After 30 years, Orissa high court orders SBI to pay for Rs. 40 lakh to two bank sweepers Two Scheduled Caste daily-wagers fought SBI for regularisation for three decades
08, Jul 2026 | CJP Team
On June 23, the Orissa High Court passed an order awarding Rs 20 lakh each as lump sum compensation to two daily wage sweepers of the State Bank of India. Bringing to an end nearly three decade long battle for regularisation, a division bench of Justices Krishna S Dixit and Chittaranjan Dash ruled that while the workers had rendered around 30 years of “spotless service”, they could not now seek regularisation as earlier rounds of litigation had not conferred such a right.
Background of the case and procedural history
The appellants, Mayadhar Nayak and Baina Nayak, were daily wagers belonging to the Scheduled Castes, who served the Government Treasury Branch of SBI in Bhubaneswar as cleaners and sweepers for approximately three decades, starting in 1994 and 1995, respectively.
The appellants had previously approached the Court in 1999 regarding non-regularisation of service and denial of pay on par with temporary employees. This produced an interim protective order on October 28, 1999 where the Court said, “If there is work for the Petitioners, they may not be retrenched.” The Court had directed the Bank to pay them remuneration under the Minimum Wages Act and be allowed to continue working as long as work was available, without being substituted by new hands. The Court also asked the bank to consider their cases for regularisation if any vacancies arose.
In 2007, the appellants again approached the Court claiming that the Bank was seeking to fill up the posts of Sweepers and other menial staff without considering their claim for appointment. This time too, the Court asked the bank to consider their cases for regularisation if any vacancies arose, keeping in view the length of their engagement and the services.
In terms of the above order, Appellants were paid on September 17, 2021 the arrears of minimum wages quantified at Rs.1, 61,619/- , each, for the period between April, 2017 & June, 2021.
Around five years later, in 2012, the appellants filed another petition for their recognition as temporary employees, pay parity under the principle of ‘equal pay for equal work’, release of bonus for the financial year 2011–12, and extension of all temporary service benefits as granted to similarly situated employees of the Bank.
In 2020, the appellants another petition seeking regularisation of their services, contending that the Bank had regularised the services of a similarly situated employee engaged as a ‘Liftman’ at the time, the appellants were receiving a consolidated monthly remuneration of Rs.16,406/- while other temporary employees of the Bank were receiving Rs.27,443/-.
On June 20 2025, a single judge bench Justice S.K. Panigrahi which was hearing both the petitions together dismissed the appellants’ writ petitions finding all their claims unsustainable. The judgment read:
“While this Court does not disregard the long and uninterrupted service rendered by the petitioners, it is well-settled that mere length of service does not by itself confer a right to regularisation. The consistent position in law is that engagement on a daily wage or casual basis, however prolonged, cannot mature into a claim for regular appointment in the absence of sanctioned posts and adherence to a lawful selection process.” (Para 18).
In 2022, the Bank had sought permission to retrench the Appellants as being surplus workers.
On July 19, 2025, the appellants were retrenched by the bank as surplus workers under Section 25F of Industrial Disputes Act, 1947 and were paid roughly Rs. 3.31 lakh each as statutory compensation and payment due to a policy shift toward outsourcing driven by IT developments in banking.
The division bench presently hearing the case, had to decide whether
- the appellants, after nearly 30 years of service were entitled to regularisation and consequential monetary benefits,
- the previous court orders, which only directed the payment of minimum wages and conditional consideration for vacancies, barred the appellants’ current claims for regularisation, and
- what constitutes fair ‘remediable and reparative justice’ for manual labourers in an era of outsourcing and AI, when regularisation might impose an excessive financial burden on the employer.
High Court’s intervention
The Division Bench partially allowed the appeals and set aside the order of the Single Judge through an order on May 18, 2026. In that it said:
“There appears to be a prima facie case for granting relief to the Appellants herein, who admittedly have put in service as Sweepers, first Appellant from 1994, and the second from 1995. The law, as it now stands in the June of its life, tilts in favour of the Appellant’s herein, inasmuch as, arguably, the impugned order of the learned Single Judge has missed the march”
- Declined Regularisation
The Court declined to order regularisation. Reliance was placed on Supreme Court’s rulings in Jaggo v. Union of India (2024), and Shripal v. Nagar Nigam (2025) but the Court noted it would cause the Bank to bear the brunt of losing huge money and that the appellants’ prior cases only resulted in a direction for minimum wages. At the same time, the Court observed that the appellants’ earlier rounds of litigation had not secured them much real benefit, since those orders only directed payment of minimum wages, which SBI had already paid. Because of this, the Bench held that the regularisation claim in the present appeals was, to an extent, barred by the principle of res judicata.
The Court then referred to a coordinate Bench’s order in Secretary, Berhampur Cooperative Central Bank Ltd. v. Bhaba Sundar Dalai (2026), where Rs 10 lakh had been awarded as compensation in lieu of regularisation. However, the Bench distinguished that case as there was no res judicata bar in it, and the employees’ service was comparatively shorter.
The Court took note of two mitigating factors specific to the present appellants, that they had roughly ten years left before superannuation, and that both belonged to Scheduled Castes, as relevant considerations in shaping the final relief.
- Justification for the Compensation Amount
In the May order, the Court had suggested both the sides to negotiate a settlement with fairness and justice. The SBI proposed to pay a lump sum compensation of Rs. 5 lakh to each of the appellants to settle the dispute. However, the appellants rejected the bank’s offer and during a personal interaction with the Court, they stated they would settle for Rs. 25 lakh each
The Court evaluated both proposals and described the Bank’s Rs. 5 lakh offer inadequate. It said:
“Rupees 5 lakh offer made by the Bank as compensation is too frugal to be mentioned, when bread is costlier than blood, Rupee value now-a-days dwindling down. The Appellants, who have given their sweat & blood, cannot seek gainful employment elsewhere at their present declining age. They were working only as sweepers with not much education nor with due social status.” (Para 7.3.2)
Instead, the Court awarded a lump sum compensation of Rs. 20, 00,000 (Twenty Lakh) to each appellant in lieu of regularisation and continued service.
While deciding the compensation amount, it remarked:
“In the AI era, we are not sure that they would be able to eke out their livelihood, having spent prime of their life blood in the menial job all these years. Even Rs.10 lakh compensation awarded by the Coordinate Bench to the workmen of a Cooperative Bank would not constitute a solid yardstick for determining what should be paid to these poor persons. Should Appellants be regularized in service, it would incur more expenditure than otherwise.” (Para 7.3.2)
The Bank was ordered to pay the total Rs. 40 lakh within eight weeks. Any delay would trigger an interest penalty (1% for the first month and 2% thereafter), which the Court directed should be recovered personally from the erring bank officials.
The full judgment may be read here:
Why Regularisation Never Came
The Fifth Schedule to the Industrial Disputes Act, 1947, that designates certain practices as unfair labour practices includes:
“10. To employ workmen as “badlis”, casuals or temporaries and to continue them as such for years, with the object of depriving them of the status and privileges of permanent workmen.”
For thirty years, and over 240 days annually, the appellants discharged their duty in continuity. For context, the Government Treasury Branch of the Bank occupies more than 11,000 square feet, spread over three levels comprising the upper basement, ground floor, and first floor. The premises include eight toilets and six urinals. The Appellants had been performing cleaning duties in the said premises along with outsourced employees.
The denial of regularisation and long-term benefits to contractual or temporary workers is a heavily litigated issue in India, and not unique to the present case. In Secretary, State of Karnataka v. Umadevi (2006) the Court clarified that temporary, daily wage, or contractual employees do not possess a legal or fundamental right to be made permanent. It held that a court cannot issue a writ of mandamus to make a worker permanent because the worker has no enforceable legal right to such a status, and the State has no legal duty to provide it outside of established rules. However, the Court also provided a narrow exception as a one-time measure for workers who have completed at least 10 years of service. Regularisation, it held, may be permitted where the appointment was irregular (meaning it suffered from a procedural flaw) but not illegal.
In Jaggo v. Union of India (2024), the Supreme Court said that the appellants’ long and uninterrupted service, for periods extending well beyond ten years, cannot be brushed aside merely by labelling their initial appointments as part-time or contractual. The essence of their employment must be considered in the light of their sustained contribution, the integral nature of their work, and the fact that no evidence suggests their entry was through any illegal or surreptitious route. The judgment read:
“The claim by the respondents that these were not regular posts lacks merit, as the nature of the work performed by the appellants was perennial and fundamental to the functioning of the offices. The recurring nature of these duties necessitates their classification as regular posts, irrespective of how their initial engagements were labelled. It is also noteworthy that subsequent outsourcing of these same tasks to private agencies after the appellants’ termination demonstrates the inherent need for these services. This act of outsourcing, which effectively replaced one set of workers with another, further underscores that the work in question was neither temporary nor occasional.” (Para 13)
In Mahanadi Coalfields Ltd. vs Brajrajnagar Coal Mines Workers Union (2024), the Court held that workers engaged to perform work of regular and perennial nature cannot be treated as contract labour.
Similarly, last year, in Shripal vs Nagar Nigam (2025), the Supreme Court while acknowledging the precedence in Umadevi, emphasised that workers performing duties that are integral, ongoing, and perennial to an institution’s functions should not be relegated to perpetual daily-wage status. The judgment authored by Justice Vikram Nath said:
“While the judgment in Uma Devi (supra) sought to curtail the practice of backdoor entries and ensure appointments adhered to constitutional principles, it is regrettable that its principles are often misinterpreted or misapplied to deny legitimate claims of long-serving employees. This judgment aimed to distinguish between “illegal” and “irregular” appointments. It categorically held that employees in irregular appointments, who were engaged in duly sanctioned posts and had served continuously for more than ten years, should be considered for regularization as a one-time measure. However, the laudable intent of the judgment is being subverted when institutions rely on its dicta to indiscriminately reject the claims of employees, even in cases where their appointments are not illegal, but merely lack adherence to procedural formalities.” (Para 26).
“Indian labour law strongly disfavours perpetual daily-wage or contractual engagements in circumstances where the work is permanent in nature. Morally and legally, workers who fulfil ongoing municipal requirements year after year cannot be dismissed summarily as dispensable, particularly in the absence of a genuine contractor agreement.” (Para 15).
To continue extracting regular labour for decades while pleading a lack of sanctioned strength is a position the Court found legally and morally unsustainable in Dharam Singh vs State of UP (2025).
In January this year, in Bhola Nath vs The State Of Jharkhand (2026), the Court while finding the State’s refusal to regularise the workers who had served for over a decade to be a clear derogation of equality principles, directed the State to forthwith regularise the appellants against the sanctioned posts they were initially appointed to, granting them all consequential service benefits
Hence, while long service alone does not guarantee automatic regularisation, the Supreme Court has ruled that continuing workers in identical, perpetual roles on temporary wages while denying them benefits can be considered arbitrary and discriminatory.
During the litigation, the appellants in present case- Mayadhar Nayak supported his wife, two children, and a father aged about 80 years. On the other hand, Baina Nayak was the sole caretaker of a mentally and physically disabled child and another son, all of whom dependent on his meagre income of about Rs 16,000.
On paper, the Nayaks had reason to expect a better outcome. They approached the High Court as early as 1999 where a coordinate bench even secured them protection against retrenchment in 1999, and in 2007 the Court directed SBI to consider them if sweeper vacancies were filled. Yet each of these interventions never fruitioned into regularisation.
When two vacancies did arise after the 2007/2008 orders, SBI chose to outsource the cleaning function rather than fill the posts departmentally citing a policy shift attributed to changes in banking operations. Because this outsourcing decision was never independently challenged, it stood, and it extinguished the very condition on which the appellants’ continued engagement depended. Rather than terminating long-serving casual workers outright, the restructuring of the underlying work itself dissolved the employee’s along with the post. By the time the Division Bench heard the 2025 appeals, it held that the earlier 2007/2008 orders had already adjudicated.
Compensation and Delayed Justice
Regularisation would have given the appellants a pension, medical benefits, promotional prospects, and crucially continued income until superannuation. A one-time payment, however large, is a terminal substitute.
None of this is to say compensation is worthless. Rs20 lakh each is a materially significant, life-altering sum, and the Court’s insistence on interest for delay and personal liability of erring officials for that interest is a genuinely useful enforcement mechanism. But as a systemic remedy for decades of institutionalised casualisation, compensation calculated case-by-case, in peculiar facts and circumstances, explicitly disclaiming precedential value, plausibly should not substitute for either a binding regularisation scheme or statutory reform that removes employers’ incentive to keep essential, perennial work permanently temporary! While salary or lump-sum compensation prevents destitution, it does not cure systemic exploitation. Compensation is at best a consolation, and workers deserve justice, not just money. Compensation does little to restore lost career opportunities, dignity and security.
“The Appellants have been fighting the legal battles since about three decades, complete justice eluding for one or the other reason,” acknowledged the Orissa High Court in the present case.
This is not unusual. Delay is a common feature of our judicial system. Labour disputes in India typically take somewhere between seven to ten years to reach a final judgment. Pendency of labour disputes in general for long period of time leads to frustration among workers.
The Delhi High Court recently flagged this delay directly, describing the backlog of pending labour matters before constitutional courts as a “sorry state of affairs” in the constitutional courts where the “poor labourers are forced to fight tooth and nail to get justice for themselves”. Reported the Indian Express.
Labour Law in the AI-era
Tucked into the judgment’s compensation calculus, the Bench doubted the appellants could “eke out their livelihood… in the AI era,” having spent their working lives in menial labour with little education. This, on one level, was an acknowledgment that older, low-skilled workers pushed out of long-term employment have genuinely diminished prospects of re-entering the labour market. But it is worth reading as part of a broader, nascent judicial awareness that automation and technological change will compound the harm of insecure employment for low-skill, manual roles.
A public employer that outsources or automates a function bears a one-time restructuring cost but the displaced worker bears a lifetime cost, often without the education or capital to pivot into new work. The Court’s remark implicitly recognises this asymmetry, even if it does not translate it into a legal standard.
“Perennial nature of work” as a legal test may itself be eroding. Much of the jurisprudence on regularisation and contract labour assumes that if work is genuinely permanent, it should attract permanent labour protections. But work that was perennial for thirty years can be redefined as time-limited or eliminable through outsourcing plus technology, without ever being tested against the perennial nature standard in a contested proceeding.
Indian courts have long tied the right to livelihood, and by extension dignity, to Article 21. It would perhaps be an overreach to describe this as an emerging AI-era jurisprudence. But future litigants representing displaced casual workers in automating sectors like banking, toll collection, municipal sanitation may well cite this observation as an early judicial acknowledgment that technological displacement deserves distinct legal weight. The judges however have made it clear that this order is based on the facts of this case and they do not intend to make it a binding precedent or a Rule of Parity.
(The legal research team of CJP consists of lawyers and interns; this judgement primer has been worked on by Tanishka Shah)
Image Courtesy: businesstoday.in
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