2007 JTR(SC) 215
2007 Supp AIR(SC) 995 ; 2007 AIR(SCW) 6301 ; 2007 113 FLR 218 ; 2007 4 JT 291 ; 2007 2 LLJ 519 ; 2007 2 LLN 997 ; 2007 3 Scale 401 ; 2007 9 SCC 337 ; 2007 2 SCC(L&S) 809 ; 2007 2 SCR 933 ; 2007 2 SLR 803 ; 2007 2 UPLBEC 1447 ; 2007 1 KLT(Online) 1153
SUPREME COURT OF INDIA
S.B. Sinha & Markandey Katju
Punjab State Warehousing Corp. , ChandigarhPETITIONER:
Versus
Manmohan Singh & Anr RESPONDENT:
Appeal (civil) 857 of 2007
(Arising out of S.L.P. (C) No. 19496 of 2005)
Decided On 20/02/2007
A State Government's policy circular for employee regularization does not apply to statutory corporations unless permitted by statute. Furthermore, only irregular appointments, not illegal ones made in violation of the constitutional scheme (Articles 14 and 16), can be considered for regularization.
Act
Referred
:Constitution of India
: Art.162, Art.14, Art.16, Art.309
Punjab Warehousing Corporation Act, 1957
(A) Constitution of India - Articles 14, 16, 162 and 309 - Regularization of employees - Applicability of State government circular to statutory corporations - A policy made by a State ordinarily applies only to employees working under it - Such policy cannot be extended to a statutory corporation unless permitted by the governing statute - Terms and conditions of employees of a statutory corporation governed by statute and statutory rules can only be altered by amendment of those rules.
(B) Regularization of appointments - Irregular vs Illegal - Appointments made in violation of the Constitutional scheme are nullities - Protective umbrella of one-time regularization schemes applies only to irregular appointments and not to those that are illegal.
Facts of the case:
An employee was appointed on a contract basis without following the constitutional scheme of public advertisement or notification through the employment exchange. The State Government issued a circular for the regularization of employees and subsequently clarified that it applied to employees of a statutory corporation. Upon termination of services, the employee sought regularization. The lower court allowed the claim based on the State Government's policy.
Findings of Court:
The statutory corporation is governed by its own act and rules, and the State Government cannot extend its policy to such a body via a circular letter. Since the appointment was made in violation of Articles 14 and 16 of the Constitution, it was illegal and not merely irregular.
Issues: Whether a state government policy issued via circular is binding on a statutory corporation and whether an illegal appointment can be regularized under a one-time scheme.
Ratio Decidendi: A state policy cannot be extended to a statutory corporation unless permitted by statute. Regularization is not permissible if appointments were made in contravention of statutory rules or the constitutional scheme; a clear distinction exists between irregular appointments, which may be regularized, and illegal appointments, which cannot.
Result: Appeal allowed.
(B) Regularization of appointments - Irregular vs Illegal - Appointments made in violation of the Constitutional scheme are nullities - Protective umbrella of one-time regularization schemes applies only to irregular appointments and not to those that are illegal.
Facts of the case:
An employee was appointed on a contract basis without following the constitutional scheme of public advertisement or notification through the employment exchange. The State Government issued a circular for the regularization of employees and subsequently clarified that it applied to employees of a statutory corporation. Upon termination of services, the employee sought regularization. The lower court allowed the claim based on the State Government's policy.
Findings of Court:
The statutory corporation is governed by its own act and rules, and the State Government cannot extend its policy to such a body via a circular letter. Since the appointment was made in violation of Articles 14 and 16 of the Constitution, it was illegal and not merely irregular.
Issues: Whether a state government policy issued via circular is binding on a statutory corporation and whether an illegal appointment can be regularized under a one-time scheme.
Ratio Decidendi: A state policy cannot be extended to a statutory corporation unless permitted by statute. Regularization is not permissible if appointments were made in contravention of statutory rules or the constitutional scheme; a clear distinction exists between irregular appointments, which may be regularized, and illegal appointments, which cannot.
Result: Appeal allowed.
Regularisation - Cited for the proposition that no regularisation is permissible under Article 162 if appointments are made in contravention of statutory rules.
Policy - Cited for the principle that a State's policy cannot be extended to a statutory corporation unless permitted by statute.
Nullity - Held that any appointment made in violation of the constitutional scheme is a nullity; the paragraph 53 exception discussed for irregular vs. illegal appointments.
Irregular - Referred to along with Ranjodh Singh to distinguish between irregular and illegal appointments for the purpose of regularisation under Umadevi.
Irregular - Explained that the Constitution Bench's direction for regularisation applies only to irregular appointments, not illegal ones.
Nullity - Held that any appointment made in violation of the Constitutional scheme would be a nullity.
Irregularity - Clarified that regularization directions are applicable to irregular appointments rather than illegal ones.
Regularisation - Cited in support of the distinction between irregular and illegal appointments in the context of regularization.
JUDGMENT:
S.B. Sinha, J.
Leave granted.
The State of Punjab formulated a scheme on 23.01.2001 for regularisation of its employees.
The question which arises for consideration in this appeal arising out of a judgment and order dated 25.04.2005 passed by a Division Bench of the Punjab and Haryana High Court in Civil Writ Petition No. 10307 of 2004 is as to whether the appellant herein was bound to invoke the said scheme in respect of its own employees.
The validity or otherwise of the said Scheme came to be questioned before this Court. This Court passed an interim order. Pursuant thereto or in furtherance thereof, Respondent No. 1 herein was appointed on contract basis as Restorer on a consolidated monthly salary. His services indisputably were extended from time to time.
The contention of the appellant is that the contract of the respondents service was not renewed as the services of Respondent No. 1 were not required any further and, thus, by an order dated 24.12.2001 his services were terminated. Questioning the validity of the said order, a writ petition was filed by the Respondent before the High Court. The said writ petition was disposed of directing the appellant herein to consider the case of Respondent No. 1 in the backdrop of the said Scheme dated 23.01.2001. Inter alia on the premise that in view of a clarification issued by the State Government that the said scheme was not applicable to the case of contract employees, the respondents claim for regularisation was rejected by an order dated 17.06.2004. A fresh Writ Petition was filed which by reason of the impugned judgment has been allowed.
The High Court, however, in its judgment opined that the case of Respondent No. 1 was covered by the said policy decision and as such he was entitled to the benefit thereof. The appellant is, thus, before us.
One of the questions which was raised for its consideration before the High Court was as to whether the workmen engaged on contract basis were covered by the Scheme dated 23.01.2001.
The said purported scheme of the State was not made in terms of Article 162 of the Constitution of India. It was by way of a circular letter dated 23.01.2001. The State, without issuing any notification or without even exercising its statutory power governing the constitution and functioning of the statutory authorities like the appellant, sought to extend the same to public sector undertakings, corporations, boards, local authorities and other autonomous bodies which it could not do in law. Therein, it was stated:
"iv. For accommodating work charged/ daily wage/ other category workers as per the above policy against the existing vacancies the existing instructions requiring permission of the DOP and FD for filling up the vacancies would not apply.
Wherever for the absorption/ regularization of workers as per the above policy any Departments own Recruitment Rules come in the way, such provisions of the Recruitment Rules will stand relaxed."
However, a clarification was sought for from the State Government by the Managing Director of the appellant by a letter dated 29.03.2001 as to whether the staff not being charged against any project or work is to be regularized or not; in response whereto, it was clarified:
" It is clarified that those employees who are working in Corporation for the last more than three years continuously apart from work charge/daily wages, are to be regularized because these categories of workers are covered under the policy instructions No. 11/34/2000-4 P. p.31301 dated 23.01.01. issued by the Government of Punjab."
It is not the case of the parties hereto that Respondent No. 1 was appointed upon compliance of the constitutional scheme as adumbrated in Articles 14 and 16 of the Constitution of India. It is also not the case of the respondent that prior to his appointment either any advertisement was issued or even the Employment Exchange was notified in regard to the then existing vacancies. It is also not known whether there existed a sanctioned post. It is furthermore neither in doubt nor in dispute that the terms and conditions of the services of the employees of the appellant - Corporation which is a body constituted and governed under the Punjab Warehousing Corporation Act, 1957 are governed by the provisions thereof and the rules framed thereunder.
The terms and conditions of employees of the appellant - Corporation being governed by a statute and statutory rules could have been altered only by reason of amendment of the rules only. The State as is well known had no say in that behalf. We fail to understand as to under what circumstances the State had issued the aforementioned circular letter dated 23.01.2001. A policy made by a State would ordinarily apply only in respect of the employees working under it. The policy decision of a State cannot be extended to a statutory Corporation unless it is permitted to do so by the statute. [See Pawan Alloys & Casting Pvt. Ltd., Meerut v. U.P. State Electricity Board and Ors. (1997) 7 SCC 251]
Furthermore, when the terms and conditions of the services of an employee are governed by the rules made under a statute or the proviso appended to Article 309 of the Constitution of India, laying down the mode and manner in which the recruitment would be given effect to, even no order under Article 162 of the Constitution of India can be made by way of alterations or amendments of the said rules. Afortiori if the recruitment rules could not be amended even by issuing a notification under Article 162 of the Constitution of India; the same cannot be done by way of a circular letter.
This aspect of the matter is covered by a decision of this Court in A. Umarani v. Registrar, Cooperative Societies & Ors. [(2004) 7 SCC 112] wherein the law was stated in the following terms:
"No regularisation is, thus, permissible in exercise of the statutory power conferred under
Article 162 of the Constitution if the appointments have been made in contravention of the statutory rules."
A Constitution Bench of this Court in Secretary, State of Karnataka & Ors. v. Umadevi & Ors. [(2006) 4 SCC 1] categorically held that any appointment made in violation of the Constitutional scheme would be a nullity.
Submission of Mr. Nidhesh Gupta, learned counsel appearing on behalf of the respondent that having regard to the fact that the policy decision was made as a one time measure, the scheme in question would come within the protective umbrella of paragraph 53 of Umadevi (supra) could be accepted for more than one reason. Firstly, because the High Court did not proceed on that basis; secondly, if the scheme itself was not applicable in case of Respondent No. 1, even in terms of the said policy decision, as has been clarified by it, the question of invoking the said paragraph in the instant case would not arise. Moreover, in view of series of decisions of this Court explaining paragraph 53 Umadevi (supra), such a Scheme could be made out only in respect of such employees whose appointments were irregular and not illegal.
This aspect of the matter has recently been considered in Punjab Water Supply & Sewerage Board v. Ranjodh Singh & Ors. [2006 (13) SCALE 426] in the following terms: "A combined reading of the aforementioned paragraphs would clearly indicate that what the Constitution Bench had in mind in directing regularisation was in relation to such appointments, which were irregular in nature and not illegal ones."
[See also Municipal Corporation, Jabalpur v. Om Prakash Dubey 2006 (13) SCALE 266 : (2007) 1 SCC 373]
For the reasons aforementioned, the impugned judgment cannot be sustained which is set aside accordingly. The appeal is allowed. No costs.