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CASE NO.: Appeal (civil)  322 of 2007

PETITIONER: P.V. George & Ors

RESPONDENT: State of Kerala & Ors

DATE OF JUDGMENT: 23/01/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T

[Arising out of S.L.P. (Civil) No.8305 of 2006] W I T H CIVIL APPEAL NO.        323         OF 2007 [Arising out of S.L.P. (Civil) No.8744 of 2006]

S.B. SINHA, J :

       Leave granted.                  Application of the doctrine of prospective overruling in service  matters is in question in these appeals which arises out of a judgment and  order dated 31.03.2006 passed by a Division Bench of the Kerala High  Court whereby and whereunder on interpretation of  a Full Bench decision in  Subaida Beevi v. State of Kerala [2005 (1) KLT 426] it was held to have no  prospective operation.           Appellants were working in the Government Presses, Kerala.   The  Government of Kerala framed rules for the employees of Kerala  Government Presses Subordinate Services to which cadre the appellants  belonged.  It consisted of several branches.  Admittedly, there are several  categories and sub-categories of employees working therein  The mode of  appointment as also the qualifications therefor has been prescribed in the  rules.  By reason of a Government order dated 01.07.1980, the rule framed  in terms of SRO No. 1030 of 1976 was amended prescribing a ratio of 1 : 1  for the purpose of promotion between diploma-holders and certificate- holders by adding a Note thereto, which reads as under :

"Note : Promotion of persons qualified under Item  2(a) and 2(b) above shall be made in the ratio 1 : 1  starting with promotion of persons qualified under Item  2(a).  If no person qualified under Item 2(a) is available  for promotion, the turn of promotion will be given to the  person qualified under Item 2(b) and vice versa.

       Provided that no senior diploma holder shall be  superseded by a junior certificate holder and provided  that the benefit of turn under the ratio of 1 : 1 forfeited by  the certificate holder by virtue of the promotion the  senior diploma holder, shall be restored to the certificate  holder in the arising vacancy."

       A further proviso was appended thereto by a Government order dated  30.08.1984 in term of  SRO No. 1044 of 1984,  which reads as follows  :

       "Provided further that the benefit of the ratio of 1 :  1 forfeited by the certificate holder by virtue of the

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promotion of the senior diploma holder shall be restored  to the certificate holder in the next arising vacancy."

       Constitutionality of the said provision was challenged before the  Kerala High Court, whereupon a Division Bench thereof in  Daniel v. State  of Kerala [1985 KLT 1057],  declared the same to be ultra vires, stating :  

       "In  the light of the decisions of the Supreme Court  in A.I.R. 1974 SC 1, AIR 1974 SC 1631, 1983 KLT 987,  1983 KLT 878, 1981 (2) Kerala 527 and 1975 KLT 1, we  have no doubt at all that this classification on  microscopic distinction could not be allowed.  We would  therefore strike down the notes to Branch Nos. 1 and 9 to  Ex. P-2"  

       The correctness of the said decision was questioned before another  Division Bench of the said Court in  Writ Appeal No.149 of 1990.  By a  judgment dated 14.01.1992,  Paripoornan, J. (as His Lordship then was),  held :         "Having heard counsel at length, we are of the  view, that since the service involved in the present cases  is the same as the one which came up for consideration in  Daniel’s case (1985 KLT 1057) and the Rules are also  the same, the judgments appealed against, do not require  interference.  It is agreed that the Bench decision in  Daniel’s case (1985 KLT 1057) considered the identical  rules in the same service (Government Presses  Subordinate Service), which in issue in these two O.Ps.  as well.  Even so, learned Government Pleader, Mr. V.C.  James, very forcefully submitted that the Bench decision  in Daniel’s case (1985 KLT 1057) is not good law, or, at  any rate, requires reconsideration in view of the later  Bench decision of this Court in Balakrishnan v. State of  Kerala (1990 (1) KLT 66).  We are unable to accept this  plea for more reasons than one.  The service rules, which  came up for consideration in the later decision,  Balakrishnan’s case (1990 (1) KLT 66) is "Engineering  Service (Radio and Electrical Branches) Rules, 1967".   The import and impact in evaluating and upholding the  reason for fixing the ratio in the later case are entirely  different.  The perspective is also different.  That apart,  the earlier bench decision in Daniel’s case (1985 KLT  1057) does not appear to have been brought to the notice  of the learned Judges, who rendered the decision in  Balakrishnan’s case (1990 (1) KLT 66).  Prima facie, the  later decision should be considered to be one rendered  per inqurium.  In these circumstances, we are satisfied  that the ratio of the earlier bench decision in Danil’s case  (1985 KLT 1057) should govern the fate of the present  two Original Petitions.  That is what has been done by  the two learned Judge of this Court.

       In these circumstances, we are of the view that no  interference is called for in these writ appeals.  The  judgments appealed against are confirmed.  The writ  appeals are dismissed.  There shall be no order as to  costs."

       It is, however,  not in dispute that Jagannadha Rao, J. (as the His  Lordship then was) in Ravindran v. State of Kerala [1992 (1) KLT 524],  took a different view, opining :

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       "In the present case the Government has filed a  counter stating that after considering various aspects, the  Government prescribed the necessary qualification for  the various supervisory posts ’according to the  requirement of duties and functions of the post’.  It is  also stated that special rules were made for the petitioner  and other similarly situated persons.  It is also stated that  Government considered that seniors who are not diploma  holders may be prejudiced by the rules as they stood in  1976, and that the ratio of 1 : 1 fixed for promotion  between the certificate holders and diploma holders is  quite reasonable and rational and hence valid.  Having  regard to the technical nature of the posts in the  government presses we do not think that the ratio  prescribed between diploma holders and certificate  holders is in any way unreasonable.  In view of the  subsequent decision of the Supreme Court in Roop  Chand’s case, AIR 1989 SC 307, and also in view of the  two judgments of the Division Bench in Balakrishnan’s  case and in Cheru’s  case, O.P. No. 1851 of 1984, we are  not inclined to follow the decision of the Division Bench  in Daniel v. State of Kerala, 1985 KLT 1057."

       The conflict in the said decisions was noticed and eventually referred   to a Full Bench in the Subaida Beevi (supra) by another Division Bench of  the said Court.  By a judgment dated 04.11.2004, the Full Bench held that  the amended special rules for the Government Presses Subordinate Services  Rules were not suffering from any infirmity and fixation of ratio of 1 : 1 for  promotion to higher posts between diploma-holders and certificate-holders  needs no interference.  Whereas the decision in Daniel (supra) was expressly  overruled,  the decision in Ravindran (supra) was upheld, holding :

       "We hold that the impugned amendment made in  the Special Rules for the Government Presses  Subordinate Service providing ratio of 1 : 1 for  promotion to higher posts between diploma holders and  certificate holders is not discriminatory and it is not  violative of articles 14 and 16 of the Constitution of  India.  Government is bound to effect promotions on the  basis of the amended Special Rules."

       A  special leave petition filed thereagainst was dismissed by this  Court by an order dated 04.03.2005.

       Appellants were issued notices as to why they shall not be reverted  from the post of Assistant Superintendent pursuant to or in furtherance of the  said decision of the Full Bench of the Kerala High Court.  Legality of the  said notices was questioned by the appellants herein in a writ petiton.  By  reason of the impugned judgment, the said writ petition has been dismissed  by the High Court,  opining :

"\005Since the Government has accepted the Full Bench  decision  and has taken steps, but, did not implement the  same, only because of the stay order passed in the other  writ petitions and has undertaken, since the vacation of  the stay order, the judgment would be implemented, the  contempt petitions are closed recording the undertaking  that the judgment will be implemented within three  months from today.  With the above observations, all the  writ petitions are dismissed and the contempt court  petitions are closed."

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       Mr. C.S. Rajan,  learned Senior Counsel appearing on behalf of the  appellants, submitted that the High Court committed a manifest error insofar  as it failed to take  into consideration that in service matters ordinarily  doctrine of prospective overruling would apply.  Reliance in his behalf has  been placed on Managing Director ECIL, Hyderabad  v. B. Karunakar  [(1993) 4 SCC 727],  R.K. Sabharwal v. State of Punjab [(1995) 2 SCC  745], Union of India and Others v. Virpal Singh Chauhan and Others  [(1995) 6 SCC 684], Ashok Kumar Gupta v. State of  U.P. [(1997) 5 SCC  201], Ajit Singh-II v. State of Punjab [(1999) 7 SCC 209], Baburam v. C.C.  Jacob [(1999) 3 SCC 362], E.A. Sathyanesan v. V.K. Agnihotri and Others  [(2004) 9 SCC 165], M. Nagaraj & Others  v. Union of India & Others  [(2006)10 SCALE 301].

       It was furthermore submitted that the promotions were given to the  appellants when the law laid down by the Kerala High Court in Daniel  (supra) and Ravindran (supra) were in force and, thus, as the law was  declared by the Full Bench only in the year 2005, the same was not  applicable in their case.  

       Mr. Uday U. Lalit, learned Senior Counsel appearing for the  respondents, would, however, support the judgment.                  For the views we propose to take, it is not necessary for us to consider  all the decisions relied upon by Mr. Rajan.  The legal position as regards the  applicability of doctrine of prospective overruling is no longer res integra.   This Court in exercise of its jurisdiction under Article 32 or Article 142 of  the Constitution of India may declare a law to have a prospective effect.  The  Division Bench of the High Court may be correct in opining that having  regard to the decision of this Court in L.C. Golak Nath and Others v. State of  Punjab and Another [AIR 1967 SC 1643) the power of overruling is vested  only in this Court and that too in constitutional matters, but the High Courts  in exercise of their jurisdiction under Article 226 of the Constitution of  India,  even without applying the doctrine of prospective overruling,   indisputably may grant a limited relief in exercise of their equity  jurisdiction.  

       We are, however, in this case not concerned with such a situation.   The  law was in a state of  flux in the sense that as far back as in the year  1992, the two Division Benches took contrary views; while one applied the  ratio laid down in Daniel’s (supra), another refused to follow the same.  

       The Full Bench of the Kerala High Court upheld the views of the  Division Bench of the said Court in Ravindran (supra) and overruled Daniel  (supra).

       The Full Bench of the High Court indisputably did not say that the  promotions which had already been granted would not be disturbed.  The  judgment of the Full Bench attained finality as special leave petition filed  thereagainst was dismissed.  Rules as amended by the State of Kerala on  01.07.1980 and 30.08.1984 were upheld.   

       If the said Rules ultimately were held to be constitutional, it was  required to be given effect to.   The  law declared by a court is ordinarily  affects the rights of the parties.  A court of law having regard to the nature of  adversarial system of our justice delivery system exercises adjudicatory role.  Legal consequences are determined in respect of the matters which had  taken place in the past.

       It may be true that when the doctrine of stare decisis is not adhered to,  a change in the law may adversely affect the interest of the citizens.  The  doctrine of prospective overruling although is applied to overcome such a  situation, but then it must be stated expressly.  The power must be exercised  in the clearest possible term.  The decisions of this Court are clear pointer  thereto.

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       As would be noticed by us hereafter in Dr. Suresh Chandra Verma  and Others v. The Chancellor, Nagpur University and Others  [(1990) 4 SCC  55], this Court  held :         "The second contention need not detain us long. It  is based primarily on the provisions of Section 57(5) of  the Act. The contention is that since the provisions of that  section give power to the Chancellor to terminate the  services of a teacher only if he is satisfied that the  appointment "was not in accordance with the law at that  time in force" and since the law at that time in force, viz.,  on March 30, 1985 when the appellants were appointed,  was the law as laid down in Bhakre’s case which was  decided on December 7, 1984, the termination of the  appellants is beyond the powers of the Chancellor. The  argument can only be described as naive. It is  unnecessary to point out that when the court decides that  the interpretation of a particular provision as given earlier  was not legal, it in effect declares that the law as it stood  from the beginning was as per its decision, and that it  was never the law otherwise. This being the case, since  the Full Bench and now this Court has taken the view  that the interpretation placed on the provisions of law by  the Division Bench in Bhakre’s case  was erroneous, it  will have to be held that the appointments made by the  University on March 30, 1985 pursuant to the law laid  down in Bhakre’s case  were not according to law. Hence,  the termination of the services of the appellants were in  compliance with the provisions of Section 57(5) of the  Act."                  The ratio laid down by this Court, as noticed hereinafter, categorically  shows the effect of a decision which had not been directed to have a  prospective operation.  The legal position  in clear and unequivocal term was  stated by a Division Bench of this Court in M.A. Murthy v. State of  Karnataka & Others [(2003) 7 SCC 517] in the following terms :         "Learned counsel for the appellant submitted that  the approach of the High Court is erroneous as the law  declared by this Court is presumed to be the law at all  times. Normally, the decision of this Court enunciating a  principle of law is applicable to all cases irrespective of  its stage of pendency because it is assumed that what is  enunciated by the Supreme Court is, in fact, the law from  inception. The doctrine of prospective over-ruling which  is a feature of American jurisprudence is an exception to  the normal principle of law, was imported and applied for  the first time in L.C. Golak Nath and Ors. v. State of  Punjab and Anr. In Managing Director, ECIL, Hyderabad  and Ors., v. B. Karunakar and Ors., the view was  adopted. Prospective over-ruling is a part of the  principles of constitutional canon of interpretation and  can be resorted to by this Court while superseding the  law declared by it earlier. It is a device innovated to  avoid reopening of settled issues, to prevent multiplicity  of proceedings, and to avoid uncertainty and avoidable  litigation. In other words, actions taken contrary to the  law declared prior to the date of declaration are validated  in larger public interest. The law as declared applies to  future cases. (See Ashok Kumar Gupta v. State of U.P.  and Baburam v. C.C. Jacob. It is for this Court to indicate  as to whether the decision in question will operate  prospectively. In other words, there shall be no  prospective over-ruling, unless it is so indicated in the  particular decision. It is not open to be held that the  decision in a particular case will be prospective in its  application by application of the doctrine of prospective

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over-ruling. The doctrine of binding precedent helps in  promoting certainty and consistency in judicial decisions  and enables an organic development of the law besides  providing assurance to the individual as to the  consequences of transactions forming part of the daily  affairs. That being the position, the High Court was in  error by holding that the judgment which operated on the  date of selection was operative and not the review  judgment in Ashok Kumar Sharma’s casa No. II. All the  more so when the subsequent judgment is by way of  Review of the first judgment in which case there are no  judgments at all and the subsequent judgment rendered  on review petitions is the one and only judgment  rendered, effectively and for all purposes, the earlier  decision having been erased by countenancing the review  applications. The impugned judgments of the High Court  are, therefore, set, aside.

       The effect of declaration of law, the rue of stare decisis and the  consequences flowing from a departure from an earlier decision has been  considered in great details by the House of Lords in National Westminster  Bank  plc  v.  Spectrum  Plus Limited and Others [(2005) UKHL 41]: [2005  (3) WLR 58], opining : "8.     People generally conduct their affairs on the basis  of what they understand the law to be. This  ’retrospective’ effect of a change in the law of this  nature can have disruptive and seemingly unfair  consequences. ’Prospective overruling’, sometimes  described as ’non-retroactive overruling’, is a  judicial tool fashioned to mitigate these adverse  consequences. It is a shorthand description for  court rulings on points of law which, to greater or  lesser extent, are designed not to have the normal  retrospective effect of judicial decisions.  9.      Prospective overruling takes several different  forms. In its simplest form prospective overruling  involves a court giving a ruling of the character  sought by the bank in the present case. Overruling  of this simple or ’pure’ type has the effect that the  court ruling has an exclusively prospective effect.  The ruling applies only to transactions or  happenings occurring after the date of the court  decision. All transactions entered into, or events  occurring, before that date continue to be governed  by the law as it was conceived to be before the  court gave its ruling.  10.     Other forms of prospective overruling are more  limited and ’selective’ in their departure from the  normal effect of court decisions. The ruling in its  operation may be prospective and, additionally,  retrospective in its effect as between the parties to  the case in which the ruling is given. Or the ruling  may be prospective and, additionally, retrospective  as between the parties in the case in which the  ruling was given and also as between the parties in  any other cases already pending before the courts.  There are other variations on the same theme.  11.     Recently Advocate General Jacobs suggested an  even more radical form of prospective overruling.  He suggested that the retrospective and  prospective effect of a ruling of the European  Court of Justice might be subject to a temporal  limitation that the ruling should not take effect  until a future date, namely, when the State had had  a reasonable opportunity to introduce new

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legislation: Banco Popolare di Cremona v Agenzia  Entrate Uffficio Cremona (Case C-475/03, 17  March 2005), paras 72-88."  

[See also Lord Rodger of Earsferry -  ’A Time for Everything under the Law  : Some Reflections on Retrospectivity’  [(2005) 121 LQR 55, 77].

       Lord  Nicholls of Birkenhead speaking for the House of Lords clearly  held that the power to apply prospective overruling is available to the House  of Lords also.

       In Queen (on the Application of Ernest Leslie Wright) v. Secretary of  State for the Home Department [(2006) EWCA Civ. 67], it was observed :    "42.    The English law in this respect is developing  rapidly. Prospective rulings seemed anathema to  Lord Wilberforce in Launchbury v Morgans  [1973] AC 127, 137 and Lord Goff of Chieveley in  Kleinwort Benson Ltd v Lincoln City Council  [1999] 2 AC 349, 379. By the time of Regina v  Governor of Brockhill Prison, ex p Evans (No. 2)  [2001] 2 AC 19, Lord Slynn at p. 26 H considered  that the effect of judicial rulings being prospective  might in some situations be "desirable and in no  way unjust", though Lord Steyn at p. 28 B thought  the point was a "novel one". With some  perspicacity Lord Hope of Craighead foresaw at p.  36 that "the issue of retrospectivity is likely to  assume an added importance when the Human  Rights Act 1998 is brought into force". Lord  Hobhouse at p.48 F would have none of it. The  latest in this line of authority seems to be In re  Spectrum Plus Ltd (in liquidation) [2005] UKHL  41, [2005] 3 WLR 58 where the danger was  acknowledged that prospective overruling "would          amount to judicial usurpation of the legislative  function", per Lord Nicholls at para. 28 but  nonetheless he noted that, especially in the human  rights field, " ’Never say never’ was a wise judicial  precept", (para. 42).  43.     The question has attracted interest in the academic  journals. See Arden L.J., "Prospective  Overruling", (2004) LQR 7; Lord Rodger of  Earlsferry, "A Time for Everything under The Law;  Some Reflections on Retrospectivity", (2005) 121  LQR 57 and Duncan Sheehan and T. T. Arvind,  "Prospective Overruling and Fixed/Floating  Charge Debate", (2006) 122 LQR 20."  

       In service matters, this Court on a number of occasions have passed  orders on equitable consideration.  But the same would not mean that  whenever  a law is declared, it will have an effect only because it has taken a  different view from the earlier one.  In those cases it is categorically stated  that it would have prospective operation.

       We are not oblivious that in Union of India v. Madras Telephone SC  & ST Social Welfare Association [2006) 9 SCALE 626], this Court  observed that where the rights had been determined in favour of some  employees in a duly constituted proceeding, which determination had  attained finality, a subsequent judgment of a Court or Tribunal taking a  contrary view would not adversely affect the applicants in whose cases the  orders had attained finality.           The rights of  the appellants were not determined in the earlier  proceedings.  According to them, merely a law was declared which was  prevailing at that point of time; but the appellants were not parties therein.

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Thus, no decision was rendered in their favour nor any right accrued  thereby.     

       In E.A. Sathyanesan (supra),  a Division Bench of this Court) of  which one of us was member) noticed :         "In view of the aforementioned authoritative  pronouncement we have no other option but to hold that  the Tribunal committed a manifest error in declining to  consider the matter on merits, upon, the premise that  Sabharwal and Ajit Singh-I had been given a prospective  operation. The extent to which the said decisions had  been directed to operate prospectively, as noticed above,  has sufficiently been explained in Ajit Singh-II and  reiterated in M.G. Badappanavar (spura)."

       Moreover, the judgment of the Full Bench has attained finality.  The  special leave petition has been dismissed.  The subsequent Division Bench,  therefore, could not have said as to whether the law declared by the Full  Bench would have a prospective operation or not.  The  law declared by a  court will have a retrospective effect if not otherwise stated to be so  specifically.  The Full Bench having not said so, the subsequent Division  Bench did not have the jurisdiction in that behalf.   

       We, therefore, do not find any merit in these appeals, which are  dismissed accordingly.  However, in the facts and circumstances of the case,  there shall be no order as to costs.