KERALA TRANSPORT DEVELOPMENT FINANCE CORPORATION LIMITED versus BASIL T K & ORS on 31 January 2022

1. Leave granted.

2. This batch of three appeals arises from the judgments of theBDivision Bench of the High Court of Kerala dated 12 April 2019 and 14March 2019 in writ appeals from a judgment of a Single Judge dated 6December 2018.

3. The Kerala Transport Development Finance CorporationLimited[1] and its Managing Director are the appellants in the first twoCappeals. In the third appeal, the appellant, Aneesh Babu R[2], seeks tochallenge one of the directions of the Single Judge by which it wasdirected that the seniority list is to be recast by placing Sherith A andBasil T K[3], who are Managers, above him in the seniority list.

4. The facts, insofar as they are material for a decision on theDappeals, need to be noted, at this stage. In 2000, the respondents wereappointed as Assistant Managers in the services of KTDFCL on contractfor a period of one year, a position on which they continued until 2006.The Service Rules framed by KTDFCL were approved by the StateGovernment on 22 February 2006. The Government issued GO (MS)No. 15/2006 on 22 February 2006 to regularize the services of oneEhundred and six contractual employees of KTDFCL. On 23 February2006, the services of the respondents were regularized. However, on12 February 2007, the State Government issued GO (MS) 4/2007cancelling the order of regularization on the ground that the appointmentswere not made through a standard recruitment procedure andFreservation as mandated by the Constitution for the members of theSchedule Castes and Scheduled Tribes was not provided In proceedingsinstituted under Article 226 of the Constitution. The High Court, by itsjudgment dated 9 April 2007, quashed the G.O (MS) 4/2007 cancellingthe regularization since the order was without issuing notice or hearingthe petitioners. KTDFCL was granted liberty to proceed in the matterGafresh. In pursuance of the direction of the Court, fresh notice wasissued to the respondents. The Government terminated the respondents’

1 “KTDFCL”

2 “Aneesh Babu”H3 “Respondents”

employment on 12 September 2007 on the grounds that:- (a) the postsagainst which the respondents were appointed were not available at thetime of their appointment; (b) the service rules were in force at the rime and therefore, theinitial appointment of the respondents was irregular and the regularizationwas consequently illegal. By its judgement dated 11 October 2007, theHigh Court had observed that the six employees, including therespondents, stood on a different footing compared to the rest of theretrenched employees since they were appointed on a contractual basisthrough a selection process. Therefore, the High Court set aside thetermination of the employment of the respondents and directed theGovernment to pass fresh orders after hearing the respondents.

5. In pursuance of the direction, a fresh notice was issued to therespondents. After hearing the respondents, the Government by its orderdated 25 April 2008 issued the following order:

“Accordingly, they were heard by the Transport Secretary to theState Government on 16/1/2008. The matter of regularization orotherwise of the termination of those six persons’ service in theK.T.D.F.C was examined in detail. It was found that no deviationfrom the decision taken earlier in the Government order read asthe 3[rd] paper above was necessary, the request for regularizationin service of K.T.D.F.C, put forth by S/Shri Basil T.K Mohanan,P.K Sherith A, Radhakrishanan I.S, Smt. Sheeja C.V, and Smt.Jasmy S is rejected.”

Subsequently, the respondents filed another writ petition challengingthe order of the Government and seeking a direction to reinstate them inservice with consequential benefits with effect from 12 September 2007.By a judgment dated 9 October 2009, a Single Judge of the Kerala HighCourt set aside the order on following grounds:- (i) the order indicatedno reason; (ii) in the earlier challenge it was submitted before the Courtthat the respondents were appointed against sanctioned posts; (iii) thoughthe posts were not available when the respondents were initially appointed,posts were created before they were regularized; (iv) the service ruleswere framed before the respondents were regularized. The High Courtdirected the reinstatement of the respondents in service with retrospectiveeffect from 12 September 2007. The direction of the High Court, whichis contained in paragraph 22 of its judgment, is extracted below:

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A“22. For these reasons, I cannot sustain Ext. P22 and thereforeExt.P22 will stand quashed. Respondents are directed to reinstatethe petitioners in service immediately with retrospective effectfrom 12/9/2007. In the circumstances of this case, it is orderedthat the petitioners will not be entitled to any monetary benefitsfor the period till they are reinstated but, will be entitled toBcontinuity of service.”

(emphasis supplied)

6. Following the above decision of the Single Judge, a writ appealwas dismissed on 14 March 2012. On 28 April 2012, the State Governmentissued GO (MS) No 23/2012 directing that the respondents be reinstatedCwith retrospective effect from 12 September 2007 without any monetarybenefits but with continuity of service. Since the order of reinstatementdid not provide clarity on promotions, the respondents wrote to the StateGovernment highlighting their grievance. The Government issued a letterdated 3 November 2012 directing that the period spent out of serviceDmay be ‘regularized as non-duty without forfeiture of past service.’ Theclarification is as follows:

“The Hon’ble High Court have granted only the benefit ofcontinuity of service to the employees reinstated in the service ofKTDFC and has not allowed them any monetary benefits notionallyEor otherwise. In order to provide continuity in service, the periodspent out of service may be regularized as non-duty withoutforefeiture of past service. Regarding the post of probation, therules as states in KTDFC Service Rules can be insisted.”

7. On 21 June 2013, the State Government clarified its earliercommunication dated 3 November 2012 to the effect that it would notFadversely affect the prospects of seniority or promotion. On 9 January2014, increments in the salary payable to the respondents were authorizedwithout taking into account the period from 12 September 2007 to 2May 2012. The respondents instituted writ proceedings contending thatthey were entitled to reckon the above period for the grant of promotionGand increments. During the pendency of the writ proceedings, therespondents were promoted as Deputy Managers with effect from 24July 2014.8. Consequent to a letter of the State Government dated 18 March2016, a Committee was constituted for the scrutiny of the seniority andHpromotion of regular employees in the managerial service of KTDFCL.

The Committee opined that the respondents were eligible to be promotedas Deputy Managers from 24 February 2007; that, since the period spentout of service was to be treated as ‘non-duty’, the requirement ofresidency of one year in the post of Deputy Manager for promotion tothe post of Manager will be completed only on 13 October 2012 and thatthey would be eligible for promotion as Managers as on 14 October2012. On 7 February 2017, a seniority list of Assistant Managers andDeputy Managers as on 1 August 2016 was published in which the namesof respondents stood at Serial Nos 1 and 2 respectively with their dateof appointment being 23 February 2006, while the name of Aneesh Babustood in Serial Nos 3, whose date of appointment was 13 October 2008.

9. On 24 March 2017, the Staff Promotion Committee resolved topromote the respondents as Managers, but referred the question asregards the eligibility dates for promotion to the State Government. TheState Government by its order dated 5 July 2017, accepted the report ofthe Committee, without providing any retrospective monetary effect. Aprovisional Seniority list of Managers as on 11 July 2017 was publishedon 15 July 2017, in which Aneesh Babu was placed in S.No 1, while therespondents were placed in S.Nos 2 and 3. It was also stated that therespondents are entitled to promotion as Manager with effect from 14October 2012. On the other hand, Aneesh Babu, who was appointed asAssistant Manager on contract basis on 27 September 2008 and wassubsequently regularized through an order dated 12 December 2014,with effect from 13 October 2008 was held to be entitled to be promotedas Manager on 11 December 2010 and as Chief Manager on 26November 2011. The respondents filed objections on the ground that theperiod when they stood retrenched must be counted as service completedfor the purpose of promotion. On 11 December 2017, the Staff PromotionCommittee finalized the seniority list.

10. The respondents instituted a writ petition before the High Courtchallenging the seniority list to the extent that the Expert Committee aswell as the Government had come to the conclusion that they were notentitled to count the period of service from 12 September 2007 to 2 May2012 towards increments and promotion. It was their contention thatthey are entitled to be promoted as Managers with effect from 24February 2008 and as Chief Manager from 22 February 2009. KTDFCLraised the following contentions supporting the decision to place therespondents after the Aneesh Babu in the Seniority List:

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(i) If the retrenched period of more than four years was consideredas actual service, then the respondents would have been permitted torejoin on 2 May 2012 at the highest promotional post of Chief Managersince the residency period for promotion from Assistant Manager toDeputy manager, and Deputy Manager to Manger is one year each; A

B(ii) The High Court by its judgment dated 9 October 2009 directedthe reinstatement of the respondents without monetary benefit. Theywere only entitled to continuity of service. The direction that they areentitled to continuity of service only means that there will not be anyforfeiture of their previous service from 23 February 2006 to 12 September2007;C

(iii) Under the service rules, non-duty period cannot be countedfor any service benefits, including probation and promotion;

(iv) Aneesh Babu was appointed as Assistant Manager on 13October 2008 through direct recruitment after undergoing a three-tierDselection process. Though the job notification was for regular appointment,he was appointed on contract basis consequent to the decision of theGovernment. Subsequently, the Government rectified its decision andregularized his appointment in 2014 with effect from 13 October 2008.The Expert Committee had noted that his appointment was erroneouslyclassified on ‘contract basis’ at the time of appointment. This error wasErectified later. The service of Aneesh Babu in KTDFCL was consideredfor calculating the residency periods for the purpose of promotion;

(v) The respondents were originally promoted as Deputy Managerwith effect from 24 July 2014. The one year residency period wouldonly be completed on 24 July 2015. However, by holding that theFrespondents would be entitled to be promoted as Manager with effectfrom 14 October 2012, they were promoted without serving in the postof Deputy Manager even for a day since they served as AssistantManager till 23 July 2014; and

(vi) The committee followed a uniform procedure of counting theirGservice in KTDFCL for calculating residency period for the purpose ofpromotion. The only period that was not calculated with respect to therespondents was the period they spent out of service due to theretrenchment.

11. On 6 December 2018, a Single Judge of the High Court allowedHthe petition and directed KTDFCL to grant promotion to the respondents, treating the period during which they were kept out of service, as notionalservice in the post of Manager and Chief Manager. The Single Judgearrived at this conclusion on the grounds that: (i) the Government on 21June 2013 had informed the respondents that the period during whichthey were kept out of service would not affect their prospect of promotion;(ii) the respondents were unable to perform their duties since they wereunjustly terminated from service, which was subsequently rectified bythe High Court; (iii) Aneesh Babu was granted promotion reckoning theservice rendered by him in the post of Assistant Manager for promotionto Deputy Manager and Manager. However, according to the ServiceRules, actual service in each of the posts is a requirement. If the benefitof promotion is denied to the respondents on that ground, it must bedenied to Aneesh Babu as well on the ground of parity; and (iv) the HighCourt, while directing the respondents to be reinstated directed thatcontinuity of service must be provided. A writ appeal filed against thejudgment of the single Judge has been dismissed by the Division Benchon 14 March 2019.

12. When the Special Leave Petitions came up for hearing beforethis Court on 3 July 2019, the Court, while issuing notice, summarizedthe submissions which were urged on behalf of KTDFCL. The orderdated 3 July 2019 records thus:

“Mr. V. Giri, learned Senior Counsel has submitted that in theorder of the learned Single Judge dated 9 October 2009 (AnnexureP1), it was specifically observed that the employees would beentitled to reinstatement with continuity of service without anymonetary benefits for the period till they are reinstated. However,in the order of the learned Single Judge dated 6 December 2018(which resulted in the impugned order of the Division Bench),there was a direction to the effect that the original petitioners willbe entitled to the fixation of pay reckoning the period during whichthey were kept out of service, but they shall also be granted allbenefits on the basis of fixation of pay. The Special Leave Petitionhas been instituted in view of this anomaly.

Issue notice, returnable in eight weeks.”

13. As stated earlier, the challenge by KTDFCL to the judgmentof the Division Bench lies within a narrow compass. While advancinghis submissions, Mr V Giri, senior counsel appearing on behalf ofKTDFCL, adverted to the following directions issued by the Single Judge:

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A“Therefore, there shall be a direction to the respondents to grantpromotion to the petitioners reckoning the period during whichthey were kept out of service treating the same as notional service,to the post of Manager and also Chief Manager. On the basis ofsuch promotion, Ext.P20 shall be revised assigning the petitionersseniority above the 4[th] respondent. Petitioners will also be entitledBto fixation of pay reckoning the period during which they werekept out of service and they shall be granted all benefits on thebasis of such fixation of pay. This shall be done within a period of‘three months’ from the date of receipt of a copy of the judgment.”

14. As a result of the above directions, the respondents have beenCheld to be entitled to the fixation of pay, reckoning the period duringwhich they were kept out of service. There is no dispute over this part.However, besides the above direction, it has been directed that “theyshall be granted all benefits on the basis of such fixation of pay”. Mr VGiri submitted that the latter part of the direction would be inconsistentDwith the earlier decision of the Single Judge dated 9 October 2009 interms of which the respondents were held entitled to reinstatement witheffect from 12 September 2007, but, without monetary benefits for theperiod till they were reinstated.

15. So far as the above grievance of KTDFCL is concerned, MrERoy Abraham, counsel appearing on behalf of the respondents, has fairlyclarified that the respondents do not claim arrears of salary for the periodduring which they were out of service, namely, from 12 September 2007until the date of reinstatement.

16. Besides the concession which has been made on behalf of theFrespondents, it is clearly evident from the earlier order of the SingleJudge dated 9 October 2009, that the respondents who were directed tobe reinstated were held not to be entitled to any monetary benefits forthe period till they were reinstated. According to the order, reinstatementfrom 12 September 2007 entitles them to continuity of service. TheGdirection in the judgment of the Single Judge dated 6 December 2018 tothe effect that respondents would be entitled to the fixation of pay byreckoning the period of service during which they were kept out of serviceis consistent with the earlier judgment. However, the further directionthat they shall be granted all benefits on the basis of such fixation of payneeds to be clarified to the extent that they shall not be entitled to anyH

payment of arrears of salary for the period during which they were outof service.

17. The surviving issue in this batch of appeals, however, relatesto the issue of seniority as between the respondents and Aneesh Babu,who has filed the third appeal. In this context, Mr V Giri appearing forKTDFCL submitted that he does not take or adopt any specific positionas regards the seniority between the contesting parties.

18. Mr Kuriakose Varghese, counsel appearing on behalf ofAneesh Babu, submitted that his client was appointed originally as anAssistant Manager following a due process of selection. The submissionis that despite the fact that he was appointed following a due process ofrecruitment, he was initially appointed on a contractual basis on 13October 2008, but the injustice to him was rectified and he was eventuallyregularized on 12 December 2014 with effect from the original date ofappointment.

19. On the other hand, it was submitted by Mr Kuriakose Varghesethat the respondents were appointed purely on a contractual basis and itwas as a result of the initial order of regularization dated 23 February2006 that they came to be recruited as regular employees. Following thecancellation of that order on 12 February 2007, there was another roundof proceedings which ultimately culminated in the order of the SingleJudge dated 9 October 2009. In this context, it was sought to be urgedthat the consequence of the direction to grant continuity of service wouldmean that the services of the respondents would have to be treated asunbroken and uninterrupted. Counsel sought to make a distinctionbetween continuity and continuous service, urging that the respondentshad not fulfilled minimum residency requirements when they werepromoted as Deputy Mangers and Managers and since his client did so,he must rank higher in seniority in the post of Manger.

20. Hence, it is urged that at the time when Aneesh Babu fulfilledthe residency requirement of one year in each of the subsequent postsas Deputy Manager and Manager, he was the only eligible candidate forpromotion to the post of Chief Maanager. As a consequence, thesubsequent reinstatement in service of the respondents should not allowthem to steal a march in seniority over Aneesh Babu. Reliance has beenplaced on the Service Rules governing KTDFCL. That in essence is thesubmission of Mr Kuriakose Varghese.

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21. At the outset, while considering the submissions, it needs to benoticed that the Kerala Transport Development Finance CorporationRules[4] contains a definition of the expression “Approved Probationer”.The provisions for promotion are contained in Rule 13. Rule 18 providesfor the determination of seniority in the following terms:

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(a) Seniority of a person in a service, class, category or gradeshall unless he has been reduced to a lower rank aspunishment be determined by the date of order of his firstappointment to such service, class category or grade.

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Provided that the seniority of persons appointed direct,otherwise than on advice of the Commission shall be inaccordance with the ranked list of approved candidates.”

22. In the present case, the respondents who were initiallyregularized in service on 23 February 2006 were aggrieved by theDcancellation of the order of regularization dated 12 February 2007. Thejudgment of the Single Judge dated 9 October 2009 set aside the orderby which the regularization of the respondents was cancelled and therewas a direction to reinstate them in service with retrospective effectfrom 12 September 2007. This clearly implies that they were entitled toEthe benefit of continuity of service. The cancellation of their regularizationstood effaced. However, the Single Judge directed that they shall not beentitled to any monetary benefits for the period till they are reinstated. Inother words, no arrears of salary were granted. The respondents have,upon their regularization, been promoted as Deputy Managers andManagers. The appointment of the respondents as Deputy ManagersFand Managers are not in question. There is no challenge to theirpromotions. The Single Judge of the High Court has come to theconclusion that since respondents stand reinstated with effect from 12September 2007 and the order by which the regularization was cancelledhas been quashed, necessary consequences under the law would haveto follow. There can be no manner of doubt that Aneesh Babu who wasGappointed to the service on 13 October 2008 could have any legitimategrievance in regard to the position of the respondents following the orderof reinstatement.

23. The Court has been informed that, as a matter of fact, all thethree employees (the respondents and Aneesh Babu) are presently holdingthe post of Manager. The next promotion which is available is to the postof Chief Manager. The promotion to the post of Chief Manager wouldbe governed by the Service Rules and Regulations. The judgment of theSingle Judge granting the benefit of seniority to the respondents is aplain consequence of the earlier judgment dated 9 October 2009 and theprovisions for seniority contained in Rule 18 of the Service Rules. Rule18 of the Service Rules provides for seniority of a person in a service,class, category or grade on the basis of the date of the order of the firstappointment to such service, class, category or grade. The respondentswere appointed to the post of Assistant Manager in 2000, whereas,Aneesh Babu was appointed in 2008. Both the respondents and AneeshBabu’s service were regularized retrospectively from their initial date ofappointment. The judgment of the Single Judge dated 9 October 2009,saves the respondents continuity of service. Therefore, there was nojustification to exclude the period during which the respondents werenot in service due to the illegal termination of employment, which wassubsequently set aside, given that the High Court expressly saved thecontinuity of service. The contention that the respondents did not satisfythe one year residency rule in the post for the purpose of promotion iswithout merit. The only distinction between the respondents and AneeshBabu is that unlike the former, the latter was in service throughout.Aneesh Babu, though appointed in 2008 in the post of Assistant Managerwas regularized retrospectively only in 2014. Inspite of not fulfilling theone year residency criteria in each post (that is as Deputy Manager andManager), he was still promoted taking into account his service as theAssistant Manager. However, this distinction between the partiesdiminishes in view of the direction of the Single Judge to grant continuityof service to the respondents. Therefore, we find no error in the impugnedjudgment. However, it only needs to be clarified that since the respondentsas well as Aneesh Babu hold the post of Manager from which the nextpromotion is to the post of Chief Manager, the promotional post of ChiefManager shall be filled up in accordance with the applicable ServiceRules and regulations.

24. As regards the appeals by KTDFCL, we clarify that thejudgment of the Single Judge dated 6 December 2018 shall stand modifiedto the extent that the respondents shall not be entitled to arrears of salaryfor the period between 2007 and 2012 when they were out of service.

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AThe rest of the directions of the Single Judge, as affirmed by the DivisionBench, are maintained, subject to the clarification that the promotion tothe post of Chief Manager shall take place in accordance with the ServiceRules and Regulations.

25. The appeals shall stand disposed of in the above terms.B26. Pending application, if any, stands disposed of.

Devika Gujral

(Assisted by : Roopanshi Virang, LCRA)

Appeals disposed of.

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