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CASE NO.: Appeal (civil)  1273-1276 of 2008

PETITIONER: A. Manoharan and Ors.

RESPONDENT: Union of India and Ors.

DATE OF JUDGMENT: 14/02/2008

BENCH: S.B. Sinha & Harjit Singh Bedi

JUDGMENT: J U D G M E N T  [Arising out of  SLP (Civil) Nos. 16720-16723 of 2003] S.B. SINHA, J :          1.      Leave granted.

2.      The Parliament of India enacted the Major Port Trusts Act, 1963 (for  short \023the 1963 Act\024).  It was preceded by several provincial Acts; one of  them being the Madras Outports Landing and Shipping Fees Act, 1885.   Regulations were framed under the provincial Acts.  They were saved under  the 1963 Act.   

    Madras Port Trust Employees (Appointment, Promotion, etc.)  Regulations, 1977 was made under Section 28 of the 1963 Act.  It was  amended in the year 2000 by the Madras Port Trust Employees  (Appointment, Promotion, etc.) Regulation 2000.  Regulation 5 read with  Schedule thereof provides that insofar as the appointment to the post of  Executive Engineer is concerned, possession of a degree in Civil  Engineering is imperative.  It was amended with the approval of the Central  Government in terms of Sub-section (1) of Section 124 of the 1963 Act.   Regulations, therefore, have statutory force.  They have been duly published  in the Gazettee.  Not only approval of the Central Government was obtained,  they were also laid before both Houses of the Parliament.   

3.      Some of the employees were Diploma holders.  They formed an  Association known as Chennai Port Trust Diploma Engineers\022 Association.   In view of embargo placed by the Regulations on their promotional  prospects as the educational qualification for holding of the post of  Executive Engineers had been laid down, they made a representation.   

       A writ petition came to be filed before the Madras High Court which  was marked as Writ Petition No. 11938 of 1993.  A prayer was made therein  for a direction upon the appropriate government/ authority to make  amendments in the Regulations of the 1963 Act in terms whereof provisions  were required to be made for grant of opportunities for promotion to the  Diploma Engineers to the post of Executive Engineers in the ratio of 4:1,  i.e., as against four posts of Executive Engineer from Graduate Engineers;  one post must be reserved for the Diploma holders.  Such a prayer was made  relying on or on the basis of the recommendations made by the Central  Government in terms of its letter dated 8.06.1991; pursuant whereto the  Madras Port Trust constituted a Committee.  Recommendations were also  made by the said Committee for grant of such benefit in favour of the  Diploma holders.  A communication was again made by the Union of India  to the Trust on 28.06.1994 providing that a common seniority list should be  maintained for diploma holders and degree holders once the two streams  merged, i.e., Diploma holders and Degree holders come on a common  platform by occupying the same post.   

       The prayer made in the writ petition was amended.  A learned Single

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Judge of the High Court opined that as Diploma holders could be promoted  to the Post of Executive Engineer in terms of the recommendations of the  Central Government, it was not necessary to issue a direction to amend the  Regulations.  However, in regard to the other prayers made in the said writ  petition, as for example, for grant of promotion, an observation was made  therein that an administrative representation therefor should be considered.   

       A writ appeal preferred thereagainst was allowed directing the  respondent no. 1 to promote the Diploma holders with retrospective effective  on the basis of common seniority.   

4.      The learned counsel appearing on behalf of the Union of India before  the High Court conceded to the contentions raised on behalf of the Diploma  holders relying on or on the basis of the said communications of the Central  Government.   

       We may notice that the Degree holders were not made parties to the  said writ proceedings.   

    A review application was filed inter alia contending that as  educational qualification for holding the post of Executive Engineers has  been laid down by the Regulations, it should be clarified that no action can  be taken on the basis of the said communication by the Central Government.                    Appellant No. 1 herein and the Chennai Port Trust Degree Engineers\022  Association also filed writ petitions before the High Court bearing Writ  Petition Nos. 4573 and 4774 of 2003 respectively.

5.        Some of the Degree holders also filed a review application together  with an application for grant of leave therefor.   

    In the said review proceedings, a letter dated 24.12.2002 issued by the  Central Government was produced.   

       The Division Bench of the High Court made a summary thereof  stating:

       \023Firstly, the diploma-holders could be  promoted up to the level of Executive Engineers;         Secondly, there could be a limited allocation  of posts for diploma holders in the ratio of 4:1 or  5:1 in relation to graduate-engineers;         Thirdly, Class III posts in the Engineer cadre  were to be redesignated without any change in  their duties and without any financial implications;             Fourthly, common seniority list was to be  maintained for degree and diploma engineers once  the two streams merge for promotion to the higher  cadres; and          Lastly, regarding the ratio of 4:1 or 5:1  between degree-engineers and diploma-engineers  whenever the two streams merge, no ratio system  would exist meaning thereby, that after the merger  i.e., after the two category of engineers come on  the same platform, the promotion has to be made  on the basis of common seniority list.\024

       It also referred to the following paragraph of the said letter:          \023These guidelines were in vogue till 2000  when these instructions were kept in abeyance by  letter No. C-13019/11/96/PE-1 dated 8.3.2000  on  the ground that cadre restructuring of  degree/diploma holders was under consideration.  Cadre restructuring proposal involving upgradation  of some posts and financial implications, could not

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be finalized as it needs consultation/concurrence of  Ministry of Finance.  Thus as on date there are no  clear instructions on the subject of promotional  avenue to the diploma holders.  Decision on cadre  restructuring will be implemented with all its  consequences.  However,  in the mean time we  need to provide guidelines as promotion of  diploma /degree holders, if due, should  not wait  till the cadre restructuring is finalized.  In the  circumstances, it has been decided to withdraw this  Ministry\022s letter No.C-13019/11/96/PE-II dated  8.3.2000 and restore the position available before  8.3.2000.   The ports are accordingly requested to  take necessary action in the matter.\024

6.      The prayer of the Degree holders - Executive Engineers to file the  application for grant of leave to file review petition, was, however, refused  to be considered holding that it has not been shown as to how individually  they are prejudiced.   

7.      So far as the writ petition filed by the appellants is concerned, the  High Court rejected their contention that the Government of India did not  have any power to provide for promotional avenues for the diploma holders  contrary to the Regulations and as such the said communications were ultra  vires, stating:

       \023The argument must necessarily fail.  In the  first place, it cannot be forgotten that the  regulations are restricted only  to the Madras Port  Trust.  They were originally framed under the  Major Port Trust Act and more particularly under  Sec 28 thereof.  Though the regulations originally  framed for the Madras Port Trust are saved under  Sec. 133 (2D) (C)  of the Major Port Trusts Act,  the fact  remains that they would apply only to  Madras Port Trust.  Where we see the other  provisions, it is obvious that the Central  Government has a plenary power  over all the  Major Port trusts, they being Port Trusts of  Bombay, Calcutta and Madras in respect of which  there were separate enactments earlier, which  separate enactments stood repealed by the present  Act.  Under the provisions of Sec. 106, the Board  has to submit the Central Government a detailed  report of the administration of the port during the  preceding year.  Section 107 ordains  every Board  to submit the statements of its income and  expenditure every year.  Under Sec. 108, the  Central Government has a power  to order a local  survey or examination of any works of the Board  or the intended site of such port.  The expenditure  of which  has to be borne by the Board.  Under  Sec. 109, the Central Government has the power to  restore or complete the work at the cost of the  Board.  Sec. 110 gives a complete control to the  Central Government as the Board could be  superseded when it is unable to perform the duties  imposed by or under the provisions of the Act.   Subsection (b) provides that if the Board has  persistently made default of the duties imposed  upon it by or under the provisions of this Act or if  its financial position has deteriorated the Board  can be superseded by the Central Government.   Before superseding,  however, the Board has to be  given a show cause notice.  Under Sec. 110 (3) (b)

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and (c) the Central Government has the power to  reconstitute the Board by fresh appointment and  fresh elections.\024

8.      Mr. K.V. Viswanathan, learned counsel appearing on behalf of the  appellants, submitted that the High Court committed a serious error in  arriving at the said findings insofar as it failed to take into consideration the  core legal issue, viz., the power of the Central Government to issue a  direction in terms of Section 111 of the 1963 Act vis-‘-vis the Regulations  making power, in their correct perspective.   

9.      The learned counsel appearing on behalf of the respondents, on the  other hand, supported the impugned judgment.

10.     The 1963 Act was enacted to make provision for constitution of port  authorities for certain major ports in India and to vest the administration,  control and management of such ports in such authorities and for matters  connected therewith.

       Section 47H of the 1963 Act reads as under:

\02347H - Officers and employees of the Authority  (1) The Authority may appoint officers and such  other employees as it considers necessary for the  efficient discharge of its functions under this Act (2) The salary and allowances payable to and the  other conditions of service of the officers and other  employees of the Authority appointed under sub- section (7) shall be such as may be specified by  regulations."

       Chapter IX of the 1963 Act provides for supervision and control of the  Central Government.   

       Section 106 of the 1963 Act provides for filing of administrative  report.  Submission of statements of income and expenditure to the Central  Government is provided for under Section 107.  Power of the Central  Government to order survey or examination of works of the Board is  contained in Section 108 thereof, whereas power of the Central Government  to restore or complete works at the cost of the Board is contained in Section  109 of the 1963 Act.   Supersession of the Board is also within the domain of  the Central Government as provided for in Section 110 of the 1963 Act.   Similarly, the power to supersede the authority is contained in Section 110A.   

       Section 111 of the 1963 Act which confers a power on the Central  Government to issue directions to the Board must be examined on the  backdrop of the aforenoticed statutory provisions.  It reads as under:

\023111 - Power of Central Government to issue  directions to Board  (1) Without prejudice to the foregoing provisions  of this Chapter, the Authority and every Board  shall, in the discharge of its functions under this  Act be bound by such directions on questions of  policy as the Central Government may give in  writing from time to time; Provided that the Authority or the Board, as the  case may be, shall be given opportunity to express  its views before any direction is given under this  sub-section. (2) The decision of the Central Government  whether a question is one of policy or not shall be  final.\024

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11.     Indisputably Chapter XI of the 1963 Act provides for power of the  Central Government to make rules for the purposes specified therein,  wherewith we are not concerned.

12.     The Board, however, has been conferred with a power to make  Regulations under Section 123 of the 1963 Act in regard to the matters  specified therein.  Section 123A of the 1963 Act empowers the authority to  make regulations consistent with the provisions of the 1963 Act inter alia for  the purposes of \023the salaries and allowances payable to and the other  conditions of service of officers and other employees of the Authority\024  under Sub-section (2) of Section 47H of the 1963 Act.  

13.     Section 124 of the 1963 Act provides for approval of the regulations  by the Central Government.  It must be published in the gazettee.  It also  provides for laying down the same before the Parliament.  Breach of some  regulations attracts penal provision.   

       Power of the Central Government to direct any Board to make any  regulations is confined to the matters specified in Section 28 or Section 76 or  Section 123 or to amend any regulation within such period as the Central  Government may specify in this behalf.   

       No regulation exists enabling the Government to issue any direction in  relation to regulation governing salaries and allowance payable to and other  conditions of service of officers and employees of the authority.  In any  event, in the event such a direction is not followed, the Central Government  may take recourse only to the provisions of Sub-section (2) of Section 124 of  the 1963 Act, which reads as under:

\023(2) No such regulation other than a regulation  made under section 28 shall be approved by the  Central Government until the same has been  published by the Board for two weeks successively  in the Official Gazette and until fourteen days have  expired from the date on which the same had been  first published in that Gazette.\024

14.     Statutory regulations have not been amended by the Central  Government.  The Central Government, as noticed hereinbefore, does not  have any power in regard thereto.  Under the 1963 Act all authorities  specified therein are statutory authorities.  They are to act within the four  corners thereof.  [See Ramchandra Murarilal Bhattad and Others v. State of  Maharashtra and Others [(2007) 2 SCC 588]

       The legal principle that an administrative act must yield to a statute is  no longer res integra.  Once a regulation has been framed, in terms of the  provisions of the General Clauses Act, the same must be amended in  accordance with the procedures laid down under the principal enactment.   Even assuming that the Central Government had the jurisdiction to direct the  authority to amend the regulations, it was required to be carried out in  accordance with law, and, thus all requisite procedures laid down therefor  were required to be fulfilled.

[See Sant Ram Sharma v. State of Rajasthan and Anr. AIR 1967 SC 1910,  D.D.A. and Ors. v. Joginder S. Monga and Ors. (2004) 2 SCC 297, Vasu  Dev Singh and Ors. v. Union of India and Ors. 2006 (11) SCALE 108,  Kerala Samsthana Chethu Thozhilali Union v. State of Kerala and Ors.  (2006) 4 SCC 327 and State of Kerala and Ors. v. Unni and Anr. (2007) 2  SCC 365]  

       Recently in Union of India and Another v. Central Electrical &  Mechanical Engineering Service (CE&MES) Group \021A\022 (Direct Recruits)  Association, CPWD & Ors.  [(2007) 13 SCALE 23], this Court held; \02310. It is now a well settled principle of law that

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an executive order must be passed in conformity  with the Rules.   Power of the State Government to  issue executive instructions is confined to filling  up of the gaps or covering the area which  otherwise has not been covered by the existing  Rules. See Sant Ram Sharma Vs. State of  Rajasthan & Anr. [AIR 1967 SC 1910] and   D.D.A. and Ors. Vs. Joginder S. Monga and Ors.  [(2004) 2 SCC 297].  Such office orders must be  subservient to the statutory rules.\024

15.     The power of the Central Government to issue directions as contained  in Section 111 of the 1963 Act cannot be stretched to amend the regulations.   Power must be exercised by the Central Government only in regard to the  administration of the trust.  Such a power to issue direction must be  construed strictly.  [See Ramana Dayaram Shetty v. The International  Airport Authority of India and Others AIR 1979 SC 1628 : (1979) 3 SCC  489, Harjit Singh & Anr. v. The State of Punjab & Anr. 2007 (3) SCALE  553, Ashoka Smokeless Coal India (P) Ltd. and Others v. Union of India and  Others, (2007) 2 SCC 640 and Poonam Verma & Ors. v. Delhi Development  Authority  [2007 (14) SCALE 485].

16.     Furthermore, Regulations have been amended only with effect from  11.08.2004.  It would have a prospective effect.  It cannot be applied  retrospectively.  Any vacancy which has arisen prior to coming into force of  the said amended regulation must be filled up in terms of the law as was  existing prior thereto.  [State of Rajasthan v. R. Dayal and Others (1997) 10  SCC 419, para 8]

17.     The High Court, therefore, committed a serious error in issuing the  impugned directions.  It also committed a serious error in holding that the  Review Petition was not maintainable at the instance of the appellants.

18.     For the reasons aforementioned, the impugned judgments cannot       be sustained.  They are set aside accordingly.  The appeals are allowed       with costs payable by the Madras Port Trust. Counsel\022s fee assessed             at Rs. 25,000/-.