Gujarat High Court Rules That Contractual Employees Cannot Claim Regularization of Services

Merely Because a Scheme is Long-Term, It Does Not Mean Employees Have a Right to Regularization – Gujarat High Court dismissed multiple petitions challenging the termination of contract-based employees under the "Mission Mangalam" scheme. The Court ruled that "merely because a scheme is long-term, it does not create an automatic right to regularization of employees engaged under it." The decision came in the case of Vijay Bharatbhai Sachdev & Ors. v. State of Gujarat & Anr., which involved several petitions challenging the contractual employment policies of the Gujarat Livelihood Promotion Company Ltd. (GLPC), a state-owned company implementing the scheme.
Dispute Over Regularization of Contractual Employees
The case arose from petitions filed by employees who had been appointed on a three-year contractual basis under the Mission Mangalam scheme. The employees argued that they had been recruited through a competitive selection process and had successfully completed their probation and performance appraisals. However, instead of being granted regular employment, they were being terminated upon the expiry of their contracts.

The petitioners contended that they were being exploited, as they were neither given regular pay scales nor benefits under the government resolution governing their employment. They claimed that their recruitment process was similar to that of regular government employees and that the nature of their work was permanent, thereby entitling them to regularization.

On the other hand, the State of Gujarat and GLPC argued that the project was not intended to provide permanent employment and that the petitioners had knowingly accepted fixed-term contracts. The government further emphasized that "the project itself is of a limited duration and posts not being of a perennial nature, it is not permissible for the petitioners to claim parity with government servants."

"No Right to Regularization for Contractual Employees"
The Court, presided over by Justice Vaibhavi D. Nanavati, ruled that the petitioners had no legal right to seek regularization of their employment. The Court observed that: "The contractual appointments were for a fixed tenure and governed by clear terms. Accepting such employment with open eyes and then seeking parity with government servants is legally untenable."

The Court also pointed out that while the Mission Mangalam project was ongoing, the nature of the employment was contractual, and no assurance of regularization had ever been given to the petitioners. The Court emphasized that the government had a valid policy in place to ensure that such employment was temporary.

The judgment relied on the Supreme Court's landmark decision in State of Karnataka v. Uma Devi (2006), where it was held that contractual employees do not have an inherent right to be regularized merely on the basis of long-term employment. The Court further noted: "The selection process alone does not confer the right to regularization. The nature of the appointment and the terms agreed upon at the outset are decisive."

Termination Order Not Illegal
One of the key contentions of the petitioners was that the termination of their services violated the principles of natural justice. They argued that their termination was arbitrary and against the spirit of the scheme they were employed under.

However, the Court found that the termination was in accordance with the terms of their contracts, which explicitly stated that employment would end upon completion of the contractual period. The Court stated: "When employment is fixed-term, the termination of such employment by efflux of time does not amount to illegal termination."

The Court also rejected the argument that a subsequent recruitment drive for similar positions rendered the termination unfair. It held that a government agency has the discretion to update qualification criteria and recruit new personnel as per evolving requirements.

Fixed-Term Employees Cannot Demand Permanent Status
In its final ruling, the Court dismissed the petitions and upheld the validity of the termination orders. It reaffirmed that contract-based employment policies of the government cannot be circumvented by claims of long-term service.

This decision reinforces the principle that "contractual employment, even in government-backed projects, does not automatically lead to a right to regularization." It serves as a crucial precedent in cases concerning fixed-term employment in public sector initiatives.

Date of Decision : February 13, 2025