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PETITIONER: S.   G. JAISINGHANI

       Vs.

RESPONDENT: UNION OF INDIA AND ORS.(With Connected Writ Petition)

DATE OF JUDGMENT: 22/02/1967

BENCH: RAMASWAMI, V. BENCH: RAMASWAMI, V. RAO, K. SUBBA (CJ) SHELAT, J.M. SIKRI, S.M. VAIDYIALINGAM, C.A.

CITATION:  1967 AIR 1427            1967 SCR  (2) 703  CITATOR INFO :  F          1968 SC 507  (8)  RF         1968 SC 938  (23)  E&D        1970 SC 470  (1,6,12,15,35,36)  RF         1972 SC2516  (15)  E          1972 SC2627  (1,5,12,13,18,21,23)  D          1973 SC1146  (9,10)  RF         1973 SC1168  (6)  RF         1973 SC1425  (14)  RF         1974 SC1618  (1,10)  D          1974 SC1806  (6)  RF         1975 SC2299  (340)  F          1976 SC 490  (57,58,106,208,212)  RF         1976 SC1207  (185)  D          1977 SC 251  (33,36)  RF         1977 SC 757  (33,38,40)  RF         1979 SC1073  (4,13)  R          1980 SC 452  (50)  RF         1980 SC1246  (8)  RF         1980 SC1561  (36)  RF         1980 SC2056  (73)  F          1982 SC 101  (31)  D          1983 SC 769  (21,22,31,38)  D          1984 SC1595  (24,63)  R          1985 SC 617  (4)  D          1985 SC1019  (24)  D          1985 SC1495  (133)  RF         1985 SC1558  (26)  RF         1987 SC2359  (9)  D          1988 SC 268  (26)  RF         1988 SC 654  (7)  RF         1990 SC1106  (5,28)  RF         1990 SC1607  (19)  R          1991 SC 101  (66,276)  RF         1991 SC 212  (2)  RF         1991 SC 537  (37,28,43)

ACT: Income-tax  Service-Seniority Rules, 1952, r. 1(f)(iii)  and (iv)Seniority  between  direct  recruits  and   promotees-If violative  of  Arts.  14 and  16  of  Constitution-Promotion Rules,  r.  4-Promotion from Class 1, Grade II to  Grade  I-

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Different  periods  of  service  for  direct  recruits   and Promotees-lf  discriminatory-Income-tax Officers  (Class  1, Grade II) Service Recruitment Rules, r. 4-Fixation of quota- Duty to follow, it mandatory.

HEADNOTE: In  1944,  the Government of India created  two  classes  of Income-tax  Service, namely, Class I service with  Grades  1 and 11, and Class 11 service with Grade II.  Recruitment  to Class I, Grade II was to be made : (a) by direct recruitment through  a competitive examination, and (b) by  pro.  motion from Class 11, Grade III.  A Class 11 officer is  considered by  the  Departmental Promotion Committee for  promotion  to Class  1,  Grade II, after 5 years’ service in Class  11  (2 years  of probation and 3 years as Income tax Officer).   In 1951,  the ratio between direct recruits and  promotees  was fixed  at  2 : 1, presumably under r. 4  of  the  Income-tax Officers  (Class  I,, Grade 11) Service  Recruitment  Rules. Under  r. 1 (f) (iii) of the Seniority Rules, 1952,  dealing with  seniority  between direct recruits, and  promotees,  a promotee  becomes  senior to a direct recruit who  has  com- pleted the probationary period of two years in the very year in  which the Department Promotion Committee recommends  the officers  in Class II far promotion to Class 1. Rule  1  (f) (iv)  deals  with a special situation in  which  an  officer initially  appointed to Class 11 service is given  seniority in the same manner as a departmental promotee, if subsequent to his passing the departmental examination he is  appointed in Class I on the results of the competitive examination. Rule  4  of the Rules of Promotion of the Central  Board  of Revenue Office Procedure Manual, states, that the prescribed minimum  service  for  an office of Class 1,  Grade  11  for promotion to Grade 1 is 5 years gazetted service including 1 year  in  class I, Grade II for promotion to Grade  1  is  5 years  gazetted  11,  the  minimum  period  of  service  for promotion  to  class I, Grade I, would be actually  4  years service in class II and 1 year service in Class I Grade II. Respondents 4, 5 and 6 were appointed in Class II, Grade III Service  in 1947.  They and the appellant (who was a  direct recruit) were appointed in Class 1, Grade 11 service in 1951 after having successfully completed in the 1950  competitive examination.   The three respondents were however  shown  as seniors  to the appellant as "deemed promotees" under  r.  1 (f) (iV) The  appellant filed a writ petition in the High  Court  and contended that (1) r.- 1 (f) (iii) and (iv) of the Seniority Rules  and r. 4 of the Promotion Rules  were  discriminatory and violative of Arts. 14 and 16 of the, 704 Constitution,   and  (2)  that  during  1951-56  there   was excessive  recruitment  of promotees, in  violation  of  the quota rule prescribing the ratio of 2 : 1. The High Court rejected the petition. In appeal to this Court, HELD  : (1) (a).  Rule 1 (f) (iii) of the  Seniority  Rules, 1952, does not violate the guarantee under Arts. 14 and 16. It  is not corrected to say that all officers  appointed  to Class  1, Grade 11 service formed one class and  that  after the officers have been one once recruited there could be  no distinction  between direct recruits and promotees.   It  is really  a  case  of  recruitment to  the  service  from  two different  sources and the adjustment of  seniority  between them.   The concept of equality in- the matter of  promotion

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can be predicated only when the promotees are drawn from the same source.  If the preferential treatment of one source in relation  to the other is based on the  differences  between the two sources, and the said differences have a  reasonable relation to the nature of  the office it can legitimately  1 be  sustained on the basis of a valid  classification.   The reason  for the classification in the present case was  that the  higher  echelons of the service should.  be  filled  by experienced  officers possessing not only a high  degree  of ability but also first-rate experience.  A rule which  gives seniority   to   outstanding  officers   with   considerable experience, and selected on merit and limiting the promotion to  a percentage not exceeding the prescribed  limit  cannot per  se be regarded as unreasonable.  The net effect of  the rule  is  that 3 years of outstanding work in  Class  II  is equated  to  2  years of probation in  Class  I,  ’Grade  II service,  and  on  a consideration of  this  aspect  of  the matter,  the  promotee  Is given  seniority  over  a  direct recruit completing the period of probation in the same year. [711 E-H; 712 B, E, G-H] The General Manager, Southern Railway v. Rangachari,, [1962] 2 S.C.R. 586, 596 followed. (b)  Rule   1(f)(iv)   is  also  based   on   a   reasonable classification and do-not offend the guarantee under Art. 14 or Art. 16(1) of the Constitution. [715 D] The  "deemed promotees" we’re appointed in Class II,  Grade, IIl  service in 1947 and completed 5 years service  in  that clam  by  the year 1952 and if  the  Departmental  Promotion Committee  had then recommended their,promotion to Class  1, Grade  II, each one of them would have become senior to  the appellant  by  the operation of r.  1(f)  (iii).Further,  if cl.  (iv)  did not exist there would be no  incentive  to  a promotee   of   this  type  to  sit  for   the   competitive examination.   Also,  if the service of  the   promotees  in Class  II.  Grade III was entirely ignored and if they  join Class  I,  Grade II service as direct recruits,  they  might become  junior  to   others by  the  operation of r.  1  (f) (iii).[715 B-D] (c)  Once  it is held that r. 1 (f) (iii) of  the  Seniority Rules is legally valid, the rule of promotion cannot be held to lead to any discrimination as between direct recruits and promotees.  The object of the rule of promotion is really to carry  out the policy of r. 1-(f) (iii) and not allow it  to be  defeated by the requirement of 5 years service in  Class I,  Grade 11 itself, before consideration for  promotion  to Class 1, Grade 1. Otherwise, a promotee certified fit by the Departemental Promotion Committee in 1952-will be senior  to the  direct recruits who completed their probation  in  that year, but the seniority Would be an empty formality For,  if the 705 promotee-officer  is  not  allowed to count  his  period  of service in Class 11 for the purpose of promotion to Grade I. Class  1,  he will have to wait till 1957 or 1958 to  go  to Grade 1, Class I, while direct ’recruits who completed their probation  in 1952 or 1953 could go to Grade I, Class  I  in 1955  or 1956 counting the 5 years, period from the date  on which they were placed on probation, [714 A-D, E-G] (2)  The  appellant was entitled to a Writ in the nature  of mandamus  commanding  respondents  1  to  3  to  adjust  the seniority  of  the appellant and  other  officers  similarly situated and to prepare a fresh seniority list in accordance with  law  after adjusting the recruitment for,  the  period 1951 to 1956 and onwards in accordance with the quota  rule. [718-D-E]

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Rule 4 of the Income4ax Officers (Class I, Grade II) Service Recruitment  Rules  is  a  statutory rule  and  there  is  a statutory  duty  cast on the Government under this  rule  to determine  the  method  to be employed for  the  purpose  of filling  the  vacancies and the number of candidates  to  be recruited.  Having fixed the quota under the rule, there  is no discretion left with the Government to alter it according to the exigencies of the situation or to deviate from it, in any  particular  year, at its own will  and  pleasure.   The absence  of  arbitrary power is the first essential  of  the rule  of law and discretion, when conferred  upon  executive authorities, must be confined within clearly defined limits, and  their  decisions should be made by the  application  of known  principles  and rules.  The quota rule is  linked  up with  the  seniority  rule and unless  the  quota  ’rule  is strictly observed in practice, it will be difficult to  hold that the seniority rule, that is, rule 1(f)(iii) and (iv) of the Seniority Rules, is not unreasonable and does not offend Art. 16.  Therefore, the promotees from Class 11, Grade  III to  Class 1, Grade 11 service, in excess of  the  prescribed quotas for each of the years 1951 to 1956 and onwards should be held to have been illegally promoted. [717 H; 718 A-D, G- H] The  order will not affect such Class 11 officers  who  have been  appointed  permanently as Assistant  Commissioners  of Income-tax. [718 F] For  the  future years Government should  adopt  the  roster system,  by framing an appropriate rule for working out  the quota between the direct recruits and the promotees and  the roster  should be maintained indicating the order  in  which appointment are made by direct recruitment and by promotion, in accordance with the percentage :fixed under the statutory rules [719 F]

JUDGMENT: CIVIL  APPELLATE/ORIGINAL  JURISDICTION : Civil  Appeal  No. 1038 of 1965. Appeal from the judgment and order dated the March 11,’ 1964 of  the Punjab High Court, Circuit Bench at Delhi  in  Civil Writ Petition No. 189-D of 1962.                             AND                 WRIT PETITION No. 5 OF 1966. Petition under Art. 32 of the Constitution of India- for the enforcement of fundamental rights. The appellant appeared in person (in C.A. No. 1038 of 1965). 706 S.   V. Gupte, Solicitor-General, N. S. Bindra, R. Ganapathy Iyer, R. H. Dhebar and R. Thiagarajan, for respondents  Nos. 1-3. A   K.  Sen,  N.  S.  Bindra,-R.   Ganapathy  Iyer  and   R. Thiagarajan, for respondent No. 4. A.   K.  Sen,  R.  Ganapathy Iyer and  R.  Thiagarajan,  for respondents Nos. 5 and 6. M.   N. Shroff for L.N. Shroff, for respondents Nos. 12, 22, 25, 28, 29, 38, 40, 43, 54, 79, 86, 107 and 117.  Niren De, Addl.  Solicitor-General, R.  Ganapathy Iyer and R.   Thiagarajan, for respondents Nos. 20, 116 and 123. The respondent No. 34 appeared in person. R.   Gopalakrishnan, Bishamberlal Khanna and H. K. Puri, for intervener. H.   R.  Gokhale,  A.  S.  R. Chari,  A.  N.  Sinha,  J.  B. Dadachanji, O.   C.  Mathur and Ravinder Narain, for the petitioner  (in

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W. P. No. 5 of 1966). S.   V. Gupte, Solicitor-General, N. S. Bindra, R. Ganapathy lyer, R. H. Dhebar and R. Thiagarajan, for respondents  Nos. 1-4. S.   V. Gupte, Solicitor-General, R. Ganapathy lyer, and R.   Thiagarajan,  for respondents Nos. 6, 7, 9, 12-17,  19, 22,  24, 26, 30, 31, 35, 37, 41, 42-50, 52-61, 63,  64,  66, 68-70, 7274, 80, 82-85 87, 91, 95 and 96. A.   S. R. Chari, R. Gopalakrishnan, Bishamberlal Khanna and H.   K. Puri, for intervener. The Judgment of the Court was delivered by Ramaswami, J. Civil Appeal No. 1038 of 1965 This appeal is brought, by certificate, from the judgment of the High Court of Punjab dated March 11, 1964 dismissing the Writ petition of the appellant Civil Writ No. 189-D of 1962. In  his  petition under Art. 226 of  the  Constitution,  the appellant, S. G. Jaisinghani, challenged the  constitutional validity of what has been described as the "seniority  rule" in  regard  to Income-tax Service, Class 1, Grade  11  along with the improper implementation of the "quota"  recruitment to that Service as infringing the guarantee of Arts. 14  and 16(i) of the Constitution.  The original respondents to  the petition were the Union of India, Secre- 707 tary  to the Government of India in the Ministry of  Finance and  the  Central  Board  of  Revenue-respondents  1  to  3. Subsequently, respondents 4 to 126 were added and those  are promotees in the Income-Tax Service who will be affected  by the result of the petition. In  order  to  improve the  Income  Tax  administration  the Government  of India, on September 29,  1944,  reconstituted and  classified the existing Income-Tax Services as Class  I and   11.    The  re-organisational  scheme   provided   for recruitment of Income-Tax Officers, Class I Grade 11 Service partly  by promotion and partly by direct recruitment.   The re-organisational scheme was set out in Government of India, Finance Department (Central Revenues) letter dated September 29,  1944  (Ex.  B).  It created two classes  of  Income-Tax Service,  Class  I with Grade I and Grade 11  and  Class  11 Service  with  Grade 111.  Recruitment to Class I  Grade  11 Service was to be made : (a) by direct recruitment through a competitive examination, and (b) by promotion from Class  It Grade  III,  the ratio prescribed in paragraph 2(d)  of  the letter being 80% by direct recruitment and 20% by  promotion from  Class  11 Grade III Service, and  in  case  sufficient number   of  suitable  candidates  was  not  available   for promotion,  surplus  vacancies  would be  filled  by  direct recruitment.   In Government of India, Ministry  of  Finance (Revenue Division) letter dated January 24, 1950 (Ex.  G  to the  writ petition), the rules of seniority were laid  down. These  rules  laid down-the principle for  determination  of seniority  (a) as between direct recruits recruited  on  the result  of  the  combined competitive  examination;  (b)  as between promotees selected from Class 11 and (c) as  between the direct recruits who complete their probation in a  given year  and the promotees in the same year for appointment  to Class  1. These rules were revised on September 5,  1952  by the  Government  of  India,  Ministry  of  Finance,  Revenue Division,   letter  No.  F.  No.  58(3)-Ad.   IT150,   dated September  5, 1952.  The relevant rule, viz., rule I (f)  as framed in 1950 was as follows               "The seniority of direct recuits recruited  on               the  results of the examinations held  by  the               Federal  Public ’Service Commission  in  1944,               and  subsequent  years shall  be  reckoned  as

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             follows :-               (i)   Direct    recruits   of    an    earlier               examination  shall rank above those  recruited               from subsequent examination.               (ii)  Direct  recruits of any one  examination               shall  rank inter se-, in accordance with  the               ranks obtained by them at that examination.               (iii) The promotees who have been certified by               the  Commission in any calendar year shall  be               senior to all               M2Sup.  CI/67-16               708               direct  recruits who complete their  probation               during  that year or after and  are  confirmed               with effect from a date in that year or after. Provided  that  a  person initially recruited  as  Class  11 Income-tax Officer, but subsequently appointed to Class I on the  results of a competitive examination conducted  by  the Federal Public Service Commission shall if he has passed the departmental  examination  held before  his  appointment  to Class I Service, be deemed to be promotee for the purpose of seniority." The rule, as revised in, 1952 was to the following effect. "The  seniority of direct recruits recruited on the  results of  the  examinations  held by the  Federal  Public  Service Commission  in 1944, and subsequent years shall be  reckoned as follows               (i)   Direct    recruits   of    an    earlier               examination  shall rank above those  recruited               from a subsequent examination.               (ii)  Direct  recruits of any one  examination               shall  rank  inter se in accordance  with  the               ranks obtained by them at that examination;               (iii) Officers promoted in accordance with the               recommendation of the,’ Departmental Promotion               Committee  before  the  next  meeting  of  the               Departmental  Promotion  Committee  shall   be               senior to all direct recruits appointed on the               results of the examinations held by the  Union               Public Service Commission during the  calendar               year  in  which  the  Departmental   Promotion               Committee met and the three previous years.               (iii) Notwithstanding  anything  contained  in               clause  (iii).a  Class 11  Income-tax  Officer               subsequently  appointed  to  Class  I  on  the               results of a Competitive Examination conducted               by  the  Federal  Public  Service   Commission               shall,  if  he  has  passed  the  Departmental               Examination  held  before his  appointment  to               Class I Service be deemed to be a promotee for               the purpose of seniority." Clause (iv) of the 1952 Rule is almost a reproduction of the proviso  to  clause  (iii) of the rule framed  in  1950  and clause (iii) has been recast in somewhat different language, though in substance it contains what the main body of clause (iii)  of  the Rule of 1950 stated.  The  effect  of  clause (iii)  of 1952 Rule is that the promotee becomes  senior  to the direct recruit who has completed 709 a probationary period of two years in the very year in which the Departmental Promotion Committee meets recommending  the officers in Class 11 for promotion to Class 1. The following illustrations clarify the application of the rule                       Illustration ’A’ --------------------------------------------------------

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Year of        Year     Year   Depart-  Position   Promo- Competitive     of       of     mental    of       tees      Exam.     appoint-  comple-promo-   direct   seniority                 ment     tion    tion    recruit                  by       of     Com-                  direct    2      mittee                 recruit   years’   met                 ment       proba-                tion ----------------------------------------------------------- 1         2         3         4              5          6 ------------------------------------------------------------ 1947 the three   1948      1950    Has completed    Senior      previous  probation.      years. 1948              1949        1951 Has not completed Do.                                     probation. 1949               1950        1952     Has not completed                                     probation. 1950               1951      1953    1950    Do.  Do. ----------------------------------------------------------      Ilustration    ’B’ ------------------------------------------------------------ 1950 the three      1951    1953     Has com-     Senior      previous                         pleted pro-      years.bation. 1951                   1952   1954     Has      not    Do.                                         completed                                         probation. 1952                    1953       1955    Do.Do. 1953         1954      1956       in 1953  Do.     Do. A Class 11 Officer when directly recruited had to be on pro- bation for two years during which period he had to undergo a course of theoretical and practical training and should pass a  departmental  examination for being confirmed.   After  a minimum 710 period  of thee years of work as Income-tax  Officer  (after his  probation  of  two  yea rs) he  is  considered  by  the Departmental  Promotion Committee for promotion to Class  1. That  is to say that he has to have a minimum service  of  5 years  in all in Class II before he is qualified  for  being considered  for  promotion  to Class I,  Grade  11  Service. Clause  (iv) of rule 1(f) deals with a special situation  in which an officer initially appointed to Class 11 Service  is given  seniority  in  the  same  manner  as  a  departmental promotee  if  subsequent  to his  passing  the  departmental examination  in Class 11 he is appointed to Class I  on  the results of the combined competitive examination held by  the Union Public Service Commission. On  October 18, 1951 the recruitment quotas of 80’/ and  20% under  the re-organisation scheme dated September  29,  1944 were revised.  Under the revised recruitment quota rule  66- 2/3% of the vacancies in Grade 11 Class I would be filled by direct  recruitment and the remaining 33-1/3%  by  promotion from  Grade  III Class 11 Service.   Any  surplus  vacancies which could not be filled by promotion for want of  suitable candidates were to be added to the quota of vacancies to  be filled by direct recruitment. Rule 4 of the Rules of Promotions at page 251 of the Central Board  of Revenue Office Procedure Manual has also been  the subject-matter of controversy in this appeal and is set  out below.               "Income-tax   Officer,  Class  I  (Grade   1)-               Promotions  to  this grade are made  from  the

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             grade  of Income-tax Officers Class  1,  Grade               II.   The promotions are made on the basis  of               seniority  subject  to  fitness,  and  not  by               selection.  Normally promotions from Class  II               are  made to Grade 11 of Class I only  in  the               first  instance.   However,  in  the   initial               stages  of the re-organisation of the  Income-               tax  Services,  several senior  officers  were               promoted  direct  from Class 11  to  Class  1,               Grade   1,  but  such  promotions   will   not               ordinarily take place in future.                NOTE.-The Union Public Service Commission has               ruled  that the promotion to Class 1, Grade  I               of  officiating I.T.O s., class 1,  Grade  11-               whose   retention  in  that  grade  has   been               approved   by   the   Departmental   Promotion               Committee  would  also  be in  the  nature  of               promotion from I.T.O., Class 11, Grade III  to               I.T.O.,   Class   1,  Grade  I   and   require               consultation with the Commission, even  though               the  promotion from I.T.O., Class 1, Grade  11               to  Class 1, Grade I is made on the  basis  of               seniority cum-fitness without reference to the               Departmental       Promotion        Committee.               Appointments  to  Class  I,  Grade  I  should,               therefore,  be referred to the Commission  for               approval so long as the officers have not been               confirmed in the Class 1, Grade II post.               711               Basis  of promotion  is  seniority-cum-fitness               and  prescribed minimum service is five  years               gazetted  service including one year in  Class               1, Grade II." The  Full Bench of the Punjab High Court rejected  the  writ petition  of the appellant holding that the  principles  for determining seniority between direct recruits and  promotees laid  down  in  rule  1(f)(iii)  and  (iv),  1952  were  not discriminatory and there was no infringement of Arts. 14 and 16(1) of the Constitution.  It was also decided by the  Full Bench  that  the quota rule announced by the  Government  of India  was  merely a policy statement and had  no  statutory force and departure from the quota did not give rise to any, justiciable  issue.   It  was  further  observed  that   the ,promotion  rule from Class I, Grade II to Class 1, Grade  I was not discriminatory and ultra vires of Arts. 14 and 16 of the Constitution. The  first  question  to be considered  in  this  appeal  is whether  rule 1(f)(iii) of the seniority rules as framed  in 1952  violates  the guarantee under Arts. 14 and 16  of  the Constitution.   It was contended on behalf of the  appellant that   the   impugned  rule  was   upon   an   unjustifiable classification  between direct recruits and promotees  after they had entered into.  Class 1, Grade 11 Service and on the basis  of that classification promotees are given  seniority with  weightage  over direct recruits of the same  year  and three  previous  years.  It was contended that there  was  a discrimination between officers of Class 1, Grade 11 Service after  their recruitment and the actual working of the  rule kept  on  pushing down the direct  recruits  and  postponing their  chances  of  promotion to higher  posts  in  Class  I Service.   It was submitted that all officers  appointed  to Class  1,  Grade II Service formed one class and  after  the officers  have  been  once  recruited  there  could  be   no distinction between direct recruits and promotees.  In other words,  it  was  contended that  the  promotees  and  direct

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recruits   became  one  class  immediately  on   entry   and thereafter there cannot be any class within that class.  ,We are  unable  to accept the contention of  the  appellant  as correct.   In our opinion, it is not right to approach  this problem as if it is a case of classification of one  service into  two classes for the purpose of promotion, and  as  the promotion  rule operation to the disadvantage of one of  the two  classes.   It is really a case of  recruitment  to  the Service  from two different sources and then  adjustment  of seniority between the recruits coming from the two  sources. So  far as Art. 16(1) is concerned, it cannot be  said  that the  rule  of seniority proceeds on an  unreasonable  basis. The  reason  for  the classification  is  the  objective  of filling  the  higher echelons of the Income Tax  Service  by experienced  officers possessing not only a high  degree  of ability  but also first-rate experience.  Having  regard  to the particular circumstances of this case, we 712 are  of opinion that the seniority rule is not  unreasonable when  read with the quota rule which provides for a  special reservation of a small percentage of posts for the promotees who  are selected by a special Committee,  which  determines the fitness of the candidates for promotion after they  have put  in  at  least  three years  of  service  as  Income-tax Officers.   A  rule  which gives  seniority  to  outstanding officers with considerable experience, and selected on merit and limiting the promotion to a percentage not exceeding the prescribed limit cannot per se be regarded as  unreasonable. As we have already pointed out, the direct recruits  joining Class  1, Grade II Service have to undergo a period  of  two years  training  and thereafter they  become  qualified  for confirmation.  A promotee having already undergone the  very same  training during the period of probation of  Class  II, Grade  III, joins Class 1, Grade II with three years  period of  assessment  and  working experience  of  the  Income-tax Department.  It is necessary to add that the selection of  a promotee to Class I is based on merit and great weightage is given by the Departmental Promotion Committee to outstanding qualifications,  record of work and the ability of the  can- didate,  so  that those who come to Class 1,  Grade  11  are officers who have shown outstanding capability as Income-tax Officers  in Class 11 Service.  The statement in Annexure  2 of  the  affidavit on behalf of respondents 1 to 4  in  Writ Petition No. 5 of 1966 shows that the standards of selection are  very  stiff  inasmuch as a  very  small  proportion  of officers considered for selection is actually promoted.  The net  effect of rule 1(f)(iii) therefore is that three  years of  outstanding  work  in Class 11 is  equated  to  two   of ’probation  in Class I Service and on consideration of  this aspect of the matter the promotee is given seniority over  a direct  recruit  completing the period of probation  in  the same year. The relevant law on the subject is well-settled.  Under Art. 16   of  the  Constitution,  there  shall  be  equality   of opportunity   for  all  citizens  in  matters  relating   to employment  or appointment to any office under the State  or to promotion from one office to a higher office  thereunder. Article  16 of the Constitution is only an incident  of  the application of the concept of equality enshrined in Art.  14 thereof.  It gives effect to the doctrine of equality in the matter of appointment and promotion.  It follows that  there can be a reasonable classification of the employees for  the purpose  of  appointment  or  promotion.   The  concept   of equality  in the matter of promotion can be predicated  only when  the promotees are drawn from the same source.  If  the

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preferential  treatment  of one source in  relation  to  the other  is  based  on the differences  between-the  said  two sources, and the said differences have a reasonable relation to the nature of the office or offices to which  recruitment is made, the said recruitment can legitimately be  sustained on the basis of a valid classification.  Dealing with the 713 extent of protection of Art. 16(1) of the Constitution, this Court  observed in The General Manager, Southern Railway  v. Rangachari(1)               "It  would be clear that matters  relating  to               employment  cannot  be confined  only  to  the               initial   matters   prior  to   the   act   of               employment.   The  narrow  construction  would               confine the application of Art. 16 (1) to  the               initial employment and nothing else; but  that               clearly is only one of the matters relating to               employment.   The  other matters  relating  to               employment  would inevitably be the  provision               as  to  the salary and  periodical  increments               therein, terms as to leave, as to gratuity, as               to   pension   and   as   to   the   age    of               superannuation.-   These   are   all   matters               relating to employment and they are, and  must               deemed  to-  ’be included in  the-  expression               matters relating to employment’ in Art. 16(1).               What  Art.  16(1) guaranttees is  equality  of               opportunity to all citizens in respect of  all               the matters relating to employment illustrated               by  us  as well as to an  appointment  to  any               office   as  explained  by  us.    The   three               provisions Art. 16(1), Art. 14 and Art.  15(1)               form  part of the same constitutional code  of               guarantees and supplement each other.  If that               be so, there would be no difficulty in holding               that  the matters relating to employment  must               include all matters in- relation to employment               both prior, and. subsequent, to the employment               which  are  incidental to the  employment  and               form part of the terms and conditions of  such               employment."               This Court further observed in that case               "Art.  16(2).  prohibits,  discrimination  and               thus assures the effective enforcement of  the               fundamental right, of equality of  opportunity               guaranteed  by  Art.  16(1).   The  words,  in               respect of only employment used in Art.  16(2)               must, therefore, include all matters  relating               to  employment as specified in.   Art.  16(1).               Therefore, we are satisfied that promotion  to               selection  posts is. included both under  Art.               16(1) and (2)." We  next proceed to consider the argument of  the  appellant that the rule of promotion from I Income-tax Officers  Class 1,  Grade  II  to  Class 1, Grade  I  is  discriminatory  in character.   It was contended, that while a  direct  recruit has  to put in 5 years as Income Tax Officer Class 1,  Grade II,  a promotee officer gets into Grade 1 with a minimum  of one  year’s  service in Class I, Grade 11,  the  other  four years being counted in Class II, Grade III.  It was I [1962] 2 S.C.R. 586, 596-598. 714 therefore  submitted  that  the rule  operated  against  the direct recruit in a discriminatory manner.  In our  opinion, there  is no substance in the contention of  the  appellant.

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Once  it is held that the rule of seniority enacted in  rule 1(f)(iii) is legally valid, the rule of promotion i.e., rule 4  of  Ch.   IX  of the  Central  Board  of  Revenue  Office Procedure   Manual   cannot   be  held  to   lead   to   any discrimination  as  between direct recruits  and  promotees. Rule 4 states that the prescribed minimum service for  Class 1, Grade 11 Officer in the matter of promotion to Grade I of that  Service is five years gazetted service  including  one year  in  Class 1, Grade 11. For a  promotee  therefore  the minimum period of service for promotion to Class I, Grade  I is  actually 4 years service in Class 11, Grade III and  one year  service in Class 1, Grade 11.  The object of the  rule is really to carry out the policy of rule 1(f) (iii) of  the Rules  of Seniority and not allow it to be defeated  by  the requirement  of  five  years service in Class  1,  Grade  11 itself before-consideration for promotion to Class I,  Grade 1.  The  promotee is placed senior to a direct  recruit  who completes  probation  in the year in which the  promotee  is selected  by  the Departmental Promotion Committee.   If  it should  be  laid down that the past  service  as  Income-tax Officer  in  Class  11  is not  to  be  counted,  then  rule 1(f)(iii)  would  be nullified, because  directly  recruited officers junior to the promotees would go to Grade I earlier than  the  promotee  officers.   For  example,  a   promotee certified  fit  by the Departmental Promotion  Committee  in 1952  will  be senior to the direct  recruits  who  complete their probation in that year.  And if it is to be laid  down that  the  promotee officer shall not count  his  period  of service in Class 11 for the purpose of promotion to Grade 1, Class  I  he will have to wait till 1957 or 1958  to  go  to Grade 1, Class 1, while direct recruits who completed  their probation in 1952 or 1953 would have gone to Grade 1,  Class I  in 1955 or 1956, counting the five years period from  the date on which they were placed on probation.  To remove this anomaly the promotion rule has been framed and we are unable to  accept the argument of the appellant that there  is  any discrimination  in  the working of this rule.  The  rule  of promotion is inextricably linked with the rule of  weightage and seniority in Grade 11.  If in the rule of promotion  the service  in  Grade  III is not to  be  taken  into  account, seniority in Grade 11 would be an empty formality. In regard to rule 1(f)(iv) of the Seniority Rules, there are only three respondents i.e., respondents 4, 5 and 6 who have been promoted as "deemed promotees" under this clause of the rule.  Each one of them was appointed in Class 11, Grade III Service  in  1947  and was appointed in Class  1,  Grade  II Service  in 1951 after having successfully competed  in  the competitive  examination of the year 1950, the same year  in which  the  appellant was successful.   The  appellant  also joined Class 1, Grade 11 Service in 1951.  The 715 three respondents have been shown as senior to the appellant in  the seniority list.  The objection of the  appellant  is that   while   they  qualified  in  the   same   competitive examination,  they had become senior to him because  of  the operation- of the artificial rule by which they are  treated as  "deemed promotees"; otherwise they would  have  remained junior to him.  On behalf of these respondents it was argued by  Mr.  Bindra that they had been appointed  to  Class  11, Grade  III Service in 1947 and completed 5 years service  in that  class  by  the  year  1952  and  if  the  Departmental Promotion  Committee met in 1953, as it actually  did  meet, and if it recommended their promotion to Class I, Grade  11, each  one of them would have become senior to the  appellant by the operation of cl. (iii) to rule 1(f).  There was  also

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the  further  consideration that if rule  1(f)(iv)  did  not exist  there was no incentive to a promotee of this type  to sit  for  the competitive examination.  It  should  also  be taken  into account that if the service of the promotees  in Class 11, Grade III is entirely ignored and if they join the Class 1, Grade 11 Service as direct recruits they might well find  themselves  becoming  junior to those  who  were  left behind in Class II, Grade Ill Service by the operation    of rule 1(f)(iii).  We are accordingly of the opinion that rule 1(f)(iv)  is based on a reasonable classification  and  does not offend the guarantee under Art. 14 or Art. 16(1) of  the Constitution. We proceed to consider the next question arising for  consi- deration  in  this  appeal, viz.,.  the  allegation  of  the appellant that there was excessive recruitment of  promotees in  violation of the quota rule.  Rule 3 of  the  Income-tax Officers (Class 1, Grade 11) Service Recruitment Rules is to the following effect               "The   Service  shall  be  recruited  by   the               following methods               (i)   By competitive examination held in India               in accordance with Part 11 of these Rules.               (ii)  By  promotion on the basis of  selection               from Grade HI (Class 11 Service) in accordance               with Part III of these Rules."               Rule 4 reads               "Subject   to  the  provisions  of   Rule   3,               Government  shall  determine  the  method   or               methods  to  be employed for  the  purpose  of               filling  any  particular  vacancies,  or  such               vacancies  as may require to be filled  during               any  particular  period,  and  the  number  of               candidates to be recruited by each method."               716               Rule 5 states               "Vacancies  in  the Service which  are  filled               otherwise   than   by   promotion   shall   be               apportioned  between. the various  communities               in India in accordance with the provisions  of               the  Government  of  India  (Home  Department)               Resolution  No. F. 14/17-B/33-Ests. dated  the               4th    July,    1934    (regarding    communal               representation in the services)     and    No.               23/5/42-Ests. (S) dated. the 11th August, 1943  (reg arding               representation of Scheduled Castes in the   Services )               and the supplementary instructions connected     the rewith." In the letter of the     Government of India dated September 29, 1944 (Ex. B to the writpetition of the appellant)  it is stated that  the  recruitment to Grade 11 of Class I will  be  made partly  by  promotion and partly by direct  recruitment  and that  "80%  of the vacancies arising in the  Grade  will  be filled  by direct recruitment through the Indian  Audit  and Allied Services Examination and the remaining 20%  vacancies will  be  filled  on the basis  of  promotion  by  selection provided   suitable  number  of  men  ’are   available   for promotion".  It was also stated in the letter that if  there are any vacancies which could not be filled by promotion for want  of  suitable candidates, these will be  added  to  the quota of vacancies to be filled by direct recruitment.   The quota was altered by the Government of India subsequently in their  letter  dated October 18, 1951 (Ex.  E  to  the  writ

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petition).   In this letter the Government of India  ,  said that.  they  had  decided in consultation.  with  the  Union Public  Service Commission that for a period of five  years, in the first instance, 66-2/3 % vacancies in Class 1,  Grade 11  will be filled by direct recruitment and  the  remaining 33-1/3 % vacancies on the basis of promotion and any surplus vacancies  which  cannot  be filled  for  want  of  suitable candidates  will- be added to the quota of vacancies  to  be filled by direct recruitment. ,.There has been no  argument, in  this  case, with regard- to the operation  of  the  rule between the years 1945 and 1950, though in the petition  the appellant  has alleged that in those years also  there  were excessive  recruitments of promotees.  It appears  from  the affidavit  of  respondent No. 1 that  these  were  formative years  of the Income Tax Service and re-organisation of  the Department was being completed and the initial period of re- organisation lasted up till 1950.  The argument was confined to  the  years 1951 to 1956.  According  to  the  appellant, there  was excessive recruitment of 71 promotees  more  than the  figure  permitted by the quota rule.  In  the  judgment under  appeal  the High Court has examined  the  matter  and found  that  the excess number of promotees was 31  for  the four  years 1951 to 1954.  During the hearing of the  appeal we had ordered the Secretary of the Finance Ministry to 717 furnish  the number of vacancies which had arisen from  year to  year  from 1945 onwards, the nature  of  the  vacancies- permanent  or temporary and the chain of vacancies and  such other  details  which are relevant to  the  matters  pending before this Court.  In his affidavit dated January 31,  1967 Mr.  R.  C. Dutt said that he was not able to work  out,  in spite of his best endeavours the number of vacancies arising in  a  particular year.  However, a statement,  Ex.  E,  was furnished  showing the number of officers recruited  by  the two  methods  of recruitment to Class I Service  during  the relevant years -------------------------------------------------------------          UPSC              War      Officers          Exam.              Service selected Year     recruits          candi-         from      datesClass --------------------------------------------------------------      1951                      50      1952                                        49      1953                       52               38      1954                       44               30      1955                       45               24      1956                                        25- ---------------------------------------------------------------- It  "is  not  clear from the affidavit of Mr.  R.,  C.  Dutt whether  the quota rule was strictly followed for the  years in question.  In the counter-affidavits of respondents 1  to 4  in  Writ  Petition  No. 5 of 1966  there  is  however  an assertion  that  the  quota rule  "has  ’been  substantially complied with." The  Solicitor-General on behalf of respondents 1, 2  and  3 submitted  that the quota rule was merely an  administrative direction  to  determine  recruitment  from  two   different sources in the proportion stated in the rule and a breach of that   quota  rule  was  not,  a  justiciable  issue.    The Solicitor-General said that there was, however,  substantial compliance  with  the  quota rule.  But  in  the.absence  of figures of permanent vacancies in Class 1, Grade; II for the relevant  years the Solicitor-General was unable to  say  to What extent there had been deviation from the rule.  We  are

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unable to accept the argument of the Solicitor-General  that the  quota rule was- not legally binding on the  Government. It  is not-disputed that rule 4 of the- Income-tax  Officers (Class 1, Grade II) Service Recruitment Rules is a statutory rule  and there is a statutory duty cast on  the  Government under  this rule to, determine the method or methods  to  be employed  for the purpose of filling the vacancies and.  the number of candidates to be recruited by each method.  In the letter of the Government of India dated October 18, 1951 718 there  is  no specific reference to rule 4,  but  the  quota fixed  in their letter must be deemed to have been fixed  by the  Government of India in exercise of the statutory  power given  under rule 4. Having fixed the quota in  that  letter under rule 4, it is not now open to the Government of  India to say that it is not incumbent upon it to follow the  quota for  each  year and it is open to it to alter the  quota  on account  of  the particular situation (See para  24  of  the counter affidavit of respondents 1 to 3 in Writ Petition No. 5  of 1966).  We are of opinion that having fixed the  quota in  exercise  of their power under rule 4  between  the  two sources of recruitment, there is no discretion left with the Government  of  India to Alter that quota according  to  the exigencies of the situation or to deviate from the quota, in any  particular year, at its own will and pleasure.   As  we have already indicated, the quota rule is linked up with the seniority  rule  and  unless  the  quota  rule  is  strictly observed in practice, it will be difficult to hold that  the seniority   rule  i.e.,  rule  1(f)(iii)  &  (iv),  is   not unreasonable   and   does  not  offend  Art.   16   of   the Constitution.   We  are  accordingly  of  the  opinion  that promotees  from  Class II, Grade III to Class  1,  Grade  II Service  in excess of the prescribed quotas for each of  the years 1951 to 1956 and onwards have been illegally  promoted and  the  appellant is entitled to a writ in the  nature  of mandamus  commanding  respondents  I  to  3  to  adjust  the seniority  of  the appellant and  other  officers  similarly placed  like  him and to prepare a fresh seniority  list  in accordance with law after adjusting the recruitment for  the period’  1951  to 1956 and onwards in  accordance  with  the quota  rule  prescribed in the letter of the  Government  of India  No. F. 24(2)-Admn.  I.T./51 dated October  18,  1951. We, however, wish to make it clear that this order will  not affect  such  Class  11 Officers  who  have  been  appointed permanently  as Assistant Commissioners of Income Tax.   But this order will apply to all other officers including  those who  have been appointed Assistant Commissioners  of  Income Tax provisionally pursuant to the orders of the High Court. In  this  context  it is important  to  emphasize  that  the absence  of  arbitrary power is the first essential  of  the rule  of law upon which our whole constitutional  system  is based.   In  a system governed by rule of  law,  discretion, when  conferred  upon  executive  autho,  rities,  must   be confined  within  clearly defined limits.  The rule  of  law from this point of view means that decisions should be  made by  the  application of known principles and rules  and,  in general,  such  decisions  should  be  predictable  and  the citizen  should  know where he is.  If a decision  is  taken without   any   principle  or  without  any   rule   it   is unpredictable  and  such a decision is the antithesis  of  a decision  taken  in accordance with the rule  of  law.  (See Dicey-"Law  of  the Constitution"-Tenth  Edn.,  Introduction ex).  "Law has reached its finest moments", stated  Douglas, J. 719

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United States v. Wunderlick(1), "when it has freed man from he   unlimited  discretion  of  some   ruler........   Where discretion  ; absolute, man has always suffered".  It is  in this sense that the rule of law may be said to be the  sworn enemy  of caprice.  Discretion, as Lord Mansfield stated  it in classic terms in the case of John Wilkes(2), "means sound discretion guided by law.  It must be governed by rule,  not by humour : it must not be arbitrary, vague and fanciful." We  should also like to suggest to the Government  that  for future years the roster system should be adopted by  framing an  appropriate rule for working out the quota  between  the direct  recruits and the promotees and that a roster  should be maintained indicating the order in which appointments are made by direct recruits and by promotion in accordance  with the  percentages  fixed under the statutory  rule  for  each method of recruitment.  For  these reasons we allow this appeal in part  and  order that a writ in the nature of ’Mandamus should be granted  to the appellant to the extent indicated above.  There will  be no order as to costs in this appeal.                 Writ Petition No. 5 of 1966 The  questions  arising for determination in this  case  are similar  in character to the questions which have  been  the subject-matter of consideration in Civil Appeal No. 1038  of 1965.  For the reasons given in that case, we hold that this petition  should  be  allowed and a writ in  the  nature  of mandamus under Art. 32 of the Constitution should be granted commanding respondents 1 to 3 to adjust the seniority of the petitioner and other officers similarly placed like him  and to  prepare  a fresh seniority list in accordance  with  law after Adjusting the recruitment for the period 1951 to 1956- and onwards in accordance with the quota rule prescribed  in the  letter  No. F. 24(2) Admn.  I.T./51 dated  October  18, 1951 of the Government of India.  There will be no order  as to costs. V.P.S. Petition allowed. Appeal allowed in part. (1)342 U.S. 98. (2)(1770) 4 Burr. 2528 at 2539. 720