Perennial Work Cannot Wear Temporary Labels Forever: Orissa High Court Raps State Over Arbitrary Termination of Long-Serving Contractual Workers

“The State cannot hide behind project labels or pre-extracted undertakings to deny security of tenure to those engaged in continuous, sanctioned, and essential functions”— In a landmark ruling Orissa High Court decisively rejected the State’s attempt to replace long-serving contractual employees with outsourced manpower, holding that “outsourcing cannot become a device to evade constitutional and institutional obligations.”

Justice Sashikanta Mishra, presiding over a batch of writ petitions involving employees engaged under the Biju Krushak Vikas Yojana – Deep Bore Well Secha Karyakrama (BKVY-DBSK), issued stern directions against their arbitrary disengagement. The Court, while refraining from issuing a direct order of regularisation in the absence of sanctioned posts, directed the authorities to consider the creation of suitable regular posts and to continue the petitioners in service till such consideration.

“Merely Labeling Work as ‘Project-Based’ Cannot Justify Perpetual Precarity”: Court Calls for Institutional Responsibility in Employment

Orissa High Court delivered a notable judgment under civil writ jurisdiction, addressing the contentious issue of regularisation and continued service of long-serving contractual employees. The petitioners, engaged since 2011 under a walk-in recruitment process conducted by the Orissa Lift Irrigation Corporation (OLIC), were facing termination following the State's policy shift toward outsourcing.

Rejecting this bureaucratic maneuver, the Court ruled that the label of ‘contractual’ or ‘project-based’ cannot be used to escape the State’s duty to ensure fair treatment and job security, especially when the petitioners have rendered over 13 years of uninterrupted service in sanctioned posts and through due selection processes.

The petitioners were engaged between 2011 and 2012 under a Government-sponsored irrigation project—BKVY-DBSK—through walk-in interviews, for posts such as Computer Assistant, Assistant Manager, Data Entry Operator, among others. They were issued letters of appointment explicitly stating their engagement was “project-specific” and “purely contractual.” Despite this, their appointments were extended yearly for over a decade.

In 2019, the State Government issued a direction to discontinue contractual appointments and shift to outsourcing. Consequently, the petitioners received disengagement notices, which prompted them to move the High Court under Articles 226 and 227 of the Constitution.

While the authorities defended their stance by relying on the Supreme Court’s ruling in State of Karnataka v. Uma Devi (2006) and the petitioners’ own undertakings not to seek regularisation, the High Court scrutinised whether such justifications could override the constitutional principles of equality, dignity, and fair labour treatment.

“Institutional Necessity Cannot Be Outsourced Away”: Court Recognises Perennial Nature of Work

The core legal question was whether contractual employees engaged for over a decade on sanctioned posts—via due process—can be denied regularisation and replaced by outsourced staff merely because their initial appointments were labelled as "project-based."

Justice Mishra squarely rejected this administrative construct:

“The institution of the label ‘project’ or the categorisation of the engagement as contractual cannot, by itself, justify denial of regular employment or be used as a device to avoid statutory or organizational responsibility.”

Referring to the principle laid down in State of Haryana v. Piara Singh (1992) 4 SCC 118, the Court held: “Where work is essential and enduring, replacing one set of temporary workers with another amounts to perpetuating arbitrariness.”

“Constitutional Rights Cannot Be Waived by Signing an Unequal Contract”

Another critical issue raised was the undertaking signed by petitioners, agreeing not to claim regularisation in the future. The State cited this to argue that the petitioners were estopped from asserting any claim.

But the Court gave precedence to constitutional rights over coercive contracts: “Undertakings or contractual clauses executed by persons who have little or no bargaining power cannot be allowed to operate as instruments of injustice.”

Quoting the Supreme Court in Central Inland Water Transport Corpn. v. Brojo Nath Ganguly (1986) 3 SCC 156, the judgment stressed: “Between a fundamental right under the Constitution and a contractual clause extracted from an unequal bargaining position, constitutional primacy must prevail.”

Thus, the Court refused to uphold a waiver obtained under economic duress or job insecurity.

“Work Continues, Posts Do Not Vanish”: Functional Reality vs Nomenclature

Justice Mishra further underlined that despite the supposed ‘project period’, the work performed by the petitioners remained essential, unbroken, and institutionally necessary. In his words:

“To approach the matter only through the prism of ‘core’ versus ‘non-core’ would be to ignore the realities of modern institutional functioning.”

Referring to Jaggo v. Union of India, 2024 SCC OnLine SC 3826, the Court held: “Where the initial engagement is legal, work is continuous, and posts are sanctioned—even if only in the project layer—constitutional fairness demands protection of livelihood.”

Relief Granted by the Court:

While noting the absence of existing regular cadre posts matching the designations of petitioners, the Court declined to issue a mandamus for automatic regularisation. However, it issued crucial directions with lasting impact:

“Authorities are directed to consider the creation of suitable regular posts appropriate to the work discharged by the petitioners, against which they can be engaged subject to eligibility.”

Until this exercise is completed:

“The petitioners shall not be disengaged.”

The Court also ordered age relaxation to be considered if the petitioners are found eligible once regular posts are created, recognising the long duration of their service.

“Administrative Artifice Cannot Defeat Fundamental Rights”—Judgment Establishes Boundaries on Outsourcing Abuse

Justice Mishra concluded:

“The engagement of the petitioners cannot continue indefinitely on such an ad hoc basis… Their engagement has to be secured, keeping in line with their fundamental right to livelihood guaranteed under Article 21.”

Thus, while refraining from judicial overreach into matters of cadre policy, the Court drew a constitutional red line that the State cannot cross under the guise of policy discretion.

This decision significantly advances the jurisprudence on contractual employment in the public sector, reinforcing that perennial work cannot be perpetually dressed in temporary robes. By refusing to accept the formalistic shield of ‘contract’ or ‘project’, the Orissa High Court has reaffirmed that constitutional guarantees of equality, dignity, and livelihood must govern employment decisions—especially when they involve the State.

Date of Decision: 7 November 2025