Full Judgment Text
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PETITIONER:
STATE OF MAHARASHTRA & ANR.
Vs.
RESPONDENT:
CHANDRAKANT ANANT KULKARNI & ORS.
DATE OF JUDGMENT08/09/1981
BENCH:
REDDY, O. CHINNAPPA (J)
BENCH:
REDDY, O. CHINNAPPA (J)
SEN, A.P. (J)
ISLAM, BAHARUL (J)
CITATION:
1981 AIR 1990 1982 SCR (1) 665
1981 SCC (4) 130 1981 SCALE (3)1445
CITATOR INFO :
R 1990 SC1072 (6)
RF 1991 SC 363 (14)
ACT:
State Reorganisation Act 1956, S. 115(5) and (7).
Reorganisation of State of Bombay-Assistant Sales Tax
Officers of Madhya Pradesh and Hyderabad and Sales Tax
Inspectors of Bombay allocated to new State-Integration of
service.
State Government executive order altering departmental
promotion rule-ASTOs of M.P. Hyderabad required to pass
departmental examination for promotion-Whether alteration of
condition of service, permissible, valid.
Seniority list of allocated ASTOs and STIs-State
Government unilaterally altering the list-ASTOs of M.P.,
Hyderabad Placed in isolated category above STIs for Bombay-
Validity of.
Integration of services-Equation of posts purely
administrative function- Chances of promotion-Not condition
of service-Fair and equitable treatment-What is.
HEADNOTE:
Assistant Sales Tax Officers serving in connection with
the affairs of the former States of Madhya Pradesh and
Hyderabad, on the appointed date, were allocated to the new
State of Bombay under s. 115 of the States Reorganisation
Act, 1956 (Act No. XXXVII) with effect from November 1,
1956. The Assistant Sales Tax officers from the former
States of Madhya Pradesh and Hyderabad were superior to the
Sales Tax Inspectors in their respective States and the
posts of Assistant Sales Tax officer in those States was a
promotion post. In the former State of Bombay, there was no
similarly constituted cadre of Assistant Sales Tax officers,
but there were posts of Sales Tax Inspectors.
On November 16,1957, the State Government by its
resolution directed that the ASTOs from Madhya Pradesh and
Hyderabad should continue in their respective pay-scales
until such of them were not appointed as STOs Grade III, and
Notes 3 and 6 appended to the Resolution provided that for
purposes of promotion their inter se seniority be Fixed on
the basis of their service as STOs and ASTOs. On February 3,
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1960, the State Government substantially modified rule 7 of
the Allocated Government Servants (Absorption, Seniority,
Pay and Allowances) Rules, 1957 and a new rule 7 was
substituted which provided that the seniority of an
allocated Government servant in the post or cadre of
absorption shall, as on November 1, 1956 be determined by
the length of continuous service etc. Since
666
there were no comparable posts of ASTos in the former State
of Bombay, the Central Government directed that the ASTos
from Madhya Pradesh and Hyderabad should not be equated with
the post of STIs but should be continued in an isolated
category and their seniority should be fixed above the
persons in the next lower grade. The State Government by its
resolution dated September 10, 1960 modified Notes 3 and 6
and directed that the seniority as on November 1, 1956 of
ASTOs from Madhya Pradesh and Hyderabad be fixed above all
persons absorbed as STIs and that the inter se seniority of
STOs from Madhya Pradesh and Hyderabad be fixed on the basis
of their continuous service as ASTOs, and that the service
rendered by the ASTOs from Madhya Pradesh as Excise Inspec-
tors or Assistant District Excise Officers in the Excise
Department be counted as equivalent service. On August
17,1962, the State Government prepared a fresh provisional
gradation list of ASTOs and STIs and invited objections.
None of the respondents raised any objection.
Upto and until August 8, 1960, departmental
examinations for promotion to the post of STOs were
conducted under the three different sets of rules applicable
to the former States of Bombay, Madhya Pradesh and
Hyderabad. The Departmental Examination Rules for Sales Tax
officers 1954 framed by the former State Government of
Bombay were made applicable to the Assistant Sales Tax
officers allocated from Madhya Pradesh and Hyderabad from
August 8,1960, as the provisions of the Bombay Sales Tax
Act, 1959 were extended to the whole of the State, the CP
and Berar Sales Tax Act 1947 and the Hyderabad General Sales
Tax 1950 having been repealed. The ASTOs from Vidarbha and
Marathwada regions of Madhya Pradesh and Hyderabad were
called upon to appear at the examinations prescribed from
the STOs of the old Bombay region, and some of the ASTOs
from Madhya Pradesh and Hyderabad who had been promoted as
STos Grade Ill were reverted to the post of ASTOs due to
their failure to pass the said examination.
The Government by its Resolution dated June 13, 1964
directed that the ex Hyderabad ASTOs even though they had
not passed the prescribed depart mental examination should
be confirmed on the basis of confidential records,
efficiency and seniority: and by its Memorandum dated
November 21,1964 order ed that all the ASTOs and STIs who
had been allocated from the old M.P. and Hyderabad States
should be considered eligible for promotion without passing
the STos examination if they are otherwise fit for
promotion.
On representation made by the ASTos from Madhya Pradesh
and Hyderabad, the Government of India, by its letter dated
March 9, 1965 to the State Government directed that the
Bombay Departmental Examination Rules, 1954, could not be
made applicable to the allocated ASTOs from Madhya Pradesh
and Hyderabad as it would amount to changing their
conditions of service to their disadvantage. It accordingly
directed that all the ASTOs from Madhya Pradesh and
Hyderabad who were compelled to appear for the said
examination and who had failed to pass the same be
reinstated as STOs. This directive resulted in Respondents I
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and 2 who had been promoted to officiate as STO, Grade 111
being reverted as STIs.
The State Government in view of this change reviewed
the cases of all the ASTOs, and STIs from the three regions
and those who were otherwise found
667
suitable were according to their seniority promoted to the
post of STO, Gr. III even though they had not passed the
STOs examination. On January 6,1966 the State Government
published a revised gradation list of ASTOs and STIs and
invited objections. Only Respondent 4 filed objections which
was considered by the Government and rejected.
The writ petition filed by Respondents 1 to S who were
STIs in the State of Bombay and had passed the prescribed
departmental examination for promotion as STOs Gr. III was
allowed by the High Court which struck down the various
resolutions and orders passed by the State Government from
time to time relating to integration of service under sub-
section (7) of S. 115 of the Act.
In the appeals by the State to this Court on the
questions whether (I) the State Government could by an
executive order without framing a rule under the Proviso to
Art. 303 of the Constitution alter the rules relating to
departmental promotion of ASTOs from Madhya Pradesh and
Hyderabad which constituted their conditions of service to
the prejudice of the STIs of Bombay without the prior
approval of the Central Government under the proviso to sub-
section (7) of section 115 of the Act, and (2) the State
Government while integrating the services could unilaterally
alter the seniority list of the allocated ASTOs and place
the ASTOs from Madhya Pradesh and Hyderabad in an isolated
category over the STIs from Bombay while determining their
inter se seniority.
Allowing the appeal,
^
HELD :1 (i). The matter of equation of posts is purely
an administrative function under s. 115 of the States Re-
organisation Act, 1956. Under sub-s. (5) of s. 115 the
Central Government is the sole repository of the power to
effectuate the integration of services in the new States. It
has been left entirely to the Central Government as to how
it has to deal with these questions. The Central Government
established an Advisory Committee for purposes of assisting
in proper consideration of the representations made to it
for the work of integration of services, the Central
Government could take all manner of assistance from the
State Government including the preparation of provisional
gradation lists, The Central Government exercises general
control in regard to the integration of services, and the
ultimate integration was done with the sanction and approval
of the Central Government. The provisional gradation lists
prepared by the State Government were not, therefore, open
to challenge. [679 A-E]
Union of India and Anr. v. P.K. Roy and Ors. [1968] 2
SCR 186 referred to.
In the instant case, not only had the Central
Government laid down the principles for integration but also
considered the representation made and passed the final
orders thereon. The provisional gradation lists were
prepared by the State Government under the direction and
with the sanction of the Central Government. The Assistant
Sales Tax officers from the former States of Madhya Pradesh
and Hyderabad allocated to the new State of Bombay, could
not be equated with the Sales Tax Inspectors. In the former
State of Bombay, there was no similarly constituted cadre of
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Assistant Sales Tax officers, but there were
668
posts of Sales Tax Inspectors. The Assistant Sales Tax
officers from Madhya Pradesh and Hyderabad were superior to
Sales Tax Inspectors in their respective States and the post
of Assistant Sales Tax officer in these State was a
promotion post. It would have been inequitable and unfair to
equate Assistant Sales Tax officers from Madhya Pradesh and
Hyderabad with Sales Tax Inspectors from Bombay having
regard to the nature of their posts, the powers and
responsibilities, and the pay-scales drawn by them. In
addition, Assistant Sales Tax officers in these States were
assessing authorities and they enjoyed statutory powers of
their own to assess tax and levy penalties, whereas the
Sales Tax Inspectors in Bombay had no such powers to assess
tax or levy penalty but had merely to scrutinise returns and
generally act in a subordinate capacity to Sales Tax
officers. [679 F-680 C]
(ii) The principle adopted by the State Government for
determining the relative inter se seniority was obviously
wrong, being contrary to the principles settled at the Chief
Secretaries Conference. The Government of India, on re
presentation by the affected Assistant Sales Tax Officers
from Madhya Pradesh and Hyderabad in consultation with the
Central Advisory Committee, directed that the inter se
seniority should be fixed taking into account continuous
service in the equated grade only subject to the inter se
seniority of the Officers, coming from the several
integrating regions. Upon that basis, the State Government
by its Resolution dated September 10, 1960 rightly modified
Notes 3 and 6 of its 1957 Resolution and directed that the
seniority as on November 1, 1956 of ASTOs from Madhya
Pradesh and Hyderabad be fixed above the persons in the
cadre of STIs and that the inter se seniority of ASTOs from
Madhya Pradesh and Hyderabad be fixed on the basis of their
continuous service as ASTOS in their respective States. [680
E.G]
2. There was a difference between the Departmental
Examination Rules framed by the former State Governments of
Bombay, Madhya Pradesh and Hyderabad regulating the
appointment of STOs. In the former State of Bombay,
eligibility for the promotion of STIs to the post of STO Gr.
Ill depended upon their passing the departmental examination
for the non-gazetted staff of the Sales Tax Department under
rule I (b) (ii) of the Recruitment Rules for the STOs Gr.
III, i. e. it was condition precedent. In the former States
of Madhya Pradesh and Hyderabad there was no such condition
attached. Under the Rules for Departmental examination, the
ASTOs who were promoted as STOs were required to pass the
departmental examination within two or three years from the
date of their promotion i.e. it was a condition subsequent.
The Departmental Examination Rules framed by the former
State Governments of Madhya Pradesh and Hyderabad for
promotion to the post of STOs formed part of the conditions
of service of ASTOs from Madhya Pradesh and Hyderabad and
they could not be altered to their disadvantage without the
prior approval of the Central Government under s. 115 (7) of
the Act. Since no examination admittedly had been held there
was no question. Of their reversion as ASTOs. [685 B-C; E-G;
683 B-F; 685F]
3(i) The Resolution dated June 13, 1964 and the
Memorandum dated November 24,1964 do not have the status of
a rule framed under the Proviso to Article 309 of the
Constitution. They merely conveyed the decision of the State
Government that the allocated ASTOs from Madhya Pradesh and
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Hyderabad
669
should be considered eligible for promotion to the post of
STO, Gr. III without passing the departmental examination
for STOs Gr. III. The State Government had not by its
Resolution or Memorandum brought about a change in the
conditions of service by an executive order. All that was
done was to rectify a mistake that had been committed in the
past in subjecting the ASTOs from Madhya Pradesh and
Hyderabad to the Departmental Examination Rules framed by
the former State Government of Bombay i.e. to a rule which
did not form part of conditions of their service and,
therefore, was not applicable to them. There is, therefore,
no infirmity in these two documents. [681 F-H]
(ii) Mere chances of promotion are not conditions of
service and the fact that there was reduction in the chances
of promotion did not tantamount to a change in the
conditions of service. A right to be considered for
promotion is a term of service, but mere chances of
promotions are not. [683 C]
(iii) The State Government’s Resolution dated June 13,
1964 and its Memorandum of November 21, 1964 clarifying that
the ASTOs from Madhya Pradesh and Hyderabad were entitled
for promotion to the post of STO Gr. III without passing the
departmental examination. placed STI from Bombay at a
disadvantage. To ensure ’fair and equitable treatment the
State Government rightly dispensed with the requirement of
passing the departmental examination in the case of STIs
from the former State of Bombay. The State Government acted
with the best of intentions. It endeavoured to strike a
balance between the competing claims to relative seniority.
When sub-section (5) of section 115 of the Act speaks of
’fair and equitable treatment’, it envisages a decision
which is fair and equitable to all. [686 A-D]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 420(N)
of 1971
From the Judgment and order dated 23rd October 1969 of
the Bombay High Court in Special Civil Application No. 1721
of 1966.
R.N. Sachthey and Mr. R.N. Poddar for the Appellant
U. R. Lalit, V. N. Ganpule and Mrs. Veena Devi Khanna
for Respondents Nos. 1 to 5
S. V. Tambewaker for Respondent No. 7
A.K. Sanghi for the intervener
M. L. Heble, V. N. Ganpule and Mrs. Veena Devi Khanna
for the intervener.
670
The Judgment of the Court was delivered by
SEN, J. In this appeal, by special leave, the question
for consideration is whether there was denial of "fair and
equitable treatment" within the meaning of sub-s. (5) of s.
115 of the States Reorganisation Act. 1956 (hereinafter
called ’the Act’) in the matter of determination of relative
seniority and equation of posts as between the Assistant
Sales Tax officers (abbreviated as ASTOs) from the former
States of Madhya Pradesh and Hyderabad and Sales Tax
Inspectors (abbreviated as STIs) from the former State of
Bombay, who were allocated to the new State of Bombay, and
their right to promotion to the posts of Sales Tax officers
(abbreviated as STOs) Grade III.
The High Court by its judgment, on a writ petition
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filed by Respondents I to S, who were STIs of the State of
Bombay and passed the prescribed departmental examination
for promotion as STOs Gr. III, has struck down the various
resolutions and orders passed by the State Government from
time to time relating to integration of services of these
officers under sub-s. (7) of s. 115 of the Act, in
compliance with the directives of the Central Government
issued under sub-s. (5) of s. 115 of the Act. The main
question in the appeal is whether the High Court was right
in doing so. To appreciate the points involved, it is
necessary to set out a few facts. On November 16, 1957, the
State Government by its Resolution purported to direct that
the ASTOs from Madhya Pradesh and Hyderabad should continue
in their respective pay-scales until such of them were not
appointed as STOs Gr. III under r. 7 of the Allocated
Government Servants (Absorption, seniority, Pay and
Allowances) Rules, 1957. Notes 3 and 6 appended to the said
Resolution provided that for purposes of promotion, their
inter se seniority shall be fixed on the basis of their
service as STIs being counted together with their service as
ASTOs in Madhya Pradesh and service as Accountants, if any,
together with their service as ASTOs in Hyderabad. In
accordance therewith, a provisional gradation list of those
who were absorbed as STIs as on November 1, 1956 as also of
those who continued as ASTOs in their respective posts with
effect from that date was prepared and published by the
State Government under r. 2 of the said Rules, on January
21, 1960 and objections thereto were invited within two
months from the date of its publication. On February 3,
1960, the State Government substantially modified r. 7 and a
new r. 7 was substituted which provided that generally the
seniority of an allocated Government servant in the post or
cadre of absorption shall, as
671
on November 1, 1956, be determined by the length of
continuous service etc. On instructions from the Central
Government and in further consultation with it. the State
Government clarified that the provisional gradation list as
published would not be finalised until representations, if
any, of the Government servants were decided by the
Government of India in consultation with the Advisory
Committee. Since there were no comparable posts of ASTOs in
the former State of Bombay, the Central Government directed
that the ASTOs from Madhya Pradesh and Hyderabad should not
be equated with the post of STIs, but should be continued in
an isolated category and their seniority should be fixed
above the persons in the next lower grade.
In accordance with the directive of the Central
Government under sub-s. (S) of s. 115 of the Act, the State
Government by its resolution dated September 10, 1960,
modified Notes 3 and 6 referred to above and directed that
the seniority as on November 1, 1956 of ASTOs from Madhya
Pradesh and Hyderabad be fixed above all persons absorbed as
STIs and that the inter se seniority of STOs from Madhya
Pradesh and Hyderabad be fixed on the basis of their
continuous service as ASTOs. It was further directed that
the service rendered by the ASTOs from Madhya Pradesh as
Excise Inspectors or Assistant District Excise officers in
the Excise Department of that State be counted as equivalent
to service as STOs. On August 17, 1962, the State Government
accordingly prepared a fresh provisional gradation list of
ASTOs and STIs and invited objections thereto afresh. It
appears that none of the respondents raised any objection.
To resume the narration. Between November 1, 1956 and
August 8, 1960, promotions to the post of STO, Gr. III were
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made on the basis of separate departmental examinations held
in accordance with the rules framed by the former State
Governments concerned. Upto and until August 8, 1960,
departmental examinations for promotion to the post of STOs
were conducted under the three different sets of rules
applicable to the former States of Bombay, Madhya Pradesh
and Hyderabad. From August 8, 1960, the Bombay Departmental
Examination Rules for STOs were made applicable to the ASTOs
allocated from Madhya Pradesh and Hyderabad as well in as
much as the Bombay Sales Tax Act, 1959 was made applicable
to the whole of the State and the C.P. and Berar Sales Tax
Act, 1947 and the Hyderabad General Sales Tax
672
Act, 1950, were repealed. The ASTOs from Vidarbha and
Marathwada regions of Madhya Pradesh and Hyderabad were
called upon to appear at the examination prescribed for the
STOs of the old Bombay region. Accordingly, promotions to
the post of STO Gr. III were regulated under the Bombay
Departmental Examination Rules and in consequence some of
the ASTOs from Madhya Pradesh and Hyderabad who had been
promoted as STOs Gr. III were reverted to the post of ASTO
due to their failure to pass the said examination. In the
meanwhile, the State Government, on January 20, 1961,
amended r. I(b) (ii) of the Recruitment Rules for the Sales
Tax Officers Grade III by the addition of the words "and
also the Departmental Examination for Sales Tax Officers"
after the words "time for promotion" which had the effect of
making the passing of such an examination a condition
precedent to promotion as STOs Gr. III.
On representations made by the ex-Hyderabad ASTOs, the
Government by its Resolution dated June ]3, 1964, directed:
Rules 2(d) of the Departmental Examination Rules
of Sales Tax officers and Assistant Sales Tax officers
issued by the Finance Department of the former
Hyderabad Govt. under their Notification number 1118/3
S. T. dated the 24th January, 1956 lays down that
Inspecting officers, Sales Tax Officers (Class I and
II) and Assistant Sales Tax Officers who are not
confirmed in their respective posts, should pass the
examination within the period specified in clause (c)
of Rule 2 of the said Rules failing which they would be
reverted to their substantive post. In accordance with
this Rule Government have reverted some Sales Tax
officers from the former Hyderabad State for not having
passed the Departmental Examination within the
prescribed time. The Government of Andhra Pradesh has
brought to the notice of this Government the
instructions contained in Ex-Hyderabad, Finance
Department, Letter No. 7851/ Admn. dated the 31st
October 1956 according to which officers and the staff
of the Sales Tax Department of the former Hyderabad
State, even though they have not passed the prescribed
Departmental Examination ate to be con firmed, if they
are otherwise found deserving of confirmation on the
basis of their confidential records, efficiency and
seniority. The said letter dated 31st October 1955 of
the Hyderabad Finance Department, also laid down that
such
673
confirmed personnel should not be promoted to higher A
posts until such times as they complete the prescribed
Departmental Examination.
2. The validity of the instructions issued in Ex-
Hyderabad Finance Department letter No. 7851/Admn.
dated the 31st October, 1956 was under the
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consideration of Government for some time and it has
now been decided to observe the instructions contained
in the Finance Department letter of the Ex-Hyderabad
Slate, and is, therefore, pleased to order that the
officers and staff of the Sales Tax Department of the
former Hyderabad State, who were otherwise found
deserving of confirmation on the basis of their confi-
dential records, efficiency and seniority may be
confirmed in their respective posts held prior to 1st
November 1956 against clear vacancies in terms-of
General Administration Department Circular No. 97
G.A.D. 12-SR-55 dated 10th September 1956 issued by the
Ex-Hyderabad Government.. Such confirmed personnel
should, however, not be promoted to higher posts until
such times as they complete the prescribed Departmental
Examination.
(emphasis supplied)
Similarly, on representations made by the ex-Madhya Pradesh
ASTOs, the State Government by its Memorandum dated November
21 ,1964, ordered:
Recruitment Rules for the Sales Tax officers
prescribed for the old Bombay State appearing in
Government Resolution Finance Department No. STO-1654
dated 28th July 1954 as amended by the Government
Resolution, Finance Department No. STE-1159/Ol81/61-
XIII dated the 29th January 1961 lays down that a Sales
Tax Inspector is not eligible for promotion of Sales
Tax Officers without passing the examination prescribed
for the Sales Tax officers. According to Govt.
Circular, Political and Services Department No. STI-
1080-D dated the 29th April 1960 pending unification of
the Recruitment Rules sanctioned by the Government of
the former State of Bombay, M.P. and Hyderabad
Recruitment to the post and services in the various
component parts of the State is to be regulated
according to the rules framed by the former Govern-
674
ments concerned and not according to the Bombay Civil
Service Rules. In view of this, the recruitment rules
of old M.P. and the Ex. Hyderabad State will be
applicable to the allocated Government servants coming
from those areas until such time as a unified set of
recruitment rules is prescribed by Government. As there
is no condition in the recruitment rules of the M.P.
State or the Ex. Hyderabad State to the effect that
persons should pass the Sales Tax Officers Examination
before he is promoted as a Sales Tax Officer it would
not be correct to ask the Assistant Sales Tax Officers
and Sales Tax Inspectors allocated from the old M.P.
State and Hyderabad State to pass the Sales Tax
Officers examination before being considered for
promotion. Government has, therefore decided that all
Assistant S.T.Os and S.T.ls who have been allocated
from the old M.P. and Hyderabad States should he
considered eligible for promotion without passing the
STOs examination if they are otherwise fit for the
promotion. Such persons will have to pass STOs
examination within such period as laid down in their
respective departmental examination rules or
recruitment rules as the ease may be.
(emphasis added)
On the representations made by the ASTOs from Madhya Pradesh
and Hyderabad, the Government of India, on March 9, 1965,
addressed a letter to the State Government to the effect:
The specific approval of the Government of India
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under the proviso to section 115(7) of the S.R. Act is
necessary not only for applying the amended rules to
the erstwhile employees of Vidarbha and Marathwada but
also for amending the rules to the disadvantage of the
erstwhile Bombay employees. The 1954 rules of Bombay
only provided that preference should be given to an
Inspector who had passed the Departmental Examination
of Sales Tax officers before he could be considered for
promotion to the post of Sales Tax officer. But the
amended rules now provide that passing this examination
is a prerequisite for consideration for promotion to
the post of Sales Tax officer.
The Government of India have normally been accord-
ing approval under the S. R. Act for prescribing such
departmental tests subject to the following
conditions:-
675
1. Additional time which may be double that of the
time that is ordinarily permissible for passing
such tests be allowed to the employees from the
integrating units in cases where tests of higher
standard are prescribed, or where tests were not
prescribed under the parent State Governments.
2. Employees of the integrating unit should be
promoted subject to their passing the test within
the additional time referred to at item (i) above
in other words promotions should not be withheld
merely because the employees have not passed a
Departmental test, and
3. Government Servants of the age of 45 years or more
should be exempted from passing departmental test
and when exempted, they should be eligible for pro
motion equally with one who has passed the tests.
I am to request that the State Government may
examine the matter on the above lines and forward to
the Government of India for approval their reconsidered
proposals together with a draft of the amendment to the
rules which the State Government may desire to make. I
am also to request that relevant extract of the rules
of the erstwhile Government of Hyderabad, Madhya
Pradesh and Bombay which are to be affected by the
proposed amendment may also be forwarded to this
Ministry.
(emphasis added)
As the Central Government was of the opinion that the Bombay
Departmental Examination Rules should not be made applicable
to the allocated ASTOs from Madhya Pradesh and Hyderabad to
their disadvantage, all the ASTOs from Madhya Pradesh and
Hyderabad who were compelled earlier to appear for the said
examination and who had failed to pass it were reinstated as
STOs. As a direct consequence of this, the Respondents l and
2 who had been promoted to officiate as STO, Gr. III were
reverted as STls by orders dated April 28, 1965 and June 30,
1965. Since the amendment made to rule I (b) (ii) on January
20, 1961 operated to the disadvantage of STIs from Bombay,
the State Government by its orders dated October 1, 1965,
suspended the said amendment to the Recruitment
676
Rules until further orders. In view of these changes, the
State Government reviewed the cases of all the ASTOs and
STIs from the three regions, and those who were otherwise
found suitable were according to their seniority promoted to
the post of STO Gr. III even though they had not passed the
STO examination. On January 6, 1966, the State Government
published a revised gradation list of ASTOs and STIs and
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invited objections thereto. None of the respondents except
Respondent 4 filed any objection. That representation, on
being forwarded by the State Government, was duly considered
by the Government of India, who rejected the same.
The decision of the Government of India is contained in
the counter-affidavit of Shri Shukla, Deputy Secretary,
Ministry of Home Affairs, which reads:
I say that the Government of India carefully
considered the representation made inter alia by the
4th petitioner and the recommendations of the State
Advisory Committee and rejected the said
representations and upheld the said gradation list
dated the 6th Jan. 1966 as there was no reason to alter
the principles on which the same had been prepared. As
stated hereinabove the Government of India was of the
opinion that the decision of the State Government to
treat Assistant Sales Tax Officers as an isolated
category and to place The same above Sales Tax Inspec-
tors was just and fair. The Government of India also
considered the alterations made by the State Government
in the rules relating to the passing of a Departmental
Examination before a Sales Tax Inspector could be
promoted to the post of a Sales Tax officer Grade III.
I say that different rules were prevalent in the
different integrating areas regulating departmental
promotions. The State Govt. decided that until unified
recruitment rules were framed promotions might be given
to all without their having to pass an examination i.e.
without any discrimination. The Government of India who
have examined the matter in consultation with the State
Advisory Committee was of the view that the deletion of
departmental examination altogether was fair and just
because by doing so and discrimination between
employees coming from different integrating areas was
removed.
(emphasis added)
677
It would appear that till 1973 there were no unified rules
by which ASTOs from Madhya Pradesh and Hyderabad and STIs
from Bombay were governed. The Maharashtra Sales Tax
officers’ Rules, 1973, framed by the State Government in
exercise of the powers under the Proviso to Art. 309 of the
Constitution came into force on August 4, 1973. Rule 2
provides that the rules shall apply to Government servants
serving in the Sales Tax Department including those of the
former States of Bombay, Madhya Pradesh and Hyderabad who
were allocated for service to the State of Bombay and
subsequently to the State of Maharashtra. Rule 4 deals with
direct recruits as well as promotees and makes the condition
for passing of the departmental examination within two years
from the date of promotion or two years from the date of
promulgation of the Rules and by r. 4 (c) it is provided
that in the event of failure to pass the examination in the
prescribed time, they shall be liable to reversion to the
posts held by them prior to their promotion. Looking to the
lapse of time in framing the Rules, r. 8 provides that STOs
who have already attained the age of 48 years on the date of
promulgation of these rules shall be exempted from passing
the Departmental Examination under the rules. It is
necessary here to mention that the Maharashtra (Bombay Area)
Sales Tax officers (Grade II and Grade III) Recruitment
Rules, 1969 framed by the State Government under the Proviso
to Art. 309 of the Constitution were struck down by the High
Court as ultra vires being per se discriminatory and thus
violative of Art. 14 of the Constitution. That was because
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r. 2 provided that nothing therein shall govern the ASTOs
from Madhya Pradesh and Hyderabad. There is no need for us
to enter into the question as to the validity or otherwise
of the said Rules. since the Maharashtra Sales Tax officers’
Rules, 1973 now hold the field.
The two questions canvassed in this appeal are: (l)
whether the State Government could by an executive order
without framing a rule under the Proviso to Art. 309 of the
Constitution, alter the rules relating to departmental
promotion of ASTOs from Madhya Pradesh and Hyderabad which
constituted their conditions of service to the prejudice of
the STIs of Bombay without the prior approval of the Central
Government under the Provision to sub s. (7) of s. 115 of
the Act, and (2) Whether the State Government while
integrating the services could unilaterally alter the
seniority list of the allocated ASTOs and STIs and place the
ASTOs from Madhya Pradesh and Hyderabad in an isolated
category over the STIs from Bombay while determining their
inter se seniority.
678
Prior to the reoganisation of the States, a Conference
of the Chief Secretaries of the States that were to be
affected by the reorganisation was held at Delhi on May 18
and 19, 1956 for the purpose of the formulation of the
principles upon which integration of services was to be
effected. The Government of India by their letter dated
April 3, 1957 informed the State Government that the work of
integration of services should be dealt with by them in the
light of the general principles already settled at the Chief
Secretaries Conference. This has been construed to be a
valid delegation of powers to prepare the preliminary and
final gradation lists under the direction and with the
sanction of the Central Government. The Government of India
by its Circular dated May 11, 1957 to all the State
Governments stated inter alia that it agreed with the views
expressed on behalf of the States’ representatives that it
would not be appropriate to provide any protection in the
matter of departmental promotion. This Circular has been
interpreted as a prior approval of the Central Government in
terms of the proviso to sub-s. (7) of s. 115 of the Act in
the matter of change in the conditions of service relating
to departmental promotions.
The following principles had been formulated for being
observed as far as may be, in the integration of Government
servants Allotted to the services of the new States:
"In the matter of equation of posts:
(i) Where there were regularly constituted similar
cadres in the different integrating units the
cadres will ordinarily be integrated on that
basis; but
(ii) Where, however, there were no such similar cadres
the following factors will be taken into
consideration in determining the equation of
posts:-
(a) nature and duties of a post;
(b) powers exercised by the officers holding a
post, the extent of territorial or other
charge held or responsibilities discharged;
(c) the minimum qualifications, if any,
prescribed for recruitment to the post.
(d) the salary of the post.
679
It is well-settled that these principles have a statutory
force.
There is a long line of decisions of this Court
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starting from the Union of India and Anr. v. P.K Roy and
Ors. (l) laying down that the Central Government has been
constituted to be the final authority in the matter of
integration of services under sub-s. (S) of s. 115 of the
Act. The matter of equation of posts is purely an
administrative function. It has been left entirely to the
Central Government as to how it has to deal with these
questions. The Central Government had established an
Advisory Committee for the purpose of assisting in the
proper consideration of the representations made to it.
There is nothing in ss. 115 to 117 of the Act prohibiting
the Central Government in any way from taking the aid and
assistance of the State Govt, in the matter of effecting the
integration of services. As observed by this Court in Roy’s
case the usual procedure followed by the Central Government
in the matter of integration of services generally, is in
order. It is not open to the Court to consider whether the
equation of posts made by the Central Government is right or
wrong. This was a matter exclusively within the province of
the Central Government. Perhaps, the only question the Court
can enquire into is whether the four principles agreed upon
at the Chief Secretaries Conference had been properly taken
into account. This is the narrow and limited field within
which the supervisory jurisdiction of the Court can operate.
But where, as here, in the matter of equation of posts, the
Central Government had properly taken into account all the
four principles decided upon at the Chief Secretaries
Conference, the decision cannot be assailed at all. In the
present case, not only the Central Government had laid down
the principles for integration, but also considered the
representations and passed the final orders and the
provisional gradation lists were prepared and published by
the State Government under the direction and with the
sanction of the Central Government.
In accordance with the principles settled at the Chief
Secretaries Conference, the Government of India, in
consolation with the Central Advisory Committee, directed
that the posts of ASTOs in the former States of Madhya
Pradesh and Hyderabad should be continued in an isolated
category, there being no corresponding post in the successor
State of Bombay with which they could be equated. There were
19 ASTOs in the pay-scale of Rs. l50-10-200-
680
EB-15-250 from Madhya Pradesh and 23 ASTOs in the pay-scale
of Rs. 170-8 1/2-225-EB-13-320 from Hyderabad allocated to
the new State of Bombay. In the former State of Bombay there
was no similarly constituted cadre of ASTOs, but there were
posts of STIs in the pay-scale of Rs. 120-8-144-EB-8-200-
10/2-250. It would have been inequitable and unfair to
equate ASTOs from Madhya Pradesh and Hyderabad with STIs
from Bombay, looking to the nature of their posts, the
powers and responsibilities and the pay-scales attached to
the same. The ASTOs from Madhya Pradesh and Hyderabad were,
in the first instance, superior to STIs in their respective
States and the post of ASTO in those States was a promotion
post. In addition, ASTOs in those States were assessing
authorities and they enjoyed statutory powers of their own
to assess tax and levy penalties, whereas the STIs in Bombay
had no such powers to assess tax or levy penalty but had
merely to scrutinise returns and generally act in a
subordinate capacity to STOs. Evidently, the State
Government was wrong in directing by its Resolution dated
November 16, 1957 that the seniority of ASTOs from Madhya 1)
Pradesh and Hyderabad and STIs from Bombay be fixed in the
cadre of Ss in the reorganised State of Bombay on the basis
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of continuous service including that in the lower grade. The
principle adopted by the State Government for determining
their relative inter se seniority was obviously wrong, being
contrary to the principles settled at the Chief Secretaries
Conference. As already stated, the Government of India, on
representation by the affected ASTOs from Madhya Pradesh and
Hyderabad, in consultation with the Central Advisory
Committee, directed that the inter se seniority should be
fixed taking into account continuous service in the equated
grade only subject to the inter se seniority of the officers
coming from the several integrating regions. Upon that
basis, the State Government by its Resolution dated
September 10, 1960, rightly modified Notes 3 and 6 of its
1957 Resolution and directed that the seniority as on
November l, 1966 of ASTOs from Madhya Pradesh and Hyderabad
be fixed above the persons in the cadre of STIs and that the
inter se seniority of ASTOs from Madhya Pradesh and
Hyderabad be fixed on the basis of their continuous service
as ASTOs in their respective States.
The High Court, in dealing with the question of
equation of posts, observed:
On merits, if the duties of Assistant Sales Tax
officers of those two States and those of Inspectors
are compared
681
in the light of the minutes contained in Ex.2
(Memorandum of the Government of Maharashtra, Finance
Department. dated November 21, 1964) the difference is
not much. We enquired about the nature of work they are
doing today and we are told on instructions by the
State’s counsel that they are doing the work that the
Sales Tax Inspectors are doing.
(emphasis added)
All that we need say is that the High Court, if we may
say so, without meaning any disrespect, has viewed the
question from a wrong perspective.
The remaining question whether the State Government by
its Resolution dated June 13, 1964 and Memorandum dated
November 21, 1964, effected a change of recruitment rules by
an executive order, in the conditions of service of the
ASTOs from Madhya Pradesh and Hyderabad, contrary to the
Proviso to sub-s. (5) of s. 115 of the Act; and if so,
whether such a change in the conditions of service could be
brought about without framing a rule under the Proviso to
Art. 309 of the Constitution. In our opinion, the question
does not really arise. There can be no dispute with the
proposition that a rule framed under the Proviso to Art. 309
of the Constitution cannot be modified by an executive
order. But the question is whether that principle is
attracted to the facts and circumstances of the present
case. The Resolution and the Memorandum referred to above,
undoubtedly do not have the status of a rule framed under
the Proviso to Art. 309 of the Constitution. They merely
conveyed the decision of the State Government that the
allocated ASTOs from Madhya Pradesh and Hyderabad should be
considered eligible for promotion to the post of STO, Gr.
IlI without passing the departmental examination for STO,
Gr. III. The State Government had not by its Resolution
dated June 13, 1964, or by its Memorandum dated Nov. 21,
1964, brought about a change in the conditions of service by
an executive order. All that was done was to rectify a
mistake that had been committed in the past in subjecting
the ASTOs from Madhya Pradesh and Hyderabad to the
Departmental Examination Rules framed by the former State
Government of Bombay i.e. to a rule which did not form part
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of conditions of their service and, therefore, was not
applicable to them. We find no infirmity in these two
documents. The decisions reached by the Government on the
representations made by ASTos from Madhya Pradesh and
682
Hyderabad were strictly in conformity with the recruitment
rules framed by the former State of Madhya Pradesh and
Hyderabad under the Proviso to Art. 309 of the Constitution.
It is quite obvious that STIs from Bombay were not entitled
to the above concession, as the passing of the STOs
examination had been made a condition precedent for their
promotion as STO Gr. III.
There was a marked distinction between the recruitment
rules framed by the former State Governments of Bombay and
Madhya Pradesh and Hyderabad for appointment as STOs. In the
former State of Bombay, eligibility for the promotion of
STIs to the post of STO Gr. III depended upon their passing
the departmental examination for the non-gazetted staff of
the Sales Tax Department under r. 1(b) (ii) of the
Recruitment Rules for the S.T.Os. Gr. III. Under r. 3,
preference was to be given to an Inspector who had passed
the departmental examination prescribed for STOs over those
who had not. By the amendment of January 20, 1961 made by
the State Government, the words "and also the departmental
examination for STOs’ were added after the words "time for
promotion". The effect of this amendment was to make the
passing of the STO examination a condition precedent for
promotion of STIs as STO Gr. III. Further, the amendment
deleted r. 3 which laid down a rule of preference. In the
former States of Madhya Pradesh and Hyderabad, neither such
condition nor any rule of preference was there. Under r. 1
of the Rules for Departmental Examination framed by the
former State Government of Madhya Pradesh, ASTOs who were
promoted as STOs were required to pass the departmental
examination within two years from the date of such
promotion. Rule 4 provided that they would not be confirmed
till they pass the said examination and on their failure to
do so, they would be reverted to the substantive post of
ASTOs. Similarly, under r. 2(c) of the Rules framed by the
former Hyderabad State, ASTOs who were prompted as STOs were
required to pass the departmental examination within three
years from the date of commencement of the rules failing
which their grade increment was to be withheld till they
pass such examination. Rule 2 (d) provided that STOs Cl. 1
and II who had not been confirmed in their respective posts,
were required to pass the said examination within the said
period failing which they were to be reverted to their
substantive posts. According to the general Circular issued
by the State Government of the reorganised State of Bombay
dated April 29, 1960, pending unification of the recruitment
rules framed by the State Government of Bombay, Madhya
Pradesh and Hyderabad, the
683
recruitment to the various posts and services was to be
regulated A according to the rules framed by the State
Governments and not according to the Bombay Civil Service
(Classification and Recruitment) Rules. It is not disputed
that the Departmental Examination Rules framed by the former
State Governments of Madhya Pradesh and Hyderabad for
promotion to the post of STOs formed part of the conditions
of service of ASTOs from Madhya Pradesh and Hyderabad.
Mere chances of promotion are not conditions of service
and the fact that there was reduction in the chances of
promotion did not tantamount to a change in the conditions
of service. A right to be considered for promotion is a term
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of service, but mere chances of promotion are not. Under the
Departmental Examination Rules for STOs, 1954, framed by the
former State Government of Madhya Pradesh. as amended on
January 20, 1960, mere passing of the departmental
examination conferred no right on the STIs of Bombay, to
promotion. By passing the examination, they merely became
eligible for promotion. They had to be brought on to a
select list not merely on the length of service, but on the
basis of merit-cum-seniority principle. It was, therefore,
nothing but a mere chance of promotion. In consequence of
the impugned orders of reversion, all that happened is that
some of the STIs who had wrongly been promoted as STOs Gr.
III had to be reverted and thereby lost a few places. In
contrast, the conditions of service of ASTOs from Madhya
Pradesh and Hyderabad, at least so far as one stage of
promotion above the one held by them before the
reorganisation of States, could not be altered without the
previous sanction of the Central Government as laid down in
the Proviso to sub-s. (7) of s. 115 of the Act.
We are unable to agree with the High Court in its
opinion that ASTOs from Madhya Pradesh and Hyderabad on
their allocation to the new State of Bombay, who had wrongly
been put at par with STIs from Bombay, had to pass the
departmental examination prescribed by the former State
Government of Bombay, for promotion to the post of STO Gr.
III before they could be actually so promoted.
It is an incontrovertible fact that the departmental
examination prescribed by the former State Governments of
Madhya Pradesh and Hyderabad had not been held after August
8, 1960 i.e. for the last 20 years. Merely because the C.P.
and Berar Sales Tax Act, 1947
684
and the Hyderabad General Sales Tax Act, 1950 stood repealed
with effect from January 1, 1960, that hardly furnished a
ground for not holding the examination. The State
Government, in their affidavit before the High Court, tried
to justify their action that the subjects under the ex-
Madhya Pradesh and Hyderabad Rules had become obsolete and,
therefore, it was felt that no useful purpose would be
served in holding these examinations. This was no
justification at all, for even after the Bombay Sales Tax
Act, 1959 had been extended throughout the State with effect
from January 1, 1960, all pending assessments pertaining to
the Vidarbha and Marathwada regions of the former States of
Madhya Pradesh and Hyderabad had to be completed in
accordance with the repealed Acts. In this context, the High
Court observed that it examined the subjects prescribed for
the three departmental examinations of Bombay, Madhya
Pradesh and Hyderabad and found that "there was not much
difference". It went on to say that "it could hardly be
suggested by any one that prescribing a subject more or less
for an examination would adversely affect conditions of
service. The purpose of examination is to prepare the
officer to be able to cope up with different kinds of
problems that would confront him with reasonable
efficiency." To say the least, the observations made by the
High Court are unwarranted.
Be that as it may, the fact remains that the condition
regarding the passing of the departmental examination became
incapable of compliance in the case of ASTOs from Madhya
Pradesh and Hyderabad who had been promoted as STOs Gr. III.
They were entitled to such promotion without passing such
examination. Under the relevant rules which regulated their
conditions of service, there was only a possibility of
reversion in the eventuality of their not passing the
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examination within the stipulated time. Since no
examinations admittedly have been held, there is no question
of their reversion as ASTOs. If the decision of the High
Court were to be upheld, it would imply that many of the
ASTO from Madhya Pradesh and Hyderabad who had been promoted
as STOs Gr III and during the past 20 years have reached the
higher echelons of service, would now have to be put back as
ASTOs, for no fault of their own. Many of them either have
retired or are on the verge of retirement.
There was thus no alternative for the State Government
but to suspend the operation of the amendment made on
January 20, 1961 to r. 1(b) (ii) of the recruitment rules,
by its order dated October 1,
685
1965, which made the passing of the STO examination a
condition A precedent for promotion of STIs to STO Gr. III.
There can be no doubt that the State Government’s Resolution
dated June 13, 1964 and its Memorandum of November 21, 1964,
clarifying that the ASTOs from Madhya Pradesh and Hyderabad
were entitled for promotion to the post of STO Gr. III
without passing the departmental examination, placed STIs
from Bombay at a disadvantage. To ensure ’fair and equitable
treatment’, the State Government rightly dispensed with the
requirement of passing the departmental examination in the
case of STIs from the former State of Bombay.
In the end, reverting back to the main question. On an
overall view of things, we are satisfied that the State
Government acted with the best of intentions. It endeavoured
to strike a balance between the competing claims to relative
seniority. When sub-s. (5) of s. 115 of the Act speaks of
"fair and equitable treatment", obviously it envisages a
decision which is fair and equitable to all.
The result, therefore, is that the appeal succeeds. The
judgment of the High Court of Bombay is set aside and the
writ petition filed by Respondents 1 to 5 is dismissed.
There shall be no order as to costs in the facts and
circumstances of the case.
N.V.K. Appeal allowed.
686