Full Judgment Text
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CASE NO.:
Appeal (civil) 4092 of 2001
PETITIONER:
State of U.P.
RESPONDENT:
Neeraj Awasthi & Others
DATE OF JUDGMENT: 16/12/2005
BENCH:
S.B. Sinha & P.P. Naolekar
JUDGMENT:
JUDGMENT
W I T H
CIVIL APPEAL NOS. 3872, 3873, 4038, 4093-4102,
7545-7646, 7647-7748 of 2001,
CIVIL APPEAL NO. 6810 of 2005
and CIVIL APPEAL NO. 6814 of 2005
S.B. Sinha, J :
The jurisdiction of the High Court to issue a direction 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.
ACT
The legislature of the State of Uttar Pradesh enacted The Uttar
Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 (for short "the Act"). The
Board has been established under Section 26-A of the Act. Section 26-B
provides for the constitution of the Board. In exercise of its power conferred
upon it by Section 25-A and 26-X of the Act, regulations have also been
framed by the 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 "Establishment Regulations").
BACKGROUND FACT
In the State of Uttar Pradesh, there are 244 Market Committees. 3395
posts were sanctioned but indisputably 5600 appointments have been made.
We are herein concerned with the orders of appointments and orders of
terminations issued in respect of about 1021 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
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 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
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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
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:
"1. 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
immediately. The following course should be
adopted to terminate such appointments:
(a) There is no legal impediment in terminating
the service of the employee concerned after
cancelling the appointments which have been
made without any created/ sanctioned post but the
reason therefor shall have to be recorded in the
order.
(b) There is no legal impediment in terminating
the service after cancelling the appointments of
such persons as did not have educational
qualifications prescribed for the post concerned but
the reason therefor should be recorded in the order.
(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
terminated after giving either notice or pay in lieu
thereof.
(2) In this regard I have to 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.
(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:
"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
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.
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
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Chairman of the Board was quoted stating:
"As the action, whatsoever, taken in this matter
will create wide 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."
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
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 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 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.
SUBMISSIONS
On behalf of the Board:
Submission of Mr. M. L. Verma, learned senior counsel appearing on
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.
(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 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 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 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
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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
compensation. No appointment having been made after 30.10.1997, 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
of the Respondents, on the other hand, urged:
(i) that the appointments of the employees 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
exigency of service or on work charge basis recognised in the
regulations in view of the fact that such employees do not derive 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-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, the
rights and privileges granted to the employees under other statutes
cannot be taken away.
(v) In view of the decision of this Court in Rakesh Ranjan Verma and
Others v. State of Bihar and Others [1992 Supp (2) SCC 343] and
U.P. State Electricity Board v. Ram Autar and Another [(1996) 8 SCC
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 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.
(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.
(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 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 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 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
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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 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 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
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, 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.
(iii) No principle has been laid down as to why adhoc employees engaged
before 1.4.1996 and after 30.10.1997 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 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 cancelled,
the same being discriminatory and mala 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 employees
who have completed one thousand days of 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 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 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 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 resolve and
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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."
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-M of the Act.
The judgment of the Division Bench dated 5.9.2000 passed in Rajnish
Varshney v. State of U.P. was made in ignorance of an earlier division bench
decision in Raja Ram Maurya v. U.P. Rajya Krishi Utpadan Mandi Parishad,
Lucknow and, thus, was rendered per incuriam.
RELEVANT PROVISIONS OF THE STATUTES
Before adverting to the rival contentions, we may briefly notice the
provisions of the said Act.
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 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 10% of the total annual receipts of
the Committee excluding loans raised by it and advances or grants made to it
except with the prior 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-laws framed by it. Sub-section (2) of Section 23 envisages that
every Committee shall have such number of Secretaries and such other
officers as may be considered 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 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:
"(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 in particular with a view to
ensure efficiency thereof;
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(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."
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 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:
"(1) 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 sub-
section (1), 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 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:
"Powers of the State Government.-(1) 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 are 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 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
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
Market Committee. Proviso appended to Section 33 provides that no bye-
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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.
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
states that the qualification, designations, grades, salaries and allowance of
the posts of officers and servants whose appointing authority is the
Committee shall be approved by the Director. Such appointment made by
the Committee under sub-section (1) of Section 23 of the Act for those posts
wherefor the Committee 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, 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
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 posts shown in Column 1 of the table. Regulation 10 provides for the
source of recruitment inter alia 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) 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 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.
The Services Regulations contain similar provisions. Part III of the
said Regulations deal with recruitment and procedure. Regulation 10 lays
down that recruitment 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 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
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 governed by the statute. It is responsible for constitution of the Market
Committees for the purpose of overseeing that the agriculturists while
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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 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 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.
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
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 is that the procedures prescribed by reason of the Regulations are
applicable to the regular employees. It is so. The question which, however,
falls for 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
wages, 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
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 or 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
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 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 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 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 M.P. and Another v. Dharam Bir (1998) 6 SCC 165]
Sections 23 and 26-F of the Act categorically mandate that all
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
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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 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.
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.
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 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 & Others v. R. Hanumaiah & Others 2005 (8)
SCALE 80]
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 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 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)"
However, it is not correct that the power of the State to issue
directions 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, 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 26-L of the Act.
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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
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 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 turn 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 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 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 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 Verma and Others v. The Chancellor, Nagpur
University and Others (1990) 4 SCC 55, para 16, Karnataka Public Service
Commission and Others v. B.M. Vijaya Shankar and Others, (1992) 2 SCC
206, paras 4 and 5 and State of M.P. and Others v. Shyama Pardhi and
Others (1996) 7 SCC 118, paras 4 and 5]
In Viveka Nand Sethi v. Chairman, J&K Bank Ltd. and Others
[(2005) 5 SCC 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 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 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
the Board became overzealous in terminating services of the employees who
were appointed prior to 1.4.1996. 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
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assigned by the learned Single Judge to arrive at a finding that such period
has been 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 of the appointments made by the Directors of the Board
on different periods had been taken into consideration. It is only upon
application of mind on the 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
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
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 be effected.
An attempt to induct an employee without following the procedure
would be a backdoor appointment. Such backdoor appointments have been
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 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 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 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\005"
A 3-Judge Bench of this Court upon taking into consideration a large
number of decision in A. Umarani v. Registrar, Cooperative Societies and
Others [(2004) 7 SCC 112] held that illegal appointments cannot be
regularised. It was further held:
"No regularisation is, thus, permissible in exercise
of the statutory power conferred under Article 162
of the Constitution if the appointments have been
made in contravention of the statutory rules."
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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.
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
appointment in violation of the Act and the Regulations framed thereunder.
In Executive Engineer, ZP Engg. Divn. And Another v. Digambara
Rao and Others [(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 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 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 Others, (2005) 5 SCC 122]
In Mahendra L. Jain and Others v. Indore Development Authority and
Others [(2005) 1 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
answer thereto must be rendered in the negative.
Regularisation cannot be claimed as a matter of
right. An illegal appointment cannot be 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 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 Others
[(2005) 5 SCC 100], Umarani (supra) was followed holding that in law 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
correspondences between the State and the Board the appointments of such
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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
(2005) 5 SCC 70 and State of Maharashtra and Another v. R.S. Bhonde and
Others (2005) 5 SCC 751].
PRECEDENTS
Mr. Chaudhary has relied upon a large number of decisions to contend
that this Court has directed framing of such schemes.
In Surya Narain Yadav and Others v. Bihar State Electricity Board
and Others [(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 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 the
generation and distribution of electricity and had been assured of absorption.
The Board had decided to absorb them on permanent 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 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 services of its employees. The Bench did not
go into the question of validity or otherwise of such a scheme. We have,
however, noticed hereinbefore that even such a scheme would be
impermissible in law.
In Madan Singh and Others etc. v. State of Haryana and Others [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
of work charged employees. The Court was of the opinion that the benefits
conferred thereunder were available to them.
In Raj Narain Prasad and Others v. State of U.P. and Others [(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 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 Mr. Chaudhary on R.N.
Nanjundappa v. T. 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 form of
recruitment read with reference to power under
Article 162 is unsound and unacceptable. The
executive has the power to appoint. That power
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
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162 does not speak of rules whereas Article 309
speaks of rules. Therefore, the present case touches
the power of the State to make rules under Article
309 of the nature impeached here. Secondly when
the Government acted 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 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
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."
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 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 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 constitute a binding precedent. Even therein,
the scope and ambit of this Court’s jurisdiction under Article 142 vis-‘-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.
On the other hand, in a series of decisions, which we have noticed
hereinbefore, this Court has now firmly laid down the law that regularization
cannot be a mode of appointment.
OTHER CONTENTIONS
Mr. Chaudhari has placed strong reliance upon the provisions of the
U.P. Regularisation of Adhoc Appointments (on Posts Outside the Purview
of the Public Service Commission) Rules, 1979 purported to have been
framed by the State in pursuance of the provisions of Clause (3) of Article
348 of the Constitution of India. Rule 4 of the said Rules reads, thus:
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"4. Regularisation of ad hoc appointments \026 (1)
Any person who \026
(i) was directly appointed on ad hoc basis on or
before June 30, 1998 and is continuing in service
as such on the date of commencement of the Uttar
Pradesh Regularisation of Ad hoc Appointments
(On Posts Outside the Purview of the Public
Service Commission) (Third Amendment) Rules,
2001.
(ii) possessed requisite qualifications prescribed
for regular appointment as the time of such ad hoc
appointment; and
(iii) has completed or, as the case may be, after he
has completed three years service shall be
considered for regular appointments in permanent
or temporary vacancy, as may be available, on the
basis of his record and suitability before any
regular appointment is made in such vacancy in
accordance with the relevant rules or orders.
(2) In making regular appointments under these
rules reservations for the candidates belonging to
the Scheduled Castes, Scheduled Tribes, Backward
Classes and other categories shall be made in
accordance with the orders of the Government in
force at the time of recruitment.
(3) For the purpose of sub-rule (1) the appointing
authority shall constitute a Selection Committee.
(4) The appointing authority shall prepare an
eligibility list of the candidates, arranged in order
of seniority, as determined from the date of order
of appointment and if two or more persons are
appointed together from the order in which their
names are arranged in the said appointment order,
the list shall be placed before the Selection
Committee along with the character rolls and such
other records of the candidates as may be
considered necessary to assess their suitability.
(5) The Selection Committee shall consider the
cases of the candidates on the basis of their records
referred to in sub-rule (4).
(6) The Selection Committee shall prepare a list of
the selected candidates, the names in the list being
arranged in order of seniority, and forward it to the
appointing authority."
Apart from the fact that such contention has not been raised before the
High Court as also in the counter-affidavit filed before us, the provisions of
the said rules by no stretch of imagination can be said to be applicable in the
instant case.
Submission of Mr. Chaudhary to take recourse to Regulation 29 of the
Establishment Regulations providing that in regard to the matters not
specifically covered by the rules persons appointed to the services of the
Board shall be governed by the regulations applicable generally to the State
Government employees is misconceived.
The said submission of Mr. Chaudhary is furthermore inconsistent
with his submissions, as noticed supra, that even in terms of Section 26-M of
the Act, the State Government had no power to issue any direction
governing appointment in respect of terms and conditions of the services of
the employees. Persons who may be appointed to the services of the Board,
furthermore, even according to the learned Counsel appearing on behalf of
the Respondents, are those who are regular employees having been
appointed in terms of the provisions of the Act and the Regulations framed
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thereunder. We have, therefore, no doubt in our mind that Regulation 29 of
the Establishment Regulations which is in Chapter VII of the Act refers to
only such regulations and orders which would be applicable to the regular
employees.
The fact that all appointments have been made without following the
procedure or services of some persons appointed have been regularised in
past, in our opinion, 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 committed in the past, it is beyond comprehension as to
how such illegality can be allowed to perpetrate. The State and the Board
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 illegality is now well-
settled. [See State of A.P. v. S.B.P.V. Chalapathi Rao and Others,(1995) 1
SCC 724, para 8, Jalandhar Improvement Trust v. Sampuran Singh (1999) 3
SCC 494, para 13 and State of Bihar and Others v. Kameshwar Prasad Singh
and Another (2000) 9 SCC 94, para 30].
In the instant case, furthermore, no post was sanctioned. It is now
well-settled 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 Market Committee to fill-up the same in terms of the
existing rules. They, having regard to the provisions of the regulations, may
not fill up all the posts.
It may be that from the very inception the provisions of the Act and
the Regulations 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 1.10.1988. We have, however, noticed
hereinbefore that such a resolution on the part of the Board was beyond its
domain. It is also true, as has been contended by Mr. Chaudhary and Mr.
Sanghi, that the power to create posts was with the Board but the Board did
not exercise its power nor the competent 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 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
rules 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 of India, the appointments although might have been made 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 from Rs. 1.92 crore to Rs.
210.88 crores and the quantum of construction work has also increased from
Rs. 65.8 crores to Rs. 128.4 crores. It has also been suggested that in
November, 2005, the income has increased in the year 2004-05 to Rs. 400
crores and the annual budget of the Market Committees which has been
sanctioned is approximately Rs. 350 crores. 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 illegalities.
A contention has been raised by Mrs. Dixit that there was no material
before the Government for issuing the impugned instructions insofar as the
financial position vis-‘-vis the strength of the employees had been taken into
consideration. It is not necessary for us to go into the aforementioned
question inasmuch as we are herein concerned with the legality and/ or
validity of the impugned orders of termination of services and the same
having not been done, the appointment of the concerned employees were
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wholly illegal and without jurisdiction and, thus, void and of no effect.
CONCLUSION
The upshot of our aforementioned discussions is:
(i) The Board and the Market Committees were bound by the Act, the
Rules and Regulations framed thereunder in making appointments.
Statutory provisions as also the constitutional requirements were
required to be complied with.
(ii) The Board had no jurisdiction to frame any scheme for regularization
in the pith 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.
(iii) The State of Uttar Pradesh 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
provisions of the statute but the same although might have been done
under a misconception of law but was not otherwise arbitrary or mala
fide.
(v) Availability of vacancies and/ or the fund by themselves would not
allow the Market Committees or the Board to make appointments in
flagrant violation of the statutory provisions. Although the direction
of the State of U.P. 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 \026 Respondents
did not have any legal right.
(vi) We are not oblivious of the fact that there may be some employees
whose services have been terminated without any rhyme or reason.
Mr. Verma appearing on behalf of the Board has assured us that the
Board shall look into cases of such employees whose termination has
been effected beyond the policy decision taken by the State although
we do not intend to express any opinion as regards such employees.
We, however, direct the Board and the Market Committees to fill up
all existing vacancies strictly in accordance with law as expeditiously as
possible and preferably within six months from date. While doing so,
amongst other eligible candidates, the candidature of the employees whose
services have been terminated should also be taken into consideration and in
the event, the appropriate authority of the Market Committees or the Board
can relax the age-bar, the same would be done. The respective Market
Committees, however, in the meanwhile, if for exigencies of the work,
intend to appoint any person, it may do so. However, post facto approval
therefor should be obtained from the Board. In the offers of appointment
which may be issued to such temporary or ad hoc employees it shall be
made clear that their appointments would be ad hoc in nature and the same
shall be co-terminus with the appointment of regular employees.
In view of our findings aforementioned, we are of the opinion that the
judgment and order dated 11.8.2000 passed by the learned Single Judge
which has been upheld by the Division Bench by its order dated 5.9.2000
does not lay down the law correctly and the judgment and order dated
13.11.2000 passed by a Division Bench of the Lucknow Bench of the
Allahabad High Court in Writ Petition No. 1093 (S/B) of 1999 lays down
the law correctly. In the result, Civil Appeal arising out of SLP(C) No.
15797 of 2001 is dismissed and other civil appeals filed by the Board and
the State of Uttar Pradesh as also civil appeal arising out of SLP(C) No.
15677 of 2003 filed by the Board are allowed. However, there shall be no
order as to costs.