Holding

Appointments made in violation of the U.P. Nagar Mahapalika Adhiniyam are void, and therefore reinstatement cannot be ordered; the appropriate relief is compensation of Rs 30,000 per workman.

Summary

The Uttar Pradesh Municipal Corporation (Nagar Mahapalika) appointed several workers as apprentices on an ad‑hoc basis before the State sanctioned the temporary posts for which they were purportedly hired. After the sanctioned period ended, the workers were terminated. The Labour Court held that, because they had worked more than 240 days, their termination violated Section 6‑N of the U.P. Industrial Disputes Act and ordered their reinstatement. The High Court stayed the award, reinstated the workers, and later dismissed the corporation’s writ petition on the ground that the workers had already been reinstated and had completed 240 days of service. The Supreme Court held that the appointments were made in breach of the U.P. Nagar Mahapalika Adhiniyam, 1959 and were therefore void; consequently, reinstatement could not be ordered. While non‑compliance with Section 6‑N may merit reinstatement, it is not automatic, and in these facts compensation of Rs 30,000 per worker was the appropriate relief. The Court set aside the Labour Court award and allowed the appeal in part, directing payment of compensation.

Issues considered

Whether the ad‑hoc appointments of the workers as apprentices complied with the procedural requirements of the U.P. Nagar Mahapalika Adhiniyam, 1959.
Whether the termination of the workers violated Section 6‑N of the U.P. Industrial Disputes Act, given their service of more than 240 days.
Whether the Labour Court’s order of reinstatement was appropriate despite the void nature of the appointments.
Whether the High Court erred in dismissing the writ petition without addressing the merits of the case.
What relief—reinstatement or compensation—is warranted under the circumstances.

Legislation cited

U.P. Industrial Disputes Acts. 6-N
U.P. Nagar Mahapalika Adhiniyam, 1959s. 106, s. 107, s. 108, s. 109, s. 111, s. 112-A

Subjects

ad‑hoc appointmentvoid appointmentU.P. Nagar Mahapalika AdhiniyamSection 6‑NIndustrial Disputes Actreinstatementcompensationlabour court awardhigh court writ petitionpublic sector recruitmentapprenticeship

Judgment

NAGAR MAHAPALIKA (NOW MUNICIPAL CORPN.) A
v.
STATEOFU.P. AND ORS.

MAY 2, 2006

[S.B. SINHA AND P.K. BALASUBRAMANYAN, JJ.] B

UP. Industrial Disputes Act-Section 6N-U.P. Nagar Mahapalika
Adhyiniyam, 1959-Ad-hoc appointments of workmen made by Municipal
Corporation-Sanction of posts by State made later for ad-hoc appointments C
for a particular period-Termination of workmen on completion of the
sanctioned period-labour Court directed reinstatement of workmen holding
that the termination of workmen is violative of the provisions of the Act as
they had worked, for more than 240 days continuousf;.~High Court, in Writ
Petition, by an interim order, granted stay of the operation of the labour
Court award subject to the condition of reinstatement of workmen till the D
final disposal of the Pelition-High Courl final(v dismissed the Writ Petition
on the ground that the workmen worked for more than 240 days and that
they had been working for past so many years pursuant to its interim order-
Correclness of-Held, ad-hoc appointmenl of the workmen were made in
violation of the provisions of the Adhiniyam and hence the appointments are E
void-Interim Order is subject to .final order after hearing on merits and
hence dismissal of Writ Petition by the High Court without going into merits
on the ground that they were working pursuant to the interim order is
erroneous-Workmen cannot be directed to continue their services since the
work for which the ad hoc appointments were made ceased to exist-Directions
to pay compensation to workmen on termination in the interest of justice. F
Appellant-Municipal Corporation, constituted and governed by U.P.
Nagar Mahapalika Adhiniyam, 1959 appointed respondents as apprentices on
ad-hoc basis. Later, the State sanctioned some temporary posts for ad-hoc
appointments for a particular period. The services of the respondents were
terminated on the completion of the period. The respondents challenged the G
justification and legality of their termination. On reference by the State, the
Labour Court held that the termination of the respondents is violative of the
. provisions of section 6N of the U.P. Industrial Disputes Act since they had
worked for more than 240 days and hence passed an award directing the
681 H
682 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A appellant to reinstate the workmen in service. The appellant filed a Writ
Petition before High Court challenging the award. The High Court, by an
interim order, stayed the operation of the Labour Court award subject to the
condition that respondents are reinstated and paid their full salary from the
date of the award. The High Court finally dismissed the Writ Petition on the
B ground that the workmen have completed 240 days of continuous service and
that they had been working for past 14 years pursuant to the interim order
by the High Court.

Partly allowing the appeals, the Court

HELD: I.I. The officers of the local-self government, at their own whims
c and caprice, have made appointments without following the procedures laid
down under the U.P. Nagar Mahapalika Adhiniyam, 1959. The Administrator
of Municipal of a Municipal Corporation, who is a public servant, was bound
to follow the provisions of the Adhiniyam and the Rules. The respondents could
not be appointed even prior to creation of the temporary posts by the State.
O The offers of appointment precede the order of sanction. The respondents,
although purported to have been appointed as apprentices, were appointed as
clerks on daily wages in Tax Assessment Department Evidently, the provisions
of the Apprentice Act, 1961 have also not been followed. [687-D, E, Fl

1.2. The High Court exercised its discretion in not granting an interim
E relief in favour of the appellant. In view of the refusal on the part of the High
Court to grant an interim relief as was prayed for by the appellant, the appellant
implemented the award pending the appeal which can only be subject to appeal,
that would not mean that the High Court would not or should not go into the
merit of the matter. In fact, it is the duty of the High Court to consider the
F Writ Petition on merits. The Respondents might have continued in service
for more than 14 years only because the High Court did not pass any interim
order, but the same, should not have formed the basis for making the interim
order absolute or for non-consideration of the merit of the matter.
[688-D, E, F[

G 1.3. Non-compliance of the provisions of Section 6-N of the U.P. Industrial
Disputes Act may lead to the grant of a relied of reinstatement with full
backwages and continuity of service in favour of the retrenched workmen but
the same would not mean that such a relief is to be granted automatically or
as a matter of course. The Labour Court, in its award, did not take into
consideration the relevant facts for exercise of its discretion in granting the
H relief. The appointments of the respondents have been made in violation of

'
NAGARMAHAPALIKA(NOW MUNICIPALCORPN.)v. STATEOFU.P. [S.B. SINHA,!.] 683

the provisions of the 'Adhiniyam. An appointment made in violation of the A
provisions of Adhiniyam is void. The same, however, although would not mean
that the provisions of the lildustrial Disputes Act are not required to be taken
into consideration for the purpose of determination of the question as to
whether the termination of workmen from services is legal or not, but the
same should have to be considered to be an important factor in the matter of B
grant of relief. The Municipal Corporation deals with public money. The
appointments of the respondents were made for carrying out the work of
assessment. Their services, thus, should not have been directed to be continued
despite the requirements therefor having come to an end. It is, therefore not
a case where the relief of reinstatement should have been granted.
1688-G-H; 689-B-C-D) C
State of Karnataka and Ors. v. Umadevi and Ors., (2006) 4 SCALE 197
CB; Branch Manager, MP. State Agro Industries Development Corpn. ltd.
and Anr. v. Shri S.C. Pandey, (2006) 2 SCALE 619; S.M. Ni/ajkar and Ors. v.
Telecom District Manager Karnataka, 12003] 4 SCC 27 and Executive
Engineer, ZP Engg. Divn. and Anr. v. Digambara Rao and Ors., 1200418 SCC D
262 referred to.

1.4. The provisions of Section 6-N of the U.P. Industrial Disputes Act
have not been complied with. Instead in and in place of issuing a direction for
reinstatement of service, interest of justice shall be sub-served if compensation
of Rs. 30,000 per person is directed to be paid. The respondents would be E
entitled to wages and other remunerations in terms of the interim order passed
by the High Court so long they have actually worked.1691-D, El

CIVIL ORIGINAL JURISDICTION: Civil Appeal No. 2411 of2006.

From the Judgment/Order dated 22.4.2004 of the High Court of Judicature p
at Allahabad in Civil Misc. Writ Petition No. 7279of1989.

D.K. Singh, Amit Mishra and Abhijit Sengupta for the Appellant.

D.K. Agarwal, Sudhir Kumar Gupta, Anurag Pandey and K.K. Tiwari for
the Respondents.
G
The Judgment of the Court was delivered by

S.B. SINHA, J. Leave granted.

The Appellant herein is a Municipal Corporation. It was constituted
under the U.P. Nagar Mahapalika Adhiniyam, 1959 (for short, "the Adhiniyam"). H
684 SUPREME COURT REPORTS (2006] SUPP. I S.C.R.

A For the purpose of recruitment of employees, the procedures laid down
in the Adhiniyam under which it was constituted and the rules framed
thereunder were required to be complied with by the Appellant. The
appointments of the Respondents indisputably were not made in terms of the
statute. They were appointed as apprentices by the Administrator of the
B Municipality by an order dated 11.12.1985.

The Government of Uttar Pradesh created 39 posts for Quinquennial
Assessment of tax upto 31st March, 1986 or till the time the same were
abolished in the scales of pay enumerated therein which was communicated
to the Administration by a letter dated 19.12.1985 subject to the following
C conditions:

"3. Only ud-hoc appointments are to be made on the aforesaid posts
and if there is no work, or if there is no requirement even before the
sanctioned period.

4. After 31 s: March, 1986, all the above posts shall be abolished
D compulsorily and the appointments should not be extended beyond
that period on any condition.'·

The following facts are not in dispute. The Respondents were appointed
on an adhoc basis purported to be as apprentices on payment of apprentice
E allowance at the rate of Rs. 230/- per month by an order dated 20th October,
1984. Order of sanction for creation of some temporary posts was issued by
the State of Uttar Pradesh which was the competent authority therefore, only
on 19.12.1985. The Respondents, however, were appointed as apprentices in
the Assessment Department by orders of the Administrator dated 5.11.1985
and 6.12.1985 wherefor an office order was issued on I 1.12.1985.
F
The tenure of the services of the Respondents came to an end with
effect frorr. 31.12.1986. On or about 4.2.1987, they filed an application before
the Concilliation Officer, Allahabad questioning the validity or otherwise of
the said order of termination. However, the State of Uttar Pradesh made a
reference of the following dispute for adjudication by the Labour Court.
G Allahabad by a notification dated 26.8.1987 in respect of the Respondent Ram
Chandra Gupta:

"Whether termination of the service of Shri Ram Chandra Gupta, son
of Shri Mithai Lal from the post of clerk by the employer w.e.f.
31.12.1986 is justified and legal? If not, to what benefit/ relief. the
H
NAGAR MAHAPALIKA(NOW MUNICIPALCORPN.)v. STATEOFU.P. [S.B. SINHA,J.] 685

workman concerned is entitled to r~ceive and with details thereof?" A
Similar references were made with regard to the other respondents also.
By an award dated 30th November, 1998, the Labour Court arrived at a finding
that all th.: workmen had worked for more than 240 days during the period
5.11.1985 and 31.12.1986 and as their services had been terminated in violation
of the provisions of Section 6-N of the U.P. Industrial Disputes Act, the B
termination of their services was illegal. The Appellant was consequently
directed to reinstate them in service. Aggrieved by and dissatisfied with the
said award, a writ petition was filed by the Appellant before the Allahabad
High Court which was marked as CMWP No. 7279 of 1989 wherein the
following judgment and order came to be passed: C
"l have heard the Ld. Counsels for the parties. During the pendency
of the Writ Petition, the operation of the impugned award shall remain
stayed subject to the condition that workmen are reinstated and are
paid their full salary from the date of the award within two months
from today. In addition, the Petitioner shall also deposit half of the D
arrears of pay and allowances, which can be withdrawn by workmen
on adequate security. In case, these conditions are not complied with,
this stay order shall automatically stand vacated."

We may hereinafter notice some relevant provisions of the Adhiniyam.
E
Sub-clause (2) of Section I06 of the Adhiniyam provides that qualification
of a person to be appointed to the post created under sub-clause (I) thereof
shall be such as may be prescribed by the State Government. Section I07 of
the Adhiniyam deals with the appointment to the post. Section I08 of the
Adhiniyam provides that notwithstanding anything contained in Section 107,
officiating and temporary appointments to posts mentioned in sub-sections F
(1), (2) and (3) thereof may be made by the appointing authorities specified
in those sub-sections without consulting the State Public Service Commission
or obtaining the recommendations of the Selection Committee but no such
appointment shall continue beyond the period of one year or shall be made
where it is expected to last for more than a year without consulting the State G
Public Service Commission or otherwise than in accordance with the
recommendations of the Selection Committee, as the case may be.

Section 109 of the Adhiniyam provides that the emoluments and other
conditions of services of officers, staff and other servants of the Nagar
Mahapalika shall be such as may be prescribed by the State Government. H
686 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A Section 111 of the Adhiniyam confers power on the State Government to make
appointments where any authority specified in Section I07 fails within a
reasonable time to make appointment to any post specified in Section I06 or
created thereunder.

Section 112-A of the Adhiniyam reads as under:
B
(I) Notwithstanding anything contained in Sections 106 to 110 the
State Government may at any time by rule provide for one or
more services of such officers and servants as the State
Government may deem fit common to the Mahapalikas or to the
Municipal Board, Jal Sansthan of the State.
c (2) that when any such service is created, officers and servants
serving on the post included in the service as well as the officers
and servants performing duties and functions of those posts
under sub-clause (I) of clause (ee) of Section 577 may if found
suitable be absorbed in the service provisionally or finally and
D the services of others shall stand determined in the prescribed
manner.
(3) That without prejudice to the generality of the provision of sub-
sections (1) and (2) such rule may also provide for consultation
with the State Public Service Commission in respect of any of the
E matters referred to in the said sub-section.

Before the High Court, a contention was raised that appointment of the
Respondents being for a fixed period as envisaged under Section 2(oo )(bb)
of the Industrial Disputes Act, 194 7 and furthermore in view of the fact that
their appointments being governed by the provisions of the U.P. Municipal
F Corporation Adhiniyam, 1959, the award of reinstatement was unwarranted in
law.

It was furthermore urged that in any event, the said Respondents
having been appointed only on an adhoc basis and not in terms of the
provisions of the said Adhiniyam and the rules framed thereunder, had no
G legal right to continue in service. Moreover, they having been appointed on
daily wages, their disengagement from services cannot be construed to be
'retrenchment' under the provisions of the U.P. Industrial Disputes Act.

The High Court, however, did not go into the aforementioned questions
H at all. The High Court dismissed the said writ petition only on the premise
NAGARMAHAPALIKA(NOW MUNICIPALCORPN.)1·. STATEOFU.P. [S.B. SINHA,J.] 687

that the workmen having completed 240 days of continuous service and as A
they had been reinstated in service pursuant to the interim order passed by
the High Court, it would not be appropriate to displace the workmen from
employment and to offer other reliefs, particularly, when a relief of reinstatement
can be. granted for violation of the provisions of Section 6-N of the Act in
view of the decision of this Court in Hindustan Tin Works Pvt. ltd. v. B
Employees of Mis Hindustan Tin Works Pvt ltd. and Ors., [ 1979] 2 SCC 80:
AIR 1979 SC 75. However, they were directed to be paid 50% of the backwages.

The learned counsel appearing on behalf of the Appellant would contend
that having regard to the nature of appointment, the impugned award could
not have been passed. The learned counsel appearing on behalf of the C
Respondent, on the other hand, would support the impugned award.

This is one of those cases which clearly depict as to how the officers
of the local-self government at their own whims and caprice have been making
appointments without following the procedures laid down under the Adhiniyam.
The Administrator of a Municipal Corporation is a public servant. He was D
bound to follow the provisions of the Adhiniyam and the Rules. It is surprising
how the Respondents could be appointed even prior to creation of the
temporary posts by the State. The Appointing Authority has now taken a
stand that the Respondents had been appointed in terms of the order of
sanction dated 19.12.1985. The offers of appointment, precede the said date. E
The Respondents although purported to have been appointed as apprentices,
were appointed as clerks on daily wages in the Assessment Department.
Evidently, the provisions of the Apprentice Act, 1961 have also not been
followed. The officers appeared to be absolutely ignorant of the provisions
of the said Act. They even do not know how offers of appointment should F
be issued.

This Court in a large number of decisions has expressed its concern on
how and in what manner appointments on daily basis or by way of ad hoc
arrangement are made in flagrant violations of constitutional provisions
enshrined under Articles 14 and 16 of the Constitution of India and/ or the G
statutory recruitment rules. This Court has also been noticing that the State
... or the public sector undertakings or the local self governments themselves
are making all endeavours to regularise the services of such employees who
have entered the services through the backdoor. The Industrial Tribunals, in
some cases the High Courts also, had been generous enough to direct H
regularisation for the services of such workmen without proper application of
688 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A mind.
Recently, a Constitution Bench of this Court has held that such
appointments being contrary to the provisions of Articles 14 and 16 of the
Constitution of India are illegal. [See Secy., State of Karna/aka & Ors. v.
B Umadevi & Ors.. (2006) 4 SCALE 197].

It is, however, difficult for us to accept that the Respondent have been
appointed on temporary basis pursuant to the said GO dated 9.12.1985 or
such appointments were made for a fixed tenure within the meaning of the
provisions of sub-clause (bb) of clause (oo) of Section 2 of the Industrial
C Disputes Act.

We, however, do not agree with the High Court that as by way of an
interim order the award was directed to be implemented, the same should itself
form the basis for dismissing the writ petition.

D The High Court exercised its discretion in not granting an interim relief
in favour of the Appellant. In view of the refusal on rhe part of the High Court
to grant an interim relief as was prayed for by the Appellant, the Appellant
implemented the award pending the appeal which can only be subject to
appeal, that would not mean that the High Court would not or should not go
E into the merit of the matter. In fact it is the duty of the High Court to consider
the appeal on merits. It is unfortunate that the writ petition filed in the year
1989 has been disposed of in 2004 but the Appellants cannot be blamed
therefor. The Respondents might have continued in service for more than 14
years only because the High Court did not pass any interim order, but the
same, in our opinion, should not have formed the basis for making the interim
F order absolute or for non-consideration of the merit of the matter.

In our opinion, the High Court did not adopt a correct approach in the
matter.

Non-compliance of the provisions of Section 6-N of the U.P. Industrial
G Disputes Act, although, may lead to tne grant of a relief of reinstatement with
full backwages and continuity of service in favour of the retrenched workmen,
the same would not mean that such a relief is to be granted automatically or ..
as a matter of course.

The Labour Court in its award did not take into consideration the
H
relevant facts for exercise of its discretion in granting the relief.
NAGARMAHAPALIKA(NOW MUNICIPALCORPN.)1·. STATEOFUP. [S.B. SINHA, J.] 689

It is now well-settled, by reason of a catena of decisions of this Co wt, A
that only because the Labour Court may grant the relief of reinstatement with
fu II backwages, the same shou Id be granted as a matter of course. The
Appellant herein has clearly stated that the appointments of the Respondents
have been made in violation of the provisions of the Adhiniyam. An
appointment made in violation of the provisions of Adhiniyam is void. The B
same, however, although would not mean that the provisions of the Industrial
Disputes Act are not required to be taken into consideration for the purpose
of determination of the question as to whether the termination of workmen
from services is legal or not but the same should have to be considered to
be an important factor in the matter of grant of relief. The Municipal Corporation
deals ·with public money. Appointments of the Respondents were made for C
carrying out the work of assessment. Such assessments are done periodically.
Their services, thus, should not have been directed to be continued despite
the requirements therefor having come to an end. It is, therefore, in our
considered view, not a case where the relief of reinstatement should have
been granted.
D
In Branch Manager, M.P. State Agro Industries Development Corpn.
Ltd. & Anr. v. Shri S.C. Pandey, (2006) 2 SCALE 619, it is stated:

"The Industrial Court as also the High Court applied the principles of
estoppel on the finding that the respondent was transferred from
Morena to Gwalior. If his appointment was void, being contrary to E
regulations, in our opinion, the procedural provisions like estoppel or
waiver were not applicable. If an appointment made by the Branch
Manager was wholly without jurisdiction, the order of appointment
itself was void. Furthermore, the contention of the appellant had been
that in terms of Regulation 16of1976 Regulations only the Managing F
Director of the Corporation could issue an offer of appointment. It has
not been found by the Industrial Courts or the High Court that the
Branch Manager and the Regional Manager were authorized to make
such appointments. The appointment of the respondent, thus, must
be held to have been made only to meet the exigencies of services and
not in terms of the service regulations. The appointment of the G
Respondent, thus, could not have been made for filling up a regular
vacancy for the purpose of invoking Rule 2 of the Standing Orders.

However, it has not been contended that the services of the
respondent were not governed by the provisions of the Industrial
H
690 SUPREME COURT REPORTS [2006] SUPP. I S.C.R.

A Disputes Act. He worked from 16.9.1985 to 19.5.1987. He must have,
thus, completed 240 days of service. The termination of his services
without complying with the provisions of Section 25F of the Industrial
Disputes Act was, thus, illegal. He, however, had unjustly been
directed to continue in service by reason of an interim order. He has
been continuing in service pursuant thereto.
B
The appellant, in our opinion, cannot be made to suffer owing to
a mistake on the part of the court. The respondent also cannot take
advantage of a wrong order.

In the peculiar facts and circumstances of the case, we, therefore,
C of the opinion that interest of justice would be sub-served if, in place
of directing reinstatement of the services of the respondent, the
appellant is directed to pay a sum of Rs. I0,000/- by way of
compensation to him. It is directed accordingly. The orders under
challenge are set aside. The appeal is allowed with the aforementioned
directions and observations."
D
The learned counsel appearing on behalf of the Respondents has
strongly relied upon a decision of this in S.M. Ni/ajkar and Ors. v. Telecom
District Manager. Karnataka, [2003) 4 SCC 27 wherein this Court was
considering the question as to whether the interpretation of the expression
E "the termination by the employer of the service of a workman for any reason
whatsoever" has been employed by the Parliament while defining the term
"retrenchment". It was held:

"12. "Retrenchment" in its ordinary connotation is discharge of labour
as surplus though the business or work itself is continued. It is well
F settled by a catena of decisions that labour laws being beneficial
pieces of legislation are to be interpreted in favour of the beneficiaries
in case of doubt or where it is possible to take two views of a
provision. It is also well settled that Parliament has employed the
expression "the termination by the employer of the service of a workman
for any reason whatsoever" while defining the term "retrenchment",
G which is suggestive of the legislative intent to assign the term
"retrenchment" a meaning wider than what it is understood to have
in common parlance. There are four exceptions carved out of the
artificially extended meaning of the term "retrenchment", and therefore,
termination of service of a workman so long as it is attributable to the
H act of the employer would fall within the meaning of "retrenchment"
NAGARMAHAPALIKA(NOW MUNICIPAL CORPN.)v. STATEOFU.P. [S.B. SINHA,J.] 691

dehors the reason for tennination. To be excepted from within the A
meaning of "retrenchment" the tennination of service must fall within
one of the four excepted categories. A tennination of service which
does not fall within categories (a), (b), (bb) and (c) would fall within
the meaning of "retrenchment"."

In Nilajkar (supra), this Court cannot be said to have laid down a law B
having universal application. In that case also backwages had been denied
by the learned Single Judge of the High Court which order was held to be
just and reasonable. Therein, the question which arose was whether in fact
the Appellants therein were appointed in a project work.

The said decision has been distinguished by this Court in various C
decisions including Executive Engineer, ZP Engg. Divn. and Anr. v.
Digambara Rao and Ors., [2004] 8 SCC 262 which in tum has been followed
in a large number of decisions.

However, there cannot be any dispute that provisions of Section 6-N D
of the U.P. Industrial Disputes Act have not been complied with. We are,
however, of the opinion that in stead and in place of issuing a direction for
reinstatement of service, interests ·of justice shall be sub-served if
compensation of Rs.30,000/- per person is directed to be paid.

It goes without saying that the Respondents would be entitled to wages E
and other remunerations in terms of the interim order passed by the High
Court so long they have actually worked. We, furthennore, hope and trust
that in all future appointments, the Appellant shall strictly follow the provisions
of the Adhiniyam and the Rules.

The Appeal is allowed in part and to the extent mentioned hereinbefore. F
No costs.

B.S. Appeal partly allowed.