http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 16  

PETITIONER: BISHAN SARUP GUPTA ETC.  ETC.

       Vs.

RESPONDENT: UNION OF INDIA & ORS.  ETC.  ETC.

DATE OF JUDGMENT16/04/1974

BENCH: PALEKAR, D.G. BENCH: PALEKAR, D.G. RAY, A.N. (CJ) MATHEW, KUTTYIL KURIEN ALAGIRISWAMI, A. BHAGWATI, P.N.

CITATION:  1974 AIR 1618            1975 SCR  (1) 104  1975 SCC  (3) 116  CITATOR INFO :  E          1977 SC 251  (34,36,38,39)  RF         1977 SC 757  (4,38,40,56)  D          1977 SC2051  (41)  R          1980 SC 452  (48)  RF         1980 SC2056  (73)  R          1982 SC 101  (32)  F          1982 SC1244  (13)  D          1983 SC 769  (22,31,38)  R          1984 SC1291  (13,19)  E          1984 SC1527  (12)  R          1984 SC1595  (24)  D          1985 SC1019  (24)  RF         1985 SC1558  (26)  D          1988 SC 268  (26)  RF         1990 SC1106  (8)  D          1990 SC1607  (26)  E&F        1991 SC 212  (1,2,3)

ACT: Income-tax   Officers  (Class  I)  Service  (Regulation   of Seniority  Rules 1973--Whether violative of Art. 16  of  the Constitution--if the Rules are just and fair.

HEADNOTE: The above appeals were disposed of by this Court on 16-8-72. The  court  set  aside the seniority list  prepared  by  the Department on 15-7-68 and save directions as to how the same was  to be prepared.  This Court held that the  Government’s decision  to promote a large number of Income  Tax  Officers from Class II to Class I infringed the quota rule which save 66-1/2  of the posts to the direct recruits and 331% of  the posts  to  the  promoters  and  therefore,  the  quota  rule collapsed and it was for the Government to devise a just and fair  seniority rule as between the direct recruits and  the promoters  for  being given effect to  from  16-1-1959.   It followed from the judgment that the Government will  prepare the seniority list from 1951 to 15-1-1959 in accordance with the  quota rule of 1952 r/w the seniority rule  1(f)  (iii). The  seniority  list  from 16-1-1959  will  be  prepared  in

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 16  

accordance  with  the  rule  to  be  freshly  made  by   the Government in that behalf. Accordingly  on  February 9, 1973 the  President  under  the proviso  to Art. 309 of the Constitution, made rules  called the  Income-tax  Officers (Class 1) Service  (Regulation  of Seniority)  Rules 1973, which were to come into  force  from 16-1-1959.  Rule 3 which provided for seniority of  officers was  that  seniority among the promoters Inter se  shall  be determined  In  the order of selection for  such  promotion. The  seniority among the direct recruits inter se  shall  be determined by the order of merit in which they are  selected and  the  relative  seniority among the  promoters  and  the direct  recruits  shall be in the ratio 1 : 1 and  shall  be regulated  in  accordance with a roster maintained  for  the purpose etc. When the present seniority list was prepared Government  had on its hands 73 promotees (Spill-over) who, though appointed earlier  between  1956-1958, had no quota  posts  for  their absorption.  Therefore, the Government had to Prepare a  new seniority  list  not only as regards the officers  who  were absorbed  in the service before 15-1-1959 but  all  officers including these spill-overs, appointed after 15-1-1959.  The seniority list from serial No. 1 to serial No. 485 (who were appointed   prior  to  15-1-1959)  has  been   prepared   in accordance with the quota system and serial No. 486 to  1717 related  to officers who have to be accommodated from  16-1- 1959 in accordance with the new Seniority Rule.  Since under Rule  3(iii),  the promotee must come first,  and  then  the direct  recruit,  serial No. 486 went to  the  promotee  and serial No. 487 went to a direct recruit and so on. The  contention of 73 spill-over promotees of 16-1-1959  was that  since  this  Court had directed that  they  should  be absorbed on a "priority basis", all of them should have been shown in the Seniority List, as having been appointed on 16- 1-1959  in  a block and thereafter the direct  recruits  for that year should have been shown. It  was further contended that as the quota rule expired  on 16-1-1959, the promotees must be deemed to have been validly appointed  in  accordance  with rule  4  of  the  Income-tax Officers  (Class I) Grade 11 Service Recruitment Rules  1945 and since there remained in existence, no seniority or quota rule  determining  their  seniority  vis-a-vis  the   direct recruits,  their  natural seniority of  earlier  appointment cannot retrospectively be altered to their detriment, and to do so would be violative of Article 16 of the Constitution. Dismissing the petitions and holding that the new  seniority list is the correct seniority list. 105 HELD : (1) It is true that this Court had directed that  the aforesaid  73  promotees should be absorbed on  a  "priority basis".   That  only meant that their  position  as  seniors should not be prejudiced by any possible claim by later pro- motees,  on  the  ground that being  recruited  outside  the quota,  they had higher rights than these 73  promotees  who had  no posts.  It was not intended that these 73  promotees should not be governed by any seniority rule.  They were  to be  governed by a rule which covered all those who  came  or were  deemed  to have come into the cadre  after  15-1-1959. [109D-E] (2)  The  new  Rules  are not violative of Art.  16  of  the Constitution.   When  the 73  spill-over  appointments  were made,   there   were  no  allocated  posts  to   which   the appointments  could have been validly made.   On  16-1-1959, there  were  no  posts  earmarked  for  them,  the  ordinary consequence  of  which  would be to  revert  them  to  their

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 16  

original class II posts unless class I posts were  regularly found  for  them.   When the quota rule  was  no  longer  in existence  there  was  no possibility  of  regularizing  the appointments.  It is, therefore, clear that the infir   city in   the  appointments  continued  on  16-1-1959  and   that infirmity could not be overcome except by a new rule.  It is not correct to say that this infirmity disappeared with  the disappearance  of the quota rule.  The spill-over  promotees claim seniority from 16-1-1959 and the other promotees claim from  some  date  between  1959 and  1962,  when  they  were promoted,  but  this claim is untenable  because  all  these officers  were  told when promoted that  their  appointments were  on an officiating or ad hoc basis and the question  of their  seniority had not been determined.   Therefore,  they cannot  contend that their dates of appointment in  class  I will  not  be  altered  for  the  purposes  of   determining seniority.   There  is    no question in  this  case  of any discrimination  being made in a service after officers  from two  sources  have been brought and absorbed in  one  cadre. The problem here is of integrating officers from two sources into  one  service by adjusting their  seniority  inter  se. [111G-112B, E; 113A-G; 114B-D; 115A-C] Mervyn  Coutinho  & Ors.  V. Collector of Customs  Bombay  & Ors. [1966] (3) SCR 600 Roshan Lal. v. Union of India [1968] 1  S.C.R.  185 and S. M. Pandit & Ors. v. State  of  Gujarat A.I.R. 1972 S.C. 252 discussed and distinguished.

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos.  2060  of 1971, 67, 139 and 393 of 1972. From  the Judgment and Order dated the 22nd September,  1970 and 25th March, 1971 of the Delhi High Court at New Delhi in Civil Writ Nos. 196 and 550 of 1970 respectively and WRIT PETITION No. 287 of 1973. Under  Article  32  of the Constitution  of  India  for  the enforcement   of fundamental rights. V.   M.  Tarkunde,  K. K. Singhvi, Yogeshwar Prasad,  S.  K. Bagga and S. Bagga for the appellant (In CA 2060/71). Niren  De,  Attorney  General  of  India,  F.  S.   Nariman, Additional  Solicitor General of India R. H. Dhebar.  R.  M. Mehta  and S. P. Navar for the appellants (In CA 67/72)  and for   Respondent  Nos.    1-3.  (In  CA  2060/71)  and   for Respondents Nos. 1-2 (In CA 139/72) and for Respondents Nos. 2-5  (In  CA  393/72) and for Respondents Nos.  1-1  (IN  WP 287/73). 106 G.   L.  Sanghi, Bishambar Lal, P. V. Kapur and S. C.  Patel for the appellant (in CA 139/72). K.   K. Singhvi, Yogeshwar Prasad, S. K. Bagga and S.  Bagga for  the Appellants (In CA 393/72) and for Respondents  Nos. 18, 20, 29, 43, 46. and 58 (In CA 67/72) and for Respondents Nos. 22, 30, 47, 50 and 62 (In CA 139/72). M. C. Setalvad, G. L. Sanghi, Bishamber Lal, P. V. Kapurand S.   C.  Patel for Respondents Nos. 25, 28, 29, 43,  50,  57 and 74 (In CA 2060/71). R.   K. Garg, S. C. Agarwal and V. J. Francis for Respondent No. 86    (In CA 2060/71). S.   K. Acharya and Somnath Chatterjee, J. N. Haldar, B.  P. Maheshwari  and  Suresh  Sethi for  the  Petitioner  in  (WP 287/73). Y.   S. Desai, G. L. Sanghi, Bishamber Lal, P. V. Kapur  and S. C. Patel for Respondent No. 1 (In CA 67/72). B.   R. Agarwala for Respondent No. 13 (In-CA 67/72) and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 16  

for Respondent No. 17 (In CA 393/72). J.   R. Nanavati, S. K. Dholakia and R. C. Bhatia  Advocates for Intervener Nos.  1, 4 & 5. S.   K. Bagga and S. Bagga for Intervener No. 2.  Intervener No. 3 appeared in person. The Judgment of the Court was delivered by- PALEKAR, J.-The above appeals were disposed of by this Court on  16-8-1972.   The  court set  aside  the  seniority  list prepared by the Department on 15-7-1968 and gave  directions as to how the same was to be prepared.  The principal  point which  was decided in these appeals related to the  validity of the quota rule and the seniority rule in their  operation after  15-1-1959.   This  Court held  that  on  Government’s decision  to Promote a large number of  Income-tax  Officers from Class 11 to Class 1, the quota rule which gave  66-1/2% of the posts to the direct recruits and 33-1/2% of the posts to  the  promoters collapsed and with the collapse  of  that quota  rule,  the sonority rule which gave  weighty  to  the promotees  of  2  to  3 years also  broke  down-  The  court observed,  "Since  the  old seniority  rule  has  ceased  to operate  by reason of the infringement of the quota rule  it will  be  for  the Government to  devise,  if  necessary  in consultation  with  the Union Public Service  Commission,  a just and fair seniority rule as between the direct  recruits and the promotees for being given effect to from  16-1-1959. It follows, therefore, that the seniority list of 15-7  1968 will  have to be get aside and the department will  have  to prepare  a  fresh  seniority  list  in  the  light  of   the observations  made in this judgment.  Broadly  sneaking  the seniority  list from 1951 to 15-1-1959 will be  prepared  in accordance  with  the quota rule of 1951 r/w  the  seniority rule 1(f)(iii).  The seniority list from 107 16-1-1959 will be prepared in accordance with the rule to be freshly  made  by  the Government in that  behalf."  It  was further directed as follows : As  already shown, these proceedings before us arise out  of the  mandamus  issued by this Court in  Jaisinghani’s  case. The  seniority  list  was  prepared  by  the  Government  in pursuance of the mandamus.  We have found that the seniority list  is not correct and will have to be prepared afresh  in accordance with the directions and observations made in this judgment.   The demand made by the officers for  the  imple- mentation of the mandamus is still unfulfilled and it can be achieved  only after the Government files a proper  list  of seniority.   These proceedings, therefore, will have  to  be kept  pending  till such a seniority list  is  prepared  and filed in court.  The respondents namely the Union of  India, the  Ministry  of Finance and the Central  Board  of  Direct Taxes are, therefore, directed to prepare a fresh  seniority list and file it in court.  It will be appreciated that this dispute regarding seniority is pending before, the court for several  years  and it is very essential that it  should  be resolved  without further delay.  We are, therefore, of  the view  that the respondents charged with the  preparation  of the fresh list shall prepare it and file it in court  within six  months from the date of this order.  After the same  is filed,  liberty  to  apply is given to the  parties  to  the proceedings." Accordingly  on  February 9, 1973 the  President  under  the proviso to Article 309 of the Constitution made rules called the  Income-tax  Officers (Class I) Service  (Regulation  of Seniority)  Rules, 1973 to come into force  from  16-1-1959. Rule 3 which is referred to hereinafter as the new seniority rule is as follows

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 16  

"3,  Seniority of officers-The seniority of  the  Income-tax Officers  in the Class I service shall be regulated as  from the  date of commencement of these rules in accordance  with the provisions hereinafter contained namely               (i)   the seniority among the promotees  inter               se  shall  be  determined  in  the  order   of               selection for such promotion and the  officers               promoted as a result of any earlier  selection               shall  rank,  senior to those  selected  as  a               result of any subsequent selection;               (ii)  the seniority among the direct  recruits               inter  se shall be determined by the order  of               merit  in  which they are  selected  for  such               appointment   by  the  Union  Public   Service               Commission  and  any  person  appointed  as  a               result  of  an earlier  selection  shall  rank               senior  to  all other persons appointed  as  a               result of any subsequent selection; and               (iii) the   relative   seniority   among   the               promotees  and the direct recruits hall be  in               the  ratio of 1 : 1 and the same shall  be  so               determined and regulated in accordance with  a               roster maintained for the purpose, which shall               follow the following sequence, namely :-               108               (a) promotee;               (b)   direct recruit;               (c) promotee;               (d) direct recruits; and so on." Having  framed the above rule to regulate the  seniority  of the officers, in supersession of any other rule which was in force  for  the  time being,  the  department  prepared  the seniority  list in accordance with the directions  given  in the judgment and filed it in court on February 15, 1973.  It is  not disputed that the directions given in  the  judgment have been followed with regard to the fixation of  seniority till  15-1-1959.   It is also not disputed that if  the  new seniority  rule referred to above is a valid rule, then  the rest  of the seniority list which comes down to  serial  No. 1717  is  also correct.  The principal objection is  to  the validity  of  the new rule.  It is challenged  not  only  as unjust  and unfair but also as violative of  the  promotees’ fundamental right under Article 16 of the Constitution. It  is  necessary to recall that in the  1950’s  there  were several  years  when the promotees were appointed  to  posts which   were   in  excess  of  their  quota.    Though   the appointments were irregular when made, they were regularised in later years when posts from their quota became  available for  them.  But when this Court held on 16-8-1972  that  the old  quota Rule had collapsed on 16-1-1959, a new  situation arose  rendering further regularization impossible,  in  the absence  of any quota rule allocating the posts between  the direct  recruits  and the, promotees.   Therefore  when  the present seniority, list was prepared, Government had on  its hands  73  promotees who, though appointed  earlier  between 19561958, had no quota posts for their absorption.  On 16-1- 1959 the 73 promotees, who are described as ’spill-overs’ on 16-1-1959,  as also subsequent promotees had to be  absorbed in the service and this could only be done by a special rule framed in this behalf.. Since  it  was anticipated that there would be  a  spillover like  this,  the  department had been  directed  that  these officers  must  be  absorbed on  a  ’priority  basis’.   The Government, therefore prepared a new seniority list not only as  regards  the officers who were absorbed in  the  service

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 16  

before  15-1-1959, but all officers, including these  spill- overs,  appointed  after 15-1-1959.  The method  adopted  is simple  enough.   The seniority list from serial  No.  1  to serial  No.  485 relating to the period prior  to  16-1-1959 i.e.  to  say,  from  1951 onwards,  has  been  prepared  in accordance with the quota rule r/w the seniority rule  which prevailed  till  then.  Serial Nos. 486 to  1717  relate  to officers  who  have  to be accommodated  from  16-1-1959  in accordance  with the new seniority rule.  Since  under  rule 3(iii)  the  promotee must come first and  then  the  direct recruit,  serial No. 486 goes to a promotes and  serial  No. 487  goes to a direct recruit and so on.  All the  promotees who come below serial No. 485 are either out of the                             109 spillovers of 16-1-1959 or those who have been appointed  by promotion  later.   That is how the, new seniority  list  is prepared.   The Government had been directed to make  a  new rule.  The seniority rule referred to is the new rule.   Its wording  is not happy.  But by mentioning a ratio of 1  :  1 and directing that the seniority would be in accordance with the roster maintained in a particular sequence of  promotees and direct recruits, the Government has notionally allocated the  posts bearing even serial numbers to the promotees  and odd serial numbers to the direct recruits.  In other  words, the  new seniority rule not only permits, the absorption  of all  promotees from 16-1-1959 into posts allocated  to  them but  also determines their seniority not only between  them- selves but also in relation to the direct recruits appointed from 1959 onwards. The  contention on behalf of the 73 spillover  promotees  of 16-1-1959  is that since this Court had directed  that  they should be absorbed on a "priority basis", all of them should have  been  shown  in  the seniority  list  as  having  been appointed on 16-1-1959 in a block and thereafter the  direct recruits  for that year should have been shown.  It is  true that this Court had directed that these promotees should  be absorbed on a "priority basis".  That only meant that  their position as senior should not be prejudiced by any  possible claim  by  later  promotees,  on  the  ground,  that   being recruited  outside  the quota, they had higher  rights  than those  73  promotees who had no posts, It was  not  intended that these 73 should not be governed by any seniority  rule. They  were to be governed by a rule which covered all  those who  came or were deemed to have come into the  cadre  after 15-1-1959. It  was  faintly  argued that at least 10 out  of  these  73 spill-overs  should  have been accommodated  in  the  period prior  to  16-1-1959  on the ground  that  this  would  have amounted,  in  the language of the judgment,  to  a  "slight deviation" from the quota rule.  It is true that this  Court had  observed that the Government was entitled between  1956 and 16th January, 1959 to follow the quota rule as a  rouogh guideline  and that a slight deviation from the quota  would not  be material.  That observation, however, applied  to  a situation   when   the  Government  deliberately   made   an appointment in a stray post intending it to be allocated  to a  promotee, in spite of its being not  strictly  consistent with  the  guideline  of the quota rule.  That  is  not  the position  in  the present case.  Government went  on  making appointments knowing that the promotees had no posts out  of their quota and it only hoped to regularize them when  posts were available.  Therefore, when the department was directed to prepare the seniority list from 1956 to January 15,  1959 in accordance with the quota rule of 1951 r/w the  seniority Rule I (f) (iii), the Government could not possibly say that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 16  

10  promotees  out  of  these  73  had  been.   deliberately appointed  by it to these posts intending the same to go  to the  promotees in spite of their falling outside the  quota. The 10 promotees besides the remaining 63 became spill-overs on  16-1-1959,  as they could not be absorbed in  any  quota posts available to them till 15-1-1959. 110 it  was  next contended that as the quota  rule  expired  on 16-1-1959,  the promotees who comprised this  spill-over  as also  those who were promoted thereafter must be  deemed  to have been validly appointed in accordance with rule 4 of the income-tax  Officers (Class 1) Grade if Service  Recruitment Rules,  1945,  and  since there  remained  in  existence  no seniority  or quota rule determining their seniority  vis-a- vis.  the  direct  recruits,’  their  natural  seniority  of earlier  appointment  cannot retrospectively be  altered  to their detriment, and to do so would be violative of  Article 16 of the Constitution.  That is the principal contention on behalf of the promotees in this case. It  is necessary to clearly understand the  implications  of our  decision in which we had held that both the quota  rule and  the seniority rule had broken down on  16-1-1959.   The cadre   from  the  very  beginning  (1945)  was   a   cadre, recruitment  to which was prescribed from two sources.   The vacant posts were directed to be allotted to direct recruits and  promotees  in  a ’particular ratio  and  seniority  was regulated inter se by rules framed later.  Some principle of allocating posts and some principle of determining  relative seniority were inevitable in the context of the constitution of  the  cadre, and Government did not and  could  not  have abandoned  these  principles in the matter  of  recruitment. The quota rule allocated the posts. between the two  sources and the seniority rule regulated the seniority vis-a-vis the direct recruits and the promotees.  Indeed there was nothing special  about  it.  In any service where  recruitment  from several  sources,  there  is  bound to  be  some  method  of allocation  ,of  posts between the several  sources  coupled with  a rule to determine seniority amongst  the  candidates recruited from those sources.  In fact a rule for regulating allocation  of posts and to determine seniority amongst  the officers  in a sine-qua-non of every well-regulated  service to  which direct recruits and promotees are appointed.   The Government  was  fully aware of this binding nature  of  the principles in the matter of recruitment and, therefore, when it  made  promotee appointments knowingly in excess  of  the quota   available   to  them,  it  calculated   that   these appointments  were  liable to be regularized  in  subsequent years when quota vacancies were available to the  promotees. That  is why when promotee appointments were made from  1957 onwards,  they were made on an officiating basis, and  every promotee  was  informed  that the question  as  to  how  his seniority  amongst the officers would ultimately be  decided was  still under consideration.  In the  meantime,  however, our  decision, which held that both the quota, rule and  the seniority  rule had collapsed on 16.1.1959, left a  void  in which  neither promotees nor direct recruits could  identify any  posts as having been allocated to them.  The 73  spill- over  had  no allocated posts.  We do not mean to  say  that there  were  no posts at all.  The point is  that  these  73 promotees bad no allocated posts.  Since, as already pointed out,  the  service  was constituted on  the  principle  that vacancies  have to be allocated between the two sources  and seniority fixed thereafter, the void created by our decision had necessarily to be filled right from 16-1-1959 by  making a  rule which not merely allocated posts between the  direct

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 16  

recruits  and  the promotees but also ,determined  inter  se seniority.  As a matter of fact this was envisaged 111 by  all  parties  to this litigation as is  clear  from  the following passage in para 25 of the judgment "Several  suggestions were made with a view to  persuade  us that some fair and just seniority rule may be evolved.   One of them was that the quota rule may still hold the field and that.  those who came in by promotion to the upgraded  posts may  be ranked lower in seniority to the direct recruit  who had   finished  his  probation  in  that  year.   A   second suggestion was the one put forward by the Government in  the letter   dated  17-2-1960  to  the  Union   Public   Service Commission  wherein  a  package  deal  was  suggested.   The seniority rule, as it stood, was to go and in its place  the seniority  rule  should  be that promoted  officers  in  any calendar  year  should  be senior  to  the  direct  recruits appointed  that year only.  Having made that  concession  in favour  of the direct recruits in response to their  demand, it  was suggested that the quota of  departmental  promotees should be raised from 33-1/3 to 50%.  In other words,  there was  a  package  deal whereby every  year  the  appointments should  be  divided  equally  between  direct  recruits  and promotees and the promotees being already in the  department should  be  given seniority over the new  direct  recruits." Although the parties had made these suggestions, this  Court declined to accept the responsibility and observed : "We  do not  think  that  we shall be justified  in  expressing  our opinion  as to how inter se seniority is to be  fixed  after 15-1-1959.   Since  the  old seniority rule  has  ceased  to operate  by reason of the infringement of the quota rule  it will  be  for  the Government to  devise,  if  necessary  in consultation  with  the Union Public Service  Commission,  a just and fair seniority rule as between the direct  recruits and the promotees for being given effect to form 16-1-1959." The new seniority rule is the direct outcome of not only our judgment  but  also  of the very  principles  on  which  the service  had  been  constituted.  The  new  seniority  rule, therefore,  was  a substitute rule very necessary  from  the point  of  view  of  the constitution  of  the  service  for maintaining its continuity as a well-regulated cadre.   When the  old  quota rule and the seniority rule  broke  down  on 16-1-1959, their place was taken by the new rule which while regulating  seniority between the promotees and  the  direct recruits  also  nationally  allocated  alternate  posts   in accordance with the roster. The  contention of the promotees is that their  appointments having been liberated from the limitation of the quota  rule must  be  regarded  as  validly made under  rule  4  of  the Recruitment  Rules  and  consequently  the  dates  of  their appointments   should  be  regarded  as  determining   their seniority  vis-a-vis the direct recruits.   This  submission does not bear scrutiny.  When the 73 spill-over appointments had  been made, there were no allocated posts to  which  the appointments  could  have been validly made.   On  16-1-1959 there  were  no  posts  earmarked  for  them,  the  ordinary consequence  of which would be that they would have  had  to revert to their original class II posts unless class I posts were  regularly found for them.  When the quota rule was  in existence,  these  appointments, though invalid  when  made, were liable to be regularised in subsequent years when posts were found for them as a consequence of the quota rule.  But once the quota rule ceased to exist on 16-1-1959, 112 there  was no possibility of regularising  the  appointments

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 16  

unless a new rule was framed to make such posts available to them.   It is, therefore, clear that the, infirmity  in  the appointments continued on 16-1-1959 and that infirmity could not  be overcome except by a new rule which made some  posts available.   It is not correct to think that this  infirmity disappeared  with the disappearance of the quota rule.   The disappearance  of  the  quota  rule  did  not  automatically regularise an appointment which was initially invalid.   The promotees  continued in the cadre because it was thought  by Government that their appointments may be regularised  under the  quota rule which, in its opinion, was  operative..  The 214 officers also who were promoted from 1959 to 1962  after upgrading  an  equal  number of class  11  posts  could  not possibly claim better treatment than the 73 spill-overs  who were their seniors.  At one time an attempt had been made by the   officers  of  the  department  to  rationalize   these appointments as appointments ’outside the quota’.  But  that was a misconception.  The cadres was one regulated by  rules and  there could be no valid appointments outside the  quota as shown in Jaisinghani’s case. (See : [1967] (2) S.C.R. 703 at  718).  This was soon realised and hence in an  endeavour to  maintain the quota ratio the department decided  not  to make any promotions in the years 1963, 1965 and 1967 to 1970 so that the officers who had been already promoted could  be absorbed in their quota.  But since this Court held in  1972 that the quota rule had ceased to exist on 16-11959 it  must follow  that the appointments were continued irregularly  in the absence of a regularising Rule.  The rule now challenged in  just  the rule which makes posts  available  right  from 16-1-1959.  Apart from the fact that all the promotees  from 16-1-1959 onwards had been appointed on an officiating or ad hoc  basis with notice that the question of their  seniority was  still  undecided, the appointments  carried  their  own infirmity  as  irregular  appointments,  and  hence  in  the absence of clear allocation of posts, they could hardly  lay claim  to  any  seniority  and  object  that  their  natural seniority  had undergone an unwarranted change in  violation of Article 16. It  is true that this Court held that quota rule had  ceased to  exist but that does not mean that having regard  to  its constitution, the service could continue to function without a  substitute  rule in its place.  The constitution  of  the service required allocation of posts to direct recruits  and promotees.   The Government was throughout  making  appoint- ments  from  both  sources  trying as far  as  it  could  to maintain  a  certain ratio between the  two  sources.   Such allocation  was implicit in the constitution of the  service itself.   When Government decided to recruit promotees on  a very  large  scale on 16-1-1959 it was  unconscious  of  the consequences  of its action.  Had it known then, as it  does now, that the quota rule would cease to exist it would have, of necessity; framed a substitute rule for allocating  posts between  the  two sources because the  constitution  of  the service coupled with its own decision to continue to recruit from  both  sources would not have tolerated a void  in  the allocation  of  posts.  By framing the new  seniority  rule, following  the direction of this Court, it is doing no  more than what it would have itself done on 16-1-1959 to preserve continuity in the allocation of posts to the two sources  so that irregularities, if any, in the 113 prior  appointments could be regularised.  And since it  is. clear  that the new rule must be read as if it was  made  on 16-1-1959  in substitution of the old rules, the  appointees after that date e.g. the 214 promotees would be governed  by

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 16  

the  rule.  The 73 spill-over promotees would have at  least some excuse for complaint because their actual  appointments had been made prior to 16-1-1959.  But, as already  noticed, it is the new seniority rule which saves them from reversion and,  therefore,  they  are  as much  bound  by  it  as  the promotees  appointed after 16-1-1959.  The present rule,  it may   be  repeated,  is  a  composite  rule  which   besides nationally   allocating  posts  between  the   two   sources determines  seniority in accordance with the roster.   After all  but 73 spill-over promotees were given available  posts _prior  to 16-1-1959, the unallocated posts from serial  no. 486 onwards were allocated to promotees and direct  recruits alternately.   The  spill-over  of  73  promotees  was  thus absorbed  against even serial numbers alternately  with  the direct recruits who were allotted odd serial numbers.   That is  how the whole list of seniority stands today.  In  these circumstances  we  don’t see on what grounds  the  promotees before us can challenge the new seniority rule as  violative of Article 16. The argument based on Article 16 proceeded on the assumption that the spill-over promotees of 16-1-1959 and the  officers promoted  thereafter were entitled to claim  seniority  from the  date  of their appointment.  The  spill-over  promotees claim  16-1-1959  as the date of appointment and  the  other promotees  claim some date between 1959 and 1962  when  they were  promoted.   It  is on this assumption  that  they  are entitled to get these dates as the dates to determine  their seniority  that  the whole submission under  Article  16  is based. It  is  necessary to remember, however, in  this  connection that  all these officers hail been told when  promoted  that their  appointments were on an officiating or ad  hoc  basis and the question of their seniority had not been determined. It  was  thereby implied that orders about  seniority  could only  be  passed after the department was in a  position  to take  a  decision  with regard to  the  inter  se  seniority between  the promotees and the direct recruits.  That  being the  situation  of  all these  officers  they  could  hardly contend  that the dates of appointment will not  be  altered for   the   purposes  of   determining   seniority.    Where recruitment  is made from one source, there is  some  ground for  the contention that an officer promoted earlier  should be  regarded as senior to an officer recruited  later.   But other  considerations come in when recruitment is made  from several  sources and it may become necessary in  the  public interest  to  frame a Rule of seniority to adjust  inter  se seniority on a basis other than the normal.  In such  cases, dates other than the dates of appointment may determine  the seniority  inter se.  As a matter of fact, we have found  in the case of these Income-tax officers themselves that  since the very beginning when the cadre was constituted the  dates of appointment did not determine seniority.  Promotees  were given seniority not only over the direct recruits  appointed in  that year but also over those who had been appointed  in the two ’previous years.  This led to discontent between the two  wings of the Income-tax Service and the Government  was seriously  thinking how best to remove it since about  1957. In 1960 the Government suggested to the Union Public Service Commission that it would 9-131 Sup-CI/75 114 like  to  suggest  a  package deal by  which  the  ratio  of recruitment  be  increased  to  50 : 50  in  favour  of  the promotees  in consideration of which the weightage given  to them  in  seniority  as  against  direct  recruits,  may  be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 16  

abolished.   The Public Service Commission did not agree  to this and hence the problem remained unsolved.  That was  the reason  why  all promotee appointments had been made  on  an officiating  basis  with  a  warning  that  the   promotees’ seniority  in  the  promoted cadre  was  undetermined.   The promotees, therefore, were not entitled to assume that their date  of  appointment  in  class I would  be  the  date  for counting seniority. There  is  no question in this case  of  any  discrimination being made in a service after officers from two sources have been  brought in one cadre.  It is true that seniority is  a vital  element in the matter of promotion but that does  not mean  that  allotment  of seniority  by  rule,  relative  to circuitment, involves any classification for the purposes of promotion.   The  argument  that the  promotees  and  direct recruits   became  one  class  immediately  on  entry   and, thereafter,  there could be no classification  between  them does  not  disclose the correct approach to the  problem  of fixing inter se seniority between them.  When recruits  from two sources have come into a service it is essential to  fix inter  se seniority for a proper integration of  the  cadre. Therefore,  it is really a case of adjustment  of  seniority between  the  recruits  and  does not  amount  to  making  a classification  after their absorption in one service.   The cases  on  which  reliance  was  placed  on  behalf  of  the promotees are quite inapplicable.  In Mervyn Coutinho & Ors. v.  Collector  of  Customs, Bombay & Ors(1)  the  point  was whether  Appraisers  promoted  to  the  grade  of  Principal Appraisers could be discriminated in the matter of seniority in the grade of Principal Appraisers on the ground that they had  entered the grade of Appraisers as either promotees  or direct  recruits.   The Customs department sought  to  carry their birth marks into the grade of the Principal Appraisers and  determine  their  seniority  accordingly.   This  Court disallowed  it  pointing  out that once  officers  from  two sources  came into one integrated grade, viz. the  grade  of Appraisers,  their  seniority  in  the  grade  of  Principal Appraisers was to be governed by their length of service  in that grade, and was not liable to be altered with  reference to  their  original position in the Appraisers’  grade.   In other  words,  the court held that all the  Appraisers  lost their birth marks after they were integrated in the cadre of Appraisers and they could not be revived after promotion  to the  higher  grade  of Principal Appraisers.   In  the  case before  us,  in the absence of a rule determining  inter  se seniority  between the two classes of  Income-tax  Officers, there  is  really  no integration of the  service  which  is unavoidably   necessary   for  the  purpose   of   effective promotions.’  One  cannot speak of promotions from  a  cadre unless  it  is  fully integrated.  If  promotions  are  made before it is fully integrated, they can be only on an ad hoc basis  to  be reviewed after seniority of  the  officers  is finally  fixed-as  has  happened in  our  case.   Mervyn  Co untinho’s   case  would  have  been  applicable  if,   after integration  of  all these Income-tax Officers in  class  1, their  seniority  as promoted Assistant  Commissioners  were again  to be altered with reference to their birth  mark  as direct recruits and promotees.  That question, however, does not arise in the present case.  In Roshan Lal v. (1)  [1966] 3 S.C.R. 600.                             115 Union  of India,(1) the decision in Marvyn  Coutinho’s  case referred to, above was relied upon and reaffirmed.  The case does  not shed any light on the question with which  we  are concerned.  Similar is the case in S. M. Pandit and Anr.  v.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 16  

State of Gujarat.(2) In this case Mamlatdars were  recruited from  two sources-directly and by promotion.  They  had  the same designation, same pay scales, same functions and  their posts  were  also interchangeable. it was,  therefore,  held that  Government could not discriminate between them in  the matter  of  their further promotion to the  post  of  Deputy Collector. As  said  earlier, the problem before us is  not  of  making discrimination in the matter of promotion from an integrated service  constituted  from two sources.  The problem  is  of integrating   two  sources  in  one  service  by   adjusting seniority  inter se.  The cases referred to above relate  to the debunking of the established seniority of officers in  a cadre in the matter of promotion. It  was next contended on behalf of the promotees that  this Court  had  directed  that  the rule to  be  framed  by  the Government should, be just and fair but in their submission, it  was not so.  The promotees contended that having  regard to their age at the time of promotion, their experience, and their diminished chances of promotions to grades higher than those  of the Assistant Commissioners, Govt. ought  to  have given  them  due weightage in the matter  of  seniority  and since  this was not done the new seniority rule was  neither just not fair. When  considering this point it must be  clearly  understood that  this  Court is not concerned with  Govt.’s  policy  in recruiting  officers  to any service.  Government  runs  the service and if it is presumed that it knows what is best  in the  public  interest.   Government  knows  the  caliber  of candidates  available  and  it  is  for  the  Government  to determine  how a particular service is to be  manned-whether by direct recruits or by promotees or both and, if by  both, what  should  be the ratio between the  two  sources  having regard to the age factor, experience and other exigencies of service.   Commissions  and  Committees  appointed  by   the Government  may indeed give useful advice but ultimately  it is  for  the  Government  to  decide  for  itself.   In  the particular service with which we are concerned, viz. that of class  I Income-tax Officers, Government bad known for  many years  that  there  was  a lot  of  discontent  amongst  the officers.   The  promotees  were  clamoring  for  a   higher proportion  of posts in the cadre while the direct  recruits were chafing against the seniority rule which gave promotees 2 to 3 years’ seniority over the direct recruits.  To  begin with the promotees had been given only 20% of the  vacancies but that was raised later on to 33-1/3%. the department  was fast  expanding  and  more officers in  class  I  who  could immediately  take up assessment work were required.   Senior class  II  officers who had the  necessary  experience  were always  available.   On the other hand,  class  I  officers, directly recruited, did not obtain this experience for about 2 to 3 years.  Therefore, though direct recruitment was made from  year  to  year, the department  had  to  promote  more officers  from class If to class 1; and this was the  reason why there was a spill-over of 73 promotee officers on  16-1- 1959.  In the (1) [1968] 1 S.C.R. 185. (2) A.I.R. 1972 S.C. 252. 116 course  of  next 3 years 214 promotees had to  be  appointed after  upgrading  a similar number of posts.   Promotion  of officers  in  such large numbers  naturally  frightened  the direct  recruits  because though they were younger  in  age, they  became  very much junior to the promotee  officers  by reason  of the seniority rule and to that extent their  pro-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 16  

motions to higher grades had become retarded by the enormous block  of nearly 300 promotees.  The discontent amongst  the direct recruits had been noted by the Government even as far back as 1957 and the Government’s anxiety in this respect is reflected in the letter No. 24/2/60 Ad.  VI dt. 17-2-1960 to the Union Public Service Commission.  In order to allay  the discontent in the service and having regard to the expansion of  the-department, Government suggested that the quota  for the promotees should be raised from 33-1/3 % to 50%, on  the one  hand,  and the weightage given to them  under  the  old seniority rule should be removed, on the other.  That letter gives a clear indication of the thinking of the Ministry  in this  respect.   But unfortunately the  suggestion  was  not accepted  by  the U.P.S.C. then and the  whole  problem  was allowed to drift. In  the  next place, we have to remember that  it  would  be wrong  to  pronounce adversely upon the new  seniority  rule merely  because  of  its  impact  on  the  fortunes  of  any particular  individual officer.  Nor will it be  correct  to point that an individual officer ’A’ would have fared better if the old quota rule and weightage rule had been  restored. One thing that the section of promotees, who are now  before us,  cannot  possibly  ignore  is that  they  had  all  been promoted  at a time when there were no posts  earmarked  for them.   Secondly, being promoted in very large numbers in  a brief  period from 1959 to 1962, they made further  recruit- ment  by promotion impossible in the years-1963, 1965,  1967 to  1970  because those who were promoted had  to  wait  for their absorption under the quota rule for several succeeding years.  We don’t want to suggest that when these  promotions were made on a mass scale, merit took the second place,  but it  cannot be ignored that those class 11 officers  who,  on merit, would have been normally considered for selection  in 1963,  1965,  and 1967 to 1970 could not  be  so  considered because of the backlog of these unabsorbed promotees. In   the  counter-affidavit  filed  by  Mr.  Mehra,   Deputy Secretary  to  the Government, Ministry  of  Finance,  dated August 31, 1973, the department has given a detailed account as  to  how, in pursuance of the direction of the  court  to frame  a  rule,  it  proceeded  to  frame  the  rule   after consulting  all  interests and concerned  authorities.   The Government  came to the conclusion on a just  assessment  of the situation that there could be only 4 alternatives before it  which could form the basis of the new rule.  Those  four alternatives were as follows :               (i)   The   seniority  of  both   the   direct               recruits  and  the promotees to  be  based  on               their length of service in class 1;               (ii)  To link the seniority to the  proportion               of  actual intake of direct recruits  and  the               promotees each year from 16-1-1959 onwards;               117               (iii) To   apply   the  1959   principles   of               seniority laid down by the Home Ministry which               would  employ ratio of vacancies  between  the               direct  recruits  and promotees based  on  the               quota  of  vacancies reserved for  direct  re-               cruitment   on  promotion  as  may  be   fixed               retrospectively from 16-1-1959;               (iv)  To fix the seniority by alternating,  on               a  roster  system,  the  actual  intake,   the               vacancies  being equally divided  between  the               promotees  and  the direct  recruits  for  the               entire period from 1959 to day. The  Government considered all these four  alternatives  and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 16  

having seen the inconvenience and disadvantages in following the first three alternatives decided in favour of the fourth alternative  as fair and just.  Detailed reasons  have  been given  in  the  affidavit why the  three  alternatives  were rejected  in  favour  of  the  last  alternative  and  on  a consideration  of  the  same,  we  do  not  think  that  the Government  came to an arbitrary or  unreasonable  decision. It  was contended on behalf of the promotees that  a  fairer way would have been to fix seniority in accordance with  the dates of appointment, the 73 spill-overs being all deemed to have been appointed, on 16.1.1959 and the rest on-the  dates of  appointment.   It  is  not  as  if  the  point  was  not considered  by  the Government.  In fact it  was  the  first alternative.  It was rejected because if that principle were followed it would have resulted in blocking of vacancies  by direct recruits or promotees to the department of both.  The promotees  and the direct recruits had, during  the  various years, joined en bloc in particular months.  For example, in 1959, 1960 and 1961 all the promotees for that year came  in one block in the month of April.  In the year 1962 they came in  December,, in 1964 in May, in 1966 in January  and  1971 again  in  May.   The direct recruits, on  the  other  hand, normally  joined duty around July and since  both  promotees and direct recruits joined in block of large ’numbers it was inevitable that these blocks would operate disadvantageously in  the matter of promotion, because instead of  ensuring  a fairer proportion of both promotees and direct recruits  for the  purposes of promotion as Assistant  Commissioners,  the blocks  would  have operated to do just the  opposite.   The whole  situation  is clearly illustrated  in  the  affidavit filed  by  the  department  and we  don’t  think  that  the, department  was wrong in not acceding to this contention  of the promotees. The  seniority  rule allocates 50% of  the  appointments  to direct   recruits  and  50%  to  the  promotees.   That   is undoubtedly  a gain for the promotees.  Learned counsel  for the  direct recruits have complained against the erosion  of their  own ration in the service.  At one time  they  manned 80%  of the posts.  Later the ratio was brought down to  66- 1/2% and now by this rule it was brought down to 50%.   They contended  that  recruitment of 50% promotees is  quite  un- usual, and, therefore, Government, should have fixed a lower proportion  for  the promotees as it has done in  other  All India  Services.   We  do not think we  can  entertain  this complaint.   Direct recruits can have a grievance  if  after recruitment  they  are not properly  treated.   They  cannot complain  as if they are representatives of  any  particular section 118 of  the general public which is the source  of  recruitment. On  the  other hand, class 11 officers in  the  service  are vitally   interested  in  their  promotion  and   they   can legitimately  have  a  grievance if they  are  not  properly represented  in the higher grade of class I. So far  as  the direct  recruits  are concerned they come into  the  service directly  after  passing a competitive  test,  Indeed  their complaint  can only be based on public interest  and  public policy  viz. that it is better to have more direct  recruits in  a  service  of this kind.  But the  question  of  public interest and policy had better be left to the Government and authorities like the Public Service Commission.  It is their function to decide after considering all the aspects of  the question  as to what should be the  respective  percentages. It  is not as if there is no other service in  which  direct recruitment is limited to only 50% of the appointments.   It

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 16  

is  true  that the Direct Taxes Enquiry  Committee  (Wanchoo Committee) had recommended in 1971 a ratio of 2 : 1 and  the Administrative Reforms Commission had recommended two  years earlier  a  ratio of 3 : 2. But as already  pointed  out  at least  from 1960, Government, having regard to (i) that  the class  11 service is enormously expanded and (ii)  that  the main  burden of assessment work fell on members of class  11 service, thought that it was absolutely essential that there should be an adequate promotional outlet to members of class It service.  In this context we have to remember that direct recruits  for  about  2 or 3  years  after  appointment  are incapable  of  doing  assessment  work  independently,   and consequently  promotees who could straight way do  the  work had to be appointed in large numbers.  And, hence if, in the Govt.’s opinion, 50% of the posts in class I service  should be   earmarked  for  promotees,  there  can  be  really   no objection,  especially, when we know that the  Union  Public Service  Commission which had not given its consent in  1960 has  now  agreed  to  the  proportion  of  promotees   being increased from 331% to 50%. Nor indeed can the promotees, after obtaining the benefit of a  higher  percentage  of recruitment to  class  I  service, legitimately  object to the abolition of  weightage  enjoyed formerly  in the matter of seniority.  The  direct  recruits had always regarded as offensive that their date, of joining the  services  should not count for seniority  in  spite  of their  being members of an All India Service but  that  they should  yield their seniority to persons promoted 2/3  years after they had joined the service.  This discontent  amongst the  direct  recruits was known to the Government.   In  the package  deal  suggested in the letter  referred  to  above, Government  had  asked for the removal  of  this  weightage. This  element  of weightage in the old  seniority  rule  had given offence to the direct recruits, and it is obvious that in  the  interest of harmonious relations  between  the  two wings  of  the service, Government, while  increasing,,  the proportion of promotees in the service, abolished  weightage in their favour. On  account of haphazard promotions, especially,  from  1959 onwards,  it has happened that a direct recruit or  promotee gains or loses several places in the new seniority list on a comparison with a list in 119 which  seniority  is based on the date of  joining  service. But  we think this cannot be helped.  If hereafter  care  is taken in proper time to determine the vacancies to be filled in  any  particular  year and lists of an  equal  number  of direct  recruits  and promotees are kept ready,  there  will survive  no serious ground for complaint, because all  those in the lists will be appointed in the course of the year and will  not  face the situation with which  the  officers  are faced  at present.  The spill-over of 73 promotees on  16-1- 1959  besides  240  promotees from 1959 to  1962  have  been alternatively  adjusted  with direct recruits  during  these years  and  this  may  well result in  a  promotee  of  1962 becoming  junior  to  a direct recruit  of  1966.   See  for example serial nos. 1109 and 1110 of the new seniority list. But  that  is inevitable because of the  massive  promotions over  several  years prior to 1963.  Though as  pointed  out above,  the direct recruit of 1966 would become senior to  a promotee  of  1962, that is not worse than what  would  have happened  to  these promotees if the 2 : 1  quota  rule  had continued to be in force.  In the latter case, the last  few 1962  promotees would have been pushed down to 1970  instead of  1966 as at present.  Indeed some promotees  have  gained

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 16  

some  places and some others lost some places in the  mutual adjustment.  But the fairness or justness of the rule should not  be  judged, as already noticed, by its  impact  on  any particular individual’s fortunes. Though the promotees submitted that the present rule was not fair  to  them, they themselves could not  put  forward  any rational  alternative.   They are indeed  pleased  with  the increase in the promotional chances.  But they are sore that the artificial rule of seniority which gave them  weightage, has been removed.  They do not dispute that by the  increase in their ratio in class I service, a larger number of  class II  officers  will,  in course of time get a  chance  to  be appointed by promotion as Assistant Commissioners.  But they are sorry that their chances to be promoted to posts  higher than that of the Assistant Commissioner are now retarded  by the removal of the weightage.  They submit, that at the time of  promotion to class 1, the age factor had already  become unfavourable to them and, therefore, weightage in some  form should  have  been given to them so that in  the  matter  of competing  for  the highest posts, they would  have  had  an equal  chance  with the direct recruits.  On behalf  of  the department  it  is  contended that on  an  analysis  of  the vacancies  which  may occur in the higher  echelons  of  the service  in  future and the present ages of  the  promotees, there  is really no ground for despondency.  But  one  thing cannot  be  ignored in this respect.   Direct  recruits  are recruited  on  an  All  India  basis  after  a   competitive examination.   They  belong to a certain age group  and  are bound to be younger than the promotees.  In practically  all India Services, promotees don’t always have an equal  chance with  the direct recruits in the matter of  appointments  to the highest posts.  Those who are young may indeed reach the top.   Promotees  who  belong to a  higher  age  group  have necessarily to pay the price and that is so in all services. On  the  other hand, however, we must remember that  in  all higher services, appointments are generally by selection and not merely on the basis of seniority in which case promotees with the necessary merit may 120 well reach the top.  In this connection it may be  necessary to  point out here that though the promotees of  the  1960’s lose  some places to direct recruits, class II officers  who were  not promoted in the years 1963, 1965 and 1967 to  1970 but  got  their chances of promotion for the first  time  in 1971 will" now get posts reserved for them in 1969.  See for example  serial  no.  1354 of the  new  seniority  list  and onwards.   All  this is the result of  haphazard  promotions which  were made in order to meet the demands of a  suddenly expanding  department  without sufficient attention  to  the Rules  in  force.   We  have to  take  an  overall  view  to determine  whether the rule now framed by the Government  to determine seniority is just and fair.  We, think it is. Since the seniority list Annexure B filed on 15-2-1973 is in accordance  with the directions given by this Court  in  its judgment  dated  16-8-1972,  we accept  it  as  the  correct seniority list. There shall be no order as to costs. S.C.                 Petitions dismissed. 121