Holding

A temporary employee appointed under a scheme that has ended has no vested right to be absorbed into the regular establishment, and the termination was valid, though salary arrears must be paid.

Summary

Gurbachan Lal was appointed as a Senior Project Leader on a temporary basis in an Establishment Development Cell (EDC) created under a DST scheme at Regional Engineering College, Kurukshetra. When the three‑year grant ended, the Board of Governors decided not to merge the EDC with the main college and terminated Lal’s service, also refusing his claim to the revised pay scale and regularisation as Assistant Professor. The High Court initially ordered absorption and payment of the revised scale, but the Division Bench set aside that order, holding that a temporary employee under a scheme that has ended has no vested right to be absorbed. The Supreme Court affirmed the Division Bench, stating that the termination was lawful, but directed the college to pay salary arrears for January‑March 2002. The Court declined to award medical reimbursement as the claim was not substantiated.

Issues considered

Whether a temporary employee appointed under a project‑based scheme is entitled to be merged into the regular establishment after the scheme ends.
Whether the Board of Governors can lawfully decide not to merge the EDC and terminate the employee’s service.
Whether the employee is entitled to the revised pay scale and regularisation as Assistant Professor.
Whether termination without assigning a reason is valid under the terms of the appointment letter.
Whether the employee is entitled to salary arrears and medical reimbursement.

Subjects

temporary employmentproject scheme terminationabsorption into regular establishmentservice lawpay scale revisionregularisationtermination of servicesalary arrears

Judgment

GURBACHAN LAL A
v.
REGIONAL ENGINEERING COLLEGE, KURUKSHETRA AND-ORS.

MARCH I, 2007

[DR. AR. LAKSHMANAN AND TARUN CHATTERJEE, JJ.] B

.> j. Service Law:

Temporary employee-Scheme or project-Completion of-
Regularisation-Entitlement to--Amendment of service condition-Right of C
employer-The Department of Science and Technology (DST), Government of
India established National Science and Technology Entrepreneurship

- Development Board (NSTEDB) to encourage and promote entrepreneurship
amongst the science and technology persons-NSTEDB, with the same
objective, set up Establishment Development Cells (EDC) in various D
educational institutions-The scheme, as framed by NSTEDB, stated that the
DST would provide financial assistance to the educational institutions for a
period of three years and thereafter it would be the responsibility of the
educational institution to continue its functioning and that the EDC should
merge into the mainstream of the institution-Engineering college established
the EDC in it and invited applications for the post of Chief Project E
Coordinator-One candidate applied for the post but he was appointed in
the post of Senior Project Leader temporarily-The appointment letter stated
that the service of the employee was liable to be terminated by either side
without assigning any reasons-The Board of Governors of the engineering
college had approved the creation of the EDC in it-The State Government F
revised the pay scale of the teachers in the engineering college but the
revised pay scale was not granted to the employee-The employee filed a writ
petition and claimed revised pay scale as well as confirmation as Assistant
Professor-During the pendency of the writ petition the engineering college
stopped the salary of the employee-The engineering college, instead of
releasing the salary, asked the employee to approach the funding agency for G
release of funds and thereafter his services were terminated-The employee
filed another writ petition-In the meanwhile, the Board of Governors decided
not to merge the EDC with the regular establishment of the engineering
college-A Single Judge allowed both the writ petitions and held that it was
483 H
484 SUPREME COURT REPORTS [2007] 3 S.C.R.

A the obligation on the part of the engineering college to absorb the faculty
members and other staff of the EDC and also held that the employee must be r
paid his salary in accordance with the revised pay scale-On appeal, the
Division Bench of the High Court set aside the judgment of the Single Judge
and held that the employee could not seek merger of the EDC with the
engineering college and fiirther held that the appointment of the employee,
B being on a temporary basis, could not confer any right on him-Correctness
of-Held: The employee was not appointed in the post which was advertised,
but was appointed as a Senior Project Leader and, therefore, the Division
Bench was justified in holding that the employee was not appointed in a
sanctioned post-It is always open to the Board of Governors to create a post "- ..
c and also to abolish any post which would not be required to be continued
in its opinion-The temporary employment of the employee cannot vest any
legal right in him to continue when the scheme itself, on the basis of which
he was appointed and was working, came to an end-Hence, it is valid in

D
law for the engineering college to terminate the employee from service in a
manner, which did not favour him-High Court judgment upheld

The D1~partment of Science and Technology (DST), Government of India
-
established National Science and Technology Entrepreneurship Development
Board (NSTEDB) to encourage and promote entrepreneurship amongst the 1't
science and technology persons. NSTEDB, with the same objective, set up
Establishment Development Cells (EDC) in various educational institutions.
E
The scheme, as framed by NSTEDB, stated that the DST would provide
financial assistance to the educational institutions for a period of three years
and thereafter it would be the responsibility of the educational institution to
continue its functioning and that the EDC should merge into the mainstream
of the institution.
F
The respondent-institution established the EDC in it and invited
applications for the post of Chief Project Coordinator. The appellant applied
~
for the post but he was appointed in the post of Senior Project Leader
temporarily. The appointment letter stated that the service of the appellant
·-
was liable to be terminated by either side without assigning any reasons. The
G Board of Governors of the respondent-institution had approved the creation
of the EDC in it on the basis of the grant-in-aid released by the Government
oflndia, Ministry of Human Resource Development.
~-
The State Government issued a notification revising the pay scales of
the teachers working in the respondent-institution. The appellant made a
H
GURBACHAN LAL''· REGIONAL ENGINEERING COLLEGE, KURUKSHETRA 485

representation that he was eligible for the revised pay scale but was not A
granted. The appellant filed a writ petition before the High Court and claimed
the revised pay scale and also for confirmation as Assistant Professor. During
the pendency of the writ petition the respondent-institution stopped the salary
of the; appellant. The respondent-institution, instead of releasing the salary,
asked the appellant to approach the funding agency for release of funds and B
thereafter his services were terminated.

The appellant filed another writ petition before the High Court. In the
meanwhile, the Board of Governors decided not to merge the EDC with the
regular establishment of the respondent-institution. A Single Judge allowed
both the writ petitions and held that it was the obligation on the part of the C
respondent-institution to absorb the faculty members and other staff of the
EDC and also held that the appellant must be paid his salary in accordance
with the revised pay scale.

On appeal, the Division Bench of the High Court set aside the judgment
of the Single Judge and held that the appellant could not seek merger of the D
EDC with the respondent-institution and further held that the appointment of
the.appellant, being on a temporary basis, could not confer any right Of!: him.
Hence the appeal.

Disposing of the appeal, the Court
E
HELD: 1.1. The Board of Governors of the Institution was within its
jurisdiction to take a decision whether the Establishment Development Cell
(EDC), i.e. the scheme was to be merged with the Institution or not. Such a
decision had to be taken by the Board of Governors on the basis of the
requirement of the Institution by taking into consideration its financial
conditions and other relevant factors. It cannot also be denied that the appellant F
could not claim any vested or enforceable legal right to claim absorption in
the Institution as even a regular post in the Institution can be abolished on
account of non-availability of work or funds. (Para 27) (496-D-F)

1.2. It was not for the appellant to approach the High Court under Article G
226 of the Constitution claiming any declaration that he was entitled to be
absorbed in the Institution in the regular scale of pay even though the
Institution had not appointelj the appellant on any of the regular posts but
such appointment was solely on the basis of the scht!me. The order of
termination issued to the appellant cannot be said to be bad in law and
accordingly the Division Bench of the High Court rightly held that the scheme H
486 SUPREME COURT REPORTS [2007] 3 S.C.R.

A had come to an end with the stoppage of the grant by the Central Government.
That being the position, the appellant was not entitled to claim absorption in
the end with the main stream, i.e. with the Institution nor would he be entitled
r·
to say that he became a permanent employee of it. [Para 27[ [496-F-H; 497-AI

Secretary, State of Karnataka v. Uma Devi, [2006[ 4 SCC 1, followed.
B
Managing Director of UP Land Development Corporation v. Amar
Singh, [2003] 5 SCC 388 and State of Himachal Pradesh v. Nodha Ram, AIR
(1997) SC 1445, relied on.
l
State of Maharashtra v. Association of Maharashtra Education Services
c Class II Officers, (1974] 4 SCC 706, held inapplicable.

2.1. The employees employed for the purpose of a scheme which has
been subsequently closed down do not acquire any vested right or enforceable
legal right to continue with the scheme nor could such employees approach
the court for a declaration to continue with the scheme after the project was
D over. [Para 30] [497-F-GI

Mahendra L. Jain v. Indore Development Authority, [20051 1 SCC 639,
relied on.

2.2. That apart, the appellant was not appointed in the post which was
E advertised, but was appointed as a Senior Project Leader and, therefore, the
Division Bench was justified in holding that the appellant was not appointed
in a sanctioned post. The question of regularization of the appellant in the
main stream of the Institution could not arise at all nor could it be said that
the appellant became a permanent employee of the Institution as the scheme
F came to an end. Therefore, it may safely be concluded that since the scheme
had come to an end as soon as the financial assistance to the Institution was
withdrawn and as the Board of Governors of the Institution had decided not to
'I'
continue with the scheme and not to merge the same with the Institution, it
cannot be said that merely because there was a clause in the advertisement
that the post of the appellant was likely to continue, the appellant had acquired
G any right whatsoever to become a permanent employee of the Institution, nor
had he acquired any vested right to continue in his position. In any view of the
matter, as he was appointed purely on a temporary basis and the scheme had
already come to an end, the appellant was not entitled to any relief to the extent ~ ~

that he had become a permanent employee of the Institution itself. [Para 31]
H (497-H; 498-A-C]
GURBACHAN LAL'· REGIONAL ENGINEERING COLLEGE, KURllKSHETRA 487

2.3. The Board of Governors of the Institution had considered all the A
i relevant factors and thereafter had taken a resolution not to merge the scheme
with the Institution or continue with it. It is always open to the Board of
Governors to create a post and also to abolish any post which would not be
required to be continued in its opinion. [Para 33) [498-G)

3.1. The guidelines for vesting of the EDC with the Institution were not B
mandatory in nature and the scheme came to an end. The question of
absorption of the appellant in the end after the closure of the scheme cannot,
therefore, arise at all. [Para 36) (499-E)

3.2. Moreover, the nature of employment was explicitly laid down in the C
appointment letter to which the appellant had communicated his acceptance,
as temporary. Therefore, it is valid in law for the institution to terminate the
appellant from service in a manner, which did not favour him. [Para 37)
[499-F,G)

Secretary, State of Karnataka v. Uma Devi, [2006) 4 SCC 1, followed. D
4. The sovereign government, after considering the economic situation
in the country and work to be got done, cannot be precluded from making
temporary appointments or engaging temporary workers or daily wagers
which clearly indicates that the authority has the power to appoint temporary
employees but the fact remains that such appointment shall remain temporary E
in nature which can be terminated at any point of time. [Para 46) (499-G-H)

Secretary, State of Karnataka v. Uma Devi, (2006) 4 SCC 1, followed.

5.1. In the present case, the appellant continued to work for ten years
or more but such continuous temporary employment of the appellant cannot F
vest any legal right in him to continue when the scheme itself, on the basis of
which he was appointed and was working, came to an end. It is also incorrect
to say that the court would direct continuity of the scheme for the purpose of
keeping the appellant in service and in any view of the matter he could not be
treated as a permanent employee of the Institution as he was appointed under
a scheme and not in the mainstream of the institution. [Para 47) [502-A-B) G

Daily Rated Casual Labour Employed under P & T Department v. Union
of India, AIR (1987) SC 2342 and Jacob M Puthuparambil v. Kera/a Water
Authority, [1991) 1 SCC 28, relied on.

State of Haryana v. Piyara Singh, [1992) 5 JT 179, referred to. H
488 SUPREME COURT REPORTS [2007) 3 S.C.R.

A 5.2. Since the service of the appellant was temporary in nature and he
was appointed under a scheme which had come to an end and he had joined
the service in complete recognition and acceptance of the conditions and
furt:1er had already accepted fresh assignment on the basis of a new scheme,
it cannot be said that the termination of his service was invalid in law.
Therefore, the stand of the appellant that it is not open to the Board of
B Governors of the Institution to say that it was unable to continue with the
EDC and thereby terminating the services of the appellant, does not hold good.
(Para 541 (505-E-F(

CIVIL APPELLATE ruRISDICTION : Civil Appeal No. 1120 of2007.
c From the Judgment and Final Order dated 26.5.2005 of the High Court
of Punjab & Haryana at Chandigarh in L.P.A. No. 138 of 2004 in CWP No.
4579/2002 and L.P.A. No. 139/2004 in CWP No. 1537112000.

P.P. Rao, S. Wasim A. Qadri and Lakshmi Raman Singh for the Appellant.
D
Mahabir Singh, V. Sudeer, MBRS. Raju, S. Balaji, Madhusmita Bohra and
S. Srinivasan for the Respondents.

The Judgment of the Court was delivered by

E TARUN CHATTERJEE, J. I. Leave granted.

2. The present dispute arises out of termination of services of Gurbachan
Lal (the appellant herein) by the Regional Engineering College, Kurukshetra
(the respondent herein).

F 3. Jn 1986, the Department of Science and Technology, Government of
India established National Science and Technology Entrepreneurship
Development Board (hereinafter called "NSTEDB") to encourage and promote
entrepreneurship amongst the science and technology persons. NSTEDB,
with the same objective, set up Establishment Development Cells (in short
G EDC) in various educational institutions. The Scheme as framed by NSTEDB
stated that Department of Science and Technology (in short DST) would
provide financial assistance for a period of three years or till the end of the
7th Five Year Plan, whichever would be earlier after which the educational
institution would be under the responsibility to continue its functioning and
that the EDC should merge into the mainstream of the Institution for continuous
H running along with its faculty and staff. The Institution established the EDC
GURBACHAN LAL'· REGIONAL ENGINEERING COLLEGE, KURUKSHETRA [T ARUN CHATTERJEE, I.] 489

in it and invited applications for the post of Chief Project Coordinator for A
~
~ which the minimum qualifications included that the candidate must be at least
a graduate in engineering/ technology or a post graduate in any branch of
Science, Mathematics, Economics or Business Administration with ten years'
of experience in industries or entrepreneurship development of which minimum
five years in a position of responsibility.
B
4. In pursuance of this scheme, on 12th April 1989, the Institution
advertised for the said post in the EDC for which the appellant applied.
However, he was appointed in the post of Senior Project Leader by an
• ). appointment .letter dated 9th August 1989 which categorically stated as follows:

"I. Appointment: Temporary[ emphasis added] c
2. Scale of Pay: Rs. 1200-50-1300-60-1900
(unrevised)

3. Initial Pay: You are allowed a basic
pay of Rs.1600 in the D
unrevised scale of pay of
Rs.1200-1900. Total
emoluments shall be
Rs. 4630 excluding HRA.
This is equivalent to the stage of E
Rs. 3700 in the revised
scale Rs. 3700-125-4950-
150-5700. The total
emoluments are Rs. 4715
excluding HRA.
The approval of the revised F
pay scale is awaited from
.., the State Government. This
'
is likely to be received
shortly. You will be placed
at the basic pay of Rs. 3700 G
in the revised pay scale of
Rs. 3700-5700 from the
-1 date of your joining. The
arrears will be put to you
on implementation of the
revised pay scale. H
490 SUPREME COURT REPORTS [2007] 3 S.C.R.

A 4. Allowances: You will receive any
allowances admissible
under the Rules of the College from
time to time.

5. Date of Next Increment: One year after from the
B date of your joining the
post.

6.... xx x x x

7..... xx x x x
c
8.... xx x x x

9. Leave: You will be governed by the
!eave rules of the college
from time to time.
D
10. Conduct & Discipline: You will be governed by the
conduct and disciplinary
rules of the college from
time to time.
E 11. Termination of service: Your service is liable to be
terminated by either side
without assigning any
reason of one month 's
notice in writing or on
F payment of on month 's pay
and allowance in lieu
thereof However, you will
not be allowed to leave the
service during semester
studies."
G [emphasis added]

5. We have examined the terms and conditions of the appointment letter
of the appellant, as quoted herein above. Condition no. I clearly indicates that ~-
the appointment of the appellant was purely temporary which can be terminated
H without assigning any reason by giving one month's notice in writing or on
GL'RBACHAN LAL " REGIONAL ENGINEERING COLLEGE. KURUKSHETRA [T ARUN CH 'TTERJEE. J.] 49 J

payment of one month's salary and allowances in lieu thereof. It was stipulated A
. 'i in the letter of appointment that the appellant would be entitled to revised pay
scale which was awaited from the State Government for the employees of the
Institution. However, the appointment Jetter indicated that he would also
receive allowances admissible under the rules of the Institution from time to
time. Clause 5 of the appointment letter also indicated that the date of next
increment would be one year after the date of joining the post. From a close B
scrutiny of the letter of appointment, it is evident that the appointment of the
appellant in the above post was temporary which could be terminated by
j, ) either of the parties without assigning any reason by giving one month's
notice or payment of one month's pay and allowances in lieu thereof.

6. However, condition no. 10 of the appointment Jetter says that
c
allowances payable to the employee of the Institution under its rules, as
applicable from time to time shall also be payable to the appellant.

7. The Board of Governors of the Institution had approved the creation
of the EDC in it on the basis of grant-in-aid released by the Government of D
India, Ministry of Human Resource Development. It was noted in the Scheme
that the fund for EDC was sanctioned up to the end of the 7th Five Year Plan
but was likely to continue in the 8th Plan also as a central scheme. It was
further resolved that the staff salary and miscellaneous operational expenses
shall be met from the grants in aid received under the Scheme of the EDC but
ultimately the Institution will have to generate its own resources to continue E
with it.

8. Before we proceed further, we may state that the appellant in the writ
petition alleged mala fide on the part of the Principal of the Institution. In
order to show that the Principal of the Institution had acted in a mala fide
manner against him, the appellant alleged the following facts:-
F

"' 9. The appellant applied for Ph.D. registration under the Principal of the
Institution (herein Respondent No. 5) as the main guide but withdrew because
work was not satisfactory and applied for Ph.D. under the guidance of the
next senior most professor. The appellant claimed that this upset the Principal G
of the Institution and he became prejudiced against him which was evident
in many instances such as the one on 16th August 1999 when the Principal
-4 of the Institution allotted official accommodation in the Institution campus to
a junior staff, ignoring the claim of the appellant who was a member of the
senior staff. However, we need not proceed further on the question of mala
H
492 SUPREME COURT REPORTS [2007] 3 S.C.R.

A tides on the part of the Principal of the Institution as we find that such ground
was not agitated by the appellant either before the Learned Single Judge or
r
the Division Bench of the High Court.

I 0. The appellant also stated that on 5th N,wember 1999, a notification
was issued by Haryana Government revising the pay scales of teachers
B working in the Institution. According to the appellant, he was eligible for the
revised pay scale but was denied the benefits of it. He made representations
in this regard but was not heard.

I I. A writ petition being W.P. No. No. 15371 of2000 was filed by the
C appellant on 9th November 2000 before the High Court of the State of Punjab
and Haryana at Chandigarh praying for issuing an appropriate writ directing
the respondents to pay the revised pay scale with pay fixation and to confirm
the appellant as Assistant professor and grant any other relief as may be
appropriate.

D 12. The Institution stopped the salary of the appellant from May 2001
to which he made representations and prayed for release of his pay. The
Principal of the Institution released the salary to the appellant but asked him
to arrange for it in future from the concerned authority. It was asserted that
owing to the mental harassment, the appellant suffered heart attack and had
to undergo an open heart bye-pass surgery. He claimed reimbursement of Rs.
E 74,492 towards medical claim but it was stopped by the Principal of the
Institution. Representations for release of his salary and reimbursement of
medical bill were made by the appellant.

13. On 31st November 200 I, the appellant received 6 months' salary
from June, 2001 to November 200 I. However, medical reimbursement was not
F released. The salary of the appellant was stopped from January 2002 for which
he filed a representation for its release. The Institution instead of releasing
the salary, asked the appellant to approach the funding agency for release of
funds.

G 14. On 28th February 2002, the appe:tant received notice for termination
of service and no salary was paid to him for the notice period. Another writ
petition was filed by the appellant before the High Court being WP no. 4579
of 2002 challenging his termination order.

15. On 2nd April, 2004, both the Writ Petitions filed by the appellant
H were allowed by the Learned Single Judge of the High Court by a common
GURBACHAN LAL"· REGIONAL ENGINEERING COLLEGE. KURUKSHETRA [TARUN CHATTERJEE, J.] 493

..., judgment. The Learned Single Judge was of the opinion that from the perusal A
~
of the documents brought on record, it was evident that there was an obligation
on the part of the Institution to absorb the faculty members and other staff
of the EDC and that it could not shun its responsibilities after enjoying
financial benefits for twelve years and thus was estopped from going back
from its obligations. The Learned Single Judge further held that it was the
obligation of the Institution to merge the members of EDC in its mainstream. B
The Learned Single Judge also held that the appellant must be paid his salary
in accordance with the revised pay scale.
> J
16. Aggrieved by the orders in the aforesaid writ petitions, the Institution
filed a Letter Patent Appeal being LPA No. 138/2004. In this LPA, it was
pointed out by the Principal of the Institution that it was the decision of the
c
Board of Governors not to merge EDC with the regular establishment of the
Institution. Since the appellant was never appointed in the regular
establishment, there was no question of allotment of a quarter. It was also
pointed out that since the salaries of the staff of the EDC were being paid
out of the financial assistance received from the DST, which was eventually D
withdrawn, the appellant could not be an employee of the Institution.

-,. 17. It was observed by the High Court that in the present case, the post
advertised was that of a Chief Project Coordinator whereas the appellant was
appointed as Senior Project Leader on temporary basis in the EDC. The High
Court in the LPA had further observed that the appointment of the appellant E
could not confer any right on him as Assistant Professor, which is a regular
post and could be filled only after giving an opportunity to all eligible
candidates to apply for the post and after following the relevant rules of the
Institution.
F
18. In the LPA it was also observed that the appellant could not seek
... merger of the EDC with the Institution but considering the fact that he had
worked for more than ten years with the Institution, it directed that the
appellant be granted relaxation in age for the post of Assistant Professor as
and when the post is advertised so that he is able to compete with other
eligible candidates to seek appointment on regular basis. G
I9. Aggrieved by the said order, the appellant filed the special leave
-~
petitions in respect of which leave has been granted.

20. We have heard the learned senior counsel appearing for the parties.
Mr. P.P. Rao, learned senior counsel appearing on behalf of the appellant made H
494 SUPREME COURT REPORTS [2007] 3 S. C.R.

A mainly two-fold submissions. First, Mr. Rao contended that in view of the
guidelines framed by the Government oflndia, as noted herein earlier, the EDC r .,..
was to be merged with the main stream of the Institution after the financial
assistance was withdrawn by the Central Government. Accordingly, Mr. Rao
submitted that it could not be said that the scheme came to an end as soon
as the financial assistance by the Central Government was withdrawn. Mr.
B Rao further submitted that it would be evident from the guidelines that it was
the duty of the Institution to continue with the scheme after the financial
assistance was withdrawn and accordingly the appellant, with the merger of
the EDC with the main stream of the Institution, became an employee of the A. ~

Institution itself. Mr. Rao further submitted that in view of the fact that an
c undertaking was also filed at the time the scheme was approved by the
Central Government, that after the financial assistance was withdrawn by it,
the Institution ought to have taken over the liability and continued to run the
scheme, it was not open to the Institution to say that it was not in a position
to continue with the scheme for financial stringency. Accordingly, Mr. Rao
contended that the services of the appellant could not be terminated without
D following the procedure for termination or dismissal from service like that of
the regular employees of the Institution. In support of this contention, Mr.
Rao relied on a decision of this Court in the case of State of Maharashtra
and Ors. v. Association of Maharashtra Education Services Class fl Officers 1
and Ors., [1974] 4 SCC 706. Mr. Rao had drawn our attention to paragraph
E 7 of the said decision and contended that it was not open to the Board of
Governors of the institution to depart from the rudiments of the scheme and
to device a new mechanism entailing the imposition of fresh conditions as a
pre-requisite to eligibility for the higher pay scale.

21. Secondly, it was contended by Mr. Rao that assuming that the EDC
F could not be merged with the Institution even then the appellant could not
be said to be a temporary employee of the Institution as he acted as Assistant
Professor for more than ten years in the same and, therefore, he became a
permanent employee of the Institution. Accordingly, it was argued that the
""
procedure for termination of services relating to the employees of the Institution
should be followed and as the Board of Governors of the Institution not
G having followed such procedure of termination in the case of the appellant,
the order of termination cannot be sustained.
~ --
22. Mr. Mahabir Singh, learned senior counsel for the respondents
refuted the aforesaid two submissions put forth by Mr. Rao. According to Mr.
H Singh, the EDC came to an end on the stoppage of grant by the Central
GURBACHAN LAL"· REGIONAL ENGINEERING COLLEGE, KURUKSHETRA [TARUN CHAlTERJEE, J] 495

Government to the Institution. Therefore, the order of termination of service A
of the appellant who was appointed purely on temporary basis under a
Scheme which came to an end on stoppage of grant by the Central Government
it could not be said to be bad, illegal and invalid in law and that being the
position, it was not open for the appellant to contend that he became a
permanent employee of the Institution as he served it for more than ten years. B
23. Mr. Singh, in support of his contention, relying on a Constitution
Bench decision of this Court in State of Karnataka v. Uma Devi, (2006] 4 SCC
I contended that the appointment of the appellant being temporary in nature,
)
as would be evident from Qlauses I and 11 of the appointment letter, as noted
herein earlier would c_lefrly show that the service of the appellant could be C
terminated by either of the parties by giving one month's notice with pay and
allowances and i~iew of the fact that the appellant was appointed on the
basis of a sch..i:rae·namely the EDC, which had come to an end, the Division
Bench of the High Court was fully justified in observing that no occasion
could arise for the Learned Single Judge to hold that the appellant had
automatically become permanent in the Institution. He further contended that D
on a plain reading of the guidelines relating to the EDC it could not be said
that the Board of Governors of the Institution had no right to direct that in
;ii. view of the financial difficulties it would not continue with the EDC.

24. We have considered the arguments advanced by the learned counsel
for the parties in depth and in detail. Let us first deal with the submission of E
Mr. Rao that the Scheme could not come to an end in view of the conditions
to the proposal for establishment of the EDC and on stoppage of funds from
the Central Government to run the EDC. We are unable to accept this
submission of Mr. Rao.
F
25. It is true that Clause 4 of the proposal of the establishment of EDC
says that it was the responsibility of the Institution to absorb the EDC
established along with its faculty and staff, in usual academic stream of the
Institution, after expiry of the period of assistance from DST was provided.
However, if we read this clause more minutely along with other clauses of the
proposal for establishment of EDC, it would be difficult for us to hold that G
clause 4 of the said proposal can at all be said to be mandatory in nature.

26. Keeping in mind that the guidelines relating to the proposal of
establishment of the EDC was not mandatory in nature, we need to proceed
to consider the factual aspects relating to this question. It is true that initially
H
496 SUPREME COURT REPORTS [2007] 3 S.C.R.

A a resolution was taken to continue with the Scheme, but on reconsideration
of the same, finally a resolution was taken on 19th November 200 I to the .,
effect that merger with the Institution was not possible in view of financial
stringency. However, the Board of Governors of the Institution in that resolution
advised that efforts may be made to introduce a Scheme or project such as
B Industrial Institute Partnership Cell sponsored for the Institution by the All
India Council of Technical Education.

27. However, as argued by Mr. Rao, it was the responsibility of the
Institution to take over the EDC and run and merge the same with it. It is an
admitted position that the EDC was constituted by the Central Government
C for which necessary funds were allocated year after year till 31st March 2002.
It is also an admitted position that after 31st March 2002 it was made known
to the Institution that financial assistance would not be given and it would
be for the Institution to merge the EDC with it. The initial recommendation
of the advisory committee of the Institution which was formed to find the
feasibility of the scheme to continue was considered by the Board of Governors
D of the Institution and thereafter the Board of Governors decided not to merge
the EDC with it. It is in pursuance of this resolution of the Board of Governors
that the scheme of EDC could not continue and had come to an end. It can
also be said in this connection that the Board of Governors of the Institution
were within their jurisdiction to take a decision whether the EDC, i.e. the
E scheme was to be merged with the Institution or not. Such a decision had to
be taken by the Board of Governors on the basis of the requirement of the
Institution by taking into consideration its financial conditions and other
relevant factors. It cannot also be denied that the appellant could not claim
any vested or enforceable legal right to claim absorption in the Institution as
everi a regular post in the Institution can be abolished on account of non-
F availability of work or funds. As noted herein earlier, it was upon the Board
of Governors to decide whether to merge the EDC with the Institution or not.
It was not for the appellant to approach the High Court under Article 226 of )
the Constitution claiming any declaration that he was entitled to be absorbed
in the Institution in the regular scale of pay even though the Institution had
G not appointed the appellant on any of the regular posts but such appointment
was solely on basis of the scheme. For the reasons aforesaid the order of
termination issued to the appellant cannot be said to be bad in law and
accordingly we are in agreement with the Division Bench of the High Court
which held that the scheme had come to an end with the stoppage of the
grant by the Central Government. That being the position the appellant was
H not entitled to claim absorption in the end with the main stream, i.e. with the
GURBACHAN LAL'· REGIONAL ENGINEERING COLLEGE, KURUKSHETRA [TARUN CHATTERJEE. J.] 497

Institution nor he would be entitled to say that he became a permanent A
employee of it.

28. Reliance can be placed in the case of Managing Director of UP
Land Development Corporation v. Amar Singh, [2003] 5 SCC 388 in which
this court clearly observed as follows:
B
"In clear and certain terms it is stated that when the project comes to
a close, the employees who are working in a project will not get any
vested right. In other words, once a project comes to an end, services
of the employees also come to an end. The other decisions cited by
the Learned Counsel more or less are to the same effect."
c
29. In State of Himachal Pradesh v. Nodha Ram, AIR (1997) SC 1445,
this court while dealing with the case of a temporary employee appointed on
the basis of a project which had been closed down observed as under :

"ft is seen that when the project is completed and closed due to
non-availability of funds, the employees have to go along with its D
closure. The High Court was not right in giving the direction to
regularize them or to continue them in other places. No vested right
is creoted in temporary employment. Directions cannot be given to
regularize their services in the absence of any existing vacancies nor
can directions be given to the State to create posts in a non-existent E
establishment. The Court would adopt pragmatic approach in giving
directions. The directions would amount to creating of posts and
continuing them despite non-availability of the work. We are of the
considered view that the directions issued by the High Court are
absolutely illegal warranting our interference. The order of the High
Court is, therefore, set aside. " (Emphasis supplied) F
~ 30. Similarly in the case of Mahendra L. Jain v. Indore Development
Authority & Ors., [2005] I 639 it has also been held that the employees
employed for the purpose of a Scheme which has been subsequently closed
down do not acquire any vested right or enforceable legal right to continue
with the scheme nor could such employees approach the court for a declaration G
to continue with the scheme after the project was over.

31. That apart, the appellant was not appointed in the post which was
advertised, but was appointed as a Senior Project Leader, therefore, the
Division Bench was justified in holding that the appellant was not appointed H
498 SUPREME COURT REPORTS [2007] 3 S.C.R.

A in a sanctioned post. In view of the discussions made hereinabove, the
question of regularization of the appellant in the main stream of the Institution
could not arise at all nor it could be said that the appellant became a
permanent employee of the Institution as the scheme came to an end. Therefore,
it may safely be concluded that since the scheme had come to an end as soon
as the financial assistance to the Institution was withdrawn and as the Board
B of Governors of the Institution had decided not to continue with the scheme
and not to merge the same with the Institution, it cannot be said that merely
because there was a clause in the advertisement that the post of the appellant
was likely to continue, the appellant had acquired any right whatsoever to
become a permanent employee of the Institution, nor had he acquired any
C vested right to continue in his position. In any view of the matter, as he was
appointed purely on temporary basis and the scheme had already come to an
end, the appellant was not entitled to any relief to the extent that he had
become a permanent employee of the Institution itself.

32. One more fact needs our attention which is borne out from the
D record. It appears that during the pendency of the writ petition before the
High Court, a new scheme, namely, Industry Institute Partnership Cell came
into existence and under the said Scheme the appellant was offered a fresh
assignment which he had already accepted and he is presently associated
with the same. Such being the state of affairs now, it would not be open to
E the appellant to allege that the scheme under which he was appointed initially
continued to run even after his accepting the offer under a new Scheme with
which he is now associated.

33. Before parting with this part of the submissions of Mr. Rao, we may
also take note of the fact that in the appointment letter of the appellant, it
F would not be evident that the services of the appellant shall be absorbed in
the Institution. At the risk of repetition, we also observed, as noted herein
earlier, that the Board of Governors had inherent right to consider the ).
justifiability of continuation of the Scheme or any post or work keeping in
mind the requirement of the Institution. In this connection we add that the
Board of Governors of the Institution had considered all the relevant factors
G and thereafter had taken a resolution not to merge the Scheme with the
Institution or continue with it. It is always open to the Board of Governors
to create a post and also to abolish any post which would not be required
to be continued in , ,, · · opinion.

34. For the reasons aforesaid, we do not agree with Mr. Rao's arguments
H
GURBACHAN LAL'· REGIONAL ENGINEERING COLLEGE. KURUKSHETRA [T ARUN CHATTERJEE. J.) 499

on the first submission . A
... 35. Coming back to the discussions of this Court in the case of State
of Maharashtra v. Association of Maharashtra Education Services Class II
Officers, (supra) and considering minutely para 7 of the same on which strong
reliance was placed by Mr. Rao, we are of the view that this decision would
not be helpful to the appellant. In that decision, this Court was dealing with B
the true nature of the scheme envisaged in the Report of the University
GraPts Commission for the year 1966-67 relating to the pay scales of lecturers
and professors in the affiliated colleges accepted by the Government of
Maharashtra. In that context, this Court in para 7 held that even though the
lecturers who held second-class masters degree and approved by the university C
as postgraduate teachers since !st April 1966 were entitled to the hi['"h 0 r pay
scale under the report of the University Grant Commission accepted by the
Government of India. Jn that context, this court held that it was not right for
the State Government to depart from the rudiments of that scheme and to
device a new mechanism entailing the imposition of fresh conditions as a pre-
requisite to eligibility for the higher pay scale. D
' 36. In the present case, the situation is quite different. As noted herein
earlier, the EDC was constituted on the guidelines in respect of which reference
has been made earlier. In view of our interpretation of Clause 4 and other
clauses of the proposal to establish the EDC, we have already come to a
conclusion that the guidelines for vesting of the EDC with the Institution was E
not mandatory in nature and the scheme came to an end. The question of
absorption of the appellant in the end after the closure of the scheme cannot
therefore arise at all.

37. Coming to the question whether the service conditions could be
F
amended to the disadvantage of the employee, as per the facts presented
before us it is clear that there existed a contract of employment between the
appellant and the Institution. Moreover, the nature of employment was explicitly
laid down in the appointment letter, as noted herein earlier, to which the
appellant had communicated his acceptance, as temporary. Therefore, it is
valid in law for the Institution to terminate the appellant from service in a G
manner, which did not favour him.

38. The constitution bench of this court in Secretary, State of Karnataka
v. Uma Devi (supra), specifically held that mainly because a temporary
employee had continued beyond the term of employment for which he was
H
500 SUPREME COURT REPORTS [2007] 3 S.C.R.

A employed such employee would not be entitled to any right to be made
permanent in service if the original appointment was not made by following f
due process. It was further held that it was not open to the court to prevent
regular recruitment at the instance of such employees.

39. Accordingly, the decisions of this court directing regularization and
B permanent continuation of temporary employee recruited under a scheme on
issuance of direction by court were overruled.

40. However, the learned senior counsel appearing for the appellant
relied on para 53 of the said decision and contended that the appellant had
acted as an assistant professor for more than ten years and therefore would
C be entitled to be absorbed or regularized in the mainstream of the Institution.

41. In Para 53 of the said decision, this Court observed as follows:

"One aspect needs to be clarified There may be cases where irregular
appointments (not illegal appointments) as explained in S. V.
·D Narayanappa (supra), R.N. Nanjundappa (supra), and B.N. Nagarajan
(supra), and referred to in paragraph 15 above, of duly qualified
persons in duly sanctioned vacant posts might have been made and
the employees have continued to work for ten years or more but
without the intervention of orders of courts or of tribunals. The
E question of regularization of the services of such employees may
have to be considered on merits in the light of the principles settled
by this Court in the cases above referred to and in the light of this
judgment. In that context, the Union of India, the State Governments
and their instrumentalities should take steps to regularize as a one
time measure, the services of such irregularly appointed, who have
F worked/or ten years or more in duly sanctioned posts but not under
cover of orders of courts or of tribunals and should further ensure
that regular recruitments are undertaken to fill those vacant
sanctioned posts that require to be filled up, in cases where temporary
employees or daily wagers are being now employed The process
must be set in motion within six months from this date. We also
G
clarifY that regularization, if any already made, but not subjudice,
need not be reopened based on this judgment, but there should be
no further by-passing of the constitutional requirement and
regularizing or making permanent, those not duly appointed as per
.
-
the constitutional scheme. " (Underlining is ours)
H
GURBACHAN LAL '· REGIONAL ENGINEERING COLLEGE, KURUKSllETRA [T ARUN CHATTERJEE, l] 50)

42. Having carefully examined para 53 of the Uma Devi's case and also A
the other relevant paras of the same relating to the absorption/regularization
•
' of temporary employees, we are unable to accept the contention of the
learned senior counsel appearing on behalf of the appellant.

43. In para 52 of the Uma Devi's case, this court has made it clear that
a mandamus cannot be issued in favour of the employees directing the B
Government, either State or Central Government, to make those employees
permanent since the employees cannot show that they have an enforceable
legal right to be absorbed or the Central Government or the State Government,
-ol as the case may be, is duty bound to make them permanent.

44. This is the general observation of this court subject to para 53 of c
the same, but we are of the view that para 53 which makes a distinction of
employees who have been continuously working for more than ten years in
a sanctioned post stand on a different footing.

45. In our view para 53 will not help the appellant although the appellant
D
in the present case continued to work in the EDC for more than ten years.
It is true that in that para, this court observed that although the appointment
was irregular and not illegal, the State Government or the Central Government,
)'
as the case may be, should take steps to regularize the employees who had
continued to work for more than ten years. The observation made by the
Constitution Bench in para 53 of the Uma Devi case may not be helpful to E
the appellant because

1. He was appointed on the basis of a scheme which from the appointment
letter clearly proves that his appointment was temporary in nature and would
come to an end with the closure of the EDC.
F
2. Since the appellant was not appointed in a duly sanctioned vacant
l., post, we do not think that the observation made by this Court in para 53
~ ' would come to his aid at all.

46. We may also note that observations made by the Constitution
Bench in the case of Uma Devi (supra) to the effect that the sovereign G
government after considering the economic situation in the country and work
to be got done, cannot be precluded from making temporary appointments or
engaging temporary workers or daily wagers which clearly indicates that the
power of the authority to appoint temporary employees was accepted by this
Court but the fact remains that such appointment shall remain temporary in H
502 SUPREME COURT REPORTS [2007) 3 S.C.R.

A nature which can be terminated at any point of time.
47. In the present case the appellant continued to work for ten years
f
or more but such continuous temporary employment of the appellant cannot
vest any legal right in him to continue when the scheme itself on the basis
of which he was appointed and was working itself came to an end. It is also
B incorrect to say that the court would direct continuity of the scheme for the
purpose of keeping the appellant in service and in any view of the matter he
could not be treated as a permanent employee of the Institution as he was
appointed under a scheme and not in the mainstream of the Institution.

48. At this juncture we may observe that the Constitution Bench held
C that the recruitment could only be made through a prescribed procedure. In
the case of State of Haryana v. Piyara Singh, (1992) 5 JT 179, a bench of
three Hon 'ble Judges pointed out that some exigencies of administration may
call for temporary appointment to be made and further held that in such a
situation efforts should be made to replace such an ad hoc or temporary
D employee t>y a regularly selected employee as early as possible. In that
situation it would be open to the said employees to compete with others for
regular selection or appointment. The decision of this court in the Piyara
Singh case (supra) had given reasons when regularization could be made
although it was kept in mind that the normal rule was to recruit persons as
a regular employee through a prescribed procedure.
E
49. Let us trace back to the year 1987 when this Court in the case of
Daily Rated Casual Labour Employed under P&T Department v. Union of
India, AIR (1987) SC 2342, in para 6 observed as follows:

"ft may be true that the petitioners have not been regularly recruited
F but many of them have been working continuously for more than a,
year in the Department and some of them have been engaged as
casual labourers for nearly ten years. They are rendering the same
kind of service, which is being rendered by the regular employees
doing the same type of work. Clause (2) of Article 38 of the
G Constitution of India which contains one of the Directive Principles
of State Policy provides that "the State shall, in particular. strive to
minimize the inequalities in income, and endeavor to eliminate
inequalities in status, facilities and opportunities, not only amongst
individuals but also amongst groups of people residing indifferent
'-
areas or engaged in different vocations." Even though the above
H Directive Principle may not be enforceable as such by virtue of
GURBACHAN LAL "· REGIONAL ENGINEERING COLLEGE. KURUKSHETRA [T ARUN CHATIERJEE, J] 503

Article 3 7 of the Constitution of India, it may be relied upon by the A

' petitioners to show that in the instant case they have been subjected
to hostile discrimination. ft is urged that the State cannot deny at
least the minimum pay in the pay scales of regularly employed
workmen even though the Government may not be compelled to
extend all the benefits enjoyed by regularly recruited employees. We B
are of the view that such denial amounts to exploitation of labour.
The Government cannot take advantage of its dominant position,
and compel any worker to work even as a casual labourer on
starving wages. It may be that the casual labourer has agreed to
work on such low wages. That he has done because he has no other
choice. It is poverty that has driven him to that State. The Government C
should be a model employer. We are of the view that on the facts and
in the circumstances of this case the classification of employees into
regularly recruited employees and casual employees for the purpose
of paying less than the minimum pay payable to employee in the
corresponding regular cadres particularly in the lowest rungs of the
department where the pay scales are the lowest is not tenable. The D
further classification of casual labourers into three categories namely
(i) those who have not completed 720 days of service; (ii) those who
have completed 720 days of service and not completed I 200 days of
service and (iii) those who have completed more than 1200 days of
service for purpose of payment of different rates of wages is equally E
untenable. There is clearly no justification for doing so. Such a
classification is violative of Articles 14 and 16 of the Constitution.
ft is also opposed to the spirit of Article 7 of the International
Covenant on Economic, Social and Cultural Rights, 1966 which
exhorts all States parties to ensure fair wages and equal wages for
equal work. We feel that there is substance in the contention of the F
petitioners. "

(Underlining is ours)

In para 8 of this decision, the Supreme Court held
G
"The question of security of work is of utmost importance. If a person
does not have the feeling that he belongs to an organization engaged
in production he would not put forward his best effort to produce
more. That sense of belonging arises only when he feels that he will
not be turned out of employment the next day at the whim of the
H
504 SUPREME COURT REPORTS (2007] 3 S.C.R.

A management. It is for this reason it is being repeatedly observed by
those who are in charge of economic affairs of the countries in
different parts of the world that as far as possible security of work
should be assured to the employees so that they may contribute to
the maximization of production. It is again for this reason that
managements and the governmental agencies in particular should
B not allow workers to remain as casual labourers or temporary
employees for an unreasonable long period of time. "

(underlining is ours)

50. From the above observation of this Court in Daily Rated Casual
C Labour Employed under P&T Department v. Union of India (supra), it was
made clear that regularization or absorption can be made of temporary employee
because unless a sense of belonging arises, the employee will not give his
best and consequently production will suffer which in turn will result in
economic loss to the nation. Keeping this in mind, this Court directed the
D government to prepare a scheme on a rational basis for absorbing those who
have worked for a continuous period of one year. This court in this decision
further observed that non-regularization of temporary employees for a long
time was not a wise policy and direction was given to the Central Government
to prepare a scheme for the absorption of the casual labourers as far as
possible who had been continuously working for more than a year in the
E department.

51. Further, in Jacob M Puthuparambil v. Kera/a Water Authority,
[ 1991] I SCC 28, this c'ourt, while interpreting Rule 9 of Kerala State and
Subordinate Service Rules, 1958 observed as under:

F "India is a developing country. It has a vast surplus labour market.
Large-scale unemployment offers a matching opportunity to the
employer to exploit the needy. Under such market conditions the J
employer can dictate his terms of employment taking advantage of
the absence of the bargaining power in the other. The zmorganised
job seeker is left with no option but to accept employment on take-
G
it-or-leave-it terms offered by the employer. Such terms ofemployment
offer no job security and the employee is left to the mercy of the
employer. Employers have betrayed an increasing tendency to employ
temporary hands even on regular and permanent jobs with a view
to circumventing the protection offered to the working classes under
the benevolent legislations enacted from time to time. One such
GURBACHAN LAL•·. REGIONAL ENGINEERING COLLEGE, KURUKSHETRA [TARUN CHATTERJEE, J] 505

device adopted is to get the work done through contract labour. " A
~

" (Underlining is ours)

52. This court, while interpreting the provisions namely Rule 9 of Kerala
State and Subordinate Service Rules, 1958 and keeping the spirit and
philosophy of the Constitution to attain socio-economic justice as quoted B
above, held that employees who were serving in the establishment for long
spells and had the requisite qualifications for the job, should not be thrown
out but their services should be regularised as far as possible. It was of the
J opinion that on interpreting the relevant clause, if it was found that services,
which had continued for a long time, had to be regularized if the incumbent
possessed the requisite qualifications.
c
53. At this juncture we may observe that the aforesaid decisions of this
court which were overruled by the Constitution Bench decision in which
reasons for giving directions to absorb temporary employees were on solid
foundation which, however 1·1as not dealt with by the constitution bench at D
the time of overruling them. The reasons given in the aforesaid decisions
which stand on solid footing, need to be considered in the light of the right
of asking for absorption as permanent employees under the government is a
ground which needs to be reconsidered. Be that as it may, the constitution
bench decision having overruled the above decisions, we need not delve any
E
further on this aspect of this matter.

54. Therefore, since the service of the appellant was temporary in
nature; appointed under a scheme which had come to an end and he had
joined the service in complete recognition and acceptance of the conditions
and further had already accepted fresh assignment on the basis of a new F
scheme as noted herein earlier, it cannot be said that termination of his service
was invalid in law. Therefore, the stand of the appellant that it is not open
I._ to the Board of Governors of the Institution to say that they were unable to
continue with the EDC and thereby terminating the services of the appellant,
does not hold good.
G
55. The appellant, as noted herein earlier, was appointed on the basis
of the appointment letter and was paid on the basis of such appointment letter
till January, 2002. There is no dispute that the appellant was paid his salary
and other emoluments as permissible under the rules of the Institution up to
December 2001. Only the salary and other emoluments from the month of H
506 SUPREME COURT REPORTS [2007] 3 S.C.R.

A January 2002 was not paid. The order of tennination was passed on 28th
February 2002 in which one-month salary with allowances was to be paid in
lieu of the tennination order which was also not paid. As per the appointment
letter, the appellant was covered under the rules of the Institution and salary
was paid in accordance with the said rules applicable to the employees of the
B Institution. Since the appointment letter clearly indicates that the services of
the appellant shall be governed by the service rules of the employees of the
Institution, we do not find any reason why the appellant should not be paid
salary and other emoluments from January 2002 to March 2002. We accordingly
direct the authority of the Institution to pay salary and other emoluments from
January 2002 to March 2002 with all allowances pennissible under the Rules,
c if not paid in the meantime.

56. There is yet another aspect of this matter. A claim was made by the
appellant for reimbursement of his medical bills to the extent of Rs. 74,492/
-. Whether the appellant was entitled to get medical benefits or not, we have
D to look into the appointment letter of the appellant. From the appointment
letter it is clear that whatever benefits the employees of the Institution are
entitled to, the appellant is also entitled to such benefits. We have not been
shown by the appellant that either the Learned Single Judge of the High Court
or the Division Bench of the High Court had dealt with the claim of
reimbursement of the medical bill. In this view of the matter, we are unable
E to go into the question whether the employees of the Institution are eligible
to get medical reimbursement. We are thus not in a position to allow the
prayer. However, we leave it open to the appellant to claim reimbursement of
medical bill if he is entitled under the rules of the Institution allowing the
employees to claim reimbursement.

F 57. Fo: the reasons aforesaid, we do not find any merit in this appeal
excepting that the authority shall pay to the appellant the salary for the period
January 2002 to March 2002 with all emoluments pennissible under the service J
rules of the employees of the Institution within three months of the
communication of this judgment, if not paid in the meantime. Accordingly, the
G judgment of the Division Bench of the High Court is hereby affirmed subject
to the modifications made herein earlier. The appeal is accordingly disposed
of with no order as to costs.

V.S.S. Appeal disposed of.