Outsourcing Cannot Become A Tool To Defeat Regularization: Supreme Court On Perennial Nature Of Government Work

“Courts Must Look Beyond Surface Labels And Consider The Realities Of Employment”, In a significant pronouncement touching upon the growing trend of outsourcing government functions, the Supreme Court on 13 February 2026, held that the outsourcing of duties earlier performed by daily-wage workers itself demonstrates the perennial and indispensable nature of such work, thereby strengthening their claim for regularization.

A Bench of Justice J.K. Maheshwari and Justice Atul S. Chandurkar observed that refusal of regularization merely on the basis of procedural technicalities, while simultaneously outsourcing the same work, would be contrary to fairness and constitutional equality under Articles 14 and 16.

The Court set aside the Madhya Pradesh High Court’s judgment and directed regularization of the appellants’ services with effect from 01.07.2006 along with consequential benefits.

Casual Workers Replaced By Outsourcing Policy

The appellants had been working as Sweepers and Cook in the Office of the Commissioner of Income Tax, Gwalior since the 1990s. Their names were sponsored through the Employment Exchange and they were engaged after interview. They continued in service for long durations.

However, pursuant to circulars dated 04.07.2011 and 10.01.2012, the Income Tax Department decided to outsource the very duties that were being performed by them. Despite long years of service, their request for regularization was rejected by the Tribunal and the High Court by mechanically relying upon Secretary, State of Karnataka v. Umadevi (3) on the ground that they had not completed ten years’ service as on 10.04.2006.

Before the Supreme Court, the appellants argued that outsourcing of their duties clearly established that the work was not temporary or occasional but perennial and essential to the functioning of the department.

Outsourcing As Evidence Of Perennial Work

The Supreme Court found merit in this contention and relied upon its recent judgment in Jaggo v. Union of India.

Quoting paragraph 13 of Jaggo, the Court reiterated:

“The recurring nature of these duties necessitates their classification as regular posts, irrespective of how their initial engagements were labelled. It is also noteworthy that subsequent outsourcing of these same tasks to private agencies after the appellants’ termination demonstrates the inherent need for these services.”

The Bench observed that once the department itself chose to continue the same work through contractors, it could not argue that there was no sanctioned or regular requirement for such services.

The Court further emphasized that the High Court had placed “undue emphasis on the initial label of the appellants’ engagements and the outsourcing decision taken after their dismissal.”

In a telling observation, the Bench stated:

“Courts must look beyond the surface labels and consider the realities of employment: continuous, long-term service, indispensable duties, and absence of any mala fide or illegalities in their appointments.”

Fairness And Equity Over Technical Objections

The Court cautioned that outsourcing policies cannot be introduced belatedly to defeat legitimate claims of long-serving employees.

Referring again to Jaggo, the Bench quoted:

“Refusing regularization simply because their original terms did not explicitly state so, or because an outsourcing policy was belatedly introduced, would be contrary to principles of fairness and equity.”

The Court further observed that Umadevi (3) was aimed at preventing “backdoor entries and illegal appointments” but was never intended to punish workers who had served continuously in sanctioned and necessary functions of the State.

It reaffirmed:

“The decision in Uma Devi (supra) does not intend to penalize employees who have rendered long years of service fulfilling ongoing and necessary functions of the State.”

Thus, where work is perennial and continues even after outsourcing, denial of regularization on rigid technical grounds would violate constitutional principles.

Constitutional Dimensions: Articles 14 And 16

The Bench linked the issue of outsourcing and regularization directly with the equality mandate under Articles 14 and 16.

The Court held that once similarly placed employees had been regularized and the department continued to require the same services, selective denial to the present appellants amounted to discrimination.

Administrative convenience, the Court implied, cannot override constitutional guarantees.

Final Directions Of The Court

Allowing the appeal, the Supreme Court set aside the High Court’s judgment dated 26.08.2019 and directed:

“The services of the appellants be regularized from 01.07.2006 on the same terms as made applicable in Ravi Verma and Ors. as well as in Raman Kumar and Ors.”

The Court further directed release of consequential benefits within three months and extended the same relief to intervenors.

No order as to costs was passed.

Outsourcing Cannot Mask Permanent State Functions

This ruling sends a clear message to government departments across the country — outsourcing of essential and recurring duties cannot be used as a shield to deny regularization to employees who have rendered long and continuous service.

By recognizing outsourcing as proof of perennial need, the Supreme Court has reinforced that constitutional fairness must prevail over bureaucratic formalism.

The judgment strengthens the evolving jurisprudence that the State cannot avoid its obligations toward long-serving workers by merely altering the mode of engagement while retaining the same essential functions.

Date of Decision: 13 February 2026