27. (P&H HC)
(Reserved on: 27.11.2025 Decided on: 13.02.2026)
A. Constitution of India, Article 12 – Panchayat Samiti -- Instrumentality of State -- Panchayat Samiti, constituted under statutory enactments governing Panchayati Raj institutions and functioning under the Haryana Panchayati Raj Act, 1994, performs governmental and public functions at the grass-root level, operates under deep and pervasive control of the State Government and is substantially funded through State and Central grants – In view of the overwhelming financial dependence and dominant State funding, the financial control test unequivocally stands fulfilled – Held, Panchayat Samiti is an instrumentality of the State and falls within the meaning of “State” under Article 12 of the Constitution of India.
(Para 20-33)
B. Constitution of India, Article 12 – Employee of Panchayat Samiti – Whether Government employee -- Once it has been held that the Panchayat Samiti is an instrumentality of the State within the meaning of Article 12 of the Constitution of India, the principal foundation of the respondents’ defence that the petitioner was not a Government employee stands substantially eroded.
(Para 3)
C. Constitution of India, Article 12, 14, 16 – Service Law – Daily wager in Panchayat Samiti – Regularisation under Government policy – De-regularisation after three years -- Petitioner appointed as Mali-cum-Chowkidar through Employment Exchange in 1991 under Panchayat Samiti – State Government framed regularisation policy dated 18.03.1996 for daily wage employees completing three years continuous service with 240 days each year – Petitioner’s services regularised w.e.f. 01.02.1996 and regular pay scale, increments and GPF benefits granted – After more than three years, State passed order de-regularising petitioner on ground that he was not a Government employee but employee of Panchayat Samiti -- Held: Reasoning is legally untenable :
-- it is impermissible for the respondents to subsequently withdraw the regularisation on the plea of lack of authority in the initial appointment. Any alleged defect in the appointment of 12.03.1991 cannot be used to unsettle a valid regularisation effected on 01.02.1996, particularly when no fraud, misrepresentation, or concealment is attributed to the petitioner.
-- de-regularisation order suffers from the vice of arbitrariness on account of inordinate delay. For over three years after regularisation, the petitioner was treated as a regular employee in all respects. Such prolonged acquiescence by the State creates a legitimate expectation in favour of the petitioner that his service status would not be disturbed. Administrative fairness does not permit the State to undo a settled position after such a lapse of time.
-- the action of the respondents is ex facie discriminatory. Other similarly situated employees were regularised under the same or similar policies. Though notices for de-regularisation were issued to some of them, their cases either remained protected by interim orders of this Court or became infructuous upon retirement. Singling out the petitioner for de-regularisation in 1999, while extending protection or continued service to others similarly placed, amounts to hostile discrimination and violates Articles 14 and 16 of the Constitution of India.
-- in view of the finding that the Panchayat Samiti is “State” under Article 12, the distinction sought to be drawn by the respondents between a Government employee and an employee of the Panchayat Samiti is artificial and unsustainable.
Impugned order quashed, and the petitioner shall be deemed to have continued in regular service w.e.f. 01.02.1996 with full continuity of service -- Petitioner shall be entitled to all consequential benefits flowing therefrom, including pay fixation, grant of increments, and retiral benefits, if any -- Arrears arising on account of such refixation shall be paid to the petitioner along with interest at the rate of 6% per annum, calculated from the date the amounts became due till the date of actual payment.
(Para 34-46)