Seniority of Direct Recruits vs. Promotees: Supreme Court Refers Key Issues to Larger Bench in Hariharan vs. Harsh Vardhan Singh Rao (2022)

Introduction

Date of the Judgment: 14 December 2022

Citation: (2022) INSC 1705

Judges: S. Abdul Nazeer, J. and Abhay S. Oka, J.

When a government department fills positions through both direct recruitment and promotions, how is seniority determined? The Supreme Court of India recently grappled with this complex issue, involving Income Tax Inspectors in Gujarat, where a dispute arose between those directly recruited and those promoted. This case highlights the intricacies of service law and the challenges in balancing the rights of different employee groups. The bench comprised of Justices S. Abdul Nazeer and Abhay S. Oka.

Case Background

The core of the dispute lies in determining the seniority of Income Tax Inspectors in Gujarat, specifically those who were directly recruited and those who were promoted. The controversy arose from the implementation of the “rota and quota” principle, which dictates the proportion of positions filled by each method.

In 1986, the Ministry of Personnel, Public Grievances and Pension issued Office Memoranda (OMs) outlining the rotation of quota for determining seniority between promotees and direct recruits. These OMs specified that if direct recruits were not available, promotees would be placed at the bottom of the seniority list, and unfilled direct recruitment vacancies would be carried forward.

The Recruitment Rules of 1969 stipulated that the quota for departmental promotees and direct recruits for the position of Inspector would be 2:1. In 2000, the Department of Personnel and Training (DoPT) issued an office note stating that direct recruits could not be granted seniority of the vacancy year if the examination was not held in that year. Further clarification in 2008 stated that appointees should be given seniority of the year in which they were substantively appointed.

In 2009, the Chief Commissioner of Income Tax, Ahmedabad, promoted 53 individuals to the post of Income Tax Inspector. Later, a requisition was sent for 46 direct posts, including 11 carried forward vacancies. The DoPT granted NOC for 482 vacancies, but the examination for direct recruitment was not conducted in the same year. The Staff Selection Commission (SSC) initiated the process in 2010, including the vacancies of 2009-10 in the Combined Graduate Level Examination (CGLE) 2010.

A draft seniority list was issued in 2014, followed by a final list in 2016. However, in 2018, the Central Board of Direct Taxes (CBDT) issued a clarification stating that direct recruits of CGLE-2010 should be interspaced with promotees of the same recruitment year. This led to a revised seniority list in 2018, which was challenged by the direct recruits in the High Court of Gujarat. The High Court quashed the revised list and restored the 2016 list, leading to the present appeal before the Supreme Court.

Timeline

Course of Proceedings

The direct recruits, respondents nos. 1 to 18, challenged the revised seniority list dated 13th February 2018 in the High Court of Gujarat. They sought to quash the clarification dated 17th January 2018 and the revised seniority list, and to restore the seniority list dated 7th September 2016.

The High Court allowed the writ petition, quashing the seniority list of 13th February 2018 and restoring the list of 7th September 2016. The High Court clarified that only direct recruits who were eligible and qualified in the recruitment year 2009-10 should be interspaced with the 53 promotees from the same year.

The promotees, original respondents nos. 11 to 14 before the High Court, appealed to the Supreme Court, challenging the High Court’s decision. The Supreme Court issued a notice and an interim order to maintain the status quo.

Legal Framework

The legal framework for this case is primarily based on the Office Memoranda (OMs) issued by the Ministry of Personnel, Public Grievances and Pension, and the Department of Personnel and Training (DoPT). These OMs provide guidelines for determining the inter-se seniority of direct recruits and promotees.

The key OMs include:

• OM dated 22nd November 1959: Provided for fixing the seniority of direct recruits and promotees based on the rotation of quota.
• OMs dated 7th February 1986 and 3rd July 1986: These OMs record that the principle of rotation of quota will be followed for determining the inter-se-seniority of promotees and direct recruits. It is mentioned therein that when direct recruits are not available, the promotees would be bunched together at the bottom of the seniority list below the last position up to which it is possible to determine seniority on the basis of rotation of quota with reference to the actual number of direct recruits who become available.
• Office Note dated 7th February 2000: Issued by the DoPT, it directed that if the examination is not held in the vacancy year, the seniority of the vacancy year cannot be granted to direct recruits.
• OM dated 3rd March 2008: Clarified that when the appointment against unfilled vacancies is made in subsequent years, the persons so appointed shall not get seniority of the earlier year. However, they should be given the seniority of the year in which they were appointed on a substantive basis.
• OM dated 13th August 2021: Issued by DoPT, clarifying that as the decision in the case of K. Meghachandra will have prospective operation, cases of inters-se-seniority of direct recruits and promotees shall not be disturbed during the period between the date of the decision in N.R. Parmar’s case and the date of decision in K. Meghachandra’s case.

The Recruitment Rules of 1969, which stipulate a 2:1 quota for departmental promotees and direct recruits, also play a crucial role in determining the seniority.

Arguments

Appellants’ (Promotees) Arguments:

• The appellants argued that the decision of the Supreme Court in Union of India & Ors. v. N.R.Parmar & Ors. [2012 (13) SCC 340] has been overruled by a larger bench in K. Meghachandra Singh & Ors. v. Ningam Siro & Ors. [2020 (5) SCC 689]. However, the overruling was prospective.
• They contended that a recruitment year is a calendar year, not a financial year.
• The advertisement for recruitment was not issued in 2009, and the examination was conducted in 2010. Therefore, the direct recruits cannot claim seniority of 2009.
• In N.R. Parmar, the advertisement was issued in the same recruitment year when the vacancies arose, which is not the case here.
• The vacancies of 2009 were combined with CGLE-2010, so the relative merit of candidates cannot be determined for assigning seniority in different recruitment years.
• Seniority cannot be disturbed after a lapse of eleven or twelve years.
• The direct recruits who were recruited on the basis of CGLE-2010 from the quota of earlier year, cannot be interspaced between the promotees of the year 2009.

Respondents’ (Direct Recruits) Arguments:

• The respondents argued that the decision in K. Meghachandra protects their case as it is specifically observed that the decision will apply prospectively and it will not affect inter-se-seniority fixed on the basis of the decision in N. R. Parmar.
• They submitted that seniority cannot be granted from the date when the candidate was not born in the cadre, but this principle does not apply when seniority is determined by rotation of vacancies based on quota.
• They relied on the decision of a Constitution Bench in Mervyn Coutindo & Ors. v. Collector of Customs, Bombay & Ors [1966 (3) SCR 600], which upheld the rotational system of fixing seniority.
• The object of the rotational system is to blend talent with experience.
• Seniority has to be determined on the basis of roster and not on the basis of the date of joining of a particular stream.
• Making the date of joining as the basis for determining seniority would lead to discretion and the possibility of misuse.
• They relied on various OMs which clearly provide for seniority to be determined according to the rotation of vacancies.
• The relevant year for determining seniority is the year in which the recruitment requisition is sent.
• The recruitment requisition was sent in 2009-10, and the advertisement was also issued in the same recruitment year.
• The segregation of vacancies for 2009-10 and 2010-11 was already done as is apparent from the seniority list dated 7th September 2016.
• The OM dated 7th February 1986 cannot be applied in the present case.

Union of India’s Arguments:

• The Union of India submitted that a new OM has been issued on 13th August 2021 by DoPT, clarifying that as the decision in the case of K. Meghachandra will have prospective operation, cases of inters-se-seniority of direct recruits and promotees shall not be disturbed during the period between the date of the decision in N.R. Parmar’s case and the date of decision in K. Meghachandra’s case.
• The Income Tax Department is adversely affected due to the order of status quo.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the decision of this Court in K. Meghachandra’s case is per incuriam or in the alternative, whether it requires reconsideration being in conflict with the decision of the Constitution Bench in the case of Mervyn Coutindo and the decision of a Bench of three Hon’ble Judges in the case of M. Subba Reddy?
2. Assuming that the decision of this Court in N.R. Parmar’s case stands overruled, in view of its prospective overruling, whether the inter-se-seniority of the direct recruits and the promotees in the facts of this case could be determined as per the decision in N.R. Parmar’s case?
3. Whether the recruitment year is a financial year or a calendar year?
4. Whether, in the facts of this case, the process of recruitment of direct recruits commenced in the very recruitment year in which the vacancies arose?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court, after considering the submissions and authorities, made the following observations:

How each authority was viewed by the Court:

• Union of India & Ors. v. N.R.Parmar & Ors. [2012 (13) SCC 340]: The Court recognized that the High Court had relied on this case. Though this case was overruled prospectively, the seniority fixed based on this case was protected.
• K. Meghachandra Singh & Ors. v. Ningam Siro & Ors. [2020 (5) SCC 689]: The Court noted that this case had prospectively overruled N.R. Parmar. However, the Court also found that the attention of the Bench was not invited to the binding decision of the Constitution Bench in the case of Mervyn Coutindo and a Coordinate Bench in the case of M. Subba Reddy.
• Mervyn Coutindo & Ors. v. Collector of Customs, Bombay & Ors [1966 (3) SCR 600]: The Court noted that the attention of the Bench in K. Meghachandra was not invited to this binding decision of the Constitution Bench.
• M. Subba Reddy & Anr. v. A.P. State Road Transport Corporation & Ors [2004 (6) SCC 729]: The Court noted that the attention of the Bench in K. Meghachandra was not invited to this binding decision of a Coordinate Bench.
• Hon’ble Punjab & Haryana High Court at Chandigarh v. State of Punjab & Ors. [2019 (12) SCC 496]: The Court noted the submission of the respondents that seniority has to be determined on the basis of roster and not on the basis of the date of joining of a particular stream.
• Arvinder Singh Bains v. State of Punjab & Ors. [2006 (6) SCC 673]: The Court noted the submission of the respondents that making the date of joining as the basis for determining seniority would lead to discretion in the hands of the Government and the possibility of misuse.
• Union of India & Ors. v. S.D. Gupta & Ors [1996 (8) SCC 14]: The Court referred to this case while dealing with the decision of M. Subba Reddy.

What weighed in the mind of the Court?

The Supreme Court’s decision to refer the matter to a larger bench was primarily influenced by the need to reconcile conflicting precedents and ensure the consistent application of the law. The court was particularly concerned about the following:

• Conflict between K. Meghachandra and earlier binding precedents: The Court noted that the decision in K. Meghachandra did not consider the binding decisions of the Constitution Bench in Mervyn Coutindo and a Coordinate Bench in M. Subba Reddy. This raised concerns about the correctness of the decision in K. Meghachandra, especially regarding the application of the ‘rotation of quota’ principle.
• Prospective overruling of N.R. Parmar: The Court acknowledged that while K. Meghachandra prospectively overruled N.R. Parmar, the inter-se-seniority already fixed based on N.R. Parmar was protected. This aspect was crucial in the present case, as the seniority list of 7th September 2016 was made in terms of the decision in N. R. Parmar.
• Determination of recruitment year: The Court found that till 2018, the financial year was treated as the recruitment year for the posts of Income Tax Inspectors. This determination was critical in deciding whether the direct recruits could claim seniority of the year in which the vacancies arose.
• Commencement of recruitment process: The Court noted that the recruitment process for direct recruits commenced in the same recruitment year in which the vacancies arose, which supported the direct recruits’ claim for seniority from the vacancy year.

The Court, therefore, deemed it necessary to refer the matter to a larger bench to address these significant legal and factual complexities.

Flowchart of the Case

Conclusion

The Supreme Court’s decision to refer the case of Hariharan & Ors. vs. Harsh Vardhan Singh Rao & Ors. to a larger bench underscores the complex and contentious nature of seniority disputes between direct recruits and promotees in government service. The case highlights the importance of adhering to established rules and precedents while also recognizing the need to adapt to changing legal interpretations. The reference to a larger bench indicates the Supreme Court’s commitment to ensuring that the legal principles governing such disputes are consistently and fairly applied.

The key issues that the larger bench will address include:

• Whether the decision of the Supreme Court in K. Meghachandra’s case is per incuriam or requires reconsideration.
• Whether the inter-se-seniority of direct recruits and promotees should be determined as per the decision in N.R. Parmar, given its prospective overruling.
• Whether the recruitment year is a financial year or a calendar year.
• Whether the recruitment process commenced in the same year in which the vacancies arose.

The outcome of this case will have significant implications for numerous government employees across the country, as it will set a precedent for how seniority is determined in cases where both direct recruitment and promotions are used to fill positions. The larger bench’s decision will be crucial in resolving the conflicting interpretations of the relevant Office Memoranda and judicial precedents.