Holding

Temporary employees appointed under a scheme whose purpose has ceased cannot be compelled by a writ of mandamus to continue in service, and the State’s bona‑fide decision to abolish such posts is lawful.

Summary

The Rajasthan Government created District Rural Development Agencies (DRDAs) as societies funded entirely by the State to implement various poverty‑alleviation schemes. Employees, including Class‑III and Class‑IV staff, were appointed on temporary six‑month contracts under the State Rural Development Agency Employees Service Regulation, 1983. In 1992, the State, after an expert committee review, abolished 273 posts across the DRDAs, terminating the employees. The petitioners challenged the terminations, arguing that the DRDAs were instrumentalities of the State, that they were entitled to regularisation, and that the DRDAs constituted an 'industry' under the Industrial Disputes Act. The Supreme Court held that the appointments were genuinely temporary, that the State’s decision to abolish the posts was a bona‑fide administrative action, and that a court cannot compel the employer to retain employees whose posts have ceased to exist. Consequently, the appeals were dismissed, affirming the High Court’s decision to reject the petitioners’ claims for regularisation.

Issues considered

The nature of employment under DRDAs: whether the employees were temporary or permanent.
Whether the DRDAs are instrumentalities of the State within the meaning of Article 12, making them amenable to writ jurisdiction.
Whether the DRDAs constitute an 'industry' under Section 2(j) of the Industrial Disputes Act, 1947, thereby invoking Section 25‑F protections.
Whether a writ of mandamus can be issued to compel continuation of employment after the abolition of temporary posts.

Legislation cited

Subjects

service lawtemporary employmentregularisationabolition of postswrit of mandamusDistrict Rural Development Agencystate fundingindustrial disputes actadministrative decision

Judgment

}

A RATENDRA AND OJ'HERS
).--
v.
STATE OF RATASTHAN AND OTHERS

FEBRUARY 5, 1999

B [SUJATA V. MANOHAR AND R.C. LAHOTI, JJ.]
~

Service Law .--Regularisation/Absorption : _,,

Temporary Posts-Project/Scheme coming to an e11d-No11- availability
of work/funds-f'osts abolished-Services tem1i11ated-Termi11atio11 chat-
c le11ged-Absorptio11/Regularisation claimed-Held, employer cannot by a writ
of mandamus be directed to continue employment of such terminated tern-
porary employees-{Rajasthan) State Rural Development Agency Employees
Service Regulation, 1983.

D Service law-Abolition of posts on need coming to an end-District
Rural Development Agencies implemellting government schemes-Agencies
having independellt entity-Complete funding by State Government-Govern-
ment abolishing certain posts in the agencies 011 the recommendation of an
Expert Committee-Agencies following government decision-Held, there is
nothing wrong in agencies having acted 011 the policy decision of the State
E Govemment.

The Government of Rajasthan introduced various programmes and
allied schemes for poverty elimination, employment generation, etc. in the
early eighties. These schemes brought into existence bodies known as
F District Rural Development Agencies (DRDAs) which were registered
under the Societies Registration Act, 1860. The main object of these
agencies was to plan and administer the area development programme --+--·
aimed at Integrated Rural Development and to implement these schemes
and other allied activities. The societies did not have funds of their own
and were completely funded by the State Government. Each District Rural
G Development Agency was an independent entity located in each district
with the District Collector as ex-officio Chairman and a Project Director
as the Chief Executive Officer. Subject to the allocation of funds by the
State of Rajasthan to each DRDA for implementation of particular >
scheme, persons including the petitioners were employed under the·
H schemes on various posts pursuant to the State Rural Development Agency
408
RAJENDRA v. STATE 409

Employees Service Regulation,1983. The appointments were made locally A
... ~
and seniority of the employees was also maintained on district basis. There
was no inter se seniority. The jobs were not interchangeable or transferable
from one DRDA to another. In the year 1992, the State Government looking
at the availability of funds took a decision to abolish certain posts in the
entire State of Rajasthan belonging to different DRDAs on the recommen·
dation of an Expert Committee appointed to review the various schemes.
B
This led to termination of several LDCs .and Class IV Employees (Peons)
by the Agencies .
..;-

Several petitions were filed before the High Court by such Class-III
and Class-IV employees. The principal grounds of challenge were that the c
petitioners having been appointed regularly against different posts, their
services could not have been terminated; the petitioners though outwardly
appointed in several societies were in fact the employees of the State
Government in as much as their salaries were being paid from the funds
made available by the State Government and that there were several
vacancies available with the State Government against which the
D
petitioners could have been accommodated and regularised; that the
DRDA was 'industry' within the meaning of Section 2(j) of the Industrial
Disputes Act, 1947 and the provisions of Section 25-F were not com}'lied
with; and the rule of 'last come • first go' was not followed.
E
Single Judge allowed the writ petition solely on the ground that
though the petitioners were employees of the DRDA Societies which were
independent bodies, the societies terminated the employment of the
petitioners at the behest of the State Government and without any applica-
tion Qf mind of their own. The single Judge left it open to the DRDAs
F
concerned to take decision afresh after proper application of micd; in the

·- event of the services of the employees of the DRDAs being still terminated,
the State Government was advised to consider the absorption of the
petitioners in various other departments if State Government by practice
was doing so. The State of Rajasthan as well as the Societies preferred writ
appeals challenging the judgment of the Single Judge which were allowed G
by Division Bench of the Rajasthan High Court.

...._ Against the Judgment of the Division Bench, the petitioners have
appealed to this Court. However the findings of Single Judge and the
Division Bench that (i) the DRDA Societies are instrumentalities of the H
410 SUPREME COURT REPORTS [1999] 1 S.C.R.
A State within the meaning of Article 12 of the Constitution and hence
amenable to writ jurisdiction of the High Court and (ii) DRDAs are not
'Industry' for the purpose of the Industrial Disputes Act, 1947 have not
been assailed in the present appeal.

Dismissing the appeals, the Court
B
HELD : 1. The appointments in question were made by the District
Rural Development Agencies. There is no material brought on record to
hold that the societies were merely a veil but the real employer was the
_State of Rajasthan. The appointment letters cleartr go to show that the
C petitioners were appointed as temporary LDCs/Class-IV employees for a
period of six months or the date of expiry of the posts whichever was
earlier. The foot- notes inserted in the letters of appointments stated that
the appointment was purely temporary and the services of the agency were
not transferable in any other department of the Government.

D 2. When the posts temporarily created for fulfilling the needs of a
particular project or scheme limited in its duration had come to an end
on account of the need of the project itself having come to an and either
because the project was fulfilled or had to be abandoned wholly or partially
for want of funds, the employer cannot by a writ of mandamus be directed
E to continue employing such employees as havP. been dislodged because
such a direction would amount to requisition for creation of posts not
required by the employer and funding such posts though the employer did
. not have the funds available for the purpose.

Delhi Development Horticulture Employees' Union v. Delhi Ad-
F ministration, Delhi and Others, AIR (1992) SC 789; Sandeep Kumar and
Others v. State of Uttar Pradesh and Others, AIR (1992) SC 713; State of
+_
Himachal Pradesh v.Ashwani Kumar and Others, JT (1996) 1 SC 214; State
of U.P. and Others v. U.P. Madhyamik Shiksha Parishad Shramik Sangh and
Another, AIR (1996) SC 708, relied on.
G 3. The decision taken by the respondent-State to abolish the posts
was a bonafide deci~ion taken after due application of mind by appointing
an Expert Committee which went deep into all relevant considerations and
made recommendations in the interest of rationalisation. The decision is
based on administrative and financial consideration. There is nothing
H wrong in the societies having acted on the policy decision of the State
RAJENDRA v. STATE [R.C. LAHOTI, J.) 411

Government. There was hardly anything left to be done by the DRDA A
Societies at their own end, in as much as the Societies did not have any
funds of their own independent of those made available by the State
Government to pay salaries attached with the posts.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5476-83
of 1998 Etc. B
From the Judgment and Order dated 1.4.97 of the Rajasthan High
Court in D.B.C.S.A. No. 467/97, 717/95, 725 and 730 of 1995.

V.A. Mohta and Kailash Vesdev for the Appellants.
c
Surya Kant for the Appellant Petitioner in C.A. Nos. 5484-94/98 and
W.P. No. 540/98.

Aruneshwar Gupta and S.N. Rath for the Respondents.

The Judgment of the Court was delivered by D

R.C. LAHOTI, J. In the early eighties, the Government of Rajasthan
introduced, various programmes and allied schemes for poverty elimination
employment generation etc. It brought into existence known as District
Rural Development Agencies (hereinafter referred to as 'DRDAs') E
registered under the Sections Registration Act, 1860. The main object of
these agencies was to plan and administer the area development
programme aiming at Integrated Rural Development. In the year 1992,
. these DRDAs were concerned with the following schemes:

Limit of Admn. Expenses F

(i) l.R.D.P. (Antyodaya) 10-15%

(ii) Desert Development Programme 5%

(iii) Jawahar Rozgar Yojna 2% G
(iv) Indira Avas Yojna 2%

(v) Apna Gaon Apana Kam 2%

(vi) Bio-gas Plants H
412 SUPREME COURT REPORTS [1999] 1 S.C.R.
A (vii) Development of women and Children
of Rural Areas.

2. The main object of the Agencies was to implement such Schemes
and to identify beneficiaries including small and marginal farmers, agricul-
B tural labourers and other persons eligible for assistance under these
Schemes. The agencies also co-ordinated execution of these plans for the
benefit of the identified participants through the existing agencies engaged
in this direction in the field whether private, public or co-operative. Each
District Rural Development Agency was an independent entity with a
District Collector as ex-officio Chairman and a project Director as the
C Chief Executive Officer.

3. There are 33 districts in the State of Rajasthan and as such there
were 33 DRDAs in the State with an ex-officio Chairman and a Project
Director. Subject to the allocation of the fund by the State of Rajasthan to
D each DRDA for implementation of particular scheme, persons were
employed on various posts pursuant to the State Rural Development
Agency Employees Service Regulation, 1983. Each DRDA was an inde-
pendent Agency located in each district. The appointments were made
locally and seniority of the employees was also maintained on district basis.
There was no inter se seniority. The jobs were not interchangeable or
E transferable from one DRDA to another. The services of the employees
strictly depended on funds made available to individual DRDA for im-
plementing its scheme for only a fixed administrative expenses were met
out of the same.

4. In the year 1992, looking to the availability of the funds, the
F
Government of Rajasthan took a decision to abolish 273 posts in the entire
State of Rajasthan belonging to different DRDAs. The DRDAs were
accordingly informed. This led to termination of several LDCs, and class-
IV (Peons). The petitioners in Civil Appeal Nos. 5476-83 of 1998 and Civil
Appeal Nos. 5484-5494 of 1998 are such Class-III and Class-IV employees.
G
5. Several petitions were filed before the High Court of Rajasthan
challenging such termination of the employees. The principal grounds of
challenge were that the petitioners having been appointed regularly against
different posts, their services could not have been so terminated un-
H ceremoniously; that the petitioners though outwardly appointed in several
RAJENDRA v. STATE [R.C. LAHOTI,J.] 413

societies were in fact the employees of the State Government inasmuch as A
their salaries were being paid from the funds made available by the State
Government and even if the need for such employment had come to an
end with the societies, there were several vacancies available with the State
Government against which the petitioners could have been accommodated
and regularized; that the DRDA was 'industry' within the meaning of · B
Section 2G) of the Industrial Disputes Act, 1947 and yet the provisions of
Section 25-F were not complied with an so the termination was bad; and
that the rule of 'last-come-first-go' was not followed.

6. The learned Single Judges before whom came up the petitions for
hearing allowed the same and several orders of termination were directed C
to be quashed. The State of Rajasthan, as well as the Societies preferred
Writ appeals which were heard by a Division B'ench and have been allowed
reversing the single bench decisions. The aggrieved petitioners have come
up to this court. The learned Single Judges and the Division Bench have
both held that the DRP-A Societies were instrumentalities of the State D
Within the meaning ·C:f Article 12 of the Constitution and hence amenable
to writ jurisdiction of the High Court. This finding has not been assailed
before this Court, being unnecessary in the submission of the learned
counsel for the State of Rajasthan, and hence we express no opinion
• thereon. So also neither the Single Judge nor the Division Bench has held E
the DRDA Society to be an 'Industry' for the purpose of the Industrial
Disputes Act, 1947. This finding is also not assailed before us.

7. A perusal of the judgments of the Learned Single Judges and the
Division Bench goes to show that the Learned Single Judge allowed the
___ ._,,.. writ petition Bench solely on the ground that though the petitioners were F
employees of the DRDA Societies which were independent bodies, the
decision to abolish the posts and consequently to terminate the employ-
ment of the petitioners was taken by the State Government which was
followed by the Societies without any application of mind of their own.
Inasmuch as the Societies terminated the employment of the petitioners at G
the behest of the State Government and not on their own, the decision was
vitiated. Having so set aside the orders of termination, the learned Single
Judge left it open to the DRDAs concerned to take decision afresh after
. properly applying mind to the financial and administrative aspects of the
case. In the event of the services of the employees of the DRDAs being H
t

414 . SUPREMECOURTREPORTS (1999) 1 S.C.R .

A terminated after following the directions of the High Court, the State
Government was advised to consider the absorption of the petitioners in
various other departments if State Government by practice was doing so.
The Division Bench has differed with the Learned Single Judges and
therefore set aside their decisions.
B 8. Having heard the learned counsel for the parties, we are of the
opinion that these appeals are wholly devoid of any merit and hence are
liable to be dismissed. It is not disputed that the employment was given to
the petitioners under various schemes framed by the State of Rajasthan
and entrusted to the DRDA Societies for implementation. The societies
C did not have any funds of their own. The funding was hundred percent by
the State of Rajasthan. One Rajender Jain Committee was constituted in
the year 1992 to review seve!'lll decisions taken regarding various schemes
of S.S. and I.R.D. which recommended that out the then 1339 posts in the
DRDAs under various schemes, 338 posts needed to be abolished and 112
D new posts deserved to be provided under various schemes. The 338
abolished posts included 19 posts of UDCs, 43 posts of LDCs, and 24 posts
of Class-IV. The newly created 112 posts did not include any posts of
UDCs, LDCs and Class-IV. . ~

E 9. Several appointment letters filed on behalf of the petitioners
themselves go to show that the appointments were made by District Rural
Development Agencies. There is no material brought on record to hold
that the societies were merely a veil but the real employer was the State of
Rajasthan. The appointment letters clearly go to show that the petitioners
were appointed as temporary LDCs/Class-IV employees for a period of six
F months or date of expiry of the posts whichever was earlier. The foot-notes
inserted in the letters of appointment stated that the appointment ~as
purely temporary and the services of the agency were not transferable in
any other department of the Government though the period of appoint-
ment would be extended after putting in satisfactory service during the
G period of initial appointment i.e. six months. Such appointments were
extended from time to time but on similar terms and conditions. Inasmuch
as the need for the work was partially over and the Government was finding
it difficult to provide funds for administrative expenses which it found to
be non-productive and unnecessary, an expert committee was appointed to
H review the situation. Decision for abolition of posts was taken consistently
RAJENDRA v. STATE [R.C. LAHOTI, J.] 415
with the findings and recommendations of such committee. A
.> - 10. In our opinion, the decision of this Court in Delhi Development
Horticulture Employees' Union v. Delhi Administration, Delhi and Others,
AIR (1992) SC 789 clinches the issue. It was a case of a temporary
employment provided to the petitioners therein under Jawaharlal Nehru
Rozgar Y ojna. It was held that the right to livelihood was found not
B
feasible to be incorporated as a fundamental right in the Constitution and
therefore the employment was also not guaranteed under the constitutional
scheme. Employment schemes were brought into being consistently with
the limited resources available at the disposal of the State. It was further
held: c
"To get an employment under such scheme and to claim on the
basis of the said employment, a right to regularisation is to frustrate
the scheme itself. No Court can be a party to such exercise. It is
wrong to approach the problems of those employed under such D
schemes with a view to providing them with full employment and
guaranteeing equal pay for equal work. These concepts, in the
context of such schemes are both unwarranted and misplaced.
They will do more harm than good by depriving the many of the
little income that they may get to keep them from starvation. They
would benefit a few at the cost of the many starving poor for whom E
the schemes are meant. That would also force the State to wind
up the existing schemes and forbid them from introducing the new
ones, for want of resources. This is not to say that the problems
of the unemployed deserve no consideration or sympathy. This is
only to emphasise that even among the unemployed a distinction p
exists between those who live below and above the poverty line,
those in need of partial and those in need of full employment, the
educated and uneducated, the rural and urban unemployed etc."

11. In Sandeep Kumar and Others v. State of UttarPradesh and others,
AIR (1992) SC 713 there were employees working on project of slum G
clearance. The project was for a particular purpose and there was no
permanent need for work. The employment having been brought to an end
and the terminations having been subjected to challenge, it was held that
a direction as to regularisation of services of such employees could not be
given. In State of Himachal Pradesh v. Ashwani Kumar and Others, JT H
416 SUPREME COURT REPORTS [1999] 1 S.C.R.
A (1996) 1 S.C. 214 a project had to be closed down for non-availability of
funds. It was held that a direction to regularise the displaced employees of
the project could not be given because such direction would amount to
creating posts and continuing them in "spite of non-availability of work. So
is the view taken in State of U.P. and Others v. U.P. Madhyc,.1ik Shiksha
B Parishad Shramik Sangh and Another, AIR (1996) SC 708.

12. In the cases at hand, on Special Leave Petitions being filed, by
interim orders passed by this Court the employment of the petitioners was
protected and they were continued in service. In its concern for the
employees, the court directed the State of Rajasthan to examine the
C possibility of absorption of the petitioners if necessary by shifting them to
other DRDAs and to indicate a scheme/roster for absorption/appointment.
The court also at one stage adjourned the hearing in these matters to
enable the respondent-State to frame a scheme, if any, so as to absorb the
petitioners. An additional affidavit has been filed on behalf of respondent-
D State on 6.10.98 setting out the relevant facts and circumstances and
explaining why the posts earlier held by the petitioners were abolished and
how and why presently there were no costs available against which the
petitioners could be accommodated or absorbed. However, at the end, the
respondent-State has made a statement (vide para 9 of the affidavit dated
E 6.10.1998) which reads as under :

"In View of the facts mentioned above and after evaluating the
fact that the number of person working are already in excess to
the posts existing in the DRDAs in the above mentioned
categories, it is submitted that there is no scope of adjusting/ab-
F
sorbing persons for the present, however in case if additional posts
are' created in future due to some new schemes/programmes, the
petitioners and similarly situated persons can be given preference
3.ccording to their seniority subject to eligibility after giving relaxa-
tion of age."
G
13. In our opinion, when the posts temporarily created for fulfilling
the needs of a particular project or scheme limited in its duration come to
an end on account of the need for the project itself having come to an end
either because the project was fulfilled or had to be abandoned wholly or
H partially for want of funds, the employer cannot by a writ of mandamus be
-1"

RAJENDRA v. STATE [R.C. LAHOTI, J.] 417

.. . directed to continue employing such employees as have been dislodged
because such a direction would amount to requisition for creation of posts
A
~ - though not required by the employer and funding such posts though the
employer did not have the funds available for the purpose. The decision
taken by the respondent-State to abolish the posts was a bona fide decision
taken after due application of mind by appointing an Expert Committee
which went deep into all relevant considerations and made recommenda-
B
tions in the interest of rationalization. The decision is based on administra-
* tive and financial considerations. There is nothing \\-Tong in the societies
having acted on the policy decision of the State Government. Really
speaking there was hardly anything left to be done by the DRDA societies
at their own end. Inasmuch as the societies did not have any funds of their c
own independent of those made available by the State Government how
could the societies have continued with the posts and the incumbents
thereon though they were left with no means to pay salaries attaching with
the posts.

D
14. An attempt was made by the petitioners to bring in some new
material on record to raise a plea that a few years after the 'abolition of
the posts, the respondents have opened new avenues of employment where
against the petitioners could be accommodated. The respondents have
disputed such stand taken on behalf of the petitioners. We find it difficult
to entertain such plea taken at this stage and sustain the same when no E
reliable material has been placed before us to uphold such plea of the
petitioners. In fact a similar attempt was made before the Division Bench
also by the petitioners moving an application for review of the judgment of
the Division Bench but the review petition was dismissed by the Division
Bench forming on opinion that a new plea was not open for consideration F
in review jurisdiction of the court and if at all there was any substance in
such plea of the petitioners then it provided a new cause of action enabling
the petitioners to file a fresh petition. In our opinion, the Division Bench
was right in taking the view which it did. From the affidavit filed on behalf
of State of Rajasthan and the figures placed before us in the form of a
tabular statement we are satisfied that the State has already made effort at G
accommodating dislodged employees of one DRDA in other DRDAs as
, _.. far as possible. There are no transferees/deputationists from Government
"'· occupying posts meant for LDCs or Class-IV in DRDAs and therefore the
petitioners' plea that they may be accommodated by repatriating such
governmental employees has no merit and no foundation. H
418 SUPREME COURT REPORTS [1999] 1 S.C.R.

A 15. We do not find any reason to interfere with the well considered .....
judgment of the Division Bench of the High Court. In our opinion, these
appeals are liable to be dismissed and are dismissed accordingly subject to
the observation that the petitioners must feel satisfied with the stand taken
by the State Government in the affidavit dated 6.10.1998 filed on its behalf,
the relevant extract wherefrom has been re-produced in para 12 above.
B Subject to this observation C.A. 5476-83 of 1998 and CA 5484-94 of 1988
are dismissed.

16. Writ Petition (Civil) No. 540 of 1998 was filed by Rafiq Ahmad
and others who were working as bio-gas mistry Grade-II under DRDAs
C and their employment was also terminated consequent upon a decision
taken to abolish the posts of Bio-Gas Mistries Grade-II. This writ petition
was simply retained for hearing with the appeals dealt with hereinabove.
As we have found the petitioners in the civil appeals not entitled to any
relief, for the same reasons the petitioners in Writ Petition (C) No. 540 of
1998 also· are held not entitled to any relief. The petition is dismissed
D subject to the observation that in the event of any additional posts being
created in future due to some new schemes/programmes being introduced,
the petitioners herein may be given preference according to their seniority
subject to eligibility after giving relaxation of age in view of the service so
far rendered by each one of them in the DRDAs.
E A.KT. Appeals and Petition dismissed.