Supreme Court clarifies the scope of compromise orders in service matters: R. Muthukumar & Ors. vs. TANGEDCO & Ors. (2022)

Date of the Judgment: 07 February 2022

Citation: 2022 INSC 123

Judges: Uday Umesh Lalit, S. Ravindra Bhat, Bela M. Trivedi

Can a public employer be compelled to extend benefits of a compromise order to individuals who were not party to the original proceedings? The Supreme Court of India recently addressed this question, clarifying that a compromise order cannot be the basis for claiming parity by non-parties. The Court held that such orders are binding only on the parties involved and do not set a precedent for others seeking similar relief. This judgment impacts how compromise orders are viewed in service matters and their precedential value. The bench comprised Justices Uday Umesh Lalit, S. Ravindra Bhat, and Bela M. Trivedi, with the opinion authored by Justice S. Ravindra Bhat.

Case Background

In 2012, Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO) initiated a recruitment drive to fill 4000 ITI Helper (Trainee) vacancies. This recruitment process was based on a report by Justice Khalid, a former Judge of the Supreme Court, who recommended a 1:1 ratio for appointing existing workers and skilled ITI workers. The recruitment process involved calling candidates from the Employment Exchange, with a ratio of 1:5 between Electrician and Wireman trades. Initially, TANGEDCO decided against conducting interviews, but later introduced them for physical fitness assessment, assigning 85% weightage to academic marks and 15% to interview performance.

Some candidates approached the Madras High Court, seeking relaxation of the upper age limit, which was granted. Subsequently, the recruitment process continued with the inclusion of interviews. Candidates who were not selected filed writ petitions, which were initially dismissed by a single judge. However, on appeal, a Division Bench of the Madras High Court passed a compromise order on 14 October 2015, directing TANGEDCO to appoint 84 petitioners who were party to the compromise. This order was based on a compromise between the parties and did not involve an assessment of the merits of the case. Following this, many other unsuccessful candidates sought similar benefits, leading to further litigation.

Timeline

Course of Proceedings

Initially, a single judge of the Madras High Court dismissed the writ petitions filed by unsuccessful candidates, upholding the recruitment process. The single judge reasoned that the interview process was consistent with previous practices and that the candidates had willingly participated in the selection process. However, on appeal, a Division Bench passed a compromise order, directing TANGEDCO to appoint 84 petitioners who were party to the compromise. This order was based on a compromise between the parties and did not involve an assessment of the merits of the case. Subsequently, other unsuccessful candidates filed writ petitions seeking similar benefits. A single judge dismissed some of these petitions, while another allowed them, leading to appeals before the Division Bench. The Division Bench, in a common judgment dated 02 August 2018, dismissed the appeals of the candidates seeking parity and allowed TANGEDCO’s appeals. This judgment was then challenged before the Supreme Court.

Legal Framework

The legal framework in this case revolves around the principles of equality under Article 14 of the Constitution of India, which mandates that all similarly situated individuals should be treated equally. The case also involves the interpretation of compromise orders and their precedential value, particularly in service matters. The Supreme Court considered the implications of such orders on public employment and the rights of candidates who were not party to the original compromise. The court also referred to the report of Justice Khalid, which recommended a 1:1 ratio for appointing existing workers and skilled ITI workers.

Arguments

Arguments of the Aggrieved Appellants:

• The aggrieved appellants argued that TANGEDCO acted unfairly and discriminatorily by refusing to employ those who were not parties to the compromise order.
• They contended that their performance might have been better than the 84 candidates who were offered employment through the compromise.
• They asserted that there is no legitimate basis to distinguish between them and those who benefited from the compromise, except for the fact that the latter approached the court earlier.
• The appellants argued that once TANGEDCO decided to offer employment to unsuccessful candidates, this policy should have been implemented fairly and evenly.
• They submitted that restricting the benefit of employment to those who approached the court earlier violated Article 14 of the Constitution.
• The appellants relied on the decision in State of Uttar Pradesh & Ors. v. Aravind Kumar Srivastava & others [(2015) 1 SCC 347], arguing that a public employer must treat all similarly situated candidates equally, irrespective of whether they approached the court.

Arguments of TANGEDCO:

• TANGEDCO argued that the compromise order was not based on the merits of the case but on a compromise memo, and therefore, it had no precedential value and was binding only on the parties involved.
• They submitted that the appellants were rejected in 2013 but approached the court belatedly after the compromise order.
• TANGEDCO contended that the compromise order was an aberration, as they were bound to appoint only successful candidates.
• They argued that the courts can grant relief only based on legal provisions and their application, and the compromise order lacked such legal basis.
• TANGEDCO stressed that the compromise order was not an order in rem and therefore had no legal basis for extending similar relief to others.
• They argued that a wrong committed based on a wrong order cannot compel the performance of an act not justified in law, and there is no concept of parity or negative equality in such cases.

[TABLE] Submissions of the Parties

Issues Framed by the Supreme Court

The Supreme Court framed the following key issues:

1. Whether the compromise order passed by the Division Bench of the Madras High Court could be the basis for extending similar benefits to individuals who were not parties to the original proceedings.
2. Whether the aggrieved appellants and the respondent applicants could claim parity based on the compromise order.
3. Whether TANGEDCO was justified in restricting the benefit of employment to those who were party to the compromise order.

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:

Cases:

• State of Uttar Pradesh & Ors. v. Aravind Kumar Srivastava & others [(2015) 1 SCC 347]: This case was cited by the appellants to argue that a public employer must treat all similarly situated candidates equally. The Supreme Court distinguished this case, noting that the previous orders in that case were based on merits adjudication and not on compromise.
• C. Channabasavaiah v. State of Mysore [1965 (1) SCR 360]: The Supreme Court referred to this case to highlight that a compromise order should not be accepted if it prejudices others and that the court should be slow to accept compromises unless it is clear that no one else is prejudiced.
• Ahmedabad Municipal Corporation & Ors. v. Rajubhai Somabhai Bharwad & Ors. [2015 (7) SCC 663]: The court cited this case to emphasize that a compromise entered into without proper authorization is not valid and that courts have a duty to scrutinize whether a valid compromise has been entered into.
• Basawaraj & Anr. v. Special Land Acquisition Officer [(2013) 14 SCC 81]: The Court relied on this case to reiterate that Article 14 of the Constitution is not meant to perpetuate illegality or fraud and that negative equality is not a valid principle.
• Chandigarh Admn. v. Jagjit Singh [(1995) 1 SCC 745]: This case was cited to support the principle that a wrong decision in one case does not confer a right on others to claim similar relief.
• Anand Buttons Ltd. v State of Haryana [(2005) 9 SCC 164]: This case was cited to support the principle that a wrong decision in one case does not confer a right on others to claim similar relief.
• K.K. Bhalla v. State of M.P. [(2006) 3 SCC 581]: This case was cited to support the principle that a wrong decision in one case does not confer a right on others to claim similar relief.
• Fuljit Kaur v. State of Punjab [(2010) 11 SCC 455]: This case was cited to support the principle that a wrong decision in one case does not confer a right on others to claim similar relief.
• Chaman Lal v. State of Punjab [(2014) 15 SCC 715]: This case was cited to support the principle that a wrong decision in one case does not confer a right on others to claim similar relief.
• The State of Odisha v. Anup Kumar Senapati [2019 SCC Online SC 1207]: The Court cited this case to reiterate that if an illegality or irregularity has been committed in favor of an individual or a group, others cannot invoke jurisdiction to repeat the same wrong.

Legal Provisions:

• Article 14 of the Constitution of India: The Court considered Article 14, which guarantees equality before the law and equal protection of laws, in the context of public employment and the implications of compromise orders.

[TABLE] Authorities Considered by the Court

Judgment

The Supreme Court held that the aggrieved appellants and the respondent applicants could not claim parity based on the compromise order passed by the Madras High Court. The Court reasoned that the compromise order was not based on the merits of the case but on a compromise between the parties. Therefore, it could not be considered a binding precedent for others seeking similar relief. The Court emphasized that a wrong decision in one case does not confer a right on others to claim similar benefits, and there is no concept of negative equality. The Court further stated that the appellants and the applicants had approached the court belatedly and were therefore not entitled to the benefits of the compromise order.

[TABLE] How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• State of Uttar Pradesh & Ors. v. Aravind Kumar Srivastava & others [(2015) 1 SCC 347]* was distinguished by the Court, which clarified that the previous orders in that case were based on merits adjudication and not on compromise.
• C. Channabasavaiah v. State of Mysore [1965 (1) SCR 360]* was relied upon to emphasize that a compromise order should not be accepted if it prejudices others and that the court should be slow to accept compromises unless it is clear that no one else is prejudiced.
• Ahmedabad Municipal Corporation & Ors. v. Rajubhai Somabhai Bharwad & Ors. [2015 (7) SCC 663]* was relied upon to emphasize that a compromise entered into without proper authorization is not valid and that courts have a duty to scrutinize whether a valid compromise has been entered into.
• Basawaraj & Anr. v. Special Land Acquisition Officer [(2013) 14 SCC 81]* was relied upon to reiterate that Article 14 of the Constitution is not meant to perpetuate illegality or fraud and that negative equality is not a valid principle.
• Chandigarh Admn. v. Jagjit Singh [(1995) 1 SCC 745]*, Anand Buttons Ltd. v State of Haryana [(2005) 9 SCC 164]*, K.K. Bhalla v. State of M.P. [(2006) 3 SCC 581]*, Fuljit Kaur v. State of Punjab [(2010) 11 SCC 455]*, and Chaman Lal v. State of Punjab [(2014) 15 SCC 715]* were cited to support the principle that a wrong decision in one case does not confer a right on others to claim similar relief.
• The State of Odisha v. Anup Kumar Senapati [2019 SCC Online SC 1207]* was cited to reiterate that if an illegality or irregularity has been committed in favor of an individual or a group, others cannot invoke jurisdiction to repeat the same wrong.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that a compromise order is binding only on the parties involved and cannot be the basis for claiming parity by non-parties. The Court emphasized that public employment should be based on merit and that a compromise order, which is not based on merits, cannot be the basis for extending similar benefits to others. The Court also considered the fact that the appellants and the applicants had approached the court belatedly, after the compromise order was passed, and therefore, they were not entitled to the benefits of that order. The Court also highlighted that the compromise order was not an order in rem and did not have any precedential value for others. The Court was also influenced by the principle that there is no concept of negative equality, and a wrong decision in one case cannot be the basis for extending similar benefits to others. The Court’s reasoning was also influenced by the need to maintain the integrity of the recruitment process and ensure that public employment is based on merit and fairness.

[TABLE] Ranking of Sentiment Analysis of Reasons Given by the Supreme Court

Fact:Law Ratio Table

The Supreme Court’s decision was heavily influenced by legal principles (70%) such as the binding nature of compromise orders, the principle of negative equality, and the need for merit-based public employment. The factual aspects of the case (30%), such as the timing of the appellants’ approach to the court and the nature of the compromise order, also played a role in the court’s reasoning.

Logical Reasoning

Key Takeaways

• A compromise order is binding only on the parties involved and cannot be the basis for claiming parity by non-parties.
• Public employment should be based on merit, and a compromise order, which is not based on merits, cannot be the basis for extending similar benefits to others.
• Individuals seeking benefits based on a compromise order must approach the court in a timely manner.
• There is no concept of negative equality, and a wrong decision in one case cannot be the basis for extending similar benefits to others.
• The integrity of the recruitment process must be maintained, and public employment should be based on fairness.

Directions

The Supreme Court did not issue any specific directions other than dismissing the appeals of the aggrieved candidates and allowing the appeals of TANGEDCO.

Development of Law

The ratio decidendi of this case is that a compromise order is binding only on the parties involved and cannot be the basis for extending similar benefits to non-parties. This judgment reinforces the principle that public employment should be based on merit and that there is no concept of negative equality. This case clarifies the scope and limitations of compromise orders in service matters and establishes that such orders do not have precedential value for others seeking similar relief. This is a reaffirmation of the principle that public employment should be based on merit and that there is no concept of negative equality.

Conclusion

In conclusion, the Supreme Court’s judgment in R. Muthukumar & Ors. vs. The Chairman and Managing Director TANGEDCO & Ors. clarifies that a compromise order is binding only on the parties involved and does not set a precedent for others seeking similar relief. The Court emphasized that public employment should be based on merit and that there is no concept of negative equality. This judgment has significant implications for service matters and underscores the importance of maintaining the integrity of the recruitment process.

Category

Parent Category: Service Law

Child Categories:

• Compromise Orders
• Public Employment
• Article 14, Constitution of India
• Parity in Service Matters
• Recruitment Process
• Negative Equality
• Laches and Delays

Parent Category: Constitution of India

Child Categories:

• Article 14, Constitution of India

FAQ

Q: What is a compromise order?

A: A compromise order is an order passed by a court based on an agreement between the parties involved in a legal dispute, without a full assessment of the merits of the case.

Q: Can a compromise order be used as a precedent for others?

A: No, a compromise order is binding only on the parties involved and cannot be used as a precedent for others seeking similar relief.

Q: What does the Supreme Court say about public employment?

A: The Supreme Court emphasized that public employment should be based on merit and that a compromise order, which is not based on merits, cannot be the basis for extending similar benefits to others.

Q: What is negative equality?

A: Negative equality is the concept that if a wrong decision has been made in one case, it does not confer a right on others to claim similar benefits. The Supreme Court has clarified that there is no concept of negative equality.

Q: What are the implications of this judgment for service matters?

A: This judgment clarifies the scope and limitations of compromise orders in service matters, establishing that such orders do not have precedential value for others seeking similar relief. It underscores the importance of maintaining the integrity of the recruitment process and ensuring that public employment is based on merit and fairness.