1967 (2) TMI 30 - SC - Income Tax

Whether rule 1(f) (iii) of the seniority rules as framed in 1952 violates the guarantee under articles 14 and 16 of the Constitution? Held that - Promotees from Class II Grade III to Class I Grade II Service in excess of the prescribed quotas for each of the years 1951 to 1956 and onwards have been illegally promoted and the appellant is entitled to a writ in the nature of mandamus commanding respondents Nos. 1 to 3 to adjust the seniority of the appellant and other officers similarly placed like him and to prepare a fresh seniority list in accordance with law after adjusting the recruitment for the period 1951 to 1956 and onwards in accordance with the quota rule prescribed in the letter of the Government of India No. F. 24(2) Admt. I.T./51 dated October 18 1951. We however wish to make it clear that this order will not affect such Class II Officers who have been appointed permanently as Assistant Commissioners of Income-tax. But this order will apply to all other officers including those who have been appointed Assistant Commissioners of Income-tax provisionally pursuant to the orders of the High Court. Appeal allowed.

Summary

Issues Involved:
1. Constitutional validity of the "seniority rule" in Income-tax Service, Class I, Grade II.
2. Implementation of the "quota" recruitment rule.
3. Discrimination in the promotion rule from Class I, Grade II to Class I, Grade I.
4. Excessive recruitment of promotees violating the quota rule.

Issue-wise Detailed Analysis:

1. Constitutional Validity of the "Seniority Rule"
The appellant challenged the seniority rule under Article 226, arguing it violated Articles 14 and 16(1) of the Constitution by creating an unjustifiable classification between direct recruits and promotees in Income-tax Service, Class I, Grade II. The court held that the rule did not violate constitutional guarantees. It reasoned that the rule was about recruitment from two different sources and adjusting seniority between them, not about creating classes within a single service. The court emphasized that the rule aimed to fill higher positions with experienced officers, and the classification was reasonable and objective. The seniority rule, when read with the quota rule, was found to be reasonable and not discriminatory.

2. Implementation of the "Quota" Recruitment Rule
The appellant contended that there was excessive recruitment of promotees violating the quota rule. The court examined the statutory rule under Rule 4 of the Income-tax Officers (Class I, Grade II) Service Recruitment Rules, which mandated the method and number of recruits from each source. The court found that the quota rule was legally binding and must be strictly followed. The court ordered a writ of mandamus commanding the respondents to adjust the seniority list according to the quota rule prescribed in the Government of India's letter dated October 18, 1951. The court emphasized the importance of the rule of law and the necessity of predictable decisions based on known principles.

3. Discrimination in the Promotion Rule
The appellant argued that the promotion rule was discriminatory, as it allowed promotees to be promoted to Class I, Grade I, with a minimum of one year's service in Class I, Grade II, while direct recruits needed five years. The court found no substance in this contention, holding that the promotion rule was linked to the seniority rule and aimed to prevent anomalies where junior direct recruits could be promoted earlier than senior promotees. The court concluded that the promotion rule did not lead to discrimination and was consistent with the seniority rule.

4. Excessive Recruitment of Promotees Violating the Quota Rule
The appellant alleged excessive recruitment of promotees from 1951 to 1956, violating the quota rule. The court found that the quota rule was not strictly followed, leading to illegal promotions. The court ordered the respondents to adjust the seniority list and recruitment according to the quota rule. The court suggested adopting a roster system for future recruitments to maintain the quota balance between direct recruits and promotees.

Separate Judgments:
The judgment in Civil Appeal No. 1038 of 1965 was delivered by Ramaswami J., and a similar judgment was applied to Writ Petition No. 5 of 1966. Both judgments ordered a writ of mandamus for adjusting the seniority list according to the quota rule, with no order as to costs.