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IN THE SUPREME COURT OF INDIA

CIVIL  APPELLATE  JURISDICTION

CIVIL APPEAL NO. 4371 OF 2008

Panchraj Tiwari … Appellant (s)   

Versus

M. P. State Electricity Board  and  others … Respondent  (s)

J U D G M E N T  

KURIAN, J.:   

1. Whether  on  integration/merger/amalgamation,  is  it

permissible to have complete denial of promotion forever in

the  integrated  service,  is  the  short  question  arising  for

consideration in this case.

2. Appellant a graduate started his career as junior engineer on

23.09.1986 in the Rural Electricity Cooperative Society, Rewa.

During 1995, it appears a policy decision was taken by the

State Government to dissolve all  such societies and merge

the  same  with  Madhya  Pradesh  State  Electricity  Board

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(hereinafter  referred  to  as  ‘MPSEB’).  Accordingly,  the

Managing  Committee  of  the  Rural  Electricity  Cooperative

Society,  Rewa  was  superseded  in  May,  1995  and  a

Superintending  Engineer  of  the  MPSEB  was  appointed  as

Officer            In-charge. However, it took a few years to

complete  the  formalities  of  the  merger.  Finally  the  Rural

Electricity Cooperative Society, Rewa was completely merged

with the MPSEB w.e.f. 15.03.2002.

3. The principles of merger were clarified by the MPSEB after

prolonged  correspondence  as  per  Annexure  P-12  dated

15.06.2004.  For  the  purpose  of  ready  reference,  we  shall

extract the contents:

“Please  refer  to  this  office  order  cited  under reference. It  is requested to issue necessary  orders for absorption of employees of REC societies falling under your area of jurisdiction on the same terms & conditions of the societies. The terms & conditions of the  societies  may  be  obtained  from  DE  (STC), Jabalpur.

Further  other  terms  &  conditions  of  which employees can be absorbed:- 1. The regular  employees  of  the  above societies

shall  be  taken  over  on  the  same  terms  & conditions as existing in the Society except that no deputation allowance shall be paid.

2. Their  pay  scale  will  be  the  same  which  they were getting before the absorption.

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3. The above employees  may not  be  transferred out of the circle concerned, so that no anomaly arises.

4. Their age of superannuation will be the same as applicable in the societies.

5. Pension/gratuity  will  be  payable  to  the employees  absorbed  in  the  Board  as  per  the rules/regulation of the concerned society.

6. Their designation will be maintained as it was in the society.”

(Emphasis supplied)

4. The principles of absorption as extracted above would clearly

show that the employees of the society have been taken over

and absorbed in the MPSEB. However, their pay-scale on the

date  of  absorption  was  protected,  their  designation  was

maintained as it was in the society at the time of absorption

and the age of superannuation, pension and gratuity of such

employees were to be governed by the rules/bylaws of the

society concerned.  

5. Though it may appear that there are some conditions which

are normally not found in the principles of integration, the

fact  remains  that  the  employees  of  the  erstwhile  society

which merged with the MPSEB, have been absorbed in the

service of MPSEB.

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6. Integration/merger  of  services  means  creation  of  a

homogenous  service  by  the  merger  of  service  personnel

belonging to different services. Though it is difficult to have a

perfect  coalescence  of  the  services  on  such  merger,  the

principle of equivalence is to be followed while absorbing the

employees, to the extent possible.  

7. Though integration of services  thus postulates  equation of

posts, it is not invariably necessary to prepare the seniority

list on the basis of the pay drawn by the incumbent in the

equated  category.  It  is  always  open  to  the  authority

concerned  to  adopt  a  just  and  the  equitable  principle  on

fixation of seniority.  

8. Once a service is merged with another service, the merged

service gets its birth in the integrated service and loses its

original  identity.  There  cannot  be  a  situation,  where  even

after merger, absorption or integration, such services which

were merged or absorbed, still retain their original status. If

so, it is not an absorption or merger or integration, it will only

be a working arrangement without any functional integration.

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9. In the instant case, the undisputed factual and legal position

is  that  there  is  absorption  of  the  employees  of  the  Rural

Electricity  Cooperative Society,  Rewa with the MPSEB.  The

Society  has  been  deregistered,  there  is  only  one  service

thereafter  and thus  there  is  functional  integration.  On the

basis of the protection of the designation and pay-scale, the

employees  have  to  be  posted  in  the  equivalent  category.

Since it is not specifically provided as to the position of such

employees in the integrated service, it is a settled equitable

principle  that  such  employees  are  placed  as  junior  to  the

junior-most officer of the category concerned in the MPSEB on

the date of absorption, viz., 15.03.2002.

10. It is provided in the conditions of service of the MPSEB

as  per  Circular  dated  15.11.1990  that  a  graduate  Junior

Engineer having satisfactory service of four years of regular

service  can  be  considered  for  promotion  to  the  post  of

Assistant Engineer after appropriate training. The appellant

started  his  career  as  a  graduate  engineer  in  the  Rural

Electricity  Cooperative  Society,  Rewa  in  1986.  He  also

claimed promotion on the basis of such circular. The Board of

Directors of the appellant’s society passed a Resolution on

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27.12.1994 for his promotion as Assistant Engineer. By that

time  the  steps  for  dissolution  of  society,  it  appears  had

already started. The Board of Directors was dissolved in May,

1995  and  a  Superintending  Engineer  of  the  MPSEB  was

appointed as Officer In-charge of the society. The said officer

forwarded the proposal of promotion of the appellant as an

Assistant Engineer to the MPSEB.  

11. It appears, the Registrar of the Cooperative Societies as

well as MPSEB have taken the stand that the appellant had

not been duly selected for promotion as Assistant Engineer in

terms of Rule 18 of the Society. The Rule reads as follows:

“18. SELECTION AND APPOINTMENT The  selection  of  suitable  candidate  for  filling-up  a post in the society as well as for making selection for promotion of eligible candidates shall be made by a selection committee to be constituted by the Board, consisting of the Chairman, a member of the Board to be elected by the Board, divisional Deputy Registrar of  Cooperative  Society,  Divisional  Engineer,  M.P. Electricity  Board and the  Managing  Director  of  the Society.

Dearness allowances to employees borne on regular establishment  shall  be  admissible  as  applicable  to the  employees  of  M.P.E.B.  from time  to  time  with previous  approved  of  the  Registrar  Cooperative societies M.P.

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Dearness allowances to employees borne on regular estt. shall be admissible as sanctioned by the M.P.E.B. to the similar categories of employees.”

(Emphasis supplied)

12. It  is the case of the appellant that since the Board of

Governors had already been dissolved and since it had been

decided to absorb the employees of the society in the Board,

there was no point in  following the process of selection in

terms of the regulations of the society. Thus, the rejection

was challenged before the High Court.

13. Learned Single Judge dismissed the writ petition on the

ground  that  writ  against  a  cooperative  society  was  not

maintainable.  However,  in  appeal,  it  was  admitted  by the

Board  that  the  society  had  already  merged  with  the

Electricity Board and, hence, case was heard on merits before

the Division Bench. It is the stand of the High Court in appeal

that the principles of integration, as extracted above, cast no

obligation on the Electricity Board to give promotion to the

appellant. The obligation was only to absorb the appellant by

protecting  the  designation  and  pay-scale  and  continue  as

such. In other words, since the appellant was absorbed as a

Junior Engineer, he should continue forever as Junior Engineer

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till  his retirement.  We are afraid that the stand cannot be

justified.

14. As held by this Court in R.S. Makashi and others v. I. M.

Menon and others1, the courts will not interfere with the

decision and principles of integration unless it is shown that

they are arbitrary, unreasonable or unfair. No doubt, there is

no vested right for an employee to have a particular position

in  the  integrated  or  merged  service.  On  equitable

considerations, it is always open to the authorities concerned

to  lay  down  the  principles  with  regard  to  the  fixation  of

seniority as held by this Court in  S. S. Bola and others v.

B.D. Sardana and others2 and Prafulla Kumar Das and

others v.  State of Orissa and others3.  However, in the

instant case, equivalence has been decided since designation

and  pay-scale  was  protected.  What  remains  is  only  the

seniority.  

15. It  is  open  to  the  authority  concerned  to  lay  down

equitable principles with regard to fixation of seniority in the

merged  cadre.  Once  a  service  gets  merged  with  another

1 (1982) 1 SCC 379 2  (1997) 8 SCC 522 3 (2003) 11 SCC 614

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service,  the  employee  concerned  has  a  right  to  get

positioned appropriately in the merged service. That is the

plain meaning of ‘absorption’. The MPSEB, having absorbed

the appellant and other employees, cannot maintain a stand

that even after absorption they will retain a distinct identity

in the equated cadre without any promotion as enjoyed by

their compeers in the parent service. That is a plain infraction

of the equity clause guaranteed under Articles 14 and 16 of

the Constitution of India.

16. Chances of promotion are not conditions of service, but

negation of even the chance of promotion certainly amounts

to variation in the conditions of service attracting infraction of

Articles 14 and 16 of the Constitution of India. No employee

has a right to particular position in the seniority list but all

employees have a right to seniority since the same forms the

basis of promotion.  

17. An employee has always an interest to seniority and a right

to be considered for promotion. If after integration, only the

chances of promotion are affected, it would have been only a

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case of heartburn of an individual or a few individuals which

is only to be ignored, as held by this Court in  Tamil Nadu

Education  Department  Ministerial  and  General

Subordinate Services Association and others v.  State

of Tamil Nadu and others4.  

18. Instant is a case where there is complete denial of promotion

forever  which  cannot  be  comprehended  under  the

constitutional  scheme  of  Articles  14  and  16  of  the

Constitution  of  India.  In  this  context,  we  shall  refer  to  a

beautiful discussion on this aspect in S. S. Bola case (supra)

at paragraph 153. The relevant portion reads as follows:

“153.  xxx  xxx      xxx   xxx

AB.  A distinction between right  to be considered for promotion  and  an  interest  to  be  considered  for promotion has always been maintained. Seniority is a facet  of  interest.  The  rules  prescribe  the  method  of recruitment/selection. Seniority is governed by the rules existing as on the date of consideration for promotion. Seniority is required to be worked out according to the existing rules. No one has a vested right to promotion or seniority.  But  an  officer  has  an  interest  to  seniority acquired by working out the rules. The seniority should be taken away only by operation of valid law. Right to be considered  for  promotion  is  a  rule  prescribed  by conditions of service. A rule which affects chances of promotion of a person relates to conditions of service.

4 (1980) 3 SCC 97

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The  rule/provision  in  an  Act  merely  affecting  the chances of promotion   would not be   regarded as varying the conditions of service. The chances of promotion are not conditions of service. A rule which merely affects the chances of promotion does not amount to change in the conditions of service. However, once a declaration of  law,  on  the  basis  of  existing  rules,  is  made  by  a constitutional  court  and  a  mandamus  is  issued  or direction  given  for  its  enforcement  by  preparing  the seniority list, operation of the declaration of law and the mandamus and directions issued by the  Court  is  the result of the declaration of law but not the operation of the rules per se.”  

(Emphasis supplied)

19. In the above circumstances, we set aside the judgment

in appeal. The absorbed employees of the Rural Electricity

Cooperative  Societies,  having  due  regard  to  their  date  of

appointment/promotion  in  each  category  in  the  respective

societies,  shall  be  placed  with  effect  from  the  date  of

absorption,  viz.,  15.03.2002  as  juniors  to  the  junior-most

employee of the Electricity Board in the respective category.

Thereafter, they shall be considered for further promotions as

per  the  rules/regulations  of  the  MPSEB.  All  other

principles/conditions  of  absorption  shall  remain  as  such.

However,  it  is made clear that  on such promotions, in the

exigencies of service, the employee concerned would also be

liable to be transferred out of the circle, if so required.

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20. The  appellant  accordingly  shall  be  entitled  to

retrospective promotions at par with and with effect from the

dates  on  which  the  junior-most  graduate  engineer  in  the

parent  service  on  the  date  of  absorption  obtained  such

promotions. However, we make it clear that benefits till date

need to be worked out only notionally.

21. The appeal is allowed as above. There is no order as to

costs.

..…….…..…………J.                     (H. L.  

GOKHALE)

..……………………J.                     (KURIAN  

JOSEPH)

New Delhi; March 4, 2014.    

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