SC Rules Autonomous Boards Must Follow Statutory Recruitment; State Circulars Can't Override Rules, No Reinstatement Granted.

The SC set aside the HC's judgment that directed the appellant to reinstate and regularize the respondents' services based on the State's policy. The SC held that the statutory board, as an autonomous body, must adhere to statutory recruitment rules, and no right to regularization can be claimed from appointments made without following proper procedures. The SC emphasized that State directives communicated via circulars cannot override statutory rules. The appeals were allowed, and no costs were awarded.

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Issues Involved:
1. Applicability of the State's policy decision regarding regularization of services.
2. Legal status of the employees' appointments.
3. Authority of the State's directives over statutory bodies.
4. Validity of the High Court's judgment.

Detailed Analysis:

1. Applicability of the State's Policy Decision Regarding Regularization of Services:
The appeals questioned the applicability of a purported policy decision by the State of Punjab regarding the regularization of services of employees engaged on a contract basis by the Appellant-Board. The respondents were engaged in schemes for maintenance of water supply and sewerage lines, and their services were terminated. They sought regularization based on the State's schemes dated 23.1.2001 and 28.3.2003, which were rejected by the appellant.

2. Legal Status of the Employees' Appointments:
The Court noted that the statutory board is an autonomous body, and no evidence was presented to show that any directive from the State would be binding on it under the statute. The statutory bodies must adhere to recruitment rules laid down under statutory rules and implement the constitutional scheme of equality as per Articles 14 and 16 of the Constitution of India. The Court emphasized that appointments made without following the prescribed procedure are illegal, and no right to regularization can be claimed based on such erroneous appointments.

3. Authority of the State's Directives Over Statutory Bodies:
The Court observed that the State's control over the recruitment of employees of local authorities must be exercised strictly according to the provisions of the Act. The purported directions from the State, communicated through circular letters, were not statutory instruments and could not supersede statutory rules. Even a scheme issued under Article 162 of the Constitution of India would not prevail over statutory rules.

4. Validity of the High Court's Judgment:
The High Court directed the appellant to reinstate the respondents and regularize their services based on the State's policy decision. However, the Supreme Court found that the High Court did not address whether the respondents had a legal right to regularization. The High Court's reliance on the State's policy decision was flawed as such decisions cannot be adopted by circular letters or executive instructions that contradict statutory rules and constitutional provisions. The Supreme Court cited several precedents, including the Constitution Bench's decision in Secretary, State of Karnataka v. Umadevi and Ors., which held that no person employed temporarily or casually could be directed to be continued permanently, thereby creating another mode of public employment not permissible under the Constitution.

The Supreme Court concluded that the High Court's judgment could not be sustained and set it aside, emphasizing that any appointment made without following the proper procedure would be ultra vires. The appeals were allowed, and no costs were awarded.

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