Supreme Court Upholds Ban on Inter-Commissionerate Transfers: SK Nausad Rahaman vs. Union of India (2022)

Date of the Judgment: 10 March 2022

Citation: 2022 INSC 217

Judges: Dr Dhananjaya Y Chandrachud, J and Vikram Nath, J

Can the government restrict transfers of its employees between different departments? The Supreme Court of India recently addressed this question in a case concerning Inter-Commissionerate Transfers (ICTs) for Central Excise and Customs Inspectors. The core issue revolved around whether the existing rules permit these transfers and if a ban on such transfers infringes upon the fundamental rights of employees. The judgment was delivered by a two-judge bench comprising Justice Dr. Dhananjaya Y Chandrachud and Justice Vikram Nath, with the majority opinion authored by Justice Dr. Dhananjaya Y Chandrachud.

Case Background

The appellants in this case were Inspectors of Central Excise and Land Customs, or Goods and Services Tax Administration, who were assigned to different Cadre Controlling Authorities (CCAs). The dispute arose from a circular issued by the Central Board of Indirect Taxes and Customs (CBIC) on 20 September 2018, which effectively banned ICTs. This circular was based on the interpretation of the Central Excise and Customs Commissionerates Inspector (Central Excise, Preventive Officer and Examiner) Group ‘B’ Posts Recruitment Rules 2016 (RR 2016).

Prior to RR 2016, the Central Excise and Land Customs Department Inspector (Group C posts) Recruitment Rules 2002 (RR 2002) were in effect. RR 2002 allowed for ICTs under certain conditions. Specifically, Rule 4(ii) of RR 2002 permitted the jurisdictional Chief Commissioner of Central Excise to allow the absorption of employees from other commissionerates. However, RR 2016, which superseded RR 2002, did not include a similar provision. Rule 5 of RR 2016 stated that each CCA would have its own separate cadre, unless otherwise directed by the CBIC.

The CBIC, interpreting the absence of a provision for ICTs in RR 2016, issued the circular on 20 September 2018, stating that no ICT applications could be considered after the enforcement of RR 2016. This circular also declared that any ICT orders issued on or after 26 December 2016 (the date RR 2016 were enacted) would be considered invalid, and the concerned officers would be treated as being on loan basis.

The appellants challenged this circular, arguing that the ban on ICTs was illegal and violated their fundamental rights. The Central Administrative Tribunal initially upheld the challenge, but the High Court of Kerala reversed the Tribunal’s decision, leading to the appeals before the Supreme Court.

Timeline

Course of Proceedings

The validity of the circular dated 20 September 2018 was challenged before the Central Administrative Tribunal. The Tribunal upheld the challenge. However, the High Court, in the exercise of its jurisdiction under Article 226, reversed the decision of the Tribunal. This reversal by the High Court led to the present batch of civil appeals before the Supreme Court.

Legal Framework

The primary legal provisions and rules discussed in the judgment are:

• Section 4 of the Customs Act 1962: This section empowers the Central Board of Indirect Taxes and Customs (CBIC) to appoint individuals as customs officers.
  “4. (1) The Board may, in addition to the officers as may be notified by the Government under section 3, appoint such persons as it may think fit to be the officers under this Act.”
• Section 4 of the Central Goods and Services Tax Act 2017: This provision is similar to Section 4 of the Customs Act, allowing the Board to appoint officers for the administration of the Act.
  “4. (1) The Board may, in addition to the officers as may be notified by the Government under section 3, appoint such persons as it may think fit to be the officers under this Act. (2) Without prejudice to the provisions of sub- section (1), the Board may, by order, authorise any officer referred to in clauses (a) to (h) of section 3 to appoint officers of central tax below the rank of Assistant Commissioner of central tax for the administration of this Act.”
• Section 2(16) of the CGST Act: Defines ‘Board’ as the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act 1963.
• Rule 4 of the Central Excise and Land Customs Department Inspector (Group C posts) Recruitment Rules 2002 (RR 2002):
  • Rule 4(i): Stipulated that each Commissionerate shall have its own separate cadre unless otherwise directed by the CBIC.
    “4. Special provision. – (i) Each Commissionerate shall have its own separate cadre unless otherwise directed by the Central Board of Excise and Customs”
  • Rule 4(ii): Allowed the jurisdictional Chief Commissioner of Central Excise to order the absorption of persons from another Commissionerate in the public interest.
    “(ii) Notwithstanding anything contained in sub- rule (1), the jurisdictional Chief Commissioner of Central Excise may, if he considers to be necessary or expedient in the public interest so to do and subject to such conditions as he may determine having regard to the circumstances of the case and for reasons to be recorded in writing, order any post in the Commissionerate of Central Excise to be filled by absorption of persons holding the same or comparable posts but belonging to the cadre another Commissionerate or Directorate under the Central Board of Excise and Customs.”
• Rule 5 of the Central Excise and Customs Commissionerates Inspector (Central Excise, Preventive Officer and Examiner) Group ‘B’ Posts Recruitment Rules 2016 (RR 2016): Stipulated that each Cadre Controlling Authority (CCA) shall have its own separate cadre, unless otherwise directed by the CBIC.
  “5. Special Provision .– Each Cadre Controlling Authority (CCA) shall have its own separate cadre, unless otherwise directed by the Central Board of Excise and Customs.”
• Article 309 of the Constitution of India: Empowers the appropriate legislature to regulate the recruitment and conditions of service of persons appointed to public services and posts in connection with the affairs of the Union or of any State. The proviso to this Article empowers the President or the Governor of a State to make rules regulating the recruitment and conditions of service until such time as the appropriate legislature makes a law.
• Article 73 of the Constitution of India: Extends the executive power of the Union to the matters with respect to which Parliament has the power to make laws.
• Article 162 of the Constitution of India: Extends the executive power of a State to the matters with respect to which the Legislature of the State has the power to make laws.
• Article 77(3) of the Constitution of India: Empowers the President to make rules for the more convenient transaction of the business of the Government of India, and for the allocation among Ministers of the said business.
• The Government of India (Transaction of Business) Rules 1961: Framed under Article 77(3) of the Constitution, these rules govern the transaction of government business. Rule 4(4) mandates consultation with the Department of Personnel and Training (DoPT) on matters related to recruitment and conditions of service.
• The Government of India (Allocation of Business) Rules 1961: Framed under Article 77(3) of the Constitution, these rules allocate government business among various ministries and departments.
• Article 14 of the Constitution of India: Guarantees equality before the law and equal protection of the laws within the territory of India.
• Article 15(1) of the Constitution of India: Prohibits discrimination on grounds of religion, race, caste, sex, or place of birth.
• Article 15(3) of the Constitution of India: Allows the State to make special provisions for women and children.
• Article 16(1) of the Constitution of India: Guarantees equality of opportunity in matters of public employment.
• Article 21 of the Constitution of India: Protects the right to life and personal liberty.

Arguments

The appellants, primarily Inspectors of Central Excise and Land Customs, argued against the ban on ICTs, making several key submissions:

Main Submission 1: The absence of a provision for ICTs in RR 2016 does not prohibit them.

• Sub-argument 1.1: Rule 5 of RR 2016, which states that each CCA shall have its own separate cadre, also includes the phrase “unless otherwise directed by the Central Board of Excise and Customs.” This implies that the CBIC has the power to allow ICTs.
• Sub-argument 1.2: The CBIC’s instructions of 27 October 2011, which lifted the ban on ICTs, should be considered as an exercise of this power to direct otherwise.
• Sub-argument 1.3: The premise of the circular dated 20 September 2018, that RR 2016 does not have a provision for recruitment by absorption, is incorrect. The Board retains the power to issue directions that allow for ICTs.
• Sub-argument 1.4: The non-inclusion of Rule 4(ii) of RR 2002 in RR 2016 was based on the understanding that such a provision is generally not made in recruitment rules, not that ICTs were to be prohibited.

Main Submission 2: The ban on ICTs, particularly on spousal grounds, violates fundamental rights.

• Sub-argument 2.1: In the absence of specific provisions in RR 2016, the Office Memorandums (OMs) issued by the Department of Personnel and Training (DoPT) should govern ICTs. DoPT has a long-standing policy for posting spouses at the same station.
• Sub-argument 2.2: The ICTs have historically been governed by OMs of DoPT and the Department of Revenue, and the absence of a specific provision in RR 2016 does not alter this.
• Sub-argument 2.3: DoPT circulars are in furtherance of the constitutional object of maintaining equality and women’s empowerment under Article 15(3) of the Constitution.
• Sub-argument 2.4: Any conflict between the policies of DoPT and the Department of Revenue should be resolved by giving primacy to DoPT on matters of recruitment and service conditions, according to The Government of India (Transaction of Business Rules) 1961.
• Sub-argument 2.5: The circular of 20 September 2018 was brought into force without the approval of DoPT, making it contrary to the Transaction of Business Rules.
• Sub-argument 2.6: The ban on ICTs discriminates between Group A and Group B/C employees and vis-à-vis other services under the Central Government where DoPT circulars apply, violating Articles 14 and 16(1) of the Constitution.
• Sub-argument 2.7: The circular indirectly discriminates and denies equality of opportunity to women, violating Articles 15(1) and 16(1) of the Constitution.
• Sub-argument 2.8: The circular does not satisfy an integrated proportionality analysis.

Main Submission 3: The power to effect ICTs, previously with the Commissionerate, now vests with the Board.

• Sub-argument 3.1: The non-inclusion of Rule 4(ii) in RR 2016 means the power to effect ICTs has been shifted from the Commissionerate to the Board.

Main Submission 4: The circular ignores the DoPT advice that the stipulation of ICTs was a surplusage in recruitment rules.

• Sub-argument 4.1: The advice of DoPT was merely that such a stipulation was a surplusage in the recruitment rules.

Main Submission 5: ICTs do not affect promotional avenues.

• Sub-argument 5.1: Under RR 2016, 90% of the cadre strength is for direct recruitment. An ICT is against the direct recruitment quota, so no promotional avenues are affected.

Main Submission 6: ICTs have always been governed by executive instructions.

• Sub-argument 6.1: Since 1958, ICTs have always been governed by executive instructions.

Main Submission 7: If the High Court’s decision is upheld, those who have already been transferred should be protected.

The respondents, represented by the Additional Solicitor General (ASG), argued in favor of the ban on ICTs:

Main Submission 1: No employee has a fundamental or vested right to transfer.

• Sub-argument 1.1: Transfer is a condition of service governed by applicable rules.

Main Submission 2: RR 2016 does not have a provision for ICTs.

• Sub-argument 2.1: Rule 4 of RR 2002 had a specific provision (Rule 4(ii)) allowing for absorption from one Commissionerate to another.
• Sub-argument 2.2: Rule 5 of RR 2016 stipulates that each CCA will have a separate cadre.
• Sub-argument 2.3: In the absence of a specific provision to bring a person from one cadre to another by absorption, there is no legal power to do so.

Main Submission 3: The non-inclusion of Rule 4(ii) was intentional to curb the misuse of ICTs.

• Sub-argument 3.1: The provision for ICTs was being abused by employees for purposes like seeking promotions and reverting to their original cadres.

Main Submission 4: Permitting ICTs without an enabling provision would negate the concept of a cadre.

• Sub-argument 4.1: The entire concept of a cadre and cadre strength would be negated if ICTs are permitted without an enabling provision.

Main Submission 5: DoPT circulars cannot override statutory rules under Article 309.

• Sub-argument 5.1: DoPT circulars cannot override statutory rules framed under Article 309 of the Constitution.

Main Submission 6: Transfers are a matter of policy and not a right.

• Sub-argument 6.1: Providing any kind of transfer, including ICTs, is a matter of policy and cannot be claimed as a matter of right.

Issues Framed by the Supreme Court

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

1. Whether the Central Excise and Customs Commissionerates Inspector (Central Excise, Preventive Officer and Examiner) Group ‘B’ Posts Recruitment Rules 2016 (RR 2016) permit Inter-Commissionerate Transfers (ICTs).
2. Whether the circular dated 20 September 2018, which bans ICTs, is valid.
3. Whether the ban on ICTs violates the fundamental rights of employees, particularly concerning gender equality, the rights of disabled persons, and the right to family life.

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, in its judgment, held that:

• The Central Excise and Customs Commissionerates Inspector (Central Excise, Preventive Officer and Examiner) Group ‘B’ Posts Recruitment Rules 2016 (RR 2016) do not permit Inter-Commissionerate Transfers (ICTs).
• The circular dated 20 September 2018, which bans ICTs, is valid because it correctly interprets RR 2016.
• While the ban on ICTs is upheld, the State must revisit its policy to accommodate the concerns of gender equality, the rights of disabled persons, and the right to family life.

The Court emphasized that rules framed under Article 309 of the Constitution prevail over executive instructions. It also acknowledged the importance of considering constitutional values when formulating policies, particularly those affecting the family life of its employees.

Ratio Decidendi

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

• Supremacy of Statutory Rules: Rules framed under Article 309 of the Constitution have supremacy over executive instructions. Therefore, if the recruitment rules do not provide for ICTs, they cannot be permitted through executive orders.
• Interpretation of Recruitment Rules: The absence of a specific provision for ICTs in the recruitment rules (RR 2016) indicates that such transfers are not permissible.
• Constitutional Values in Policy Making: While policy decisions are within the domain of the executive, they must be consistent with constitutional values, including gender equality, the rights of disabled persons, and the right to family life.

Obiter Dicta

The obiter dicta in the judgment includes:

• Need for Review of Policy: The Court, while upholding the ban on ICTs, directed the respondents to revisit the policy to accommodate the concerns of gender equality, the rights of disabled persons, and the right to family life.
• Importance of Reasonable Accommodation: The Court emphasized the importance of reasonable accommodation for disabled persons, drawing from various precedents and statutory mandates.
• Impact of Policies on Women: The Court highlighted that policies should not indirectly discriminate against women and should promote equality of opportunity.

Flowchart of Decision Making

Conclusion

The Supreme Court’s judgment in SK Nausad Rahaman vs. Union of India upheld the ban on Inter-Commissionerate Transfers (ICTs) for Central Excise and Customs Inspectors, emphasizing the supremacy of statutory rules over executive instructions. While the Court acknowledged the importance of gender equality, the rights of disabled persons, and the right to family life, it did not strike down the ban. Instead, it directed the respondents to revisit the policy to accommodate these concerns. The judgment underscores the need for policy decisions to be consistent with constitutional values and highlights the importance of reasonable accommodation for disabled persons. This case serves as a significant precedent in service law, emphasizing the primacy of rules framed under Article 309 of the Constitution.