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PETITIONER: U.P.STATE TOURISM DEVELOPMENT CORPORATION LTD.

       Vs.

RESPONDENT: I.B. MISRA & ORS.

DATE OF JUDGMENT18/01/1995

BENCH: AGRAWAL, S.C. (J) BENCH: AGRAWAL, S.C. (J) RAY, G.N. (J)

CITATION:  1995 SCC  Supl.  (1) 589 JT 1995 (1)   565  1995 SCALE  (1)255

ACT:

HEADNOTE:

JUDGMENT: S.C. AGRAWAL, J.: 1.   Leave granted. 2.   These  appeals  relate to appointment on  the  post  of General  Manager  in  the  U.P  State  Tourism   Development Corporation  (hereinafter referred to as ’the  Corporation’) which is a company registered under the Companies Act and is an undertaking of the Government of Uttar Pradesh.  The said appointment is governed by Rule 19 of the U.P. State Tourism Development Corporation Rules, 1981 (hereinafter referred to as ’the Rules’).  The post of General Manager is a class one post  in  the Corporation.  I.B. Misra,  respondent  No.  1, joined  the Corporation on the post of Manager  Grade-II  in 1978.   In March, 1984 he was promoted as  Manager  Grade-I. He  was  selected  for appointment on the  post  of  Project Officer  by  the  Corporation  in 1989 but  as  he  was  not appointed on the said post he filed a Writ Petition No. 4733 of  1991  which is pending before the Lucknow Bench  of  the Allahabad  High  Court.  While the said  Writ  Petition  was pending a vacancy occurred on the post of General Manager in the Corporation and respondent No. 1 filed Writ Petition No. 677  of 1992 giving rise to these appeals in  the  Allahabad High Court, Lucknow Bench, wherein he prayed that direction, order  or  a  writ  of  mandamus  be  issued  directing  the respondents in the said Writ Petition to hold selection  for the  said  post of General Manager in  accordance  with  the Rules.  It appears that the said post of General Manager  is being  filled by having on deputation officers in the  State services of the Government of Uttar Pradesh.  The High Court by  its judgment dated March 24, 1994 allowed the said  Writ Petition filed by respondent No. 1 and issued a writ in  the nature  of mandamus commanding the respondents in  the  said Writ  Petition  to  make selection on the  post  of  General Manager  in  accordance with observations made in  the  said judgment  within a period of four months and it was  further directed  that  the  deputation  of  the  present  incumbent

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holding the post of General Manager in the Corporation would come 567 to  an end after the expiry of four months. Review  Petition filed  by  the  appellant  against  the  said  judgment  was dismissed  by  the High Court by order dated May  30,  1994. These  appeals have been filed by the appellant against  the said  order dated March 24, 1994 and May 30, 1994 passed  by the High Court. 3.   The question arising for consideration in these appeals relates to the interpretation of Rule 19 of the Rules  which reads as under:-               "Rule 19.  Sources of Recruitment:               Appointment   to  various  posts   under   the               Corporation  shall be made by  the  appointing               authority   by  any  one  of   the   following               methods:-               (a)   By direct recruitment.               (b)   By   promotion   of   the    Corporation               employees  through a departmental test  or  an               interview  or  selection by any  other  manner               prescribed by the Managing Director from  time               to time.               (c)   By  deputation  from Government  or  any               other  Central/State  Corporation  and   other               statutory body.               (d)   By employment on contract bass.               (e)   From any other source as approved by the               Board.               All class I posts in the Corporation shall  be               selection   posts  and  will  be   filled   by               selection  or  by deputation.  Such  of  those               Corporation  employees  who  are  eligible  in               terms  of qualifications, age and  experience,               may also compete for selection.               Fifty  percent of the class II posts  will  be               filled by open market selection and 50 percent               reserved for the employees of the Corporation.               If however, it is found that sufficient number               of employees are not available for filling  in               the quota by promotion on the basis of  merit,               the Corporation may, fill those posts also  by               open market selection.  There will thus be  no               rigidity about quota for direct recruitment or               by  promotion  and  there  will  not  be   any               accumulation or carry out to subsequent years.               Promotions  within the various  posts  falling               under class III will be made fifty percent  by               promotion   from   within   the    Corporation               employees,  provided, suitable candidates  are               available, and fifty percent by promotion from               open  market selection.  In all the  cases  of               promotions the criteria of merit-cum-seniority               for holding the higher posts will apply and no               person  shall have a right to be  promoted  on               the basis of seniority alone.  Class III posts               at the lowest stage will be filled 15  percent               by  promotion from Class IV provided  suitable               candidates  with requisite qualifications  are               available from amongst the Class IV  employees               and rest by open market.  The Corporation  may               fill  these posts also- by open market on  the               non  availability of the sufficient number  of               employees   of  filling  in  the   quota   for               promotion.

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             Notwithstanding  anything  contained  in   the               above  rules regarding source  of  recruitment               the Board will have full powers to modify  the               source   of  recruitment  or  the   stipulated                             percentages  for direct  recruitment/promotion               and the Board’s decision shall, in such cases,               be final." 4.   The  said Rule, in clauses (a) to (e), prescribes  five methods  for making appointments on the various posts  under the Corporation.  But in so far as Class I posts 568 are  concerned, it is specifically mentioned that  the  said posts shall be selection posts and must be filled either  by selection or by deputation.  In other words, appointment  on Class  I posts is restricted to two methods only, i.e.,  (i) by  selection or (ii) by deputation.  The employees  of  the Corporation who are eligible in terms of qualifications, age and experience can also compete for such selection.  In  the matter of appointment Class I posts differ from Class 11 and Class  III  posts.   As  regards Class  II  posts  the  Rule postulates that 50 per cent posts have to be filled by  open market selection and 50 per cent have to be reserved for the employees  of the Corporation by promotion on the  basis  of merit.   Insofar as Class III posts are concerned, the  Rule lays  down  that  50  per cent posts are  to  be  filled  by promotion from within the Corporation employees on the basis of  meritcum-seniority  and  50 per cent  from  open  market selection.   But  15 per cent of Class III posts  at  lowest stage are to be filled by promotion from Class IV  employees and rest from open market.  It would thus appear that  while appointment by promotion is envisaged on Class 11 and  Class III  posts,  there  is  no  provision  for  appointment   by promotion on Class I posts. 5.    On behalf of respondent No. 1 it was urged before  the High Court that ever since 1981 the post of General  Manager has been filled by deputation of officers in State  services and  no appointment has been made by selection  even  though Rule  19 makes provision for appointment on Class I post  by selection.  It was also urged that the persons who have been appointed by deputation on the post of General Manager  ever since  1981 did not possess the qualifications required  for the  post  of  General  Manager  and,  in  this  connection, reliance   was  placed  on  the  qualifications  that   were mentioned in the advertisement inviting applications for the post of General Manager when the said post was advertised in the year 1987.  The said qualifications were as follows:-               "Graduate  in  any discipline or  three  years               diploma in Hotel Management from a  recognised               Institute with minimum 15 years experience  as               Senior Manager in hotel industry" 6.   It was also urged on behalf of respondent No. 1 that on the proper construction of the Rules, the Corporation should first  consider  suitable  candidates  for  appointment   by process  of  selection and, only if no candidate  was  found suitable,  the  Corporation  could resort  to  the  mode  of appointment by deputation and it was not permissible for the Corporation to completely ignore the mode of appointment  by selection  and  to continue making of  appointments  on  the posts of General Manager by deputation. 7.   On  behalf  of  the appellant  it  was  submitted  that advertisement  which  was  issued in year 1987  was  for  an additional post of General Manager which was proposed to  be created in connection with the policy to expand the chain of hotels  in the State of Uttar Pradesh as a part  of  tourism promotion  but  the said proposal to establish  a  chain  of

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hotels  was not approved by the Government and the post  was not  created.   It has been submitted that for the  post  of General  Manager a person with high administrative  capacity is required and for that reason the post has been filled  by taking on deputation officers from different departments  of the  Government who were working on various responsible  po- sitions involving high level of 569 administrative abilities. 8.   While  construing  the provisions of Rule 19  the  High Court has held:-               "In  nutshell, we are of the view that  rule19               should  be  read to the  extent  that  Class-I               posts must be filled by promotion from amongst               the  eligible officers of the  Corporation  on               the  basis  of seniority merit. only  when  no               suitable  candidate  would  be  available  for               promotion  to the said post from  amongst  the               eligible  officers  of  the  Corporation,  the               appointment  may  be made on  deputation  from               amongst  the  persons qualified for  the  said               post  on certain qualifications, which may  be               laid  down by the Corporation,  failing  which               the  appointment can be made by direct  selec-               tion  from amongst the candidates  called  for               interview" 9.   In  taking  the  said view the High  Court  has  placed reliance  on the decision of this Court in  Gujarat  Housing Board  Engineers  Association & Anr. v. State of  Gujarat  & Ors., JT 1993 (6) S.C. 469.  We find it difficult to endorse the  said view of High Court.  As pointed out earlier,  Rule 19  makes a distinction between the appointment on  Class  I posts  on the one hand and Class II and Class III  posts  on the other.  While in respect of Class II and Class III posts provision  has been made for appointment by  promotion  from amongst  the employees of the Corporation, there is no  such provision for appointment by promotion in respect of Class I posts  and appointment on Class I posts can only be made  by two  modes, namely, by selection or by deputation.  The  em- ployees  of  the Corporation who are eligible  in  terms  of qualifications, age and experience can, however, compete for selection.   In  these  circumstances,  we  are  unable   to appreciate  how  the High Court could construe  Rule  19  as providing  that Class I posts should be filled by  promotion of  eligible  officers of the Corporation on  the  basis  of seniority-cum-merit  and that only if no suitable  candidate would  be available for promotion from amongst the  eligible officers  of the Corporation that the appointment should  be made  on deputation and failing this from amongst  the  can- didates competed.  The High Court appears to have carved out a  third mode of appointment on the post of General  Manager [which is a Class I post] namely, by promotion, though  Rule 19  does not provide for such mode of appointment.   In  our opinion, such a construction is not permissible. 10.  The decision in Gujarat Housing Board   Engineers Association & Anr. v. State   of  Gujarat (supra)  on  which reliance has been placed by the High Court in coming to  the aforesaid conclusion stands on a different footing.  In that case,  in clause (1) of Regulation 3 of the Gujarat  Housing Board   Services   Classifications   of   and    Recruitment Regulations, 1981, there were three modes for appointment to the post of Assistant Housing Commissioner (Technical),  now Superintendent   Engineer  namely,  (i)  by   promotion   of employees  working as Executive Engineer in  Board’s  Higher Services on the basis of senioritycum-merit; (ii) by calling

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Executive  Engineer  on deputation from State  Building  and Communication  Department  (iii) by  direct  selection  from amongst  the candidate called for interview.  In clause  (3) of  Regulation 3 of the said Regulations, it  was  expressly provided  :  "If a suitable candidate is not  available  for appointment by promotion from among the Executive  Engineers of  the  Housing  Board,  a  panel  of  names  of  Executive Engineers  having at least 4 years standing experience  from the 570 State B & C Department may be called for with a proviso that no departmental inquiry should be pending against him.   One of  the  vacancy  will  be selected by  the  Board  and  the selected candidate will be appointed by the Board." 11.  This Court construed clause (1) of Regulation 3 in  the light of clause (3) of the said Regulation to hold that  the post  must  be  filled by promotion  of  eligible  Executive Engineers   of   the   Housing  Board  on   the   basis   of seniority-cum-merit and it is only if no suitable  candidate is  available  from amongst the Executive Engineers  of  the Housing  Board  that  the  appointment  should  be  made  on deputation from amongst the Executive Engineers of the State Building and Communication Department and failing this,  the appointment  can  be made by direct  selection  amongst  the candidates called for interview.  The language used in  Rule 19  of  the Rules is, however, different from that  used  in Regulation   3  of  the  Gujarat  Housing   Board   Services Classifications  of Recruitment Regulations, 1981 which  was considered by this Court in Gujarat Housing Board  Engineers Association & Anr. v. State of Gujarat (supra).  There is no provision in Rule 19 of the Rules providing for promotion as a  mode  of appointment.  Moreover, in Rule 19 there  is  no provision similar to clause (3) of Regulation 3 of the  said Regulations  and  it  is left to  the  Corporation  to  make appointment  on  Class  I post either  by  selection  or  by deputation.   The fact that ever since 1981  no  appointment has been made by selection and all appointments on the  post of  General Manager have been made on deputation  would  not justify  construing  Rule 19 in the way the High  Court  has construed it. 12.  It  is no doubt true that as a result  of  appointments that  have  been  made on the post  of  General  Manager  by deputation  the  other  mode  of  appointment,  namely,   by selection, as provided in Rule 19, has been rendered otiose. Shri R.K. Jain, the learned senior counsel appearing for the appellant, has submitted that the Corporation has  preferred appointment on the post of General Manager by deputation  in order to secure officers having high level of administrative ability  from the State Government because for the  post  of General  Manager a person with high administrative  capacity is   needed  and  further  more  an  officer  appointed   on deputation, if he is not found suitable for the job, can  be sent  back  at  any time but this may  not  be  possible  if regular appointment is made by selection.  Having regard  to the aforesaid submissions made by Shri Jain we are unable to hold  that  the Corporation has been acting  arbitrarily  in making  appointments  on  the post  of  General  Manager  by deputation and in not resorting to the process of  selection for making such appointment. 13.The  High Court has observed that the present  policy  of making  appointment on the post of General Manager by  depu- tation  would  result  in impairing the  efficiency  of  the person holding a post just below the post of General Manager because  he  knows that he would never be appointed  on  the post  of General Manager and would have to stagnate on  that

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post  for ever.  The High Court has pointed out that  avenue of  promotion  is  one of the methods by means  of  which  a person  shows his skill and efficiency.  These  observations are in consonance with the law laid down by this Court.   In Council of Scientific and Industrial Research & Anr. v.   K. G.S. Bhatt & Anr., 1989 (4) SCC 635, 571 it has been observed :-               "A person is recruited by an Organisation  not               just  for a job, but for a whole career.   One               must,  therefore, be given an  opportunity  to               advance.    This  is  the  oldest   and   most               important  feature  of  the  free   enterprise               system.  The opportunity for advancement is  a               requirement for progress of any  organisation.               It  is an incentive for personnel  development               as   well.   Every  management  must   provide               realistic    opportunities    for    promising               employees  to move upward.   The  organisation               that fails to develop a satisfactory procedure               for promotion is bound to pay a severe penalty               in  terms  of administrative  costs,  misallo-               cation  of  personnel, low morale,  and  inef-               fectual  performance among both  nonmanagerial               employees and their supervisors.  There cannot               be  any modem management must less any  career               planning, manpower development, management de-               velopment  etc.  which  is not  related  to  a               system of promotions." Similarly in Dr. Ms. O.Z Hussain v. Un of India, 1990  Supp. SCC 688, it has bee said :-               "This  Court  has on more than  one  occasion,               pointed  out  that  provision  for   promotion                             increases  efficiency  of the  public  service               while  stagnation reduces efficiency  and  the               service  ineffective.   Promotion  is  thus  a               normal incidence of service" 14.  But  this  does not justify reading into  Rule  19  the requirement that appointment on the post of General  Manager should  be made by promotion and if no suitable  person  was available appointment may be made by deputation.  That is  a matter  which  appertains  to the  promotion  policy  to  be adopted  by  the  Corporation.   It  is  expected  that  the Corporation while revising its promotion policy will keep in view these observations. 15.  In  the result the appeals are  allowed,  the  judgment dated March 24, 1994 and the order dated May 13, 1994 passed by the High Court are set aside and the Writ Petition  filed by  respondent No. 1 is dismissed.  But in circumstances  of the case, there is no order as to costs. 572