Supreme Court Upholds Employee Transfer and Seniority: Gwalior Development Authority vs. Subhash Saxena (2022)

Introduction

Date of the Judgment: March 14, 2022
Citation: 2022 INSC 285
Judges: K.M. Joseph, J., S. Ravindra Bhat, J.

Can an employee’s transfer between different development authorities be considered valid, and how should their seniority be determined when such transfers occur? The Supreme Court of India recently addressed this complex issue in a case involving the Gwalior Development Authority (GDA) and one of its employees, Subhash Saxena. The court’s decision clarifies the rules governing employee transfers and seniority disputes in Madhya Pradesh, providing important insights for both employers and employees. This judgment delves into the nuances of service law, examining the validity of transfers and the proper determination of seniority in the context of development authorities.

Case Background

The case revolves around Subhash Saxena, who was initially appointed as a Sub-Engineer in the Special Area Development Authority (SADA), Malajkhand, on June 24, 1982. He was later promoted to Assistant Engineer on November 3, 1987, effective from September 7, 1987. On December 20, 1988, the State Government modified an earlier order and posted Mr. Saxena to the Gwalior Development Authority (GDA) as an Assistant Engineer. He joined the GDA on December 29, 1988.

The State Government contended that Mr. Saxena was transferred during his probation period, first to SADA, Chirmiri, and then to GDA, Gwalior. On May 27, 1995, the State issued instructions that employees transferred but not absorbed would be treated as employees of their parent institution. On June 22, 1995, 19 SADAs, including Malajkhand, were abolished, and their assets and liabilities were transferred to the Municipal Council. Mr. Saxena applied to the GDA on September 26, 1995, for merging his services, and the State clarified on November 9, 1995, that he should be considered an employee of the Housing and Environment Department and included in the joint gradation list.

Timeline:

Course of Proceedings

The case initially involved a writ petition filed by Mr. Saxena, claiming promotion to the post of Executive Engineer in GDA. The High Court directed GDA to consider Mr. Saxena’s case for promotion, taking into account his lien with SADA. A gradation list was published on July 1, 2003, showing Mr. Saxena at Serial No. 2. However, the government later ordered that his name could not be shown under the GDA establishment. This led to further litigation, with Mr. Saxena claiming seniority from September 7, 1987.

The learned Single Judge of the High Court initially allowed Mr. Saxena’s writ petition, but this was later recalled. Subsequently, the High Court allowed the writ petitions, finding that Mr. Saxena’s promotion was made in accordance with the Special Area Development Authority (Chairman and Officers Servants Recruitment and Conditions of Service) Rules, 1976. The court held that the transfer of Mr. Saxena was prior to the 1991 Amendment Act and that the State Government’s transfer was a mode of recruitment. The court directed that Mr. Saxena be treated as an Assistant Engineer in GDA from September 7, 1987, with all consequential benefits.

This decision led to three appeals. Writ Appeal No. 327 of 2013 was filed by Shri Bharat Bihari Mathur and Shri Dev Dutt Mishra, Writ Appeal No. 48 of 2014 was filed by the State of Madhya Pradesh, and Writ Appeal No. 481 of 2013 was filed by the GDA. The Division Bench of the High Court dismissed all three writ appeals, upholding the decision of the Single Judge.

Legal Framework

The case primarily revolves around the interpretation of the Madhya Pradesh Nagar Tatagram Nivesh Adhiniyam, 1973 (referred to as ‘the Act’) and the rules framed thereunder. Key provisions include:

• Section 76B of the Act: This section relates to the constitution of the M.P. Development Authority Services. The judgment notes that the post of Assistant Engineer fell in the State Cadre.
• Section 72 of the Act: This section grants the State Government the power of superintendence and control over the acts and proceedings of officers appointed under Section 3 and the authorities under this Act. The court clarifies that this power does not extend to controlling the service of employees of the authority or SADA.
  
  The section states:
  
  “72. State Government’s power of supervision and control – The State Government shall have the power of superintendence and control over the acts and proceedings of the officers appointed under Section 3 and the authorities under this Act.”
• Section 73 of the Act: This section deals with the power of the State Government to give directions to all Authorities in the matter of policy.
• Rule 3(2) of the Madhya Pradesh Special Area Development Authority (Chairman and Officers and Servants Recruitment and Conditions of Service) Rules, 1976: This rule allows for the transfer of officers or officials from one Authority Service to another, either by mutual agreement or by the State Government.
  
  The rule states:
  
  “3(2) Officers or officials borne on these posts of these cadre are liable for transfer from one Authority Service to other Authority Service. Such transfer may be made either by the mutual agreement between the two authorities, or by the State Government.”
• Rule 17 of the 1976 Rules: This rule outlines the procedure for appointment by promotion, emphasizing seniority-cum-merit.
  
  The rule states:
  
  “17. Appointment by promotion – (1) Appointment by promotion shall be made on consideration of seniority -cum-merit.
  (2) In selecting candidates for promotion regard shall be had to: –
  (i) tact and energy
  (ii) intelligence and ability
  (iii)integrity; and
  (iv) previous record of service
  (3) The Appointing Authority shall consider the cases of al the eligible candidates and may in its discretion interview any of the candidates.
  (4) xxx xxx xxx”

Arguments

The appellants, including the State of Madhya Pradesh and the GDA, argued that Mr. Saxena’s transfer was a deputation, not an absorption. They contended that:

• The transfer was made under Section 72 of the Act, which deals with the State Government’s power of superintendence and control, and not under Section 73, which deals with policy directions.
• Rule 3(2) of the 1976 Rules applies only to transfers between SADAs, not from a SADA to a Development Authority.
• Mr. Saxena’s initial promotion in 1987 was flawed because he did not have the required 12 years of service as a Sub-Engineer, as per the PWD rules.
• The order dated 20.12.1988 was not issued by the Development Authority with prior approval of the State Government, as required for recruitment by transfer or deputation.

The respondents, led by Mr. Saxena, argued that:

• He was validly transferred to the GDA and should be treated as an employee of the GDA from September 7, 1987.
• The letter dated November 9, 1995, clarified that he was an employee of the Housing and Environment Department and should be included in the joint gradation list.
• The transfer was in accordance with the rules and that he was absorbed in the service of the Gwalior Development Authority.
• His promotion in 1987 was valid under the 1976 Rules, which did not require 12 years of service.

The State also argued that Mr. Saxena was inconsistent in his claims, initially stating that he was absorbed in the GDA by the State Government order dated 09.11.1995, and later claiming that his absorption was made by the order dated 20.12.1988.

Issues Framed by the Supreme Court

The Supreme Court addressed the following key issues:

1. Whether the transfer of the first respondent from SADA, Malajkhand to GDA, Gwalior, was a deputation or a valid transfer/absorption.
2. Whether the promotion of the first respondent in 1987 was valid, considering the State’s contention that the PWD rules requiring 12 years of service should apply.
3. How the seniority of the first respondent should be determined in the context of the transfer and promotion.
4. Whether the State and GDA could challenge the High Court’s judgment when they had not challenged the initial judgment in Writ Appeal No. 327 of 2013.

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 dismissed the appeals, upholding the High Court’s decision. The court found that:

The Court also analyzed the authorities and held that:

The Court emphasized that the first respondent was transferred in 1988 as an Assistant Engineer and continued to work in the GDA. The final seniority list dated 01.07.2003 showed him as absorbed in the GDA. The Court declined to interfere, considering the passage of time and the dismissal of earlier petitions.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several factors, including the validity of the transfer, the legality of the promotion, and the procedural aspects of the case. The court emphasized the importance of adhering to the rules and regulations governing service conditions. The court also considered the fact that the first respondent had been working in the GDA for a long period and was shown as absorbed in the final seniority list. The court also gave importance to the fact that the State and GDA did not challenge the initial judgment in Writ Appeal No. 327 of 2013.

The court’s reasoning can be summarized as follows:

The court rejected the State’s argument that the transfer was a deputation, stating that “Section 72 of the Act read as follows: ‘72. State Government’s power of supervision and control – The State Government shall have the power of superintendence and control over the acts and proceedings of the officers appointed under Section 3 and the authorities under this Act.’”.

The court also rejected the argument that the promotion was flawed, stating that “There is no dispute that his employer , viz., SADA Malajkhand , was competent to take a decision otherwise. Rule 17 of the 1976 Rules read as follows: ‘17. Appointment by promotion – (1) Appointment by promotion shall be made on consideration of seniority -cum-merit.’”.

The court also emphasized the importance of finality in litigation, stating that “The Judgment in Writ Appeal No. 327 of 2013 would remain final as regards the State of Madhya Pradesh. Therefore, it may not be legal or proper to further consider the challenge at the instance of the State, when it is directed only against the Judgment in Writ Appeal No. 48 of 2014.”

Key Takeaways

The key takeaways from this judgment are:

• ✓ Transfers between development authorities are valid if done in accordance with the relevant rules and regulations.
• ✓ Seniority should be determined based on the applicable rules and the employee’s continuous service.
• ✓ Promotions made by competent authorities are valid if they adhere to the rules of seniority-cum-merit.
• ✓ State Governments must adhere to their own rules and cannot arbitrarily change service conditions.
• ✓ Parties must challenge judgments in a timely manner, and failure to do so can lead to the decision becoming final.
• ✓ Courts will not interfere with decisions that have become final due to the passage of time and the dismissal of earlier petitions.

Directions

The Supreme Court did not issue any specific directions other than dismissing the appeals.

Development of Law

The ratio decidendi of this case is that transfers between development authorities are valid when done according to the rules, and seniority should be determined based on continuous service. The court also emphasized that once a judgment becomes final, it cannot be challenged again by the same parties. This case reinforces the importance of adhering to service rules and the finality of judicial decisions.

Conclusion

In conclusion, the Supreme Court dismissed the appeals, upholding the High Court’s decision that Mr. Saxena’s transfer was valid, his promotion was legal, and his seniority should be reckoned from 1987. The court emphasized the importance of following service rules and the finality of judicial decisions. This judgment provides clarity on the rules governing employee transfers and seniority disputes in Madhya Pradesh.