Contractual Employment and Regularization: Supreme Court Strikes Down Interim Order on Hiring

The Supreme Court of India recently decided a crucial case concerning contractual employment and the rights of contract workers seeking regularization. The case, Rajasthan State Road Development and Construction Corporation Ltd. v. Piyush Kant Sharma & Ors., revolved around whether an interim order restraining the Corporation from appointing new contractual employees in place of the original writ petitioner was legally valid. The apex court ruled in favor of the Corporation, quashing the High Court’s interim order.

Background of the Case

The dispute arose when the Rajasthan State Road Development and Construction Corporation Ltd. (the appellant) challenged an interim order passed by the High Court of Rajasthan in favor of Piyush Kant Sharma (the respondent). The respondent, who was engaged as a Computer Operator on a contractual basis, sought regularization of his services and a regular pay scale.

The appellant argued that there was no employer-employee relationship between the Corporation and the respondent. Instead, the respondent was hired through a third-party contractor, M/s Sahara Supreme Security Service, Jaipur. Additionally, the Corporation contended that there was no sanctioned post for a Computer Operator within its organizational structure. During the pendency of the respondent’s writ petition, the Corporation issued an e-tender and awarded a new contract to M/s Rakshak Security (P) Ltd. to hire Computer Operators and other personnel for a period of 12 months.

Interim Order Passed by the High Court

The High Court passed an interim order on September 23, 2019, restraining the Corporation from appointing a new set of contractual employees in place of the original writ petitioner. The interim order effectively prevented the Corporation from proceeding with its newly awarded contract.

Arguments of the Parties

Petitioner’s Arguments

• The petitioner had been working as a Computer Operator for over three years and deserved regularization.
• Other similarly situated Computer Operators had been retained, indicating a continuing requirement for the position.
• The High Court was justified in passing the interim order to prevent arbitrary removal of existing contractual workers.

Respondent’s Arguments

• The petitioner was never directly employed by the Corporation but was engaged through a third-party contractor.
• There was no sanctioned post for a Computer Operator within the Corporation’s structure.
• The High Court’s interim order was passed without assigning any valid reasons.
• The petitioner had no legal right to seek regularization, especially when hired through a contractual arrangement.

Supreme Court’s Verdict

The Supreme Court set aside the interim order passed by the High Court, stating that it had been issued without valid reasoning. The court emphasized that:

• The High Court had not provided any justification for restraining the Corporation from hiring new contractual employees.
• There was no employer-employee relationship between the respondent and the Corporation.
• The writ petitioner was a contract worker engaged through a third-party contractor and had no right to claim regularization.

In its judgment, the Supreme Court stated:

“No reasons, whatsoever, have been assigned by the High Court while passing the impugned interim order. The High Court has failed to appreciate and consider the fact that there was no regular sanctioned post of Computer Operator in the appellant Corporation and that there was no employer-employee relationship between the original writ petitioner and the appellant Corporation.”

Key Takeaways from the Judgment

The Supreme Court’s ruling reaffirms the legal position regarding contractual employment and the limited rights of contract workers seeking regularization. The key takeaways from this judgment are:

1. Contractual employees hired through third-party contractors do not have an automatic right to claim regularization.
2. An interim order restraining hiring by a public entity must be backed by valid reasons; otherwise, it is liable to be set aside.
3. The existence of a sanctioned post is a crucial factor in determining whether regularization can be granted.
4. Public sector corporations have the right to manage their hiring processes, including awarding contracts for services.

Conclusion

The Supreme Court’s decision in this case serves as an important precedent for contractual employment disputes. It clarifies that merely working for a public sector entity through a contractor does not create an employer-employee relationship. Furthermore, courts must provide adequate justification before issuing interim orders that interfere with the hiring processes of public bodies.

This ruling upholds the principle that contractual employment must be governed by the terms of the contract and statutory provisions, rather than by judicial intervention in favor of contract workers seeking regularization. The Supreme Court’s approach ensures that public sector organizations can function efficiently without undue restrictions imposed by courts.

Petitioner Name: Rajasthan State Road Development and Construction Corporation Ltd..
Respondent Name: Piyush Kant Sharma & Ors..
Judgment By: Justice Ashok Bhushan, Justice R. Subhash Reddy, Justice M. R. Shah.
Place Of Incident: Rajasthan.
Judgment Date: 15-10-2020.

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