Allahabad High Court
Kalamuddin And 186 Others vs State Of U.P. And 5 Others on 27 March, 2023
Author: Sangeeta Chandra
Bench: Sangeeta Chandra
HIGH COURT OF JUDICATURE AT ALLAHABAD A.F.R. Reserved on 30.09.2022 Delivered on 27.03.2023 In Chamber Case :- WRIT - A No. - 3451 of 2022 Petitioner :- Kalamuddin And 186 Others Respondent :- State Of U.P. And 5 Others Counsel for Petitioner :- Siddharth Khare,Sr. Advocate Counsel for Respondent :- C.S.C.,Sujeet Kumar Rai With Case :- WRIT - A No. - 4952 of 2022 Petitioner :- Mohammad Idrish 29 Others Respondent :- State Of U.P. And 5 Others Counsel for Petitioner :- Siddharth Khare,Sr. Advocate Counsel for Respondent :- C.S.C.,Sujeet Kumar Rai With Case :- WRIT - A No. - 4998 of 2022 Petitioner :- Suresh Kumar And 149 Others Respondent :- State Of U.P. And 5 Others Counsel for Petitioner :- Siddharth Khare,Sr. Advocate Counsel for Respondent :- C.S.C. With Case :- WRIT - A No. - 5377 of 2022 Petitioner :- Anand Saini And 9 Others Respondent :- State Of U.P. And 6 Others Counsel for Petitioner :- Siddharth Khare,Sr. Advocate Counsel for Respondent :- C.S.C.,Sujeet Kumar Rai With Case :- WRIT - A No. - 6165 of 2022 Petitioner :- Prachi Sengar Respondent :- State Of U.P. And 5 Others Counsel for Petitioner :- Pavan Kumar Mishra Counsel for Respondent :- C.S.C.,Sujeet Kumar Rai With Case :- WRIT - A No. - 10627 of 2022 Petitioner :- Vikas Singh Respondent :- State Of U.P. And 5 Others Counsel for Petitioner :- Siddharth Khare Counsel for Respondent :- C.S.C.,Sujeet Kumar Rai Hon'ble Mrs. Sangeeta Chandra,J.
1. Heard Sri Ashok Khare, learned Senior Advocate assisted by Sri Siddhartha Khare, learned counsel for the petitioners, and Sri Ajit Kumar Singh, Additional Advocate General assisted by Sri Sudhanshu Srivastava for the respondent no. 1 and 2, and Sri O. P. Singh, learned Senior Advocate assisted by Sri Sujit Kumar Rai for the respondent no. 5 and 6, and Sri Navin Sinha, learned Senior Advocate again assisted by Sri Sujit Kumar Rai for the respondent nos. 3 & 4.
2. All of the above petitions are connected and are being taken up together as they involve identical issues. There are a total of 378 petitioners before this Court. All of them have challenged Circular dated 17.09.2021 issued by the Commissioner and Registrar Cooperatives U.P. Lucknow and also the communication of the Deputy General Manager (Administration) of U.P. State Nirman Sahkari Sangh Limited Lucknow (hereinafter referred to as "Sangh") and the notice dated 22.02.2022 issued by the Superintendent Engineer, and have prayed for a Mandamus to be issued to the respondents not to interfere in the working of the petitioners as Sahyogis/Clerks/Junior Engineers /Assistant Engineers, and to pay them their regular monthly emoluments and not to cause any break in the continuity of the service of the petitioners, and to continue the petitioners till the requirement of work continues to exist. A further prayer has been made to restrain the respondents from replacing the petitioners by Contract employees engaged through service providers.
3. We will take the facts of the leading case of Kamal Uddin and Others Vs. State of U.P. and Others, as they cover almost all the grounds and other Writ Petitions are also of similar nature. In the Writ Petition it has been submitted that U. P. Rajya Nirman Sahakari Sangh/ U.P. State Construction Cooperative Sangh Ltd Lucknow, is an Apex Level Cooperative Society registered under the provisions of the U.P. Cooperative Societies Act, 1965. Its service conditions of employees are governed by U.P. Cooperative Institutional Service Board which has framed a set of Regulations known as U.P. Cooperative Societies Employees Service Regulations, 1975.
4. In paragraph 6 of the Writ Petition it is claimed that the Sangh is an instrumentality of the State and is under its total administrative and financial control. The majority of the funding of the Sangh is borne by the State Government. The recruitment and other conditions of the service of employees are governed by Statutory Regulations framed under Section 122 of the 1965 Act. (This has been specifically denied in the counter affidavit of the Sangh).
5. It has further been submitted that all the Writ Petitioners are working either as Sahyogis/Class IV employees or as Clerks or as Junior Engineers or Assistant Engineers for a long time on basis of contracts signed annually. Some of the petitioners have been working since 1999 while others have been engaged in 2010, but most of them have been working for the past 10 to 20 years on the basis of such contractual arrangement where contracts are entered into on different dates in the month of April each year and extend upto 31st March of the next year. Some copies of contracts entered into initially by each category of such petitioners have been filed as exemplars. It has further been stated that initially a Class IV employee was engaged in the year 2002 on a consolidated payment of Rs.2000/- which has increased from time to time and now is Rs.11,500/-. Similarly a Clerk was initially engaged on a consolidated fee of Rs.3,000/- and the monthly pay has now increased to Rs.13,000/-. A Junior Engineer was engaged in 2010 on monthly pay of Rs.9,375/- which has now increased to Rs.15,063/-. An Assistant Engineer was engaged in the year 2009 on monthly pay of Rs.10,000/- which has now increased to Rs.23,500/-. Details of all the petitioners allegedly continuously working, from the time of their initial engagement, though on the basis of annual contracts signed each time, have been specified in a tabular charts filed as annexures no. 12A, 12B, 12C and 12D to the Writ Petition.
6. On 17.09.2021 (Annexure-13) the Commissioner and Registrar Cooperatives U.P. i.e. the Respondent No.2 issued a Circular addressed to the Managing Director of all Apex Level Societies and District Cooperative Societies referring to Government Orders for obtaining outsourced employees through GeM Portal. It referred to Government Orders dated 18.12.2019, 25.08.2020 and 18.06.2020. It has been stated that the main Government Order issued in this regard for adoption of GeM Portal as devised by the Government of India is the Government Order dated 25.08.2020 (Annexure-14). Acting in pursuance of such Circular correspondence was undertaken by the officers of the Sangh, and on information so collected it was revealed that a total number of 622 employees were working on contractual basis in different Divisions of the Sangh. In pursuance of such correspondence, the Superintendent Engineer issued a GeM Bid Invitation Notice inviting bids from service providers for supplying 622 contractual employees. The actual bid document was released on the GeM Portal on 24.02.2022 inviting bids up to 08.03.2022. The bid documents mentioned the department's name as Cooperative Department U.P., and the manpower required through outsourcing has been specified to match with the number and category of employees such as the petitioners who have been engaged on contractual basis and have been working since long with the Sangh. This clearly demonstrated the intention of the respondents to dispense with the services of the petitioners subsequent to 31.03.2022 and to replace them by persons engaged through an outsourcing Agency/service provider, to be decided by evaluating the bids uploaded on the GeM Portal. The petitioners are being sought to be replaced en bloc by employees engaged again on Contract through service provider by way of outsourcing.
7. In paragraph-34 of the Writ Petition, it has been submitted that the impugned action is with the intention to deprive the petitioners of any benefit accruing to them on the basis of their substantial length of service despite the fact that the State Government has from time to time issued orders with regard to Regularisation of such employees. Details of some such Regularisation/ Absorption Rules have been mentioned in the sub-paragraphs as U.P. Regularisation of Ad hoc Appointments (on posts within the purview of UP Cooperative Institutional Service Board) Regulations, 1985; U.P. Regularisation of Service of Persons Working on Daily Wages or on Work Charge or on Contract Basis (on posts within the purview of U.P. Cooperative Institutional Service Board in Cooperative Societies) Regulations, 2017; and Government Order dated 24.02.2016 permitting Regularisation of daily wage employees/work charged employees/employees on Contract in Government Departments/Autonomous Bodies/ Public Sector Corporations/ Local Bodies/Development Authorities and Zila Panchayats; and U.P. Regularisation of persons working on daily wages or on work charge or on Contract in Government Departments and Group ''C' and Group ''D' posts (outside the purview of U.P. Public Service Commission) Rules, 2016.
8. It has been stated further that several of the petitioners stand squarely covered by the Regularisation Rules as mentioned in paragraph-34, but till date no steps have been taken for their Regularisation. The remaining petitioners though specifically not covered by the aforesaid Regularisation Rules nevertheless, on account of their continued working directly as contractual employees, have a legitimate expectation of being ultimately regularised in future. The legitimate expectation has been sought to be thwarted by replacement of the petitioners with contractual employees engaged through service provider in pursuance of the impugned order Annexure -13. Each of the petitioners possess the requisite qualification for the work performed by them and one set of contractual employees should not be replaced by another set of contractual employees. In the present case the respondents intend to replace directly engaged contractual employees by contractual employees engaged through service provider selected through the GeM Portal. Arrangement of obtaining contractual employees through an outsourcing Agency imposes additional financial burden upon the Sangh in the form of commission payable to the service provider, as also the payment of GST on such Contract entered into with the service provider. There does not exist any financial benefit to the Sangh by taking recourse to such device.
9. It has also been stated in paragraph-41, 42 and 43 of the petition that utilisation of GeM Portal should only be in case contractual employees are required through a service provider. There existed no occasion for the GeM Portal to be utilised when contractual employees are engaged directly by the respondent Apex Level Cooperative Society. The Sangh has proceeded to mechanically act upon the Circular dated 17.09.2021, without any clarification sought from the respondent No. 2 whether it permits employees directly engaged through Contract to continue. There does not exist any rational reason for replacing directly appointed contractual employees who have worked for past several years by employees to be engaged again on Contract but through service provider.
10. Initially, when the writ petition was filed, this Court was pleased to grant an interim order dated 25.03.22 which noted that the petitioners were all employees of U.P. State Nirman Sahkari Sangh and engaged on Contract basis for past several years and that the respondents were proceeding to now employ other persons through outsourcing. The respondents had stated that they were following the Government Order dated 25.08.2020 and had invited tenders for the purpose of engaging service providers through GeM portal as contemplated under the said Government Order. The argument raised by the petitioners was that if the Government Order is to be complied with, it could not be used as a tool to replace employees like the petitioners already engaged on Contract basis directly by the respondents. The Court was prima facie of the opinion that the petitioners have been discharging their duties for the past more than a decade and it would be quite unfortunate to replace them by outsourced employees or even direct them to apply through GeM portal. The Court, therefore, directed that till further orders status quo shall be maintained with regard to "the nature of status of employment of the petitioners with the establishment and the future renewal of Contract will not be influenced in any manner by inviting outsourced agencies to provide work force through GeM portal". It was also clarified that the petitioners would not be replaced through outsourced agencies' workers. Similar interim orders were granted thereafter on 08.04.22 and 13.04.2022 and 26.04.2022 and 24.05.2022 in all the writ petitions further clarifying the same that even if there is no renewal of a Contract, if the petitioners have been continuing to work for a decade in the respondents' establishment on Contract on year to year basis, then they be not replaced by outsourced employees, nor they should be compelled to apply through GeM portal. The Court observed that the respondents were at liberty to take work or not from them but they were certainly not at liberty to replace them by outsourced employees. It was also clarified that the respondents should not engage any employee through outsourced Agency to take work. If there is work available with the respondents and if they want to engage employees, the petitioners shall be permitted to enter into Contract again. However, if additional work force is required over and above the petitioners and similar other employees, it would be open for the respondents to take employment through outsourced agencies.
11. The Respondents had filed two Special Appeals against such interim orders where, while condoning the delay in filing the Special Appeal, the Court observed that the learned Single Judge had passed the interim order taking into account the fact that the petitioners had been engaged on contractual basis and had been working for last more than 10 years and, therefore, should be allowed to continue and in case there is requirement of additional workforce, it was left open to the authorities to engage persons to outsourcing Agency. It observed that interference in the interim orders passed by the Writ Court was not required as it was the admitted case of the appellant that persons who were already working, were not being replaced with other workforce to be engaged for outsourcing Agency. The Appellate Court disposed of the Special Appeals directing that the writ petitions should be taken up and decided expeditiously.
12. A Counter Affidavit has been filed on behalf of the Respondent Nos.1 & 2 wherein it has only been stated that the Circular 17.09.2021 issued by the Commissioner and Registrar Cooperatives, was in accordance with the Government Order dated 18.12.2019, issued by the Department of Personnel, and Government Order dated 25.08.2020 issued by the Micro, Small and Medium Industries Department Government of U.P., and Government Order dated 18.08.2020 was issued by the Department of Labour. The said Government Orders had not been challenged by the petitioners and only consequential orders had been challenged.
13. In response to the same, a Rejoinder Affidavit has been filed by the petitioners where they state that they have challenged the action of the Respondent Nos.3 & 4 which is independent of the validity of Government Orders. The Circular and the Government Order only constitute a decision that in case of requirement of materials or outsourcing of manpower, the GeM Portal is to be utilized. No Government Order contains any decision regarding engagement of contractual employees by the Sangh, and that they cannot be directly engaged by the Sangh. These Government Orders provided that in case manpower is to be engaged through outsourcing, then the GeM Portal has to be utilized. This is evident also from the fact that despite such Government Orders being circulated, there continue to exist several Corporations under the control of the State Government which continue to engage contractual employees directly, for example, the State Warehousing Corporation, the U.P. Construction Labour Development Federation etc.
14. In the Counter Affidavit filed by the Respondent Nos.3 to 6, it has been stated that the Government of India had issued an order on 17.12.2017 for taking manpower and other resources from the GeM Portal which was adopted by the State Government Order dated 23.08.2018. Thereafter, also the State Government had issued at least three Government Orders. The Said Government Orders had not been challenged in the writ petitions and only consequential Circular had been challenged. The petitioners had been permitted to work as contractual employees only till 31.03.2022 when their contracts expired, and still they had not applied for getting a fresh engagement through GeM Portal. Paragraph-6 of the writ petition has been specifically denied. It has been stated that U.P. Rajya Nirman Sahkari Sangh is a registered Apex level Cooperative Society and a body Corporate with autonomous existence on which the State Government has got no control. It is further stated that the petitioners have been working for short periods of time for example for six months upto one year. The Tenure/Contract was not extended. Fresh Contract was required to be signed. No fresh Contract had been signed after 31.03.2022. With respect to several of the writ petitioners, it has been pointed out that they had not been working continuously as alleged, some of them had worked for one or two years only. Details of such employees with names have also been mentioned. The petitioners have never been ''appointed'' but having only been engaged on contractual basis for a fixed period with a monthly consolidated salary and had no right to continue beyond the term of the Contract.
15. In Paragraphs 19 & 20 of the Counter Affidavit, it has been stated that it is absolutely wrong to say that the answering respondents were going to dispense with the contracts by replacing the petitioners and engaging other persons through outsourcing. The respondents are not going to disengage the petitioners because as per the Government Order, contractual employees who were working on different posts earlier would be engaged as fresh contractual employees through GeM Portal as per the directions given by the Government. However, their engagement should not be made if their work and conduct is not satisfactory, and it would also be informed to the Agency who would take a decision about their fresh engagement. It is only to promote transparency in the employment of contractual workers that the Government of India had taken a policy decision that manpower should be purchased from the GeM Portal and once the policy has been determined by the Central Government which has been adopted at the State level, it has to be followed as the policy decision has not yet been challenged by the petitioners. The petitioners are not going to be disengaged as alleged as the Contract came to an end on 31.03.2022 itself, then there was no fresh Contract. Not entering into fresh Contract with the contractual employees does not mean termination of their employment, it only means cessation of their work on the current period of engagement having come to an end on 31.03.2022. The petition has been filed on mere apprehension as no cause of action has yet arisen. The argument that replacement of contractual employees with contractual employees would be arbitrary, would not apply here because the Contract of all the petitioners had come to an end on 31.03.2022 and now the Government of India had taken a policy decision to make engagement only through GeM Portal to maintain transparency in such engagement which cannot be said to be in violation of Article 14 of the Constitution.
16. In the Supplementary Counter Affidavit filed by the respondents along with a Stay Vacation application, it has been mentioned that after the end of the Contract of the petitioners on 31.03.2022, no work has been taken from them and no payment has been made. It has further been clarified that several of the writ petitioners had worked only for one year or two years on Contract basis and the averments made in the writ petition that they had continued for more than a decade is false.
17. In the Supplementary Rejoinder Affidavit filed by the petitioners they have referred to the Interim Orders granted on 25.03.2022 and on 08.04.2022, directing the respondents to maintain the status of the petitioners employment and not to engage contractual employees through outsourcing, against which two Special Appeals were filed and dismissed on 04.07.2022. It has also been stated that complete information regarding periods of engagement of such petitioners has been mentioned in the Tabular Charts enclosed with the writ petition and that the respondents were resorting to artificial breaks between the end of one Contract and the signing of another fresh Contract. The petitioners working as Junior Engineers had deposited the security amount in the form of a Demand Draft of Rs.50,000/- and those working as Assistant Engineers had deposited a Demand Draft of Rs.1,00,000/- each. Such security amount was never returned at the end of the period of Contract and remained continuously in possession of the respondents. One Contract ended and another was signed indicating clearly that the breaks were artificial in nature. If such breaks were real then at the end of every Contractual term, the Security Money would have been returned and fresh Security Money would have been accepted on signing of fresh Contract.
18. In the Second Supplementary Counter Affidavit filed on behalf of the Respondent Nos.3 to 6 a reference has been made to the Circular dated 17.09.2021 which had referred to various Government Orders which provided mandatorily for engagement of manpower through outsourcing via GeM Portal. This Court by means of Interim Orders directed the respondents to maintain the status of employment of the petitioners, their future renewal of Contract would not be affected by inviting of bids of outsourcing Agencies to provide workforce through GeM Portal. Since Contempt Petitions were filed the Board of Directors had come to a decision to cancel the entire process of outsourcing or selecting Agencies through GeM Portal and the selected Agency's Contract was also terminated.
19. In the Second Supplementary Rejoinder Affidavit filed in reply to the Second Supplementary Counter Affidavit of the respondents, the petitioners have stated that the Circular dated 17.09.2021 is only a generally worded communication which has referred to some Guidelines having been sought by different Cooperative Societies with regard to outsourcing of employees. The said Circular has been wrongly interpreted by the Sangh to say that a direction had been issued that contractual employees would be employed only through outsourcing Agency selected through GeM Portal. Several direct contractual employees continue to be engaged in other Apex Level Cooperative Societies and Institutions. Petitioners have brought on record a Contract entered into between Sudhanshu Patel of Awsar Multi Solutions Private Limited on 14.03.2022 which would remain in force up to 14.01.2023. In Paragraph-7 of the Second Supplementary Rejoinder Affidavit a mention has been made of information downloaded from Google regarding the selected service provider namely Awsar Multi Solution Private Limited which has its registered address at 505A/5/1649, Adil Nagar, Kursi Road, Lucknow, which happens to be the residential address of Smt. Rekha Verma wife of Shri J.P. Verma, the Private Secretary to Sri Mukut Bihari Verma, the Cooperative Minister, in power till March, 2022. It has been averred that the outsourcing Agency was wholly fraudulent and the Directors of Awsar Multi Solution Private Limited included Roshan Verma and Kshitij Kumar Verma who were close blood relatives of Mukut Bihari Verma, the then Cooperative Minister. A copy of the House Tax bill obtained from Lucknow Municipal Corporation with regard to the residential premises belonging to Rekha Verma have been filed as Annexure to the said affidavit.
20. This Court has perused IInd Supplementary Rejoinder Affidavit and IIIrd Supplementary Rejoinder Affidavit and the information downloaded from Google which has been filed as Annexure to the Second Supplementary Rejoinder Affidavit. It has come out from the same that Awsar Multi Solutions Private Ltd. is a private Company incorporated on 16.08.2021 with an authorized share capital of Rs.1,00,000/- and paid-up capital of Rs.10,000 only. The Company has two Directors Roshan Verma and Kshitij Kumar Verma.
21. In the IIIrd supplementary Counter Affidavit filed on behalf of the Respondent Nos.3 to 6 it has been stated that the interim order passed by this Court only directed for maintenance of status quo with regard to the nature of employment of the petitioners. It had not directed maintenance of status-quo with respect to their service. The nature of employment continues to remain contractual. It has also been reiterated that once the entire process of outsourcing has been cancelled by order dated 10.08.2022 nothing remained to be adjudicated. If and when additional manpower is required then the Sangh may consider fresh Contract to be entered into as per requirement of work. Also the Contract with Awsar Multi Solutions has been cancelled and the entire process of selection of service provider through GeM Portal has also been abandoned. However, there is no specific reply given by the respondents to the allegations made regarding the connection of Directors of Awsar Multi Solutions with the Private Secretary of the then Cooperative Minister or with the Minister himself.
22. It is the case of the petitioners as argued by Sri Ashok Khare, learned Senior Advocate assisted by Sri Siddharth Khare that U.P. State Nirman Sahkari Sangh Limited Lucknow (hereinafter referred to as "Sangh") is an Apex level Cooperative Society governed by the provisions of U.P. Cooperative Societies Act 1965, and is within the purview of U.P. Institutional Service Board and the provisions of U.P. Cooperative Employees Service Regulations 1975. The State Government exercises all pervasive control over it and the Sangh, therefore, is covered by the definition of State under Article 12 of the Constitution. The Sangh had engaged 622 employees on contractual basis for discharging work of Sahyogis (Class IV); Clerks, Junior Engineers and Assistant Engineers and they had been working for a substantial period of time. As and when their contracts ended, they were engaged again through fresh contracts. Also, despite no interference in the interim order by the Division Bench, it was not complied with and none of the petitioners were permitted to function with effect from 01.04.2022 and no payments were made to them. On account of such willful disobedience, a contempt petition was filed which is pending consideration.
23. It has been argued that the nature of appointment of the petitioners is contractual but such contractual engagement is entered into by the respondent Apex level Cooperative Society directly with the petitioners and there is no intermediary in between, in the form of a service provider. At the time of engagement of Junior Engineers and Assistant Engineers on contractual basis, a security amount of Rs.50,000 to 1,00,000 had been obtained from each of them. The said security amount deposited at the time of initial engagement has thereafter continued to remain with the respondents and it has not been returned or required to be resubmitted upon re-engagement of the petitioners. Also, only in eight cases out of 622 contractual employees, it has been stated that the services were not continuous but there were breaks in their continuity. Apart from the aforesaid eight employees, the respondents have not been able to point out any break between the initial engagement and continuance thereafter of the rest of the employees. Such employees who had not worked continuously, had still been working for substantial lengths of time of almost 20 years in some cases after their engagement.
24. It has also been argued that the petitioners have been working for more than two decades although on contractual basis. At the end of each year the respondent entered into a fresh Contract. Therefore, according to the respondents it should be treated as a fresh contractual engagement but according to the petitioners, it is a re-engagement of the petitioners and this is supported by the fact that the security amount deposited by Junior Engineers and Assistant Engineers of Rs.50,000/- and Rs.1,00,000/- respectively has not been returned or resubmitted. This fact goes a long way to demonstrate the actual nature of engagement of the petitioners.
25. The immediate cause of action for filing the writ petition arose as a Circular was issued on 17.09.2021 by the Commissioner and Registrar Cooperatives, U.P. Lucknow addressed to Managing Directors of all Apex level Cooperative Societies and Chief Executive Officers of all District Cooperative Banks, and Secretaries of all District Cooperative Federations, mentioning that some Cooperative Societies had sought Guidelines in pursuance of a Government Order issued on 25.08.2020 which required use of GeM portal developed by the Central Government for the purpose of purchase of material/manpower.
26. Communication was issued thereafter by the Deputy General Manager (Administration) on 19.01.2022 addressed to all Divisional In-charges of the respondent Sangh requiring information with regard to existing contractual employees for the purpose of outsourcing the same through GeM portal, a copy of which has been filed as Annexure-15 in Writ Petition No. 3451 of 2022.
27. In pursuance of such communication, a letter was written to the convener of GeM portal by the respondent- Sangh on 11.02.2022 intimating that there existed a total number of 622 employees working on Contract basis in the four categories as aforesaid, and requiring such employees to be engaged through GeM portal in accordance with paragraph 2 (4) of the Government Order dated 25.08. 2020.
28. A GeM portal Invitation to Offer was issued on 22.02.2022 thereafter by the Executive Engineer (Convener), inviting bids for engagement of 108 Assistant Engineers, 102 Junior Engineers, 241 Clerks and 171 Sahyogis, aggregating a total of 622 employees.
29. The petitioners fearing disengagement thereafter filed a Writ Petition No. 3451 of 2022 before this Court and an Interim Order was granted by this Court initially on 25.03.2022, which has been reiterated and clarified as aforesaid in all the four writ petitions which were filed subsequently.
30. Further, it has been argued that the Circular dated 17.09.2021 as also the Government Orders dated 18.12.2019, 18.08.2020 and 25.08.2020 issued by the State Government with regard to utilization of GeM portal for purchasing manpower and resources, did not prohibit any Society from directly engaging contractual employees, nor did it require engagement of contractual employees through an outsourcing Agency.
However, the respondent Sangh has misconstrued the said Government Orders and Circular issued by the Commissioner and Registrar Cooperatives, to the detriment of the petitioners.
31. This Court during the course of hearing on 12.09.2022, had passed an order that the apprehension of the petitioners is that being directly engaged contractual employees of the Respondents Nos.3 to 6, they shall be disengaged and Contractual Employees shall be engaged through service providers to be selected through GeM Portal where as the Government Orders that have been referred to in the Counter Affidavit filed by the Respondent Nos. 1 and 2 referred to Government Orders of 18.12.2019, 18.08.2020, and 25.08.2020, all provide that contractual employees engaged through service providers/ outsourced employees shall be allowed to continue to work though the service providers may be changed from time to time, and such service providers may be selected through the GeM Portal. This Court had found nothing in the Government Orders that directly engaged contractual employees should be disengaged and the work being performed by such employees shall be outsourced and the outsourcing shall be handed over to the service providers selected through GeM Portal. Also, this Court had noticed the submission of the petitioners that contractual employees engaged directly by the Opposite Parties Nos. 3 to 6 were so engaged only after relevant sanction for such engagement was given by the Competent Authority. Their engagement prima facie could not be said to be illegal or irregular as they were engaged on the earlier Government sanction in this regard. The learned Additional Advocate General had stated that the intention of the Government Orders was limited only to outsourced employees to be engaged through service providers. These Government Orders had nothing at all to do with the contractual employees such as the petitioners, and the Government Order / scheme of the GeM Portal as initiated by the Government of India and adopted by the State of U.P., also talk of maintaining the continuity of outsourced employees. Contractual employees such as the petitioners have not been referred to at all in the said Government Orders.
32. This Court had observed that since the Government Orders had been issued by the Department of Personnel/Karmik, an affidavit be filed by an Officer not less than the rank of Special Secretary of the Karmik department, to clarify the intention of the Government Orders dated 18.12.2019, 18.08.2020 and 25.08.2020 stating clearly what the Government meant by the term "Outsourced Employees" as in the common parlance, outsourced employees are just contractual employees, referred to by another name.
33. In the affidavit filed thereafter by the Special Secretary Karmik Department all the three Government Orders dated 18.12.2019, 18.08.2020 and 25.08.2020. have been filed as Annexures, and it has been stated that all the three Government Orders mentioned purchase of manpower through outsourcing, though the word ''outsourcing' has not been defined or explained in these Government Orders. However, after perusal of these Government Orders, it is evident that an agreement would be entered into between the Administrative Department or the Subordinate Institutions and service provider of manpower. The Agreement/Contract would not be entered directly between concerned Department and the employees made available by the service provider Agency. The payment of remuneration of these outsourced personnel will be made to the service provider Agency. The service provider Agency would be liable for payment of remuneration as well as deductions for EPF / ESI etc., every month in the concerned Bank accounts. Such personnel engaged through outsourcing could not be changed at will of the service provider. The employees through outsourcing could be removed only after permission of the concerned department in case of indiscipline and involvement in criminal activities etc.
34. In Paragraph-11 of the said affidavit filed by the Special Secretary, it has stated that a writ petition relating to outsourcing had been filed before this Court at Lucknow registered as Writ Petition No.31208 (MB) of 2019, [M/s RMS Techno Solution Versus Additional Chief Secretary Revenue and Others]. This Court by its order dated 20.11.2019 had observed that a perusal of the scheme framed in the Government Orders impugned showed that even against sanctioned posts to be filled as per Rules, contractual employees are to be provided through service providers. In the case of State of Karnataka Versus Uma Devi reported in 2006 (4) SCC 1, the Supreme Court had directed the Government not to indulge in adhocism, rather it should be stopped within a period of six months. Despite a number of years having elapsed yet the Government was engaging persons on Contract basis through service provider. It also observed that the Supreme Court had commented over such engagement as Government should not run through Contract employees. The Division Bench took cognizance of the arrangement made by the State of U.P. that instead of filling up the posts on regular basis, it managed through contractual service of persons sent by service provider. The State Government was directed to explain whether it is permissible after the judgement of the Supreme Court in the case of Uma Devi (Supra); and as to why sanctioned posts are not being filled up on a regular basis. The Division Bench observed that till such explanation is given in proper terms, the State Government would not engage service providers to provide contractual employees, if it is against regular sanctioned posts.
35. It has been stated in the affidavit that in compliance of the interim order dated 20.11.2019, in RMS Techo Solutions (supra), engagement through outsourcing is not being made on regular/sanctioned posts in the Government Departments or their Subordinate Institutions.
In Paragraph-12 of such affidavit, it has been stated that there is no policy framed regarding recruitment through contractual basis by the Department of Karmik. The contractual employees engaged by various Departments and subordinate institutions for the work in the projects would be governed by the service conditions/terms mentioned in the Contract/Agreement such as their terms of Appointment, Engagement payment of salary etc. are being done by the concerned Department. In Paragraph-13 of the said affidavit it has been stated "it is clear outsourcing of manpower and appointment or engagement on Contract basis are different from each other, and Government Orders dated 18.12.2019, 18.08.2020 and 25.08.2020 are applicable for outsourcing of personnel only. These Government Orders are not applicable on Appointments/Engagement of personnel and employees on Contract basis.".
36. More or less, the view as mentioned in the Counter Affidavit and the Affidavit filed by the Special Secretary Karmik Department Government of U.P. has been reiterated in the arguments of the learned Additional Advocate General, Ajit Kumar Singh assisted by Shri Sudhanshu Srivastava, Additional Chief Standing Counsel. It has been argued that the Government Orders dated 08.12.2019, 18.08.2020 and 25.08.2020 were issued by the various Departments only for Government Departments and their Subordinate Institutions, and not for Cooperative Societies. It was because the Cooperative Societies/Federations themselves sought clarifications from the Commissioner and Registrar Cooperative Societies as to whether they should engage employees through service providers that the Commissioner and Registrar had issued a Circular dated 17.09.2021, saying that if necessary, Cooperative Societies/Federation may refer to the said Government Orders for engaging employees through service providers. It has been further argued that the State-respondents have not made the Government Orders dated 18.12.2019, 18.08.2020 and 25.08.2020 binding upon the Cooperative Societies as Cooperative Societies are Autonomous Bodies and run on their own funds, although some Cooperative Societies do have some amount of Government share also in their funds, but they have their own Committees of Management, and Board of Directors to take policy decisions for them.
37. During the course of arguments, Shri O.P. Singh, and Shri Navin Sinha, Learned Senior Advocates assisted by Shri Sujit Kumar Rai for the Respondents Nos.3 to 6, have argued that the Board of Directors of the Sangh have now taken a decision that all contracts entered with any service provider for example, Contract entered into on 24.11.2021, for engagement of 15, additional hands, shall be done away with. Therefore, even when selection process was completed in pursuance of GeM Portal bid dated 24.02.2022 no Contract has been entered into between the Federation and the service provider so selected. The earlier service provider Awsar Multi Solutions' Contract has also been cancelled. The learned Senior Counsel have referred to initial interim order granted on 25.03.2022 by this Court which was later on modified by interim order dated 08.04.2022, wherein directions to maintain status-quo with regard to petitioners nature of employment in the establishment and the future renewal of Contract were issued and the Court had directed that the respondents would not engage any employee through outsourcing Agency to take work, and if there was work available with the respondents and if they wanted to engage new employees, the petitioners would be permitted to enter into Contract. However, if additional workforce was needed over and above the petitioners, it would be open for the respondents to take it from outsourced employees. It has been argued that despite such modification and clarifications issued by this Court in its orders, the Board of Directors of the Sangh had taken a decision on 10.08.2022, to do away with the method of engaging employees through outsourcing or engaging service providers all together.
38. Sri O.P. Singh, learned Senior Advocate, assisted by Sri Sujit Kumar Rai has argued that the petitioners before this Court have prayed for six main reliefs. The first relief relates to quashing of the Circular dated 17.09.2021 issued by the Commissioner and Registrar Cooperative, U.P. Lucknow and also the communication of the Deputy General Manager (Administration) of the Nirman Sangh, Annexures 13 and 15 to the writ petition. The consequential relief relates to quashing of the notice dated 22.02.2022 issued by the Superintendent Engineer of the Sangh inviting bids on the GeM portal. The third relief relates to restraining the respondents from taking any action on the basis of such impugned orders/letters/notices.
With regard to first relief as claimed, it has come out from the affidavits filed by the State Respondents that the Commissioner and Registrar had only issued Guidelines to various Cooperative Societies that in case they resort to outsourcing of manpower, they must follow the Government Orders issued from time to time, and the service provider must be selected only through GeM portal and the employees engaged through Contract should be selected from Sewayojan Portal. Government Orders are applicable only to Government departments and do not have any binding effect on Cooperative Societies like the Sangh which is independent and autonomous body. The Communication of the Deputy Manager (Annexure 15 to the writ petition) and the notice dated 22.02.2022 (Annexure 17 to the writ), have also been challenged but now the Board of Directors has taken a considered decision and cancelled the process of outsourcing. The Managing Director has issued the order dated 10.08.2022 in this regard. After cancellation of the process of outsourcing the reliefs as claimed for do not survive and nothing remains to be adjudicated. The other reliefs sought by the petitioners in the nature of restraining the respondents from interfering in the working of the petitioners or breaking their continuity and to pay them salary and other benefits, cannot be given as the Contract entered into between the respondent nos. 3 to 6 and the petitioners came to an end on 31.03.2022 and no fresh Contract has thereafter been signed. The petitioners are neither regular employees, nor temporary employees, nor ad hoc employees. They are only contractual employees and bound by the terms of the Contract. Since there is no Contract between the parties they have no legitimate right to continue to work and claim salary. Also, the petitioners have prayed that they should not be replaced by other contractual employees engaged through service provider. Such relief also need not be granted as the process of outsourcing and selection of service provider has already been cancelled by order dated 10.08.2022 hence no question arises to replace the petitioners by employees engaged through a service provider.
39. It has also been argued that the petitioner's contracts were for a fixed term. They were never renewed. On expiry of term, the question of availability of work and of funds was considered and fresh contracts were signed again for a fixed period. Also it has been argued that the petitioners have placed reliance upon judgements relating to termination of Contract arbitrarily, however such judgements do not apply in the case of the petitioners as the petitioners contracts have not been terminated. The petitioners Contract were for a fixed term and they came to an end on 31.03.2022 and the employment of the petitioners automatically seized.
40. It has been argued by the counsel for the respondents that the petitioners have submitted that while cancelling the outsourcing process nothing has been disclosed about future course of action. In this regard, it has been argued that when the Contract came to an end, the Sangh was not bound to make any fresh contracts with any of the petitioners. Sangh may or may not engage fresh employees through Contract, taking into account availability of work. In case regular employees of the Sangh can sufficiently discharge the work at hand it may not be necessary to engage any fresh employees.
41. In response to the argument made by the learned counsel for the petitioners regarding wilful disobedience of Interim Orders passed by this Court, it has been submitted that the Hon'ble Court while granting interim relief to the petitioners was cautious and had only directed maintenance of status quo with regard to nature and status of employment and not with regard to their service. It was clarified that future renewal of Contract would not be influenced in any manner by inviting outsourcing agencies through GeM portal. The Sangh has taken a decision not to resort to outsourcing. The Interim Orders further stated that in case additional hands were required, the Sangh was free to engage such additional hands through outsourcing. 15 such additional hands were engaged through service provider but in view of the interim order dated 20.09.2019 granted by the Division Bench of this Court at Lucknow, in writ petition RMS Techno Solutions Versus Additional Chief Secretary Revenue and others, the Contract with the service provider has been cancelled. Now the Sangh will proceed to work with its regular employees and in case of any additional manpower needed to complete the projects in hand, it will consider engaging persons through fresh Contract.
42. In reply to the argument raised by Shri O. P. Singh, learned Senior Advocate regarding the writ petition having become infructuous on the issuance of the Order dated 10.08.2022, by the Managing Director, it has been argued by Sri Ashok Khare that the order of the Managing Director only records reasons for passing of the same. The sole reason mentioned therein is the grant of Interim Orders by the High Court and the rejection of Special Appeals by the Division Bench. The order of the Managing Director contains no decision, not to outsource employees and not to utilise the GeM Portal for engagement of outsourced contractual employees. Even in the absence of the order of the Managing Director dated 10.08.2022, the tender bids could not have been acted upon because of the Interim Orders granted by this Court. There is nothing on record placed by the respondents that they will not issue a fresh tender bid on the GeM Portal for the same purpose as soon as the interim orders are vacated. The intention of the respondents is clear from the fact that despite issuance of order dated 10.08.2022, the petitioners have not been permitted to discharge their duties nor any salary has been paid to them. This Court in its orders had clarified that it was for the respondents to either take work from the petitioners or not to take such work but they could not engage fresh employees through GeM Portal for the work which was being done by the petitioners. Even though there does not exist any absence of work as the respondents themselves have identified the requirement of 622 Contract employees which is equal to the number of existing employees, to be employed now through outsourcing Agency, the services of the petitioners were not renewed/they were not re-engaged on account of the understanding of the respondent Sangh that contractual engagement is to be made only by outsourcing and the outsourcing agencies to be identified through the GeM Portal. On account of the issuance of the order dated 10.08.2022, the proceedings initiated for identification of service provider through GeM Portal has been cancelled and on such account the sole existing reason even though misconceived, has also ceased to exist. Despite this, the petitioners have not been permitted to resume duties nor the payment of salary has commenced. There continues to exist requirement of work and there does not exist any allegations of unsatisfactory working against the petitioners. As such the order dated 17.09.2021 appears to be wholly irrational. At the start of the litigation this Court had stayed the misconceived reason with regard to misinterpretation of the Circular issued by the Commissioner and Registrar, Cooperatives, U.P., however, this misconceived reason has also ceased to exist during the pendency of the Writ Petition on account of issuance of the order of the Managing Director dated 10.08.2022.
43. It has also been argued that the absurdity of the situation is further apparent from the stand of the respondents as contained in the counter affidavit, that the services of the petitioners were not to be disengaged despite inviting bids for selection of service provider on the GeM Portal. In paragraphs No. 19, 20 and 23 of the counter affidavit filed by the respondents No. 3 to 6, this fact has been clearly mentioned. If that be so, it is apparent that only because of some irrational motive the respondents are not permitting the petitioners to function. The only reason perhaps for such behaviour is that the petitioners have approached this Court by means of the present Writ Petition and have been granted interim orders by the High Court.
44. It has been argued that the repeated argument raised by the respondents on the strength of the order passed by the Managing Director on 10.08.2022 that the Writ Petition has become infructuous is clearly misleading and mischievous and an attempt to preclude the scrutiny of the High Court, with no other commitment as to future course of action.
45. Despite passing of such order dated 10.08.2022, the Managing Director has not permitted the petitioners to discharge their duties. Their salary has also not been released to them. Therefore, the repeated claim of the respondents on the strength of the order passed by the Managing Director dated 10.08.2022, that the writ petitions have become infructuous is misleading and an attempt to preclude scrutiny by the High Court of the impugned orders, with no commitment as to future course of action.
46. It has also been argued that the impugned orders are even otherwise arbitrary as the petitioners have been working on Contract for the past several years and they cannot now be sought to be replaced by other contractual employees. Replacement of one set of Contract employees by another set of contractual employees is highly questionable and impermissible.
47. In the written submissions filed on behalf of respondent Nos.1 & 2, a preliminary objection has been raised with regard to the maintainability of the writ petition on the ground that the Sangh does not have ingredients of an "authority" within the meaning of Article 226 of the Constitution and reliance has been placed upon judgement rendered by the Full Bench of this Court in Vijay Bihari Srivastava Vs. U.P. Postal Primary Cooperative Bank Ltd. and another (2003) 1 UPLBEC 1; and Anil Kumar Pandey and others versus State of U.P. and others 2016 (7) ADJ 495 (Full Bench); and S.S. Rana Vs. Registrar, Circle Officer Cooperative Society and Another (2006) 11 SCC 63.
48. It has also been stated in the written submissions that the petitioners who were engaged on Contract on year to year basis cannot seek a writ in the nature of mandamus for continuity and regularization in view of the law settled by the Constitution Bench in Secretary of State, Karnataka versus Uma Devi, 2006 (4) SCC 1.
49. The Government Order dated 18.12.2019 in Clause 3 (4) and the Government Order dated 25.08.2020 in Clause 2(4) and the Government Order dated 18.08.2020 in Clause 2(5) provide for continuity of only personnel already working on outsourcing basis. The Government Order provides for selection of service provider through GeM portal and engagement of already working outsourced employees through the selected service provider via GeM portal. The said Government Orders mandate registration of personnel to be engaged by the service provider on the Sewa Yojan portal.
50. Additionally, it has been submitted that these Government Orders are not applicable to Cooperative Societies and they are applicable only if they are adopted by the Board of Directors. The Circular dated 17.09.2021 issued by the Commissioner and Registrar Coperatives, U.P. was only issued as a guidance to all Apex level as well as Central Cooperative Societies of U.P. to follow the mandatory provisions of the Government Orders dated 18.12.2019, 18.08.2020, and 25.08.2020, issued by different Departments of the Government of U.P., for selection of the service provider and engagement of outsourced employees through the service provider. It has been mentioned in the said Circular that such procedure has to be followed mandatorily in different Departments of the Government of U.P. and their subordinate institutions. However, such Circular does not require all Cooperative Societies to engage manpower only through service provider via GeM portal.
51. The affidavit filed by the Special Secretary, Department of Personnel, clarifies that the outsourcing of manpower and direct engagement of employees on contractual basis are two different things from each other and the Government Orders as aforesaid are applicable for outsourcing of personnel only in the various Departments of the State of U.P. and their subordinate institutions.
52. Additionally, it has been stated that the writ petitions have become infructuous in view of the decision of the Board of Directors of the Sangh for cancelling the entire proceedings of selection of service provider via GeM portal as well as cancelling the Contract of the selected service provider by its Resolution dated 10.11.2022.
53. After considering the pleadings and arguments, three questions arise for this Court for consideration. They are:-
(i) Whether Writ Petition under Article 226 against the Sangh an Apex level Society is maintainable?
(ii) Whether a writ of mandamus can be issued for enforcement of contractual rights?
(iii) Whether the petitioners are entitled to any relief and if so, what relief can be granted to them by this Court?
54. The question of maintainability of the writ petition against an Apex level Cooperative Society has been raised for the first time in the written submissions. No reference to the same was made during the course of arguments by any of the counsel appearing for the respondents. However, since it has been raised and the question of jurisdiction is one which the Court has to see on its own even if it is not raised by any of the parties, this Court shall now consider the judgements cited in this regard.
55. In Vijay Bihari Srivastava (supra), the Court was considering a case where the petitioner was appointed as Secretary in U.P. Postal Primary Cooperative Bank Ltd in pursuance of a Resolution passed by the Committee of Management, which was approved by the Annual General Body and the petitioner was confirmed on the post of Secretary thereafter. Later on, he was directed to handover the charge of the post of Secretary to another person and was reverted to the post of Accountant. Being aggrieved against the said order, the petitioner moved this Court in a writ petition for mandamus to be issued to the opposite parties to allow the petitioner to function on the post of Secretary in the Bank and not to revert the petitioner from the post on which he was substantively appointed without following the procedure as laid down in Regulation 84 & 85 of the U.P. Cooperative Societies Employees Service Regulations 1975, and also to quash the decision of the Committee of Management for taking over the charge of the petitioner from the post of the Secretary and handing over the charge of the post of Accountant to the petitioner. When the matter came up before a Division Bench, it raised the question as to whether a Full Bench decision in Radha Charan Sharma Vs. U.P. Cooperative Federation, 1982 UPLBEC 89 (FB), can be ignored by a Division Bench in view of subsequent decision of the Supreme Court in U.P. State Cooperative Land Development Bank Vs. Chandra Bhan Dubey 1999 (1) SCC 741; and as to whether a writ in the nature of Certiorari would lie against a Cooperative Society and whether it comes within the meaning of the words "other authority" occurring in Article 226 of the Constitution of India. It is the observations made by the Full Bench while considering the latter questions which are relevant for the controversy involved in this petition.
56. The Full Bench referred to several decisions of this Court as well as of the Supreme Court relating to Societies Registration Act and the Cooperative Societies Act. It referred to Judgement of the Supreme Court in U.P. State Cooperative Land Development Bank Ltd versus Chandrabhan Dubey 1999 (1) SCC 741; where it was observed that a juristic personality like a Cooperative Society which is registered under the Act but is otherwise free of Government control will not be an "authority" within the meaning of Article 12, but held that on the facts of the case, that in the service rules framed by such Cooperative Society, the Managing Director and the Chief General Manager were officials of the State Government sent on deputation to the appellant, and found that it would be difficult to imagine a situation where the Government sends one of its employees on deputation to head a Body or Institution, not controlled by that Government, even though the employee may be paid out of the funds of that Body or Institution, unless there is a specific provision of law so entitling the Government. Moreover, the service conditions of its employees particularly with regard to disciplinary proceedings against them were statutory in nature, the exercise of power of dismissal had to be in accordance with the statutory regulations with the approval of the statutory body hence the Court had held that the State Government had all pervasive control over the Society, and its employees had statutory protection and, therefore, the appellant being an authority of the State would be amenable to jurisdiction of the High Court under Article 226 of the Constitution. The Full Bench in Vijay Bihari Srivastava (supra) observed in paragraph 35 thus: -
"In the light of foregoing discussions, we answer the question as to whether a writ petition in the nature of Certiorari will lie against a Cooperative Society, or it comes within the meaning of the words "other authority" occurring in Article 226 of the Constitution, as follows:
A writ petition in the nature of Certiorari will lie against a Cooperative Society only when such Society has ingredients of an ''authority' within the meaning of Article 226 of the Constitution and not otherwise. The following Guidelines are culled out from the various decisions of the Supreme Court, referred to above: (1) . The Constitution of the Managing Body/committee constitutes the functionaries of the government. (2) . There is an existence of deep and pervasive control of the management and policies of the Cooperative Society by the Government. (3) The function of the Cooperative Society is of public importance and closely related to the Governmental Functions.(4). The financial control is by the government or it provides financial aid Controlling its affairs. (5). The violation of statutory Rules applicable to the Society in regard to the service matters of its employees, and (6). Statutory violations or non-compliance of it by an authority under the act."
57. It was further observed in paragraph 37 as follows: -
"37. It is also not necessary that all factors enumerated above, be exhausted to determine that a Society is an authority within the meaning of Article 226 of the Constitution. It is also clarified that mere regulatory provision in the Cooperative Society by the Registrar or other authority, shall not make the Managing Body/Committee as an authority as observed in paragraph 40 of the report in Pradeep Kumar Biswas (supra). The Court may, however decline to entertain the writ petition if it finds that the petitioner has alternative remedy to ventilate his grievances."
58. In the case of S.S. Rana Vs. Registrar, Cooperative Societies Another 2006 (11) SCC 634, the Supreme Court observed as under: -
"12. It is well settled that general regulations under an Act, like Companies Act or the Cooperative Societies Act, would not render the activities of a Company or Society as subject to the control of the State. Such control in terms of the provisions of the Act are meant to ensure proper functioning of the Society and the State or Statutory Authorities would have nothing to do with its day to day functions.
13. The decision of the seven Judges bench of this Court in Pradeep Kumar Biswas (supra) whereupon strong reliance has been placed has no application in the instant case. In that case, the Bench was deciding a question as to whether in view of the subsequent decisions of this Court, the law was correctly laid down in Sabhajeet Tiwari versus Union of India and others (1975) 1 SCC 485, and it is not whether the same deserved to be overruled. - - -"
59. A Full Bench of this Court in Anil Kumar Pandey and 17 others Vs. State of U.P. and others, 2016 (7) ADJ 495; decided the following questions: -
"1. Whether a writ petition under Article 226 of the Constitution of India would be maintainable against a Cooperative Cane Development Society at the instance of its employee, for the alleged breach of the provisions of the U.P. Cane Cooperative Service Regulations 1975, which govern his service conditions.?
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3. Whether the U.P. Cane Cooperative Service Regulations 1975 are statutory in nature having been issued under Section 122 of the U.P. Cooperative Societies Act 1965 or are merely in the nature of administrative instructions.?
60. The Court observed in Anil Kumar Pandey (supra) as follows -
"The Regulations which have been framed in the exercise of powers conferred by Section 122 of the Act are Traceable to a source of statutory power. These Regulations are framed by the Cane Commissioner as an ''Authority' to whom the functions of doing so have been delegated by the State Government under Section 122. Hence, the Regulations cannot be regarded merely as administrative instructions. The Regulations have been made in pursuance of the statutory power conferred by section 122.
The answer to question (1) was then given in the following terms:-
"---In so far as question one is concerned, the issue would have to be resolved having due regard to the tests which have been laid down in the judgement of five Judges of this Court in Vijay Bihari Srivastava's case. Moreover, the issue of maintainability is distinct from whether the discretion should be exercised under Article 226 in a given case. Even if a petition is maintainable, the Court may, in the facts of a particular case, decline to entertain it under Article 226 as, for instance, where disputed questions of fact arise or an efficacious alternative remedy is available."
61. In Thalappalam Service Cooperative Bank Ltd Versus State of Kerala and others 2013 (16) SCC 82, the Supreme Court while considering the question of Cooperative Societies and whether they are amenable as "other authorities" to writ jurisdiction, observed while referring to the judgement in U.P. State Cooperative Land Development Bank Ltd versus Chandrabhan Dubey (supra) that-
"before an institution can be a statutory body, it must be created by or under the Statute and owe its existence to a Statute. This must be the primary thing which has got to be established. Here a distinction must be made between an institution which is not created by or under a Statute, but is governed by certain statutory provisions for the proper maintenance and administration of the institution. There have been a number of institutions which are not created by or under any Statute, have adopted certain statutory provisions, but that by itself is not in our opinion, sufficient to clothe the institution with a statutory character - - ."
"15. We can, therefore, draw a clear distinction between a body which is created by a statute and a body which, after having come into existence, is governed in accordance with the provisions of a Statute. Societies with which we are concerned, fall under the latter category that is governed by the Societies Act and are not statutory bodies, but only body corporate within the meaning of Section 9 of the Kerala Cooperative Societies Act, having perpetual succession and a common seal and hence have the power to hold property, enter into Contract, institute and defend suits, and other legal proceedings and to do all things necessary for the purpose, for which it was constituted. Section 27 of the Societies Act categorically states that the final authority of a Society lies in the General Body of its members and every Society is managed by the Managing Committee constituted in terms of the bylaws as provided under Section 28 of the Societies Act. Final authority so far as such types of Societies are concerned, as the Statute says, is the general body and not the Registrar of Cooperative Societies or the State Government."
"17. Societies are....of course, subject to the control of the statutory authorities like Registrar, Joint Registrar, the Government etc., but it cannot be said that the State exercises any direct or indirect control over the affairs of the Society which is deep and all pervasive. Supervisory or general regulation under the Statute over the Cooperative Societies, which are a body corporate, does not render activities of the body so regulated as subject to such control of the State, so as to bring it within the meaning of the ''State'' or in the instrumentality of the State."
62. The aforesaid judgment affirmed the observations of the Supreme Court in S.S Rana vs. Registrar Cooperative Societies and Another 2006 (11) SCC 634. While referring to S.S. Rana, it observed that-
"In that case this Court was dealing with the maintainability of the writ petition against Kangra Central Cooperative Society Bank Ltd, a Society registered under the provisions of Himachal Pradesh Cooperative Societies Act 1968. After examining various provisions of the Himachal Pradesh Cooperative Societies Act, this Court held as follows:
"9. It is not in dispute that the Society has not been constituted under an Act. It functions like any other Cooperative Society... regulated in terms of the provisions of the Act, except as provided in the bylaws of the Society. The State has no say in the functions of the Society. Membership, acquisition of shares and all other matters are governed by the bylaws framed under the Act. The terms and conditions of service of an officer of the Cooperative Society, indisputably, governed by the Rule 456, to which reference has been made by Mr. Vijai Kumar, does not contain any provision in terms were of any legal right as such is conferred upon an officer of the society.
10. It has not been shown before us that the State exercises any direct or indirect and control over the affairs of the Society, or, deep and pervasive control. The State furthermore is not the majority shareholder. The State has the power only to nominate one Director. It cannot, thus, be said that the State exercises any functional control over the affairs of the Society in the sense that the majority Directors are nominated by the State. For arriving at the conclusion that the State has a deep and pervasive control over the Society, several other relevant questions are required to be considered, namely, (1) how was the Society created? (2) whether it enjoys any monopolistic character? (3) do the functions of the Society partake to statutory functions or public functions ? And (4) can it be characterised as public authority?
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12. It is well settled that general regulations under an Act, like the Companies Act or the Cooperative Societies Act, would not render the activities of a Company or a Society as subject to control of the State. Such control in terms of the provisions of the Act are meant to ensure proper functioning of the Society and the State or statutory authorities would have nothing to do with its day to day functions."
63. The learned counsel for the State Respondent has placed reliance upon the judgement of a Coordinate Bench of this Court in Writ-A No. 2329 of 2019: Krishna Mohan versus State of U.P. and 3 others, decided on 14.02.2019 where after considering the law as aforesaid, it was observed that merely regulatory control cannot be said to be all pervasive control and primary level Cooperative Societies cannot be said to come within definition of ''authority' under Article 12 of the Constitution and writ jurisdiction cannot be exercised against them at the instance of their employees.
64. This Court has considered judgments cited by the learned counsel for the State Respondents as aforesaid, but is of the considered opinion that none of the said judgments has dealt with a case where the Circular issued by a State Respondent, in this case, the Commissioner and Registrar, Cooperatives, U.P., was under challenge. It is settled law that no judgement can be a binding precedent for an issue which it has not considered at all. One additional fact, may change the binding nature of a precedent. The Court should not place reliance on a judgment without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance has been placed. Observations of Courts are neither to be read as Euclid's theorems, nor as provisions of the Statute and they cannot be read out of context.
65. This Court having considered the judgments relied upon by the counsel for the parties finds that although a statement has been made in the writ petition that the Sangh is under the complete control of the State Government and substantial funding is done by the Government, such averment has been denied in the the counter affidavit.
66. Neither of the parties has filed any documentary evidence to substantiate their rival claims. The question of maintainability of the writ petition against the Sangh has not been raised at the stage of arguments either. It is only in the written submissions of the State Respondents that the issue of maintainability has been raised. This Court has found that the Circular of the Respondent no.2 has been challenged as it proposed to issue Guidelines to the Cooperative Societies at different levels to purchase manpower only from the GeM Portal devised by the Government and only in accordance with the various Government Orders issued from time to time. The employees were to be engaged only from the Sewayojan Portal of the Employment Exchange.
67. The learned counsel for the respondents Nos. 1 & 2 have clarified during the course of arguments that such Circular issued by the Respondent no.2 was not binding and the Government Orders it relied upon were meant for Government Departments and their subordinate entities and not for Cooperative Societies.
68. If that is the case, then the conduct of the Respondent nos.3 to 6 after issuance of such Circular dated 17.09.2021 belies the arguments of their learned counsels. If at all the respondent no.2 had no control over the Respondent Nos.3 to 6 then it is quite improbable that they would have issued tender notice on GeM portal inviting bids from service providers. This Court is of the considered opinion that the question of maintainability has been raised only to digress from the main issue as to whether the Respondent No.2 could have issued such Circular dated 17.09.2021. It is evident also that the petitioners are indeed going to be affected if such Circular is to be given effect to by the Respondent nos.3 to 6. Therefore, this Court holds that writ petitions are maintainable as they challenge the Circular of the respondent no.2 and consequential actions taken thereafter by respondent nos.3 to 6.
69. Questions (ii) and (iii) shall be dealt with by me together. The counsel for the State Respondents has also placed reliance upon two judgements of the Supreme Court regarding right of contractual employees to continuity and regularization. The first such case relied upon is Secretary, State of Karnataka and others versus Uma Devi and others, 2006 (4) SCC 1 and paragraph 43 to 47 thereof.
The Supreme Court observed as follows: -
"43. - - - - - therefore, consistent with the scheme for public employment, this Court by laying down the law, has necessarily to hold that unless the appointment is in terms of the relevant rules and after a proper competition among qualified persons, the same would not confer any right on the appointed. If it is a contractual appointment, appointment comes to an end at the end of the Contract if it were an engagement or appointment on daily wages or casual basis, the same would come to an end when it is discontinued. ------- It is not open to the Court to prevent regular recruitment at the instance of temporary employees whose period of employment has come to an end or of ad-hoc employees who by the very nature of their appointment, do not acquire any right. The High Court sitting under Article 226 of the Constitution, should not ordinarily issue directions for absorption, regularisation, permanent continuance unless the recruitment itself was made regularly and in terms of the constitutional scheme.------"
The Supreme Court further observed in paragraph-45 as follows:-
"45. While directing that appointments, temporary or casual, be regularized or made permanent, the Courts are swayed by the fact that the person concerned has worked for some time and in some cases for a considerable length of time. It is not as if the person who accepts an engagement either temporary or casual in nature, is not aware of the nature of his employment. While accepting the employment with open eyes, it may be true that he is not in a position to bargain - not at arms length - since he might have been searching for some employment so as to eke out his livelihood and takes whatever he gets. But on that ground alone, it would not be appropriate to jettison the constitutional scheme of appointment and to take the view that a person who has temporarily or casually got employed should be directed to be continued permanently. By doing so, it will be creating another mode of public appointment which is not permissible. -- -."
It was observed in paragraph-46 & 47 as follows:-
"46. ------Moreover, the invocation of the doctrine of legitimate expectation, cannot enable the employees to claim that they must be made permanent or they must be regularized in the service though they had not been selected in terms of the rules for appointment. The fact that in certain cases the Court had directed regularization of the employees involved in those cases cannot be made use of to found a claim based on legitimate expectation - -."
47. When a person enters a temporary employment or gets engagement as a contractual or casual worker and the engagement is not based on a proper selection as recognized by the relevant Rules of procedure, he is aware of the consequences of the appointment being temporary, casual or contractual in nature. Such person cannot invoke the theory of legitimate expectations for being confirmed in the post when an appointment to the post could be made only by following a proper procedure for selection and in some cases in consultation with the Public Service Commission. Therefore, the theory of legitimate expectation cannot be successfully advanced by temporary, contractual or casual employees. It cannot also be held that the State has held out any promise while engaging these persons either to continue them where they are or to make them permanent.- - It is also obvious that this theory cannot be invoked to seek a positive relief of being made permanent in the post."
(emphasis supplied)
70. The counsel for the Respondents have also placed reliance upon judgement rendered by the Supreme Court in State of U.P. and Others versus Principal Abhay Nandan Inter-College and others Civil Appeal 865 of 2021, decided on 27.09.2021. The Supreme Court was considering a challenge to the judgement of the Division Bench of the Allahabad High Court holding Regulation 101 framed under the Intermediate Education Act 1921 as amended, as unconstitutional. The Court considered the provisions of the Intermediate Education Act 1921 and the Regulations framed thereunder as amended from time to time and the Payment of Salaries Act 1971. The Court noted that in January 2008, with a view to regulate and curtail staff expenditure, a policy decision was taken by the State of U.P. not to create any new post in Class IV category and wherever it may be necessary, work may be carried out through outsourcing. Thereafter, recommendation was made by the Sixth Central Pay Commission in March 2008 that it would be appropriate to have outsourcing of Class IV employees instead of making any new recruitment in all Government departments. Regulation 101 was amended accordingly in 2009 and Government Orders were also issued on 08.09.2010 and 06.01.2011, making outsourcing applicable to all Government Departments and aided schools, deciding not to go for fresh recruitment of Class IV employees and further directing that any arrangement concerning the post to be vacated may be made only through outsourcing. Regulation 101 was once again amended by Government Order dated 04.09.2013 notified on 24.04.2014. The effect of the said amendment was to make the post of Class IV employees which was hitherto supposed to be filled up by institutions, unavailable for such recruitment and work of Class IV employees was to be taken only through outsourcing. The permanent posts were accordingly abolished, thereby replacing the method of appointment by way of outsourcing. An exception was carved out only for dependents of those employees who had died in harness.
71. By the Seventh Central Pay Commission Report, the recommendations made in the Sixth Central Pay Commission report were reiterated with a word of caution in its implementation. But, the need to go for outsourcing, keeping in view the financial constraints and efficiency, was once again reiterated. In paragraph 3.72 and paragraph 3.83 of the Report reference was made to broad guidance to be provided in the rules on identification of contractors and the tendering process. It referred to 3 kinds of contractual appointments. The first related to tasks of routine nature, typically those relating to housekeeping, maintenance related activities, data entry, driving and so on, which are normally bundled and entrusted to agencies. These agencies would then depute the necessary persons to carry out the tasks. The Commission also took the view that "....a clear guidance from the Government on jobs that can and should be contracted out would be appropriate. While doing so, the concerns of confidentiality and accountability may be kept in view. Further, to bring about continuity and to address the concerns regarding exploitation of contractual manpower, uniform Guidelines/model Contract agreements may be devised by the government- -."
72. The Supreme Court observed that the primary concern for doing away with recruitment on the post of Class IV employees and for replacing the process with utilisation of service through outsourcing was that of financial difficulty, followed by efficiency. The Court observed also that it was a policy decision introduced carefully after considering all relevant materials and based on the opinion of experts in the field of finance and administration and after widespread consultations with stakeholders. It being based on recommendations of the Sixth Central Pay Commission and the Seventh Central Pay Commission, was not amenable to challenge by invoking jurisdiction under Article 226 of the Constitution. The Court observed in paragraph 37 as follows:-
"A policy decision is presumed to be in public interest, and such a decision once made is not amenable to challenge, until and unless there is manifest or extreme arbitrariness, the constitutional Court is expected to keep its hands off."
The Court further observed in paragraph-39 that-
"once a Rule is introduced by way of a policy decision, a demonstration on the existence of manifest, excessive and extreme arbitrariness is needed before it can be set aside. The parametres required for testing the validity of an Act of Legislature are expected to be followed by the Court. The Court will not adopt a doctrinaire approach. The representatives of people are expected to operate on democratic principles. The presumption is that they are conscious of every fact, which would go to sustain the constitutionality of the law. A law cannot operate in a vacuum. In the concrete world, when the law is put into motion in practical experiences, bottlenecks that would flow from its application, are best researched by the lawgivers. Solutions to vexed problems made manifest through experience, would indeed require a good deal of experimentation, as long as it passes muster in law. It is no part of a Court's function to probe into what it considers to be more wise or a better way to deal with the problem....".
73. The Supreme Court further observed that outsourcing is in fact doing away with the post altogether i.e., abolishing a post. No Court can direct creation of post. The deliberation done by the Division Bench in interpreting the word outsourcing was outside the scope of judicial review and ought to have been avoided. The Supreme Court observed in paragraph 43 thus:-
"...Outsourcing as a matter of policy has been introduced throughout the State. It is one thing to say that it has to be given effect to with caution, as recommended by the Seventh Central Pay Commission, and another to strike it down as unconstitutional. Outsourcing per se is not prohibited in law. It is clear that a recruitment by way of outsourcing may have its own deficiencies and pitfalls, however, a decision to take outsourcing cannot be declared as ultra vires of the Constitution on the basis of mere presumption and assumption. Obviously, we do not know the nature of the scheme and safeguards attached to it...".
74. It observed in paragraph 45 also:-
"....We are also not dealing with the Scheme per se, and therefore, are in dark on the conditions of service.....One cannot simply presume that outsourcing as a method of recruitment would necessarily be adopting Contract labour and that there exists an element of unfair trade practice, as sought to be contended by the respondents.
75. Counsel for the Respondents has placed reliance upon judgement rendered by the Supreme Court in University of Delhi versus Delhi University Contract Employees Union and others 2021 SCC Online SC 256, and paragraph 7 thereof and argued that while considering judgement rendered in Uma Devi and subsequent judgements rendered by Division Benches thereafter in State of Karnataka and others versus M.L. Kesri and others 2010 (9) SCC 247; State of Gujarat and others versus P.W.D. Employees Union and Others 2013 (12) SCC 417; Nihal Singh and others versus State of Punjab and others 2013 (14) SCC 65; Sheo Narayan Nagar and others versus State of U.P. and others 2018 (13) SCC 432; and Narendra Kumar Tiwari and others versus State of Jharkhand and others 2018 (8) SCC 238; the Supreme Court reiterated the law as settled in Uma Devi and its paragraph 47, 49 and 53 and explained the observations made by Division Bench in M.L. Kesari on the basis of judgement rendered in the case of Official Liquidator versus Dayanand and others 2008 (10) SCC page 1. It observed that even if an advertisement was issued for engagement of contractual employees to be made on some sort of selection, the more qualified and meritorious persons do not apply because they know that the employment will be for a fixed term with a fixed salary and their engagement will come to an end with the conclusion of the project. As a result, only mediocres respond to such advertisements and join such contractual positions. It observed that all the decisions relied upon by the Employees' Union related to employees who had put in more than 10 years of service and could claim the benefit in terms of paragraph 53 of the decision in Uma Devi. The one time measure of regularisation had been elaborated in ML Kesari. Each department and each instrumentality had to undertake a one-time exercise and prepare a list of all casual, daily wage or ad hoc employees who had been working for more than 10 years without the intervention of Courts and tribunals, and subject them to a process of verification as to whether they were working against vacant posts and possessed the requisite qualification for the post and if so, regularise their services. After the decision in Umadevi, several departments and instrumentalities had not commenced the one-time regularization process. Some departments on the other hand had undertaken the one-time exercise excluding several employees from consideration either on the ground that their cases were pending in the Courts or due to sheer oversight. In such circumstances, the employees who are entitled to be considered in terms of paragraph 53 of the decision in Uma Devi would not lose their right to be considered for regularisation, merely because the one time exercise was completed without considering their case, or because six months period mentioned in paragraph 53 of Uma Devi had expired. If any employer had held the one-time exercise in terms of Uma Devi but did not consider the cases of some employees who were entitled to the benefit but who had not put in 10 years of continuous service as on 10.04.2006, the employer should consider their cases also, as a continuation of the one-time exercise. The one-time exercise would be concluded only when the employees who are entitled to be considered in terms of paragraph 53 of Uma Devi are so considered. The object behind this direction in paragraph 53 of Uma Devi was twofold. First is to ensure that those who have put in more than 10 years of continuous service without the protection of any interim orders of Court or Tribunal, before the date of decision in Uma Devi, are considered for regularisation in view of their long service. Second is to ensure that departments/instrumentalities do not perpetuate the practice of employing persons on daily wage/adhoc/casual basis for long periods and then periodically regularise them on the ground that they have served for more than 10 years, thereby defeating the constitutional or statutory provisions relating to recruitment and appointment.
76. The Supreme Court observed in paragraph 12 of the decision in University of Delhi (supra) that at the time of judgement rendered in Uma Devi most of the Contract employees had put in just about 3 to 4 years of service. But as of now, most of them had completed more than 10 years on Contract basis. Though the benefit of regularisation cannot be granted, a window of opportunity must be given to them to compete with the available talent through public advertisement. A separate and exclusive test meant only for Contract employees would not be an answer as that would confine the zone of consideration to Contract employees themselves. In such a case, an advertisement for open recruitment and selection should be made by the University by giving the benefit of age relaxation to those employees who were engaged before the judgement in Uma Devi, and by giving them the benefit of 10 marks in the ensuing selection process and for every additional year they had put in, one additional mark may be given to them subject to a ceiling of eight additional marks.
77. The learned counsel for the petitioner on the other hand has placed reliance upon National Aluminium Company Limited versus Deepak Kumar Panda 2002 (6) SCC 223 paragraph 2 & 4; the Court was considering a case where the respondent was appointed as a French interpreter by the Company in 1985 on contractual basis after holding an interview on a consolidated pay initially for one year which engagement was later extended on an annual basis for almost five years. The reasons disclosed at the time of his disengagement were that he had failed to produce original certificate of higher qualification of graduation in French and that despite giving several opportunities in this regard he had failed to furnish the same. The Company disclosed other misconduct of staying away from duty without waiting for sanction of leave. It also contended that the contractual appointment having come to an end, the respondent had no legally enforceable right to continue in service. The Court considered the said ground regarding failure to produce reliable proof of having requisite qualification in detail and observed that it was not as if the respondents' services were not extended for any other administrative reasons. In fact, it was an undisputed fact that juniors to the respondent employed on similar terms were continued in service and thereafter absorbed on regular basis. The Court held that the Company was not justified in treating the respondent as unqualified as they had taken work from him for five years.
The learned Senior Counsel for the Petitioner has argued that this Court had to test the ground taken by the Respondents in discontinuing the Petitioners engaged on contractual basis, while keeping other employees again on contractual basis but through a service provider.
78. The learned Counsel for the petitioners has also placed reliance upon Grid Co. Ltd and another versus Sadananda Dolloi and others 2011 (15) SCC 16 and paragraphs 1, 22 to 39 thereof. The appellant Corporation terminated the services of the respondent by giving three months notice and salary as stipulated in the Contract. The Supreme Court considered the true nature of the appointment of the respondent and as to whether it was a regular appointment or simply contractual in nature and also the question that if the appointment was contractual whether the termination thereof was vitiated by any legal infirmity to call for interference under Article 226 of the Constitution. While considering the second question the Court observed in paragraph 25 as follows:-
"25. It is true that judicial review of matters that fall in the realm of contracts is also available before the superior Courts, but the scope of any such review is not all pervasive. It does not extend to the Court substituting its own view for that taken by the decision making authority. Judicial review and resultant interference is permissible where the action of the authorities is malafide, arbitrary, irrational, disproportionate or unreasonable but impermissible if the petitioners challenge is based only on the ground that the view taken by the authority may be less reasonable than what is a possible alternative. The legal position is settled that judicial review is not so much concerned with the correctness of the ultimate decision as it is with the decision making process unless of course the decision itself is so perverse or irrational or in such outrageous defiance of logic that the person taking the decision can be said to have taken leave of his senses."
79. While referring to the judgement in Sreelekha Vidyarthi versus State of U.P. 1991 (1) SCC 212, the Supreme Court observed in Grid Co. (supra) the difference between public and private law activities of the State. The Court had reasoned that unlike private individuals, the State while exercising its powers and discharging its functions, acts for the public good and in public interest. Consequently, every State action has an impact on public interest which would in turn bring in the minimal requirements of public law applications in the discharge of such functions. The Court declared that to the extent, the challenge to State action is made on the ground of being arbitrary, unfair and unreasonable hence offensive to Article 14 of the Constitution, judicial review is permissible. The fact that the dispute fell within the domain of contractual obligations did not, declared the Court, relieve the State of its obligation to comply with the basic requirements of Article 14. Not being impressed with the argument that the Contract itself stated that it was based upon the pleasure doctrine, the Court Had observed that :-
"....an additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions."
80. The Supreme Court in Grid Co. (supra) however referred to the decision in Satish Chandra Anand versus Union of India, AIR 1953 Supreme Court 250, where the petitioner an employee of Directorate General of Resettlement and Employment, was removed from contractual employment after being served the notice of termination. The Contract of service in that case was initially for a period of five years which was later extended. A Five Judges Bench hearing the matter dismissed the petition, challenging the termination primarily on the ground that the petitioner could not prove a breach of a Fundamental Right since no right accrued to him as the whole matter rested in Contract and termination of the Contract did not amount to dismissal, or removal from service nor was it a reduction in rank. The Court found it to be an ordinary case of a Contract being terminated by notice under one of its clauses. It quoted paragraph 10 and 11 of the judgement rendered in Satish Chandra Anand (supra) as follows: -
"10. There was no compulsion on the petitioner to enter into the Contract he did, he was as free under the law as any other person to accept or reject the offer which was made to him. Having accepted, he still has open to him all the rights and remedies available to other persons similarly situated to enforce any rights under his Contract which have been denied to him, assuming there are any, and to pursue in the ordinary Courts of the land such remedies for a breach as are open to him to exactly the same extent as other persons similarly situated. He has not been discriminated against and he has not been denied the protection of any laws which others similarly situated could claim....,
11. ...the petitioner has not been denied any opportunity of employment or of appointment. He has been treated just like any other person to whom an offer of temporary employment under these conditions was made. His grievance, when analysed, is not one of personal differentiation but it is against an offer of temporary employment on special terms as opposed to permanent employment. But of course the State can enter into contracts of temporary employment and impose special terms in each case, provided they are not inconsistent with the Constitution, and those who choose to accept those terms and enter into the Contract are bound by them, even as the State is bound".
81. The Court observed the development of law since the time of Satish Chandra Anand to Sreelekha Vidyarthi and observed in Grid Co. (supra) paragraph 38 as follows :-
"38. Conspectus of the pronouncements of this Court and the development of law over the past few decades does show that there has been a notable shift from the stated legal position settled in earlier decisions, that termination of a contractual employment in accordance with the terms of the Contract was permissible and the employee could claim no protection against such termination even when one of the contracting parties happened to be the State. Remedy for a breach of a contractual condition was also by way of civil action for damages/compensation. With the development of law relating to judicial review of administrative actions, a Writ Court can now examine the validity of a termination orders passed by a public authority. It is no longer open to the authority passing the orders to argue that its action being in the realm of Contract is not open to judicial review."
82. Now coming to the case of Grid Co. (supra), considering the facts of the case the Court had observed that the power to make contractual employment is implicit in the power to make a regular permanent appointment unless the Statute under which this authority is exercised forbids making such an appointment. The appointment order had specifically described the appointment to be a tenure appointment limited to a period of three years subject to renewal on the basis of performance. The Appellant Corporation had also extended the tenure suggesting that the appointment was a tenure appointment, extendable at the discretion of the Board of Directors. The Court held that renewal of Contract employment depended upon the perception of the management as to the usefulness of the respondent and the need for an incumbent in the position held by him. This discretion lay entirely in the Board of Directors there was no element of any unfair treatment or unequal bargaining power between the appellant and the respondent no. 1 to call for an oversympathetic or protective approach towards the latter. Contractual appointments work only if they seem mutually beneficial to both the contracting parties and not otherwise. There was no material to show any unreasonableness, unfairness, perversity or irrationality in the action taken by the Corporation.
83. The learned counsel for the petitioner has also placed reliance upon judgement rendered by a Coordinate Bench on 12.08.2021 in Writ-A No. 4845 of 2021: Sunita Singh versus State of UP and others, wherein the Court was considering maintainability of writ petition filed by teachers appointed on contractual basis in Kasturba Gandhi Balika Vidyalaya. The Coordinate Bench considered three Full Bench decisions given by this Court in Sheela Devi Vs. state of U.P. and others 2010 SCC Online ALL 1142, relating to maintainability of writ petitions by Anganwadi Workers, and M.K. Gandhi Vs. Director of Education (Secondary) U.P., Lucknow, 2005 SCC Online ALL 728; and Roychan Abraham Vs. State of U.P. and others, 2019 SCC Online ALL 3935 (FB), where Full Bench considered whether the writ petition would be maintainable against the action taken by private unaided schools.
84. The Full Bench in Sheela Devi Vs. State of U.P. and others, while considering the maintainability of writ petition by Anganwadi workers, observed thus -
"26. The above decisions of the Supreme Court clearly demonstrate that the ambit and scope of Article 226 has been liberalised, interpreted and expanded by the Courts. A petition is maintainable if the petitioner seeks relief in accordance with law and his real grievance is against the action or an order passed by a statutory authority or an authority vested with the performance of public functions. In short a writ petition would always be maintainable under Article 226 of the Constitution against an order passed by any person in discharge of public duty or by public authority that is, an officer of the Government."
The Full Bench of this Court in Roychan Abraham was called upon to consider the correctness of another decision of the learned judges of the Court rendered in MK Gandhi versus Director of Education. In M.K. Gandhi, the Full Bench had held that the employees of an educational institution whose services were governed solely by non-statutory bylaws could not maintain a writ petition. The Full Bench in M.K. Gandhi held that a private educational institution was not State. The decision in M.K. Gandhi, when taken in appeal to the Supreme Court, was upheld to the aforesaid extent. A further direction which had come to be issued there in namely for the CBSE to take further steps against the concerned institution was set aside. In Roychan Abraham, the Full Bench elaborately noticed the various decisions rendered by the Supreme Court as well as this Court with respect to bodies which discharge a public function or perform a public duty. Upon noticing the body of precedents which had grown on the subject, the Full Bench observed that:-
".......legal right of an individual may be founded upon a Contract or a statute or an instrument having the force of law. For a public law remedy enforceable under Article 226 of the Constitution, the actions of the authority need to fall in the realm of public law - be it a legislative Act of the State, or an executive act of the State or an instrumentality or a person or authority imbued with public law element. The question is required to be determined in each case having regard to the nature of and extent of authority vested in the State.- - - Even if it be assumed that an educational institution is performing public duty, the act must have direct nexus with the discharge of public duty. It is undisputedly a public law action which confers a right up on the aggrieved to invoke extraordinary jurisdiction under Article 226 for a prerogative Writ. Individual wrongs or breach of mutual contracts without having any public element as its integral part cannot be rectified through petition under Article 226..."
85. It is true that the law as quoted above that a Contract of personal service which is not imbued with any statutory flavour cannot be enforced and that the Writ as prayed for in cases of termination cannot be granted, has consistently held the field.
The Full Bench then went on to observe that while it was true that even a private institution imparting education is amenable to judicial review under Article 226 of the Constitution by virtue of the fact that it discharges a public function, that the decision M.K. Gandhi must be understood as confined to the facts of the case. It was noted that MK Gandhi essentially answers the question whether a writ petition would be maintainable for violation of non-statutory bylaws and for enforcement of a private Contract. The Court went on to observe that MK Gandhi cannot be understood as having propounded the principle that private educational institutions do not render a public function. Ultimately it was held that the decision in MK Gandhi did not merit being reviewed.
86. The Supreme Court in the case of Ramakrishna Mission Versus Kago Kunya, 2019 (5) SCALE 559 held that: -
"43. - - - If a person or authority is State within the meaning of Article 12 of the Constitution, admittedly a writ petition under Article 226 would lie against such a person or body. However, with a caveat that even in such cases Writ would not lie to enforce private law rights. There are a catena of judgements on this aspect and it is not necessary to refer to those judgements as that is the basic principle of judicial review of an action under the administrative law. The reason is obvious. Private law is that part of a legal system which is a part of Common Law that involves relationships between individuals, such as law of Contract or torts. Therefore, even if petition would be maintainable against any authority, which is State under Article 12 of the Constitution, before issuing any Writ, particularly Writ of mandamus, the Court has to satisfy that action of such an authority which is challenged, is in the domain of public law as distinguished from private law." - - -, even if the body discharges a public function in a wider sense, there is no public law element involved in the enforcement of a private Contract of service......"
87. The Supreme Court held further: -
"Thus, contracts of a purely private nature would not be subject to Writ jurisdiction merely by reason of the fact that they are structured by statutory provisions. The only exception to this principle arises in a situation where the Contract of service is governed or regulated by a statutory provision. Hence when an employee is a workmen governed by Industrial Disputes Act 1947, it constitutes an exception to the general principle that a Contract of personal service is not capable of being specifically enforced or performed. - -"
88. In Suneeta Singh versus State of U.P. and others, a Coordinate Bench of this Court observed that:-
"the three well-known and repeatedly articulated exceptions to a Contract of service not being specifically enforceable are (A) where a civil servant is removed from service in violation of Article 311 or a law made under Article 309 of the Constitution, (B) where a workmen is removed in violation of protections accorded by industrial legislation, and, (C) where an employee of a body is dismissed in breach of a statute or a statutory rule. ...The precedents following an undeviating thread have stuck to the three exceptions noticed above..... contractual engagement of the petitioners would have been liable to be tested solely on the aforesaid principles but for the fact that their engagement is also controlled and governed by executive orders, Circulars and policy statements issued by the respondents from time to time. These orders were made in the exercise of executive power of the State or as an expression of policy by an authority which is State, and are actions of a body which discharges a public function or performs a public duty would bind those authorities to the same extent as any statutory rule, regulation or a code of conduct enforceable in law. - - - It is this distinguishing feature that would confer a right on the petitioners here to assail and question the actions of the respondents notwithstanding the fact that their engagement is contractual. The directives and orders and Circulars issued by the respondents govern and control a whole gamut of activities relating to KGBV, including the selection and appointment of teachers and staff, the terms of engagement, curriculum and pattern of instructions. .... to put it in other words, the challenge to orders of termination or variation in terms of engagement would have to be established and found to be in violation of a provision or stipulation contained in those executive orders and Circulars issued by the respondents so as to warrant writ being issued notwithstanding their employment being otherwise and principally governed by the terms of the individual contracts - -."
89. In answer to the question nos. (ii) and (iii), this Court has gone through various judgments of Supreme Court and of this Court viz. Uma Devi, Delhi University, Satish Chandra Anand, Shreelekha Vidyarthi, National Alluminium Company Ltd., Grid Co. Ltd., Roshan Lal Tandon, Ramkrishna Mission, Sheela Devi, M.K. Gandhi, Roychan Abraham and Suneeta Singh (supra), and this Court is of the considered opinion that for specific performance of Contract of personal service, the law is settled that there are only three exceptions, which are:
(a) where a civil servant is removed in violation of Article 311 or Rules made under Article 309;
(b) Where a workman is removed in violation of protection accorded by industrial legislation;
(c) where an employee of the State or its instrumentality is dismissed in violation of statutory rule or regulation.
90. However, the contractual engagement of the petitioners is controlled by executive orders, Circulars and policy statements of the Respondents issued from time to time also. These orders like the Circular dated 17.09.2021, have been issued by the respondent no.2 as an expression of policy by an authority which is the State, and consequential action of the Sangh which is a body discharging a public function and a public duty, would also bind such respondents as a Code of Conduct enforceable in law. The petitioners would derive a right to assail and question the action of the respondents notwithstanding the fact that their engagement is contractual. In other words, this Court can certainly interfere if the policy decision in pursuance of which impugned Invitation to Bid on GeM portal has been taken is arbitrary and irrational.
91. In the affidavit sworn by the Special Secretary, Department of Personnel, filed in compliance of order passed by the High Court on 20.09.2022, it has been stated that there is no prohibition regarding direct engagement of contractual employees. In paragraph-12 and 13 of the affidavit of the Special Secretary, it has been stated that there does not exist any policy of Personnel Department with regard to recruitment of contractual employees and such contractual engagement by department/subordinate institutions for work will be governed by service conditions/terms mentioned in the Contract/agreement as entered into by the concerned Department. It has also been stated that the Government Orders dated 18.12.2019, 18.08.2020 and 25.08.2020 are applicable for outsourcing of personnel only and the said Government Orders are not applicable on appointment/engagement of personnel on contractual basis. There exists no such prohibition for direct engagement of contractual employees and this fact is buttressed by the circumstance that in all other Apex level Cooperative Societies/Public Sector Undertakings, contractual employees have been re-engaged for the Financial Year 2022-23.
Hence, this Court is of the considered opinion that it is a misunderstanding on the part of the respondent Cooperative Sangh that there existed a prohibition against direct engagement of contractual employees and that there was a mandate that all contractual employees were to be engaged only through an outsourcing Agency which would be chosen only through the GeM portal. Such reasoning constituted the basis of the impugned Orders and the action of the respondents in not re-engaging the petitioners for the year 2022-23.
92. There does not exist any conscious decision at any level either in the State Government or in the respondent Coperative Society that contractual employees are not to be directly engaged or ought to be engaged only through an outsourcing Agency. In the absence of any such decision, the impugned orders are clearly arbitrary and liable to be quashed. In paragraph-4 of the Government Order dated 25.08.2022, it it has been clearly specified that the currently working outsourced employees should be retained as employees through outsourcing Agency. Identifying an outsourcing Agency for supply of 622 employees to replace the currently working 622 contractual employees with a further stipulation that the existing workers should now be engaged through an outsourcing Agency selected through GeM portal appears to be a wholly whimsical decision having no rational basis.
93. None of the affidavits filed on behalf of the respondent Sangh refer to any such decision taken by the Government. The Commissioner and Registrar, only interpreted the Government Orders and the Sangh called for information regarding number of employees directly working on Contract and on the basis of information that there were 622 such employees, tender notice was issued on the GeM portal for providing 622 employees and for selection of an outsourcing Agency for their engagement. The decision to issue the tender notice on the GeM portal and not to renew the Contract of the petitioners is a mechanical decision based upon misunderstanding of the Circular and the Government Orders issued from time to time.
94. This Court has on consideration of rival submissions found that although the petitioners have no right to challenge and have also not challenged the Government Orders issued by the Labour Department and the Department of Micro, Small and Medium Industries, so far as purchase of manpower from service provider selected through GeM Portal is concerned as applicable to Government Departments and subordinate institutions; the question which can and has been raised by them, is with regard to interpretation of the Circular of the Respondent no.2 by the Respondent nos.3 to 6. It is evident from a perusal of the Circular that Guidelines have been given by the Commissioner and Registrar Cooperatives U.P. that in case manpower is to be purchased for outsourcing, it has to be done through the GeM Portal by inviting bids from service providers. The affidavits filed by the Respondents clearly indicate that the Circular dated 17.09.2021 did not anywhere provide that no directly engaged contractual employee, even if he is rendering satisfactory service, can be continued by signing of a fresh Contract with him on the expiry of the current term of the Contract.
95. There is no prohibition in the Circular dated 17.09.2021 for the Cooperative Societies from engagement of contractual employees directly. The interpretation given by the Respondent nos.3 to 6 to the aforesaid Circular is misconceived and irrational, as is evident from the facts that several Apex level Cooperative Societies are still continuing to engage employees directly through individual contracts which have been brought on record by the petitioners and which averment has not been specifically controverted by the respondents. The consequential actions taken by the Respondent nos.3 to 6 viz. annexure 15 and 17 to the writ petition, are entirely unwarranted and liable to be set aside. This Court, however, finds that the Respondent nos.3 to 6 through their Board of Directors have already taken a decision to cancel the proceedings undertaken for outsourcing. The Managing Director has issued the consequential order also in this regard. The writ petitioners may or may not be engaged contractually again depending upon their past performance and satisfactory conduct earlier by the Respondent nos.3 to 6. Although, no writ of mandamus can be issued to the Respondent nos.3 to 6 in this regard by the Court under Article 226 of the Constitution, this Court having already held that the interpretation of the Circular dated 17.09.2021 by the Respondent no.2 as given by the Respondent nos.3 to 6 being irrational and misconceived, the right of the petitioners to be engaged afresh as per past practice stands revived. The eclipse cast by the Circular dated 17.09.2021 is removed.
96. Accordingly, the writ petitions stand disposed of.
Order Date: 27/ 03/2023 Rahul [Justice Sangeeta Chandra]