Contractual Employees Have No Right to Renewal; Outsourcing Policy Beyond Judicial Review: Allahabad High Court - 2025-07-10

No Inherent Right to Contract Renewal for Arogya Mitras , Outsourcing Policy Affirmed: Allahabad High Court

Lucknow: The Allahabad High Court, in a significant ruling on service law, has dismissed a batch of writ petitions filed by ' Arogya Mitras ' challenging the government's decision to shift their engagement to an outsourced model. The court, presided over by Hon'ble Mr. Justice Rajesh SinghChauhan , held that contractual employees have no inherent right to demand the renewal of their contracts and that a government policy decision to outsource services is generally beyond the scope of judicial review.

The court also vacated all interim orders previously granted in the matter but directed that honorariums already paid to the petitioners for the work they performed would not be recovered.

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Background of the Case

The case involved several petitions, led by Sanjay Kumar Chaurasiya & 36 Others , filed by individuals working as Pradhan Mantri Arogya Mitras (PMAMs) under the central government's ambitious Ayushman Bharat-Pradhan Mantri Jan Arogya Yojna (AB-PMJAY).

The petitioners were initially engaged on a contractual basis by District Health Societies in 2018-19. They challenged orders dated 22.08.2023 and 29.02.2024, issued by the State Agency for Comprehensive Health and Integrated Services (SACHIS), which is the nodal agency for implementing the AB-PMJAY scheme in Uttar Pradesh. These orders mandated that all future engagements of PMAMs would be handled through a designated Beneficiary Facilitation Agency (BFA), an outsourced entity, and directed that the petitioners' existing contracts would not be renewed beyond March 2024.

Arguments from Both Sides

Petitioners' Arguments: The petitioners argued that they were appointed through a due process and had been working continuously. They contended that the shift to an outsourced model would unlawfully terminate their services and that they could not be compelled to join a private agency, as their appointing authority was the Chief Medical Officer. They secured interim orders by stating their contracts were still subsisting.

Respondents' Arguments: Representing SACHIS, Senior Advocate Sri Upendra Nath Mishra dismantled the petitioners' claims. He argued that the entire model for PMAM engagement was changed by the Government of India in 2021 to improve beneficiary facilitation. The new policy mandated engagement through a centralized outsourcing agency. Consequently, 'Writers Business Services Pvt. Ltd.' was appointed as the BFA for Uttar Pradesh.

The respondents asserted that the petitioners were contractual employees under a specific project whose terms had been amended. Their original contracts were for a fixed term and had not been renewed. It was highlighted that the petitioners had misrepresented facts to the court by claiming their contracts were subsisting, thereby obtaining interim relief by "playing fraud upon the Court." Furthermore, it was clarified that there was no separate fund under the amended scheme to pay honorariums directly to PMAMs; all payments were to be routed through the BFA.

Court's Rationale and Legal Precedents

Justice Chauhan framed two central questions for determination: 1. Do contractual employees have a right to get their contract renewed? 2. Is the policy of outsourcing subject to judicial review?

Citing a series of Supreme Court judgments, the High Court provided a decisive answer to both.

On Contract Renewal : The court relied on landmark cases like Yogesh Mahajan v. Professor R.C. Deka (2018) and Director, Institute of Management Development, U.P. v. Pushpa Srivastava (1992). The bench reiterated the established principle: > "It is settled law that no contract employee has a right to have his or her contract renewed from time to time... where the appointment is contractual and by efflux of time, the appointment comes to an end, the respondent could have no right to continue in the post."

The court noted that the petitioners failed to produce any document showing their contracts had been renewed, making their claim to continued employment untenable.

On Outsourcing Policy: Regarding the challenge to the outsourcing policy itself, the court referred to the Supreme Court's decision in State of Uttar Pradesh and Others v. Principal, Abhay Nandan Inter College and Others (2021), which held: > "'Outsourcing' as a matter of policy is being introduced throughout the State. It is one thing to say that it has to be given effect to with caution... and another to strike it down as unconstitutional. 'Outsourcing' per se is not prohibited in law."

The High Court concluded that a policy decision to outsource, being a governmental prerogative, falls outside the purview of judicial review unless proven to be arbitrary or unconstitutional, which was not the case here.

The court also strongly condemned the petitioners for their "non-disclosure of material facts" and obtaining interim orders based on incorrect information, stating that this "alone may be the reason to dismiss these writ petitions."

Final Decision

Finding no merit in the petitions, the court dismissed the entire bunch. It held that a writ court cannot issue a direction to renew a contract, especially when the petitioners have no constitutional or statutory right to such a renewal. All interim orders were vacated.

In a measure of relief, the court directed that the honorariums paid to the petitioners during the pendency of the litigation, in lieu of the work performed under interim orders, shall not be recovered.