Holding

Contract teachers' service does not count for future service and Rule 41A is inapplicable; the Tribunal's view is overruled.

Summary

The State of Karnataka appointed certain teachers on a one‑year contract under the 1983 Special Recruitment Rules, paying them a salary lower than the minimum pay‑scale and expressly stating that their service would not count for future government service. After regular recruitment, these contract teachers were absorbed under the 1990 Absorption Rules, which fixed their basic pay as if they had been regular candidates but denied any arrears. The teachers approached the Karnataka Administrative Tribunal seeking to be treated as "local candidates" and to receive benefits under Rule 41A of the Karnataka Civil Services Rules, relying on the Tribunal's earlier decision in Parameshwarappa's case. The Supreme Court held that the contract appointments were precarious, their service was not to be counted, and therefore Rule 41A could not be invoked; it overruled the Tribunal and High Court decisions. The Court allowed the State's appeals, setting aside the earlier orders, but directed that any emoluments already paid under those orders not be recovered.

Issues considered

Whether teachers appointed on contract under the 1983 Special Recruitment Rules can be treated as "local candidates" for the purpose of Rule 41A of the Karnataka Civil Services Rules upon absorption.
Whether the Tribunal's reliance on Parameshwarappa's case to grant such benefits is legally valid.
Whether contract teachers are entitled to arrears of salary for the period of their contract service.

Legislation cited

Constitution of Indias. Article 309 (proviso)

Subjects

contract appointmentabsorptionlocal candidateRule 41AKarnataka Civil Services Rulesservice tenurepay scalearrears of salaryadministrative tribunalservice law

Judgment

A STATE OF KARNATAKA AND ORS.
v.
G. HALAPPA AND ORS.

. APRIL 26, 2002 -
B (S. RAJENDRA BABU AND P. VENKATARAMA REDDI, JJ.]

Service Law :

Karnataka Education Department Services (Recruitment to Secondary
C School Assistant Grade-II Cadre and Physical Education Teachers Grade-I)
(Special Recruitment) Rules, 1983 :

Appointments-On contract basis-Till regular incumbent selected and
reports on duty-Salary less than the minimum of Pay Scale-Service not
D counted for the purpose offurther service in Government-Analogy between
the contract employees and local candidates whose services are regularly
absorbed could not be drawn-Karnataka Civil Services (Absorption ofPersons
Appointed on Contract Basis in the category of posts of Primary School '
Teachers, Secondary School Teachers, Government Junior College-Lecturers.
First Grade College Lecturers, Lecturers in Polytechnics, Lecturers in
E Government Engineering Colleges, into State Civil Services) (Special) Rules,
1990.

Appellant-State appointed local candidates by making special provisions
in the Karnataka Education Department Services (Recruitment to Secondary
School Assistant Grade-II Cadre and Physical Education Teachers Grade-I)
F (Special Recruitment) Rules, 1983; on the other hand respondents were
recruited on contract basis on certain terms for a period of one year or until
the regplar incumbent reports for duty whichever is earlier. The candidates
appointed on contract basis would get consolidated salary equal to Rs. 10 less
than the minimum of the pay scale attached to the post. These respondents
G were subsequently regularly recruited to Government services as Teachers
and Lecturers. Thereafter, the State framed certain rules for absor~tion of
contract Teachers/Lecturers on certain terms. However, it was made clear
that they would not be entitled to claim any arrears of salary. It was also
provided therein that the initial basic pay of a contract teacher absorbed under
the Rules shall be fixed in the scale of pay of the category of the post to which
H 500
!
)i-

STATEv.G.HALAPPA 501
he has been appointed at a stage equal to the basic pay that he would have A
drawn ifhe had been appointed to such post as regular candidate, with effect
from the date of his appoilttment as a contract teacher. The contract
employees moved the Central Administrative Tribunal to treat them as local
candidates as under the rules local candidates have been conferred some
additional pay benefits including pay protection. Tribunal relied on its earlier B
Judgment in Parmeshwarappa 's case and decided the case in favour of contract
employees by treating them at par with local candidates under Rules 41-A of
• the Karnataka Civil Services Rules. Hence appeal by the State.

Allowing the appeals, the Court

HELD : 1. The appointments to which the contract employees joined C
are very precarious appointments, the same being terminable at the end of

-
one year or earlier than even before the regular recruitment takes place. It
was made clear that their salary would be fixed at less than the minimum of
the pay scale attached to the post and their service as rendered would not be
counted for the purpose of further service in Government. If this position is D
clear, then an analogy could not have been drawn between contract employees
and the local candidates whose services are regularly absorbed. [504-C-E]

2. Tctinvoke Rule 41A ofKarnataka Civil Services Rules would be out
of place in a case of this nature because the intendment of such Rules is that
if a person has been appointed as a local candidate and if he is likely to be E
absorbed in a regular service but in a different post, certain benefits are given
to him. That is not the situation in the present case. Similarly, in the case of
a regularly appointed candidate if he is appointed in another post, continuity
would be maintained so far as emoluments are concerned. Such a situation
in the present case will not arise at all because it is not the continuation of F
the original appointment made which is on a contract basis and contract comes
to an end either on the expiry of the term or when a regular candidate reports
on duty. Particularly when the contract itself makes it clear that the service
shall not be counted for any purpose, the claim of the respondents could not
have been brought under Rule 41A at all. [504-E, F, G]
G
State of Maharashtra v. Digambar, [1995] 4 SCC 683 and Union of India

- and Anr. v. KN. Sivadas and Ors., [1997] SCR Supp. 3 p. 211, referred to.

3. The view taken by the Tribunal in Parameshwarappa 's case is not
justified and, therefore, that view shall stand overruled. However, it is clarified
that if any emoluments have already been paid to the respondents in terms H
502 SUPREME COURT REPORTS [2002] 3 S.C.R.

A of the orders made by the Tribunal as confirmed by the High Court, the
same shall not be recovered. [505-C-D]

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 525-641
of 1999.

B From the Judgment and Order dated 1.4.1998 of the Karnataka High
Court in W.P. No. 10496/98 and 10497-10612 of 1998.
"
WITH ...

C.A. Nos. 2941-3091/2002, 3491-3516, 3747-3748 of 2000)
c V.R. Reddy, N. Ganpathy, Sanjay R. Hegde, Satya Mitra, S.K. Kulkarni,
M. Giresh Kumar, Ankur Kulkarni, Ms. Sangeeta Kumar, S. Ravindra Bhat,
Naveen R. Nath, Lalit Mohini Bhat, S.R. Hegde and Vinod Pandey for the

D
appearing parties.

The Judgment of the Court was .delivered by

RAJENDRA BABU, J. Leave granted in SLP(C) Nos. 6456-6606/
-
2000.

The State of Karnataka appointed stipendiary graduates or local
E candidates by making special provisions in exercise of the powers conferred
by the proviso to Article 309 of the Constitution [vide notification no. DPAR
50 SOE 8l(A) dated June 25, 1982]. Similarly, in different departments
recruitments were made because a large number of vacancies stood unfilled.
In supersession or addition to other Rules, the Karnataka Education Department
Services (Recruitment to Secondary School Assistant Grade-II Cadre and
F Physical Education Teachers Grade-I) (Special Recruitment) Rules, 1983 were
"'I

framed, which were notified on September 28, 1983.

The respondents were recruited under these rules and Rule 3(1) of the
said Rules provided that the appointment shall be on contract basis for a
period not exceeding one year or until the candidates selected by the
G
recruitment committees report to duty whichever is earlier and that their
appointment shall stand terminated on the expiry of the said period. The
terms of contract were spelt out !Jy a separate order [No. ED 296 DPI 83
dated December I, 1983] issued by the State Government. The selection was
•
to be made by a committee on the basis of the marks obtained in the qualifying
H examination. The appointment of the candidates on contract basis shall be on
STATE v.G. HALAPPA [RAJENDRA BABU, J.] 503

the consolidated salary equal to Rs.IO less than the minimum ofthe pay scale A
attached to the post.

Subsequently, regular recruitment took place in which the respondents
were also participants and they were regularly recruited into the Government
service and have been appointed in the category of posts of Primary School
Teachers, Secondary School Teachers, Government Junior College Lecturers, B
First Grade College Lecturers, Lecturers in Polytechnics, Lecturers in
• Government Engineering Colleges. Thereafter, the State Government framed
certain rules known as 'the Karnataka Civil Services {Absorption of Persons
Appointed on Contract Basis in the category of posts of Primary School
Teachers, Secondary School Teachers, Government Junior College Lecturers, C
First Grade College Lecturers, Lecturers in Polytechnics, Lecturers in
Government Engineering Colleges, into State Civil Services) (Special) Rules,
1990 [horeinafter referred to as 'the Absorption Rules']. It was provided
therein that irrespective of the general recruitment rules and other rules in
that regard a contract teacher will be absorbed in the category of post to D
which he was initially appointed on contract basis other than the posts of
Lecturers in Government Junior Colleges. It was also provided therein that
the initial basic pay of a contract teacher absorbed under these rules shall be
fixed in the scale of pay of the category of the post to which he is appointed
at a stage equal to the basic pay that he would have been eligible to draw had
he been appointed to such post as a regular candidate in accordance with the E
rules of recruitment with effect from the date of his appointment as a contract
teacher. It was however, made clear that he would not be entitled to any
arrears of salary for the period of service rendered by him prior to the date
of absorption under these rules.

Application had been filed before the Karnataka Administrative Tribunal
F
[hereinafter referred to as 'the Tribunal'] seeking for direction to the authorities
making the selection so that the petitioners therein were to be treated as
"local candidates" for the purpose of recruitment, as was done by the Tribunal
in certain other similar cases. The Tribunal in Pa~ameshwarappa 's case further
elucidated that such persons who had been appointed after selection by the G
DLRC on a regular basis will be entitled to have their pay fixed by taking
note of the service rendered by them on contract basis and necessary benefit
of increment be given by stepping up the salary. When this order was
challenged before this Court, the same was dismissed on the ground of delay
in presentation of the same.
H
504 SUPREME COURT REPORTS [2002] 3 S.C.R.

A The picture that emerges before the Court in these matters is that there
were a large number of vacancies available in the State of Karnataka and
those posts could not be filled up for one reason or the other. Pending direct
recruitment, steps were taken to fill up those vacancies either by engaging the
services· of stipendiary graduates or by engaging the services of contract
B employees. In the case of either of these categories, they were to draw a
minimum emolument which is less than the minimum of the pay scale attached
to the post. Further, it was made clear that the period of service rendered will
not be counted for any purpose. The expression "local candidate" and Rule •
41A of the Kamataka Civil Services Rules and Note 7 to Rule 41 was however,
interpreted in a very strained manner by the Tribunal to uphold the contention
C raised on behalf of the petitioners.

The appointments to which the contract employees or the stipendiary
graduates joined are very precarious appointments, the same being terminable
at the end of one year or earlier than even before the regular recruitment
takes place. It was made clear that their salary is fixed at the emolument
D which is less than the minimum of the pay scale attached to the post and their
service as rendered will not be counted for the purpose of further service in
the Government. If this position is clear, as to how an analogy could have
been drawn between oontract employees and the local candidates whose
services are regularly absorbed is difficult to understand. Subsequently, the
E local candidate is appointed to a post which is vacant and he will be absorbed
in the same post and appropriate benefits will be given to him. To invoke
Rule 4 lA of the Karnataka Civil Services Rules would be out of place in a
case of this nature because the intendment of the said Rule is that if a person
has been appointed as a local candidate and if he is likely to be absorbed in
F the regular service but in a different post, certain benefits are given to him.
That is not the situation in the present case. Similarly, in the case of a
regularly appointed candidate if he is appointed in another post, continuity
would be maintained so far as emoluments are concerned. Such a situation

G
in the present case will not arise at all because it is not the continuation of
the original appointment made which is on a contract basis and contract
comes to an end either on the expiry of the term or on a regular candidate
-
reporting to duty. Particularly when the contract itself makes it clear that the
service shall not be counted for any purpose, the claim of the respondents
could not have been brought under Rule 41A at all.

In State of Maharashtra v. Digambar, [1995] 4 SCC 683 and Union of
H India and Anr. v. K.N Sivadas and Ors., [1997] SCR Supp. 3 p. 211 this Court
STATEv.G. HALAPPA [RAJENDRABABU, J.] 505

has held that even in cases where a large number of petitions have been filed A
by different categories of persons and the question to be answered is the
same, if some of which have been decided and which reached this Court have
been dismissed by this Court at the SLP stage and the burden upon the State
falls too heavy on its coffers, it may become necessary for the Court to set
it right appropriately. Therefore, the arguments advanced on behalf of the B
appellants that if we interfere with the order of the Tribunal it may lead to
anomalous situation in respect of some of the persons who have already been
• given benefit on the basis of Parameshwarappa 's case and not in case of
some others need not detain us.

In that view of the matter, we do not think the view taken by the C
Tribunal in Parameshwarappa 's case is justified and, therefore, that view
shall stand overruled. Thus, we have no option but to allow these appeals
because both the Tribunal and the High Court have proceeded on. the basis
of Parameshwarappa's case. The orders made by the High Court and Tribunal
stand set aside. However, we make it clear that if any emoluments have
already been paid to the respondents in terms of the orders made by the D
Tribunal as confirmed by the High Court, the same shall not be recovered but
in other respects the order made by us shalt be given full effect to.

S.K.S. Appeals allowed.