State Cannot Deny Regularisation Of Long-Serving Contract Staff Appointed On Sanctioned Post By Due Process : Supreme Court

The Supreme Court on Friday (January 30) observed that the State, being a modal employer, cannot deny regularization to the contract workers just because they were appointed on a contractual basis. The Court said that the workers who have been granted repeated yearly extensions for a couple of years are entitled to seek regularization in terms of the doctrine of legitimate expectation.

“…we are unable to persuade ourselves to accept the respondent-State's contention that the mere contractual nomenclature of the appellants' engagement denudes them of constitutional protection. The State, having availed of the appellants' services on sanctioned posts for over a decade pursuant to a due process of selection and having consistently acknowledged their satisfactory performance, cannot, in the absence of cogent reasons or a speaking decision, abruptly discontinue such engagement by taking refuge behind formal contractual clauses. Such action is manifestly arbitrary, inconsistent with the obligation of the State to act as a model employer, and fails to withstand scrutiny under Article 14 of the Constitution.”, observed a bench of Justices Vikram Nath and Sandeep Mehta.

The Court allowed the the appeal of contractual workers, whose tenure was extended for ten years,  and “deprecated the practice adopted by States of engaging employees under the nominal labels of “part-time”, “contractual” or “temporary” in perpetuity and thereby exploiting them by not regularizing their positions.”

Holding that the appellants had been continued on sanctioned vacant posts for over a decade without any cogent justification for their discontinuance, the Court directed the State of Jharkhand to forthwith regularise their services.

The appellants were held entitled to consequential service benefits from the date of the judgment.

Background

The appellants were appointed in 2012 as Junior Engineers (Agriculture) against 22 sanctioned posts in the State's Land Conservation Directorate, following a public advertisement and a selection process. Though the appointments were labelled contractual and made initially for one year, the engineers were granted repeated extensions for more than ten years, with their performance consistently found satisfactory.

The appellants' appointment letters designated them as “temporary and contractual,” explicitly denying any obligation for regularization. Despite this label, they performed all regular duties for over a decade, receiving periodic extensions based on satisfactory performance. In 2023, the state declared the current extension as the final one, terminating their service. The Jharkhand High Court dismissed their challenge, ruling that contractual employees had no legal right to regularization, leading to an appeal before the Supreme Court.

Setting aside the impugned decision, the judgment authored by Justice Mehta criticized the State for exploiting the employees' labour for ten years and then casting them aside based on a contractual label.

“The State cannot be permitted to exploit its employees or to take advantage of their vulnerability, helplessness or unequal bargaining position,” the Court said.

“Where employees have continued to discharge their duties on contractual posts for a considerable length of time, as in the present case, it is but natural that a legitimate expectation arises that the State would, at some stage, recognize their long and continuous service. It is in this belief, bolstered by repeated extensions granted by the Executive, that such employees continue in service and refrain from seeking alternative employment, notwithstanding the contractual nature of their engagement.”, the court added.

The Court reiterated that the ratio laid down in State of Karnataka v. Uma Devi, (2006) 4 SCC 1 that the doctrine of legitimate expectation cannot ordinarily be extended to persons whose appointments are temporary, casual or contractual in nature, applies “only to those temporary, contractual or casual employees whose engagement was not preceded by a proper selection process in accordance with the extant rules. Consequently, where such engagement is made after following a due and lawful selection procedure, there is no absolute bar in law preventing such employees from invoking the doctrine of legitimate expectation.”

Rejecting the State's reliance on contractual terms barring regularisation, the Court held that acceptance of such conditions does not amount to waiver of fundamental rights. It relied on earlier precedents to underline that unconscionable contractual clauses imposed in situations of unequal bargaining power cannot shield arbitrary State action from constitutional scrutiny.

Conclusions

In light of our discussion, the Court summarized its conclusions as follows:

I. The respondent-State was not justified in continuing the appellants on sanctioned vacant posts for over a decade under the nomenclature of contractual engagement and thereafter denying them consideration for regularization.

II. Abrupt discontinuance of such long-standing engagement solely on the basis of contractual nomenclature, without either recording cogent reasons or passing a speaking order, is manifestly arbitrary and violative of Article 14 of the Constitution.

III. Contractual stipulations purporting to bar claims for regularization cannot override constitutional guarantees. Acceptance of contractual terms does not amount to waiver of fundamental rights, and contractual stipulations cannot immunize arbitrary State action from constitutional scrutiny.

IV. The State, as a model employer, cannot rely on contractual labels or mechanical application of Umadevi (supra) to justify prolonged ad-hocism or to discard long-serving employees in a manner inconsistent with fairness, dignity, and constitutional governance.

V. In view of the foregoing discussion, we direct the respondent-State to forthwith regularize the services of all the appellants against the sanctioned posts to which they were initially appointed. The appellants shall be entitled to all consequential service benefits accruing from the date of this judgment.

Related judgments - 'Uma Devi' Judgment Can't Be Used To Justify Exploitative Engagements : Supreme Court Allows Regularisation Of Long-Serving Daily Wagers

Govts Engaging Temporary Workers For Long Periods Unfair; 'Uma Devi' Judgment Being Misapplied Against Long-Serving Workers : Supreme Court

Govt Institutions Should Not Mirror Gig Economy Trends By Misusing Temporary Employment Contracts: Supreme Court

Employee Appointed Through Valid Process Can't Be Denied Regularization If Performing Permanent Role For Considerable Time: Supreme Court

Cause Title: BHOLA NATH VERSUS THE STATE OF JHARKHAND & ORS. (with connected matters)

Citation : 2026 LiveLaw (SC) 95

Click here to download judgment

Appearance:

For Petitioner(s) : Mr. Kumar Shivam, AOR Mr. Pradeep Kumar Tripathi, Adv. Mr. K. Parameshwar, Sr. Adv. Mr. Saurabh Mishra, Sr. Adv. Mr. Gaurav Prakah Pathak, Adv. Ms. Anushka, Adv. Mr. Nishant Kumar, AOR

For Respondent(s) :Ms. Ruchira Gupta, Adv. Mr. Jayant Mohan, AOR Mr. Karma Dorojee, Adv. Ms. Adya Shree Dutta, Adv. Ms. Pooja Tripathi, Adv. Mr. Mohtisham Ali, Adv. Mr. Dorjee Ongmu Lachunga, Adc. Mr. Mangaljit Mukherjee, Adv. Mr. Karma Dorjee, Adv. Mr. Anil Kumar, Adv. Mr. Manoneet Dwivedi, Adv. Mr. Prakash Kumarmangalam, Adv. Mr. Abhishek Kumar Gupta, Adv. Mr. Shantanu Sagar, AOR