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2006 INSC 388
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  • Section 5, Subsection 2 of the 1983 Income Tax Act
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Citation Codes
Neutral Citations
2006 INSC 388
Equivalent Citations
citation codes
Case Number
Disposition
Attorney(S)
Judges
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  • Section 5, Subsection 2 of the 1983 Income Tax Act
Smart Summary

Factual and Procedural Background

The appellants are directly-recruited District Registrars in the Tamil Nadu Registration Service, governed by the Tamil Nadu State and Subordinate Services Rules, 1955 (“General Rules”) and the Tamil Nadu Registration Service Rules, 1969 (“Special Rules”). Under the Special Rules, District Registrars could be filled by (i) direct recruitment through the Tamil Nadu Public Service Commission and (ii) recruitment by transfer of Sub-Registrars. A 1972 amendment removed the fixed 1:5 quota and required only that at least three directly recruited District Registrars be in position at any given time.

During 1981-1984, the State temporarily appointed several Sub-Registrars as District Registrars under Rule 10(a)(i)(1) of the General Rules. Their services were later regularised for the years 1986-87, 1987-88 and 1988-89. The appellants were directly recruited in October 1989 and completed probation in 1991.

When a combined seniority list was prepared, the temporarily-appointed (now regularised) promotees were ranked above the appellants, prompting the latter to challenge the list before the Tamil Nadu Administrative Tribunal. The Tribunal dismissed their applications, and the Madras High Court affirmed that dismissal on 24-12-2001. The present consolidated appeals are against that High Court judgment.

Legal Issues Presented

  1. Whether promotee District Registrars appointed temporarily under Rule 10(a)(i)(1) are entitled to count seniority from the date of their initial temporary appointment or only from the date of subsequent regularisation.
  2. Whether Rule 4 or Rule 23(a) of the General Rules, relied on by the High Court, overrides the limitation contained in Rule 10(a)(i)(1) for determining seniority.
  3. Whether the High Court’s interpretation, granting retrospective seniority to promotees, is consistent with Supreme Court precedent on appointments made “otherwise than in accordance with the Rules.”

Arguments of the Parties

Appellants' Arguments

  • The promotees were expressly appointed “temporarily under Rule 10(a)(i)(1),” which itself states that such appointments are made otherwise than in accordance with the Rules; hence, their service prior to regularisation cannot count for seniority.
  • None of the procedural safeguards of Rule 4 (preparation of approved list, consultation with Public Service Commission) were followed for the promotees, so Rule 4 cannot be invoked to give them retrospective seniority.
  • Supreme Court decisions (e.g., V. Sreenivasa Reddy, E. Paripoornam, Sanjay K. Sinha-II) hold that ad hoc or fortuitous service under Rule 10(a)(i)(1) is excluded for determining seniority vis-à-vis direct recruits.
  • The High Court’s approach conflicts with the quota principle implicit in the Special Rules and unfairly disadvantages direct recruits who entered service through the prescribed competitive process.

Respondents' Arguments

  • The appointing authority had discretion under Rule 23(a) to allow probation to commence from the date of first temporary appointment; absence of a contrary order implies probation started on that initial date.
  • Unless a rule expressly forbids it, service rendered on probation or in an officiating capacity must be counted for seniority (relying on L. Chandrakishore Singh v. State of Manipur).
  • The promotees filled clear, continuing vacancies, not fortuitous posts, and therefore should not be deprived of the benefit of their earlier service.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
I.K. Sukhija v. Union of India, (1997) 6 SCC 406 Seniority may run from date of ad hoc promotion if made against clear vacancies. Relied upon by the High Court; distinguished implicitly by the Supreme Court because ad hoc promotions here were made dehors the recruitment rules.
V. Sreenivasa Reddy v. Govt. of A.P., 1995 Supp (1) SCC 572 Temporary appointees under Rule 10(a)(i)(1) cannot count such service for seniority; seniority starts only from regular appointment. Accepted by the Supreme Court as laying down the correct position and applied to the instant promotees.
State of T.N. v. E. Paripoornam, 1992 Supp (1) SCC 420 Service under Rule 10(a)(i)(1) is a stop-gap arrangement and is excluded for seniority purposes. Followed by the Supreme Court to negate the High Court’s contrary view.
Sanjay K. Sinha-II v. State of Bihar, (2004) 10 SCC 734 Appointments made contrary to the rules are fortuitous and do not confer seniority over regular appointees. Cited approvingly to reinforce the principle that only regular service counts for seniority.
L. Chandrakishore Singh v. State of Manipur, (1999) 8 SCC 287 Where an appointment is later approved, entire service may count for seniority unless a contrary rule exists. Relied on by respondents; Supreme Court held the factual matrix differed because initial appointment here was explicitly outside the rules.

Court's Reasoning and Analysis

The Supreme Court conducted a rule-based analysis:

  1. Rule 2(1) of the General Rules defines a person as “appointed to a service” only when he first discharges duties in accordance with the recruitment rules. Temporary appointments under Rule 10(a)(i)(1) are expressly made “otherwise than in accordance with the Rules,” so the promotees were not members of the service until regularisation.
  2. Rule 39(c) underscores that a temporary promotee must be replaced by a duly qualified member as soon as possible; this further indicates the provisional nature of Rule 10 appointments.
  3. Government orders giving retrospective regularisation cannot override the principle that seniority flows only from lawful entry into service.
  4. The High Court’s reliance on Rule 4 and Rule 23(a) was misplaced because the prerequisites for invoking those rules—preparation of an approved list and explicit determination of probation commencement—were absent.
  5. Consistent Supreme Court precedents (e.g., V. Sreenivasa Reddy, E. Paripoornam) mandate exclusion of ad hoc service for seniority when appointments are made dehors the rules. The High Court’s contrary approach was therefore legally erroneous.

Holding and Implications

Appeals Allowed – High Court judgment set aside.

The Supreme Court directed the State to re-determine the inter se seniority of District Registrars by counting the promotees’ seniority only from the date their services were regularised, not from their initial temporary appointments under Rule 10(a)(i)(1). This elevates the appellants above the promotees in the seniority list.

Implications are confined to the parties: the appellants gain higher seniority with consequential service benefits; promotees lose retrospective seniority. The decision re-affirms the settled principle that service rendered through ad hoc appointments outside the recruitment rules does not confer seniority.

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    K. Madalaimuthu And Another v. State Of T.N And Others

    Altamas Kabir, J.— These three appeals arise from the common judgment and order dated 24-12-2001 passed by the Division Bench of the Madras High Court in Writ Petitions Nos. 16806 of 1998, 1548 of 1999 and 1549 of 1999. One K. Madalaimuthu was the petitioner in the first two writ petitions, while one A. Arumuga Nainar was the petitioner in the third writ petition. Both of them had similar interests and the reliefs prayed for were also similar and were thus disposed of by the common judgment referred to above. Since these appeals arise out of a common judgment and order passed by the Madras High Court, they have been clubbed together, heard together and are being disposed of by this common judgment.

    2. The appellants belong to the Tamil Nadu Registration Services and are said to be working as Assistant Inspector Generals of Registration. Their services are governed by the Tamil Nadu State and Subordinate Services Rules, 1955 (hereinafter referred to as “the General Rules”) and by the Tamil Nadu Registration Services Rules, 1969 (hereinafter called “the Special Rules”). In 1969, the Special Rules provided for two classes of officers. Class I comprised the Inspector General (Registration). Class II provided for two categories, namely, Inspector of Registration Officers and District Registrars. Subsequently, the categorisation was modified and the District Registrars were placed in the third category. The method of recruitment of District Registrars is either by direct recruitment or recruitment by transfer from the Tamil Nadu Registration Subordinate Service. According to the appellants, the recruitment for the post of District Registrar comes under the purview of the Tamil Nadu Public Service Commission and the Special Rules had originally provided that substantive vacancies of District Registrars were to be filled or reserved to be filled by direct recruitment and by recruitment by transfer from the Madras Registration Subordinate Service in the proportion of 1:5, provided that the number of substantive vacancies filled or reserved to be filled by direct recruitment was not to exceed three at a given time. It is the further case of the appellants that the Special Rules were amended on 26-4-1972 whereby the proportion of 1:5 was omitted and it was substituted by the condition that substantive vacancies of District Registrars were to be filled or reserved to be filled by direct recruitment and by recruitment by transfer from the Tamil Nadu Registration Subordinate Service in such manner that there would be at least three directly recruited District Registrars in position at any given time and this would be exclusive of directly recruited District Registrars occupying higher posts in the department or outside. It was also stipulated that if in any particular year, a direct recruit was to be appointed, he was to be given the first vacancy.

    3. In 1981, 1982 and 1984 the Government prepared a temporary list of officers who were fit for appointment by transfer to the post of District Registrar, pending finalisation of the regular list in consultation with the Tamil Nadu Public Service Commission. It is the case of the appellants that the said temporary list for the year 1981 consisted of 34 Sub-Registrars and the lists for the years 1982 and 1983 consisted of 36 and 25 Sub-Registrars, respectively. Subsequently, temporary appointments were made under Rule 10(a)(i)(1) of the General Rules which reads as follows:

    “10. (a)(i)(1) Where it is necessary in the public interest owing to an emergency which has arisen to fill immediately a vacancy in a post borne on the cadre of a service, class or category and there would be undue delay in making such appointment in accordance with these rules and the Special Rules, the appointing authority may temporarily appoint a person, who possesses the qualifications prescribed for the post otherwise than in accordance with the said rules:
    Provided that no appointment by direct recruitment under this clause shall be made of any person other than the one sponsored by the Tamil Nadu Public Service Commission from its regular or reserve list of successful candidates to any of the posts within the purview of the Tamil Nadu Public Service Commission.”

    4*. Subsequently, the State Government after considering the proposal of the Inspector General of Registration and the observations of the Tamil Nadu Public Service Commission passed various orders regularising the services of those candidates from the Tamil Nadu Registration Subordinate Service who had been temporarily appointed to function as District Registrars under Rule 10(a)(i)(1) of the General Rules. Consequently, by virtue of the State Government's orders the services of the said officers who had been recruited by transfer to the post of District Registrars for the years 1986-87, 1987-88 and 1988-89 were regularised.

    5. As indicated hereinbefore, the appellants were directly recruited as District Registrars in the Tamil Nadu Registration Service by GO dated 24-10-1989 and while Shri A. Arumuga Nainar joined his duties on 9-11-1989 Shri K. Madalaimuthu joined his duties on 22-11-1989. Both successfully completed their probation period but since A. Arumuga Nainar had joined his duties earlier, he was senior to Shri K. Madalaimuthu in the cadre.

    6. Having regard to the Special Rules regarding recruitment to the post of substantive vacancies of District Registrars in the proportion of 1:5, which stood modified on 26-4-1972 so that at any given time there would be at least three directly recruited District Registrars, the appellants claimed that their seniority should be counted from the year 1986 when the first set of transferee officers were sought to be regularised. The said claim was turned down by the Government on the ground that in terms of Rule 2(1) of the Tamil Nadu State and Subordinate Services Rules, a person is said to be appointed to a service only when he discharges for the first time the duties of a post borne on the cadre of such service and commences probation or training prescribed for members thereof. It was also indicated that inter se seniority in the post of District Registrars, where there was more than one method of recruitment, would have to be fixed under Rule 35(aa) of the Tamil Nadu State and Subordinate Services Rules read with Rule 2(1). The obvious inference was that the seniority of the appellants could not be fixed in the year 1986 as they had not entered service at that point of time. Subsequently, the names of the appellants were included in the seniority list but placed below the persons who were promotee District Registrars.

    7. Aggrieved by the preparation of the seniority list, the appellants herein and one K. Durairajan filed OAs Nos. 779 of 1995, 1067 of 1995, 1068 of 1995, 7429 of 1996 and 1181 of 1997 before the Tamil Nadu Administrative Tribunal (for short “the Tribunal”) for a direction upon the respondents to fix their inter se seniority for the year 1986 in a manner so that they were placed above the promotees for the said year in the inter se seniority list. By its detailed order, the learned Tribunal dismissed the applications filed by the appellants herein upon holding that if their claim was to be accepted, their seniority will have to date back to a period when they had not even commenced discharging their duties of District Registrars which would run counter to the provisions of Rule 2(1) of the Tamil Nadu State and Subordinate Services Rules. The Tribunal accepted the case made out on behalf of the promotees who had been appointed temporarily under Rule 10(a)(i)(1) on different dates and also took note of the fact that probation of the said promotees had been declared in respect of the regular panel of District Registrars for the years 1985-86, 1986-87 and 1987-88. Inasmuch as the appellants had been appointed only in 1989, the Tribunal was of the view that the claim of the appellants herein was without merit.

    8. Being aggrieved by the decision of the Tribunal, the first appellant herein filed Writ Petitions Nos. 16806 of 1998 and 1548 of 1999. Mr K. Durairajan who had filed OA No. 1181 of 1997 did not challenge the common order passed by the Tribunal. Reiterating their submissions made before the Tribunal, the appellants herein urged before the High Court that the common order dated 10-8-1998 passed by the Tribunal should be quashed and a direction should be given to the State Government to prepare the inter se seniority list between the promotees and the direct recruits in the cadre of District Registrars by following the quota as per Rule 25 of the Tamil Nadu Registration Service Rules and to grant the appellants consequential seniority/promotion over all the promotees from 1981 onwards together with all service benefits.

    9. After discussing the Special Rules governing the Tamil Nadu Registration Service which had originally made provision for recruitment by direct recruits and promotees in the proportion of 1:5, the High Court took note of the government order dated 26-4-1972 whereby such ratio was amended and it was provided that substantive vacancies of District Registrars were to be filled by direct recruitment or recruitment by transfer from the Tamil Nadu Registration Subordinate Service in such a manner that there would be at least three directly recruited District Registrars in position at any given time. The High Court observed that this amendment virtually took away the quota available to the direct recruits and merely made a provision that at any given time there should be at least three directly recruited District Registrars in position. The High Court took note of the concession given to the directly recruited District Registrars to the effect that in a particular year a direct recruit was to be given the first vacancy over and above the promotees.

    10. After discussing the relevant rules relating to the appointment of District Registrars in terms of the Tamil Nadu State and Subordinate Service and the Special Rules, the High Court came to a finding that Rule 23(a) of the General Rules was relevant regarding the filling up of the vacancies by direct recruitment.

    11. In order to understand the reasoning of the High Court, the provisions of Rule 23(a) are set out hereinbelow:

    “23. (a) If a person appointed temporarily either under sub-rule (a) or sub-rule (d) of Rule 10 to fill a vacancy otherwise than in accordance with the rules governing appointment thereto, such vacancy being a vacancy which may be filled by direct recruitment, is subsequently appointed to the service, class or category in accordance with the rules, he shall commence his probation if any, in such category either from the date of his first temporary appointment or from such subsequent date, as the appointing authority may determine. If the post is one to which appointment may be made by transfer, and the person who had been appointed thereto either under General Rule 10(a) or 10(d) is subsequently recruited thereto by transfer and included in the list of approved candidates, the appointing authority may, in his discretion, allow such person to commence his probation if any, from the date of his first temporary appointment or from such subsequent date, as the appointing authority may determine:
    Provided that the date so determined by the appointing authority to commence probation in this clause shall not be earlier than the date of commencement of probation of the juniormost person already in service.”

    12. According to the High Court, though initially the appointment of the promotee District Registrars was said to have been made under Rule 10(a)(i)(1) of the General Rules, since they had been subsequently recruited by transfer and included in the list of approved candidates, the appointing authority had the discretion either to allow them to commence their probation from the date of their first temporary appointment or from such subsequent date as the appointing authority chose to determine. The High Court held in the instant case that when the appointing authority had not determined any subsequent date for the commencement of the probation by the promotee District Registrars, it would mean that they would be deemed to have been allowed to commence their probation from the date of their first temporary appointment. In other words, the moment they commenced their probation they were said to have been appointed to the service.

    13. Negating the submissions made on behalf of the appellants herein that since the initial temporary appointments of the promotees had not been made according to the Rules, their seniority could not be reckoned from the date of their initial appointment under Rule 10(a)(i)(1) of the aforesaid Rules and placing reliance on Rule 4(a) of the aforesaid Rules, the High Court distinguished the various decisions cited on behalf of the appellants herein to bolster their case that appointment in accordance with the Rules is a condition precedent in counting seniority. The High Court held that the appointment of the promotees had been made in accordance with the Rules and in particular Explanation II to Rule 4 and that having regard to the above, the said decisions would have no application to the facts of the case. On the contrary, the High Court was of the view that the appointments of the promotees, though temporary and ad hoc, were not by way of any stop-gap arrangement and the decision of this Court in I.K Sukhija v. Union of India (1997) 6 SCC 406 was relied upon in support of the view that when promotions are made on ad hoc basis against clear vacancies, the seniority will be counted from the date of the initial appointment and not from the date of confirmation.

    14. On the basis of its aforesaid reasoning, the High Court chose not to interfere with the common order passed by the Tribunal and dismissed the writ applications filed by the appellants herein.

    15. As indicated hereinbefore, these appeals have been preferred against the said judgment and order of the High Court of Judicature of Madras.

    16. Appearing in support of the appeals, Mr L. Nageswara Rao, learned Senior Advocate firstly submitted that the High Court had erred in applying Rule 4 of the Tamil Nadu State and Subordinate Services Rules to the facts of the instant case, inasmuch as, the appointment orders of the promotees themselves indicate that they had been appointed temporarily under Rule 10(a)(i)(1) of the Tamil Nadu State and Subordinate Services Rules.

    17. Mr Rao urged that none of the conditions indicated in Rule 4 regarding preparation and publication of the list of approved candidates had been complied with and, on the other hand, the orders of promotion and posting of the promotees were admittedly made under Rule 10(a)(i)(1) of the General Rules which specifically indicates that such appointments were made otherwise than in accordance with the Rules. The further case of the appellants was that since the initial appointment of the promotees had been made otherwise than in accordance with the Rules, they would not be entitled to the benefit of the service rendered by them prior to the regularisation of their appointment for counting their seniority and that their seniority will have to be reckoned from the date on which they were regularised.

    18. In support of such proposition, reliance was placed on the decision of this Court in V. Sreenivasa Reddy v. Govt. of A.P 1995 Supp (1) SCC 572, (1995) 29 ATC 495 wherein this Court was called upon to consider the dispute involving inter se seniority between persons temporarily appointed as Assistant Executive Engineers dehors the Rules, to fill emergent vacancies as against direct recruits. It was held that since the appointments of the appellants concerned were under Rule 10(a)(i)(1), they were not made on the basis of selection by the Public Service Commission and, therefore, their appointments were made otherwise than in accordance with the Special Rules. They could not, therefore, be members of the service till they were appointed to the service in accordance with the Special Rules. It was also held that a direct recruitee takes his seniority from the date on which he starts discharging the duty of the post borne on the cadre while a temporary appointee appointed dehors the Rules or on ad hoc basis or to a fortuitous vacancy gets seniority from the date of regular appointment. Considering further the effect of Rules 4, 23(a) and 33(a) of the Rules and Rule 5 of the sub-rules, this Court went on to hold that a Public Service Commission candidate gets his seniority from the date on which he starts discharging his duties on the post borne on the cadre and his seniority shall be determined with effect from that date while in respect of temporary appointees under Rule 10(a)(i)(1), who are subsequently appointed in accordance with the Rules, the temporary service rendered prior to their appointment would not be counted towards their seniority.

    19. Reliance was also placed on another decision of this Court in State of T.N v. E. Paripoornam 1992 Supp (1) SCC 420, (1992) 19 ATC 653 wherein also the provisions of Rule 10(a)(i)(1) of the Tamil Nadu State and Subordinate Services Rules were under consideration in respect of junior professors who were later appointed on a regular basis on the basis of an approved list prepared by the Public Service Commission. Even though the services of such temporary appointees were intended to be regularised with effect from the dates of their original appointments on a temporary basis, this Court held that they would not be entitled to count their temporary service for the purpose of seniority and that the services rendered by the appointees under Rule 10(a)(i)(1) could not be considered for the purpose of seniority as such appointment was a stop-gap arrangement, emergency or fortuitous arrangement.

    20. A later decision of this Court in Sanjay K. Sinha-II v. State of Bihar (2004) 10 SCC 734 was then referred to by Mr Rao regarding promotions against non-existing posts and its effect on inter se seniority with direct recruits. This Court held that appointments made contrary to the Rules were merely fortuitous and did not confer any benefit of seniority on appointees over and above the regular/substantive appointees to the service.

    21. Several other decisions in which the aforesaid principle had been reiterated were relied upon by Mr Nageswara Rao, but reference to the same will only amount to multiplication of the decisions cited. It was contended by Mr Rao that seniority in a cadre could only be in respect of substantial posts and not in respect of temporary posts made otherwise than in accordance with the Rules.

    22. Mr Rao urged that the High Court had, in fact, taken a view which was contrary to the law as laid down by this Court and, could not, therefore, be sustained.

    23. Mr R. Venkataramani, learned Senior Advocate, who appeared for the respondents, sought to justify the order passed by the High Court and contended that unless there was a contrary rule, service rendered on probation or in an officiating capacity could not be ignored for determination of seniority as was held by this Court in L. Chandrakishore Singh v. State of Manipur (1999) 8 SCC 287. In the said matter, a further observation was made that grant or approval to an appointment made without following the prescribed procedure implies confirmation and relates back to the date on which appointment was made. In other words, the entire period of service in such case counts for seniority.

    24. On a consideration on the submissions made on behalf of the respective parties and the decisions cited on their behalf, the consistent view appears to be the one canvassed on behalf of the appellants. The decisions cited by Mr Rao have been rendered in the context of Rule 10(a)(i)(1) and the other relevant rules which are also applicable to the facts of the instant case. Apart from the above, the law is well settled that initial appointment to a post without recourse to the rules of recruitment is not an appointment to a service as contemplated under Rule 2(1) of the General Rules, notwithstanding the fact that such appointee is called upon to perform duties of a post borne on the cadre of such service. In fact, Rule 39(c) of the General Rules indicates that a person temporarily promoted in terms of Rule 39(a) is required to be replaced as soon as possible by a member of the service who is entitled to the promotion under the Rules. It stands to reason that a person who is appointed temporarily to discharge the functions in a particular post without recourse to the recruitment rules, cannot be said to be in service till such time as his appointment is regularised. It, therefore, follows that it is only from the date on which his services are regularised that such appointee can count his seniority in the cadre.

    25. In the instant case, the authorities on the strength of the several government orders giving retrospective effect to the regularisation of the promotees, have taken the date of initial appointment of such promotees as the starting point of their seniority. In our view, such a course of action was erroneous and contrary to the well-established principles relating to determination of seniority. In our view, the High Court took an erroneous view in the matter in applying Rule 4 of the General Rules and holding that the period during which the promotees had initially discharged the duties of District Registrars, though appointed temporarily under Rule 10(a)(i)(1), was to be counted for determining their seniority. The decision of this Court in L. Chandrakishore Singh (1999) 8 SCC 287 relied on by Shri Venkataramani did not involve the question of persons appointed outside the service as a stop-gap arrangement. The fact situation of the said decision is different from the fact situation of the instant case which finds support from the decisions cited by Mr Rao.

    26. We, therefore, set aside the order passed by the High Court and direct the respondents concerned to redetermine the seniority of the appellants in relation to the promotees after reckoning the starting point of seniority of such promotees from the date on which their services were regularised and not from the date of their initial appointment under Rule 10(a)(i)(1) of the General Rules.

    27. The appeals, therefore, succeed and are disposed of with the aforesaid directions. There will be no order as to costs.

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    K. Madalaimuthu And Another v. State Of T.N And Others
    (Jul 4, 2006)