CHIEF COMMISSIIONER OF INCOME TAX &ORS V. V.SUBBA RAO

C.A. No.-012410-012413 - 1996

AI Insights

The case involves a series of appeals and SLPs by the Income Tax and Central Excise Departments challenging the decisions of the CAT, which had struck down certain provisions of an OM that governed the seniority of employees in these departments. The contested provisions allowed seniority to be determined by the order of confirmation rather than the order of merit as per initial selection. The Supreme Court upheld the CAT's decision, referencing the principles established in the Direct Recruit Class II Engineering Officers' Association v. State of Maharashtra case, which emphasized that seniority should be based on the order of merit in selection and not on subsequent confirmation, which can be influenced by non-merit factors.

• Counselvise Citation: [2000] 140 COUNSELVISE.COM (IT) 354628 (SC)
• Appeal Type: Supreme court cases
• Pronouncement Date: 23-11-2000
• Other Referred Cases: Direct Recruit Class II Engineering Officers' Association v. State of Maharashtra & Ors., S.B. Patwardhan v. State of Maharashtra
• Laws Referred To: Direct Recruit Class II Engineering Officers' Association v. State of Maharashtra & Ors. [(1990) 2 SCC 715], S.B. Patwardhan v. State of Maharashtra [(1977) 3 SCC 399]
• Result in Favour of: Others
• Court: SUPREME COURT
• Department Lawyers: L N RAO
• Assessee Lawyers: R N TRIVEDI; P P MALHOTRA
• Keywords: Arbitrary; Central Excise Department; Income Tax Department; Office Memorandum; Seniority; Unconstitutional
• Section: 5; 4

Judgement Text

"v 224L.......T.......T.......T.......T.......T.......T.......T.......T....R .PL58 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 12410-12413 OF 1996.@@ CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC Chief Commissioner of Income Tax & Ors. ...Appellant (s) Versus V. Subba Rao & Ors. ...Respondent(s) WITH@@ BBBB [C.A. Nos. 12414-12417/96, 12375/96, SLP(C) Nos. 7519/97 and 19683/97] O R D E R˜@@ CCCCCCCCCC ........L.......I.......T.......T.......T.......T.......T.......T....J .SP2 S.L.P. (C) No. 7519 of 1997@@ CCCCCCCCCCCCCCCCCCCCCCCCCCC It is stated by the learned counsel that the Special Leave Petition has become infructuous. It is accordingly dismissed. C.A. Nos. 12410-1241/96, 12414-12417/96 & SLP(C) No.19683/97@@ CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC This batch of appeals and Special Leave Petition are directed against the orders of the Central Administrative Tribunal (for short \"the Tribunal\") in different cases but the point involved is one and the same. Some of these matters relate to the seniority of the employees in the Income Tax Department and some others relate to the seniority of the employees of the Central Excise Department. In all these cases the seniority of the employees was being determined in ...2 (2) accordance with the Office Memorandum (OM) dated 22nd of December, 1959 issued by the Government of India, Ministry of Home Affairs. The applications before the Tribunal having been filed challenging the validity of the proviso to paragraph 4 as well as proviso to paragraph 5 of the OM, on consideration of the submissions made by the parties, the Tribunal has struck down the aforesaid two proviso and hence the Income Tax Department as well as the Central Excise Department have preferred appeals before this Court. In the impugned judgments, the Tribunal has come to the conclusion that the appointments having been made in accordance with the rules providing for substantive appointment, the proviso indicating that the date of confirmation should be the basis of inter se seniority is unconstitutional and must be held to be arbitrary as has already been held by this Court in the Case of Direct Recruit Class II Engineering Officers’@@ CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC Association v. State of Maharashtra & Ors. [(1990) 2 SCC@@ CCCCCCCCCCC CCCCCCCCCCCCCCCCCCCCCCCCCCC 715] (for short \"Direct Recruit case\"). At this stage it would be appropriate to extract paragraphs 4 and 5 of the OM dated 22nd of December, 1959. ................L.......T.......T.......T.......T.......T.......J .SP1 \"4. Direct Recruits. - Notwithstanding the provisions of para 3 above, the relative seniority of all direct recruits shall be determined by the order of merit in which they are selected for such appointment, on the recommendations of the UPSC or other selecting authority, person appointed as a result of an earlier selection being senior to those appointed as a result of a subsequent selection: Provided that where persons recruited initially ...3 (3) on temporary basis are confirmed subsequently in an order different from the order of merit indicated at the time of their appointment seniority shall follow the order of confirmation and not the original order of merit. 5. Promotees. - (1) The relative seniority of persons promoted to the various grades shall be determined in the order of their selection for such promotions : Provided that where persons promoted initially on a temporary basis are confirmed subsequently in an order different from the order of merit indicated at the time of their promotion, seniority shall follow the order of confirmation and not the original order of merit. (ii) Where promotions to a grade are made from more than one grade the eligible persons shall be arranged in separate lists in the order of their relative seniority in their respective grades. Thereafter, the Departmental Promotion Committee shall select persons for promotion from each list up to the prescribed quota and arrange all the candidates selected from different lists in a consolidated order of merit which will determine the seniority of the persons on promotion to the higher grade.\" .SP2 ........L.......I.......T.......T.......T.......T.......T.......T....J The learned Additional Solicitor General appearing for the Income Tax Department and Mr. Malhotra, the learned senior counsel appearing for the Excise Department contended before us that the question of confirmation being linked with seniority as per the proviso could not have been held to be arbitrary or irrational since confirmation is made by the authority on the basis of the suitability and efficiency of the person concerned and as such in the efficient administration of the service the confirmation has a vital role and, therefore, the proviso to paragraph 4 and proviso to paragraph 5 of the aforesaid OM could not have been held to be ...4 (4) arbitrary. It was also further contended that the decision of this Court in the Constitution Bench decision in the Direct Recruit case must be applied to the facts of that case and could not have been made applicable for testing the validity of the OM which is in vogue since 1959. The learned Additional Solicitor General also further urged that the said OM having been allowed to operate since 1959, the seniority already determined prior to the impugned decisions of the Tribunal should not have been unsettled and the judgments should have been allowed to operate prospectively only and in fact the Union of India has already issued an OM to that effect on 4.11.1992 and paragraph 4 of that OM unequivocally indicates that the seniority already determined according to the existing principles on the date of issue of this order will not be reopened. Even if in some cases seniority has already been challenged or is in dispute it will continue to determine on the basis of the principle already existing prior to the date of issue of this order. Mr. Nageshwar Rao and all other learned counsel appearing for the respondents however refuted the submissions made by the learned Additional Solicitor General contending inter alia that in view of the judgment of this Court in S.B.@@ CCCC Patwardhan v. State of Maharashtra [(1977) 3 SCC 399] which@@ CCCCCCCCCC CCCCCCCCCCCCCCCCCCCC has been reaffirmed by the Constitution Bench in the Direct Recruit case, the conclusion is irresistible that proviso to paragraph 4 and the proviso to paragraph 5 of the OM is ...5 (5) arbitrary and irrational and, therefore, the Tribunal rightly struck down the same. On the submission of the learned Additional Solicitor General that the seniority already determined should not be unsettled, it was contended that no data and particulars have been placed before the Court to indicate the effect of the seniority being redetermined. In the eye of law once a particular proviso is struck down by a Court, it tantamounts to holding that such proviso never stood on the statute until and unless the Court specifically directs that the effect of the judgment would be from the date of the judgment or from a future date depending upon the contingency of the case. That being the position, according to the learned counsel appearing for the respondents, the Tribunal was wholly justified in striking down proviso to paragraph 4 and proviso to paragraph 5 of the OM. Having regard to the submissions made by the learned counsel appearing for the parties and in view of the authoritative pronouncement of this Court both in Patwardhan’s@@ CCCCCCCCCCCC case as well as in the Direct Recruit case, we have no manner@@ CCCC of doubt that the Tribunal rightly held the proviso to the aforesaid two paragraphs of the OM to be arbitrary and accordingly struck down the same. In the Constitution Bench decision of this Court in the Direct Recruit case, this Court has held that \"if the appointment is made after considering@@ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB the claims of all eligible candidates and the appoointee@@ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB continues in the post uninterruptedly till the regularisation@@ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ...6 (6) of his service in accordance with the rules made for regular@@ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB substantive appointments, there is no reason to exclude the@@ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB officiating service for the purpose of seniority. Same will@@ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB be the position if the initial appointment itself is made in@@ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB accordance with the rules applicable to substantive@@ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB appointments as in the present case. To hold otherwise will@@ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBCCCCCCCCCCCCCCCCCCCCCCC be discriminatory and arbitrary.\" The two paragraphs of the OM@@ CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC namely paragraph 4 dealing with the direct recruitment and paragraph 5 dealing with the promotion and the proviso thereto, the validity of the same has to be determined in view of the aforesaid pronouncement of this Court. It has been held in Patwardhan’s case that the principle that seniority@@ CCCCCCCCCCCCCCCCC should be determined on the basis of confirmation is a wholly unsound principle and therefore it was indicated that the seniority has to be determined on the test of continuous service and not on the basis of confirmation, inasmuch as confirmation is one of the inglorious uncertainties of Government service which does not necessarily depend upon efficiency of the incumbent nor on the availability of the substantive vacancies. The learned Additional Solicitor General appearing for the Income Tax Department and Mr. Malhotra appearing for the Excise Department wanted to urge before us that the confirmation of these employees being dependent upon their passing of the departmental test it cannot be said that the said confirmation has no connection with their efficiency and, therefore, the aforesaid ratio ...7 (7) would not apply to the case in hand. We are unable to persuade ourselves to agree with the aforesaid submission inasmuch as non-passing of departmental examination will entail not getting of any increment in the service and, in fact, so far as the Income Tax Department is concerned, the earlier practice of terminating the services stood abandoned since 1985. That being the position and the appointees having been appointed on the basis of competitive test through a process of selection and having been allowed to continue in service, there would be no rhyme or reason not to take the continuous service into account for the purpose of their seniority by taking recourse to the proviso to the OM as stated earlier and such proviso has rightly been held to be unconstitutional and discriminatory. It is, no doubt, true that sometimes the Court, while striking a particular provision, gives retrospective effect to the same, but that would depend upon the facts of each case. Though a contention has been advanced before us that in implementing the decision of the Tribunal by way of redetermining the seniority of these employees there will be a total administrative chaos, but there has been no material placed before us on the basis of which we can come to the aforesaid conclusion. That being the position, we are not persuaded to accept the submission of the learned Additional Solicitor General that the seniority already determined may not be unsettled because of the impugned judgment of the ...8 (8) Tribunal. In the premises aforesaid, we see no infirmity with the conclusion arrived at by the Tribunal so as to be interfered with by us in exercise of our jurisdiction under Article 136 of the Constitution of India. These appeals and S.L.P. stand dismissed accordingly. .SP1 .....................J@@ BBBBBBBBBBBBBBBBBBBBBB ( G.B. PATTANAIK )@@ BBBBBBBBBBBBBBBBBB New Delhi, .....................J@@ BBBBBBBBBBBBBBBBBBBBBB November 23, 2000. (B.N. AGRAWAL)@@ BBBBBBBBBBBBBB .PA .PL65 L.......T.......T.......T.......T.......T.......T.......T.......T....R Item No.102 COURT No. 3 SEC.XIIA, XII,XVI,IX S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS CIVIL APPEAL No.12410-12413/1996@@ EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE Chief Commissioner Of Income tax & Ors. Appellant(s) VERSUS V.Subba Rao & Ors. Respondent (s) (With Appln.for stay and O.R.) WITH C.A. 12414-12417/1996,C.A.12375/1996,SLP(C)7519/97(With appln.for c/delay in filing SLP),SLP(C)19683/97(With appln.for c/delay in filing SLP) Date : 23.11.2000 These appeals were called on for hearing@@ AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA today. @@ AAAAAAA CORAM : HON’BLE MR. JUSTICE G.B. PATTANAIK HON’BLE MR. JUSTICE B.N. AGRAWAL For Appellant (s) Mr. R.N. Trivedi,ASG (In CA 12410-12417/96) Mr.P.P.Malhotra,Sr.Adv. M/s.K.C.Kaushik,Mrs.Asha G.Nair and S.K.Dwivedi, Advs. for Mr. D.S. Mahra,Adv. (In CA 12375/96 and Mr.P.P.Malhotra,Sr.Adv. SLP(C) 19683/97) Mr.Hemant Sharma and Mr.B.K.Prasad,Advs. ( In SLP(C) 7519/1997) Mr.P.P.Malhotra,Sr.Adv. M/s. Y.P.Mahajan,B.V.Balram Das,Advs. For the Respondent(s) M/s.L.N.Rao,G.R.K.Prasad,Ms.M.Tatia and Mr. S.Misra,Advs.for Mr. S.U.K.Sagar,Adv. Mr. Krishnamurthi Swami,Adv. Mr. S.V.Deshpande,Adv. Mr. T.V.Ratnam,Adv. UPON hearing counsel, the Court made the following O R D E R ........L.......I.......T.......T.......T.......T...................J. .SP2 S.L.Ps. and Civil Appeals stand dismissed in terms of the signed order. .SP1 (J.S. Rawat) (S. Malkani)@@ AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA Court Master Court Master (Signed order is placed on the file) "