OFFICIAL LIQUIDATOR v. DAYANAND AND OTHERS

~ A stultify opportunity of competition to younger generation ~ comprising more. meritorious persons who may be waiting for a chance to apply for direct recruitment. Obviously, the Court did not want to sacrifice the merit by showing undue sympathy with members of the company paid staff who joined service B with full knowledge about their status, terms and conditions of their employment and the fact that they were to be paid from the company fund and not Consolidated Fund of India. In this context, we may also mention that though the Official Liquidators ''1 appear to have issued advertisements for appointing the c company paid staff and made some sort of selection, more qualified and meritorious persons must have shunned from I

applying because they knew that the employment will be for a I-

fixed term on fixed salary and their engagement will come to I

an end with the conclusion of liquidation proceedings. As a result of this, only mediocres must have responded to the D advertisements and jointed as company paid staff. In this scenario, a direction for absorption of all the company paid staff " has to be treated as violative of the doctrine of equality enshrined in Articles 14 and 16 of the Constitution.

38Copy pinpoint38. Since the 1999 Scheme was framed by the Government of India in furtherance of the opportunity given by this Court and no deviation is shown to have been made from the 1978 Scheme insofar as Group 'C' posts are concerned, the same cannot be dubbed as arbitrary, irrational and unreasonable, simply because all the company paid staff who were in position as on 27 .8.1999 may not get absorbed in the regular cadres. Here, it is worth noticing that as per the details of 119 company paid staff furnished by the senior counsel appearing for Tapas Chakraborty and others, only 54 had completed tenure of 10 years on 27.8.1999 i.e. the date specified in the 1999 Scheme. Of them, 21 were Lower Division Clerks, 1.6 were Upper Division Slerks (there is no >-.-' provision for appointment to the post of Upper Division Clerk by direct recruitment), 1 was Assistant, 1 was Superintendent, 1 was Assistant Commander, 1 was Commander, 2 were H

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[G.S. SINGHVI, J.]

Technical Assistants and the rest were Record Arrangers, A Peons and Security Guards. Of the remaining 65 employees, 3 were appointed in the year 2000 and others had worked for per~ods ranging from 13 m~nths to 8 years 31/2 months as on 27.8.1999. This means that not even 50% of the writ petitioners had completed 10 years tenure which was considered by the B Courts as benchmark for issuing direction for regularization of· the services of temporary/ad hoc/daily wagers employed in ·. Government departments. The position of the company paid · staff of Delhi High Court is different. The details furnished by Ms. Jyoti Mendiratta show that 27 of the company paid staff c have been absorbed under the 1999 Scheme. Of the remaining 26 company paid staff, all except 1 had worked for more than 10 years as on 27.8.1999. 9 of the company paid staff had worked for 20 years or more. However, they could not be absorbed due to abolition of posts in furtherance of the policy D decision taken by the Government of India.

39Copy pinpoint39. The additional documents produced by Shri Malhotra show that in the year 2001, the Government of India had taken a policy decision to reduce the strength of civilian staff in all the cadres. This was reflected in the speech made by the E Finance Minister, Government of India, while presenting the budget for 2001-02. He stated that all requirements of recruitment will be scrutinized to ensure that fresh recruitment is limited to 1% of total civilian staff strength and there will be reduction in manpower by 2% per annum, achieving a reduction of 10% in 5 years. Thereafter, OM No.2/8/2001-PIC dated 16.5.2001 was issued by the Government of India. Paragraphs 2.1 and 2.2 of that OM read as under :

"2.1 All Ministries/Departmef)ts are accordingly requested to prepare Annual Direct Recruitment Plans covering the requirements of all cadres, whether managed by that Ministry/Department itself, or managed by the Department of Personnel and .Training, etc. The task of preparing the Annual Recruitment Plan will be undertaken H

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A in each Ministry/Department by a Screening Committee )--

headed by the Secretary of that Ministry/Department with the Financial Advisor as a Member and JS (Admn.) of the L Department as Member Secretary. The Committee would J also have one senior representative each of the B Department of Personnel and Training and the Department of Expenditure. While the Annual Recruitment Plans for vacancies in Groups 'B', 'C' and 'D' could be cleared by this Committee itself, in the case of Group 'A' Services, the Annual Recruitment Plan would be cleared by a '1'

c Committee headed by Cabinet Secretary with secretary of the Department concerned, Secretary (DoPT) and Secretary (Expenditure) as Members.

2.2 While preparing the Annual Recruitment Plans, the concerned Screening Committees would ensure that direct recruitment does not in any case exceed 1% of the total sanctioned strength of the Department. Since about 3% of staff retire every years, this wouid translate into only 1/ 3rd of the direct recruitment vacancies occurring in each year being filled up . Accordingly, direct recruitment would be limited to 1/3rd of the direct recruitment vacancies arising in the year subject to a further ceiling that this does not exceed 1% of the total sanctioned strength of the Department. While examining the vacancies to be filled up, ~ the functional needs of the organization would be critically ~ F examined so that there is flexibility in filling up vacancies in various cadres depending upon their relative functional " need. To amplify, in case an organization needs certain posts to be filled up for safety/security/operational considerations, a corresponding reduction in direct G recruitment in other cadres of the organization may be done with a view to restricting the overall direct recruitment to one-third of vacancies meant for direct recruitment subject to the condition that the total vacancies proposed >-- .,,. for filling up should be within the 1% ceiling. The remaining /-

H vacancies meant for direct recruitment which are not ~ ~·

p. 387 Copy page pinpoint

[G.S. SINGHVI, J.]

~ cleared by the Screening Committee will not be filled up by promotion or otherwise and these posts wil: stand abolished."

40Copy pinpoint40. For implementation of the aforementioned decision, the Screening Committee met sometime in March, 2005 and decided to reduce the number of posts in the regular cadres of the Department of Company Affairs. The background note circulated to the members of the Screening Committee vide 'y Office Memo No.A.12011/3/2003-Ad.ll dated 14.3.2005 made a clear mention of the orders passed by the Calcutta and Delhi High Courts in favour of the company paid staff, dismissal of c the appeal by the Division Bench of Calcutta High Court, pendency of similar appeals before the Division Bench of Delhi High Court and the Government's decision to process the matter for filing SLP against the orders of Calcutta High Court. The Screening Committee which met on 16.3.2005 considered and approved abolition of the direct recruitment quota posts for r the years 2001-2002, 2002-2003 and 2003-2004. The decision of the Screening Committee was circulated to various offices of the Ministry of Company Affairs vide letter No.A.12011/3/ 2003-Admn.ll dated 2.9.2005. This exercise was in consonance with the policy decision taken by the Government of India. The respondents have neither assailed the decision of the Government to abolish the posts on the ground of malafides nor the learned counsel could show that the exercise undertaken )... by the Screening Committee is vitiated by arbitrariness or non- F / application of mind or the same is influenced by extraneous reasons. Therefore, the view expressed by the Calcutta and Delhi High Courts that the 1999 Scheme is unworkable or impractical or has become redundant, cannot be approved. G

41Copy pinpoint41. The creation and abolition of posts, formation and structuring/ restructuring of cadres, prescribing the source and mode of recruitment and qualifications and criteria of selection etc. are matters which fall within the exclusive domain of the employer. Although the decision of the employer to create or H

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~ A abolish posts or cadres or to prescribe the source or mode of recruitment and lay down the qualification etc. is not immune from judicial review, the Court will always be extremely cautious and circumspect in tinkering with the exercise of discretion by the employer. The Court cannot sit in appeal over the judgment B of the employer and ordain that a particular post or number of posts be created or filled by a particular mode of recruitment. The power of judicial review can be exercised in such matters only if it is shown that the action of the employer is contrary to ---('

any constitutional or statutory provisions or is patently arbitrary " c or vitiated by malafides.

42Copy pinpoint42. In State of Haryana v. Navneet Verma [2008 (2) SCC 65], a Division Bench of two-Judges referred to M. Ramanatha Pillai v. State of Kera/a [1973 (2) SCC 650], Kedar Nath Bahi v. State of Punjab (1974 (3) SCC 21], State of Haryana v. Des D Raj Sangar[1976 (2) SCC 844], Dr. N.C. Singha/ v. Union of India [1980 (3) SCC 29) and A vas Vik as Sanghathan v. '1 Engineers Association [2006 (4) SCC 132) and culled out the following principles :

E "(a) the power to create or abolish a post rests with the Government;

(b) whether a particular post is necessary is a matter depending upon the exigencies of the situation and administrative necessity; A F (c) creation and abolition of posts is a matter of government policy and every sovereign government has this power in the interest and necessity of internal administration; G (d) creation, continuance and abolition of posts are all decided by the Government in the interest ofadministration .>.--~ and general public;

(e) the court would be the least competent in the face of H scanty material to decide whether the Government acted

p. 389 Copy page pinpoint

[G.S. SINGHVI, J.] _,\ honestly in creating a post or refusing to create a post or A ""' its decision suffers from mala tides, legal or factual;

(f) as long as the decision to abolish the post is taken in good faith in the absence of material, interference by the court is not warranted." B

43Copy pinpoint43. In Secretary, State of Kamataka v. Uma Devi (supra), the Constitution Bench adverted its attention to financial ',- implications of creation of extra posts and held that the Courts should not pass orders which impose unwarranted burden on the State and its instrumentalities by directing creation of c particular number of posts for absorption of employees appointed on ad hoc or temporary basis or as daily wagers.

44Copy pinpoint44. In Divisional Manager, Aravali Golf Club and another v. Chander Hass and another [(2008) 1 SCC 683] also, a two- D Judges Bench considered the issue relating to creation of post l' and held :-

"15. 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 E this purely executive or legislative function, and direct creation of posts in any organisation. This Court has time and again pointed out that the creation of a post is an ). executive or legislative function and it involves economic

- factors. Hence the courts cannot take upon themselves the power of creation of a post. Therefore, the directions given F

by the High Court and the first appellate court to create the posts of tractor driver and regularise the services of the respondents against the said posts cannot be sustained and are hereby set aside." G

45Copy pinpoint45. Although in paras 20, 26, 27, 28 and 33 of the last ........ mentioned judgment some sweeping observations have been made suggesting that the orders passed by the High Courts and this Court in some of the cases amount to an encroachment ·H

p. 390 Copy page pinpoint

A on the domain of the executive and legislature, we do not propose to deal with the same and decide whether those obser\tations were at all called for in the backdrop of factual ~ • matrix of that case and leave the same to be decided in an appropriate case. B

46Copy pinpoint46. In view of the above stated legal position, we hold hat 1• the directions given by the High Courts for creation of supernumerary posts to facilitate absorption of the company "T paid staff are legally unsustainable and are liable to be set aside. c

47Copy pinpoint47. The next issue which needs to be address is whether the impugned orders can be sustained on the ground that by having worked continuously for 10 years or more as company paid staff as on 27.8.1999, some of the respondents acquired D a right to be absorbed in the regular cadre or regularized in service and they are entitled to the benefit of the principle of equal pay for equal work and have their pay fixed in the regular ¥

pay scales prescribed for the particular posts.

48Copy pinpoint48. The questions whether in exercise of the power vested E in it under Article 226 of the Constitution of India, the High Court can issue a mandamus and compel the State and its instrumentalities/agencies to regularize the services of temporary/ad-hoc/daily wager/casual/contract employees and whether direction can be issued to the public employer to Al F prescribe or give similar pay scales to employees appointed '- through different modes, with different condition of service and different sources of payment have become subject matter of debate and adjudication .in several cases.

49Copy pinpoint49. The judgments of 1980s and early 1990s - Dhirendra Chamoli v. State of UP. [1986 (1) SCC 637], Surinder Singh pnd Another v. Engineer-in-Chief, CPWD and Others [1986 }-... (i) SCC 639], Daily Rated Casual Labour v. Union of India [1988 (1) SCC 122], Dharwad District P.W.D. Literate Daily H Wage Employees' Association v. State of Karnataka [1990 (2)

p. 391 Copy page pinpoint

[G.S. SINGHVI, J.]

___. .... SCC 396], Bhagwati Prasad v. Delhi State Mineral A Development Corporation (supra), State of Haryana v. Piara Singh (supra) are representative of an era when this Court enthusiastically endeavored to expand the meaning of equality clause enshrined in the Constitution and ordained that employees appointed on temporary/ad hoc/daily wage basis 8 should be treated at par with regular employees in the matter of payment of salaries and allowances and that their services be regularized. In several cases, the schemes framed by the \ ')" governments and public employer for regularization of temporary/ad-hoc/daily wag/casual employees irrespective of c the source and mode of their appointment/ engagement were also approved. In some cases, the courts also directed the State and its instrumentalities/agencies to frame schemes for regularization of the services of such employees. In State of Haryana v. Piara Singh (supra), this Court while reiterating that appointment to the public posts should ordinarily be made by regular recruitment through the prescribed agency and that even .., where ad-hoc or temporary employment is necessitated on account of the exigencies of administration, the candidate should be drawn from the employment exchange and that if no candidate is available or sponsored with the employment exchange, some method consistent with the requirements of Article 14 of the Constitution should be followed by publishing notice in appropriate manner for calling for applications and all those who apply in response thereto should be considered >-- fairly, proceeded to observe that if an ad-hoc or temporary F ,,, employee is continued for a fairly long spell, the authorities are duty bound to consider his case for regularization subject to his fulfilling the conditions of eligibility and the requirement of satisfactory service. The propositions laid down in Piara Singh's case were followed by almost all High Courts for G directing the concerned State Governments and public authorities to regularize the services of ad-hoc/temporary/daily wage employees only on the ground that they have continued for a particular length of time. In some cases, the schemes framed for regularization of the services of the backdoor H

p. 392 Copy page pinpoint

A entrants were also approved.

50Copy pinpoint50. The above noted judgments and orders encouraged the political set up and bureaucracy to violate the soul of Article 14 and 16 as also the provisions contained in the Employment ~xchanges (Compulsory Notification of Vacancies) Act, 1959 8 with impun_ity and the spoil system which prevailed in the United Stats of America in sixteenth and seventeenth century got firm foothold in this country. Thousands of persons were employed/ engaged throughout the length and breadth of the country by backdoor methods. Those who could pull strings in the power corridors at the higher and lower levels managed to get the cake of public employment by trampling over the rights of other eligible and more meritorious persons registered with the employment exchanges. A huge illegal employment market developed in different parts of the country and rampant corruption afflicted the whole system. This was recognized by the Court in Delhi Development Horticulture Employees Union V. Delhi Administration, Delhi and others [1992 (4) sec 99] in the following words:

E "23. Apart from the fact that the petitioners cannot be directed to be regularised for the reasons given above, we may take note of the pernicious consequences to which the direction for regularisation of workmen on the only ground that they have put in work for 240 or more days, has been leading. Although there is an Employment F Exchange Act which requires recruitment on the basis of registration in the Employment Exchange, it has become a common practice to ignore the Employment Exchange and the persons registered in the Emp!oyment Exchanges, and to employ and get employed directly those who are G either not registered with the Employment Exchange or who though registered are lower in the long waiting list in the Employment Register. The courts can take judicial notice of the fact that such employment is sought and given directly for various illegal considerations including money. H

p. 393 Copy page pinpoint

[G.S. SINGHVI, J.] I The employment is given first for temporary periods with A ... technical breaks to circumvent the relevant rules, and is continued for 240 or more days with a view to give the benefit of regularization knowing the judicial trend that those who have completed 240 or more days are directed to be automatically regularized. A good deal of illegal B employment market has developed resulting in a new source of corruption and frustration of those who are waiting at the Employment Exchanges for years. Not all those who gain such backdoor entry in the employment are in need of the particular jobs. Though already employed c elsewhere, they join the jobs for better and secured prospects. That is why most of the cases which come to the courts are of employment in government departments, public undertakings or agencies. Ultimately it is the people who bear thE?heavy burden of the surplus labour. The other equally injurious effect of indiscriminate regularization has been that many of the agencies have stopped undertaking casual or temporary works though they are urgent and essential for fear that if those who are employed on such works are required to be continued for 240 or more days they have to be absorbed as regular employees although the works are time-bound and there is no need of the workmen beyond the completion of the works undertaken. The public interests are thus jeopardised on both counts."

51Copy pinpoint51. The menace of illegal and backdoor appointments compelled the Courts to have rethinking and in large number of subsequent judgments this Court declined to entertain the claims of ad-hoc and temporary employees for regularization of services and even reversed the orders passed by the High Courts and Administrati¥_e Tribunals - Director, Institute of G Management Development, UP. v. Pushpa Sriva,stava [1992 (4) SCC 33], Dr. M.A. Haque,and Others v. Union of India and .__. Others [1993 (2) SCC 213], J & K Public Service Commission v. Dr. Narinder Mohan [1994 (2) SCC 630], Dr. Arundhati Ajit Pargaonkar v. State of Maharashtra [1994 Suppl. (3) SCC H

p. 394 Copy page pinpoint

·.r;- A 380], Union of India v. Kishan-Gopa/ Vyas (1996 (7) SCC 134], ,._ 1 Union of India v. Moti Lal [1996 (7) SCC 481], Hindustan Shipyard Ltd. v. · Dr. P. Sambasiva Rao [1996 (7) SC_C 499], State of H.P. v. _Suresh Kumar Verma [1996 (7) SCC 562}, Dr. Surinder Singh Jamwal v. State of J&K [1996 (9) SCC 619], B E. Ramakrishnan v. State of Kera/a [1996 (10) SCC 565], Union of India and Others v. Bishambar Dutt [1996 (11) SCC 341], Union oflndia v. Mahender Singh [1997 (1) SCC 247], P. Ravindran and Others v. Union Territory of Pondicherry and Others [1997 ( 1) SCC 350], Ashwani Kumar and Others 'f c v. State of Bihar and Others [1997 (2) SCC 1], Santosh Kumar Verma and Others v. State of Bihar and Others [1997 (2) SCC 713], State of U.P. and Others v. Ajay [1997 (4) SCC 88], Patna University v. Dr. Arnita Tiwari [1997 (7) SCC 198] and Madhyamik Shiksha Parishad v. Anil Kumar Mishra [2005 (5) 0 sec 122].

52Copy pinpoint52. The shift in the Court's approach became more prominent in A. Umarani v. Registrar, Cooperative Societies [2004 (7) SCC 112], decided by a three-Judges Bench, wherein it was held that the State cannot invoke Article 162 of E the Constitution for regularization of the appointments made in violation of the mandatory statutory provisions. In Secretary, State of Karnataka v. Uma Devi (supra), the Constitution Bench again considered the .question whether the State can frame scheme for regularization of the services of ad-hoc/temporary/ F daily wager appointed in violation of the doctrine of equality or ..... · the one appointed with a· clear stipulation that such appointment will not confer any right on the appointee to seek regularization or absorption in the regular cadre and whether the Court can issue mandamus for regularization or absorption G of such appointee and .answered the same in negative. The Court adverted to the theme of constitutionalism in a system established· in rule of law, expanded meaning given to the doctrine of equality in general and equality in the matter of )..._ employment in particular, multi-facet problem.s including the one H .reiating to unwarranted fiscal burden on the public exchequer

p. 395 Copy page pinpoint

[G.S. SINGHVI, J.]

created on account of the directions given by the High Courts A and this Court for regularization of the services of persons appointed on purely temporary or ad hoc basis or engaged on daily wages or as casual labourers, referred to about three . dozen judgments including R.N. Nanjundappa v. T. Thimmiah [1972 (1) S-CC 409], Daily Rate Casual Labour v. Union of · B India [1988 (1) SCC 122], Bhagwati Prasad v. Delhi State Mineral Development Corporation [1990 (1) SCC 361], Dharwad District P. W.D. Literate Daily Wage Employees Association and others v. State of Karnataka and others [1990 (2) sec 396], State of Haryana v. Piara Singh [1992 (4) sec c I

118] and State of Punjab v. Surinder Kumar [1992 (1) SCC 489] and held:

"47. When a person enters a temporary employment or gets engagement as a contractual or casual worker and the engagement is not based on a proper selection as ,D recognised by the relevant rules or procedure, he is aware of the consequences of the appointment being temporary, casual or contractual in nature. Such a person cannot invoke the theory of legitimate expectation for being confirmed in the post when an appointment to the post could be made only by following a proper procedure for selection and in cases concerned, in consultation with the Public Service Commission. Therefore, the theory of legitimate expectation cannot be successfully advanced by temporary, contractual or casual employees. It cannot also be held that the State has held out any promise while engaging these persons either to continue them where they are or to make them permanent. The State cannot constitutionally make such a promise. It is also obvious that the theory cannot be invoked· to seek a po~itive relief of being m~de permanent in the post.

48. It was then contended that the rights of the employees thus appointed, under Articles 14 and 16 of the Co~stitution, are violated. It is stated that the State has hi

p. 396 Copy page pinpoint

A treated the employees unfairly by employing them on less than minimum wages and extracting work from them for a pretty long period in comparison with those directly recruited who are getting more wages or salaries for·doing similar work. The employees before us were engaged on B ;a · daily wages in the department concerned on wage that was made known to them. There is no case that the wage agreed upon was not being paid. Those who are working on daily wages formed a class by themselves, they cannot claim that they are discriminated as against those who c hav·e been regularly recruited on the basis of the relevant rules. No right can be founded on an employment on daily wages tq claim that such employee should be treated on a par with a regularly recruited candidate, and made permanent in employment, even assuming that the principle could be invoked for claiming equal wages for equal work. There is no fundamental right in those who have been employed on daily wages or temporarily or on contractual basis, to claim that they have a right to be absorbed in service. As has been held by this Court, they cannot be said to be holders of a post, since, a regular appointment could be made only by making appointments consistent with the requirements of Articles 14 and 16 of the Constitution. The right to be treated equally with the other employees employed on daily wages, cannot be extended to a claim for equa:I treatment with those who were regularly empioyed. That would be treating unequals as equals. It cannot also be relied on to claim a right to be absorbed in service even though they have never been selected in terms of the relevant recruitment rules. The arguments based on Articles 14 and 16 of the Constitution G are therefore overruled.

49. It is contended that the State action in not regularising the employees was not fair within the framework of the rule of law. The rule of law compels the State to make ·appointments as envisaged by the Constitution and in the H

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. -4 [G.S. SINGHVI, J.]

manner we have indicated earlier. In most of these cases, no doubt, the employees had worked for some length of A

time but this has also been brought about by the pendency of proceedings in tribunals and courts initiated at the instance of the employees. Moreover, accepting ii)n argument of this nature would mean that the State would 8 be permitted to perpetuate an illegality in the matter of public employment and that would be a negation of the constitutional scheme adopted by us, the people of India. It is therefore not possible to accept the argument thf!t there must be a direction to make permanent all the c persons employed on daily wages. When the court is approached for relief by way of a writ, the court h9s necessarily to ask itself whether the person before it ha,d any legal right to be enforced. Considered in the light cpf the very clear constitutional scheme, it cannot be said that the employees have been able to establish a legal right to be made permanent even though they have never been appointed in terms of the relevant rules or in adherence of Articles 14 and 16 of the Constitution."

53Copy pinpoint53. In paragraph 25, the Constitution Bench specifically referred to the conclusions recorded in paragraphs 45 to 50 of the judgment in State of Haryana v. Piara Singh (supra) and observed:

)'- "26. With respect, why should the State be allowed tQ F

. 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 G recruitment. The direction to make permanent-the distinction between regularisation and making permanent, was not emphasized here-can only encourage the State, ..... ....-4 the model employer, to flout its own rules and would confer undue benefits on a few at the cost of many waiting to H

p. 398 Copy page pinpoint

A compete. With respect, the direction made in para 50 (of J..- . SCC) of Piara Singh is to some extent inconsistent with . the conclusion in para 45 (of SCC) therein. With great respect, it appears to us that the last of the directions clearly ru.ns counter to the constitution.al scheme of B employment recognised in the earlier part of the decision. Really, it canno.t 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." -r c 54. In paragraph 54, the Constitution Bench clarified that the earlier decisions which run counter to the principles settled by it will stand denuded of their status as precedents.

55Copy pinpoint55. In Jawaharlal Nehru Technological University v. T. D Sumalatha (Smt.) and others [2003. (10) SCC 405], a two- Judges Bench considered an issue somewhat similar to the one being considered in these appeals. The facts of that case show that the respondents, who were graduates, were appointed as investigators on consolidated pay between 1985 E and 1991 in the Nodal Centre set up in the University under the scheme known as the National Technical Manpower Information System sponsored by the then Ministry of Education and Culture, Government of India. The Nodal Centre was financed entirely by the Ministry of Education and Culture, Government F of India. Initially, the term of the Nodal Centre was 1 year and 9 ·-1 months, but it was continued thereafter. The respondents were appointed for 89 days but their services were extended from time to time on similar terms. Their consolidated pay was also revised twice. They filed writ petition claiming regularization of service in the University. Some directions were issued by the G ~ig_h Co~rt for con_sideration of the cases of the respondents for absorption. The University declined their prayer. In the second round of .litigation, the Hig.h Col!rt directed the ~ ......... University to absorb the respondents by applying GO No.212 dated 22.4.1994 issued by the State Government for H

p. 399 Copy page pinpoint

[G.S. SINGHVI, J.]

regularization of the services of temporary/ad hoc/daily wage A employees of the Government departments. While reversing the order of the High Court, this Court referred to GO No.212 and held:

"7. Can it be said that by virtue of this provision, the State 8 Government assumes the responsibility of absorbing the staff employed in the organizations or establishments with which it has no administrative or financial nexus, merely I )- because an instrumentality of the State is involved in managing it, that too, in a limited sense? The answer could only be in the negative. When the State Government or its q instrumentalities have not created the posts on their own and do not bear any part of the financial burden, the question of getting the clearance from the Finance and Planning Department of the Government for the purpose of regularization or absorption does not arise. Viewed 9 from any angle, GO No. 212 would be wholly out of place for those working in the nodal centre which is created and nurtured by the Central Government. It is not within the domain of the State Government or even the University to regulate the staff pattern or the monetary benefits of the F staff working therein, without the approval of the Central Government. Therefore, no directions should have been issued to the State Government or to the University to regularize the services of Respondents 1 to 5, if necessary, by creating additional posts." ,F

56Copy pinpoint56. After rejecting the plea of the respondents for regularization of service, this Court adverted to the issue of increase in their salary and held :

"9. Though the plea of regularization in respect of any of ~ the fifth re~pondents cannot be countenanced, the respo.ndent employees should have a fair deal consistent with the guarantee enshrined in Articles 21 and 14 of the ' Constitution. They should not be made to work on a meager salary for years together. It would be unfair and H

p. 400 Copy page pinpoint

unreasonable to extract work from the employees who I

have been associated with the nodal centre almost from its inception by paying them remuneration which, by any objective standards, is grossly low. The Central Government itself has rightly realized the need to revise B the consolidated salary and accordingly enhanced the grant on that account on two occasions. That revision was made more than six years back. It is high time that another revision is made. It is therefore imperative that the -'(

Ministry concerned of the Union of India should take expeditious steps to increase the salary of the c investigators viz. Respondents 1 to 4 working in the nodal centre in Hyderabad. In the absence of details regarding the nature of work done by the said respondents and the equivalence of the job done by them to the other posts prevailing in the University or the Central Government D institutions, we are not in a position to give any direction ,)_

based on the principle of "equal pay for equal work". y However, we consider it just and expedient to direct Respondent 7 or 8, as the case may be, to take an expeditious decision to increase the consolidated salary that is being paid to Respondents 1 to 4 to a reasonable level commensurate with the work done by them and keeping in view the minimum salary that is being paid to the personnel doing a more or less similar job. As far as the fifth respondent is concerned, though we refrain from giving similar directions in view of the fact that the post is not specifically sanctioned under the Scheme, we would like to observe that the Central Government may consider increasing the quantum of office expenditure suitably so that the University will be able to disburse higher salary to the fifth respondent."

[Emphasis supplied] A

57Copy pinpoint57. By virtue of Article 141 of the Constitution, the judgment of the Constitution Bench in Secretary, State of Karnataka v. H -·

p. 401 Copy page pinpoint

[G.S. SINGHVI, J.]

Uma Devi (supra) is binding on all the courts including this A Court till the same is overruled by a larger Bench. The ratio of the Constitution Bench judgment has been followed by different two-Judges Benches for declining to entertain the claim of regularization of service made by ad hoc/temporary/ daily wage/casual employees or for reversing the orders of the High B Court granting relief to such employees - Indian Drugs and Pharamaceuticals Ltd. v. Workmen [2007 (1) SCC 408J, Gangadhar Pillai v. Siemens Ltd. [2007 ( 1) SCC 533], Kendriya Vidyalaya Sangathan v. L. V. Subramanyeswara [2007 (5) SCC 326], Hindustan Aeronautics Ltd. v. Dan c Bahadur Singh [2007 (6) SCC 207]. However, in U.P. SEB v. Pooran Chand Pandey [2007 (11) SCC 92] on which reliance has been placed by Shri Gupta, a· two-Judges Bench-has attempted to dilute the Constitution Bench judgment by suggesting that the said decision cannot be applied to a case D where regularization has been sought for in pursuance of Article 14 of the Constitution and that the same is in conflict with the . judgment of the seven-Judges Bench in Maneka Gandhi v. .. Union of India [1978 (1) SCC 248].

58Copy pinpoint58. The facts of UP. SEB v. Pooran Chand Pandey E (supra) were that the respondents (34 in number) were employed as daily wage employees by the Cooperative Electricity Supply Society in 1985. The Society was taken over by Uttar Pradesh Electricity Supply Board in 1997 along with daily wage employees. Earlier to this, the Electricity Board had F taken a policy decision on 28.11.1996 to regularize the services of its employees working on daily wages from before 4.5.1990, subject to their passing the examination. The respondents moved the High Court claiming benefit of the policy decision dated 28.11.1996. The learned Single Judge of the High Court G, held that once the employees of the society became employees of the Electricity Board, there was no valid ground to discriminate them in the matter of regularization of service. The Division Bench approved the order of the Single Bench. A two- J udges Bench of this Court dismissed the appeal of the H

p. 402 Copy page pinpoint

\ A Electricity Board. In para 11 of its judgment, the two-Judges Bench distinguished Secretary, State of Karnataka v. Uma Devi (supra) by observing that the ratio of that judgment cannot be applied to a case where regularization has been sought for in pursuance of Article 14 of the Constitution. The two-Judges B Bench then referred to State of Orissa v. Sudhanshu Sekhar Misra [AIR 1968 SC 647], State of Gujarat v. Ambica Quarry Works [1987 (1) SCC 213], Bhavnagar University v. Palitana Sugar Milt Pvt. Ltd. [2003 (2) SCC 111 ], Bharat Petroleum Ltd. v. N.R. Viramani [2004 (8) SCC 579] and observed: c ·"We are. constrained to refer to the above decisions and principles contained therein because we find that often Umadevi (3) case is being applied by courts mechanically as if it were a Euclid's formula without seeing the facts of a particular case. As observed by this Court in Bhavnagar D University and Bharat Petroleum Corpn. Ltd. a little difference in facts or even one additional fact may make a lot of difference in the precedential value of a decision. r Hence, in our opinion, Umadevi (3) case cannot be applied mechanically without seeing the facts of a particular case, E as a little difference in facts can make Umadevi (3) case inapplicable to the facts of that case."

"We may further point out that a seven-Judge Bench decision of this Court in Maneka Gandhi v. Union of India F has held that reasonableness and non-arbitrariness is part of Article 14 of the Constitution. It follows that the Government must act in a reasonable and non-arbitrary manner otherwise Article 14 of the Constitution would be violated. Maneka Gandhi case is a decision ·of a seven- Judge Bench, whereas Umadevi (3) case is a decision G of a five-Judge Bench of this Court. It is well settled that a smaller Bench decision cannot override a larger Bench decision of the Court. No doubt, Maneka Gandhi case does not specifically deal with the question of . _

regularisation of government employees, but the principle H

p. 403 Copy page pinpoint

'· [G.S. SINGHVI, J.] ~ of reasonableness in executive action and the law which A it has laid down, in our opinion, is of general application."

[Emphasis supplied]

59Copy pinpoint59. We have carefully analyzed the judgment of the two- Judges Bench and are of the considered view that the above B '

reproduced observations were not called for. The only issue

.. )· which fell for consideration by two-Judges Bench was whether the daily wage employees of the society, the establishment of which was taken over by the Electricity Board along with the c employees, were entitled to be regularized in terms of the policy decision taken by the Board and whether the High Court committed an error by invoking Article 14 of the Constitution for granting relief to the writ petitioners. The question whether the Electricity Board could frame such a policy was neither raised nor considered by the High Court and this Court. The D High Court simply adverted to the facts of the case and held that once the daily wage employees of the society became employees of the Electricity Board, they could not be discriminated in the matter of implementation of the policy of regularization. Therefore, the two-Judges Bench had no occasion to make any adverse comment on the binding character of the Constitution Bench judgment in Secretary, State of Karnataka v. Uma Devi (supra).

60Copy pinpoint60. There have been several instances of different ...,,,, Benches of the High Courts not following the judgments/orders of coordinate and even larger Benches. In some cases, the High Courts have gone to the extent of ignoring the law laid down by this Court without any tangible reason. Likewise, there have been instances in which smaller Benches of this Court have either ignored or bypassed the ratio of the judgments of the larger Benches including the Constitution Benches. These ~- ..+ cases are illustrative of non-adherence to the rule of judicial discipline which is sine qua non for sustaining the system. In Mahadeolal Kanodia v. Administrator General of W.B. [1960 (3) SCR 578), this Court observed: H

p. 404 Copy page pinpoint

A "If one thing is more necessary in law than any other thing, fl.- · it is the quality of certainty. That quality would totally disappear if Judges of coordinate jurisdiction in a High Court start overruling one another's decisions. If one Division Bench of a High Court is unable to distinguish B a previous decision of ·another Division Bench, and holding the view that the earlier decision is wrong, itself gives effect to that view the result would be utter

c confusion. The position would be equally bad where a Judge sitting singly in the High Court is of opinion that the previous decision of another Single Judge on a question of law is wrong and gives effect to that view "'f

instead of referring the matter to a larger Bench. In such a case lawyers would not know how to advise their clients ~~ and all courts subordinate to the High Court would find themselves in an embarrassing position of having to D choose between dissentient judgments of their own High Court. .,... [Emphasis added] p

61Copy pinpoint61. In Lala Shri Bhagwan v. Ram Chandra [AIR 1965 SC 1767], Gajendragadkar, C.J. observed :

"It is hardly necessary to emphasize that considerations of judicial propriety and decorum require that if a learned Single Judge hearing a matter is inclined to take the view ~ F that the earlier decisions of the High Court, whether of a Division Bench or of a Single Judge, need to be reconsidered, he should not embark upon that enquiry ' 1-

sitting as a Single Judge, but should refer the matter to a Division Bench or, in a proper case, place the relevant G papers before the Chief Justice to enable him to constitute a larger bench to examine the question. That is the proper and traditional way to deal with such mattes and it is ~- ,l- founded on healthy principles of judicial decorum and '°', propriety. It is to be regretted that the learned Single Judge H departed from this traditional way in the present case and

p. 405 Copy page pinpoint

... [G.S. SINGHVI, J.] -1 chose to examine the question himself." A

62Copy pinpoint62. In Union of India v. Raghubir Singh [1989 (2) SCC 754], R.S. Pathak, C.J. while recognizing need for constant development of law and jurisprudence emphasized the necessity of abiding by the earlier precedents in following 8 words:

"The doctrine of binding precedent has the merit of . 'r promoting a certainty and consistency in judicial decisions, and enables an organic development of law, besides providing assurance to the individual as to the c consequence of transaction forming part of his daily affairs. And, therefore, the need for a clear and consistent enunciation of legal principle in the decisions of a court."

63Copy pinpoint63. In Sundarjas Kanya/al Bhatija and others v. Collector, D Thane [1989 (3) SCC 396], a two-Judges Bench observed as under:

"In our system of judicial review which is a part of our constitutional scheme, we hold it to be the duty of judges of superior courts and tribunals to make the law more E predictable. The question of law directly arising in the case should not be dealt with apologetic approaches. The law must be made more effective as a guide to behaviour. It ~ must be determined with reasons which carry convictions ~· within the courts, profession and public. Otherwise, the F ' lawyers would be in a predicament and would not know how to advise their clients. Sub-ordinate courts would find themselves in an embarrassing position to choose between the conflicting opinion. The general public would be in dilemma to obey or not to obey such law and it G ultimately falls into disrepute." j

64Copy pinpoint64. In Dr. Vijay Laxmi Sadho v. Jagdish (2001 (2) SCC 247], this Court considered whether the learned Single Judge of Madhya Pradesh High Court could ignore the judgment of a H

p. 406 Copy page pinpoint

' ~;--- ( A coordinate Bench on the same issue and held : ;-- "33. As the learned Single Judge was not in agreement with the view expressed in Devilal case it would have been proper, to maintain judicial discipline, to refer the matter ~ . to a larger Bench rather-than to take a different view. We B note it with regret and distress that the said course was not followed. It is well-settl~d that if a Bench of coordinate jurisdiction disagrees with another Bench of coordinate jurisdiction whether on the basis of "different arguments" -r :. or otherwise, on a question of law. it is appropriate that c the matter be referred to a larger Bench for resolution of the issue rather than to leave two conflicting judgments to operate, creating confusion. It is not proper to sacrifice certainty of law. Judicial decorum, no less than legal propriety forms the basis of judicial procedure and it must be respected at all costs."

65Copy pinpoint65. In Pradip Chandra Parija and others v. Pramod Chandra Patnaik and others [2002 ( 1) SCC 1], the Constitution Bench noted that the two learned Judges denuded the correctness of an earlier Constitution Bench judgment in Bharat Petroleum Corpn. Ltd. v. Mumbai Shramik Sangha [2001 (4) sec448] and reiterated the same despite the fact that the second Constitution Bench refused to reconsider the earlier verdict and observed : F "3. We_ may point out, at the outset, that in Bharat -...i Petroleum Corpn. Ltd. v. Mumbai Shramik Sangha (2001 Ai..

(4) SCC 448) a Bench of five Judges considered a somewhat similar question. Two learned Judges in that case doubted the correctness of the scope attributed to a G certain provision in an eanlier Constitution Bench judgment and, accordingly, referred the matter before them directly to a Co~stitution Bench. The Constitution Bench that then heard the matter took the view that the decision of a ~ Constitution Bench binds a Bench of two learned Judges H and that judicial discipline obliges them to follow it,

p. 407 Copy page pinpoint

[G.S. SINGHVI, J.] ~

regardless of their doubts about its correctness. At the A most, the Bench of two learned Judges could have ordered that the matter be heard by a Bench of three learned Judges.

5. The learned Attorney-General submitted that a B Constitution Bench judgment of this Court was binding on smaller Benches and a judgment of three learned Judges y was binding on Benches of two learned Judges - a proposition that learned counsel for the appellants did not dispute. The learned Attorney-General drew our attention . to the judgment of a Constitution Bench in Sub-Committee c of Judicial Accountability v. Union of India (1992 (4) SCC 97) where it has been said that "no coordinate Bench of this Court can even comment upon, let alone sit in judgment over, the discretion exercised or judgment rendered in a cause or matter before another coordinate D Bench" (SCC p. 98, para 5). The learned Attorney-General submitted that the appropriate course for the Bench of two learned Judges to have adopted, if it felt so strongly that the judgment in Nityananda Kar (1991 Supp. (2) SCC 506) was incorrect, was to make a reference to a Bench of three E learned Judges. That Bench of three learned Judges, if it also took the same view of Nityananda Kar, could have referred the case to a Bench of five learned Judges. ~ ,,. 6. In the present case the Bench of two learned Judges F has, in terms, doubted the correctness of a decision of a Bench of three learned Judges. They have, therefore, referred the matter directly to a Bench of five Judges. In our view, judicial discipline and propriety demands that a Bench of two learned Judges should follow a decision G of a Bench of three learned Judges. But if a Bench of two ..+ learned Judges concludes that an earlier judgment of three learned Judges is so very incorrect that in no circumstances can it be followed, the proper course for it to adopt is to refer the matter before it to a Bench of three H

p. 408 Copy page pinpoint

A learned Judges setting out, as has been done here, the >-- reasons why it could not agree with the earlier judgment. If, tl1en, the Bench of three learned Judges also comes to the conclusion that the earlier judgment of a Bench of t

three learned Judges is incorrect, reference to a Bench B of five learned Judges is justified.

[Emphasis supplied]

66Copy pinpoint66. In State of Bihar v. Ka/ika Kuer and others [2003 (5) ..., SCC 448], the Court elaborately considered the principle of per c incuriam and held that the earlier judgment by a larger Bench cannot be ignored by invoking the principle of per incuriam and the only course open to the coordinate or smaller Bench is to make a request for reference to the larger Bench. In State of Punjab v. Devans Modern Breweries Ltd. [2004 (11) SCC 26], D the Court reiterated that if a coordinate Bench does not agree with the principles of law enunciated by another Bench, the matter has to be referred to a larger Bench. In Central Board of Dwaoodi Bohra Community v. State of Maharashtra [2005 (2) SCC 673], the Constitution Bench interpreted Article 141, E referred to various earlier judgments including Bharat Petroleum Corpn. Ltd. v. Mumbai Shramik Sangha (supra), Pradip Chandra Parija and others v. Pramod Chandra Patnaik and others (supra) and held that "the law laid down in a decision delivered by a Bench of larger strength is binding on any subsequent Bench of lesser or co-equal strength and it ~ would be inappropriate if a Division Bench of two Judges starts 411

overruling the decisions of Division Benches of three Judges. The Court further held that such a practice would be detrimental not only to the rule of discipline and the doctrine of binding pre.cedents but it will also lead to inconsistency in decisions on the point of law; consistency and certainty in the development of law and its contemporary status - both would be immediate casualty." ~- '

67Copy pinpoint67. hi State of UP. and others v. Jeet S. Bisht and another H [2007 (6) SCC 586], when one of the Hon'ble Judges (Katju,

p. 409 Copy page pinpoint

[G.S. SINGHVI, J.]

J.) constituting the Bench criticized the orders passed by various Benches in the same case, the other Hon'ble Judge (Sinha, J.) expressed himself in the following words:

"100. For the views been taken herein, I regret to express my inability to agree with Brother Katju, J. in regard to the criticisms of various orders passed in this case itself by other Benches. I am of the opinion that it is wholly inappropriate to do so. One Bench of this Court, it is trite, does not sit in appeal over the other Bench particularly when it is a coordinate Bench. It is equally inappropriate for us to express total disagreement in the same matter as also in similar matterB with the directions and observations made by the larger Bench. Doctrine of judicial restraint, in my opinion, applies even in this realm. We should not forget other doctrines which are equally developed viz. Judicial Discipline and respect for the D Brother Judges."

68Copy pinpoint68. In U.P. Gram Panchayat Adhikari Sangh v. Daya Ram Saroj [2007 (2) SCC 138], the Court noted that by ignoring the earlier decision of a coordinate Bench, a Division Bench of the E High Court directed that part-time tube-well operators should be treated as permanent employees with same service conditions as far as possible and observed:

"26. Judicial discipline is self-discipline. It is an inbuilt mechanism in the system itself. Judicial discipline demands that when the decision of a coordinate Bench of the same High Court is brought to the notice of the Bench, it is to be respected and is binding, subject of course, to the right to take a different view or to doubt the correctness of the decision and the permissible course then open is to refer the question or the case to a larger Bench. This is the minimum discipline and decorum to be maintained by judicial fraternity."

69Copy pinpoint69. It is interesting to note that in Gair Board, Ernakulam H

410 SUPREME COURT REPORTS' [2008] 15 S.C.R

.... A v. Indira Devi P.S. [1998 (3) SCC 259], a two~Judges Bench >-- doubted the correctness of the seven.:Judges Bench judgment in Bangalore Water Supply & Sewerage Board v. A. Rajappa [1978 (2) sec 213]and directed the matter to be placed ~ . before Hon'ble the Chief Justice of India for constituting a larger B Bench. However, a three-Judges Bench headed by Dr. A.S; Anand, C.J., refused to entertain the reference and observed that the two-Judges Bench is bound by the judgment of the larger Bench - Coir Board, Ernakulam, Kera/a State v. Indira -( Devai P.S. [2000 (1) SCC 224]. c 70. We are distressed to note that despite several pronouncements on the subject, there is substantial increase in the number of cases involving violation of the basics of judicial discipline. The learned Single Judges and Benches of the High Courts refuse to follow and accept the verdict and law laid down by coordinate and even larger Benches by citing minor difference in the facts as the ground for doing so. Therefore, it has become necessary to reiterate that disrespect to constitutional ethos and breach of discipline have grave impact on the credibility of judicial institution and encourages chance litigation. It must be remembered that predictability and certainty is an important hallmark of judicial jurisprudence ,_ developed in this country in last six decades and increase in the frequency of conflicting judgments of the superior judiciary will do incalculable harm t_o the system inasmuch as the courts ~ F at the grass root will not be able to decide as to which of the 4 judgment lay down the correct law and which one should be followed. We may add that in our constitutional set up every citizen is under a duty to abide by the Constitution and respect its ideals and institutions. Those who have been entrusted with the task of administering the system and operating various constituents of the State and who take oath to act in accordance with the Constitution and uphold the same, have to set an example by exhibiting total commitment to the Constitutional ~

ideals. This principle is required to be observed with greater rigour by the members of judicial fraternity who have been

p. 411 Copy page pinpoint

[G.S. SINGHVI, J.]

bestowed with the power to adjudicate upon important A constitutional and legal issues and protect and preserve rights of the individuals and society as a whole. Discipline is sine qua non for effective and efficient functioning of the judicial system. If the Courts command others to act in accordance with the provisions of the Constitution and rule of law, it is not possib~le 8 to countenance violation of the constitutional principle by those who are required to lay down the law.

71Copy pinpoint71. In the light of what has been stated above, we deem, it proper to clarify that the comments and observations made by the two-judges Bench in UP State Electricity Board v. Pooran c Chandra Pandey (supra) should be read as obiter and the same should neither be treated as binding by the High Courts, Tribunals and other judicial foras nor they should be relied upQn or made basis for bypassing the principles laid down by the Constitution Bench. 0

-1 Equal Pay for Equal Work

72Copy pinpoint72. The respondents' claim for fixation of pay in the regul~r scale and grant of other monetary benefits at par with those appointed against the sanctioned posts has been accepted by the High Courts on the premise that their duties and functions are similar to those performed by regular employees. In t~e opinion of the High Courts, similarity in the nature of work of the company paid staff on the one hand and regular employees on the other hand, is by itself sufficient for invoking the principle of equal pay for equal work, In our view, the approach adopt~d by the High Courts is clearly erroneous and directions given for bringing about parity between the company paid staff and regular employees in the matter of pay, allowances etc. are liable to be upset. G

73Copy pinpoint73. The principle of equal pay for equal work for men and women embodied in Article 39(d) was first considered in Kishori.Mohanlal Bakshi v. Union of India [AIR 1962 SC 11391 and it was held that the said principle is not capable of being H

p. 412 Copy page pinpoint

A enforced in a Court of law. After 36 years, the issue was again considered in Randhir Singh v. Union of India (supra), and it was unequivocally ruled that the principle of equal pay for equal work is not an abstract doctrine and can be enforce_d by reading it into the doctrine of equality enshrined in Articles 14 B and 16 of the Constitution of India. The ratio of Randhir Singh V; Union of India (supra) Was reiterated and a·pplied in several -cases - Dhirendra Chamoli v. State of U.P. (supra), Surinder Singh and Another v. Engineer-in-Chief, CPWO and Others 1 (supra), Daily Rated Casual Labour v. Union of India (supra), c Dharwad District P. WO. Literate Daily Wage Employees' Association v. State of Karnataka (supra) and Jaipal v. State of Haryana [1988 (3) sec 354] and it was held that even a daily wage employee who is performing duties similar to regular employees is entitled to the same pay. However, in Federation of All India Customs and Central Excise 0 Stenographers (Recognized) Union v. Union of India [1988 (3) SCC 91], Mewa Ram Kanojia v. A.1.1.M.S. [1989 (2) sec ~ 235], V. Markandeya v. State of A.P. [1989 (3) sec 191], Harbans Lal and others v. State of Himachal Pradesh and E others [1989 (4) SCC 459], State of U.P. and others v. JP. Chaurasia and others [1989 (1) SCC 121], Griha Kalyan Workers' Union v. Union of India [1991 (1) SCC 619], Ghaziabad Development Authority v. Vikram Chaudhary [1995 (5) SCC 21 OJ, State of Haryana and others v. Jasmer Singh and others [1996 (11) SCC 77], State of Haryana v. --4 F Surinder Kumar [1997 (3) SCC 633], Union of India v. K.V. Baby [1998 (9) SCC 252], State of Orissa v. Bairam Sahu [2003 (1) SCC 250], Utkal University v. Jyotirmayee Na yak [2003 (4) sec 760], State of Haryana and another v. Tilak Raj and others [2003 (6) SCC 123], Union of India v. Tarit G Ranjan Das [2003 (11) SCC 658], Apangshu Mohan Lodh v. State of Tripura [2004 (1) SCC 119]. State of Haryana v. Charanjit Singh [2006' (9) SCC 321], Hindustan Aeronautics k Ltd. v. Dan Bahadur Singh (supra), Kendriya Vidyalaya Sangathan v. L. V. Subramanyeswara (supra) and Canteen H Mazdoor Sabha v. Metallurgical & Engineering Consultants

p. 413 Copy page pinpoint

[G.S. SINGHVI, J.]

_.. (India) Ltd. [2007 (7) sec 71 O], the Court consciously and A repeatedly deviated from the ruling of Randhir Singh v. Union of India (supra) and held that similarity in the designation or quantum of work are not determinative of equality in the matter of pay scales and that before entertaining and accepting the claim based on the principle of equal pay for equal work, the B Court must consider the factors like the source and mode of recruitment/appointment, the qualifications, the nature of work, the value judgment, responsibilities, reliability, experience, confidentiality, functional need etc. In State of Haryana and others v. Jasmer Singh and others (supra), the two-Judges ,c Bench laid down the following principle :

"8. It is, therefore, clear that the quality of work performed ' by different sets of persons holding different jobs will have to be evaluated. There may be differences in educational 1

or technical qualifications which may have a bearing on D the skills which the holders bring to their job although the t:i,esjgnation of the job may be the same. There may also be other considerations which have relevance to efficiency in service which may justify differences in pay scales on the basis of criteria such as experience and seniority, or E a need to prevent stagnation in the cadre, so that good performance can be elicited from persons who have reached the top of the pay scale. There may be various other similar considerations which may have a bearing on efficient performance in a job. This Court has repeatedly F observed that evaluation ofsuch jobs for the purposes of pay scale must be left to expert bodies and, unless there are any mala tides, its evaluation should be accepted."

74Copy pinpoint74. In Harbans Lal and others v. State of Himachal G Pradesh and others (supra), the Court held that the claim of carpenters employed by an incorporated company for party in wages payable to their counterparts in Government service is unsustainable. In Jawaharlal Nehru Technological University v. T. Sumalatha (Smt.) and others (supra), it was held that the H

p. 414 Copy page pinpoint

A respondents who were employed under a scheme known as National Technical Manpower Information System, which was sponsored by the then Ministry of Education and Culture, cannot claim parity with the regular. Government employees in the matter of pay-scale. B

75Copy pinpoint75. In Canteen Mazdoor Sabha v. Metallurgical & Engineering Consultants (India) Ltd. (supra), another two- JudgesBench held that simply because some employees of a contractor of the alleged head employer are performing the task or duties similar to the employees of the head employer, it will not entitle such employees to claim parity.

76Copy pinpoint76. As mentioned earlier, the respondents were employed/ engaged by the Official Liquidators pursuant to the sanction accorded by the Court under Rule 308 of the 1959 Rules and they are paid salaries and allowances from the company fund. They were neither appointed against sanctioned posts nor they were paid out from the Consolidated Fund of India. Therefore, the mere fact that they were doing work similar to the regular employees of the office of the Official Liquidators cannot be treated as sufficient for applying the principle of equal pay for equal work. Any such direction will compel the Government to sanction additional posts in the offices of the Official Liquidators so as to facilitate payment of salaries and allowances to the company paid staff in the regular pay scale from the F Consolidate Fund of India and in view of our finding that the policy decision taken by°the Government of India to reduce the number of posts meaot for direct recruitment does not suffer from any legal or constitutional infirmity, it is not possible to entertain the plea of the respondents for payment of salaries G and allowances in the regular pay scales and other monetary benefits at par with regular employees by applying the principle of equal pay for equal work.

Legitimate Expectation

77Copy pinpoint77. We shall now advert to the question whether the

p. 415 Copy page pinpoint

[G.S. SINGHVI, J.]

respondents can invoke the doctrine of legitimate expectation A ~ for supporting the impugned orders. This part of the respondent's claim is founded on their assertion that notwithstanding the contrary stipulation contained in the orders of appointment, they had expected that in view of the 1978 Scheme the Government will absorb them in the regular cadres B on some future date and give benefit of the principle of equal pay for equal work. The argument of Shri Bhaskar P. Gupta and Ms. Jyoti Mendiratta is that the respondents had joined as company paid staff with the hope that they will be absorbed in ' the Government service, but their hopes have been totally belied c because instead "Of creating adequate number of posts for absorption of company paid staff in accordance with the 1999 Scheme, the Government has arbitrarily abolished large number of posts in direct recruitment quota and on that account, even those who have been adjudged suitable will never get absorbed in the regular cadres. In our opinion, there is no merit in this argument. The pleadings of the parties and records produced before the High Courts and this Court do not show that any competent authority of the Government of India had ever .. given any assurance much less made a promise to the respondents that they will get absorbed against the sanctioned posts or that there will be no abolition of posts meant to be filled by direct recruitment. As a matter of fact, the respondents joined as company paid staff knowing fully well that they were being employed as additional staff in connection with the liquidation proceedings and on the basis of sanction accorded by the concerned Court and further that they will have no right to seek absorption. They also knew that their employment will come to an end on the expiry of the tenure specified in the letter/order of appointment or on cessation of the liquidation proceedings. In this scenario, the doctrine of legitimate expectation cannot be invoked for sustaining the directions given by the High Courts for absorption of all company paid ' _._ staff with consequential benefits or for nullifying the policy decision taken by the Government to gradually reduce the direct recruitment quota. H

p. 416 Copy page pinpoint

78Copy pinpoint78. The concept of "due process of law" has played a major '"- role in the development of administrative law. It ensures fairness in public administration. The administrative authorities who are entrusted with the task of deciding lis between the parties or ~'

adjudicating upon the rights of the individuals are duty bound B to comply with the rules of natural justice, which are multifaceted. The absence of bias in the decision making process a'nd compliance of audi 21lteram partem are two of these facets. The doctrine of legitimate expectation is a nacent y addition to the rules of natural justice. It goes beyond statutory c rights by serving as another device for rendering justice. At the root of the principle of legitimate expectation is the constitutional principle of rule of law, which requires regularity, predictability and certainty in government's dealings with the public- J. Raz, The Authority of Law [(1979) Ch. 11]. The 'legal certainty' is also a basic principle of European Community. D European law is based upon the concept of "vertrauensschutz" (the honouring of a trust or confidence). It is for these reasons that the existence of a legitimate expectation may even in the absence of a right of private law, justify its recognition in public law. E

79Copy pinpoint79. In Halsbury's laws of England (Fourth Edition), the doctrine of legitimate expectation has been described in the following words :

F "A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either .from a representation or promise made by the authority, including an implied representation, or from consistent past G practice."

80Copy pinpoint80. A formal statement on the doctrine of legitimate + . expectation can be found in the judgment of House of Lords in Council of Civil Services Union v. Minister of the Civil Service H [1985 AC 374 (HL]. In that case the Government tried to forbid

p. 417 Copy page pinpoint

[G.S. SINGHVI, J.]

• ~ trade unionism among civil service. For this, Civil Service Order-in-1982 Council was issued. The Court of appefl declared that the Minister had acted unlawfully in abridging the A

F . fundamental right of a citizen to become a member of the trade union. The House of Lords approved the judgment of the Court \ of appeal and held that such a right could not be taken away B without consulting the concerned civil seNant. I

81Copy pinpoint81. In India, the Courts have gradually recognized that while administering the affairs of the State, the Government and its .... 'r departments are expected to honour the policy statements an~ treat the citizens without any discrimination. The theory o c legitimate expectation first found its mention in Navjyoti Coop. Group Housing Society v. Union of India [1992 (4) SCC 477], In that case the right of a housing society for right to priority in the matter of registration was recognized in the following words: D " ... In the aforesaid facts, the Group Housing Societies were entitled to 'legitimate expectation' of following ~ consistent past practice in the matter of allotment, even though they may not have any legal right in private law to receive such treatment. The existence of 'legitimate expectation' may have a number of different consequences and one of such consequences is that the authority ought not to act to defeat the 'legitimate expectation' without some overriding reason of public policy to justify its doing ... so. In a case of 'legitimate expectation' if the authority proposes to defeat a person's 'legitimate expectation' it should afford him an opportunity to make representations in the matter. In this connection reference may be made to the discussions on 'legitimate expectation' at page 151 of Volume 1(1) of Halsbury's Laws of England - Fourth G ~ Edition (re-issue). We may also refer to a decision of the House of Lords in Council of Civil Service Unions v. Minister for the Civil Service. It has been f:ield in the said + decision that an aggrieved person was entitled to judicial review if he could show that a decision of the public H

p. 418 Copy page pinpoint

,.__ A authority affected him of some benefit or advantage which i,_

in the past he had been permitted to enjoy and which he legitimately expected to be permitted to continue to enjoy either until he was given reasons for withdrawal and j,__ the opportunity to comment on such reasons. ,,,' 8 It may be indicated here that the doctrine of 'legitimate expectation' imposes in essence a duty on public authority to act fairly by taking into consideration all relevant factors relating to such 'legitimate expectation'. y ; Within the conspectus of fair dealing in case of 'legitimate c expectation', the reasonable opportunities to make representation by the parties likely to be affected by any change of consistent past policy, come in. We have not been shown any compelling reasons taken into consideration by the Central Government to make a D departure from the existing policy of allotment with reference 'to seniority in Registration by introducing a new guideline." ~-

(emphasis supplied) E

82Copy pinpoint82. In Food Corporation of India v. Kamdhenu Cattle Feed Industries [1993 (1) SCC 71], this Court considered whether rejection of the tender of the respondent was vitiated by arbitrariness. The claim of the respondents was negated in the following words : .... F "In the contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to article 14 of the Constitution of which non-arbitrariness is a significant facet. There is no unfettered discretic;m in public G law: A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is 'fairplay in action'. Due ~--

observance of this obligation as a part of good -+- I._ administration raises a reasonable or legitimate H expectation in every citizen to be treated fairly in his

p. 419 Copy page pinpoint

[G.S. SINGHVI, J.]

interaction with the State and its instrumentalities, with this A . element forming a necessary component of the decision making process in all State actions. To satisfy this · requirement of non-arbitrariness in a State action, .it is, therefore, nec~ssary to consider and give due weight to the reasonable or legitimate expectations of the persons . B likely to be affected by the decision or else that unfairness . in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona tides. of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. The c rule of law does not completely eliminate discretion jn the exercise of power, as it is unrealistic, but provides for control of its exercise of by judicial review.

The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct D enforceable right, but failure to consider and give due 1 weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non- arbitrariness, a necessary concomitant of the rule of law. E Every legitimate expectation is a relevant factor requiring due consideration in a fair decision-making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be F • determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this G manner would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this H

420 SUPREME COURT REPORTS [20081 15 S.C.R.

A context."

[Emphasis supplied]

83Copy pinpoint83. In Union of India and others v. Hindustan Development Corporation and others [1993 (3) SCC 499] this B · Court considered the doctrine of legitimate expectation and held:

"For legal purposes, the expectation cannot be the same as anticipation. It is different from a wish, a desire or a c hope nor can it amount to a claim or demand on the ground of a right. However earnest and sincere a wish, a desire or a hope may be and however confidently one may look to them to be fulfilled, they by themselves cannot amount to an assertable expectation and a mere disappointment D does not attract legal consequences. A pious hope even leading to a moral obligation cannot amount to a legitimate expectation. The legitimacy of an expectation can be inferred only if it is founded on the sanction of law or custom or an established procedure followed in regular and natural sequence. Again it is distinguishable from a E genuine expectation. Such expectation should be justifiably legitimate and protectable. Every such legitimate expectation does not by itself fructify into a right and therefore it does not amount to a right in the conventional sense. 'r [Emphasis supplied] F

84Copy pinpoint84. In Punjab Communications Ltd. v. Union of India [1999 (4) SCC 727], the Court observed as under : ' "The principle of 'legitimate expectation' is still at a stage. G · of evolution. The principle is at the root of the rule of law and requires regularity, predictability and certainty in the Government's dealings with the public. The procedural part of it relates to a representation that a hearing or other appropriate procedure will be afforded before the decision is made .... H ,'"'....

p. 421 Copy page pinpoint

[G.S. SINGHVI, J.]

.-1 However, the more important aspect is whether the . A decision-maker can sustain the change in policy by resort to Wednesbury principles of rationc;ility or whether the court can go into the question whether the decision-maker has properly balanced the legitimate expectation as against the need for a change .... In sum, this means that the B judgment whether public interest overrides the substantive legitimate expectation of individuals wiH be for. the decision-maker who has made the change in the policy. "' The choice of the policy is for the decision-maker and not for the court. The legitimate substantive expectation merely c permits the court to find out if the change in policy which is the cause for defeating the legitimate expectation is irrational or perverse or one which no reasonable person could have made." (emphasis in original)

85Copy pinpoint85. In J.P. Bansal v. State of Rajasthan [2003 (5) SCC D 134], this Court refused to invoke the doctrine of legitimate -~ expectation in favour of the appellant who claimed compensation of pre-mature termination of the contractual appointment as Judicial Member of the Rajasthan Taxation Appellate Tribunal. E

86Copy pinpoint86. In Or. Chanchal Goyal (Mrs.) v. State of Rajasthan llllllf [2003 (3) sec 485], the appellants claim for absorption in the regular cadre/regularization of service was rejected by the High >- Court. While approving the orders of the Single and Division F Benches of the High Court, this Court observed :

"23. On the facts of the case delineated above, the principle of legitimate expectation has no application. It has not been shown as to how any act was done by the authorities which created an impression that the conditions G attached in the original appointment order were waived. Mere continuance does not imply such waiver. No legitimate expectation can be founded on such unfounded impressions. It was not even indicated as to who, if any, H "'. and with what authority created such impression. No waiver

p. 422 Copy page pinpoint

A which would be against requisite compliances can be countenanced. Whether an expectation exists is, self- evidently, a question offact. Clearstatutory words override any expectation, however founded."

87Copy pinpoint87. In Secretary, State of Karnataka v. Uma Devi (supra), 8 the Constitution Bench referred to the claim of the employees based on the doctrine of legitimate expectation and observed as under: · · ·( .. "The doctrine can be invoked if the decisions of the c administrative authority affect the person by depriving him of some benefit or advantage which either (i) he had in the past been permitted by the decision-maker to enjoy and which he can legitimately expect to be permitted to continue to do until there have been communicated to him some rational grounds for withdrawing it on which he has been given an opportunity to comment; or (ii) he has received assurance from the decision-maker that they will .. not be withdrawn without giving him first an opportunity of advancing reasons for contending that they should not be withdrawn."

88Copy pinpoint88. In Ku/deep Singh v. Govt of NCT of Delhi [2006 (5) SCC 702], the Court refused to invoke the doctrine of legitimate expectation to nullify the revised policy decision taken by the F Government not to grant fresh liquor licenses.

89Copy pinpoint89. In Ram Pravesh Singh v. State of Bihar [2006 (8) SCC 381], a two-Judges Bench considered the question whether the I employees of Futwah Phulwarisharif Gramya Vidyut Sahakari C- Samiti Ltd., which was a cooperative society, could claim J G absorption in the services of Bihar State Electricity Board by invoking the doctrine of legitimate expectation. The facts of that case show that the society was brought into existence by the J. \.--- State Government, the Electricity Board and the Rural Electrification Corporation for effective implementation of Rural l~ H Electrification Scheme meant for better distribution of electricity Ji ~

p. 423 Copy page pinpoint

[G.S. SINGHVI, J.]

to rural areas, but the license of the society was revok~d in the A year 1995 and the Board refused to absorb the employees of the society. The learned Single Judge and Division Bench of the High Court declined. to interfere with the decision of the Board. This Court dismissed the appeal of the employees and observed: B

"What is legitimate expectation? Obviously, it is not a legal right. It is an expectation of a benefit, relief or remedy, that may ordinarily flow from a promise or established practice. The term "established practice" refers to a regular, consistent, predictable and certain conduct, process or c activity of the decision-making authority. The expectation should be legitimate, that is, reasonable, logical and valid. Any expectation which is based on sporadic or casual or random acts, or which is unreasonable, illogical or invalid cannot be a legitimate expectation. Not being a right, it is D not enforceable as such. It is a concept fashioned by the courts, for judicial revie:.w of administrative action. It is procedural in character based on the requirement of a higher degree of fairness in administrative action, as d consequence of the promise made, or practice 8 established. In short, a person can be said to have a "legitimate expectation" of a particular treatment, if any representation or promise is made by an authority, either expressly or impliedly, or if the regular and consistent past practice of the authority gives room for such expectation in the normal course. As a ground for relief, the efficacy of the doctrine is rather weak as its slot is just above ·"fairness in action" but far below "promissory estoppel". It may only entitle an expectant: (a) to an opportunity to show cause before the expectation is dashed; or (b) to an explanation as to the cause for denial. In appropriate cases, the courts may grant a direction requiring the authority to follow the promised procedure or established practice. A legitimate expectation, even when made out, does not always entitle the expectant to a relief. Public H

p. 424 Copy page pinpoint

A interest, change in policy, conduct of the expectant or any ~

other valid or bona fide reason given by the decision- maker, may be sufficient to negative the "legitimate expectation". The doctrine of legitimate expectation based on established practice (as contrasted from legitimate B expectation based on a promise), can be invoked only by someone who has dealings or transactions or negotiations with an authority, on which such established practice has a bearing, or by someone who has a recognised legal '( relationship with the authority." c AJter noticing the judicial precedents on the subject, the L I Court held that employees of the erstwhile society cannot ~

invoke the theory of legitimate expectation for compelling the I- Board to absorb them despite its precarious financial condition.

90Copy pinpoint90. By applying the ratio of the aforementioned judgment to the facts of this case, we reiterate that the respondents cannot invoke the doctrine of legitimate expectation. At the cost of repetition, it needs to be emphasized that the respondents " ." ;

were employed by the Official Liquidators as additional staff pursuant to the sanction accorded by the concerned Courts. The conditions of their appointment clearly envisaged cessation of ( employment at the end of fixed tenure or on completion of ,, liquidation proceedings. Of course, as it later turned out, the

~l respondents were made to work in relation to different liquidation proceedings and for that purpose, the term of their employmenUengagement was extended from time to time and they continued in service for many years in the same capacity. ,..- However, no material has been placed before this Court to show l that any promise was made or any assurance was held out to the respondents by any competent authority of the Government G of India for their absorption in the regular cadres. There is nothing in the language of Rule 308 of the 1959 Rules from which it can be inferred that those employed as additional staff in connection with the liquidation proceedings will, in future, be absorbed in the regular cadres. The 1978 as also the 1999 H

p. 425 Copy page pinpoint

[G.S. SINGHVI, J.]

Schemes are merely illustrative of compassionate approach A adopted by the Government of India for facilitating absorption of the company paid staff against the sanctioned posts to the extent of 50% vacancies in the direct recruitment quota. These schemes cannot be read as a charter for legitimating the claim of company paid staff to be absorbed in the Government B service de hors availability of vacancies, more so when the Government has taken a rational policy decision to reduce 'y direct recruitment to various services in a phased manner. In our opinion, any direction by the Court for absorption of all company paid staff would be detrimental to public interest in c more than one ways. Firstly, it will compel the Government to abandon the policy decision of reducing the direct recruitment to various services. Secondly, this will be virtual abrogation of the statutory rules which envisages appointment to different cadres by direct recruitment. D

91Copy pinpoint91. Before parting, we consider it necessary to take ~ cognizance of the fact that in compliance of order passed by Calcutta High Court in Writ Petition No.211 of 2001, the Government of India created 51 posts for absorption of staff employed by the Court Liquidator. However, that cannot be E made basis for granting relief to the respondents because creation of those posts was clouded by the threat of contempt, ..,. for which proceedings had been initiated by the aggrieved employees. >- F ..... 92. On the basis of above discussion, we hold that -

(i) the respondents are not entitled to aosorption against the sanctioned posts in Group C of the Department of Company Affairs, Government of India, as of right. G

' (ii) The 1999 Scheme does not suffer from any legal l or constitutional infirmity insofar as it provides for absorption of the company paid staff only to the extent of 50% vacancies in direct recruitment quota H

426· SUPREME COURT REPORTS.· [2008] 15 S.C.R

A of Group C posts.

(iii) The decision taken by the Government of India t6 reduce the number of posts in direct recruitment quotq c;lnd consequential abolition of posts in the Department of Company Affairs is not vitiated by B arbitrariness or violation of the doctrine of equality or malafides.

(iv) The doctrine of legitimate expectation cannot be invoked for sustaining the directions given by the c High Collrts ·of Calcutta and Delhi for creation of supernumerary posts to facilitate absorption of all compa~y paid staff in the regular cadres.

(v) The respondents .are not entitled to have their pay fixed in the regular scales and other monetary benefits at par with regular employees working under the Official Liquidators.

93Copy pinpoint93. Notwithstanding our conclusion that the directions ·given by the Calcutta and Delhi High Courts for absorption of company paid staff against Group C posts and grant of monetary benefits to them at par with regular employees of the \ Department of Company Affairs are legally unsustainable, we are inclined to accept the contention of the respondents that failure of the Government of India to frame scheme for abso.rption of Group D posts has resulted in invidious discrimination qua one section of the company paid staff. The appellants have not placed any material before this Court to . show that the finding recorded by the learned Single Judge of Delhi High Court that a number of persons were employed by G_ the Official Liquidator in 1985 and thereafter who could be considered for absorption against Group D posts. This means that at the time· of framing of the 1978 Scheme the existing company paid staff did not include the employees who could be absorbed on Group D posts and this appears to be the H reason why: the said scheme was confined to absorption of

p. 427 Copy page pinpoint

[G.S. SINGHVI, J.]

company paid staff against Group C posts. Since the employees who could be eligible for absorption on Group D posts were appointed in 1985 and thereafter, the Government of India should have, while framing the 1999 Scheme, taken cognizance of their presence and made appropriate provision for their absorption. Its failure to do so has certainly resulted in unintended discrimination qua one section of the company paid staff. It is, therefore, appropriate to direct that the Government of India should frame a scheme for absorption of eligible and suitable employees against Group D posts. The scheme should be modeled on the 1999 Scheme. The needful be done within c six moths. Thereafter, eligible and suitable members of the company paid staff should be absorbed against Group D posts. .

94Copy pinpoint94. We also feel that the salaries and allowances payable to the company paid staff should be suitably increased in the . wake of huge escalation of living cost. In Jawaharlal Nehru D Technological University v. T. Sumalatha (Smt.) and others -• (supra), a two-Judges Bench, after taking note of the fact that emoluments payable to the Investigators appointed in the Nodal Centre at Hyderabad had not been revised for six years , directed the Union of India to take expeditious steps in that E direction. Keeping that judgment in mind, we direct the Official Liquidators attached to various High Courts to move the , concerned Court for increasing the emoluments of the company paid staff. Such a request should be sympathetically considered by the concerned Courts and the emoluments of the company ' F paid staff be suitably enhanced and paid subject to availability of funds.

95Copy pinpoint95. In the result, the appeals are allowed. The impugned judgments and orders are set aside subject to the direction for , G framing of scheme for absorption of eligible and suitable employees against Group D posts and implementation thereof J. and increase in the salaries and emoluments payable to the : company paid staff.

RP. Appeals allowed. H