Regularisation means fresh hiring: SC

Says a contract employee has not vested right to regularisation

Hasnaat Malik April 05, 2021


The top court has ruled that regularisation of a contract employee means a fresh appointment “into the stream of regular appointment” and that it does not apply retrospectively under the Punjab Regularization Policy 2010.

"Regularization of a contract employee is … a fresh appointment into the stream of regular appointments. A contractual employee for the first time becomes a civil servant,” a six-page judgment authored by Justice Syed Mansoor Ali Shah said.

Justice Shah was part of a three-judge bench, led by Justice Manzoor Ahmad Malik, which adjudicated the question as to whether the date of regularisation of contract employees is the date of their initial appointment on contract basis or the date of their regularisation under the Regularization Policy 2010.

The verdict said contractual employees enjoy no vested right to regularisation, much less to be regularized from any particular date. It said the benefit of regularisation under the Regularization Policy 2010 is prospective in nature and there is no legal justification to give it a retrospective application.

"Any such step would totally negate the purpose and significance of Contract Appointment Policy and leave no distinction between a contractual and a regular employee," the judgment said.

The court held that persons appointed on contract basis are not civil servants, therefore, their service matters are not governed by the rules framed under Civil Servants Act, 1974 as their appointment is strictly regulated by the terms and conditions of the contract.

The judgment said the Contract Appointment Policy was conceived after the government realised that regular mode of appointment is not suitable for most of the government sector assignments due to administrative and financial factors.

"The rationale behind the contractual mode of appointment is based on financial and economic reasons, as well as, administrative reasons.” The court said according to the policy, the financial constraints of salary and pension under regular appointment had become unsustainable.

“Besides several administrative reasons associated with the regular employees also tilted the scales in favour of the contractual mode of appointment.

“[These include] large scale absenteeism of regular employees; poor performance leading to poor service delivery; cumbersome accountability mechanism systems; huge administrative costs of transfer and promotions, etc…

[The regular employment also does not have any] concept of performance based indicators – contract mode being more flexible to tap in the best human resource available in the market. Latest management practices in the developed world also recommended contract mode of appointment.”

According to the judgment, the contract appointment is strictly regulated by the terms and conditions of the contract.  It said the period of contract is between 3 to 5 years and extension is generally granted for a period of three to five years and not for an indefinite period.

“On expiry of contract appointment, if no extension is granted, it is ensured that the contract employee is not allowed to continue in service. Contract appointment is liable to be terminated on one month’s notice or on one month’s pay, in lieu thereof, on either side without assigning any reason.”

It said the contract provides that the contract appointment shall not confer any right of regular appointment nor shall such appointment be regularised under any circumstances. A contract employee shall, under no circumstances, claim conversion of his contract appointment into regular appointment.

On the other hand, the court noted, the employees appointed on regular basis are governed by the rules framed under the Punjab Civil Servants Act, 1974 such as the Punjab Civil Servants (Appointment & Conditions of Service) Rules, 1974, Service Rules of the post, Leave Rules, Pension Rules, etc.

"The above shows that a contractual employee is appointed under a scheme, which is totally different from that of regular appointment and a contractual appointee does not enjoy the right to be appointed on regular basis or to be readily shifted into the regime of regular appointment.

“It does not matter if the appointment on contract is through the same process of public advertisement and scrutiny through the Punjab Public Service Commission.

“It is still a contractual appointment for a limited period of time and is different from a regular appointment by virtue of which a person attains the status of a civil servant.  This distinction between the two streams of services is important to address the question posed [to the court],” it said.

The judgment said the scheme of regularisation is unnecessary for a civil servant (a regular employee) and has been introduced only to induct the contractual employees into regular service.

"The Regularization Policy provides for a special procedure whereby the cases of the contractual employees are considered for regularization on a case-to-case basis, keeping in view their performance and other qualifications.”

The court noted that that has been the tenor of the jurisprudence evolved by this court and reference can be made to the January 29, 2018 judgment of a five-member SC bench.

It said it is also important to underline that the consistent governmental policies on regularisation have finally manifested themselves in the Punjab Regularization of Service Act, 2018, which specifically provides for regularisation from immediate effect.

“Therefore, there has been a consistent design behind the scheme of regularization and it has always been conceived from the date of regularization. We see no reason to upset this uniform governmental policy which has now received legislative support under the Act," the judgment said.


Around three dozen respondents were appointed on contract basis as veterinary officers in Grade-17 in Punjab Livestock and Dairy Development Department from 2004 to 2009. Their services were subsequently regularised with immediate effect via order dated 15.2.2011.

The grievance of the respondents was that they ought to have been regularised from the date of their initial appointment on contractual basis rather than on February 15, 2011.

Their representation and departmental appeal were turned down on July 21, 2018 and January 29, 2020.

However, on approaching the Punjab Service Tribunal, the appeals of the respondents were allowed vide impugned order dated October 14, 2020, allowing regularisation of the services with effect from the date of their initial appointment on contract basis.

Later, the Punjab government challenged the order in the Supreme Court. After hearing arguments by both the sides, the court converted the Punjab government’s petitions into appeals. The court later set aside the tribunal’s order.


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