Punjab and Haryana High Court: In a petition filed under Articles 226 and 227 of the Constitution seeking quashing of an order, passed by the Director, Department of Local Self Government (‘Respondent 2’), denying petitioner’s claim to include his previous term of service for the purposes of increment and pensionary benefits, a Single Judge Bench of Harpreet Singh Brar, J., held that exploitative undertakings taken from employees to not claim any arrears were void ab initio since no employee could be forced to contract out of his statutory rights. Further, the Court stated that the State and its instrumentalities, as employers, should lead as examples and not abuse the power as per their whims.
Accordingly, the Court allowed the petition and stated that the petitioner would be entitled to count past service and other benefits towards regularization and calculation of pension.
Background
In September 1992, the petitioner joined the Municipal Council (‘respondent’) as a Tubewell Operator. His services were eventually regularized in December 1994 as he had completed 240 days in service up to October 1993 in terms of instructions stated. However, in March 1994, the services of the petitioner were terminated without issuing any show cause notice in this regard.
Aggrieved by the same, the petitioner approached the Industrial Tribunal, Ludhiana (‘Tribunal’) and Tribunal directed that the services of the petitioner be reinstated with continuity of service and full back wages.
Thereafter, a resolution was passed by the respondent whereby it was agreed that the petitioner be reinstated subject to him furnishing an affidavit claiming that he would not claim any arrears. Consequently, the petitioner submitted an affidavit to regain employment. Accordingly, he was given a fresh appointment.
Since the petitioner is bound to retire in 2026, the petitioner moved a representation before Respondent 2 stating that his services from July 1992 to June 2012 should also be counted towards regular service for the purposes of increment and pensionary benefits. However, the claim was denied by the impugned order concerned.
The petitioner contended that he remained unemployed for 11 years before his services were reinstated after the Tribunal’s award and being a poor person, he gave into the arm-twisting tactics of the respondent into joining as a fresh appointee instead of having his past service counted, even though he was a regular employee before his unceremonious termination. Per contra, the respondents argued that since the petitioner gave his explicit consent for the same, he could not be allowed to subsequently claim the arrears.
Issues, Analysis and Decision
The Court stated that if an employee could be denied substantial service rights on the basis of an undertaking given by him/her on the dictate of the employer.
The Court specified that it seemed that the petitioner was unjustly terminated by the respondent il without issuing a show cause notice or allowing him an opportunity to defend himself. Further, the Court highlighted that the act and conduct of the Respondent 2 demonstrated no regard for the said award even though it categorically mentioned that he be granted continuity of service as well as full back wages. Thus, the Court opined that the Respondent 2 had exceeded its authority by dragooning the petitioner into giving up his rights for an opportunity to earn his livelihood as he did not have a real choice and had to submit to the whimsical approach of the respondent because he was struggling financially for over a decade subsequent to his abrupt and illegal termination.
Further, the Court specified that by virtue of Sections 16, 19A and 23 the Contract Act, 1872 (‘Contract Act’), the respondent could not be allowed to take shelter of the affidavit to justify denying the petitioner his legal right, especially in view of the fact that it was them who erroneously terminated his services in 1994.
Therefore, the Court observed that the conduct exhibited by the respondents was unbecoming of a public employer and the State and its instrumentalities, being model employers, were held up to higher standards bearing an additional responsibility to ensure that their actions were not perceived as arbitrary or violative of the constitutional philosophy. Further, the Court stated that while Article 14 of the Constitution struck at the heart of arbitrary State action and demanded that exercise of any public power be only guided by reason and equality, Article 21 of the Constitution safeguarded the right to livelihood, which certainly included just and non-capricious treatment.
The Court emphasized that when a public employer acts on a whim and causes implicit economic duress to the employee, it betrays the constitutional promise of fairness, which is impermissible with arbitrariness and fair play being sworn enemies. The Court opined that the overt display of fair play is integral to the idea of natural justice and failure to abide by the same would not merely amount to an administrative misconduct but would be a direct affront to the rule of law.
The Court observed that there iss an inherent imbalance of power between an employer and an employee and the employer, very unambiguously, controls the source of livelihood of the employee and thereby is in a position of influence. When such an employer was an instrument of the State itself as in the instant case, a unique opportunity was presented to lead as an example. As such, it was vital that a fair procedure established by law, preventing arbitrary abuse of power, was strictly adhered to. Demanding undertakings that lacked legal sanctity or capriciously denied benefit of the services rendered by an employee was inconsistent with the constitutional guarantees. The Court further stated that the unfortunate practice of extracting undertakings from employees who had been reinstated after tedious litigation was rather common and these undertakings were exploitative as they often pertained to forgoing past service benefits including arrears of salary, increments, continuity of service and retiral benefits and were obtained by placing the employees under duress.
The Court highlighted that often the reinstated employees are issued fresh appointment letters, as was the case in the matter at hand, to deny them any benefits of their past service, which directly impacted their regularization, seniority and pensionary benefits. Eventually, the employees usually remained silent in the face of these exploitative practices, considering that livelihoods were at stake. Thus, the Court held that it could not allow an employer to take advantage of their employees’ financial circumstances to bend them to their will.
The Court observed that such exploitative undertakings were void ab initio since no employee could be forced to contract out of his statutory rights. The Court stated that it could not condone the highly iniquitous arm-twisting tactics employed by Respondent 2 as it rendered the entire exercise tainted by the vice of arbitrariness. Accordingly, the Court allowed the petition and set aside the impugned order.
Further, the Court stated that the petitioner would be entitled to count past service and other benefits towards regularization and calculation of pension and the respondents were granted 3 months to pass an appropriate order
[Ranjit Singh v. State of Punjab, 2025 SCC OnLine P&H 9449, decided on 25-9-2025]
Advocates who appeared in this case:
For the Petitioner: Amrindra Pratap Singh, Advocate
For the Respondents: Vikas Sonak, AAG, Punjab
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