IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION   

CIVIL APPEAL NO.3702 OF 2006

A. Manjula Bhashini & others     …..Appellant (s)

Versus

The Managing Director, A.P. Women’s   .....Respondent (s) Cooperative Finance Corporation Ltd.  and another

With C.A. Nos.3685 of 2006, 3703 of 2006, 3704 of 2006, 3705 of 2006, 3706 of 2006, 3707 of 2006,  3709 of 2006, 3710 of 2006, 3712 of 2006, 3713 of 2006, 3714 of 2006, 3715 of 2006, 3716 of 2006, 3717  of 2006, 3718 of 2006, 3721 of 2006, 3723 of 2006, 3724 of  2006, 3726 of 2006, 3727 of 2006, 3728 of  2006, 3729 of 2006, 3730 of 2006, 3731 of 2006, 3732 of 2006, 3733 of 2006, 3734 of 2006, 3737 of  2006, 3742 of 2006, 3744 of 2006, 3748 of 2006, 3749 of 2006, 3750 of 2006, 3751 of 2006, 3752 of  2006, 3753 of 2006, 3754 of 2006 and 3755 of 2006.

J U D G M E N T

G.S. Singhvi, J.

1. Whether  the  persons  employed  on  daily  wage  basis  or  nominal  muster  roll  or  

consolidated  pay  or  as  contingent  worker  on  full  time  basis  in  different  departments  of  the  

Government of Andhra Pradesh and its agencies/instrumentalities are entitled to be regularised in  

service on completion of 5 years and whether amendments made in the Andhra Pradesh (Regulation  

of Appointments to Public Services and Rationalization of Staff Pattern and Pay Structure) Act,  

1994  (for  short  ‘the  1994  Act’)  by  Amendment  Act  Nos.3  and  27  of  1998  are  ultra  vires  the  

provisions of the Constitution are the questions which arise for determination in these appeals, some  

of which have been filed by the State Government and its agencies/instrumentalities and some have  

been filed by the employees, who could not convince the Andhra Pradesh Administrative Tribunal  

(for short “the Tribunal”) and/or the High Court to accept their prayer for issue of a mandamus to  

the concerned authorities to regularise their services.

2. In 1970s, 80s and early 90s, the country witnessed an unusual phenomena in the field of  

public  employment.  Lakhs  of  persons  were  engaged/employed  under  the  Central  and  State  

Governments  in  violation  of  the  doctrine  of  equality  enshrined  in  Articles  14  and  16  of  the  

Constitution, Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 (for short  

‘the 1959 Act’) and the rules framed under proviso to Article 309 of the Constitution.  The officers  

who were entrusted with the task of making appointments on Class III and Class IV posts misused  

their  power  and  employed  their  favourites  or  all  those  who  enjoyed  political  power  without  

considering the claims of other similarly situated persons.  For avoiding compliance of the mandate  

of the equality clause enshrined in the Constitution and other statutory provisions, the empowered  

authorities resorted to the mechanism of employing the persons of their choice on daily wages or  

nominal  muster roll  or  contract  or part  time basis  with the hope that  on some future date  the  

Government  will  frame  policy  for  regularisation  of  such  employees.  In  this  manner,  nepotism,  

favoritism and even corruption became hallmark of the appointments and a huge illegal employment  

market  developed in the  country,  a  fact  of  which cognizance  was taken by this  Court  in Delhi  

Development Horticulture Employees’ Union v. Delhi Administration [(1992) 4 SCC 99].   

3. State of Andhra Pradesh was no exception to the aforementioned malady. Thousands of  

persons were employed in different departments of the Government and agencies/instrumentalities  

of the State on daily wages or nominal muster roll or consolidated pay or part time basis.  In some  

cases, employment was given despite the fact that sanctioned posts were not available.  Even if the  

posts  existed,  the  concerned authorities  neither  issued advertisement  nor sent  requisition  to the  

employment exchange(s) and made appointments in complete disregard of Articles 14 and 16 of the  

Constitution and the relevant statutory provisions including the 1959 Act depriving thousands of  

unemployed persons of their right to be considered for appointment to public posts/offices.   

4. In order to check the menace of irregular appointments, which was creating unwarranted  

financial burden on the State, and, thereby adversely affecting the welfare schemes and development

programmes and also causing dissatisfaction among the members of younger generation who were  

denied the right of consideration for appointment, the Government of Andhra Pradesh decided to  

bring  a legislation  for  totally  banning  appointment  on daily  wages,   regulating  appointment  on  

temporary basis and for rationalisation of staff pattern and pay structure.  In furtherance of that  

decision,  the  Governor  of  Andhra  Pradesh  promulgated  the  Andhra  Pradesh  (Regulation  of  

Appointments to Public Services and Rationalisation of Staff Pattern and Pay Structure) Ordinance,  

1993.    The same was published in the State Gazette dated 25.11.1993.  The Ordinance was replaced  

by  the  1994  Act,  which  was  enforced  with  effect  from  25.11.1993.  The  State  Government’s  

determination to curb irregular appointments and reduce burden on the State exchequer is clearly  

reflected in the statement of objects and reasons contained in the bill presented before the legislative  

assembly, the relevant portions of which are extracted below:    

“…………The number of employees has been increasing at an enormous rate. The  census of Government employee conducted by the State Government in 1976, 1981  and  1988  and  as  projected  in  1993  shows  that  the  number  of  employees  of  the  Government,  Universities,  Institutions  receiving  Grant-in-Aid  and  Public  Sector  Undertakings, Local Bodies has increased from 6.78 lakhs in 1976 to 12.34 lakhs in  1993  which  constituted  an  increase  of  82%.   Out  of  this,  the  employees  of  the  Departments of the State alone increased from 2.85 lakhs to 5.56 lakhs representing an  increase of 95%.  The Public Sector Undertakings grew at 128% from 1.44 lakhs to  3.28 lakhs.  Among the Government employees and Local Body employees, the class  IV and other categories constitute about 41%.

The expenditure particulars show that the amount spent on the salaries,  allowances  and  pension  of  Government  employees,  Panchayat  Raj  employees,  employees paid out of the Grant-in-Aid, amounts to a figure of Rs.4277 crores in 1993- 94 salaries on the due dates.  Government considers that it is not fair that people’s  interest should be neglected and even sacrificed by not taking up schemes just to pay  salaries to its employees.

In addition to the salary and pension commitment there is a heavy debt  servicing burden on the Government.  The debt also has been increasing from year to  year.  In 1983 the total outstanding debt was Rs.2543 crores.   It  has now reached  Rs.10970 crores during 1993-94.  At present, the Government are paying as much as  Rs.1012 crores for payment of interest and Rs.330 crores for repayment of principal  amount every year.  The total amount of non-plan items of expenditure in 1993-94 is  amounting to Rs.6222 crores, which cannot be avoided.  The Government are not able  to complete a number of Irrigation Projects and Power Projects because of lack of  funds.  For the same reason productive assets like completed irrigation projects and  roads  are  not  being  properly  maintained  resulting  in  wastage  of  assets  whose  replacement  will  cost  several  hundreds  of  crores  of  rupees.   At  present,  the  Government are spending 81% of the debt they receive from the Government of India,  Market borrowings and all other categories of loans for repayment; which means only  19% of the total debt is being added to our resources.  But it is estimated that from

next  year  onwards  the  repayment  will  be  more  than  the  debt  receipts.  If  the  Government  are  caught  in  such  a  debt  trap  the  amount  available  to  the  State  Government will be limited to its own tax and non-tax revenues and the devolutions  from the Government of India.  The devolutions expected from the Government of  India is about Rs.1698 crores in 1993-94.  Since the expenditure on establishment is  already 105% of the own tax and non-tax revenues of the state, it can be seen that  between this expenditure and other non-plan expenditure the Government would have  exhausted  the  most  of  the  resources  leaving  very  little  for  welfare  schemes  and  developmental programmes.   Since no Government can allow such total neglect  of  welfare and developmental activities the employees of  the State will  not be getting  salaries on time and eventually they will not be getting their full salary also.

The  irregular  appointments  are  adversely  affecting  the  interest  of  several  thousands of unemployed persons who have registered in the employment exchange  and  awaiting  their  turn  for  orders.   It  is  also  adversely  affecting  the  interests  of  Scheduled Castes, Scheduled Tribes and backward Classes who have reservation in  employment since the N.M.R. appointments are not taking care of the reservation for  these  categories.   Government  have  constituted  District  Selection  Committees  and  some  ad  hoc  Selection  Committees  besides  the  Andhra  Pradesh  Public  Service  Commission  to  take  up  recruitment  in  accordance  with  law  in  Government  Departments.  Irregular appointments are depriving these legitimate recruiting bodies  from  performing  their  functions.   Irregular  appointments  in  excess  of  sanctioned  strength will also result in industrial undertakings becoming unviable and eventually  sick.  When a unit goes sick, it results in retrenchment and even winding-up, thus,  adversely affecting the interests of the existing employees who are recruited against  sanctioned  strength  and  through  authorised  process  of  selection.   Similarly  unauthorised appointments over and above the sanctioned strength in Government  Departments would also increase the number of employees and to that extent militate  against the Government looking after the existing employees who have been recruited  through proper channel.  The Act will, therefore, protect the interests of candidates in  Employment  Exchanges,  reserved  categories,  the  existing  employees  who  were  recruited  through  proper  channel  and  the  legitimate  functions  of  the  recruiting  agencies.

From the above, it can be seen that the financial position of the State arising  out  of  excessive  expenditure  on  staff  is  so  alarming  that  it  cannot  be  tackled  by  ordinary administrative actions and instructions.  It is, therefore, thought that a time  has  come  when  we  have  to  provide  for  deterrent  action  for  illegal  and  irregular  appointments by enacting a law.  It has accordingly been decided to enact a law to  achieve the following objects, namely:-

(a) totally banning such appointments in the institutions covered by legislation;

(b) imposing stringent penalties for making appointments by public servants  on violation of the law;

(c) to protect public servants from being held for contempt for non-compliance  of  the orders  of  Tribunal  or High Court  and also for abatement of  pending cases  claiming regularization of services which are already filed before the courts of law by  making a suitable provisions therefor; and

(d) to  protect  the  interests  of  candidates  registered  with  Employment  Exchange, the reservation rights of Scheduled Castes, Scheduled Tribes and Backward  Classes, the rights of the existing employees who are recruited through proper channel  and the functions of Andhra Pradesh Public Service Commission, District Selection

Committees and other Selection Committees constituted by the Government.

The legislation will prevent further deterioration of finances of the State  and  at  the  same  time  conserve  the  resources  for  the  welfare  and  developmental  activities.”

5. For  the  sake  of  convenient  reference,  Sections  2(ii),  3,  4,  7  and  9  of  the  1994  Act  

(unamended) are reproduced below:

“2(ii) ‘daily wage employee’ means any person who is employed in any public  service on the basis of payment of daily wages and includes a person employed on the  basis of nominal muster roll or consolidated pay either, on full-time or part-time or  piece  rate  basis  or  as  a  workcharged employee  and any  other  similar  category  of  employees  by  whatever  designation  called  other  than  those  who  are  selected  and  appointed in a sanctioned post  in accordance with the relevant  rules on a regular  basis.    

3.  Prohibition  of  daily  wage  appointments  and  regulation  of  temporary  appointments.– (1) The appointment of any person in any public service to any post, in  any class, category or grade as a daily wage employee is hereby prohibited.

(2)  No temporary appointment shall be made in any public service to any post, in any  class, category or grade without the prior permission of the competent authority and  without the name of the concerned candidate being sponsored by the Employment  Exchange.

4. Regulation of recruitment.– No recruitment in any public service to any post in any  class, category or grade shall be made except, –  

(a) from the panel of candidates selected and recommended for appointment  by  the  Public  Service  Commission/College  Service  Commission  where  the  post  is  within the purview of the said Commission;

(b) from a panel  prepared by  any Selection Committee  constituted  for  the  purpose in accordance with the relevant rules or orders issued in that behalf; and

(c) from the candidates having the requisite qualification and sponsored by  the  Employment  Exchange  in  other  cases  where  recruitment  otherwise  than  in  accordance with clauses (a) and (b) is permissible.

Explanation: – For the removal of doubts it is hereby declared that nothing in this  section  shall  apply  to  compassionate  appointments  made  in  favour  of  son/daughter/spouse of any person employed in public service who dies in harness or  who retires from service on medical grounds, in accordance with the relevant orders  issued from time to time.

7. Bar for regularization of services.–  No person who is a daily wage employee and no  person who is appointed on a temporary basis under section 3 and is continuing as  such at the commencement of this Act shall have or shall be deemed ever to have a  right to claim for regularization of services on any ground whatsoever and the services  of such person shall be liable to be terminated at any time without any notice and  without assigning any reason:

Provided that in the case of Workmen falling within the scope of section 25-F of the  Industrial Disputes Act, 1947, one month’s wages and such compensation as would be  payable under the said section shall be paid in case of termination of services:

Provided further that nothing in this section shall apply to the Workmen governed by  Chapter V-B of the Industrial Disputes Act, 1947.

Explanation.– For the removal of doubts it is hereby declared that the termination of  services under this section shall not be deemed to be dismissal or removal from service  within the meaning of article  311 of  the Constitution or of any other relevant law  providing  for  the  dismissal  or  removal  of  employees  but  shall  only  amount  to  termination simpliciter, not amounting to any punishment.

9.   Abatement  of  claims.–  Notwithstanding  anything  contained  in  any  judgment,  decree  or  order  of  any  court,  tribunal  or  other  authority,  the  claims  for  regular  appointment of all daily wage employees and persons appointed on a temporary basis,  shall stand abated and accordingly,–

(a) no suit or other proceeding shall be instituted, maintained or continued in  any court,  tribunal  or other  authority  by the daily  wage or temporary appointees  against the Government or any person or authority whatsoever for the regularization  of the services;

(b) no court shall enforce any decree or order directing the regularization of  the services of such persons; and  

(c) all  proceedings  pending  in  any  court  or  tribunal  claiming  the  regularization of services shall abate.”

6. As soon as the 1994 Act was enacted, the beneficiaries of illegal employment market and  

back door  entrants  became apprehensive  of  termination of  their  services  in  terms of  Section 7.  

Therefore, they approached the State Government through their mentors and sympathizers in the  

political and bureaucratic set up and succeeded in getting the rigor of that section relaxed.  This is  

evinced from the fact that by taking shelter of the judgment of this Court in State of Haryana v.  

Piara Singh [(1992) 4 SCC 118] and using its executive power under Article 162 of the Constitution,  

the State Government issued G.O.Ms. No.212 dated 22.4.1994 (hereinafter referred to as ‘G.O. dated  

22.4.1994’) for facilitating regularisation of the services of those employed on daily wages or nominal  

muster roll or consolidated pay subject to the condition that such persons had worked continuously  

for a minimum period of 5 years and were continuing on 25.11.1993.  The relevant portions of G.O.  

dated 22.4.1994 are reproduced below:

“Government  notice  that  appointing  authorities  of  the  Institutions  and

Establishments  under  the  control  of  State  Government,  Local  Authorities,  Corporations owned and controlled by the State Government and other bodies  established by the State Government grossly violated the instructions issued from  time  to  time  by  the  Government  and  appointed  persons  indiscriminately  to  various  categories  of  services  either  on  Daily  Wage  basis  or  temporary  basis  without  there  being  a  post  and  without  being  sponsored  by   Employment  Exchange and without observing the rule of reservation to the Scheduled Caste,  Scheduled  Tribe  and  Backward  classes.   In  most  of  the  cases,  the  persons  appointed for a specific work have been continued even after their need ceased.  After  a  lapse  of  some time,  all  these  appointees  have  approached the  various  Courts  and  Tribunals  for  regularization  of  their  services  and  Courts  and  Tribunals have been directing the State Government to regularize the services on  the ground that they have a long service to their credit.  This practice has been  causing considerable drain on the finances of the State Government.  Government  have  thought  it  imperative  to  prohibit  the  unauthorised  and  irregular  appointments by a law in the public interest.  Accordingly the State Government  have  enacted  law  regulating  the  appointments  to  Public  Services  and  for  Rationalisation  of  the  Staff  Pattern  and  Pay  Structure  in  the  reference  read  above.   This  will  streamline  the  recruitment  along  healthy  lines,  to  enforce  Employment Exchanges (Compulsory Notification of Vacancies) Act in its true  letter and spirit, to follow the rule of reservation enshrined in the Constitution  with utmost strictness and to punish those who are guilty of violating the law.  The above Act came into force with effect from 25.11.1993.

2. Though  the  reference  2nd cited,  information  has  been  obtained  from  various  Government  Offices,  Local  Bodies,  Public  Sector  undertakings  etc.,  from  the  information received by Government it is seen that appointing authorities have  violated the instructions issued by Government and appointed several individuals.  Appointments have been made indiscriminately in the Government Offices, Local  Bodies,  Universities,  Public  Sector undertakings  and various other Bodies  and  Institutions  operating  on  Government  finances.   In  fact,  there  is  no  need  to  continue all these Daily Wage/Temporary employees for the reasons that not all of  them are appointed in sanctioned posts and the recruitment was in many cases  not  through  Employment  Exchange.   Their  appointment  was  made  without  following rule of reservation and in the case of workcharged employees, there is  no work for them as the specific work for which they were appointed has already  been completed.  Though the Act  provides  that no person who is  Daily Wage  employee and no person who is appointed on temporary basis shall have any right  to claim for regularization of service on any ground, it has been the endeavour of  the Government to regularize as many as NMR/Daily Wage employees as possible  who are otherwise qualified depending on the requirement of the workload while  keeping  in  mind  the  hardship  that  would  be  caused  if  their  services  are  not  regularised.   The Hon’ble Supreme Court in its  Judgement dated 12.8.1992 in  Civil Appeal No. 2979/92 and batch have also observed to evolve an appropriate  policy for regularization.  Accordingly, Government after careful examination of  the whole issue and in supersession of all previous orders on the subject including  G.O.Ms.  No.  193,  General  Administration  Department,  dated  14.3.1990  and  keeping in view the above judgement of Supreme Court of India, have formulated  a  scheme  for  regularization  of  services  of  the  persons  appointed  on  Daily  Wage/NMR  or  on  consolidated  pay  and  are  continuing  on  the  date  of  commencement of the Act.  Government accordingly decided that the services of  such persons who worked continuously for a minimum period of 5 years and are  continuing on 25.11.1993 be regularised by the appointing authorities subject to  fulfillment of the following conditions:

1) The persons appointed should possess the qualifications prescribed as per rules in  force as on the date from which his/her services have to be regularised.

2) They should be within the age limits as on the date of appointment as NMR/Daily  wage employee.

3) The rule of reservation wherever applicable will be followed and back-log will be set- off against future vacancies.

4) Sponsoring of candidates from Employment Exchange is relaxed.

5) Absorption  shall  be  against  clear  vacancies  of  posts  considered  necessary  to  be  continued as per work-load excluding the vacancies already notified to the Andhra  Pradesh Public Service Commission / District Selection Committee.

6) In the case of Workcharged Establishment, where there will be no clear vacancies,  because of the fact that the expenditure on Workcharged is at a fixed percentage of  P.S.  charges  and  as  soon  as  the  work  is  over,  the  services  of  workcharged  establishment  will  have  to  be  terminated,  they  shall  be  adjusted  in  the  other  departments,  District  Offices  provided  there  are  clear  vacancies  of  last  Grade  Service.”

7. A number of  persons  who were  employed on daily  wages or  nominal  muster roll  or  

consolidated pay, but did not complete 5 years on 25.11.1993 challenged the aforesaid G.O. by filing  

writ petitions and applications before the High Court and Tribunal respectively.  A learned Single  

Judge of the High Court allowed the writ petitions and held that all persons employed on daily  

wages or nominal muster roll or contract basis are entitled to be considered for regularisation on  

completion of 5 years.  The Division Bench upheld the order of the learned Single Judge with the  

modification that daily wagers etc. would be entitled to be considered for regularisation with effect  

from the date of completion of 5 years continuous service. The special leave petitions filed by the  

State Government and agencies and instrumentalities of the State were dismissed by this Court vide  

judgment titled District Collector v. M.L. Singh [1998 (2) ALT 5 (SC)], which is reproduced below:   

“We  have  heard  the  learned  counsel  for  the  parties.   These  matters  relate  to  regularisation and payment of wages to the respondents who were employed on daily  wage basis.  By the impugned judgment, the Division Bench of the High Court, while  affirming with modification the order passed by the learned Single Judge has directed  that  all  employees  who have completed five  years  of  continuous  service  should be  considered for regularization in accordance with the terms of G.O.Ms. No.212, dated  April 22, 1994 and that they should be paid their wages at par with the wages paid to  the permanent employees of that category.  As regards payment of wages there is no  dispute  between  the  parties  that  the  same  have  to  be  paid  from  the  date  of  regularization.  Insofar as regularization is concerned, we are of the view that the High

Court has rightly directed that on the basis of the Notification G.O. Ms. No. 212, the  respondent employees shall  be regularized with effect  from the date or dates,  they  completed five  years  continuous  service.   It  is  however  made clear  that  the  other  condition  laid  down in  the  said  G.O.Ms.  No.  212 will  have  to  be  satisfied  for  the  purpose of regularisation.  The special leave petitions are disposed of accordingly.  No  costs.”   

8. The part time employees, who were not covered by G.O. dated 22.4.1994 also approached  

the Tribunal and High Court claiming regularisation of their services.  By an interlocutory order  

dated  25.4.1997,  the  High  Court  directed  that  a  scheme  be  framed  for  regularisation  of  their  

services.  The  State  Government  promptly  implemented  the  High  Court’s  directive  and  issued  

G.O.(P)  No.112  dated  23.7.1997  for  regularization  of  part  time  employees  who  had  worked  

continuously for a minimum period of 10 years and were continuing on 25.11.1993 subject to the  

following conditions:-

1. “Absorption  shall  be  against  clear  vacancies  of  posts  considered  necessary  to  be  continued  as  per  work-load  excluding  the  vacancies  already  notified  to  the  Andhra  Pradesh  Public  Service  Commission  or  as  the  case  may  be,  the  District  Selection  Committee.

2. The persons appointed should possess the qualifications prescribed as per rules in force  as on the date from which his or her services have to be regularised.

3. The person should be within the age limit as on the date of appointment as part-time  employee.

4. The Rule of Reservation wherever applicable will be followed and back-log will be set off  against future vacancies.

5. The sponsoring of candidate from Employment Exchange is relaxed.

6. If there are two candidates, one part-time and the second one a full-time employee (Daily  Wage employee) of any category or name and there exists only one vacancy, the senior  most between the two in terms of continuous service already rendered prior to 25-11- 1993 treating two years of  part-time  service  as  one year of  full-time  service,  relative  seniority will be calculated and regularization will be suggested for the senior among the  two accordingly.

7. The regularization of services of full-time employee already made in terms of G.O.Ms.  No.212, Finance & Planning (FW.PC.III) Department, dt.22-4-1994 will not be reopened  for giving effect to the present order.”

9. Although,  in  State  of  Haryana v.  Piara  Singh (supra)  this  Court  did not  lay  down a

proposition that the government/public employer is bound to frame policy for regularisation of all  

daily  wage  employees  and  similarly  situated  persons  and  the  policy  contained  in  G.O.  dated  

22.4.1994 was intended to be only one time measure for regularisation of the services of the persons  

employed  on  daily  wages  or  nominal  muster  roll  or  consolidated  pay  who  completed  5  years  

continuous service on 25.11.1993, interpretation thereof by the High Court, which was approved by  

this Court became basis for lodgment of claim for regularisation of service by all those who were  

employed on daily wages or nominal muster roll or consolidated pay on or before 25.11.1993 and the  

cut  off  date  specified  in  the  G.O.  for  determination  of  eligibility  for  regularisation  became  

redundant.

10. With  a  view  to  clearly  bring  out  the  object  underlying  the  policy  of  regularisation  

contained  in  G.O.  dated  22.4.1994  and  to  make  the  same  an  integral  part  of  the  statute,  the  

legislature amended the 1994 Act. The first amendment was made by Act No.3 of 1998, which was  

published in Andhra Pradesh Gazette dated 3.1.1998 and was brought into force at once.  Sections 1,  

2 and 3 of Amendment Act No.3 of 1998 read thus:

“1. Short title and commencement.  (1) This  Act  may  be  called  the  Andhra Pradesh (Regulation of Appointments to Public Services and Rationalisation  of Staff Pattern and Pay Structure) (Amendment) Act, 1998.

(2) It shall come into force at once.

2. Amendment  of  section  4.,  Act  2  of  1994.   In  the  Andhra  Pradesh  (Regulation of Appointments to Public Services and Rationalisation of Staff Pattern  and Pay Structure) Act, 1994, (hereinafter referred to as the principal Act), in section  4, in sub-section (2), after clause (b), the following shall be added, namely: -

“(c) to the appointments made in favour of members of Scheduled Castes  or  Scheduled  Tribes,  who  or  whose  parents  or  spouse  are  subjected  to  atrocities, in accordance with the relevant orders issued from time to time.”

  3. Amendment of section 7.  In section 7 of the principal Act;-  

(a) in the opening paragraph for the expression, “Section 3 and”, the expression,  “Section 3 and no person who” shall be substituted;

(b) in the first proviso, for the words “provided that,” the words “provided also  that” and in the second proviso, for the words “provided further that”, the  words “provided also that” shall respectively be substituted;

(c) After  the  opening  paragraph and before  the  first  proviso  so  amended,  the  following provisions shall be inserted, namely:

“Provided  that  the  services  of  a  person,  who  worked  on  daily  wage/NMR/Consolidated pay/Contingent worker on full time basis continuously for a  minimum  period  of  five  years  and  is  continuing  as  such  on  the  date  of  the  commencement  of  the  Act  shall  be  regularised  in  accordance  with  the  scheme  formulated in G.O.Ms. No. 212, Finance & Planning (FW.PC. III) Department, dated  the 22nd April, 1994:

Provided  further  that  the  services  of  a  person  who  worked  on  part-time  basis  continuously for a minimum period of ten years and is continuing as such on the date  of the commencement of this Act shall be regularised in accordance with the scheme  formulated in G.O. (P).112, Finance & Planning (FW.PC. III) Department, dated the  23rd July, 1997.”

11. After 8 months, the 1994 Act was again amended by Act No.27 of 1998.  The preface and  

Sections 1, 4 and 7A of the second Amendment Act read as under:

“Whereas,  according  to  the  provisions  of  the  Andhra  Pradesh  (Regulation  of  Appointments  to  Public  Services  and  Rationalisation  of  Staff  Pattern  and  Pay  Structure) Act, 1994 and in accordance with the scheme formulated in the orders  issued  by  the  Government  in  G.O.Ms.  No.  212,  Finance  & Planning (FW.PC.III)  Department dated the 22nd April, 1994, the services of a person who worked on daily  wage/NMR/Consolidated  pay/Contingent  worker  on  full  time  basis  and  also  continuing as such as on the 25th November, 1993, the date on which the aforesaid  Act has come into force shall be regularised;  

And Whereas, in various judgments rendered by the different courts, the  orders  issued  by  the  Government  in  G.O.Ms.No.  212,  Finance  &  Planning  (FW.PC.III) Department, dated the 22nd day of April, 1994 have been interpreted,  that the completion of five years of service as on 25th November, 1993 shall mean that  as and when any employee completes five years of service and that the first proviso  under Section 7 of the said Act have also been interpreted to mean as two separate  and independent conditionalities;

And Whereas, the said interpretation is contrary to the intendment and  the policy of the Government;

And Whereas, the Government felt it necessary to remove the ambiguity  found in the said proviso to section 7 of the said Act;

1. Short title and commencement.  (1) This Act may be called the Andhra  Pradesh (Regulation of Appointments to Public Services and Rationalisation of Staff  Pattern and Pay Structure) (Second Amendment) Act, 1998.

(2) Sub-section (1) of section 3 shall be deemed to have come into force on the  28th October, 1996 and the remaining provisions shall come into force at once.

4. Amendment of section 7.  In section 7 of the principal Act for the first  proviso, the following proviso shall be substituted, namely:-

Provided that the services of those persons continuing as on the 25th November, 1993

having completed a continuous minimum period of five years of service on or before  25th November, 1993 either on daily wage, or nominal muster roll, or consolidated pay  or  as  a  contingent  worker  on  full  time  basis,  shall  be  regularised  in  substantive  vacancies, if they were otherwise qualified fulfilling the other conditions stipulated in  the  scheme  formulated  in  G.O.Ms.  No.  212,  Finance  &  Planning  (FW.PC.  III)  Department, dated the 22nd April, 1994.

7A. Abatement of Claims. (1) Notwithstanding any Government order, judgement,  decree or order of any Court, Tribunal or other authority, no person shall claim for  regularization of service under the first proviso to section 7 as it was incorporated by  the  Andhra  Pradesh  (Regulation  of  Appointments  to  Public  Services  and  Rationalisation of Staff Pattern and Pay Structure) (Amendment) Act, 1998.

(2) No  suit  or  other  proceedings  shall  be  maintained  or  continued  in  any  Court, Tribunal or other authority against the Government or any person or other  authority whatsoever for regularization of services and all such pending proceedings  shall abate forthwith;

(3) No Court shall enforce any decree or order directing the Government or  any person or other authority whatsoever for regularization of services.”  

12. The daily wage employees and similarly situated persons who would have been affected  

by the amendments challenged the same in a batch of writ petitions filed before the High Court.  

Some employees also filed applications before the Tribunal.  The writ petitions were allowed by the  

learned Single Judge of the High Court vide judgment titled D. Sesharani v. Managing Director,  

A.P. Women’s Co-op. Finance Corporation [2001 (2) ALT 607]. The learned Single Judge held that  

the amendments are contrary to the fundamental rights guaranteed to the petitioners under Articles  

14, 16 and 21 of the Constitution and the Directive Principles of State Policy enshrined in Articles  

39A, 41, 42 and 43.  The learned Single Judge further held that Section 7A of the Amendment Act  

by which judicial review was denied to the aggrieved persons is contrary to the law laid down by the  

Supreme Court in Minerva Mills Limited v. Union of India [(1980) 2 SCC 591] and L. Chandra  

Kumar v.  Union  of  India  [(1995)  1  SCC 400].  The  learned  Single  Judge  then  relied  upon  the  

judgment of this  Court  in State of Haryana v.  Piara Singh (supra) and declared that the State  

Government is obliged to create posts for regularisation of the services of daily wagers etc. from the  

date of completion of 5 years service.

13. The appeals preferred by the State Government and its agencies/instrumentalities were  

allowed by the Division Bench and the order of the learned Single Judge was set aside by placing

reliance upon the judgments of this Court in S.S. Bola v. B.D. Sardana [1997 (8) SCC 522], Gujarat  

Agricultural University v. Rathod Labhu Bechar [2001 (3) SCC 574] and Indra Sawhney v. Union of  

India [2000 (1) SCC 168].  The Division Bench also reversed the direction given by the learned  

Single Judge to the State Government for creation of posts for regularisation of the services of daily  

wagers etc., but declared that the ban imposed on regularisation would be effective from the date of  

enforcement of Amendment Act No.27/1998 i.e. 19.8.1998 and all  persons who have completed 5  

years service as on the date of coming into force thereof would be entitled to be considered for  

regularisation of their services.  The relevant portions of the Division Bench judgment are extracted  

below:   

“58. The entire basis whereupon the judgment of the learned single Judge is based is,  therefore,  erroneous.   As  indicated  hereinbefore  having  regard  to  the  mode  of  appointment the requirements thereof, absence of sanctioned posts, non-observance of  the  statutory rules  the  part-time employees,  ad  hoc  employees  and NMRs did  not  derive any legal right whatsoever to continue in service.  In fact, save and except the  right  conferred  upon  them  to  be  considered  for  regularisation  by  reason  of  G.O.Ms.No.212, they did not have any other legal right whatsoever.  It is now well  settled principle that by reason of a catena of decisions of the High Court as also of the  Supreme Court of India a prolonged service would not ripen into permanence nor by  reason thereof the status of employee can be changed.

59. It  is  also not  a  case where an individual  decision inter-party  had been  sought to be taken away by reason of the said Amendment Act in terms whereof their  rights and liabilities alone were affected.  The interpretation of a policy decision is a  judgment in rem and by reason thereof, no inter-party rights had been conferred or  adjudicated upon.

60. The  validation  Act  or  for  that  purpose  any  Amendment  Act  does  not  offend the doctrine of separation of powers.  It is also trite that the Court in exercise  of its jurisdiction under Article 226 of the Constitution while exercising its power of  judicial review over legislation would not invalidate an act on the ground of malice or  otherwise.  Such an approach, in our opinion, is wholly unwarranted inasmuch as the  question as to whether the statute suffers from the vice of fraud on legislation or not  must be kept  confined to the  legislative  competence  and not  otherwise.   Right  to  employment is not a fundamental right or a constitutional right.  In terms of Articles  14 and 16 of the Constitution the right of a citizen is confined only to consideration  therefore.  Thus it would be incorrect to contend that the same would be a right of  property.

67. The  next  question  which  may  arise  for  consideration  would  be  as  to  whether the cut off date 25.11.1993 is so arbitrary as to attract the wrath of Article 14  of the Constitution.

68. Fixing a cut off date is normally not arbitrary unless it can be said to be  case where such a date has been fixed arbitrarily or capriciously and no reason exists  therefor.

69. After the decision of the Apex Court in Piara Singh’s case (supra) the State  had appointed  a  committee.   The  committee  had gone  into  the  matter  and made  certain recommendations including fixation of cut off date.  Such a cut off date was  fixed  keeping  in  view the  coming into  force  of  such  policy  decision.   In  Sushma  Sharma v. State of Rajasthan the Apex Court has held:

It may be borne in mind that wisdom or lack of wisdom in the action of the  Government or  legislature  is  not  justiciable  by  court.   See  in  this  connection the  observations of the U.S. Supreme Court in the case of Metropolis Theatre Company  v. City of Chicago and Ernest J. Magerstadt (1912) 57 I Ed 730).  To find fault with a  law is  not to demonstrate its  invalidity.   There the learned judge Mr. Justice Mc  Kenna observed as follows:

“It  may seem unjust  and oppressive,  yet  be free from judicial  interference.  The  problems  of  government  are  practical  ones  and  may  justify,  if  they  do  not  require, rough accommodations, illogical, it may be, and unscientific.  But even such  criticism should not be hastily expressed.  What is best is not always discernible, the  wisdom of any choice may be disputed or condemned.  Mere errors of government  are not subject to our judicial review.  It is only its palpably arbitrary exercises which  can be declared void.

This passage has been quoted with approval by Chief Justice Chandrachud in  Prag Ice & Oil Mills v. Union of India (1978) 3 SCR 293 at p.333: AIR 1978 SC 1296  at p.1318.

70. Yet again in the matter of  Cauvery Water Disputes  Tribunal  the Apex  Court clearly held:

To the extent that the Ordinance interferes with the decision of this Court and  of the Tribunal appointed under the Central legislation, it is clearly unconstitutional  being not only in direct conflict with the provisions of Article 262 of the Constitution  under which the said enactment is made but being also in conflict with the judicial  power of the State.

71. There is another aspect of the matter which we may not lose sight of.  In  terms of Act 2 of 1994 a complete ban had been imposed in making recruitment of  NMR, part-time or ad hoc employees.  Thus on and from 25.11.1993 nobody had been  employed nor could be employed.  Any such appointment would ex facie violate the  provisions of the said Act 2 of 1994 which not only contains a penal provision but also  imposed statutory liability upon the officers to pay and unto the State all such salaries  and emoluments  paid  to  such  employees.   Even a  ban  had been imposed  on  the  treasuries to honour such bills.

72. Act 27 of 1998 has come into force on 19.8.1998.  Thus the ban which now  would be imposed, as regards grant of regularisation will be effective from that date.  Can it be said that five years continuous service as on 13.8.1998 is a condition which  is  wholly  arbitrary  and  irrational  so  as  to  attract  Articles  14  and  246  of  the  Constitution.   The  answer  to  the  aforementioned  question  must  be  rendered  in  negative.  It will be a repetition to state that by reason of G.O.Ms.No.212 no workman  derives any vested right to be appointed as such.  But the employees who fulfill the  criteria were entitled to be only considered therefor.   Regularisation of service in  terms  of  aforementioned  G.O.Ms.No.212  is  dependant  upon  fulfillment  of  the  condition enumerated therein.  As is evident from the decision of the apex Court in  M.L.Singh’s case (supra) a distinction must be borne in mind between a vested right  and a right to be considered inasmuch as the requirement of a clear vacancy has a

direct  nexus  therewith.   Even if  there  were  clear  vacancies,  such  vacancies  were  required to be filled up having regard to the reservation policy of the State. ”

 14. Learned counsel for the employees supported the order of the learned Single Judge and  

argued that the Division Bench committed serious error by declaring that Amendment Act Nos.3 of  

1998 and 27 of 1998 are constitutional.  Learned counsel relied upon the judgments of this Court in  

Madan Mohan Pathak vs. Union of India [(1978) 2 SCC 50], State of Gujarat vs. Raman Lal Keshav  

Lal Soni [(1983) 2 SCC 33], Chairman, Railway Board vs. C.R. Rangadhamaiah [(1997) 6 SCC 623],  

Govt.  of  Andhra  Pradesh  vs.  G.V.K.  Girls  High  School  [(2000)  8  SCC  370]  and  argued  that  

amendments made in the 1994 Act are liable to be struck down not only because the same have the  

effect of nullifying the judgment of this Court in District Collector vs. M.L. Singh (supra), but also  

because Section 7A of Act No.27 of 1998 is a clear encroachment upon the courts’ power of judicial  

review, which is one of the basic features of the Constitution. Learned counsel further argued that  

by virtue of  the policy contained in G.O. dated 22.4.1994, persons appointed on daily  wages or  

nominal muster roll or consolidated pay acquired a right to be regularised in service and the State  

could not have deprived them of the said right by retrospectively amending the 1994 Act.  Another  

argument of the learned counsel is that once this Court held that all persons appointed on daily  

wages or nominal muster roll or consolidated pay are entitled to be regularised with effect from the  

date of completion of 5 years continuous service,  the legislature was not justified in prescribing  

25.11.1993 as the cut off date for determining the eligibility of daily wagers etc. for the purpose of  

regularisation.  Learned counsel emphasized that the interpretation placed by this Court on G.O.  

dated 22.4.1994 is final and the same could not have been undone by amending the 1994 Act.     

15. Learned  counsel  for  the  State  of  Andhra  Pradesh  and  its  agencies/instrumentalities  

argued that the 1994 Act was amended to clarify the object underlying the policy of regularisation  

contained in G.O. dated 22.4.1994 and to make the same an integral part of the statute and the  

Division  Bench  rightly  held  that  the  Amendment  Acts  do  not  have  the  effect  of  nullifying  the  

judgment of this Court in District Collector v. M.L. Singh (supra).  Learned counsel pointed out that  

the  policy  contained  in  G.O.  dated  22.4.1994  was  one  time  measure  for  relaxing  the  negative  

mandate contained in Section 7 against regularisation of the persons appointed on daily wages or on

temporary basis and argued that the legislature did not exceed its jurisdiction by laying down the  

requirements of completing 5 years continuous service on or before 25.11.1993 for the purpose of  

regularisation. They, however, questioned the direction given by the Division Bench for considering  

the cases of all daily wagers and like for regularisation who completed 5 years on 19.8.1998 i.e. the  

date on which Amendment Act No.27 of 1998 was published in the Gazette, by arguing that it was  

legally  impermissible  for  the  Division Bench to change  and/or  extend the date  of  eligibility  for  

regularisation from 25.11.1993 to 19.8.1998 simply because the amendment made in Section 7 by Act  

No.27 of 1998 was not enforced retrospectively.  

16. In the light of the above, we shall first consider whether the amendments made in the  

1994 Act have the effect of nullifying or overriding the judgment of this Court in District Collector  

v. M.L. Singh (supra) and whether Section 7A of Act No.27 of 1998 amounts to an encroachment on  

courts’ power of judicial review.  For this purpose, it is necessary to understand the true nature of  

the  1994  Act,  mischief  sought  to  be  remedied  by  enactment  thereof  and  the  reasons  for  its  

amendment.   The  1994  Act  was  enacted  in  the  backdrop  of  the  decision  taken  by  the  State  

Government to curb irregular appointments, to rationalise the staff pattern and pay structure and  

thereby reduce unnecessary expenditure and also to ensure that only those selected by the specified  

recruiting agencies are appointed against the sanctioned posts.  This is clearly discernible from the  

statement of objects and reasons contained in the Bill which led to enactment of the 1994 Act and  

provisions  contained  therein  to  which  reference  will  be  made  hereinafter.  Although  in  Aswini  

Kumar Ghose v. Arabinda Bose [AIR 1952 SC 369], it was held that the statement of objects and  

reasons contained in the Bill cannot be used or relied upon for the purpose of construction of the  

statute, this rule has not been strictly followed in the subsequent judgments. In A. Thangal Kunju  

Musaliar v. M. Venkatachalam Potti [AIR 1956 SC 246], the statement of objects and reasons were  

used for judging reasonableness of the classification made in an enactment to see if it infringed or  

was contrary to the Constitution.  In Central Bank of India v. Workmen [AIR 1960 SC 12], it was  

held that the statement of objects and reasons can be used for the limited purpose of understanding  

the background and antecedent state of affairs leading up to the legislation.  The same view was

reiterated in large number of other judgments including Bhaiji v. Sub-Divisional Officer, Thandla  

[(2003) 1 SCC 692], in which the Court referred to Principles of Statutory Interpretation by Justice  

G.P. Singh, 8th Edn., 2001 and observed:

“Reference to the Statement of Objects and Reasons is permissible for understanding  the  background,  the  antecedent  state  of  affairs,  the  surrounding  circumstances  in  relation to the statute, and the evil which the statute sought to remedy. The weight of  judicial  authority  leans  in  favour  of  the  view  that  the  Statement  of  Objects  and  Reasons cannot  be utilized for the purpose of  restricting and controlling the plain  meaning  of  the  language  employed  by  the  legislature  in  drafting  a  statute  and  excluding from its operation such transactions which it plainly covers.”

17. In  B.  Banerjee  v.  Smt.  Anita  Pan [(1975)  1  SCC 166],  this  Court  approved the view  

expressed by the Calcutta High Court that the statement of objects and reasons contained in the  

West Bengal Premises Tenancy (Second Amendment) Bill, 1969 and proceedings of the legislature  

including the speech made by the Minister at the time of introducing the Bill could be looked into for  

understanding the true character of the amendment and observed:

“The explosive import of neglecting such a distressing urban development reasonably  obliges the State to impose drastic restrictions on landlords’ right to property. And  when circumvention of wholesome legal inhibitions is practised on a large scale the  new challenge is met by clothing the law with more effective armour and that is the  rationale of the Amendment Act. The learned Judges rightly refer to the legislative  proceedings,  notorious  common  knowledge  and  other  relevant  factors  properly  brought to their ken. The “sound-proof theory” of ignoring voices from Parliamentary  debates, once sanctified by British tradition, has been replaced by the more legally  realistic and socially responsible canon of listening to the legislative authors when their  artifact is being interpreted.”

18. In K.P. Varghese v. ITO, Ernakulam [(1981) 4 SCC 173], this Court while rejecting the  

argument of the revenue that rule of strict construction should be applied for interpreting Section  

52(2), referred to the statement of objects and reasons contained in the Bill presented before the  

Parliament, speech made by the Finance Minister and observed:

“Now it is true that the speeches made by the members of the legislature on the floor  of  the  House  when a  Bill  for  enacting  a  statutory  provision  is  being  debated  are  inadmissible for the purpose of interpreting the statutory provision but the speech  made by the Mover of the Bill explaining the reason for the introduction of the Bill can  certainly  be  referred  to  for  the  purpose  of  ascertaining  the  mischief  sought  to  be  remedied by the legislation and the object and purpose for which the legislation is

enacted. This is in accord with the recent trend in juristic thought not only in western  countries but also in India that interpretation of a statute being an exercise  in the  ascertainment  of  meaning,  everything  which  is  logically  relevant  should  be  admissible.”

19. In Chern Taong Shang v. S. D. Baijal [(1988) 1 SCC 507], the Court referred to the object  

sought  to  be  achieved  by  enacting  Maritime  Zones  of  India  (Regulation  of  Fishing  by  Foreign  

Vessels) Act, 1981 i.e. preventing the illegal poaching of fishes by foreign vessels including foreign  

vessels chartered by Indian parties by providing deterrent punishment to protect Indian fishermen  

and observed:

“It is pertinent to mention that in interpreting a statute the court has to ascertain the  will  and policy of  the legislature as discernible from the object and scheme of  the  enactment and the language used therein. Viewed in this context it is apparent that the  said Act has been made with the sole purpose of  preventing poaching of  fishes by  foreign  vessels  chartered  by  Indian  citizens  within  the  exclusive  economic  zone  of  India as specified in Rule 8(1) (q) of Maritime Zone of India Rules as amended in 1982  as well as in breach of the provisions of the said Act and the terms and conditions of  permit issued under Section 5 of the said Act.”

20. In  Utkal  Contractors  and  Joinery  v.  State  of  Orissa  [1987  (3)  SCC  279],  the  Court  

interpreted the provisions of the Orissa Forest Produce (Control of Trade) Act, 1981 and observed:-

“………A statute is best understood if we know the reason for it.  The reason for a  statute is the safest guide to its interpretation.  The words of a statute take their colour  from the reason for it.   How do we discover  the reason for a statute?  There are  external and internal aids.  The external aids are Statement of Objects and Reasons  when the Bill is presented to Parliament, the reports of committees which preceded the  Bill  and the reports of  Parliamentary  Committees.   Occasional  excursions into the  debates of Parliament are permitted.  Internal aids are the preamble, the scheme and  the provisions of the Act.  Having discovered the reason for the statute and so having  set the sail to the wind, the interpreter may proceed ahead.  No provision in the statute  and no word of the statute may be construed in isolation.  Every provision and every  word must be looked at generally before any provision or word is attempted to be  construed.   The  setting  and  the  pattern  are  important.   It  is  again  important  to  remember that Parliament does not waste its breath unnecessarily.  Just as Parliament  is  not  expected to  use  unnecessary  expressions,  Parliament  is  also  not  expected to  express  itself  unnecessarily.   Even  as  Parliament  does  not  use  any  word  without  meaning something, Parliament does not legislate where no legislation is called for.  Parliament cannot be assumed to legislate for the sake of legislation; nor indulge in  legislation merely to state what it  is  unnecessary to state or to do what is  already  validly done.  Parliament may not be assumed to legislate unnecessarily.”

21. In Gurudevdatta VKSSS Maryadit v. State of Maharashtra [(2001) 4 SCC 534], a three-

Judge Bench of this Court interpreted the provisions of Maharashtra Cooperative Societies Act,  

1960, Maharashtra Cooperative Societies (Second Amendment) Ordinance, 2001 and observed:

“Further,  after  introduction  of  the  Bill  and  during  the  debates  thereon  before  Parliament, if a particular provision is inserted by reason of such a debate, question of  indication of any object in the Statement of Objects and Reasons of the Bill does not  and cannot  arise.  The  Statement  of  Objects  and Reasons  needs  to  be  looked into,  though not by itself a necessary aid, as an aid to construction only if necessary. To  assess the intent of the legislature in the event of there being any confusion, Statement  of Objects and Reasons may be looked into and no exception can be taken therefor —  this is not an indispensable requirement but when faced with an imperative need to  appreciate the proper intent of the legislature, statement may be looked into but not  otherwise………….   While the Statement of Objects and Reasons in the normal course of events cannot be  termed to be the main or principal aid to construction but in the event it is required  to discern the reasonableness of the classification as in the case of Shashikant Laxman  Kale v. Union of India [1990 (4) SCC 366] Statement of Objects and Reasons can be  usefully  looked  into  for  appreciating  the  background  of  the  legislature’s  classification.”

22. The proposition  which  can be  culled  out  from the  aforementioned  judgments  is  that  

although the statement of  objects and reasons contained in the Bill  leading to enactment of  the  

particular Act cannot be made the sole basis for construing the provisions contained therein, the  

same can be referred to for understanding the background, the antecedent state of affairs and the  

mischief sought to be remedied by the statute.  The statement of objects and reasons can also be  

looked into as an external aid for appreciating the true intent of the legislature and/or the object  

sought  to  be  achieved  by  enactment  of  the  particular  Act  or  for  judging  reasonableness  of  the  

classification made by such Act.

23. We  may  now  advert  to  the  statement  of  objects  and  reasons  contained  in  the  Bill  

introduced in Andhra Pradesh Legislative Assembly. A perusal thereof shows that between 1976 and  

1993, the total number of employees of the State Government, agencies/instrumentalities of the State  

and bodies/institutions receiving aid from the Government increased by 82% i.e. from 6.78 lakhs to  

12.34 lakhs and in 1993-1994, the State Government had to spend more than 80% of total revenue in  

payment of salaries, allowances, pension, etc. of the employees causing severe strain on the revenue

of  the  State  which  adversely  affected  implementation  of  the  welfare  schemes  and  development  

programmes.  That apart, there was growing dissatisfaction among several thousand unemployed  

persons including those belonging      to Scheduled Castes, Scheduled Tribes and Other Backward  

Classes,  who were registered with the Employment Exchanges  but  could not  get  opportunity  of  

competing for selection for appointment against the sanctioned posts.  With a view to redeem the  

situation,  the State Government decided to totally prohibit  employment on daily  wages and also  

restrict appointment on temporary basis and, at the same time, ensure that all appointments are  

made against the sanctioned posts only on the recommendations of the specified recruiting agencies.  

In furtherance of that decision, the Governor of Andhra Pradesh promulgated the ordinance, which  

was replaced by the 1994 Act. The term ‘daily wage employee’ has been defined in Section 2(ii) to  

mean any person employed in any public service on the basis of payment of daily wages and includes  

a person employed on the basis of nominal muster roll or consolidated pay either on full-time or  

part-time or  piece  rate  basis  or  as  a  workcharged  employee  and any other  similar  category  of  

employees  by  whatever  designation  called  other  than  those  who are  selected  and  appointed  on  

sanctioned posts in accordance with the relevant rules on a regular basis.  The term ‘public service’  

has been defined in Section 2(vi) to mean service in any office or establishment of the Government, a  

local authority, a Corporation or undertaking wholly owned or controlled by the State Government,  

a body established under any law made by the Legislature of the State whether incorporated or not,  

including a University, and any other body established by the State Government or by a Society  

registered under any law relating to the registration of societies for the time being in force, and  

receiving  funds  from  the  State  Government  either  fully  or  partly  for  its  maintenance  or  any  

educational institution whether registered or not but receiving aid from the Government.  By Section  

3(1), total prohibition came to be imposed on the appointment of any person in any public service to  

any post, in any class, category or grade as a daily wage employee.  By Section 3(2), it came to be  

provided that no temporary appointment shall be made in any public service to any post, in any  

class, category or grade without the prior permission of the competent authority and without the  

name of the concerned candidate being sponsored by the Employment Exchange.  Section 4 of the  

Act lays down that no recruitment in any public service to any post in any class, category or grade

shall be made except from the panel of candidates selected and recommended for appointment by  

the  Public  Service  Commission/College  Service  Commission  or  from  a  panel  prepared  by  any  

Selection Committee constituted for the purpose in accordance with the relevant rules or orders or  

from among the candidates having the requisite qualification and sponsored by the Employment  

Exchange.  Section 5 of the Act provides that where an appointment has been made otherwise than  

in accordance with Section 4, the drawing authority shall not sign the salary bill of the appointee  

concerned and the Pay and Accounts Officer, Sub-Treasury Officer or any other officer upon whom  

duty has been cast of passing the salary bill shall not pass such bill.  Section 6 envisages imposition of  

different  types  of  penalties  on  the  holders  of  elective  offices  or  any  other  officer  or  authority  

responsible for making appointment in contravention of the provisions of the Act.  It also provides  

for recovery of the pay and allowances paid to a person appointed in contravention of the provisions  

of the Act.  Section 7 contains a prohibition against regularization of persons appointed on daily  

wages  or  on  temporary  basis.   It  lays  down  that  such  appointee  shall  have  no  right  to  claim  

regularisation  of  service  on  any  ground  whatsoever  and  his/her  service  shall  be  liable  to  be  

terminated without any notice and without assigning any reason.  By virtue of first proviso to the  

Section  7,  an  exception  has  been  made  in  the  case  of  workman to  whom Section  25(F)  of  the  

Industrial Disputes Act, 1947 is applicable.  The service of such person can be terminated only after  

complying with the provisions of Section 25(F).  Section 9 of the Act contains a non obstante clause  

and lays down that notwithstanding anything contained in any judgment, decree or order of any  

court, tribunal or other authority, the claims for regular appointment of all daily wage employees  

and persons appointed on a temporary basis, shall stand abated and no suit or other proceedings  

shall be instituted, maintained or continued in any court, tribunal or other authority by daily wage  

or temporary appointees and no court shall enforce any decree or order directing regularisation of  

the services of such persons.  Section 10(1) imposes a bar to the creation of posts in any office or  

establishment relating to a public service without the previous sanction of the competent authority.  

Section 10(2) declares that any appointment made to any post created in violation of sub-section (1)  

shall  be invalid  and the provisions  of  Sections 5,  6,  and 7 shall  mutatis  mutandis apply  to such  

appointment.  Section 11 envisaged constitution of a committee to review the existing staff pattern in

all  offices  and  establishments  and  also  the  pay  scales,  allowances,  exgratia,  etc.  payable  to  the  

employees of  different categories other than teaching staff  of the Universities  and submission of  

report by the committee to State Government containing specific recommendations.  By Section 12,  

the committee was clothed with the powers of civil  court in relation to certain specified matters.  

Section 14 postulates imposition of penalty for abatement of any offence punishable under the Act.  

Section 15 provides for imposition of penalty on the officers of the companies acting against the  

provisions of the Act.

24. If the State Government had sincerely implemented the provisions of the 1994 Act, it may  

have succeeded in cleansing the mess created due to irregular employment of thousands of persons  

and, thereby, saved considerable revenue which could be utilized for execution of welfare schemes  

and development programmes.  By ensuring that appointments  against  the sanctioned posts  are  

made  only  from  among  the  candidates  selected  by  the  specified  recruiting  agencies  like  Public  

Service Commission/College Service Commission etc. or from among the candidates sponsored by  

the employment exchanges, the State Government could have demonstrated its commitment to the  

system established by rule of law and determination to comply with the equality clause enshrined in  

the Constitution and other relevant statutory provisions in their true spirit.    Unfortunately, that did  

not happen because, in spite of the prohibition contained in Section 7 against regularisation of the  

existing daily wage employees and persons appointed on temporary basis,  the State Government  

wilted  under  the  pressure  exerted  by  the  vested  interests  and  issued  G.O.  dated  22.4.1994  

incorporating therein policy for regularisation of the services of those appointed on daily wages or  

nominal  muster  roll  or  consolidated  pay,  who  had  continuously  worked  for  5  years  and  were  

continuing on 25.11.1993, i.e., the date of enforcement of the 1994 Act. This was intended to be one  

time measure and not an ongoing process/scheme for regularisation of the services of all daily wage  

employees on their completing 5 years. A somewhat similar policy framed by the Government of  

India  in  1993 for  grant  of  temporary status  to  the  casual  labourers  and regularisation of  their  

services was considered by this Court in Union of India v. Mohan Pal [(2002) 4 SCC 573] and it was  

held that a policy of this nature cannot be interpreted as creating a right in favour of all casual

labourers to be regularized in service irrespective of the date of completion of the specified period.  

The  1993 Scheme envisaged conferment  of  temporary status  and benefit  of  regularisation upon  

casual labourers who had completed 240 days in a year (206 days in the case of offices observing 5  

days  a  week).   Those  who did  not  fulfill  this  condition  approached  the  Central  Administrative  

Tribunal, which allowed their applications and held that the casual labourers are entitled to the  

benefit of temporary status and regularisation as and when they fulfill the conditions enumerated in  

the 1993 Scheme.  While reversing the order of the Central Administrative Tribunal, this Court  

observed:

“……..We do not think that clause 4 of the Scheme envisages it as an ongoing scheme.  In  order  to  acquire  “temporary”  status,  the  casual  labourer  should  have  been  in  employment as on the date of commencement of the Scheme and he should have also  rendered a continuous service of at least one year which means that he should have  been engaged for a period of at least 240 days in a year or 206 days in case of offices  observing 5 days a week. From clause 4 of the Scheme, it does not appear to be a  general guideline to be applied for the purpose of giving “temporary” status to all the  casual workers, as and when they complete one year’s continuous service. Of course, it  is  up to the Union Government to formulate any scheme as  and when it  is  found  necessary that the casual labourers are to be given “temporary” status and later they  are to be absorbed in Group ‘D’ posts.”

The ratio of the afore-mentioned judgment was reiterated in Union of India v. Gagan  

Kumar [2005 (6) SCC 70] and Director General, Doordarshan, Mandi House v. Manas Dey [2005  

(13) SCC 437].   

25. So far as these appeals are concerned, we find that the learned Single Judge interpreted  

G.O. dated 22.4.1994 as entitling all daily wage employees to claim regularisation in service with  

effect  from the date of completion of 5 years irrespective of the date on which such period was  

completed or would have been completed.  The Division Bench maintained the order of the learned  

Single Judge with the modification that regularisation would be from the date of completion of 5  

years continuous service.  This Court approved the view taken by the Division Bench apparently  

because even though the policy contained in  G.O.  dated 22.4.1994 was intended to be one time  

measure for facilitating regularisation of those who completed 5 years service on 25.11.1993, it did  

not contain a specific stipulation that only those who have completed 5 years continuous service as  

on 25.11.1993 will be regularised.  A reading of the judgment in District Collector vs.            M.L.

Singh (supra) makes it clear that while examining  correctness of judgment of the Division Bench of  

the High Court, this Court did not consider the background in which the 1994 Act was enacted,  

mischief sought to be remedied by it and various provisions contained therein including Section 7  

whereby it  was made clear that  no person employed on daily  wage or on temporary basis  and  

continuing as such on the date of commencement of the Act shall have or shall ever be deemed to  

have the right to claim regularisation of service and his/her services shall be liable to be terminated  

at  any time without any notice and without assigning any reason.  We may observe  that  if  the  

officers responsible for drafting G.O. dated 22.4.1994 had bothered to carefully read the provisions  

of the 1994 Act then instead of using the expression “such persons who worked continuously for a  

minimum period  of  5  years  and  are  continuing  on 25.11.1993”,  they  would  have  employed  the  

expression “such persons who have completed minimum 5 years of continuous service on or before  

25.11.1993  on  daily  wages  or  nominal  muster  roll  or  consolidated  pay”.   However,  utter  non-

application of mind by the concerned officers resulted in the use of an ambiguous expression in the  

policy of regularisation which generated enormous litigation requiring the individual employees and  

the State Government to invest money for an avoidable exercise.

26. In  order  to  remove  the  ambiguity  and  imperfectness  in  the  language  of  G.O.  dated  

22.4.1994 and make the policy of regularisation an integral  part of the 1994 Act, the legislature  

enacted  Amendment  Act  Nos.3  of  1998 and 27  of  1998.   The  purpose  of  making the  policy  of  

regularisation a part of the 1994 Act was not to dilute the main object of the 1994 Act, i.e., to curb  

the  menace  of  irregular  appointments  and also  ensure  that  appointments  are  made against  the  

sanctioned posts only from among the candidates selected by the designated recruiting agencies but  

also to harmonize the same with the prohibition contained in Section 7 against regularisation of daily  

wage and temporary employees.  The preface of Act No.27 of 1998 clearly shows that the policy  

contained in G.O. dated 22.4.1994 was intended to be one time measure for regularisation of the  

persons employed on daily wages or nominal muster roll or consolidated pay, who completed 5 years  

continuous service on or before 25.11.1993, i.e., the date of enforcement of the 1994 Act and it was  

not a continuing scheme for regularisation of all ‘daily wage employees’ as and when they were to

complete  5  years  period.   The  language  of  first  proviso  to  Section  7  by  which  the  policy  of  

regularisation was engrafted in the 1994 Act shows that the amendments were made with the sole  

object of removing the ambiguity in the policy contained in G.O. dated 22.4.1994 and the same were  

not intended to nullify or override the judgment in District Collector vs. M.L. Singh (supra).  We  

have no doubt that if the language of the policy contained in G.O. dated 22.4.1994 was similar to the  

one contained in newly inserted proviso to Section 7 and there was no ambiguity in it, the courts  

would not have interpreted the same in a manner which would entitle all persons employed on daily  

wages before 25.11.1993 to claim regularisation irrespective of the date of completion of 5 years  

service.  Here it will also be apposite to mention that the policy contained in G.O. dated 22.4.1994 did  

not confer an indefeasible right upon all daily wage employees (as the term has been defined in  

Section 2(ii) of the 1994 Act) to be regularised in service de-hors the date of enforcement of the Act.  

Therefore, it cannot be said that by incorporating the policy of regularisation in the 1994 Act, the  

legislature has taken away an accrued or vested right of the daily wage employees.  It is interesting  

to note that the judgment of this Court in State of Haryana v. Piara Singh (supra) of which shelter  

was taken by the State Government for framing the policy of regularisation of daily wagers etc. in  

the teeth of the prohibition contained in Section 7 against such regularisation does not lay down that  

there will be wholesale regularisation of daily wagers, casual employees, work charge employees, etc.  

While dealing with the question whether the High Court was right in declaring that the government  

could not have prescribed the requirement of particular length of service on a particular date as a  

condition for regularisation, this Court observed:

“These orders are not in the nature of a statute which is applicable to all existing and  future situations. They were issued to meet a given situation facing the Government at  a given point of time. In the circumstances,  therefore,  there was nothing wrong in  prescribing a particular date by which the specified period of service (whether it is one  year or two years) ought to have been put in. Take for example, the orders issued by  the Haryana government. The first order is dated January 1, 1980. It says, a person  must  have  completed  two  years  of  service  as  on  December  31,  1979  i.e.,  the  day  previous to the issuance of the order. However could it be said that fixing of such a  date is arbitrary and unreasonable? Similarly the order dated January 3, 1983 fixes  September  15,  1982  as  the  relevant  date.  This  notification/order  does  two  things.  Firstly, it excludes Class III posts of clerks from the purview of the SSSB in the case of  those who have completed a minimum of two years of service as on September 15,  1982, and secondly, it provides for their regularisation subject to certain conditions.  No particular attack was made as to this date in the High Court. Consequently the  Government of Haryana had no opportunity of explaining as to why this particular

date was fixed. Without giving such an opportunity, it cannot be held that the fixation  of the said date is arbitrary. What is more relevant is that the High Court has not held  that this particular date is arbitrary. According to it, fixation of any date whatsoever is  arbitrary, because in its opinion the order must say that any and every person who  completes the prescribed period of service must be regularised on completion of such  period  of  service.  The  next  order  dated  March  24,  1987  prescribes  the  date  as  December 31, 1986 i.e., the end of the previous year. In the circumstances, we see no  basis for holding that fixation of the date can be held to be arbitrary in the facts and  circumstances of the case.”

(emphasis added)

27. The distinction between legislative and judicial functions is well known.  Within the scope  

of its legislative competence and subject to other constitutional limitations, the power of legislature  

to enact laws is plenary.  In exercise of that power, the legislature can enact law prospectively as well  

retrospectively.   The  adjudication  of  the  rights  of  the  parties  according  to  law  enacted  by  the  

legislature is a judicial function.  In the performance of that function, the court interprets and gives  

effect to the intent and mandate of the legislature as embodied in the statute.  If the court finds that  

the particular statute is ultra vires the power of legislature or any provision of the Constitution, then  

the same can be struck down.  It is also well settled that the legislature cannot by bare declaration,  

without anything more, directly overrule, reverse or override a judicial decision. However it can, in  

exercise of the plenary powers conferred upon it by Articles 245 and 246 of the Constitution, render  

a  judicial  decision  ineffective  by  enacting  a  valid  law  fundamentally  altering  or  changing  the  

conditions on which such a decision is based.  Such law can also be given retrospective effect with a  

deeming date or with effect from a particular date.

28. The  question  whether  the  legislature  possesses  the  power  to  enact  law  apparently  

affecting pre-existing judgment or amend the existing law which has already been interpreted by the  

Court in a particular manner, has been considered in several cases. In Government of A.P. v. H.M.T.  

Ltd.  [1975 (2) SCC 274],  this Court considered whether the amendment made in definition of a  

‘house’ contained in the Andhra Pradesh (Gram Panchayat) Act, by amending Act No.16 of 1974  

was  intended  to  undo  the  judgment  of  the  High  Court  which  had  interpreted  the  unamended  

definition and held that buildings other than factory premises were not a ‘house’.  After noticing the

unamended and amended definitions of the term `house’, the Court held as under:-

“The new definition of “house” which is to be read retrospectively into the Act meets  effectively  both  the  objections  by  reason  of  which  the  High  Court  held  that  the  buildings constructed by the respondent were not a “house”. By the amendment, the  old clause: “having a separate principal entrance from the common way” is dropped  and the definition of “house” is re-framed to include a “factory”. It is clear and is  undisputed that the buildings constructed by the respondent — the colony buildings as  well  as the factory buildings — answer fully  the description of a “house” and are  squarely within the new definition contained in Section 2(15).

We  see  no  substance  in  the  respondent’s  contention  that  by  re-defining  the  term  “house”  with  retrospective  effect  and  by  validating  the  levies  imposed  under  the  unamended Act as if notwithstanding anything contained in any judgment, decree or  order of any court, that Act as amended was in force on the date when the tax was  levied,  the  Legislature  has  encroached upon a  judicial  function.  The  power of  the  Legislature  to  pass  a  law postulates  the  power  to  pass  it  prospectively  as  well  as  retrospectively,  the  one  no  less  than  the  other.  Within  the  scope  of  its  legislative  competence  and  subject  to  other  constitutional  limitations,  the  power  of  the  Legislature to enact laws is plenary. In United Provinces v. Atiqa Begum, Gwyer, C.J.  while  repelling  the  argument  that  Indian  Legislatures  had  no  power  to  alter  the  existing laws retrospectively observed that within the limits of their powers the Indian  Legislatures were as supreme and sovereign as the British Parliament itself and that  those  powers  were  not  subject  to  the  “strange  and  unusual  prohibition  against  retrospective legislation”. The power to validate a law retrospectively is, subject to the  limitations aforesaid, an ancillary power to legislate on the particular subject.

The State Legislature, it is significant, has not overruled or set aside the judgment of  the High Court. It has amended the definition of “house” by the substitution of a new  Section 2(15) for the old section and it has provided that the new definition shall have  retrospective effect, notwithstanding anything contained in any judgment, decree or  order of any court or other authority. In other words, it has removed the basis of the  decision rendered by the High Court so that the decision could not have been given in  the  altered  circumstances.  If  the  old  Section  2(15)  were  to  define  “house”  in  the  manner that the amended Section 2(15) does, there is no doubt that the decision of the  High Court would have been otherwise. In fact, it was not disputed before us that the  buildings constructed by the respondent meet fully the requirements of Section 2(15)  as amended by the Act of 1974.”

(emphasis added)

29. In Indian Aluminium Co.  v.  State  of   Kerala [1996 (7) SCC 637], this Court examined  

the validity of the Kerala Electricity Surcharge (Levy and Collection) Act, 1989 and upheld the  

same.  It is borne out from the judgment that by Section 36 of the Finance Act, 1978, the Central  

Excise and Salt Act, 1944 was amended for imposition of central excise duty on electricity under  

item 11-E in the First Schedule to the Excise Act and fixed 2 paisa per kilo watt electricity unit.  To  

recoup the loss caused to the Kerala Electricity Board by imposition of central excise duty, the State

Government issued an order under Section 3 of the Kerala Essential Articles Control (Temporary  

Powers)  Act,  1961  whereby  surcharge  @  Rs.2.5  paisa  per  unit  was  levied.   On  1.10.1984,  the  

Government  of  India  withdrew  the  levy  of  excise  duty  on  electricity.   However,  the  State  

Government did not withdraw the surcharge.  Therefore, the consumers filed writ petition in the  

High Court.  During the pendency of the writ petition, the State Government discontinued the levy  

of surcharge by issuing an ordinance.  In Chakolas Spinning and Weaving Mills Ltd. vs. K.S.E.  

Board [1988 (2) KLT 680], a Division Bench of the High Court ruled that levy of surcharge was  

beyond the competence of the State.  Special leave petition filed against the order of the High Court  

was dismissed. Thereafter, the Kerala Electricity Surcharge (Levy and Collection) Ordinance, 1989  

was promulgated, which later on became the 1989 Act.  This Court upheld the power of the State to  

enact law for levy of surcharge on the electricity supplied by the Electricity Board.  The Court  

referred to the earlier judgments in Prithvi Cotton Mills Ltd. v. Broach Borough Municipality [1969  

(2)  SCC 283],  Patel  Gordhandas  Hargovindas  v.  Municipal  Commissioner  [1964  (2)  SCR 608],  

Orient Paper Mills Ltd. v. State of Orissa [AIR 1961 SC 1438], M/s. Misrilal Jain v. State of Orissa  

[1977 (3) SCC 212), Tirath Ram Rajendra Nath v. State of U.P. [1973 (3) SCC 585], Government of  

A.P.  v.  H.M.T.  Ltd.  (supra),  I.N.  Saksena v.  State  of  M.P.  [1976 (4)  SCC 750]  and some other  

judgments and held:

“The validity of the Validating Act is to be judged by the following tests: (i) whether  the legislature enacting the Validating Act has competence over the subject-matter; (ii)  whether by validation,  the legislature has  removed the defect  which the court  had  found  in  the  previous  law;  (iii)  whether  the  validating  law  is  consistent  with  the  provisions of Chapter III of the Constitution.  If these tests are satisfied, the Act can  validate the past transactions which were declared by the court to be unconstitutional.  The legislature cannot assume power of adjudicating a case by virtue of its enactment  of the law without leaving it to the judiciary to decide it with reference to the law in  force.  The legislature also is incompetent to overrule the decision of a court without  properly removing the base on which the judgment is founded.

The court does not have the power to validate an invalid law or to legalise  impost of tax illegally made and collected or to remove the norm of invalidation or  provide a remedy.  These are not judicial functions but the exclusive province of the  legislature.  Therefore, they are not encroachment on judicial power.

In exercising legislative power, the legislature by mere declaration, without

anything more, cannot directly overrule, revise or override a judicial decision.  It can  render  judicial  decision  ineffective  by  enacting  valid  law  on  the  topic  within  its  legislative field fundamentally altering or changing its character retrospectively.  The  changed or altered conditions should be such that the previous decision would not  have  been  rendered  by  the  court,  if  those  conditions  had  existed  at  the  time  of  declaring  the  law as  invalid.   It  is  also  empowered  to  give  effect  to  retrospective  legislation with a deeming date or with effect from a particular date………….   

The vice pointed out in Chakolas case has been removed under the Kerala  Electricity Surcharge (Levy and Collection) Act, 1989.  Consequently, Section 11 of  this Act validated the invalidity pointed out in Chakolas case removing the base. In the  altered situation, the High Court would not have rendered Chakolas case under the  Act.  It has made the writ issued in Chakolas case ineffective.  Instead of refunding the  duty illegally collected under invalid law, Section 11 validated the illegal collections  and directed the  liability  of  the  past  transactions  as  valid  under  the Act  and also  fastened liability on the consumers.  In other words, the effect of Section 11 is that the  illegal collection made under invalid law is to be retained and the same shall now stand  validated under the Act.  Thus considered, Section 11 is not an incursion on judicial  power of the court and is a valid piece of legislation as part of the Act.”

30. The judgment in S.S. Bola v. B.D. Sardana (supra) calls for a detailed reference because  

the main issue considered in that case is similar to the one raised in these appeals.  The facts of that  

case show that in A.N. Sehgal v. Raje Ram Sheoran [1992 Supp (1) SCC 304] and S.L. Chopra v.  

State of Haryana [1992 Supp (1) SCC 391], this Court interpreted the rules framed under proviso to  

Article 309 of the Constitution and gave certain directions for fixation of seniority of the members of  

engineering services.  After about three years, the State legislature enacted the Haryana Service of  

Engineers,  Class  I,  Public  Works  Department  (Buildings  and  Roads  Branch),  (Public  Health  

Branch)  and  (Irrigation  Branch)  Act,  1995  and  repeal  the  existing  rules.   The  Act  was  given  

retrospective effect from 1.11.1966 that is the date on which the State of Haryana was formed.  The  

Punjab and Haryana High Court struck down various provisions of the Act on the ground that the  

same were enacted with the sole object of nullifying the earlier judgments of this Court in A.N.  

Sehgal v. Raje Ram Sheoran (supra) and S.L. Chopra v. State of Haryana (supra).  By majority of  

2:1, this Court held that the 1995 Act is a valid piece of legislation and set aside the order of the  

High Court.  G.B. Pattanaik, J. (as he then was), who rendered leading judgment of the majority  

noted that in Sehgal’s case and Chopra’s case, the Court had not invalidated the recruitment rules  

but merely interpreted some provisions relating to determination of the  inter se seniority of the

direct recruits and promotees and held that the Act cannot be invalidated on the ground that it was  

an encroachment on judicial function.  Pattanaik, J. then referred to the statement of objects and  

reasons contained in the Bill introduced in Haryana Vidhan Sabha, various judgments of this Court  

including in State of Gujarat v. Raman Lal Keshav Lal Soni (supra) and held:

“……….In view of the aforesaid legal position when the impugned Act is examined  the  conclusion  is  irresistible  that  the  said  Act  cannot  be  said  to  be  an  Act  of  usurpation of the judicial power by the Haryana Legislature, but on the other hand it  is a valid piece of legislation enacted by the State Legislature over which they had  legislative  competence under  Entry  41  of  List  II  of  the  Seventh Schedule  and by  giving  the  enactment  retrospective  effect  the  earlier  judgments  of  this  Court  in  Sehgal and Chopra have become ineffective. But since this does not tantamount to a  mere  declaration  of  invalidity  of  an  earlier  judgment  nor  does  it  amount  to  an  encroachment by the legislature into the judicial sphere the Court will not be justified  in holding the same to be invalid. Needless to mention that the impugned Act has  neither been challenged on the ground of lack of legislative competence nor has it  been established to have contravened any provisions of Part III of the Constitution.  Consequently  Mr  Sachar’s  contention  has  to  be  rejected  and  the  Act  has  to  be  declared intra vires. Necessarily, therefore the seniority list drawn up on different  dates in accordance with the earlier Rules of 1961 will have to be annulled and fresh  seniority list has to be drawn up in accordance with the provisions of the Act since the  Act has been given retrospective effect with effect from 1-11-1966. It may, however,  be reiterated that any promotion already made on the basis of the seniority list drawn  up in  accordance  with  the  Recruitment  Rules  of  1961 will  not  be  altered  in  any  manner.”

Pattanaik, J. then referred to the judgment in Zohrabi v. Arjuna [1980 (2) SCC 203],  

wherein it was held that a mere right to take advantage of the provisions of an Act is not an accrued  

right and proceeded to observe:

“In the aforesaid premises,  it must be held that the direct recruits did not have a  vested right nor had any right  accrued in their favour in the matter of getting a  particular position in the seniority list of Executive Engineers under the pre-amended  Rules which is said to have been taken away by the Act since such a right is neither a  vested right of an employee nor can it be said to be an accrued right. Thus there is no  bar for the legislature to amend the law in consequence of which the inter se position  in  the  rank  of  Executive  Engineer  might  get  altered.  Consequently,  we  see  no  invalidity  in  the  enactment  of  the  Haryana  Service  of  Engineers,  Class  I,  Public  Works  Department  (Buildings  and  Roads  Branch),  (Public  Health  Branch)  and  (Irrigation Branch) Respectively Act, 1995.”

S. Saghir Ahmad, J. who agreed with Pattanaik, J expressed his views in the following  

words:

“It would be within the exclusive domain of the judiciary to expound the law as it is

and not to speculate what it should be as it is the function of the legislature. It is also  within  the  exclusive  power  of  the  judiciary  to  hold  that  a  statute  passed  by  the  legislature is ultra vires. The legislature in that situation does not become a helpless  creature as it continues to remain a living pillar of a living Constitution. Though it  cannot directly override the judicial  decision, it  retains the plenary powers under  Articles 245, 246 and 248 to alter the law as settled or declared by judicial decisions.  This is what was observed by this Court in Anwar Khan Mehboob Co. v. State of M.P  which had the effect of indirectly overruling its previous decision in Firm Chhotabhai  Jethabai Patel & Co. v.  State of M.P. The legislature can also validate an Act which  was declared  invalid  by  the  Court  or  amend it  with retrospective  effect  so  as  to  remove the grounds of its invalidity. (See: Rai Ramkrishna v. State of Bihar and Jadao  Bahuji v. Municipal Committee.)

The power to make a law includes the power to give it retrospective effect subject to  the restriction imposed by Article 20(1) that a legislature cannot make retrospective  penal laws. It would be valid for the legislature to make any other enactment with  retrospective  effect  provided  no  fundamental  right  is  infringed  by  reasons  of  its  taking away the vested right. Under the scheme of the Constitution, it is competent  for the legislature to put an end to the finality of a judicial decision and, therefore, it  would be competent for the legislature to render ineffective the judgment of a court  by changing the basis of the Act upon which that judgment was founded.  

Where, however, the statutory provision is interpreted by the Court in a particular  manner and directions are issued for implementing the judgment in the light of the  interpretation  placed  on  the  statutory  provisions,  the  legislature  need  not  pass  a  validating  Act.  In  this  situation,  the  legislature,  in  exercise  of  its  plenary  powers  under Articles  245,  246 and 248 can make a new Act  altering fundamentally  the  provisions which were the basis of the judgment passed by the Court. This can be  done with retrospective effect. So far as service conditions are concerned, they can be  altered with retrospective effect by making service rules under Article 309 or by an  Act of the legislature.”

31. In Mylapore Club v. State of T.N. [2005 (12) SCC 752], a three-Judge Bench examined  

the validity of Sections 2 and 3 of the Madras City Tenants’ Protection (Amendment) Act, 1994 (Act  

No. 2 of 1996).  By Section 2 of the 1996 Act, Section 1 of the Madras City Tenants’ Protection Act,  

1921 was amended and clause (f) was added providing for exemptions for tenancies of land owned  

by  religious  institutions  and religious  charities  belonging to  Hindu,  Muslim,  Christian  or  other  

religions.   By Section 3, it was declared that any proceeding instituted by a tenant in respect of any  

land owned by such a religious institution or religious charity, which was being exempted from the  

operation of the Act pending before any court or other authority, would stand abated and all rights  

and privileges conferred by the extension of the Madras City Tenants’ Protection Act, 1921 would

cease and would become unenforceable.  However, a proviso was added to the effect that nothing  

contained in Section 3 shall be deemed to render invalid, any suit or proceeding in which a decree or  

order passed had been executed or satisfied in full before the date of the coming into force of the  

amending Act.  It was argued on behalf of the tenant Club that the amendment made by Sections 2  

and  3  of  Act  No.  2  of  1996,  whereby  exemption  was  granted  to  certain  tenancies  was  not  in  

consonance  with  the  object  of  the  parent  Act.   It  was  further  contented  that  Section  3  of  the  

amending Act which provided for certain pending proceedings to abate was a legislative act to put  

an end to a judicial proceedings and the same was clearly unconstitutional.  While rejecting the first  

argument, the Court observed:

“The power to legislate is a plenary power vested in the legislature and unless those  who challenge the legislation clearly establish that their fundamental rights under the  Constitution are affected or that the legislature lacked legislative competence, they  would not succeed in their challenge to the enactment brought forward in the wisdom  of the legislature.  Conferment of a right to claim the benefit of a statute, being not a  vested  right,  the  same  could  be  withdrawn  by  the  legislature  which  made  the  enactment.   It  is  open to  the  legislature  to  bring  in  a  law that  has  retrospective  operation.  That position is not disputed.  When it affects vested rights or accrued  rights, that question will have to be considered in that context.  But the right to take  advantage of a statute has been held to be not an accrued right.  It could not be said  that  Amendment  Act  2  of  1996  lacked  either  legislative  competence  or  that  it  is  unconstitutional.  It is a matter for the legislature to balance the object of the Parent  Act  with the  object  of  protecting the  rights  of  religious  institutions  and religious  charities and on the basis of the material available to the legislature, the decision to  exempt the buildings of such religious institutions and religious charities has been  taken.”

While rejecting the second argument, the Court observed:

“By Section 3 of amending Act 2 of 1996 impugned herein, which is in pari materia  with Section 9 of the amending Act of 1960, the legislature had intended that pending  proceedings should be affected.  Even otherwise,  once the applicability  of  the Act  itself is withdrawn, no relief can be granted to a person who could have been or who  was earlier a beneficiary under that enactment, after such withdrawal.  Here, the  section provides that even if some steps have been taken pursuant to the claim by the  tenant under Section 9 of the Parent Act, the proceeding cannot be continued in view  of the exemption enacted in favour of the institutions.  Reading Section 3 of amending  Act 2 of 1996, it could not be said that it is a legislative intervention with a judicial  decision.  The proviso to Section 3 of amending Act 2 of 1996 has saved concluded  transactions based on judicial adjudications.  All that the said Section 3 does is to  make it explicit that the amendment is intended to apply to pending proceedings.  In  the context of Section 6 of the General Clauses Act, unless it is shown that any right  has  accrued  to  the  claimant  under  Section 6  of  the  General  Clauses  Act,  such a  provision making it  clear that the Act could not be applied any more to pending  proceedings is not in any way invalid or incompetent.  Unless the proceedings have

concluded and the rights of the landlord have passed to the tenant, no right accrues to  the tenant.  He is only in the process of acquiring a right, the process having been set  in motion at his instance.  When pending proceedings are affected by an amendment,  it is open to the legislature to provide that the said process cannot continue.  That  alone has been done by Section 3 of amending Act 2 of 1996.  Therefore there is no  merit in challenge to Section 3 of the amending Act.”

   32. Before parting with this aspect of the case, we consider it proper to notice the ratio of the  

judgments on which reliance has been placed by the learned counsel for the employees.  In Madan  

Mohan Pathak v. Union of India (supra), a seven-Judge Bench considered the constitutional validity  

of the Life Insurance Corporation (Modification of Settlement) Act, 1976 by which an attempt was  

made to nullify  the mandamus issued by the Calcutta High Court for payment of  bonus to the  

employees in terms of the settlements.  This Court declared that the 1976 Act is violative of Article  

31(2) of the Constitution and also held that by simply bringing new legislation, the Parliament could  

not nullify the mandamus issued by the High Court for payment of cash bonus to the employees in  

terms of the settlement.  

33. In State of Gujarat v. Raman Lal Keshav Lal Soni (supra), this Court considered the  

question whether  the  State  legislature could retrospectively  amend the Gujarat  Panchayats  Act,  

1961 and deprive the employees of the Panchayats of their status as government servants.  The High  

Court allowed the writ petition filed by the members of the Panchayat service belonging to the local  

cadre and declared that they have acquired the status of government servants.  The High Court also  

issued consequential directions for equation of posts, revision of pay scales and payment of salaries.  

During the pendency of the appeals, the 1961 Act was amended with retrospective effect from 1978  

and  members  of  Panchayat  service  were  sought  to  be  deprived  of  their  status  as  government  

servants.   This  Court  struck  down  the  amendment  on  the  ground  that  the  same  violated  

fundamental right acquired by the employees of the panchayats and observed:

“Now, in 1978 before the Amending Act was passed, thanks to the provisions of the  principal  Act  of  1961,  the ex-municipal  employees who had been allocated to the  panchayat  service  as  Secretaries,  Officers  and  servants  of  Gram  and  Nagar  Panchayats,  had  achieved  the  status  of  government  servants.   Their  status  as  government  servants  could  not  be  extinguished,  so  long  as  the  posts  were  not  abolished and their services were not terminated in accordance with the provisions of

Article  311  of  the  Constitution.   Nor  was  it  permissible  to  single  them  out  for  differential treatment.  That would offend Article 14 of the Constitution.  An attempt  was made to justify the purported differentiation on the basis of history and ancestry,  as it were.  It was said that Talatis and Kotwals who became Secretaries, Officers and  servants of Gram and Nagar Panchayats were government servants,  even to start  with, while municipal employees who became such Secretaries, Officers and servants  of Gram and Nagar Panchayats were not.  Each carried the mark of the ‘brand’ of  his origin and a classification on the basis of the source from which they came into the  service, it was claimed, was permissible.  We are clear that it is not.  Once they had  joined the common stream of service to perform the same duties,  it  is  clearly not  permissible  to  make  any  classification  on  the  basis  of  their  origin.   Such  a  classification would be unreasonable and entirely irrelevant to the object sought to be  achieved.  It is to navigate around these two obstacles of Article 311 and Article 14  that the Amending Act is sought to be made retrospective, to bring about an artificial  situation as if the erstwhile municipal employees never became members of a service  under the State.  Can a law be made to destroy today’s accrued constitutional rights  by artificially reverting to a situation which existed 17 years ago? No.

The legislation is pure and simple, self-deceptive, if we may use such an expression  with reference to a legislature-made law.  The legislature is undoubtedly competent to  legislate with retrospective effect to take away or impair any vested right acquired  under existing laws but since the laws are made under a written Constitution, and  have to conform to the dos and don’ts of the Constitution, neither prospective nor  retrospective laws can be made so as to contravene fundamental rights.  The law must  satisfy the requirements of the Constitution today taking into account the accrued or  acquired rights of the parties today.  The law cannot say, 20 years ago the parties had  no rights, therefore, the requirements of the Constitution will be satisfied if the law is  dated back by 20 years.  We are concerned with today’s rights and not yesterday’s.  A  legislature cannot legislate today with reference to a situation that obtained 20 years  ago and ignore the march of events and the constitutional rights accrued in the course  of  the  20  years.  That  would  be  most  arbitrary,  unreasonable  and  a  negation  of  history.”   

34. In Chairman, Railway Board v. C.R. Rangadhamaiah (supra),  the Constitution Bench  

considered  the  question  whether  the  Railway  Administration  could  amend  the  rules  with  

retrospective  effect  and  reduce  the  pension  payable  to  the  employees  and  held  that  such  an  

amendment violated Articles 14 and 16 of the Constitution, inasmuch as it affected vested right of  

the employees.

35. In Govt. of Andhra Pradesh v. G.V.K. Girls High School (supra), this Court answered in  

negative the question whether the Government could issue a G.O. and deny benefit of grant-in-aid to  

the  school  and amend the  Andhra Pradesh Education  Act,  1982 for  denying  the  benefit  of  the  

judgment rendered by the High Court in favour of the respondent.  

36. In none of the above noted cases, this Court considered an issue akin to the one examined  

by  us.    Therefore,  the  proposition  of  law laid  down in  those  cases  cannot  be  relied  upon  for  

entertaining the claim of daily wage employees for regularisation irrespective of the fact that they  

may not have completed 5 years continuous service on or before 25.11.1993.

37. In view of the above discussion, we hold that the amendments made in the 1994 Act by  

Act Nos.3 of 1998 and 27 of 1998 do not have the effect of nullifying or overriding the judgment in  

District Collector v. M.L. Singh (supra).  We further hold that the policy of regularisation contained  

in first proviso to Section 7 of Act No.27 of 1998 is one time measure intended to benefit only those  

daily wage employees, etc. who completed 5 years continuous service on or before 25.11.1993 and the  

employees who completed 5 years service after 25.11.1993 cannot claim regularisation.   

38. The question whether Section 7A of Act No. 27 of 1998 amounts to an encroachment on  

the  court’s  power on judicial  review is  answered in  negative  in  view of  the  three-Judge  Bench  

judgment in Mylapore Club v. State of Tamil Nadu (supra) and we respectfully follow the ratio of  

that  judgment.   Even  otherwise,  in  view  of  the  interpretation  placed  by  us  on  the  policy  of  

regularisation contained in first proviso to Section 7 of the 1994 Act, the question of abatement of  

claims etc. has become purely academic.

39. We shall  now consider  whether  the  cut  off  date,  i.e.,  25.11.1993 specified  in the  first  

proviso to Section 7 of the 1994 Act (as amended by Act No. 27 of 1998) for determination of the  

eligibility of daily wage employees to be considered for regularisation is arbitrary, irrational and  

violative of Articles 14 and 16 of the Constitution.  Undisputedly, the Ordinance issued in 1993 was  

the first exercise of legislative power by the State to prohibit employment on daily wages and to  

restrict appointments on temporary basis and, at the same time, streamline the recruitment in public  

services by adopting a procedure consistent with the doctrine of equality embodied in Articles 14  

and 16 of the Constitution.  The 1994 Act was enforced with effect from 25.11.1993, i.e., the date on

which the Ordinance was published in the official Gazette.  Therefore, that date had direct bearing  

on the policy of regularisation circulated vide G.O. dated 22.4.1994, which was issued by the State  

Government in exercise of its executive power under Article 162 of the Constitution.  When that  

policy was engrafted in the 1994 Act in the form of proviso to Section 7, the legislature could not  

have fixed any date other than 25.11.1993 for determining the eligibility of daily wage employees  

who fulfilled the requirement of 5 years continuous service.  If any other date had been fixed for  

counting 5 years service of daily wage employees for the purpose of proviso to Section 7, the object  

sought to be achieved by enacting the 1994 Act would have been defeated, inasmuch as the regular  

recruitment could not have been made for appointment against the sanctioned posts and back door  

entrants would have occupied all the posts.  Therefore, the cut off date i.e.25.11.1993 prescribed by  

the legislature for determining the eligibility of daily wage employees and others covered by Section  

7 of the 1994 Act cannot be dubbed as arbitrary, unreasonable, irrational or discriminatory.  This  

view of ours is in tune with judicial precedents on the subject.  In  Union of India v. Parameswaran  

Match Works [(1975) 1 SCC 305], a three-Judge Bench was called upon to decide whether the date  

for making the declaration, i.e., September 4, 1967 fixed for grant of the benefit of concessional rate  

of duty was irrational and arbitrary.  The High Court declared that the cut off date fixed for grant  

of the concessional rate of duty violated Article 14 of the Constitution.  This Court disapproved the  

view taken by the High Court and held that the choice of a date as the basis for classification cannot  

always be dubbed as arbitrary even if no particular reason is forthcoming for the same, unless it is  

shown to be capricious or whimsical.  It was further held that there is no mathematical or logical  

way for fixing a particular date and the decision of the legislature or its delegate must be accepted  

unless the fixation of date is found to be very wide off the reasonable mark.   

40. In Sushma Sharma v. State of Rajasthan [(1985) Supp. SCC 45], fixation of 25th June,  

1975 as the cut off date for the determination of eligibility of temporary teachers for the purpose of  

absorption in terms of the Rajasthan Universities Teachers (Absorption of Temporary Lecturers)  

Act, 1973 was challenged on the ground of discrimination and violation of Articles 14 and 16.  A  

learned Single Judge of the High Court declared that the cut off date was arbitrary and violative of

the equality  clause enshrined in the Constitution.  The Division Bench reversed the order of  the  

learned Single Judge and held that the cut off date did not offend the doctrine of equality.  This  

Court approved the view taken by the Division Bench and observed:

“The object of this legislation was to provide for absorption of temporary lecturers of  long standing.  So therefore  experience and continuous employment were necessary  ingredients. The Hindi version of the Ordinance used the expression “ke prarambh ke  samaya is roop me karya kar rahe hein” is capable of meaning “and are continuing”  to work as  such at  the  time of  the  commencement of  the Ordinance.  Keeping the  background of the purpose of the Act in view that would be the proper construction  and if that is the proper construction which is in consonance with the English version  of the Ordinance and the Act as well as with the object of the Act then in our opinion  the Act and the Ordinance should be construed to mean that only those would be  eligible for screening who were appointed prior to June 25, 1975 and were continuing  at  the  time  of  the  commencement  of  the  Ordinance  i.e.  June  12,  1978  i.e.  approximately about three years. If that is the correct reading, then we are unable to  accept the criticism that those who were for a short period appointed prior to June 25,  1975 then again with interruption were working only at the time of the commencement  of the Ordinance i.e. June 12, 1978 would also be eligible. In other words people with  very short experience would be eligible for absorption. That cannot be the purpose of  the Act. It cannot be so read reasonably. Therefore on a proper construction it means  that all temporary lecturers who were appointed as such on or before June 25, 1975  and  were  continuing  as  such  at  the  commencement  of  the  Ordinance  shall  be  considered  by  the  University  for  screening  for  absorption.  The  expression  “were  continuing” is significant. This is in consonance with the object of the Act to ensure  continuity  of  experience  and  service  as  one  of  the  factors  for  regularising  the  appointment  of  the  temporary  lecturers.  For  regularising  the  appointment  of  temporary  lecturers,  certain  continuous  experience  is  necessary.  If  a  Legislature  considers  a particular  period of  experience  to be necessary,  the wisdom of  such a  decision is not subject to judicial review. Keeping the aforesaid reasonable meaning of  clause 3 of the Ordinance and Section 3 of the Act in view, we are of the opinion that  the criterion fixed for screening for absorption was not an irrational  criterion not  having any nexus with the purpose of the Act. Therefore, the criticism that a teacher  who was working even for two or three months only before June 25, 1975 and then  with  long  interruptions  was  in  employment  of  the  University  at  the  time  of  the  commencement of the Ordinance would be eligible  but a teacher who had worked  continuously from June 26, 1975 i.e. after the date fixed i.e. June 25, 1975 for three  years  would  be  ineligible  and  as  such  that  will  be  discrimination  against  long  experience,  cannot  be  accepted.  Such  a  construction  would  be  an  unreasonable  construction unwarranted by the language used in the provisions concerned. It is well- settled that if a particular period of experience is fixed for screening or for absorption,  it is within the wisdom of the Legislature, and what period should be sufficient for a  particular job or a particular employment is not subject to judicial review.”

(emphasis added)

41. In Union of India v. Sudhir Kumar Jaiswal [(1994) 4 SCC 212], it was held that fixing of  

1st August as the cut off date for determining the eligibility in the matter of age of the candidates  

appearing  in  the  examination  held  for  recruitment  to  the  Indian  Administrative  Service/Indian

Foreign Service etc. cannot be termed as arbitrary merely because the preliminary examination was  

held prior to that date.  The court accepted the explanation given by the Union of India that 1st of  

August of the year is normally fixed for determination of the eligibility of the candidates and the  

same was not modified before holding the preliminary examination because it was only a screening  

test  and  marks  obtained at  such  examination  were not  taken  into  consideration  at  the  time of  

preparing the final result.  In Union of India v. K.G. Radhakrishana Panickar [(1998) 5 SCC 111], it  

was held that the decision of the railway administration to fix 1.1.1961 as the cut off date for the  

purpose of counting of past service of Project Casual Labourers for the purpose of retrial benefits  

was not arbitrary or unreasonable because two separate schemes were framed for regularisation of  

casual labourers.   

42. The question which remains to be considered is whether the Division Bench was justified  

in holding that all daily wage employees who completed 5 years service on the date of enforcement of  

Act No. 27 of 1998, i.e.,  19.8.1998 would be entitled to be considered for regularisation of  their  

services.  A reading of paragraphs 54, 67, 68 and 72 of the impugned judgment shows that even  

though the Division Bench did not find the cut off date i.e. 25.11.1993 specified in first proviso to  

Section 7 for determining the eligibility of daily wage employees for regularisation to be arbitrary,  

irrational or discriminatory, yet it changed the said date from 25.11.1993 to 19.8.1998 solely on the  

premise that Act No. 27 of 1998 was enforced with effect from that date.  In our view, once the  

Division Bench negatived the challenge to the validity of Act Nos.3 of 1998 and 27 of 1998, there was  

no warrant for altering the date of eligibility specified in first proviso to Section 7 of the 1994 Act  

and thereby extend the zone of  eligibility  of  daily wage employees  who could be considered for  

regularisation.  As a corollary, we hold that the declaration made by the Division Bench that all  

persons who completed 5 years service as on the date of coming into force of Act No.27 of 1998  

would be entitled to be considered for regularisation of their services is legally unsustainable and is  

liable to be set aside.

43. In the result, the appeals filed by the employees (C.A. Nos.3702, 3703, 3704, 3705, 3706,

3707, 3709, 3710, 3721, 3733, 3734, 3737, 3742, 3744, 3748, 3749 and 3751 of 2006) are dismissed and  

those filed by the State Government and agencies/instrumentalities of the State (C.A. Nos.3685, 3712,  

3713, 3714, 3715, 3716, 3717, 3718, 3723, 3724, 3726, 3727, 3728, 3729, 3730, 3731, 3732, 3750, 3752,  

3753, 3754 and 3755 of 2006) are allowed.  The declaration made by the Division Bench that the ban  

on regularisation will be effective from 19.8.1998 i.e. the date on which Act No.27 of 1998 came into  

force and that all persons who have completed 5 years service as on that date would be entitled to be  

considered for regularisation of service is set aside.  It is, however, made clear that the daily wage  

employees and others who are covered by Section 7 of the 1994 Act (amended) and whose services  

have not  been regularised so far,  shall  be entitled to be considered for regularisation and their  

services  shall  be  regularised  subject  to  fulfillment  of  the  conditions  enumerated  in  G.O.  dated  

22.4.1994.   With a view to obviate further litigation on this  issue,  we direct  the Government of  

Andhra Pradesh, its officers and agencies/instrumentalities of the State to complete the exercise for  

regularisation of the services of eligible employees within four months of the receipt/production of  

copy of this order, without being influenced by the fact that the application, writ petition or appeal  

filed by any such employee may have been dismissed by the Tribunal or High Court or this Court.  

Since some of the appeals decided by this order relate to part time employees, we direct that similar  

exercise  be  undertaken  in  their  cases  and  completed  within  four  months  keeping  in  view  the  

conditions enumerated in G.O.(P). No.112 dated 23.7.1997.    

……………………….J. [ B.N. Agrawal ]

……………………….J.                  [ G.S. Singhvi ] New Delhi, July 06, 2009