Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.5286-87 OF 2005

Bharat Sanchar Nigam Ltd. … Appellant

Vs.

R. Santhakumari Velusamy & Ors. … Respondents

With

CIVIL APPEAL NOS.3405, 4542, 4543, 4544, 4545 and 4546 of 2006

J U D G M E N T

R.V.RAVEENDRAN, J.

The appellant,  Bharat  Sanchar  Nigam Ltd.,  is  the  successor  of  the  

Department  of  Telecommunications,  Ministry  of  Communications,  and  

Government of India (for short ‘government’ or ‘telecom department’). The  

question involved in these matters is whether rules of reservation will apply  

to upgradation of posts.

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2. There were four grades of employees of telecom departments known  

as  Telegraphists  or  Telecom  Operating  Assistants  in  the  Telecom  

Department. Promotions from one grade to a higher grade were on the basis  

of seniority/departmental examination. The telecom department introduced  

an ‘One Time-Bound Promotion’ scheme (‘OTBP scheme’ for short) in the  

year 1983-84 under which regular employees who had completed 16 years  

of service in a grade, were placed in the next higher grade. After some years,  

the  employees  unions  demanded  a  second  time-bound  promotion  on  

completion of 26 years of service in the basic grade, as Group C and Group  

D cadres were only entitled to one-time bound promotion. The government  

decided that a second time bound promotion was not feasible. However, to  

provide relief from stagnation in the grade, the government decided to have  

a  Biennial  Cadre  Review  (‘BCR’  for  short)  under  which  a  specified  

percentage  of  posts  could  be  upgraded  on  the  basis  of  functional  

justification.  

3. The  BCR  scheme  was  accordingly  introduced  vide  Circular  dated  

16.10.1990. It was made applicable to those cadres in Group C and Group D,  

for which one-time bound promotion scheme on completion of 16 years of  

service in the basic grade was in force. Under the said scheme, employees  

who were in regular service as on 1.1.1990 and had completed 26 years of  

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satisfactory  service  in  the  basic  cadres,  were  to  be  screened  by  a  duly  

constituted  Committee  to  assess  their  performance  and  determine  their  

suitability for advancement and if they were found suitable, to be upgraded  

in the higher scale. The upgradation was restricted to 10% of the posts in  

Grade III. We extract below the relevant terms of the BCR from the Circular  

dated 16.10.1990:

“…….

(iii) Biennial Cadre Reviews will be conducted in respect of the eligible  cadre at the level of circles who control these cadres.  

(iv) At  the  time  of  review  the  number  of  officials  who  have   completed/would be completing 26 years of service in the basic cadres   including  time spend in  higher  scale  (OTBP)  will  be  ascertained.  The   persons  will  be  screened  by  the  duly  constituted  Review  committee  to   assess the performance and suitability for advancement.  

(v) In  the  Biennial  cadre  review,  suitable  number  of  posts  will  be  created by upgradation based on functional justification.  

(vi) Creation of posts  by upgradation will  be in  the scales  indicated  below:  

Basic scale of the  cadre  

Scale  after  OTBP  after  16  years  of  basic grade

Scale  after  BCR  on  completion  of  26  years  or  more  

750-940 800-1150 950-1400 825-1200 950-1400 1200-1800 975-1540 1320-2040 1400-2600 975-1600 1400-2300 1600-2660  

(10% of the posts in the pay  scale of 1600-2660 will be in  the pay scale of Rs.2000-3200

1320-2040 1600-2600 1640-2900  (10% of the posts in the pay  scale of 1640-2900 will be in  the  pay  scale  of  Rs.2000- 3200)

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(vi) xxx xxx xxx

(viii) Necessary posts will be created by upgradation under the powers  of CGMs in consultation with their accredited finance.  

(ix) The first Biennial Cadre Review for eligible cadres/officials may  be conducted immediately covering the period upto 30.6.1992 to ascertain  the eligible officials who have completed/will be completing 26 years of  services or more as on the crucial dates, namely, the date of the review  01.1.1991,  01.7.1991  and  01.1.1992.  The  number  of  posts  needed  or  provide for the promotion of the eligible persons will be determined and  will be sanctioned/activated in four instalments the first immediately, the  second on 01.9.1991, the third on 01.7.1991 and the fourth on 01.1.1992.  With these posts, it should be possible be provide for promotion of those  employees who have completed 26 years of service or more on the above  crucial dates, subject to their otherwise being found fit. The criterion for  promotion will be seniority, subject to selection.  

Order implementing the first instalment of cadre review should be issued  before 30.11.1990.  

In the second cadre review, which will cover the period from 1.7.1992 to  30.6.1994,  which  should  be  completed  before  01.7.1992,  the  required  number  of  posts  needed  to  be  released  in  half  yearly  instalments  on  1.7.1992, 1.1.1993, 1.7.1993 and 1.1.1994 to cater for promotion of those  who would have completed 26 years of service on the four crucial dates,  will be ascertained and sanctions released in appropriate instalment so that  the promotions of eligible personnel could be notified on due dates.  

……”

4. The  Government  issued  the  following  clarification  regarding  

designations by circular dated 11.3.1991:  

State of Entry Grade allotted

(i) Initial Entry (Basic grade) Grade I (ii) OTBP scale Grade II (iii) BCR scale Grade III (iv) 10% of posts in BCR pay scales Grade IV

to be placed in pay scale of 2000-3200

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By letter dated 7.5.1993, the telecom department clarified that there were no  

sanctioned posts in regard to 10% BCR and the number of posts depend  

upon the number  of  BCR officials  available;  and that  therefore  no  local  

officiating arrangement could be made if an official in the 10% BCR retired  

before the next review.

5. By  circular  dated  13.12.1995,  the  government  formulated  the  

procedure  regarding  promotion  to  Grade  IV.  Under  the  said  procedure,  

promotions to Grade IV were to be based on seniority in the basic grade  

from among the officers in Grade III subject to fitness determined in the  

usual  manner  of  OTBP.  By  a  clarificatory  Circular  dated  1.3.1996,  the  

government  issued  a  clarification  that  promotion  to  Grade  IV would  be  

given from among officials in Grade III on the basis of their seniority in the  

basic grade, subject to fulfillment of other conditions and that normal rules  

of reservation would apply to promotions in Grade IV.  

6. The circular of the telecom department dated 1.3.1996 applying rules  

of reservations to promotions to Grade IV under BCR was challenged by the  

All India Non SC/ST Telecom Employees Association on the ground that  

principles of reservation would not apply for upgradation of existing posts  

which did not carry any change in duties and responsibilities. The Central  

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Administrative  Tribunal,  Ahmedabad Bench by its  order  dated 11.4.1997  

(OA No.623/1996 – All India Non-Schedule Caste/Schedule Tribe Telecom  

Employees Association v. Union of India) held that the department could not  

apply reservation rules while upgrading the posts under the BCR scheme  

and  directed  the  department  to  take  appropriate  action  for  effecting  

promotions to the upgraded posts without applying the reservation roster.  

The  writ  petition  (SCA  No.7576  of  1997)  filed  by  the  government  

challenging  the   said  order  of  the  Tribunal  (Ahmedabad  Bench)  was  

dismissed by the Gujarat High Court by order dated 24.3.1999. In view of  

the said decision, the Government issued an order dated 8.9.1999 directing  

that a Review DPC be held and all ineligible officers wrongly promoted to  

Grade  IV  by  application  of  reservation  roster  as  per  office  order  dated  

1.3.1996, should be reverted back and all eligible officers should be placed  

in Grade IV and their pay should be fixed notionally. As a consequence of  

the said Circular dated 8.9.1999, the contesting respondents were reverted  

from Grade IV to Grade III.  

7. Feeling aggrieved, the contesting respondents filed applications before  

the Madras Bench of the Tribunal. They challenged the validity of the said  

order dated 8.9.1999 and sought its quashing and also sought a direction to  

the government to permit them to continue in Grade IV. Similar applications  

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were  filed  before  the  Tribunal’s  Bangalore  Bench.  A Full  Bench  of  the  

Tribunal at Bangalore allowed the applications by order dated 26.4.2000. It  

held :  

“Through  the  mechanism of  grant  of  time-bound advancements  to  the  higher scales of pay with different designations, or through appointments  to  posts  which  are  upgraded with  higher  scales  of  pay within  a  given  cadre, entailing creation of additional posts or not, essentially what takes  place is a process of advancement/appointment to these higher scales of  pay. We are convinced that this process can only be treated as promotion  in the light of the principle laid down by the Hon'ble Supreme Court that  an appointment to a higher scale of pay even at the same post and even  without involving any additional responsibilities can still be a promotion.  Even if in a given situation, the creation of the upgraded posts with higher  scales of pay do not result in a net addition to the existing number of posts  in  that  cadre,  but  is  specifically  and  explicitly  created  to  remove  stagnation, to follows that those upgraded posts involving higher scales of  pay are in effect a substitute for promotion. It is so because either through  a  regular  promotion  in  terms  of  the  Cadre  and  Recruitment  rules  or  through the creation of the upgraded posts in the same cadre with a higher  scale of pay what is sought to be achieved is the provision of opportunities  for career advancement which, in the circumstances, is synonymous with  promotional  opportunities.  Once this basic objective for the creation of  upgraded posts is understood and appreciated, we are of the firm opinion  that  such  provisions  for  career  advancement  through  appointments  to  upgraded posts cannot be treated for the purpose of reservation of special  categories like SCs and STs differently from appointments to posts which  are designated in particular as promotional posts. In our view, it is also  absolutely  immaterial  as  to  whether  the  mode of  appointment  to  these  upgraded posts  with  higher  scales  of  pay is  by selection or  by merely  applying the criterion of seniority subject to fitness. In fact, it is evident  that appointments to a number of posts which are specifically designated  as promotional posts are also made on the basis of seniority-cum-fitness.  Therefore,  the  adoption  of  that  latter  criterion  for  appointment  to  a  upgraded  post  by  itself  cannot  make  such  an  appointment  as  non- promotional  appointment.  On  this  score  drawing  a  distinction  between  upgradation  and  promotion  based  on  the  nomenclature  only  does  not  appear to be tenable.”

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8. The  Full  Bench  of  the  Tribunal  differed  from  the  decision  of  its  

Ahmadabad Bench and held that  the  decision of  the  Gujarat  High Court  

affirming the said decision was also of no assistance as it was at variance  

with the decisions of this Court in Union of India vs. S.S. Ranade - 1995 (4)  

SCC 462, Lalit Mohan Deb v. Union of India - 1973 (3) SCC 862, State of   

Rajasthan vs. Fateh Chand Soni - 1996 (1) SCC 562, and Ram Prasad vs.   

D.K. Vijay - 1999 (7) SCC 251. It held that the BCR upgradation to Grade  

IV in the telecom department amounted to promotion, attracting reservation  

for SCs and STs.

9. Following the said decision of  the Full  Bench of  the Tribunal,  the  

Madras  Bench  of  the  Tribunal  by  order  dated  25.7.2000  allowed  the  

applications  filed  by  the  contesting  respondents  herein  and  directed  the  

government  to restore the contesting respondents  to their  promoted posts  

which  they  were  holding  before  the  order  dated  8.9.1999.  The  

Telecommunication Department challenged the said order of the Tribunal by  

filing a batch of writ petitions before the Madras High Court. The Madras  

High Court,  by the impugned order dated 18.10.2004, dismissed the writ  

petitions upholding the order of the Tribunal.

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10. The said order is challenged in these appeals by special leave by the  

appellant. The appellant has put forth the following contentions :

(i) There is a clear distinction between upgradation and promotion. While  

promotion involves advancement in rank, grade or both and is always a step  

towards advancement to higher position, grade or honour, upgradation does  

not involve promotion to a higher position and the pedestal of the employee  

remains  the  same  and  the  employee  is  merely  conferred  some  financial  

benefits by granting a higher pay scale, to overcome stagnation. The BCR  

scheme  introduced  as  per  order  dated  16.10.1990  was  a  scheme  of  

upgradation and not promotion.

(ii) Where  there  is  only  upgradation  of  existing  posts,  with  creating  

additional posts, principles of reservation would not apply. The Tribunal and  

the  High  Court  committed  a  serious  error  by  treating  upgradation  as  a  

promotion to which reservation rules  would apply.  The Tribunal  and the  

High Court ought to have followed the decision of this Court in  All India  

Employees Association (Railways) vs. V.K. Agarwal - 2001 (10) SCC 165  

and the decision of the Gujarat High Court dated 24.3.1999 in Special Civil  

Application  No.7576 of  1997 -  Union of  India  vs.  All  India  Non SC/ST  

Telecom Employees Association.  

11. Article 16(4) enables the State to make any provision for reservation  

of  appointment  or  posts  in  favour  of  any  backward  classes  of  citizens.  

Article 16(4A) enables the State to make any provision for reservation in  

matters of promotion, with consequential seniority, to any class or classes of  

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posts  in  the  services  under  the  State  in  favour  of  Scheduled  Castes  and  

Scheduled  Tribes,  which  in  the  opinion  of  the  State,  are  not  adequately  

represented in the services under the State. As upgradation involves neither  

appointment  nor  promotion,  it  will  not  attract  reservation.  Upgradation  

involves mere conferment of financial benefits by providing a higher scale  

of pay. If there is mere upgradation of posts, as contrasted from promotion,  

reservation  provisions  would  not  apply.  [See  :  All  India  Employees  

Association (Railways) vs. V.K. Agarwal - 2001 (10) SCC 165 and Union of   

India vs. V. K. Sirothia - 2008 (9) SCC 283]. In  V.K. Agarawal this Court  

held :

“It  appears  from  all  the  decisions  so  far  that  if  as  a  result  of   reclassification or readjustment, there are no additional posts which are   created and it is a case of upgradation, then the principle of reservation  will not be applicable. It is on this basis that this Court on 19.11.1998 had  held that reservation for SC and ST is not applicable in the upgradation of  existing posts and CA No.1481 of 1996 and the connected matters were  decided against the Union of India. The effect of this is that where the  total  number of posts  remained unaltered,  though in different  scales of  pay, as a result of regrouping and the effect of which may be that some of  the employees who were in the scale of pay of Rs.550-700 will go into the  higher scales, it would be a case of upgradation of posts and not a case of  additional vacancy or post being created to which the reservation principle  would apply. It is only if in addition to the total number of existing posts   some additional posts are created that in respect of those additional posts   the reservation will apply, but with regard to those additional posts the  dispute does not arise in the present case. The present case is restricted to  all existing employees who were redistributed into different scales of pay  as a result of the said upgradation.”   

(emphasis supplied)

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The decision of this  Court  in V.K.  Sirothia arose from a decision of  the  

Allahabad Bench of the Tribunal which expressed a similar view (in  V.K.  

Sirothia vs. Union of India - O.A. No.384/1986). The Tribunal held :  

“The  restructuring  of  posts  was  done  to  provide  relief  in  terms  of  promotional avenues. No additional posts were created. Some posts out of  existing total were placed in higher grade to provide these avenues to the  staff who were stagnating. The placement of these posts cannot be termed  as creation of additional posts. There were definite number of posts and  the total remained the same. The only difference was that some of these  were in a higher grade. It was deliberate exercise of redistribution with the  primary  object  of  betterment  of  chance  of  promotion  and  removal  of  stagnation.”

The Union of India challenged the said order of the Tribunal and this Court  

by a brief order dated 19.11.1998 (Union of India vs. V.K. Sirothia – 2008  

(9) SCC 283) dismissed the appeal by a brief order. The relevant portion of  

the said order is extracted below :

“The finding of the Tribunal that “the so-called promotion as a result of  redistribution of posts is not promotion attracting reservation” on the facts  of the case, appears to be based on good reasoning. On facts, it is seen that  it  is  a  case  of  upgradation  on  account  of  restructuring  of  the  cadres,  therefore, the question of reservation will not arise. We do not find any  ground to interfere with the order of the Tribunal.”

12. We may next consider the concepts of ‘promotion’ and ‘upgradation’.  

In  Lalit  Mohan  Deb, this  Court  explained  the  difference  between  a  

promotion post and a selection grade :

“It is well recognised that a promotion post is a higher post with a higher  pay. A selection grade has higher pay but in the same post. A selection  grade is intended to ensure that capable employees  who may not get a  chance of promotion on account of limited outlets of promotions should at  

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least  be  placed  in  the  selection  grade  to  prevent  stagnation  on  the  maximum  of  the  scale.  Selection  grades  are,  therefore,  created  in  the  interest of greater efficiency.”

In Tarsen Singh vs. State of Punjab – 1994 (5) SCC 392, this Court defined  

‘promotion’ thus :

“Promotion  as  understood  under  the  service  law  jurisprudence  means  advancement in rank, grade or both. Promotion is always a step towards  advancement to a higher position, grade or honour.”

13. In  S.S. Ranade  the scope and meaning of the word ‘promotion’ was  

considered. The issue in that case was whether a  Commandant (Selection  

Grade) held a higher rank than a Commandant and consequently entitled to  

be superannuated at a later age of 58 years instead of 55 years. This Court,  

following the decision in Lalit Mohan Deb, held as follows:

“Undoubtedly,  a  Commandant  who becomes a  Commandant  (Selection  Grade) secures a promotion to a higher pay scale. But it is a higher pay  scale in the same post. The use of the word 'promotion' in Rule 6 and the  Constitution  of  a  Departmental  Promotion  Committee  for  selection  of  Commandant (Selection Grade) in Rule 7, do not necessarily lead to the  conclusion that the promotion which is contemplated there is necessarily a  promotion to a higher post. Promotion can be either to a higher pay scale   or to a higher post. These two Rules and the use of the word 'promotion'  there do not conclude the issue.

xxx             xxx           xxx

In  the  present  case,  an  element  of  selection  is  involved  in  granting  selection grade because there is no automatic promotion to the selection   grade pay scale. But this factor is not decisive. In the present case also, as  in  the  above  cases,  Selection  Grade  posts  are  created  entirely  for  the  purpose of granting some relief to those who have very limited avenues of  getting promotion to a higher post. That is why a higher pay or pay scale is  granted in the same post. Thus, by its very nature, a selection grade post  cannot  be  considered  as  a  higher  post  for  the  purposes  of  Rule  9.  ...Because the creation of a selection grade in the same post stands on a  

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very  different  footing.  By its  very  nature  a  selection  grade  provides  a  higher pay or a higher pay scale in the same post. The beneficiary of a  selection grade does not thereby occupy a post which is higher in rank  than the post earlier occupied by him.”

(emphasis supplied)

On facts, this Court found that the respondent therein required a promotion  

which resulted in occupation of a post which was higher in rank than the  

post earlier occupied, to get the relief of longer service. This Court held that  

though his promotion from Commandant to Commandant (Selection Grade),  

resulted in a promotion to a higher pay scale, that was not sufficient to grant  

relief to the respondent therein as his promotion to selection grade did not  

involve advancement to a higher post.

14. In  Fateh  Chand  Soni, this  Court  following  Ranade defined  

‘promotion’ thus:   

“The High Court, in our opinion was not right in holding that promotion  can only be to a higher post in the service and appointment to a higher  scale of an officer holding the same post does not constitute promotion. In  the  literal  sense  the  word  "Promote"  means  "to  advance  to  a  higher  position, grade, or honour". So also "Promotion" means "advancement of  preferment  in  honour,  dignity,  rank  or  grade".  [See:  Webster's  Comprehensive Dictionary,  International Edition, p. 1009]. "Promotion"   thus  not  only  covers  advancement  to  higher position  or  rank  but  also   implies advancement to a higher grade. In service law also the expression   "Promotion" has been understood in the wider sense and it has been held   that "Promotion can be either to a higher pay scale or to a higher post."  

(emphasis supplied)

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15. The distinction between upgradation and promotion was spelt out by  

a Full Bench of the Kerala High Court in  N.G. Prabhu vs. Chief Justice,   

Kerala High Court  - 1973 (2) Lab. IC 1399, thus :

“Promotion is, of course, appointment, to a different post carrying a higher  scale of pay in the service. If, to better the conditions of service of the  incumbents in posts in the same category the scale  of pay of all the posts  in the category is raised, the incumbents would naturally get the higher  scale of pay. But in such a case it may not be proper to characterize the  event as a promotion to higher posts though a benefit of a higher scale of  pay is obtained by all concerned. In other words, if the upgradation relates  to all the posts in a category naturally,  there is no sense in calling it  a  promotion of all the persons in that category. That is because there is no  question of appointment  from one post  to another.  Parties  continued to  hold same posts but get a higher scale of pay. It may be that it is not all the  posts in a particular  category that are so upgrade, but only a part of it.  Normally, the benefit of such upgradation would go to the seniors in the  category.  They would automatically  get  a  higher  scale  of  pay.  That  is  because though their posts continue in the same category a higher scale of  pay is fixed for those posts. It is appropriate then to say that the seniors  have been nominated to the higher grade which has been so created by  upgradation. This phenomenon does not differ from the case where all the  posts  are  upgraded and,  it  appears  to  us that  those who get the higher  grade cannot be said to have been ‘promoted’ because here again there is  no question of appointment from one post to another. They continue to  hold the same post,  but because of seniority in the same post  they are  given a higher scale of pay. When a person is nominated to the higher  scale  of  pay from time to  time based  on  seniority,  it  may  perhaps  be  loosely termed as a promotion.”   

16. But even in cases where no additional posts were created, but where a  

process of selection was involved in the upgradation, the process has to be  

considered not as an upgradation simplicitor, but a process of promotion and  

therefore the principles of reservation would be attracted. We may refer to  

the Constitution Bench decision of this Court in Ram Prasad (supra) where  

this  Court held that appointment from senior scale to selection scale is  a  

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promotion  though  it  may  not  be  a  promotion  to  a  higher  position  and  

consequently  the  reserved  candidates  are  entitled  to  be  promoted  to  the  

selection scale by way of roster points. For this purpose, the Constitution  

Bench relied upon the decision of Fateh Chand Soni.

17. In  Fateh Chand Soni (supra), the issue was whether seniority in the  

selection grade (in the Rajasthan Police Service) was to be fixed on the basis  

of date of appointment to the selection scale or on the basis of seniority in  

the senior scale irrespective of the date on which appointment was made to  

the selection scale. This Court held that appointment to the selection scale of  

an  officer  in  the  senior  scale  in  the  service  constituted  promotion  and  

seniority in the selection scale had to be fixed on the basis of the date of  

selection  and  a  person  selected  and  appointed  as  a  result  of  an  earlier  

selection would rank senior to a person who is selected and appointed as a  

result of a subsequent selection. We note below the reasoning of this Court :

“In Lalit Mohan Deb v. Union of India, the pay scale of all the Assistants  in the Civil Secretariat in Tripura was Rs.80-180 and on the basis of the  recommendations  of  the  Second  Pay  Commission  appointed  by  the  Government of India the scales were revised and 25% of the posts were  placed in the Selection Grade in the scale of Rs.  150-300 and the rest  continued in the old pay scale of Rs.80-180. For the purpose of filling the  Selection Grade posts, a test was held and those who qualified in the said   test were appointed to the Selection Grade. The Assistants in the Selection  Grade and the Assistants in the old pay scale were doing the same type of  work.  This  Court  observed that  “provision of  a  Selection Grade in the  same category of posts is not a new thing” and that “a Selection Grade is  intended to ensure that capable employees who may not get a chance of  promotion on account of limited outlets of promotions should at least be  

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placed in the Selection Grade to prevent stagnation on the maximum of the  scale” and that “Selection Grades are, therefore created in the interest of  greater  efficiency”.  The Court  took  note  of  the  fact  that  the  basis  for   selection  of  some  of  the  Assistants  to  the  Selection  Grade  scale  was  seniority-cum-merit  which  is  one  of  the  two  or  three  principles  of   promotion  widely  accepted  in  the  administration  and,  therefore,  the  creation of Selection Grade in the category of Assistants was not open to  challenge.  In that case, the Court  had proceeded on the basis that the   appointment to the higher grade amounted to promotion.

The Rules governing appointment to the Selection Scale in the Service  also envisage that such appointment constitutes promotion. The relevant  provision is contained in Rule 28(A) of the Rules which prescribes the  criteria, eligibility and procedure for promotion to Junior, Senior and other  posts encadred in the Service. Under sub-rule (5) of Rule 28(A) promotion  from the lowest post or category of post in the Service to the next higher  post or category of post in the Service is required to be made strictly on  the basis of seniority-cum-merit. Sub-rule (6) of Rule 28(A) provides that  selection for promotion to all other higher posts or higher categories of  posts in the Service shall be made on the basis of merit and on the basis of  seniority-cum-merit in the proportion of 50:50.”

(emphasis supplied)

18. In Dayaram Asanand Gursahani v. State of Maharashtra – 1984 (3)  

SCC 36 a three Judge Bench of this Court held :

“………As mentioned earlier,  the selection grade post  is  not  a  post  to  which  promotion  has  to  be  made  nor  is  there  any  efficiency  bar  rule  attached to it. Further it is not shown that the Governor had issued any  executive instructions as it had been done in Sant Ram Sharma v. State of   Rajasthan and Anr. (1968) 1 SCR 111 and in Lalit Mohan Deb and Ors.   v. Union of India and Ors. (1973) 3 SCC 862 enabling the High Court to  withhold increments in the extended pay scale which is in this case called  as selection grade pay scale. The pay scale to which a judicial officer is  entitled is a condition of service which can be regulated by a statute or  rules made under the proviso to Article 309 or by executive instructions  issued under  Article 162 of the Constitution.  It  cannot  come within the  range of the expression 'control' in Article 235 of the Constitution. (See  B.S. Yadav and Ors. etc. v. State of Haryana and Ors. etc. (1981) 1 SCR  1024). It is only where there is such a law, rule or executive instruction,  the High Court may act under Article 235 of the Constitution to sanction it  or to refuse to sanction it. We are of the view that in the present case the  mere nomenclature given to the extended pay scale as the selection grade  pay  scale  does  not  lead  to  the  inference  that  there  is  an  element  of  selection  involved  in  sanctioning  it.  In  the  circumstances  it  should  be  

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treated as just an extended pay scale which forms part of the pay scale of  Rs.  900-1800  as  clarified  in  two  Government  orders  sanctioning  the  selection grade posts. ………”

The aforesaid decision in Dayaram Asanand Gursahani was distinguished in  

Fateh Chand Soni on the following reasoning :  

“The High Court has referred to the decision of this Court in  Dayaram  Asanand Gursahani v. State of Maharashtra and Ors. [1984] 2 SCR 703,  wherein,  after  considering  the  resolution  of  the  State  Government  sanctioning the post of District Judge in the Selection Grade, this Court  has held that the said resolution did not indicate that there was any process  of promotion by selection or otherwise from the cadre of District Judges to  the Selection Grade District Judges. In the particular facts of that case it  was held that mere nomenclature given to the extended pay scale as the  Selection Grade pay Scale does not lead to the inference that there is no  element of selection involved in sanctioning it and that it should be treated  as  just  an  extended  pay scale  which  forms part  of  the  pay  scale.  The  position in the present case is, however, different. Here the Selection Scale  is a separate scale and is not an extension of the Senior Scale. Moreover  appointment to the Selection Scale is made by selection on the basis of  merit  and  seniority-cum-merit  in  accordance  with  Rule  28(A)  of  the  Rules.”

19. In  view  of  the  decisions  in  Dayaram  Asanand  Gursahani,  Fateh  

Chand Soni  and Ram Prasad,  the position that emerges is that even where  

the upgradation does not involve appointment to a different or higher post,  

but  is  as  a  result  of  a  promotional  process  involving  selection,  then  the  

principles of reservation are attracted.     

 20. In  Union of India vs. Pushpa Rani - 2008 (9) SCC 242, this Court  

examined  the  entire  case  law  and  explained  the  difference  between  

upgradation and promotion thus :

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“In legal parlance, upgradation of a post involves transfer of a post from  lower to higher grade and placement of the incumbent of that post in the  higher grade. Ordinarily, such placement does not involve selection but in   some  of  the  service  rules  and/or  policy  framed  by  the  employer  for   upgradation of posts, provision has been made for denial of higher grade   to an employee whose service record may contain adverse entries or who  may  have  suffered   punishment. The  word  ‘promotion’  means  advancement  or  preferment  in  honour,  dignity,  rank,  grade.  Promotion  thus  not  only  covers  advancement  to  higher  position  or  rank  but  also  implies  advancement  to  a  higher  grade.  In  service  law,  the  word  ‘promotion’ has been understood in wider sense and it has been held that   promotion can be either to a higher pay scale or to a higher post.  

Once it is recognized that additional posts becoming available as a result  of restructuring of different cadres are required to be filled by promotion  from amongst employees who satisfy the conditions of eligibility and are  adjudged  suitable,  there  can  be  no  rational  justification  to  exclude  applicability of policy of reservation while effecting promotions, more so  because it has not been shown that procedure for making appointment by  promotion  against  such  additional  posts  is  different  than  the  one  prescribed for normal promotion.  

Policy contained in Letter dated 9.10.2003 has been framed with a view to  strengthen  and  rationalize  the  staffing  pattern.  For  this  purpose,  the  Ministry of Railways undertook review of certain cadres. The basis of the  review was functional, operation and administrative  requirement of the  Railways.  This  exercise  was  intended  to  improve  efficiency  of  administration by providing incentives to existing employees in the form  of better promotional avenues and at the same time requiring promotees to  discharge more onerous duties. The policy envisaged that additional posts   becoming available in the higher grades as a sequel to restructuring of   some of the cadres should be filled by promotion by considering such of   the employees who satisfy the conditions of eligibility including minimum  period  of  service  and  who  are  adjudged  suitable  by  the  process  of   selection.  This cannot  be equated with upgradation of posts  which are   required to be filled by placing existing incumbents in the higher grade   without subjecting them to the rigor of selection. It has therefore to be held  that the Railway Board  did not commit any illegality by directing that  existing instructions with regard to the policy of reservation of posts for  SC and ST will  apply  at  the  stage  of  effecting  promotion  against  the  additional  posts.  The  Tribunal  committed  serious  illegality  by  striking  down para 14 of letter dated 9.10.2003. Matters relating to creation and  abolition  of  posts,  formation  and  structuring/restructuring  of  cadres,  prescribing the source/mode of recruitment and qualifications, criteria of  selection,  evaluation  of  service  records  of  employees  fall  within  the  exclusive domain of employer. What steps should be taken for improving  

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efficiency  of  the  administration  is  also  the  preserve  of  the  employer.  Power of judicial  review can be exercised in such matters only if  it  is  shown that the action of the employer is contrary to any constitutional or  statutory provision or is patently arbitrary or is vitiated by mala fides. The  court cannot sit in appeal over the judgment of the employer and ordain  that a particular post be filled by direct recruitment or promotion or by  transfer.  The  court  has  no  role  in  determining  the  methodology  of  recruitment or laying down the criteria of selection. It is also open to the  court to make comparative evaluation of the merit of the candidates. The  court cannot suggest the manner in which the employer should structure or  restructure  the  cadres  for  the  purpose  of  improving  efficiency  of  administration.”

(emphasis supplied)  

In  Pushpa Rani,  this  Court  while  considering a  scheme contained in  the  

letter  dated  9.10.2003  held  that  it  provided  for  a  restructuring  exercise  

resulting in creation of additional posts in most of the cadres and there was a  

conscious decision to fill-up such posts from promotion from all eligible and  

suitable  employees  and,  therefore,  it  was  a  case  of  promotion  and,  

consequently, reservation rules were applicable.  

21. On  a  careful  analysis  of  the  principles  relating  to  promotion  and  

upgradation in the light of the aforesaid decisions, the following principles  

emerge :

(i) Promotion is an advancement in rank or grade or both and is a step  

towards  advancement  to  higher  position,  grade  or  honour  and  dignity.  

Though in the traditional sense promotion refers to advancement to a higher  

post, in its wider sense, promotion may include an advancement to a higher  

pay scale without moving to a different post. But the mere fact that both –  

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that is advancement to a higher position and advancement to a higher pay  

scale – are described by the common term ‘promotion’, does not mean that  

they are the same. The two types of promotion are distinct and have different  

connotations and consequences.  

(ii) Upgradation merely confers a financial benefit by raising the scale of  

pay of the post without there being movement from a lower position to a  

higher position. In an upgradation, the candidate continues to hold the same  

post without any change in the duties and responsibilities but merely gets a  

higher pay scale.

(iii) Therefore, when there is an advancement to a higher pay scale without  

change of post, it may be referred to as upgradation or promotion to a higher  

pay  scale.  But  there  is  still  difference  between  the  two.  Where  the  

advancement to a higher pay-scale without change of post is available to  

everyone who satisfies  the  eligibility  conditions,  without  undergoing  any  

process  of  selection,  it  will  be upgradation.  But if  the  advancement to  a  

higher pay-scale without change of post is as a result of some process which  

has elements of selection, then it will be a promotion to a higher pay scale.  

In  other  words,  upgradation  by  application  of  a  process  of  selection,  as  

contrasted from an upgradation simplicitor can be said to be a promotion in  

its wider sense that is advancement to a higher pay scale.  

(iv) Generally,  upgradation  relates  to  and  applies  to  all  positions  in  a  

category, who have completed a minimum period of service. Upgradation,  

can also be restricted to a percentage of posts in a cadre with reference to  

seniority (instead of being made available to all employees in the category)  

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and it will still be an upgradation simplicitor.  But if there is a process of  

selection or consideration of comparative merit or suitability for granting the  

upgradation or benefit  of advancement to a higher pay scale, it  will  be a  

promotion.  A mere screening to eliminate such employees whose service  

records may contain adverse entries or who might have suffered punishment,  

may  not  amount  to  a  process  of  selection  leading  to  promotion  and  the  

elimination may still  be  a part  of  the  process of  upgradation simplicitor.  

Where  the  upgradation  involves  a  process  of  selection  criteria  similar  to  

those applicable to promotion, then it will, in effect, be a promotion, though  

termed as upgradation.   A

(v) Where the process is an upgradation simplicitor, there is no need to  

apply  rules  of  reservation.  But  where  the  upgradation  involves  selection  

process and is therefore a promotion, rules of reservation will apply.

(v) Where there is a restructuring of some cadres resulting in creation of  

additional  posts  and  filling  of  those  vacancies  by  those  who  satisfy  the  

conditions of eligibility which includes a minimum period of service, will  

attract the rules of reservation. On the other hand, where the restructuring of  

posts does not involve creation of additional posts but merely results in some  

of the existing posts being placed in a higher grade to provide relief against  

stagnation, the said process does not invite reservation.    

22. In this case, the BCR scheme did not involve creation of additional  

posts but merely restructured the existing posts as a result of which 10% of  

the posts in Grade III were placed in a higher grade (Grade IV) to give relief  

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against stagnation. This is evident from the terms of the BCR scheme and  

the clarification contained in the letter dated 7.5.1993 that no posts were  

sanctioned, as far as 10% BCR was concerned.

23. In  this  case,  the  BCR scheme  dated  16.10.1990  provided  that  the  

persons who had completed 26 years of service would be screened by a duly  

constituted Review Committee to assess the performance and suitability for  

advancement.  The  screening  was  for  the  limited  purpose  of  finding  out  

whether the service record of the employee contained any adverse entries or  

whether the employee had suffered punishment. The screening process did  

not involve consideration of comparative merit nor involve any selection.  

The 10% posts were upgraded strictly by seniority subject to screening. This  

is evident from the terms of BCR scheme and the Circular dated 13.12.1995  

which  provided  that  the  promotions  to  Grade  IV  were  to  be  based  on  

seniority in the basic grade from among the officers in Grade III, subject to  

fitness  determined  as  per  OTBP  manner,  that  is  screening  to  ascertain  

whether  there  are  any  adverse  comments  or  punishment  against  the  

employee concerned.

24. To sum up, the BCR scheme was an upgradation scheme to give relief  

against stagnation. It did not involve creation of any new posts. It did not  

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involve advancement  to  a  higher  post.  It  did  not  involve any process  of  

selection for conferment of the benefit of higher pay-scale. The upgradation  

was given to the senior most 10% of BCR scale employees in Grade III  

strictly as per seniority. BCR scheme as per circular dated 16.10.1990 was  

thus a scheme for upgradation simplicitor without involving any creation of  

additional posts or any process of selection for extending the benefit. Such a  

scheme of upgradation did not invite the rules of reservation.  

25. We accordingly allow these appeals, set aside the orders of the High  

Court and the Tribunal and dismiss the Original Applications challenging  

the order of the telecom department dated 8.9.1999.       

……………………………J. (R V Raveendran)

New Delhi; ……………………………J. September 6, 2011. (Markandey Katju)            

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