MGNREGA Funding No Bar to Regularisation of Skilled Contractual Staff: Commentary on Hari Singh & Others v. State of Himachal Pradesh & Another

1. Introduction

The decision of the Himachal Pradesh High Court dated 01.09.2025, delivered by Hon’ble Mr. Justice Sandeep Sharma in a batch of writ petitions led by Hari Singh & Others v. State of Himachal Pradesh & Another, marks a significant development in Indian service jurisprudence, particularly concerning contractual employees engaged under centrally sponsored schemes like MGNREGA.

The central question before the Court was whether Computer Operators engaged on contract basis in the Rural Development Department – whose remuneration was drawn from Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) funds and who had been granted regular pay scales – were entitled to regularisation of service under the State’s regularisation policy, despite:

• their being said to be engaged “under MGNREGA”,
• the absence of a specific regularisation policy for MGNREGA-funded staff, and
• their initial recruitment not having been routed through the Public Service Commission or the Staff Selection Commission.

The Court clubbed together multiple writ petitions (CWP Nos. 10354, 10398, 10587, 10771, 10772, 10775, 10801, 11004, 11005, 11006, 11007 of 2023 and CWP No. 5 of 2024), all involving Computer Operators similarly situated in different blocks and District Rural Development Agencies (DRDAs).

The judgment squarely addresses the tension between:

• the constitutional mandate of fairness and equality under Articles 14, 16 and 21,
• the guidelines and funding structure of centrally sponsored schemes like MGNREGA, and
• the State’s repeated reliance on contractual “scheme posts” over decades.

In doing so, it reinforces the principle that a State, as a “model employer”, cannot perpetuate long-term “ad hocism” by keeping skilled employees in contractual limbo while simultaneously extracting perennial work from them and granting them regular pay scales.

2. Factual Background

2.1 Creation of Posts and Initial Engagement (2007)

On 14.09.2007, the Governor of Himachal Pradesh issued a notification approving the filling up of:

• 77 posts of Computer Operators in Development Blocks (one in each Block),
• 12 posts in District Rural Development Agencies (one in each DRDA), and
• 3 posts at the Rural Development Department headquarters.

This decision was taken with the prior concurrence of the Finance Department. The notification laid down:

• that the engagements would be on contract basis with fixed remuneration, and
• that the remuneration of Computer Operators would be met from MGNREGA and other centrally sponsored scheme funds.

Pursuant thereto, an advertisement dated 28.09.2007 invited applications for the posts of Computer Operators. The petitioners, being eligible, applied and were selected on the basis of merit. They were initially appointed on contract basis at a fixed remuneration of Rs. 6,000 per month, through written contracts renewed from time to time.

2.2 R&P Rules and Pay-Scale Regularisation (2012–2017)

In 2012, the State notified the Himachal Pradesh Department of Personnel Computer Operator Class-III, Non-Gazetted Common Director Recruitment & Promotion Rules, 2012. These rules:

• prescribed minimum educational and other qualifications for direct recruitment (Clause 7), and
• stipulated the pay scale:
  • Regular incumbents: Rs. 10,300–34,800 + 3,200 Grade Pay.
  • Contractual employees: Rs. 13,500 per month.

After these R&P Rules came into force, the services of the petitioners were converted into “Government contract” and they executed fresh contracts with the State through the Rural Development Department.

Parallelly, in 2012 the Government circulated a regularisation policy (communication dated 17.08.2012), under which contractual appointees were to be regularised on completion of six years of service. The petitioners, engaged between 2006–2008, completed six years by around 2014. However, despite repeated representations, they were not regularised.

In 2017, by notification dated 09.10.2017, the State granted the regular pay scale of Rs. 10,300–34,800 + 3,200 Grade Pay along with allowances like HRA, CCA, DA and CA to contractual Computer Operators, including the petitioners. Yet, they continued to be treated as contractual employees: they were denied earned leave, medical benefits, NPS/GPF coverage and the status of regular employees.

2.3 Prior Litigation by Similarly Situated Employees

(a) The Rakesh Kumar litigation

Rakesh Kumar, a Junior Engineer engaged under a centrally sponsored Watershed Programme in the office of a Block Development Officer, approached the High Court in CWP No. 6451 of 2011. On 26.02.2014, a learned Single Judge directed his regularisation upon completion of eight years of contractual service.

The State:

• filed LPA No. 178 of 2014, which was dismissed,
• approached the Supreme Court by SLP, which was also dismissed,
• later rejected his case again, leading to further litigation (CWPOA No. 166 of 2019), decided on 22.11.2022,
• filed LPA No. 61 of 2025, which was dismissed, and then another SLP, also dismissed.

Ultimately, the State implemented the order in Rakesh Kumar’s favour on 17.07.2025. This litigation established that contractual employees under centrally sponsored schemes, on completion of prescribed tenure and satisfying other conditions, are entitled to regularisation.

(b) The Harish Sharma litigation

Certain employees initially appointed under the 3rd State Finance Commission in the Planning Department and later engaged in HPRDEGS (a related rural development employment scheme) in 2009 filed O.A. No. 131 of 2015 (Harish Sharma v. State of H.P.) before the erstwhile H.P. Administrative Tribunal, seeking regularisation under the 2012 regularisation policy.

The Tribunal allowed the OA, directing reconsideration of their case. Although the State initially challenged the order, it eventually:

• reconsidered the matter in light of the Department of Personnel’s opinion, and
• regularised Harish Sharma and others by order dated 17.11.2018/24.02.2018, against vacant posts of Clerks/Class-IV in the Rural Development Department, w.e.f. 16.05.2016.

Of central importance is that these employees too were originally being paid from scheme funds but were nonetheless regularised by absorbing them against regular departmental posts.

2.4 State’s Stand in the Present Batch of Writs

In response to the present petitions, the State admitted most factual aspects but relied on the following grounds to oppose regularisation:

1. The petitioners were engaged under MGNREGA, and their remuneration is paid from administrative expenses under this centrally funded scheme; therefore, regularisation would unjustifiably burden the State exchequer.
2. The petitions were co-terminus with the scheme; their contracts explicitly stated that the engagement was temporary and scheme-bound.
3. MGNREGA guidelines (2022–23) have no provision for regularising such personnel.
4. The petitioners were not recruited through the Himachal Pradesh Public Service Commission (HPPSC) or Himachal Pradesh Staff Selection Commission (HPSSC, earlier Rajya Chayan Aayog) against sanctioned posts, but under a departmental policy and a special selection committee; therefore they are not eligible for regularisation.
5. Though some similarly placed Computer Operators had been regularised, that was only due to court orders passed in individual cases; those cannot become a general rule or precedent to claim parity.

The petitioners countered this by arguing parity with Rakesh Kumar, Harish Sharma and others; they emphasised their long and continuous service (about 18 years), their performance of the same work as regular Computer Operators, and the fact that they were already drawing regular pay scales as per the R&P Rules.

3. Issues Before the Court

The primary legal issues were:

1. Whether contractual Computer Operators, whose remuneration is drawn from MGNREGA or other centrally sponsored scheme funds, can claim regularisation under the State’s regularisation policy once they:
   • have completed the requisite period of contractual service,
   • perform the same duties as regular Computer Operators, and
   • have been granted the regular pay scale under R&P Rules.
2. Whether the fact that MGNREGA only contemplates engagement of “unskilled manual workers” (Section 2(r) of the MGNREGA Act) affects the nature of these appointments and the State’s obligations.
3. Whether absence of recruitment through HPPSC/HPSSC or absence of an explicit regularisation policy covering MGNREGA-funded staff can bar regularisation when:
   • posts were created with Finance Department concurrence,
   • appointments were made through a transparent selection process, and
   • others similarly situated had been regularised.
4. From what date the petitioners’ services should be regularised, if at all.

4. Summary of the Judgment

The High Court allowed all the writ petitions and held that:

1. The petitioners were in fact appointed against created and sanctioned posts of Computer Operators in the Rural Development Department, and could not legitimately be treated as “MGNREGA workers” under the MGNREGA Act.
2. The use of MGNREGA or centrally sponsored scheme funds to pay their salaries does not absolve the State of its obligations as employer under Articles 14 and 16, nor does it bar regularisation.
3. Given their long and continuous service (around 18 years), their appointment through a proper process, and the fact that similarly situated employees (e.g. Rakesh Kumar and Harish Sharma) had already been regularised, denial of regularisation is arbitrary, discriminatory and unconstitutional.
4. The petitioners’ services must be regularised with effect from 9 October 2017, i.e., the date on which they were granted the regular pay scale under the 2012 R&P Rules. This date will count for the purposes of seniority.

The Court relied heavily on the doctrine that the State is a “model employer”, that it cannot perpetuate long-term exploitation by keeping employees on contract while extracting perennial work from them, and that it cannot hide behind central funding or lack of “sanctioned posts” when it has in substance created and continued such posts over many years.

5. Analysis

5.1 Precedents and Authorities Cited

5.1.1 Secretary, State of Karnataka v. Umadevi, (2006) 4 SCC 1

While not extensively quoted, Umadevi forms the backdrop. The State attempted to rely on the general principle that irregular appointments cannot be regularised en masse and that regular recruitment must be through constitutionally mandated procedures.

However, following subsequent Supreme Court jurisprudence (discussed below), the High Court approached Umadevi as:

• a restraint against wholesale regularisation of illegal appointees, not
• a licence to keep lawfully selected, long-serving employees in perpetual contractual status while extracting perennial work at lower security and benefits.

5.1.2 State of Himachal Pradesh & Ors. v. Nishant Sharma & Ors. (LPA No. 66 of 2022, decided by a Division Bench)

In Nishant Sharma, the Division Bench considered teachers and staff engaged under the Sarva Shiksha Abhiyan (SSA) through the Himachal Pradesh School Education Society (HPSES), a society fully controlled by the State Government. Key findings included:

• HPSES is “State” within the meaning of Articles 12 and 226 due to pervasive State control.
• SSA was not a temporary project; employees had worked for nearly two decades.
• Continuing them as contract appointees for decades without pay parity and security was arbitrary, exploitative and violative of Articles 14 and 16.
• The plea of “no sanctioned posts” cannot stand when the State has in practice engaged people for perennial work; as the Supreme Court held in Nihal Singh v. State of Punjab, (2013) 14 SCC 65, sanctioned posts are to be consciously created when work is long-term.

The High Court in the present case used Nishant Sharma as a direct parallel: MGNREGA implementation staff, like SSA staff, work in a State-controlled structure; the project has continued for many years; and the work is clearly perennial. Thus, similar protections apply.

5.1.3 Dharam Singh & Ors. v. State of U.P. & Anr., Civil Appeal No. 8558 of 2018

The Supreme Court’s decision in Dharam Singh is pivotal. The Court there condemned:

• long-term extraction of regular, perennial labour under temporary labels (ad hoc, daily wage, outsourcing) while withholding security and parity, and
• the misuse of financial stringency as a blanket justification for denial of fair treatment.

Key takeaways from Dharam Singh include:

• The State is a “constitutional employer”, not a mere market participant; it cannot balance budgets “on the backs of those who perform the most basic and recurring public functions”.
• Where work is perennial – recurring year after year – establishment and sanctioned strength must reflect that reality.
• Prolonged insecurity of employment for workers discharging regular duties offends Articles 14, 16 and 21.
• Courts may direct:
  • creation of supernumerary posts,
  • regularisation from a specified date, and
  • payment of arrears and service benefits.

Justice Sandeep Sharma explicitly cited Dharam Singh to underline that:

• Umadevi cannot be used as a shield to justify exploitation and perpetual ad hocism;
• “ad-hocism thrives where administration is opaque”; and
• the State must maintain accurate establishment records and justify resort to precarious engagements over sanctioned posts.

5.1.4 Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly, AIR 1986 SC 1571

This seminal decision, though old, remains influential on the doctrine of unconscionable contracts and the role of the State as a model employer. The Supreme Court held that:

• the State and its instrumentalities must not take undue advantage of the employee’s economic necessity, and
• contractual terms grossly one-sided in favour of the employer can be struck down as unconscionable and against public policy.

The High Court here evoked this principle to suggest that contractual terms that purport to keep employees perpetually temporary, despite decades of regular work and pay scales, are unconscionable and contrary to public policy.

5.1.5 State Of Haryana v. Piara Singh, (1992) 4 SCC 118

In Piara Singh, the Supreme Court held that the Court’s concern in such matters is to:

• ensure adherence to the rule of law, and
• ensure that the executive acts fairly and provides a fair deal to its employees, consistent with Articles 14 and 16.

This decision remains a foundational authority on the propriety of regularising employees who have been kept in service for long periods on ad hoc or temporary basis.

5.1.6 Bhupendra Nath Hazarika v. State Of Assam, (2013) 2 SCC 516

In Bhupendra Nath Hazarika, the Supreme Court emphasised:

• that the State must function as a model employer,
• that employees should be treated with “dignified fairness”, and
• that an atmosphere of trust between administration and employees is essential for good governance.

The High Court implicitly used this normative framework to censure the State’s prolonged failure to regularise employees who had served faithfully for nearly two decades.

5.1.7 The Rakesh Kumar and Harish Sharma lines of cases

Although these are High Court/Tribunal decisions rather than Supreme Court authorities, their importance lies in:

• demonstrating that the State has already regularised similarly situated employees engaged under centrally sponsored schemes, and
• showing a consistent judicial trend that contractual status cannot be perpetuated for employees discharging regular functions under the State’s control.

Further, the fact that the State carried some of these matters up to the Supreme Court and lost reinforces the legal soundness of the underlying principles.

5.2 Legal Reasoning of the Court

5.2.1 Nature of Engagement: Sanctioned Posts versus Scheme Workers

A crucial aspect of the Court’s reasoning is its treatment of the 14.09.2007 notification. Even though the notification described the posts as contractual and tied to scheme funds, the Court emphasised that:

• the Governor formally approved the filling up of 77 + 12 + 3 posts of Computer Operators,
• this was done with the prior concurrence of the Finance Department, and
• job-specific qualifications and selection criteria were prescribed, followed by advertisement and a competitive selection process.

Taken together, these elements meant that:

• the posts were in fact created under the authority of the State; and
• the petitioners were appointed against these created posts, albeit on contract basis.

Thus, the State’s argument that there were “no sanctioned posts” is rejected in substance: having consciously created and staffed these posts for nearly two decades, the State cannot subsequently deny their existence for the purpose of regularisation.

5.2.2 Misuse of MGNREGA Funds: Skilled Work vs. Unskilled Manual Work

The Court examined the object and scheme of the Mahatma Gandhi National Rural Employment Guarantee Act, 2005. The Act’s stated object is:

“to provide for the enhancement of livelihood security of the households in rural areas of the country by providing at least one hundred days of guaranteed wage employment in every financial year to every household whose adult members volunteer to do unskilled manual work...”

Section 2(r) defines “unskilled manual work” as:

“any physical work which any adult person is capable of doing without any skill or special training.”

The Court drew a sharp contrast between this statutory definition and the actual duties of the petitioners:

• The petitioners were Computer Operators – a skilled role that requires training and qualifications.
• They were not engaged to perform manual, unskilled work for 100 days a year, but to perform technical and clerical functions on a continuous, year-round basis.

Therefore, as a matter of law and logic:

• they could not have been properly appointed as “MGNREGA workers” within the meaning of the Act; and
• the State’s use of MGNREGA or related scheme funds to pay their salaries does not convert them into MGNREGA “beneficiaries” or absolve the State of its obligations as their employer.

This is a critical point of principle: the funding source does not change the character of the employment relationship. Where:

• posts are created by the State,
• appointments are made by the State through a selection process, and
• employees work under the control and supervision of the State,

a master–servant relationship exists with the State, regardless of whether the salary line-items are drawn from State, central, or scheme funds.

5.2.3 Long Tenure, Perennial Work and Regular Pay Scale

The Court laid great emphasis on three factors:

1. Long and continuous service: the petitioners had worked as Computer Operators for more than 18 years without interruption, clearly indicating that the work was not sporadic or temporary but perennial.
2. Grant of regular pay scale: from 2017 onward, the petitioners were paid the same pay scale as regular Computer Operators, with most allowances, under the 2012 R&P Rules. This:
   • confirmed that they met the prescribed qualifications and
   • brought their financial treatment (save for some benefits) on par with regular employees.
3. Performance of identical duties: there was no dispute that the petitioners were performing the same work as regular Computer Operators in the Department.

In such circumstances, continuing to label them “contractual” was held to be an artificial device, contrary to the constitutional guarantees of equality (Article 14) and equality of opportunity in public employment (Article 16).

5.2.4 Parity with Similarly Situated Employees (Article 14)

The petitioners’ case was further strengthened by the fact that:

• Shri Rakesh Kumar (a Junior Engineer) and others under centrally sponsored schemes had been ordered to be regularised by the High Court, with the State’s challenges up to the Supreme Court failing; and
• Shri Harish Sharma and others, also initially engaged under scheme-based funding, had been regularised by the State itself (after judicial directions), by absorbing them against posts of Clerks/Class-IV.

Given that:

• the petitioners were similarly situated in all material respects, and
• the State had in fact treated similarly placed persons more favourably,

refusal to afford the same benefit to the petitioners amounted to unjustifiable discrimination, violating Article 14’s prohibition of arbitrary and unequal treatment.

5.2.5 Non-PSC/SSSB Recruitment: Irregular or Illegal?

The State argued that because the petitioners were not recruited through HPPSC or HPSSC, they could not be regularised. The Court rejected this, noting that:

• the posts had been created by a formal notification with Finance concurrence,
• a transparent recruitment process with public advertisement and defined criteria was followed by a duly constituted committee, and
• there was no allegation that the petitioners lacked the requisite qualifications or that the process was tainted or arbitrary.

In other words:

• the appointments, even if not made through the usual Commission route, were neither backdoor nor illegal in the Umadevi sense, but at most “irregular” in terms of recruitment channel;
• such irregularities do not, by themselves, bar regularisation, especially after decades of unbroken service and when the State itself has approved R&P Rules and granted regular pay scales.

5.2.6 State as Model Employer and Prohibition of Exploitative Ad Hocism

Relying on Central Inland Water Transport, Piara Singh, Bhupendra Nath Hazarika, Nihal Singh and Dharam Singh, the Court emphasised:

• the State must act as a “model employer” and cannot exploit economic vulnerability by locking employees into perpetual contractual arrangements despite extracting regular work; and
• long-term contract engagements without security, parity or social protection amount to unfair labour practices that violate Articles 14 and 16.

The Court noted that financial stringency, though relevant to policy, cannot be used as a “talisman” to justify systemic unfairness:

• If the State can rely on an employee’s labour for 18 years to run its programmes, it must also shoulder the responsibilities of an employer in terms of status, benefits and security.
• Sanctioned posts “do not fall from heaven”; they must be consciously created if perennial work exists.

5.2.7 Funding Source and Policy Vacuum: No Defence

The State’s heavy reliance on the facts that:

• MGNREGA funds were being used to pay the petitioners, and
• MGNREGA guidelines and State policy do not provide for regularisation of such staff,

was categorically rejected. The Court held that:

• employees cannot be deprived of their constitutional rights merely because of how the State chooses to allocate or book its expenditure; and
• the absence of an explicit policy cannot be used to deny relief where constitutional violations are established and where the State has previously regularised similarly situated employees.

5.2.8 Date from which Regularisation is to Operate

The petitioners had prayed for regularisation:

• either from 25.06.2012 (when similarly situated incumbents were allegedly regularised), or
• from the date they were granted regular pay scale.

The Court, taking a calibrated approach, directed regularisation:

“with effect from the date they were granted regular pay scale i.e. 9th October, 2017, but certainly period of regularization shall be counted for the purpose of seniority.”

This accomplishes two things:

• It aligns the date of regularisation with the point in time when the State itself brought the petitioners on par (in pay terms) with regular Computer Operators, thus avoiding retrospective regularisation beyond that date.
• It ensures that, at least from 2017 onwards, their service is recognised as regular for purposes such as seniority, promotion and pensionable service.

While the judgment does not expressly detail arrears or interest (unlike Dharam Singh, where the Supreme Court specified a full financial scheme), by conferring regular status from 09.10.2017, it implicitly entitles them to the full incidents of regular service from that date – including leave, medical benefits, provident fund/NPS, and other related service benefits.

6. Complex Concepts Simplified

6.1 “Regularisation”

In Indian service law, “regularisation” means converting an employee’s status from temporary/contract/ad hoc into a regular position within the sanctioned cadre of the department. This typically entails:

• inclusion in the regular establishment with a substantive post,
• eligibility for full pay scale and routine increments,
• accumulation of pensionable service,
• access to promotions based on seniority and merit, and
• social security benefits such as provident fund, gratuity, medical benefits, etc.

Regularisation is not meant to validate illegal/backdoor appointments; rather, it is a remedy where:

• persons were appointed through some fair process to meet genuine needs,
• they have worked continuously for a long period, and
• the State has treated them almost as regular employees but withheld formal status.

6.2 Contractual Employee

A “contractual employee” is engaged for a specified period under a contract, usually:

• with a fixed monthly remuneration (often without full allowances),
• without pension or long-term security, and
• with lesser statutory benefits.

When such a contractual arrangement is renewed year after year for decades for work that is clearly not temporary, courts become suspicious that the label “contractual” is being used to avoid fair labour standards rather than to meet genuinely temporary needs.

6.3 Centrally Sponsored Scheme and Implementing Agency

A “centrally sponsored scheme” (CSS) is one where:

• the Union Government provides funds (often partially matched by the State), and
• the State Government or its society/agency implements the programme.

However:

• if the State creates posts, recruits people, and controls their work, those employees are effectively employees of the State or its instrumentality;
• the mere fact that salaries are reimbursed or funded by the Centre does not, by itself, make them Central Government employees or exempt the State from being their employer.

6.4 Sanctioned Post vs. Non-Sanctioned Post

A “sanctioned post” is a position formally created by the government through a conscious decision, typically after financial concurrence, and included in the approved establishment of a department.

States often argue that contractual staff cannot be regularised because “there are no sanctioned posts”. Courts, relying on cases like Nihal Singh, increasingly reject this when:

• the work is perennial,
• the department has, in practice, engaged workers continuously for many years, and
• the State has not taken steps to rationally assess and sanction posts despite obvious need.

In such circumstances, courts may:

• direct the State to create sanctioned or supernumerary posts, or
• deem the posts sanctioned for the purposes of regularisation.

6.5 MGNREGA and “Unskilled Manual Work”

MGNREGA guarantees up to 100 days of wage employment per rural household per year to adults willing to do unskilled manual work. Typical tasks include:

• earthwork,
• rural infrastructure creation (like roads, ponds, check dams), and
• soil and water conservation activities.

It does not envisage regular, skilled positions like Computer Operators. Administrative and technical staff required to implement MGNREGA (programme officers, engineers, computer operators, etc.) are usually appointed by States under their own staffing arrangements. Labelling these skilled personnel as “MGNREGA workers” mischaracterises the nature of their work and undermines their rights.

6.6 “Model Employer”

The concept of the State as a “model employer” means that:

• the government should set a higher standard in fairness and labour practices than a private employer,
• it should not exploit workers’ vulnerability, and
• it should act transparently and reasonably in recruitment, retention and termination.

This idea underpins much of the Court’s criticism of long-term reliance on contractual arrangements for regular work.

6.7 Supernumerary Posts

“Supernumerary posts” are temporary posts created over and above the existing sanctioned strength, often:

• to regularise or absorb employees without immediately restructuring the cadre,
• to ensure that individuals get the benefit of regular service without disturbing existing seniority lists.

In Dharam Singh, the Supreme Court directed creation of such posts to regularise long-serving employees. While the Himachal Pradesh High Court did not specifically direct creation of supernumerary posts in the present case, the reasoning is consistent with that approach.

7. Impact and Implications

7.1 Impact on Himachal Pradesh

This judgment sets a clear precedent within Himachal Pradesh that:

1. Skilled contractual employees engaged under centrally sponsored schemes (MGNREGA, SSA, NRLM, NRHM, etc.) cannot be denied regularisation merely because:
   • their pay is drawn from central or scheme funds,
   • there is no explicit policy for their regularisation, or
   • their recruitment was not routed through HPPSC/HPSSC, provided the initial recruitment was otherwise fair and against created posts.
2. Where:
   • posts have been formally created with Finance Department concurrence,
   • R&P Rules are framed, and
   • regular pay scales are granted for years,
   the State cannot continue to treat employees as temporary or scheme-bound.
3. Discriminatory treatment between similarly situated employees (e.g., Rakesh Kumar and Harish Sharma vis-à-vis the petitioners) will attract Article 14 scrutiny.

Practically, the ruling can:

• encourage other similarly placed contractual staff in different departments and schemes to seek regularisation,
• compel the State to undertake a comprehensive audit of long-term contractual engagements and rationalise them into sanctioned posts, and
• increase the financial and pension liabilities of the State in the medium to long term.

7.2 Alignment with Emerging Supreme Court Jurisprudence

The judgment harmonises with the Supreme Court’s recent trajectory in cases like Dharam Singh:

• Umadevi is not abandoned, but its rigid application is softened where:
  • appointments were not blatantly illegal or backdoor,
  • employees have served for very long durations, and
  • the nature of work is undeniably perennial.
• The focus shifts from formalistic objections (“no sanctioned post”, “scheme post”, “not PSC-recruited”) to substantive fairness and constitutional obligations (“who controlled the work?”, “how long?”, “is the work perennial?”, “are there comparators?”).

Therefore, while the decision is formally binding only within Himachal Pradesh, it is likely to be persuasive elsewhere, especially in High Courts dealing with similar fact patterns of long-term scheme-based contractual staff.

7.3 Implications for Governance of Centrally Sponsored Schemes

For state governments and implementing agencies across India, the judgment sends clear signals:

• If a scheme is effectively permanent (continuing over decades) and requires ongoing administrative and technical manpower, those posts should be:
  • recognised as part of the regular establishment, or
  • provided regularised status in some structured manner.
• Using scheme funds to pay such staff does not relieve the State of employer obligations; it only determines the financial source, not the legal relationship.
• MGNREGA’s statutory framework, limited to unskilled manual work, cannot lawfully be stretched to cover employment of skilled Computer Operators in a manner that deprives them of their rights.

If similar litigation proliferates, Union and State governments may need to revisit:

• how they design scheme implementation structures, and
• whether to create dedicated, regular cadres for long-running schemes instead of relying indefinitely on contractual staff.

7.4 Balancing Fiscal Concerns with Constitutional Duties

The Court recognises that financial constraints are real but insists, following Dharam Singh, that they cannot trump fundamental rights:

• Fiscal prudence must be pursued through rational manpower planning and appropriate cadre restructuring, not by denying fair status to those already serving in essential roles for decades.
• Budgetary concerns cannot justify a two-tier workforce performing identical duties but receiving different levels of security and benefits.

8. Conclusion

The Himachal Pradesh High Court’s decision in Hari Singh & Others v. State of Himachal Pradesh & Another is a robust reaffirmation of constitutional principles in the realm of public employment. The Court holds firmly that:

• funding through MGNREGA or other centrally sponsored schemes does not alter the employer–employee relationship where the State has created posts, recruited staff, and supervised their work;
• MGNREGA, confined by statute to unskilled manual work, cannot be invoked to justify the precarious status of skilled Computer Operators engaged for 18 years;
• long-term extraction of skilled labour under contractual labels, coupled with grant of regular pay scales, makes continued denial of regular status arbitrary and exploitative; and
• the State, as a model employer, must align its staffing practices with constitutional norms of fairness, equality and human dignity.

By directing regularisation from the date of grant of regular pay scale (09.10.2017), and recognising that period for seniority, the Court balances the equities between employees’ rights and the State’s concerns, while sending a clear message: perennial work requires regular arrangements, not permanent temporariness.

In the broader legal landscape, the judgment contributes to an evolving service law jurisprudence that:

• resists mechanical reliance on Umadevi in cases of long-serving, fairly recruited employees undertaking regular work, and
• demands that public administration move beyond “ad hocism” toward transparent, rational and constitutionally compliant human resource management.