Holding

Illegal appointments made in contravention of the Uttar Pradesh Krishi Utpadan Mandi Act and its service regulations cannot be regularised, and the Board lacks jurisdiction to frame a regularisation scheme; the High Court's direction was set aside.

Summary

The Uttar Pradesh State Agricultural Produce Market Board appointed 1,021 employees between April 1996 and October 1997 without complying with the statutory provisions of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 and its service regulations. The State later cancelled those appointments on a last‑come‑first‑go basis, and the High Court held the terminations illegal and directed the Board to frame a scheme for regularising the employees. On appeal, the Supreme Court held that appointments made in violation of the Act and its regulations are void and cannot be regularised; the Board lacks jurisdiction to devise a regularisation scheme, and the State’s direction under Section 26‑M, though not wholly unreasonable, cannot compel regularisation. Consequently, the High Court’s order was set aside and the writ petitions dismissed. The Court directed the Board and Market Committees to fill existing vacancies in accordance with law, giving consideration to the terminated employees where appropriate. The appeal by the State and the Board was allowed.

Issues considered

The High Court's jurisdiction to direct the Board to frame a scheme for regularisation of irregularly appointed employees.
Whether appointments made without statutory sanction are illegal and can be regularised.
The scope of the State Government's power under Section 26‑M of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 to issue policy directions concerning appointments.
Whether principles of natural justice apply to the termination of the employees.
Whether a post that is not sanctioned can be reinstated or filled by the Board.

Legislation cited

Constitution of Indias. Article 12, s. Article 14, s. Article 142, s. Article 16, s. Article 162, s. Article 166, s. Article 309
Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964s. 25-A, s. 26-A, s. 26-B, s. 26-M, s. 26-X

Subjects

illegal appointmentregularisationstatutory authorityArticle 14Article 16Uttar Pradesh Krishi Utpadan Mandi ActHigh Court jurisdictionnatural justicetermination of servicepublic service law

Judgment

A STATE OF U.P.
v.
NEERAJ A WAS THI AND ORS.

DECEMBER 16, 2005

B [S.B. SINHA AND P.P. NAOLEKAR, JJ.]

Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964:

Sections 25-A, 26-A, 26-B and 26-X-Appointments-lrregular
C appointments-Termination of-3395 posts were sanctioned for 244 Market
Committees in the State-1021 employees were appointed between the period
1.4.1996 to 30.10.1997-State Agricultural Produce Market Board passed
a resolution proposing regularization of services of those employees who had
completed one thousand days of service-'-State directed cancellation of all
D irregular appointments during the period 1.4.1996 to 30.10.1997 on last-
come-jirst go basis-Services ofa large number of employees were terminated
on the ground that such appointments were unauthorized/irregular-Rules
framed by Board for regularization of its employees not approved by State-
But High Court held termination orders to be illegal and also directed State
to formulate a scheme for regularization of those employees-Correctness
E of-Held: If illegality had been committed in the past such illegality cannot
be allowed to perpetrate-No equality can be claimed in illegality-When
a post is not sanctioned directions for reinstatement should not be issued-
Availability of vacancies and/or the fund by themselves would not allow the
Market Committees or the Board to make appointments in flagrant violation
p of the statutory provisions-High Court could not have issued a writ of or
in the nature of mandamus as the writ petitioners did not have any legal
right-High Court is not justified in directing the State to formulate a scheme
for regularization ofthe employees-Hence, High Court'sjudgment set aside-
Uttar Pradesh Agricultural Produce Market Committees (Centralised) Services
Regulations, 1961.
G
In the State of Uttar Pradesh there were 244 Market Committees. Out
of the sanctioned posts of3395, 1021 employees were appointed between the
period 1.4.1996 and 30.10.1997. The U.P. State Agricultural Produce Market
Board constituted under Section 26-A of the Uttar Pradesh Krishi Utpadan

H 906
ST ATE OF U.P. v. NEE RAJ AW AS THI 907
Mandi Adhiniyam, 1964 passed a resolution under Uttar Pradesh Agricultural A
Produce Market Committees (Centralised) Services Regulations, 1961
proposing regularization of the services of those employees who have
completed one thousand days of service.

The appellant-State directed that the services of all such employees who
had been irregularly appointed during the period 1.4.1996 to 30.10.1997 be B
cancelled on last-come-first go basis. Pursuant to such direction the services
of a large number of employees were terminated on the ground that their
appointments were authorized/irregular. The appellant-State had also refused
to approve the proposed rules framed by the Board for regularization of its
employees.
c
The High Court allowed the writ petition filed by the affected employees
holding that the terminations were illegal. The High Court also issued a
direction for framing a scheme for regularization of the said employees.
Hence the appeal.

The following question arose before the Court:- D

Whether the High Court had jurisdiction to issue a direction for framing
a scheme for regularization of the employees of the U.P. State Agricultural
Produce Market Board?

Allowing the appeal, the Court E

HELD: 1. The fact that all appointment have been marle without following
the procedure or services of some persons appointed have been regularized
in the past cannot be said to be a normal mode which must receive the seal of
the court. Past practice is not always the best practice. If illegality has been F
committed in the past, it is beyond comprehension as to how such illegality
can be allowed to perpetrate. The State of the U.P. State Agricultural Produce
Market Board constituted under Section 26-A of the Uttar Pradesh Krishi
Utpadan Mandi Adhiniyam, 1964 were bound to take steps in accordance with
law. Even in this behalf Article 14 of the Constitution of India will have no
application. Article 14 has a positive concept. No equality can be claimed in G
illegality is now well-settled. (933-G-H; 934-AJ

State of MP. v. Dharam Bir, (1998) 6 SCC 165, Bangalore Developmer:it
Authority v. R. Hanumaiah, (2005) 8 SCALE 80, Punit Raj v. Dinesh
Chaudhary, (2003\ 8 SCC 204, Dr. Suresh Chandra Verma v. The Chancellor, H
908 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A Nagpur Univeristy, [199014SCC55, Karnataka Public Service Commission
v. B.M Vijaya Shankar, [1992) 2 SCC 206, State of MP. v. Shyama Pardhi,
[199617 SCC 118, Viveka Nand Sethi v. Chairman, J and K Bank Ltd, [2005)
5 SCC 337, Delhi Development Horticulture Employees' Union v. Delhi Admn.,
[1992) 4 SCC 99, State of Haryana v. Piara Singh, [19921 4 SCC 118, A.
Umarani v. Registrar, Cooperative Societies, [2004) 7 SCC 112, Executive
B Engineer, ZP Engg. Divn. v. Digambara Rao, [20041 8 SCC 262, Madhyamik
Shiksha Parishad, U.P. v. Anil Kumar Mishra, [2005) 5 SCC 122, Mahendra
l. Jain v. Indore Development Authority, [2005) 1 SCC 639, Manager, Reserve
Bank of India, Bangalore v. S. Mani, [2005] 5 SCC 100, Union of India v.
Gagan Kumar, [2005) 5 SCC 70, State of Maharashtra v. R.S. Bhonde, (2005]
C 5 SCC 751, Surya Narain Yadav v. Bihar State ElectriCity Board, (1985] 3
SCC 38, State ofA.P. v. S.B.P. V. Chalapathi Rao, [1995] 1SCC724, Jalandhar
Improvement Trust v. Sampuran Singh, [1999] SCC 494 and State of Bihar v.
Kamleshwar Prasad Singh, (2000] 9 SCC 94, relied on.

Rakesh Ranjan Verma v. State of Bihar, (1992] Supp. 2 SCC 343 and
D U.P. State Electricity Boardv. Ram Auta, (1996] 8 SCC 506, referred to.

Madan Singh v. State of Haryana, AIR (1988) SC 2133, Raj Narain
Prasadv. State ofU.P., [1998) 8 SCC 473, R.N. Nanjundappa v. T. Thimmiah,
(1972) 2 SCR 799 and All Manipur Regular Posts Vacancies Substitute
Teachers' Association v. State of Manipur, (1991) Supp. 2 SCC 643, held
E inapplicable.
2. In the instant case, furthermore, no post was sanctioned. It is now
well-settled that when a post is not sanctioned, normally, directions for
reinstatement should not be issued. Even if some posts were available, it is
for the Board or the U.P. Agricultural Produce Market Committees to fill up
F the same i~ terms of the existing rules. They, having regard to the provisions
of the regulations, may not fill up all the posts. (934-C]

3. It may be that from the very inception the provisions of the Uttar
Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 and the Uttar Pradesh
G Agricultural Produce Market Committees (Centralised) Services
Regulations, 1984 framed thereunder had been given a complete go-by. It,
furthermore, may be that the Board had adopted resolution for purported
regularization of the services of its employees and employees of Market
Committees appointed prior to 1.10.1998. Such a resolution on the part of
the Board was beyond its domain. It is also true that the power to create posts
H
STATE OF U.P. v. NEERAJ AWASTHI 909
was with the Board but the Board did not exercise its power but the competent A .
authorities of the Market Committees proceeded to appoint employees on the
sweet will of the concerned authorities without in any way bothering for the
provisions of the Act and the Rules framed thereunder. It is interesting to
note that the Market Committees claimed themselves to be local authorities
for the purpose of obtaining exemption from payment of income tax. The
officers of the local authorities had a bounden duty not only to act within the B
four-corners of the statute but having regard to the constitutional scheme in
mind. They failed and/or neglected to do so. As appointments had been made
de hors the rule~ and without following the procedures known in law and in
flagrant violation of constitutional scheme as laid down in Articles 14 and 16
of the Constitution oflndia, the appointments although might have been made C
in exigencies of services, they must be held to be wholly illegal and without
jurisdiction. An attempt has been made by the Respondents to show.that the
income of the Market Committees has increased and the quantum of
construction work has also increased. The availability of funds is not and
cannot be a valid ground to make the appointments of persons without proper
sanction and creation of posts and cannot be taken to be an excuse to perpetuate D
illegalities. (934-D-H; 935-A)

4.(i) The Board and the Market Committees were bound by the Act, the
Rules and the Regulations framed thereunder in making appointments.
Statutory provisions as also the constitutional requirements were required E
to be complied with.

(ii) The Board had no jurisdiction to frame any scheme for
regularization in the face of the statutory regulations operating in the field.
Any legislation involving appointment or laying down the conditions of service
of the employees would require prior sanction of the State. F
(iii) The appellant-State in exercise of its purported power under Section
26-M of the Act could not have issued the directions as it has been done but
such a direction cannot be said to be wholly unreasonable.

(iv) The State although could not exercise a statutory power beyond the G
provisions of the statute but the same although might have been done under
a misconception of law but was not otherwise arbitrary or malafide.

(v) Availability of vacancies and/or the fund by themselves would not
allow the Market Committees or the Board to make the appointments in
flagrant violation of the statutory provisions. Although the direction of the H
910 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A appellant-State which had been acted upon by the Board did not have a statutory
backing, the High Court could not have issued a writ of or in the nature of
mandamus as the writ petitioners/respondents did not have any legal right.

(vi) There may be some employees whose services have been terminated
without any rhyme or reason. But the Board has assured that it shall look
B into cases of such employees whose termination has been effected beyond the
policy decision taken by the State. [935-D-H; 936-A-BJ

CIVIL AP PELLA TE JURISDICTION : Civil Appeal No. 4092 of 2001.

From the Judgment and Order dated. 5.9.2000 of the Allahabad High
C Court at Lucknow Bench in W.P. No. l 184(SB) of 1999.

WITH

C.A.Nos.4095,4099,4093,4096,4097,4098,4094,4100,4102,4101,3872,
3873/2001, 6810/2005, 4038, 7545-7646, 7647-7748/2001and6814 of2005.
D
M.L. Verma, Uday Umesh Lalit, G.L. Sanghi, Anoop George Choudhary,
Mrs. Shobha Dixit, N.C. Mehrotra, Aarohi Bhalla, Satya Mitra, Ms. Sujata
Kurdukar, Shakil Ahmed Syed, Mohd. Taiyab Khan, Firasat Ali Siddiqui,
Shashindra Tripathi, M.P. Shorawala, M.C. Dhingra, Kumar Parimal, Aniruddha
P. Mayee, Ms. Hema Sahu, C.L. Sahu, Ms. Rachana Srivastava, Irshan Ahmad,
E D. Mahesh Babu, Raj Singh Rana and Shail Kumar Dwivedi with them for the
appearing parties.

The Judgment of the Court was delivered by

S.B. SINHA, J. The jurisdiction of the High Court to issue a direction
F for framing a scheme for regularisation of the employees of the U.P. State
Agricultural Produce Market Board (for short "the Board") is in question in
this batch of appeals which arise out of judgments and orders passed by the
High Court of Judicature at Allahabad in the writ petitions filed by the private
respondents either dismissing or allowing the same.
G
ACT

The legislature of the State of Uttar Pradesh enacted The Uttar Pradesh
K.rishi Utpadan Mandi Adhiniyam, I 964 (for short "the Act"). The Board has
been established under Section 26-A of the Act. Section 26-B provides for
H the constitution of the Board. In exercise of its power conferred upon it by !
STATE OF U.P. v. NEERAJ A WASTHI [SINHA, J.] 911

Section 25-A and 26-X of the Act, regulations have also been framed by the A
Board laying down the terms and conditions of the service of the employees
of the Market Committees known as the Uttar Pradesh Agricultural Produce
Market Committees (Centralised) Services Regulations, 1984 (for short "Services
Regulations"). Similar regulations have also been framed by the Board in
respect of its own employees being the Uttar Pradesh Agricultural Produce
Markets Board (Officers and Staff Establishment) Regulations, 1984 (for short B
"Establishment R~gulations").

BACKGROUND FACT

In the State of Uttar Pradesh, there are 244 Market Committees. 3395
posts were sanctioned but indisputably 5600 appointments have been made. C
We are herein concerned with the orders of appointments and orders of
terminations issued in respect of about l 021 employees who were appointed
between the period 1.4.1996 and 30.10.1997. A resolution was passed by the
Board on or about 30th September, 1996 proposing regularisation of the
services of those employees who have completed one thousand days of D
service. The Board had also its construction divisions. The said proposal
was, however, confined to the employees working in the construction divisions
against contingency funds. Approval having been sought for from the State
Government in relation to framing of appropriate rules, in this behalf,
informations were . sought for from various departments including Mandi
Parishad in regard to the appointments made in past six months ,by a letter E
dated 20th November, 1997. Relevant informations were furnished by the
Director of the Mandi Parishad whereafter the State sought for further
informations and details regarding the appointments made in the Mandi
Parishad and Mandi Samities by a letter dated 17.3 .1998. Such informations
were sought for by the State again by a letter dated 18.5.1998. On or about p
12.2.1999, an order was issued by the State directing that services of all such
employees who had been irregularly appointed during the period 1.4.1996 to
30.10.1997 be cancelled on last-come-first-go-basis stating:

"I. The irregular appointment made in the Mandi Parishad and Mandi
Samities during the period w.e.f. 1.4.96 to 30.10.97 should be cancelled G
immediately. The following course should be adopted to terminate
such appointments:

(a) There is no legal impediment in terminating the service of the
etnployee concerned after cancelling the appointments which have
been made without any created/sanctioned post but the reason therefor H
912 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A shall have to be recorded in the order.

(b) There is no legal impediment in terminating the service after
cancelling the appointments of such per~ons as did not have
educational qualifications prescribed for the -post concerned but the
reason therefor should be recorded in the order.
B
(c) The termination of service of such persons, as have been appointed
in relation to some post and also have educational qualification
prescribed for that post, should be made in accordance with the
procedure mentioned in their appointment order. In case, no procedure
is mentioned in the appointments order, their service should be
c terminated after giving either notice or pay in lieu thereof.

(2) In this regard I have t.J inform this thing also that after making
intensive examination in respect of irregular appointments made in the
Mandi Parishad and Mandi Samities before 1.4.96, kindly furnish clear
report alongwith detailed statement by 20.2.99.
D
(3) Kindly make available in each case by 18.2.99 your proposal with
clear recommendation to the Govt. for action against the officers
responsible for the said irregular appointments."

Further directions were issued on 17 .3 .1999 in the following terms:
E
"In regard to the appointed subject and Semi Govt. Letter No. Dire-
Camp/99-468 dt. 8.3.99, I have been directed to say that keeping in
view, the decision taken by Govt. in regard to irregular appointments
made on the post of various categories in U.P. State Agricultural
Production Marketing Board, there has been no requirement of
F prescribed procedure rules. In such circumstances, the proposal sent
to Govt. vide letter 1418/Camp dt..18.10.96 of Marketing Board Office
is rejected by the Govt. after due consideration."

Pursuant thereto or in furtherance of such directions, the services of a
large number of employees were terminated on or about 20th March, 1999.
G
On 27.1.1998, the Director of the Board informed the Secretary,
Department of Agriculture that all appointments are unauthorized/irregular
and, thus, void ab initio and, therefore, their appointments should be terminated
following the rules. In the said letter, the opinion of the Chairman of the Board
H was quoted stating: ...
STATE OF U.P. v. NEERAJ AWASH-II [SINHA, J.] 913
"As the action, whatsoever, taken in this matter will create wide A
ranging ramifications (both political and administrative) therefore it
will be proper to send the factual report of the whole case to Govt.
for guidance. It will be expedient to take further action after consulting
the department of justice and obtaining orders from the Hon'ble
Minister for Agriculture and the Hon'ble Chief Minister."
B
Photocopies of the notesheets and photocopies of the details of all
appointments and the report received from the Deputy Director
(Administration) were annexed thereto.

It may be noticed that the State in the meantime had also refused to
approve the proposed rules framed by the Board for regularisation of its C
employees.

PROCEEDINGS BEFORE THE HIGH COURT

Questioning the aforementioned directions of the State, one Rajnish
Varsheny filed a writ petition before a Division Bench of the Allahabad High D
Court in April, 1999. By a judgment and order dated 11.8.2000, a learned
Single Judge of the Allahabad High Court allowed the same holding that the
orders of termination issued pursuant to the orders of the State Government
dated 12.2.1992 were illegal. A Division Bench of the High Court, Lucknow
Bench, put its seal of approval to the order of the learned Single Judge by E
a judgment and order dated 5.9.2000 in similar writ petitions filed by other
dismissed employees. A writ petition filed by one Anshuman Misra, however,
was dismissed by another Division Bench of the Allahabad High Court at
Lucknow upholding the said order of the State Government.

The parties are, thus, before us. F
SUBMISSIONS

On behalf of the Board:

Submission of Mr. M. L. Verma, learned senior counsel appearing on G
behalf of the Board are:

(i) In terms of the statutory mandate contained in Section 26-M of
the Act, the Board was bound by the directions issued by the
State.
_,, ._ ·--
H
914 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A (ii) The appointments having been made in utter disregard of the
mandatory provisions of the Services Regulations and the
Establishment Regulations, the employees did not derive any
legal right to continue in the said posts.
(iii) Such appointments having been made on a pick and choose
B method and on an adhoc basis, the judgments of the High Court
cannot be sustained.
(iv) Indisputably the provisions of U.P. Industrial Disputes Act and
the rules framed thereunder relating to retrenchment of workmen
were complied with and in that view of the mater it cannot be
c said that the orders of termination passed against the employees
were illegal.
(v) In any view of the matter, the remedy of the employees, if any,
was to approach the industrial courts.
(vi) It is not a case, it was urged, where principles of natural justice
D were required to be complied with.

On behalf of the State

Mr. Uday Umesh Lalit, learned senior counsel appearing on behalf of
the State of Uttar Pradesh submitted that from the records it would appear
E that the State adopted a known criterion for cancellation of appointment of
such employees who were in the last slots, namely, 1.4.1996 to 30.10.1997.
Such orders of termination ensured that the principles of last-come-first-go
basis are followed and the employees are paid one month's salary in lieu of
notice as also 15 days wages for each completed year of service by way of
F compensation. No appointment having been made after 30. l 0.1997, the
impugned judgment of the High Court cannot be sustained.

On behalf of the Writ Petitioners

Mr. Anoop G. Chaudhari, learned senior counsel appearing on behalf
G of the Respondents, on the other hand, urged:
(i) that the appointments of the ell\Ployees cannot be said to be
illegal as the provisions contained in the respective regulations
apply to appointments in regular cadre.
(ii) There is no embargo in appointing employees on adhoc basis in
H exigency of service or on work charge basis recognised in the
STATE OF U.P. v. NEERAJ AWASTl-11 [SINHA. J.] 915
regulations in view of the fact that such employees do not derive A
the benefits which are granted to the regular employees.

(iii) Section 26-M of the Act had no application in the facts of the
case in view of the fact that appointment of adhoc employees is
not a matter which would come within the purview of the
functions of the Board as envisaged under Section 26-F and 26- B
L of the Act. In any event, so far as the appointments of employees
employed in the Market Committees are concerned, the same
being governed by Section 23 of the Act, Section 26-M thereof
will have no application.

(iv) By reason of purported directions issued under Section 26-M, c
the rights and privileges granted to the employees under other
statutes cannot be taken away.

(v) In view of the decision of this C.Qurt in Rakesh Ranjan Verma
and Ors. v. State of Bihar and Ors., [1992] Supp 2 SCC 343 and
UP. State Electricity Board v. Ram Autar and Anr., [1996] 8
D
sec 506, the statutory power of appointment being vested in the
Board, the State could not interfere therewith.
(vi) In any view of the matter, the purported policy decision adopted
by the State must be held to be wholly illegal and without
jurisdiction as prior thereto the requirements of each of the
samities had not been taken into consideration. It was pointed
E
out that even by 1998 full reports had not been submitted by the
Board as regards the financial position of the Market Committees
vis-a-vis the strength of the employees and, thus, the policy
decision must be held to have been made without any application
of mind. F
(vii) A policy decision of a State cannot be communicated by a demi-
official letter without complying with the constitutional norms.

(viii)One set of adhoc employees and/ or daily wagers should not be
replaced by another set of adhoc employees/ daily wagers.
G
(ix) The Board having adopted a resolution to regularise the services
of its employees, there was no need to obtain any approval from
the State.

(x) As admittedly no appointment whatsoever was made in terms of
the statutory regulations since the inception of constitution of the H
916 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A Market Committees and Boards, the State could not have ignored
the past practice particularly in a case of .this nature where the
employees concerned have requisite educational qualifications.

(xi) The court in such a situation can be said to have the requisite
jurisdiction in directing a State within the meaning of Article 12
B of the Constitution of India to make a scheme of regularisation.

Mr. G.L. Sanghi, learned senior counsel appearing on behalf of another
writ applicant submitted that institutions of the market committees and the
Board having their activities principally in rural areas, the human problem
should not be ignored as without such daily wagers or adhoc employees
C functions of the statutory body may have to be stopped.

The learned counsel submitted that the appointments being not void ab
initio and of no effect, the State could not have issued directions for termination
of their services. As the appointments were made having regard to the necessity
felt by the Market Committees and the Board, this Court should not exercise
D its discretionary jurisdiction under Article 136 of the Constitution of India.

Mrs. Shobha Dixit, learned senior counsel appearing on behalf of Rajnish
Varshney supplemented the arguments of Mr. Chaudhary and Mr. Sanghi
contending that there was no material before the government for issuing the
impugned instructions. It was submitted that the Market Committees having
E regard to Section 19 of the Act had their own funds, the case of each Committee
should have been considered separately.

HIGH COURT

A learned Single Judge of the High Court in his order dated
F 11.8.2000, which has been approved by the Division Bench of the Allahabad
High Court in its judgment dated 5.9.2000, held that:

(i) the normal functions of the Board pertain to establishment or
construction of new Market yards; control over Market
Committees, direction to the Committees to ensure efficiency,
G etc., it could not have interfered in the functioning of the Market
Committees.

(ii) The procedures prescribed were to be applied in relation to
selection of regular employees and not adhoc employees or daily
wagers.
H
STATE OF U.P. v. NEERAJ AWASTHI [SINHA, J.] 917

(iii) No principle has been laid down as to why adhoc employees A
engaged before 1.4.1996 and after 30. l 0.1997 should be retained
in service and, thus, the action of the State was discriminatory in
nature.
(iv) The Government instead of formulating any policy resorted to
an arbitrary method of issuing a 'Tugalaki' order in terminating B
the services of the employees recruited between 1.4.1996 and
30.10.1997 were also terminated.

{v) Although such irregular appointments have been made by several
directors but only those made by two of them, namely, Shri P.N.
Misra and Dr. Raja Ram, having been picked up for being C
cancelled, the same being discriminatory and ma la fide, the order
impugned in the writ application were unsustainable.
(vi) An employee should not be continued to be kept as adhoc
employee for more than 240 days.
(vii) The resolution of the Board to regularise services of such D
employees who have completed one thousand days 0f service
was valid. As the writ petitioners have been working in various
Committees for a long period ranging from six to nine years,
termination of their services was arbitrary.
(viii)The principles of natural justice have been ignored in terminating E
the services of such employees and, thus, the orders terminating
the services of the writ petitioners were bad in law.

It was directed:

"Having regard to the discussions made above, I am inclined to hold p
that written and verbal termination orders of the petitioners issued by
the authorities at the direction of the Government as contained in
letter dated 12.2.99 are arbitrary, unreasonable and discriminatory
and, therefore, all such termination orders along with the irrational
impugned letter of source dated 12.2.99 are hereby quashed. A writ
of certiorari is issued accordingly. Further, a writ of mandamus is G
also issued commanding the opposite parties to allow the petitioners
to resume their duty with immediate effect. They shall be deemed to
have continued in service and as such, they shall be relegated to their
original position. However, they will not get their back wages. The
U .P. Agricultural Produce Market Board shall within six months , H
918 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A resolve and formulate a policy to deal with the terms of their service
by giving due consideration to its earlier resolution regarding
regularization of their services. The Board will also take stern step to
ensure that such an odd situation to the embarrassment of the
competent authorities does not arise in future."

B However, as noticed supra, another Division Bench of the same Court
in its judgment dated 13.11.2000 opined that the appointments having been
made in violation of the statutory regulations, the appointees must be held to
have entered into service through backdoor and in that view of the matter, the
State has the requisite jurisdiction to issue a direction in terms of Section 26-
C M of the Act.

The judgment of the Division Bench dated 5.9.2000 passed in Rajnish
Varshney v. State of UP., was made in ignorance of an earlier division bench
decision in Raja Ram Maurya v. UP. Rajya Krishi Utpadan Mandi Parishad,
Lucknow and, thus, was rendered per incuriam.

D RELEVANT PROVISIONS OF THE STATUTcS
Before adverting to the rival contentions, we may briefly notice the
provisions of the said Act.

E Market Committees are incorporated and constituted in terms of Sections
12 and 13. Section 19 of the said Act provides for establishment of a Market
Committee Fund. Sub-section (2) of Section 19 mandates that all expenditure
incurred by the committee shall be defrayed out of the said fund and the
surplus, if any, shall be invested in such a manner as may be prescribed. Sub-
section (3) of Section 19 inter alia illustrates as to how such funds are to be
F utilised including salaries, pensions and allowances, etc. and other expenses,
as may be prescribed, as specified in clause (ii). The proviso appended thereto
mandates that annual expenditure in respect of matters specified in clause (ii)
shall not exceed I 0% of the total annual receipts of the Committee excluding
Joans raised by it and advances or grants made to it except with the prior
G approval of the Board.

Section 23 of the Act occurring in Chapter IV provides for appointments
of officers and servants of the Market Committee and their conditions of
services. The appointments of such officers who may be appointed for carrying
out the purpose of the Act must be done in terms of the bye-Jaws framed by
H it. Sub-section (2) of Section 23 envisages that every Committee shall have t
I
ST ATE OF U.P. v. NEERAJ AW ASTHI [SINHA, J. ] 919
such number of Secretaries and such other officers as may be considered A
necessary by the Board for the effective discharge of the functions of the
Committee, appointed by the Board on such terms and conditions as may be
provided for in the regulations made by it.

Chapter V of the Act deals with external control. Establishment and
constitution of the Board are envisaged under Sections 26-A and 26-B. Section B
26-A empowers the Board to appoint such officers and servants as it considers
necessary for efficient performance of its functions on such terms and
conditions, as may be provided for in the regulations made by the Board.
Section 26-L provides for the powers and functions of the Board. Functions
of the Board are provided for in Sub-section ( 1) thereof stating: C
"(i) superintendence and control over the working of the Market
Committees and other affairs thereof including programmes undertaken
by such Committees for the construction of New Market Yards and
development of existing Markets and Market Areas;

(ii) giving such direction to Committees in general or any Committee D
in particular with a view to ensure efficiency thereof;

(iii) any other function entrusted to it by this Act;

(iv) such other functions as may be entrusted to the Board by the
State Government by notification in the Gazette." E
The powers of the Board have been enumerated under Sub-section (2)
of Section 26-L of the Act which includes:

"(x) to do such other things as may be of general interest to Market
Committees or considered necessary for the efficient functioning of F
the Board as may be specified from time to time by the State
Government."

Section 26-M of the Act empowers the State Government to issue
directions in the following terms:
G
"( l) In the discharge of its functions, the Board shall be guided by
such directions on question of policy, as may be given to it by the
State Government.

(2) If any question arises whether any matter is or is not a matter as
respects which the State Government may issue a direction under H
920 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A sub-section (I), the decision of the State Government shall be final."

Section 26-V of the Act provides for accounts and audit. Section 26-
X thereof empowers the Board to make regulations with the previous approval
of the State Government which shall be subject to the said Act and the rules
made thereunder. Section 32 of the Act confers power upon the Board to call
B for the proceedings of a Committee for the purpose of satisfying itself as
regard legality or propriety of a decision or an order or orders and pass order
thereon as it may deem fit if it is of the opinion that the decision or order of
the Committee should be modified, annulled or reversed. Section 33-B of the
Act reads as under:

C "Powers of the State Government.-( I) The State Government with a
view to satisfying itself that the powers, functions and duties of the
Board or a Committee by or under this Act ar;: exercised or performed
by it properly, may require the Commissioner or the Collector or any
other person or persons to inspect or cause to be inspected any
property, office, document or any work, of the Board or the Committee
D
or to make inquiries into all or any of the activities of the Board or
the Committee in such manner as may be prescribed and to report to
it the result of such inquiry within such· period as may be specified.
(2) The Board or the Committee, as the case may be, shall give to the
Commissioner or the Collector, or other person or persons, all facilities
E during inspection and for the proper conduct of the inquiry and shall
produce any document or information in its possession, when so
demanded for the purpose of such inspections or inquiry, as the case
may be."

Section 39 of the Act provides for the bye-laws making power in the
F Market Committee. Proviso appended to Section 33 provides that no bye-law
other than a bye-law made by adopting draft or model bye-law suggested by
the Board shall be valid unless approved by it. Section 40 of the Act provides
for rule making power.

G The State Government framed rules known as "The U.P. Krishi Utpadan
Mandi Niyamavali, 1965 (for short "the Rules") in terms of Section 40 of the
Act. The functions, duties and powers of the Committees in terms of Sections
16 and 17 of the Act have been laid down in Rule 46. Rule 60 stat«::s that the
qualification, designations, grades, salaries and allowance of the posts of
officers and servants whose appointing authority is the Committee shall be
H approved by the Director. Such appointment made by the Committee under
STATE OF U.P. v. NEERAJ AWASTHI [SINHA, J.] 921
sub-section ( l) of Section 23 of the Act for those posts wherefor the Committee A
is the appointing authority shall be intimated within 30 days of the date of
such appointments to the Directors or to such officer as may be authorised
by the Director in this behalf. Sub-rule (3) of Rule 60 mandates that the
Market Committee shall maintain service records and character rolls in such
forms as are prescribed for government servants and those records shall be
kept in the custody of the Market Secretary. Rule 63 provides for the functions, B
powers and duties of the Secretary.

In exercise of its regulation making power, as noticed hereinbefore,
Services Regulations and the Establishment Regulations have been made.

Regulation 2(e) defines "Employee" to mean 'every person appointed C
on whole time basis in Classes A, B, C and D mentioned in Regulation 5,
whether on contract basis, on deputation or otherwise but does not include
persons employed on daily wages, work charged and on part-time basis.
Chapter IV of the Establishment Regulations provides for recruitment and
appointment. Regulation 9 specifies the appointing authority in respect of the D
posts shown in Column I of the table. Regulation l 0 provides for the source
of recruitment inter a/ia providing that 85 per cent posts in lowest grade in
Class C shall be filled by direct recruitment and 15 per cent by promotion
from Class D and all the posts in Class D shall be filled by direct recruitment.
Regulation 11(1) provides for constitution of a Selection Committee for the
purpose of recruitment to Class A and B posts whereas Regulation 11(2) E
provides for constitution of a Selection Committee for recruitment to Class
C and D posts. Regulation 12 empowers the appointing authority to determine
the number of vacancies in all the classes to be filled during the course of
the year as also the number of vacancies to be reserved for candidates
belonging to Schedules Castes and Scheduled Tribes and other categories
F
under Regulation 8. The other sub-regulations contained in Regulation 12
provides for the mode and manner in which such vacancies shall be filled up.
Chapter V lays down the conditions of service by way of appointment,
probation, confirmation and seniority. Chapter VI provides for superannuation,
pay, allowances and other service conditions.
G
The Services Regulations contain sirilar provisions. Part Ill of the said
Regulations deal with recruitment and procedure. Regulation 10 lays down
that recruitmept may be made either from the open market or from promotion.
Regulation 11 provides for reservation. Constitution of Selection Committee
is contained in Regulation 12. Regulation 14 provides for determination of H
922 SUPREME COURT REPORTS f2005] SUPP. 5 S.C.R.

A vacancies whereas Regulation 16 provides for the procedure of selection by
direct recruitment. Chapter V of the said Regulations lays down the mode
and manner in which the appointment, probation, confirmation and seniority
would be made.

LEGALITY OF THE APPOINTMENTS
B
The Board is a 'State' within the meaning of Article 12 of the
Constitution of India. It was constituted in terms of the provisions of the said
Act. The powers and functions of the Board as also the State in terms of the
provisions of the statute having been delineated, they must act strictly in
terms thereof. It is a statutory authority. Its powers, duties and functions are
C governed by the statute. It is responsible for constitution of the Market
Committees for the purpose of overseeing that the agriculturists while selling
their agricultural produce receive the just price therefor. It not only regulates
sale and purchase of the agricultural produce but also controls the markets
where such agricultural produces are bought and sold. The Board is entitled
D to levy market fee and recover the same from the buyers and sellers through
Market Committees. Indisputably, Market Committees and the Board have
power to appoint officers and servants. Although, the power of the Board in
this respect is not circumscribed, that of the Market Committees is. Market
Committees can appoint only such number of secretaries and other officers
as may be necessary for efficient discharge of its functions. Terms and
E conditions of such services are to be provided by it. Section 19 of the Act,
however, imposes further restriction on the power of the Market Committee
by limiting the annual expenditure made in this regard not exceeding 10% of
the total annual receipt of the Committee.

F The appointments for different classes of employees are to be made by
the Board and the officers, as the case may be, in terms of the provisions of
the regulations.

Both the Services Regulations and the Establishment Regulations, as
noticed hereinbefore, are applicable respectively to the employees of the
G Board as also the Market Committees. The said regulations provide for detailed
procedure for appointment and the terms and conditions therefor. No
appointment, thus, can be made in violation of the provisions of statute and
statutory rules.

Submission of the learned counsel appearing on behalf of the employees
H is that the procedures prescribed by reason of the Regulations are applicable
STATE OF U.P. v. NEERAJ AWASTHI [SINHA, J.] 923
to the regular employees. It is so. The question which, however, falls for A
consideration is as to whether any appointment can be made de 'hors the
provisions of the Act and the rules. Our attention has been drawn to the
definition of 'employee' which does not include persons employed on daily
w·ages, work charged and/ or part-time basis. If the expression "employee"
does not bring within its fold any person employed on daily wages, work
charged or on part- time basis, the same would mean that the persons so B
appointed would not be the employees within the meaning of the said
regulation. It would, therefore, not be correct to contend that the Market
Committee "r the Board have the jurisdiction to appoint anybody on daily
wages, work charged or on part-time basis de'hors the rules. The power to
make appointments by the committee or the board whether contained in C
Section 23 or Section 26-F of the Act are statutory in nature. In absence of
any provisions conferred upon them to appoint any employee de'hors the
provisions of Sections 23 and 26-F and the regulations framed thereunder,
indisputably would mean that such appointments are de'hors the Act and the
rules. The Rules also provide that any appointment made by the Committee
under Sub-section (1) of Section 23 shall be intimated within 30 days of such D
appointment to the Director or to such other officer as may be authorised by
the Director in this behalf. It implies that although the Market Committee
may have power to make appointments, such appointments can be made in
relation to the posts created therefor by the Board wherefor requisite intimation
has to be given to the Director or the officer authorised in this behalf. We E
may assume that for meeting the exigencies of situations it may be possible
for the Committee or the Board to appoint a person on adhoc basis. Such
adhoc employees, however, being not employee within the meaning of the
provisions of the Act and the Regulations, a legal relationship between the
employer and the employee would not come into being. As no legal
relationship of employer and employee comes into being, evidently, such F
persons do not derive any status. They a fortiori derive no legal right to
continue in service subject, of course, to the compliance of the provisions of
any other Act or the rules conferring certain benefits to them. [See State of
MP. and Anr. v. Dharam Bir, [1998] 6 SCC 165]

Sections 23 and 26-F of the Act categorically mandate that all G
appointments must be made in terms of the provisions of the regulations. The
terms and conditions of such services are also required to be prescribed by
the regulations, the logical corollary whereof would be that permanent status
is required to be given to a person who is not otherwise an employee of the
Board or the Market committee, as the case may be. It is required to be done H
924 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A in terms of the regulation only.
The Board is entitled to take a decision which is within its powers and
functions delineated by the Act. A decision by way of resolution or otherwise
cannot be taken by the Board which is beyond the scope and purview of the
Act and the regulations framed thereunder.
B
The Board, therefore, was bound to make a regulation if it intended to
put the respondents on its rolls. The High Court, as noticed hereinbefore,
however, was of the opinion that it was not necessary so to do. For the
reasons aforementioned, we do not agree.

C POWER OF STATE TO ISSUE DIRECTIONS
The State in exercise of its power conferred upon it could issue
directions. The power of the State Government is confined to issue directions
. on question of policy. It cannot, however, interfere in the day to day
functionings of the Board. Such policy decision, however, must be in relation
D to the activities of the Board under the Act and not de'hors the same. [See
Rakesh Ranjan Verma, (supra), Ram Autar, (supra) and Bangalore
Development Authority & Ors. v. R. Hanumaiah & Ors., (2005) 8 SCALE
80]

E Such a decision on the part of the State Government must be taken in
terms of the constitutional scheme, i.e., upon compliance of the requirement
of Article 162 read with Article 166 of the Constitution of India. In the
instant case, the directions were purported to have been issued by an officer
of the State. Such directions were not shown to have been issued pursuant to
any decision taken by a competent authority in terms of the Rules of Executive
F Business of the State framed under Article 166 of the Constitution of India.

In Punit Rai v. Dinesh Chaudhary, [2003] 8 SCC 204], this Court held:

"The said circular letter has not been issued by the State in exercise
of its power under Article 162 of the Constitution of India. It is not
G stated therein that the decision has been taken by the Cabinet or any
authority authorized in this behalf in terms of Article 166(3) of the
Constitution of India. It is trite that a circular letter being an
administrative instruction is not a law within the meaning of Article
13 of the Constitution of India. (See Dwarka Nath Tewari v. State of
Bihar,)"
H
STATE OF U.P. v. NEERAJ AWASTHI [SINHA, J.] 925

However, it is not correct that the power of the State to issue directions A
must be confined to the matters enumerated in Sub-section ( 1) of Section 26-
L of the Act. Section 26-L is subject to the provisions of the Act. The
functions of the Board enumerated in Section 26-L of the Act are, therefore,
not exhaustive. Appointment of servants and officers are also one of the
functions of the Board. The Board also has right to supervise and control the
activities of the officers and Market Committees. In that view of the matter, B
if a policy decision is taken by the Board in regard to the appointment or
terms and conditions of the servants, in the event, regulations made in this
behalf do not contain any provisions, such policy decision must conform to
the directions of the State issued in that behalf, if any. The Board further is
empowered to do such other things as are specified in clause (x) of Section C
26-L of the Act.

The Board, however, in law could not have abdicated its power in
favour of the State Government.

We are, therefore, of the opinion that the direction by the State was D
strictly not in accordance with law.

The directions of the State were, therefore, although not binding on the
Board, the same cannot be said to be wholly irrational. In his report dated
7 .1.1998, the Chairman of the Board sought for advice of the Government.
The State had the power of supervision over the activities of the officers of E
the Board and the Board itself. While granting such advice, the State had
taken into consideration the last segment of employment. The State was not
expected to direct the Board and the Board in tum could not have directed
the Market Committees to dismiss all the employees who have been illegally
appointed. If such directions had been confined to the period 1.4.1996 to
F,
30.10.1997 on following certain basic principles like last-come-first-go-basis,
we do not see any reason as to why the same would be termed to be arbitrary
or discriminatory.

NATURAL JUSTICE

If the employees are workmen within the purview of the U.P. Industrial
G
Disputes Act, they are protected thereunder. Rules 42 and 43 of the U.P.
Industrial Disputes Rules provide that before effecting any retrenchment in
terms of the provisions of Section 6-N of the U.P. Industrial Disputes Act,
the employees concerned would be entitled to a notice of one month or in
lieu thereof pay for one month and 15 days wages for each completed year H
926 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A service by way of compensation. If such a retrenchment is effected under the
Industrial Disputes Act, the question of complying with the principles of
natural justice would not ·arise. The principle of natural justice would be
attracted only when the services of some persons are terminated by way of
a punitive measure or thereby a stigma is attached. [See Dr. Suresh Chandra
B Verma and Ors. v. The Chancellor, Nagpur University and Ors., [1990] 4
SCC 55, para 16, Karnataka Public Service Commission and Ors. v. B.M
Vijaya Shankar and Ors., [1992] 2 SCC 206, paras 4 and 5 and State of MP.
and Ors. v. Shyama Pardhi and Ors., [1996] 7 SCC 118, paras 4 and 5]

In Viveka Nand Sethi v. Chairman, J&K Bank ltd and Ors., [2005] 5
c sec 337], it was held:
"The principle of natural justice, it is trite, is no unruly horse. When
facts are admitted, an enquiry would be an empty formality. Even the
principle of estoppel will apply. [See Gurjeewan Garewal (Dr.) v.
Dr. Sumitra Dash,] The principles of natural justice are required to
D be complied with having regard to the fact situation obtaining therein.
It cannot be put in a straitjacket formula. It cannot be applied in a
vacuum without reference to the relevant facts and circumstances of
the case."

The High Court, therefore, must be held to have erred in law in holding
E that the principles of natural justice were required to be complied with.

DIRECTIONS OF THE HIGH COURT

The directions of the High Court, in our opinion, were not justified. It
may be that in implementing the advice of the State, some of the officers of
F the Board became overzealous in terminating services of the employees who
were appointed prior to 1.4. I 996. The learned Single Judge of the High Court
was not, therefore, correct in describing a decision of the Board an arbitrary
or a discriminatory one. No sufficient or cogent reason has been assigned by
the learned Single Judge to arrive at a finding that such period has been
G picked up out of the hat. With a view to judge the correctness or otherwise
of such a decision, it was necessary to consider the backdrop thereof. We
have noticed hereinbefore the contents of the correspondences passed between
the parties. When the advice of the Chief Minister and/ or the State was
sought for, the Chief Minister wanted the details of such appointment made
within the last six months. However, at a later stage, the validity or otherwise
H of the appointments made by the Directors of the Board on different periods
STATE OF U.P. v. NEERAJ AWASTHI [SINHA, J.] 927

had been taken into consideration. It is only upon application of mind on the A
facts and circumstances of this case that a direction was issued on 17.3.1999
by the State.

REGULARISATION

The direction of the High Court to frame scheme for regularisation of B
the employees as also the resolution of the Board to regularise the services
of the employees who had completed one thousand days of service must be
considered having regard to the aforementioned legal position in mind.

When questioned, Mr. Chaudhari and Mr. Sanghi submitted that
regularisation would mean permanence. Regularisation of the services of an C
employee would, therefore, mean that the concerned persons who had no
status within the purview of the definition of 'employee' would become
employee. Thus, a change in the status would b_e effected.

An attempt to induct an employee without following the procedure
would be a backdoor appointment. Such backdoor appointments have been D
deprecated by this Court times without number. [See for example Delhi
Development Horticulture Employees' Union v. Delhi Admn., [1992] 4 SCC
99, para 23]

Even in State of Haryana v. Piara Singh, [1992] 4 SCC 118, whereupon E
the learned counsel for the parties relied upon, it is stated:

"Ordinarily speaking, the creation and abolition of a post is the
prerogative of the Executive. It is the Executive again that lays down
the conditions of service subject, of course, to a law made by the
appropriate legislature. This power to prescribe the conditions of F
service can be exercised either by making rules under the proviso to
Article 309 of the Constitution or (in the absence of such rules) by
issuing rules/instruct-ions in exercise of its executive power. The
court comes into the picture only to ensure observance of fundamental
rights, statutory provisions, rules and other instructions, if any,
governing the conditions of service. The main concern of the court G
in such matters is to ensure the rule of law and to see that the Executive
acts fairly and gives a fair deal to its employees consistent with the
requirements of Articles 14 and 16 ... "

A 3-Judge Bench of this Court upon taking into consideration a large H
928 SUPREME COURT REPORTS (2005] SUPP. 5 S.C.R.

A number of decision in A. Umarani v. Registrar, Cooperative Societies and
Ors., [2004] 7 SCC 112 held that illegal appointments cannot be regularised.
It was further held:
t
"No regularisation is, thus, permissible in exercise of the statutory
power conferred under Article 162 of the Constitution if the
B appointments have been made in contravention of the statutory rules."

The power to frame regulations is expressly conferred on the Board in
terms of Section 26 of the Act. Such regulations are to be made with the
previous approval of the State Government. Indisputably, the State Government
by its letter dated 17.3.1999 refused to accord permission in relation thereto.
c
If no appointment could be made by the State in exercise of its power
under Article 162 of the Constitution of India as the same would be in ..
contravention of the statutory rules, there cannot be any doubt whatsoever
that the Board or for that matter the Market Committees cannot make an
D appointment in violation of the Act and the Regulations framed thereunder.

In Executive Engineer, ZP Engg. Divn. And Anr. v. Digambara Rao
and Ors., [2004] 8 SCC 262, it was held:

"It may not be out of place to mention that completion of 240 days
of continuous service in a year may not by itself be a ground for
E directing an order of regularisation. It is also not the case of the
respondents that they were appointed in accordance with the extant
rules. No direction for regularisation of their services, therefore, could
be issued. (See A. Umarani v. Registrar, Coop. Societies and Pankaj
Gupta v. State of J&K) Submission of Mr. Maruthi Rao to the effect
F that keeping in view the fact that the respondents are diploma-holders
and they have crossed the age of 40 by now, this Court should not
interfere with the impugned judgment is stated to be rejected."

[See also Madhyamik Shiksha Parishad, U.P. v. Anil Kumar Mishra
and Ors., [2005] 5 SCC 122]
G
In Mahendra L. Jain and Ors. v. Indore Development Authority and
Ors. [2005] I SCC 639, it was categorically held:

"The question, therefore, which arises for consideration is as to whether
they could lay a valid claim for regularisation of their services. The
H answer thereto must be rendered in the negative. Regularisation cannot
STATE OF U.P. v. NEERAJ AWASTHI [SINHA, J.] 929

be claimed as a matter of right. An illegal appointment cannot be A
legalised by taking recourse to regularisation. What can be regularised
is an irregularity and not an illegality. The constitutional scheme
which the country has adopted does not contemplate any back-door
appointment. A State before offering public service to a person must
comply with the constitutional requirements of Articles 14 and 16 of B
the Constitution. All actions of the State must conform to the
constitutional requirements. A daily-wager in the absence of a statutory
provision in this behalf would not be entitled to regularisation. (See
State of U.P. v. Ajay Kumar and Jawaharlal Nehru Krishi Vishwa
Vidyalaya v. Bal Kishan Soni.,)"

In Manager, Reserve Bank of India, Bangalore v. S. Mani and Ors.,
c
(2005] 5 SCC 100, Umarani (supra) was followed holding that in Jaw 240
days of continuous service by itself give rise to permanence which' reason has
weight with the opinion of learned Single Judge of the High Court.

It is, therefore, not correct to contend that only because in the D
correspondences between the State and the Board the appointments of such
persons have been described to be irregular, the same would not mean that
they are not illegal.

In any event, no temporary or permanent status can be granted to an
employee by way of regularisation. [See Union of India v. Gagan Kumar, E
(2005] 5 SCC 70 and State of Maharashtra and Anr. v. R.S. Bhonde and
Ors., [2005] 5 SCC 751.

PRECEDENTS

Mr. Chaudhary has relied upon a large number of decisions to contend F
that this Court has directed framing of such schemes.

In Surya Narain Yadav and Ors. v. Bihar State Electricity Board and
Ors., [1985] 3 SCC 38], the writ petitioners were appointed as trainee engineers
pursuant to an advertisement issued therein. Representations have been made
to them that after their training was completed, they would be absorbed in G
regular employment of the Board. Some employees who were getting age-
barred for government employment and had left the Board were told to come
back under the temptation of getting permanently employed under the Board.
When the Board was reeling under a strike of its employees, these trainee
engineers stood by the Board to keep up tile generation and distribution of H
930 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A electricity and had ·been assured of absorption. The Board had decided to
absorb them on pennanent basis but initially on a probation of two years
without conducting any further examination. It was in aforementioned situation,
this Court applied the principles of promissory estoppel and observed that the
Board should have regularized the services of the trainee engineers. The
B Court did not lay down any law that regularization would be directed despite
the fact appointments had been made in violation of the rules.

In Piara Singh, (supra), this Court was beset with the scheme framed
by the State to regularize the servicc::s of its employees. The Bench did not
go into the question of validity or otherwise of such a scheme. We have,
C however, noticed hereinbefore that even such a scheme would be impennissible
in law~

In Madan Singh and Ors. etc. v. State of Haryana and Ors., AIR
(1988) SC 2133, this Court was dealing with a matter where the State
Government had come forward with orders from time to time for absorption
D of work charged employees. The Court was of the opinion that the benefits
conferred thereunder were available to them.

In Raj Narain Prasad and Ors. v. State of UP. and Ors., [1998] 8 SCC
473 yet again no law has been laid down. No decision other than Piara Singh
(supra) has been referred to. Before this Court, a scheme was submitted in
E terms whereof the scheme had undertaken to regularize work-charged
employees employed prior to 19.9.1985. This Court besides the proposals
made therein issued certain other directions.

Strong reliance has been placed by !vfr. Chaudhary on R.N. Nanjundappa
F v. ! Thimmiah & Anr., [1972] 2 SCR 799 for the proposition that irregular
employees can be regularized. Therein it was held:

"The contention on behalf of the State that a rule under Article 309
for regularisation of the appointment of a person would be a fonn of
recruitment read with reference to power under Article 162 is unsound
and unacceptable. The executive has the power to appoint. That power
G may have its source in Article 162. In the present case the rule which
regularised the appointment of the respondent with effect from
February 15, 1958, notwithstanding any rules cannot be said to be in
exercise of power under Article 162. First, Article 162 does not speak
of rules whereas Article 309 speaks of rules. Therefore, the present
H case touches the power of the State to make rules under Article 309
STATE OF U.P. v. NEERAJ A WASTHI [SINHA, J. ] 931

of the nature impeached here. Secondly when the Government acted A
under Article 309 the Government cannot be said to have acted also
under Article 162 in the same breath. The two articles operate in
different areas. Regularisation cannot be said to be a form of
appointment. Counsel on behalf of the respondent contended that
regularisation would mean conferring the quality of permanence on B
the appointment whereas counsel on behalf of the State contended
that regularisation did dot mean permanence but that it was a case of
regularisation of the rules under Article 309. Both the contentions are
fallacious. If the appointment itself is in infraction of the rules or if
it is in violation of the provisions of the Constitution illegality cannot
be regularised. Ratification or regularisation is possible of an act C
which is within the power and province of the authority but there has
been some non-compliance with procedure or manner which does not
go to the root of the appointment. Regularisation cannot be said to be
a mode of recruitment. To accede to such a proposition would be to
introduce a new head of appointment in defiance of rules or it may
have the effect of setting at naught the rules." D
The said decision has been noticed in various judgments referred to
hereinbefore. It instead of helping the Respondents goes directly against
them.

In All Manipur Regular Posts Vacancies Substitute Teachers' Association E
v. State of Manipur, [1991] Supp 2 SCC 643, this Court was confronted with
various interim orders passed by the High Court from time to time in several
writ petitions. It was observed that if the direct recruitment takes place on
one hand and substituted teachers are also directed to be regularized
subsequently, it would create an enormous problem for the department to p
accommodate both the categories of persons and in the aforementioned
situation, in exercise of its power under Article 142 of the Constitution of
India, this Court with a view to avoid further litigation and also to avoid
seemingly conflicting interim orders issued by the High Court gave certain
directions. Such directions having evidently been issued by this Court in
exercise of its power under Article 142 of the Constitution of India do not G
constitute a binding precedent. Even therein, the scope and ambit of this
Court's jurisdiction under Article 142 vis-a-vis existence of the statue and
statutory rules and the constitutional mandate contained in Articles 14 and 16
of the Constitution of India had not been taken into consideration.

H
932 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A On the other hand, in a series of decisions, which we have noticed
hereinbefore, this Court has now finnly laid down the law that regularization
cannot be a mode of appointment.