Contractual employees hired for specific schemes have no indefeasible right to regularization after scheme discontinuation.

The petitioners were appointed as contractual employees under a project-based scheme managed by the Gujarat Urban Livelihood Mission.

They approached the High Court seeking regularization of their services, claiming that despite changes in the names of the schemes, their services were being continuously utilized on sanctioned posts.

An interim order of status quo regarding their service conditions was granted in 2018 based on a statement that their case was identical to Special Civil Application No. 19872 of 2017.

During the pendency of this petition, the Gujarat High Court and the Supreme Court dismissed the allied matters cited by the petitioners.

The respondent corporation argued that the scheme had been discontinued and it could not bear the salary expenses.

1. Whether contractual employees appointed under a specific project-based scheme have a legal right to regularization or continued employment after the scheme's discontinuation.

2. Whether the principles of regularization established in Bhola Nath v. State of Jharkhand apply to employees who continued in service primarily under the protection of a court’s interim status quo order.

The Court applied the principle that project-based contractual employees have no indefeasible right to continue in employment once the scheme concludes.

It distinguished the precedent of Bhola Nath v. State of Jharkhand (2026 INSC 99), which mandates regularization for long-term service on sanctioned posts, noting it does not apply to short-term contractual stints extended by judicial interim orders.

The Court also referenced an Apex Court observation from SLP No. 25391-25392 of 2025, suggesting that authorities should use discretion objectively when replacing experienced contract employees, though this does not grant a right to regularization.

The Court reasoned that the petitioners’ claim lacked merit because the very matters they relied upon for parity (SCA No. 19872 of 2017) had been dismissed by both the Division Bench and the Supreme Court.

The Judge observed that the petitioners had only completed 2-3 years of service before approaching the court and their continued service was a result of the "protected umbrella" of the court's status quo order, not a voluntary extension by the State.

The Court found that there is no parity between regular government employees and contractual staff, as the latter are not subject to standard service conditions like transfers or increments.

Consequently, since the underlying scheme was set to expire on 31.05.2026, the petitioners held no right to remain in service.

The Court directed the respondents to pay any unpaid salaries for November and December 2024 and subsequent months by 31.05.2026, instructing the Ahmedabad Municipal Corporation to submit the necessary proposals to the Gujarat Urban Livelihood Mission within ten days. Rule discharged.