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M.P State Agro Industries Development Corpn. Ltd. And Another v. S.C Pandey .
Factual and Procedural Background
The respondent was engaged on 16 September 1985 as a typist on daily wages in the Morena Branch of the appellant-Corporation, a statutory body governed by the M.P. State Road Transport Corporation Service Recruitment Selection Regulations, 1976 (“1976 Regulations”). On 18 July 1987 the Regional Manager terminated his services on the ground that they were no longer required.
Challenging the termination, the respondent moved Labour Court No. 2, Gwalior, which granted an interim order allowing him to continue in service. Ultimately, the Labour Court held that he was entitled to be classified/regularised as a permanent typist and directed the Corporation to grant him regular pay and consequential benefits.
The Corporation’s appeal to the Industrial Tribunal was dismissed, followed by dismissal of its writ petition and letters patent appeal before the Madhya Pradesh High Court. The Corporation then approached the Supreme Court.
Legal Issues Presented
- Whether the respondent’s initial appointment, made by a Branch Manager without adherence to the 1976 Regulations, was void ab initio.
- Whether completion of 240 days of work or six months’ service entitled the respondent to regularisation under the M.P. Industrial Employment (Standing Orders) Rules, 1963 and Section 25-B of the Industrial Disputes Act, 1947.
- Whether the respondent’s termination was illegal for non-compliance with Section 25-F of the Industrial Disputes Act.
- Whether principles such as estoppel or waiver could validate an otherwise void appointment.
- What relief, if any, was appropriate in the circumstances.
Arguments of the Parties
Appellant’s Arguments
- The respondent’s engagement was contrary to the 1976 Regulations because only the Managing Director is the competent appointing authority; hence no legal right to regularisation accrued.
- Mere completion of 240 days does not create entitlement to permanent status, as affirmed in Mahendra L. Jain v. Indore Development Authority (2005) 1 SCC 639.
- The Labour Court wrongly equated “classification” with “regularisation”.
Respondent’s Arguments
- A clear vacancy existed and the respondent had worked satisfactorily for more than six months, fulfilling the conditions in the Standing Orders for classification as a permanent employee.
- The Standing Orders apply at the entry point; therefore, the respondent’s case is distinguishable from promotion cases. Reliance was placed on Dwarika Prasad Tiwari v. M.P. SRTC (2001) 8 SCC 322.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| M.P. SRTC v. Narain Singh Rathore, 1994 MPLJ 959 (FB) | Standing Orders cannot override statutory recruitment rules; intervention limited to statutory framework. | Accepted as correct exposition; used to show Standing Orders cannot validate appointments made in breach of recruitment regulations. |
| Mahendra L. Jain v. Indore Development Authority, (2005) 1 SCC 639 | Standing Orders subject to constitutional and statutory limits; daily-wager gains no permanence merely by length of service. | Relied on to hold respondent’s long service did not confer legal right to regularisation. |
| Dwarika Prasad Tiwari v. M.P. SRTC, (2001) 8 SCC 322 | Standing Orders classify nature of employment; proviso does not cover promotions or higher-grade regularisations. | Clarified that even under this authority the respondent’s case fails because his very entry breached recruitment norms. |
| M.P. Housing Board v. Manoj Shrivastava, (2006) 2 SCC 702 | (i) Dual statutory regime must be harmonised; (ii) daily-wager holds no post; (iii) 240 days’ service grants no right to regularisation; (iv) appointments contrary to statute are void. | Applied “on all fours” to conclude respondent had no enforceable right arising from a void appointment. |
| State of Punjab v. Jagdip Singh, (1964) 4 SCR 964 | Confirmation or appointment by an unauthorised officer when no post exists is void. | Cited to reinforce that Branch Manager’s action was without authority, rendering appointment void. |
| Dhampur Sugar Mills Ltd. v. Bhola Singh, (2005) 2 SCC 470 | Completion of 240 days does not ipso facto entitle a workman to regularisation. | Quoted to rebut Labour Court and High Court’s reliance on Section 25-B for conferment of permanency. |
Court's Reasoning and Analysis
The Supreme Court observed that recruitment to the appellant-Corporation is governed exclusively by the 1976 Regulations, under which only the Managing Director is empowered to appoint staff. The respondent’s engagement by a Branch Manager therefore lacked statutory authority and was void ab initio, a conclusion bolstered by Jagdip Singh (1964).
The Court distinguished between “classification” under the Standing Orders and “regularisation”, emphasizing that completion of 240 days of work merely attracts the protective provisions of the Industrial Disputes Act and does not transform an invalid appointment into a valid one (Mahendra L. Jain; Manoj Shrivastava).
Estoppel or waiver cannot validate an appointment made in violation of mandatory statutory provisions. Consequently, the Labour Court, Tribunal and High Court erred in granting regular status and consequential benefits.
However, the Court acknowledged that the respondent had in fact completed 240 days and that his retrenchment on 18 July 1987 was effected without complying with Section 25-F of the Industrial Disputes Act, rendering the retrenchment illegal. Yet, because the respondent’s continued service was solely due to an erroneous interim order, reinstatement was deemed inequitable. Balancing equities, the Court opted for monetary compensation.
Holding and Implications
HELD: The appeal is allowed; the orders of the Labour Court, Industrial Tribunal and High Court are set aside. Instead of reinstatement, the appellant shall pay the respondent Rs 10,000 as compensation. No order as to costs.
Implications: The judgment reinforces that appointments made in disregard of statutory recruitment rules are void and cannot be regularised through Standing Orders or by mere passage of time. While the protective provisions of the Industrial Disputes Act remain applicable to such employees, relief may be limited to compensation rather than reinstatement, thereby deterring reliance on void appointments as a pathway to permanent public employment.
S.B Sinha, J.— Leave granted.
2. The appellant herein is a statutory corporation and, thus, “State” within the meaning of Article 12 of the Constitution.
3. The respondent herein was temporarily appointed as a typist. He was appointed by the Branch Manager, Morena Branch of the appellant whereafter intimation thereto was given to the Regional Manager, stating:
“Shri Vinod Bharga has left the services from this office and now Shri S.C Pandey has been temporarily appointed as a typist w.e.f 16-9-1985.
The original application of Shri Pandey is enclosed herewith. Please issue necessary orders.”
4. He appears to have been appointed on daily wages. His services were terminated by an order dated 18-7-1987 with immediate effect by the Regional Manager on the ground that his services were no longer required.
5. On or about 23-8-1987, assailing the said order of termination, he filed an application before the Presiding Officer, Labour Court No. 2, Gwalior wherein an interim order was passed not to remove him from services. Although, the order of termination had been given effect to, but in view of the said interim order, he was allowed to continue in service.
6. Before the Labour Court the appellant, inter alia, raised a contention that the respondent had been illegally appointed by the then Branch Manager and, thus, he derived no legal right to continue in service. It was categorically stated that the employees of the said undertaking are governed by the Rules and Regulations framed by the Corporation known as the Service Recruitment Selections Regulations, 1976 (hereinafter referred to as “the 1976 Regulations”) in terms whereof only the Managing Director was designated as the appointing authority.
7. The issues which inter alia arose for consideration before the Labour Court were:
“(4) Whether the petitioner was appointed on contingency and due to which he is not entitled to be regularised?
(6) Whether the order of termination of the petitioner is legal and valid, because his appointment itself was illegal?”
8. The Labour Court held that the M.P Industrial Employment (Standing Orders) Rules, 1963 framed under the M.P Industrial Employment (Standing Orders) Act, 1961 are applicable to the Corporation. On a finding that the respondent was appointed against a vacant post, it was held that he had acquired a right to be appointed as a regular/permanent employee in the post of typist purported to be in terms of the proviso appended to Rule 2(4) of the Standing Orders (sic). The order of termination was also held to be bad in law, although, no reason therefor was assigned. The Labour Court without considering the contentions raised by the appellant Corporation held:
“Since the petitioner is in continuous service of the respondents in compliance with the interim orders of this Court and it has already been decided that the petitioner is entitled to be regularised on the post of typist, therefore, the respondents are hereby directed to regularise/classify the petitioner on the post of typist within a period of 30 days of this order with effect from 6 months after 16-9-1985 and will also pay to the petitioner the difference between regular pay scale of permanent post and pay scale given to him, from the date of his regularisation along with other consequential benefits.”
9. An appeal preferred by the appellant herein against the said order before the Tribunal was dismissed inter alia on the ground that the respondent was accepted as a working staff in the Morena Office and he had been transferred to Gwalior by an order of the Regional Manager himself.
10. Before the Tribunal reliance was placed on behalf of the appellant Corporation upon a decision of a Full Bench of the Madhya Pradesh High Court in M.P SRTC v. Narain Singh Rathore 1994 MPLJ 959 (FB). The said decision was distinguished by the Tribunal stating that as therein the employee was claiming the benefit of the Standard Standing Order in the promotional post, it had no application to the fact of the case.
11. Despite the fact that before the Labour Court the respondent made a prayer that his services may not be terminated, although they stood terminated, the Tribunal opined that the law of pleadings should not be strictly applied to labour cases on the purported ground that the services of the respondent were not terminated legally or properly.
12. The writ petition filed by the appellant Corporation herein before the High Court of Madhya Pradesh at Gwalior was also dismissed. The High Court applied the principles contained in Section 25-B of the Industrial Disputes Act and opined that the termination of services of the respondent was illegal.
13. A letters patent appeal thereagainst was summarily dismissed by a Division Bench of the High Court.
14. Ms Hetu Arora, the learned counsel appearing on behalf of the appellant Corporation in assailing the judgment of the High Court, would contend that as the respondent herein had not been able to establish that he was appointed in the services of the appellant Corporation in terms of the provisions of the regulations governing selection and appointment, the impugned order cannot be sustained. Reliance, in this behalf, has been placed on Mahendra L. Jain v. Indore Development Authority (2005) 1 SCC 639.
15. Mr Ashok Mathur, the learned counsel appearing on behalf of the respondent, on the other hand, submitted that as a finding of fact has been arrived at that there was a clear vacancy, and as he has satisfactorily worked for a period of more than six months, he was rightly held entitled to be classified as a permanent employee in terms of the provisions of the Standing Orders. It was furthermore contended that in view of the fact that the provisions of the Standing Orders relating to classification were rightly invoked at the entry point being a case of appointment and not promotion. Strong reliance has been placed on Dwarika Prasad Tiwari v. M.P SRTC (2001) 8 SCC 322.
16. The Industrial Courts and the High Court inter alia proceeded on the basis that the respondent having completed 240 days of service during the preceding 12 months, he should have been regularised in service. Section 25-B of the Industrial Disputes Act was also invoked on that premise. The Labour Court, however, wrongly equated classification with regularisation. The term “regularisation” does not connote permanence.
17. The question raised in this appeal is now covered by a decision of this Court in M.P Housing Board v. Manoj Shrivastava (2006) 2 SCC 702 wherein this Court clearly opined that: (1) when the conditions of service are governed by two statutes; one relating to selection and appointment and the other relating to the terms and conditions of service, an endeavour should be made to give effect to both of the statutes; (2) a daily-wager does not hold a post as he is not appointed in terms of the provisions of the Act and the Rules framed thereunder and in that view of the matter he does not derive any legal right; (3) only because an employee had been working for more than 240 days that by itself would not confer any legal right upon him to be regularised in service; (4) if an appointment has been made contrary to the provisions of the statute the same would be void and the effect thereof would be that no legal right was derived by the employee by reason thereof.
18. The said decision applies on all fours to the facts of this case. In Mahendra L. Jain (2005) 1 SCC 639 this Court has categorically held that the Standing Orders governing the terms and conditions of service must be read subject to the constitutional and statutory limitations for the purpose of appointment both as a permanent employee or as a temporary employee. An appointment to the post of a temporary employee can be made where the work is essentially of temporary nature. In a case where there existed a vacancy, the same was required to be filled up by resorting to the procedures known to law i.e upon fulfilling the constitutional requirements as also the provisions contained in the 1976 Regulations. No finding of fact has been arrived at that before the respondent was appointed, the constitutional and statutory requirements were complied with.
19. A Constitution Bench of this Court in State of Punjab v. Jagdip Singh (1964) 4 SCR 964, AIR 1964 SC 521 has categorically held that if an order of confirmation is passed when no post was available and that too by a person who was not authorised therefor, the appointment would be void. We have noticed hereinbefore that the Branch Manager in his letter dated 27-9-1985 addressed to the Regional Manager stated that the respondent had already been appointed w.e.f 16-9-1985. Before the Labour Court, the offer of appointment had not been produced. It had not, therefore, been disclosed as to on what terms and conditions he was appointed.
20. A Full Bench of the Madhya Pradesh High Court in Narain Singh Rathore 1994 MPLJ 959 (FB) held: (MPLJ p. 967, para 15)
“15. Service conditions are essentially matters of agreement between employer and the employee. Where the employer frames regulations or rules relating to conditions of service, they are treated as part of the conditions of service of the employee. The M.P Industrial Employment (Standing Orders) Act, 1961 was enacted to provide for rules defining with sufficient precision in certain matters the conditions of service of employees in certain undertakings in the State. It contemplates statutory interventions in service conditions of employees in certain undertakings. Rules have been framed under the Act. There is no doubt that the intention is to improve the service conditions of the employees and ensure that they are not adversely affected by unilateral action of the employers. But the contours of intervention cannot be extended beyond the statutory framework.”
21. In Dwarika Prasad Tiwari (2001) 8 SCC 322 whereupon Mr Mathur placed reliance, a Division Bench of this Court accepted the views of the Full Bench in Narain Singh Rathore 1994 MPLJ 959 (FB). However, it was held that the Standing Order categorises the nature of employment and it does not classify individual employees in different posts according to the hierarchy created in a department and thus the proviso to Rule 2 (sic) does not apply to promotions or regularisations in higher grade.
22. Such appointments, in our opinion, having regard to the decisions in Mahendra L. Jain (2005) 1 SCC 639 and Manoj Shrivastava (2006) 2 SCC 702 must be made in accordance with extant rules and regulations. It is also a well-settled legal position that only because a temporary employee has completed 240 days of work, he would not be entitled to be regularised in service. Otherwise also the legal position in this behalf is clear as would appear from the decision of this Court in Dhampur Sugar Mills Ltd. v. Bhola Singh (2005) 2 SCC 470 apart from Mahendra L. Jain (2005) 1 SCC 639.
23. The Industrial Court as also the High Court applied the principles of estoppel on the finding that the respondent was transferred from Morena to Gwalior. If his appointment was void, being contrary to the Regulations, in our opinion, the procedural provisions like estoppel or waiver are not applicable. If an appointment made by the Branch Manager was wholly without jurisdiction, the order of appointment itself was void. Furthermore, the contention of the appellant had been that in terms of Regulation 16 of the 1976 Regulations, only the Managing Director of the Corporation could issue an offer of appointment. It has not been found by the Industrial Court or the High Court that the Branch Manager and the Regional Manager were authorised to make such appointments. The appointment of the respondent, thus, must be held to have been made only to meet the exigencies of services and not in terms of the service regulations. The appointment of the respondent, thus, could not have been made for filling up a regular vacancy for the purpose of invoking Rule 2 of the Standing Orders.
24. However, it has not been contended that the services of the respondent were not governed by the provisions of the Industrial Disputes Act. He worked from 16-9-1985 to 19-5-1987. He must have, thus, completed 240 days of service. The termination of his services without complying with the provisions of Section 25-F of the Industrial Disputes Act was, thus, illegal. He, however, had unjustly been directed to continue in service by reason of an interim order. He has been continuing in service pursuant thereto.
25. The appellant, in our opinion, cannot be made to suffer owing to a mistake on the part of the court. The respondent also cannot take advantage of a wrong order.
26. In the peculiar facts and circumstances of the case, we are, therefore, of the opinion that interest of justice would be subserved if, in place of directing reinstatement of the services of the respondent, the appellant is directed to pay a sum of Rs 10,000 by way of compensation to him. It is directed accordingly. The orders under challenge are set aside. The appeal is allowed with the aforementioned directions and observations.
27. There shall be no order as to costs.
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