D. RAGHU AND OTHERS versus R. BASAVESWARUDU AND OTHERS ETC. on 5 February 2020

[2020] 5 S.C.R. 74

SUPREME COURT REPORTS

[2020] 5 S.C.R.

A

D. RAGHU AND OTHERS

v.

R. BASAVESWARUDU AND OTHERS ETC.

(Civil Appeal Nos. 1970-1975 of 2009)

BFEBRUARY 05, 2020

[SANJAY KISHAN KAUL AND K. M. JOSEPH, JJ.]

Service Law – Appellants in C.A Nos.1970-1975 of 2009(concerning entitlement to promotion to the post of Inspector,Central Excise) were originally recruited as Data Entry OperatorsC(DEOs) Grade ‘A’ and working as Data Entry Operators Grade‘B’ from the year 2000 – Challenged notice dated.05.11.2002seeking to confine promotion to the post of Inspector to categoryof Tax Assistant, Upper Division (UD) Clerk, Stenographer Grade-II, etc., with certain years of experience – Tribunal directed theDappellants to be considered for promotion to the post of Inspectors– Challenged by Union of India and official respondents – HighCourt set aside the order inter alia holding that Writ Petitioners hadlegal right, under the erstwhile 1979 Rules, to be considered forpromotion to the vacancies arising prior to the 2002 Rules whichcame to be made w.e.f 07.12.2002 in regard to the post ofEInspector – It also found that it was only when the Senior TaxAssistant Rules, 2003 (STA Rules, 2003) were made in the year2003 that the restructuring in the Department, to which the Cabinetgave its approval on 19.07.2001, came into effect – Regardingvacancies arising after 07.12.2002, it was left undecided – C.AFNo. 1976 of 2009 relates to the right to be promoted to the post ofU.D.Clerk & Tax Assistant in Central Excise Department – HighCourt allowed writ petition filed against the Order of the Tribunaltherein and found that promotions to the post of UDC and TaxAssistant must be effected on the basis of the rights crystallizedunder the 1979 Rules, as amended – Held: Promotion to the postGof Inspector was governed by the 1979 Rules till 07.12.2002 –Under the 1979 Rules, DEOs were not among the feeder categoriesfor promotion as Inspector – By order dtd.19.07.2001, Cabinetapproved restructuring of certain posts including the post ofInspector – Thereunder, the post of DEO Grade ‘B’ among otherHcategories, were merged and the cadre of Senior Tax Assistants

R. BASAVESWARUDU AND OTHERS

emerged – However, the restructured cadre of Senior Tax Assistants,did not come into being – It was born with the bringing into forceof the STA Rules, 2003, on 20.01.2003 – Tribunal proceeded onthe basis that the restructuring became complete with the issuanceof order dtd.19.07.2001 – Appellants are not entitled to haveseniority determined in respect of vacancies of Inspector arisingprior to 07.12.2002 – Appellants are eligible to be considered forpromotion from 20.01.2003 and are entitled to add their serviceas DEO Grade ‘B’ for the purpose of the 2002 Inspector Rulesand considered for vacancies to be filled by promotion, which aroseafter 07.12.2002 – Persons in Clause (a) u/Column 12 of the 2002Rules, are also entitled to be considered for two years from20.01.2003 – Seniority is to be considered based on r.5, STA Rules– Said exercise, if not carried out already shall be carried out –Further promotions based on the above will be granted – However,the promotions shall be notional where promotions have alreadybeen effected, entitling the parties to seniority and pensionarybenefits – In C.A. No. 1976 of 2009, no fault is found with theorder of High Court – Central Excise and Land CustomsDepartment Group ‘C’ Posts Recruitment Rules, 1979 – ElectronicData Processing Discipline (Group-E Technical Post) RecruitmentRules, 1992 – Central Excise and Land Customs DepartmentInspector (Group ‘C’ posts) Recruitment Rules, 2002 – CentralExcise And Customs Department Senior Tax Assistant (Group ‘C’Posts) Recruitment Rules, 2003 – Central Excise And CustomsDepartment Tax Assistant (Group ‘C’ Posts) Recruitment Rules,2003 – Interpretation of Statutes.

Disposing of the appeals, the Court

HELD: 1.1 ANALYSIS

Disposing of the appeals, the Court

HELD: 1.1 ANALYSIS

Though there is case for the respondents that the ban onrestructuring was lifted by letter dated 03.01.2002, suchcontention appears to be categorically belied by the prohibitionagainst filling-up of any vacancy in respect of posts included inthe cadre restructuring, till such time, as further orders areissued. Though vacancies may have arisen, which could be filled-up under the 1979 Rules, this appears to be a case where aconscious decision was taken not to fill-up the vacancies in thewake of the restructuring process which was undertaken by the AB

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AGovernment. Though a contention is taken that the post ofInspector is not part of the cadre restructuring, there may notbe merit in the said contention. The post of Inspector emergedas re-designated post in place of the erstwhile post of Inspector/Preventive Officer/Appraiser. More importantly, that it was aBpart of the restructuring, is clear from the fact that the numberof posts fell from a little over 22000 to a little over 18000.Therefore, the post of Inspector was a post which can be treatedas included in cadre restructuring. The taboo against filling-upof the vacancy, is clearly reflected in the communication dated05.06.2002. On 26.6.2002, urgent direction is issued to holdCDPC to the post of Superintendent of Central Excise andSuperintendent of Customs. The next letter to notice is theletter dated 19.09.2002. Therein, after referring to letter dated26.06.2002, it is stated that it was decided to initiate the processfor filling-up vacancies that have arisen on account of cadreDrestructuring in all remaining cadres up to Grade ‘B’. It wasdirected to ensure that apparently DPC was convened in respectof all Grades for the change of number of posts, as also Grades,where revised Recruitment Rules have been circulated. On23.09.2002, promotion orders in respect of Superintendents wereallowed to be issued. On 28.10.2002, the Draft RecruitmentERules for Group ‘C’ post of Inspector and Senior Tax Assistantwas communicated to all Chief Commissioners, both, Customsand Central Excise. It was further stated that Notificationsnotifying the Rules will be issued shortly. Direction was givento start the process of DPC. Thus, it could be said that by theFissuance of this communication, the Government decided toproceed with the recruitment by promotion to the post ofInspector. A perusal of the communication dated 28.10.2002,reveals the following:

All chief Commissioners were favoured with DraftGRecruitment Rules for the Group ‘C’ post of Inspector (CentralExcise and Land Customs), Inspector (Examiner) and Inspector(Preventive Officers). Besides the Draft Recruitment Rules forthe post of Senior Tax Assistant, as approved by the Ministry,was also dispatched to the Chief Commissioners. It is specificallyHstated that the Notifications, notifying the Rules, will be issued shortly. The Chief Commissioners were told that they mayinitiate necessary action to process for DC (apparently DPC).The next sentence is of crucial significance. [Paras 69-71] [146-G-H; 147-A-D; 147-G-H; 148-A-D]

1.2 This communication establishes further, the followingaspects:

Restructuring the post of Inspector, contemplated underthe order dated 19.07.2001, had not yet come into being. Thisis because there is reference to the post of Inspector (CentralExcise & Customs), Inspector (Examiner) and Inspector(Preventive Officer). If the post of Inspector, as contemplatedunder the Order dated 19.07.2001, had already come intoexistence with the issuance of the Order dated 19.07.2001, therewas no occasion to continue to refer to pre- designated postsfrom which the post of Inspector emerged. Still further, what wasobviously contemplated was that the post of Inspector was tobe filled-up after the process of restructuring was over. In otherwords, the Rules relating to Inspector and the Rules relatingto recruitment of Senior Tax Assistants, was to be brought intoforce simultaneously. This conclusion appears inevitable fromthe circumstance that the Chief Commissioners were directedto await issuance of Notification notifying the Rules before ordersof promotions were issued based on the Rules which were theDraft Recruitment Rules. It is not indicated in the Order dated28.10.2002 that promotion to the post of Inspector was to bemade under 1979 Rules. What was, in fact, contemplated wasthat the process, viz., the holding of the DPC for the post ofInspector, was to begin and operationalised under the DraftRules but the actual orders of promotion were to be issued onlyafter the Rules were actually brought into force. The DraftRecruitment Rules for the Tax Assistant was also sent by letterdated 06.11.2002. In the Order dated 14.11.2002, it isspecifically, inter alia, ordered that promotion orders in respectof the post of Inspector (Central Excise)/Preventive Officer/Examiner of Customs may be issued on the basis of theRecruitment Rules after the allotment of GSR Number by theGovernment of India Press. Thus, the green signal was givento go ahead with the issuance of promotion order for the post A

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Aof Inspector, inter alia, based on the Recruitment Rules, afterthe allotment of the GSR, which means the Notification of theRules. What actually happened was, however, as follows:

The Inspector Rules and the Senior Tax Assistant Ruleswere not published and brought into force on the same date. TheBInspector Rules came to be finalised and published on29.11.2002. It is brought into force on 07.12.2002. The STARules, though published on 16.01.2003, was brought into forceon 20.01.2003. [Paras 72-75] [148-E-H; 149-A-B; 150-A-C]

2.1 WHEN CADRE RESTRUCTURING TOOK PLACECTurning back to Note 1 to the 2002 Inspector Rules, it isnoticed that promotion under Clause (a) was to be operative fora period of two years from the date on which the restructuredCadre in Clause (b) comes into existence. If the interpretationsought to be placed by the appellants is accepted, and it is heldDthat the restructured cadre of Senior Tax Assistant came intoforce with effect from 19.07.2001, the result would be thatpromotion under Clause (a) would be limited by a period of twoyears from 19.07.2001. In other words, no promotion could beordered from the Feeder Category mentioned in Clause (a) inColumn 12 of the 2002 Inspector Rules after 18.07.2003. ThisEalso means that promotions could be, therefore, effected duringthe period commencing from 19.07.2001. This produces theanomalous result that promotions are to be countenanced underthe 2002 Rules, retrospectively from 19.07.2001. What is more,according to the appellants, promotions were banned during theFperiod. This, in our view, completely militates against the ideathat the restructured Cadre came into being from 19.07.2001.The Court is not oblivious and has indeed expressly articulatedthe circumstances from communication dated 19.07.2001 whichprobablised the appellant’s contention that restructuring becamea reality from 19.07.2001. But, the Court, at this juncture, mustGalso notice that the actual distribution of posts in differentformations was postponed. It may not be in apposite, at thisjuncture, to also notice another factual aspect. There is a definitecase for the respondents that the Data Entry Operator Grade‘B’ and ‘C’ continued as such and they were only re-designatedHas Senior Tax Assistant or Tax Assistant on the enforcement of

the 2003 Rules and not before such enforcement. In fact, it wasalso not seriously disputed before us that this was indeed thecase on the ground. The Court may also find light from the STARules. Rule 5 declares that “all the persons appointed onregular basis at the commencement of the Rules in the Gradeof Assistant, Tax Assistant, U.D. Clerk (Special Pay), Data EntryOperator Grade ‘B’ and Grade ‘C’, shall be deemed to havebeen appointed as Senior Tax Assistant under these Rules”.No doubt, the Rule contemplated that the persons to be deemedto have been appointed as Senior Tax Assistant under the 2003Rules, were the categories. What is more relevant is, they arereferred to as the persons appointed at the commencement of“these Rules”. The words used are “persons appointed”. Theintention appears to be to indicate that the persons wereappointed and working on the commencement of the Rules,which is on 20.01.2003. It is those persons, who were referredto by the designation, which were the posts which were held bythem prior to the restructuring. In other words, appellants, whowere working as Data Entry Operator Grade ‘B’, upon beingpromoted in the year 2000, were indeed persons who wereappointed on regular basis as Data Entry Operator Grade ‘B’as on 20.01.2003, when the Rules, admittedly, were brought intoforce. Further support is found for the view that the appellantsbecame Senior Tax Assistant upon Rules being brought intoforce from the further limbs of Rule 5. Sub-Rules (ii), (iii) and(iv) deal with the issue of inter se seniority of the differenterstwhile restructured categories from which the designatedcategory of Senior Tax Assistant was born. Those Assistants,who were drawing salary of pay scale of 5000-8000, and DataEntry Operator Grade ‘C’, drawing the same pay scale, were re-designated as Senior Tax Assistants in the same scale. Theywere to rank at the top of the seniority list of the newly createdposts of Senior Tax Assistants. Just below them were put thecategories of Data Entry Operator Grade ‘B’ and Tax Assistants,both drawing the pay scale of 4500-7000, and they have beenplaced in the higher pay scale of 5000-8000 and they were tobe placed below the Data Entry Operator Grade ‘C’. Similarly,at the bottom of the pyramid, there is the post of Upper DivisionClerk with special pay, who were to be placed below all the above AB

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Acategories as aforesaid. Note 1, in Column 12 of the 2002Inspector Rules provides that the promotion in Clause (a) wasto be operative for a period of two years from the date on whichthe restructured cadres, mentioned under Clause (b) above,comes into existence. Had it been the case where therestructured cadre in Clause (b) had already come intoBexistence, by virtue of order dated 19.07.2001, the Law Giverwould have used language indicating the past tense. The LawGiver, thus, contemplated that the restructured cadre in Clause(b), which includes cadre of Senior Tax Assistants, had not comeinto existence and it was to come into existence. It came intoCexistence, indeed, in the future, viz., on 20.01.2003. On aconsideration of the Government Orders and, more importantly,the Statutory Rules that the conclusion appears to be inevitablethat restructured cadre actually came into force in the cadre ofSenior Tax Assistant with the Rules being brought into force onD20.01.2003. Quite apart from the fact that this is the legalinterpretation that flows, we are also supported by the fact onthe ground that the appellants appeared to continue till after theRules were brought into force with the designation as Data EntryOperators Grade ‘B’. A perusal of Rule 5(v) of the STA Rules2003 would also show reference to ‘present employees’ and theyEwere to pass the departmental examination ‘within two years’.Failure was to result in their being rendered ineligible for futureincrements. Certainly, the period of two years would commenceonly from 20.01.2003. If so, the ‘present employees’, includingthe appellants continued as Data Entry Operator Grade ‘B’ tillF20.01.2003. The view that the STA Cadre emerged only on20.01.2003, is supported by official understanding, as reflectedin proceedings dated 21-04-2003. The principle ofcontemporanea expositio is apposite in the facts. [Paras 81-85][153-F-H; 154-A-H; 155-A-H; 156-A-B]

G3.1 APPELLANTS RIGHTS AS SENIOR TAXASSISTNATS ON RESTRUCTURING

The Tribunal proceeded on the basis that the restructuringbecame complete with the issuance of the order dated19.07.2001. It must be noted that the Original Application cameHto be filed on 19.11.2002 at a time when the Inspector Rules

had not even been finalized as the Rules came to be finalizedonly on 29.11.2002 and, in fact, brought into force till later on07.12.2002. Undoubtedly, the Note contemplated, giving personsin Clause (a), viz., those falling in the pre-restructured cadre,the benefit of taking into consideration the service rendered inthe restructured Cadre, for being promoted as Inspector. Thepersons falling in the restructured Cadre, were not conferredwith such advantage. However, by the time the OriginalApplication came to be heard, the Senior Tax Assistants Rules2003 came into force with effect from 20.01.2003. Under Rule5 of the 2003 Rules, the persons working as Data Entry OperatorGrade ‘B’, inter alia, stood re-designated as Senior TaxAssistants and they were also given the benefit of reckoning thepast service and calculating the qualification of experience of twoyears under the Inspector Rules, 2002. In fact, the Tribunal hasalso taken note of the 2003 Rules. Both the persons in the pre-structured cadre and those in the restructured cadres, were, byvirtue of Note 1 to Column 12 to the 2002 Rules and Rule 5(i)of the Senior Tax Assistants Rules 2003, respectively, weregiven the benefit of counting service as provided therein. TheTribunal, in fact, has gone on to find that the Senior TaxAssistants under Rule 5(i) of the 2003 Rules were entitled toreckon their service as Data Entry Operator Grade ‘B’ foreligibility for promotion as Inspector. The Tribunal goes on tofind that the unified restructured cadre of Senior Tax Assistantsalone would be eligible for promotion as Inspector. Theintegrated seniority is to be worked out in terms of Rule 5 ofthe 2003 Senior Tax Assistant Rules. This is based on thepremise that with effect from 19.07.2001, the restructuring ofSenior Tax Assistant came into force and all the earlier Cadresstood merged. [Para 87] [157-A-G]

3.2 The Original Application has been allowed in part. Itis necessary to notice that the effect of granting the said reliefand also the effect of not granting the reliefs in paragraph 8(b).Granting of the Relief 8(c) would mean that this Court would alsohave to accept that under the 2002 Inspector Rules, it is onlythe restructured Cadre, which would be entitled for promotionto the cadre of Inspector. To put it differently, the persons fallingin Category (a), which corresponds to feeder categories, under AB

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Athe 1979 Rules, would not be entitled for promotion as Inspector.It is now necessary to look at their prayer, i.e., 8(b) and theeffect of not granting any relief thereunder. Prayer 8(b) wassought by the appellants to set aside the Recruitment Rulescommunicated vide 28.10.2002, as confirmed vide Gazette ofIndia Notification dated 29.11.2002, incorporating theBunconscionable conditions under Clause (a) and Note 1 ofColumn 12 of the 2002 Inspector Recruitment Rules. Thisprayer is also based on the restructuring process, having effectfrom 19.07.2001. The Tribunal has not granted the relief inparagraph 8(b) of the Original Application. This means that theCpersons in Category (a) of Column 12 of the Inspector Rules,cannot be affected. The result is that it exposes the fallacy ingrant of Relief 8(c). In fact, there are two basic flaws. In the firstplace, the restructuring did not come into effect on issue ofcommunication dated 19.07.2001. The restructuring came intoeffect only with the issuance of Rules. This by itself takes awayDthe entire basis of the Tribunal’s Order. Secondly, the Tribunalhas not declared the Statutory Rule infirm, which was the specificrelief sought for by the appellants in Relief 8(b). In other words,Clause (a) of Column 12 and the Note, in the 2002 InspectorRules impugned on the one hand, continues on the Statute Book,Ewhereas, the declaration is purportedly granted under paragraph8(c), which necessarily involves declaring that only personsre-designated under the restructured cadres in Clause (b) asSenior Tax Assistants, inter alia, would be entitled to beconsidered for promotion as Inspector of Central Excise andCustoms. In fact, the Order of the Tribunal at Chandigarh alsoFdid not involve granting any exclusive right to the persons inthe restructured Cadre falling in Clause (b). The decision of theBombay High Court also does not reflect any such reasoning.It is well-settled that when Statutory Rules are challenged, theyare upheld, or if warranted, declared ultra vires or read down, ifGpossible. The Order of the Tribunal is specific that what isgranted, is the relief contained in paragraph 8(c) of the OriginalApplication. Resultantly, Clauses (a) and (b) continued to be onthe Statute Book. The Tribunal has rather allowed the OriginalApplication partly and found that the appellants are also entitledto be considered for promotion as Inspector. In Arriving at thisHconclusion, the Tribunal has drawn support undoubtedly from the views expressed by the Central Administrative Tribunal,Chandigarh, the Central Administrative Tribunal, Madras and theHigh Court of Bombay. [Paras 88, 89] [158-C-H; 159-A-D]

4.1 WHETHER STA COULD ADD SERVICE AS DATAENTRY OPERATORS AND WHETHER PERSONS INCLAUSE (A) HAD AN EXCLUSIVE RIGHT FOR TWOYEARS?

The appellants are right that they are entitled to count theprevious service. The words used in Rule 5 are unambiguousand clear. In this regard, the Court must also deal with the yetanother contention based on the differences between Rule 5 ofthe Senior Tax Assistant Recruitment Rules, 2003 and Rule 4of the Tax Assistant Rules, 2003. It may be true that there issome difference but, in our view, the words used differently inthe two provisions, are not meant to take away the right, whichwas conferred on persons who were on restructuring to bedesignated as Senior Tax Assistants and Tax Assistants. In Rule5, what is contemplated is that the service rendered by DataEntry Operators Grade ‘B’ and ‘C’, inter alia, beforecommencement of the Rules is to be taken about for eligibilityfor promotion to the next higher grade. No doubt, in Rule 4, ofthe Tax Assistant Rules, the Rule Maker has become morearticulate. They have referred to the words like ‘respectivepost’, before commencement of Rules and ‘regular service’which expressions are conspicuous by their absence in Rule 5of the Senior Tax Assistant Rules. Better wisdom prevailed onthe Law Giver in the course of few months to attain clarity inthought and expression but the Court would not be gleaning theintention of the Law Giver, if it were oblivious to the contextand the object with which the entire exercise of restructuringwas carried out. They would also amount to introducing anelement of discrimination between the Senior Tax Assistants andthe Tax Assistants in the conferring of benefits. Of foremostimportance is that the view the Court has taken is warrantedby even the plain words used in Rule 5. Rule 5 clearly indicatesthat the service which was rendered by a Data Entry OperatorGrade ‘B’ and ‘C’, inter alia, prior to the commencement of theRules, would be considered for promotion. This leaves us in no A

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Adoubt that the intention was to allow the Data Entry Operatorboth Grade ‘B’ and ‘C’, inter alia, to tag their previous servicethat is prior to 20.01.2003 for the purpose of calculating therequisite period of service under the 2002 Inspector Rules. Itwould appear that what was contemplated was that the InspectorRules and the STA Rules would be brought into force at the sameBtime. If it had so happened, the following consequences wouldhave followed. Not only would STA would be a feeder categorybut STA would have been able to count their previous serviceas Data Entry Operator Grade ‘B’, inter alia. Still further, underNote 1, promotion under Clause (a), was to be operative for aCperiod of two years, from the date the restructured cadre, underClause (b), was to come into existence. Apart from indicatingthat the restructuredcadre ‘was to come into force’ and,therefore, it had not come into force as on 19.07.2001 ascontended by the Data Entry Operators, the promotion fromClause (a) being predicated on the point of time when theDrestructured cadre came into force, if the STA Rules were alsobrought into force from 07.12.2002, the service rendered bypersons under the restructured Grade could have been availedof by persons in Clause (a) from 07.12.2002.

EAs regards the argument that under the 2002 InspectorRules, persons in Clause

EAs regards the argument that under the 2002 InspectorRules, persons in Clause (a) were given an exclusive right to be promoted for aperiod of two years, little merit is seen in the same. Clause (c)of Column 12 provides for promotion from the categoriesFthereunder, in the absence of persons falling in Clause (b). Nosuch rider is found in Clause (b). If the STA Rules had beenbrought into force on 07.12.2002, then, it is clear that addingtwo years as Data Entry Operator Grade ‘B’, the appellantswould certainly be eligible, particularly, keeping in mind theintent in Order dated 28.10.2002. There can be doubt thatGnothing stands in the way of appellants and others similarlysituated being considered from 20.01.2003 by adding the serviceas Data Entry Operator Grade ‘B’. Both, persons in Clause (a)and persons in Clause (b), subject to being possessed ofqualifications, could compete for the vacancies. The right ofthose in Clause (a), would come to an end from 19.01.2005.H

There can be no doubt that the STA Rules came into effect on20.01.2003. The restructured cadre of STA became a reality from20.01.2003. [Paras 92-96] [160-G-H; 161-A-H; 162-A-E]

4.2 The problem, however, arises as what is to be donequa vacancies of Inspector which were purportedly filled-up ason 20.01.2003 pursuant to Notice dated 05.11.2002 which wasimpugned in O.A. 1362 of 2002. The Tribunal has not interferedwith the notice dated 05.11.2002 but it has found that it was notin accordance with the Rules (apparently Inspector Rules 2002which superseded the 1979 Rules). But this is again premisedon the restructuring becoming a reality with effect from19.07.2001. This, has been found to be erroneous. Persons inClause (a), under the 2002 Rules, could be promoted for aperiod of two years from the date the restructured categoriesunder Clause (b) came into force. Thus, the promotion involving2002 Rules from Clause (a) could be for a two year from20.01.2003 as the restructured category came into force only on20.01.2003, even according to the respondents. Thus, for bothcategories in Clauses (a) and (b) (STAs), their eligibility under2002 Rules, commenced only from 20.01.2003. If so, thequestion would be the effect of promotion already made as notedby the Tribunal itself. As on 05.11.2002, the 1979 Rulesgoverned promotions. The status of the draft Recruitment Rulesis no longer res integra. While, promotion can be based on draftRecruitment Rules, it cannot be done, if the draft Rules are inthe teeth of existing Statutory Rules. [Paras 97-100] [162-E-H;163-A-C]

4.3 Vacancies were filled- up as per notice dated 05.11.2002from persons falling under Clause (a), who corresponded to thefeeder category in the 1979 Rules. The appellants have not laidany challenge to the Order of the Tribunal. The ban on directrecruitment was to come to an end on 31.12.2002. There were242 vacancies of Inspectors in Hyderabad Commissionerate. Itis true that under letter dated 28.10.2002, and even read withletter dated 14.11.2002, what was contemplated was promotionunder the draft Recruitment Rules for Inspector and STA.Promotion orders were to be made only after GSR Number weremade for the Draft Rules, meaning thereby, after it was finalised.They were intended, as already found, to be operated at the AB

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Asame time, thus, rendering both categories in Clauses (a) and(b), to be considered. Having regard to the fact that vacancieswere not filled-up, as can be seen from communications dated10.09.2001 and 05.06.2002, in the light of the restructuring thattook place in the Department, it would appear that a consciousdecision was taken to not fill- up the vacancies arising from theBrestructuring based on 1979 Rules. Instead, communicationdated 28.10.2002 clearly would show that the vacancies were tobe filled-up, based on the proposed new Recruitment Rules. Thisbeing the case, the High Court was in error in proceeding onthe basis that the principle in Y.V.Rangaiah would apply. TillC07.12.2002, the STA was not even in Feeder Category. Ithas also been held that the STA Cadre is born on 20.01.2003.There is a case for the respondents that the ban on directrecruitment (which is also a method of appointment) was to cometo an end. There was a need to have Inspectors in a larger number of vacancies. The STA Cadre could not have been usedDto fill the vacancies. The finding that from 19.07.2001, therestructured Cadre came into being, is unsustainable. In suchcircumstances, though it may be true, intention was to fill-up thevacancies after both sets of Rules were operationalised,promotions were made. As to whether it is legal, the answer canEbe that promotion, as per extant Rules, given in vacancies priorto the new Rules, is recognized. This is not a case where theAuthority was denying promotion to vacancies based on theearlier Rules. It is also noticed that based on such promotion,further promotions have been given. The appellants weredirected to be considered for vacancies, which were filled-upFafter. The Court cannot, in the circumstances, be persuaded tohold that the Tribunal was right in directing the respondents torevise the seniority qua promotion made earlier. [Paras 102-104][163-G-H; 164-A-H]

5. LEGALITY AND CORRECTNESS OF HIGH COURTGDIRECTING VACANCIES TO BE FILLED WHICHEXSISTED PRIOR TO 07.12.2002

The High Court was not right in directing filling-up ofvacancies prior to 07.12.2002, based on the 1979 Rules, as afterHthe 2003 Rules came into force, going by the intention of the

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Authority, the right to promotion would be based on the newRules, even if the vacancies arose prior to the new Rules. Thatis to say, when the High Court disposed of the matter, if anyvacancy remained to be filled-up in the Cadre of Inspector, then,as the STA Rules had come into existence on 20.01.2003, theSTAs armed with the right to add service as Data Entry OperatorGrade ‘B’, were entitled to be considered. However, it is herethat the impact of the matter, having been pending in this Courtfor more than a decade, and, in the meantime, the judgment beingimplemented and further promotions being made, cannot be lostsight of, even in an Appeal, which is maintained by grant ofSpecial Leave, as in this case. It is open to the Court to declineto interfere. The Court bears in mind the principles laid downby this Court in Taherakhatoon (D) By Lrs.v. SalambinMohammad and would not disturb the direction to fill-up thevacancies which arose prior to 07.12.2002, as directed. [Para106] [165-D-H]

6. VACANCIES OF INSPECTOR WHICH AROSEAFTER 07.12.2002

Both persons in Clauses (a) and (b)(STA Cadre) becameentitled to be considered for promotion under the two sets ofRules with effect from 20.01.2003. Certainly, the appellantshaving worked as Data Entry Operator Grade ‘B’ are entitledto add the period of service as Data Entry Operators Grade ‘B’.Thus, vacancies of Inspector, to be filled-up by promotion, mustbe filled-up by considering both on the basis of the seniority,under Rule 5 of the 2003 STA Rules. The appellants would beentitled also to be considered for promotion based on the sameon the basis of the entitlement, as aforesaid. [Para 107] [166-C-E]

7.1 CIVIL APPEAL NO. 1976 OF 2009

7.1 CIVIL APPEAL NO. 1976 OF 2009

Under the 1979 Rules, on the basis of an amendment, thepost of Tax Assistant (old) was incorporated by GSR 314 dated12.07.1996. Thereunder, post of Tax Assistant (old) was includedin the 1979 Rules. Promotion to the post was to be from thepost of U.D. Clerk with three years’ service subject to theirpassing a departmental exam with minimum marks of 40 percent. There are other rights given to Senior Clerks under the AB

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ANote. Under the 1979 Rules, the post of U.D. Clerk was to befilled-up 50 per cent from direct recruitment and 50 per cent bypromotion. One of the feeder categories was L.D. Clerks withseven years’ service which was relaxable up to five years. Thesecond Feeder Category was Women Searchers recruited priorto 09.05.1975 with five years’ combined service as WomenBSearcher and L.D. Clerk and who have passed departmental orpromotional exam. The 1979 Rules, insofar as it related to thepost of U.D. Clerks and Tax Assistants, continued to remain inforce even after the promulgation of the Inspector Rules, 2002and the Senior Tax Assistant Rules. It is when the Tax AssistantCRules were made in supersession of the 1979 rules so far as itrelated to the post of U.D. Clerk and L.D. Clerk that the 1979Rules ceased to apply. Thus, 1979 Rules continued to be in forcein regard to the post of U.D. Clerk and L.D. Clerk till05.05.2003. Under the 2003 Tax Assistant Rules, brought into force w.e.f. 05.05.2003, as contended by the official respondentsDbefore the Tribunal, the persons working as U.D. Clerks, wereto be established as initial cadre of Tax Assistants. So also, theL.D. Clerks, upon passing the examination, were to become TaxAssistants. The posts of U.D. Clerk and L.D. Clerk are Group‘C’ posts. No doubt, the ban, which was imposed on directErecruitment, was to continue till 31.12.2002 (See Order dated19.09.2002). By Order dated 28.10.2002, the draft RecruitmentRules for Inspector and Senior Tax Assistants was communicatedand the process was to be set in motion and promotion was toawait the issue of Notification. [Paras 112-115] [169-B-H; 170-A-B]F

7.2 As far as the post of Tax Assistant is concerned, bythe order dated 06.11.2002, all the Chief Commissioners wereforwarded the draft Recruitment rules for Tax Assistants whichwas approved by the Ministry. The Commissioners were toinitiate necessary action for the process of DPC, etc. The issueGof any order passed under the draft Tax Assistant RecruitmentRules was to await issue of Notification of the said Rules.However, on 14.11.2002, it ordered, inter alia, that DPC in theremaining Grades except DOSL-222 may be held on the basisof the existing Recruitment Rules and the promotion ordersHissued by 25.11.2002. As far as the post of L.D. Clerks and old Tax Assistants is concerned, the vacancies, which existed as on06.11.2002, were to be filled-up under the existing RecruitmentRules(See letter dated 14.11.2002). The orders were to beissued by 25.11.2002. By 25.11.2002, the Tax Assistant Ruleswere not even finalised, leave alone brought into force. The TaxAssistant Rules came into force only by publication on03.05.2003 and brought into force two days thereafter, i.e., on05.05.2003. Going by letter dated 14.11.2002, the principle thatvacancies must be filled-up in accordance with the existingRules, would appear to apply. The intention of the Authoritywould also appear to be the same as is evident from Clause (3)of Order date 14.11.2002. In such circumstances, there is noscope for any ambiguity and the Court is unable to find fault withthe order of the High Court. [Paras 116-118] [170-B-G]

8. SUMMARY OF CONCLUSIONS IN C.A. NOS.1970-1975 OF 2009

1) Promotion to the post of Inspector was governed by the1979 Rules till 07.12.2002.

2) Under the 1979 Rules, Data Entry Operators were notamong the feeder categories for promotion as Inspector.

3) By 19.07.2001, Cabinet approved restructuring ofcertain posts including the post of Inspector. The number ofposts of Inspector fell from a little over 22000 to a little over18000. Thereunder, the post of Data Entry Operator Grade ‘B’among other categories, were merged and the cadre of SeniorTax Assistants emerged. However, the restructured cadre ofSenior Tax Assistants, did not come into being.

4) The restructured Cadre of Senior Tax Assistants wasborn with the bringing into force of the Senior Tax AssistantRules 2003, on 20.01.2003. Data Entry Operators Grade ‘B’,among other categories, were re-designated as Senior TaxAssistants under Rule 5.

5) The Inspector Rules 2002, was brought into force on07.12.2002 superseding the 1979 Rules relating to Inspectors.

A

B

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D

E

F

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A6) The post of Senior Tax Assistant, which was not amongthe feeder categories under the 1979 Rules, became one of thefeeder categories for promotion as Inspector, under InspectorRules, 2002 under Clause (b) of Column 12.

7) There was a ban of promotion to the posts of Inspector.BThis is clear from communications dated 10.09.2001, 03.01.2002and 05.06.2002. The communication dated 28.10.2002 read withcommunication dated 14.11.2002, establish that the DraftRecruitment Rules which were finalized on 29.11.2002 andbrought into force on 07.12.2002 as far as Inspectors areconcerned and Draft Recruitment Rules finalized and broughtCinto force on 20.01.2002 as far as Senior Tax Assistants areconcerned, were to be basis for promotion to the post ofInspector. As per Order dated 28.10.2002, DepartmentalPromotion Committee (DPC), was to operate, based on the draftrules but no promotion orders were to be issued till the draftDrules were finalized. With order dated 04.11.2002 even thepromotion orders were permitted. The authority apparentlycontemplated simultaneous bringing into force of the InspectorRules and the STA Rules.

8) The High Court was in error in holding that it has toEbe necessarily held that the vacancies which arose prior to therevised Recruitment Rules coming into force has to be filled-up under then existing Rules (the 1979 Rules) relying upon caselaw including Y.V. Rangaiah(supra). There was a consciousdecision taken to not fill-up vacancies based on therestructuring, and what is more, letters dated 28.10.2002 andF14.11.2002 show that promotion to the post of Inspector was tobe effected based on the new recruitment rules.

9) It is while so, that in the Hyderabad Commissionerate,by Notice dated 05.11.2002, persons falling under Clause (a) ofColumn 12 of the ‘Draft Inspector Rules’ who also correspondedGto the feeder categories under the ‘extant’ Statutory Rules, the1979 Rules, alone were called for selection as Inspector.

10) The benefit of reckoning service under Note 1 tocategories in Clause (a) would be available only after therestructuring came into effect which was on 20.01.2003. This alsoHindicates that the powers that be contemplated simultaneous operation of the ‘Inspector Rules’ and the Senior Tax AssistantRules.

11) However, the Inspector Rules and the Senior TaxAssistant Rules were enforced with a gap of about six weeks.

12) The appellants even proceeding on the basis that theywere to be treated as Senior Tax Assistant as on 07.12.2002,were not having the two years’ experience required under the2002 Inspector Rules.

13) With the 2003 Senior Tax Assistant Rules brought intoforce on 20.01.2003 under Rule 5(1), the appellants who wereworking as Data Entry Operators Grade ‘B’ could take intoconsideration their service as Data Entry Operators Grade ‘B’for reckoning the period of two years stipulated under the 2002Inspector Rules. In this regard, the finding of the Tribunal iscorrect. Appellants in O.A. have stated that they were promotedas Data Entry Operator Grade ‘B’ in April 2000. If so, theirservice as such would count and even as on 07.12.2002, theywould have 2 years’ service as contemplated under the 2002Rules. As on 20.01.2003, certainly, they would be eligible to beconsidered for promotion as Inspectors.

14) The Tribunal not having granted prayer 8(b), the DraftRecruitment Rules, 2002 relating to Inspectors as finalized whichwas impugned remained intact. The Tribunal clearly erred ingranting the declaration, as sought for in paragraph 8(c),recognizing exclusive right to the restructured Cadre.

15) The restructuring Order under letter dated19.07.2001, fructified and became complete and effective relatingto the post of Senior Tax Assistant only on 20.01.2003. Thefindings to the contrary by the Tribunal stood correctly set asideby the High Court.

16) The Tribunal has not interfered with the promotionalready granted to persons drawn from the categories other thanthe Senior Tax Assistant pursuant to Notice dated 05.11.2002.

17) Ban of Direct Recruitment was to end on 31.12.2002.In respect of promotion made earlier and not interfered with,the Tribunal could not have directed review of seniority based A

B

C

D

E

F

G

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Aon later promotions as Inspector. The appellants cannot be givenseniority based on later promotions qua promotions given, whichcannot be termed illegal, when as on the date of earlierpromotions, appellants were not even in the cadre. Promotionfrom Senior Tax Assistant could have been made only 20.01.2003at the earliest. Even the categories in Clause (a) could haveBbeen promoted under the 2002 Inspector Rules, vide Note 1only for two years starting from the date the restructured Cadrein Clause (b) come into force, i.e., 20.01.2003.

18) The contention that persons in Clause (a) of Column12 of the Rules, who were also in the feeder categories forCpromotion under 1979 Rules, had an exclusive right to beconsidered for promotion for a period of two years is rejected.

19) While promotions can be made based on DraftRecruitment Rules, it cannot be so made, if the Draft Rules areDin the teeth of existing Statutory Rules [V. Ramakrishnan andothers]. In this case, however, under Orders dated 28.10.2002and 14.11.2002, what was contemplated was processing by DPCunder the Draft Recruitment Rules and issue of the promotionsorders after the Draft Rules were finalized.

E20) However, till 07.12.2002, under the 1979 Rules, beingalso feeder categories under the said rules, those in Clause (a)Column 12, 2002 Inspector Rules could be promoted. While itmay be contrary to what was contemplated by the CentralAuthority (as evident from letters dated 28.10.2002 and14.11.2002) promotions were made, which could not be termedFillegal. Even the Tribunal has not set aside the promotions.

21) The High Court has directed the filling-up of vacanciesprior to 07.12.2002 as per the 1979 Rules. In this regard, havingregard to the fact that the vacancies were not filled-up as perthe ban, as can be seen from 10.09.2001 and 05.06.2002, and itGwas specifically contemplated under letter dated 28.10.2002 thatvacancies arising from restructuring be filled- up, as per the newRecruitment Rules, the principle in Y.V. Rangaiahmay not applyand it was the Rules as on date of filling-up the vacancies, thatwould count. As on the date of the High Court Order, the STAHRules 2003, had come into force on 20.01.2003. Thus, vacancies existing prior to 07.12.2002 and which were not filled-up, mustbe filled-up by considering STA (Appellants) including theirservice as Data Entry Operators Grade ‘B’.

22) But it is here that the impact of the matter remainingpending, and in the meantime, implementation of the judgmentand what is more, further promotions being made cannot be lostsight of. The Court bears in mind the principle laid down inTaherakhatoon (D) By Lrs.and would not disturb the directionsto fill-up vacancies which arose prior to 07.12.2002, as directed.

23) However, in case of vacancies of Inspector, which aroseafter 07.12.2002, the appellants would, undoubtedly, have a rightto be considered as explained hereinbefore. In regard to suchvacancies, the matter must be looked into and seniority fixed,based on Rule 5 of the STA Rules. The persons working inClause (a) are also entitled to be considered for a period of twoyears from 20.01.2003 under the Inspector Rules to beconsidered for promotion. [Para 119] [170-G-H; 171-A-H; 172-A-H; 173-A-H; 174-A-H; 175-A-D]

9. RELIEF IN CIVIL APPEAL NOS. 1970-1975 OF 2009Civil Appeals Nos. 1970-1975 of 2009 are disposed of asfollows:

The restructured cadre of Senior Tax Assistants came intoforce on 20.01.2003. Appellants are not entitled to have senioritydetermined in respect of vacancies of Inspector which aroseprior to 07.12.2002. The appellants are eligible to be consideredfor promotion from 20.01.2003 and they are entitled to add theirservice as Data Entry Operator Grade ‘B’ for the purpose of the2002 Inspector Rules and considered for vacancies to be filledby promotion, which arose after 07.12.2002. The persons inClause (a) under Column 12 of the 2002 Rules, are also entitledto be considered for two years from 20.01.2003. Seniority is tobe considered based on Rule 5 of the STA Rules. The exercise,as above, if not carried out already shall be carried out. Furtherpromotions based on the above will be granted. However, it isdirected that the promotions shall be notional where promotions A

B

C

DE

F

G

H

Ahave already been effected, however, entitling the parties toseniority and pensionary benefits. The above exercise shall becompleted at the earliest. [Para 120] [170-D-G]

10. Civil Appeal No. 1976 of 2009 will stand dismissed.

Union of India through Govt. of Pondicherry andBAnother v. V. Ramakrishnan and Others (2005) 8 SCC394 : [2005] 4 Suppl. SCR 291 ; Taherakhatoon (D)By LRS. v. Salambin Mohammad (1999) 2 SCC 635 :[1999] 1 SCR 901 – relied on.

Y.V. Rangaiah and Others v. J. Sreenivasa Rao andCOthers (1983) 3 SCC 284 – held inapplicable.

P. Ganeshwar Rao and Others v. State of A.P. andOthers (1988) Suppl. SCC 740 : 1988 Suppl. SCR805 ; P. Mahendran and Others v. State of Karnatakaand Others (1990) 1 SCC 411 : [1989] 2 Suppl. SCRD385 ; A.A. Calton v. Director of Education (1983) 3SCC 33 : [1983] 2 SCR 598 ; N.T. Devin Katti andOthers v. Karnataka Public Service Commission andOthers (1990) 3 SCC 157 ; K. Ramulu (Dr.) andAnother v. (Dr.) S. Suryaprakash Rao and OthersE(1997) 3 SCC 59 : [1997] 1 SCR 287 ; DeepakAgarwal and Another v. State of U.P. and others (2011)6 SCC 725 : [2011] 4 SCR 149 ; M.I. Kunjukunju andOthers v. State of Kerala and Others (2015) 11 SCC440 ; State of Tripura and Others v. Nikhil RanjanFChakraborty and Others (2017) 3 SCC 646 –referred to.

Case Law Reference

R. BASAVESWARUDU AND OTHERS

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1970-1975 of 2009.

From the Judgment and Order dated 02.03.2005 of the HighCourt of Andhra Pradesh at Hyderabad in Writ Petition Nos. 7963,11090, 18501, 20108, 20890 of 2004 and Writ Petition (SR) No. 119787of 2004 in Writ Petition No. 4444 of 2005.

C

With

Civil Appeal No. 1976 of 2009.

D

C. U. Singh, P. S. Patwalia, Devadatt Kamat, K. Radhakrishnan,Sr. Advs., Brahamadandi Ramesh, Mrs. K. Radha, K. Maruthi Rao,Praveen Agrawal, M.Vijaya Bhaskar, Mohan Rao, Abhijit Sengupta,Rajesh Inamdar, Javedur Rahman, Aditya Bhatt, Aswin G. Raj, RaufRahim, Ms. Shrinidhi Rao, Ms. Sunita Rani Singh, Ms. Sakshi Kakkar(for B. Krishna Prasad), Sridhar Potaraju, Ms. Shweta Parihar,Ms. Shiwani Tushir, Ms. G. Usha Sri, T. Vishnu Menon, Mrs. AnjaniAiyagari, T. V. Ratnam, V. N. Raghupathy, Advs. for the appearingparties.

E

The Judgment of the Court was delivered by F

K. M. JOSEPH, J.

1. Civil Appeal Nos. 1970-1975 of 2009 and Civil Appeal No.1976 of 2009, having been heard together, and as there are certaincommon issues, they are being disposed of by the following commonJudgment.

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2. In Civil Appeal Nos. 1970-1975 of 2009, the controversyrevolves around the entitlement to promotion to the post of Inspectorof Central Excise. In Civil Appeal No. 1976 of 2009, on the other hand,the controversy relates to the right to be promoted to the post of U.D.Clerk and Tax Assistant in the Central Excise Department. Both these H

Acases arise out of Original Applications (O.A.s) filed before the CentralAdministrative Tribunal (CAT), Hyderabad and the Orders of theTribunal in the cases being questioned in a batch of Writ Petitions. Asfar as Civil Appeal Nos. 1970-1975 of 2009 are concerned, the CATallowed O.A. 1362 of 2002 and directed the appellants in Civil AppealBNos. 1970-1975 of 2009 to be considered for promotion to the post ofInspectors. They were originally recruited as Data Entry Operators(DEOs) Grade ‘A’ and had been working as Data Entry OperatorsGrade ‘B’ from the year 2000. In short, the appellants, as applicantsbefore the Tribunal, had called in question the legality of Notice dated05.11.2002 seeking to confine the promotion to the post of Inspector,Cto category of Tax Assistant, Upper Division (UD) Clerk, StenographerGrade-II, etc., with certain years of experience, for promotion. Six WritPetitions came to be filed, including by the Union of India and the officialrespondents, challenging the said verdict by which the appellants werealso directed to be considered. A Division Bench of the High CourtDproceeded to consider the matter. Justice G. Bikshapathy wrote anopinion allowing the Writ Petitions, setting aside the Order of theTribunal. The other learned Judge, who constituted the Division Bench,wrote a separate concurring Judgment, and thus, the Writ Petitionscame to be allowed. What is found by the High Court is that the WritPetitioners were having a legal right, under the erstwhile Rules whichEwere made in the year 1979, to be considered for promotion to thevacancies which arose prior to the Rules which came to be made witheffect from 07.12.2002 in regard to the post of Inspector. The HighCourt also found that it was only when the Rules were made in theyear 2003 that the restructuring in the Department, to which the CabinetFgave its approval on 19.07.2001, came into effect. Regarding vacanciesarising after 07.12.2002, it was left undecided.

3. As far as Civil Appeal No. 1976 of 2009 is concerned, it arisesfrom O.A. 1040 of 2003, again decided by the CAT, Hyderabad.

4. The impugned Order of the High Court reveals that the HighGCourt allowed the Writ Petition filed against the Order of the Tribunalfollowing the Judgment of the High Court in the Writ Petitions whichformed the subject matter of the controversy relating to Inspectors andwhich is the subject matter of Civil Appeal Nos. 1970-1975 of 2009.In other words, following the principle that the vacancies must be filled-Hup in accordance with the extant Rules, the court found that promotions to the post of U.D. Clerk and Tax Assistant must be effected on thebasis of the rights crystallized under the 1979 Rules, as amended.

A LOOK AT THE RULES

THE 1979 RULES REGARDING POST OF INSPECTOR

5. In 1979, the Rules known as the Central Excise and LandCustoms Department Group ‘C’ Posts Recruitment Rules, 1979, cameto be enacted (in short, ‘the 1979 Rules’). The Rules were made underArticle 309 of the Constitution of India. In the said Rules, apart fromthe post of Inspector (Senior Grade)(inter alia) with a scale of pay ofRs. 550-25-750-E.B.-30-900, which is shown as a post to be filled-upby promotion, there is the post of Inspector (Ordinary Grade). It is thispost which has generated the controversy in Civil Appeal Nos. 1970-1975 of 2009.

6. The Method of Recruitment is mentioned as follows:

a) 75 per cent by Direct Recruitment;

b) 25 per cent by Promotion. Column 12, which relates to theGrade from which Feeder Category for promotion is shown as follows:

In case of recruitment by promotion/deputation/transfergrade from which promotion/ deputation/ transfer to be made

Promotion:

By selection from amongst:

(i) Upper Division Clerks with 5 years service.

(ii) Upper Division Clerks with 13 years of totalservice as UDC and Lower Division Clerk takentogether subject to the condition that they shouldhave put in a minimum of two years service inthe grade of Upper Division Clerks;

(iii) Stenographers (Senior Grade) with 2 yearsservice.

(iv) Stenographers (Senior Grade) or Steno (OrdinaryGrade) with 12 years service as Stenographer/

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A

Upper Division Clerk and Lower Division Clerkif any taken together subject to the condition thatthey should have put in a minimum of two yearsservice as Stenographer (Ordinary Grade) orUpper Division Clerk.

B

(v) Woman searcher with 7 years service in thegrade.

(vi) Draftsman with 7 years service in the grade.Note:Candidates will be required to possess suchphysical standard and pass such written test andpractical tests and confirm to such age limits asmay be specified by the Central Board of Exciseand Customs from time to time.

C

THE ELECTRONIC DATA PROCESSING DISCIPLINE-(GROUPE TECHNICAL POST) RECRUITMENT RULES,D1992

7. On 03.04.1992, Rules were made regulating the method ofrecruitment for Group ‘C’ (Technical Post) in the Electronic DataProcessing Discipline of the field formations of the Central Board ofExcise and Customs (CBEC). The posts included the post of Data EntryEOperator Grade ‘A’, Data Entry Operator Grade ‘B’ and the post ofData Entry Operator Grade ‘C’. Under Rule 5 under the heading “InitialConstitution”, persons appointed on regular basis as Key PunchOperator, Terminal Operator and Lower Division Clerk performing theduties of Terminal Operator before the commencement of these RulesFwere to be deemed to have been appointed as Data Entry OperatorGrade ‘A’ and to rank enblock senior to those appointed after thecommencement of these Rules. The post of Data Entry Operator Grade‘A’ was to be filled-up by Direct Recruitment. The educationalqualification was shown as 12[th] Standard Pass or equivalent. The postof Data Entry Operator Grade ‘B’ was to be filled-up by promotion,Gfailing which, by transfer on deputation. As far as promotion isconcerned, Data Entry Operators Grade-A, with six years RegularService in the Grade, were rendered eligible for being considered forpromotion. As far as Data Entry Operators Grade ‘C’ is concerned,again the post was to be filled-up by promotion, failing which, by transferHon deputation, Data Entry Operators Grade ‘B’, with 3 years Regular

Service, were declared eligible for being considered for promotion asData Entry Operator Grade ‘C’. There is also the post of Data EntryOperator Grade ‘D’, to be filled-up by promotion, failing which, bytransfer on deputation. Data Entry Operator Grade ‘C’, with four yearsregular service, was Feeder Category for promotion as Data EntryOperator Grade ‘D’.

THE 1996 AMENDMENT TO THE 1979 RULES

8. On 12.07.1996, the 1979 Rules came to be amended. Underthe said amendment, the post of Tax Assistant was included. 1497 postswere shown as the number of posts, subject to variation dependent onworkload. The scale of pay was indicated as Rs. 1350-30-1440-40-1800-E.B.-50-2200. The post was to be filled-up by promotion. The FeederCategory was to be U.D. Clerk, with three years regular service inthe Grade, subject to their passing of Departmental Examination, withminimum marks of 40 per cent and above, in each paper.

THE CENTRAL EXCISE AND LAND CUSTOMSDEPARTMENT INSPECTOR (Group ‘C’ POSTS)RECRUITMENT RULES, 2002

9. By Notification dated 29.11.2002, Rules were made insupersession of the 1979 Rules. The Rules are called the Central Exciseand Land Customs Department Inspector (Group ‘C’ posts) RecruitmentRules, 2002 (hereinafter referred to as ‘Inspector Rules, 2002’, forshort). The Rules were to come into force on the date of publication inthe Official Gazette. It is not in dispute that the publication of theGazette is effected on 07.12.2002.

10. In regard to the post of Inspector (Central Excise), underColumn 11, viz., Method of Recruitment, the Rules proclaim that 66.23per cent is to be filled-up by Direct Recruitment and 33.13 per cent isto be filled-up by promotion. Column 12 is significant and we refer tothe same. It reads as follows:

In case of recruitment by promotion/deputation/absorption,grade from which promotion/ deputation/ absorption to bemade12

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APromotion:(a) By selection from those candidates working in thefollowing restructured cadres;(i) Tax Assistant with 2 years service as TaxBAssistant or 5 years service as Tax Assistant andUpper Division Clerk put together;(ii) Upper Division Clerk or stenographer Grade IIIwith 5 years service;(iii) Upper Division clerk with 13 years of total serviceCas Upper Division Clerk and Lower DivisionClerk taken together subject to the condition thatthey should have put in a minimum of 2 yearsservice in the grade of Upper Division Clerk;(iv) Stenographer Grade II with 2 years service;D(v) Stenographer Grade II or Stenographer Grade IIIwith 12 years service as Stenographer or UpperDivision Clerk and Lower Division Clerk, if any,taken together subject to the condition that theyhave completed a minimum of 2 years service asEStenographer Grade III or Upper Division Clerk.(vi) Woman searcher with 7 years service in thegrade;(vii) Draftsman with 7 years service in the grade.F(b) By selection from those candidates working in thefollowing restructured cadre:(i) Senior Tax Assistant with 2 years regular servicein the grade;(ii) Stenographer Grade II with 2 years regularGservice in the grade;(iii) Women searcher with 7 years service in thegrade;(iv) Draftsman with 7 years service in the grade.H

(c) Failing the method of recruitment specified underClause (b) above, by selection from thosecandidates working as Tax Assistant andStenographer Grade III having not less than 10years service including the service to be includedfor this purpose under the provisions of the rulesregulating the method of recruitment to the postof Tax Assistant:

Note 1 : Promotion under Clause (a) above shallbe only operative for a period of two years fromthe date on which the restructured cadresmentioned under Clause (b) above comes intoexistence.

The service rendered under the new grade in therestructured cadres shall be counted towardsconsidering the eligibility for promotion underClause (a) above.

Note 2: Candidates shall be required to pass suchwritten test as may be determined by the CentralBoard of Excise and Customs from time to time.The maximum age of eligibility for thedepartmental candidates shall be 45 years whichshall be relaxable to 47 years in the case ofcandidates belonging to the Scheduled Castes orScheduled Tribes category. However, those of theofficials who were not considered for suchpromotion upto the age of 45 to 47 years, as thecase may be, shall be granted the benefit ofrelaxation in age limit upto 50 years in order toenable a fair opportunity of a minimum of twochances. However, those officials who wereconsidered for promotion upto the age limit of 45to47 years, as the case may be, on two or moreoccasions and were not found fit for promotionshall not be eligible for this relaxation.

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A

Note 3: Candidates shall be required to passphysical tests and confirm the physical standardsas specified in Column 8.Note 4: The eligible officers under Clause (a), (|b)and 9c) above shall be required to pass throughBan interview before promotion.

Note 5: Where juniors who have completed theirqualifying or eligibility service are being consideredfor promotion, their seniors would also beconsidered provided they are not short of theCrequisite qualifying or eligibility service by morethan half of such qualifying or eligibility serviceor two years, whichever is less and havesuccessfully completed their probation period forpromotion to the next higher grade alongwith theirDjuniors who have already completed suchqualifying or eligibility service.CORRIGENDUM DATED 24THAPRIL, 2003 TOINSPECTOR RULES, 2002

E11. Under the same, in Clause (a) of Column 12, which we havealready extracted, for the word “restructured” in third line, it was tobe read as “pre-structured”. The result of this amendment is thatClause (a) under Column 12 of the Inspector Rules, 2002, was to beread as by selection of those candidates working in the “pre-structuredcadres”.F

THE CENTRAL EXCISE AND CUSTOMS DEPARTMENTSENIOR TAX ASSISTANT (GROUP ‘C’ POSTS)RECRUITMENT RULES, 2003(in short S.T.A. Rules, 2003)

12. The Rules made on 16.01.2003, came into force on the dateGof publication of the Gazette and the publication was effected on20.01.2003. Rule 5, around which debate ensued before us, reads asfollows:

“5. Initial constitution.-(i)All the persons appointed on the regularbasis at the time of commencement of these rules to the GradeHof Assistant, Tax Assistant, Upper Division Clerk (Special Pay),

Data Entry Operator Grade ‘B’ and ‘C’ shall be deemed to havebeen appointed as Senior Tax Assistants under these rules. Theservice rendered by them before commencement of these rulesshall be taken into account for deciding the eligibility for promotionto the next higher grade.

(ii) Assistants(Rs. 5000-8000) and Data Entry Operator Grade‘C’ (Rs. 5000-8000) are being redesignated as Senior TaxAssistants in the same scale of pay. Therefore, the Assistantsand Data Entry Operator Grade ‘C’ shall be placed enblock seniorto the other categories. However, their inter-se-placement shallbe done according to the date from which they had actually beenappointed to these grades on regular basis subject to the conditionthat their inter se placement in their respective category shall notbe altered.

(iii) The Data Entry Operator Grade ‘B’ (4500-7000) and TaxAssistants (4500-7000) have been placed in their higher scaleof 5000-8000 and they shall be placed below the Assistant andData Entry Operator Grade ‘C’ and their inter-se placement shallbe fixed in accordance with the date of regular appointment tothe respective grade subject to the condition that their inter-seplacement in respective category shall not be disturbed.

(iv) Upper Division Clerk with special pay shall be placed belowAssistant, Data Entry Operator Grade ‘c’, Data Entry OperatorGrade ‘B’ Tax Assistants.

(v) The present employees would be required to pass the requiredor suitable departmental examination, as specified by theCompetent Authority, from time to time, in Computer Applicationand relevant procedures within two years falling which they wouldnot be eligible for further increments.”

THE CENTRAL EXCISE AND CUSTOMS DEPARTMENTTAX ASSISTANT (GROUP ‘C’ POSTS) RECRUITMENTRULES, 2003

13. Lastly, we may notice the Central Excise and CustomsDepartment Tax Assistant (Group ‘C’ Posts) Recruitment Rules, 2003,hereinafter referred to as the 2003, Tax Assistant Rules. Rules are seento be made on 02.05.2003 and they came into force on their publicationin the Official Gazette on 05.05.2003. Rule 4 alone is relevant for ourpurpose.

A

B

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A“4. Initial Constitution.-(1) The person appointed on regular basisand holding the post of Upper Division Clerk and Data EntryOperator Grade A on the commencement of these rules shalldeemed to have been appointed as Tax Assistant under theserules and the service rendered by such persons in the respectiveBposts before commencement of these rules shall be taken intoaccount as regular service rendered on the post of Tax Assistantfor the purpose of promotion etc.

(2) The person holding the post of Data Entry Operator Grade -A appointed under these rules as Tax Assistant shall, within twoCyears from the date of such appointment as Tax Assistant, passthe Departmental Examination as conducted by the competentauthority, falling which he shall not be entitled to get any furtherincrement.

D(3) Any person, who holds a post of Lower Division Clerk onregular basis and falls within the seniority list as determined bythe appointing authority at the commencement of these rules shall,on passing the Departmental Computer Proficiency examinationconducted by the appointing authority, be deemed to have beenpromoted with effect from date of passing such examination onEthe post of Tax Assistant.

D

(4) The Upper Division Clerks and Data Entry Operator Grade– A shall be placed en-block senior and, their inter se placementshall be fixed in accordance with the date of regular appointmentFto the respective grade subject to the condition that their interse placement in the respective grade shall not distributed.

(5) Lower Division Clerks shall be placed below Upper DivisionClerks and Data Entry Operator Grade – A.”

G14. The Method of Recruitment is Direct Recruitment in regardto 90 per cent of the vacancies and 10 per cent posts to be filled-up bypromotion. Feeder categories, in regard to promotion, are shown asLower Division Clerks, Head Hawaldars, who had rendered sevenyears of service in the Grade on regular basis and who possesses certainHqualifications which are mentioned therein.

IN-BETWEEN THE RULES

15. On 11.03.1988, one-third of the posts of U.D. Clerks cameto be abolished and a Grade of Tax Assistant came to be created. TaxAssistants also became part of the Feeder Cadre to the post ofInspector, inter alia. On 05.08.1988, Central Board of Excise andCustoms (CBEC) clarified, inter alia, that Tax Assistants, with twoyears’ experience in the Grade or five years’ combined service in U.D.Clerk and Tax Assistant, were to be eligible for promotion.Stenographers, Women Searchers, Draftsmen, etc., were also declaredeligible for promotion as Inspector. They are the old Tax Assistants andnot to be confused with the Tax Assistants under the 2003 Rules.

16. The next crucial development took place in the followingbackground. The Data Entry Operators performed essentially technicalfunctions and the very concept was linked with the object of bringingabout computerization in the Department. As noticed the initialconstitution consisted of Key Punch Operators, Terminal Operators andLower Division Clerks performing duties of Terminal Operators, whowere deemed to have been appointed as Data Entry Operator Grade‘A’. The Data Entry Operators began to complain that promotionalavenues for Data Entry Operator Grade ‘A’, which is the entry post,was limited to promotions as Data Entry Operators Grade ‘B’, ‘C’ andat the top of the pyramid, Data Entry Operator Grade ‘D’. Personsworking in the Ministerial Cadre, including U.D. Clerks, Stenographers,etc., were eligible under the 1979 Rules, for being promoted to theExecutive Post, viz., the post of Inspector, inter alia. Data EntryOperators complained that they would stagnate in the post of Data EntryOperator for years without promotion. It would appear that the post ofData Entry Operator Grade ‘D’ is not available in all theCommissionerates and only certain Commissionerates had the post ofGrade ‘D’. It is pursuant to this simmering discontent being noticedapparently that the Union Cabinet decided to go in for cadrerestructuring in the Central Excise and Customs Department. Since,much may turn on the purport of the said decision, articulated in letterdated 19.07.2001, we advert to the same:

“I am directed to say that the Central Government has approvedthe restructuring of Customs & Central Excise Department. Asa result of restructuring there has been a change in the numberof nomenclature of the various grades/ posts. The revised number B

C

D

E

F

G

H

SUPREME COURT REPORTS

[2020] 5 S.C.R.

Aand designation of the various posts at different level in Customsand Central Excise Department has been indicated in Annexure– I.

2. All the post at different levels as per Annexure-I standsanctioned with immediate effect. Wherever there is a reductionBin the number of posts at any level, such reduction will beeffective after the existing incumbents of the posts are promotedto the higher level or the post fall vacant on account of retirementetc. The number of categories of the post other than thosereferred to in Annexure ‘I’ have been kept in their existingCstrengths and in their existing pay scales only.

3. No direct recruitment may be made to various grades for theyear 2001-2002 without approval of Ministry/ Department as theCabinet has approved a one time relaxation for filling of allvacancies by promotion in all Cadres.

D4. The formation-wise distribution of post at different levels willbe notified separately.

5. The details of the other Posts that have been included in therestructuring have not been proposed to be altered on the scaleor strengths are indicated in Annexure -II.

E

6. The Cadres/ Post which have not been included in theRestructuring Proposal are indicated in Annexure – III.

7. This issue in pursuance to the approval conveyed vide CabinetSecretariat note No. 28/CM/2001 (1) dated 16.07.2001.

F

Yours faithfully

Sd/-

(K.C. Jain)

G

Dy. Secretary to the Govt. of India

ANNEXURE – I

REVISED NUMBER OF POSTS AT DIFFERENT LEVELSIN THE CUSTOMS AND CENTRAL EXCISEHDEPARTMENT ON RESTRUCTURING

NOTES:

G

1. The posts in the grade of Supdts. Also include of S.I.O.,A.A.D.I.O. of various directorates (S.I. No.).

2. The posts in the grade of inspector also include the post ofP.O. and Examiner and intelligence Officer (S.I. No. 10).

H

[2020] 5 S.C.R.

A3. The post in the grade of A.O. also include the post ofA.C.A.O. and E.A.O. (Sl. No. 12).

4. The existing post in the cadres of Asst., Tax Asst., UDC (SpPay), DEO Gr. (C) and DEO Gr.(B) have been merged into anredesignated as Sr. Tax Asst. (Sl. No. 19).

B5. The existing posts in the cadres of UDC, DEO(A) and LDC(except 717 posts of LDC for the promotion of Group D) havebeen merged and redesignated as Tax Asstt. (New) (S.I. No.20)

6. The cadre of O.S. has been abolished and the post have beenCmerged in the posts of A.O. (Sl. No. 19)

7. Other posts which exists in the department and are notreflected in the above table have been kept in existing strengthsin the existing pay scales only.

D8. Details of Others posts are given in Annexure II (Sl. No. 15,25,30 & 33).

Sd…

(K.C.Jain)

Dy. Secretary to Govt. of India”

E

17. On 10.09.2001, the CBEC directed a freeze on promotion.It reads as follows:

“New Delhi, the 10.09.01

To,

FAll Chief Commissioners/Commissioners of Customs and CentralExcise, All Directors Generals/Directors of Customs and Central Excise Narcotics Commissioner, C.B.N. GwaliorGSubject: Holding of DPC for promotion to the grade of Group‘B’ & ‘C’ in C.B.E.C. Department – reg.

Sir,

I am directed to say that the issue of holding of DPCs inHrespect of Group ‘B’ & ‘C’ posts as well as making direct recruitment to the various posts pending distribution of posts ofvarious field formations is being undertaken by theImplementation Cell in Pursuant to sanction issued by Board’sletter F.No.A-11019/72/99-Ad.IV dated 19.07.2001 conveying theapproval of the Cabinet to the restructuring of Customs andCentral Excise Department has been considered by the Board.

2. It is felt that if the DPCs for group ‘B’ & ‘C’ are conductedby the cadre authorities it may lead to widening of imbalancesin promotion prospects or create imbalances. The Board have,therefore, decided that the holding of DPC of group ‘B’ & ‘C’post may be frozen and no DPC may be held for Group ‘B’ &‘C’ post till the distribution of posts under various level iscompleted and instructions are issued by the Board in this regard.

3. As you are aware that Board have already imposed a banfor filling up of posts of LDCs and Sepoys vide their letter F.No.A-11012/27/2000-Ad. IV dated 10.04.2001, it is reiterated thatthese instructions may be strictly adhered to and it is furtherstated that no direct recruitment may be made to any grade tillfurther orders of the Board/ Department of Revenue.

4. The receipt of this letter may please by acknowledged.

Yours faithfully,

SD/-

(Y.P. Vashishat)

Under Secretary to the Govt. of India”

18. Thereafter, there is communication dated 19.09.2001, whichwill be adverted to later on.

19. It is necessary to note what is alleged to be an Order of theCBEC, lifting the ban on promotion, dated 03.01.2002:

“New Delhi, the 3[rd] Jan, 2002

To,

All Chief Commissioners/ Commissioners of Customs and CentralExcise, All Directors Generals/ Directors of Customs and Central Excise.

Narcotics Commissioner, C.B.N. Gwalior

A

B

C

D

E

F

G

H

A

Subject: Holding of DPC for promotion to the grade of Group‘B’ & ‘C’ in C.B.E.C. Department – reg.

Sir,

I am directed to refer to Board’s letter of even number dated10.9.2001 imposing a ban on holding of DPCs for Group ‘B’ &B‘C’ posts. The Board have received representations against theaforesaid ban on promotions.

2. The matter has been considered by the Board and it hasbeen decided that where ever the DPC, have already been held,the panel prepared by the DPCs may be given effect and theCresultant vacancies in the feeder cadre may also be filled up.Where the DPCs have not been held, the DPCs may be held onthe basis of pre-revised strength i.e. the strength existing beforethe cadre restructuring and the resultant vacancies may be filledup.

D

3. Action may be taken on priority basis under intimation tothe Board.

Yours faithfully,SD/-

(Y.P. Vashishat)

E

Under Secretary to the Govt. of India”

20. The communication dated 05.06.2002 by the CBEC purportingto allocate posts to each zone, and communicating the sanctionedstrength, needs to be noticed:

F

“F. No. A-11013/4/2002-Ad.IV

Government of IndiaMinistry of FinanceDepartment of RevenueCentral Board of Excise & Customs G

Dated: 05th June, 2002

To All Chief Commissioners of Central Excise and Customs, All Chief Commissioners of Customs, All Chief Commissioners of Customs (Preventive), H

All Directors General,All Directors.Chief Departmental Representative, CEGATChairman, Settlement Commission.

Subject:Allocation of posts in Group ‘A’, ‘B’, ‘C’ and ‘D’ amongstvarious Zones/Commissionerates and Directorates Gen. /Directorates – reg.

Sir,

I am directed to refer to Ministry’s letter F. No A-11019/72/99-Ad.IV dated 19th July 2001, notifying the revised sanctionedstrength at different levels in the Central Excise & Customsdepartment consequent to approval of cadre restructuring ofCentral Excise and Customs departments by the Union Cabinet.

2. I am further directed to say that the allocation of staff tothe Zones / Commissionerate / Directorates Gen. / Directoratesat different levels has been decided by the Board and approvedby the Government has been detailed in the enclosed Folder. Theallocation indicated herein supersedes all earlier allocations inrespect of the Cadres/Categories in the enclosed folder. Thenumber and categories of posts in the Central Excise & Customsdepartment other than those referred to in the enclosed Folderremains unaltered.

3. Separate staff strength has been allocated for the officesof Chief Commissioner, Commissioner (Appeals) andCommissioner (Adjudication) for which no separate staff hadbeen allocated till now. The staff allocated to these formationshas been shown along with the allocation to the Commissioneratein which city it is located. The model adopted for the allocationis indicated in Annexure – IV of the enclosed folder.

4. I am also directed to request all Chief Commissioners andother Heads of Department to carefully study the details ofreorganization of the Customs and Central Excise formations andbring to the notice of the Board any discrepancies or any aspectsthat may require review or may not have been taken into account,to enable necessary corrective steps may be taken at an earlydate with the approval of appropriate authority.

A

B

C

D

E

F

G

H

A

5. I am further directed to say that the sanctioned strengthnow indicated supersedes all previous sanction issued so far. Thesanctioned strength now indicated will accordingly form yoursanctioned strength of Group ‘A’, ‘B’, ‘C’ & ‘D’ posts. Asindicated in the preceding paras, the Chief Commissioners arerequested to study the allocation of posts within their respectivejurisdiction and send proposal which are considered necessarywithin the overall sanctioned strength provided to theCommissionerates within their jurisdiction.

B

B

6. I am also directed to inform that the Cadre Control whichis presently vested with respective Commissioners in particularZones will continue to vest with them for the present in order toensure that there is no dislocation in the cadre management atthe field level. Switch over of cadre control from Commissionersto Chief Commissioners would be effected from a date to bespecified after the new formations come into existence.

C

D

7. It has been decided to extend the ban on direct recruitmentimposed, in terms of para 3 of Deptt’s letter F. No. A-11019/72/99 Ad.IV dated 19.07.2001 upto 31.12.2002. However, the banwould be applicable only to the posts that have been included inthe cadre restructuring. It has also been decided that the ban ondirect recruitment would not apply to compassionate groundappointments made with the approval of the Board.

E

8. The Detailed instructions/ orders/ Recruitment Rulesgoverning the manner of filling up of the vacancies at all levelswill be issued separately. No vacancy in respect of the postsincluded in the cadre restructuring should be filled up till suchtime as further orders are issued.

F

Yours faithfully

Encls.: As above

G

(Y.P.Vashishat)

Under Secretary to the Govt. of India”

21. Still further, on 19.09.2002, the CBEC initiated process forfilling-up of vacancies based on the post restructuring strength andpermitting convening of Departmental Promotion Committees (DPCs)Hwhere the revised Recruitment Rules stood circulated. It was, however, clarified that promotion orders would be issued only on the directionsof the Ministry. That ban on Direct Recruitment was to continue. TheOrder reads as follows:

“New Delhi, Dated 19[th] September, 2002

ToAll Chief Commissioner of Central Excise,All Chief Commissioner of Customs,All Chief Commissioners of Customs (Preventive),All Director General, All Directors,The Chief Department Representative CEGATThe Chairman, Settlement Commission.

Sir,

Subject: Filling up of posts in Group B, C and D – reg.

I am directed to refer to Ministry’s letter F.No.A-11013/4/2002-Ad. IV dated 05.06.2002 on he allocation of posts in Group‘A’, ‘B’, ‘C’ and ‘D’ amongst various Commissionerates andDirectoraes General/ Directorates. So far as Group ‘A’ postssuitable action is being taken by the Board. As for remainingposts, you have already been advised o hold DPCs for promotionto the grade of Superintendents of Central Excise,Superintendents of Customs (Prev) vide our letter no. F.A.600/11/23-2002-Ad. III B dated 26[th] June, 2002 and to the grade ofAO/ACAO/EOA Group ‘B’ vide letter F.No.A.32012/3/2002-Ad.IIB dated 15[th] July, 2002. The cadre of O.S. is to be mergedwith the cadre of A.O. and all the existing O.S. are only toredesignated as Administrative Officer. Since the pay scale ofboth he cadres is same, the re-designation can be done by anadministrative order.

2. It has now been decided to initiate the process of filling upof vacancies that has arisen on account of cadre restructuringin all remaining cadres up to Grade ‘B’. You are directed toensure that DPCs are converted in respect of all grades whereRecruitment Rules except for change in the number of posts, asalso grades where revised Recruitment Rules have beencirculated. You may accordingly hold DPCs immediately for fillingup vacancies in various grades, and ensure that by 30[th]

A

B

C

D

E

F

G

H

ASeptember, 2002 the lists are kept ready. It is clarified thatpromotion orders may be issued only on receipt of furtherdirections from the Ministry.

3. The ban imposed on direct recruitment in terms of para-3of letter F.No.A.11019/72/99-Ad.IV dated 19.07.2001 isBapplicable up to 31.12.2002. IT is clarified that this ban appliesonly to the posts that have arisen in the cadre restructuring andthat the ban will not apply to posts in the lower grades whichare not to be filled by promotion, and can only be filled up bypromotion, and can only be filled up by Direct Recruitment.Requisite steps for filling up Direct Recruitment posts may alsoCbe initiated immediately in accordance with existing instructionson the subject so as to ensure that Direct Recruitment vacanciescan immediately be filled up after 31.12.2002 of Board’s letterof 05.06.2002.

4. Further, in suppression of the instruction contained in paraD7 & 8 of Board’s letter of 05.06.2002 the Commissioners arealso permitted to make compassionate ground appointments aswell as inter Commissionerate transfers, with the approval ofChief Commissioners, in accordance with existing instructions onthe subject. The instructions contained in paras (7) & (8) ofEBoard’s letter of even no. dated 05.06.2002 stand modified tothis extent.

Yours faithfully,

(NISHA MALHOTRA)

Jt. Secy. (Admn.)”

F

22. The communication dated 28.10.2002 is the next development.It reads as follows:

“Dated 28[th] October, 2002

ToGAll Chief Commissioner of Customs & Central Excise Subject:Draft Recruitment Rules – Circulation of reference andnecessary action-Reg.

Sir,

HPlease find enclosed Draft Recruitment Rules for Group ‘C’ Posts of Inspector (Central Excise & Land Customs), Inspector(Examiner), Inspector (Preventive Officer) & Senior TaxAssistant as approved by the Ministry. Notifications, notifyingthese Rules will be issued shortly. Meanwhile you may initiatethe necessary action to start the process for DPC etc. You may,however, await issue of notifications before issue of any ordersof promotions based on these Rules.

A

B

Draft of the Recruitment Rules of Tax Assistants will also besent shortly as they are being finalized in consultation with lawMinistry.

Yours faithfully,CSd……

(B.K. Gupta)O.S.D. (Admn.) CBEC

Enclosures: As above”

23. On 06.11.2002, the Draft Recruitment Rules for Tax Assistantcame to be forwarded with the caveat that promotion orders be notissued until the Rules were notified:

“Dated 6[th] November, 2002

To

All Chief Commissioner of Customs & Central Excise Sir, Subject: Draft Recruitment Rules – Circulation of reference andnecessary action-Reg.

In continuation of this office letter dated 28.10.2002 forwardingof Draft Recruitment Rules of Group “C” Post of Inspector(Central Excise and land Customs), Inspector (Examiner),Inspector (Preventive Officer) & Senior Tax Assistant, pleasefind enclosed Draft Recruitment Rules for Tax Assistant (Group“C”) as approved by the Ministry. The Notification for notifyingthese Rules will be issued shortly. Meanwhile you may getcirculated these Draft Rules to all the Commissionerates, initiate D

E

F

G

H

116SUPREME COURT REPORTS

[2020] 5 S.C.R.

Athe necessary action to start the process for DPC etc. Confirmthe issue of Notification notifying these Rules before issue of anyorder based on these Rules.

Yours faithfully

Enclosures: As above

B

(B.K. Gupta)O.S.D. (Admn.) CBEC”

24. On 14.11.2002, the CBEC permitted issuance of promotionorders subject to certain conditions:

C“New Delhi the 14[th] November 2002

To

All Chief CommissionerAll Director GeneralAll Director under CBEC

D

Subject : Cadre restructuring of Customer and Central Excise –regarding promotion in the Grade ‘B’, ‘C’ and ‘D’ posts.

Sir,

I am directed to refer to Minister’s letter F. No. A-11013/01/E2002-AdIV dated 19[th] September, 2002 regarding holding ofDPC’s in all grade where Recruitment Rules Exits, us also ingrades where revised recruitment rules have been circulated. Interms of Para 2 of the said letter, it was directed to hold theDPC’s by 30[th] September, 2002 and keep the list ready for issue.FIt was also clarified that promotion orders may only be issuedon receipt of further directions from Ministry.

E

2. In view of the above, you are requested to issue thepromotion orders in respect of remaining Group ‘B’, ‘C’ and ‘D’posts as stated below:- G

(i) promotion orders in respect of Sepoy, Havaldar, HeadHavaldar, Tax Assistant, Senior Tax Assistant andInspector of Central Excise/Preventive Officer/Examiner of Customs may be issued on the basis ofRecruitment Rules after allotment of GSR No by theGovernment of India Press. Wherever not yet allotted.

H

(ii) DPC in respect of Appraisers and AdministrativeOfficer may be held on the basis of existing RecruitmentRules and promotion orders may be issued.

A

(iii) DPC in respect of remaining grades except DOS L-IImay be held on the basis of existing Recruitment Rulesand Promotion orders may be issued by 25.11.2002.B

(iv) Promotion in the grade of DOS L-II may be made onlyafter the new recruitment rules are circulated by theMinistry.

Yours faithfully

C

(Angra Ram)

Under Secretary to the Government of India”

25. Thereafter, as already noticed, the Inspector Rules, 2002came to be notified on 07.12.2002. We may further notice that theSenior Tax Assistant (STA) Rules came to be notified on 20.01.2003.On 21.04.2003, the following decision was taken by the CBEC:

“New Delhi, the 21[st] April, 2003

To,

All Chief Commissioners of Central Excise, All Chief Commissioners of Customs, All Director Generals, All Commissioner of Central Excise/Customs/Directors underCBEC

Subject:Cadre Restructuring of Customs and Central Excise –Fixation of date of Existence of restructured cadres-reg.

Madam,

I am directed to say that clarification have been sought byfield formations regarding the date of existence of restructuredcadres. The matter has been examined in the Board and it hasbeen decided that the restructured cadres would come intoexistence from the dates on which the new/amended rules arenotified. Accordingly D

E

F

G

H

118SUPREME COURT REPORTS

A(a) The restructured cadre of Inspector (Central excise),Inspector (Preventive Office) and Inspector (Examiner)came into effect on and from 07.12.2002 i.e., the dateof publication of Recruitment Rules.

(b) The restructured cadre of Senior Tax Assistant cameBinto existence on and from 20.01.2003 i.e. the date ofpublication of Recruitment Rule.

Yours faithfully,SD/-

(Y.P. VASHISHAT)

Under Secretary to the Govt. of India”

C

THE SPATE OF LITIGATION

26. The position, as noticed, led to a scenario where the erstwhileData Entry Operators Grade ‘B’ and ‘C’, who came to be re-designated as Senior Tax Assistants (STAs) and who were not invitedDto participate in the promotional exercise for the post of Inspector,launched litigation in various Tribunals across the country.

THE PROCEEDING IN THE CHANDIGARH TRIBUNAL

27. O.A.1221 of 2002 came to be filed before the Tribunal atEChandigarh. The applicants were Data Entry Operators Grade ‘A’, whowere promoted in the year 2000 as Data Entry Operators Grade ‘B’.They contended that they being Data Entry Operators Grade ‘B’, weredeemed to have been appointed as Senior Tax Assistants and wereeligible to be considered for the post of Inspector. They were also placedin the higher Grade of Rs.5000 to 8000 and were senior to the U.D.FClerks. The applicants Complained that though they were eligible tobe considered for promotion to the post of Inspector, Central Excisealong with the candidates of the pre-structured cadre, they were notbeing considered. The Tribunal found merit in the contention of theapplicants and held as follows:

G“10. There is no doubt that the Data Entry Operators Grade Bhave now been redesignated as Senior Tax AssistantsRecruitment Rules, 2002. It is also very clearly mentioned in thenotification in para 4(i) that the service rendered by them beforecommencement of these rules shall be taken into considerationHfor deciding the eligibility for promotion to the next higher grade.

According to the Inspector Recruitment Rules, 2002, underClause (b)(i) of schedule to these rules, Senior Tax Assistantswith 2 years regular service are eligible for consideration forpromotion. In other words, Data Entry Operators Grade b with2 years service as Data Entry Operator and/or Senior TaxAssistants are eligible promotion. There is no such condition inthe Recruitment Rules, that the categories of employees coveredunder clause (b) under column 12 of the schedule are requiredto put in 2 years of service exclusively as Senior Tax Assistant.Their past service as Data Entry Operators is also required tobe taken into consideration. In fact the respondents are relyingon the provision made in Note 1 under col.12 to emphasize thatthe Senior Tax Assistants will be considered for promotion onlyafter 2 years from the date of restructured cadres come intoexistence. Note 1 reads as under:

Note 1: Promotion under clause (a) above shall be operative onlyfor a period of two years from the date or which the restructuredcadres mentioned under clause (b) above come into existence.”A close reading of the above Note would reveal that it is inrespect of employees covered under Clause (a) and is notrelevant to the employees under Clause (b). It is therefore, wrongto interpret the provision made in the above Note that Data EntryOperators (now redesignated as Sr.Tax Assistants) are noteligible for promotion for a period of 2 years. In fact, Senior TaxAssistant have been given higher grade of Rs.5000-8000 and theyare senior to the UDCs according to the Senior Tax AssistantRecruitment Rules, 2002, while UDCs have been considered forpromotion for the post of Inspector, there does not appear to beany justification for denying senior Tax assistants their legitimateright for consideration for promotion.

11. Note 2 under col.12 specifically provides that the candidatesshall be required to pass such written test as may be determinedby the Central Board of Excise and Customs from time to time.The judgment in the case of Madan Singh & ors (supra) citedby the learned counsel for the applicant is, therefore,distinguishable to the extent that the departmental examinationis prescribed in the relevant rules in the instant case. Senior TaxAssistants are, therefore, required to pass the written test before AB

C

D

E

F

G

H

AB

C

D

E

F

G

H

Athey are considered for promotion to the post of Inspector ashas been done in the case of other categories employees. AsSr. Tax Assistants are senior to UDCs, they should also havebeen given an opportunity to appear in the departmental writtenexamination and if they had passed, they should have beenconsidered for promotion to the post of Inspector. Non-Bconsideration of Sr. Tax Assistants for promotion is, therefore,in violation of the relevant Rules.”

28. On the basis of the aforesaid discussion, the Tribunal directedapplicants to be considered for promotion as Inspector, in terms of therelevant Rules, considering the service rendered by them as Data EntryCOperator Grade ‘B’, after giving them an opportunity to appear in thedepartmental examination, as provided in Note 2 in the Schedule to theInspector Rules, 2002, inter alia.

29. The next, in the chronological order, is the Order dated29.08.2003 passed by the CAT at Bombay. This decision went againstDthe reasoning adopted by the Chandigarh Bench, which we have alreadynoted. However, the High Court of Bombay, by its Judgment dated07.10.2003, allowed the Writ Petitions filed against Order dated29.08.2003. The High Court found the reasoning of the ChandigarhBench appealed to it. No doubt, it related to filling-up the post ofEInspector (Customs). The Special Leave Petition filed against theJudgment of the High Court of Bombay came to be dismissed on09.02.2004 by this Court. In the interregnum, CAT, Madras, by Ordersdated 04.09.2003 and 12.09.2003, adopted the view accepted by theChandigarh Bench. Finally, CAT, Ahmedabad also, by its decision dated07.05.2004, accepted the view propounded by the CAT, Chandigarh.FTHE LITIGATION BEFORE US

ORIGINAL APPLICATION NO. 1362 OF 2002

30. The applicants, as already noticed, are the appellants in theCivil Appeal Nos. 1970-1975 of 2009. They approached the TribunalGon the following allegations, inter alia. They had been appointed asData Entry Operator Grade ‘A’ between October, 1993 to March, 1994.On completion of six years’ service, they came to be promoted as DataEntry Operator Grade ‘B’. After completing the desiredcomputerization, they were entrusted with regular work relating to theHExecutive Side. This included technical work, statistics, preventive audit

D. RAGHU AND OTHERS v.R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

D. RAGHU AND OTHERS v.R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

and other legal work. They claimed that they were at par with theexisting Tax Assistants. After the Fifth Central Pay Commission, theystood equated with the Tax Assistants. There were grievances raisedrelating to promotional avenues not being on par as between the DataEntry Operators and the Tax Assistants. There was reference madeto the Order dated 19.07.2001. It was pointed out that the officialrespondent had communicated the Draft Recruitment Rules, whichcontained “an unconscionable condition”. The unconscionable conditionreferred to was the incorporation of Clause (a) that those working asTax Assistants with two years of service, etc., were given preferencefor promotion over the restructured categories. They contended thatOrder dated 19.07.2001 had already come into force. They pointed outthat there was no meaning in considering the pre-structured Cadre ofTax Assistants and U.D. Clerks, etc., after the restructuring [Apparently,they felt aggrieved by the invitation to the Tax Assistants and U.D.Clerks, based on the provisions contained under 2002 Rules (Column12, Clause (a))]. The proposed promotion was dubbed as an attemptedbackdoor entry. It was only the restructured Cadre of Senior TaxAssistant (STA) alone, which was eligible for promotion as Inspector.The pre-structured Cadre should not be allowed to steal a march overthe applicants, who were already placed in the higher scale. Theunconscionable part of the Rules was dubbed as violative of Articles14 and 16 of the Constitution of India. In the grounds, they attackedNote 1 to 2002 Rules found in Column 12. The Note was alleged tohave given “leverage to the Tax Assistants and the U.D. Clerks andStenographers to count their pre-structured service”. Being new Cadre,they could not have required period of two years under the restructuredCadre. The Draft Recruitment Rules were impugned as being issuedwith “malafide intention” for creating avenues for the “ineligible LowerDivision Cadre”. It is also contended that Draft Rules had not beenfinalised, and only after finalisation, the matter could be proceeded with.

31. The reliefs sought were as follows:

“(a) to set aside the intimation letters C.No.II/3/21/2002 Con.Sec. C.No. II/3/16/2003-Con. Sec. & C.No. II/03/52/2002 Estt. All dated 5.11.2002 conducting physical Test/interviews, in the absence of finalization of draftrecruitment rules, on the basis of the unconscionableconditions stipulated in the draft recruitment rules forthe purpose of promoting the in-eligible candidates, AB

C

D

E

F

GH

122SUPREME COURT REPORTS

A

B

C

D

E

F

G

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depriving the applicants from their due promotion to theposts of inspector of Customs and Central Excise,declaring the same as arbitrary, illegal, unwarranted,misconceived, frivolous and in violation of Articles 14& 16 of the Constitution of India.

(b) to set aside that part of recruitment rules communicatedvide F.No. A 12018/48/2000-Ad. III-B dated 28.10.2002of R-1, incorporating certain unconscionable conditionsunder Clause (a), as confirmed vide Gazette of IndiaNotification dated 29.11.2002 and note(1) of clause (b)of column 12 of Group ‘C’ Recruitment Rules 2002, foreligibility condition for promotion to the cadre ofinspector of Customs and Central Excise, providingillegal opportunities to the cadres that were existing priorto the restructured cadre when the restructured processhas already been affected w.e.f. 19.7.2001, givingleverage to the ineligible candidates to march over theeligible candidates of DEOs Grade ‘B’ cadre forpromotion to the cadre of Inspector of Customs andCentral Excise, declaring that part of the said draft rulesas arbitrary, illegal, un-warranted, misconceived,malafide and against the principles of natural justice andin violation of Articles 14 & 16 of the Constitution ofIndia;

(c) to declare that the applicants who were working asDEOs in Gr. ‘B’ in the scale 4500-7000 even beforere-structuring deemed to have been merged into thecadre of Sr. Tax Assistants in the scale of 5000-8000as enumerated under the restructured schemecommunicated vide R-1 Letter F. No. A-11019/72/99Ad. IV dated 19.7.2001 communicating the approval ofrestructuring by the Ministry with immediate effectenclosing Annex. I therewith showing the cadres andthe strength, duly directing the respondents to considerthe cases of the applicants for promotion to the cadreof Inspectors, Customs and Central Excise, by way of100% promotion under one time relaxation scheme onpar with those Assistants, DEO Grade ‘C’, Tax Assistants, DEO Grade ‘B’ and UDC(Special Pay),who were redesignated as Senior Tax Assistants underthe restructuring of cadres who are only to beconsidered for promotion to the cadre of Inspectors ofCentral Excise & Customs; with all consequentialbenefits; and be pleases to pass such other and furtherorder, or orders as the Hon’ble Tribunal may deem fitand proper in the circumstances of the case.”

32. In the reply by the official respondents, it was, inter alia,pointed out as follows:

The post of Inspector was covered by 1979 Rules. Feedercategories were, as we had noted earlier. There was, in other words,reference to the 1979 Rules as amended in 1996. Regarding the Orderdated 19.07.2001, the stand of the Government was that it was onlyapproval of the Ministry for restructuring process. It was contendedthat it was incorrect to say that the new Cadre of Senior Tax Assistantsand Tax Assistants were created from 19.07.2001. The restructuringbecame effective only after the formulation of the Recruitment Rules.The Order dated 19.07.2001 was silent as regards mode of restructuringand the process after merger. In regard to the claim of the appellantsof parity with U.D. Clerks, it was pointed out that the appellants couldnot compare themselves with the U.D. Clerks for promotion asInspector. The initial scale of Data Entry Operator Grade ‘A’ (EntryPost) was Rs.1150-1500 prior to the Fifth Central Pay Commission,whereas, the pay of U.D. Clerk was Rs.1200-2040. The educationalqualification required for being an U.D. Clerk was Graduation. For aData Entry Operator Grade ‘A’, on the other hand, the educationalqualification was pass in the Intermediate Course. It was furthercontended that the nature of duty was also different. The U.D. Clerkswere selected on staff selection conducted on all-India basis. The DataEntry Operators Grade ‘A’ were employed through EmploymentExchanges. As far as conditions in Column 12, which were challengedby the applicants, viz., the requirement of two years’ service, whichwas dubbed as unconscionable, it was contended that the conditionrelating to two years’ service was necessary to cover fair process fordifferent categories. The Cadre of Inspector was a basic work force.Promotions were effected on the basis of promotion to the post ofSuperintendent, on all-India basis, leading to large number of vacanciesin the post of Inspector. In the Andhra Pradesh zone, there were 242

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Avacancies of Inspector. The applicants, it was contended, did not fallin the feeder categories. The contention of the applicants that they weredoing various other works, was denied and it was contended that theData Entry Operators were basically doing the work of data entry andwhen they were doing the other work, the nature of work was typingon computers.B

ORDER OF THE TRIBUNAL IN O.A. NO. 1362 OF 2002

33. After setting out the pleadings, noting the contentions and alsothe orders passed by the Central Administrative Tribunal, Chandigarh,the Madras Bench and also the Division Bench of the Bombay HighCCourt, the Tribunal proceeded to enter the following findings, inter alia:

a. The above decisions referred, viz., by the Tribunals andthe Bombay High Court, were found to have beenrendered on careful considerations of the Rules notifiedon 29.11.2002. The Tribunal agreed with theinterpretation.

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b. The Tribunal proceeded to, therefore, express its inabilityto accept the contention of the respondents that theaction initiated by sending the impugned intimation letterdated 05.11.2002, confining the consideration of selectionfor promotion to the post of Inspector only to candidatesEin the pre-structured Cadre, was in accordance with theprovisions of the Rules.

34. It is further held that the further contention of the respondentsthat the 1979 Rules entitled them to fill-up the vacancies, could not beaccepted, since the restructuring of the cadres had coming to effectFon 19.7.2001 itself.

35. The existing Assistants, Tax Assistants, U.D. Clerks (SpecialPay), DEOs Grade ‘B’ and ‘C’ were found to have been merged andre-designated as Senior Tax Assistants (STAs). It was found that therestructuring cadres came into effect from the date of issue of letterGdated 19.07.2001. Therefore, any further promotions to be effectedfrom restructured cadres was to be only in accordance with the Rulespromulgated under Article 309, viz., the Inspector Recruitment Rules,2002. It was done in the supersession of the 1979 Rules. It was foundthat the Authorities were not justified in resorting to fill-up the existingHvacancies in 242 posts in the Cadre of Inspector by following the old Rules of 1979 which were superseded by the new Rules, by initiatingthe process of selection before the new Rules, came to be notified inthe Gazette after the date of restructuring of cadres came into forcei.e. on 19.07.2001, thereby confining the selection only to the pre-structured category. The Tribunal did not agree with the contention ofthe respondents that the restructuring of the Cadre came into force onlywith effect from 16.01.2003 (apparently the date of publication of theSenior Tax Assistant (STA) Rules). The contention of the appellantswas accepted that the appellants must be deemed to have beenabsorbed into the Cadre of Senior Tax Assistants in the scale of payRs. 5000-8000 under the restructured scheme with effect from19.07.2001. Therefore, for the purpose of promotion to the Cadre ofInspector, appellants became eligible for consideration under the newRules framed which came into force with effect from 07.12.2002.Therefore, the Authorities were to consider the appellants for promotionto the cadre of Inspector of Central Excise and Customs based on thenew Rules and not on the basis of the old Rules prevailing in respectof pre-structured cadres. Rejecting the contention of the respondentsthat the restructuring did not come into effect on 19.07.2001, as theRules relating to all the restructured cadres were formulatedsubsequently, it was further found that since in Rule 5 of the SeniorTax Assistant Rules, it has been clarified that the service rendered bythem before the amendment of the Rules was to be taken intoconsideration for promotion to the next higher cadre, it was found thatin view of the said Rules, the Senior Tax Assistants could take intoconsideration their service as Data Entry Operator Grade ‘B’, andtherefore, Data Entry Operator Grade ‘B’ with two years’ service inthe said post was eligible for promotion. There was no condition inClause (b) that the employees were to put in two years’ serviceexclusively as Senior Tax Assistants. It is further found as follows:

“The learned counsel for the applicants has also relied upon adecision of the Supreme Court reported in 1998 SCC (L&S) page1075 in the case of Rajasthan Public Service Commission Vs.Chanan Ram and another, in support of his contention that oncadre restructuring coming into force, the earlier cadres standabolished. He further submitted that after merging of variouscadres into restructured cadre of Senior Tax Assistant, theuniformity of restructured cadre of Senior Tax Assistant alonewould be eligible for promotion to the cadre of Inspector of AB

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Customs and Central Excise. It is also pointed out by him that itis incumbent on the part of the respondents to work out theplacement of the categories mentioned under sub para (3)of para4 of the Recruitments rules of Senior Tax Assistants for workingout the inter se seniority from among the integrated cadres andbasing on such seniority, promotion to the cadre of Inspector ofCustoms and Central Excise has to taken place. According tohim, even for the one time measure standard relaxation by wayof 100% by promotion to the cadre of Inspector of Excise, themethod shown in the recruitment rules of Senior Tax Assistantsfor the purpose of inter se seniority placement of various cadreshas to be followed and promotion to the next higher cadre ofInspector of Central Excise has to be given on the basis of suchintegrated seniority list as per sub-para (3) of Para 4 of the saidrecruitment rules. We agree with the above contentions of thelearned counsel for the applicants, since we have taken the viewthat with effect from 19.7.2001 the restructuring of Senior TaxAssistants came into force ad all the earlier cadres of Assistant,Tax Assistant/ UDC (Spl. Pay), DEOs Gr. B and C have beenmerged and redesignated as Senior Tax Assistant, the promotionfrom the said cadre to the next cadre of Inspector of Customsand Central Excise is to be considered only on the basis of thenew recruitment rules which came into force. In this view ofthe matter, we find that all the applicants became eligible forconsideration for promotion to the post of Inspector of Customsand Central Excise and the service rendered by them in thepredesignated cadre for two years is also to be taken intoconsideration.

The learned Standing Counsel for the respondents submitted thatthe selection process initiated on 5.11.2002 for promotion to thepost of Inspector of Central Excise and Customs from the othercategories of employees other than the DEOs Gr.B and Gr.Chas been finalised and the existing vacancies were filled up. Sinceit is now found that the applicants are also eligible forconsideration for the promotion to the said post, we find itnecessary to dispose of this O.A. by directing the officialrespondents to consider the cases of the applicants also forpromotion to the post of Inspector of Customs and Central Excisein terms of the relevant rules, taking into consideration the service rendered by them as DEO Gr.B after giving them an opportunityto appear in the Departmental Examination as notified in Note 2in the schedule to the Inspector Recruitment Rules 2002 and incase they are successful and are finally selected as Inspectors,as per Rules, they should be promoted as Inspectors and assignsuitably seniority vis-à-vis other categories of staff who havealready been promoted.

In the result, this O.A. is allowed in part. The respondents aredirected to consider the cases of the applicants for promotion tothe post of Inspector of Customs and Central Excise in terms ofthe relevant recruitment rules taking into consideration the servicerendered by them as Data Entry Operators Gr. B after givingthem opportunity to appear in the departmental examination asprovided in Note 2 in the schedule to the Inspector. RecruitmentRules, 2002. In case, they are successful and are finally selectedas Inspectors, as per rules, they should be promoted as Inspectorsand assigned suitably seniority vis-à-vis other categories of staffwho have already been promoted by the revision of seniority asper the provisions of Rule 5 of Rules relating to recruitment ofGrade C Senior Tax Assistants in the Central Excise and CustomsDepartment. The declaration sought for by the applicants in para8(C) of the O.A. is granted as prayed for.”

36. As already noticed, the High Court came to the conclusionthat the decision dated 19.07.2001 was an approval, in principle, forthe restructuring. The restructuring came into force with effect fromthe date on which Statutory Rules in 2003 were framed. It was furtherfound that in regard to the existing vacancies, the erstwhile Rules of1979 held the field and governed the parties.

37. We heard learned Counsel for the parties. Shri C.U. Singh,learned Senior Counsel, led the arguments on behalf of the appellants.We also heard Shri P.S. Patwalia, learned Senior Counsel on behalf ofthe party respondents and Shri K. Radhakrishnan, learned Senior Counselon behalf of the Government of India besides Shri Sridhar Potaraju,learned Counsel on behalf of some of the party respondents.

38. The learned Senior Counsel for the appellants, undoubtedly,after referring to the Rules and the Government decisions, contendedthat this is a clear case where the High Court was in error in proceeding AB

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Aon the basis that the vacancies must be filled-up on the basis of the1979 Rules. He pointed out that the principle enunciated in Y.V.1Rangaiah and othersv. J. Sreenivasa Rao and othersis, by no means,a universal or unexceptionable norm. The decision was rendered in thespecial facts of the case. He drew our attention to the body of caselaw flowing from this Court, which has enunciated the principle thatBdespite the fact that there exists Statutory Rules and unfilled vacancies,it is very much open to the Government, when it is mulling change, totake a conscious decision, though supported by reasons, to leavevacancies unfilled and to take a call at a relevant point of time.

39. As regards the effect of 2002 Rules and the 2003 STA Rules,Cit was the contention of Shri C.U. Singh that the Court may bear inmind the backdrop in which the restructuring came about as personswho were appointed as Data Entry Operators were found stagnatingin comparison to their colleagues working in the ministerial cadre.Perceiving merit in their genuine grievances, the Government decidedDto completely restructure. It is accordingly that certain categories, whichincluded Data Entry Operator Grade ‘B’ and ‘C’, were designated asSenior Tax Assistants. This is evidenced by the proceedings dated19.07.2001. The restructuring attained completeness from the saiddecision, as correctly found by the Tribunal. The Order of the Tribunalhas not been properly appreciated by the High Court, it is complained.EOur attention has been drawn to the view taken by the ChandigarhBench and the High Court of Bombay, in particular. It is furtherimpressed upon us that this Court lend its seal of approval to the viewexpressed by the High Court of Bombay. He pointed out, thus, that theTribunal at Chandigarh, Madras, High Court of Bombay and the TribunalFat Ahmedabad, have spoken in one voice about the rights of the erstwhilecadre of Data Entry Operators to be treated as Senior Tax Assistants.They were entitled to count their previous service also for the purposeof calculating the period of two years’ service as required in the 2002Inspector Rules for promotion.

G40. Per contra, the learned Senior Counsel Shri P.S. Patwalia,K. Radhakrishnan, Senior Counsel and Shri Sridhar Potaraju, learnedCounsel stoutly defended the Order of the High Court. It is theircontention that quite apart from the fact that in terms of the principlelaid down in Y.V. Rangaiah(supra) that existing vacancies should be H1 (1983) 3 SCC 284

filled-up under the old Rules, the Data Entry Operators were not inthe feeder categories for promotion as Inspector under the 1979 Rulesin 2002. They come into Feeder Category for promotion only when theRules were framed in the year 2002, which was brought into force on07.12.2002. Even proceeding under the said Rules, Shri P.S. Patwaliawould point out that they would have to gain experience and work fortwo years as STA and they were certainly not eligible for beingconsidered when the Government decided to fill the vacancies on05.11.2002. Therefore, apart from the principle enunciated in Y.V.Rangaiah(supra), they would make the mark in terms of the Rules onlyon completion of two years’ service from January 2003 as Senior TaxAssistants. Our Attention is drawn to 2002 Inspector Rules to point outthat what is required under the said Rules is that the Senior TaxAssistants, with two years Regular Service in the Grade, alone, wouldbe eligible. Having regard to the pay-scale of a Senior Tax Assistant, itis not open to the appellants to contend that the requirement of RegularService in the Grade, would be fulfilled, by taking into considerationthe previous service rendered by them in the erstwhile Cadre of DataEntry Operator. It is also contended that the Memorandum dated19.07.2001 also embodies a decision, in principle, in this regard. Ourattention is drawn to Memorandums dated 05.06.2002 and 28.10.2002.It is only on issuance of the Rules that the restructuring happened. TheRules were brought into force in the year 2003. It is further contendedthat all the Data Entry Operators Grade ‘A’, ‘B’ and ‘C’ continued assuch and were only re-designated as Tax Assistants or Senior TaxAssistants upon the enforcement of the 2003 Rules and not before. Thepay-scale of Senior Tax Assistants was Rs.5000-8000. The appellantsbelonging to Data Entry Operator Grade ‘B’ did not draw the pay-scaleof a Senior Tax Assistant, though, the Grade of Data Entry OperatorGrade ‘C’ was same as that of the STA. Reliance was placed on theMemorandum of the Government of India dated 21.04.2003, whichcategorically states that restructured Cadre of STA came into forceonly on 20.01.2003.

41. Under the 2002 Inspector Rules, there is a clear scheme.The earlier Ministerial Staff, who were eligible for promotion under therepealed Rules, continued to remain eligible under the 2002 Rules. Theeligibility was for a period of two years. The period of two years startedfrom the day on which the restructured cadres came into force. Forthe first two years, the earlier Ministerial Staff were eligible. During AB

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Athat period, the Rules contemplated that the restructured Cadres wouldacquire eligibility. Rule 5 of the 2003 STA Rules is sought to beexplained away by pointing out, it would only mean that if any of theMinisterial Staff, who had been Tax Assistants/U.D. Clerks (SpecialPay), who came into the restructured Cadre of Senior Tax Assistants,fall short of two years or five years under Part 12(a) of the 2002BInspector Rules, then, their previous service, as also service afterrestructuring, would count towards their eligibility. In this regard, he drewour attention to Note 1 of the 2002 Rules. Distinction is sought to bedrawn between Rule 5 of the Senior Tax Assistant Rules, 2003 andRule 4 of the Tax Assistant Rules, 2003. The Grade of Senior TaxCAssistant is higher than the Grade of Data Entry Operator Grade ‘B’,both in terms of status and pay-scale.

42. Thus, it is contended that the service rendered by the Officers,prior to there being restructuring, could not be counted for the purposeof Clause (12)(b) of the 2002 Inspector Rules. As regards the questionDas to whether there was a ban on appointment, it is contended thatthough, initially a ban was imposed vide Memorandum dated 10.09.2001by Memorandum dated 03.01.2002, the ban was clearly lifted. It iscontended that the letter dated 05.06.2002 extended the ban relating toDirect Recruitment but it did not affect letter dated 03.01.2002, whichhad removed the ban. Reliance is also placed on letter dated 28.10.2002.EIt is contended also that since there was no ban during the period 2001-2002 and 2002-2003, and seeking to draw support from the O.M. dated08.09.1998, which provides for a model calendar for holding of DPCs,the principle in Y.V. Rangaiah(supra), is pressed into service. It ispointed out that promotions had already been made on the basis of theimpugned judgment of the High Court and resultant vacancies wereFalso filled-up by implementation Orders dated 26.09.2005, 17.05.2006and 19.07.2006. Even the erstwhile Data Entry Operator Grade ‘B’,re-designated as Senior Tax Assistants, have been promoted asInspectors. Many of the contesting parties have further been promotedas Superintendents. The judgment of the High Court of Bombay hasGnot been implemented. The Order of the CAT, Chandigarh Bench, issought to be faulted. It is pointed out that the Draft Recruitment Rulesdated 28.10.2002 were taken as Final Recruitment Rules and the entirejudgment proceeds on the said basis. It also failed to examine the scopeof Clauses (a) and (b) in Column 12 as also the Note below Column12 of the 2002 Inspector Rules. The High Court of Bombay also didHnot refer to and consider the effect of the 2002 Rules.

D. RAGHU AND OTHERS v.R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

43. The Data Entry Operators were not in the category on01.01.2001, for the Recruitment Year 2001-2002 and, on 01.01.2002,for the Recruitment Year 2002-2003, and therefore, they were noteligible.

AMENDMENT OF LAW AND FILLING-UP OF OLDVACANCIES

44. The appellants would point out that it is not a universalprinciple that vacancies must be filled-up in accordance with theunamended Rules. He would point out that the view taken by this Court,in this regard, may be noticed.

45. In Y.V. Rangaiah(supra), this Court was dealing a case underthe Andhra Pradesh Registration and Subordinate Service Rules. TheRule in question, inter alia, contemplated preparation of a panel everyyear in September. That apart, the Government also issued very clearinstructions, which emphasised prompt preparation of panels beingessential for increasing administrative efficiency and filling of vacancieswithout delay. Instead of filling-up vacancies on the 01.09.1976, therewas delay and the panel came to be drawn-up in 1977 by which timean amendment to the Rules purported to take away rights of the LowerDivision Clerks for promotion and the Feeder Category was sought tobe confined to the U.D. Clerks. It was in the said factual context thatthe court proceeded to lay down as follows:

“9. Having heard the counsel for the parties, we find no force ineither of the two contentions. Under the old rules a panel had tobe prepared every year in September. Accordingly, a panelshould have been prepared in the year 1976 and transfer orpromotion to the post of Sub-Registrar Grade II should have beenmade out of that panel. In that event the petitioners in the tworepresentation petitions who ranked higher than Respondents 3to 15 would not have been deprived of their right of beingconsidered for promotion. The vacancies which occurred priorto the amended rules would be governed by the old rules andnot by the amended rules. It is admitted by counsel for both theparties that henceforth promotion to the post of Sub-RegistrarGrade II will be according to the new rules on the zonal basisand not on the State-wide basis and, therefore, there was noquestion of challenging the new rules. But the question is of fillingthe vacancies that occurred prior to the amended rules. We have A

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Anot the slightest doubt that the posts which fell vacant prior tothe amended rules would be governed by the old rules and notby the new rules.”

46. It suffices, for our purpose, to note that the view taken bythe Court, in the said case, came to be followed in subsequent judgments,2Bviz., P. Ganeshwar Rao and others v. State of A.P. and others;P.Mahendran and othersv. State of Karnataka and others3;A.A. Caltonv. Director of Education4and N.T. Devin Katti and othersv. KarnatakaPublic Service Commission and others5.

47. On the other hand, there is another line of decisions whichCis relied upon by the appellants. Very briefly, the principle is this:

Despite availability of vacancies, if the Appointing Authorityconsciously takes a decision to keep unfilled the vacancies for goodreasons, the Rules, as on the day of consideration of the matters relatingto promotion, would govern the situation.

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48. The representative of this view would be the decision by theBench of three Judges inK. Ramulu (Dr.) and anotherv. (Dr.) S.Suryaprakash Rao and others6and P. Ganeshwar Rao(supra). In K.Ramulu (Dr.)(supra), the Government had taken a decision to amendthe Rules in question. It also took a conscious decision not to fill theEvacancies till the amendment. For the years 1995-1996, there was nopanel prepared. Essentially on the said facts, this Court held as follows:

“12. The same ratio was reiterated in Union of India v. K.V.Vijeesh [(1996) 3 SCC 139 : 1996 SCC (L&S) 683] (SCC paras5 and 7). Thus, it could be seen that for reasons germane to thedecision, the Government is entitled to take a decision not to fillFup the existing vacancies as on the relevant date. Shri H.S.Gururaja Rao, contends that this Court in Y.V. Rangaiah v. J.Sreenivasa Rao [(1983) 3 SCC 284 : 1983 SCC (L&S) 382]had held that the existing vacancies were required to be filledup as per the law prior to the date of the amended Rules. TheGmere fact that Rules came to be amended subsequently does not 2 (1988) Supp. SCC 7403 (1990) 1 SCC 411

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empower the Government not to consider the persons who wereeligible prior to the date of amendment. It is seen that the caserelated to the amendment of the Rules. Prior to the amendmentof the Rules two sources were available for appointment as Sub-Registrar, namely, UDCs and LDCs. Subsequently, Rules cameto be amended taking away the right of the LDCs forappointment as Sub-Registrar. When the vacancies were notbeing filled up in accordance with the existing Rules, this Courthad pointed out that prior to the amendment of the Rules, thevacancies were existing and that the eligible candidates wererequired to be considered in accordance with the prevailing Rules.Therefore, the mere fact of subsequent amendment does not takeaway the right to be considered in accordance with the existingRules. As a proposition of law, there is no dispute and cannot bedisputed. But the question is whether the ratio in Rangaiah case[(1983) 3 SCC 284 : 1983 SCC (L&S) 382] would apply to thefacts of this case. The Government therein merely amended theRules, applied the amended Rules without taking any consciousdecision not to fill up the existing vacancies pending amendmentof the Rules on the date the new Rules came into force. It istrue, as contended by Mr H.S. Gururaja Rao, that this Court hasfollowed the ratio therein in many a decision and those cited byhim are P. Ganeshwar Rao v. State of A.P. [1988 Supp SCC740 : 1989 SCC (L&S) 123 : (1988) 8 ATC 957] , P. Mahendranv. State of Karnataka [(1990) 1 SCC 411 : 1990 SCC (L&S)163 : (1990) 12 ATC 727] , A.A. Calton v. Director of Education[(1983) 3 SCC 33 : 1983 SCC (L&S) 356] , N.T. Devin Katti v.Karnataka Public Service Commission [(1990) 3 SCC 157 :1990 SCC (L&S) 446 : (1990) 14 ATC 688] , Ramesh KumarChoudha v. State of M.P. [(1996) 11 SCC 242 : (1996) 7 Scale619] In none of these decisions, a situation which has arisen inthe present case had come up for consideration. Even Rule 3 ofthe General Rules is not of any help to the respondent for thereason that Rule 3 contemplates making of an appointment inaccordance with the existing Rules.

13. It is seen that since the Government have taken a consciousdecision not to make any appointment till the amendment of theRules, Rule 3 of the General Rules is not of any help to therespondent. The ratio in the case of Ramesh Kumar Choudha ABC

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v. State of M.P. [(1996) 11 SCC 242 : (1996) 7 Scale 619] isalso not of any help to the respondent. Therein, this Court hadpointed out that the panel requires to be made in accordance withthe existing Rules and operated upon. There cannot be anydispute on that proposition or direction issued by this Court. Asstated earlier, the Government was right in taking a decision notto operate Rule 4 of the General Rules due to their policy decisionto amend the Rules. He then relies on para 14 of the unreportedjudgment of this Court made in Union of India v. S.S. Uppal[(1996) 2 SCC 168 : 1996 SCC (L&S) 438 : (1996) 32 ATC 668]. Even that decision is not of any help to him. He then reliesupon the judgment of this Court in Gajraj Singh v. STAT [(1997)1 SCC 650 : (1996) 7 Scale 31] wherein it was held that theexisting rights saved by the repealed Act would be consideredin accordance with the Rules. The ratio therein is not applicablebecause the existing Rules do not save any of the rights acquiredor accruing under the Rules. On the other hand, this Court hadpointed out (in Scale para 23) thus: (SCC pp. 664-65, para 22)

“Whenever an Act is repealed it must be considered, exceptas to transactions past and closed, as if it had never existed.The effect thereof is to obliterate the Act completely fromthe record of Parliament as if it had never been passed; itnever existed except for the purpose of those actions whichwere commenced, prosecuted and concluded while it was anexisting law. Legal fiction is one which is not an actual realityand which the law recognises and the court accepts as areality. Therefore, in case of legal fiction the court believessomething to exist which in reality does not exist. It is nothingbut a presumption of the existence of the state of affairs whichin actuality is non-existent. The effect of such a legal fictionis that a position which otherwise would not obtain is deemedto obtain under the circumstances. Therefore, when Section217(1) of the Act repealed Act 4 of 1939 w.e.f. 1-7-1989, thelaw in Act 4 of 1939 in effect came to be non-existent exceptas regards the transactions, past and closed or saved.””

49. In Deepak Agarwal and anotherv. State of U.P. and others7,one of the two appellants was a Statistical Officer. The other one was a Technical Officer. The Rules prior to their amendment included themin the Feeder Category for the promotion to the post of Deputy ExciseCommissioner. The amendment, by which they stood deprived of theirright to be considered for promotion, was made considering workexperience, duties and qualifications of Statistical Officer and TechnicalOfficers rendering them unfit to be considered for the higher post. Thequestion, which fell for consideration, was posed in paragraph 18 asfollows:

“18. The short question that arises for consideration is as towhether the appellants were entitled to be considered forpromotion on the post of Deputy Excise Commissioner under the1983 Rules, on the vacancies, which occurred prior to theamendment in the 1983 Rules on 17-5-1999.”

50. This Court noticed that there was no statutory duty cast onthe State to complete the selection process within a prescribed period.It further noted the statutory provision enabling the State to leave aparticular post unfilled. It was still further found that the promotion tothe vacancies had been made under the amended Rules. The principlelaid down in Y.V. Rangiah(supra) came to be distinguished in thefollowing words:

“24. We are of the considered opinion that the judgment in Y.V.Rangaiah case [(1983) 3 SCC 284 : 1983 SCC (L&S) 382]would not be applicable in the facts and circumstances of thiscase. The aforesaid judgment was rendered on the interpretationof Rule 4(a)(1)(i) of the Andhra Pradesh Registration andSubordinate Service Rules, 1976. The aforesaid Rule providedfor preparation of a panel for the eligible candidates every yearin the month of September. This was a statutory duty cast uponthe State. The exercise was required to be conducted each year.Thereafter, only promotion orders were to be issued. However,no panel had been prepared for the year 1976. Subsequently, theRule was amended, which rendered the petitioners thereinineligible to be considered for promotion. In these circumstances,it was observed by this Court that the amendment would not beapplicable to the vacancies which had arisen prior to theamendment. The vacancies which occurred prior to the amendedRules would be governed by the old Rules and not the amendedRules.”

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A51. Still further, we may notice the following statement of thelaw contained hereunder:

“26. It is by now a settled proposition of law that a candidatehas the right to be considered in the light of the existing rules,which implies the “rule in force” on the date the considerationBtook place. There is no rule of universal or absolute applicationthat vacancies are to be filled invariably by the law existing onthe date when the vacancy arises. The requirement of filling upold vacancies under the old rules is interlinked with the candidatehaving acquired a right to be considered for promotion. The rightto be considered for promotion accrues on the date ofCconsideration of the eligible candidates. Unless, of course, theapplicable rule, as in Y.V. Rangaiah case [(1983) 3 SCC 284 :1983 SCC (L&S) 382] lays down any particular time-frame,within which the selection process is to be completed. In thepresent case, consideration for promotion took place after theDamendment came into operation. Thus, it cannot be accepted thatany accrued or vested right of the appellants has been takenaway by the amendment.”

52. This Court proceeded to follow the judgment in K. Ramulu(Dr.)(supra).

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53. In M.I. Kunjukunju and othersv. State of Kerala and others8,the Court proceeded to lay down that when Recruitments Rules wereamended with retrospective effect, pending process of selection, theselection must proceed in accordance with amended Rules. The Court,inter alia, took the view that a candidate, on making an application toFthe post pursuant to the advertisement, do not acquire any vested rightof selection (See paragraph 19).

54. In State of Tripura and othersv. Nikhil Ranjan Chakrabortyand others9, the Court, following Deepak Agarwal(supra), took the viewthat a candidate only has a right to be considered in the light of theGextant Rules, on the date of which, the consideration for promotion takesplace and there is no Rule of an absolute application that vacanciesmust invariably be filled-up under the existing law when they arose.We may only refer to paragraph 9:

8 (2015) 11 SCC 440H9 (2017) 3 SCC 646

“9. The law is thus clear that a candidate has the right to beconsidered in the light of the existing rules, namely, “rules in forceon the date” the consideration takes place and that there is norule of absolute application that vacancies must invariably be filledby the law existing on the date when they arose. As against thecase of total exclusion and absolute deprivation of a chance tobe considered as in Deepak Agarwal [Deepak Agarwal v. Stateof U.P., (2011) 6 SCC 725 : (2011) 2 SCC (L&S) 175] in theinstant case certain additional posts have been included in thefeeder cadre, thereby expanding the zone of consideration. It isnot as if the writ petitioners or similarly situated candidates weretotally excluded. At best, they now had to compete with somemore candidates. In any case, since there was no accrued rightnor was there any mandate that vacancies must be filledinvariably by the law existing on the date when the vacancyarose, the State was well within its rights to stipulate that thevacancies be filled in accordance with the Rules as amended.Secondly, the process to amend the Rules had also begun wellbefore the Notification dated 24-11-2011.”

ANALYSIS

55. The post of Inspector, which is at the centre stage of thecontroversy in Civil Appeal Nos. 1970-1975 of 2009, is mentioned asthe post of Inspector (Ordinary Grade) in the 1979 Rules. The FeederCategory, in regard to the post of Inspector, was:

a. Upper Division Clerks with five years’ service;

b. Upper Division Clerks with 13 years of total service asUpper Division Clerk and Lower Division Clerk, takentogether subject to the condition that they have aminimum of two years’ service in the Grade of UpperDivision Clerk;

c. Stenographers (Senior Grade) with two years’ service;

d. Stenographers (Senior Grade) or Stenographers(Ordinary Grade) with twelve years’ service asStenographer/Upper Division Clerk and Lower DivisionClerk, if any, taken together subject to a minimum oftwo years’ service as Stenographers (Ordinary Grade)or Upper Division Clerk Grade; AB

C

D

E

F

G

H

Ae. The next category, eligible was, Women Searchers withseven years’ service in the Grade;

f. Draftsmen with seven years’ service in the Grade.

56. Later on, by an amendment, the post of Tax Assistant wascreated out of the Cadre of Upper Division Clerks (This must beBreferred to as the old Cadre of Tax Assistants in contrast with the Cadreof Tax Assistants as a result of restructuring and by Rules dated03.05.2003). The old Tax Assistants were also, by virtue of Order dated19.03.1988, rendered eligible for consideration as Inspector.

57. On the other hand, the Data Entry Operators, a Cadre, whichCwas thought of and created to bring about computerization in the Exciseand Customs Department, came into being and came to be governedby the Rules made in the year 1992. There were four Grades. TheEntry Grade was Data Entry Operator Grade ‘A’, and Data EntryOperator Grade ‘A’ with six years’ service, could aspire for promotionDas Data Entry Operator Grade ‘B’. Likewise, Data Entry OperatorGrade ‘B’ could aspire to be entitled as Data Entry Operator Grade‘C’. At the top of the pyramid, was the post of Data Entry OperatorGrade ‘D’.

58. It is seen from the above that the Data Entry Operators wereEnot eligible to be considered for promotion as Inspector. The post ofInspector is a Group ‘C’ post. The Data Entry Operators were alsoGroup ‘C’ but in the technical branch. The Upper Division Clerks,Stenographers, Women Searchers, Draftsmen, etc., who constituted thefeeder categories, were holding posts in the Ministerial Category. Thepost of Inspector was a Group ‘C’ post in the Executive Category. TheFholders of the post in the Ministerial Cadre were in the Feeder Categoryfor promotion to the Executive post but holders of posts of Data EntryOperators, though a Group ‘C’ post, but being in the technical side, theyconstituted a different and separate Cadre. There was no avenue forthem to get further promotions by getting promoted as an Inspector.G59. According to the Data Entry Operators, they were actually,after the period of computerization was over, doing various other worksand had gained experience which entitled them to be considered forpromotion as Inspector. This issue apparently engaged the attention ofthe Government. Government Decided to bring about restructuring.HAccordingly, the decision regarding restructuring is seen captured in the

D. RAGHU AND OTHERS v.R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

proceedings dated 19.07.2001. As to what is the effect of the same,will be the heart of the controversy. Hence, we deem it appropriate todissect the said proceedings in detail.

A

60. The Order dated 19.7.2001, recites that Government hasapproved restructuring. It is further stated that as a result of therestructuring, there has been a change in number and nomenclature ofthe various Grades and posts. The revised pay and designation of thevarious posts at different levels, in both the Customs and Central ExciseDepartments, has been indicated in Annexure-1. The post of Inspectoris at Serial No.10. It refers to the post of Inspector, Preventive Officerand Examiner. The existing pay is shown as Rs.5500-9000. Therestructured post has been shown as Inspector. The pay-scale remainsthe same. The sanctioned strength is shown as 18053. The Notes aresignificant and they read as follows:

B

C

“Notes:

1. The posts in the grade of Superintendents also includeposts of SIO, AAD, IO of various directorates (Sl. No.7).

D

2. The posts in the grade of Inspectors also include theposts of P.O. and Examiner and Intelligence Officers(Sl. No. 10).

E

3. The posts in the grade of AO also include the posts ofACAO and EAO (Sl. No. 12)

4. The existing posts in the cadres of Asst., Tax Asstt.UDC (Sp Pay), DEO Gr(C) and DEO Gr (B) have beenmerged into and redesignated as Sr. Tax Asstt (Sr. No.F19).

5. The existing posts in the cadres of UDC, DEO(A) andUDC (except 717 posts of LDC for the purpose ofpromotion of Group D) have been merged andredesignated as Tax Asstt. (neew) (Sl No. 20).

G

6. The cadre of OS has been abolished and the posts havebeen merged in the posts of A.O. (Sl. No. 12).

7. Other posts which exist in the department and are notreflected in the above table have been kept in theirexisting strength in the existing pay scales only.H

A8. Details of other posts are given in Annexure II (Sl. No.15, 25, 30 and 33).”

61. No doubt, at Serial No.4, the expression used in existing posts‘have been’ merged into and re-designated as Senior Tax Assistant(New).B

62. The post of Senior Tax Assistant is shown as ‘New’ with apay-scale of Rs.5000-8000. The sanctioned strength is shown as 3152.So also, the post of Tax Assistant is shown as ‘New’. The sanctionedstrength is shown as 5525. The pay-scale is Rs.4000-6000. Coming backto the body of the communication, it is stated that all the posts at differentClevels, as per Annexure-1, stand sanctioned with immediate effect. Itis next stated that whenever there is a reduction in the number of postsat any level, such reduction will be effective after the existing incumbentsare promoted to the higher level or the post falls vacant on account ofretirement, etc. For the year 2001-2002, no Direct Recruitment was tobe made without approval of the Ministry/Department as the CabinetDhad approved a one-time relaxation for filling-up of all the vacanciesby promotion in all the cadres. Next, it is stated that the formation-wisedistribution of posts, at different levels, will be notified separately. Theother posts included in the restructuring proposal but where there is noproposal for alteration of the scale or strength, were included inEAnnexure-2. The post of Inspector does not figure in Annexure-2.

63. At first blush, on a perusal of the decision, as embodied inthe communication dated 19.07.2001, the view, we may tentatively take,would be that Government has not only approved the restructuring, butit has intended it to be effective. It is not in dispute that the post ofFInspector was formerly the post of Inspector/Preventive Officer/Appraiser. In place of these three posts, there was only to be the postof Inspector. In terms of the sanctioned strength, it is common casethat there was formerly in excess of 22000 posts of Inspector. Thenumber of posts, in fact, came down to 18053 as a result ofrestructuring. The restructuring has also resulted in abolishing of certainGposts, as for instance, the post of O.S.. Certain posts came to be mergedand new posts have emerged. Of interest to us, in resolving the dispute,are the cadres of Assistant, Tax Assistant, U.D. Clerk (Special Pay),Data Entry Operator Grade ‘C’ and Grade ‘B’, which merged, and thepost of Senior Tax Assistant, emerged. In place of the enumerated posts,Has above, it was contemplated that the post of Senior Tax Assistant will take their place. The existing posts of U.D. Clerk, Data EntryOperator Grade ‘A’ also underwent a merger and, in their place,emerged the post of Tax Assistant (New).

64. A perusal of the proceeding dated 19.07.2001 also driveshome the point that the posts in different levels, consequent uponrestructuring, have been articulated in Annexure-1. What is more, theystood sanctioned with immediate effect. These circumstances,undoubtedly, do point to the restructuring exercise being not one onlyin principle but also to have effect immediately. Even more, in thisdirection, is the further decision that as a result of restructuring, therehas been reduction in the number of posts and if there is a person,holding the post, the restructuring in the form of reduction, was not tocome into force except after the person holding the post was to eitherretire or he was promoted to the next higher post. An illustration wouldclarify the point. As noticed, prior to the restructuring, there were morethan 22000 posts of Inspector. The number of posts of Inspector wasreduced to a little over 18000. What would happen to the persons whowere holding the posts of Inspector in excess of 18000, is, what isprovided in the order. The person holding the posts of Inspector, inexcess of the reduced sanctioned strength, would continue to hold thepost till either retirement or he was promoted, whereafter, the post woulddie a natural death. The expression used in Note 4 also indicates thatthe posts were merged and re-designated. Undoubtedly, these aspectsdo provide circumstances for us to hold that the decision of the Cabinet,as provided in the communication dated 19.07.2001, was not just aprinciple set in motion towards achieving the target of actualrestructuring, but it itself exhaustively brought about the restructuringper se.

65. The next letter is dated 25.07.2001. Therein addressing allChief Commissioners of Customs/Central Excise and Commissioneratebesides Director Generals, it is stated that the cadre restructuringproposal has been approved. In addition to the communication, a numberof activities had to be initiated, including the issuance of Customs andExcise notifications, indicating jurisdiction and also distribution of postsin various Grades among the Commissionerates and Customs House.An implementation Cell was constituted consisting of seven members.The next communication is dated 10.9.2001. It reads as follows:

“I am directed to say that the issue of holding of DPCs in respectof Group ‘B’ & ‘C’ posts as well as making direct recruitment ABC

DE

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SUPREME COURT REPORTS

A

to the various posts pending distribution of posts of various fieldformations is being undertaken by the Implementation Cell inpursuant to sanction issued by Board’s letter F.No. A-11019/72/99-Ad.IV dated 19.07.2001 conveying the approval of the Cabinetto the restructuring of Customs and Central Excise Departmenthas been considered by the Board.

B

2. It is felt that if the DPCs for group ‘B’ & ‘C’ are conductedby the cadre authorities it may lead to widening of imbalancesin promotion prospects or create imbalances. The Board have,therefore, decided that the holding of DPC of group ‘B’ & ‘C’post may be frozen and no DPC may be held for group ‘B’ &C‘C’ post till the distribution of posts under various level iscompleted and instructions are issued by the Board in this regard.

3. As you are aware that Board have already imposed a ban forfilling up of post of LDC and Sepoys vide their letter F.No.A-11012/27/2000-Ad.IV dated 10.04.2001. It is reiterated that theseDinstructions may be strictly adhered to and it is further stated thatno direct recruitment may be made to any grade till further ordersof the Board/ Department of Revenue.

4. The receipt of this letter may please be acknowledged.”

(Emphasis supplied)

E

66. It may be noticed that by the said letter the holding of DPCfor Group ‘B’ and Group ‘C’ posts was frozen till the distribution ofposts under various levels was completed and instructions werereceived. The next communication is dated 19.09.2001.

F

F“As you are aware, some reports have earlier been called fromthe field formations by this Directorate with regard to sanctionedand working strength of different cadres and additionalrequirements, if any, keeping in view the model structure of thenew Commissionerates which was circulated (copy againenclosed for ready reference). It is observed that either reportsGhave not been received of where received, there are somedeficiencies. Many commissionerates have still projectedrequirements of OS, UDCs, Examiners, DEO etc. which cadreshave already been merged into new cadres and will not existunder the new dispensation. Similarly some of theHCommissionerates have accepted the model structure without considering the actual requirement. As stated in earliercommunications, the model structure indicates averagerequirement for one Commissionerate and it may not be possibleto apply it across the board. Airport and Preventive CustomsCommissionerates may not require 19 or 12 Appraisers whereasthey may need more Supdts. and Inspectors than indicated in themodel structure. It is therefore, necessary to adjudge the actualrequirement of staff of different cadres keeping in view thequantum and nature of work handled by the particularCommissionerates and the principles governing the cadrerestructuring proposals which envisage the deptt. To be officer-oriented, technology driven with reduced manual processing ofdocuments by greater use of computers and reducing interfacewith tax-payers. This means a reduction in man-power ingeneral.

2. It is, therefore, requested that precise information in theproforma I to III annexed to this letter may please be provided.Proforma I relates to existing sanctioned strength prior to cadrereview for each cadre. In case, any cadre which is existing buthas been left out in the proforma the same may be added at theend of proforma. This proforma has to be in reference to cadresexisting prior to the cadre restricting exercise. Proforma II seeksinformation on actual requirement of staff of each cadre whichwill exist after the coming into effect of the cadre restructuringproposal. While providing information in this proforma thefollowing points should be carefully considered:

(i) Since new Zones are being created by bifurcating ortrifurcating the existing Zone, the staff proposed in thisproforma will be for the same overall jurisdiction forwhich staff indicated in proforma I was sanctioned. Anydeviation may please be indicated as footnote to thisproforma. This means where one zone has been dividedinto three zones, the staff strength of cadres notaffected by the restructuring exercise would remainsame for all three zones i.e. total strength of such cadrein three zones would be equal of strength in earliercombined zone.

A

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A(ii) Requirement in this proforma should be in the referenceto cadres which will exist henceforth. For example,requirement of Sr. Tax Assistants should be adjudgedwith reference to the work earlier handled by TaxAssistants, Special Pay UDCs, DEOs Grade B and CBas all these cadres have been merged into the cadre ofSr. Tax Assistants. Similarly requirement of AOs shouldinclude the requirement for work earlier handled by OSas the cadre of OS has been merged with cadre of AO.Similarly, all POs/Examiners/Inspectors will bedesignated as Inspector only. A chart showing theCmerger/abolition of cadres and increase/decrease in theno. of posts is enclosed.

(iii) While indicating requirements for the Zone, it may beensured that where no. of posts have been reduced theDrequirement of staff has to reduce proportionally for theZone. For example, the number of Inspector level postshaving been reduced from 21222 to 18053, the Zones’sanctioned strength has also to be reduced in the sameratio. Similarly where posts have been increased (forexample, superintendents and Appraisers), theErequirement can be increased proportionately. In caseof any deviation required in any Zone in this regard, fulljustification should be provided in a separate note. Sincetotal no. of posts in any cadre cannot be more than postsapproved for the country as a whole, the ChiefFCommissioners should consider the requirementsprojected work carefully. It may please be noted thatpurpose of this exercise is to allocate the staff alreadysanctioned to Zones/Commissionerates and not toconsider sanction of additional staff. Proposals foradditional staff should not therefore be made whileGfurnishing the information.

D

G

(iv) Staff required for the Chief Commissioners’ office andfor Commissioner(Appeal)/Adjn. should also beadjudged keeping in view the modern tools ofHadministration available.

(v) Wherever requirement of any cadre for the new Zones/Commissionerates exceeds the staff managingthe samejurisdiction at present, the proposal for additional staffshould be supported by the study conducted by theS.I.U. If in any formation S.I.U. has recommendedreduction in staff, the same should also be indicated.

3. Proforma III seeks information on staff sanctioned andrequired for handling Customs work falling in the jurisdiction ofCentral Excise Commissionerates under the proposals for re-organization forwarded by the Chief Commissioners.Requirement of staff projected must be supported by the statisticsof work being handled by the Customs Division/ICD/CFS etc.The staff sanctioned/required this work should not be includedin the data provided in proforma I and II and a confirmation tothis effect recorded in the proforma. However, if no staff hasbeen sanctioned for customs work earlier and the work was beingmanaged by staff sanctioned for Central Excise work, this maybe indicated in this proforma and staff sanctioned should beincluded in proforma I with suitable remarks. The staff requiredshould be only with reference to designations which will befunctional after implementation of the proposal.

4. In respect of each Commissionerate, the name of the cadrecontrolling Commissionerate should also be informed alongwithdetails of cadres controlled by them.

5. Since giving effect to the proposal of restructuring includingpromotions etc., is dependant on the information being sought,you are requested to ensure that carefully compiled informationcomplete in all respects is made available within a week’s time.”

The chart is omitted.

67. On 03.01.2002, the following communication is seen sent:

“I am directed to refer to Board’s letter of even number dated10.09.2001 imposing a ban on holding of DPCs for Group ‘B’ &‘C’ posts. The Board have received representations against theaforesaid ban on promotions.

2. The matter has been considered by the Board and it has beendecided that wherever the DPCs may also be filled up. Where A

B

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146SUPREME COURT REPORTS

Athe DPCs have not been held, the DPCs may be held on thebasis of re-revised strength i.e. the strength existing before thecadre restructuring and the resultant vacancies may be filled up.

3. Action may be taken on priority basis under intimation to theBoard.”

B68. In proceeding dated 02.04.2002, promotion was effected tothe post of Tax Assistant from the post of U.D. Clerk. According toShri C.U. Singh, this was by way of filling-up the posts in terms ofOrder dated 03.01.2002. Further proceedings to be noticed is dated05.06.2002. Therein reference is made to 19.07.2001 while notifyingCthe revised sanctioned strength at different levels consequent to approvalof cadre restructuring. It is further stated that the allocation of staff tothe zones Commissionerates, Director General and Directorate atdifferent levels has been decided by the Board and approved by theGovernment as detailed in the enclosed folder. The allocation supersededall earlier Notifications in respect of Cadre categories in the enclosedDfolder separately. All the Chief Commissioners and other Head ofDepartments were required to carefully study the detail of reorganisationof the formation and to bring to the notice of the Board any discrepancythat may require review or may not have been taken into account forcorrective action. Cadre control was to vest to the respectiveECommissioners in the particular zones and it is further stated that theban on direct recruitment was to continue till 31.12.2002. The ban wasto applicable only to posts including in the cadre restructuring. Finally,in paragraph 8, it is stated as follows:

“The detailed instructions/orders/ recruitment rules governing theFmanner of filling up of the vacancies at all levels will be issuedseparately. No vacancy in respect of the posts included in thecadre restructuring should be filled up till such time as furtherorders are issued.”

(Emphasis supplied)

G

69. It may be noted at once that though there is case for therespondents that the ban on restructuring was lifted by letter dated03.01.2002, such contention appears to be categorically belied by theprohibition against filling-up of any vacancy in respect of posts includedin the cadre restructuring, till such time, as further orders are issued.HThough vacancies may have arisen, which could be filled-up under the 1979 Rules, this appears to be a case where a conscious decision wastaken not to fill-up the vacancies in the wake of the restructuringprocess which was undertaken by the Government. Though a contentionis taken that the post of Inspector is not part of the cadre restructuring,we are of the view that there may not be merit in the said contention.The post of Inspector emerged as re-designated post in place of theerstwhile post of Inspector/Preventive Officer/Appraiser. Moreimportantly, that it was a part of the restructuring, is clear from thefact that the number of posts fell from a little over 22000 to a littleover 18000. Therefore, the post of Inspector was a post which can betreated as included in cadre restructuring. The taboo against filling-upof the vacancy, is clearly reflected in the communication dated05.06.2002. On 26.6.2002, urgent direction is issued to hold DPC tothe post of Superintendent of Central Excise and Superintendent ofCustoms. Therein, it is, inter alia, stated as follows:

“I am further directed to say that while drawing up the panelfor promotion to the cadre of Superintendents of Central Excisefrom the Grade of Inspectors of Central Excise andSuperintendents of Customs (Preventive) from the grade ofPreventive Officers, the vacancies arising on account of thecadre restructuring scheme as also regular vacancies arising onaccount of retirement etc., during the year 2002-2003 may betaken into account after observing the procedure for DPC etc.However, posts indicated in the cadre restructuring scheme shallbe filled up only after necessary orders are issued by the Ministryin this regard.

I am also directed to draw your attention to this Ministry’s letterF.No.A. 32012/9/89-Ad.II B dated 26.06.1990 (Copy enclosed)and to say that this year orders of promotion instead of beingissued on the last working day of June may issued on the 1[st]working day of July 2002.”

70. The next letter to notice is the letter dated 19.09.2002. Therein,after referring to letter dated 26.06.2002, it is stated that it was decidedto initiate the process for filling-up vacancies that have arisen on accountof cadre restructuring in all remaining cadres up to Grade ‘B’. It wasdirected to ensure that apparently DPC was convened in respect of allGrades for the change of number of posts, as also Grades, whererevised Recruitment Rules have been circulated. On 23.09.2002, A

B

C

DE

F

GH

Apromotion orders in respect of Superintendents were allowed to beissued. On 28.10.2002, the Draft Recruitment Rules for Group ‘C’ postof Inspector and Senior Tax Assistant was communicated to all ChiefCommissioners, both, Customs and Central Excise. It was further statedthat Notifications notifying the Rules will be issued shortly. Directionwas given to start the process of DPC. Thus, it could be said that byBthe issuance of this communication, the Government decided to proceedwith the recruitment by promotion to the post of Inspector.71. A perusal of the communication dated 28.10.2002, revealsthe following:

CAll chief Commissioners were favoured with Draft RecruitmentRules for the Group ‘C’ post of Inspector (Central Excise and LandCustoms), Inspector (Examiner) and Inspector (Preventive Officers).Besides the Draft Recruitment Rules for the post of Senior TaxAssistant, as approved by the Ministry, was also dispatched to the ChiefCommissioners. It is specifically stated that the Notifications, notifyingDthe Rules, will be issued shortly. The Chief Commissioners were toldthat they may initiate necessary action to process for DC (apparentlyDPC). The next sentence is of crucial significance. It reads as follows:

“You may however await issue of notification before issue of”any order of promotion based on these Rules.E

72. This communication establishes further, the following aspects:

Restructuring the post of Inspector, contemplated under the orderdated 19.07.2001, had not yet come into being. This is because thereis reference to the post of Inspector (Central Excise & Customs),Inspector (Examiner) and Inspector (Preventive Officer). If the postFof Inspector, as contemplated under the Order dated 19.07.2001, hadalready come into existence with the issuance of the Order dated19.07.2001, there was no occasion to continue to refer to pre-designatedposts from which the post of Inspector emerged.

73. Still further, what was obviously contemplated was that theGpost of Inspector was to be filled-up after the process of restructuringwas over. In other words, the Rules relating to Inspector and the Rulesrelating to recruitment of Senior Tax Assistants, was to be brought intoforce simultaneously. This conclusion appears inevitable from thecircumstance that the Chief Commissioners were directed to awaitHissuance of Notification notifying the Rules before orders of promotions

were issued based on the Rules which were the Draft RecruitmentRules. It is not indicated in the Order dated 28.10.2002 that promotionto the post of Inspector was to be made under 1979 Rules. What was,in fact, contemplated was that the process, viz., the holding of the DPCfor the post of Inspector, was to begin and operationalised under theDraft Rules but the actual orders of promotion were to be issued onlyafter the Rules were actually brought into force. The Draft RecruitmentRules for the Tax Assistant was also sent by letter dated 06.11.2002.By letter dated 14.11.2002, it is directed as follows:

A

B

“I am directed to refer to Minister’s letter F.No.A-11013/01/2002-AdIV dated 19[th] September 2002 regarding holding ofDPC’s in all grade where Recruitment Rules exist, as also ingrades where revised recruitment rules have been circulated. Interms of Para 2 of the said letter, it was directed to hold theDPC’s by 30[th] September, 2002 and keep the list ready for issue.It was also clarified that promotion orders may only be issuedon receipt of further directions from Ministry.

C

D

2. In view of the above, you are requested to issue the promotionorders in respect of remaining Group ‘B’, ‘C’ and ‘D’ posts as satedbelow:-

(i) promotion orders in respect of Sepoy, Havaldar, HeadHavaldar, Tax Assistant, Senior Tax Assistant andInspectorof Central Excise/Preventive Officer/Examiner of Customs may be issued on the basis ofRecruitment Rules after allotment of GSR No by theGovernment of India Press, Wherever not yet allotted.

E

F

(ii) DPC in respect of Appraisers and AdministrativeOfficer may be held on the basis of existing RecruitmentRules and promotion orders may be issued.

(iii) DPC in respect of remaining grades except DOS L-IImay be held on the basis of existing Recruitment RulesGand Promotion orders may be issued by 25.11.2002.

(iv) Promotion in the grade of DOS L-II may be made onlyafter the new recruitment rules are circulated by theMinistry.”

(Emphasis supplied)H

A

A74. In the Order dated 14.11.2002, it is specifically, interalia,ordered that promotion orders in respect of the post of Inspector(Central Excise)/Preventive Officer/Examiner of Customs may beissued on the basis of the Recruitment Rules after the allotment of GSRNumber by the Government of India Press. Thus, the green signal wasgiven to go ahead with the issuance of promotion order for the post ofBInspector, inter alia, based on the Recruitment Rules, after the allotmentof the GSR, which means the Notification of the Rules.

75. What actually happened was, however, as follows:

The Inspector Rules and the Senior Tax Assistant Rules wereCnot published and brought into force on the same date. The InspectorRules came to be finalised and published on 29.11.2002. It is broughtinto force on 07.12.2002. The STA Rules, though published on16.01.2003, was brought into force on 20.01.2003.

WHEN CADRE RESTRUCTURING TOOK PLACED

76. The next question, however, which would arise as to whenwas the cadre restructuring actually effectuated. In this regard, we havealready noticed the contents of the communication dated 19.07.2001.We have also pointed out the circumstances which tends to indicatethat not only the Cabinet took a decision to bring about restructuring inEthe Central Excise and Customs Department in principle but evidencingan actual sanctioning of posts with immediate effect in various cadres.We have also noticed how the Government has provided that in caseof reduction in strength, as a result of the restructuring, persons holdingposts in excess of the revised and reduced strength, were permitted tocontinue till their promotion or retirement, etc.. We have noticed theFlanguage used in Note 4 also. The time is now ripe for us to have alook at the Statutory Rules. The contention of the respondents and thefinding of the High Court is that restructuring came into effect onlywith the issuance of the Statutory Rules in the case of Senior TaxAssistants on 16.01.2003, which was published in the Official Gazette Gon 20.1.2003. Therefore, the actual restructuring became a reality onlyon 20.01.2003, runs the argument of the respondents.

77. Inspector Rules, 2002 came into force on 07.12.2002. TheSenior Tax Assistant Rules came into force with effect from20.01.2003. In Column 12 to the Schedule to the 2002 Inspector Rules,Hwhich deals with how promotion is to be effected; Clause (a) contains,

D. RAGHU AND OTHERS v.R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

apparently, those categories, which were among the feeder categoriesunder the 1979 Rules. In fact, Clause (a) itself recites by selection fromthose candidates working in the pre-restructured cadre. No doubt, thewords ‘pre-structured’ is added by Corrigendum in 2003. Clause(b) provides for selection from those candidates working in therestructured cadre. The third Feeder Category is to operate, failing themethod of recruitment specified under clause(b). It is apposite that wenotice, at this juncture, Note 1. For the purpose of convenience, it isrecapitulated again. It reads as follows:

In case of recruitment by promotion/ deputation/absorption,grade from which promotion/deputation/absorption to bemade.12Promotion: (a) By selection from those candidates workingin the following restructured cadres:Note 1: Promotion under Clause (a) above shall be onlyoperative for a period of two years from the date on whichthe restructured cadres mentioned under Clause (b) abovecomes into existence.The service rendered under the new grade in therestructured cadres shall be counted towards consideringthe eligibility for promotion under Clause (a) above.

78. It is strenuously argued before us on behalf of therespondents that Note 1 reveals the Legislative intent that the feedercategories, mentioned in Clause (a), would be given the right exclusivein nature, thereby excluding those categories in Clause (b). Thisexclusive right, it is pointed out, was to last only for a period of twoyears. We may shift focus also to the STA Rules of 2003. We mayadvert to it as much may turn on its purport:

“5. Initial constitution.-(i) All the persons appointed on the regularbasis at the time of commencement of these rules to the Gradeof Assistant, Tax Assistant, Upper Division Clerk (Special Pay),Data Entry Operator Grade B’ and ‘C’ shall be deemed to havebeen appointed as Senior Tax Assistants under these rules. Theservice rendered by them before commencement of these rulesshall be taken into account for deciding the eligibility for promotionto the next higher grade.

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SUPREME COURT REPORTS

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A(ii) Assistants (Rs. 5000-8000) and Data Entry Operator Grade‘C’ (Rs. 5000-8000) are being redesignated as Senior TaxAssistants in the same scale of pay. Therefore, the Assistantsand Data Entry Operator Grade ‘c’ shall be placed enblock seniorto the other categories. However, their inter-se placement shallbe done according to the date from which they had actually beenBappointed to these grades on regular basis subject to the conditionthat their inter se placement in their respective category shall notbe altered.

(iii) The Data Entry Operator Grade ‘B’ (4500-7000) and TaxAssistants (4500-7000) have been placed in their higher scaleCof 5000-8000 and they shall be placed below the Assistant andData Entry Operator Grade ‘C’ and their inter-se-placement shallbe fixed in accordance with the date of regular appointment tothe respective grade subject to the condition that their inter-se-placement in respective category shall not be disturbed.

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(iv) Upper Division Clerk with special pay shall be placed belowAssistant, Data Entry Operator Grade ‘C’, Data Entry OperatorGrade ‘B’ Tax Assistants.

(v) The present employees would be required to pass the requiredor suitable departmental examination, as specified by theECompetent Authority, from time to time, in Computer applicationand relevant procedures within two years falling which they wouldnot be eligible for further increments.”

79. We may notice that under the 2003 STA Rules, Rule 5contemplated the initial constitution of the Cadre of Senior TaxFAssistants. It was to consist of the former categories of Tax Assistant,U.D. Clerk (Special Pay), Data Entry Operator Group ‘B’ and ‘C’.The future method of recruitment was by way of 100 per cent promotionfrom Tax Assistants, as provided in Column 12 of the said Rules. It isalso necessary to notice Rule 4 of the Tax Assistant Rules 2003, whichGwas brought into force with effect from 05.05.2003.

“4. Initial constitution:- (1) The person appointed on regular basisand holding the post of Upper Division Clerk and Data EntryOperator Grade A on the commencement of these rules shalldeemed to have been appointed as Tax Assistant under theseHrules and the service rendered by such persons in the respective posts before commencement of these rules shall be taken intoaccount as regular service rendered on the post of Tax Assistantfor the purpose of promotion etc.

(2) The person holding the post of Data Entry Operator Grade-A appointed under these rules as Tax Assistant, shall, within twoyears, from the date of such appointment as Tax Assistant, passthe Departmental Examination as conducted by the competentauthority, failing which he shall not be entitled to get any furtherincrement.

(3) Any person, who holds a post of Lower Division Clerk onregular basis and falls within the seniority list as determined bythe appointing authority at the commencement of these rules shall,on passing the Departmental Computer Proficiency examinationconducted by the appointing authority, be deemed to have beenpromoted with effect from date of passing such examination onthe post of Tax Assistant.

(4) The Upper Division Clerks and Data Entry Operator Grade -A shall be placed en-block senior, and their inter se placementshall be fixed in accordance with the date of regular appointmentto the respective grade subject to the condition that their interse placement in the respective grade shall not be disturbed.

(5) Lower Division Clerks shall be placed below Upper DivisionClerks and Data Entry Operator Grade -A.”

80. The dispute, as to when the restructuring was completed, mustbe resolved on a conspectus of the decision dated 19.07.2001 and thesubsequent decisions, as expressed in communications which we haveadverted to, and the combined effect of all these Rules.

81. Now, turning back to Note 1 to the 2002 Inspector Rules,we notice that promotion under Clause (a) was to be operative for aperiod of two years from the date on which the restructured Cadre inClause (b) comes into existence. If the interpretation sought to be placedby the appellants is accepted, and we are to hold that the restructuredcadre of Senior Tax Assistant came into force with effect from19.07.2001, the result would be that promotion under Clause (a) wouldbe limited by a period of two years from 19.07.2001. In other words,no promotion could be ordered from the Feeder Category mentionedin Clause (a) in Column 12 of the 2002 Inspector Rules after 18.07.2003.

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AThis also means that promotions could be, therefore, effected duringthe period commencing from 19.07.2001. This produces the anomalousresult that promotions are to be countenanced under the 2002 Rules,retrospectively from 19.07.2001. What is more, according to theappellants, promotions were banned during the period. This, in our view,completely militates against the idea that the restructured Cadre cameBinto being from 19.07.2001. We are not oblivious and we have indeedexpressly articulated the circumstances from communication dated19.07.2001 which probablised the appellant’s contention thatrestructuring became a reality from 19.07.2001. But, we, at thisjuncture, must also notice that the actual distribution of posts in differentCformations was postponed. It may not be in apposite, at this juncture,to also notice another factual aspect. There is a definite case for therespondents that the Data Entry Operator Grade ‘B’ and ‘C’ continuedas such and they were only re-designated as Senior Tax Assistant orTax Assistant on the enforcement of the 2003 Rules and not beforesuch enforcement. In fact, it was also not seriously disputed before usDthat this was indeed the case on the ground. We may also find lightfrom the STA Rules. Rule 5 declares that “all the persons appointedon regular basis at the commencement of the Rules in the Grade ofAssistant, Tax Assistant, U.D. Clerk (Special Pay), Data Entry OperatorGrade ‘B’ and Grade ‘C’, shall be deemed to have been appointed asESenior Tax Assistant under these Rules”. No doubt, the Rulecontemplated that the persons to be deemed to have been appointedas Senior Tax Assistant under the 2003 Rules, were the categories,which we have already indicated. What is more relevant is, they arereferred to as the persons appointed at the commencement of “theseRules”. The words used are “persons appointed”. The intention appearsFto be to indicate that the persons were appointed and working on thecommencement of the Rules, which is on 20.01.2003. It is thosepersons, who were referred to by the designation, which were the postswhich were held by them prior to the restructuring. In other words,appellants, who were working as Data Entry Operator Grade ‘B’, uponGbeing promoted in the year 2000, were indeed persons who wereappointed on regular basis as Data Entry Operator Grade ‘B’ as on20.01.2003, when the Rules, admittedly, were brought into force.

82. We find further support for the view that the appellantsbecame Senior Tax Assistant upon Rules being brought into force fromHthe further limbs of Rule 5. Sub-Rules (ii), (iii) and (iv) deal with the

issue of inter se seniority of the different erstwhile restructuredcategories from which the designated category of Senior Tax Assistantwas born. Those Assistants, who were drawing salary of pay scale of5000-8000, and Data Entry Operator Grade ‘C’, drawing the same payscale, were re-designated as Senior Tax Assistants in the same scale.They were to rank at the top of the seniority list of the newly createdposts of Senior Tax Assistants. Just below them were put the categoriesof Data Entry Operator Grade ‘B’ and Tax Assistants, both drawingthe pay scale of 4500-7000, and they have been placed in the higherpay scale of 5000-8000 and they were to be placed below the DataEntry Operator Grade ‘C’. Similarly, at the bottom of the pyramid, thereis the post of Upper Division Clerk with special pay, who were to beplaced below all the above categories as aforesaid.

83. We also bear in mind that the language used in Note 1, inColumn 12 of the 2002 Inspector Rules. It provides that the promotionin Clause (a) was to be operative for a period of two years from thedate on which the restructured cadres, mentioned under Clause (b)above, comesinto existence. Had it been the case where therestructured cadre in Clause (b) had already come into existence, byvirtue of order dated 19.07.2001, the Law Giver would have usedlanguage indicating the past tense. The Law Giver, thus, contemplatedthat the restructured cadre in Clause (b), which includes cadre of SeniorTax Assistants, had not come into existence and it was to come intoexistence. It came into existence, indeed, in the future, viz., on20.01.2003.

84. We are, thus, of the view that on a consideration of theGovernment Orders and, more importantly, the Statutory Rules that theconclusion appears to be inevitable that restructured cadre actually cameinto force in the cadre of Senior Tax Assistant with the Rules beingbrought into force on 20.01.2003. Quite apart from the fact that this isthe legal interpretation that flows, we are also supported by the facton the ground that the appellants appeared to continue till after the Ruleswere brought into force with the designation as Data Entry OperatorsGrade ‘B’. A perusal of Rule 5(v) of the STA Rules 2003 would alsoshow reference to ‘present employees’ and they were to pass thedepartmental examination ‘within two years’. Failure was to result intheir being rendered ineligible for future increments. Certainly, the period AB

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Aof two years would commence only from 20.01.2003. If so, the ‘presentemployees’, including the appellants continued as Data Entry OperatorGrade ‘B’ till 20.01.2003. The view that the STA Cadre emerged onlyon 20.01.2003, is supported by official understanding, as reflected inproceedings dated 21-04-2003. The principle of contemporaneaexpositio is apposite in the facts.BAPPELLANTS RIGHTS AS SENIOR TAX ASSISTNATS ONRESTRUCTURING

85. Having found that restructuring was effective from the dateof the promulgation of the Statutory Rules in case of Senior TaxCAssistant w.e.f. 20.01.2003, and also having found that there was aban on carrying out promotions under the earlier Rules, as evident froma perusal of communications dated 10.09.2001, 03.01.2002 and05.06.2002, and thus, it manifested a conscious decision on the part ofthe Government not to fill the vacancies in accordance with the earlierDRecruitment Rules, viz., 1979 Rules, the question arises as to what isthe nature of the right which the appellants had. It must be rememberedthat the appellants filed the Original Application before the Tribunaltaking exception to the Notice dated 05.11.2002. Now, let us analysethe reasoning of the Tribunal with reference to the case set up by theparties. The case of the appellants must be understood as follows:E

The restructured cadre has come into existence on19.07.2001.

The restructured cadre has come into existence on19.07.2001.

Promotion to the post of Inspector could be made onlyfrom the restructured cadres while so the draft recruitmentrules came to be issued on 28.10.2002.

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86. In the said Rules, preference was sought to be given to thepre-structured cadres, which included the old tax assistants with acertain number of years. It was Clause (a) to Column 12 of the 2002Inspector Rules, which was alleged as unconscionable and violative ofArticles 14 and 16 of the Constitution of India. It was the furtherGcomplaint that Note 1 in Column 12 of the 2002 Inspector Rules wasalso flawed insofar as the persons in the pre-structured cadre, viz., thosefalling in Clause (a), were enabled to steal a march by being promoted,taking into consideration their service in the new Grade in therestructured Cadre for the eligibility for promotion under Clause (a).HThe only Cadre, which was eligible for promotion after the order dated

19.07.2001, was the restructured Cadre, including the Cadre of SeniorTax Assistants, ran the argument.

87. The Tribunal proceeded on the basis that the restructuringbecame complete with the issuance of the order dated 19.07.2001. Itmust be noted that the Original Application came to be filed on19.11.2002 at a time when the Inspector Rules had not even beenfinalized as the Rules came to be finalized only on 29.11.2002 and, infact, brought into force till later on 07.12.2002. Undoubtedly, the Notecontemplated, giving persons in Clause (a), viz., those falling in the pre-restructured cadre, the benefit of taking into consideration the servicerendered in the restructured Cadre, for being promoted as Inspector.The persons falling in the restructured Cadre, were not conferred withsuch advantage. However, by the time the Original Application cameto be heard, the Senior Tax Assistants Rules 2003 came into force witheffect from 20.01.2003. Under Rule 5 of the 2003 Rules, the personsworking as Data Entry Operator Grade ‘B’, inter alia, stood re-designated as Senior Tax Assistants and they were also given the benefitof reckoning the past service and calculating the qualification ofexperience of two years under the Inspector Rules, 2002. In fact, theTribunal has also taken note of the 2003 Rules. Both the persons inthe pre-structured cadre and those in the restructured cadres, were,by virtue of Note 1 to Column 12 to the 2002 Rules and Rule 5(i) ofthe Senior Tax Assistants Rules 2003, respectively, were given thebenefit of counting service as provided therein. The Tribunal, in fact,has gone on to find that the Senior Tax Assistants under Rule 5(i) ofthe 2003 Rules were entitled to reckon their service as Data EntryOperator Grade ‘B’ for eligibility for promotion as Inspector. TheTribunal goes on to find that the unified restructured cadre of SeniorTax Assistants alone would be eligible for promotion as Inspector. Theintegrated seniority is to be worked out in terms of Rule 5 of the 2003Senior Tax Assistant Rules. This is based on the premise that with effectfrom 19.07.2001, the restructuring of Senior Tax Assistant came intoforce and all the earlier Cadres stood merged. We notice also thefollowing findings by the Tribunal:

The Tribunal noticing the contention of the respondents that theselection process initiated on 05.11.2002 has been finalized fromcategories other than of the employees i.e. Data Entry Operator Grade‘B’ and ‘C’ and the existing vacancies were filled-up, it was, thereafter,found by the Tribunal as it is now found that the appellants were also ABC

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Aeligible, the Original Application was to be disposed of by directing theappellants be considered eligible for promotion after considering theservice rendered by them as Data Entry Operator Grade ‘B’. TheOriginal Application was accordingly disposed of directing the appellantsbe considered for promotion based on the years of service on the postof Data Entry Operator Grade ‘B’ after allowing them to appear forBthe examination contemplated in Note 2 under the 2002 Inspector Rules.The further relief granted was to direct to promote them if they weresuccessful and to fix the seniority based on Rule 5. The declarationwhich was sought for by the appellants in paragraph 8(c) of the OriginalApplication, which we have already extracted, was granted.

C88. Thus, the Original Application has been allowed in part. It isnecessary to notice that the effect of granting the said relief and alsothe effect of not granting the reliefs in paragraph 8(b). Granting of theRelief 8(c) would mean that this Court would also have to accept thatunder the 2002 Inspector Rules, it is only the restructured Cadre, whichDwould be entitled for promotion to the cadre of Inspector. To put itdifferently, the persons falling in Category (a), which corresponds tofeeder categories, under the 1979 Rules, would not be entitled forpromotion as Inspector.

89. It is now necessary to look at their prayer, i.e., 8(b) and theEeffect of not granting any relief thereunder. Prayer 8(b) was soughtby the appellants to set aside the Recruitment Rules communicated vide28.10.2002, as confirmed vide Gazette of India Notification dated29.11.2002, incorporating the unconscionable conditions under Clause(a) and Note 1 of Column 12 of the 2002 Inspector Recruitment Rules.This prayer is also based on the restructuring process, having effectFfrom 19.07.2001. The Tribunal has not granted the relief in paragraph8(b) of the Original Application. This means that the persons inCategory (a) of Column 12 of the Inspector Rules, cannot be affected.The result is that it exposes the fallacy in grant of Relief 8(c). In fact,there are two basic flaws. In the first place, as we have noticed, theGrestructuring did not come into effect on issue of communication dated19.07.2001. The restructuring came into effect only with the issuanceof Rules, for reasons, which we would have already explained. Thisby itself takes away the entire basis of the Tribunal’s Order. Secondly,the Tribunal has not declared the Statutory Rule infirm, which was thespecific relief sought for by the appellants in Relief 8(b). In other words,HClause (a) of Column 12 and the Note, in the 2002 Inspector Rules

impugned on the one hand, continues on the Statute Book, whereas,the declaration is purportedly granted under paragraph 8(c), whichnecessarily involves declaring that only persons re-designated under therestructured cadres in Clause (b) as Senior Tax Assistants, inter alia,would be entitled to be considered for promotion as Inspector of CentralExcise and Customs. In fact, the Order of the Tribunal at Chandigarhalso did not involve granting any exclusive right to the persons in therestructured Cadre falling in Clause (b). The decision of the BombayHigh Court also does not reflect any such reasoning. It is well-settledthat when Statutory Rules are challenged, they are upheld, or ifwarranted, declared ultra vires or read down, if possible. The Orderof the Tribunal is specific that what is granted, is the relief containedin paragraph 8(c) of the Original Application. Resultantly, Clauses (a)and (b) continued to be on the Statute Book. The Tribunal has ratherallowed the Original Application partly and found that the appellantsare also entitled to be considered for promotion as Inspector. In Arrivingat this conclusion, the Tribunal has drawn support undoubtedly from theviews expressed by the Central Administrative Tribunal, Chandigarh,the Central Administrative Tribunal, Madras and the High Court ofBombay.

WHETHER STA COULD ADD SERVICE AS DATA ENTRYOPERATORS AND WHETHER PERSONS IN CLAUSE (A)HAD AN EXCLUSIVE RIGHT FOR TWO YEARS?

90. What is to be the eligibility condition flowing from therequirement in Clause (b) that Senior Tax Assistants should have putin two years’ service in the Grade. It is the contention of the respondentsthat what is contemplated by the Law Giver is that only personsmentioned in Clause (a) to Column 12, who were incidentally persons,who fell in the feeder category under the 1979 Rules, are to beconsidered for filling-up vacancies for a period of two years, and it istherefore their contention that the right of persons mentioned in Clause(b) arises only after the expiry of two years, and till then, the persons,who are qualified in Clause (a), are alone to be considered during thesetwo years. It is also seen that the use of the word ‘Grade’ is referredto, to contend that appellants, who were working as Data Entry OperatorGrade ‘B’, were not in the same Grade, in terms of the pay-scale towhich they became entitled upon the restructuring coming into effectw.e.f 20.01.2003. In other words, appellants, who were on a lower pay-scale than the Senior Tax Assistants, and thus only after 20.01.2003, A

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Awhen the actual restructuring became a reality, the appellants wouldcommence working in the Grade, meaning the post with the scale ofpay attached to the post of Senior Tax Assistant.

91. On the other hand, the case of the appellants is that a perusalof the Rule 5 of Senior Tax Assistant Recruitment Rules, 2003, wouldBshow that the appellants were entitled to take into consideration theservice which was rendered by them prior to 2003. We also noticeanother aspect, viz., there is the case for the respondents that Note 1to Column 12 contemplates that the service rendered by persons, fallingin Clause (a) in the restructured cadre, could be considered for thepurpose of calculating the period required under Column 12. Therefore,Can attempt is made to contend that the provisions of Rule 5 must alsobe understood in the said vein. Let us look at the issue with concreteexamples:

(i) An U.D. Clerk is eligible to be considered for promotionas Inspector under Clause (a). He has to, however, putDin certain number of years.

(ii) The U.D. Clerk, who has less than requisite service ason 20.01.2003, in order that he be considered forpromotion as an eligible person under Clause (a), it isquite clear that he can add the service after 20.01.2003Eas Senior Tax Assistant to the previous service and makea claim for being considered. The latter part of Note 1to Column 12, in our view, is only to clothe personsfalling in Clause (a) with the right to add the service inthe restructured Cadre. But that is not to say that RuleF5 of the Senior Tax Assistant Recruitment Rules, 2003,has the same object.

92. Coming back to the issue, as to whether a person falling withinthe four walls of Rule 5 of the 2003, Rules can stake a claim forcounting the previous service prior to 20.01.2003, we are of the viewGthat the appellants are right that they are entitled to count the previousservice. The words used in Rule 5 are unambiguous and clear. In thisregard, we must also deal with the yet another contention based onthe differences between Rule 5 of the Senior Tax Assistant RecruitmentRules, 2003 and Rule 4 of the Tax Assistant Rules, 2003. It may betrue that there is some difference but, in our view, the words usedHdifferently in the two provisions, are not meant to take away the right, which was conferred on persons who were on restructuring to bedesignated as Senior Tax Assistants and Tax Assistants.

93. In Rule 5, what is contemplated is that the service renderedby Data Entry Operators Grade ‘B’ and ‘C’, inter alia, beforecommencement of the Rules is to be taken about for eligibility forpromotion to the next higher grade. No doubt, in Rule 4, of the TaxAssistant Rules, the Rule Maker has become more articulate. Theyhave referred to the words like ‘respective post’, before commencementof Rules and ‘regular service’ which expressions are conspicuous bytheir absence in Rule 5 of the Senior Tax Assistant Rules. Better wisdomprevailed on the Law Giver in the course of few months to attain clarityin thought and expression but we would not be gleaning the intentionof the Law Giver, if we were oblivious to the context and the objectwith which the entire exercise of restructuring was carried out. Theywould also amount to introducing an element of discrimination betweenthe Senior Tax Assistants and the Tax Assistants in the conferring ofbenefits. Of foremost importance is that the view we have taken iswarranted by even the plain words used in Rule 5. Rule 5 clearlyindicates that the service which was rendered by a Data Entry OperatorGrade ‘B’ and ‘C’, inter alia, prior to the commencement of the Rules,would be considered for promotion. This leaves us in no doubt that theintention was to allow the Data Entry Operator both Grade ‘B’ and‘C’, inter alia, to tag their previous service that is prior to 20.01.2003for the purpose of calculating the requisite period of service under the2002 Inspector Rules. It would appear that what was contemplated wasthat the Inspector Rules and the STA Rules would be brought into forceat the same time. If it had so happened, the following consequenceswould have followed. Not only would STA would be a feeder categorybut STA would have been able to count their previous service as DataEntry Operator Grade ‘B’, inter alia. Still further, under Note 1,promotion under Clause (a), was to be operative for a period of twoyears, from the date the restructured cadre, under Clause (b), was tocome into existence. Apart from indicating that the restructuredcadre‘was to come into force’ and, therefore, it had not come into force ason 19.07.2001 as contended by the Data Entry Operators, the promotionfrom Clause (a) being predicated on the point of time when therestructured cadre came into force, if the STA Rules were also broughtinto force from 07.12.2002, the service rendered by persons under therestructured Grade could have been availed of by persons in Clause(a) from 07.12.2002.

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A94. As regards the argument that under the 2002 Inspector Rules,persons in Clause (a) were given an exclusive right to be promoted fora period of two years, we see little merit in the same. Clause (c) ofColumn 12 provides for promotion from the categories thereunder, inthe absence of persons falling in Clause (b). No such rider is found inClause (b). If the STA Rules had been brought into force on 07.12.2002,Bthen, it is clear that adding two years as Data Entry Operator Grade‘B’, the appellants would certainly be eligible, particularly, keeping inmind the intent in Order dated 28.10.2002. There can be doubt thatnothing stands in the way of appellants and others similarly situated beingconsidered from 20.01.2003 by adding the service as Data EntryCOperator Grade ‘B’. Both, persons in Clause (a) and persons in Clause(b), subject to being possessed of qualifications, could compete for thevacancies. The right of those in Clause (a), would come to an end from19.01.2005.

95. The effect of STA Rules, 2003 coming into force only on20.01.2003 qua vacancies that existed prior to 20.01.2003, the effectDof promotion made from other categories, and the direction by theTribunal to consider appellants for promotion and apply Rules as toseniority.

96. There can be no doubt that the STA Rules came into effecton 20.01.2003. The restructured cadre of STA became a reality fromE20.01.2003.

97. The problem, however, arises as what is to be done quavacancies of Inspector which were purportedly filled-up as on20.01.2003 pursuant to Notice dated 05.11.2002 which was impugnedin O.A. 1362 of 2002. The Tribunal has not interfered with the noticeFdated 05.11.2002 but it has found that it was not in accordance withthe Rules (apparently Inspector Rules 2002 which superseded the 1979Rules). But this is again premised on the restructuring becoming a realitywith effect from 19.07.2001. This, we have found to be erroneous.

98. The Tribunal notices the contention of respondents thatGselection has been finalised for categories other than Data EntryOperator Grades ‘B’ and ‘C’ and existing vacancies were filled-up.Thereafter, the Tribunal, on the basis that it found appellants were alsoeligible, directed appellants to be considered taking into considerationtheir service as Grade ‘B’ and with opportunity to take the exam. Ifthey were found successful and selected as Inspector, suitable seniorityHwas to be assigned based on Rule 5.

99. Here, it is necessary to notice that persons in Clause (a),under the 2002 Rules, could be promoted for a period of two yearsfrom the date the restructured categories under Clause (b) came intoforce. Thus, the promotion involving 2002 Rules from Clause (a) couldbe for a two year from 20.01.2003 as the restructured category cameinto force only on 20.01.2003, even according to the respondents. Thus,for both categories in Clauses (a) and (b) (STAs), their eligibility under2002 Rules, commenced only from 20.01.2003.

100. If so, the question would be the effect of promotion alreadymade as noted by the Tribunal itself. As on 05.11.2002, the 1979 Rulesgoverned promotions. The status of the draft Recruitment Rules is nolonger res integra. While, promotion can be based on draft RecruitmentRules, it cannot be done, if the draft Rules are in the teeth of existingStatutory Rules. In this regard, we may notice the following discussionin Union of India through Govt. of Pondicherry and another v. V.Ramakrishnan and others10:

“28. Valid rules made under proviso appended to Article 309 ofthe Constitution operate so long the said rules are not repealedand replaced. The draft rules, therefore, could not form the basisfor grant of promotion, when Rules to the contrary are holdingthe field. It can safely be assumed that the principle in AbrahamJacob; (1998) 4 SCC 65 : 1998 SCC (L&S) 995, Vimal Kumari;(1998)4 SCC 114: 1998 SCC(L&S) 1018 and Gujarat KishanMazdoor Panchayat; (2003)4 SCC 712 : 2003 SCC (L&S) 565that draft rules can be acted upon, will apply where there areno rules governing the matter and where recruitment is governedby departmental instructions or executive orders under Article162 of the Constitution.”

101. The Tribunal granted relief by giving the declaration under8(c), which we have found unwarranted. The High Court has foundthat regarding the vacancies prior to 07.12.2002, it is to be filled-up asper the 1979 Rules.

102. Thus, it is clear that vacancies were filled- up as per noticedated 05.11.2002 from persons falling under Clause (a), whocorresponded to the feeder category in the 1979 Rules. The appellantshave not laid any challenge to the Order of the Tribunal.

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A103. It is to be remembered that the ban on direct recruitmentwas to come to an end on 31.12.2002. There were 242 vacancies ofInspectors in Hyderabad Commissionerate. It is true that under letterdated 28.10.2002, and even read with letter dated 14.11.2002, what wascontemplated was promotion under the draft Recruitment Rules forBInspector and STA. Promotion orders were to be made only after GSRNumber were made for the Draft Rules, meaning thereby, after it wasfinalised. They were intended, as already found, to be operated at thesame time, thus, rendering both categories in Clauses (a) and (b), tobe considered. We are of the view that having regard to the fact thatvacancies were not filled-up, as can be seen from communications datedC10.09.2001 and 05.06.2002, in the light of the restructuring that tookplace in the Department, it would appear that a conscious decision wastaken to not fill-up the vacancies arising from the restructuring basedon 1979 Rules. Instead, communication dated 28.10.2002 clearly wouldshow that the vacancies were to be filled-up, based on the proposedDnew Recruitment Rules. This being the case, the High Court was inerror in proceeding on the basis that the principle in Y.V. Rangaiah(supra) would apply.

104. Till 07.12.2002, the STA was not even in Feeder Category.We have also held that the STA Cadre is born on 20.01.2003. There isEa case for the respondents that the ban on direct recruitment (which isalso a method of appointment) was to come to an end. There was aneed to have Inspectors in a larger number of vacancies. The STACadre could not have been used to fill the vacancies. The finding thatfrom 19.07.2001, the restructured Cadre came into being, isFunsustainable. In such circumstances, though it may be true, intentionwas to fill-up the vacancies after both sets of Rules were operationalised,promotions were made. As to whether it is legal, the answer can bethat promotion, as per extant Rules, given in vacancies prior to the newRules, is recognized. This is not a case where the Authority was denyingGpromotion to vacancies based on the earlier Rules. We also notice thatbased on such promotion, further promotions have been given. Theappellants were directed to be considered for vacancies, which werefilled-up after. We cannot, in the circumstances, be persuaded to holdthat the Tribunal was right in directing the respondents to revise theseniority qua promotion made earlier.H

D. RAGHU AND OTHERS v.R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

LEGALITY AND CORRECTNESS OF HIGH COURTDIRECTING VACANCIES TO BE FILLED WHICHEXSISTED PRIOR TO 07.12.2002

105. The High Court has left open the question about entitlementto promotion to vacancies after 07.12.2002. It has directed all vacancies,which are prior to 07.12.2002, to be filled-up as per the 1979 Rules.While, we agree that the STA cadre was born on 20.01.2003, clearly,the whole purpose was to simultaneously operate the Rules, both relatingto Inspector and STAs. This would have resulted in STA beingconsidered with the experience they had as Data Entry Operator Grade‘B’ also. This, as already noticed, was a case where the Authorityclearly intended to fill-up the vacancies of Inspector under the newRecruitment Rules. However, the vacancies, which were filled-up,cannot be subjected to a review based on Rules relating to seniority inRules 5(i) of the STA Rules, based on promotion orders on dates, whenon the dates, on which the vacancies stood filled-up, the appellants werenot even in the cadre.

106. But the High Court was not right in directing filling-up ofvacancies prior to 07.12.2002, based on the 1979 Rules, as after the2003 Rules came into force, going by the intention of the Authority, theright to promotion would be based on the new Rules, even if thevacancies arose prior to the new Rules. That is to say, when the HighCourt disposed of the matter, if any vacancy remained to be filled-upin the Cadre of Inspector, then, as the STA Rules had come intoexistence on 20.01.2003, the STAs armed with the right to add serviceas Data Entry Operator Grade ‘B’, were entitled to be considered.However, it is here that the impact of the matter, having been pendingin this Court for more than a decade, and, in the meantime, thejudgment being implemented and further promotions being made, cannotbe lost sight of, even in an Appeal, which is maintained by grant ofSpecial Leave, as in this case. It is open to the Court to decline tointerfere. We bear in mind the principles laid down by this Court inTaherakhatoon (D) By Lrs.v. Salambin Mohammad11and would notdisturb the direction to fill-up the vacancies which arose prior to07.12.2002, as directed.

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166SUPREME COURT REPORTS

AVACANCIES OF INSPECTOR WHICH AROSE AFTER07.12.2002

107. As noted, the High Court has left open the question aboutentitlement to vacancies after 07.12.2002. The STA rules came intoforce on 20.01.2003. The restructured cadre of STA came into forceBon that said day. We have already found that STAs are entitled to counttheir previous service as Data Entry Operators Grade ‘B’ for thepurpose of promotion under 2002 Inspector Rules. Even, persons inClause (a) of the 2002 Inspector Rules, would be entitled to beconsidered for promotion under 2002 Rules from the date on which therestructured cadre in Clause (b) came into force. Thus, both personsCin Clauses (a) and (b)(STA Cadre) became entitled to be consideredfor promotion under the two sets of Rules with effect from 20.01.2003.Certainly, the appellants having worked as Data Entry Operator Grade‘B’ are entitled to add the period of service as Data Entry OperatorsGrade ‘B’. Thus, vacancies of Inspector, to be filled-up by promotion,Dmust be filled-up by considering both on the basis of the seniority, underRule 5 of the 2003 STA Rules. The appellants would be entitled alsoto be considered for promotion based on the same on the basis of theentitlement, as aforesaid.

CIVIL APPEAL NO. 1976 OF 2009E

108. The appellants challenge the common judgment passed bythe High Court in Writ Petition No. 2378 of 2005 and Writ Petition No.45 of 2005. The appellants filed this Appeal with the leave of the Courtas they were not parties to the Writ Petitions. The Writ Petitioners, twoeach in the two Writ Petitions, were the four applicants (hereinafterFreferred to as ‘the applicants’) in O.A. 1040 of 2003 filed before theCAT, Hyderabad.109. The case in brief, set up by the four applicants before theTribunal, was as follows:

Applicant nos. 1 and 2 were appointed as Lower Division ClerkG(L.D.) and they were working as such. Applicant nos. 3 and 4 wereappointed as L.D. Clerks and were working as U.D. Clerks. Applicantnos. 1 and 2 set the claim for promotions as U.D. Clerk under theRecruitment Rules of 1979. Applicant nos. 3 and 4, on the other hand,claimed promotion as Tax Assistant under the said Rules. There isreference to the various orders, which we have already referred to inH

connection with the post of Inspector, including order dated 19.07.2001.It is the further case that the respondents who, it may be noted, wereofficial respondents, had conducted DPC for all other cadres uptoInspectors and issued promotion orders. Only with regard to the postof Inspector, promotion orders were not issued before 31.12.2002 inview of the stay passed in O.A. 1362 of 2002. The stay was vacatedon 31.12.2002 and the promotion orders were issued on the same day.It is further stated that promotions were given to the extent of 214 on31.12.2002. Due to the delay, U.D. Clerks were not being consideredfor promotion as Tax Assistants and L.D. Clerks for U.D. Clerks. Thereis discrimination. Meanwhile, new Recruitment Rules, i.e., STA Rules2003 and Tax Assistant Rules 2003, which we have already referredto, have come into force in the process of restructuring and re-designating of the posts. The said Rules are prospective in nature. Theold Rules prevailed till the new Rules came into force. Even if the DPCis conducted after 31.12.2002, the vacancies that will be consideredwould be only those which have arisen on or before 31.12.2002. Therestructuring cannot take away the accrued rights. They soughtpromotion as per the old Rules. A direction was sought to promote themunder the Rules as U.D. Clerks and Tax Assistants from the date oftheir eligibility and availability of vacancies with all consequentialbenefits.

110. In their reply, the stand taken by the respondents to the O.A.was as follows, inter alia:

Since restructuring was directed, it was further directed that novacancy included in the restructuring, should be filled-up. The STA Rules2003 and the Tax Assistant Rules 2003 came into force. On thepublication of the said Notification of the STA Rules of 2003 on20.01.2003, further promotions were regulated as per the Notification.Under the Tax Assistant Rules 2003, under Section 4, all the U.D. Clerkswere deemed to have been re-designated as Tax Assistants and theirpromotions have to be regulated further in the said cadre only. As faras L.D. Clerks were concerned, under the 2003 Tax Assistant Rules,on passing departmental examination, they were to be deemed to havebeen promoted as Tax Assistants. Thus, the stand was that Applicantnos. 1 and 2 would, on passing departmental examination under the 2003Rules, become Tax Assistant, whereas, Applicant nos. 3 and 4, whowere U.D. Clerks, were deemed to have been appointed as TaxAssistants in the very same pay-scale and they have to work out the AB

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Apromotions under the said cadre. Delay was attributed to court cases.It was denied that Department has not followed instructions in Orderdated 19.07.2002 as all the vacancies, which arose before therestructuring, were duly filled-up under the old Rules. It is lastly pointedout that the chain vacancies in the Inspector cadre, upon filling up thepost of 373 posts of Superintendent, were filled-up by following theBRecruitment Rules notified on 29.11.2002 superseding the earlierRecruitment Rules. Filling-up of the post was done by from thosecandidates working in the pre-structured cadre. The consideration ofthe pre-structured cadre was to be operative for two years from thedate on which the restructured cadre came into force. The saidCpromotions were part of restructuring following the amended Rules. TheDraft Recruitment Rules were also notified for the restructured Cadreand, as such, the contention of the applicants that the said promotionswere done following the earlier Rules and as such they were entitledto be considered based on the earlier Recruitment Rules, was pointed as untenable and liable to be rejected (Thus, it may be noted that theDstand taken in this O.A. by the official respondents was the personswho were promoted as Inspectors, were give promotions in terms oftheir being part of the pre-structured cadre). The Tribunal dismissedthe O.A. by Order dated 10.12.2004 after noticing the contentions andnoticing the arguments based on Y.V. Rangaiah(supra) among the otherEdecisions and found that there is no case for grievance. Noticing thatwith regard to one of the grievances, viz., need to pass ministerial staffexamination, it was already redressed by deleting this requirement forpromotion as Senior Tax Assistant. Through proceedings dated04.06.2001, the further contention relating to seniority was also dealtwith by noticing that since the date of their entry into the feeder cadreFwould be one of the relevant factors and it had not been finalised, theapplicants could represent against the seniority. It also drew supportfrom another order passed by Tribunal in two other O.A.s dated15.10.2004 (O.A.s 834-835 of 2009) and found that the issue involvedwas one and the same and agreed with it. It was found that theGapplicants had been placed on the higher pay-scale.

111. The High Court, in the two Writ Petitions, filed by the fourApplicants, allowed the same drawing support from the judgmentrendered in the case relating to the Inspectors and it found thatpromotions to the post of U.D. Clerk and Tax Assistant was to be madeHas per the old Rules in respect of the vacancies which arose prior to 05.05.2003. Substantially, the contention, appellants have taken, is basedon Dr. Ramulu(supra). The contention is also that the intention andthe conscious decision of the Government was not to fill-up anyvacancies by way of 100 per cent promotions until the amendedRecruitment Rules were notified in the Official Gazette. There is alsoa case for the appellants that the order of the High Court runs counterto the judgment of the Bombay High Court and the orders of theTribunal which we have already referred to in connection with othercases.

112. Under the 1979 Rules, on the basis of an amendment, thepost of Tax Assistant (old) was incorporated by GSR 314 dated12.07.1996. Thereunder, post of Tax Assistant (old) was included in the1979 Rules. Promotion to the post was to be from the post of U.D.Clerk with three years’ service subject to their passing a departmentalexam with minimum marks of 40 per cent. There are other rights givento Senior Clerks under the Note. We have already extracted the TaxAssistant Rules 2003. It is the appellants case that it is established lawthat vacancies created due to cadre restructuring shall be filled inaccordance with new Recruitment Rules. There is reference, in fact,to order dated 26.09.2005, implementing the orders of the High Court.

113. Under the 1979 Rules, the post of U.D. Clerk was to befilled-up 50 per cent from direct recruitment and 50 per cent bypromotion. One of the feeder categories was L.D. Clerks with sevenyears’ service which was relaxable up to five years. The second FeederCategory was Women Searchers recruited prior to 09.05.1975 with fiveyears’ combined service as Women Searcher and L.D. Clerk and whohave passed departmental or promotional exam.

114. It may be noted that the 1979 Rules, insofar as it related tothe post of U.D. Clerks and Tax Assistants, continued to remain in forceeven after the promulgation of the Inspector Rules, 2002 and the SeniorTax Assistant Rules. It is when the Tax Assistant Rules were made insupersession of the 1979 rules so far as it related to the post of U.D.Clerk and L.D. Clerk that the 1979 Rules ceased to apply. Thus, 1979Rules continued to be in force in regard to the post of U.D. Clerk andL.D. Clerk till 05.05.2003.

115. Under the 2003 Tax Assistant Rules, brought into force w.e.f.05.05.2003, as contended by the official respondents before the Tribunal,the persons working as U.D. Clerks, were to be established as initial AB

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Acadre of Tax Assistants. So also, the L.D. Clerks, upon passing theexamination, were to become Tax Assistants. The posts of U.D. Clerkand L.D. Clerk are Group ‘C’ posts. No doubt, the ban, which wasimposed on direct recruitment, was to continue till 31.12.2002 (SeeOrder dated 19.09.2002). By Order dated 28.10.2002, which we havealready extracted, the draft Recruitment Rules for Inspector and SeniorBTax Assistants was communicated and the process was to be set inmotion and promotion was to await the issue of Notification.

116. As far as the post of Tax Assistant is concerned, by theorder dated 06.11.2002, all the Chief Commissioners were forwardedthe draft Recruitment rules for Tax Assistants which was approved byCthe Ministry. The Commissioners were to initiate necessary action forthe process of DPC, etc. The issue of any order passed under the draftTax Assistant Recruitment Rules was to await issue of Notification ofthe said Rules. However, on 14.11.2002, it ordered, inter alia, that DPCin the remaining Grades except DOSL-222 may be held on the basisDof the existing Recruitment Rules and the promotion orders issued by25.11.2002.

117. As far as the post of L.D. Clerks and old Tax Assistants isconcerned, the vacancies, which existed as on 06.11.2002, were to befilled-up under the existing Recruitment Rules(See letter datedE14.11.2002). The orders were to be issued by 25.11.2002. By 25.11.2002,the Tax Assistant Rules were not even finalised, leave alone broughtinto force. The Tax Assistant Rules came into force only by publicationon 03.05.2003 and brought into force two days thereafter, i.e., on05.05.2003. Going by letter dated 14.11.2002, the principle thatvacancies must be filled-up in accordance with the existing Rules, wouldFappear to apply. The intention of the Authority would also appear to bethe same as is evident from Clause (3) of Order date 14.11.2002.

118. In such circumstances, there is no scope for any ambiguityand we are unable to find fault with the order of the High Court.

SUMMARY OF CONCLUSIONS IN C.A. NOS.1970-1975 OFG2009

119. Summary of Conclusions in C.A. Nos. 1970-1975 of 2009,is as follows:

1) Promotion to the post of Inspector was governed by theH1979 Rules till 07.12.2002.

D. RAGHU AND OTHERS v.R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

2) Under the 1979 Rules, Data Entry Operators were notamong the feeder categories for promotion as Inspector.

3) By 19.07.2001, Cabinet approved restructuring of certainposts including the post of Inspector. The number ofposts of Inspector fell from a little over 22000 to a littleover 18000. Thereunder, the post of Data EntryOperator Grade ‘B’ among other categories, weremerged and the cadre of Senior Tax Assistants emerged.However, the restructured cadre of Senior TaxAssistants, did not come into being.

4) The restructured Cadre of Senior Tax Assistants wasborn with the bringing into force of the Senior TaxAssistant Rules 2003, on 20.01.2003. Data EntryOperators Grade ‘B’, among other categories, were re-designated as Senior Tax Assistants under Rule 5.

5) The Inspector Rules 2002, was brought into force on07.12.2002 superseding the 1979 Rules relating toInspectors.

6) The post of Senior Tax Assistant, which was not amongthe feeder categories under the 1979 Rules, became oneof the feeder categories for promotion as Inspector,under Inspector Rules, 2002 under Clause (b) of Column12.

7) There was a ban of promotion to the posts of Inspector.This is clear from communications dated 10.09.2001,03.01.2002 and 05.06.2002. The communication dated28.10.2002 read with communication dated 14.11.2002,establish that the Draft Recruitment Rules which werefinalized on 29.11.2002 and brought into force on07.12.2002 as far as Inspectors are concerned and DraftRecruitment Rules finalized and brought into force on20.01.2002 as far as Senior Tax Assistants areconcerned, were to be basis for promotion to the postof Inspector. As per Order dated 28.10.2002,Departmental Promotion Committee (DPC), was tooperate, based on the draft rules but no promotion orderswere to be issued till the draft rules were finalized. With A

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order dated 04.11.2002 even the promotion orders werepermitted. The authority apparently contemplatedsimultaneous bringing into force of the Inspector Rulesand the STA Rules.

8) The High Court was in error in holding that it has to benecessarily held that the vacancies which arose priorto the revised Recruitment Rules coming into force hasto be filled-up under then existing Rules (the 1979 Rules)relying upon case law including Y.V. Rangaiah(supra).There was a conscious decision taken to not fill-upvacancies based on the restructuring, and what is more,letters dated 28.10.2002 and 14.11.2002 show thatpromotion to the post of Inspector was to be effectedbased on the new recruitment rules.

9) It is while so, that in the Hyderabad Commissionerate,by Notice dated 05.11.2002, persons falling under Clause(a) of Column 12 of the ‘Draft Inspector Rules’ whoalso corresponded to the feeder categories under the‘extant’ Statutory Rules, the 1979 Rules, alone werecalled for selection as Inspector.

10) The benefit of reckoning service under Note 1 tocategories in Clause (a) would be available only afterthe restructuring came into effect which was on20.01.2003. This also indicates that the powers that becontemplated simultaneous operation of the ‘InspectorRules’ and the Senior Tax Assistant Rules.

11) However, the Inspector Rules and the Senior TaxAssistant Rules were enforced with a gap of aboutsix weeks.

12) The appellants even proceeding on the basis that theywere to be treated as Senior Tax Assistant as on07.12.2002, were not having the two years’ experiencerequired under the 2002 Inspector Rules.

13) With the 2003 Senior Tax Assistant Rules brought intoforce on 20.01.2003 under Rule 5(1), the appellants whowere working as Data Entry Operators Grade ‘B’ couldtake into consideration their service as Data Entry

D. RAGHU AND OTHERS v.R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

Operators Grade ‘B’ for reckoning the period of twoyears stipulated under the 2002 Inspector Rules. In thisregard, the finding of the Tribunal is correct. Appellantsin O.A. have stated that they were promoted as DataEntry Operator Grade ‘B’ in April 2000. If so, theirservice as such would count and even as on 07.12.2002,they would have 2 years’ service as contemplated underthe 2002 Rules. As on 20.01.2003, certainly, they wouldbe eligible to be considered for promotion as Inspectors.

14) The Tribunal not having granted prayer 8(b), the DraftRecruitment Rules, 2002 relating to Inspectors asfinalized which was impugned remained intact. TheTribunal clearly erred in granting the declaration, assought for in paragraph 8(c), recognizing exclusive rightto the restructured Cadre.

15) The restructuring Order under letter dated 19.07.2001,fructified and became complete and effective relatingto the post of Senior Tax Assistant only on 20.01.2003.The findings to the contrary by the Tribunal stoodcorrectly set aside by the High Court.

16) The Tribunal has not interfered with the promotionalready granted to persons drawn from the categoriesother than the Senior Tax Assistant pursuant to Noticedated 05.11.2002.

17) Ban of Direct Recruitment was to end on 31.12.2002.In respect of promotion made earlier and not interferedwith, the Tribunal could not have directed review ofseniority based on later promotions as Inspector. Theappellants cannot be given seniority based on laterpromotions qua promotions given, which cannot betermed illegal, when as on the date of earlier promotions,appellants were not even in the cadre. Promotion fromSenior Tax Assistant could have been made only20.01.2003 at the earliest. Even the categories in Clause(a) could have been promoted under the 2002 InspectorRules, vide Note 1 only for two years starting from thedate the restructured Cadre in Clause (b) come intoforce, i.e., 20.01.2003.

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18) We reject the contention that persons in Clause (a) ofColumn 12 of the Rules, who were also in the feedercategories for promotion under 1979 Rules, had anexclusive right to be considered for promotion for aperiod of two years.

19) While promotions can be made based on DraftRecruitment Rules, it cannot be so made, if the DraftRules are in the teeth of existing Statutory Rules [V.Ramakrishnan and others(supra)]. In this case, however,under Orders dated 28.10.2002 and 14.11.2002, whatwas contemplated was processing by DPC under theDraft Recruitment Rules and issue of the promotionsorders after the Draft Rules were finalized.

20) However, till 07.12.2002, under the 1979 Rules, beingalso feeder categories under the said rules, those inClause (a) Column 12, 2002 Inspector Rules could bepromoted. While it may be contrary to what wascontemplated by the Central Authority (as evident fromletters dated 28.10.2002 and 14.11.2002) promotionswere made, which could not be termed illegal. Even theTribunal has not set aside the promotions.

21) The High Court has directed the filling-up of vacanciesprior to 07.12.2002 as per the 1979 Rules. In this regard,having regard to the fact that the vacancies were notfilled-up as per the ban, as can be seen from 10.09.2001and 05.06.2002, and it was specifically contemplatedunder letter dated 28.10.2002 that vacancies arisingfrom restructuring be filled-up, as per the newRecruitment Rules, the principle in Y.V. Rangaiah(supra) may not apply and it was the Rules as on dateof filling-up the vacancies, that would count. As on thedate of the High Court Order, the STA Rules 2003, hadcome into force on 20.01.2003. Thus, vacancies existingprior to 07.12.2002 and which were not filled-up, mustbe filled-up by considering STA (Appellants) includingtheir service as Data Entry Operators Grade ‘B’.

22) But it is here that the impact of the matter remainingpending, and in the meantime, implementation of the judgment and what is more, further promotions beingmade cannot be lost sight of. We bear in mind theprinciple laid down in Taherakhatoon (D) By Lrs.(supra)and would not disturb the directions to fill-up vacancieswhich arose prior to 07.12.2002, as directed.

23) However, in case of vacancies of Inspector, which aroseafter 07.12.2002, the appellants would, undoubtedly,have a right to be considered as explained hereinbefore.In regard to such vacancies, the matter must be lookedinto and seniority fixed, based on Rule 5 of the STARules. The persons working in Clause (a) are alsoentitled to be considered for a period of two years from20.01.2003 under the Inspector Rules to be consideredfor promotion.

RELIEF IN CIVIL APPEAL NOS. 1970-1975 OF 2009

120. Civil Appeals Nos. 1970-1975 of 2009 are disposed of asfollows:

The restructured cadre of Senior Tax Assistants came into forceon 20.01.2003. Appellants are not entitled to have seniority determinedin respect of vacancies of Inspector which arose prior to 07.12.2002.The appellants are eligible to be considered for promotion from20.01.2003 and they are entitled to add their service as Data EntryOperator Grade ‘B’ for the purpose of the 2002 Inspector Rules andconsidered for vacancies to be filled by promotion, which arose after07.12.2002. The persons in Clause (a) under Column 12 of the 2002Rules, are also entitled to be considered for two years from 20.01.2003.Seniority is to be considered based on Rule 5 of the STA Rules. Theexercise, as above, if not carried out already shall be carried out. Furtherpromotions based on the above will be granted. However, we directthat the promotions shall be notional where promotions have alreadybeen effected, however, entitling the parties to seniority and pensionarybenefits. The above exercise shall be completed at the earliest.

121. Civil Appeal No. 1976 of 2009 will stand dismissed.

122. There shall be no order as to costs in all the appeals.

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