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PETITIONER: STATE OF MAHARASHTRA & ANR.

       Vs.

RESPONDENT: CHANDRAKANT ANANT KULKARNI & ORS.

DATE OF JUDGMENT08/09/1981

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) SEN, A.P. (J) ISLAM, BAHARUL (J)

CITATION:  1981 AIR 1990            1982 SCR  (1) 665  1981 SCC  (4) 130        1981 SCALE  (3)1445  CITATOR INFO :  R          1990 SC1072  (6)  RF         1991 SC 363  (14)

ACT:      State Reorganisation Act 1956, S. 115(5) and (7).      Reorganisation of  State of  Bombay-Assistant Sales Tax Officers of  Madhya Pradesh  and  Hyderabad  and  Sales  Tax Inspectors of  Bombay allocated  to new State-Integration of service.      State Government  executive order altering departmental promotion rule-ASTOs  of M.P.  Hyderabad  required  to  pass departmental examination for promotion-Whether alteration of condition of service, permissible, valid.      Seniority  list   of  allocated  ASTOs  and  STIs-State Government unilaterally  altering the  list-ASTOs  of  M.P., Hyderabad Placed in isolated category above STIs for Bombay- Validity of.      Integration  of   services-Equation  of   posts  purely administrative function-  Chances of promotion-Not condition of service-Fair and equitable treatment-What is.

HEADNOTE:      Assistant Sales Tax Officers serving in connection with the affairs  of the  former States  of  Madhya  Pradesh  and Hyderabad, on  the appointed date, were allocated to the new State of  Bombay under  s. 115  of the States Reorganisation Act, 1956  (Act No.  XXXVII) with  effect from  November  1, 1956. The  Assistant Sales  Tax  officers  from  the  former States of  Madhya Pradesh and Hyderabad were superior to the Sales Tax  Inspectors in  their respective  States  and  the posts of  Assistant Sales  Tax officer in those States was a promotion post.  In the former State of Bombay, there was no similarly constituted cadre of Assistant Sales Tax officers, but there were posts of Sales Tax Inspectors.      On  November  16,1957,  the  State  Government  by  its resolution directed  that the  ASTOs from Madhya Pradesh and Hyderabad should  continue in  their  respective  pay-scales until such of them were not appointed as STOs Grade III, and Notes 3  and 6  appended to the Resolution provided that for purposes of  promotion their  inter se seniority be Fixed on the basis of their service as STOs and ASTOs. On February 3,

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1960, the  State Government substantially modified rule 7 of the Allocated  Government Servants  (Absorption,  Seniority, Pay and  Allowances) Rules,  1957  and  a  new  rule  7  was substituted  which   provided  that   the  seniority  of  an allocated  Government  servant  in  the  post  or  cadre  of absorption shall,  as on  November 1,  1956 be determined by the length of continuous service etc. Since 666 there were  no comparable posts of ASTos in the former State of Bombay,  the Central  Government directed  that the ASTos from Madhya Pradesh and Hyderabad should not be equated with the post  of STIs  but should  be continued  in an  isolated category and  their seniority  should  be  fixed  above  the persons in the next lower grade. The State Government by its resolution dated  September 10,  1960 modified Notes 3 and 6 and directed  that the  seniority as  on November 1, 1956 of ASTOs from  Madhya Pradesh  and Hyderabad be fixed above all persons absorbed  as STIs and that the inter se seniority of STOs from Madhya Pradesh and Hyderabad be fixed on the basis of their  continuous service  as ASTOs, and that the service rendered by  the ASTOs from Madhya Pradesh as Excise Inspec- tors or  Assistant District  Excise Officers  in the  Excise Department be  counted  as  equivalent  service.  On  August 17,1962, the  State Government  prepared a fresh provisional gradation list  of ASTOs  and STIs  and invited  objections. None of the respondents raised any objection.      Upto   and   until   August   8,   1960,   departmental examinations  for   promotion  to  the  post  of  STOs  were conducted under the three different sets of rules applicable to  the   former  States   of  Bombay,  Madhya  Pradesh  and Hyderabad. The  Departmental Examination Rules for Sales Tax officers 1954  framed by  the  former  State  Government  of Bombay were  made applicable  to  the  Assistant  Sales  Tax officers allocated  from Madhya  Pradesh and  Hyderabad from August 8,1960,  as the  provisions of  the Bombay  Sales Tax Act, 1959  were extended  to the  whole of the State, the CP and Berar Sales Tax Act 1947 and the Hyderabad General Sales Tax 1950  having been  repealed. The ASTOs from Vidarbha and Marathwada regions  of Madhya  Pradesh  and  Hyderabad  were called upon  to appear  at the  examinations prescribed from the STOs  of the  old Bombay  region, and  some of the ASTOs from Madhya  Pradesh and  Hyderabad who had been promoted as STos Grade  Ill were  reverted to  the post  of ASTOs due to their failure to pass the said examination.      The Government  by its  Resolution dated  June 13, 1964 directed that  the ex  Hyderabad ASTOs  even though they had not passed  the prescribed  depart mental examination should be  confirmed   on  the   basis  of   confidential  records, efficiency  and  seniority:  and  by  its  Memorandum  dated November 21,1964  order ed  that all  the ASTOs and STIs who had been  allocated from  the old  M.P. and Hyderabad States should be  considered eligible for promotion without passing the  STos   examination  if   they  are  otherwise  fit  for promotion.      On representation made by the ASTos from Madhya Pradesh and Hyderabad,  the Government of India, by its letter dated March 9,  1965 to  the State  Government directed  that  the Bombay Departmental  Examination Rules,  1954, could  not be made applicable  to the  allocated ASTOs from Madhya Pradesh and  Hyderabad   as  it   would  amount  to  changing  their conditions of  service to their disadvantage. It accordingly directed  that   all  the  ASTOs  from  Madhya  Pradesh  and Hyderabad  who   were  compelled  to  appear  for  the  said examination  and   who  had  failed  to  pass  the  same  be reinstated as STOs. This directive resulted in Respondents I

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and 2  who had  been promoted to officiate as STO, Grade 111 being reverted as STIs.      The State  Government in  view of  this change reviewed the cases  of all the ASTOs, and STIs from the three regions and those who were otherwise found 667 suitable were  according to  their seniority promoted to the post of  STO, Gr.  III even  though they  had not passed the STOs examination.  On January  6,1966 the  State  Government published a  revised gradation  list of  ASTOs and  STIs and invited objections. Only Respondent 4 filed objections which was considered by the Government and rejected.      The writ  petition filed by Respondents 1 to S who were STIs in  the State  of Bombay  and had passed the prescribed departmental examination  for promotion  as STOs Gr. III was allowed by  the High  Court which  struck down  the  various resolutions and  orders passed  by the State Government from time to  time relating  to integration of service under sub- section (7) of S. 115 of the Act.      In the  appeals by  the State  to  this  Court  on  the questions whether  (I) the  State  Government  could  by  an executive order  without framing a rule under the Proviso to Art. 303  of the  Constitution alter  the rules  relating to departmental promotion  of ASTOs  from  Madhya  Pradesh  and Hyderabad which  constituted their  conditions of service to the prejudice  of the  STIs  of  Bombay  without  the  prior approval of the Central Government under the proviso to sub- section (7)  of section  115 of  the Act,  and (2) the State Government while integrating the services could unilaterally alter the  seniority list  of the  allocated ASTOs and place the ASTOs  from Madhya  Pradesh and Hyderabad in an isolated category over  the STIs  from Bombay while determining their inter se seniority.      Allowing the appeal, ^      HELD :1  (i). The matter of equation of posts is purely an administrative  function under  s. 115  of the States Re- organisation Act,  1956. Under  sub-s. (5)  of  s.  115  the Central Government  is the  sole repository  of the power to effectuate the integration of services in the new States. It has been  left entirely  to the Central Government as to how it has  to deal with these questions. The Central Government established an  Advisory Committee for purposes of assisting in proper  consideration of  the representations  made to it for  the  work  of  integration  of  services,  the  Central Government could  take all  manner of  assistance  from  the State Government  including the  preparation of  provisional gradation lists,  The Central  Government exercises  general control in  regard to  the integration  of services, and the ultimate integration was done with the sanction and approval of the  Central Government.  The provisional gradation lists prepared by  the State  Government were not, therefore, open to challenge. [679 A-E]      Union of  India and  Anr. v. P.K. Roy and Ors. [1968] 2 SCR 186 referred to.      In  the   instant  case,   not  only  had  the  Central Government laid down the principles for integration but also considered the  representation made  and  passed  the  final orders  thereon.   The  provisional   gradation  lists  were prepared by  the State  Government under  the direction  and with the  sanction of  the Central Government. The Assistant Sales Tax  officers from the former States of Madhya Pradesh and Hyderabad  allocated to  the new  State of Bombay, could not be  equated with the Sales Tax Inspectors. In the former State of Bombay, there was no similarly constituted cadre of

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Assistant Sales Tax officers, but there were 668 posts of  Sales Tax  Inspectors.  The  Assistant  Sales  Tax officers from  Madhya Pradesh and Hyderabad were superior to Sales Tax Inspectors in their respective States and the post of  Assistant  Sales  Tax  officer  in  these  State  was  a promotion post. It would have been inequitable and unfair to equate Assistant  Sales Tax officers from Madhya Pradesh and Hyderabad with  Sales  Tax  Inspectors  from  Bombay  having regard  to  the  nature  of  their  posts,  the  powers  and responsibilities, and  the  pay-scales  drawn  by  them.  In addition, Assistant  Sales Tax officers in these States were assessing authorities  and they  enjoyed statutory powers of their own  to assess  tax and  levy penalties,  whereas  the Sales Tax  Inspectors in Bombay had no such powers to assess tax or levy penalty but had merely to scrutinise returns and generally  act  in  a  subordinate  capacity  to  Sales  Tax officers. [679 F-680 C]      (ii)  The principle adopted by the State Government for determining the  relative inter  se seniority  was obviously wrong, being contrary to the principles settled at the Chief Secretaries Conference.  The  Government  of  India,  on  re presentation by  the affected  Assistant Sales  Tax Officers from Madhya  Pradesh and  Hyderabad in consultation with the Central Advisory  Committee,  directed  that  the  inter  se seniority should  be fixed  taking into  account  continuous service in  the equated  grade only  subject to the inter se seniority  of   the  Officers,   coming  from   the  several integrating regions.  Upon that  basis, the State Government by its  Resolution dated September 10, 1960 rightly modified Notes 3  and 6  of its 1957 Resolution and directed that the seniority as  on November  1,  1956  of  ASTOs  from  Madhya Pradesh and  Hyderabad be  fixed above  the persons  in  the cadre of  STIs and that the inter se seniority of ASTOs from Madhya Pradesh  and Hyderabad be fixed on the basis of their continuous service as ASTOS in their respective States. [680 E.G]      2. There  was a  difference  between  the  Departmental Examination Rules  framed by the former State Governments of Bombay,  Madhya   Pradesh  and   Hyderabad  regulating   the appointment  of   STOs.  In  the  former  State  of  Bombay, eligibility for the promotion of STIs to the post of STO Gr. Ill depended upon their passing the departmental examination for the non-gazetted staff of the Sales Tax Department under rule I  (b) (ii)  of the  Recruitment Rules for the STOs Gr. III, i.  e. it was condition precedent. In the former States of Madhya  Pradesh and Hyderabad there was no such condition attached. Under  the Rules for Departmental examination, the ASTOs who  were promoted  as STOs  were required to pass the departmental examination  within two or three years from the date of  their promotion i.e. it was a condition subsequent. The Departmental  Examination Rules  framed  by  the  former State  Governments  of  Madhya  Pradesh  and  Hyderabad  for promotion to  the post of STOs formed part of the conditions of service  of ASTOs  from Madhya  Pradesh and Hyderabad and they could  not be altered to their disadvantage without the prior approval of the Central Government under s. 115 (7) of the Act. Since no examination admittedly had been held there was no question. Of their reversion as ASTOs. [685 B-C; E-G; 683 B-F; 685F]      3(i)   The Resolution  dated  June  13,  1964  and  the Memorandum dated  November 24,1964 do not have the status of a rule  framed under  the Proviso  to  Article  309  of  the Constitution. They merely conveyed the decision of the State Government that  the allocated ASTOs from Madhya Pradesh and

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Hyderabad 669 should be  considered eligible  for promotion to the post of STO, Gr.  III without  passing the  departmental examination for STOs  Gr. III.  The State  Government  had  not  by  its Resolution or  Memorandum brought  about  a  change  in  the conditions of  service by  an executive  order. All that was done was to rectify a mistake that had been committed in the past  in  subjecting  the  ASTOs  from  Madhya  Pradesh  and Hyderabad to  the Departmental  Examination Rules  framed by the former  State Government  of Bombay i.e. to a rule which did not  form part  of  conditions  of  their  service  and, therefore, was  not applicable to them. There is, therefore, no infirmity in these two documents. [681 F-H]      (ii)   Mere chances  of promotion are not conditions of service and the fact that there was reduction in the chances of  promotion   did  not  tantamount  to  a  change  in  the conditions  of   service.  A  right  to  be  considered  for promotion  is  a  term  of  service,  but  mere  chances  of promotions are not. [683 C]      (iii)  The State Government’s Resolution dated June 13, 1964 and its Memorandum of November 21, 1964 clarifying that the ASTOs  from Madhya  Pradesh and  Hyderabad were entitled for promotion to the post of STO Gr. III without passing the departmental  examination.  placed  STI  from  Bombay  at  a disadvantage. To  ensure ’fair  and equitable  treatment the State Government  rightly dispensed  with the requirement of passing the  departmental examination  in the  case of  STIs from the  former State of Bombay. The State Government acted with the  best of  intentions. It  endeavoured to  strike  a balance between  the competing claims to relative seniority. When sub-section  (5) of  section 115  of the  Act speaks of ’fair and  equitable treatment’,  it  envisages  a  decision which is fair and equitable to all. [686 A-D]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 420(N) of 1971      From the  Judgment and order dated 23rd October 1969 of the Bombay  High Court in Special Civil Application No. 1721 of 1966.      R.N. Sachthey and Mr. R.N. Poddar for the Appellant      U. R.  Lalit, V.  N. Ganpule and Mrs. Veena Devi Khanna for Respondents Nos. 1 to 5      S. V. Tambewaker for Respondent No. 7      A.K. Sanghi for the intervener      M. L.  Heble, V.  N. Ganpule and Mrs. Veena Devi Khanna for the intervener. 670      The Judgment of the Court was delivered by      SEN, J.  In this appeal, by special leave, the question for consideration  is whether  there was denial of "fair and equitable treatment"  within the meaning of sub-s. (5) of s. 115 of  the States  Reorganisation  Act.  1956  (hereinafter called ’the Act’) in the matter of determination of relative seniority and  equation of  posts as  between the  Assistant Sales Tax  officers (abbreviated  as ASTOs)  from the former States  of  Madhya  Pradesh  and  Hyderabad  and  Sales  Tax Inspectors (abbreviated  as STIs)  from the  former State of Bombay, who  were allocated  to the new State of Bombay, and their right  to promotion to the posts of Sales Tax officers (abbreviated as STOs) Grade III.      The High  Court by  its judgment,  on a  writ  petition

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filed by  Respondents I  to S, who were STIs of the State of Bombay and  passed the  prescribed departmental  examination for promotion  as STOs  Gr. III, has struck down the various resolutions and  orders passed  by the State Government from time to  time relating  to integration  of services of these officers  under  sub-s.  (7)  of  s.  115  of  the  Act,  in compliance with  the directives  of the  Central  Government issued under  sub-s. (5)  of s.  115 of  the Act.  The  main question in  the appeal  is whether the High Court was right in doing  so. To  appreciate  the  points  involved,  it  is necessary to  set out a few facts. On November 16, 1957, the State Government  by its Resolution purported to direct that the ASTOs  from Madhya Pradesh and Hyderabad should continue in their  respective pay-scales  until such of them were not appointed as  STOs Gr.  III under  r.  7  of  the  Allocated Government  Servants   (Absorption,   seniority,   Pay   and Allowances) Rules,  1957. Notes 3 and 6 appended to the said Resolution provided  that for  purposes of  promotion, their inter se  seniority shall  be fixed  on the  basis of  their service as STIs being counted together with their service as ASTOs in  Madhya Pradesh and service as Accountants, if any, together with  their  service  as  ASTOs  in  Hyderabad.  In accordance therewith,  a provisional gradation list of those who were  absorbed as STIs as on November 1, 1956 as also of those who  continued as ASTOs in their respective posts with effect from  that date  was prepared  and published  by  the State Government  under r.  2 of  the said Rules, on January 21, 1960  and objections  thereto were  invited  within  two months from  the date  of its  publication. On  February  3, 1960, the State Government substantially modified r. 7 and a new r.  7 was  substituted which provided that generally the seniority of  an allocated Government servant in the post or cadre of absorption shall, as 671 on  November  1,  1956,  be  determined  by  the  length  of continuous service  etc. On  instructions from  the  Central Government and  in further  consultation with  it. the State Government clarified  that the provisional gradation list as published would  not be  finalised until representations, if any,  of   the  Government  servants  were  decided  by  the Government  of  India  in  consultation  with  the  Advisory Committee. Since  there were no comparable posts of ASTOs in the former  State of Bombay, the Central Government directed that the  ASTOs from Madhya Pradesh and Hyderabad should not be equated with the post of STIs, but should be continued in an isolated  category and  their seniority  should be  fixed above the persons in the next lower grade.      In  accordance   with  the  directive  of  the  Central Government under  sub-s. (S) of s. 115 of the Act, the State Government by  its  resolution  dated  September  10,  1960, modified Notes  3 and  6 referred to above and directed that the seniority  as on  November 1,  1956 of ASTOs from Madhya Pradesh and Hyderabad be fixed above all persons absorbed as STIs and  that the  inter se  seniority of  STOs from Madhya Pradesh and  Hyderabad  be  fixed  on  the  basis  of  their continuous service  as ASTOs.  It was  further directed that the service  rendered by  the ASTOs  from Madhya  Pradesh as Excise Inspectors  or Assistant  District Excise officers in the Excise Department of that State be counted as equivalent to service as STOs. On August 17, 1962, the State Government accordingly prepared  a fresh  provisional gradation list of ASTOs and  STIs and  invited objections  thereto afresh.  It appears that none of the respondents raised any objection.      To resume  the narration.  Between November 1, 1956 and August 8,  1960, promotions to the post of STO, Gr. III were

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made on the basis of separate departmental examinations held in accordance  with the  rules framed  by the  former  State Governments  concerned.  Upto  and  until  August  8,  1960, departmental examinations  for promotion to the post of STOs were conducted  under the  three  different  sets  of  rules applicable to  the former  States of  Bombay, Madhya Pradesh and Hyderabad.  From August 8, 1960, the Bombay Departmental Examination Rules for STOs were made applicable to the ASTOs allocated from  Madhya Pradesh  and Hyderabad  as well in as much as  the Bombay  Sales Tax Act, 1959 was made applicable to the  whole of  the State and the C.P. and Berar Sales Tax Act, 1947 and the Hyderabad General Sales Tax 672 Act, 1950,  were  repealed.  The  ASTOs  from  Vidarbha  and Marathwada regions  of Madhya  Pradesh  and  Hyderabad  were called upon  to appear at the examination prescribed for the STOs of  the old  Bombay region.  Accordingly, promotions to the post  of STO  Gr. III  were regulated  under the  Bombay Departmental Examination  Rules and  in consequence  some of the ASTOs  from Madhya  Pradesh and  Hyderabad who  had been promoted as  STOs Gr.  III were reverted to the post of ASTO due to  their failure  to pass  the said examination. In the meanwhile,  the  State  Government,  on  January  20,  1961, amended r.  I(b) (ii) of the Recruitment Rules for the Sales Tax Officers  Grade III  by the  addition of  the words "and also the  Departmental Examination  for Sales  Tax Officers" after the words "time for promotion" which had the effect of making the  passing  of  such  an  examination  a  condition precedent to promotion as STOs Gr. III.      On representations  made by the ex-Hyderabad ASTOs, the Government by its Resolution dated June ]3, 1964, directed:           Rules 2(d)  of the  Departmental Examination Rules      of Sales  Tax officers and Assistant Sales Tax officers      issued  by   the  Finance   Department  of  the  former      Hyderabad Govt.  under their Notification number 1118/3      S. T.  dated the  24th January,  1956  lays  down  that      Inspecting officers,  Sales Tax  Officers (Class  I and      II) and  Assistant  Sales  Tax  Officers  who  are  not      confirmed in  their respective  posts, should  pass the      examination within  the period  specified in clause (c)      of Rule 2 of the said Rules failing which they would be      reverted to  their substantive post. In accordance with      this Rule  Government  have  reverted  some  Sales  Tax      officers from the former Hyderabad State for not having      passed  the   Departmental   Examination   within   the      prescribed time.  The Government  of Andhra Pradesh has      brought  to   the  notice   of  this   Government   the      instructions   contained   in   Ex-Hyderabad,   Finance      Department, Letter  No.  7851/  Admn.  dated  the  31st      October 1956  according to which officers and the staff      of the  Sales Tax  Department of  the former  Hyderabad      State, even  though they have not passed the prescribed      Departmental Examination  ate to be con firmed, if they      are otherwise  found deserving  of confirmation  on the      basis of  their confidential  records,  efficiency  and      seniority. The  said letter  dated 31st October 1955 of      the Hyderabad  Finance Department,  also laid down that      such 673      confirmed personnel  should not be promoted to higher A      posts until  such times as they complete the prescribed      Departmental Examination.           2. The  validity of the instructions issued in Ex-      Hyderabad  Finance  Department  letter  No.  7851/Admn.      dated  the   31st   October,   1956   was   under   the

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    consideration of  Government for  some time  and it has      now been  decided to observe the instructions contained      in the  Finance Department  letter of  the Ex-Hyderabad      Slate, and  is, therefore,  pleased to  order that  the      officers and  staff of  the Sales Tax Department of the      former  Hyderabad   State,  who  were  otherwise  found      deserving of  confirmation on the basis of their confi-      dential  records,   efficiency  and  seniority  may  be      confirmed in  their respective  posts held prior to 1st      November  1956  against  clear  vacancies  in  terms-of      General  Administration   Department  Circular  No.  97      G.A.D. 12-SR-55 dated 10th September 1956 issued by the      Ex-Hyderabad  Government..   Such  confirmed  personnel      should, however,  not be promoted to higher posts until      such times as they complete the prescribed Departmental      Examination.           (emphasis supplied) Similarly, on  representations made by the ex-Madhya Pradesh ASTOs, the State Government by its Memorandum dated November 21 ,1964, ordered:           Recruitment  Rules  for  the  Sales  Tax  officers      prescribed  for  the  old  Bombay  State  appearing  in      Government Resolution  Finance Department  No. STO-1654      dated 28th  July 1954  as  amended  by  the  Government      Resolution, Finance  Department  No.  STE-1159/Ol81/61-      XIII dated the 29th January 1961 lays down that a Sales      Tax Inspector  is not  eligible for  promotion of Sales      Tax Officers without passing the examination prescribed      for  the   Sales  Tax   officers.  According  to  Govt.      Circular, Political  and Services  Department No.  STI-      1080-D dated the 29th April 1960 pending unification of      the Recruitment  Rules sanctioned  by the Government of      the  former   State  of   Bombay,  M.P.  and  Hyderabad      Recruitment to  the post  and services  in the  various      component  parts  of  the  State  is  to  be  regulated      according to the rules framed by the former Govern- 674      ments concerned  and not  according to the Bombay Civil      Service Rules.  In view  of this, the recruitment rules      of old  M.P.  and  the  Ex.  Hyderabad  State  will  be      applicable to  the allocated Government servants coming      from those  areas until  such time  as a unified set of      recruitment rules is prescribed by Government. As there      is no  condition in  the recruitment  rules of the M.P.      State or  the Ex.  Hyderabad State  to the  effect that      persons should  pass the Sales Tax Officers Examination      before he  is promoted  as a Sales Tax Officer it would      not be  correct to ask the Assistant Sales Tax Officers      and Sales  Tax Inspectors  allocated from  the old M.P.      State  and  Hyderabad  State  to  pass  the  Sales  Tax      Officers  examination   before  being   considered  for      promotion. Government  has, therefore  decided that all      Assistant S.T.Os  and S.T.ls  who have  been  allocated      from the  old  M.P.  and  Hyderabad  States  should  he      considered eligible  for promotion  without passing the      STOs examination  if they  are otherwise  fit  for  the      promotion.  Such   persons  will   have  to  pass  STOs      examination within  such period  as laid  down in their      respective   departmental    examination    rules    or      recruitment rules as the ease may be.           (emphasis added) On the representations made by the ASTOs from Madhya Pradesh and Hyderabad,  the Government  of India,  on March 9, 1965, addressed a letter to the State Government to the effect:           The specific  approval of  the Government of India

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    under the  proviso to section 115(7) of the S.R. Act is      necessary not  only for  applying the  amended rules to      the erstwhile  employees of Vidarbha and Marathwada but      also for  amending the rules to the disadvantage of the      erstwhile Bombay  employees. The  1954 rules  of Bombay      only provided  that preference  should be  given to  an      Inspector who  had passed  the Departmental Examination      of Sales Tax officers before he could be considered for      promotion to  the post  of Sales  Tax officer.  But the      amended rules now provide that passing this examination      is a  prerequisite for  consideration for  promotion to      the post of Sales Tax officer.           The Government of India have normally been accord-      ing approval  under the  S. R. Act for prescribing such      departmental   tests    subject   to    the   following      conditions:- 675      1.   Additional time  which may  be double  that of the           time that  is ordinarily  permissible for  passing           such tests  be allowed  to the  employees from the           integrating units  in cases  where tests of higher           standard are  prescribed, or  where tests were not           prescribed under the parent State Governments.      2.    Employees  of  the  integrating  unit  should  be           promoted subject  to their passing the test within           the additional  time referred to at item (i) above           in other  words promotions  should not be withheld           merely because  the employees  have not  passed  a           Departmental test, and      3.   Government Servants of the age of 45 years or more           should be  exempted from passing departmental test           and when exempted, they should be eligible for pro           motion equally with one who has passed the tests.           I am  to request  that the  State  Government  may      examine the  matter on  the above  lines and forward to      the Government of India for approval their reconsidered      proposals together with a draft of the amendment to the      rules which  the State Government may desire to make. I      am also  to request  that relevant extract of the rules      of  the   erstwhile  Government  of  Hyderabad,  Madhya      Pradesh and  Bombay which  are to  be affected  by  the      proposed  amendment  may  also  be  forwarded  to  this      Ministry.           (emphasis added) As the Central Government was of the opinion that the Bombay Departmental Examination Rules should not be made applicable to the  allocated ASTOs from Madhya Pradesh and Hyderabad to their disadvantage,  all the  ASTOs from  Madhya Pradesh and Hyderabad who  were compelled earlier to appear for the said examination and who had failed to pass it were reinstated as STOs. As a direct consequence of this, the Respondents l and 2 who  had been  promoted to  officiate as STO, Gr. III were reverted as STls by orders dated April 28, 1965 and June 30, 1965. Since the amendment made to rule I (b) (ii) on January 20, 1961  operated to  the disadvantage of STIs from Bombay, the State  Government by  its orders  dated October 1, 1965, suspended the said amendment to the Recruitment 676 Rules until  further orders.  In view  of these changes, the State Government  reviewed the  cases of  all the  ASTOs and STIs from  the three  regions, and  those who were otherwise found suitable were according to their seniority promoted to the post  of STO Gr. III even though they had not passed the STO examination.  On January  6, 1966,  the State Government published a  revised gradation  list of  ASTOs and  STIs and

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invited objections  thereto. None  of the respondents except Respondent 4  filed any  objection. That  representation, on being forwarded by the State Government, was duly considered by the Government of India, who rejected the same.      The decision of the Government of India is contained in the counter-affidavit  of  Shri  Shukla,  Deputy  Secretary, Ministry of Home Affairs, which reads:           I say  that  the  Government  of  India  carefully      considered the  representation made  inter alia  by the      4th petitioner  and the  recommendations of  the  State      Advisory    Committee    and    rejected    the    said      representations and  upheld  the  said  gradation  list      dated the 6th Jan. 1966 as there was no reason to alter      the principles  on which the same had been prepared. As      stated hereinabove  the Government  of India was of the      opinion that  the decision  of the  State Government to      treat Assistant  Sales  Tax  Officers  as  an  isolated      category and  to place The same above Sales Tax Inspec-      tors was  just and  fair. The  Government of India also      considered the alterations made by the State Government      in the  rules relating to the passing of a Departmental      Examination before  a  Sales  Tax  Inspector  could  be      promoted to  the post of a Sales Tax officer Grade III.      I say  that  different  rules  were  prevalent  in  the      different  integrating  areas  regulating  departmental      promotions. The  State Govt. decided that until unified      recruitment rules were framed promotions might be given      to all without their having to pass an examination i.e.      without any discrimination. The Government of India who      have examined the matter in consultation with the State      Advisory Committee was of the view that the deletion of      departmental examination  altogether was  fair and just      because  by   doing  so   and  discrimination   between      employees coming  from different  integrating areas was      removed.           (emphasis added) 677 It would  appear that  till 1973 there were no unified rules by which  ASTOs from  Madhya Pradesh  and Hyderabad and STIs from  Bombay   were  governed.  The  Maharashtra  Sales  Tax officers’ Rules,  1973, framed  by the  State Government  in exercise of  the powers under the Proviso to Art. 309 of the Constitution came  into force  on August  4,  1973.  Rule  2 provides that  the rules  shall apply to Government servants serving in  the Sales  Tax Department including those of the former States  of Bombay,  Madhya Pradesh  and Hyderabad who were allocated  for service  to  the  State  of  Bombay  and subsequently to  the State of Maharashtra. Rule 4 deals with direct recruits as well as promotees and makes the condition for passing of the departmental examination within two years from the  date of  promotion or  two years  from the date of promulgation of  the Rules  and by  r. 4  (c) it is provided that in  the event of failure to pass the examination in the prescribed time,  they shall  be liable  to reversion to the posts held  by them prior to their promotion. Looking to the lapse of  time in framing the Rules, r. 8 provides that STOs who have already attained the age of 48 years on the date of promulgation of  these rules  shall be exempted from passing the  Departmental   Examination  under   the  rules.  It  is necessary here to mention that the Maharashtra (Bombay Area) Sales Tax  officers (Grade  II and  Grade  III)  Recruitment Rules, 1969 framed by the State Government under the Proviso to Art. 309 of the Constitution were struck down by the High Court as  ultra vires  being per  se discriminatory and thus violative of  Art. 14  of the Constitution. That was because

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r. 2  provided that  nothing therein  shall govern the ASTOs from Madhya  Pradesh and  Hyderabad. There is no need for us to enter  into the  question as to the validity or otherwise of the said Rules. since the Maharashtra Sales Tax officers’ Rules, 1973 now hold the field.      The two  questions canvassed  in this  appeal are:  (l) whether the  State Government  could by  an executive  order without framing  a rule under the Proviso to Art. 309 of the Constitution,  alter  the  rules  relating  to  departmental promotion of  ASTOs from  Madhya Pradesh and Hyderabad which constituted their  conditions of service to the prejudice of the STIs of Bombay without the prior approval of the Central Government under  the Provision  to sub  s. (7) of s. 115 of the  Act,   and  (2)  Whether  the  State  Government  while integrating  the   services  could  unilaterally  alter  the seniority list of the allocated ASTOs and STIs and place the ASTOs from  Madhya Pradesh  and  Hyderabad  in  an  isolated category over  the STIs  from Bombay while determining their inter se seniority. 678      Prior to  the reoganisation of the States, a Conference of the  Chief Secretaries  of the  States that  were  to  be affected by  the reorganisation  was held at Delhi on May 18 and 19,  1956 for  the purpose  of the  formulation  of  the principles upon  which integration  of services  was  to  be effected. The  Government of  India by  their  letter  dated April 3, 1957 informed the State Government that the work of integration of  services should be dealt with by them in the light of the general principles already settled at the Chief Secretaries Conference.  This has  been construed  to  be  a valid delegation  of powers  to prepare  the preliminary and final gradation  lists under  the  direction  and  with  the sanction of  the Central Government. The Government of India by its  Circular  dated  May  11,  1957  to  all  the  State Governments stated  inter alia that it agreed with the views expressed on  behalf of  the States’ representatives that it would not  be appropriate  to provide  any protection in the matter of  departmental promotion.  This Circular  has  been interpreted as a prior approval of the Central Government in terms of  the proviso  to sub-s. (7) of s. 115 of the Act in the matter  of change  in the conditions of service relating to departmental promotions.      The following  principles had been formulated for being observed as  far as may be, in the integration of Government servants Allotted to the services of the new States:      "In the matter of equation of posts:      (i)  Where there  were  regularly  constituted  similar           cadres in  the  different  integrating  units  the           cadres  will  ordinarily  be  integrated  on  that           basis; but      (ii) Where,  however, there were no such similar cadres           the  following   factors  will   be   taken   into           consideration  in   determining  the  equation  of           posts:-           (a)  nature and duties of a post;           (b)   powers exercised  by the  officers holding a                post, the  extent  of  territorial  or  other                charge held or responsibilities discharged;           (c)     the  minimum   qualifications,   if   any,                prescribed for recruitment to the post.           (d)  the salary of the post. 679 It is  well-settled that  these principles  have a statutory force.      There is  a  long  line  of  decisions  of  this  Court

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starting from  the Union  of India  and Anr.  v. P.K Roy and Ors. (l)  laying down  that the  Central Government has been constituted to  be the  final authority  in  the  matter  of integration of  services under  sub-s. (S)  of s. 115 of the Act.  The   matter  of   equation  of  posts  is  purely  an administrative function.  It has  been left  entirely to the Central Government  as to  how it  has to  deal  with  these questions.  The   Central  Government   had  established  an Advisory Committee  for the  purpose  of  assisting  in  the proper consideration  of the  representations  made  to  it. There is  nothing in  ss. 115  to 117 of the Act prohibiting the Central  Government in  any way  from taking the aid and assistance of the State Govt, in the matter of effecting the integration of  services. As observed by this Court in Roy’s case the  usual procedure followed by the Central Government in the  matter of  integration of  services generally, is in order. It  is not  open to the Court to consider whether the equation of posts made by the Central Government is right or wrong. This  was a matter exclusively within the province of the Central Government. Perhaps, the only question the Court can enquire  into is whether the four principles agreed upon at the  Chief Secretaries Conference had been properly taken into account.  This is  the narrow  and limited field within which the supervisory jurisdiction of the Court can operate. But where,  as here, in the matter of equation of posts, the Central Government  had properly  taken into account all the four  principles  decided  upon  at  the  Chief  Secretaries Conference, the  decision cannot  be assailed at all. In the present case,  not only the Central Government had laid down the principles  for integration,  but  also  considered  the representations  and   passed  the   final  orders  and  the provisional gradation  lists were  prepared and published by the State  Government  under  the  direction  and  with  the sanction of the Central Government.      In accordance  with the principles settled at the Chief Secretaries  Conference,   the  Government   of  India,   in consolation with  the Central  Advisory Committee,  directed that the  posts of  ASTOs in  the former  States  of  Madhya Pradesh and  Hyderabad should  be continued  in an  isolated category, there being no corresponding post in the successor State of Bombay with which they could be equated. There were 19 ASTOs in the pay-scale of Rs. l50-10-200- 680 EB-15-250 from  Madhya Pradesh and 23 ASTOs in the pay-scale of Rs.  170-8 1/2-225-EB-13-320  from Hyderabad allocated to the new State of Bombay. In the former State of Bombay there was no  similarly constituted cadre of ASTOs, but there were posts of  STIs in  the pay-scale  of Rs. 120-8-144-EB-8-200- 10/2-250. It  would have  been  inequitable  and  unfair  to equate ASTOs  from Madhya  Pradesh and  Hyderabad with  STIs from Bombay,  looking to  the nature  of  their  posts,  the powers and  responsibilities and  the pay-scales attached to the same.  The ASTOs from Madhya Pradesh and Hyderabad were, in the  first instance, superior to STIs in their respective States and  the post of ASTO in those States was a promotion post. In  addition, ASTOs  in those  States  were  assessing authorities and  they enjoyed  statutory powers of their own to assess tax and levy penalties, whereas the STIs in Bombay had no  such powers  to assess  tax or  levy penalty but had merely  to   scrutinise  returns  and  generally  act  in  a subordinate  capacity   to  STOs.   Evidently,   the   State Government was  wrong in  directing by  its Resolution dated November 16, 1957 that the seniority of ASTOs from Madhya 1) Pradesh and  Hyderabad and  STIs from Bombay be fixed in the cadre of  Ss in the reorganised State of Bombay on the basis

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of continuous service including that in the lower grade. The principle adopted  by the  State Government  for determining their relative inter se seniority was obviously wrong, being contrary to  the principles settled at the Chief Secretaries Conference. As  already stated,  the Government of India, on representation by the affected ASTOs from Madhya Pradesh and Hyderabad,  in   consultation  with   the  Central  Advisory Committee, directed  that the  inter se  seniority should be fixed taking  into account continuous service in the equated grade only subject to the inter se seniority of the officers coming from  the  several  integrating  regions.  Upon  that basis,  the   State  Government   by  its  Resolution  dated September 10,  1960, rightly  modified Notes  3 and 6 of its 1957 Resolution  and  directed  that  the  seniority  as  on November l,  1966 of ASTOs from Madhya Pradesh and Hyderabad be fixed above the persons in the cadre of STIs and that the inter  se   seniority  of  ASTOs  from  Madhya  Pradesh  and Hyderabad be  fixed on the basis of their continuous service as ASTOs in their respective States.      The  High  Court,  in  dealing  with  the  question  of equation of posts, observed:           On merits,  if the  duties of  Assistant Sales Tax      officers of  those two  States and  those of Inspectors      are compared 681      in  the   light  of   the  minutes  contained  in  Ex.2      (Memorandum of  the Government  of Maharashtra, Finance      Department. dated  November 21, 1964) the difference is      not much. We enquired about the nature of work they are      doing today  and we  are told  on instructions  by  the      State’s counsel  that they  are doing the work that the      Sales Tax Inspectors are doing.           (emphasis added)       All that we need say is that the High Court, if we may say so,  without meaning  any  disrespect,  has  viewed  the question from a wrong perspective.      The remaining  question whether the State Government by its Resolution  dated June  13, 1964  and  Memorandum  dated November 21, 1964, effected a change of recruitment rules by an executive  order, in  the conditions  of service  of  the ASTOs from  Madhya Pradesh  and Hyderabad,  contrary to  the Proviso to  sub-s. (5)  of s.  115 of  the Act;  and if  so, whether such  a change in the conditions of service could be brought about  without framing  a rule  under the Proviso to Art. 309  of the  Constitution. In our opinion, the question does not  really arise.  There can  be no  dispute with  the proposition that a rule framed under the Proviso to Art. 309 of the  Constitution cannot  be  modified  by  an  executive order.  But  the  question  is  whether  that  principle  is attracted to  the facts  and circumstances  of  the  present case. The  Resolution and  the Memorandum referred to above, undoubtedly do  not have  the status  of a rule framed under the Proviso  to Art.  309 of  the Constitution.  They merely conveyed the  decision of  the  State  Government  that  the allocated ASTOs  from Madhya Pradesh and Hyderabad should be considered eligible  for promotion  to the  post of STO, Gr. IlI without  passing the  departmental examination  for STO, Gr. III.  The State  Government had  not by  its  Resolution dated June  13, 1964,  or by  its Memorandum  dated Nov. 21, 1964, brought about a change in the conditions of service by an executive  order. All  that was  done was  to  rectify  a mistake that  had been  committed in  the past in subjecting the  ASTOs   from  Madhya   Pradesh  and  Hyderabad  to  the Departmental Examination  Rules framed  by the  former State Government of  Bombay i.e. to a rule which did not form part

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of conditions  of their  service  and,  therefore,  was  not applicable to  them. We  find  no  infirmity  in  these  two documents. The  decisions reached  by the  Government on the representations made by ASTos from Madhya Pradesh and 682 Hyderabad were  strictly in  conformity with the recruitment rules framed  by the  former State  of  Madhya  Pradesh  and Hyderabad under the Proviso to Art. 309 of the Constitution. It is  quite obvious that STIs from Bombay were not entitled to  the  above  concession,  as  the  passing  of  the  STOs examination had  been made  a condition  precedent for their promotion as STO Gr. III.      There was  a marked distinction between the recruitment rules framed  by the  former State Governments of Bombay and Madhya Pradesh and Hyderabad for appointment as STOs. In the former State  of Bombay,  eligibility for  the promotion  of STIs to  the post of STO Gr. III depended upon their passing the departmental  examination for  the non-gazetted staff of the  Sales   Tax  Department  under  r.  1(b)  (ii)  of  the Recruitment Rules  for the  S.T.Os. Gr.  III.  Under  r.  3, preference was  to be  given to  an Inspector who had passed the departmental  examination prescribed for STOs over those who had  not. By  the amendment  of January 20, 1961 made by the State  Government, the  words "and also the departmental examination for  STOs’ were  added after the words "time for promotion". The  effect of  this amendment  was to  make the passing of  the STO  examination a  condition precedent  for promotion of  STIs as  STO Gr.  III. Further,  the amendment deleted r.  3 which  laid down  a rule of preference. In the former States  of Madhya Pradesh and Hyderabad, neither such condition nor  any rule  of preference was there. Under r. 1 of the  Rules for  Departmental Examination  framed  by  the former State  Government of  Madhya Pradesh,  ASTOs who were promoted as  STOs were  required to  pass  the  departmental examination  within   two  years   from  the  date  of  such promotion. Rule  4 provided that they would not be confirmed till they  pass the said examination and on their failure to do so,  they would  be reverted  to the  substantive post of ASTOs. Similarly,  under r.  2(c) of the Rules framed by the former Hyderabad State, ASTOs who were prompted as STOs were required to  pass the  departmental examination within three years from  the date  of commencement  of the  rules failing which their  grade increment  was to  be withheld  till they pass such  examination. Rule  2 (d) provided that STOs Cl. 1 and II who had not been confirmed in their respective posts, were required  to pass  the said examination within the said period failing  which they  were to  be  reverted  to  their substantive posts.  According to the general Circular issued by the  State Government  of the reorganised State of Bombay dated April 29, 1960, pending unification of the recruitment rules framed  by the  State  Government  of  Bombay,  Madhya Pradesh and Hyderabad, the 683 recruitment to  the various  posts and  services was  to  be regulated A  according to  the rules  framed  by  the  State Governments and  not according  to the  Bombay Civil Service (Classification and  Recruitment) Rules.  It is not disputed that the Departmental Examination Rules framed by the former State  Governments  of  Madhya  Pradesh  and  Hyderabad  for promotion to  the post of STOs formed part of the conditions of service of ASTOs from Madhya Pradesh and Hyderabad.      Mere chances of promotion are not conditions of service and the  fact that  there was  reduction in  the chances  of promotion did  not tantamount  to a change in the conditions of service. A right to be considered for promotion is a term

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of service, but mere chances of promotion are not. Under the Departmental Examination Rules for STOs, 1954, framed by the former State  Government of  Madhya Pradesh.  as amended  on January  20,   1960,  mere   passing  of   the  departmental examination conferred  no right  on the  STIs of  Bombay, to promotion. By  passing the  examination, they  merely became eligible for  promotion. They  had to  be brought  on  to  a select list  not merely on the length of service, but on the basis of  merit-cum-seniority principle.  It was, therefore, nothing but  a mere  chance of  promotion. In consequence of the impugned  orders of reversion, all that happened is that some of  the STIs  who had wrongly been promoted as STOs Gr. III had  to be  reverted and  thereby lost  a few places. In contrast, the  conditions of  service of  ASTOs from  Madhya Pradesh and  Hyderabad, at  least so  far as  one  stage  of promotion  above   the  one   held  by   them   before   the reorganisation of  States, could  not be altered without the previous sanction  of the Central Government as laid down in the Proviso to sub-s. (7) of s. 115 of the Act.      We are  unable to  agree with  the High  Court  in  its opinion that  ASTOs from  Madhya Pradesh  and  Hyderabad  on their allocation to the new State of Bombay, who had wrongly been put  at par  with STIs  from Bombay,  had to  pass  the departmental examination  prescribed  by  the  former  State Government of  Bombay, for  promotion to the post of STO Gr. III before they could be actually so promoted.      It is  an incontrovertible  fact that  the departmental examination prescribed  by the  former State  Governments of Madhya Pradesh  and Hyderabad had not been held after August 8, 1960  i.e. for the last 20 years. Merely because the C.P. and Berar Sales Tax Act, 1947 684 and the Hyderabad General Sales Tax Act, 1950 stood repealed with effect  from January  1, 1960,  that hardly furnished a ground  for   not  holding   the  examination.   The   State Government, in  their affidavit before the High Court, tried to justify  their action  that the  subjects under  the  ex- Madhya Pradesh  and Hyderabad Rules had become obsolete and, therefore, it  was felt  that no  useful  purpose  would  be served  in   holding  these   examinations.  This   was   no justification at  all, for  even after  the Bombay Sales Tax Act, 1959 had been extended throughout the State with effect from January  1, 1960, all pending assessments pertaining to the Vidarbha  and Marathwada regions of the former States of Madhya  Pradesh   and  Hyderabad  had  to  be  completed  in accordance with the repealed Acts. In this context, the High Court observed  that it examined the subjects prescribed for the  three   departmental  examinations  of  Bombay,  Madhya Pradesh and  Hyderabad and  found that  "there was  not much difference". It  went on  to say  that "it  could hardly  be suggested by any one that prescribing a subject more or less for an  examination would  adversely  affect  conditions  of service. The  purpose  of  examination  is  to  prepare  the officer to  be able  to cope  up  with  different  kinds  of problems   that   would   confront   him   with   reasonable efficiency." To  say the least, the observations made by the High Court are unwarranted.      Be that  as it may, the fact remains that the condition regarding the passing of the departmental examination became incapable of  compliance in  the case  of ASTOs  from Madhya Pradesh and Hyderabad who had been promoted as STOs Gr. III. They were  entitled to  such promotion  without passing such examination. Under  the relevant rules which regulated their conditions of  service, there  was  only  a  possibility  of reversion in  the  eventuality  of  their  not  passing  the

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examination   within   the   stipulated   time.   Since   no examinations admittedly have been held, there is no question of their  reversion as  ASTOs. If  the decision  of the High Court were  to be  upheld, it  would imply  that many of the ASTO from Madhya Pradesh and Hyderabad who had been promoted as STOs Gr III and during the past 20 years have reached the higher echelons of service, would now have to be put back as ASTOs, for  no fault  of their own. Many of them either have retired or are on the verge of retirement.      There was  thus no alternative for the State Government but to  suspend the  operation  of  the  amendment  made  on January 20,  1961 to  r. 1(b) (ii) of the recruitment rules, by its order dated October 1, 685 1965, which  made the  passing  of  the  STO  examination  a condition A  precedent for promotion of STIs to STO Gr. III. There can be no doubt that the State Government’s Resolution dated June 13, 1964 and its Memorandum of November 21, 1964, clarifying that  the ASTOs from Madhya Pradesh and Hyderabad were entitled  for promotion  to the  post of  STO  Gr.  III without passing  the departmental  examination, placed  STIs from Bombay at a disadvantage. To ensure ’fair and equitable treatment’, the  State Government rightly dispensed with the requirement of  passing the  departmental examination in the case of STIs from the former State of Bombay.      In the  end, reverting back to the main question. On an overall view  of things,  we are  satisfied that  the  State Government acted with the best of intentions. It endeavoured to strike a balance between the competing claims to relative seniority. When  sub-s. (5)  of s.  115 of the Act speaks of "fair and  equitable treatment",  obviously it  envisages  a decision which is fair and equitable to all.      The result, therefore, is that the appeal succeeds. The judgment of  the High  Court of  Bombay is set aside and the writ petition  filed by  Respondents 1  to 5  is  dismissed. There shall  be no  order as  to  costs  in  the  facts  and circumstances of the case. N.V.K.                                       Appeal allowed. 686