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CASE NO.: Appeal (civil)  4996 of 2006

PETITIONER: Indian Drugs & Pharmaceuticals Ltd.

RESPONDENT: Workman, Indian Drugs & Pharmaceuticals Ltd.

DATE OF JUDGMENT: 16/11/2006

BENCH: S. B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T (Arising out of Special Leave Petition (Civil) No.3862 of 2006)

MARKANDEY KATJU, J.

       Leave granted.

This appeal has been filed against the impugned judgment and  order dated 30.9.2005 passed by the Uttaranchal High Court in W.P.  No.3360 of 2001.  By that Judgment the High Court has modified the  award of the Labour Court, U.P., Dehradun,  to the extent that the  workmen, in whose favour the award had been made, were allowed to  be continued in the service of the appellant employer till their  superannuation, and if their services were not required they should not  be terminated except in accordance with Industrial Law.  The High  Court further directed that  the workmen in question should be paid  wages like the regular employees performing the work and duties in the  appellant-company.      

       We have heard the learned counsel for the parties and perused the  record.

       The facts of the case are that the appellant is a Public Sector  Undertaking which has a plant in Rishikesh where it was  manufacturing pharmaceuticals.  The present dispute relates to the ten  concerned employees who were appointed as casual workers on daily  rate basis for the reason that they were dependants of employees dying  in harness.  Such appointments were made by the appellant due to the  persistent and prolonged agitation by the trade union since the appellant  wanted to maintain industrial harmony, although there was no  rule/policy for such compassionate appointment in the service of the  appellant company, which was already over-staffed.  As against 1049  sanctioned posts, there were already 1299 employees working in the  company at the relevant time.

The aforesaid ten persons were paid wages according to the rates  of daily wages, declared by the State Government from time to time, as  agreed with the union.  Since the appellant was already over-staffed in  all its departments, the said persons were given work in the nature of  cleaning window panes, sweeping floors and such sundry jobs on  contract basis which work was not the work of the regular employees  of the appellant-company.

From the year 1986 the financial position of the appellant- company became critical as it was running on huge losses and hence its  corporate office issued stop/ban order, banning any fresh

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recruitment/appointments.  The company also applied to the BIFR as it  had become sick.  The BIFR had also issued directions to the company  to reduce its manpower in order to try to revive the company, but  despite this situation the union started pressing and agitating for  regularization of the aforesaid ten concerned daily rated employees.   The failure of talks between the company and the union led to the  reference of a dispute under the Industrial Disputes Act before the  Labour Court in the year 1992 in the following terms :

"Whether the action of the employer in not  regularizing 22 workmen and not granting them wage  scales and other benefits given to the regular employees is  unjustified and/or illegal"

Before the Labour Court, only 10 out of the 22 workmen  appeared and filed written statement and therefore the award was  passed only in respect of the said ten persons.  The Labour Court held  that although the said persons were employed as "casual daily rated  employees" by the company, yet in view of their having continued for a  long time, they were entitled to regularization and the action of the  management in not regularizing them was unjustified and  consequentially they should be paid the wages and benefits as given to  other regular employees from the date of the award i.e. 25.7.1996.

In the writ petition filed by the appellant challenging the said  award, the High Court upheld the contention of the appellant that the  respondents were not entitled to regularization in view of the well  settled law laid down by this Hon’ble Court in the case of Madhyamik  Shiksha Parishad, U.P. vs. Anil Kumar Mishra & Ors. reported in  2005(5) SCC 122 wherein it has been categorically held that  completion of 240 days or more does not entitle/import the right of  regularization.  The High Court therefore, held that the impugned  award, to the extent it directed for regularization of the respondents,  could not be sustained.

It is contended before by the learned counsel for the appellant  that the High Court has committed a serious error, in as much as, while  holding that the respondents were not entitled to regularization, it  directed that company shall continue such employees in its services till  their superannuation and they shall be paid wages like the regular  employees of the company.  We are inclined to agree with this  submission of the learned counsel for the appellant.

It has come in the evidence that the number of sanctioned posts  in the company were only 1049, but there were already 1299  employees working in the company at the relevant time.  We fail to  understand how could 1299 employees be appointed when there were  only 1049 sanctioned posts?  Moreover, the ten concerned employees  were over and above the 1299 already working in the company at the  relevant time.

It has come on record that the financial position of the appellant- company was going from bad to worse and all the measures taken by  them during the critical years from 1988 onwards including a ban on  recruitment and other austerity measures did not bear any fruitful result.   The company incurred heavy losses and as against the meagre capital  of Rs.21 crores for the Rishikesh Unit, the petitioner had incurred an  accumulated loss to the tune of Rs.233 crores upto the year 1992-93.   The annual accounts for the said year were produced as Exhibit E-11  before the courts below.  Subsequently the appellant was declared a  sick company by the BIFR.   A revival proposal was prepared before  the BIFR where the union agreed not to raise any demand which  entailed any liability.  Hence, in our opinion there could be no  justification for grant of parity in wages.  The BIFR appointed the IDBI  as the operating agency in the year 1986 when the accumulated losses

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of the company reached an astonishing figure of Rs.624 crores in the  year 1995.  In our opinion the High Court failed to appreciate that when  the appellant is still before the BIFR, and where the Government is  making an effort to again present a revival proposal, there was no  justification to saddle the appellant with liabilities on the basis of  compassion when no legal right exists in favour of the concerned  respondents.  When there was no vacancy and the company was in poor  financial condition, the impugned order was wholly uncalled for.  

In the present case it is relevant to state that the Government in  effort to revive the company drastically reduced the manpower of the  appellant-company from 1991 onwards and the petitioner which at one  point of time had a total of about 13000 employees in all its units in  India, have at present, in total, only about 9 employees at the  Hyderabad plant i.e. supervisors and managers, 29 at Gurgaon in which  there are only 4 in the workers category, 15 employees at the Bihar  plant i.e. only supervisors and managers, 30 employees at the Tamil  Nadu plant i.e. supervisors and managers and about 200 odd employees  at the Rishikesh plant including only about 39 regular workers.  It is  relevant to state the Government is still pursuing the plans of reduction  in manpower under a VRS Scheme.  Thus, in the scenario as stated  above, the impugned directions of the courts below were, in our  opinion,  wholly uncalled for and in violation of settled legal principles.  

It may be mentioned that a daily rated or casual worker is only a  temporary employee, and it is well settled that a temporary employee  has no right to the post vide State of Uttar Pradesh & Anr. vs. Kaushal  Kishore Shukla 1991(1) SCC 691.  The term ’temporary employee’ is  a general category which has under it several sub-categories e.g. casual  employee, daily rated employee, ad hoc employee, etc.

The distinction between a temporary employee and a permanent  employee is well settled.  Whereas a permanent employee has a right to  the post, a temporary employee has no right to the post.  It is only a  permanent employee who has a right to continue in service till the age  of superannuation (unless he is dismissed or removed after an inquiry,  or his service is terminated due to some other valid reason earlier).  As  regards a temporary employee, there is no age of superannuation  because he has no right to the post at all.  Hence, it follows that no  direction can be passed in the case of any temporary employee that he  should be continued till the age of superannuation.

Similarly, no direction can be given that a daily wage employee  should be paid salary of a regular employee vide State of Haryana vs.  Tilak Raj 2003 (6) SCC 123.  

We are afraid that the Labour Court and High Court have passed  their orders on the basis of emotions and sympathies, but cases in Court  have to be decided on legal principles and not on the basis of emotions  and sympathies.   

Admittedly, the employees in question in Court had not been  appointed by following the regular procedure, and instead they had  been appointed only due to the pressure and agitation of the union and  on compassionate ground.  There were not even vacancies on which  they could be appointed. As held in A. Umarani vs. Registrar,  Cooperative Societies & Ors. 2004(7) SCC 112, such employees  cannot be regularized as regularization is not a mode of recruitment.  In  Umarani’s case the Supreme Court observed that the compassionate  appointment of a woman whose husband deserted her would be illegal  in view of the absence of any scheme providing for such appointment  of deserted women.    

In State of M.P. and others vs. Yogesh Chandra Dubey and  others 2006 (8) SCC 67, this Court held that a post must be created

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and/or sanctioned before filling it up.  If an employee is  not appointed  against a sanctioned post he is not entitled to any scale of pay.  In our  opinion, the ratio of the aforesaid decision squarely applies to the facts  of the present case also. In M/s. Indian Drugs and Pharmaceuticals Ltd.  vs. Devki Devi  & Ors. AIR 2006 SC 2691, which is a case relating to the appellant’s  Rishikesh unit, it has been held in paragraph 10 that "The undisputed  position is that appellant company does not have any rule for  compassionate appointment".  In that decision it has also been noted  that the appellant is a sick company which is before the BIFR and the  bleak financial position of the company has been considered by this  Court in Officers & Supervisors of IDPL vs. Chairman & M.D., IDPL  and Ors. 2003(6) SCC 490.  Originally more than 6500 employees  were employed by the appellant but out of them 6171 have taken  retirement and only 421 employees are now working throughout the  country.  The appellant company is not functional and is trying to  further reduce the number of employees.  In paragraph 15 of the said  judgment it has also been noted that no production is going on in the  company since 1994.  These facts have been completely lost sight of by  the Labour Court and the High Court.

Thus, it appears that in the present case the appellant is trying to  reagitate the issues which have been already decided by this Court in  M/s. Indian Drugs and Pharmaceuticals Ltd.  vs. Devki Devi & Ors.  AIR 2006 SC 2691.        

In a recent Constitution Bench decision of this Court in  Secretary, State of Karnataka and others vs. Umadevi & others 2006  (4) SCC 1, this Court has exhaustively dealt with a matter similar to  that under consideration in the present case, and we may refer to some  of the observations made therein.

In paragraphs 4 and 5 of the said judgment, the Constitution  Bench this Court observed :

"The Union, the States, their departments and  instrumentalities have resorted to irregular appoints,  especially in the lower rungs of the service, without  reference to the duty to ensure a proper appointment  procedure through the Public Service Commissions or  otherwise as per the rules adopted and to permit these  irregular appointees or those appointed on contract or on  daily wages, to continue year after year, thus, keeping out  those who are qualified to apply for the post concerned and  depriving them of an opportunity to compete for the post.   It has also led to persons who get employed, without the  following of a regular procedure or even through the  backdoor or on daily wages, approaching the courts,  seeking directions to make them permanent in their posts  and to prevent regular recruitment to the posts concerned.   The courts have not always kept the legal aspects in mind  and have occasionally even stayed the regular process of  employment being set in motion and in some cases, even  directed that these illegal, irregular or improper entrants be  absorbed into service.    A class of employment which can  only be called "litigious employment", has risen like a  phoenix seriously impairing the constitutional scheme.   Such orders are passed apparently in exercise of the wide  powers under Article 226 of the Constitution.  Whether the  wide powers under Article 226 of the Constitution are  intended to be used for a purpose certain to defeat the  concept of social justice and equal opportunity for all,  subject to affirmative action in the matter of public  employment as recognized by our Constitution, has to be  seriously pondered over.  It is time, that the courts desist

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from issuing orders preventing regular selection or  recruitment at the instance of such persons and from  issuing directions for continuance of those who have not  secured regular appointments as per procedure established.   The passing of orders for continuance tends to defeat the  very constitutional scheme of public employment.  It has to  be emphasized that this is not the role envisaged for the  High Courts in the scheme of things and their wide powers  under Article 226 of the Constitution are not intended to be  used for the purpose of perpetuating illegalities,  irregularities or improprieties or for scuttling the whole  scheme of public employment.  Its role as the sentinel and  as the guardian of equal rights protection should not be  forgotten.                                                             This Court has also on occasions issued directions  which could not be said to be consistent with the  constitutional scheme of  public employment.  Such  directions are issued presumably on the basis of equitable  considerations or individualization of justice.  The question  arises, equity to whom ?  Equity for the handful of people  who have approached the court with a claim, or equity for  the teeming millions of this country seeking employment  and seeking a fair opportunity for competing for  employment? When one side of the coin is considered, the  other side of the coin has also to be considered and the way  open to any court of law or justice, is to adhere to the law  as laid down by the Constitution and not the make  directions, which at times, even if do not run counter to the  constitutional scheme, certainly tend to water down the  constitutional requirements.  It is this conflict that is  reflected in these cases referred to the Constitution Bench".

We have underlined the observations made above to emphasize  that the Court cannot direct continuation in service of a non-regular  appointee.  The High Court’s direction is hence contrary to the said  decision.  

Thereafter in paragraph 33 it was observed:

"It is not necessary to notice all the decisions of this  Court on this aspect.  By and large what emerges is that  regular recruitment should be insisted upon, only in a  contingency can an ad hoc appointment be made in a  permanent vacancy, but the same should soon be followed  by a regular recruitment and that appointments to non- available posts should not be taken note of for  regularization.  The cases directing regularization have  mainly proceeded on the basis that having permitted the  employee to work for some period, he should be absorbed,  without really laying down any law to that effect, after  discussing the constitutional scheme for public  employment".

The underlined observation in the above passage makes it clear  that even if an ad hoc or casual appointment is made in some  contingency the same should not be continued for long, as was done in  the present case.        

In paragraph 43, the Court observed:  

"Thus, it is clear that adherence to the rule of  equality in public employment is a basic feature of our

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Constitution and since the rule of law is the core of our  Constitution, a court would certainly be disabled from  passing an order upholding a violation of Article 14 or in  ordering the overlooking of the need to comply with the  requirements of Article 14 read with Article 16 of the  Constitution.  Therefore, consistent with the scheme for  public employment, this Court while laying down the law,  has necessarily to hold that unless the appointment is in  terms of the relevant rules and after a proper competition  among qualified persons, the same would not confer any  right on the appointee.  If it is a contractual appointment,  the appointment comes to an end at the end of the contract,  if it were an engagement or appointment on daily wages or  casual basis, the same would come to an end when it is  discontinued.  Similarly, a temporary employee could not  claim to be made permanent on the expiry of his term of  appointment.  It has also to be clarified that merely because  a temporary employee or a casual wage worker is  continued for a time beyond the term of his appointment,  he would not be entitled to be absorbed in regular service  or made permanent, merely on the strength of such  continuance, if the original appointment was not made by  following a due process of selection as envisaged by the  relevant rules.  It is not open to the court to prevent regular  recruitment at the instance of temporary employees whose  period of employment has come to an end or of ad hoc  employees who by the very nature of their appointment, do  not acquire any right.  The High Courts acting under  Article 226 of the Constitution, should not ordinarily issue  directions for absorption, regularization, or permanent  continuance unless the recruitment itself was made  regularly and in terms of the constitutional scheme".  

The underlined observations above clearly indicate that the  casual, daily rated, or ad hoc employees, like the respondents in the  present appeal, have no right to be continued in service, far less of  being regularized and get regular pay.  

In paragraph 45 this Court observed :

"While directing that appointments, temporary or  casual, be regularized or made permanent, the courts are  swayed by the fact that the person concerned has worked  for some time and in some cases for a considerable length  of time.  It is not as if the person who accepts an  engagement either temporary or casual in nature, is not  aware of the nature of his employment.  He accepts the  employment with open eyes.  It may be true that he is not in  a position to bargain \026 not at arm’s length \026 since he might  have been searching for some employment so as to eke out  his livelihood and accepts whatever he gets.  But on that  ground alone, it would not be appropriate to jettison the  constitutional scheme of appointment and to take the view  that a person who has temporarily or casually got employed  should be directed to be continued permanently.  By doing  so, it will be creating another mode of public appointment  which is not permissible.  If the court were to void a  contractual employment of this nature on the ground that  the parties were not having equal bargaining power, that  too would not enable the court to grant any relief to that  employee.  A total embargo on such casual or temporary  employment is not possible, given the exigencies of  administration and if imposed, would only mean that some  people who at least get employment temporarily,

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contractually or casually, would not be getting even that  employment when securing of such employment brings at  least some succour to them. After all, innumerable citizens  of our vast country are in search of employment and one is  not compelled to accept a casual or temporary employment  if one is not inclined to go in for such an employment.  It is  in that context that one has to proceed on the basis that the  employment was accepted fully knowing the nature of it  and the consequences flowing from it.  In other words, even  while accepting the employment, the person concerned  knows the nature of his employment.  It is not an  appointment to a post in the real sense of the term.  The  claim acquired by him in the post in which he is  temporarily employed or the interest in that post cannot be  considered to be of such magnitude as to enable the giving  up of the procedure established, for making regular  appointments to available posts in the services of the State.   The argument that since one has been working for some  time in the post, it will not be just to discontinue him, even  though he was aware of the nature of the employment when  he first took it up, is not (sic) one that would enable the  jettisoning of the procedure established by law for public  employment and would have to fail when tested on the  touchstone of constitutionality and equality of opportunity  enshrined in Article 14 of the Constitution".

The underlined part of the above passage clearly negates the  claim of the respondents.        

As regards the claim of the workmen concerned for being paid  salary or regular employment, this claim has been definitely rejected in  paragraph 48 of the aforesaid judgment which states as under:    "It was then contended that the rights of the  employees thus appointed, under Article 14 and 16 of the  Constitution, are violated.  It is stated that the State has  treated the employees unfairly by employing them on less  than minimum wages and extracting work from them for a  pretty long period in comparison with those directly  recruited who are getting more wages or salaries for doing  similar work.  The employees before us were engaged on  daily wages in the department concerned on a wage that  was made known to them.  There is no case that the wage  agreed upon was not being paid.  Those who are working  on daily wages formed a class by themselves, they cannot  claim that they are discriminated as against those who have  been regularly recruited on the basis of the relevant rules.   No right can be founded on an employment on daily wages  to claim that such employee should be treated on a par with  a regularly recruited candidate, and made permanent in  employment, even assuming that the principle could be  invoked for claiming equal wages for equal work.   There is  no fundamental right in those who have been employed on  daily wages or temporarily or on contractual basis, to claim  that they have a right to be absorbed in service.  As has  been held by this Court, they cannot be said to be holders  of a post, since, a regular appointment could be made only  by making appointments consistent with the requirements  of Articles 14 and 16 of the Constitution.  The right  to be  treated equally with the other employees employed on daily  wages, cannot be extended to a claim for equal treatment  with those who were regularly employed.  That would be  treating unequals as equals.   It cannot also be relied on to  claim a right to be absorbed in service even though they

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have never been selected in terms of the relevant  recruitment rules.  The arguments based on Articles 14 of  the Constitution are therefore overruled".                                         (emphasis supplied)

       In paragraph 19 of the aforesaid judgment of the Constitution  Bench, an important observation has been made about whether the  Court can impose financial burden on the State in this manner.   Paragraph 19 states as under:

" One aspect arises.  Obviously, the State is also  controlled by economic considerations and financial  implications of any public employment.  The viability of  the department or the instrumentality of the project is also  of equal concern for the State.  The State works out the  scheme taking into consideration the financial implications  and economic aspects.  Can the court impose on the State a  financial burden of this nature by insisting on regularization  or permanence in employment, when those employed  temporarily are not needed permanently or regularly?  As  an example, we can envisage a direction to give permanent  employment to all those who are being temporarily or  casually employed in a public sector undertaking.  The  burden may become so heavy by such a direction that the  undertaking itself may collapse under its own weight.  It is  not as if this had not happened.  So, the court ought not to  impose a financial burden on the State by such directions,  as such directions may turn counterproductive".  

No comment is necessary on the above passage as it is explicit  enough.

       In paragraphs 46 to 48 of the judgment, this Court also observed   that temporary, contractual, casual or daily wage ad hoc employees  appointed de hors the constitutional scheme to public employment have  no legitimate expectation to be absorbed or, regularized for granted  permanent continuation in service on the ground that they have  continued for a long time in service.  It was observed by this Court that  non grant of permanent continuation in service of such employees does  not violate Article 21 of the Constitution and such employees do not  have any enforceable legal right to be permanently absorbed, nor to be  paid salary of regular employees.  A regular process of recruitment or  employment has to be resorted to when regular vacancies and posts are  to be filled up.  This Court further observed that public employment  must comply with Articles 14 and 16 of the Constitution as the rule of  equality in public employment is a basic feature of the Constitution.

       No doubt, there can be occasions when the State or its  instrumentalities employ persons on temporary or daily wage basis in a  contingency as additional hands without following the required  procedure, but this does not confer any right on such persons to  continue in service or get regular pay.  Unless the appointments are  made by following the rules, such appointees do not have any right to  claim permanent absorption in the establishment.  

A perusal of the record of the present case shows that the  respondents were appointed on purely casual and daily rate basis  without following the relevant service rules.  Thus they had no right to  the post at all, vide State of U.P. vs. Kaushal Kishore 1991 (1) SCC  691.

In Delhi Development Horticulture Employees’ Union vs.  Administration, Delhi and others AIR 1992 SC 789 while deprecating  the tendency of engaging daily wagers without advertisement this Court

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held the same to be back door entries in violation of Article 16 of the  Constitution.  As such this Court refused to give any direction to  regularize the petitioners.

Thus, it is well settled that there is no right vested in any daily  wager to seek regularization.  Regularization can only be done in  accordance with the rules and not de hors the rules.  In the case of E.  Ramakrishnan & others vs. State of Kerala & others 1996 (10) SCC  565 this Court held that there can be no regularization de hors the rules.   The same view was taken in Dr. Kishore vs. State of Maharashtra  1997(3) SCC 209, Union of India & others vs. Bishambar Dutt 1996  (11) SCC 341.  The direction issued by the services tribunal for  regularizing the services of persons who had not been appointed on  regular basis in accordance with the rules was set aside although the  petitioner had been working regularly for a long time.    In Dr. Surinder Singh Jamwal & another vs. State of Jammu &  Kashmir & others AIR 1996 SC 2775, it was held that ad hoc  appointment does not give any right for regularization as regularization  is governed by the statutory rules.

In Ashwani Kumar & others etc. vs. State of Bihar & others etc.  AIR 1996 SC 2833, the appointment made without following the  appropriate procedure under the rules/Government circulars and  without advertisement or inviting application from the open market was  held to be in flagrant breach of Articles 14 and 16 of the Constitution.  

Creation and abolition of posts and regularization are a purely  executive function vide P.U. Joshi vs. Accountant General,  Ahmedabad & others 2003(2) SCC 632.  Hence, the court cannot  create a post where none exists.  Also, we cannot issue any direction to  absorb the respondents or continue them in service, or pay them  salaries of regular employees, as these are purely executive functions.   This Court cannot arrogate to itself the powers of the executive or  legislature.  There is broad separation of powers under the Constitution,  and the judiciary, too, must know its limits.  

The respondents have not been able to point out any statutory  rule on the basis of which their claim of continuation in service or  payment of regular salary can be granted.   It is well settled that unless  there exists some rule no direction can be issued by the court for  continuation in service or payment of regular salary to a casual, ad hoc,  or daily rate employee.  Such directions are executive functions, and it  is not appropriate for the court to encroach into the functions of another  organ of the State.  The courts must exercise judicial restraint in this  connection.  The tendency in some courts/tribunals to legislate or  perform executive functions cannot be appreciated.  Judicial activism in  some extreme and exceptional situation can be justified, but resorting to  it readily and frequently, as has lately been happening, is not only  unconstitutional, it is also fraught with grave peril for the judiciary.

In Asif Hameed vs. State of Jammu & Kashmir AIR 1989 SC  1899, this Court observed:

"Before adverting to the controversy directly involved in  these appeals we may have a fresh look on the inter se  functioning of the three organs of democracy under our  Constitution.  Although the doctrine of separation of  powers has not been recognized under the Constitution in  its absolute rigidity but the Constitution makers have  meticulously defined the functions of various organs of the  State. Legislature, Executive and Judiciary have to function  within their own spheres demarcated under the  Constitution.  No organ can usurp the functions assigned to  another.   The Constitution trusts to the judgment of these

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organs to function and exercise their discretion by strictly  following the procedure prescribed therein.  The  functioning of democracy depends upon the strength and  independence of each of its organs.  The legislature and  executive, the two facets of people’s will, have all the  powers including that of finance.  The judiciary has no  power over the sword or the purse, nonetheless it has power  to ensure that the aforesaid two main organs of the State  function within the constitutional limits.  It is the sentinel  of democracy.  Judicial review is a powerful weapon to  restrain unconstitutional exercise of power by the  legislature and executive.  The expanding horizon of  judicial review has taken in its fold the concept of social  and economic justice.  While exercise of powers by the  legislature and executive is subject to judicial restraint, the  only check on our own exercise of power is the self  imposed discipline of judicial restraint.

When the State action is challenged, the function of  the court is to examine the action in accordance with law  and to determine whether the legislature or the executive  has acted within the powers and functions assigned under  the constitution and if not, the court must strike down the  action.  While doing so the court must remain within its self  imposed limits.  The court sits in judgment on the action of  a coordinate branch of the Government.  While exercising  power of judicial review of administrative action, the court  is not an appellate authority.  The constitution does not  permit the court to direct or advise the executive in matters  of policy or to sermonize quo any matter which under the  constitution lies within the sphere of the legislature or  executive, provided these authorities do not transgress their  constitutional limits or statutory powers".

The courts must, therefore, exercise judicial restraint, and not  encroach into the executive or legislative domain.  Orders for creation  of posts, appointment on these posts, regularization, fixing pay scales,  continuation in service, promotions, etc. are all executive or legislative  functions, and it is highly improper for Judges to step into this sphere,  except in a rare and exceptional case.  The relevant case law and  philosophy of judicial restraint has been laid down by the Madras High  Court in great detail in Rama Muthuramalingam vs. Dy. S.P.  AIR  2005 Mad 1, and we fully  agree with the views expressed therein.   

No doubt, in some decisions the Supreme Court has directed  regularization of temporary or ad hoc employees but it is well settled  that a mere direction of the Supreme Court without laying down any  principle of law is not a precedent.  It is only where the Supreme Court  lays down a principle of law that it will amount to a precedent.  Often  the Supreme Court issues directions without laying down any principle  of law, in which case, it is not a precedent.  For instance, the Supreme  Court often directs appointment of someone or regularization of a  temporary employee or payment of salary, etc. without laying down  any principle of law.  This is often done on humanitarian  considerations, but this will not operate as a precedent binding on the  High Court.  For instance, if the Supreme Court directs regularization  of service of an employee who had put in 3 years’ service, this does not  mean that all employees who had put in 3 years’ service must be  regularized.  Hence, such a direction is not a precedent.  In Municipal  Committee, Amritsar vs. Hazara Singh, AIR 1975 SC 1087, the  Supreme Court observed that only a statement of law in a decision is  binding.  In State of Punjab vs. Baldev Singh, 1999 (6) SCC 172, this  Court observed that everything in a decision is not a precedent.  In  Delhi Administration vs. Manoharlal, AIR 2002 SC 3088, the

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Supreme Court observed that a mere direction without laying down any  principle of law is not a precedent.  In Divisional Controller, KSRTC  vs. Mahadeva Shetty 2003 (7) SCC 197, this Court observed as  follows:  

"\005..The decision ordinarily is a decision on the case before  the Court, while the principle underlying the decision  would be binding as a precedent in a case which comes up  for decision subsequently.  The scope and authority of a  precedent should never be expanded unnecessarily beyond  the needs of a given situation.  The only thing binding as an  authority upon a subsequent Judge is the principle, upon  which the case was decided\005\005"    

In Jammu & Kashmir Public Service Commission vs. Dr.  Narinder Mohan AIR 1994 SC 1808, this Court held that the  directions issued by the court from time to time for regularization of ad  hoc appointments are not a ratio of this decision, rather the aforesaid  directions were to be treated under Article 142 of the Constitution of  India.  This Court ultimately held that the High Court was not right in  placing reliance on the judgment as a ratio to give the direction to the  Public Service Commission to consider the cases of the respondents for  regularization.  In that decision this Court observed:  

"11. This Court in Dr. A.K. Jain vs. Union of India 1988  (1) SCR 335, gave directions under Article 142 to  regularize the services of the ad hoc doctors appointed on  or before October 1, 1984.  It is a direction under Article  142 on the particular facts and circumstances therein.   Therefore, the High Court is not right in placing reliance on  the judgment as a ratio to give the direction to the PSC to  consider the cases of the respondents.  Article 142 power is  confided only to this Court.  The ratio in Dr. P.C.C Rawani  vs. Union of India 1992 (1) SCC 331, is also not an  authority under Article 141.  Therein the orders issued by  this Court under Article 32 of the Constitution to regularize  the ad hoc appointments had become final. When contempt  petition was filed for non implementation, the Union had  come forward with an application expressing its difficulty  to give effect to the orders of this Court. In that behalf,  while appreciating the difficulties expressed by the Union  in implementation, this Court gave further direction to  implement the order issued under Article 32 of the  Constitution. Therefore, it is more in the nature of an  execution and not a ratio under Article 141. In Union of  India v Gian Prakash Singh, 1993(5) JT (SC) 681 this  Court by a Bench of three Judges considered the effect of  the order in A.K. Jain’s case and held that the doctors  appointed on ad hoc basis and taken charge after October 1,  1984 have no automatic right for confirmation and they  have to take their chance by appearing before the PSC for  recruitment. In H.C. Puttaswamy v Hon’ble Chief Justice  of Karnataka, AIR 1991 SC 295: (1991 Lab 1 C 235), this  Court while holding that the appointment to the post of  clerk etc. in the subordinate courts in Karnataka State  without consultation of the PSC are not valid appointments,  exercising the power under the Article 142, directed that  their appointments as regular, on humanitarian grounds,  since they have put in more than 10 years’ service. It is to  be noted that the recruitment was only for clerical grade  (Class-III post) and it is not a ratio under Article 141. In  State of Haryana v Piara Singh, (1992 AIR SC 2130), this  Court noted that the normal rule is recruitment through the  prescribed agency but due to administrative exigencies, an

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ad hoc or temporary appointment may be made. In such a  situation, this Court held that efforts should always be  made to replace such ad hoc or temporary employees by  regularly selected employees, as early as possible.  Therefore, this Court did not appear to have intended to lay  down as a general rule that in every category of ad hoc  appointment, if the ad hoc appointee continued for long  period, the rules of recruitment should be relaxed and the  appointment by regularization be made. Thus considered,  we have no hesitation to hold that the direction of the  Division Bench is clearly illegal and the learned single  Judge is right in directing the State Government to notify  the vacancies to the PSC and the PSC should advertise and  make recruitment of the candidates in accordance with the  rules".

       In view of the above observations of this Court it has to be held  that the rules of recruitment cannot be relaxed and the court/Tribunal  cannot direct regularization of temporary appointees de hors the rules,  nor can it direct continuation of service of a temporary employee  (whether called a casual, ad hoc or daily rate employee) or payment of  regular salaries to them.  

       It is well settled that regularization cannot be a mode of  appointment vide Manager, RBI, Bangalore vs S. Mani & others, AIR  2005 SC 2179 (para 54).        

In the aforesaid decision the Supreme Court referred to its own  earlier decision in A Umarani vs. Registrar, Cooperative Societies &  others, AIR 2004 SC 4504 wherein it was observed: "Regularization,  in our considered opinion, is not and cannot be a mode of recruitment  by any "State" within the meaning of Article 12 of the Constitution of  India or any body or authority governed by a Statutory Act or the Rules  framed thereunder.  It is also now well-settled that an appointment  made in violation of the mandatory provisions of the Statute and in  particular ignoring the minimum educational qualification and other  essential qualifications would be wholly illegal.  Such illegality cannot  be cured by taking recourse to regularization. (See State of H.P. vs.  Suresh Kumar Verma and another 1996(7) SCC 562").  This Court in R.N.  Nanjundappa  vs. T. Thimmiah, 1972 (1) SCC 409 held:   

" If the appointment itself is in infraction of the rules  or if it is in violation of the provisions of the Constitution  the illegality cannot be regularized.  Ratification or  regularization is possible of an act which is within the  power and province of the authority but there has been  some noncompliance with procedure or manner which does  not go to the root of the appointment.  Regularization  cannot be said to be a mode of recruitment.  To accede to  such a proposition would be to introduce a new head of  appointment in defiance of the rules or it may have the  effect of setting at naught the rules.

The decision in the case of R.N. Nanjundappa (supra)  has been followed by the Supreme Court in several  decisions viz. Ramendra Singh vs. Jagdish Prasad, 1984  Supp SCC 142; K. Narayanan vs. State of Karnataka, 1994  Supp(1) SCC 44, and V. Sreenivasa Reddy vs. Government  of A.P., 1995 Supp (1) SCC 572.  These decisions have  also been noticed by the Supreme Court in Sultan Sadik vs.  Sanjay Raj Subba, 2004 (2) SCC 377 and A. Umarani vs.  Registrar, Cooperative Societies and others, 2004 (7) SCC  112".           

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We are of the opinion that if the court/tribunal directs that a daily  rate or ad hoc or casual employee should be continued in service till the  date of superannuation, it is impliedly regularizing such an employee,  which cannot be done as held by this Court in Secretary, State of  Karnataka vs. Umadevi (supra), and other decisions of this Court.         In view of the above discussion, we are of the opinion that the  orders of the Labour Court as well as the High Court were wholly  unjustified and cannot be sustained for the reasons already mentioned  above.  The appeal is, therefore, allowed.  The impugned judgment of  the High Court and the Labour Court are set aside and the Reference  made to the Labour Court is answered in the negative.  There shall be  no order as to costs.

       Before parting with this case, we would like to state that although  this Court would be very happy if everybody in the country is given a  suitable job, the fact remains that in the present state of our country’s  economy the number of jobs are limited.  Hence, everybody cannot be  given a job, despite our earnest desire.

       It may be mentioned that jobs cannot be created by judicial  orders, nor even by legislative or executive decisions. Jobs are created  when the economy is rapidly expanding, which means when there is  rapid industrialization.  At present, the state of affairs in our country is  that although the economy has progressed a little in some directions,  but the truth is that this has only benefited a handful of persons while  the plight of the masses has worsened.  Unemployment in our country  is increasing, and has become massive and chronic.  To give an  example, for each post of a Peon which is advertised in some  establishments there are over a thousand applicants, many of whom  have MA, M.SC., M.Com or MBA degrees.  Recently, about 140 posts  of Primary School Teachers  were advertised in a District in Western  Madhya Pradesh, and there were about 13000 applicants i.e. almost 100  applicants for each post.  Large scale suicides by farmers in several  parts of the country also shows the level of unemployment.  These are  the social and economic realities of the country which cannot be  ignored.           One may be very large hearted but then economic realities have  also to be seen.  Giving appointments means adding extra financial  burden to the national exchequer.  Money for paying salaries to such  appointees does not fall from the sky, and it can only be realized by  imposing additional taxes on the public or taking fresh loans, both of  which will only lead to additional burden on the people.             

       No doubt, Article 41 provides for the right to work, but this has  been deliberately kept by the founding fathers of our Constitution in the  Directive Principles and hence made unenforceable in view of Article  37, because the founding fathers in their wisdom realized that while it  was their wish that everyone should be given employment, but the  ground realities of our country cannot be overlooked.  In our opinion,  Article 21 of the Constitution cannot be stretched so far as to mean that  everyone must be given a job.  The number of available jobs are  limited, and hence Courts must take a realistic view of the matter and  must exercise self-restraint.

       In Rajendra vs. State of Rajasthan AIR 1999 SC 923 this Court  following its own decision in Delhi Development Horticulture  Employees Union vs. Delhi Administration, Delhi, AIR 1992 SC 789  held that the right to livelihood was found not feasible to be  incorporated as a fundamental right in the Constitution and therefore  employment was also not guaranteed under the Constitutional scheme.   In Sandeep Kumar vs. State of U.P. AIR 1992 SC 713 this Court  observed that where there was no work in the project the employees  cannot be regularized.  In State of Himachal Pradesh vs. Ashwani  Kumar, 1996(1) J.T. 214 this Court held that where a project has to be

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closed down for non-availability of funds a direction to regularize 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.  The same view was taken in State of U.P.  vs. U.P. Madhyamik Shiksha Parished Shramik Sangh AIR 1996 SC  708.  It follows from these decisions that there is no legal right in  temporary employees (whether called casual, ad hoc, or daily rated  workers) to get absorption, or to be continued in service or get regular  pay.          In the present case, the appellant is a sick company which has  been running on huge losses for many years, and is practically closed  down.  There are no vacancies on which the respondents could have  been appointed.  While we may have sympathy with them, we cannot  ignore the hard economic realities, nor the settled legal principles.  The  appeal is allowed.