Court’s Decision
The Bombay High Court emphatically ruled that daily-wage employees who have continuously worked for several years in essential services cannot be denied permanency on the ground of financial constraints. The Court quashed the orders of the Industrial Court and the termination of four municipal workers (drivers and firemen) by the Malegaon Municipal Corporation, holding that their long-standing engagement entitled them to permanency and continuity of service.
Justice Milind N. Jadhav, delivering the judgment, observed:
“Equity must not be a casualty in the hands of executive convenience. Article 14 of the Constitution demands not only equality before law but fairness in State action.”
The Court directed the Corporation to reinstate the employees within one week, grant continuity in service, back wages, and confer permanency benefits from the date of judgment.
Facts
Four petitioners—two drivers and two firemen—were appointed by the Malegaon Municipal Corporation in 2017 on a daily-wage basis for six-month terms at ₹7,000 per month. Their contracts were repeatedly renewed over nine years, with short breaks on paper, while they performed duties identical to those of permanent staff.
Despite continuous service, they were denied regularization. They approached the Industrial Court under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971, alleging unfair labour practice.
Although the Industrial Court initially granted interim protection, it later dismissed their complaints in May 2025. Within a month, the Corporation terminated their services, citing breach of the 35% ceiling on establishment expenditure imposed by a Government Resolution dated 14 January 2016.
Aggrieved, the workers filed writ petitions before the Bombay High Court challenging both the Industrial Court’s order and their termination.
Issues
- Whether long-serving daily-wage workers performing perennial duties are entitled to permanency despite financial restrictions under a government resolution.
- Whether the Corporation’s plea of being “powerless” to make appointments due to exceeding expenditure limits can justify denial of regularization.
- Whether termination of employees during pendency of the writ petitions amounted to arbitrary state action.
Petitioners’ Arguments
The petitioners contended that they had served continuously for nine years, completing well beyond 240 days of service annually, and were performing permanent, essential functions in the Fire Department.
Their counsel argued that the Corporation’s refusal to regularize their services amounted to blatant exploitation under the guise of contractual engagement. The petitioners emphasized that they worked alongside regular employees, performing identical duties, and the plea of “financial constraint” was a façade to perpetuate insecurity and deny social benefits.
They further argued that termination during pendency of proceedings was a defiance of judicial protection and violated principles of fairness under Article 14 and Article 21.
Respondent’s Arguments
The Corporation, represented by its Additional Commissioner, admitted the workers’ long service but contended that the Government Resolution of 2016 restricted establishment expenditure to 35% of annual revenue.
Since the Corporation’s current expenditure exceeded 49.2%, it claimed to be “powerless to make new appointments or regularize employees”. The Corporation insisted that only certain exempted categories, such as safai kamgars (sanitation workers), could be regularized despite the financial ceiling.
It maintained that the petitioners’ continuation was purely contractual, extended through interim orders, and did not confer any right to permanency.
Analysis of the Law
The Court analyzed Section 43 of the Partnership Act, Section 28 of the MRTU & PULP Act, and relevant Government Resolutions to conclude that financial restrictions cannot override statutory labour rights.
Justice Jadhav cited the Punjab and Haryana High Court’s ruling in Harbhan Singh v. Bhakra Beas Management Board (2025), emphasizing that “law, in its finest expression, is not a rigid instrument but a compassionate force that must respond to the human condition.”
He held that Article 14 mandates fairness and equitable treatment, observing that the Corporation’s plea of helplessness could not justify prolonged contractual exploitation.
The Court declared:
“If the Corporation can appoint safai kamgars despite the 35% ceiling, it cannot deny the same equity to firemen and drivers performing essential duties.”
The Court underscored that continuing such workers on daily wages for nine years amounted to unfair labour practice, contravening Items 6, 9, and 10 of Schedule IV of the MRTU & PULP Act.
Precedent Analysis
- Conservator of Forests v. Savala Dhondiba Pise (2010) – The Bombay High Court held that denying permanent status to long-serving daily wagers amounts to unfair labour practice and that Umadevi does not negate statutory labour rights.
- Dharam Singh v. State of U.P. (Supreme Court, 2025) – The apex court ruled that financial constraints cannot be used to perpetuate precarious employment, holding that “the State cannot balance budgets on the backs of those who perform basic and recurring public functions.”
- Jaggo v. Union of India (2024) and Shripal v. Nagar Nigam Ghaziabad (2025) – The Supreme Court condemned misuse of temporary contracts and outsourcing as tools of exploitation, stressing that Umadevi cannot shield unfair practices.
- Chief Conservator of Forests v. Jagannath Maruti Kondhare (1996) – Recognized that long-term casual employment in perennial work indicates intention to deny permanent benefits, thereby amounting to unfair labour practice.
The High Court harmonized these precedents to hold that workers engaged in essential and perennial duties must be regularized.
Court’s Reasoning
The Court rejected the Corporation’s claim of helplessness, stating that administrative convenience cannot override constitutional fairness. It found that the petitioners were employed against sanctioned posts, and their termination during pendency of litigation was “arbitrary, high-handed, and in defiance of natural justice.”
Quoting the Supreme Court’s recent observations, the Court noted:
“The State is not a mere market participant but a constitutional employer; it cannot balance budgets on the backs of those performing recurring public duties.”
Justice Jadhav emphasized that financial stringency cannot serve as a “talisman to override fairness and reason.”
The Court declared that long-term extraction of labour under temporary labels violates Articles 14, 16, and 21, and reiterated that sensitivity to the human consequences of job insecurity is a constitutional disciplinepradip-ramesh-shinde-ors-v-male….
Conclusion
The High Court allowed all four writ petitions, quashed the Industrial Court’s orders (dated 6 May 2025) and the Corporation’s termination orders (dated 2 July 2025).
It directed the Corporation to:
- Reinstate all workers within one week;
- Grant continuity in service and back wages from the date of termination; and
- Confer permanency benefits from the date of judgment.
Justice Jadhav concluded that:
“To deprive workers of status and privilege of permanency after nine years of continuous service amounts to state-sponsored exploitation.”
Implications
This ruling reinforces the principle that financial limitations cannot be a justification for denying constitutional and statutory labour rights. It establishes that municipal bodies and public institutions must regularize long-serving workers performing essential functions.
The judgment will likely have widespread implications across Maharashtra and India, curbing the tendency of government bodies to rely indefinitely on contractual labour under the pretext of fiscal discipline.
It also reinforces the Supreme Court’s evolving stance against “institutional ad-hocism”, mandating public employers to maintain transparent staffing patterns aligned with recurring functional needs.
