiated, the minimum
qualification therefor, the constitution of Selection Committee and other
relevant factors.

It is not in dispute that the Respondents herein were appointed
without any advertisements and without any intimation to the
employment exchange. Appointments are said to be made at the instance
of two officers. Only after retirement of the said officers, writ petitions
were filed before several High Courts including Chhattisgarh, Punjab and
Haryana, Himachala Pradesh, Delhi, Madhya Pradesh and Rajasthan.

The writ petitions involved 52 employees. Different views were
expressed by different High Courts.

The writ petitions filed by the Respondents were allowed directing
the Appellant to regularise the services of the Respondents to pay them
all monetary benefits in terms of the appointment letters.

Mr. Bhaskar P. Gupta, learned senior counsel appearing on behalf
of the Appellant submitted that the matter relating to regularisation of
services recruited on ad hoc basis is no longer res integra in view of the
recent Constitution Bench decision of this Court in Secretary, State of
Karnataka and Others v. Umadevi and Others [2006 (4) SCALE 197].

Mr. Ashok Mathur, learned counsel appearing on behalf of the
Respondents, on the other hand, submitted that the appointments of the
Respondents may be irregular but not illegal and in that view of the
matter, the impugned judgments need not be interfered with.
The Respondents herein were appointed only on applications made
by them. Admittedly, no advertisement was issued in a newspaper nor
the employment exchange was notified as regard existence of vacancies.
It is now trite law that a 'State' within the meaning of Article 12 of the
Constitution of India is bound to comply with the constitutional
requirements as adumbrated in Articles 14 and 16 thereof. When
Recruitment Rules are made, the employer would be bound to comply
with the same. Any appointment in violation of such Rules would render
them as nullities. It is also well-settled that no recruitment should be
permitted to be made through backdoor.

It was contended that for Class IV employees, the Employment
Exchanges were not required to be notified in view of Section 3(1)(d) of
the 1959 Act. Section 3(1)(d) of the 1959 Act reads as under:

"3. Act not to apply in relation to certain vacancies
 (1) This Act shall not apply in relation to
vacancies 
(a) ***
(b) ***
(c) ***
(d) in any employment to do unskilled office
work;"

Such a plea does not appear to have been raised before the High
Court. The question as regards the nature of duties required to be
performed by the Respondents having not been raised. No material was
placed by the employer to show as to whether the job of the Respondents
was within the purview of the aforementioned provision. The
Respondents themselves stated that they raised the question of
applicability of the said provision of the Act in a suit filed at Jagadhri
when another person was appointed as Peon-cum-Messenger. It,
therefore, cannot be said that they were not aware of the statutory
provisions contained in the said suit.

The order of ban suggests that if any appointment was to be made
due to exigencies of work, the approval of the Director (Finance) or
Managing Director was to be obtained and the paper routed in respect
thereof should be through the corporate office. The Respondents contend
that as at the point of time the Managing Director, Shri S.S. Jain had been
placed under suspension, the file was placed before the General Manager
(Marketing). The said plea cannot be accepted for more than one reason.
If the regular incumbent or the Managing Director was placed under
suspension, somebody else must be incharge of the said post.
Furthermore, the file could be placed before the Director (Finance). The
General Manager by no stretch of imagination could accord approval for
appointment.

Submission of the learned counsel appearing on behalf of the
Respondents to the effect that the ban was only on paper is not a matter
which would fall for consideration of this Court inasmuch as it is not in
dispute that the ban was lifted only on 16.12.1994. On what premise, an
advertisement was issued on 30.11.1993 is not known. It is not the case
of the Respondent that despite existence of ban some other workman was
appointed prior to the lifting thereof. Even if, recruitments have been
made illegally, the Respondents cannot claim any legal right on the basis
thereof.

Regularisation, furthermore, is not a mode of appointment. If
appointment is made without following the Rules, the same being a
nullity the question of confirmation of an employee upon the expiry of
the purported period of probation would not arise. The Constitution
Bench in Umadevi (supra) made a detailed survey of the case laws
operating in the field.

The referral order to the Constitution Bench was made by a 3-
Judge Bench of this Court stating:

"1. Apart from the conflicting opinions between
the three Judges' Bench decisions in Ashwani Kumar
and Ors. Vs. State of Bihar and Ors., reported in
1997 (2) SCC 1, State of Haryana and Ors vs., Piara
Singh and Ors. Reported in 1992 (4) SCC 118 and
Dharwad Distt. P.W.D. Literate
Daily Wage Employees Association and Ors. Vs.
State of Karnataka and Ors. Reported in 1990 (2)
SCC 396, on the one hand and State of Himachal
Pradesh vs. Suresh Kumar Verma and Anr., reported
in AIR 1996 SC 1565, State of Punjab vs.
Surinder Kumar and Ors. Reported in AIR 1992 SC
1593, and B.N. Nagarajan and Ors. Vs. State of
Karnataka and Ors., reported in 1979 (4) SCC 507
on the other, which has been brought out in one of
the judgments under appeal of Karnataka High Court
in State of Karnataka vs. H. Ganesh Rao, decided on
1.6.2000, reported in 2001 (4) Karnataka Law
Journal 466, learned Additional Solicitor General
urged that the scheme for regularization is repugnant
to Articles 16(4), 309, 320 and 335 of the
Constitution of India and, therefore, these cases are
required to be heard by a Bench of Five learned
Judges (Constitution Bench).

2. On the other hand, Mr. M.C. Bhandare,
learned senior counsel, appearing for the employees
urged that such a scheme for regularization is
consistent with the provision of Articles 14 and 21 of
the Constitution.

3. Mr. V. Lakshmi Narayan, learned counsel,
appearing in CC Nos.109-498 of 2003, has filed the
G.O. dated 19.7.2002 and submitted that orders have
already been implemented.

4. After having found that there is conflict of
opinion between three Judges Bench decisions of
this Court, we are of the view that these cases are
required to be heard by a Bench of five learned
Judges.
5. Let these matters be placed before Hon'ble the
Chief Justice for appropriate orders."

The Constitution Bench opined that any appointment made in
violation of the Recruitment Rules as also in violation of Articles 14 and
16 of the Constitution would be nullity. The contention raised on behalf
of the employees that those temporary or ad hoc employees who had
continued for a fairly long spell, the authorities must consider their cases
for regularisation was answered, thus:

"With respect, why should the State be allowed to
depart from the normal rule and indulge in
temporary employment in permanent posts? This
Court, in our view, is bound to insist on the State
making regular and proper recruitments and is bound
not to encourage or shut its eyes to the persistent
transgression of the rules of regular recruitment.
The direction to make permanent -- the distinction
between regularization and making permanent, was
not emphasized here -- can only encourage the
State, the model employer, to flout its own rules and
would confer undue benefits on a few at the cost of
many waiting to compete. With respect, the
direction made in paragraph 50 of Piara Singh
(supra) are to some extent inconsistent with the
conclusion in paragraph 45 therein. With great
respect, it appears to us that the last of the directions
clearly runs counter to the constitutional scheme of
employment recognized in the earlier part of the
decision. Really, it cannot be said that this decision
has laid down the law that all ad hoc, temporary or
casual employees engaged without following the
regular recruitment procedure should be made
permanent."

It was furthermore opined:

"26. It is not necessary to notice all the decisions of
this Court on this aspect. By and large what emerges
is that regular recruitment should be insisted upon,
only in a contingency an ad hoc appointment can be
made in a permanent vacancy, but the same should
soon be followed by a regular
recruitment and that appointments to non-available
posts should not be taken note of for regularization.
The cases directing regularization have mainly
proceeded on the basis that having permitted the
employee to work for some period, he should be
absorbed, without really laying down any law to that
effect, after discussing the constitutional scheme for
public employment."

Taking note of some recent decisions of this Court, it was held that
the State does not enjoy a power to make appointments in terms of
Article 162 of the Constitution of India. It further quoted with approval a
decision of this Court in Union Public Service Commission v. Girish
Jayanti Lal Vaghela & Others [2006 (2) SCALE 115] in the following
terms:

"The appointment to any post under the State can
only be made after a proper advertisement has been
made inviting applications from eligible candidates
and holding of selection by a body of experts or a
specially constituted committee whose members are
fair and impartial through a written examination or
interview or some other rational criteria for judging
the inter se merit of candidates who have applied in
response to the advertisement made. A regular
appointment to a post under the State or Union
cannot be made without issuing advertisement in the
prescribed manner which may in some cases include
inviting applications from the employment exchange
where eligible candidates get their names registered.
Any regular appointment made on a post under the
State or Union without issuing advertisement
inviting applications from eligible candidates and
without holding a proper selection where all eligible
candidates get a fair chance to compete would
violate the guarantee enshrined under Article 16 of
the Constitution..."

It was clearly held:
"These binding decisions are clear imperatives that
adherence to Articles 14 and 16 of the Constitution
is a must in the process of public employment."

The contention of the learned counsel appearing on behalf of the
Respondents that the appointments were irregular and not illegal, cannot
be accepted for more than one reason. They were appointed only on the
basis of their applications. The Recruitment Rules were not followed.
Even the Selection Committee had not been properly constituted. In view
of the ban in employment, no recruitment was permissible in law. The
reservation policy adopted by the Appellant had not been maintained.
Even cases of minorities had not been given due consideration.

The Constitution Bench thought of directing regularisation of the
services only of those employees whose appointments were irregular as
explained in State of Mysore v. S.V. Narayanappa [(1967) 1 SCR 799],
Nanjundappa v. T. Thimmiah & Anr.[(1972) 2 SCR 799] and B.N.
Nagarajan & Ors. v. State of Karnataka & Ors. [(1979) 3 SCR 937]
wherein this Court observed:

"In B.N. Nagarajan & Ors. Vs. State of Karnataka &
Ors. [(1979) 3 SCR 937], this court clearly held that
the words "regular" or "regularization" do not
connote permanence and cannot be construed so as
to convey an idea of the nature of tenure of
appointments. They are terms calculated to condone
any procedural irregularities and are meant to cure
only such defects as are attributable to methodology
followed in making the appointments"

Judged by the standards laid down by this Court in the
aforementioned decisions, the appointments of the Respondents are
illegal. They do not, thus, have any legal right to continue in service.

It is true that the Respondents had been working for a long time. It
may also be true that they had not been paid wages on a regular scale of
pay. But, they did not hold any post. They were, therefore, not entitled
to be paid salary on a regular scale of pay. Furthermore, only because the
Respondents have worked for some time, the same by itself would not be
a ground for directing regularisation of their services in view of the
decision of this Court in Uma Devi (supra).

In view of the authoritative pronouncement of the Constitution
Bench, in our opinion, the impugned judgments cannot be sustained.
They are set aside accordingly.

S/Shri Somvir Singh, Hansraj Benewal, Malkiat Singh, Ranjit
Singh are said to be working. They may be relieved of their posts. We
may, however, observe that their cases may be considered for future
appointment and age bar, if any, in view of the policy decision of the
Appellant itself may be relaxed to the extent they had worked. The salary
or any remuneration paid to them, however, may not be recovered. This
order, however, is being passed in exercise of our jurisdiction under
Article 142 of the Constitution of India keeping in view the principles
embodied in Section 70 of the Contract Act. The appeals are allowed. No
costs.

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