R. P. KHANNA & ORS.

S.A.F. ABBAS & ORS. ETC.

February 22, 1972

[S. M. S!KRI, C.J., A. N. RAY AND M. H. BEG, JJ.]

ltidian Administrative Service (Regulation of Seniority) Rules 1954, Rule 3(3) (b)-Year of allotment of promotee--Officiation in senior post prior to inclusion of promotee's name in Select List can be taken into consjderation only after approval by Central Government and Union Public Service Commission-Post held by promotee may be declared equivc.:lent to senior post rettrospectively.

Rule 3(3){b) of the Indian Administrative Service (Regulation of Senicnty) Rules 1954 laid down in its main part that tlr. year of allotment of an officer who was appointed to the service by promotion shall ™' the year of allotment of the junior-most among the officers who entered th: service by direct recruitment who officited continuously in a senior post from a date earlier than the date of commencement of such officiation by the former. The second proviso to the rule laid dwn that a promotee shall he deemed to have officiated dpntinuously in a senior post prior to the date of inclusion of his name in the Select List prepared in accordance with the requirements of the lndi':ln Adniinistrative Service {Appointment by Promotion) Regulations, if the period of such officiation prior to that date was approved by the Central Government in consultation with the Union Public Service Commission. The appellants became members of the Indian Administrative Service in the years 1949 and

1950 by direct recruitm_ent.

The respondents were initially recruited to the executive branch of the Bihar State Civil Service and were subsequently in the years 1955 and 1956 promoted to the Indian Administrative Service. The Government of India on 3 September 1958 allotted to the respondents the year 1948 and placed them below the junior most amongst the direct recruits of the 1948 allotment in purported compliance with Rule 3 ( 3 )(b) aforesaid.

The appellants thereupon made a repre- Sentation to the Union Government as a result Of which the Union Government by order dated 20 September 1967 revised the seniority of the promotees and allotted to some of the promotees the year 1950 and to others the year 1952. In making this order the Government of India agreed with the Ministry of Law in its view that rule 2{g) of the Seniority Rules did not perm.it retrospective declaration of a post as equivalent to a senior post within the meaning of Rule 3(3){b) as had been done by the State Government in the cae, of the respondents. The respondents challenged the Union Government's order dated 20 September 1967 in the High Court.

That Court quashed the said order and directed that the promotees would continue to hold the year of allotment assigned to them in the year 1958. Jn appeal to this Court by the direct recruits the questions that fell for consideration were {i) whether the period of officiation in a senior post by a promotees prior to the inclusion of his name in the Select List could be taken into consi!leration without the appoval of the Central Government and the Union Public Service Commission as required by Rule 3(3){b); (ii) whether the State Government was authorised to retrospectively declare a post as equivalent to a 'senior post'; (iii)

whether in the circumstances of the case the order of the High Court restoring the year 1948 as the year df allotment for the respondents was right. ·

HELD : (i) The Select List for the promotion of the respondents was fiually approved by the Uiiion Public Service Cornmm..ion on 26 Decem ber 1955. Rule 3(3)(b) of the Regulation of Seniority Rules, 1954 speaks of approval by the Central Government in consultation with the Union Public Service Commission of the period of the officiation prior to the date of the inclusion of the names of the promotees in the select list.

This approval '.lS contemplated in rule 3(3) (b) is a specific.approval and is directed to the particular matter mentioned therein as to whetber there is approval of the period of officiation prior to the inclusion of tne names in the selec~ list.

On the materials in the pre,., nt appeals it could not be held that the Central Government gave any approval in consultation with lhe Union Public Service Commission within the meaning of rule 3(3)(b) so as to enable the promotees to have the benefit of the period of officiation prior to the date of the inclusion of lheir names in the select list. [556H-557CJ

D. R. Nim, /.P.S. v. Union of India, [1967] 2 S.C.R. 325 and State of Oris.a & Anr. v. B. K, MohapMra, L1970] l S.C.R. 266, opplied.

(ii) The contention on behalf of the direct recruits that it is not open to the State to make a retrospective declaration with regard to posts be ing 1nade equivalent to senior posts was, however, unacceptable. (Reaw sons discussed.) The State Government has power to make such a retros pective declaration. The order of the Union Government dated 20 Sep tember 196 7 which directed the years of allotment on the basis that there could not be any rctr_pspcctive declaration Of equivalent i; ost could not be sustained. [557C-559HJ

(iii) The High Court directed that the promotees must continue to hold ranks as assigned to them in the year 1958. This order of the High Court must be set aside for the reason that the year of allotment must now be determined by the approval of the Central Government in consultation with the Union Public Service Commission. [560AJ

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 565 and 1470 to 1474 ol 1970. Appeals trom the judgment and order dated November 7, 1969 of the Patna High Court in Civil Writ Jurisdiction Cases Nos. 853, 854 and 877 to 880 of 1968.

Basudeo Prasad, R. B. Datar and S. N. Prasad, for the appellan!S (in all the appeals).

Lal Narain Sinha, Advocate-General for the .State of B!har, C. K. Daphtary and U. P. Singh, for responderii No. 4 (in C.A.

No. 565 of 1970), respondent No. 2 (in C.A. No. 1473 of 1970) and respondent No. 3 (in C.As. Nos. 1470 to 1472 and 1474 of 1970).

M. C. Chagla, Gobind Das and S. P. Naypr, for.respondent No. 3 (iin: C.As. NoS. 565 and 1473 of 1970) and respondent.No. 2 (in C.As. Nos. 1470 to 1472 and 1474 oi 1970). 7-L1031 Sup.Cl/72

SUPREME COIJRT REPORTS

(1972] 3 S.C.R.

A C. K. Daphtary, S. C. Agarwal, R. K. Garg and V. I. Francis, for respondent No. 1 (in C.A. No. 14 70 of 1970).

S. C. Agarwal, R. K. Garg and V. I. Francis, for respondents Nos. 1 and 2 (in C.A. No. 565 of 1970) aind respondent No. 1 (in C.As. Nos. 1471to1474 of 1970).

The Judgment of the Court was delivered by

Ray, J.-These six appeals are by certiificate from the judgment dated 7 November, 1969 of the High Court at Patria quashlng the order of the Government of India dated 20 September, 1967, and directing that the respondents must continue to hold rank as assigned to them in 1958.

The appellants and the respondents are now members of the lndian Administrative Service. For the sake of brevity the appellants can be described as direct recruits and the respondents as promotees.

The direct recruits were appointed to the Indian Administrative Service in the years 1949 and 1950 as a result of competitive examination held for nicruitment of candidates to that D Service.

The promotees were initially recruited to the executive branch of the Bihar Stiate Civil Service and were subsequently in the years 1955 and 1956 promoted to the Indian Administrative Service.

The controversy i!I the present appeals is as to the seniority E between the direct recruits and the promotees und.er the Indian Administrative Service (Regulation 9f Seniority) Rules, 1954.

The Government of India on 3 September, 1958 allotted to the promotees the year 1948 and placed them below the junior most amongst the direct recruits of the 1948 allotment.

I The direct recruits thereafter made representation against the decision of the Government of India. Eventually, on 13 January, 1965 the State of Bihar forwarded the representation of the direct recruits to the Government of India against the decision made by the Government of India in the year 1958. On 4 January, 1966 ·

the Government of India took a tentative decision to allow the repreSentation of the direct recruits on !lie ground that the previous G decision was on wrong facts and on wrong interpretation.

On 14 April, 1967 the State of Bihar represented to the Government of India to reject the representation of the direct recruits on the ground that the facts alleged by the direct recruits were wrong.

On 20 September, 1967 the Government of India H however allowed the representation of the direct recruits and revised the seniority of the promotees and allotted to some of the promotees the year 1950 and to some of the promotees the year

1952 as mentioned in the letter of the Government of lndia dated 20 September, 1967 set out hereunder:-

"The matter was further examined in consultation with the Ministry of Law, who have reiterated their earlier advice and said that rule 2(g) of the Indian Administrative Service (Regulation of Seniority) Rules, 1954 does not permit retro-!'ctive declaration of a post equivalent to a senior post of the I.As.- The declaration made by the State Government in the presen~ case cannot have retrospective operation. It will have prospective operation.

The Government of India have therefore decided to revise the seniority of the officers concerned. It will appear from the attached statement that the relevant dates for the purpQ.Ses of fixation of seniority will be 26 December, 1955 in the case of S/Shri S. C. Mishra, S. A. F. Abbas, R. S. Manda!, S. K. Sinha and S. K.

Chakravarty; 1 February, 1956 in the case of Shri S.

Sahay and 17 October, 1956 in the case of S/Shri Ramanand Sinha, Anwar Karim, R. C. Sinha, S. K.

Ghosh and M. Alam. As Shri M. K. Mukherjee the seniormost regular recruit of 1950 batch started officiating continuously in senior posts with effect from 2 May, 1955 , a date earlier than the relevant dates of S/Shri S. C. Mishra, S. A. F. Abbas, R. S. Manda!, S. K. Sinha, S. K. Chakravarty, N. P. Sinha and S. Sahay, these officers may be re-!tllotted to the year 1950 and may be placed before Shri S. D. Prasad (RR-1950) and above Shri P. S. Appu (RR-1951).

Shri N. Nagamani, the seniormost regular recruit of 1952 batch started officiating continuously in senior posts earlier than the relevant dates of S / Shri Raman and Sinha, A'.nwar Karim, R. C.

Sinha, S. K. Ghosh and M. Alam. These officers may be allotted to the year 1952 and may be placed below Shri K. K. Srivastava (RR-1952) and above Shri R. B.

Lal (SCS, SR-1952)".

The promotees impe<1ched the Government of India Memoran- G dum dated 20 September, 1967 principally on the ground that the Government of India. was wrong in holding th!'t it was not competent to the St:ate of Bihar to make a retrospective declaration of a post as equivalent to a cadre iiost. The promotees succeeded in the High Court.

The High Court quashed the order dated 20 September 1967 and directed that the promotees would continue to hold th~ year of allotment assigned to them in the year 1958.

The Indian , Administrative Service (Regulation of Seniority) Rules, 1954 formed the bone of contention between the direct

rruits and the promotees. In order to appreciate the rival content1on.s refere!1ce may be made to the origin of the Indian Adminis-! trative Service and the relevant rules and regulations in that behalf.

The origin of the Indian Administrative Service is to be found in .the Memorandum of Agreement dated 21 October 1946 between the Government of India and the Government of the then Provinces. 1The Indian Administrative Service came to be consti

tuted under the Agreement with effect from 21 Ociober, 1946.

Recruitment to the Indian Administrative Service was to be by direct recruitment or by promotion of members of a Provincial Civil Service. The Indian Civil Administrative Cadre Rules, 1950 specified in the Schedule thereto for each Province the strength of the cadre and the number and character of the posts. In 1951 the All-India Services Act came into existence. Tne All-India Service was defined t9 mean the Indian Administrative Service or the Service known as the Indian Police Service. Later on section 2(a) was introduced into the 1951 Act to include certain other specified Services as All India Services.

Section 3 of the All-India Services Act, 1951 conferred power on the Cent; ral Government after consultation with the Governments of the States conerned to make rules for the regulation of recruitment and the conditions of service of persons appointed to All-India Service. That is how the Indian Administrative Service (Cadre) Rules, d 954 came into exisnce repealing the Indian Civil

Administrativ~ Cadre Rules, 1950. So did the Indian Administrative Service (Recruitment) Rules, 1954 and the Indian Administrative Service (Regulation of Seniority) Rules, 1954.

Two other Regulations which are material for the purposes of the present appeals are the Indian fl.dministrative Service (Appointment by Promotion) Regulations, 1955 and the Indian Administrative Service (Fixation of Ca.dre Strength) Regulations, 1955.

The Promotion Regulations, 1955 were in exercise of the rule making power under rule 8 of the Indian Administrative Service (Recruitment) Rules, 1954. The Fixation of Cadre Strength Regulations, 1955 were made in exercise of the rule making power conferred on the Central Government by rule 4 of the Indian Administrative Service (Cadre) Rules.

The 1954 Cadre Rules defined cadre post to mean any of the posts specified in item 1 of the Schedule to the Indian Administrative Service (Fixation of Cadre Strength) Regulations. The Cadre Strength Regulations, 1955 set out the strength and the composition of the cadre in relation to the different States including Bihar. For the State of Bihar there. are 8 items.

The first item relates to senior posts under the State Government which are 103 in number and item 2 relates to senior posts under the Central Government which are 41 in number. Of these 144 posts 36 are to be filled by promotion and sclecon in accordance with

A rule 8 of the Recruitment Rules, 1954. The other 108 posts are to be filled by direct recruitment. Items 5, 6, 7 and 8 in the Bihar Cadre Strength relate to .other posts with which the present appeals are not concerned. Of the total authorised strength of 211 cadre posts in the State of Bihar 175 are direct recruitment posts and 36 are promotion posts.

The Regulation of Seniority Rules, 1954 .B defines senior post meaning a post included and specified under item 1 of the cadre of each State in the Schedule to the Fixation of Cadre Strength Regulations •. 1955. The 1954 Recruitment Rules speak of recruitment to the Service inter alia (a) by a competitive examinallion, and (b) by promotion. The other two modes of recruitment by selection fmm emergency commissioned officers and c from persons who hold any substantive capacity gazetted post and who are not members of the State Civil Service are not relevant for the purpose of the present appeals.

Rule 7 of the Recruitment Rules, 1954 relates to recruitment by competitive examination and rule 8 relates to recruitment by promotion or selection. The Promotion Regulations, 1955 prescribed the conditions of eligibility D for promot, ion.

In the background of these Rules and Regulations it follows that members of a State Civil Service are promoted to the Indian Administrative Service. The present appeals relate to promotees after the abovementioned Rules and Regulations came into existence.

The question of ireniority of promotees vis>-a-vis direct recruits is covered by rule 3(3)(b) of the Indian Administrative Service (Regulation of Seniority) Rules, 1954 which is set out hereunder :-

"The year of allotment of an officer appointed to the Service after the commencement of these rules, shall be:-

(b) where the officer is appointed to the Service by promotion in accordarice with sub-rule ( 1) of rule 8 of the Recruitment Rules, the year of allotment of the junior-most among the officers recruited to the Service in accordance with rule 7 of these rules who officiated continuously in a senior post from a date earlier than the date of commencement of such officiating by the former :

Provided that the year of allotment of an officer appointed to the Service in accordance with sub-rule (I) of rule 8 of the Recruitment Rules who started officiating continuously in a senior post from a dae earlier than he date on which any of t!he officers recrmted l'O the service in accordance with rule 7 of those rules so started officiating, shall be determined ad hoc by the Central

554 SUPREME COURT llEPORTS

L 1972] 3 S.C.R.

Government i:n consultation with the State Governmen,

concerned.

Provided further that an officer appointed to the Service after the commencement of these rules in accordance with sub-rule (1) of rule 8 of the Recruitment Rules shall be deemed to hav• officiated continuously in a senior post prior to the date of the inclusion of his name in 'the Seleco List prepared in acdordance wit'h the requirements of the Indian Administrative Service (Appointment bY. Promotion) Regtilations framed under sub-rule (1) of rule 8 of the Recruitment Rules, if the period of such officiation prior to that date is approved by the Central Government in consultation with the Com.mission".

There are two explanations which need not be set out because ·

they are not relevant for the purposes of the present appeals.

The scheme of the Indian Administrative Service (Regulation ·

of Seniority) Rules, 1954 is that every officer shall be assigned a Ii) year of al!Ollment in accordance with the provisions contained therein.

The present appeals raise the question of the year of allotment of the promotees who were promoted to the Service, after the commencement of the Rules, in the years 1955 and 1956.

Therefore, rule 3(3 ){b) applies to the case of 1ib.e promotees vis-avis the direct recruits.

The Indian Police Service (Regulation of Seniority) Rules, 1954 is the counter-part of the Indian Administrative Service (Regulation ()f Seniority) Rules, 1954. Rule 3(3)(b) of the Indian Police Service (RegulatiOn of Seniority) Rules is in identical language with rule 3(3)(b) of the Indian Administrative Service (Regulation of Seniority) Rules.

Rule 3(3 )(b) of the Indian Police Service (Regulation of Seniority) Rules came up for consideration before this Court in two cases.

These are the decisions in D. R. Nim, l.P.S. v. Union of India(') and State of Orissa & Anr. v. B. K.

Mahapatra(').

Rule 3(3)(b) which is in common language in the Rules of both the Services and the two provisos lay down the mode of regulation of seniority of the promotees vis-a-vis the direct recruits.

Promotees will be given the year of allotment of

G the junior-most among direct recruits who officiated in a senior post from a date earlier than the date of commencement of such officiation by a promotee. The first proviso regulates the seniority between direct recruits and promotees who started officiating continuously in a senior post from a date er!ier than the . te on which the direct recruits so started officia#ing by ~~1bmbg tthhe JI mode of regulation of seniority by ad hoc determmatton Y e Central Government iµ consultation with the State Government.

The effect of the second proviso was stated by this Court in Nim's(') case to be this : "The second proviso limits the operation of the first proviso by diyiding the officiating period into two classes; first, a period before the date of inclusion of an officer in the Select List and, secondly, the period after that date.

The first period can. on!)' be counted if such period is approved by the Central Government in consultation with the Union Public Service Commission".

The rulings of this ourt hold that a promotee can obtain the advantage of officiation continuously in a senior post prior to the inclusion of the name in the Select List if the period of such officiation is approved by the Central Government in consultation with the Union Public Service Commission. The officiation in a senior post is one of the indispensable ingredients in the application of rule 3(3)(b). A senior post as defined -in the Regulation of Seniority Rules means a post included and specified under item 1 of the cadre of the State or any post declared equivalent thereto by the State Government concerned. It may be stated here that the

definition of senior post underwent change in the year 1967 by notification No. 27/47/64-AIS(IIl)-A dated 17 April, 1967 and the new definition of senior post came into effect on 22. April, 1967.

The present appeals are governed by the definition of senior post prior to the year 1967. The important words in the relevant deli• nition of the senior post are 'any post declared equivalent thereto by the State Government'.

The memorandum dafud 20 September, 1967 Was impeached by the promotees on the ground that the State Government could not make a retrospective declaration with regard to malting posts equivalent to senior pQSts.

Counsel on behalf of direct recruits contended that the letter dated 9 April, 1958 from the Chief Secretary to the Government of Bihar to the Secretary to the Government of India, Ministry of Home Affairs could not amount to a declaration of posts as equivalent to senior posts and further '1Jiat there could not be any retrospective declaration of making posts equivalent to senior posts.

Counsel on behalf of the Union contended that the declaration contemplated with regard to senior posts must be a formal order G and it was not open to the State to make a retro-active declaration because the rule contemplated approval of such officiation in consultation with the Commission. In other words, it was said that the State would first have to make a declaration with regard to making posts equivalent to senior posts and thereaft!er approval of such officiation would be given by the State Government in consul-

H tation with the Public Service Commission.

Criticism was made by counsel for the direct recruits that there was no proper Select List and Rao's letter dated 9 July, 1958 and

(I) [1970] 2 S.C.R 325.

the reply thereto dated 3 September, 1958 by the Deputy Secretary to t; he Government of India wer!l contended not to amount to approval by the Central Government in consultation with the Union Public Service Commission of the period of officiation prior to the date of inclusion of the names of promotees in the Select List.

There was an ad hoc list in the year 1954 and the ad hoc list is referred to in the Chief Secretary's letter with the letter 'A'. The select list was prepared in the year 1955 and is referred to in the Chief Secretary's letter with the letter ''B'. In the Chief Secretary's letter the date of officiation of the promotees was proposed by the State Government to be 28 December, 1954. The date of officiation in the senior scale by the promotees as agreed to by the Government of India was shown in that letter as some time in the month of October, 1955 with regard to three promotees and in the month of December, 1955 with regard to 1ihe fourth promotee.

With regard to the other three promotees no date was shown as having been agreed to l:>Y the Government of India. The State Government proposed with regard to some of the promotees that they should be allowed the benefit of officiation from the time of the inclusion of their names in the ad hoc list in the year 1954.

The Deputy. Secretary tci the GovernmenQ of India by letter dated 3 September, 1958 accepted the recommendation of the State Government with re2:ard to the promotees and allotted to them the year 1948 and placed the promotees below Shri B. S. Srivastava who was the junior most among direct recruits who had started officiating continuously in a senior p0st earlier than 28 December,

1954. The impeached ircular dated 20 September, 1967 did not allow retrospective declaration of equivalent posts and therefore the year of allotment was no longer 1948. The High Court held that there could be retrospective declaration and thus in effect restored 1948 as the year of allotment.

The Government of India by the letter dated 20 September, 1967 which is impeached by the promotees changed the. year of allotment of the promotees from 1948 to 1950 with regard to the first three promotee9 and to the year 1951 with regard to the fourth promotee and the year 1952 with regard to the other two promotees and placed these promofees below the direct recruits of those batches who started officiating continuously in a senior post earlier than the date of such officiation bv the promotees.

On these materials it appears that the ad hoc list was prepared with the approval of the Union Public Service Commission on 28 December, 1954 and the Select List was finally approved by the Union Public Service Commission on 26 December, 1955.

The select list was the list prepared for appointment of the promotees by promotion to the Indian Administrative Ser.ice. Rule 3(3)(b)

1f the Regulation of Seniority Rules, 1954 speaks of approval by

.A the Central Governm_ent in consultation with the Union Public Service Commission of the period of officiation pr(or to the date of e inclusion of the names of the promotees in the select list.

This .app:oval as contemplated in rule 3(3)(b.) is-a specific approval and 1s drrected to the par!Jcular matter mentioned therein as to whether there is approval of the period of officiation prior to the B inclusion of the names in the select list. On the materials in the present appeals we are unable to hold that the Central Government gave any approval in consultation with the Union Public Service Commission within the meaning of rule 3(3) (b) so as to enable the promotees the benefit of the period of officiation prior to the date of the inclusion of their names in the select list.

The contention on behalf of the direct recruits that it is not open to the State -to make a retrospective declaration with regard to posts being made equivalent to senior posts is unacceptable. From the point of view of workability of the rule as well as the circumstances and the COl)ditions of service it may not always be practicable to make such prospective declaration.

It is only when the Government has found that it is necessary or desirable to declare such posts equivalent to senior posts that the Government will do so. That will be usually possible after the Government will have considered several factors, namely, finance, structure of the service, the personnel fit' for undertaking the post. Normally, the promotees obtain promotion from the State Civil Service after long E service.

That is why rule 3(3)(b) of the Regulation of Seniority Rules is designed to arrive at a fair adjustment of the competing claims of the direct recruits and the promotees. To hold that a promotee could not get the benefit of officiation unless the post was declared as equivalent to a senior cadre post before the promotee was appointed to officiate might defeat the policy of the Govern-

F ment. A promot_ee may be officiating continuously for a long period and his name may be included in the select list after some time.

Again a person who officiates continuously for long time may thereafter be not included in the select list. Such a person

rnlht deprive a person who would otherwise be found suitable for appointment by w:omotion after similar officiation in a sil)lilar post. 'It is only when the State Government finds that it is desirable to G declare the post equivalent to a senior post inter alia by reason of the efficiency of the person which has entitled him to promotion that the consequential necessity arises for giving him that senior post by requisite declaration of a senior _ post.

A retrospective declaration therefore is in the scheme of things practical as well as

reasonable. ·

The basic idea of declaration of post as equivalent to a senior post is that it is treated as a post of equal rank and responsibility. 'Ruic 3(3)(b) is designed to strike a balance between conflicting

claims. When a promotee with the background of a long conti- "' nuous officiation gets promotion it is in the fitness of things that the peod of .such officiation is not lost to him.

The necessary check 1s supplied by approval by the Central Government in consultation with the Commission.

There will be two sources charged with the ft'.sponsibility of approval of the period of officiation prior to the inclusion of the name in the select list. "B

A retrospective declaration that a post is equivalent to a senior post really amounts to declaration of an existing fact. . It is that tho person who has officiated continuously for a long time i~ allowed the benefit of a senior post prior to the appointment by promotion of such officer to the Cadre of the Indian Administrative Service. Ordinarily, under Cadre Rules a non-cadre officer cannot hold a cadre post excepting for short time of three months and if it is for a longer period not without approval by the Central Government. Therefore, there is no occasion for declaration by

the State Government of a non-cadre post as equivalent to a cadre post. The question of declaration arises only for the purpose of giving the promotee the benefit of the period of officiation prior )) to promotion. The use of the word 'deemed' in rule 3(3)(b) of the Regulation of Seniority Rules indicates that the Government has the power to make a retrospective declaration because it Js only after promotion that there is any occasion to consider whether the period of offication prior to promotion will be counted for purposes of seniority.

The harmonious construction of the definition of 'senior post' occurring in the 1954 Cadre Rules along with rule 3(3)(b) of

the Regulation of Seniority Rules is that promotee will by a legal fiction obtain advantage of the period of officiation first by the declaration and second bv the approval of the Central Government in consultation with the Union Public Service Commission.

F It is not the declaration but the approval which introduces the legal fiction.

There is an apprehension that retrospective declaration might cause mischief in the sense that it would enable a promotee to obtain seniority as against a direct recruit. The apprehension is unmerited because promotees obtain promotion after long service G and that is why the year of allotment of promotee is below the junior most among direct recruits who continuously officiated in a senior post from a date earlier than the date of commencement of such officiation by the promotee. Again, there may .be a salutary reason to defend a retrospective declaration because a prospective declaration by the State Government may not be acceptable H to the Central Government by not giving approval of the period of officiation prior to the date of inclusion of the names in the select list. There is no time limit fixed with regard to approval by the

Central Government.

Therefore, . a retrospective declaration will be under the check of approval by the Central Government and such approval will always act as a. safecty valve against any abuse or mischief of retospective declaration.

It is important to notice that' the defuutlon of 'Senior post' has undergone change in the year 1967. The amendment of the definition has brushed way the necessity of any declaration by the Government of a post being made equivalent to senior cadre post. also deleted the second nroviso to rule 3(3)(b) of the Regulation of Seniority Rules. In place of the second proviso a new explanation has been added. The explanation states , that in respect of a promotee the period of continuous officiation in a senior post shall, for the purposes of determination of his seniority, count only from the date of the inclusion of l)is name in the Select List, or from the date of his officiating appointment to such senior post whichever is later; The declaration of a .P<>St to be equivalent to a senior post and the approval of the Government of India in consultation with the Commiss!on fur alk>\vjng a promotee the benefit of the period of continuous officiation prior to the inclusion of his nam11 in the Select List are all obsolete now. One of the reasons for the changes may be that a prospective declaration might give rise to show of preference or favour to some chosen persons who might not turn out to be suitable person to fill that post.

Again, the disadvan-. tage of prospective declaration may be that the Government might be saddled with the problem of a declaration in anticipation and later finding out the absence of necessity of such a post or even of not finding a suitable person for occupying such a post. The soundness of a retrospective declaration rests on the consideration that not only will the promotee by that time have been tried and tested in that post but also his promotion would indicate the benefit of the period of continuous officiation which earned promotion for him. To deny a retrospective declaration would in the case of promotion of persons from State Civil Service deprive them of the opportunity of enjoyment of the period. of officiation.'

For these reasons, we uphold the judgment of the High Court that the memorandum dated 20 September, 1967 which stated that the State Government could not retrospectively declare a post to be equivalent to a senior post was bad.

The State Government has power to make such a retrospective declaration. The order

dated 20 September, 1967 which also directed the years of allotment on the basis that there could not be any retrospective declaration of equivalent post cannot be sustained.

The High Court however further directed that the promotees must continue to hold ranks as assigned to them in the year 1958".

This order of the High Court is to be set aside, for the reason that A the year of allotment will now have to be determined by the approval of the Central Government in consultation with the Union Public Service Commission.

The appeals are therefore dismissed in so far as they relate to quashing of the order of the Central Government dated 20 Septem- B ber, 1967. The appeals are allowed setting aside the order of the High Court that the promotees would continue to hold ranks as assigned to them in the year 1958. In .the facts and circumstances of the case parties will pay and bear their own costs.

G.C.

Appeals allowed.

R. P. KHANNA & ORS

A.F. ABBAS & ORS. ETC

February 22, 1972

A. N. RAY

M. H. BEG, JJ.

Central Government

Union Public Service Commission

Government of India

3 September 1958

Union Government

Regulation of Seniority Rules, 1954

D. R. Nim

[1967] 2 S.C.R. 325

20 Sep tember 196 7

November 7, 1969

Patna High Court

Basudeo Prasad

R. B. Datar

S. N. Prasad

Lal Narain Sinha

C. K. Daphtary

U. P. Singh

M. C. Chagla

Gobind Das

S. P. Naypr

SUPREME COIJRT REPORTS

A C. K. Daphtary

S. C. Agarwal

R. K. Garg

V. I. Francis

Ray

20 September, 1967

Bihar Stiate Civil Service

3 September, 1958

13 January, 1965

State of Bihar

4 January, 1966

14 April, 1967

Government of lndia

S. C. Mishra

S. A. F. Abbas

R. S. Manda

S. K. Sinha

S. K.

Chakravarty

S.

Sahay

Ramanand Sinha

Anwar Karim

R. C. Sinha

S. K.

Ghosh

M. Alam

M. K. Mukherjee

S. C. Mishra

S. A. F. Abbas

S. K. Chakravarty

N. P. Sinha

S. Sahay

S. D. Prasad

P. S. Appu

N. Nagamani

Raman

Sinha

A'.nwar Karim

R. C.

Sinha

S. K. Ghosh

K. K. Srivastava

R. B.

Lal

21 Ociober, 1946

Indian Administrative Service

All-India Services Act

section 2(a)

Section 3

All-India Services Act, 1951

Cadre Rules, 1950

Promotion Regulations, 1955

Cadre Strength Regulations, 1955

Bihar

Recruitment Rules, 1954

Regulation of Seniority Rules, 1954

Recruitment Rules, 1954

Promotion Regulations, 1955

Nim

22. April, 1967

9 April, 1958

Government of Bihar

Ministry of Home Affairs

Public Service Commission

Rao

[1970] 2 S.C.R 325

B. S. Srivastava

28 December,

1954

26 December, 1955

Regulation of Seniority Rules, 1954

20 Septem- B ber, 1967


R. C. JAL & ANR.

UNION OF INDIA

February 23, 1972

[S. M. SIICRI, C.J., A. N. GROVER, A. N. RAY, D. G. PALEKAR

AND M. H. BEG, JI.]

Coal Production Fund Ordinance (39 of 1944)-Coal despatched from colliery in British India to consignee in Princely State-L1'ability of ct>n-- signee to P'i.'Y the cess.

Coal was despatched from collreries within British India in December 1946 and fanu:uy and February 1947, to the appellant in Indore. The respondent filed a suit in 1953 tor recovery of coal production cess levied under the Coal Production Fund Ordinance, 1944, and r. 3(1) of the Coal Production Fund Rules, 1944.

On the question whether the Ordinance had no territorial operation to reach the appellant, because, he was a resident of a Princely State at tho time of despatch of the coal.

HELD : In R. C. Jal! v. Union of India, U962] Supp. 3 S.C.R. 436, it was held that the cess was an excise duty Qn the manufacture or production of coal and that the method of collection did not affect the e.,., nce of the duty. The coal production cess was n the production of coal and was levied on coal des1>3tched from collieries in the then British India, - that is, the taxable eYent happened within the theD British India. Under the Rules, the duty was to be collected by the railway administcatfon as a surcharge on freight and was to. be recovered from the consignee if the freight charges were to be collected at the destination. The appellant was the tonsignec and the freight charges were to be collected from him at the destination, namely, Indore. llie cess_ thus became a part of the freight for purposes of collection but in 'essence remained a tax on goods.

Once the duty attaches to the goods they became impressed with the liability and the consignee was liable to pay. The 'tiit was filed in 1953 when Indore was within India and the right of the Union to claim, as well the liability of the appellant to pay, the cess, was valid and subsisting.

It was not a case of the Union sueing or enforcing any revenue law in a foreign court.

Therefore, the Union was entitled to a decree against the appellant. [5650-H; 566B-DJ

Govt. of India, Ministry of Finance v. Taylor, :[1955] A.C. 491; 27 J.T.R. 356, distinguished .

. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1920 of 1968.

Appeal from the judgment and decree dated April 15, 1968 of the Madhya Pradesh High Court in Letters Patent Appeal No. 21 H of 1962.

M. C. Chag/a, A. K. Verma, B. Datta, J. B. Dadachan; i, O. C. Md/Jiur and Ravinder Narain, for the appellants.

Jagdish Swarup, Solicitor-General of India, S. N. Prasad and B. D. Sharma, for the respondent.

The Judgment of the Court was delivered by

Ray, J. This is an appeal by certificate from the judgment dated 15 April, 1968 of the High Court of Madhya Pradesh upholding the judgment and decree passed by Nevaskar, J. of that High Court.

The Union filed a suit against the appellant in the Court of Small Causes J]ldge at Indore in the year 1953 and claimed a decree for Rs. 83-12-0.

The claim in the suit represented coal production cess levied under Ordinance No. XXXIX of 1944 on coal and coke despatched from collieries in the then British India to the appellant.

The. only question which falls for consideration in this appeal is whether the Union could make a valid claim for the amount.

Counsel on behalf of the appellant contended that the appellant was at the material time a resident at Indore in the then Holkar

State and the Ordinance passed in the then British India would have no territorial operation to reach him.

The Ordinance was called the Coal Production Fund Ordinance of 1944. It extended to the whole of the then British India.

Section 2 of the Ordinance provided inter alia as E follows:-

(1 ) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint in this behalf, there shall be levied and collected as a cess. for the purposes of this Ordinan~. on all coal and coke despatched from collieries in British India a duty of excise at such rate not . exceeding one rupee and four annas for ton, as may from time to time be fixed by the Central Government by notification in the official gazette;

Provided that the Central Government may, by noti- G fication in the official Gaiette, exempt from liability to the duty of excise any specified class or classes of coal or coke.

(2) • • • •

( 3) A duty levied under this section shall be in

H addition to any other duty of excise or customs for the time being leviable under any other law.

( 4) The duties imposed by this section shall, subjec: to and in accordanee with the rules made under this Ordinance in this behalf, be collected on behalf of the Central. Government by such agencies and in such manner as may be prescribed by the rules."

Section 5 of the Ordinance conferred power on the Central Government to make rules and to provide for inter alia the manner in which the duties imposed by this Ordinance shall be collected, the pets9ns who shall be liable to make the payments, the making of refunds, remissions and recoveries, the deduction of collections agencies of a percentage of the realisations to cover the cost of collection, and the procedure to be followed in remitting the proceeds to the credit of the Central Government.

The Coal Production Fund Rules, 1944 were made by the Central Government in exercise of powers conferred by section 5 of the Coal Production Fund Ordinance 1944. Rule 3 related to recovery of excise duty.

Rule 3 (I) was as follows :-

"Recovery of excise duty : ( l) The duty of excise imposed under sub-section ( 1) of section 2 of the Ordinance on coal and coke shall, when such coal or coke is despatched by rail from collieries or coke plants, be collected by the Ralway Administrations by means of a surcharge on freight, and such duty of excise shall be recovered:-

(a) from the consigner if the freight charges are being prepaid at the destination of the consignment;

(b) from the consignee if the freight charges are collected at the destination of the consignment;

( c) from the party paying freight if the consignment ·

is booked on the "Weight Only" system".

The Coal Production Fund Ordinance , f 944 was repealed tiy the Coal Production Fund (Repealing) Ordinance, 1947. The Repealing Ordinance of 194 7 for the. avoidance of doubts declared that the provisions of section 6 of the General Clauses Act, 1887 applied in respect of such repeal.

Therefore the repeal of the 1944 Ordinance did not affect the right of the railway to recover the surcharge on freight or the liability of the appellant to pay and the remedy in respect of the right and liability.

The claim of the Union related to coal production cess on three several consignments of coal despatched in the months of

cember, 194?, January 1947 and February, 1947 from three A

~1fferent collies at !vf ohuda, Umaria and Burhar respectively m the then Bntish India to the appellant the consignee at Indore.

Eac~ cons1g:tlfilent was under a railway invoice and a railway rece1.pt.

Freight was payable on each consignment.

Coal productton cess was under the 1944 Rules to be collected by means of a surcharge on freight.

Freight and the coal production cess as a surcharge thereon were payable at the destination at Indore by the consignee.

The appellant paid freight but did not pay the coal production cess by way of surcharge. The Union therefore sued the appellant for the sums of Rs. 27-8-0, Rs. 27-8-0 and Rs. 28-12-0 aggregating Rs. 83-12-0 in respect of the aforesaid surcharge on the three several consignments.

The validity of the Ordinance came up for consideration by this Court in R. C. Jail v. Union of India(').

In that case suit was filed in the year 19 5 3 at Chhindwara for recovery of coal ce.ss on 3 consignments of coal despatched from collieries in the then British India in the months of January/February, 1947 to the consigb.ee at Indore.

This Court held that coal cess was levied and collected with the authority of laiiz.

This Court however did not decide two contentions sought to be raised. in that case.

These ', Vere first, that coal cess is a fee and not a tax or duty and secondly, that the consignee was a non-resident and therefore the Ordinance not having extra-territorial operation could not reach him.

Counsel bn behalf of the appellant contended that the appellant was at the material time a resident" of Indore and was therefore not bound by the revenue law of the then British India and

no suit could be filed for enforcing recovery of revenuei dues against the appellant.

Reliance was placed. in support of the contention on the decision of the House of Lords in Government y of India, Ministry of Finance v. Taylor and Anr.(2 ). In Tay- , /or's(') case the Government of India sought to prove in the voluntary liquidation of a company registered in the United Kingdom but trading in India for a sum due in Ie$pect of Indian income-tax including capital gains tax, whicli arose on the sa:\e Qf the company's undertaking in India.

It was held by. the majority G opinion that although under section 302 of the English Companies Act, 1948 a liquidator was require.cf to provide in the liquidation of the company for liabilities of the company the tax claims would not be a liability within the meaning of section 302 of the English Companies Act The un; urimo~ opini?D was that e revenue claims would not be enforceable m relation to assets m England.

The ratio of the decision in Taylor's(') c~ that H India being a foreign Gove!rnment could not ue the liquidator

(I) [ 1962] Supp. 3 S.C.R. 436.

(2) [195.5] !A, C, 491; 27 l.T.R. 356.

Taylor in England for income tax levied and declared to be payable under the Indian law.

A foreign State cannot enforce . a claim for revenues against a foreigner in his home country. The reason is that a foreign court will not be an agency for tax gathering.

The decision in Taylor's('') case is of no aid to the appellant in the present case.

The Union in the present case did not either sue or enforce any revenue law in a foreign court.

The Coal Production Cess was levied on coal despatched from collieries in the then British India.

Under the Rules the excise duty was to be collected by the railway administration as a surcharge on freight and was to be recovered from the consignee if the freight charges were to be collected at the destination. The fact found in the present case was that the coa~ was despatched from the collieries within the then British India. The appellant was the consign'ee.

Freight charges were to be collected at the station of destination, namely, Indore.

The appellant also paid the freight charges on the consignments.

The levy of cess which is the taxable event happened within the then British India. The duty of excise is determined by reference to goods despatched from collieries.

The tax is on the production of coal.

The liability to pay cess. is on the goods.

The cess is a tax on goods and not on the sale of goods.

This Court examined the true character of the cess in Jail's(') case and Subba Rao, J. speaking for the Court said at page 451 of the 1 Report : "Excise duty is primarily a duty on the production or manufacture of goods produced or manufactured within the country.

It is an indirect duty which the manufacturer or producer passes on to the ultimate consumer, that is, its ultimate incidence will always be on the consumer.

Therefore, subject always to the legislative competence of the taxing authoriy, the said tax can be levied at a convenient stage so long as the character of the impost, that is, it is a duty on the manufacture or prwuction, is not lost.

The method of collection does not affect the essence of the duty, but only relates to the machinery of collection for administrative convenience. . ........... A perusal of the provisions of the Ordinance 'clearly demonstrates that the duty impOsed is in essence excise duty and there is a rational connection between the said

tlllC and the person on whom it is imposed".

The ruling in Jail's(') case establishes two propositi0il1S. First, that the cess is a tluty on the manufacture or production of coal and secondly, the method of collection does not affect the essence of the excise duty.

(1) [1955] A.C 491 8-L103 l Sup.CI/72

(2) [1962] Snpp. 3 s.r.R.436.

The transaction of sale is a composite transaction consisting of agreement of sale, passing of title, delivery of goods and payment _of. price and costs charges of transportation.

The cess fonned surcharge on the freight.

The appellant being the consignee was liable. for the same.

The cess became a part of the freight for purposes of collection but in essence the cess remained a tax on goods.

The machinery for collection of the duty is not to be confused with the duty itself.

Once the duty attaches to the goods these bame impressed with the liability and the purchaser, namely, the consignee in the present case was affixed with the liability to pay.

The liability arose at the colliery.

Tho collection was to be at Indore.

The appellant became liable to pay the cess along with the payment of the freight charges.

The suit was filed in the year 1953 when Indore was within India and the right of the Union to claim as well as -the liability of the appellant to pay the cess was valid and subsisting.

The Un!_on was therefore entitled to a decree against the appellant.

Counsel on behalf of the appellant &QUght to raise an additional ground that there was no cause of action against appellant No. 2.

Notice of the application for urging additional ground was given on 22 January, 1972.

We did not allow this additional ground to be raised at this late stage. If the appellant had raised this question at the trial of the suit the respondent would have dealt with the same.

We therefore thought that it would not be fair and proper to allow this ground to be raised.

For these reasons the judgment of the High Court is affinned.

The appeal is dismissed with costs.

V.P.S.

Appeal dismissed.

R. C. JAL & ANR

UNION OF INDIA

February 23, 1972

A. N. GROVER

A. N. RAY

D. G. PALEKAR

M. H. BEG

Coal Production Fund Ordinance

Indore

Coal Production Fund Ordinance, 1944

Coal Production Fund Rules, 1944

India

Govt. of India

CIVIL APPELLATE JURISDICTION

M. C. Chag

A. K. Verma

B. Datta

J. B. Dadachan

O. C. Md

Ravinder Narain

Jagdish Swarup

S. N. Prasad

B. D. Sharma

Ray

High Court of Madhya Pradesh

Nevaskar

Court of Small Causes J]ldge at Indore

Section 2

Central Government

Central.

Section 5

Coal Production Fund Rules, 1944

section 5

Coal Production Fund Ordinance 1944

section 2

section 6

General Clauses Act, 1887

Chhindwara

Government of India

United Kingdom

section 302

English Companies Act, 1948

section 302

Companies Act

England

Taylor

Subba Rao

22 January, 1972