Recognition of Perennial Municipal Duties and the Illegality of Indefinite Daily-Wage Engagements

Introduction

In the landmark decision of SHRIPAL & ANR. v. NAGAR NIGAM, GHAZIABAD (2025 INSC 144), the Supreme Court of India addressed the legal implications of engaging individuals on a daily-wage or casual basis for essential, ongoing municipal functions. The dispute stemmed from a series of conflicting awards by the Labour Court, which led both workmen (engaged in horticultural tasks) and the employing municipal corporation (Ghaziabad Nagar Nigam) to approach the High Court, and thereafter the Supreme Court.

The primary contention was whether longstanding daily-wage employees performing regular duties—comparable to permanent gardeners—could be abruptly terminated on the ground of an asserted ban on new public-sector recruitment. The Supreme Court’s judgment sets out crucial guidelines clarifying when daily-wage or temporary engagements can be deemed illegal or irregular, underscoring the importance of adhering to statutory labor protections and fair recruitment procedures.

Summary of the Judgment

• Context: The workmen claimed continuous employment as gardeners under direct supervision of Ghaziabad Nagar Nigam but were dismissed without due process, even as conciliation proceedings were pending. The Nagar Nigam argued the workmen were hired via contractors and that there was a state-imposed ban on fresh recruitments.
• High Court’s Stance: The High Court directed partial relief, ordering daily-wage re-engagement with minimum pay instead of full reinstatement.
• Supreme Court’s Decision: The Supreme Court set aside the High Court’s limited relief. It ruled that discontinuation of services during pending industrial dispute proceedings—without complying with Sections 6E and 6N of the U.P. Industrial Disputes Act, 1947—was illegal. The Court ordered the employer to reinstate the workmen with continuity of service and 50% back wages, as well as to initiate a process for their regularization.

Analysis

Precedents Cited

1. Secretary, State of Karnataka v. Umadevi (2006) 4 SCC 1: The Court referred to this precedent, which distinguishes between “illegal” appointments and “irregular” but venial defects in appointments. Although Umadevi set strict standards for regularization, the Supreme Court in this case emphasized that Umadevi should not be used to perpetuate exploitative daily-wage engagements for tasks of a permanent nature.
2. Jaggo v. Union of India (2024 SCC OnLine SC 3826): The judgment highlighted the Court’s broader criticism of indefinite “temporary” arrangements in public employment, making clear that labeling employees as “contractual” or “casual” when performing permanent functions causes systemic abuse and must attract judicial scrutiny.

Legal Reasoning

The Supreme Court’s reasoning can be distilled into the following key points:

1. Violation of Section 6E of the U.P. Industrial Disputes Act: The employer altered workmen’s conditions and terminated them during conciliation proceedings without securing explicit permission from the adjudicatory authority, contravening Section 6E. This rendered the termination illegal on procedural grounds alone.
2. Breach of Section 6N of the U.P. Industrial Disputes Act: No retrenchment compensation or notice pay was provided at the time of termination. Regardless of the workmen’s purported contractual or casual status, statutory obligations under Section 6N have to be met.
3. Employer-Employee Relationship Established: The record showed a direct wage payment from the Nagar Nigam’s Horticulture Department and supervision of daily tasks. The Court reasoned that mere reference to a “contractor” is insufficient without documentation evidencing actual outsourcing. The absence of tender notices, contractor agreements, or payment made through a third party strongly suggested a direct employment relationship.
4. Perennial Nature of Duties: The Supreme Court emphasized the horticultural work—tree planting, park maintenance, and beautification—was an essential and continuing municipal function, making indefinite casual or daily-wage classification inappropriate. The recognized shortage of permanent gardeners corroborated that the work was ongoing, not ad hoc.
5. Equal Pay for Equal Work: The Court mentioned that the workmen performed tasks identical to those of regular gardeners but were compensated inadequately under precarious conditions. It noted that an existing ban on fresh recruitment could not be employed to bypass labor rights and fundamental fairness.

Impact

This ruling has several significant implications:

• Underlines Statutory Protections: Employers, particularly public-sector entities, must observe statutory safeguards under industrial and labor laws. Oral or informal termination methods are likely to be struck down.
• Discourages Prolonged Casual Engagement: Public bodies using perpetual daily-wage schemes instead of permanent appointments for work that is regular in nature risk judicial intervention. Courts may grant continuity of service, back wages, and pathways to regularization.
• Clarifies Application of Umadevi: The Court reiterated that while Umadevi restricts regularization for purely “illegal” appointments, it does not exonerate employers from compliance with fundamental labor protections nor condone exploitative daily-wage practices.
• Promotes Equitable Treatment in Public Employment: State institutions cannot invoke recruitment bans to deny essential statutory protections to employees who have, in reality, functioned every bit as regular workers.

Complex Concepts Simplified

1. Industrial Dispute: A disagreement between employers and employees over employment, non-employment, or terms of employment, which can be referred to a Conciliation Officer or Labour Court.
2. Retrenchment Compensation: A statutory sum payable to an employee who is terminated for reasons other than disciplinary action. It aims to cushion the worker’s financial loss while seeking new employment.
3. Regularization: A process by which a worker engaged on a temporary or daily-wage basis is granted permanent status, subject to statutory norms, sanctioned vacancies, and procedural fairness.
4. Section 6E, U.P. Industrial Disputes Act: Prohibits changes to working conditions and firings during the course of an industrial dispute unless authorized by the appropriate adjudicatory authority.
5. Section 6N, U.P. Industrial Disputes Act: Mandates notice, wages in lieu of notice, and compensation for retrenchment (when a worker is terminated). Even casual or daily-wage employees may be entitled to this protection.

Conclusion

In SHRIPAL & ANR. v. NAGAR NIGAM, GHAZIABAD, the Supreme Court of India has unequivocally reaffirmed that when an employer—particularly in the public sector—engages individuals on daily-wage basis to fulfill continuous, essential responsibilities, any abrupt termination without strict adherence to statutory prerequisites is unlawful. The Court’s directives for reinstatement with continuity of service, partial back wages, and a structured regularization process highlight a new emphasis on fairness and compliance in public employment practices. Going forward, municipal bodies and other government departments must remain vigilant in respecting worker rights to compensation, notice, and fair hiring procedures, lest they face judicial censure and mandatory reinstatement remedies.