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PETITIONER: P.   MURUGESAN AND OTHERS

       Vs.

RESPONDENT: STATE OF TAMIL NADU AND OTHERS

DATE OF JUDGMENT03/02/1993

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) SHARMA, L.M. (CJ) ANAND, A.S. (J)

CITATION:  1993 SCR  (1) 405        1993 SCC  (2) 340  JT 1993 (2)   115        1993 SCALE  (1)423

ACT: Civil Services-Madras Corporation Engineering Service Rules, 1969-Promotion to the posts of Assistant Executive Engineer- Ratio  3:1 between graduate engineers (Assistant  Engineers) and  diploma-holder  engineers  (Junior  Engineers)  Whether violative of Articles 14, 16 of the Constitution. Madras  City  Municipal Corporation  Act,  1919-Section  87- Vacancies  arose  prior to  Madras  Corporation  Engineering Service   (Amendment)  Rules,  1990-Whether  to  be   filled according   to  unmended  Madras   Corporation   Engineering Services Rules, 1969-Supreme Court’s direction.

HEADNOTE: Under  the  Madras Corporation  Engineering  Service  Rules, 1969,  the recruitment to the posts of, Assistant  Engineers was  by  (1) direct recruitment, (b) by promotion  from  the category   of   Supervisors  and  (c)  by   appointment   on deputation. The  graduate Supervisors were required to put in a  minimum of  five  years service in the category of  Supervisors  for becoming eligible for promotion, whereas the diploma-holder- Supervisors were required to put in a minimum service of ten years as Supervisors. In the category of Supervisors, in the matter of pay  scales too,  distinction  was  maintained  between  graduates   and diploma-holders;  while  the pay-scale of  the  category  of Supervisors  was Rs. 325-650, the graduates were started  at the  initial  pay of Rs. 400.  From 1972  onwards,  the  pay scales prescribed for the graduates and the  diploma-holders were different. In  1978, the diploma-holder-Supervisors were designated  as junior  Engineers, while the degree-holder-Supervisors  were designated  as Assistant Engineers.  The Posts of  Assistant Engineers   were   redesignated   as   Assistant   Executive Engineers. 406 In  1978  certain promotions were made to  the  category  of Assistant  Executive Engineers by applying the ratio of  3:1 between the graduate-engineers (Assistant Engineers) and the diploma-holder-engineers (junior Engineers). The  respondents-Junior Engineers challenged the  promotions

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in writ petitions in the High Court, which was dismissed  by a Single Judge. On  appeal, a Division Bench of the High Court  quashed  the promotions   holding   that  as   the   Madras   Corporation Engineering  Service  Rules, 1969 did not  provide  for  any ratio, the Corporation could not prescribe the ratio of  3:1 by a mere resolution or by an executive order. The Special Leave Petition preferred against the judgment of the  Division Beach of the High Court was dismissed by  this Court on 25.1.1990. The  State Government thereafter amended the 1969  Rules  in 1990  providing  for the ratio of 3:1  between  the  degree- holders  and the diploma holders in the matter of  promotion to the posts of the Assistant Executive Engineers.  The 1990 Amendment  Rules  also  provided  that  a  junior   Engineer (diploma-holder)  who acquired an engineering degree or  its equivalent   during  his  service  would  be  eligible   for appointment  as Assistant Executive Engineer, if he puts  in three  years  of  service  in  the  Corporation  Engineering Subordinate Service after obtaining the degree. The  diploma-holders  questioned the validity  of  the  1990 Amendment Rules, in writ petitions before the High Court. The Single Judge dismissed the writ petitions and upheld the validity  of the 3:1 ratio.  On appeal, the  Division  Bench quashed the amendment introducing the ratio of 3:1,  against which the present appeal was riled by he graduate Engineers. The  appellants contended that the Assistant  Engineers  and the junior Engineers constituted different categories though performing   similar  functions  and   discharging   similar responsibilities;  that their payslips were different;  that the Statutory Rules of 1969 made a distinction, between  the two categories inasmuch as while only five years’ qualifying service   was   prescribed  for  the   Assistant   Engineers (graduates), ten years 407 was  prescribed for the Junior Engineers  (diploma-holders); that   in  such  a  situation  imposing  of  an   additional restriction upon the promotional chances of Junior Engineers by  the  1990 Amendment Rules was  neither  incompetent  nor discriminatory, that Section 87 of the Madras City Municipal Corporation Act was not mandatory but only directory. The   respondents-diploma-holders  submitted  that  in   the category  of Supervisors graduates were appointed by  direct recruitment  and  diploma-holders  by  promotion  from   the category of Overseers; that the Assistant Engineers as  well as  Junior  Engineers  performed  identical  functions   and discharged identical responsibilities; that they were inter- transferable;  that  in such a situation prescription  of  a quota between them for promotion to the higher category  was discriminative  and was violative of Articles 14 and  16  of the   Constitution;  that  once  the  diploma-holders   were required to put in ten years’ service as against five years’ service  in  the case of the graduates, in the  category  of Supervisors for becoming eligible for promotion as Assistant Executive Engineers, the eligible graduates and the eligible diploma-holders  became  equals in all  respects  and  there should not be any distinction thereafter for the purpose  of promotion;  that at any rates In view of the  provisions  in Section 87 of the Madras City Municipal Corporation Act, the vacancies which arose prior to the coming into force of  the 1990 Amendment Rules should be filled up in accordance  with the unamended Rules, i.e. without reference to the quota. Allowing the appeal, this Court, HELD : 1.01. It is held by the constitution Bench in Triloki Nath Khosa that a distinction made on the basis of  academic

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qualification  for  the  purpose  of  promotion  to   higher category  is  not violative of Articles 14 and 16.   In  the said  case, a rule barring the  non-graduate-engineers  from promotion to the category of executive engineers was upheld. If  the  diploma-holders  can  be  barred  altogether   from promotion as held in Triloki Nath Khosa, it is difficult  to appreciate  how  and  why  is  the  rule  making   authority precluded  from restricting the promotion.  The rule  making authority  may  be  of the opinion,  having  regard  to  the efficiency   of  the  administration  and   other   relevant circumstances  that  while it is not necessary  to  bar  the diploma-holders from promotion altogether, their chances  of promotion should be restricted. [416E, 417D] 1.02.     There  would be no justification in principle  for holding that the 408 rule-making authority has only two options namely either  to bar  the  diploma-holders altogether from  promotion  or  to allow them equal opportunity with the graduate engineers  in the  matter  of promotion.  It must be remembered  that  the power  of rule-making under the proviso to Article  309  has been held to be legislative in character. [419C] 1.03. If so, the test is whether such a restrictive view  is permissible vis-a-vis a legislature.  If not, it is  equally impermissible in the case of the rule-making authority under the proviso to Article 309.  The only test that such a  rule has to pass is that of Articles 14 and 16. [419D] 1.04.     Since  1969  the  graduate  supervisors  and  non- graduate Supervisors were treated differently in the  matter of  pay, designation and in the matter of promotion,  though they were discharging identical functions and duties.  It is thus  clear  that  though they belonged to  one  class  they represented two different categories, while it is true, they performed    similar   duties   and    discharged    similar responsibilities. [419G] 1.05.     It  cannot be said that it is not  permissible  to the rule-making authority, if it thinks it necessary in  the interests of administration to limit the promotional chances of non-graduates to one out of four vacancies, on the  basis of academic qualifications. [420B] 1.06.     The   distinction  was  also  in  the  matter   of promotion   and  not  for  any  other  purpose.    If   that distinction  is not discrimination, it is difficult  to  see how and why another distinction now created (quota rule)  is discriminatory. [422D] B.S.  Vadera  v. Union of India, AIR 1969 SC 118;  State  of Jammu  &  Kashmir v. Triloki Nath Khosa, [1974] 1  SCR  771; State of Mysore & Anr. v. P. Narasing Rao, [1968] 1 SCR 407; Union  of India v. Dr. (Mrs.) S.B. Kohli, AIR 1973 SC 81  1; Roop  Chand  Adlakha and Ors. v. D.D-4. and Ors.,  [1988]  3 Supp.  SCR 253 and Shamkant Narayan Deshpande v. Maharashtra Industrial  Development Corporation & Anr., 1992  (2)  Scale 857, referred to. Mohammad  Shujat Ali & Ors. etc. v. Union of India and  Ors. etc.,, [1975] 1 SCR 449, explained. Roshan Lal Tandon v. Union of India, [1968] 1 SCR 185; Menyn v.  Collector of Bombay, AIR 1967 SC 52 = [1966] 3 SCR  600; H.C. Sharma 409 and   Others   v.  Municipal  Corporation   of   Delhi   and Others,[1983] 3 SCR 372; Punjab State Electricity Board  and Anr. v. Ravinder Kumar Sharma and Ors., [1987] 1 SCR 72  and N. Abdul Basheer & Ors. etc. etc. v. KK Karunakaran &  Ors., [1989] 3 SCR 201, distinguished. 2.01.     Section   87   of  the   Madras   City   Municipal

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Corporation  Act does indicate and manifest the  concern  of the   Legislature  that  the  vacancies  occurring  in   the Corporation Service should not be kept unfilled for a period of  more than three months.  Sub-section (3) which  provides for the consequence of default on the part of the council to abide by sub-section (1) emphasises   the  concern  of   the Legislature.  So also does sub-section (2).  Sub-section (4) says that if there is going to be any delay or if a suitable or  qualified  person  is not  available,  the  council  may appoint a person on temporary basis. [424H, 425A] 2.02.     The  vacancies  occurring prior  to  three  months before  the date of commencement of the  impugned  amendment ought to have been filled in accordance with the rules  then obtaining. [425B] 2.03.     Having   regard  to  the  particular   facts   and circumstances  of the present case, it is directed that  the Corporation shall ascertain the vacancies in the category of Assistant Executive Engineers, that have arisen three months prior  to  the coming into force of the  impugned  amendment (introducing the quota of 3:1 as between degree-holders  and diploma-holders  )  and shall work out the  vacancies  which would  have gone to the diploma-holders if  unamended  Rules had  been  followed.  The Corporation shall  also  ascertain which  of  the diploma-holders would have been  promoted  in those  vacancies.  Such diploma-holders will be promoted  in the  existing  and future vacancies.  Until  these  diploma- holders  are  so  promoted  to  the  category  of  Assistant Executive  Engineers, no degree-holders shall  be  promoted. After these diploma-holders are so promoted, it is  obvious, the  amended  Rules shall be applied and followed.   As  and when  a  diploma-holder  is promoted in  pursuance  of  this direction,  his promotion shall be given effect to from  the date  he ought to have been promoted.   Such  diploma-holder promoters shall be entitled to the benefit of seniority  and pay-fixation flowing from such retrospective promotions, but they shall not be entitled to the.arrears of ’difference  in salary  for  the  period they have not  actually  worked  as Assistant Executive Engineers. [425E-H] Ramgiah v. Srinivasa Rao, [1983] 3 SCC 284; P. Ganeshwar Rao v. 410 State  of Andhra Pradesh, [1988] Supp SCC 740; P.  Mahendran and Others v.  State of Karnataka and Ors., [1990] 1 SCC 411 and Devin Katti & Ors. v.     Kamataka    Public     Service Commission and Others, [1990] 3 SCC 157, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 406 of 1993. From  the Judgment and Order dated 29.7.1992 of  the  Madras High Court in Writ Appeal No. 518 of 1991. M.K. Ramamurthi, Ms. Chandan Ramamurthi, M.A. Chainasamy and Krishnamoorthy for the Appellants. R.   Thyagarajan,   S.  Navaneethan,  V.  Balachandran,   S. Srinivasan,  P.R. Seetharaman, R. Mohan, A.T.M. Sampath  and N. Kannadasan for the Respondents. The Judgment of the Court was delivered by B.P.  JEEVAN  REDDY, J. Heard the Counsel for  the  parties. Leave granted. The  dispute is between the degree holders and  the  diploma holders   in  the  engineering  service  under  the   Madras Municipal Corporation. The  Corporation  of Madras is governed by the  Madras  City Municipal  Corporation Act, 1919.  It employs a good  number

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of engineers in connection with the discharge of its duties. Till  1965,  there  was only one  category  of  supervisors. Recruitment  to this category was by direct  recruitment  of graduate  engineers as well as by promotion from  the  lower category  of overseers.  Diploma holders were  not  eligible for  direct  appointment  as supervisors;  they  were  first appointed to the category of overseers and then promoted  as supervisors.  The category above the supervisors was that of assistant   engineers.    Supervisors,   whether    directly recruited  (graduates) or promotees  (diploma-holders)  were required  to  put in 20 years’ service in  the  category  of supervisors lo become eligible for promotion to the category of assistant engineers.  No distinction was made as  between the  degree holders (graduates) and diploma-holders  in  the matter  of  promotion  or  in  the  matter  of   eligibility criteria. 411 In  the year 1965, say the appellants (who are all  graduate engineers),  the Corporation resolved (on 7.8.65) to  follow the rule in vogue in State Government service and apply  the ratio  of 3:1 between graduates and diploma-holders  in  the matter of promotion to the category of assistant  engineers. The  respondents who are all diploma-holders, deny that  any such resolution was passed.  According to them it was only a recommendation  of the Ad-hoc Committee constituted  by  the Corporation  and  that  the said  recommendation  was  never accepted  as such by the Corporation.  The respondents  rely upon  the  Division Bench judgment dated  21.12.89  in  writ appeal  No. 990 of 1984 etc. holding that no such ratio  was actually  enforced in the Corporation  Engineering  Service. Be  that  as it may, some time prior to 1969,  the  Act  was amended empowering the Government to frame rules  regulating the  recruitment and conditions of service of the  employees of  the  Corporation.  In exercise of the  said  power,  the Government   of  Tamil  Nadu  framed  rules  called   Madras Corporation Engineering Service Rules (contained in G.O.M.S. No.  31  RD-LA dated 7.1.69). These rules  applied  only  to class 1A, 1B and class IT of engineering services under  the Corporation  and not to other posts.  The post of  assistant engineer  was in category III in class-II.   Recruitment  to this  category was by (a) direct recruitment  (b)  promotion from  the category of supervisors and (c) by appointment  on deputation  from  the  Government  department.   So  far  as promotion  is concerned, a distinction was made  as  between degree-holders    and   diploma-holders.     The    graduate supervisors were required to put in a minimum of five  years service in the category of supervisors for becoming eligible for  promotion, whereas the diploma-holder-supervisors  were required  to  put  in  a minimum service  of  ten  years  as supervisors to become eligible for such promotion.  At about this  time,  a  practice  developed  where  under  graduate- supervisors  were  referred  to as  Junior  engineers.   The diploma-holders-supervisors  (who are necessarily  promotees in the category of supervisors) continued to be referred  to as supervisors. In  the year 1978 the Government of.Tamil Nadu  altered  the designations  of  the  categories  relevant  before  us   by G.O.M.S.  No. 954 dated 2.6.1978.Para-2 of the  G.O.  stated that the diploma-holder-supervisors shall be designated  as’ junior  engineers while the degree-holders-supervisors  (who had come to be known as junior engineers meanwhile) would be designated   as  assistant  engineers.    Consequently   the erstwhile  post  of assistant engineer was  redesignated  as assistant  executive  engineer.  By G.O.M.S. No.  907  dated 20.5.1981, this change in designation was given

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412 effect to and incorporated in the Statutory Rules issued  in 1969 (Madras Corporation Engineering Service Rules). The  recruitment  and  conditions of  service  of  assistant engineers   and   juniors  (formerly   known   together   as Supervisors)  were  governed  by the  by-laws  made  by  the Corporation.  In the matter of pay scales too, a distinction was being maintained between graduates and  diploma-holders even  when  they were in the same category  of  Supervisors. The pay scale admissible to the category of supervisors  was 325-650  but the graduates were given a  higher  start-their initial  pay was fixed at 400.  No such treatment was  given to  the diploma-holders.  According to the appellants  there was  yet  another distinction from 1972  onwards;  the  pay- scales  prescribed for the graduate engineers  and  diploma- holder-engineers  were  different  as  per  the  particulars mentioned  in para 33 of the S.L.P. They point out  that  in the  counter  filed  to  the  Special  Leave  Petition,  the respondents  have not denied the said averment; they  merely stated in para 20 of their counter that the "allegations  in paragraphs 33 to 36 are of no avail to the petitioner." Whether in pursuance of the Resolution of 1965 or otherwise, certain  promotions were made to the category  of  assistant executive engineers, in the year 1978, applying the ratio of 3:1   as  between  graduate-engineers  and   diploma-holder- engineers.  We may refer to these two categories hereinafter as assistant engineers and junior engineers, since that  was the  designation  given to them by G.O.M.S.  No.  954  dated 2.6.1978.  The said promotions were questioned  by  diploma- holders  in a batch of writ petitions 2810 of 1978 etc.)  in the Madras High Court.  It was dismissed by a learned Single Judge.   On appeal, however, a Division Bench of that  court held  judgment  dated 21.12.1989 in Writ Appeal No.  990  of 1984  etc.) that inasmuch as the Statutory Rules  framed  in 1969  did not provide for any such ratio, it is not open  to the  Corporation  to  prescribe  such  a  ratio  by  a  mere resolution  or  by  an executive  order.   Accordingly,  the Division Bench quashed the said promotions.  A Special leave petition  preferred against he said judgment in  this  Court was dismissed on 25.1.1990. It is then that he Government of Tamil  Nadu stepped in and amended the 1969 Rules  providing for  the  said  ratio  of 3:1 by way  of  G.O.M.S.  No.  138 (Municipal  Administration  and  Water  Supply)  dated   9th February,  1990.  So far as relevant herein, the  said  G.O. prescribed the "ratio of 3:1 between the degree holders  and diploma holders" in the matter of promotion to the 413 assistant executive engineers.  It was further provided that a   junior   engineer  (diploma-holder)  who   acquired   an engineering  degree or its equivalent during his service  as junior   engineer  will  be  eligible  for  appointment   as assistant  executive engineer if he puts in three  years  of service  in the Corporation Engineering Subordinate  Service after  obtaining the engineering degree or  its  equivalent. The result of this amendment was that a two-fold distinction came to be made between graduates and diplomaholders in  the matter  of  promotion  to the post  of  assistant  executive engineers.  In addition to the hitherto existing distinction in the matter of length of qualifying period of service  (10 years  for  diploma-holders/junior engineers  as  against  5 years  for  degree-holders/assistant  engineers),  the   new restriction  imposed  by  the said amendment  was  that  the diploma holders/junior engineers were restricted to only one out  of  four posts of assistant  executive  engineers;  the remaining   three  were  reserved  for   graduates/assistant

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engineers.  (Of  course, according to the appellant  such  a ratio  was  in  vogue as a matter of fact  since  1965.  the respondents  deny  this assertion.  Be that as it  may,  the ratio   or  quota, as it may  be  called  was  statutorily imposed by the said amendment. The  validity  of  the 1990 amendments,  in  particular  the introduction  of  ratio of 5:1, was questioned  by  diploma- holders  in  the  Madras  High Court  in  a  batch  of  Writ Petitions  being Writ Petition 2943 of 1990 etc.  A  learned Single  Judge dismissed the batch by his Judgment and  Order dated  21.3.1991, upholding the validity of the said  ratio. On appeal, a Division Bench took a contrary view and quashed the amendment introducing the ratio of 3:1.  In this  appeal the  correctness of the view taken by the Division Bench  is called in question. Mr.  M.K.  Ramamurthy, learned counsel for  the  appellants’ submitted  that  classification  on the  basis  of  academic qualifications is a well accepted basis. for the purpose  of promotion  and  that the Division Bench of the  Madras  High Court was in error in holding otherwise.  He submitted  that assistant   engineers  and  junior   engineers   constituted different categories though performing similar functions and discharging similar responsibilities.  Their pay-scales were different-at  any  rate from 1972.  Even  earlier,  the  pay fixation  formula  was different in the case  of  graduates. Even the Statutory Rules of 1969 made a distinction  between the  two  categories  inasmuch as  while  only  five  years’ qualifying service was prescribed for graduates, ten  years’ qualifying service was prescribed for diploma-holders. 414 In such a situation imposing an additional restriction  upon the  promotional chances of diploma holders by the  impugned amendment is neither incompetent nor can it be characterised as  discriminatory.   He  submitted  that  right  from  1972 onward,  a clear distinction was being observed between  the graduates   and  diploma-holders  and  that   the   impugned amendment is but another step in the same process. On  the other hand the learned counsel for  the  respondents holders submitted that whether graduates or diploma-holders, they  were all in the category of supervisors till the  year 1981.   There was only one category of supervisors to  which graduates were appointed by direct recruitment and  diploma- holders  by promotion from the lower category of  overseers. They performed identical functions and discharged  identical responsibilities.   They were inter-transferable.   On  some occasions,  graduates (assistant engineers) were  posted  to assist  a  diploma holder (junior engineer)  in  discharging certain  duties.   Even  after  1978  when  the   graduates- supervisors  were  designated  as  assistant  engineers  and diplomaholders-supervisors   were   designated   as   junior engineers,   the  same  situation  continued.   In  such   a situation  prescription  of  a quota  as  between  them  for promotion  to the higher category is discriminatory  and  is violative  of  Articles  14  and  16  of  the  Constitution. Learned  counsel  submitted  that  in  any  event  once  the diploma-holders  were required to put in ten years’  service (as against five years’ service in the case of graduates) in the  category  of  supervisors  for  becoming  eligible  for promotion  as  assistant executive engineers,  the  eligible graduates and the eligible diploma-holders became equals  in all  respects.  No distinction is permissible thereafter  in the  matter of and for the purpose of  promotion.   Creating such a distinction, imposing a disability upon the  diploma- holders,  is not only unjust and inequitable, it is  also  a clear   case   of  hostile   discrimination.    Lastly   and

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alternatively  counsel  submitted that the  vacancies  which arose  prior  to the coming into the force of  the  impugned amendment,  at any rate, should be filled up  in  accordance with  the  unamended  Rules.  It is  pointed  out  that  the impugned   amendment  is  only  prospective  in   operation. Section 87 of the Act is relied upon in this behalf. It  is  true  that theory of classification  should  not  be carried  too far lest it may subvert, perhaps submerge,  the precious   guarantee   of  equality,  as  pointed   out   by Chandrachud, J. in State of Jammu & Kashmir v. Triloki  Nath Khosa,   [1974]   1  SCR  771.    Minute   and   microcosmic classification 415 should  not  be permitted nor should the  Court  countenance "mini  classifications  based  on  micro  distinctions",  as pointed out by Krishna Iyer, J. in the same case.  Looked at from this broad angle, it may appear there is some force  in what  the respondents contend viz., that once the  graduate- engineers and diploma-holder-engineers constitute one class, perform  same  duties and discharge  same  responsibilities, placing a restriction on the diploma holders alone (limiting their chances of promotion to one out of four promotions, as has  been done by the impugned Amendment) is  not  justified but  this  may  be a too simplistic way of  looking  at  the issue.   We cannot fail to take note of the fact that  right from  1974  i.e., since the decision  of  the  Constitutions Bench  in  Triloki Nath Khosa this Court  has  been  holding uniformly that even where direct recruits and promotees  are integrated  into a common class, they could for purposes  of promotion to the higher cadre be classified on the basis  of educational qualifications. In  the Kashmir Engineering Service, the post  of  assistant engineer could be filled both by direct recruitment as  well as  by  promotion.   There  were  degree-holders  and   also diploma-holders  in  the  category.  By  the  Kashmir  Civil Services  (Revised Pay) Rules, 1968 it was provided  that  a diploma-holder-assistant engineer shall not cross the  stage of  Rs. 610 in the scale of Rs.  300-30-540-EB-35-610-EB-35- 750, which was the scale applicable to assistant  engineers. In  1970, Jammu and Kashmir Engineering  (Gazetted)  Service Recruitment Rules, 1970 were issued providing that the  post of executive engineer (the next higher post) shall be filled only  by promotion from among the assistant  engineers,  who possessed   a  bachelor’s  degree  in  engineering  or   its equivalent  qualification  provided they have put  in  seven years’   service  in  the  assistant  engineer’s   category. Assistant  engineers who were not degree-holders  were  thus barred   from  promotion  to  the  category   of   executive engineers.   Both the Rules, namely 1968 Pay Rules and  1970 Recruitment Rules were questioned by diploma-holders in  the J  & K High Court.  Though a learned Single Judge  dismissed the  writ petition, his judgment was reversed in  appeal  by the  Division Bench.  The Division Bench was of the  opinion that   where  the  employees  were  grouped   together   and integrated   into  one  unit  without  reference  to   their qualifications, they form a single class in spite of initial disparity in the matter of their educational  qualifications and that no discrimination is permissible to be made between them  on the basis of such qualifications.  On  appeal  this Court  reversed  the Judgment of the  Division  Bench.   Two judgments were delivered, one by Chandrachud J. on behalf of himself A.N. Ray, C.J. and 416 D.G. Palekar, and the other by Krishna Iyer, J. for  himself and Bhagwati J. Chandrachud J. while affirming the principle

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that a classification must be truely founded on  substantial differences  which  distinguished persons  grouped  together from those left out of the group and that such  differential attributes  must  bear a just and rational relation  to  the object  sought  to  be achieved, stated  the  scope  of  the Judicial scrutiny in such matters in the following words :               "Judicial  scrutiny can therefore extend  only               to     the    consideration    whether     the               classification  rests  on a  reasonable  basis               whether  it  bears nexus with  the  object  in               view.   It cannot extend to embarking  upon  a               nice  or mathematical evaluation of the  basis               of  classification, for were such  an  inquiry               permissible it would be open to the courts  to               substitute their own judgment for that of  the               legislature  or the rule-making  authority  on               the  need to classify or the  desirability  of               achieving a particular object." The  learned  Judge held that judged from the  above  stand- point  it was impossible to accept the proposition that  the classification  of Assistant Engineers  into  Degree-Holders and  Diploma-Holders  rests on any  unreal  or  unreasonable basis.  They accepted the plea that the said  classification was  brought about with a view to  achieving  administrative efficiency in the Engineering services.  The higher academic qualifications,   the   learned  Judge  held,   is   atleast presumptive  evidence  of a higher  mental  equipment.   The learned  Judge said "what is relevant is that the object  to be   achieved   here  is  not  a  mere   presence   for   an indiscriminate   imposition   of   inequalities   and    the classification  cannot  be  characterized  as  arbitrary  or absurd.   That  is the farthest that judicial  scrutiny  can extend." The learned Judge referred to the earlier  decision of this Court in State of Mysore & Anr. v. P. Narasing  Rao, [1968]  1 SCR 407 and the Union of India v. Dr. (Mrs.)  S.B. Kohli,  AIR  1973 SC 811 to demonstrate that  a  distinction made  on  the basis of academic  qualifications  was  always upheld  by  this  Court.  Indeed, in the  latter  case,  the relevant rule required that a professor of orthopaedics must have  a post-graduate degree in the  particular  speciality. It  was upheld as a relevant requirement, The learned  Judge then explained the decision in Roshan Lal Tandon v. Union of India  (upon  which substantial reliance was placed  by  the respondents in that case) as an authority certainly for  the proposition  that "no discrimination could be  made  between promotees and                 417 direct  recruits by reference to the source from which  they were drawn" but that it does not bar a classification  based upon academic qualifications.  In the words of  Chandarchud. J.  Roshanlal  Tandon’s case is thus no  authority  for  the proposition  that  if  direct  recruits  and  promotees  are integrated  into  one class, they cannot be  classified  for purposes  of  promotion on a basis other than the  one  that they  were  drawn  from  different  sources."  Having   thus distinguished   Roshanlal  Tandon’s  case  and   Mervyn   v. Collector  of  Bombay, AIR 1967 S.C. 52, the  learned  Judge concluded :               "We  are therefore of the opinion that  though               persons  appointed directly and  by  promotion               were  intregrated  into  a  common  class  for               Assistant Engineers, they could, for  purposes               of  promotion  to the cadre of  Executive  En-               gineers,   be  classified  on  the  basis   of               educational    qualifications.     The    rule

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             providing that graduates shall be eligible for               such  promotion to the exclusion  of  diploma-               holders does not violate articles 14 and 16 of               the Constitution and must be upheld." This decision clearly supports the appellants contention and goes to sustain the validity of the impugned amendment.   If the diploma-holders can be barred altogether from promotion, it is difficult to appreciate how and why is the rule making authority  precluded  from restricting the  promotion.   The Rule  making authority may be of the opinion, having  regard to  the efficiency of the administration and other  relevant circumstances  that  while it is not necessary  to  bar  the diploma-holders from promotion altogether, their chances  of promotion should be restricted.  On principles, there is  no basis for the contention that only two options are open to a rule   making  authority-either  bar   the   diploma-holders altogether or allow them unrestricted promotion on par  with the   graduates.   This  aspect  has  been   emphasised   by Venkatachaliah  J. in Roop Chand Adlakha and Ors. v.  D.D.A. and Ors., [1988] 3 Supp.  SCR 253 in the following words.               "If   Diploma-Holders   of  course  on   the               justification  of the job-requirements and  in               the interest of maintaining a certain  quality               of  technical expertise in the cadre   could               validily be excluded from the eligibility  for               promotion  to  the higher cadre, it  does  not               necessarily follow as an inevitable               corollary that the choice of the recruitment               418               policy  is  limited only two  choices,  namely               either  to  consider them "eligible"  or  ’not               eligible.".   State,   consistent   with   the               requirements  of the promotional-posts and  in               the interest of the efficiency of the service,               is  not precluded from conferring  eligibility               on  Diploma-Holders conditioning it  by  other               requirements  which  may,  as  here,   include               certain quantum of service-experience.  In the               present  case,  eligibility-determination  was               made  by a cumulative-criterion of  a  certain               educational  qualification plus  a  particular               quantum of service experience.  It cannot,  in               our  opinion,  be said, as postulated  by  the               High  Court, that the choice of the State  was               either   to  recognise  Diploma   Holders   as               "eligible"  for  promotion or  wholly  exclude               them as "not-eligible". Counsel  for the respondents however placed strong  reliance upon  certain observations made by Bhagwati, J. in  Mohammad Shujat  Ali  & Ors. etc. v. Union of India  and  Ors.  etc., [1975] 1 SCR 449.  After referring to the facts of, and  the principles enunciated in, T.N. Khosa the learned Judge  made the following observations:               "But  where  graduates and  non-graduates  are               both regarded as fit and, therefore,  eligible               for  promotion,  it is difficult to  see  how,               consistently   with   the  claim   for   equal               opportunity,  any differentiation can be  made               between  them  by  laying  down  a  quota   of               promotion  for  each and  giving  preferential               treatment  to graduates over non-graduates  in               the  matter  of fixation of such  quota.   The               result  of fixation of quota of promotion  for               each  of  the two categories  of  Supervisors,               would  be  that when a vacancy arises  in  the

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             post  of Assistant Engineer, which,  according               to   the  quota  is  reserved   for   graduate               Supervisors, a non-graduate supervisor  cannot               be  promoted  to that vacancy, even if  he  is               senior  to all other graduate Supervisors  and               more suitable than they.  His opportunity  for               promotion  would be limited only to  vacancies               available for non-graduate Supervisors.   That               would  clearly  amount  to  denial  of   equal               opportunity to him."               419               On  the basis of the above observations it  is               argued that once the diploma-holders are  also               held   eligible  for  promotion,  it  is   not               permissible  for the rule-making authority  to               make  any  distinction between  graduates  and               diploma-holders.   We  cannot  agree.   As   a               matter  of fact this court in Shujat Ali  case               upheld the validity of the Andhra Pradesh rule               which made a distinction between the  graduate               supervisors  and non-graduate  supervisors  in               the   matter  of  promotion  to   the   higher               categories on the ground that in the erstwhile               States  of  Andhra  and  Hyderabad,   graduate               supervisors  were always treated  as  distinct               and  separate  from  the  non-graduate  super-               visors, their pay scales were different;  they               were  never really integrated into  one  class               and  graduate supervisors were  called  Junior               Engineers.   Accordingly,  it  was  held  that               reducing  the  chances of  promotion  of  non-               graduate   supervisors   vis-a-vis    graduate               supervisors  was  not discriminatory.  (As  we               shall   presently  point  out,   the   factual               situation  in Madras  Corporation  Engineering               service is similar).  The observations  quoted               above cannot be read in isolation nor can they               be read as running counter to the ratio of TN.               Khosa.    Both  decisions  were  rendered   by               Constitution Benches.  In any event, the facts               and  circumstances of the case before  us  are               akin  to  those in Shujat  Ali.   Secondly  as               explained  hereinbefore  there  would  be   no               justification  in principle for  holding  that               the rule-making authority has only two options               namely  either  to  bar  the   diploma-holders               altogether  from  promotion or to  allow  them               equal opportunity with the graduate  engineers               in  the  matter  of  promotion.   It  must  be               remembered that the power of rule-making under               the proviso to Article 309 has been held to be               legislative in character.  Vader  A.I.R. 1969               S.C.  118.  If so, the test is whether such  a               restrictive  view  is  permissible   vis-a-vis               legislature.    If   not,   it   is    equally               imperviously  in the case of  the  rule-making               authority  under the proviso to  Article  309.               The only test that such a rule has to pass  is               that  of  Articles  14 and 16   and  to  that               aspect we may turn now.               The facts of this case, narrated hereinbefore,               clearly  disclose  that  long  prior  to   the               impugned  amendment, a clear  distinction  was               being maintained between these two categories.               The   1969   Rules,  as   originally   issued,

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             prescribed  a five years’  qualifying  service               for  graduate engineers while prescribing  ten               years’ qualifying service for diploma holders,               though  earlier it was twenty years  for  both               uniformly.   No one ever questioned  it.   The               graduates   were   designated   as   Assistant               Engineers while Supervisors were designated as               junior  engineers  in  the  year  1978.   This               distinctive  designations were  recognised  by               and  incorporated  into  the  Statutory  Rules               (1969  Rules) in the year 1981.  No  grievance               was made on that count.  Even               420 when both of them were in the same pay scale, the  graduates were  being  given a higher start at Rs.  400  straightaway, while no such benefit was given to a promote.  Further, from 1972   onwards,  it  appears,  their  very  payscales   were different.   It is thus clear that though they  belonged  to one  class they represented two different categories,  while it  is  true, they performed similar duties  and  discharged similar   responsibilities.    It   is   asserted   by   the Respondent’s  counsel that there is also a common  seniority list but this fact is denied by the appellant.  According to them, there were two separate seniority lists till 1979  and that  when in 1979 a single seniority list was prepared,  it was  objected to by the graduates, Be that as it  ’may,  the question still remains whether it is not permissible to  the rule-making  authority,  if it thinks it  necessary  in  the interests of administration to limit the promotional chances of  non-graduate to one out or four vacancies, on the  basis of   academic   qualifications.   In  the   light   of   the Constitution Bench decision in Triloki Nath Khosa, we cannot say that it is not permissible.               In  Shamkant Narayan Deshpande v.  Maharashtra               Industrial  Development  Corporation  &  Ors.,               1992 (2) Scale 857 a Bench consisting of  P.B.               Sawant and G.N. Ray, JJ. took the same view as               we  do in this case.  We also agree  with  the               basis   upon   which   the   learned    Judges               distinguished  the decision in H.C Sharma  and Ors. v. Municipal Corporation of Delhi and Others, [1983]  3 SCR 372.               The  learned  counsel for  respondents  relied               upon the decision in Punjab State  Electricity Board  and Anr. v. Ravinder Kumar Sharma and Ors., [1987]  1 SCR  72, a decision rendered by a Bench comprising A.P.  Sen and B.C. Ray, JJ. the category of line-men in the service of the  Punjab State Electricity Board comprised both  diploma- holders  and others who may be referred to  as  non-diploma- holders.   They  constituted one single  category  having  a common  seniority list.  By means of the Rules issued  under the  proviso  to  Article 309, a quota  was  prescribed  for diploma-holders,  the  result  of which  was  that  diploma- holders who were far junior to the non-diploma-holders  were promoted  ignoring  the non-diploma-holders.  The  rule  was held  to be bad by the learned Subordinate  Judge,  Patiala. On  appeal, the Additional District Judge, Patiala  affirmed the  judgment.  It was affirmed by the High Court  as  well. The  matter was brought to this Court.  This court  affirmed the  judgment of the High Court.  A persual of the  judgment shows  that the attention of the Bench was not drawn  either to  TN.   Khosa or to other decisions.  Reference  was  made only to the obser-               421               vations in Shujat All quoted hereinbefore  and

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             it was held that the distinction made  between               the  diploma-holders  and  non-diploma-holders               was  discriminatory and bad.  Apart  from  the               distinction on facts between that case and the               case  before  us,  it  is  evident  that  non-               consideration  of  the T.N.  Khosa  and  other               decisions  relevant under the subject has  led               to  the  laying down of  a  proposition  which               seems  to  run counter to  T.N.  Khosa.   With               great  respect  to  the  learned  Judges   who               decided that case, we are unable to accept the               broad proposition flowing from the case.               The  counsel for the respondents  then  relied upon  N. Abdul Basheer & Ors. etc. etc. v. KK Karunakaran  & Ors.,  [1989]  3  SCR 201 a decision of  a  Bench  of  three learned  Judges.   On an examination of the  facts  of  that case,  it was held by Pathak, C.J. speaking for  the  Bench, that  the history of the evolution of the Kerala Excise  and Prohibition  Subordinate  Service  does not  show  that  the graduates  and  non-graduates were treated as  two  separate categories.   The  following  observations  bring  out   the factual position found in that case.               "The history has varied with the circumstances               prevailing before and after the reorganisation               of the State on 1 November, 1956.   Originally               when  more emphasis was laid on the  induction               of  graduates, the ratio of graduate  to  non-               graduate  officers was maintained at  3:1  but               from  9 September, 1974 the ratio was  changed               inversely to 1:3.  More non-graduates were now               inducted  into the Service.  The trend  shows,               if   anything,  that  it  ran  in  favour   of               absorbing more non-graduates.  The  conditions               pertaining  to  the  service,  and  respecting               which  the constitution of the service  varied               from  time  to time, showed  fluctuations.   A               consistent  or  coherent policy in  favour  of               graduates  was  absent.  This is  not  a  case               where  the cadre of officers was kept  in  two               separate  divisions.  It was a  single  cadre,               and they were all equal members of it.   There               is   no  evidence  that  graduate   Preventive               Officers enjoyed higher pay than  non-graduate               Preventive Officers.  The High Court has noted               that  the nature of the duties  of  Preventive               Officers whether graduate or non-graduate  was               identical,  and both were put to  field  work.               Non-graduate Preventive Officers were regarded               as competent as graduate Preventive Of-               422               ficers.   There is no evidence of any  special               responsibility   being  vested   in   graduate               Preventive Officers.  Once they were  promoted               as Excise Inspectors there was no  distinction               between   graduate  and  non-graduate   Excise               Inspectors.’ It  is thus clear that the facts of that case were  entirely different  and  it  is  those  facts  which  influenced  the decision  holding  that no distinction can be  made  between graduates  and  non-graduates inspectors in  the  matter  of promotion.   The said decision, however, cannot be  read  as containing any proposition contrary to T.N. Khosa.  We  are, therefore,  of  the opinion that the principle of  the  said decision cannot help the respondents.  So far as the factual situation  is concerned, the facts of the case before us  do

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show,  as  discussed  hereinbefore,  that  since  1969   the graduate  supervisors  and  non-graduate  supervisors   were treated differently in the matter of pay, designation and in the  matter  of  promotion  though  they  were   discharging identical functions and duties. It  may  also  be noticed in this  connection  that  in  the government  service, the ratio of 3:1 as  between  graduates and  diploma-holders has been in vogue since prior  to  1965 and  the corporation has been trying to implement  the  said ratio in its service too. Another  argument  urged  by the  learned  counsel  for  the Respondents  is  that  by prescribing  a  longer  qualifying period of service for diplomaholders, they have been equated with   the   graduates  and  that  thereafter   no   further distinction   is   permissible.   We  cannot   agree.    The distinction  aforesaid was also in the matter  of  promotion and  not for any other purpose.  If that distinction is  not discrimination,  it is difficult to see how and why  another distinction  now  created (quota  rule)  is  discriminatory. Suppose, if these two requirements (i.e., longer  qualifying service  and  quota rule) had been introduced  at  the  same time,  there  could  have  been  no  room  for  the  present argument.   The  rule would  have been good.   How  does  it become  bad,  if they are introduced at  different  times? Both  relate to their eligibility and chances of  promotion. To  wit,  the  basic question is  if  they  can  be  barred altogether from promotion, a& held in T N. Khosa, why  can’t their  chances  of  promotion be  restricted,  curtailed  or hedged in.               Sri    Thyagarajan,   learned   counsel    for               respondents 3 to 8 (diploma-holders) raised an               alternative  contention based upon Section  87               of the               423               Madras   City   Municipal   Corporation   Act.               Section 87 reads as follows               "87.   TIME  WITHIN WHICH VACANCY  IN  CERTAIN               POSTS MUST BE FILLED UP:               (1)   If  a  vacancy  occurs  in  any   office               included in Class I-B or Class II, or any  new               office  in Class I-B or Class II  is  created,               the council shall within three months  appoint               any qualified and suitable person to hold such               office.               (2)   If   the  State  Government  refuse   to               confirm  the appointment so made, the  council               shall   appoint  some  other   qualified   and               suitable  person within forty-five  days  from               the    receipt   of   the    order    refusing               confirmation.               (3)   In default of any appointment being made               in  accordance  with sub-section (1)  or  sub-               section(2),  as  the case may  be,  the  State               Government  may appoint a person who in  their               opinion, is qualified and suitable to hold the               office and such person shall be deemed to have               been appointed by the council.               (4)   Pending an appointment under sub-section               (1)  or  sub-section  (2),  the  council   may               appoint   a   person  to   hold   the   office               temporally and assign to him such salary as it               may think fit :               Provided  always that the salary  so  assigned               shall  not  exceed the maximum  fixed  by  the               State  Government by rules in respect  of  the

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             office." The  contention of the learned counsel is this:  sub-section (1) of Section 87 obligates the council to fill up a vacancy within  three  months  of  occurrence  of  a  vacancy  by  a qualified and suitable person.  Sub-section (3) provides the consequence  of  the  default of the council  in  making  an appointment  within the time prescribed by sub-section  (1). In such eventuality the State Government becomes entitled to appoint  a  person, who in their opinion  is  qualified  and suitable  for such office and the person so appointed  shall be deemed to have been appointed by the council.  Sub- 424 section  (4)  empowers  the  council  to  make  a  temporary appointment pending an appointment under section (1) or sub- section  (2).  Sub-section  (2)  says  that  if  the   State Government  refuses to confirm the appointment made  by  the council  under  sub-section (1), the council shall  have  to appoint  some  other qualified and  suitable  person  within forty-five days from the date of receipt of the order of the Government refusing confirmation.  The counsel contends that in  view  of the said provision, the vacancies  which  arose three  months prior to the date of the commencement  of  the impugned  amendment  should  be  filled  according  to   the unamended  rules i.e., without reference to the  quota.   He relies  upon  the  decisions of this  Court  in  Rangiah  v. Srinivasa  Rao, 119831 3 SCC 284; P. Ganeshwar Rao v.  State of  Andhra Pradesh, [1988] Supp.  SCC 740; P. Mahendran  and Others v. State of Karnataka and Ors., [1990] 1 SCC 411  and Devin Katti & Others v. Karnataka Public Service  Commission and Others, [1990] 3 SCC 157. On  the  other hand the learned counsel  for  the  appellant submits  firstly, that this argument was not  raised  before the  High  Court and should not be allowed to be  raised  at this stage for the first time, secondly, he says Section  87 is  not mandatory but only directory.  The  learned  counsel also argues that in pursuance of the judgment of the learned Single Judge dated 21.3.1991 (upholding the validity of  the impugned  amendment  and giving certain  directions  in  the matter  of  making  promotions  to  the  post  of  assistant executive engineer) and also because stay was refused by the Division  Bench of High Court in the Writ Appeals  preferred against  the said judgment, the Corporation promoted  thirty degree-holders  including  six appellants  on  5.6.1991.  In fact,  it  is  stated,  by an  order  dated  30.4.1991,  the Division  Bench allowed the Corporation to  make  promotions pending  the Writ Appeals, of course, subject to the  result of  the  writ  appeals.  It is  submitted  further  that  by another Order passed in May, 1992, the Corporation  promoted another twelve degree-holders and three diploma-holders.  It is  also  brought to our notice that in  the  Special  leave petition  preferred  against the judgment  of  the  Division Bench,   this   Court   stayed   the   reversion   of    the appellants/petitioners  by its order dated  14.9.1992  which order was continued by another order dated 21.9.1992. It  is submitted that in the above circumstances a direction of the nature  sought  for  by respondents 3 to  8  will  mean  the reversion  of  the  appellants who  have  been  promoted  in pursuance  of the order of the learned Single Judge.  It  is pointed out if this 425 Court  is upholding the impugned amendment, it would not  be just to permit the reversion of degree-holders on the ground urged by the respondents for the first time in this appeal. In  our  opinion Section 87 does indicate and  manifest  the concern  of the Legislature that the vacancies occurring  in

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the  Corporation Service should not be kept unfilled  for  a period  of  more than three months.  Sub-section  (3)  which provides  for the consequence of default on the part of  the council  to abide by sub-section (1) emphasises the  concern of  the  Legislature.  So also does sub-section  (2).   Sub- section  (4) says that if there is going to be any delay  or if  a  suitable or qualified person is  not  available,  the council  may appoint a person on temporary basis.  The  said provision  is,  therefore,  analogous to,  and  indeed  more specific than rule 4 of the Andhra Pradesh Registration  and Subordinate Service Rules considered in Rangiah v. Srinivasa Rao.   Accordingly it must be held that the learned  counsel for  respondents 3 to 8 is right in his submission that  the vacancies occurring prior to three months before the date of commencement  of the impugned amendment ought to  have  been filled in accordance with the rules then obtaining.  At  the same  time  we  cannot fail to recognise the  force  in  the argument of the learned counsel for the appellants that  the respondents  not  having raised the said contention  in  the High  Court  i.e., before the learned Single  Judge  or  the Division  Bench should not be allowed to raise the  same  in this  Court  for  the first time.  On  a  balancing  of  the contending  equities,  we  are  of  the  opinion  that   the following  direction  would be the appropriate  one  in  the particular  facts  and  circumstances  of  this  case.   The direction is this : The  Corporation  shall  ascertain  the  vacancies  in   the category of Assistant executive engineers, that have  arisen three months prior to the coming into force of the  impugned amendment  (introducing the quota of 3:1 as between  degree- holders   and  diploma-holders)  and  shall  work  out   the vacancies  which would have gone to the  diploma-holders  if unamended  Rules had been followed.  The  Corporation  shall also ascertain which of the diploma-holders would have  been promoted  in those vacancies.  Such diploma-holders will  be promoted  in the vacancies that may be existing as on  today and  those that may arise in future.  Until  these  diploma- holders  are  so  promoted to  the  category  of Assistant Executive  Engineers, no degree-holders shall  be  promoted. After these diploma-holders are so 426 promoted  and  thereafter, it is obvious the  amended  Rules shall be applied and followed.  It is further directed  that as  and  when a diploma-holder is promoted in  pursuance  of this direction, his promotion shall be given effect to  from the  date  he ought to have been  promoted.   Such  diploma- holders  promotees  shall  be entitled  to  the  benefit  of seniority  and pay-fixation flowing from such  retrospective promotions, but they shall not be entitled to the arrears of difference  in salary for the period they have not  actually worked as Assistant Executive Engineers. For  the reasons recorded hereinabove the appeal is  allowed subject  to the direction made in the  preceding  paragraph. The Order of the Division Bench of the Madras High Court  in Writ Appeal No. 518 of 1991 is set aside.  There shall be no orders to costs. V.P.R. Appeal allowed. 427