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Ram Kishore Inspecto... v. Mr. Santosh Anand In...

Central Administrative Tribunal
Dec 24, 2008
Smart Summary (Beta)

Factual and Procedural Background

The applicants, selected through the Combined Main (Graduate Level) Examination 2003 conducted by the Staff Selection Commission (SSC) for the post of Inspector, Central Excise, challenged Clause XI of the Office Memorandum (OM) dated 12.7.2005. This clause restricted their transfer/posting outside the Shillong Zone without all India transfer liability. The selection process had earlier been declared illegal by the Supreme Court in Radhey Shyam Singh & others v. Union of India & others (1997) leading to a shift from zonal to all India recruitment. Despite this, the 2003 batch was restricted to zone-wise postings, unlike subsequent batches from 2006 onwards, which had all India transfer liability. After representations by the applicants were not adequately addressed, they filed Original Application (OA) 540/2007, which was treated as a representation and disposed of. Non-compliance led to a contempt petition and further directions. The present OA was filed following non-response to further representations.

Legal Issues Presented

  1. Whether Clause XI of the OM dated 12.7.2005, restricting transfer/posting of the 2003 batch Inspectors to the Shillong Zone without all India transfer liability, amounts to invidious discrimination violating Articles 14 and 16 of the Constitution of India.
  2. Whether the policy decision of the respondents discontinuing inter-Commissionerate transfers and restricting transfer liability to zone-wise postings is arbitrary, unreasonable, or violative of constitutional principles.
  3. Whether similarly situated employees (2003 and 2006 batches) can be treated differently in terms of transfer liability without intelligible differentia and rational nexus to the object sought to be achieved.
  4. Whether the applicants are entitled to all India transfer liability on par with the 2006 batch in light of principles of equality, non-arbitrariness, and legitimate expectation.

Arguments of the Parties

Applicants' Arguments

  • Clause XI of the OM and the denial of all India transfer liability to the 2003 batch constitutes invidious discrimination and is arbitrary and unreasonable.
  • The applicants are similarly circumstanced to the 2006 batch, who have all India transfer liability, thus differential treatment violates Articles 14 and 16.
  • The respondents have failed to rebut the claim of discrimination, which amounts to admission as per precedent.
  • The policy decision is contrary to constitutional principles and cannot be sustained merely on administrative convenience.
  • Legitimate expectation arises from the uniform mode of appointment and selection, entitling the applicants to all India transfer liability.

Respondents' Arguments

  • Transfer policy is an executive prerogative and the applicants accepted the conditions of service; hence, they are estopped from challenging it.
  • The change in policy in 2004 cannot be given retrospective effect to the 2003 batch.
  • No enforceable fundamental right has accrued to the applicants to seek mandamus for transfer liability.
  • The discontinuation of inter-Commissionerate transfers was due to administrative difficulties and litigation, and compassionate transfers are allowed only on deputation basis.
  • Discrimination, if any, is reasonable classification and not arbitrary, as subsequent batches were recruited under different conditions.
  • Reliance on the Apex Court decision in P.U. Joshi & others v. Accountant General to support the reasonableness of policy decisions.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Radhey Shyam Singh & others v. Union of India & others, (1997) 1 SCC 60 Invalidation of zonal selection for Inspector, Central Excise; mandated all India recruitment. Set the background for the change in recruitment policy implemented from 2003 onward.
M. Venkataramana Hebbar (Dead) by Lrs. v. M. Rajagopal Hebbar & others, (2007) 6 SCC 401 Failure to specifically deny allegations amounts to admission. Applicants’ claim of discrimination not rebutted by respondents deemed admitted.
Railway Board v. A. Pitchumani, (1972) 4 SCC 608 Discrimination in service conditions and classification of similarly situated persons violates Article 14. Supported applicants’ contention against discriminatory treatment.
D.S. Nakara v. Union of India, (1983) 1 SCC 304 Article 14 forbids arbitrary and invidious discrimination; allows reasonable classification. Provided foundational principles on equality, arbitrariness, and classification.
Maneka Gandhi v. Union of India, (1978) 2 SCR 621 Equality is a dynamic concept; Article 14 strikes at arbitrariness and ensures fairness. Reinforced the principle that arbitrary state action violates Article 14.
Ram Krishna Dalmia v. S. R. Tendolkar, 1959 SCR 279 Test of permissible classification under Article 14: intelligible differentia and rational nexus. Applied to assess reasonableness of classification in transfer policy.
Re. Special Courts Bill, (1979) 2 SCR 476 Classification must not be arbitrary but rational; courts should avoid doctrinaire tests. Guided the court’s approach to evaluating classification validity.
E. P. Royappa v. State of Tamil Nadu, (1974) 2 SCR 348 Equality is antithetic to arbitrariness; arbitrariness violates Articles 14 and 16. Supported the proposition that arbitrariness in service matters is unconstitutional.
Purnendu Mukhopadhyay & others v. V.K. Kapoor & another, 2007 (12) SCALE 549 State cannot treat similarly situated employees differently. Applied to reject differential treatment of 2003 and 2006 batches.
M. Rao v. State of Andhra Pradesh, (1990) 2 SCC 707 Court cannot direct government to amend or frame statutory rules which is executive prerogative. Respondents’ reliance rejected as policy found arbitrary despite prerogative.
Union of India & another v. Central Electrical & Mechanical Engineering Service (CE&MES) Group A Assn., (2008) 1 SCC (L&S) 173 Alteration of service conditions to detriment is impermissible. Supported applicants’ claim against adverse policy changes.
Noida Entrepreneurs Association v. NOIDA & others, (2008) 1 SCC (L&S) 672 Executive orders/policies are subject to judicial review on grounds including arbitrariness. Justified judicial scrutiny of transfer policy.
M/s. Dhampur Sugar (Kashipur) Ltd. v. State of Uttranchal & others, 2007 (11) SCALE 374 Public powers must be exercised bona fide, in good faith, and supported by reason. Informed court’s expectation of reasoned and bona fide executive action.
Delhi Development Authority v. Joint Action Committee, Allottee of SFS Flats, 2007 (14) SCALE 507 Policy decisions are not beyond judicial review if unconstitutional or arbitrary. Supported court’s jurisdiction to review the impugned transfer policy.
Union of India v. Pushpa Rani & others, (2008) 9 SCC 242 Judicial review of employer’s decisions limited to cases of arbitrariness, mala fides or constitutional violation. Court balanced respect for executive prerogative with constitutional safeguards.
Anil Kumar Vitthal Shete & others v. State of Maharashtra & another, (2007) 1 SCC (L&S) 901 Policy fixing service conditions must not be arbitrary or unreasonable. Reinforced requirement of reasonableness in service conditions policy.
Government of Andhra Pradesh & others v. P. Laxmi Devi, 2008 (3) SCALE 45 Higher legal norms prevail over lower conflicting norms. Supported supremacy of constitutional principles over impugned policy.
Official Liquidator v. Dayanand, 2008 (13) SCALE 558 Legitimate expectation forms part of natural justice and fairness in administrative action. Applied to uphold applicants’ expectation of uniform transfer liability.
State of Uttar Pradesh & others v. Chaudhari Ran Beer Singh & another, (2008) 5 SCC 550 Court can remit policy decisions for reconsideration if found contrary to law. Guided court’s direction to respondents for reconsideration of transfer liability policy.

Court's Reasoning and Analysis

The court acknowledged that interference in executive policy decisions is limited to exceptional cases of invidious discrimination, arbitrariness, or unreasonableness. The applicants, selected in 2003 under a zonal recruitment system later declared illegal, were restricted to transfers within the Shillong Zone without all India transfer liability, unlike the 2006 batch who had such liability. The court examined constitutional principles under Articles 14 and 16, emphasizing that equality forbids arbitrary classification and discrimination without intelligible differentia and rational nexus to the objective sought.

The court extensively reviewed Supreme Court precedents that articulate the twin tests for permissible classification and the prohibition against arbitrariness in state action. It found that the respondents failed to justify the differential treatment between the 2003 and 2006 batches, as administrative convenience alone cannot sustain an arbitrary classification. The respondents’ policy was neither reasonable nor supported by adequate explanation, and the denial of all India transfer liability to the 2003 batch lacked a rational basis.

The court further recognized the applicants’ legitimate expectation to be treated uniformly with similarly situated employees of the 2006 batch. It held that the respondents’ policy was contrary to constitutional mandates and principles of fairness and equality. While respecting the executive’s prerogative in framing service conditions, the court emphasized that such policies must conform to constitutional standards and cannot be arbitrary or discriminatory.

Consequently, the court set aside Clause XI of the OM insofar as it denied all India transfer liability to the 2003 batch and remitted the matter back to the respondents for reconsideration by a reasoned and speaking order within a stipulated timeframe.

Holding and Implications

The court partly allowed the Original Application, holding that the denial of all India transfer liability to the 2003 batch of Inspectors, while granting it to the 2006 batch, constituted invidious discrimination and arbitrariness violative of Articles 14 and 16 of the Constitution of India. Clause XI of the OM dated 12.7.2005 is set aside to the extent it restricts transfer/posting of the 2003 batch outside the Shillong Zone without all India transfer liability.

The matter is remitted to the respondents to reconsider and decide on providing all India transfer liability to the 2003 batch on par with the 2006 batch by a reasoned and speaking order within three months of receipt of the judgment. No costs were imposed.

The decision directly affects the parties by granting relief to the applicants but does not establish a new precedent beyond reaffirming established constitutional principles on equality, arbitrariness, and administrative fairness.

Show all summary ...

Shri Shanker Raju: Invidious discrimination, unreasonableness and arbitrariness are exceptions to interfere in a policy decision taken by the Executive.

2. Applicants, who have been the selectee of Combined Main (Graduate Level) 2003 conducted by the Staff Selection Commission (SSC) for the post of Inspector, Central Excise, have assailed Clause XI of OM dated 12.7.2005 offering appointment to the post of Inspector insofar, as it restricts their transfer/posting outside the zone without all India transfer liability.

3. At the outset, learned senior counsel Shri Mahabir Singh along with Ms. Madhusumita Bora, learned counsel, restricts the claim to para 8 (a) and (c) of the OA whereby apart from clause XI of OM, discrimination has been alleged.

4. A brief factual matrix of this case transpires that the applicants, who have been selected on the post of Inspector, Central Excise through Graduate Level Examination, which was being held on zonal basis, were declared to be illegal by the Apex Court in Radhey Shyam Singh & others, etc. v. Union of India & others, (1997) 1 SCC 60 on 9.12.1996. As per the conditions of service as to appointment contained in Memorandum dated 12.7.2005 wherein willingness to serve anywhere within the jurisdiction of Shillong Zone, the following is the impugned clause: (xi) He / She is liable to transfer / posting within this Zone to which he / she is nominated and under no circumstances his / her request for transfer to any other Commissionerate outside this Zone will be entertained.

5. On 19.2.2004, Ministry of Finance & Central Board of Customs & Excise cancelled an inter-Commissionerate transfers allowed in Groups B, C and D employees and introduced transferability on compassionate grounds on deputation only.

6. A Committee named Bhardwaj Committee was constituted to examine merger of analogous post on all India seniority in Groups B, C and D in August 2004. Certain recommendations were made in October 2004 where in Groups B & C in executive cadre of Customs Excise, merger has been recommended and pending merger of analogous post, all India seniority is directed to be maintained. On all India transfer liability, it is restricted to transfer on promotion and inter-se-seniority has to be fixed at each stage for gradual merger. However, the aforesaid was considered by the competent authority and was not accepted and after appointment seniority is maintained Commissionerate / zone-wise in accordance with recruitment rules.

7. On being offered appointment, applicants were posted to different ranges under the Shillong zone. However, from the year 2005 to 2007 a transferability on all India basis has been interpreted as condition of service to the Inspectors recruited in Central Excise and one of the cited examples is of examination conducted by SSC in February 2006 whereas the candidates selected for appointment are liable to serve anywhere in India and the posts carrying all India transfer liability.

8. Aggrieved by absence of on all India liability, a representation preferred by the applicants when not responded to by the respondents led to filing of OA-540/2007, which was disposed of by treating the OA as representation and disposal thereof on 30.3.2007. Non-compliance resulted in a contempt petition, being CP-292/2007, where certain directions have been issued. Vide an order passed on 19.10.2007, respondents rejected the claim of the applicants on the ground that as per the existing policy of the CBEC, inter-Commissionerate transfers have been discontinued as transfers allowed under the previous policy resulted in enormous litigation. However, on extreme compassionate grounds, such transfers could be allowed on deputation basis initially for a period of three years and upto a maximum of five years.

9. On further representation when nothing has been responded to by the respondents, leads to filing of present OA.

10. Learned senior counsel for applicant while relying upon the law of pleadings states that his contention as to the discrimination taken in paragraph 4.11 of the OA has not been specifically rebutted and denied by the respondents. As such, it would amount to admission as held by the Apex Court in M. Venkataramana Hebbar (Dead) by Lrs. v. M. Rajagopal Hebbar & others, (2007) 6 SCC 401.

11. Learned senior counsel would also rely upon the decision of Apex Court in Railway Board v. A. Pitchumani, (1972) 4 SCC 608 to contend that discrimination in the matter of conditions of service and classification of similarly situated is an antithesis to Article 14 of the Constitution of India.

12. Learned counsel would also contend that once all India recruitment has been ordered by the Apex Court, which was implemented from 2003 batch, isolating the batch of 2003 for all India transfer liability even after decision of the respondents to change the policy in 2004, yet following the all India transfer liability in subsequent batches right from 2006, the applicants being equally in all respects to the incumbents as they had also been appointed similarly, an option accorded to them to be posted on all India transfer liability, when not extended, constitutes an invidious discrimination, which is violative of Articles 14 & 16 of the Constitution of India.

13. On the other hand, learned counsel appearing for respondents vehemently opposed the contentions and objected to the prayer part. He also states that multiple reliefs have been made, which is barred under law.

14. Learned counsel for respondents would state that transfer on a policy laid down by the respondents is their prerogative and as the applicants have accepted all the conditions of service, they are now estopped to challenge the policy. It is also stated that change of policy in 2004 cannot have any retrospective effect.

15. Learned counsel states that no enforceable and fundamental right had accrued in favour of the applicants to be issued mandamus and as to cut-off date, it is stated that when the same is reasonable, it does not require any interference by this Tribunal.

16. To propagate his submissions, learned counsel for respondents has relied upon the decision of Apex Court in P.U. Joshi & others v. Accountant General, Ahmedabad & others, (2003) 2 SCC 632.

17. Learned counsel would state that recommendations of Bhardwaj Committee had not been accepted by the respondents and as per the decision arrived at by the respondents on 19.10.2007, the all India seniority list would have large impact on officers of relevant cadre and as recommendations have been placed before the Board for decision for implementation, specific time-limit cannot be raised. However, it is stated that post of Inspector has already been classified as Group B post and necessary changes in the recruitment rules would be made shortly.

18. It is further stated by learned counsel that the candidates are selected on the basis of exam conducted by the SSC and they are allocated different zones and their seniority is maintained Commissionerate / Zone-wise.

19. It is stated that applicants were allocated to the Shillong Zone, which is as per laid down criteria. Learned counsel would contend that in the light of administrative chaotic conditions caused due to all India transfer liability, now inter-Commissionerate transfer had been stopped and in exceptional circumstances, transfer on deputation basis has been adopted.

20. Insofar as merger is concerned, it is stated that out of 44 zones, 18 have given unqualified support to the proposed merger. As regards the discrimination meted out to the applicants, it is stated that whereas all India transfer liability is allowed from 2006 batch, subsequent deviation in the policy would not be retrospectively operated, which is well-reasonable and hence cannot be assailed successfully in judicial review.

21. We have carefully considered the rival contentions of the parties and perused the material placed on record.

22. Invidious discrimination, which is arbitrary, has been held to be violative of Article 14 of the Constitution, which forbids class legislation with the following observations in D.S. Nakara v. Union of India, (1983) 1 SCC 304 : 10. The scope, content and meaning of Art. 14 of the Constitution has been the subject matter of intensive examination by this Court in a catena of decisions. It would, therefore, be merely adding to the length of this judgment to recapitulate all those decisions and it is better to avoid that exercise save and except referring to the latest decision on the subject in Maneka Gandhi v. Union of India, (1978) 2 SCR 621 : (AIR 1978 SC 597) from which the following observation may be extracted: "........what is the content and reach of the great equalising principle enunciated in this article ? There can be no doubt that it a founding faith of the Constitution. It is indeed the pillar on which rests securely the foundation of our democratic republic. And, therefore, it must not be subjected to a narrow, pedantic or lexicographic approach. No attempt should be made to truncate its all- embracing scope and meaning for, to do so would be to violate its activist magnitude. Equality is a dynamic concept with many aspects and dimensions and it cannot be imprisoned within traditional and doctrinaire limits...... Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. The principle of reasonableness, which legally as well as philosophically, is an essential element of equality or non-arbitrariness pervades Art. 14 like a brooding omnipresence."

11. The decisions clearly lay down that though Art. 14 forbids class legislation, it does not forbid reasonable classification for the purpose of legislation. In order, however, to pass the test of permissible classification, two conditions must be fulfilled, viz., (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group; and (ii) that that differentia must have a rational relation to the objects sought to be achieved by the statute in question. (See Ram Krishna Dalmia v. S. R. Tendolkar, 1959 SCR 279 at P. 296: (AIR 1958 SC 538 at p. 547)). The classification may be founded on differential basis according to objects sought to be achieved but what is implicit in it is that there ought to be nexus i.e. causal connection between the basis of classification and object of the statute under consideration. It is equally well settled by the decisions of this Court that Art .14 condemns discrimination not only by a substanstive law but also by a law of procedure.

12. After an exhaustive review of almost all decisions bearing on the question of Art. 14, this Court speaking through Chandrachud, C. J. in Re. Special Courts Bill, (1979) 2 SCR 476 at p. 534: (AIR 1979 SC 478 at P. 509) restated the settled propositions which emerged from the judgments of this Court undoubtedly in so far as they were relevant to the decision on the points arising for consideration in that matter. Four of them are apt and relevant for the present purpose and may be extracted. They are : "3. The constitutional command to the State to afford equal protection of its laws sets a goal not attainable by the invention and application of a precise formula. Therefore, classification need not be constituted by an exact or scientific exclusion or inclusion of persons or things. The Courts should not insist on delusive exactness or apply doctrinaire tests for determining the validity of classification in any given case. Classification is justified if it is not palpably arbitrary.

4. The principle underlying the guarantee of Article 14 is not that the same rules of law should be applicable to all persons within the Indian territory or that the same remedies should be made available to them irrespective of differences of circumstances. It only means that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws would have to be applied to all in the same situation, and there should be no discrimination between one person and another if as regards the subject matter of the legislation their position is substantially the same.

5. The law can make and set apart the classes according to the needs and exigencies of the society and as suggested by experience. It can recognise, even a degree of evil, but the classification should never be arbitrary, artificial or evasive.

6. The classification must not be arbitrary but must be rational, that is to say, it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of the legislation. In order to pass the test, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others, and (2) that differentia must have a rational relation to the object sought to be achieved by the Act."

13. The other facet of Article 14 which must be remembered is that it eschews arbitrariness in any form. Article 14 has, therefore, not to be held identical with the doctrine of classification. As was noticed in Maneka Gandhi's case (AIR 1978 SC 597) in the earliest stages of evolution of the Constitutional law, Art. 14 came to be identified with the doctrine of classification because the view taken was that Article 14 forbids discrimination and there will be no discrimination where the classification making the differentia fulfils the aforementioned two conditions. However, in E. P. Royappa v. State of Tamil Nadu, (1974) 2 SCR 348: (AIR 1974 SC 555) it was held that the basic principle which informs both Articles 14 and 16 is equality and inhibition against discrimination. This Court further observed as under : "From a positivistic point of view, equality is antithetic to arbitrariness. In fact, equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. Where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is, therefore, violative of Art. 14 and if it affects any matter relating to public employment, it is also violative of Art. 16. Articles 14 and 16 strike at arbitrariness in State action and ensure fairness and equality of treatment."

14. Justice Iyer has in his inimitable style dissected Article 14 as under : "The article has a pervasive processual potency and versatile quality, equalitarian in its soul and allergic to discriminatory diktats. Equality is the antithesis of arbitrariness and ex cathedra ipse dixit is the ally of demagogic authoritarianism. Only knight-errants of 'executive excesses', if we may use current cliche, can fall in love with the Dame of despotism, legislative or administrative. If this Court gives in here it gives up the ghost. And so it is that I insist on the dynamics of limitations on fundamental freedoms as implying the rule of law; Be you ever so high, the law is above you." ((1978) 2 SCR 621 at p. 728: AIR 1978 SC 597 at p. 661). Affirming and explaining this view, the Constitution Bench in Ajay Hasia etc. v. Khalid Mujib Sahravardi, (1981) 2 SCR 79 : (AIR 1981 SC 487) held that it must, therefore, now be taken to be well settled that what Article 14 strikes at is arbitrariness because any action that is arbitrary must necessarily involve negation of equality. The Court made it explicit that where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is, therefore, violative of Article 14. After a review of large number of decisions bearing on the subject, in Air India etc. v. Nargesh Meerza, (1982) 1 SCR 438 : (AIR 1981 SC 1829) the Court formulated propositions emerging from an analysis and examination of earlier decisions. One such proposition held well established is that Article 14 is certainly attracted where equals are treated differently without any reasonable basis.

15. Thus the fundamental principle is that Article 14 forbids class legislation but permits reasonable classification for the purpose of legislation which classification must satisfy the twin tests of classification being founded on an intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group and that differentia must have a rational nexus to the object sought to be achieved by the statute in question.

16. As a corollary to this well established proposition, the next question is, on whom the burden lies to affirmatively establish the rational principle on which the classification is founded correlated to the object sought to be achieved? The thrust of Article 14 is that the citizen is entitled to equality before law and equal protection of laws. In the very nature of things the society being composed of unequals a welfare State will have to strive by both executive and legislative action to help the less fortunate in society to ameliorate their condition so that the social and economic inequality in the society may be bridged. This would necessitate a legislation applicable to a group of citizens otherwise unequal and amelioration of whose lot is the object of state affirmative action. In the absence of the doctrine of classification such legislation is likely to flounder on the bed rock of equality enshrined in Article 14. The Court realistically appraising. the social stratification and economic inequality and keeping in view the guidelines on which the State action must move as constitutionally laid down in Part IV of the Constitution, evolved the doctrine of classification. The doctrine was evolved to sustain a legislation or State action designed to help weaker sections of the society or some such segments of the society in need of succour. Legislative and executive action may accordingly be sustained if it satisfies the twin tests of reasonable classification and the rational principle correlated to the object sought to be achieved. The State, therefore, would have to affirmatively satisfy the Court that the twin tests have been satisfied. It can only be satisfied if the State establishes not only the rational principle on which classification is founded but correlates it to the objects sought to be achieved. This approach is noticed in Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCR 1014 at p. 1034 : (AIR 1979 SC 1628 at pp. 1637-38) when at page 1034, the Court observed that a discriminatory action of the Government is liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.

23. In Purnendu Mukhopadhyay & others v. V.K. Kapoor & another, 2007 (12) SCALE 549, it is held by the Apex Court that State cannot treat employees similarly situated differently.

24. What discerns from the ratio decidendi is that when the persons are similarly circumstanced and are equal in all respects even under the guise of policy decision, an invidious discrimination without an intelligible differentia having no reasonable nexus with an object sought to be achieved, is forbidden.

25. In the above view of the matter, whereas in 1996 the Apex Court (supra) stopped zonal selection and selection to the post of Inspector, Central Excise has been ordered to be held on all India basis, the same was implemented in 2003. However, in the batch of Graduate Level Examination of 2003 conducted by the SSC, neither any option for posting has been offered to the applicant, nor has transfer liability been made outside the Commissionerate and zone whereas the decision taken by the respondents on 19.2.2004 regarding inter-Commissionerate transfer when caused administration difficulties and resulted in protracted litigation, was henceforth stopped with an exception to allow inter-Commissionerate transfer and inter-zonal transfer of Groups B, C and D employees on compassionate grounds, that too, on deputation basis. However, as a juxtaposition, when the only justification comes forth is the administrative exigency, the Graduate Level Exam of 2006 is not only in the scheme of exam but also in the memorandum of appointment offered to the selected persons contains a note as to posting of candidates anywhere in India with post carrying all India liability. There is no class negativating all India transfer liability or restricting it to the Commissionerate or inter-zonal basis. In such view of the matter, the applicants, who belong to 2003 batch of Graduate Level Examination, have also been selected as Inspector, Central Excise whereas similarly circumstanced candidates of 2006 examination were also appointed and selected as Inspector, Central Excise. The conditions of service of such person as to all India transfer liability have not been adopted uniformly. As a result of which some persons belonging to Shilling zone appointed in 2006 will have an all India transfer liability whereas the candidates selected in the batch of 2003 would not have been so. As such, the plea of the respondents citing the decision of the Apex Court in M. Rao v. State of Andhra Pradesh, (1990) 2 SCC 707 that the Court cannot direct Government to frame statutory rules or amend existing statutory rules in a manner, which is prerogative of the Government, is misconceived.

26. In the matter of conditions of service, though the prerogative is of the Executive and the legislation to implement and legislate respectively, yet nothing allows an exception to it an arbitrary action on hostile discrimination. Equals are to be treated equally. We do not find any justification and its whisper thereof as to why the batch of 2006 has been allowed inter-transfer liability in the zone / Commissionerate whereas it has been denied to 2003 batch.

27. In Union of India & another v. Central Electrical & Mechanical Engineering Service (CE&MES) Group A (Direct Recruits) Assn., CPWD & others, (2008) 1 SCC (L&S) 173, it is ruled by the Apex Court that in the matter of administrative law and conditions of service, alteration to the detriment is not permissible in law.

28. In a three Judge Bench of Apex Court in Noida Entrepreneurs Association v. NOIDA & others, (2008) 1 SCC (L&S) 672 ruled that orders passed by the Executive have to be tested on the touchstone of reasonableness.

29. In M/s. Dhampur Sugar (Kashipur) Ltd. v. State of Uttranchal & others, 2007 (11) SCALE 374, the Apex Court, insofar as exercise and action of public authority is concerned, ruled as follows- 67. Now, it is well-settled and needs no authority for holding that every power must be exercised bona fide and in good faith. Before more than hundred years, Lord Lindley said in General Assembly of Free Church of Scotland v. Overtaum, 1904 AC 515 : 20 TLR 370; I take it to be clear that there is a condition implied in this as well as in other instruments which create power, namely, that the powers shall be used bona fide for the purpose for which they are conferred. In other words, every action of a public authority must be based on utmost good faith, genuine satisfaction and ought to be supported by reason and rationale. It is, therefore, not only the power but the duty of the Court to ensure that all authorities exercise their powers properly, lawfully and in good faith. If powers are exercised with oblique motive, bad faith or for extraneous or irrelevant considerations, there is no exercise of power known to law and the action cannot be termed as action in accordance with law.

30. In Delhi Development Authority, N.D., & another v. Joint Action Committee, Allottee of SFS Flats & others, 2007 (14) SCALE 507 as to judicial review of administrative law in a policy decision, the following observations have been made:- 59. An executive order termed as a policy decision is not beyond the pale of judicial review. Whereas the superior courts may not interfere with the nitty gritties of the policies, or substitute one by the other but it will not be correct to contend that the court shall like its judicial hands off, when a plea is raised that the impugned decision is a policy decision. Interference therewith on the part of the superior court would not be without jurisdiction as it is subject to judicial review.

60. Broadly, a policy decision is subject to judicial review on the following grounds: if it is unconstitutional; if it is de hors the provisions of the Act and the Regulations; if the delegatee has acted beyond its power of delegation; if the executive policy is contrary to the statutory of a larger policy.

31. In Union of India v. Pushpa Rani & others, (2008) 9 SCC 242, insofar as policy matters and judicial review are concerned, following observations have made:- 37. Before parting with this aspect of the case, we consider it necessary to reiterate the settled legal position that 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 the employees fall within the exclusive domain of the employer. What steps should be taken for improving efficiency of the administration is also the preserve of the employer. The 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 due to 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 not 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.

32. In the matter of conditions of service, three Judge Bench of the Apex Court in Anil Kumar Vitthal Shete & others v. State of Maharashtra & another, (2007) 1 SCC (L&S) 901 ruled as under:- 33. From the above decisions, it is clear that it is always open to an employer to adopt a policy for fixing service conditions of his employees. Such policy, however, must be in consonance with the Constitution and should not be arbitrary, unreasonable or otherwise objectionable. When several cadres are sought to be unified in few cadres, e.g. three cadres in the instant case, it is natural that all Judicial Officers have to be placed in one or the other cadre. The said fact itself cannot make the decision vulnerable. The High Court, in our opinion, considered the question in its proper perspective and while creating three cadres and placing Judicial Officers in one of the cadres, took into account the relevant principles. So far as the Judges of Small Causes Courts are concerned, they were placed in Category 2 but considering the fact that it was a promotional post from Civil Judges (Senior Division), all of them were en bloc placed above Civil Judges (Senior Division) in the said Category. We find no infirmity therein. It is also clear that in the State of Maharashtra, the new cadre of District Judges covers three existing cadres (i) District Judges, (ii) Joint District Judges, and (iii) City Civil Court Judges and all of them have been placed senior to other cadres in the same category of Additional District Judges, Chief Judges, Small Causes Court and Additional Chief Judges, Small Causes Court. This has been done on the basis that for the District Judge cadre, Additional District Judge cadre is a feeder cadre. The cadre of Additional District Judge is also a feeder cadre for the cadre of Judges of the City Civil Court. Likewise, the cadre of Additional Chief Judge, Small Causes Court is a feeder cadre for the Judges of City Civil Court. In other words, a person holding the post of Additional District Judge can be promoted as a District Judge or as a City Civil Court Judge. Since all the three cadres were to be merged, the superiority of the District Judges and the Judges of City Civil Court was required to be maintained and is accordingly maintained. But it does not mean that District Judges, Chief Judges, Small Causes Court and Additional District Judges/Additional Chief Judges, Small Causes Court cannot be placed in one and the same category. We, therefore, find no illegality in the decision of the Full Court on its Administrative Side which calls for interference.

33. In nutshell, the ratio decidendi discerned shows that even on fixing conditions of service, it should be ensured by the Executive that such an action should not be arbitrary, unreasonable and arbitrariness is one where principle of equality is offended. We do not find any reasonableness, justification and apt reasons in law, as explained by the respondents to distinguish the batch of 2003 from batch of 2006 in the matter of all India transfer liability. It is certainly a decision, which is based on unreasonable classification and does not qualify the twin test laid down under Article 14 of the Constitution even if it is a policy decision, which is contrary to the Constitution of India as per pure theory of law propounded by the Apex Court in Government of Andhra Pradesh & others v. P. Laxmi Devi, 2008 (3) SCALE 45 wherein it has been held that if a legal norm in a higher layer of this hierarchy conflicts with a legal norm in a lower layer, the former will prevail.

34. Legitimate expectation and a nascent edition to a principle of natural justice is fairness in administrative action. Applicants, who are similarly appointed by the respondents and are equally placed with the batch of Inspector of 2006, expect on procedural and substantive law, an expectation to be having all India transfer liability. When the same is denied, it is illegal as ruled by the Apex Court in Official Liquidator v. Dayanand, 2008 (13) SCALE 558.

35. To legislate and to make rules is not a function assigned to the judiciary. However, when the policy decision of the Government is found contrary to law, the only remedy left is to sent the matter back for reconsideration of review as ruled by the Apex Court in State of Uttar Pradesh & others v. Chaudhari Ran Beer Singh & another, (2008) 5 SCC 550.

36. The irrationality in the action of the respondents is writ large on the face as the object not to have inter-Commissionerate transfer liability is to minimize administrative problems, as such inducting such a class after the policy decision of 2004 as a service condition for 2006 batch is neither explained nor justified by the respondents.

37. Resultantly, for the foregoing reasons, this OA is partly allowed. Discrimination meted out to the applicants is not sustainable in law. Clause (xi) denying all India transfer liability is set aside and matter is accordingly remitted back to the respondents to reconsider providing all India transfer liability to the batch of Inspector, Central Excise of the year 2003 at par with 2006 batch of similarly placed officers by a speaking order to be passed within a period of three months from the date of receipt of a copy of this order. No costs. ( Dr. Veena Chhotray ) ( Shanker Raju ) Member (A) Member (J) /sunil/