The Judgment of the Court was delivered by

C.S Rajan, J.:— The petitioners in O.P No. 6776/90 were appointed as Technical Supervisor and Extension Officer respectively in 1973 and 1975. They were promoted as Assistant District Industries Officer in 1981 and 1982 respectively. The first petitioner was promoted as Assistant Director of Industries and Commerce in 1984 and the second petitioner was promoted to the same post in 1985. They were further promoted as Deputy Directors in 1987 and 1989 respectively. The Special Rules issued for the Kerala Industries Service in 1966 govern their promotions. The petitioners are Engineering graduates. The Special Rules, as it stood then, recognised the distinction between Engineering graduates and non-Engineering graduates. For an engineering graduate, experience for a period of not less than 3 years was sufficient for getting promotion. At the same time, 4 years experience was prescribed in the case of other degree holders for promotion.

2. The Special Rules were amended as per G.O (P) No. 94/90.ID dated 20th June 1990, a copy of which has been produced as Ext. P1. R. 1(2) of Ext. P1 states that the Special Rules shall come into force at once, and that sub-rules (c) and (d) of R. 3 shall be deemed to have come into force on the 1st day of July 1983, sub-r. (b) of R. 4 shall be deemed to have come into force on the 31st day of January 1977 and notes under category 2 of Class V of Branch I of Appendix shall be deemed to have into force on the 1st day of July 1983. The offending amendment is to Rules 3(c) and 4(b). The above two provisions are extracted below for easy reference:

“3 (c) A member of a service who gets promotion or appointment by transfer not on the basis of his/her seniority in the respective feeder category but by virtue of possession of a special qualification either in any branch of Engineering/Technology or in Co-operation earlier than his/her senior or seniors in the respective feeder category shall be considered for promotion to a still higher post only after the turn of the said senior or seniors for such promotion arises:

Provided that the above sub-rule shall not apply if the said senior or seniors are not qualified either under the provisions of the General Rules or under these rules for appointment to the category of post concerned on the date of occurrence of the vacancy”.

“4(b) other qualification:— No persons shall be eligible for appointment to any of the classes of categories specified in column (1) of the Appendix to these rules by the method specified in Column (2) unless he possesses the qualifications specified in the corresponding entry in column (3) thereof”.

3. Thus R. 3(c) takes away the right of promotion of an Engineering graduate for further promotion till any of the senior non-Engineering degree holders who was superseded by the Engineering graduate is promoted to the higher post. By prescribing other qualifications in R. 4(b) with retrospective effect from 31.1.1977 the petitioners’ promotions are liable to be reviewed on the basis of the new qualifications.

4. The petitioner in O.P No. 7218/90 was directly recruited as Assistant Director of Industries and Commerce on 25.4.1986 He was promoted as Deputy Director on 24.5.1989 He was also a degree holder in Engineering.

5. The challenge against the restrospective amendment of the Special Rules is very simple. By virtue of the amendments with retrospective effect, the vested rights/accrued rights of the petitioners who were promoted in accordance with the earlier Special Rules cannot be adversely affected. Though the respondents have power to issue Special Rules retrospectively, such retrospective issuance of Special Rules or the amendment of the Special Rules with retrospective effect cannot have adverse effect on the promotions of persons who had already been promoted.

6. The learned counsel for the petitioners submitted that the present amendment is discriminatory and arbitrary, the learned counsel also cited the ruling of the Supreme Court reported in Sate of Gujarat v. Raman Lal Kesav Lal Soni (1983) 2 SCC 33 wherein Justice Chinnappa Reddy has held categorically that a restrospective law cannot take away vested rights and such deprivation is arbitrary and thus offending Arts. 14 and 16 of the Constitution. The Supreme Court dealt with the above situation in the following words:

“The Legislature is undountely competent to legislate with retrospective effect to take away or impair any vested right acquired under existing laws but since the laws are made under a written Constitution and have to conform to the dos and don't's of the Constitution, neither prospective nor retrospective laws can be made so as to contravene fundamental rights. The law must satisfy the requirements of the Constitution today taking into account the accrued or acquired rights of the parties today. The law cannot say, 20 years ago the parties had no rights, therefore, the requirements of the Constitution will be satisfied if the law is dated back by 20 years. We are concerned with today's rights and not yesterday's. A legislature cannot legislate today with reference to a situation that obtained 20 years ago and ignore the march of the events and the constitutional rights accrued in the course of the 20 years. That would be most arbitrary, unreasonable and a negation of history.”

7. The above ruling was accepted and followed by a Division Bench of this Court in the ruling reported in T.K Gopinathan v. State of Kerala (1984 KLT 726).

8. Another Division Bench of this Court in the ruling reported in State of Kerala v. P.K Satheesh (1994 (2) KLJ 1041) also dealt with the same question in the following words:

“19. The Supreme Court has time and again held that retrospectivity of an amendment to the service rules which takes away the vested rights of employees, is not sustainable. We may refer to a few decisions on the point, apart from these referred to by the learned Judge. In P.D Aggarwal v. State of U.P, (1987) 3 SCC 622 : AIR 1987 SC 1676 it was observed that while the Government had undoubtedly the power under the proviso to Art. 309 of the Constitution to make rules and amend them with retrospective effect, such retrospective amendments cannot take away vested rights. The amendments must be reasonable and not arbitrary or discriminatory violating Articles 14 and 16 of the Constitution. In Ex. Capt. K.C Arora v. State of Haryana, (1984) 3 SCC 281 : AIR 1987 SC 1858, this principle was reiterated in more empliatic terms. It was pointed out that while the Legislature was undoubtedly competent to legislate with retrospective effect to take away or impair any vested right acquired under existing laws, they have to conform to the do's and dont's of the Constitution. Neither prospective nor retrospective laws can be made so as to contravene fundamental rights. The law must satisfy the requirements of the Constitution today, taking into account the accrued or acquired rights of the parties today. The law cannot say that 20 years ago the parties had no right and therefore, the requirements of the Constitution will be satisfied if the law is dated back by 20 years. We are concerned with today's rights and not yesterday's. A Legislature cannot legislate today with reference to the situation that obtained 20 years ago, and ignore the march of events and constitutional rights accrued in the course of the 20 years. That would be most arbitrary, unreasonable and a negation of history. A similar sentiment was expressed in Narayanan v. State of Karnataka, 1994 Supp (1) SCC 44 : AIR 1994 SC 55. It was observed that seniority is an incident of service which cannot be eroded or curtailed by a rale which operates discriminately. The operation of a rule with retrospective effect may result in undue benefit to one class of employees over the other. The rule making authority should not be permitted normally to act in the past. Therefore, the rule impugned in that case made in the year 1985 permitting appointment by transfer and making it operative from 1976 was held to be vicious, contravening Articles 14 and 16 of the Constitution”.

9. The same was explained by the Supreme Court in a recent ruling reported in Chairman, Railway Board v. C.R Rangadhamaiah (1997) 6 SCC 623, in the following words:

“24. In many of these decisions the expressions “vested rights” or “accrued rights” have been used while striking down the impugned provisions which had been given retrospective operation so as to have an adverse effect in the matter of promotion, seniority, substantive appointment, etc. of the employees. The said expressions have been used in the context of a right flowing under the relevant rule which was sought to be altered with effect from an anterior date and thereby taking away the benefits available under the rule in force at that time. It has been held that such an amendment having retrospective operation which has the effect of taking away a benefit already available to the employee under the existing rule is arbitrary, discriminatory and violative of the rights guaranteed under Arts. 14 and 16 of the Constitution. We are unable to hold that these decisions are not in consonance with the decisions in Roshan Lal Tandon, B.S Yadav and Raman Lal Keshav Lal Soni.”

10. A counter affidavit has been filed by the Government in O.P No. 6776/90. With regard to the retrospective amendment of R. 3(c), the counter affidavit explains as follows:

‘Till the pay revision issued in G.O (P) No. 515/85.Fin. dated 16.9.1985 came into effect from 1.7.1983, the scales of pay of Assistant Registrar and Assistant District Industries Officer were one and the same. Likewise the scales of pay of Industries Extension Officer and Senior Co-operative Inspector were one and the same. But in the above said pay revision order, the scale of pay of Assistant Registrar became higher than Assistant District Industries Officer and that the scale of pay of the Industries Extension Officer became higher than the Senior Co-operative Inspector. The fluctuation in the scales of pay in each pay revision order will lead to administrative difficulty and confusion inmaking appointments by promotion or transfer in terms of the General Rules of the Kerala State and Subordinate Service Rules. In order to avoid this situations sub r. (c) & (b) of R. 3 of Ext. P1 Special Rules were given effect retrospectively from 1.7.1983 ie, the date on which the pay revision order dated 16.9.1985 came into force”.

11. The explanation with regard to the retrospective operation of R. 4(b) is as follows:

“6. Experience prescribed shall be one acquired after securing the basic academic or other qualifications”. Copy of the above notification is produced herewith as Ext. R1. The above notification is produced here with as Ext. R1. The above notification was intended to be applied only in respect of direct recruits’. As the said amendment does not cany the intended meaning and also in order to remove the ambiguity, Government decided to make clear the provision at the time of issuing the revised Special Rules (Ext. P1) by incorporating the provisions therein in the form of a Note by giving effect to it retrospectively from 31.1.1977 i.e the date on which the Ext. R1 amendment came into operation. It was at this background a ‘Note’ was included under sub-r. (b) into, obviously a mistake crept in byoversight The intention was to give retrospective operation to the Note only under sub rule (b) of R. 4 of Ext. P1 and not for the R. 4 as a whole. When this mistake came into notice, expeditious action has been initiated to issue an amendment to Ext. P1 order to give retrospective effect specially to this Note under sub-r. (b) of R. 4 above. Action on this direction was already taken by the Government before the filing of the instant O.P Thus, it is evident that the petitioners in the O.P need not have any fear and apprehension over R. 3(c) and R. 4(b) of Ext. P1 Special Rules.”

12. There is a further explanation for the retrospective amendment of these rules in paragraph 9 of the counter affidavit which is a follows:

“With the coming into force of the Pay Revision order issued in G.O (P) 515/85.Fin dated 16.9.1985, the scales of pay of certain posts which were one and the same earlier have become different The fluctuation in the scales of pay in each pay revision order will lead to administrative difficulty and confusion in making appointments by promotion or transfer in terms of the General Rules of KS & SSR. It is with a view to overcome this lacuna, R. 3(c) was given retrospective effect from 1.7.1983 The reasons for giving retrospective operation to R. 3(c) of Ext. P1 have been amply explained in answer para 13 ante. In the circumstances retrospective operation of the said rule will never be arbitrary and will not in any way adversely affect the petitioners as apprehended, pending finalisation of the amendment proposes.”

13. But none of these explanations offers sufficient reason for the retrospective amendment of the rules. The result of these retrospective amendments is to review the promotions effected between 1977 and 1990; Thus, it cannot be denied that persons who were promoted to the various posts like the petitioners will suffer and their promotions will be reviewed. In some cases their dates may be postponed and in some cases they may not get promotion at all. Another effect of such a review is that the so called seniors who did not satisfy the eligibility criteria for promotion to various posts will be promoted and they will Become seniors to the petitioners. Thus, the seniority of the petitioners in the various categories to which they were promoted earlier also would be adversely affected. The Supreme Court has already held that seniority is a condition of service (See K. Narayanan v. State of Karnataka 1994 Supp (1) SCC 44 : AIR 1994 SC 55).

14. There is a vague statement in the counter affidavit that the petitioners will not be adversely affected by the retrospective amendment of the rules. But the counter affidavit is silent as to whether a review of promotions will be or will not be conducted on the basis of Ext. P1 Special Rules. As explained in the counter affidavit, if the motive behind the amendment of the rules with retrospective effect is to help the seniors who did not have the qualifications for promotion earlier, then definitely a review is a must as far as they are concerned. Otherwise the purpose of the retrospective amendment cannot be achieved.

15. There is also a plea that the promotions of the petitioners are only provisional and therefore, they do not confer any rights on the petitioners. But the petitioners were promoted, may be provisionally, long back. They were promoted because there were vacancies on those dates and they were qualified to be promoted. The Government have taken a long time to regularise their promotions by convening a D.P.C The time lag taken by the Government in this respect shall not be put against the petitioners. If the D.P.C had met in time and made selection, the petitioners would have been regularly promoted in accordance with the conditions existing at the time of occurrence of the vacancies. There is another contention for the petitioners that the dates 1.7.1983 and 31.1.1977 have absolutely no nexus or relevance to the amendment carried out as per Ext. P1. Therefore, the fixation of the two dates for the retrospective operation of the amendment is discriminatory and arbitrary. The argument advanced in the counter affidavit with regard to the above contention is that the pay revision order dated 16.9.1985 by which the scale of pay of Assistant Registrar became higher than the scale of pay of Assistant District Industries Officer and the scale of pay of Extension Officer became higher than the scale of pay of Senior Co-operative Inspector was brought into force with effect from 1.7.1983 The Special Rules for the Kerala Industries Service which was originally issued on 25.11.1966 was amended on 31.1.1977 Therefore, R. 4(b) was given retrospective effect from 31.1.1977 I do not think that these reasons are legally sustainable in order to support the fixation of the above dates. The pay revision orders by which certain posts were granted higher scales of pay have nothing to do with the amendment of R. 3(c). Equally unsustainable is the argument that since once the rules were amended in 1977, the present amendment of R. 4(b) also must be given retrospective effect from the same date. In fact R. 3(d) covers the cases of persons in the feeder category who are having higher scale of pay since they do not have any preference for promotion on the basis of their higher scale of pay. Therefore, the retrospective effect given to the amendment of R. 3(c) and R. 4(b) of the Special Rules for the Kerala Industries Service is declared unconstitutional and inoperative. These rules can only have prospective operation.

16. The Original Petitions are allowed as indicated above.