REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 1970-1975 OF 2009

D. RAGHU AND OTHERS      ...  APPELLANT(S)

VERSUS

R. BASAVESWARUDU AND OTHERS ETC.  ... RESPONDENT(S)

WITH

CIVIL APPEAL NOS. 1976 OF 2009

J U D G M E N T

K.M. JOSEPH, J.

1. Civil  Appeal  Nos.  1970-1975  of  2009  and  Civil

Appeal No. 1976 of 2009, having been heard together,

and  as  there  are  certain  common  issues,  they  are

being disposed of by the following common Judgment.

2. In  Civil  Appeal  Nos.  1970-1975  of  2009,  the

controversy  revolves  around  the  entitlement  to

promotion to the post of Inspector of Central Excise.

In Civil Appeal No. 1976 of 2009, on the other hand,

1

the controversy relates to the right to be promoted

to the post of U.D. Clerk and Tax Assistant in the

Central Excise Department. Both these cases arise out

of  Original  Applications  (O.A.s)  filed  before  the

Central Administrative Tribunal (CAT), Hyderabad and

the  Orders  of  the  Tribunal  in  the  cases  being

questioned in a batch of Writ Petitions. As far as

Civil Appeal Nos. 1970-1975 of 2009 are concerned,

the CAT allowed               O.A. 1362 of 2002 and

directed the appellants in Civil Appeal Nos. 1970-

1975 of 2009 to be considered for promotion to the

post of Inspectors. They were originally recruited as

Data Entry Operators (DEOs) Grade ‘A’ and had been

working as Data Entry Operators Grade ‘B’ from the

year 2000. In short, the appellants, as applicants

before  the  Tribunal,  had  called  in  question  the

legality  of  Notice  dated  05.11.2002  seeking  to

confine the promotion to the post of Inspector, to

category of Tax Assistant, Upper         Division

(UD) Clerk, Stenographer Grade-II, etc., with certain

years  of  experience,  for  promotion.  Six  Writ

Petitions came to be filed, including by the Union of

2

India and the official respondents, challenging the

said  verdict  by  which  the  appellants  were  also

directed to be considered. A Division Bench of the

High Court proceeded to consider the matter. Justice

G.  Bikshapathy  wrote  an  opinion  allowing  the  Writ

Petitions, setting aside the Order of the Tribunal.

The other learned Judge, who constituted the Division

Bench,  wrote  a  separate  concurring  Judgment,  and

thus, the Writ Petitions came to be allowed. What is

found by the High Court is that the Writ Petitioners

were having a legal right, under the erstwhile Rules

which were made in the year 1979, to be considered

for promotion to the vacancies which arose prior to

the  Rules  which  came  to  be  made  with  effect  from

07.12.2002 in regard to the post of Inspector. The

High Court also found that it was only when the Rules

were made in the year 2003 that the restructuring in

the  Department,  to  which  the  Cabinet  gave  its

approval on 19.07.2001, came into effect. Regarding

vacancies  arising  after  07.12.2002,  it  was  left

undecided.

3

3. As  far  as  Civil  Appeal  No.  1976  of  2009  is

concerned, it arises from O.A. 1040 of 2003, again

decided by the CAT, Hyderabad.  

4. The impugned Order of the High Court reveals that

the  High  Court  allowed  the  Writ  Petition  filed

against  the  Order  of  the  Tribunal  following  the

Judgment  of  the  High  Court  in  the  Writ  Petitions

which formed the subject matter of the controversy

relating  to  Inspectors  and  which  is  the  subject

matter of Civil Appeal Nos. 1970-1975 of 2009. In

other  words,  following  the  principle  that  the

vacancies must be filled-up in accordance with the

extant Rules, the court found that promotions to the

post of U.D. Clerk and Tax Assistant must be effected

on the basis of the rights crystallized under the

1979 Rules, as amended.  

A LOOK AT THE RULES  THE 1979 RULES REGARDING POST OF INSPECTOR  

5. In 1979, the Rules known as the Central Excise

and  Land  Customs  Department  Group  ‘C’  Posts

Recruitment  Rules,  1979,  came  to  be  enacted  (in

short, ‘the 1979 Rules’). The Rules were made under

4

Article 309 of the Constitution of India. In the said

Rules,  apart  from  the  post  of  Inspector  (Senior

Grade)(inter alia) with a scale of pay of Rs. 550-25-

750-E.B.-30-900,  which  is  shown  as  a  post  to  be

filled-up  by  promotion,  there  is  the  post  of

Inspector (Ordinary Grade). It is this post which has

generated the controversy in Civil Appeal Nos. 1970-

1975 of 2009.

6. The  Method  of  Recruitment  is  mentioned  as

follows: a)75 per cent by Direct Recruitment;  

b)25 per cent by Promotion. Column 12, which relates

to the Grade from which Feeder Category for promotion

is shown as follows:

In  case  of  recruitment  by promotion/deputation/transfer grade  from  which  promotion/ deputation/  transfer  to  be made  

12 Promotion: By selection from amongst:

(i) Upper Division  Clerks with 5 years  service.

(ii) Upper  Division Clerks with 13 years of total service as UDC  and  Lower Division Clerk taken

5

together  subject  to the  condition  that they should have put in a minimum of two years service in the grade  of  Upper Division Clerks;

(iii) Stenographers (Senior  Grade)  with 2 years service.

(iv) Stenographers (Senior  Grade)  or Steno  (Ordinary Grade) with 12 years service  as Stenographer/  Upper Division  Clerk  and Lower Division Clerk if  any  taken together  subject  to the  condition  that they should have put in a minimum of two years  service  as Stenographer (Ordinary  Grade)  or Upper  Division Clerk.

(v) Woman  searcher  with 7  years  service  in the grade.

(vi) Draftsman  with  7 years service in the grade. Note:  Candidates will be required to possess  such physical  standard and  pass  such written  test  and practical  tests  and confirm to such age limits  as  may  be

6

specified  by  the Central  Board  of Excise  and  Customs from time to time.   

THE  ELECTRONIC  DATA  PROCESSING  DISCIPLINE  (GROUP-E TECHNICAL POST) RECRUITMENT RULES, 1992

7. On  03.04.1992,  Rules  were  made  regulating  the

method of recruitment for Group ‘C’ (Technical Post)

in the Electronic Data Processing Discipline of the

field formations of the Central Board of Excise and

Customs (CBEC). The posts included the post of Data

Entry Operator Grade ‘A’, Data Entry Operator Grade

‘B’ and the post of Data Entry Operator Grade ‘C’.

Under  Rule  5  under  the  heading  “Initial

Constitution”, persons appointed on regular basis as

Key  Punch  Operator,  Terminal  Operator  and  Lower

Division  Clerk  performing  the  duties  of  Terminal

Operator before the commencement of these Rules were

to be deemed to have been appointed as Data Entry

Operator  Grade  ‘A’  and  to  rank  enblock  senior  to

those  appointed  after  the  commencement  of  these

Rules.  The post of Data Entry Operator Grade ‘A’ was

7

to  be  filled-up  by  Direct  Recruitment.  The

educational qualification was shown as 12th Standard

Pass or equivalent. The post of Data Entry Operator

Grade ‘B’ was to be filled-up by promotion, failing

which, by transfer on deputation. As far as promotion

is concerned, Data Entry Operators Grade-A, with six

years  Regular  Service  in  the  Grade,  were  rendered

eligible for being considered for promotion. As far

as Data Entry Operators Grade ‘C’ is concerned, again

the post was to be filled-up by promotion, failing

which,  by  transfer  on  deputation,  Data  Entry

Operators Grade ‘B’, with 3 years Regular Service,

were  declared  eligible  for  being  considered  for

promotion as Data Entry Operator Grade ‘C’. There is

also the post of Data Entry Operator Grade ‘D’, to be

filled-up by promotion, failing which, by transfer on

deputation. Data Entry Operator Grade ‘C’, with four

years  regular  service,  was  Feeder  Category  for

promotion as Data Entry Operator Grade ‘D’.

THE 1996 AMENDMENT TO THE 1979 RULES  

8. On 12.07.1996, the 1979 Rules came to be amended.

Under the said amendment, the post of Tax Assistant

8

was included. 1497 posts were shown as the number of

posts,  subject  to  variation  dependent  on  workload.

The scale of pay was indicated as Rs. 1350-30-1440-

40-1800-E.B.-50-2200. The post was to be filled-up by

promotion. The Feeder Category was to be U.D. Clerk,

with  three  years  regular  service  in  the  Grade,

subject to their passing of Departmental Examination,

with minimum marks of 40 per cent and above, in each

paper.

THE  CENTRAL  EXCISE  AND  LAND  CUSTOMS  DEPARTMENT INSPECTOR (Group ‘C’ POSTS) RECRUITMENT RULES, 2002

9. By Notification dated 29.11.2002, Rules were made

in  supersession  of  the  1979  Rules.  The  Rules  are

called the Central Excise and Land Customs Department

Inspector (Group ‘C’ posts) Recruitment Rules, 2002

(hereinafter referred to as ‘Inspector Rules, 2002’,

for short). The Rules were to come into force on the

date of publication in the Official Gazette. It is

not in dispute that the publication of the Gazette is

effected on 07.12.2002.

10. In  regard  to  the  post  of  Inspector  (Central

Excise),  under  Column  11,  viz.,  Method  of

Recruitment, the Rules proclaim that 66.23 per cent

9

is to be filled-up by Direct Recruitment and 33.13

per cent is to be filled-up by promotion. Column 12

is significant and we refer to the same. It reads as

follows:

In  case  of  recruitment  by promotion/deputation/absorption, grade  from  which  promotion/ deputation/  absorption  to  be made  

12 Promotion:

(a) By  selection  from  those candidates working in the following  restructured cadres;

(i) Tax  Assistant  with  2 years  service  as  Tax Assistant  or  5  years service  as  Tax Assistant  and  Upper Division  Clerk  put together;

(ii) Upper  Division  Clerk or  stenographer  Grade III  with  5  years service;

(iii) Upper  Division  clerk with 13 years of total service  as  Upper Division  Clerk  and Lower  Division  Clerk taken together subject to the condition that they  should  have  put in  a  minimum  of  2 years  service  in  the grade  of  Upper Division Clerk;

(iv) Stenographer  Grade  II

10

with 2 years service; (v) Stenographer  Grade  II

or  Stenographer  Grade III  with  12  years service  as Stenographer  or  Upper Division  Clerk  and Lower  Division  Clerk, if any, taken together subject  to  the condition  that  they have  completed  a minimum  of  2  years service  as Stenographer Grade III or  Upper  Division Clerk.

(vi) Woman searcher with 7 years  service  in  the grade;

(vii) Draftsman with 7 years service in the grade.

(b) By  selection  from  those candidates working in the following  restructured cadre:

(i) Senior  Tax  Assistant with  2  years  regular service in the grade;

(ii) Stenographer  Grade  II with  2  years  regular service in the grade;

(iii) Women  searcher  with  7 years  service  in  the grade;

(iv) Draftsman with 7 years service in the grade.

(c) Failing  the  method  of recruitment  specified under  Clause  (b)  above, by  selection  from  those candidates working as Tax

11

Assistant  and Stenographer  Grade  III having  not  less  than  10 years  service  including the  service  to  be included for this purpose under  the  provisions  of the rules regulating the method of recruitment to the  post  of  Tax Assistant:

  Note 1 : Promotion under Clause  (a)  above  shall  be only  operative  for  a  period of two years from the date on which the restructured cadres mentioned  under  Clause  (b) above comes into existence.

The  service  rendered  under the  new  grade  in  the restructured  cadres  shall  be counted  towards  considering the eligibility for promotion under Clause (a) above.

Note  2:  Candidates  shall  be required to pass such written test as may be determined by the  Central  Board  of  Excise and  Customs  from  time  to time.  The  maximum  age  of eligibility  for  the departmental candidates shall be  45  years  which  shall  be relaxable to 47 years in the case  of  candidates  belonging to  the  Scheduled  Castes  or Scheduled  Tribes  category. However,  those  of  the officials  who  were  not considered for such promotion upto  the  age  of  45  to  47

12

years,  as  the  case  may  be, shall be granted the benefit of  relaxation  in  age  limit upto  50  years  in  order  to enable a fair opportunity of a  minimum  of  two  chances. However,  those  officials  who were considered for promotion upto the age limit of 45to 47 years, as the case may be, on two  or  more  occasions  and were  not  found  fit  for promotion  shall  not  be eligible for this relaxation.

Note  3:  Candidates  shall  be required  to  pass  physical tests  and  confirm  the physical  standards  as specified in Column 8.

Note 4: The eligible officers under  Clause  (a),  (|b)  and 9c)  above  shall  be  required to pass through an interview before promotion.

Note  5:  Where  juniors  who have  completed  their qualifying  or  eligibility service  are  being  considered for  promotion,  their  seniors would  also  be  considered provided  they  are  not  short of  the  requisite  qualifying or  eligibility  service  by more  than  half  of  such qualifying  or  eligibility service  or  two  years, whichever  is  less  and  have successfully  completed  their probation  period  for promotion to the next higher

13

grade alongwith their juniors who  have  already  completed such  qualifying  or eligibility service.  

CORRIGENDUM  DATED  24  TH   APRIL,  2003  TO  INSPECTOR RULES, 2002

11. Under the same, in Clause (a) of Column 12, which

we  have  already  extracted,  for  the  word

“restructured” in third line, it was to be read as

“pre-structured”.  The  result  of  this  amendment  is

that  Clause  (a)  under  Column  12  of  the  Inspector

Rules, 2002, was to be read as by selection of those

candidates working in the “pre-structured cadres”.

THE CENTRAL EXCISE AND CUSTOMS DEPARTMENT SENIOR TAX ASSISTANT  (GROUP  ‘C’  POSTS)  RECRUITMENT  RULES, 2003(in short S.T.A. Rules, 2003)   

12. The Rules made on 16.01.2003, came into force on

the  date  of  publication  of  the  Gazette  and  the

publication  was  effected  on  20.01.2003.  Rule  5,

around  which  debate  ensued  before  us,  reads  as

follows:

“5.  Initial  constitution.-(i)All the  persons  appointed  on  the regular  basis  at  the  time  of commencement of these rules to the

14

Grade of Assistant, Tax Assistant, Upper  Division  Clerk  (Special Pay),  Data  Entry  Operator  Grade ‘B’  and  ‘C’  shall  be  deemed  to have been appointed as Senior Tax Assistants under these rules. The service  rendered  by  them  before commencement of these rules shall be taken into account for deciding the eligibility for promotion to the next higher grade.  

(ii) Assistants(Rs. 5000-8000) and Data Entry Operator Grade ‘C’ (Rs. 5000-8000) are being redesignated as  Senior  Tax  Assistants  in  the same scale of pay. Therefore, the Assistants and Data Entry Operator Grade ‘C’ shall be placed enblock senior  to  the  other  categories. However,  their  inter-se-placement shall  be  done  according  to  the date from which they had actually been appointed to these grades on regular  basis  subject  to  the condition  that  their  inter  se placement  in  their  respective category shall not be altered.

(iii)  The  Data  Entry  Operator Grade  ‘B’  (4500-7000)  and  Tax Assistants  (4500-7000)  have  been placed  in  their  higher  scale  of 5000-8000 and they shall be placed below the Assistant and Data Entry Operator  Grade  ‘C’  and  their inter-se placement shall be fixed in  accordance  with  the  date  of regular  appointment  to  the respective  grade  subject  to  the condition  that  their  inter-se placement  in  respective  category shall not be disturbed.

15

(iv)  Upper  Division  Clerk  with special pay shall be placed below Assistant,  Data  Entry  Operator Grade  ‘c’,  Data  Entry  Operator Grade ‘B’ Tax Assistants.

(v)The present employees would be required to pass the required or suitable departmental examination, as  specified  by  the  Competent Authority, from time to time, in Computer Application and relevant procedures  within  two  years falling  which  they  would  not  be eligible for further increments.”

THE  CENTRAL  EXCISE  AND  CUSTOMS  DEPARTMENT  TAX ASSISTANT (GROUP ‘C’ POSTS) RECRUITMENT RULES, 2003

13. Lastly,  we  may  notice  the  Central  Excise  and

Customs  Department  Tax  Assistant  (Group  ‘C’  Posts)

Recruitment Rules, 2003, hereinafter referred to as

the 2003, Tax Assistant Rules. Rules are seen to be

made on 02.05.2003 and they came into force on their

publication  in  the  Official  Gazette  on  05.05.2003.

Rule 4 alone is relevant for our purpose.  

“4. Initial Constitution.-(1) The person appointed on regular basis and holding the  post  of  Upper  Division  Clerk  and Data  Entry  Operator  Grade  A  on  the commencement of these rules shall deemed to have been appointed as Tax Assistant under  these  rules  and  the  service rendered  by  such  persons  in  the respective posts before commencement of these rules shall be taken into account as regular service rendered on the post

16

of  Tax  Assistant  for  the  purpose  of promotion etc.

(2) The person holding the post of Data Entry Operator Grade -A appointed under these  rules  as  Tax  Assistant  shall, within two years from the date of such appointment as Tax Assistant, pass the Departmental Examination as conducted by the  competent  authority,  falling  which he  shall  not  be  entitled  to  get  any further increment.

(3)  Any  person,  who  holds  a  post  of Lower  Division  Clerk  on  regular  basis and falls within the seniority list as determined  by  the  appointing  authority at  the  commencement  of  these  rules shall,  on  passing  the  Departmental Computer  Proficiency  examination conducted  by  the  appointing  authority, be  deemed  to  have  been  promoted  with effect  from  date  of  passing  such examination  on  the  post  of  Tax Assistant.

(4) The Upper Division Clerks and Data Entry Operator Grade – A shall be placed en-block  senior  and,  their  inter  se placement shall be fixed in accordance with the date of regular appointment to the  respective  grade  subject  to  the condition that their inter se placement in  the  respective  grade  shall  not distributed.

(5)  Lower  Division  Clerks  shall  be placed below Upper Division Clerks and Data Entry Operator Grade – A.”   

14.  The Method of Recruitment is Direct Recruitment

in regard to 90 per cent of the vacancies and 10 per

17

cent  posts  to  be  filled-up  by  promotion.  Feeder

categories,  in  regard  to  promotion,  are  shown  as

Lower  Division  Clerks,  Head  Hawaldars,  who  had

rendered  seven  years  of  service  in  the  Grade  on

regular  basis  and  who  possesses  certain

qualifications which are mentioned therein.  IN-BETWEEN THE RULES    15. On  11.03.1988,  one-third  of  the  posts  of  U.D.

Clerks  came  to  be  abolished  and  a  Grade  of  Tax

Assistant  came  to  be  created.  Tax  Assistants  also

became  part  of  the  Feeder  Cadre  to  the  post  of

Inspector,  inter alia. On 05.08.1988, Central Board

of Excise and Customs (CBEC) clarified,  inter alia,

that Tax Assistants, with two years’ experience in

the Grade or five years’ combined service in U.D.

Clerk  and  Tax  Assistant,  were  to  be  eligible  for

promotion. Stenographers, Women Searchers, Draftsmen,

etc., were also declared eligible for promotion as

Inspector. They are the old Tax Assistants and not to

be confused with the Tax Assistants under the 2003

Rules.  

16. The next crucial development took place in the

following  background.  The  Data  Entry  Operators

18

performed  essentially  technical  functions  and  the

very concept was linked with the object of bringing

about computerization in the Department. As noticed

the  initial  constitution  consisted  of  Key  Punch

Operators,  Terminal  Operators  and  Lower  Division

Clerks performing duties of Terminal Operators, who

were  deemed  to  have  been  appointed  as  Data  Entry

Operator Grade ‘A’. The Data Entry Operators began to

complain  that  promotional  avenues  for  Data  Entry

Operator  Grade  ‘A’,  which  is  the  entry  post,  was

limited to promotions as Data Entry Operators Grade

‘B’, ‘C’ and at the top of the pyramid, Data Entry

Operator  Grade  ‘D’.  Persons  working  in  the

Ministerial  Cadre,  including  U.D.  Clerks,

Stenographers,  etc.,  were  eligible  under  the  1979

Rules,  for  being  promoted  to  the  Executive  Post,

viz., the post of Inspector,  inter alia. Data Entry

Operators complained that they would stagnate in the

post  of  Data  Entry  Operator  for  years  without

promotion.  It  would  appear  that  the  post  of  Data

Entry Operator Grade ‘D’ is not available in all the

Commissionerates  and  only  certain  Commissionerates

19

had the post of Grade ‘D’. It is pursuant to this

simmering  discontent  being  noticed  apparently  that

the  Union  Cabinet  decided  to  go  in  for  cadre

restructuring  in  the  Central  Excise  and  Customs

Department. Since, much may turn on the purport of

the  said  decision,  articulated  in  letter  dated

19.07.2001, we advert to the same: “I  am  directed  to  say  that  the

Central  Government  has  approved  the restructuring of Customs & Central Excise Department. As a result of restructuring there has been a change in the number of nomenclature of the various grades/ posts. The revised number and designation of the various  posts  at  different  level  in Customs and Central Excise Department has been indicated in Annexure – I.

2. All the post at different levels as per Annexure-I stand sanctioned with immediate effect. Wherever there is a reduction in the number of posts at any level, such reduction  will  be  effective  after  the existing  incumbents  of  the  posts  are promoted to the higher level or the post fall vacant on account of retirement etc. The number of categories of the post other than  those  referred  to  in  Annexure  ‘I’ have been kept in their existing strengths and in their existing pay scales only.

3. No direct recruitment may be made to various  grades  for  the  year  2001-2002 without approval of Ministry/ Department as the Cabinet has approved a one time relaxation for filling of all vacancies by promotion in all Cadres.

20

4. The  formation-wise  distribution  of post at different levels will be notified separately.

5. The details of the other Posts that have  been  included  in  the  restructuring have not been proposed to be altered on the scale or strengths are indicated in Annexure -II.

6. The Cadres/ Post which have not been included in the Restructuring Proposal are indicated in Annexure – III.

7. This issue in pursuance to the approval conveyed vide Cabinet Secretariat note No. 28/CM/2001 (1) dated 16.07.2001.

Yours faithfully

Sd/- (K.C. Jain)

Dy. Secretary to the Govt. of India

ANNEXURE – I

REVISED NUMBER OF POSTS AT DIFFERENT LEVELS IN THE CUSTOMS  AND  CENTRAL  EXCISE  DEPARTMENT  ON RESTRUCTURING

S.NO. POST EXISTING PAY SCALE

POST REDESIGNATED AS

PAY SCALE

SANCTIONED STRENGTH

A’ EXEC 1. Chief

Commissioner 22400- 24500

Chief Commissioner

22400- 24500

47

2. Commissioner 18400- 22400

Commissioner 18400- 22400

290

3. Additional Commissioner

14300- 18300

Additional Commissioner

14300- 18300

300

4. Joint Commissioner

12000- 16500

Joint Commissioner

12000- 16500

276

5. Deputy Commissioner

10000- 15200

Deputy Commissioner

10000- 15200

701

6. Assistant 8000- Assistant 8000- 690

21

Commissioner 13500 Commissioner 13500 B’ EXEC 7. SUPDT.CEX/S.I.O

/I.O.A.D.D. 6500- 10500

SUPDT. 6500- 10500

9437

8. SUPDT. CUS 6500- 10500

SUPDT. 6500- 10500

2520

9. Appraiser 6500- 10500

Appraiser 6500- 10500

809

C’ EXEC 10. Inspector/PO/

Examiner 6500- 9000

Inspectors 5500- 9000

18053

A’ MIN 11. CAO 8000-

13500 CAO 8000-

13500 155

B’ MIN 12. AO/ACAO/EAO 6500-

10500 6500- 10500

972

13. Sr.PA 6500- 10500

Sr.PA 6500- 10500

14. Programmer New 6500- 10500

20

15. Others* 177 C’ MIN 16. DOS L-I 5500-

9000 DOS L-I 5500-

9000 631

17. DOS L-II 5000- 8000

DOS L-II 5000- 8000

1353

18. DEO-GR. D 5500- 9000

ASTT. PROG 5500- 9000

60

19. SR. TAX Assistant

NEW 5000- 8000

3152

20. TAX ASSISTANT NEW 4000- 6000

5525

21. LDC 3050- 4590

LDC 3050- 4590

717

22. STENO GR. – I 5500- 9000

STENO GR.-I 5500- 9000

244

23. STENO GR. – II 5000- 8000

STENO GR- II 5000- 8000

490

24. STENO GR.-III 4000- 6000

STENO  GR.- III

4000- 6000

490

25. OTHERS* 803 C’ EXEC (OTHERS) 26. DRIVERS – I 4500-

7500 DRIVERS-I 4500-

7500 414

27. DRIVERS – II 4000- 6000

DRIVERS – II 4000- 6000

526

28. DRIVERS – III 3200- 6000

DRIVERS-III 3200- 6000

1130

29. ARMOURER 3200- ASI (Weapon) 3200- 51

22

4900 4900 30. OTHERS* 55 31. HAVALDAR 2650-

4900 HAVALDAR 2650-

4900 4326

32. SEPOY 2550- 3540

SEPOY 2550- 3540

9339

33. OTHERS* 1071

TOTAL 65161   

NOTES: 1.The posts in the grade of Supdts. Also

include of S.I.O., A.A.D.I.O. of various directorates               (S.I. No.).

2.The posts in the grade of inspector also include the post of P.O. and Examiner and intelligence Officer (S.I. No. 10).

3.The post in the grade of A.O. also include the post of A.C.A.O. and E.A.O. (Sl. No. 12).

4.The existing post in the cadres of Asst., Tax Asst., UDC (Sp Pay), DEO Gr. (C) and DEO  Gr.(B)  have  been  merged  into  an redesignated  as  Sr.  Tax  Asst.  (Sl.  No. 19).

5.The existing posts in the cadres of UDC, DEO(A) and LDC (except 717 posts of LDC for the promotion of Group D) have been merged  and  redesignated  as  Tax  Asstt. (New) (S.I. No. 20)

6.The cadre of O.S. has been abolished and the post have been merged in the posts of A.O. (Sl. No. 19)

7.Other posts which exists in the department and are not reflected in the above table have been kept in existing strengths in the existing pay scales only.

8.Details  of  Others  posts  are  given  in Annexure II (Sl. No. 15, 25,30 & 33).

Sd… (K.C.Jain)

Dy. Secretary to Govt. of India”

23

17. On  10.09.2001,  the  CBEC  directed  a  freeze  on

promotion. It reads as follows:

“New Delhi, the 10.09.01

To,

All  Chief  Commissioners/Commissioners  of Customs and Central Excise, All  Directors  Generals/Directors  of Customs and Central Excise Narcotics Commissioner, C.B.N. Gwalior

Subject: Holding of DPC for promotion to the grade of Group ‘B’ & ‘C’ in C.B.E.C. Department – reg.

Sir,

I am directed to say that the issue of holding of DPCs in respect of Group ‘B’ &  ‘C’  posts  as  well  as  making  direct recruitment to the various posts pending distribution  of  posts  of  various  field formations  is  being  undertaken  by  the Implementation  Cell  in  Pursuant  to sanction issued by Board’s letter F.No.A- 11019/72/99-Ad.IV  dated  19.07.2001 conveying the approval of the Cabinet to the restructuring of Customs and Central Excise Department has been considered by the Board.

2. It is felt that if the DPCs for group ‘B’  &  ‘C’  are  conducted  by  the  cadre authorities  it  may  lead  to  widening  of imbalances  in  promotion  prospects  or create  imbalances.  The  Board  have, therefore, decided that the holding of DPC of group ‘B’ & ‘C’ post may be frozen and no DPC may be held for Group ‘B’ & ‘C’ post till the distribution of posts under

24

various  level  is  completed  and instructions are issued by the Board in this regard.

3. As  you  are  aware  that  Board  have already imposed a ban for filling up of posts of LDCs and Sepoys vide their letter F.No.  A-11012/27/2000-Ad.  IV  dated 10.04.2001,  it  is  reiterated  that  these instructions  may  be  strictly  adhered  to and it is further stated that no direct recruitment may be made to any grade till further orders of the Board/ Department of Revenue.  

4. The receipt of this letter may please by acknowledged.

Yours faithfully, SD/-

(Y.P. Vashishat) Under Secretary to the Govt. of India”

18.  Thereafter,  there  is  communication  dated

19.09.2001, which will be adverted to later on.  

19. It is necessary to note what is alleged to be an

Order  of  the  CBEC,  lifting  the  ban  on  promotion,

dated 03.01.2002:  “New Delhi, the 3rd Jan, 2002

To, All Chief Commissioners/ Commissioners of  Customs and Central Excise, All Directors Generals/ Directors of  Customs and Central Excise. Narcotics Commissioner, C.B.N. Gwalior

Subject: Holding of DPC for promotion to the grade of Group ‘B’ & ‘C’ in C.B.E.C. Department – reg.

Sir,

25

I  am  directed  to  refer  to  Board’s letter  of  even  number  dated  10.9.2001 imposing  a  ban  on  holding  of  DPCs  for Group  ‘B’  &  ‘C’  posts.  The  Board  have received  representations  against  the aforesaid ban on promotions.

2. The matter has been considered by the Board and it has been decided that where ever the DPC, have already been held, the panel prepared by the DPCs may be given effect and the resultant vacancies in the feeder cadre may also be filled up. Where the DPCs have not been held, the DPCs may be  held  on  the  basis  of  pre-revised strength i.e. the strength existing before the cadre restructuring and the resultant vacancies may be filled up. 3. Action may be taken on priority basis under intimation to the Board.

Yours faithfully, SD/-

(Y.P. Vashishat) Under Secretary to the Govt. of India”

    20. The communication dated 05.06.2002 by the CBEC

purporting  to  allocate  posts  to  each  zone,  and

communicating  the  sanctioned  strength,  needs  to  be

noticed: “F. No. A-11013/4/2002-Ad.IV

Government of India Ministry of Finance Department of Revenue Central Board of Excise & Customs

Dated: 05th June, 2002

26

To  All  Chief  Commissioners  of  Central Excise and Customs, All Chief Commissioners of Customs, All  Chief  Commissioners  of  Customs (Preventive), All Directors General, All Directors. Chief Departmental Representative, CEGAT Chairman, Settlement Commission.

Subject: Allocation of posts in Group ‘A’, ‘B’, ‘C’ and ‘D’ amongst various Zones/Commissionerates  and Directorates Gen. / Directorates – reg.

Sir,

I  am  directed  to  refer  to Ministry’s  letter  F.  No  A- 11019/72/99-Ad.IV  dated  19th  July 2001,  notifying  the  revised sanctioned  strength  at  different levels  in  the  Central  Excise  & Customs  department  consequent  to approval  of  cadre  restructuring  of Central  Excise  and  Customs departments by the Union Cabinet.

2. I am further directed to say that the allocation of staff to the Zones  /  Commissionerate  / Directorates  Gen.  /  Directorates  at different levels has been decided by the  Board  and  approved  by  the Government has been detailed in the enclosed  Folder.  The  allocation indicated  herein  supersedes  all earlier allocations in respect of the Cadres/Categories  in  the  enclosed folder. The number and categories of posts in the Central Excise & Customs department other than those referred to  in  the  enclosed  Folder  remains unaltered.

27

3. Separate staff strength has been allocated  for  the  offices  of  Chief Commissioner,  Commissioner  (Appeals) and  Commissioner  (Adjudication)  for which  no  separate  staff  had  been allocated  till  now.  The  staff allocated  to  these  formations  has been shown along with the allocation to the Commissionerate in which city it is located. The model adopted for the  allocation  is  indicated  in Annexure – IV of the enclosed folder. 4. I am also directed to request all Chief  Commissioners  and  other  Heads of Department to carefully study the details  of  reorganization  of  the Customs and Central Excise formations and bring to the notice of the Board any discrepancies or any aspects that may  require  review  or  may  not  have been  taken  into  account,  to  enable necessary  corrective  steps  may  be taken  at  an  early  date  with  the approval of appropriate authority. 5. I am further directed to say that the sanctioned strength now indicated supersedes  all  previous  sanction issued  so  far.  The  sanctioned strength  now  indicated  will accordingly  form  your  sanctioned strength of Group ‘A’, ‘B’, ‘C’ & ‘D’ posts. As indicated in the preceding paras,  the  Chief  Commissioners  are requested to study the allocation of posts  within  their  respective jurisdiction and send proposal which are  considered  necessary  within  the overall sanctioned strength provided to the Commissionerates within their jurisdiction. 6. I am also directed to inform that the Cadre Control which is presently vested with respective Commissioners in particular Zones will continue to

28

vest  with  them  for  the  present  in order  to  ensure  that  there  is  no dislocation  in  the  cadre  management at  the  field  level.  Switch  over  of cadre  control  from  Commissioners  to Chief Commissioners would be effected from a date to be specified after the new formations come into existence. 7. It has been decided to extend the ban on direct recruitment imposed, in terms of para 3 of Deptt’s letter F. No.  A-11019/72/99  Ad.IV  dated 19.07.2001 upto 31.12.2002. However, the ban would be applicable only to the posts that have been included in the cadre restructuring. It has also been decided that the ban on direct recruitment  would  not  apply  to compassionate  ground  appointments made with the approval of the Board. 8. The Detailed instructions/ orders/ Recruitment  Rules  governing  the manner of filling up of the vacancies at  all  levels  will  be  issued separately. No vacancy in respect of the  posts  included  in  the  cadre restructuring  should  be  filled  up till such time as further orders are issued.

Yours faithfully Encls.: As above

(Y.P.Vashishat)  Under Secretary to the Govt. of

India”

21. Still further, on 19.09.2002, the CBEC initiated

process for filling-up of vacancies based on the post

restructuring  strength  and  permitting  convening  of

Departmental  Promotion  Committees  (DPCs)  where  the

revised Recruitment Rules stood circulated. It was,

29

however,  clarified  that  promotion  orders  would  be

issued only on the directions of the Ministry. That

ban on Direct Recruitment was to continue. The Order

reads as follows:

“New Delhi, Dated 19th September, 2002 To All Chief Commissioner of Central Excise, All Chief Commissioner of Customs, All Chief Commissioners of Customs  (Preventive), All Director General, All Directors, The Chief Department Representative CEGAT The Chairman, Settlement Commission.

Sir,

Subject: Filling up of posts in Group B, C and D – reg.

I am directed to refer to Ministry’s letter  F.No.A-11013/4/2002-Ad.  IV  dated 05.06.2002 on he allocation of posts in Group  ‘A’,  ‘B’,  ‘C’  and  ‘D’  amongst various  Commissionerates  and  Directoraes General/ Directorates. So far as Group ‘A’ posts suitable action is being taken by the  Board.  As  for  remaining  posts,  you have already been advised o hold DPCs for promotion to the grade of Superintendents of  Central  Excise,  Superintendents  of Customs  (Prev)  vide  our  letter  no. F.A.600/11/23-2002-Ad.  III  B  dated  26th

June, 2002 and to the grade of AO/ACAO/EOA Group ‘B’ vide letter F.No.A.32012/3/2002- Ad.IIB dated 15th July, 2002. The cadre of O.S. is to be merged with the cadre of A.O. and all the existing O.S. are only to redesignated  as  Administrative  Officer. Since the pay scale of both he cadres is

30

same, the re-designation can be done by an administrative order. 2. It has now been decided to initiate the process of filling up of vacancies that has  arisen  on  account  of  cadre restructuring in all remaining cadres up to Grade ‘B’. You are directed to ensure that DPCs are converted in respect of all grades where Recruitment Rules except for change in the number of posts, as also grades  where  revised  Recruitment  Rules have been circulated. You may accordingly hold  DPCs  immediately  for  filling  up vacancies  in  various  grades,  and  ensure that by 30th September, 2002 the lists are kept ready. It is clarified that promotion orders may be issued only on receipt of further directions from the Ministry. 3. The ban imposed on direct recruitment in  terms  of  para-3  of  letter F.No.A.11019/72/99-Ad.IV dated 19.07.2001 is  applicable  up  to  31.12.2002.  IT  is clarified that this ban applies only to the posts that have arisen in the cadre restructuring and that the ban will not apply to posts in the lower grades which are not to be filled by promotion, and can only be filled up by promotion, and can only be filled up by Direct Recruitment. Requisite  steps  for  filling  up  Direct Recruitment  posts  may  also  be  initiated immediately  in  accordance  with  existing instructions  on  the  subject  so  as  to ensure that Direct Recruitment vacancies can  immediately  be  filled  up  after 31.12.2002  of  Board’s  letter  of 05.06.2002. 3. Further,  in  suppression  of  the instruction contained in para 7 & 8 of Board’s  letter  of  05.06.2002  the Commissioners are also permitted to make compassionate ground appointments as well as inter Commissionerate transfers, with the  approval  of  Chief  Commissioners,  in

31

accordance with existing instructions on the subject. The instructions contained in paras (7) & (8) of Board’s letter of even no.  dated  05.06.2002  stand  modified  to this extent.

Yours faithfully, (NISHA MALHOTRA)

Jt. Secy. (Admn.)”   22. The communication dated 28.10.2002 is the next

development. It reads as follows:

“Dated 28th October, 2002

To All  Chief  Commissioner  of  Customs  & Central Excise

Subject: Draft  Recruitment  Rules  – Circulation  of  reference  and necessary action-Reg.

Sir,

Please  find  enclosed  Draft Recruitment Rules for Group ‘C’ Posts of Inspector (Central Excise & Land Customs), Inspector  (Examiner),  Inspector (Preventive  Officer)  &  Senior  Tax Assistant  as  approved  by  the  Ministry. Notifications, notifying these Rules will be  issued  shortly.  Meanwhile  you  may initiate the necessary action to start the process  for  DPC  etc.  You  may,  however, await issue of notifications before issue of any orders of promotions based on these Rules.

Draft of the Recruitment Rules of Tax Assistants will also be sent shortly as they are being finalized in consultation with law Ministry.

Yours faithfully, Sd……  

32

(B.K. Gupta) O.S.D. (Admn.) CBEC

Enclosures: As above”

23. On 06.11.2002, the Draft Recruitment Rules for

Tax Assistant came to be forwarded with the caveat

that promotion orders be not issued until the Rules

were notified: “Dated 6th November, 2002

To All  Chief  Commissioner  of  Customs  & Central Excise

Sir, Subject:  Draft  Recruitment  Rules  –

Circulation  of  reference  and  necessary action-Reg.

---

In continuation of this office letter dated  28.10.2002  forwarding  of  Draft Recruitment  Rules  of  Group  “C”  Post  of Inspector  (Central  Excise  and  land Customs), Inspector (Examiner), Inspector (Preventive  Officer)  &  Senior  Tax Assistant,  please  find  enclosed  Draft Recruitment Rules for Tax Assistant (Group “C”)  as  approved  by  the  Ministry.  The Notification  for  notifying  these  Rules will be issued shortly. Meanwhile you may get circulated these Draft Rules to all the  Commissionerates,  initiate  the necessary action to start the process for DPC etc. Confirm the issue of Notification notifying these Rules before issue of any order based on these Rules.

Yours faithfully Enclosures: As above

(B.K. Gupta)

33

O.S.D. (Admn.) CBEC”   

24. On  14.11.2002,  the  CBEC  permitted  issuance  of

promotion orders subject to certain conditions:

“New Delhi the 14th November 2002 To All Chief Commissioner All Director General All Director under CBEC

Subject : Cadre  restructuring  of Customer and Central Excise – regarding  promotion  in  the Grade ‘B’, ‘C’ and ‘D’ posts.

Sir, I am directed to refer to Minister’s

letter F. No. A-11013/01/2002-AdIV dated 19th September, 2002 regarding holding of DPC’s in all grade where Recruitment Rules Exits,  us  also  in  grades  where  revised recruitment rules have been circulated. In terms of Para 2 of the said letter, it was directed  to  hold  the  DPC’s  by  30th

September, 2002 and keep the list ready for  issue.  It  was  also  clarified  that promotion  orders  may  only  be  issued  on receipt  of  further  directions  from Ministry. 2. In  view  of  the  above,  you  are requested to issue the promotion orders in respect of remaining Group ‘B’, ‘C’ and ‘D’ posts as stated below:- (i) promotion orders in respect of Sepoy,

Havaldar,  Head  Havaldar,  Tax Assistant,  Senior  Tax  Assistant  and Inspector  of  Central Excise/Preventive Officer/Examiner of Customs may be issued on the basis of Recruitment Rules after allotment of GSR  No  by  the  Government  of  India Press. Wherever not yet allotted.

34

(ii)DPC  in  respect  of  Appraisers  and Administrative Officer may be held on the  basis  of  existing  Recruitment Rules  and  promotion  orders  may  be issued.  

(iii)DPC  in  respect  of  remaining  grades except DOS L-II may be held on the basis  of  existing  Recruitment  Rules and Promotion orders may be issued by 25.11.2002.

(iv)Promotion  in  the  grade  of  DOS  L-II may  be  made  only  after  the  new recruitment  rules  are  circulated  by the Ministry.

Yours faithfully

(Angra Ram) Under Secretary to the Government of

India”  

 25. Thereafter,  as  already  noticed,  the  Inspector

Rules, 2002 came to be notified on 07.12.2002. We may

further notice that the Senior Tax Assistant (STA)

Rules  came  to  be  notified  on  20.01.2003.  On

21.04.2003, the following decision was taken by the

CBEC:

“New Delhi, the 21st April, 2003 To, All Chief Commissioners of Central Excise, All Chief Commissioners of Customs, All Director Generals, All  Commissioner  of  Central Excise/Customs/Directors under CBEC

Subject: Cadre  Restructuring  of  Customs and  Central Excise – Fixation of

35

date of Existence of restructured cadres-reg.

Madam,  I  am  directed  to  say  that

clarification  have  been  sought  by  field formations regarding the date of existence of  restructured  cadres.  The  matter  has been examined in the Board and it has been decided that the restructured cadres would come  into  existence  from  the  dates  on which the new/amended rules are notified. Accordingly

(a) The  restructured  cadre  of Inspector  (Central  excise), Inspector (Preventive Office) and Inspector  (Examiner)  came  into effect  on  and  from  07.12.2002 i.e., the date of publication of Recruitment Rules.

(b) The restructured cadre of Senior Tax Assistant came into existence on and from 20.01.2003 i.e. the date  of  publication  of Recruitment Rule.

Yours faithfully, SD/-

(Y.P. VASHISHAT) Under Secretary to the Govt. of

India”

THE SPATE OF LITIGATION  

26. The position, as noticed, led to a scenario where

the erstwhile Data Entry Operators Grade  ‘B’ and

‘C’,  who  came  to  be  re-designated  as  Senior  Tax

Assistants  (STAs)  and  who  were  not  invited  to

participate in the promotional exercise for the post

36

of  Inspector,  launched  litigation  in  various

Tribunals across the country.

THE PROCEEDING IN THE CHANDIGARH TRIBUNAL  

27. O.A.1221  of  2002  came  to  be  filed  before  the

Tribunal  at  Chandigarh.  The  applicants  were  Data

Entry Operators Grade ‘A’, who were promoted in the

year 2000 as Data Entry Operators Grade ‘B’. They

contended that they being Data Entry Operators Grade

‘B’, were deemed to have been appointed as Senior Tax

Assistants and were eligible to be considered for the

post  of  Inspector.  They  were  also  placed  in  the

higher Grade of Rs.5000 to 8000 and were senior to

the  U.D.  Clerks.  The  applicants  Complained  that

though  they  were  eligible  to  be  considered  for

promotion to the post of Inspector, Central Excise

along  with  the  candidates  of  the  pre-structured

cadre, they were not being considered. The Tribunal

found merit in the contention of the applicants and

held as follows:

“10. There  is  no  doubt  that  the Data Entry Operators Grade B have now been redesignated  as  Senior  Tax  Assistants Recruitment Rules, 2002. It is also very clearly mentioned in the notification in para  4(i)  that  the  service  rendered  by

37

them  before  commencement  of  these  rules shall  be  taken  into  consideration  for deciding the eligibility for promotion to the next higher grade. According to the Inspector Recruitment Rules, 2002, under Clause (b)(i) of schedule to these rules, Senior Tax Assistants with 2 years regular service are eligible for consideration for promotion.  In  other  words,  Data  Entry Operators Grade b with 2 years service as Data  Entry  Operator  and/or  Senior  Tax Assistants are eligible promotion. There is no such condition in the Recruitment Rules,  that  the  categories  of  employees covered under clause (b) under column 12 of the schedule are required to put in 2 years of service exclusively as Senior Tax Assistant.  Their  past  service  as  Data Entry  Operators  is  also  required  to  be taken  into  consideration.  In  fact  the respondents are relying on the provision made in Note 1 under col.12 to emphasize that  the  Senior  Tax  Assistants  will  be considered  for  promotion  only  after  2 years from the date of restructured cadres come  into  existence.  Note  1  reads  as under:

Note 1: Promotion under clause (a) above shall be operative only for a period of two  years  from  the  date  or  which  the restructured cadres mentioned under clause (b) above come into existence.”

A close reading of the above Note would reveal that it is in respect of employees covered  under  Clause  (a)  and  is  not relevant  to  the  employees  under  Clause (b). It is therefore, wrong to interpret the provision made in the above Note that Data Entry Operators (now redesignated as Sr.Tax  Assistants)  are  not  eligible  for promotion  for  a  period  of  2  years.  In fact, Senior Tax Assistant have been given

38

higher grade of Rs.5000-8000 and they are senior to the UDCs according to the Senior Tax  Assistant  Recruitment  Rules,  2002, while  UDCs  have  been  considered  for promotion for the post of Inspector, there does not appear to be any justification for  denying  senior  Tax  assistants  their legitimate  right  for  consideration  for promotion.

11. Note  2  under  col.12  specifically provides  that  the  candidates  shall  be required to pass such written test as may be  determined  by  the  Central  Board  of Excise and Customs from time to time. The judgment in the case of Madan Singh & ors (supra) cited by the learned counsel for the  applicant  is,  therefore, distinguishable  to  the  extent  that  the departmental examination is prescribed in the relevant rules in the instant case. Senior  Tax  Assistants  are,  therefore, required to pass the written test before they are considered for promotion to the post of Inspector as has been done in the case of other categories employees. As Sr. Tax Assistants are senior to UDCs, they should also have been given an opportunity to  appear  in  the  departmental  written examination and if they had passed, they should have been considered for promotion to  the  post  of  Inspector.  Non- consideration  of  Sr.  Tax  Assistants  for promotion is, therefore, in violation of the relevant Rules.”

28. On  the  basis  of  the  aforesaid  discussion,  the

Tribunal  directed  applicants  to  be  considered  for

promotion  as  Inspector,  in  terms  of  the  relevant

Rules, considering the service rendered by them as

39

Data Entry Operator Grade ‘B’, after giving them an

opportunity  to  appear  in  the  departmental

examination, as provided in Note 2 in the Schedule to

the Inspector Rules, 2002, inter alia.   

29. The  next,  in  the  chronological  order,  is  the

Order dated 29.08.2003 passed by the CAT at Bombay.

This decision went against the reasoning adopted by

the Chandigarh Bench, which we have already noted.

However, the High Court of Bombay, by its Judgment

dated  07.10.2003,  allowed  the  Writ  Petitions  filed

against Order dated 29.08.2003. The High Court found

the reasoning of the Chandigarh Bench appealed to it.

No  doubt,  it  related  to  filling-up  the  post  of

Inspector (Customs). The Special Leave Petition filed

against the Judgment of the High Court of Bombay came

to be dismissed on 09.02.2004 by this Court. In the

interregnum, CAT, Madras, by Orders dated 04.09.2003

and  12.09.2003,  adopted  the  view  accepted  by  the

Chandigarh  Bench.  Finally,  CAT,  Ahmedabad  also,  by

its  decision  dated  07.05.2004,  accepted  the  view

propounded by the CAT, Chandigarh.

THE LITIGATION BEFORE US

40

ORIGINAL APPLICATION NO. 1362 OF 2002  

30. The  applicants,  as  already  noticed,  are  the

appellants  in  the  Civil  Appeal  Nos.  1970-1975  of

2009. They approached the Tribunal on the following

allegations,  inter alia. They had been appointed as

Data Entry Operator Grade ‘A’ between October, 1993

to March, 1994. On completion of six years’ service,

they came to be promoted as Data Entry Operator Grade

‘B’.  After  completing  the  desired  computerization,

they were entrusted with regular work relating to the

Executive  Side.  This  included  technical  work,

statistics,  preventive  audit  and  other  legal  work.

They claimed that they were at par with the existing

Tax  Assistants.  After  the  Fifth  Central  Pay

Commission,  they  stood  equated  with  the  Tax

Assistants. There were grievances raised relating to

promotional avenues not being on par as between the

Data Entry Operators and the Tax Assistants. There

was reference made to the Order dated 19.07.2001. It

was  pointed  out  that  the  official  respondent  had

communicated  the  Draft  Recruitment  Rules,  which

contained  “an  unconscionable  condition”.  The

41

unconscionable  condition  referred  to  was  the

incorporation of Clause (a) that those working as Tax

Assistants  with  two  years  of  service,  etc.,  were

given preference for promotion over the restructured

categories.  They  contended  that  Order  dated

19.07.2001 had already come into force. They pointed

out that there was no meaning in considering the pre-

structured Cadre of Tax Assistants and U.D. Clerks,

etc., after the restructuring [Apparently, they felt

aggrieved by the invitation to the Tax Assistants and

U.D. Clerks, based on the provisions contained under

2002  Rules  (Column  12,  Clause  (a))].  The  proposed

promotion was dubbed as an attempted backdoor entry.

It  was  only  the  restructured  Cadre  of  Senior  Tax

Assistant  (STA)  alone,  which  was  eligible  for

promotion  as  Inspector.  The  pre-structured  Cadre

should  not  be  allowed  to  steal  a  march  over  the

applicants,  who  were  already  placed  in  the  higher

scale.  The  unconscionable  part  of  the  Rules  was

dubbed  as  violative  of  Articles  14  and  16  of  the

Constitution of India. In the grounds, they attacked

Note 1 to 2002 Rules found in Column 12. The Note was

42

alleged to have given “leverage to the Tax Assistants

and the U.D. Clerks and Stenographers to count their

pre-structured service”. Being new Cadre, they could

not  have  required  period  of  two  years  under  the

restructured Cadre. The Draft Recruitment Rules were

impugned  as  being  issued  with  “malafide intention”

for  creating  avenues  for  the  “ineligible  Lower

Division  Cadre”.  It  is  also  contended  that  Draft

Rules  had  not  been  finalised,  and  only  after

finalisation, the matter could be proceeded with.

31. The reliefs sought were as follows: “(a) to set aside the intimation letters C.No.II/3/21/2002  Con.  Sec.  C.No. II/3/16/2003-Con.  Sec.  &  C.No. II/03/52/2002  Estt.  All  dated  5.11.2002 conducting  physical  Test/interviews,  in the  absence  of  finalization  of  draft recruitment  rules,  on  the  basis  of  the unconscionable  conditions  stipulated  in the  draft  recruitment  rules  for  the purpose  of  promoting  the  in-eligible candidates, depriving the applicants from their  due  promotion  to  the  posts  of inspector of Customs and Central Excise, declaring the same as arbitrary, illegal, unwarranted,  misconceived,  frivolous  and in violation of Articles 14 & 16 of the Constitution of India.

(b)to set aside that part of recruitment rules  communicated  vide  F.No.  A 12018/48/2000-Ad.  III-B  dated  28.10.2002 of  R-1,  incorporating  certain unconscionable  conditions  under  Clause

43

(a), as confirmed vide Gazette of India Notification dated 29.11.2002 and note(1) of clause (b) of column 12 of Group ‘C’ Recruitment  Rules  2002,  for  eligibility condition for promotion to the cadre of inspector of Customs and Central Excise, providing  illegal  opportunities  to  the cadres  that  were  existing  prior  to  the restructured cadre when the restructured process has already been affected w.e.f. 19.7.2001,  giving  leverage  to  the ineligible  candidates  to  march  over  the eligible  candidates  of  DEOs  Grade  ‘B’ cadre  for  promotion  to  the  cadre  of Inspector of Customs and Central Excise, declaring  that  part  of  the  said  draft rules as arbitrary, illegal, un-warranted, misconceived,  malafide  and  against  the principles  of  natural  justice  and  in violation  of  Articles  14  &  16  of  the Constitution of India;

(c) to  declare  that  the  applicants  who were working as DEOs in Gr. ‘B’ in the scale 4500-7000 even before re-structuring deemed to have been merged into the cadre of  Sr.  Tax  Assistants  in  the  scale  of 5000-8000  as  enumerated  under  the restructured scheme communicated vide R-1 Letter F. No. A-11019/72/99 Ad. IV dated 19.7.2001  communicating  the  approval  of restructuring  by  the  Ministry  with immediate  effect  enclosing  Annex.  I therewith  showing  the  cadres  and  the strength, duly directing the respondents to consider the cases of the applicants for promotion to the cadre of Inspectors, Customs and Central Excise, by way of 100% promotion under one time relaxation scheme on par with those Assistants, DEO Grade ‘C’,  Tax  Assistants,  DEO  Grade  ‘B’  and UDC(Special Pay), who were redesignated as Senior  Tax  Assistants  under  the restructuring of cadres who are only to be

44

considered for promotion to the cadre of Inspectors  of  Central  Excise  &  Customs; with  all  consequential  benefits;  and  be pleases  to  pass  such  other  and  further order, or orders as the Hon’ble Tribunal may  deem  fit  and  proper  in  the circumstances of the case.”

  32. In the reply by the official respondents, it was,

inter alia, pointed out as follows:

The post of Inspector was covered by 1979

Rules. Feeder categories were, as we had noted

earlier. There was, in other words, reference to

the 1979 Rules as amended in 1996. Regarding the

Order  dated  19.07.2001,  the  stand  of  the

Government was that it was only approval of the

Ministry  for  restructuring  process.  It  was

contended that it was incorrect to say that the

new  Cadre  of  Senior  Tax  Assistants  and  Tax

Assistants  were  created  from  19.07.2001.  The

restructuring  became  effective  only  after  the

formulation of the Recruitment Rules. The Order

dated 19.07.2001 was silent as regards mode of

restructuring and the process after merger. In

regard to the claim of the appellants of parity

with U.D. Clerks, it was pointed out that the

45

appellants could not compare themselves with the

U.D.  Clerks  for  promotion  as  Inspector.  The

initial scale of Data Entry Operator Grade ‘A’

(Entry Post) was Rs.1150-1500 prior to the Fifth

Central Pay Commission, whereas, the pay of U.D.

Clerk  was  Rs.1200-2040.  The  educational

qualification required for being an U.D. Clerk

was Graduation. For a Data Entry Operator Grade

‘A’,  on  the  other  hand,  the  educational

qualification  was  pass  in  the  Intermediate

Course. It was further contended that the nature

of duty was also different. The U.D. Clerks were

selected  on  staff  selection  conducted  on  all-

India basis. The Data Entry Operators Grade ‘A’

were  employed  through  Employment  Exchanges.  As

far  as  conditions  in  Column  12,  which  were

challenged  by  the  applicants,  viz.,  the

requirement  of  two  years’  service,  which  was

dubbed as unconscionable, it was contended that

the condition relating to two years’ service was

necessary  to  cover  fair  process  for  different

categories. The Cadre of Inspector was a basic

46

work force. Promotions were effected on the basis

of promotion to the post of Superintendent, on

all-India  basis,  leading  to  large  number  of

vacancies in the post of Inspector. In the Andhra

Pradesh  zone,  there  were  242  vacancies  of

Inspector. The applicants, it was contended, did

not fall in the feeder categories. The contention

of the applicants that they were doing various

other works, was denied and it was contended that

the Data Entry Operators were basically doing the

work of data entry and when they were doing the

other  work,  the  nature  of  work  was  typing  on

computers.   

ORDER OF THE TRIBUNAL IN O.A. NO. 1362 OF 2002

33. After  setting  out  the  pleadings,  noting  the

contentions and also the orders passed by the Central

Administrative Tribunal, Chandigarh, the Madras Bench

and also the Division Bench of the Bombay High Court,

the  Tribunal  proceeded  to  enter  the  following

findings, inter alia:

a. The above decisions referred, viz., by

the Tribunals and the Bombay High Court,

47

were  found  to  have  been  rendered  on

careful  considerations  of  the  Rules

notified  on  29.11.2002.  The  Tribunal

agreed with the interpretation.  

b. The  Tribunal  proceeded  to,  therefore,

express  its  inability  to  accept  the

contention of the respondents that the

action initiated by sending the impugned

intimation  letter  dated  05.11.2002,

confining the consideration of selection

for promotion to the post of Inspector

only to candidates in the pre-structured

Cadre,  was  in  accordance  with  the

provisions of the Rules.   34.  It is further held that the further contention

of the respondents that the 1979 Rules entitled them

to  fill-up  the  vacancies,  could  not  be  accepted,

since the restructuring of the cadres had coming to

effect on 19.7.2001 itself.

35. The  existing  Assistants,  Tax  Assistants,  U.D.

Clerks (Special Pay), DEOs Grade ‘B’ and ‘C’ were

found to have been merged and re-designated as Senior

48

Tax  Assistants  (STAs).  It  was  found  that  the

restructuring cadres came into effect from the date

of issue of letter dated 19.07.2001. Therefore, any

further promotions to be effected from restructured

cadres was to be only in accordance with the Rules

promulgated  under  Article  309,  viz.,  the  Inspector

Recruitment  Rules,  2002.  It  was  done  in  the

supersession of the 1979 Rules. It was found that the

Authorities were not justified in resorting to fill-

up the existing vacancies in 242 posts in the Cadre

of Inspector by following the old Rules of 1979 which

were superseded by the new Rules, by initiating the

process of selection before the new Rules, came to be

notified  in  the  Gazette  after  the  date  of

restructuring  of  cadres  came  into  force  i.e.  on

19.07.2001, thereby confining the selection only to

the  pre-structured  category.  The  Tribunal  did  not

agree with the contention of the respondents that the

restructuring of the Cadre came into force only with

effect  from  16.01.2003  (apparently  the  date  of

publication of the Senior Tax Assistant (STA) Rules).

The contention of the appellants was accepted that

49

the appellants must be deemed to have been absorbed

into the Cadre of Senior Tax Assistants in the scale

of pay Rs. 5000-8000 under the restructured scheme

with  effect  from  19.07.2001.  Therefore,  for  the

purpose  of  promotion  to  the  Cadre  of  Inspector,

appellants  became  eligible  for  consideration  under

the  new  Rules  framed  which  came  into  force  with

effect  from  07.12.2002.  Therefore,  the  Authorities

were to consider the appellants for promotion to the

cadre  of  Inspector  of  Central  Excise  and  Customs

based on the new Rules and not on the basis of the

old  Rules  prevailing  in  respect  of  pre-structured

cadres. Rejecting the contention of the respondents

that the restructuring did not come into effect on

19.07.2001,  as  the  Rules  relating  to  all  the

restructured cadres were formulated subsequently, it

was further found that since in Rule 5 of the Senior

Tax Assistant Rules, it has been clarified that the

service rendered by them before the amendment of the

Rules  was  to  be  taken  into  consideration  for

promotion to the next higher cadre, it was found that

in view of the said Rules, the Senior Tax Assistants

50

could take into consideration their service as Data

Entry Operator Grade ‘B’, and therefore, Data Entry

Operator Grade ‘B’ with two years’ service in the

said post was eligible for promotion. There was no

condition in Clause (b) that the employees were to

put in two years’ service exclusively as Senior Tax

Assistants. It is further found as follows:

“The  learned  counsel  for  the  applicants has also relied upon a decision of the Supreme Court reported in 1998 SCC (L&S) page 1075 in the case of Rajasthan Public Service  Commission  Vs.  Chanan  Ram  and another, in support of his contention that on cadre restructuring coming into force, the  earlier  cadres  stand  abolished.  He further  submitted  that  after  merging  of various cadres into restructured cadre of Senior  Tax  Assistant,  the  uniformity  of restructured cadre of Senior Tax Assistant alone would be eligible for promotion to the  cadre  of  Inspector  of  Customs  and Central Excise. It is also pointed out by him that it is incumbent on the part of the respondents to work out the placement of the categories mentioned under sub para (3)of para 4 of the Recruitments rules of Senior Tax Assistants for working out the inter  se  seniority  from  among  the integrated  cadres  and  basing  on  such seniority,  promotion  to  the  cadre  of Inspector  of  Customs  and  Central  Excise has to taken place. According to him, even for  the  one  time  measure  standard relaxation by way of 100% by promotion to the  cadre  of  Inspector  of  Excise,  the method shown in the recruitment rules of

51

Senior Tax Assistants for the purpose of inter  se  seniority  placement  of  various cadres has to be followed and promotion to the  next  higher  cadre  of  Inspector  of Central  Excise  has  to  be  given  on  the basis of such integrated seniority list as per sub-para (3) of Para 4 of the said recruitment rules. We agree with the above contentions of the learned counsel for the applicants, since we have taken the view that  with  effect  from  19.7.2001  the restructuring  of  Senior  Tax  Assistants came into force ad all the earlier cadres of  Assistant,  Tax  Assistant/  UDC  (Spl. Pay), DEOs Gr. B and C have been merged and redesignated as Senior Tax Assistant, the promotion from the said cadre to the next  cadre  of  Inspector  of  Customs  and Central Excise is to be considered only on the  basis  of  the  new  recruitment  rules which came into force. In this view of the matter, we find that all the applicants became  eligible  for  consideration  for promotion  to  the  post  of  Inspector  of Customs and Central Excise and the service rendered  by  them  in  the  predesignated cadre for two years is also to be taken into consideration.

The  learned  Standing  Counsel  for  the respondents submitted that the selection process  initiated  on  5.11.2002  for promotion  to  the  post  of  Inspector  of Central Excise and Customs from the other categories  of  employees  other  than  the DEOs Gr.B and Gr.C has been finalised and the  existing  vacancies  were  filled  up. Since it is now found that the applicants are  also  eligible  for  consideration  for the promotion to the said post, we find it necessary  to  dispose  of  this  O.A.  by directing  the  official  respondents  to consider the cases of the applicants also

52

for promotion to the post of Inspector of Customs and Central Excise in terms of the relevant rules, taking into consideration the service rendered by them as DEO Gr.B after giving them an opportunity to appear in  the  Departmental  Examination  as notified in Note 2 in the schedule to the Inspector  Recruitment  Rules  2002  and  in case they are successful and are finally selected as Inspectors, as per Rules, they should  be  promoted  as  Inspectors  and assign suitably seniority vis-à-vis other categories of staff who have already been promoted.

In the result, this O.A. is allowed in part.  The  respondents  are  directed  to consider the cases of the applicants for promotion  to  the  post  of  Inspector  of Customs and Central Excise in terms of the relevant  recruitment  rules  taking  into consideration the service rendered by them as Data Entry Operators Gr. B after giving them  opportunity  to  appear  in  the departmental  examination  as  provided  in Note 2 in the schedule to the Inspector. Recruitment Rules, 2002. In case, they are successful  and  are  finally  selected  as Inspectors, as per rules, they should be promoted  as  Inspectors  and  assigned suitably  seniority  vis-à-vis  other categories of staff who have already been promoted by the revision of seniority as per  the  provisions  of  Rule  5  of  Rules relating to recruitment of Grade C Senior Tax Assistants in the Central Excise and Customs Department. The declaration sought for by the applicants in para 8(C) of the O.A. is granted as prayed for.”

36. As already noticed, the High Court came to the

conclusion that the decision dated 19.07.2001 was an

approval,  in  principle,  for  the  restructuring.  The

53

restructuring came into force with effect from the

date on which Statutory Rules in 2003 were framed. It

was  further  found  that  in  regard  to  the  existing

vacancies, the erstwhile Rules of 1979 held the field

and governed the parties.  

37. We heard learned Counsel for the parties. Shri

C.U. Singh, learned Senior Counsel, led the arguments

on behalf of the appellants. We also heard Shri P.S.

Patwalia,  learned  Senior  Counsel  on  behalf  of  the

party respondents and Shri K. Radhakrishnan, learned

Senior Standing Counsel on behalf of the Government

of  India  besides  Shri  Sridhar  Potaraju,  learned

Counsel on behalf of some of the party respondents.

38. The learned Senior Counsel for the appellants,

undoubtedly,  after  referring  to  the  Rules  and  the

Government decisions, contended that this is a clear

case where the High Court was in error in proceeding

on the basis that the vacancies must be filled-up on

the basis of the 1979 Rules. He pointed out that the

principle enunciated in  Y.V. Rangaiah and others v.

J.  Sreenivasa  Rao  and  others  1 is,  by  no  means,  a

1 (1983) 3 SCC 284

54

universal or unexceptionable norm. The decision was

rendered in the special facts of the case. He drew

our attention to the body of case law flowing from

this Court, which has enunciated the principle that

despite the fact that there exists Statutory Rules

and unfilled vacancies, it is very much open to the

Government,  when  it  is  mulling  change,  to  take  a

conscious decision, though supported by reasons, to

leave  vacancies  unfilled  and  to  take  a  call  at  a

relevant point of time.

39. As regards the effect of 2002 Rules and the 2003

STA Rules, it was the contention of Shri C.U. Singh

that the Court may bear in mind the backdrop in which

the  restructuring  came  about  as  persons  who  were

appointed  as  Data  Entry  Operators  were  found

stagnating in comparison to their colleagues working

in the ministerial cadre. Perceiving merit in their

genuine  grievances,  the  Government  decided  to

completely  restructure.  It  is  accordingly  that

certain  categories,  which  included  Data  Entry

Operator Grade ‘B’ and ‘C’, were designated as Senior

Tax Assistants. This is evidenced by the proceedings

55

dated  19.07.2001.  The  restructuring  attained

completeness  from  the  said  decision,  as  correctly

found by the Tribunal. The Order of the Tribunal has

not been properly appreciated by the High Court, it

is complained. Our attention has been drawn to the

view taken by the Chandigarh Bench and the High Court

of  Bombay,  in  particular.  It  is  further  impressed

upon us that this Court lend its seal of approval to

the view expressed by the High Court of Bombay. He

pointed out, thus, that the Tribunal at Chandigarh,

Madras,  High  Court  of  Bombay  and  the  Tribunal  at

Ahmedabad, have spoken in one voice about the rights

of the erstwhile cadre of Data Entry Operators to be

treated as Senior Tax Assistants. They were entitled

to count their previous service also for the purpose

of calculating the period of two years’ service as

required in the 2002 Inspector Rules for promotion.

40. Per contra, the learned Senior Counsel Shri P.S.

Patwalia, K. Radhakrishnan, Senior Standing Counsel

and  Shri  Sridhar  Potaraju,  learned  Counsel  stoutly

defended the Order of the High Court. It is their

contention that quite apart from the fact that in

56

terms of the principle laid down in  Y.V. Rangaiah

(supra) that existing vacancies should be filled-up

under the old Rules, the Data Entry Operators were

not  in  the  feeder  categories  for  promotion  as

Inspector under the 1979 Rules in 2002. They come

into  Feeder  Category  for  promotion  only  when  the

Rules were framed in the year 2002, which was brought

into force on 07.12.2002. Even proceeding under the

said Rules, Shri P.S. Patwalia would point out that

they would have to gain experience and work for two

years as STA and they were certainly not eligible for

being considered when the Government decided to fill

the  vacancies  on  05.11.2002.  Therefore,  apart  from

the  principle  enunciated  in  Y.V.  Rangaiah (supra),

they would make the mark in terms of the Rules only

on completion of two years’ service from January 2003

as Senior Tax Assistants. Our Attention is drawn to

2002  Inspector  Rules  to  point  out  that  what  is

required under the said Rules is that the Senior Tax

Assistants,  with  two  years  Regular  Service  in  the

Grade, alone, would be eligible. Having regard to the

pay-scale of a Senior Tax Assistant, it is not open

57

to the appellants to contend that the requirement of

Regular Service in the Grade, would be fulfilled, by

taking  into  consideration  the  previous  service

rendered by them in the erstwhile Cadre of Data Entry

Operator. It is also contended that the Memorandum

dated  19.07.2001  also  embodies  a  decision,  in

principle, in this regard. Our attention is drawn to

Memorandums  dated  05.06.2002  and  28.10.2002.  It  is

only on issuance of the Rules that the restructuring

happened. The Rules were brought into force in the

year 2003. It is further contended that all the Data

Entry Operators Grade ‘A’, ‘B’ and ‘C’ continued as

such and were only re-designated as Tax Assistants or

Senior  Tax  Assistants  upon  the  enforcement  of  the

2003 Rules and not before. The pay-scale of Senior

Tax  Assistants  was  Rs.5000-8000.  The  appellants

belonging to Data Entry Operator Grade ‘B’ did not

draw the pay-scale of a Senior Tax Assistant, though,

the Grade of Data Entry Operator Grade ‘C’ was same

as  that  of  the  STA.  Reliance  was  placed  on  the

Memorandum  of  the  Government  of  India  dated

21.04.2003,  which  categorically  states  that

58

restructured Cadre of STA came into force only on

20.01.2003.

41. Under the 2002 Inspector Rules, there is a clear

scheme.  The  earlier  Ministerial  Staff,  who  were

eligible  for  promotion  under  the  repealed  Rules,

continued to remain eligible under the 2002 Rules.

The eligibility was for a period of two years. The

period of two years started from the day on which the

restructured cadres came into force. For the first

two  years,  the  earlier  Ministerial  Staff  were

eligible. During that period, the Rules contemplated

that  the  restructured  Cadres  would  acquire

eligibility. Rule 5 of the 2003 STA Rules is sought

to be explained away by pointing out, it would only

mean that if any of the Ministerial Staff, who had

been Tax Assistants/U.D.  Clerks (Special Pay), who

came  into  the  restructured  Cadre  of  Senior  Tax

Assistants, fall short of two years or five years

under Part 12(a) of the 2002 Inspector Rules, then,

their  previous  service,  as  also  service  after

restructuring, would count towards their eligibility.

In this regard, he drew our attention to Note 1 of

59

the 2002 Rules. Distinction is sought to be drawn

between Rule 5 of the Senior Tax Assistant Rules,

2003 and Rule 4 of the Tax Assistant Rules, 2003. The

Grade  of  Senior  Tax  Assistant  is  higher  than  the

Grade of Data Entry Operator Grade ‘B’, both in terms

of status and pay-scale.                     

42. Thus, it is contended that the service rendered

by the Officers, prior to there being restructuring,

could not be counted for the purpose of Clause (12)

(b)  of  the  2002  Inspector  Rules.  As  regards  the

question  as  to  whether  there  was  a  ban  on

appointment, it is contended that though, initially a

ban was imposed vide Memorandum dated 10.09.2001 by

Memorandum  dated  03.01.2002,  the  ban  was  clearly

lifted.  It  is  contended  that  the  letter  dated

05.06.2002  extended  the  ban  relating  to  Direct

Recruitment  but  it  did  not  affect  letter  dated

03.01.2002, which had removed the ban. Reliance is

also  placed  on  letter  dated  28.10.2002.  It  is

contended also that since there was no ban during the

period 2001-2002 and 2002-2003, and seeking to draw

support  from  the  O.M.  dated  08.09.1998,  which

60

provides for a model calendar for holding of DPCs,

the principle in  Y.V. Rangaiah (supra), is pressed

into service. It is pointed out that promotions had

already  been  made  on  the  basis  of  the  impugned

judgment of the High Court and resultant vacancies

were  also  filled-up  by  implementation  Orders  dated

26.09.2005,  17.05.2006  and  19.07.2006.  Even  the

erstwhile  Data  Entry  Operator  Grade  ‘B’,  re-

designated  as  Senior  Tax  Assistants,  have  been

promoted  as  Inspectors.  Many  of  the  contesting

parties  have  further  been  promoted  as

Superintendents. The judgment of the High Court of

Bombay has not been implemented. The Order of the

CAT, Chandigarh Bench, is sought to be faulted. It is

pointed out that the Draft Recruitment Rules dated

28.10.2002 were taken as Final Recruitment Rules and

the entire judgment proceeds on the said basis. It

also failed to examine the scope of Clauses (a) and

(b) in Column 12 as also the Note below Column 12 of

the 2002 Inspector Rules. The High Court of Bombay

also did not refer to and consider the effect of the

2002 Rules.  

61

43. The Data Entry Operators were not in the category

on  01.01.2001,  for  the  Recruitment  Year  2001-2002

and, on 01.01.2002, for the Recruitment Year 2002-

2003, and therefore, they were not eligible.  

AMENDMENT OF LAW AND FILLING-UP OF OLD VACANCIES  

44. The appellants would point out that it is not a

universal principle that vacancies must be filled-up

in  accordance  with  the  unamended  Rules.  He  would

point out that the view taken by this Court, in this

regard, may be noticed.

45. In Y.V. Rangaiah (supra), this Court was dealing

a  case  under  the  Andhra  Pradesh  Registration  and

Subordinate  Service  Rules.  The  Rule  in  question,

inter alia, contemplated preparation of a panel every

year in September. That apart, the Government also

issued  very  clear  instructions,  which  emphasised

prompt  preparation  of  panels  being  essential  for

increasing administrative efficiency and filling of

vacancies  without  delay.  Instead  of  filling-up

vacancies on the 01.09.1976, there was delay and the

panel came to be drawn-up in 1977 by which time an

amendment to the Rules purported to take away rights

62

of the Lower Division Clerks for promotion and the

Feeder Category was sought to be confined to the U.D.

Clerks. It was in the said factual context that the

court proceeded to lay down as follows:

“9. Having heard the counsel for the parties, we find no force in either of the two  contentions.  Under  the  old  rules  a panel had to be prepared every year in September.  Accordingly,  a  panel  should have been prepared in the year 1976 and transfer or promotion to the post of Sub- Registrar Grade II should have been made out  of  that  panel.  In  that  event  the petitioners  in  the  two  representation petitions  who  ranked  higher  than Respondents 3 to 15 would not have been deprived  of  their  right  of  being considered  for  promotion.  The  vacancies which occurred prior to the amended rules would be governed by the old rules and not by the amended rules. It is admitted by counsel  for  both  the  parties  that henceforth promotion to the post of Sub- Registrar Grade II will be according to the new rules on the zonal basis and not on  the  State-wide  basis  and,  therefore, there was no question of challenging the new rules. But the question is of filling the vacancies that occurred prior to the amended rules. We have not the slightest doubt  that  the  posts  which  fell  vacant prior  to  the  amended  rules  would  be governed by the old rules and not by the new rules.”

 46. It suffices, for our purpose, to note that the

view taken by the Court, in the said case, came to be

followed in subsequent judgments, viz., P. Ganeshwar

63

Rao  and  others  v.  State  of  A.P.  and  others  2;  P.

Mahendran  and  others v.  State  of  Karnataka  and

others  3;  A.A.  Calton v. Director  of  Education  4 and

N.T.  Devin  Katti  and  others v.  Karnataka  Public

Service Commission   and others  5.  

47. On  the  other  hand,  there  is  another  line  of

decisions  which  is  relied  upon  by  the  appellants.

Very briefly, the principle is this:

Despite availability of vacancies, if the

Appointing  Authority  consciously  takes  a

decision to keep unfilled the vacancies for

good  reasons,  the  Rules,  as  on  the  day  of

consideration  of  the  matters  relating  to

promotion, would govern the situation.

48. The  representative  of  this  view  would  be  the

decision by the Bench of three Judges in K. Ramulu

(Dr.) and another v.  (Dr.) S. Suryaprakash Rao and

others  6 and  P. Ganeshwar Rao (supra). In  K. Ramulu

(Dr.) (supra), the Government had taken a decision to

amend the Rules in question. It also took a conscious

2  (1988) Supp. SCC 740 3 (1990) 1 SCC 411 4 (1983) 3 SCC 33 5 (1990) 3 SCC 157 6 (1997) 3 SCC 59

64

decision not to fill the vacancies till the amendment.

For the years 1995-1996, there was no panel prepared.

Essentially  on  the  said  facts,  this  Court  held  as

follows:

“12. The  same  ratio  was  reiterated in Union of India v. K.V. Vijeesh [(1996) 3 SCC 139 : 1996 SCC (L&S) 683] (SCC paras 5 and 7). Thus, it could be seen that for reasons  germane  to  the  decision,  the Government is entitled to take a decision not to fill up the existing vacancies as on the relevant date. Shri H.S. Gururaja Rao,  contends  that  this  Court  in Y.V. Rangaiah v. J.  Sreenivasa  Rao [(1983)  3 SCC 284 : 1983 SCC (L&S) 382] had held that the existing vacancies were required to be filled up as per the law prior to the date of the amended Rules. The mere fact  that  Rules  came  to  be  amended subsequently  does  not  empower  the Government not to consider the persons who were  eligible  prior  to  the  date  of amendment.  It  is  seen  that  the  case related  to  the  amendment  of  the  Rules. Prior to the amendment of the Rules two sources were available for appointment as Sub-Registrar,  namely,  UDCs  and  LDCs. Subsequently,  Rules  came  to  be  amended taking  away  the  right  of  the  LDCs  for appointment  as  Sub-Registrar.  When  the vacancies  were  not  being  filled  up  in accordance with the existing Rules, this Court had pointed out that prior to the amendment of the Rules, the vacancies were existing and that the eligible candidates

65

were  required  to  be  considered  in accordance  with  the  prevailing  Rules. Therefore,  the  mere  fact  of  subsequent amendment does not take away the right to be  considered  in  accordance  with  the existing Rules. As a proposition of law, there  is  no  dispute  and  cannot  be disputed. But the question is whether the ratio in Rangaiah case [(1983) 3 SCC 284 : 1983 SCC (L&S) 382] would apply to the facts of this case. The Government therein merely  amended  the  Rules,  applied  the amended Rules without taking any conscious decision  not  to  fill  up  the  existing vacancies pending amendment of the Rules on the date the new Rules came into force. It  is  true,  as  contended  by  Mr  H.S. Gururaja Rao, that this Court has followed the ratio therein in many a decision and those  cited  by  him  are P.  Ganeshwar Rao v. State of A.P. [1988 Supp SCC 740 : 1989  SCC  (L&S)  123  :  (1988)  8  ATC 957]  , P.  Mahendran v. State  of Karnataka [(1990)  1  SCC  411  :  1990  SCC (L&S)  163  :  (1990)  12  ATC  727]  , A.A. Calton v. Director of Education [(1983) 3 SCC 33 : 1983 SCC (L&S) 356] , N.T. Devin Katti v. Karnataka  Public  Service Commission [(1990) 3 SCC 157 : 1990 SCC (L&S) 446 : (1990) 14 ATC 688] , Ramesh Kumar Choudha v. State of M.P. [(1996) 11 SCC 242 : (1996) 7 Scale 619] In none of these  decisions,  a  situation  which  has arisen in the present case had come up for consideration. Even Rule 3 of the General Rules is not of any help to the respondent for the reason that Rule 3 contemplates

66

making  of  an  appointment  in  accordance with the existing Rules.

13. It  is  seen  that  since  the Government have taken a conscious decision not  to  make  any  appointment  till  the amendment  of  the  Rules,  Rule  3  of  the General Rules is not of any help to the respondent.  The  ratio  in  the  case of Ramesh  Kumar  Choudha v. State  of M.P. [(1996) 11 SCC 242 : (1996) 7 Scale 619]  is  also  not  of  any  help  to  the respondent.  Therein,  this  Court  had pointed out that the panel requires to be made in accordance with the existing Rules and  operated  upon.  There  cannot  be  any dispute on that proposition or direction issued by this Court. As stated earlier, the  Government  was  right  in  taking  a decision  not  to  operate  Rule  4  of  the General Rules due to their policy decision to amend the Rules. He then relies on para 14  of  the  unreported  judgment  of  this Court  made  in Union  of  India v. S.S. Uppal [(1996) 2 SCC 168 : 1996 SCC (L&S) 438  :  (1996)  32  ATC  668]  .  Even  that decision is not of any help to him. He then  relies  upon  the  judgment  of  this Court  in Gajraj  Singh v. STAT [(1997)  1 SCC 650 : (1996) 7 Scale 31] wherein it was held that the existing rights saved by the repealed Act would be considered in accordance  with  the  Rules.  The  ratio therein  is  not  applicable  because  the existing  Rules  do  not  save  any  of  the rights  acquired  or  accruing  under  the Rules. On the other hand, this Court had

67

pointed out (in Scale para 23) thus: (SCC pp. 664-65, para 22)

“Whenever  an  Act  is  repealed  it must  be  considered,  except  as  to transactions past and closed, as if it  had  never  existed.  The  effect thereof  is  to  obliterate  the  Act completely  from  the  record  of Parliament  as  if  it  had  never  been passed; it never existed except for the  purpose  of  those  actions  which were  commenced,  prosecuted  and concluded  while  it  was  an  existing law.  Legal  fiction  is  one  which  is not an actual reality and which the law recognises and the court accepts as a reality. Therefore, in case of legal  fiction  the  court  believes something to exist which in reality does not exist. It is nothing but a presumption of the existence of the state of affairs which in actuality is non-existent. The effect of such a legal  fiction  is  that  a  position which otherwise would not obtain is deemed  to  obtain  under  the circumstances.  Therefore,  when Section  217(1)  of  the  Act  repealed Act  4  of  1939  w.e.f.  1-7-1989,  the law in Act 4 of 1939 in effect came to be non-existent except as regards the transactions, past and closed or saved.””

49. In  Deepak Agarwal and another v.  State of U.P.

and  others  7, one  of  the  two  appellants  was  a

7(2011) 6 SCC 725

68

Statistical Officer. The other one was a Technical

Officer. The Rules prior to their amendment included

them in the Feeder Category for the promotion to the

post of Deputy Excise Commissioner. The amendment, by

which  they  stood  deprived  of  their  right  to  be

considered for promotion, was made considering work

experience, duties and qualifications of Statistical

Officer and Technical Officers rendering them unfit to

be considered for the higher post. The question, which

fell for consideration, was posed in paragraph 18 as

follows:

“18. The  short  question  that  arises for  consideration  is  as  to  whether  the appellants were entitled to be considered for promotion on the post of Deputy Excise Commissioner under the 1983 Rules, on the vacancies,  which  occurred  prior  to  the amendment in the 1983 Rules on 17-5-1999.”

50. This Court noticed that there was no statutory

duty  cast  on  the  State  to  complete  the  selection

process within a prescribed period. It further noted

the statutory provision enabling the State to leave a

particular post unfilled. It was still further found

that  the  promotion  to  the  vacancies  had  been  made

69

under the amended Rules. The principle laid down in

Y.V. Rangiah (supra) came to be distinguished in the

following words:

“24. We are of the considered opinion that  the  judgment  in Y.V.  Rangaiah case [(1983) 3 SCC 284 : 1983 SCC (L&S) 382] would not be applicable in the facts and  circumstances  of  this  case.  The aforesaid  judgment  was  rendered  on  the interpretation of Rule 4(a)(1)(i) of the Andhra  Pradesh  Registration  and Subordinate  Service  Rules,  1976.  The aforesaid Rule provided for preparation of a panel for the eligible candidates every year in the month of September. This was a statutory duty cast upon the State. The exercise was required to be conducted each year.  Thereafter,  only  promotion  orders were to be issued. However, no panel had been  prepared  for  the  year  1976. Subsequently, the Rule was amended, which rendered  the  petitioners  therein ineligible to be considered for promotion. In these circumstances, it was observed by this Court that the amendment would not be applicable  to  the  vacancies  which  had arisen  prior  to  the  amendment.  The vacancies  which  occurred  prior  to  the amended Rules would be governed by the old Rules and not the amended Rules.”

51. Still  further,  we  may  notice  the  following

statement of the law contained hereunder:

“26. It  is  by  now  a  settled proposition of law that a candidate has the right to be considered in the light of the  existing  rules,  which  implies  the “rule  in  force”  on  the  date  the consideration took place. There is no rule

70

of universal or absolute application that vacancies are to be filled invariably by the  law  existing  on  the  date  when  the vacancy arises. The requirement of filling up old vacancies under the old rules is interlinked  with  the  candidate  having acquired  a  right  to  be  considered  for promotion. The right to be considered for promotion  accrues  on  the  date  of consideration of the eligible candidates. Unless, of course, the applicable rule, as in Y.V. Rangaiah case [(1983) 3 SCC 284 : 1983  SCC  (L&S)  382]  lays  down  any particular  time-frame,  within  which  the selection process is to be completed. In the  present  case,  consideration  for promotion took place after the amendment came into operation. Thus, it cannot be accepted that any accrued or vested right of the appellants has been taken away by the amendment.”

52. This Court proceeded to follow the judgment in K.

Ramulu (Dr.) (supra).

53. In M.I. Kunjukunju and others v. State of Kerala

and others  8, the Court proceeded to lay down that when

Recruitments  Rules  were  amended  with  retrospective

effect, pending process of selection, the selection

must proceed in accordance with amended Rules. The

Court, inter alia, took the view that a candidate, on

making  an  application  to  the  post  pursuant  to  the

8 (2015) 11 SCC 440

71

advertisement,  do  not  acquire  any  vested  right  of

selection (See paragraph 19).

54. In  State of Tripura and others v.  Nikhil Ranjan

Chakraborty and others  9, the Court, following  Deepak

Agarwal (supra), took the view that a candidate only

has a right to be considered in the light of the

extant Rules, on the date of which, the consideration

for promotion takes place and there is no Rule of an

absolute application that vacancies must invariably be

filled-up under the existing law when they arose. We

may only refer to paragraph 9:

“9. The  law  is  thus  clear  that  a candidate has the right to be considered in  the  light  of  the  existing  rules, namely, “rules in force on the date” the consideration takes place and that there is no rule of absolute application that vacancies must invariably be filled by the law existing on the date when they arose. As against the case of total exclusion and absolute  deprivation  of  a  chance  to  be considered  as  in Deepak  Agarwal [Deepak Agarwal v. State of U.P., (2011) 6 SCC 725 : (2011) 2 SCC (L&S) 175] in the instant case  certain  additional  posts  have  been included  in  the  feeder  cadre,  thereby expanding the zone of consideration. It is not  as  if  the  writ  petitioners  or similarly situated candidates were totally excluded. At best, they now had to compete with some more candidates. In any case, since there was no accrued right nor was

9 (2017) 3 SCC 646

72

there any mandate that vacancies must be filled invariably by the law existing on the date when the vacancy arose, the State was well within its rights to stipulate that the vacancies be filled in accordance with the Rules as amended. Secondly, the process to amend the Rules had also begun well before the Notification dated 24-11- 2011.”

ANALYSIS  

55. The post of Inspector, which is at the centre

stage of the controversy in Civil Appeal Nos. 1970-

1975 of 2009, is mentioned as the post of Inspector

(Ordinary  Grade)  in  the  1979  Rules.  The  Feeder

Category, in regard to the post of Inspector, was:

a.Upper Division Clerks with five years’ service;

b.Upper  Division  Clerks  with  13  years  of  total

service  as  Upper  Division  Clerk  and  Lower

Division  Clerk,  taken  together  subject  to  the

condition that they have a minimum of two years’

service in the Grade of Upper Division Clerk;

c.Stenographers  (Senior  Grade)  with  two  years’

service;

d.Stenographers  (Senior  Grade)  or  Stenographers

(Ordinary Grade) with twelve years’ service as

Stenographer/Upper  Division  Clerk  and  Lower

73

Division Clerk, if any, taken together subject to

a minimum of two years’ service as Stenographers

(Ordinary Grade) or Upper Division Clerk Grade;

e.The next category, eligible was, Women Searchers

with seven years’ service in the Grade;

f.Draftsmen with seven years’ service in the Grade.   

56. Later  on,  by  an  amendment,  the  post  of  Tax

Assistant  was  created  out  of  the  Cadre  of  Upper

Division Clerks (This must be referred to as the old

Cadre of Tax Assistants in contrast with the Cadre of

Tax Assistants as a result of restructuring and by

Rules dated 03.05.2003). The old Tax Assistants were

also, by virtue of Order dated 19.03.1988, rendered

eligible for consideration as Inspector.  

57. On the other hand, the Data Entry Operators, a

Cadre,  which  was  thought  of  and  created  to  bring

about  computerization  in  the  Excise  and  Customs

Department, came into being and came to be governed

by the Rules made in the year 1992. There were four

Grades. The Entry Grade was Data Entry Operator Grade

‘A’,  and  Data  Entry  Operator  Grade  ‘A’  with  six

years’ service, could aspire for promotion as Data

74

Entry  Operator  Grade  ‘B’.  Likewise,  Data  Entry

Operator Grade ‘B’ could aspire to be entitled as

Data  Entry  Operator  Grade  ‘C’.  At  the  top  of  the

pyramid, was the post of Data Entry Operator Grade

‘D’.

58. It is seen from the above that the Data Entry

Operators  were  not  eligible  to  be  considered  for

promotion as Inspector. The post of Inspector is a

Group ‘C’ post. The Data Entry Operators were also

Group  ‘C’  but  in  the  technical  branch.  The  Upper

Division  Clerks,  Stenographers,  Women  Searchers,

Draftsmen,  etc.,  who  constituted  the  feeder

categories,  were  holding  posts  in  the  Ministerial

Category. The post of Inspector was a Group ‘C’ post

in the Executive Category. The holders of the post in

the Ministerial Cadre were in the Feeder Category for

promotion to the Executive post but holders of posts

of Data Entry Operators, though a Group ‘C’ post, but

being  in  the  technical  side,  they  constituted  a

different and separate Cadre. There was no avenue for

them to get further promotions by getting promoted as

an Inspector.

75

59. According to the Data Entry Operators, they were

actually,  after  the  period  of  computerization  was

over,  doing  various  other  works  and  had  gained

experience which entitled them to be considered for

promotion as Inspector. This issue apparently engaged

the attention of the Government. Government Decided

to  bring  about  restructuring.  Accordingly,  the

decision regarding restructuring is seen captured in

the proceedings dated 19.07.2001. As to what is the

effect  of  the  same,  will  be  the  heart  of  the

controversy. Hence, we deem it appropriate to dissect

the said proceedings in detail.  

60. The  Order  dated  19.7.2001,  recites  that

Government has approved restructuring. It is further

stated that as a result of the restructuring, there

has been a change in number and nomenclature of the

various  Grades  and  posts.  The  revised  pay  and

designation of the various posts at different levels,

in both the Customs and Central Excise Departments,

has  been  indicated  in  Annexure-1.  The  post  of

Inspector is at Serial No.10. It refers to the post

of  Inspector,  Preventive  Officer  and  Examiner.  The

76

existing  pay  is  shown  as  Rs.5500-9000.  The

restructured post has been shown as Inspector. The

pay-scale remains the same. The sanctioned strength

is shown as 18053. The Notes are significant and they

read as follows:

“Notes:

1.The posts in the grade of Superintendents also include  posts  of  SIO,  AAD,  IO  of  various directorates (Sl. No. 7).

2.The  posts  in  the  grade  of  Inspectors  also include  the  posts  of  P.O.  and  Examiner  and Intelligence Officers (Sl. No. 10).

3.The posts in the grade of AO also include the posts of ACAO and EAO (Sl. No. 12)

4.The existing posts in the cadres of Asst., Tax Asstt. UDC (Sp Pay), DEO Gr(C) and DEO Gr (B) have been merged into and redesignated as Sr. Tax Asstt (Sr. No. 19).

5.The existing posts in the cadres of UDC, DEO(A) and  UDC  (except  717  posts  of  LDC  for  the purpose  of  promotion  of  Group  D)  have  been merged and redesignated as Tax Asstt. (neew) (Sl No. 20).

6.The  cadre  of  OS  has  been  abolished  and  the posts have been merged in the posts of A.O. (Sl. No. 12).

7.Other posts which exist in the department and are not reflected in the above table have been kept in their existing strength in the existing pay scales only.

8.Details of other posts are given in Annexure II (Sl. No. 15, 25, 30 and 33).”

77

61. No doubt, at Serial No.4, the expression used in

existing  posts  ‘have  been’  merged  into  and  re-

designated as Senior Tax Assistant (New).

62. The  post  of  Senior  Tax  Assistant  is  shown  as

‘New’  with  a  pay-scale  of  Rs.5000-8000.  The

sanctioned strength is shown as 3152. So also, the

post  of  Tax  Assistant  is  shown  as  ‘New’.  The

sanctioned strength is shown as 5525. The pay-scale

is  Rs.4000-6000.  Coming  back  to  the  body  of  the

communication, it is stated that all the posts at

different levels, as per Annexure-1, stand sanctioned

with  immediate  effect.  It  is  next  stated  that

whenever there is a reduction in the number of posts

at any level, such reduction will be effective after

the existing incumbents are promoted to the higher

level  or  the  post  falls  vacant  on  account  of

retirement, etc. For the year 2001-2002, no Direct

Recruitment was to be made without approval of the

Ministry/Department  as  the  Cabinet  had  approved  a

one-time  relaxation  for  filling-up  of  all  the

vacancies by promotion in all the cadres. Next, it is

stated that the formation-wise distribution of posts,

78

at different levels, will be notified separately. The

other  posts  included  in  the  restructuring  proposal

but where there is no proposal for alteration of the

scale or strength, were included in Annexure-2. The

post of Inspector does not figure in Annexure-2.

63. At first blush, on a perusal of the decision, as

embodied in the communication dated 19.07.2001, the

view,  we  may  tentatively  take,  would  be  that

Government has not only approved the restructuring,

but it has intended it to be effective. It is not in

dispute that the post of Inspector was formerly the

post  of  Inspector/Preventive  Officer/Appraiser.  In

place of these three posts, there was only to be the

post  of  Inspector.  In  terms  of  the  sanctioned

strength, it is common case that there was formerly

in excess of 22000 posts of Inspector. The number of

posts, in fact, came down to 18053 as a result of

restructuring. The restructuring has also resulted in

abolishing  of  certain  posts,  as  for  instance,  the

post of O.S.. Certain posts came to be merged and new

posts have emerged. Of interest to us, in resolving

the  dispute,  are  the  cadres  of  Assistant,  Tax

79

Assistant,           U.D. Clerk (Special Pay), Data

Entry Operator Grade ‘C’ and Grade ‘B’, which merged,

and the post of Senior Tax Assistant, emerged. In

place  of  the  enumerated  posts,  as  above,  it  was

contemplated that the post of Senior Tax Assistant

will take their place. The existing posts of U.D.

Clerk, Data Entry Operator Grade ‘A’ also underwent a

merger and, in their place, emerged the post of Tax

Assistant (New).

64. A perusal of the proceeding dated 19.07.2001 also

drives home the point that the posts in different

levels,  consequent  upon  restructuring,  have  been

articulated in Annexure-1. What is more, they stood

sanctioned  with  immediate  effect.  These

circumstances,  undoubtedly,  do  point  to  the

restructuring  exercise  being  not  one  only  in

principle but also to have effect immediately. Even

more, in this direction, is the further decision that

as  a  result  of  restructuring,  there  has  been

reduction in the number of posts and if there is a

person, holding the post, the restructuring in the

form of reduction, was not to come into force except

80

after  the  person  holding  the  post  was  to  either

retire or he was promoted to the next higher post. An

illustration  would  clarify  the  point.  As  noticed,

prior  to  the  restructuring,  there  were  more  than

22000  posts  of  Inspector.  The  number  of  posts  of

Inspector was reduced to a little over 18000. What

would  happen  to  the  persons  who  were  holding  the

posts of Inspector in excess of 18000, is, what is

provided in the order. The person holding the posts

of  Inspector,  in  excess  of  the  reduced  sanctioned

strength, would continue to hold the post till either

retirement or he was promoted, whereafter, the post

would die a natural death. The expression used in

Note 4 also indicates that the posts were merged and

re-designated. Undoubtedly, these aspects do provide

circumstances for us to hold that the decision of the

Cabinet,  as  provided  in  the  communication  dated

19.07.2001, was not just a principle set in motion

towards achieving the target of actual restructuring,

but  it  itself  exhaustively  brought  about  the

restructuring per se.  

81

65. The  next  letter  is  dated  25.07.2001.  Therein

addressing all Chief Commissioners of Customs/Central

Excise and Commissionerate besides Director Generals,

it is stated that the cadre restructuring proposal

has been approved. In addition to the communication,

a number of activities had to be initiated, including

the  issuance  of  Customs  and  Excise  notifications,

indicating  jurisdiction  and  also  distribution  of

posts  in  various  Grades  among  the  Commissionerates

and  Customs  House.   An  implementation  Cell  was

constituted consisting of seven members.  The next

communication  is  dated  10.9.2001.  It  reads  as

follows:  

 “I am directed to say that the issue of holding of DPCs in respect of Group ‘B’ & ‘C’ posts as well as making direct recruitment to the various posts pending distribution of posts of various field formations  is  being  undertaken  by  the Implementation  Cell  in  pursuant  to sanction issued by Board’s letter F.No. A-11019/72/99-Ad.IV  dated  19.07.2001 conveying the approval of the Cabinet to the restructuring of Customs and Central Excise Department has been considered by the Board.  

2. It is felt that if the DPCs for group  ‘B’  &  ‘C’  are  conducted  by  the cadre  authorities  it  may  lead  to widening  of  imbalances  in  promotion

82

prospects  or  create  imbalances.  The Board have, therefore, decided that the holding of DPC of group ‘B’ & ‘C’ post may be frozen and no DPC may be held for group  ‘B’  &  ‘C’  post  till  the distribution  of  posts  under  various level is completed and instructions are issued by the Board in this regard.

3.  As  you  are  aware  that  Board  have already imposed a ban for filling up of post of LDC and Sepoys vide their letter F.No.A-11012/27/2000-Ad.IV  dated 10.04.2001. It is reiterated that these instructions may be strictly adhered to and it is further stated that no direct recruitment  may  be  made  to  any  grade till  further  orders  of  the  Board/ Department of Revenue.

4. The receipt of this letter may please be acknowledged.”

(Emphasis supplied)

66. It may be noticed that by the said letter the

holding of DPC for Group ‘B’ and Group ‘C’ posts was

frozen till the distribution of posts under various

levels was completed and instructions were received.

The next communication is dated 19.09.2001.  

 “As you are aware, some reports have earlier  been  called  from  the  field formations  by  this  Directorate  with regard  to  sanctioned  and  working strength  of  different  cadres  and additional requirements, if any, keeping in view the model structure of the new Commissionerates  which  was  circulated (copy  again  enclosed  for  ready

83

reference). It is observed that either reports have not been received of where received,  there  are  some  deficiencies. Many  commissionerates  have  still projected  requirements  of  OS,  UDCs, Examiners,  DEO  etc.  which  cadres  have already been merged into new cadres and will  not  exist  under  the  new dispensation.  Similarly  some  of  the Commissionerates have accepted the model structure without considering the actual requirement.  As  stated  in  earlier communications,  the  model  structure indicates  average  requirement  for  one Commissionerate  and  it  may  not  be possible to apply it across the board. Airport  and  Preventive  Customs Commissionerates may not require 19 or 12 Appraisers whereas they may need more Supdts. and Inspectors than indicated in the  model  structure.  It  is  therefore, necessary  to  adjudge  the  actual requirement of staff of different cadres keeping in view the quantum and nature of  work  handled  by  the  particular Commissionerates  and  the  principles governing  the  cadre  restructuring proposals which envisage the deptt. To be  officer-oriented,  technology  driven with  reduced  manual  processing  of documents  by  greater  use  of  computers and reducing interface with tax-payers. This means a reduction in man-power in general.  

2.  It  is,  therefore,  requested  that precise information in the proforma I to III annexed to this letter may please be provided. Proforma I relates to existing sanctioned  strength  prior  to  cadre review  for  each  cadre.  In  case,  any cadre  which  is  existing  but  has  been left out in the proforma the same may be added  at  the  end  of  proforma.  This

84

proforma  has  to  be  in  reference  to cadres  existing  prior  to  the  cadre restricting exercise. Proforma II seeks information  on  actual  requirement  of staff  of  each  cadre  which  will  exist after  the  coming  into  effect  of  the cadre  restructuring  proposal.  While providing  information  in  this  proforma the following points should be carefully considered:

(i) Since new Zones are being created by bifurcating or trifurcating the existing Zone,  the  staff  proposed  in  this proforma will be for the same overall jurisdiction  for  which  staff  indicated in  proforma  I  was  sanctioned.  Any deviation  may  please  be  indicated  as footnote  to  this  proforma.  This  means where  one  zone  has  been  divided  into three  zones,  the  staff  strength  of cadres not affected by the restructuring exercise would remain same for all three zones i.e. total strength of such cadre in  three  zones  would  be  equal  of strength in earlier combined zone.  

(ii) Requirement in this proforma should be in the reference to cadres which will exist  henceforth.  For  example, requirement of Sr. Tax Assistants should be adjudged with reference to the work earlier  handled  by  Tax  Assistants, Special Pay UDCs, DEOs Grade B and C as all these cadres have been merged into the  cadre  of  Sr.  Tax  Assistants. Similarly  requirement  of  AOs  should include the requirement for work earlier handled by OS as the cadre of OS has been merged with cadre of AO. Similarly, all  POs/Examiners/Inspectors  will  be designated  as  Inspector  only.  A  chart showing  the  merger/abolition  of  cadres and  increase/decrease  in  the  no.  of posts is enclosed.

85

(iii) While indicating requirements for the Zone, it may be ensured that where no.  of  posts  have  been  reduced  the requirement  of  staff  has  to  reduce proportionally  for  the  Zone.  For example, the number of Inspector level posts having been reduced from 21222 to 18053,  the  Zones’  sanctioned  strength has  also  to  be  reduced  in  the  same ratio. Similarly where posts have been increased (for example, superintendents and Appraisers), the requirement can be increased  proportionately.  In  case  of any deviation required in any Zone in this  regard,  full  justification  should be provided in a separate note. Since total no. of posts in any cadre cannot be  more  than  posts  approved  for  the country  as  a  whole,  the  Chief Commissioners  should  consider  the requirements  projected  work  carefully. It may please be noted that purpose of this exercise is to allocate the staff already  sanctioned  to Zones/Commissionerates  and  not  to consider  sanction  of  additional  staff. Proposals  for  additional  staff  should not therefore be made while furnishing the information.  

(iv)  Staff  required  for  the  Chief Commissioners’  office  and  for Commissioner(Appeal)/Adjn.  should  also be adjudged keeping in view the modern tools of administration available.

(v)  Wherever  requirement  of  any  cadre for  the  new  Zones/Commissionerates exceeds  the  staff  managing the  same jurisdiction  at  present,  the  proposal for additional staff should be supported by the study conducted by the S.I.U. If in any formation S.I.U. has recommended

86

reduction in staff, the same should also be indicated.

3.  Proforma  III  seeks  information  on staff  sanctioned  and  required  for handling  Customs  work  falling  in  the jurisdiction  of  Central  Excise Commissionerates under the proposals for re-organization  forwarded  by  the  Chief Commissioners.  Requirement  of  staff projected  must  be  supported  by  the statistics of work being handled by the Customs Division/ICD/CFS etc. The staff sanctioned/required this work should not be  included  in  the  data  provided  in proforma I and II and a confirmation to this effect recorded in the proforma.   However, if no staff has been sanctioned for customs work earlier and the work was  being  managed  by  staff  sanctioned for  Central  Excise  work,  this  may  be indicated  in  this  proforma  and  staff sanctioned  should  be  included  in proforma  I  with  suitable  remarks.  The staff  required  should  be  only  with reference to designations which will be functional  after  implementation  of  the proposal.

4. In respect of each Commissionerate, the  name  of  the  cadre  controlling Commissionerate should also be informed alongwith  details  of  cadres  controlled by them.

5. Since giving effect to the proposal of  restructuring  including  promotions etc.,  is  dependant  on  the  information being  sought,  you  are  requested  to ensure  that  carefully  compiled information complete in all respects is made available within a week’s time.”

The chart is omitted.

87

67. On  03.01.2002,  the  following  communication  is

seen sent:  

 “I am directed to refer to Board’s letter of even number dated 10.09.2001 imposing a ban on holding of DPCs for Group ‘B’ & ‘C’ posts. The Board have received  representations  against  the aforesaid ban on promotions.  

2. The matter has been considered by the Board and it has been decided that wherever the DPCs may also be filled up. Where the DPCs have not been held, the DPCs may be held on the basis of re-revised strength i.e. the strength existing  before  the  cadre restructuring  and  the  resultant vacancies may be filled up.

3.  Action  may  be  taken  on  priority basis under intimation to the Board.”

68. In  proceeding  dated  02.04.2002,  promotion  was

effected to the post of Tax Assistant from the post

of U.D. Clerk. According to Shri C.U. Singh, this was

by  way  of  filling-up  the  posts  in  terms  of  Order

dated 03.01.2002. Further proceedings to be noticed

is  dated  05.06.2002.  Therein  reference  is  made  to

19.07.2001  while  notifying  the  revised  sanctioned

strength at different levels consequent to approval

of cadre restructuring. It is further stated that the

allocation  of  staff  to  the  zones  Commissionerates,

88

Director General and Directorate at different levels

has been decided by the Board and approved by the

Government as detailed in the enclosed folder. The

allocation  superseded  all  earlier  Notifications  in

respect of Cadre categories in the enclosed folder

separately.  All the Chief Commissioners and other

Head of Departments were required to carefully study

the detail of reorganisation of the formation and to

bring to the notice of the Board any discrepancy that

may require review or may not have been taken into

account for corrective action.  Cadre control was to

vest  to  the  respective  Commissioners  in  the

particular zones and it is further stated that the

ban  on  direct  recruitment  was  to  continue  till

31.12.2002.  The ban was to applicable only to posts

including in the cadre restructuring.  Finally, in

paragraph 8, it is stated as follows:  

“The  detailed  instructions/orders/ recruitment rules governing the manner of filling up of the vacancies at all levels will be issued separately.  No vacancy in respect of the posts included in the cadre restructuring  should  be  filled  up  till such time as further orders are issued.”

(Emphasis supplied)

89

 69. It may be noted at once that though there  is

case  for  the  respondents  that  the  ban  on

restructuring was lifted by letter dated 03.01.2002,

such contention appears to be categorically belied by

the prohibition against filling-up of any vacancy in

respect of posts included in the cadre restructuring,

till such time, as further orders are issued. Though

vacancies may have arisen, which could be filled-up

under the 1979 Rules, this appears to be a case where

a conscious decision was taken not to fill-up the

vacancies in the wake of the restructuring process

which was undertaken by the Government.  Though a

contention is taken that the post of Inspector is not

part of the cadre restructuring, we are of the view

that there may not be merit in the said contention.

The post of Inspector emerged as re-designated post

in place of the erstwhile                   post of

Inspector/Preventive  Officer/Appraiser.  More

importantly, that it was a part of the restructuring,

is clear from the fact that the number of posts fell

from  a  little  over  22000  to  a  little  over  18000.

Therefore, the post of Inspector was a post which can

90

be treated as included in cadre restructuring. The

taboo against filling-up of the vacancy, is clearly

reflected  in  the  communication  dated  05.06.2002.

On 26.6.2002, urgent direction is issued to hold DPC

to the post of Superintendent of Central Excise and

Superintendent  of  Customs.   Therein,  it  is,  inter

alia, stated as follows:  

 “I am further directed to say that while  drawing  up  the  panel  for promotion  to  the  cadre  of Superintendents of Central Excise from the  Grade  of  Inspectors  of  Central Excise  and  Superintendents  of  Customs (Preventive)  from  the  grade  of Preventive  Officers,  the  vacancies arising  on  account  of  the  cadre restructuring  scheme  as  also  regular vacancies  arising  on  account  of retirement etc., during the year 2002- 2003  may  be  taken  into  account  after observing  the  procedure  for  DPC  etc. However, posts indicated in the cadre restructuring scheme shall be filled up only after necessary orders are issued by the Ministry in this regard.

I  am  also  directed  to  draw  your attention  to  this  Ministry’s  letter F.No.A.  32012/9/89-Ad.II  B  dated 26.06.1990 (Copy enclosed) and to say that  this  year  orders  of  promotion instead  of  being  issued  on  the  last working day of June may issued on the 1st working day of July 2002.”

91

70. The next letter to notice is the letter dated

19.09.2002. Therein, after referring to letter dated

26.06.2002,  it  is  stated  that  it  was  decided  to

initiate  the  process  for  filling-up  vacancies  that

have arisen on account of cadre restructuring in all

remaining cadres up to Grade ‘B’.  It was directed to

ensure that apparently DPC was convened in respect of

all Grades for the change of number of posts, as also

Grades,  where  revised  Recruitment  Rules  have  been

circulated.             On 23.09.2002, promotion

orders in respect of Superintendents were allowed to

be issued.                        On 28.10.2002, the

Draft Recruitment Rules for               Group ‘C’

post  of  Inspector  and  Senior  Tax  Assistant  was

communicated to all Chief Commissioners, both, Customs

and  Central  Excise.  It  was  further  stated  that

Notifications  notifying  the  Rules  will  be  issued

shortly.  Direction was given to start the process of

DPC.  Thus, it could be said that by the issuance of

this communication, the Government decided to proceed

with  the  recruitment  by  promotion  to  the  post  of

Inspector.  

92

71. A perusal of the communication dated 28.10.2002,

reveals the following:

All chief Commissioners were favoured with

Draft Recruitment Rules for the Group ‘C’ post

of  Inspector  (Central  Excise  and  Land

Customs), Inspector (Examiner) and Inspector

(Preventive  Officers).  Besides  the  Draft

Recruitment Rules for the post of Senior Tax

Assistant, as approved by the Ministry, was

also dispatched to the Chief Commissioners. It

is specifically stated that the Notifications,

notifying the Rules, will be issued shortly.

The Chief Commissioners were told that they

may initiate necessary action to process for

DC (apparently DPC). The next sentence is of

crucial significance. It reads as follows:

“You  may  however  await  issue  of

notification before issue of any order

of promotion based on these Rules.”

72. This  communication  establishes  further,  the

following aspects:

93

Restructuring  the  post  of  Inspector,

contemplated under the order dated 19.07.2001,

had not yet come into being.  This is because

there is reference to the post of Inspector

(Central  Excise  &  Customs),  Inspector

(Examiner) and Inspector (Preventive Officer).

If  the  post  of  Inspector,  as  contemplated

under the Order dated 19.07.2001, had already

come into existence with the issuance of the

Order dated 19.07.2001, there was no occasion

to continue to refer to pre-designated posts

from which the post of Inspector emerged.

73. Still further, what was obviously contemplated

was that the post of Inspector was to be filled-up

after  the  process  of  restructuring  was  over.   In

other words, the Rules relating to Inspector and the

Rules  relating  to  recruitment  of  Senior  Tax

Assistants,  was  to  be  brought  into  force

simultaneously.  This  conclusion  appears  inevitable

from the circumstance that the Chief Commissioners

were  directed  to  await  issuance  of  Notification

notifying the Rules before orders of promotions were

94

issued  based  on  the  Rules  which  were  the  Draft

Recruitment Rules. It is not indicated in the Order

dated  28.10.2002  that  promotion  to  the  post  of

Inspector was to be made under 1979 Rules.  What was,

in fact, contemplated was that the process, viz., the

holding of the DPC for the post of Inspector, was to

begin and operationalised under the Draft Rules but

the actual orders of promotion were to be issued only

after the Rules were actually brought into force. The

Draft Recruitment Rules for the Tax Assistant was

also sent by letter dated 06.11.2002. By letter dated

14.11.2002, it is directed as follows:  

 “I am directed to refer to Minister’s letter  F.No.A-11013/01/2002-AdIV  dated 19th September 2002 regarding holding of DPC’s  in  all  grade  where  Recruitment Rules  exist,  as  also  in  grades  where revised  recruitment  rules  have  been circulated. In terms of Para 2 of the said letter, it was directed to hold the DPC’s by 30th September, 2002 and keep the list ready for issue. It was also clarified that promotion orders may only be  issued  on  receipt  of  further directions from Ministry.

2.  In  view  of  the  above,  you  are requested to issue the promotion orders in respect of remaining Group ‘B’, ‘C’ and ‘D’ posts as sated below:-

95

(i)  promotion  orders  in  respect  of Sepoy,  Havaldar,  Head  Havaldar,  Tax Assistant,  Senior  Tax  Assistant  and Inspector of  Central  Excise/Preventive Officer/  Examiner  of  Customs  may  be issued on the basis of Recruitment Rules after  allotment  of  GSR  No  by  the Government of India Press, Wherever not yet allotted.

(ii) DPC in respect of Appraisers and Administrative  Officer  may  be  held  on the basis of existing Recruitment Rules and promotion orders may be issued.

(iii) DPC in respect of remaining grades except DOS L-II may be held on the basis of  existing  Recruitment  Rules  and Promotion  orders  may  be  issued  by 25.11.2002.

(iv) Promotion in the grade of DOS L-II may  be  made  only  after  the  new recruitment rules are circulated by the Ministry.”   

(Emphasis supplied)

 74. In  the  Order  dated  14.11.2002,  it  is

specifically,  inter  alia, ordered  that  promotion

orders in respect of the post of Inspector (Central

Excise)/Preventive Officer/Examiner of Customs may be

issued on the basis of the Recruitment Rules after

the  allotment  of  GSR  Number  by  the  Government  of

India Press.  Thus, the green signal was given to go

ahead with the issuance of promotion order for the

post  of  Inspector,  inter  alia,  based  on  the

96

Recruitment Rules, after the allotment of the GSR,

which means the Notification of the Rules.

75. What actually happened was, however, as follows:

The  Inspector  Rules  and  the  Senior

Tax Assistant Rules were not published and

brought into force on the same date. The

Inspector Rules came to be finalised and

published  on  29.11.2002.  It  is  brought

into force on 07.12.2002. The STA Rules,

though  published  on  16.01.2003,  was

brought into force on 20.01.2003.

WHEN CADRE RESTRUCTURING TOOK PLACE

76. The next question, however, which would arise as

to  when  was  the  cadre  restructuring  actually

effectuated. In this regard, we have already noticed

the contents of the communication dated 19.07.2001.

We  have  also  pointed  out  the  circumstances  which

tends to indicate that not only the Cabinet took a

decision to bring about restructuring in the Central

Excise  and  Customs  Department  in  principle  but

evidencing  an  actual  sanctioning  of  posts  with

immediate  effect  in  various  cadres.  We  have  also

97

noticed how the Government has provided that in case

of  reduction  in  strength,  as  a  result  of  the

restructuring, persons holding posts in excess of the

revised  and  reduced  strength,  were  permitted  to

continue till their promotion or retirement, etc.. We

have noticed the language used in Note 4 also. The

time  is  now  ripe  for  us  to  have  a  look  at  the

Statutory  Rules.  The  contention  of  the  respondents

and  the  finding  of  the  High  Court  is  that

restructuring came into effect only with the issuance

of  the  Statutory  Rules  in  the  case  of  Senior  Tax

Assistants on 16.01.2003, which was published in the

Official Gazette on 20.1.2003. Therefore, the actual

restructuring  became  a  reality  only  on  20.01.2003,

runs the argument of the respondents.   

77.  Inspector  Rules,  2002  came  into  force  on

07.12.2002.  The Senior Tax Assistant Rules came into

force with effect from 20.01.2003.  In Column 12 to

the Schedule to the 2002 Inspector Rules, which deals

with  how  promotion  is  to  be  effected;  Clause  (a)

contains,  apparently,  those  categories,  which  were

among the feeder categories under the 1979 Rules. In

98

fact,       Clause (a) itself recites by selection

from those candidates working in the pre-restructured

cadre.  No doubt, the words ‘pre-structured’ is added

by  Corrigendum  in  2003.  Clause  (b)  provides  for

selection  from  those  candidates  working  in  the

restructured cadre.  The third Feeder Category is to

operate, failing the method of recruitment specified

under clause(b). It is apposite that we notice, at

this  juncture,  Note  1.   For  the  purpose  of

convenience, it is recapitulated again.  It reads as

follows:   

In case of recruitment by promotion/ deputation/absorption,  grade  from which  promotion/deputation/absorption to be made.

12 Promotion: (a) By selection from those candidates  working  in  the  following restructured cadres: Note  1:  Promotion  under  Clause  (a) above shall be only operative for a period of two years from the date on which  the  restructured  cadres mentioned under Clause (b) above comes into existence.  

The  service  rendered  under  the  new grade in the restructured cadres shall be  counted  towards  considering  the eligibility for promotion under Clause (a) above.   

78. It is strenuously argued before us on behalf of

the respondents that Note 1 reveals the Legislative

99

intent  that  the  feeder  categories,  mentioned  in

Clause (a), would be given the right exclusive in

nature, thereby excluding those categories in Clause

(b).  This exclusive right, it is pointed out, was to

last only for a period of two years.  We may shift

focus also to the STA Rules of 2003.  We may advert

to it as much may turn on its purport:  

 “5. Initial constitution.-(i) All the persons appointed on the regular basis at  the  time  of  commencement  of  these rules  to  the  Grade  of  Assistant,  Tax Assistant, Upper Division Clerk (Special Pay), Data Entry Operator Grade B’ and ‘C’  shall  be  deemed  to  have  been appointed as Senior Tax Assistants under these  rules.  The  service  rendered  by them before commencement of these rules shall be taken into account for deciding the  eligibility  for  promotion  to  the next higher grade.

(ii) Assistants (Rs. 5000-8000) and Data Entry Operator Grade ‘C’ (Rs. 5000-8000) are  being  redesignated  as  Senior  Tax Assistants  in  the  same  scale  of  pay. Therefore, the Assistants and Data Entry Operator  Grade  ‘c’  shall  be  placed enblock senior to the other categories. However, their inter-se placement shall be done according to the date from which they  had  actually  been  appointed  to these grades on regular basis subject to the  condition  that  their  inter  se placement  in  their  respective  category shall not be altered.

100

(iii) The Data Entry Operator Grade ‘B’ (4500-7000)  and  Tax  Assistants  (4500- 7000) have been placed in their higher scale  of  5000-8000  and  they  shall  be placed  below  the  Assistant  and  Data Entry  Operator  Grade  ‘C’  and  their inter-se-placement  shall  be  fixed  in accordance  with  the  date  of  regular appointment  to  the  respective  grade subject  to  the  condition  that  their inter-se-placement  in  respective category shall not be disturbed.

(iv) Upper Division Clerk with special pay  shall  be  placed  below  Assistant, Data  Entry  Operator  Grade  ‘C’,  Data Entry Operator Grade ‘B’ Tax Assistants.

(v)  The  present  employees  would  be required  to  pass  the  required  or suitable  departmental  examination,  as specified  by  the  Competent  Authority, from  time  to  time,  in  Computer application  and  relevant  procedures within  two  years  falling  which  they would  not  be  eligible  for  further increments.”

79. We may notice that under the 2003 STA Rules, Rule

5 contemplated the initial constitution of the Cadre

of Senior Tax Assistants.  It was to consist of the

former  categories  of  Tax  Assistant,  U.D.  Clerk

(Special Pay), Data Entry Operator Group ‘B’ and ‘C’.

The future method of recruitment was by way of 100

per cent promotion from Tax Assistants, as provided

in Column 12 of the said Rules.  It is also necessary

101

to notice Rule 4 of the Tax Assistant Rules 2003,

which  was  brought  into  force  with  effect  from

05.05.2003.  

 “4. Initial constitution:- (1) The person appointed on regular basis and holding  the  post  of  Upper  Division Clerk and Data Entry Operator Grade A on  the  commencement  of  these  rules shall deemed to have been appointed as Tax  Assistant  under  these  rules  and the service rendered by such persons in  the  respective  posts  before commencement of these rules shall be taken into account as regular service rendered on the post of Tax Assistant for the purpose of promotion etc.  

(2)  The  person  holding  the  post  of Data Entry Operator Grade-A appointed under  these  rules  as  Tax  Assistant, shall, within two years, from the date of such appointment as Tax Assistant, pass  the  Departmental  Examination  as conducted by the competent authority, failing which he shall not be entitled to get any further increment.

(3) Any person, who holds a post of Lower Division Clerk on regular basis and falls within the seniority list as determined by the appointing authority at  the  commencement  of  these  rules shall,  on  passing  the  Departmental Computer  Proficiency  examination conducted by the appointing authority, be deemed to have been promoted with effect  from  date  of  passing  such examination  on  the  post  of  Tax Assistant.

(4)The Upper Division Clerks and Data Entry  Operator  Grade  -A  shall  be

102

placed  en-block  senior,  and  their inter se placement shall be fixed in accordance  with  the  date  of  regular appointment  to  the  respective  grade subject  to  the  condition  that  their inter se placement in the respective grade shall not be disturbed.

(5)  Lower  Division  Clerks  shall  be placed below Upper Division Clerks and Data Entry Operator Grade -A.”   

 80. The  dispute,  as  to  when  the  restructuring  was

completed, must be resolved on a conspectus of the

decision  dated  19.07.2001  and  the  subsequent

decisions,  as  expressed  in  communications  which  we

have  adverted  to,  and  the  combined  effect  of  all

these Rules.    

81. Now, turning back to Note 1 to the 2002 Inspector

Rules, we notice that promotion under Clause (a) was

to be operative for a period of two years from the

date on which the restructured Cadre in Clause (b)

comes into existence. If the interpretation sought to

be placed by the appellants is accepted, and we are

to hold that the restructured cadre of Senior Tax

Assistant  came  into  force  with  effect  from

19.07.2001, the result would be that promotion under

Clause (a) would be limited by a period of two years

103

from 19.07.2001. In other words, no promotion could

be  ordered  from  the  Feeder  Category  mentioned  in

Clause (a) in Column 12 of the 2002 Inspector Rules

after 18.07.2003.  This also means that promotions

could  be,  therefore,  effected  during  the  period

commencing  from  19.07.2001.  This  produces  the

anomalous  result  that  promotions  are  to  be

countenanced  under  the  2002  Rules,  retrospectively

from  19.07.2001.  What  is  more,  according  to  the

appellants, promotions were banned during the period.

This, in our view, completely militates against the

idea that the restructured Cadre came into being from

19.07.2001.  We are not oblivious and we have indeed

expressly  articulated  the  circumstances  from

communication dated 19.07.2001 which probablised the

appellant’s  contention  that  restructuring  became  a

reality from 19.07.2001.  But, we, at this juncture,

must  also  notice  that  the  actual  distribution  of

posts in different formations was postponed. It may

not be in apposite, at this juncture, to also notice

another factual aspect. There is a definite case for

the respondents that the Data Entry Operator Grade

104

‘B’ and ‘C’ continued as such and they were only re-

designated as Senior Tax Assistant or Tax Assistant

on the enforcement of the 2003 Rules and not before

such enforcement. In fact, it was also not seriously

disputed before us that this was indeed the case on

the ground.  We may also find light from the STA

Rules.   Rule  5  declares  that  “all  the  persons

appointed on regular basis at the commencement of the

Rules in the Grade of Assistant, Tax Assistant, U.D.

Clerk (Special Pay), Data Entry Operator Grade ‘B’

and Grade ‘C’, shall be deemed to have been appointed

as  Senior  Tax  Assistant  under  these  Rules”.   No

doubt, the Rule contemplated that the persons to be

deemed to have been appointed as Senior Tax Assistant

under the 2003 Rules, were the categories, which we

have already indicated.  What is more relevant is,

they are referred to as the persons appointed at the

commencement of “these Rules”.  The words used are

“persons appointed”. The intention appears to be to

indicate that the persons were appointed and working

on  the  commencement  of  the  Rules,  which  is  on

20.01.2003.  It is those persons, who were referred

105

to by the designation, which were the posts which

were  held  by  them  prior  to  the  restructuring.  In

other  words,  appellants,  who  were  working  as  Data

Entry Operator Grade ‘B’, upon being promoted in the

year 2000, were indeed persons who were appointed on

regular basis as Data Entry Operator Grade ‘B’ as on

20.01.2003, when the Rules, admittedly, were brought

into force.  

82.  We find further support for the view that the

appellants  became  Senior  Tax  Assistant  upon  Rules

being brought into force from the further limbs of

Rule 5.  Sub-Rules (ii), (iii) and (iv) deal with the

issue  of  inter  se seniority  of  the  different

erstwhile  restructured  categories  from  which  the

designated category of Senior Tax Assistant was born.

Those  Assistants,  who  were  drawing  salary  of  pay

scale  of  5000-8000,  and  Data  Entry  Operator  Grade

‘C’, drawing the same pay scale, were re-designated

as Senior Tax Assistants in the same scale. They were

to rank at the top of the seniority list of the newly

created posts of Senior Tax Assistants. Just below

them were put the categories of Data Entry Operator

106

Grade ‘B’ and Tax Assistants, both drawing the pay

scale of 4500-7000, and they have been placed in the

higher pay scale of 5000-8000 and they were to be

placed  below  the  Data  Entry  Operator  Grade  ‘C’.

Similarly, at the bottom of the pyramid, there is the

post of Upper Division Clerk with special pay, who

were to be placed below all the above categories as

aforesaid.  

83. We also bear in mind that the language used in

Note 1, in Column 12 of the 2002 Inspector Rules. It

provides that the promotion in Clause (a) was to be

operative for a period of two years from the date on

which  the  restructured  cadres,  mentioned  under

Clause (b) above,  comes into existence. Had it been

the case where the restructured cadre in Clause (b)

had already come into existence, by virtue of order

dated  19.07.2001,  the  Law  Giver  would  have  used

language indicating the past tense. The Law Giver,

thus,  contemplated  that  the  restructured  cadre  in

Clause  (b),  which  includes  cadre  of  Senior  Tax

Assistants, had not come into existence and it was to

107

come into existence. It came into existence, indeed,

in the future, viz., on 20.01.2003.  

84. We are, thus, of the view that on a consideration

of the Government Orders and, more importantly, the

Statutory  Rules  that  the  conclusion  appears  to  be

inevitable that restructured cadre actually came into

force in the cadre of Senior Tax Assistant with the

Rules being brought into force on 20.01.2003.  Quite

apart  from  the  fact  that  this  is  the  legal

interpretation that flows, we are also supported by

the fact on the ground that the appellants appeared

to continue till after the Rules were brought into

force with the designation as Data Entry Operators

Grade ‘B’.  

A perusal of Rule 5(v) of the STA Rules 2003 would

also show reference to ‘present employees’ and they

were to pass the departmental examination ‘within two

years’. Failure was to result in their being rendered

ineligible  for  future  increments.  Certainly,  the

period  of  two  years  would  commence  only  from

20.01.2003. If so, the ‘present employees’, including

the appellants continued as Data Entry Operator Grade

108

‘B’  till  20.01.2003.  The  view  that  the  STA  Cadre

emerged only on 20.01.2003, is supported by official

understanding, as reflected in proceedings dated 21-

04-2003. The principle of contemporanea expositio is

apposite in the facts.    

APPELLANTS  RIGHTS  AS  SENIOR  TAX  ASSISTNATS  ON RESTRUCTURING

85. Having  found  that  restructuring  was  effective

from the date of the promulgation of the Statutory

Rules  in  case  of  Senior  Tax  Assistant  w.e.f.

20.01.2003, and also having found that there was a

ban  on  carrying  out  promotions  under  the  earlier

Rules, as evident from a perusal of communications

dated  10.09.2001,  03.01.2002  and  05.06.2002,  and

thus, it manifested a conscious decision on the part

of  the  Government  not  to  fill  the  vacancies  in

accordance with the earlier Recruitment Rules, viz.,

1979 Rules, the question arises as to what is the

nature of the right which the appellants had. It must

be remembered that the appellants filed the Original

Application before the Tribunal taking exception to

the Notice dated 05.11.2002. Now, let us analyse the

reasoning of the Tribunal with reference to the case

109

set up by the parties. The case of the appellants

must be understood as follows:

 The  restructured  cadre  has  come  into

existence on 19.07.2001.  

 Promotion to the post of Inspector could be

made only from the restructured cadres while

so the draft recruitment rules came to be

issued on 28.10.2002.

86. In the said Rules, preference was sought to be

given  to  the  pre-structured  cadres,  which  included

the  old  tax  assistants  with  a  certain  number  of

years. It was Clause (a) to Column 12 of the 2002

Inspector Rules, which was alleged as unconscionable

and  violative  of  Articles  14  and  16  of  the

Constitution of India. It was the further complaint

that Note 1 in Column 12 of the 2002 Inspector Rules

was also flawed insofar as the persons in the pre-

structured cadre, viz., those falling in Clause (a),

were  enabled  to  steal  a  march  by  being  promoted,

taking into consideration their service in the new

Grade in the restructured Cadre for the eligibility

for promotion under Clause (a). The only Cadre, which

110

was  eligible  for  promotion  after  the  order  dated

19.07.2001, was the restructured Cadre, including the

Cadre of Senior Tax Assistants, ran the argument. 87. The  Tribunal  proceeded  on  the  basis  that  the

restructuring  became  complete  with  the  issuance  of

the order dated 19.07.2001. It must be noted that the

Original Application came to be filed on 19.11.2002

at a time when the Inspector Rules had not even been

finalized as the Rules came to be finalized only on

29.11.2002  and,  in  fact,  brought  into  force  till

later  on  07.12.2002.  Undoubtedly,  the  Note

contemplated,  giving  persons  in  Clause  (a),  viz.,

those  falling  in  the  pre-restructured  cadre,  the

benefit  of  taking  into  consideration  the  service

rendered  in  the  restructured  Cadre,  for  being

promoted  as  Inspector.  The  persons  falling  in  the

restructured  Cadre,  were  not  conferred  with  such

advantage.  However,  by  the  time  the  Original

Application  came  to  be  heard,  the  Senior  Tax

Assistants  Rules  2003  came  into  force  with  effect

from 20.01.2003. Under Rule 5 of the 2003 Rules, the

persons  working  as  Data  Entry  Operator  Grade  ‘B’,

inter  alia,  stood  re-designated  as  Senior  Tax

111

Assistants and they were also given the benefit of

reckoning  the  past  service  and  calculating  the

qualification of experience of two years under the

Inspector Rules, 2002. In fact, the Tribunal has also

taken note of the 2003 Rules. Both the persons in the

pre-structured  cadre  and  those  in  the  restructured

cadres, were, by virtue of Note 1 to Column 12 to the

2002 Rules and Rule 5(i) of the Senior Tax Assistants

Rules 2003, respectively, were given the benefit of

counting service as provided therein. The Tribunal,

in fact, has gone on to find that the Senior Tax

Assistants under Rule 5(i) of the 2003 Rules were

entitled  to  reckon  their  service  as  Data  Entry

Operator Grade ‘B’ for eligibility for promotion as

Inspector.  The  Tribunal  goes  on  to  find  that  the

unified restructured cadre of Senior Tax Assistants

alone would be eligible for promotion as Inspector.

The integrated seniority is to be worked out in terms

of Rule 5 of the 2003 Senior Tax Assistant Rules.

This is based on the premise that with effect from

19.07.2001, the restructuring of Senior Tax Assistant

came  into  force  and  all  the  earlier  Cadres  stood

112

merged. We notice also the following findings by the

Tribunal:

The  Tribunal  noticing  the  contention  of

the  respondents  that  the  selection  process

initiated  on  05.11.2002  has  been  finalized

from categories other than of the employees

i.e. Data Entry Operator Grade ‘B’ and ‘C’ and

the existing vacancies were filled-up, it was,

thereafter, found by the Tribunal as it is now

found that the appellants were also eligible,

the Original Application was to be disposed of

by  directing  the  appellants  be  considered

eligible for promotion after considering the

service  rendered  by  them  as  Data  Entry

Operator Grade ‘B’. The Original Application

was  accordingly  disposed  of  directing  the

appellants be considered for promotion based

on the years of service on the post of Data

Entry Operator Grade ‘B’ after allowing them

to appear for the examination contemplated in

Note  2  under  the  2002  Inspector  Rules.  The

further  relief  granted  was  to  direct  to

113

promote them if they were successful and to

fix  the  seniority  based  on  Rule  5.  The

declaration  which  was  sought  for  by  the

appellants in paragraph 8(c) of the Original

Application, which we have already extracted,

was granted.

88. Thus, the Original Application has been allowed

in part. It is necessary to notice that the effect of

granting the said relief and also the effect of not

granting the reliefs in paragraph 8(b). Granting of

the Relief 8(c) would mean that this Court would also

have to accept that under the 2002 Inspector Rules,

it is only the restructured Cadre, which would be

entitled for promotion to the cadre of Inspector. To

put it differently, the persons falling in Category

(a),  which  corresponds  to  feeder  categories,  under

the 1979 Rules, would not be entitled for promotion

as Inspector.  

89. It  is  now  necessary  to  look  at  their  prayer,

i.e., 8(b) and the effect of not granting any relief

thereunder. Prayer 8(b) was sought by the appellants

to set aside the Recruitment Rules communicated vide

114

28.10.2002,  as  confirmed  vide  Gazette  of  India

Notification  dated  29.11.2002,  incorporating  the

unconscionable conditions under Clause (a) and Note 1

of Column 12 of the 2002 Inspector Recruitment Rules.

This  prayer  is  also  based  on  the  restructuring

process, having effect from 19.07.2001. The Tribunal

has not granted the relief in paragraph 8(b) of the

Original Application. This means that the persons in

Category (a) of Column 12 of the Inspector Rules,

cannot be affected. The result is that it exposes the

fallacy in grant of Relief 8(c). In fact, there are

two  basic  flaws.  In  the  first  place,  as  we  have

noticed, the restructuring did not come into effect

on  issue  of  communication  dated  19.07.2001.  The

restructuring came into effect only with the issuance

of Rules, for reasons, which we would have already

explained. This by itself takes away the entire basis

of the Tribunal’s Order. Secondly, the Tribunal has

not declared the Statutory Rule infirm, which was the

specific  relief  sought  for  by  the  appellants  in

Relief 8(b). In other words, Clause (a) of Column 12

and the Note, in the 2002 Inspector Rules impugned on

115

the one hand, continues on the Statute Book, whereas,

the  declaration  is  purportedly  granted  under

paragraph 8(c), which necessarily involves declaring

that  only  persons  re-designated  under  the

restructured  cadres  in  Clause  (b)  as  Senior  Tax

Assistants,  inter  alia,  would  be  entitled  to  be

considered  for  promotion  as  Inspector  of  Central

Excise  and  Customs.  In  fact,  the  Order  of  the

Tribunal at Chandigarh also did not involve granting

any  exclusive  right  to  the  persons  in  the

restructured  Cadre  falling  in  Clause  (b).  The

decision  of  the  Bombay  High  Court  also  does  not

reflect any such reasoning. It is well-settled that

when Statutory Rules are challenged, they are upheld,

or if warranted, declared  ultra vires or read down,

if possible. The Order of the Tribunal is specific

that  what  is  granted,  is  the  relief  contained  in

paragraph  8(c)  of  the  Original  Application.

Resultantly, Clauses (a) and (b) continued to be on

the Statute Book. The Tribunal has rather allowed the

Original  Application  partly  and  found  that  the

appellants  are  also  entitled  to  be  considered  for

116

promotion  as  Inspector.  In  Arriving  at  this

conclusion,  the  Tribunal  has  drawn  support

undoubtedly from the views expressed by the Central

Administrative  Tribunal,  Chandigarh,  the  Central

Administrative Tribunal, Madras and the High Court of

Bombay.  

WHETHER STA COULD ADD SERVICE AS DATA ENTRY OPERATORS AND WHETHER PERSONS IN CLAUSE (A) HAD AN EXCLUSIVE RIGHT FOR TWO YEARS?

90.  What is to be the eligibility condition flowing

from the requirement in Clause (b) that Senior Tax

Assistants should have put in two years’ service in

the Grade. It is the contention of the respondents

that what is contemplated by the Law Giver is that

only persons mentioned in Clause (a) to Column 12,

who were incidentally persons, who fell in the feeder

category under the 1979 Rules, are to be considered

for filling-up vacancies for a period of two years,

and it is therefore their contention that the right

of persons mentioned in Clause (b) arises only after

the expiry of two years, and till then, the persons,

who  are  qualified  in  Clause  (a),  are  alone  to  be

considered during these two years. It is also seen

117

that the use of the word ‘Grade’ is referred to, to

contend  that  appellants,  who  were  working  as  Data

Entry Operator Grade ‘B’, were not in the same Grade,

in  terms  of  the  pay-scale  to  which  they  became

entitled  upon  the  restructuring  coming  into  effect

w.e.f  20.01.2003.  In  other  words,  appellants,  who

were  on  a  lower  pay-scale  than  the  Senior  Tax

Assistants, and thus only after 20.01.2003, when the

actual restructuring became a reality, the appellants

would commence working in the Grade, meaning the post

with the scale of pay attached to the post of Senior

Tax Assistant.  

91.  On the other hand, the case of the appellants is

that a perusal of the Rule 5 of Senior Tax Assistant

Recruitment  Rules,  2003,  would  show  that  the

appellants were entitled to take into consideration

the service which was rendered by them prior to 2003.

We also notice another aspect, viz., there is the

case for the respondents that Note 1 to Column 12

contemplates  that  the  service  rendered  by  persons,

falling  in  Clause  (a)  in  the  restructured  cadre,

could be considered for the purpose of calculating

118

the period required under Column 12. Therefore, an

attempt is made to contend that the provisions of

Rule 5 must also be understood in the said vein. Let

us look at the issue with concrete examples:  

(i) An U.D. Clerk is eligible to be considered

for promotion as Inspector under Clause (a).

He has to, however, put in certain number of

years.

(ii) The  U.D. Clerk, who has less than requisite

service as on 20.01.2003, in order that he be

considered  for  promotion  as  an  eligible

person under Clause (a), it is quite clear

that he can add the service after 20.01.2003

as  Senior  Tax  Assistant  to  the  previous

service  and  make  a  claim  for  being

considered.  The  latter  part  of  Note  1  to

Column 12, in our view, is only to clothe

persons falling in Clause (a) with the right

to add the service in the restructured Cadre.

But that is not to say that Rule 5 of the

Senior Tax Assistant Recruitment Rules, 2003,

has the same object.  

119

92. Coming back to the issue, as to whether a person

falling within the four walls of Rule 5 of the 2003,

Rules can stake a claim for counting the previous

service prior to 20.01.2003, we are of the view that

the appellants are right that they are entitled to

count the previous service. The words used in Rule 5

are unambiguous and clear. In this regard, we must

also deal with the yet another contention based on

the  differences  between  Rule  5  of  the  Senior  Tax

Assistant Recruitment Rules, 2003 and Rule 4 of the

Tax Assistant Rules, 2003. It may be true that there

is some difference but, in our view, the words used

differently in the two provisions, are not meant to

take away the right, which was conferred on persons

who were on restructuring to be designated as Senior

Tax Assistants and Tax Assistants.  

93. In  Rule  5,  what  is  contemplated  is  that  the

service rendered by Data Entry Operators Grade ‘B’

and ‘C’, inter alia, before commencement of the Rules

is to be taken about for eligibility for promotion to

the next higher grade. No doubt, in Rule 4, of the

Tax Assistant Rules, the Rule Maker has become more

120

articulate.  They  have  referred  to  the  words  like

‘respective post’, before commencement of Rules and

‘regular service’ which expressions are conspicuous

by  their  absence  in  Rule  5  of  the  Senior  Tax

Assistant Rules. Better wisdom prevailed on the Law

Giver in the course of few months to attain clarity

in  thought  and  expression  but  we  would  not  be

gleaning the intention of the Law Giver, if we were

oblivious to the context and the object with which

the entire exercise of restructuring was carried out.

They would also amount to introducing an element of

discrimination between the Senior Tax Assistants and

the  Tax  Assistants  in  the  conferring  of  benefits.

Of foremost importance is that the view we have taken

is warranted by even the plain words used in Rule 5.

Rule 5 clearly indicates that the service which was

rendered by a Data Entry Operator Grade ‘B’ and ‘C’,

inter alia,  prior to the commencement of the Rules,

would be considered for promotion. This leaves us in

no doubt that the intention was to allow the Data

Entry Operator both Grade ‘B’ and ‘C’, inter alia, to

tag  their  previous  service  that  is  prior  to

121

20.01.2003  for  the  purpose  of  calculating  the

requisite period of service under the 2002 Inspector

Rules. It would appear that what was contemplated was

that the Inspector Rules and the STA Rules would be

brought into force at the same time. If it had so

happened,  the  following  consequences  would  have

followed.  Not  only  would  STA  would  be  a  feeder

category but STA would have been able to count their

previous service as Data Entry Operator Grade ‘B’,

inter alia. Still further, under Note 1, promotion

under Clause (a), was to be operative for a period of

two  years,  from  the  date  the  restructured  cadre,

under Clause (b), was to come into existence. Apart

from indicating that the  restructured cadre ‘was to

come into force’ and, therefore, it had not come into

force as on 19.07.2001 as contended by the Data Entry

Operators,  the  promotion  from  Clause  (a)  being

predicated on the point of time when the restructured

cadre came into force, if the STA Rules were also

brought  into  force  from  07.12.2002,  the  service

rendered  by  persons  under  the  restructured  Grade

122

could have been availed of by persons in Clause (a)

from 07.12.2002.

94. As  regards  the  argument  that  under  the  2002

Inspector Rules, persons in Clause (a) were given an

exclusive right to be promoted for a period of two

years, we see little merit in the same. Clause (c) of

Column 12 provides for promotion from the categories

thereunder,  in  the  absence  of  persons  falling  in

Clause (b). No such rider is found in Clause (b). If

the  STA  Rules  had  been  brought  into  force  on

07.12.2002, then, it is clear that adding two years

as  Data  Entry  Operator  Grade  ‘B’,  the  appellants

would certainly be eligible, particularly, keeping in

mind the intent in Order dated 28.10.2002. There can

be doubt that nothing stands in the way of appellants

and others similarly situated being considered from

20.01.2003  by  adding  the  service  as  Data  Entry

Operator Grade ‘B’. Both, persons in Clause (a) and

persons  in  Clause  (b),

subject to being possessed of qualifications, could

compete  for  the  vacancies.  The  right  of  those  in

Clause (a), would come to an end from 19.01.2005.

123

95. The effect of STA Rules, 2003 coming into force

only on 20.01.2003    qua   vacancies that existed prior

to  20.01.2003,  the  effect  of  promotion  made  from

other categories, and the direction by the Tribunal

to consider appellants for promotion and apply Rules

as to seniority.

96. There can be no doubt that the STA Rules came

into effect on 20.01.2003. The restructured cadre of

STA became a reality from 20.01.2003.  

97. The problem, however, arises as what is to be

done   qua vacancies  of  Inspector  which  were

purportedly  filled-up  as  on  20.01.2003  pursuant  to

Notice dated 05.11.2002 which was impugned in O.A.

1362 of 2002. The Tribunal has not interfered with

the notice dated 05.11.2002 but it has found that it

was  not  in  accordance  with  the  Rules  (apparently

Inspector  Rules  2002  which  superseded  the  1979

Rules).  But  this  is  again  premised  on  the

restructuring  becoming  a  reality  with  effect  from

19.07.2001. This, we have found to be erroneous.  

98. The  Tribunal  notices  the  contention  of

respondents  that  selection  has  been  finalised  for

124

categories other than Data Entry Operator Grades ‘B’

and  ‘C’  and  existing  vacancies  were  filled-up.

Thereafter, the Tribunal, on the basis that it found

appellants were also eligible, directed appellants to

be considered taking into consideration their service

as Grade ‘B’ and with opportunity to take the exam.

If  they  were  found  successful  and  selected  as

Inspector,  suitable  seniority  was  to  be  assigned

based on Rule 5.

99. Here, it is necessary to notice that persons in

Clause (a), under the 2002 Rules, could be promoted

for  a  period  of  two  years  from  the  date  the

restructured  categories  under  Clause  (b)  came  into

force. Thus, the promotion involving 2002 Rules from

Clause (a) could be for a two year from 20.01.2003 as

the  restructured  category  came  into  force  only  on

20.01.2003, even according to the respondents. Thus,

for both categories in Clauses (a) and (b) (STAs),

their  eligibility  under  2002  Rules,  commenced  only

from 20.01.2003.  

100.If  so,  the  question  would  be  the  effect  of

promotion  already  made  as  noted  by  the  Tribunal

125

itself.  As  on  05.11.2002,  the  1979  Rules  governed

promotions. The status of the draft Recruitment Rules

is no longer  res integra. While, promotion can be

based on draft Recruitment Rules, it cannot be done,

if  the  draft  Rules  are  in  the  teeth  of  existing

Statutory Rules. In this regard, we may notice the

following discussion in Union of India through Govt.

of  Pondicherry  and  another  v.  V.  Ramakrishnan  and

others  10:

“28.  Valid  rules  made  under  proviso appended  to  Article  309  of  the Constitution  operate  so  long  the  said rules are not repealed and replaced. The draft rules, therefore, could not form the basis for grant of promotion, when Rules to the contrary are holding the field. It can safely be assumed that the principle in Abraham Jacob; (1998) 4 SCC 65 : 1998 SCC (L&S) 995,  Vimal Kumari; (1998)4 SCC 114: 1998 SCC(L&S) 1018 and Gujarat  Kishan  Mazdoor  Panchayat; (2003)4  SCC  712  :  2003  SCC  (L&S)  565 that draft rules can be acted upon, will apply where there are no rules governing the  matter  and  where  recruitment  is governed by departmental instructions or executive  orders  under  Article  162  of the Constitution."

101.The  Tribunal  granted  relief  by  giving  the

declaration  under  8(c),  which  we  have  found

10  2005(8) SCC 394

126

unwarranted. The High Court has found that regarding

the  vacancies  prior  to  07.12.2002,  it  is  to  be

filled-up as per the 1979 Rules.

102.Thus, it is clear that vacancies were filled- up

as per notice dated 05.11.2002 from persons falling

under  Clause  (a),  who  corresponded  to  the  feeder

category in the 1979 Rules. The appellants have not

laid any challenge to the Order of the Tribunal.

103.It is to be remembered that the ban on direct

recruitment  was  to  come  to  an  end  on  31.12.2002.

There were 242 vacancies of Inspectors in Hyderabad

Commissionerate. It is true that under letter dated

28.10.2002,  and  even  read  with  letter  dated

14.11.2002, what was contemplated was promotion under

the draft Recruitment Rules for Inspector and STA.

Promotion  orders  were  to  be  made  only  after  GSR

Number  were  made  for  the  Draft  Rules,  meaning

thereby, after it was finalised. They were intended,

as already found, to be operated at the same time,

thus, rendering both categories in Clauses (a) and

(b), to be considered. We are of the view that having

regard to the fact that vacancies were not filled-up,

127

as can be seen from communications dated 10.09.2001

and  05.06.2002,  in  the  light  of  the  restructuring

that took place in the Department, it would appear

that a conscious decision was taken to not fill-up

the vacancies arising from the restructuring based on

1979 Rules. Instead, communication dated 28.10.2002

clearly  would  show  that  the  vacancies  were  to  be

filled-up,  based  on  the  proposed  new  Recruitment

Rules. This being the case, the High Court was in

error in proceeding on the basis that the principle

in Y.V. Rangaiah (supra) would apply.     

104.Till 07.12.2002, the STA was not even in Feeder

Category. We have also held that the STA Cadre is

born  on  20.01.2003.  There  is  a  case  for  the

respondents that the ban on direct recruitment (which

is also a method of appointment) was to come to an

end. There was a need to have Inspectors in a larger

number of vacancies. The STA Cadre could not have

been used to fill the vacancies. The finding that

from  19.07.2001,  the  restructured  Cadre  came  into

being,  is  unsustainable.  In  such  circumstances,

though it may be true, intention was to fill-up the

128

vacancies  after  both  sets  of  Rules  were

operationalised, promotions were made. As to whether

it is legal, the answer can be that promotion, as per

extant Rules, given in vacancies prior to the new

Rules, is recognized. This is not a case where the

Authority was denying promotion to vacancies based on

the earlier Rules. We also notice that based on such

promotion,  further  promotions  have  been  given.  The

appellants  were  directed  to  be  considered  for

vacancies, which were filled-up after. We cannot, in

the  circumstances,  be  persuaded  to  hold  that  the

Tribunal was right in directing the respondents to

revise the seniority qua promotion made earlier.  

LEGALITY  AND  CORRECTNESS  OF  HIGH  COURT  DIRECTING VACANCIES  TO  BE  FILLED  WHICH  EXSISTED  PRIOR  TO 07.12.2002   105.The High Court has left open the question about

entitlement  to  promotion  to  vacancies  after

07.12.2002. It has directed all vacancies, which are

prior to 07.12.2002, to be filled-up as per the 1979

Rules. While, we agree that the STA cadre was born on

20.01.2003,  clearly,  the  whole  purpose  was  to

simultaneously  operate  the  Rules,  both  relating  to

129

Inspector and STAs. This would have resulted in STA

being considered with the experience they had as Data

Entry  Operator  Grade  ‘B’  also.  This,  as  already

noticed,  was  a  case  where  the  Authority  clearly

intended to fill-up the vacancies of Inspector under

the  new  Recruitment  Rules.  However,  the  vacancies,

which were filled-up, cannot be subjected to a review

based on Rules relating to seniority in Rules 5(i) of

the STA Rules, based on promotion orders on dates,

when  on  the  dates,  on  which  the  vacancies  stood

filled-up, the appellants were not even in the cadre.

106.But the High Court was not right in directing

filling-up of vacancies prior to 07.12.2002, based on

the 1979 Rules, as after the 2003 Rules came into

force, going by the intention of the Authority, the

right to promotion would be based on the new Rules,

even if the vacancies arose prior to the new Rules.

That is to say, when the High Court disposed of the

matter, if any vacancy remained to be filled-up in

the Cadre of Inspector, then, as the STA Rules had

come  into  existence  on  20.01.2003,  the  STAs  armed

with the right to add service as Data Entry Operator

130

Grade ‘B’, were entitled to be considered. However,

it is here that the impact of the matter, having been

pending in this Court for more than a decade, and, in

the  meantime,  the  judgment  being  implemented  and

further promotions being made, cannot be lost sight

of, even in an Appeal, which is maintained by grant

of Special Leave, as in this case. It is open to the

Court to decline to interfere. We bear in mind the

principles laid down by this Court in  Taherakhatoon

(D)  By  Lrs. v.  Salambin  Mohammad  11 and  would  not

disturb the direction to fill-up the vacancies which

arose prior to 07.12.2002, as directed.

VACANCIES OF INSPECTOR WHICH AROSE AFTER 07.12.2002  

107.As  noted,  the  High  Court  has  left  open  the

question  about  entitlement  to  vacancies  after

07.12.2002.  The  STA  rules  came  into  force  on

20.01.2003. The restructured cadre of STA came into

force on that said day. We have already found that

STAs are entitled to count their previous service as

Data Entry Operators Grade ‘B’ for the purpose of

promotion under 2002 Inspector Rules. Even, persons

11 (1999) 2 SCC 635]

131

in Clause (a) of the 2002 Inspector Rules, would be

entitled to be considered for promotion under 2002

Rules from the date on which the restructured cadre

in Clause (b) came into force. Thus, both persons in

Clauses (a) and (b)(STA Cadre) became entitled to be

considered for promotion under the two sets of Rules

with  effect  from  20.01.2003.  Certainly,  the

appellants having worked as Data Entry Operator Grade

‘B’ are entitled to add the period of service as Data

Entry  Operators  Grade  ‘B’.  Thus,  vacancies  of

Inspector,  to  be  filled-up  by  promotion,  must  be

filled-up by considering both on the basis of the

seniority, under Rule 5 of the 2003 STA Rules. The

appellants would be entitled also to be considered

for promotion based on the same on the basis of the

entitlement, as aforesaid.    

CIVIL APPEAL NO. 1976 OF 2009

108.The  appellants  challenge  the  common  judgment

passed by the High Court in Writ Petition No. 2378 of

2005 and Writ Petition No. 45 of 2005. The appellants

filed this Appeal with the leave of the Court as they

were  not  parties  to  the  Writ  Petitions.  The  Writ

132

Petitioners, two each in the two Writ Petitions, were

the four applicants (hereinafter referred to as ‘the

applicants’) in O.A. 1040 of 2003 filed before the

CAT, Hyderabad.

109.The case in brief, set up by the four applicants

before the Tribunal, was as follows:

Applicant  nos.  1  and  2  were  appointed  as

Lower Division Clerk (L.D.) and they were working

as such. Applicant nos. 3 and 4 were appointed as

L.D.  Clerks  and  were  working  as  U.D.  Clerks.

Applicant  nos.  1  and  2  set  the  claim  for

promotions as U.D. Clerk under the Recruitment

Rules of 1979. Applicant nos. 3 and 4, on the

other hand, claimed promotion as Tax Assistant

under the said Rules. There is reference to the

various orders, which we have already referred to

in  connection  with  the  post  of  Inspector,

including  order  dated  19.07.2001.  It  is  the

further case that the respondents who, it may be

noted, were official respondents, had conducted

DPC  for  all  other  cadres  upto  Inspectors  and

issued promotion orders. Only with regard to the

133

post  of  Inspector,  promotion  orders  were  not

issued  before  31.12.2002  in  view  of  the  stay

passed in O.A. 1362 of 2002. The stay was vacated

on  31.12.2002  and  the  promotion  orders  were

issued on the same day. It is further stated that

promotions were given to the extent of 214 on

31.12.2002. Due to the delay, U.D. Clerks were

not  being  considered  for  promotion  as  Tax

Assistants and L.D. Clerks for U.D. Clerks. There

is  discrimination.  Meanwhile,  new  Recruitment

Rules,  i.e.,  STA  Rules  2003  and  Tax  Assistant

Rules 2003, which we have already referred to,

have  come  into  force  in  the  process  of

restructuring  and  re-designating  of  the  posts.

The said Rules are prospective in nature. The old

Rules  prevailed  till  the  new  Rules  came  into

force.  Even  if  the  DPC  is  conducted  after

31.12.2002, the vacancies that will be considered

would  be  only  those  which  have  arisen  on  or

before 31.12.2002.  The restructuring cannot take

away the accrued rights. They sought promotion as

per  the  old  Rules.  A  direction  was  sought  to

134

promote them under the Rules as U.D. Clerks and

Tax Assistants from the date of their eligibility

and  availability  of  vacancies  with  all

consequential benefits.  

110.In  their  reply,  the  stand  taken  by  the

respondents to the O.A. was as follows, inter alia:

Since  restructuring  was  directed,  it  was

further directed that no vacancy included in the

restructuring, should be filled-up. The STA Rules

2003 and the Tax Assistant Rules 2003 came into

force.  On  the  publication  of  the  said

Notification  of  the  STA  Rules  of  2003  on

20.01.2003, further promotions were regulated as

per  the  Notification.  Under  the  Tax  Assistant

Rules 2003, under Section 4, all the U.D. Clerks

were  deemed  to  have  been  re-designated  as  Tax

Assistants  and  their  promotions  have  to  be

regulated further in the said cadre only. As far

as L.D. Clerks were concerned, under the 2003 Tax

Assistant  Rules,  on  passing  departmental

examination, they were to be deemed to have been

promoted as Tax Assistants. Thus, the stand was

135

that Applicant nos. 1 and 2 would, on passing

departmental  examination  under  the  2003  Rules,

become Tax Assistant, whereas, Applicant nos. 3

and 4, who were U.D. Clerks, were deemed to have

been appointed as Tax Assistants in the very same

pay-scale  and  they  have  to  work  out  the

promotions  under  the  said  cadre.  Delay  was

attributed  to  court  cases.  It  was  denied  that

Department has not followed instructions in Order

dated  19.07.2002  as  all  the  vacancies,  which

arose before the restructuring, were duly filled-

up under the old Rules. It is lastly pointed out

that the chain vacancies in the Inspector cadre,

upon  filling  up  the  post  of  373  posts  of

Superintendent, were filled-up by following the

Recruitment  Rules  notified  on  29.11.2002

superseding  the  earlier  Recruitment  Rules.

Filling-up of the post was done by from those

candidates working in the pre-structured cadre.

The consideration of the pre-structured cadre was

to be operative for two years from the date on

which the restructured cadre came into force. The

136

said  promotions  were  part  of  restructuring

following  the  amended  Rules.  The  Draft

Recruitment  Rules  were  also  notified  for  the

restructured Cadre and, as such, the contention

of the applicants that the said promotions were

done following the earlier Rules and as such they

were  entitled  to  be  considered  based  on  the

earlier  Recruitment  Rules,  was  pointed  as

untenable and liable to be rejected (Thus, it may

be noted that the stand taken in this O.A. by the

official  respondents  was  the  persons  who  were

promoted as Inspectors, were give promotions in

terms of their being part of the pre-structured

cadre). The Tribunal dismissed the O.A. by Order

dated 10.12.2004 after noticing the contentions

and noticing the arguments based on Y.V. Rangaiah

(supra) among the other decisions and found that

there  is  no  case  for  grievance.  Noticing  that

with regard to one of the grievances, viz., need

to  pass  ministerial  staff  examination,  it  was

already  redressed  by  deleting  this  requirement

for promotion as Senior Tax Assistant. Through

137

proceedings  dated  04.06.2001,  the  further

contention relating to seniority was also dealt

with by noticing that since the date of their

entry into the feeder cadre would be one of the

relevant factors and it had not been finalised,

the  applicants  could  represent  against  the

seniority.  It  also  drew  support  from  another

order passed by Tribunal in two other O.A.s dated

15.10.2004 (O.A.s 834-835 of 2009) and found that

the  issue  involved  was  one  and  the  same  and

agreed with it. It was found that the applicants

had been placed on the higher pay-scale.

111.The High Court, in the two Writ Petitions, filed

by  the  four  Applicants,  allowed  the  same  drawing

support  from  the  judgment  rendered  in  the  case

relating  to  the  Inspectors  and  it  found  that

promotions  to  the  post  of  U.D.  Clerk  and  Tax

Assistant was to be made as per the old Rules in

respect  of  the  vacancies  which  arose  prior  to

05.05.2003. Substantially, the contention, appellants

have  taken,  is  based  on  Dr.  Ramulu (supra).  The

contention  is  also  that  the  intention  and  the

138

conscious decision of the Government was not to fill-

up any vacancies by way of 100 per cent promotions

until the amended Recruitment Rules were notified in

the Official Gazette. There is also a case for the

appellants  that  the  order  of  the  High  Court  runs

counter to the judgment of the Bombay High Court and

the  orders  of  the  Tribunal  which  we  have  already

referred to in connection with other cases.

112.Under  the  1979  Rules,  on  the  basis  of  an

amendment,  the  post  of  Tax  Assistant  (old)  was

incorporated by GSR 314 dated 12.07.1996. Thereunder,

post of Tax Assistant (old) was included in the 1979

Rules. Promotion to the post was to be from the post

of U.D. Clerk with three years’ service subject to

their passing a departmental exam with minimum marks

of  40  per  cent.  There  are  other  rights  given  to

Senior  Clerks  under  the  Note.  We  have  already

extracted the Tax Assistant Rules 2003. It is the

appellants  case  that  it  is  established  law  that

vacancies created due to cadre restructuring shall be

filled  in  accordance  with  new  Recruitment  Rules.

There  is  reference,  in  fact,  to  order  dated

139

26.09.2005,  implementing  the  orders  of  the  High

Court.  

113.Under the 1979 Rules, the post of U.D. Clerk was

to be filled-up 50 per cent from direct recruitment

and  50  per  cent  by  promotion.  One  of  the  feeder

categories was L.D. Clerks with seven years’ service

which  was  relaxable  up  to  five  years.  The  second

Feeder Category was Women Searchers recruited prior

to 09.05.1975 with five years’ combined service as

Women Searcher and L.D. Clerk and who have passed

departmental or promotional exam.  

114.It may be noted that the 1979 Rules, insofar as

it  related  to  the  post  of  U.D.  Clerks  and  Tax

Assistants, continued to remain in force even after

the promulgation of the Inspector Rules, 2002 and the

Senior  Tax  Assistant  Rules.  It  is  when  the  Tax

Assistant Rules were made in supersession of the 1979

rules so far as it related to the post of U.D. Clerk

and L.D. Clerk that the 1979 Rules ceased to apply.

Thus, 1979 Rules continued to be in force in regard

to  the  post  of  U.D.  Clerk  and  L.D.  Clerk  till

05.05.2003.       

140

115.Under the 2003 Tax Assistant Rules, brought into

force w.e.f. 05.05.2003, as contended by the official

respondents before the Tribunal, the persons working

as U.D. Clerks, were to be established as initial

cadre of Tax Assistants. So also, the L.D. Clerks,

upon  passing  the  examination,  were  to  become  Tax

Assistants. The posts of U.D. Clerk and L.D. Clerk

are Group ‘C’ posts. No doubt, the ban, which was

imposed on direct recruitment, was to continue till

31.12.2002  (See  Order  dated  19.09.2002).  By  Order

dated  28.10.2002,  which  we  have  already  extracted,

the draft Recruitment Rules for Inspector and Senior

Tax Assistants was communicated and the process was

to be set in motion and promotion was to await the

issue of Notification.

116.As far as the post of Tax Assistant is concerned,

by  the  order  dated  06.11.2002,  all  the  Chief

Commissioners  were  forwarded  the  draft  Recruitment

rules for Tax Assistants which was approved by the

Ministry.  The  Commissioners  were  to  initiate

necessary action for the process of DPC, etc. The

issue  of  any  order  passed  under  the  draft  Tax

141

Assistant  Recruitment  Rules  was  to  await  issue  of

Notification  of  the  said  Rules.  However,  on

14.11.2002, it ordered,  inter alia, that DPC in the

remaining Grades except DOSL-222 may be held on the

basis  of  the  existing  Recruitment  Rules  and  the

promotion orders issued by 25.11.2002.

117.As far as the post of L.D. Clerks and old Tax

Assistants is concerned, the vacancies, which existed

as  on  06.11.2002,  were  to  be  filled-up  under  the

existing  Recruitment  Rules (See  letter  dated

14.11.2002).  The  orders  were  to  be  issued  by

25.11.2002.  By  25.11.2002,  the  Tax  Assistant  Rules

were  not  even  finalised,  leave  alone  brought  into

force. The Tax Assistant Rules came into force only

by publication on 03.05.2003 and brought into force

two days thereafter, i.e., on 05.05.2003. Going by

letter dated 14.11.2002, the principle that vacancies

must  be  filled-up  in  accordance  with  the  existing

Rules, would appear to apply. The intention of the

Authority  would  also  appear  to  be  the  same  as  is

evident from               Clause (3) of Order date

14.11.2002.

142

118.In such circumstances, there is no scope for any

ambiguity and we are unable to find fault with the

order of the High Court.  

SUMMARY OF CONCLUSIONS IN C.A. NOS.1970-1975 OF 2009   119.Summary of Conclusions in C.A. Nos. 1970-1975 of

2009, is as follows:  

1)Promotion to the post of Inspector was governed

by the 1979 Rules till 07.12.2002. 2) Under the 1979 Rules, Data Entry Operators were

not among the feeder categories for promotion as

Inspector.

3)By 19.07.2001, Cabinet approved restructuring of

certain posts including the post of Inspector.

The  number  of  posts  of  Inspector  fell  from  a

little  over  22000  to  a  little  over  18000.

Thereunder, the post of Data Entry Operator Grade

‘B’ among other categories, were merged and the

cadre of Senior Tax Assistants emerged. However,

the restructured cadre of Senior Tax Assistants,

did not come into being. 4) The restructured Cadre of Senior Tax Assistants

was  born  with  the  bringing  into  force  of  the

Senior Tax Assistant Rules 2003, on 20.01.2003.

143

Data  Entry  Operators  Grade  ‘B’,  among  other

categories,  were  re-designated  as  Senior  Tax

Assistants under Rule 5.

5) The Inspector Rules 2002, was brought into force

on 07.12.2002 superseding the 1979 Rules relating

to Inspectors.

6) The post of Senior Tax Assistant, which was not

among the feeder categories under the 1979 Rules,

became one of the feeder categories for promotion

as Inspector, under Inspector Rules, 2002 under

Clause (b) of Column 12.  

7) There was a ban of promotion to the posts of

Inspector.  This  is  clear  from  communications

dated 10.09.2001, 03.01.2002 and 05.06.2002. The

communication  dated  28.10.2002  read  with

communication  dated  14.11.2002,  establish  that

the   

Draft Recruitment Rules which were finalized on

29.11.2002 and brought into force on 07.12.2002

as  far  as  Inspectors  are  concerned  and  Draft

Recruitment  Rules  finalized  and  brought  into

force  on  20.01.2002  as  far  as  Senior  Tax

144

Assistants are concerned, were to be basis for

promotion to the post of Inspector. As per Order

dated  28.10.2002,  Departmental  Promotion

Committee  (DPC),  was  to  operate,  based  on  the

draft rules but no promotion orders were to be

issued till the draft rules were finalized. With

order dated 04.11.2002 even the promotion orders

were  permitted.  The  authority  apparently

contemplated simultaneous bringing into force of

the Inspector Rules and the STA Rules.

8)The High Court was in error in holding that it

has  to  be  necessarily  held  that  the  vacancies

which  arose  prior  to  the  revised  Recruitment

Rules coming into force has to be filled-up under

then existing Rules (the 1979 Rules) relying upon

case law including  Y.V. Rangaiah (supra). There

was  a  conscious  decision  taken  to  not  fill-up

vacancies based on the restructuring, and what is

more,  letters  dated  28.10.2002  and  14.11.2002

show that promotion to the post of Inspector was

to  be  effected  based  on  the  new  recruitment

rules.

145

9) It  is  while  so,  that  in  the  Hyderabad

Commissionerate,  by  Notice  dated  05.11.2002,

persons falling under Clause (a) of Column 12 of

the ‘Draft Inspector Rules’ who also corresponded

to  the  feeder  categories  under  the  ‘extant’

Statutory  Rules,  the  1979  Rules,  alone  were

called for selection as Inspector.

10) The benefit of reckoning service under Note 1 to

categories in Clause (a) would be available only

after the restructuring came into effect which

was on 20.01.2003. This also indicates that the

powers  that  be  contemplated  simultaneous

operation of the ‘Inspector Rules’ and the Senior

Tax Assistant Rules.    

11) However, the Inspector Rules and the Senior Tax

Assistant Rules were enforced with a gap of about

six weeks.  

12) The appellants even proceeding on the basis that

they were to be treated as Senior Tax Assistant

as on 07.12.2002, were not having the two years’

experience  required  under  the  2002  Inspector

Rules.

146

13) With the 2003 Senior Tax Assistant Rules brought

into  force  on  20.01.2003  under  Rule  5(1),  the

appellants  who  were  working  as  Data  Entry

Operators Grade ‘B’ could take into consideration

their service as Data Entry Operators Grade ‘B’

for reckoning the period of two years stipulated

under the 2002 Inspector Rules. In this regard,

the  finding  of  the  Tribunal  is  correct.

Appellants  in  O.A.  have  stated  that  they  were

promoted  as  Data  Entry  Operator  Grade  ‘B’  in

April 2000. If so, their service as such would

count and even as on 07.12.2002, they would have

2 years’ service as contemplated under the 2002

Rules. As on 20.01.2003, certainly, they would be

eligible  to  be  considered  for  promotion  as

Inspectors.

14) The Tribunal not having granted prayer 8(b), the

Draft  Recruitment  Rules,  2002  relating  to

Inspectors  as  finalized  which  was  impugned

remained intact. The Tribunal clearly erred in

granting  the  declaration,  as  sought  for  in

147

paragraph  8(c),  recognizing  exclusive  right  to

the restructured Cadre.

15) The  restructuring  Order  under  letter  dated

19.07.2001,  fructified  and  became  complete  and

effective  relating  to  the  post  of  Senior  Tax

Assistant only on 20.01.2003. The findings to the

contrary  by  the  Tribunal  stood  correctly  set

aside by the High Court.

16) The  Tribunal  has  not  interfered  with  the

promotion already granted to persons drawn from

the  categories  other  than  the  Senior  Tax

Assistant pursuant to Notice dated 05.11.2002.    

17)  Ban  of  Direct  Recruitment  was  to  end  on

31.12.2002. In respect of promotion made earlier

and not interfered with, the Tribunal could not

have directed review of seniority based on later

promotions as Inspector. The appellants cannot be

given  seniority  based  on  later  promotions  qua

promotions given, which cannot be termed illegal,

when  as  on  the  date  of  earlier  promotions,

appellants were not even in the cadre. Promotion

from  Senior  Tax  Assistant  could  have  been  made

148

only  20.01.2003  at  the  earliest.  Even  the

categories in Clause (a) could have been promoted

under the 2002 Inspector Rules, vide Note 1 only

for  two  years  starting  from  the  date  the

restructured Cadre in Clause (b) come into force,

i.e., 20.01.2003.

18) We reject the contention that persons in Clause

(a) of Column 12 of the Rules, who were also in

the  feeder  categories  for  promotion  under  1979

Rules, had an exclusive right to be considered for

promotion for a period of two years.

19) While  promotions  can  be  made  based  on  Draft

Recruitment Rules, it cannot be so made, if the

Draft Rules are in the teeth of existing Statutory

Rules  [V.  Ramakrishnan  and  others (supra)].  In

this case, however, under Orders dated 28.10.2002

and  14.11.2002,  what  was  contemplated  was

processing  by  DPC  under  the  Draft  Recruitment

Rules and issue of the promotions orders after the

Draft Rules were finalized.  

20)  However, till 07.12.2002, under the 1979 Rules,

being also feeder categories under the said rules,

149

those  in  Clause  (a)  Column  12,  2002  Inspector

Rules could be promoted. While it may be contrary

to what was contemplated by the Central Authority

(as  evident  from  letters  dated  28.10.2002  and

14.11.2002) promotions were made, which could not

be termed illegal. Even the Tribunal has not set

aside the promotions.  

21) The  High  Court  has  directed  the  filling-up  of

vacancies  prior  to  07.12.2002  as  per  the  1979

Rules. In this regard, having regard to the fact

that the vacancies were not filled-up as per the

ban,  as  can  be  seen  from  10.09.2001  and

05.06.2002, and it was specifically contemplated

under  letter  dated  28.10.2002  that  vacancies

arising from restructuring be filled-up, as per

the new Recruitment Rules, the principle in Y.V.

Rangaiah (supra)  may not apply and it was the

Rules  as  on  date  of  filling-up  the  vacancies,

that would count. As on the date of the High

Court Order, the STA Rules 2003, had come into

force  on  20.01.2003.  Thus,  vacancies  existing

prior to 07.12.2002 and which were not filled-up,

150

must be filled-up by considering STA (Appellants)

including their service as Data Entry Operators

Grade ‘B’.  

22) But it is here that the impact of the matter

remaining  pending,  and  in  the  meantime,

implementation of the judgment and what is more,

further  promotions  being  made  cannot  be  lost

sight of. We bear in mind the principle laid down

in  Taherakhatoon (D) By Lrs. (supra) and would

not disturb the directions to fill-up vacancies

which arose prior to 07.12.2002, as directed.

23) However,  in  case  of  vacancies  of  Inspector,

which  arose  after  07.12.2002,  the  appellants

would,  undoubtedly,  have  a  right  to  be

considered as explained hereinbefore. In regard

to  such  vacancies,  the  matter  must  be  looked

into and seniority fixed, based on Rule 5 of the

STA Rules. The persons working in Clause (a) are

also entitled to be considered for a period of

two years from 20.01.2003 under the Inspector

Rules to be considered for promotion.

RELIEF IN CIVIL APPEAL NOS. 1970-1975 OF 2009  

151

120.Civil Appeals Nos. 1970-1975 of 2009 are disposed

of as follows:

The restructured cadre of Senior Tax Assistants

came  into  force  on  20.01.2003.  Appellants  are  not

entitled to have seniority determined in respect of

vacancies  of  Inspector  which  arose  prior  to

07.12.2002.  The  appellants  are  eligible  to  be

considered for promotion from 20.01.2003 and they are

entitled to add their service as Data Entry Operator

Grade ‘B’ for the purpose of the 2002 Inspector Rules

and  considered  for  vacancies  to  be  filled  by

promotion, which arose after 07.12.2002. The persons

in Clause (a) under Column 12 of the 2002 Rules, are

also entitled to be considered for two years from

20.01.2003. Seniority is to be considered based on

Rule 5 of the STA Rules. The exercise, as above, if

not carried out already shall be carried out. Further

promotions  based  on  the  above  will  be  granted.

However,  we  direct  that  the  promotions  shall  be

notional where promotions have already been effected,

however,  entitling  the  parties  to  seniority  and

152

pensionary  benefits.  The  above  exercise  shall  be

completed at the earliest.  

121.Civil  Appeal  No.  1976  of  2009  will  stand

dismissed.

122.There shall be no order as to costs in all the

appeals.

.......................J.    (SANJAY KISHAN KAUL)

   ......................J.                    (K.M. JOSEPH) NEW DELHI, FEBRUARY 05, 2020.

153