Holding

A workman not appointed in accordance with statutory recruitment rules or against a clear vacancy is not entitled to permanent classification, and thus the award of regularisation is invalid.

Summary

Laut Kumar Verma, engaged on daily wages, applied before the Labour Court for classification as a permanent clerk, claiming that continuous service of more than six months entitled him to permanent status under Clause 2 of the Standard Standing Orders and protection of Section 25‑F of the Industrial Disputes Act. The Labour Court and the High Court directed his regularisation and back‑wages. The State appealed, contending that the respondent was never appointed in accordance with statutory rules or against a clear vacancy and therefore could not be deemed a permanent employee. The Supreme Court held that a workman not appointed under the statutory recruitment scheme and without a ticket of permanent employee is ineligible for permanent classification, rendering the lower courts' orders erroneous. It distinguished ‘irregular’ from ‘illegal’ appointments and, although the Special Leave Petition was barred by limitation, the Court condoned the delay and awarded Rs 1,50,000 as compensation. The appeal was allowed and the impugned judgments set aside.

Issues considered

Whether a daily‑wage worker not appointed under statutory rules can be classified as a permanent employee under Clause 2 of the Standard Standing Orders and the Madhya Pradesh Industrial Relations Act.
Whether the award directing regularisation and back‑wages is legally valid.
Whether the Special Leave Petition is barred by limitation and if the delay can be condoned.
Distinction between ‘irregular appointment’ and ‘illegal appointment’ in the context of state employment.
Whether compensation for the delay in filing the SLP is warranted.

Legislation cited

Constitution of Indias. Article 12, s. Article 16
Industrial Disputes Act, 1947s. 25-F
Madhya Pradesh Industrial Relations Act, 1960s. Clause 2 (Standard Standing Orders)

Subjects

labour lawregularisationpermanent employeedaily wage workerindustrial disputes actMadhya Pradesh Industrial Relations Actspecial leave petitionlimitationirregular appointmentillegal appointmentconstitutional lawArticle 16employee classification

Judgment

STATE OF M.P. AND ORS. A
v.
LAUT KUMAR VERMA

NOVEMBER 24, 2006

[S.B. SINHA AND MARKANDEY KATJU, JJ.] B

Labour Law:

Madhya Pradesh Industrial Relations Act, 1960:
c
Standard Standing Order-Clause 2-Dai/y wager-Termination of
services-Claim for regularization and for classification as permanent clerk-
Allowed by Labour Court and High Court-Held, workman having not been
appointed in terms of statutory rules, nor against a clear vacancy, Labour
Court and High Court were not correct in directing regularization-Industrial D
Disputes Act, 1947-s.25-F-Constitution of India-Article 16.

Constitution of India, 150:

Article 136-Special Leave Petition-Condonation of delay-
Meanwhile Award of Labour Court in favour of workman implemented-
Held, decision to implement the award was subject to decision in SLP-Delay E
condoned-Appeal of State a/lowed-Workman to be paid compensation and
costs for condoning the massive delay in filing SLP.

Words and Phases:

'Irregular appointment' and 'illegal appointment'-Distinction F
between-Explained

Respondent was engaged on daily wages. On his application, the Labour
Court made an award holding that having worked continuously for a period of
more than six months he acquired the right for classification in the category
of permanent clerk, and, as such, his services could not have been terminated G
without complying with the provisions of S.25-F of the Industrial Disputes
Act, 1947. A direction was issued to the employer to classify the worker on
permanent basis from two years prior to the date of filing his application, and
to regularize his service with consequential benefits. The employer-State after
591 II
592 SUPREME COURT REPORTS [2006] SUPP. 9 S.C.R.

A unsuccessfully challenging the award before the High Court, filed the present
appeal.

It was contended for the appellant that under the provisions of the
Madhya Pnl,desh Industrial Relations act, 1960, and clause 2 of the Standard
Standing 0 rders the respondent was not entitled to be classified as a
B permanent employee. For the respondent, on the or other hand, it was
contended thmt the special leave petition being barred by limitation, the delay
in filing the sa•me should not be condoned. lt was also pointed out that the
award of the La,bour court had been implemented by classifying the respondent
as permanent.
c Allowing tb.e appeal, the Court

HELD: 1. A workman would be entitled to classification of permanent
or temporary employee, if th~ conditions precedent therefor are satisfied. The
respondent was not a1npointed in terms of statutory rules, nor was he appointed
D against a clear vacanc,Y. He was not appointed on a permanent post or placed
on probation. He was i.'lso not given a ticket of permanent employee. He was
furthermore not entitkd to any regular scale of pay attached to any post.
Working on daily wage's alone would not entitle him to the status of a
permanent employee. The Labour Court, Industrial tribunal as also the High
Court were not correct in dfrecting regularization of sen•ice of the respondent.
E (595-F; 597-C-D; 600-FI

Secretary, State of Karnataka & Ors. v. Umadevi (3) & Ors., 12006) 4
SCC I, followed.

MP. Housing Board & Anr. v. Mano} Shrivastava, 120061 2 SCC 702;
F Municipal Council, Sujanpur v. Surinder Kumar, (20061 5 SCC 173; and
Indian Drugs and Pharmaceuticals Limited v. Workman, Indian Drugs and
Pharmaceuticals Limited, Civil App1eal No. 4996 of 2006 decided by SC on
16.11.2006, relied on.

State of Madhya Pradesh & Ors. v. Yogesh Chandra Dubey & Ors.,
G (2006) 9 SCALE 73: 12006) 8 sec 67' dted.

2. The distinction between the two terms i.e. 'irregular appointment'
and 'illegal appointment' is apparent. In the event the appointment is made in
total disregard of the constitutional sciheme as also the recruitment rules
H framed by the employer, which is State within the meaning of Article 12 of
STA TE OF M.P. v. LALIT KUMAR VERMA 593

the Constitution of India, the recruitment would be an illegal one; whereas A
. there may be cases where, although, substantial compliance of the
constitutional scheme as also the rules has been made, the appointment may
be irregular in the sense that some provisions of some rules might not have
been strictly adhered to. [598-F-G)

National Fertilizers Ltd. v. Somvir Singh, (2006) 5 SCC 493; R.S. Garg B
v. State of UP. & Ors., (2006) 7 SCALE 405; State of Gujarat & Anr. v.
Karshanbhai K. Rabari & Ors., [20061 6 SCC 21; Principal, Mehar Chand
Polytechnic & Anr. v. Anu Lamba & Ors., (2006) 7 SCC 161 and B.N.
Nagarajan & Ors. v. State of Karnataka & Ors., (1979) 4 SCC 507, relied
on.
c
Mineral Exploration Corpn. Employees' Union v. Mineral Exploration
Corpn. Ltd. & Anr., [2006) 6 SCC 310, referred to.

3.1. The decision to implement the judgment was evidently subject to
the decision of this Court. But, the Special Leave Petition is barred by D
limitation. The legal position somehow was uncertain before the decision
rendered by the Constitutien Bench of this Court in Uma Devi.* It has
categorically been stated in the instant case that there was no vacant post in
the department in which the respondent could be reinstated. The State had
also adopted a policy decision regarding regularization. The said policy
decision has also no application in the case of the respondent Even otherwise, E
it would be unconstitutional being hit by Article 16 of the Constitution oflndia.

*Secretary, State of Karnataka & Ors. v. Umadevi (3) & Ors., [2006) 4
sec 1, referred to.
3.2. Keeping in view the peculiar facts and circumstances of this case, p
the interest of justice would be sub-served by directing that any benefit which
has already been given to the respondent shall not be recovered. He is also
directed to be paid a sum of Rs. 1,50,000/- (One lakh fifty thousand) towards
compensation and costs for condoning the massive delay in filing the Special
Leave Petition. Accordingly, the impugned judgments are set aside. [601-C)
G
CIVIL APPELLATE JURJSDICTION : Civil Appeal No. 5185 of2006.

From the Judgment and Order dated 4-9-2003 of the High Court of
Madhya Pradesh (Gwalior Bench) in W.P. No.1587/2000.
S.K. Dubey, Amit Mishra and B.S. Banthia for the Appellants. H
594 SUPREME COURT REPORTS [2006] SUPP. 9 S.C.R.

A Ashok Mathur for the Respondent.

The Judgment of the Court was delivered by

S.B. SINHA, J. Leave granted.

B Respondent herein was appointed on daily wages. Indisputably, his
recruitment was not made in terms of the statutory rules. No offer of
appointment was also issued. He filed an application before the Labour Court
purported to be for his classification in permanent category of workman. An
Award was made on the premise that ·he having worked continuously for a
period of more than six months, acquired a right for classification in the
C category of permanent clerk and in that view of the matter, his services could
not have been terminated without complying with the provisions of Section
25F of the Industrial Disputes Act, 1947; He was directed to be classified cin
the permanent basis as clerk from two years prior to the date of his filing the
application, i.e., 11th November, 1991. He was also held to be entitled to
D prescribed wages and thus, the amount of difference in wages of the said post
and other benefits was directed to be paid. A writ petition was preferred
thereagainst by the appellants before the High Court, which was also dismissed
by a learned Single Judge, opining that no case had been made out to
interfere therewith.

E Shri S.K. Dubey, learned Senior Counsel appearing on behalf of the
appellants would contend that the impugned judgment cannot be sustained
in view of the fact that the respondent, in Jaw, was not entitled to be classified
as a permanent employee under the provisions of Madhya Pradesh Industrial
Relations Act, 1960. Strong reliance in this behalf was placed on State of
Madhya Pradesh & Ors. v. Yogesh Chandra Dubey & Ors. [2006] 9 SCALE
F 73 : (2006] 8 SCC 67. It was urged that in any event the respondent should
not have been directed to be held entitled to back wages from 1992.

Mr. Ashok Mathur, learned counsel appearing on behalf of the
respondent, on the other hand, would submit :-

G (i) that the Special Leave Petition being barred by limitation, the delay
in filing the same should not be condoned;

(ii) as the certificates issued in favour of the respondent had been
examined by three Courts, this Court should not interfere therewith.

H
STATE OF M.P. v. LAUT KUMAR VERMA [S.B. SINHA, J.] 595
The application was filed by the respondent before the Labour Court A
on the premise that the order of termination dated 10.10.1991 was illegal and
he should have been declared permanent on 1st April, 1987 after classification
in the category of Supervisor and Clerk.

Clause 2 of the Standard Standing Orders reads as under:
B
"2. Classification of employees.Employees shall be classified as (i)
permanent, (ii) permanent seasonal, (iii) probationers, (iv) badlies, (v)
apprentices, and (vi) temporary:

(i) A permanent employee is one who has completed six
months satisfactory service in a clear vacancy in one or more C
posts whether as a probationer or otherwise, or a person
whose name has been entered in the muster roll and who is
given a ticket of permanent employee;

* * *.
D
(vi) temporary employee means an employee who has been
employed for work which is essentially of a temporary
character, or who is temporarily employed as an additional
employee in connection with the temporary increase in the
work of a permanent nature; provided that in case such
employee is required to work continuously for more than six E
months he shall be deemed to be a permanent employee,
within the meaning of clause (i) above."

A workman, therefore, would be entitled to classification of permanent
or temporary employee, if the conditions precedent therefor are satisfied.
Respondent was not appointed against a clear vacancy. He was not appointed F
in a permanent post or placed on probation. He had also not been given a
ticket of permanent employee. Working on daily wages alone would not
entitle him to the status of a perman..:nt employee.

In Mahendra L. Jain & Ors. v. Indore Development Authority & Ors. G
[2005) 1 SCC 639, this Court opined :

"The 1961 Act provides for classification of employees in five
categories. The 1973 Act, as noticed hereinbefore, clearly mandates
that all posts should be sanctioned by the State Government and all
appointments to the said cadre must be made by the State Government H
,.
596 SUPREME COURT REPORTS [2006] SUPP. 9 S.C.R.

A alone. Even the appointments to the local cadre must be made by the
Authority. The said provisions were not complied with. It is accepted
that no appointment letter was issued in favour of the appellants. Had
the appointments of the appellants been made in terms of the
provisions of the Adhiniyam and the Rules framed thereunder, the
respondent Authority was statutorily enjoined to .make an offer of
B appointment in writing which was to be accepted by the appellants
herein. Who made the appointments of the appellants to the project
or other works carried on by the Authority is not known. Whether the
person making an appointment had the requisite jurisdiction or not is
also not clear. We have noticed hereinbefore that in the case of Om
c Prakash Mondloi, the CEO made an endorsement to the effect that he
may be tried in daily wages and should be entrusted with the work
of progress collection of ODA work. The said order is not an offer of
appointment by any sense of the term."

It was further opined :
D
"The Standing Orders governing the terms and conditions of
service must be read subject to the constitutional limitations wherever
applicable. Constitution being the suprema lex, shall prevail over all
other statutes. The only provision as regards recruitment of the
employees is contained in Order 4 which merely provides that the
E manager shall within a period of six months, lay down the procedure
for recruitment of employees and notify it on the notice board on
which Standing Orders are exhibited and shall send copy thereof to
the Labour Commissioner. The matter relating to recruitment is governed
by the 1973 Act and the 1987 Rules. In the absence. of any specific
directions contained in the Schedule appended to the Standing Orders,
F the statute and the statutory rules applicable to the employees of the
respondent shall prevail.

* * *
For the purpose of this matter, we would proceed on the basis that
G the 1961 Act is a special statute vis-' -vis the 1973 Act and the Rules
framed thereunder. But in the absence of any conflict in the provisions
of the said Act, the conditions of service including those relating to
recruitment as provided for in the 1973 Act and the 1987 Rules would
apply. If by reason of the latter, the appointment is i_nvalid, the same
H cannot be validated by taking recourse to regularisation. For the
STATE OF M.P. v. LALIT KUMAR VERMA [S.B. SINHA, J.] 597

purpose of regularisation which would confer on the employee A
concerned a permanent status, there must exist a post. However, we
may hasten to add that regularisation itself does not imply permanency.
We have used the term keeping in view the provisions of the 1963
Rules."

The said decision shall apply in all fours to the facts of the present B
case. {See also MP. Housing Board & Anr. v. Mano} Shrivastava [2006] 2
SCC 702, Municipal Council, Sujanpur v. Surinder Kumar, [2006] 5 SCC 173
and Indian Drugs and Pharmaceuticals Limited v. Workman, Indian Drugs
and Pharmaceuticals Limited, Civil Appeal No. 4996 of 2006 decided on
16.l l.2006} c
The respondent was also not appointed in terms of the statutory rules.
He was furthermore not entitled to any regular scale of pay attached to any
post. Ordinarily, therefore, he could not have been directed to be regularized
in service having regard to the Constitution Bench decision of this Court in
Secretmy, State of Karnataka & Ors. V. Umadevi 3 & Ors. [2006] 4 sec 1,. D
Reliance, however, has been placed by Mr. Mathur on paragraph 53 of the
judgment which reads as under :

"One aspect needs to be clarified. There may be cases where
irregular appointments (not illegal appointments) as explained in S. V.
Narayanappa, R.N. Nanjundappa and B.N. Nagarajan and referred E
to in para 15 above, of duly qualified persons in duly sanctioned
vacant posts might have been made and the employees have continued
to work for ten years or more but without the intervention of orders
of the courts or of tribunals. The question of regularisation of the
services of such employees may have to be considered on merits in
the light of the principles settled by this Court in the cases F
abovereferred to and in the light of this judgment. In that context, the
Union of India, the State Governments and their instrumentalities
should take steps to regularise as a one-time measure, the services of
such irregularly appointed, who have worked for ten years or more in
duly sanctioned posts but not under cover of orders of the courts or G
of tribunals and should further ensure that regular recruitments are
undertaken to fill those vacant sanctioned posts that require to be
filled up, in cases where temporary employees or daily wagers are
being now employed. The process must be set in motion within six
months from this date. We also clarify that regularisation, if any
H
598 SUPREME COURT REPORTS (2006) SUPP. 9 S.C.R.

A already made, but not sub judice, need not be reopened based on this
judgment, but there should be no further bypassing of the
constitutional requirement and regularising or making permanent, those
not duly appointed as per the constitutional scheme."

Strong reliance has also been placed by Mr. Mathur upon a Division
B Bench decision of this Court in Mineral Exploration Corpn. Employees'
Union v. Mineral Exploration Corpn. Ltd. & Anr. [2006] 6 SCC 310, wherein,
this Court, while following the case of Uma Devi & Ors. (supra), invoked
paragraph 53 of the said decision to opine :

"We, therefore, direct the Tribunal to decide the claim of the
c workmen of the Union strictly in accordance with and in compliance
with all the directions given in the judgment by the Constitution
Bench in Secy., State of Karnataka v. Umadevi (3) and in particular,
paras 53 and 12 relied on by the learned Senior Counsel appearing for
the Union. The Tribunal is directed to dispose of the matter afresh
within 9 months from the date of receipt of this judgment without
D
being influenced by any of the observations made by us in $his
judgment. Both the parties are at liberty to submit and furnish the
details in regard to the names of the workmen, nature of the work, pay
scales and the wages drawn by them from time to time and the
transfers of the workmen made from time to time, from place to place
E and other necessary and requisite details. The above details shall be
submitted within two months from the date of the receipt of this
judgment before the Tribunal."

The question whic_h, thus, arises for consideration, would be : ls there
any distinction between 'irregular appointment' and 'illegal. appointment'?
F The distinction between the two terms is apparent. In the event the appointment
is made in total disregard of the constitutional scheme as also the recruitment
rules framed by the employer, which is State within the meaning of Article 12
of the Constitution of India, the recruitment would be an illegal one; whereas
there may be cases where, although, substantial compliance of the
G constitutional scheme as also the rules have been made, the appointment may
be irregular in the sense that some provisions of some rules might not have
been strictly adhered to.

In National Fertilizers Ltd. v. Somvir Singh [2006] 5 SCC 493,.it has
been held :
H
I
··-r

l
STATE OF M.P. v. LALIT KUMAR VERMA [S.B. SINHA, J.] 599

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

The Constitution Bench thought of directing regularisation of the
services only of those employees whose appointments were irregular C
as explained in State of Mysore v. S. V. Narayanoppa, R.N.
Nanjundappa v. T. Thimmiah arid B.N. Nagarajan v. State of
Karnataka wherein this Court observed: [ Umadevi (3) case l , SCC
p.24, para 16]

"16. In B.N. Nagarajan v. State of Karnataka this Court clearly D
held that the words 'regular' or 'regularisatio11' do not connote
permanence and cannot be construed so as to convey an idea
of the nature of tenure of appointments. They are terms calculated
to condone any procedural irregularities and are meant to cure
only such defects as are attributable to methodology followed in
making the appointments." E
Judged by the standards laid down by this Court in the
aforementioned decisions, the appointments of the respondents are
illegal. They do not, thus, have any legal right to continue in service."

In R.S. Garg v. State of U.P. & Ors. [2006] 7 SCALE 405, it has been F
held by this Court :

"The original appointment of 3rd respondent being illegal and
not irregular, the case would not come within the exception carved out
by the Constitution Bench. Furthermore, relaxation, if any, could have
been accorded only in tenns of Rule 28 of the Rules, Rule 28 would G
be attracted when thereby undue hardship in any particular case is
caused. Such relaxation of Rules shall be permissible only in
consultation with the Commission. It is not a case where an undue
hardship suffered by the 3rd respondent could legitimately been raised
being belonging to a particular class of employee. No such case, in
H
600 SUPREME COURT REPORTS [2006] SUPP. 9 S.C.R.

A law could have been made out. It, in fact, caused hardship to other
employees belonging to the same category, who were senior to him;
and thus, there was absolutely no reason why an exception should
have been made in his case."

{See also State of Gujarat & Anr. v. Karshanbhai K. Rabari & Ors.
B [2006] 6 sec 21}

Yet, recently in Principal, Mehar Chand Polytechnic & Anr. v. Anu
Lamba & Oc [2006] 7 SCC 161, it was held :

"The respondents did not have legal right to be absorbed in
c service. They were appointed purely on temporary basis. It has not
been shown by them that prior to their appointments, the requirements
of the provisions of Articles 14 and 16 of the Constitution had been
complied with. Admittedly, there did not exist any sanctioned post.
The Project undertaken by the Union of India although continued for
some time was initially intended to be a time-bound one. It was not
D
meant for generating employment. It was meant for providing technical
education to the agriculturists. In the absence of any legal right in the
respondents, the High Court, thus, in our considered view, could. not
have issued a writ of or in the nature of mandamus."

E We may, however, notice that in Mineral Exploration (supra), the
attention of this Court was not drawn to the earlier precedents including a
Three Judge Bench of this Court in B.N. Nagarajan & Ors. v. State of
Karnataka & Ors. [1979] 4 SCC 507,.

The Labour Court, Industrial Tribunal as also the High Court, therefore,
F was not correct in directing regularisation of service of the respondent.

Our attention has been further drawn to the fact that by reason of an
Office Order dated 26.4.2004, the Award of the Labour Court as also the High
Court had been implemented by classifying the respondent as permanent on
the basis of daily wages clerk.
G
Yet again, by another Office Order dated 17.12.2004, the provisions of
Madhya Pradesh Revised Pay Rules, 1998 had been applied in his case.

The decision to implement the judgment was evidently subject to the
decision of this Court. But, the Special Leave Petition is barred by limitation.
H The question, inter alia, which arises for consideration before us is as to
STATE OF M.P. v. LALIT KUMAR VERMA (S.B. SINHA,J.] 601
whether we should condone the delay or allow the respondent to continue A
to occupy the pennanent post.

The legal position somehow was uncertain before the decision rendered
by the Constitution Bench of this Court in Uma Devi (supra). It has
categorically been stated before us that there was no vacant post in the
department in which the respondent could be reinstated. The State had also B
adopted a policy decision regarding regularisation. The said policy decision
has also no application in the case of the respondent. Even otherwise, it
would be unconstitutional being hit by Article 16 of the Constitution of India.

Keeping in view the peculiar facts and circumstances of this case, we
are of the opinion that the interest of justice would be sub-served if we direct C
that any benefit which has already been given to the respondent shall not
be recovered. He is also directed to be paid a sum of Rs. J,50,000/- (One lakh
fifty thousand) towards compensation and costs for condoning the massive
delay in filing the Special Leave Petition.
D
The impugned judgments are set aside, subject to the directions
mentioned hereinbefore. This appeal is allowed. No costs.

RP. Appeal dismissed.