Written by Viraj Saxena & Varchasv Dalmia, B.A. LL.B. (Hons.) students at National Law University, Odisha.
The Contrast between two Parallel Systems
The landscape of labour law in India is marked by a stark dichotomy between two systems: one governing private employers, strictly adhered to, actively supervised and generally intolerant of the casualization of permanent employment, while the other is mostly “self-regulated” and informal, governing the State. For several years, the state governments have exploited this imbalance by engaging thousands of workers on a “muster roll” or “work charged” basis for essential public services, while denying them any stability, legal protections, pensionary and retiral benefits that any private employer operating at the very same services would be legally obligated to provide.
The consequences of this exploitation are far from theoretical. Consider, for instance, that a road maintenance worker who has served the government for more than thirty years since 1987 remains a “casual” employee on official records.
This arrangement is squarely struck down by the Supreme Court’s Decision in the recent case of Sukhendu Bhattacharjee v. State of Assam [2026] INSC 523 [72]. Justices Vikram Nath and Sandeep Mehta, with the judgment delivered by Sandeep Mehta, said that sovereign immunity is not a legitimate defence under any labour law, to the extent that the Fifth Schedule of the Industrial Disputes Act, 1947 provides an exemption to the government. This article looks at the origin of the case, the judgment passed and the importance of the judgment beyond the Indian state of Assam.
The Legal Framework
Section 2(ra) of the Industrial Disputes Act, 1947, read with Item 10 of the Fifth Schedule identifies the deliberate practice by employers of treating workers as ‘casuals’ and ‘badlis’ and keeping them for years without proper status or privileges, as an Unfair Labour Practice (ULP). Private employers caught doing this face regularization orders, back wage liability and penalties. The labour courts have always considered structural casualisation as a calculated tactic to suppress wage costs while extracting the output of permanent labour. However, the State has always worked on a different principle altogether.
There are three reasons that routinely justify the decisions of the state governments. These reasons include: financial difficulty, lack of sanctioned posts, and the case of Secretary, State of Karnataka and Ors. v. Umadevi and Ors. (2006) 4 SCC 1, where it was held that irregular employment did not per se result in a claim for regularization. This decision stemmed from a genuine fear of the potential judicial validation of a practice of patronage-driven entry to the civil services through irregular appointments. But over the last twenty years, this decision turned into something totally different. Irregular appointments, even if done by the State in the first place, became an umbrella term for refusal of regularization to casual workers at the expense of the same precedent cited in their defense. Such actions result in a paradoxical situation. A private employer engaging its employees casually in core perennial positions is made to bear the consequences of its own wrong. A government doing just the same gets away with citing Umadevi, financial hardships, and defending its stance for nearly seventeen years.
This is the gap that Sukhendu Bhattacharjee aims to bridge. The message of the Court here is clear that there is no exception to the government under the Fifth Schedule of the IDA. Item 6 and Item 10 of the Fifth Schedule apply to the government employers as much as to the private ones. A State which perpetuates the status of “casual” to perennial labour through structural means, makes use of its own mismanagement in order to deprive relief to workers, and then uses an already-established precedent intended for another matter is committing Unfair Labour Practice.
The Assam Story: A Promise Made, Partially Kept, Then Withdrawn
Starting from the 1980s, the public works infrastructure in Assam was mostly dependent on workers recruited under the Muster Roll and Work Charged categories to occupy positions where the permanent cadre neither could nor wanted to do so. Realizing the importance of such reliance for the functioning of the Public Works Department in 1995, the Chief Secretary of the State made a promise to regularize workers working till April 1, 1993. This was more of an official commitment than just an aspiration. The Cabinet moved in 2005 to fulfil this commitment, providing over 30,000 positions for Grade IV workers. For some time, it looked like the State was making amends as a good employer. However, a group of eligible workers, without being disqualified in any manner, was denied the benefits as a result of errors of procedure and omission made by the relevant departments of the State. These workers fulfilled all eligibility criteria, worked for the required duration of time, and were in the same category as that of workers who were regularized in 2005–06.
Finally, the last event took place in June 2012, when the State released the Office Memorandum, whereby the regularization drive was declared closed forever. This Memorandum is the embodiment of decades-long cynicism on the part of the State that used its own failure as a reason to deny the workers the relief to which they were entitled by law. The regularization policy initiated in 1995 and realized in 2005 was terminated administratively in 2012, again for no other reason than the negligence of the relevant departments.
This is the central legal question the Supreme Court was invited to adjudicate upon. There is no dispute over the case facts. The claimants and the workers already regularized were the same people from all practical and legal points of view.
The Supreme Court’s Intervention
The workers initially approached the Gauhati High Court, where a Single Judge ruled in their favour by quashing the 2012 OM and directing regularization. On appeal, the Division Bench, in 2017 ruled that the claim could not succeed in light of the Umadevi principle. Thus after almost a decade of litigation, it seems that finally the case has been decided, though ten years later than it deserved to be decided. The judgement of the court is based on three aspects, each of them different yet complementary.
The first one is related to Article 14. The appellants did not ask for a policy but seek inclusion in a policy that is already in force. The government had defined certain classes or groups of people that fall under this policy. After making such a definition, no arbitrariness can be allowed in excluding members of that very class. Thus, after having identified and defined certain criteria for inclusion in the class, the state cannot arbitrarily exclude someone from getting the benefits of such a policy.
The second relates to legitimate expectation and executive authority. The Court found that the State’s act of seeking prior permission from the High Court before implementing its own validly passed 2005 Cabinet decision amounted to an unwarranted surrender of its executive authority.[1] Having made an executive promise through the Cabinet resolution, the State was bound to implement it. Using its own administrative failure as a legal defence to deny an identically placed class of workers their due benefit was therefore constitutionally impermissible.
The third relates to the Umadevi principle. In their judgement, it should be noted that the bench explicitly discouraged the arbitrary application of this ruling for purposes other than those for which this ruling is made. It cannot be used here because here the issue involves the failure of the department of the state and that too after they have made an executive promise which they failed to fulfil for an identical class.[2]
The remedial step was just as crucial and, as such, quite comprehensive. The Court did not confine itself to declaring an entitlement but went further by mandating that those regularized in this case should have their regularization backdated to the same day as those regularized in 2005-06, thus maintaining their continuity and seniority. The Court ordered that where necessary supernumerary positions be made available, thus preventing the defense from using the defense that there were “no sanctioned posts.” The Court ordered payment of all arrears relating to pensions, which had been accruing for the workers since they retired, during the course of the protracted legal process.
- Why this Matters
The constitutional principle of the State as the model employer finds expression in Articles 38, 39, and 41 of the Directive Principles, envisioning a State that defines standards of labour dignity instead of manipulating processes to avoid meeting them. It is Sukhendu Bhattacharjee that translates this ethical standard into an operational principle of enforceable accountability. The core of this judgment is clear and long overdue: sovereign immunity is no longer a valid argument in labour law. There is no government exception clause in the Fifth Schedule of the Industrial Disputes Act. The State which promotes labour welfare legislation but builds up its public infrastructure on the basis of underpaid, permanently temporary workers cannot claim to be a model employer. Instead, it acts as the cleverest violator, possessing legislative powers, institutional sustainability, and the ability to litigate for decades, while its employees grow old.
As for legal practitioners, the judgment reinforces the principle of administrative estoppel in matters of public employment as it draws strict limits on the use of reactive Umadevi-type arguments; and it validates the right to equality guaranteed by Article 14 as a practical legal tool for fighting intra-class discrimination at government level. The directive concerning supernumerary posts is particularly crucial since it deprives the State of its most reliable procedural defence.
For the general public, the judgment is important as it restores a simple truth that the Muster Roll and Work Charged workers who built roads in Assam and its public infrastructure were promised a permanent position in 1995. They witnessed their colleagues become permanent employees in 2005 and got the news in 2012 about departmental negligence, barring them from theirs. They went to court for another nine years. Finally, the issue of how those who had been building this country should be considered has reached the legal arena and, this time, received its rightful answer.
Caveat: The views, analyses, and information presented in this article are provided in good faith and for general informational purposes only. No representation or warranty, express or implied, is made regarding the accuracy, adequacy, validity, reliability, or completeness of the information. Readers should conduct their own research and seek professional guidance where appropriate. Neither the author nor the publisher shall be held responsible for any loss, liability, or consequence arising from reliance on this content.
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