Supreme Court Clarifies Seniority Rules for Central Excise Inspectors: B.S. Murthy vs. A. Ravinder Singh (2022)

LEGAL ISSUE: Determination of inter se seniority between direct recruits and promotee inspectors in the Central Excise Department.

CASE TYPE: Service Law

Case Name: B.S. Murthy & Ors. vs. A. Ravinder Singh & Ors.

[Judgment Date]: March 15, 2022

Date of the Judgment: March 15, 2022
Citation: 2022 INSC 201
Judges: Uday Umesh Lalit, J., Hemant Gupta, J., S. Ravindra Bhat, J. (authored the opinion)

Can the government deny seniority to promotee employees based on a retrospective application of office memorandums, especially when a ban on direct recruitment was in effect? The Supreme Court of India recently addressed this complex issue in a case concerning the seniority of Central Excise Inspectors. The core question revolved around how to determine the inter se seniority between direct recruits and promotees, particularly when promotions occurred during a period when direct recruitment was restricted. This judgment clarifies the application of executive instructions and statutory rules in determining seniority.

Case Background

The case involves a dispute over the seniority of Inspectors of Central Excise, who are recruited through two channels: direct recruitment and promotion. The Central Excise and Land Customs Group-C Recruitment Rules, 1979, established a 75%:25% ratio between direct recruits and promotees. However, these rules did not specify how to determine the inter se seniority between these two groups. Initially, seniority was determined based on executive instructions, specifically an office memorandum (OM) dated 22.12.1959. This OM stipulated that seniority was based on the order of initial appointment, with permanent officers ranking higher than officiating ones. The 1959 OM was later modified by another OM issued on 07.02.1986.

In 1983-1984, some promotee inspectors challenged a seniority list issued in 1985, arguing that their length of service was not considered. The Central Administrative Tribunal (CAT) initially sided with the promotees, directing the department to revise the seniority list according to the 1986 OM. However, this decision was later reviewed, and the CAT clarified that the 1986 OM was prospective, applicable only from 1.3.1986. This led to further confusion and multiple rounds of litigation, with the direct recruits and promotees disagreeing on the correct application of the OMs.

The department, following the CAT’s orders, prepared new seniority lists, but these were challenged again by both direct recruits and promotees. The core of the dispute was whether the promotees’ seniority should be determined based on the actual vacancies arising each year or based on the number of vacancies indented for direct recruitment. The department insisted on the latter, while the promotees argued for the former, citing a ban on direct recruitment during certain years.

Timeline

Course of Proceedings

The dispute began when five Revenue Inspectors, promoted in 1983-1984, challenged the 1985 seniority list. The CAT initially ruled in their favor in 1988, directing the department to revise the seniority list according to the 1986 OM. However, the direct recruits, who were not parties to the original case, filed review applications. The CAT reiterated its main order, leading the department to issue a final seniority list in 1993. This list was again challenged, and the CAT eventually clarified that the 1986 OM was prospective, applicable only from 1.3.1986. The CAT directed the department to prepare a fresh list following the 1959 OM for pre-1986 promotees and the 1986 OM for post-1986 appointees.

A special cell was formed to comply with the CAT’s order, and a new seniority list was issued in 1997. This list was also challenged, and the CAT suggested forming a committee to resolve the issue. The committee submitted its reports, but the matter remained unresolved. The department then circulated a tentative seniority list in 2002, which was again challenged by the promotees. The CAT, in its order dated 29.12.2003, considered the submissions and held that the direct recruit/promotion register was an authentic document, that there were no excess promotions, that the date of appointment of direct recruits was the date for counting seniority, and that those promoted on an ad hoc basis were eligible for seniority from the date of their continuous officiation. The CAT set aside the 2002 seniority list and directed the department to revise it.

Aggrieved by the CAT’s order, the direct recruits and the Central Government filed writ petitions before the High Court. The High Court held that the vacancy register was not relevant for promotions, that promotions should be based on indents placed for direct recruitment, and that the length of continuous service could not be counted for seniority. The High Court upheld the seniority list dated 22.07.2002, leading to the current appeals before the Supreme Court.

Legal Framework

The core legal framework for this case is derived from the following:

• Central Excise and Land Customs Group-C Recruitment Rules, 1979: These rules, framed under Article 309 of the Constitution of India, govern the recruitment of Inspectors of Central Excise. They specify that 75% of the posts are filled by direct recruitment and 25% by promotion. However, they do not provide guidelines for determining inter se seniority between direct recruits and promotees.
• Office Memorandum (OM) dated 22.12.1959: This OM provided the initial guidelines for determining seniority in the Central Secretariat, which was also followed by the Central Excise Department. It stipulated that seniority was determined by the order of initial appointment, not the date of confirmation, and that permanent officers ranked higher than officiating ones.
• Office Memorandum (OM) dated 07.02.1986: This OM modified the 1959 OM, introducing the principle of rotation of quota along with a bunching rule. It stated that if adequate direct recruits were not available, the promotees would be bunched together at the bottom of the seniority list, below the last position determined by the rotation of quotas. It also clarified that promotees would be treated as regular only to the extent that direct recruitment vacancies were reported to the recruiting authorities.
• Article 309 of the Constitution of India: This article empowers the President of India to frame rules regulating the recruitment and conditions of service of persons appointed to public services.

Arguments

Arguments by the Promotee Inspectors (Appellants):

• The High Court overlooked the fact that the Committee constituted pursuant to the decision of the Full Bench of CAT, had suggested that the direct recruit/promotee register of Inspectors maintained from 1984 to 1996 should be taken as the basis to arrive at the number of vacancies year-wise to determine the seniority.
• The Chairperson of the Committee clarified that the Special Cell’s formula of taking the actual number of direct recruits appointed to arrive at the promotee quota was narrow. Instead, it was suggested to take the indents placed with the Staff Selection Commission (SSC) together with the appointments made on compassionate grounds, inter-Commissionerate transfers, sports quota, and surplus cell, which were in the nature of direct recruitment as a basis for arriving at the number of direct recruit vacancies.
• The January 2002 seniority list completely ignored the previous directions of CAT, which had attained finality, and proceeded to apply the 1986 OM retrospectively, in regard to pre-1986 promotees, as well as ad-hoc promotees, without considering that most such promotees were in fact promoted within the quota available to them, under the rules.
• The department ignored two facts: first, that 110 appointments were made which were adjustable only against the direct recruit quota, and second, that the existence of a ban, though partial, preventing direct recruitment, was a neutral fact that could not have operated against the promotees.
• The method of calculating promotee quota vacancies was flawed. The quota is to be worked out based on the total vacancies arising each year, as supported by the 1979 Rules and 1986 OM. The department’s stand that the quota is to be worked out not on the total reported vacancies but on the indents placed with the SSC for direct recruits is unjustified.
• The 1986 OM is an executive instruction subordinate to statutory rules formulated under Article 309 of the Constitution. Rule 7 of the 1979 Rules empowers the department to relax any of the rules. The Ministry of Finance imposed restrictions on filling direct recruit vacancies during 1984-1990, exempting vacancies to be filled by promotion.
• Replies under the Right to Information Act (RTI) confirmed that restrictions on filling direct recruit vacancies did not apply to vacancies filled by promotion, provided the resultant vacancies in the lowest level of the cadre were not filled during the ban period.
• The 25% promotee quota vacancies were worked out based on actual vacancies available each year, and the promotee inspectors were promoted well within their quota.

Arguments by the Direct Recruit Inspectors (Respondents):

• The impugned judgment does not call for interference, as the question of inter se seniority has been gone into multiple times, and the department correctly interpreted previous rulings.
• The previous seniority list (as on 01.01.1992) dated 15.10.1997 was not challenged by the promotees, but by the direct recruits. Therefore, the promotees cannot seek better seniority than what their position was in the list dated 15.10.1997.
• The vacancy register at most indicates the vacancy position in the cadre and is not meant to confer the benefit of promotion on in-service candidates, especially when promotions are to be made based on indents for direct recruits.
• The pertinent issue was whether promotees can claim seniority over the direct recruits when they occupied posts beyond the prescribed ratio, subject to the bunching process. Some promotees were promoted on a temporary or ad-hoc basis, and their seniority can only be assigned when the vacancy crystallizes, subject to the quota rule.
• There cannot be excess direct recruitment, as only clear vacancies are reported to selection agencies, while promotions can be given on an ad-hoc or temporary basis. The bunching process balances the ratio without much deviation.
• The OMs are to be read as they are, and quotas have been specifically fixed between direct recruits and promotees at 75% and 25%. The quota of promotees is co-relatable to the indent placed for direct recruitment with the SSC and has no relation to permanent strength or vacancy position.
• The direct recruit/promotee register is not a vacancy register, and discrepancies in it were highlighted to the CAT. The Departmental Promotion Committee (DPC) reports are more authentic in considering if promotions were made regularly.
• Promotions should conform to the quota prescription under the rules, and the CAT should have held that promotions could only be given in proportion to the promotee quota based on indents placed for direct recruitment.
• The bunching system was introduced not to cause injustice to promotee officers, and the Central Government clarified that promotions could be given to the extent of the indent by resorting to the bunching system, even if the indented vacancies were not filled up.

Arguments by the Central Government (Respondent):

• The relative seniority of direct recruits and promotees has to be determined according to the rotation of vacancies based on the quota of vacancies reserved for direct recruitment and promotion in the Recruitment Rules.
• While finalizing the seniority of Inspectors for the years 1983 to 2002 as on 01.01.2002, the promotee quota vacancies were arrived at year-wise, in terms of the indents placed to the SSC for direct recruitment and other appointments made under direct recruit quota.
• In tune with the OM of 1986, all excess promotees were not given any seniority position in the seniority list dated 15.10.1997, and since the appellants did not challenge that list, they cannot challenge their seniority position in the impugned seniority list.
• In accordance with the principle adopted, the indents placed to SSC together with actual appointments on compassionate grounds, sports quota, and vacancies for inter-Commissionerate transfers were taken as vacancies meant for direct recruitment.

[TABLE] Submissions by Parties

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue that the court addressed was:

• How to determine the inter se seniority between direct recruits and promotee inspectors, particularly when promotions occurred during a period when direct recruitment was restricted?

The Court also dealt with the following sub-issues:

• Whether the 1986 OM was to be applied retrospectively or prospectively.
• Whether the promotee quota was to be determined based on the actual vacancies arising each year or based on the number of vacancies indented for direct recruitment.
• Whether promotions made during a ban on direct recruitment could be considered as being within the promotee quota.
• Whether the direct recruit/promotee register was an authentic document for determining the number of vacancies.
• Whether the date of appointment of direct recruits was the date for counting seniority.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities while deciding the case:

Cases

Legal Provisions

Judgment

The Supreme Court allowed the appeals by the promotee inspectors and set aside the judgment of the High Court. The Court held that the High Court had erred in its interpretation of the 1986 OM and in its understanding of the facts of the case. The Supreme Court restored the order of the Central Administrative Tribunal (CAT). The Court reasoned that the promotees were not promoted in excess of their quota, and that the ban on direct recruitment during 1984-1990 did not mean that the promotees had to be treated as ad-hoc appointees. The Court also emphasized that the promotee quota had to be determined based on the actual vacancies arising each year, not on the indents placed for direct recruitment.

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

The court analyzed the authorities as follows:

• State Of West Bengal & Ors v Aghore Nath Dey & Ors [1993 (3) SCC 371]:* The court distinguished this case, stating that the promotions inthe present case were not in excess of the quota, unlike in Aghore Nath Dey.
• Devindra Prasad Sharma v State of Mizoram [1997 (4) SCC 422]: The court distinguished this case, holding that the rules were different and that the present case involved a unique situation due to the ban on direct recruitment and the existence of promotee vacancies.
• Suraj Parkash Gupta v State of J& K [2000 (3) SCR 807]: The court distinguished this case, stating that the promotions in the present case were not in excess of the quota, unlike in Suraj Parkash Gupta.
• K.V. Subba Rao & Ors. v. Government of Andhra Pradesh [1988 (2) SCR 1118]: The court followed this case, reiterating that seniority cannot be claimed from a date before appointment.
• M. Nirmala v State of AP [1986 (3) SCR 507]: The court followed this case to support the principle that seniority cannot be claimed from a date before regularization.
• M. Subba Reddy v A.P. State Road Transport Corporation [2004 Supp (2) SCR 7]: The court distinguished this case, stating that the promotions in the present case were not against direct recruit vacancies but against vacancies in their own quota.
• State of Uttaranchal & Ors. v Dinesh Kumar Sharma [2006 Supp (10) SCR 1]: The court followed this case, reiterating that seniority is to be reckoned from the date of appointment, not the date when the vacancy arose.
• AFHQ/ISOs SOs (DP) Association & Ors. V. Union of India (UOI) & Ors [2008 (3) SCC 331]: The court used this case to distinguish Subba Reddy, noting that the present case involved a ban on direct recruitment.
• Pawan Pratap Singh v. Reevan Singh [2011 (2) SCR 831]: The court followed the principles laid down in this case regarding the determination of seniority.
• Direct Recruit Class II Engg. Officers’ Assn. v. State of Maharashtra [(1990) 2 SCR 900]: The court referred to this Constitution Bench decision to emphasize that inter se seniority is determined by service rules.
• P. Sudhakar Rao & Ors. v U. Govinda Rao & Ors [(2013) 8 SCC 693]: The court reiterated that seniority cannot be given from a date anterior to the date of appointment.

Ratio Decidendi

The ratio decidendi of the judgment can be summarized as follows:

• Prospective Application of OMs: Executive instructions, such as the 1986 OM, are to be applied prospectively unless expressly stated otherwise. They cannot be applied retrospectively to the detriment of employees who were promoted before the issuance of such instructions.
• Determination of Promotee Quota: The promotee quota is to be determined based on the actual vacancies arising each year, not on the indents placed for direct recruitment. The existence of a ban on direct recruitment does not alter this principle.
• Promotions During Ban: Promotions made during a ban on direct recruitment, if exempted from the ban, are to be considered regular and within the promotee quota. Such promotions cannot be treated as ad-hoc or temporary appointments.
• Authenticity of Register: The direct recruit/promotee register is an authentic document for determining the number of vacancies and the actual promotions made.
• Date of Seniority: The seniority of direct recruits is to be counted from the date of their actual appointment, not from the date of receipt of dossiers or recommendation.

Obiter Dicta

There are no explicit obiter dicta in the judgment. However, the following points can be considered as observations made by the court that are not essential to the decision:

• The court emphasized the need for a fair and equitable interpretation of service rules and executive instructions to ensure that the legitimate expectations of employees are not defeated.
• The court stressed the importance of maintaining authentic records, such as the direct recruit/promotee register, for determining vacancies and promotions.

Conclusion

The Supreme Court’s judgment in B.S. Murthy vs. A. Ravinder Singh (2022) provides significant clarity on the determination of seniority between direct recruits and promotees in the Central Excise Department. The Court’s emphasis on the prospective application of executive instructions, the calculation of promotee quota based on actual vacancies, and the recognition of promotions during a ban on direct recruitment as regular appointments, ensures a more equitable system for determining seniority. This judgment clarifies the application of executive instructions and statutory rules in determining seniority, and it has significant implications for similar service law disputes.