26 years on, High Court quashes employee’s de-regularisation order

Three decades after an employee was first appointed and nearly 27 years after his services were stripped of regular status, the Punjab and Haryana High Court has quashed the de-regularisation order and restored full continuity of service with interest on arrears after holding that a Panchayat Samiti is an “instrumentality of the State” under Article 12 of the Constitution.

Setting aside the August 8, 1999, order, Justice Sandeep Moudgil ruled that once the State had validly regularised an employee under a policy and granted him all consequential benefits, it could not “retreat behind technicalities of its own making” to undo that status.

The order by Justice Moudgil came on the petition was filed against the State of Haryana in 2000. The controversy before the court was whether a Panchayat Samiti could be treated as “State” under Article 12 and whether the State was justified in de-regularising the petitioner-employee after granting him regular status with effect from February 1, 1996.

Justice Moudgil held that a Panchayat Samiti owed its existence to the Haryana Panchayati Raj Act, 1994; discharged governmental functions such as implementing welfare schemes and administering public funds; functioned under “deep and pervasive” State control; and was substantially funded by the government. Quoting precedent, the court observed: “Where the financial assistance of the State is so much as to meet almost the entire expenditure, it affords some indication of governmental character.”

Justice Moudgil added that the court had “no hesitation to hold that respondent-Panchayat Samiti is an instrumentality of the State and falls within the meaning of ‘State’ under Article 12 of the Constitution of India.”

Turning to the timeline, Justice Moudgil observed that the petitioner was appointed as Mali-cum-Chowkidar on March 12, 1991, through employment exchange sponsorship. After completing the requisite service, he was regularised under government instructions from February 1, 1996, against a vacant sanctioned post. The regularisation was confirmed in November 1996 and he was granted revised pay scales, annual increments for 1997, 1998 and 1999, and allotted a general provident fund number with deductions being made.

Yet, on August 8, 1999—more than three years after regularisation—the State de-regularised him on the ground that his initial appointment had been made by the Panchayat Samiti and that he was not a government employee.

Rejecting this stand as “legally untenable”, Justice Moudgil held that any alleged defect in the 1991 appointment could not be invoked to unsettle a valid regularisation of 1996, particularly when “no fraud, misrepresentation, or concealment is attributed to the petitioner.” It further found the action arbitrary due to “inordinate delay” and discriminatory since similarly situated employees were either protected by interim orders or continued till retirement.

“The Constitution is not a parchment of power but a living promise of justice. When the State confers regular status upon a workman through a declared policy and allows him to serve for years as a regular employee, it cannot later retreat behind technicalities of its own making to deny him the fruits of that status,” Justice Moudgil declared.

The Bench added justice, in a constitutional democracy, was not served by postponement. When wages and service benefits were unlawfully withheld, delay itself became a form of denial. Interest, therefore, was not a penalty, but a restitution for the loss suffered by the employee due to illegal State action.

Allowing the petition, Justice Moudgil quashed the August 8, 1999, order and directed that the petitioner “shall be deemed to have continued in regular service from February 1, 1996, with full continuity of service,” with all consequential benefits including pay fixation, increments and retirement dues. Arrears are to be paid with 6 per cent interest from the date due till actual payment.