Holding

The restructured Senior Tax Assistant cadre came into force on 20 January 2003, and appellants are not entitled to seniority for Inspector vacancies before 7 December 2002 but are eligible for promotion from that later date, with their DEO service counted for seniority.

Summary

The appellants, originally recruited as Data Entry Operators (DEOs) Grade B, challenged a notice that limited promotion to the post of Inspector to pre‑restructured categories, arguing that the 2001 cabinet‑approved cadre restructuring merged DEOs into the Senior Tax Assistant (STA) cadre and that their prior service should count for promotion. The Court examined the timeline of the restructuring, the issuance of the Inspector Rules 2002 (effective 07‑12‑2002) and the STA Rules 2003 (effective 20‑01‑2003), and the effect of various government communications that froze promotions pending the new rules. It held that the restructured STA cadre only became operative on 20‑01‑2003, and that vacancies arising before 07‑12‑2002 must be filled under the 1979 Rules, while vacancies after that date are to be filled under the 2002 Inspector Rules with DEOs allowed to count their prior service. Consequently, the appellants are eligible for promotion from 20‑01‑2003, can add their DEO service for seniority, and are entitled to notional promotions for pension benefits. The Court dismissed Civil Appeal No. 1976 and disposed of Appeals Nos. 1970‑1975 with the above directions.

Issues considered

The date on which the cadre restructuring and the Senior Tax Assistant cadre became effective
Whether vacancies for the post of Inspector arising before 07‑12‑2002 should be filled under the 1979 Rules or the 2002 Inspector Rules
The entitlement of Data Entry Operators to count their prior service for promotion under the 2002 Inspector Rules
The validity of the exclusive right granted to Clause (a) candidates for a two‑year period under the 2002 Rules
The applicability of the principle in Y.V. Rangaiah versus the government's conscious decision to defer promotions

Legislation cited

Subjects

promotioncadre restructuringSenior Tax AssistantInspector recruitment rulesservice tenurevacancy fillingstatutory interpretationArticle 14Article 16central excisecustomsseniority

Judgment

74 [2020]
SUPREME COURT 5 S.C.R. 74
REPORTS [2020] 5 S.C.R.

A D. RAGHU AND OTHERS
v.
R. BASAVESWARUDU AND OTHERS ETC.
(Civil Appeal Nos. 1970-1975 of 2009)
B FEBRUARY 05, 2020
[SANJAY KISHAN KAUL AND K. M. JOSEPH, JJ.]
Service Law – Appellants in C.A Nos.1970-1975 of 2009
(concerning entitlement to promotion to the post of Inspector,
Central Excise) were originally recruited as Data Entry Operators
C
(DEOs) Grade ‘A’ and working as Data Entry Operators Grade
‘B’ from the year 2000 – Challenged notice dated.05.11.2002
seeking to confine promotion to the post of Inspector to category
of Tax Assistant, Upper Division (UD) Clerk, Stenographer Grade-
II, etc., with certain years of experience – Tribunal directed the
D appellants to be considered for promotion to the post of Inspectors
– Challenged by Union of India and official respondents – High
Court set aside the order inter alia holding that Writ Petitioners had
legal right, under the erstwhile 1979 Rules, to be considered for
promotion to the vacancies arising prior to the 2002 Rules which
came to be made w.e.f 07.12.2002 in regard to the post of
E
Inspector – It also found that it was only when the Senior Tax
Assistant Rules, 2003 (STA Rules, 2003) were made in the year
2003 that the restructuring in the Department, to which the Cabinet
gave its approval on 19.07.2001, came into effect – Regarding
vacancies arising after 07.12.2002, it was left undecided – C.A
F No. 1976 of 2009 relates to the right to be promoted to the post of
U.D.Clerk & Tax Assistant in Central Excise Department – High
Court allowed writ petition filed against the Order of the Tribunal
therein and found that promotions to the post of UDC and Tax
Assistant must be effected on the basis of the rights crystallized
under the 1979 Rules, as amended – Held: Promotion to the post
G
of Inspector was governed by the 1979 Rules till 07.12.2002 –
Under the 1979 Rules, DEOs were not among the feeder categories
for promotion as Inspector – By order dtd.19.07.2001, Cabinet
approved restructuring of certain posts including the post of
Inspector – Thereunder, the post of DEO Grade ‘B’ among other
H categories, were merged and the cadre of Senior Tax Assistants
74
D. RAGHU AND OTHERS v. 75
R. BASAVESWARUDU AND OTHERS

emerged – However, the restructured cadre of Senior Tax Assistants, A
did not come into being – It was born with the bringing into force
of the STA Rules, 2003, on 20.01.2003 – Tribunal proceeded on
the basis that the restructuring became complete with the issuance
of order dtd.19.07.2001 – Appellants are not entitled to have
seniority determined in respect of vacancies of Inspector arising
B
prior to 07.12.2002 – Appellants are eligible to be considered for
promotion from 20.01.2003 and are entitled to add their service
as DEO Grade ‘B’ for the purpose of the 2002 Inspector Rules
and considered for vacancies to be filled by promotion, which arose
after 07.12.2002 – Persons in Clause (a) u/Column 12 of the 2002
Rules, are also entitled to be considered for two years from C
20.01.2003 – Seniority is to be considered based on r.5, STA Rules
– Said exercise, if not carried out already shall be carried out –
Further promotions based on the above will be granted – However,
the promotions shall be notional where promotions have already
been effected, entitling the parties to seniority and pensionary
D
benefits – In C.A. No. 1976 of 2009, no fault is found with the
order of High Court – Central Excise and Land Customs
Department Group ‘C’ Posts Recruitment Rules, 1979 – Electronic
Data Processing Discipline (Group-E Technical Post) Recruitment
Rules, 1992 – Central Excise and Land Customs Department
Inspector (Group ‘C’ posts) Recruitment Rules, 2002 – Central E
Excise And Customs Department Senior Tax Assistant (Group ‘C’
Posts) Recruitment Rules, 2003 – Central Excise And Customs
Department Tax Assistant (Group ‘C’ Posts) Recruitment Rules,
2003 – Interpretation of Statutes.
Disposing of the appeals, the Court F
HELD: 1.1 ANALYSIS
Though there is case for the respondents that the ban on
restructuring was lifted by letter dated 03.01.2002, such
contention appears to be categorically belied by the prohibition
against filling-up of any vacancy in respect of posts included in G
the cadre restructuring, till such time, as further orders are
issued. Though vacancies may have arisen, which could be filled-
up under the 1979 Rules, this appears to be a case where a
conscious decision was taken not to fill-up the vacancies in the
wake of the restructuring process which was undertaken by the H
76 SUPREME COURT REPORTS [2020] 5 S.C.R.

A Government. Though a contention is taken that the post of
Inspector is not part of the cadre restructuring, there may not
be merit in the said contention. The post of Inspector emerged
as re-designated post in place of the erstwhile post of Inspector/
Preventive Officer/Appraiser. More importantly, that it was a
B part of the restructuring, is clear from the fact that the number
of posts fell from a little over 22000 to a little over 18000.
Therefore, the post of Inspector was a post which can be treated
as included in cadre restructuring. The taboo against filling-up
of the vacancy, is clearly reflected in the communication dated
05.06.2002. On 26.6.2002, urgent direction is issued to hold
C DPC to the post of Superintendent of Central Excise and
Superintendent of Customs. The next letter to notice is the
letter dated 19.09.2002. Therein, after referring to letter dated
26.06.2002, it is stated that it was decided to initiate the process
for filling-up vacancies that have arisen on account of cadre
D restructuring in all remaining cadres up to Grade ‘B’. It was
directed to ensure that apparently DPC was convened in respect
of all Grades for the change of number of posts, as also Grades,
where revised Recruitment Rules have been circulated. On
23.09.2002, promotion orders in respect of Superintendents were
allowed to be issued. On 28.10.2002, the Draft Recruitment
E
Rules for Group ‘C’ post of Inspector and Senior Tax Assistant
was communicated to all Chief Commissioners, both, Customs
and Central Excise. It was further stated that Notifications
notifying the Rules will be issued shortly. Direction was given
to start the process of DPC. Thus, it could be said that by the
F issuance of this communication, the Government decided to
proceed with the recruitment by promotion to the post of
Inspector. A perusal of the communication dated 28.10.2002,
reveals the following:
All chief Commissioners were favoured with Draft
G Recruitment Rules for the Group ‘C’ post of Inspector (Central
Excise and Land Customs), Inspector (Examiner) and Inspector
(Preventive Officers). Besides the Draft Recruitment Rules for
the post of Senior Tax Assistant, as approved by the Ministry,
was also dispatched to the Chief Commissioners. It is specifically
H stated that the Notifications, notifying the Rules, will be issued
D. RAGHU AND OTHERS v. 77
R. BASAVESWARUDU AND OTHERS

shortly. The Chief Commissioners were told that they may A
initiate necessary action to process for DC (apparently DPC).
The next sentence is of crucial significance. [Paras 69-71] [146-
G-H; 147-A-D; 147-G-H; 148-A-D]
1.2 This communication establishes further, the following
aspects: B
Restructuring the post of Inspector, contemplated under
the order dated 19.07.2001, had not yet come into being. This
is because there is reference to the post of Inspector (Central
Excise & Customs), Inspector (Examiner) and Inspector
(Preventive Officer). If the post of Inspector, as contemplated C
under the Order dated 19.07.2001, had already come into
existence with the issuance of the Order dated 19.07.2001, there
was no occasion to continue to refer to pre- designated posts
from which the post of Inspector emerged. Still further, what was
obviously contemplated was that the post of Inspector was to D
be filled-up after the process of restructuring was over. In other
words, the Rules relating to Inspector and the Rules relating
to recruitment of Senior Tax Assistants, was to be brought into
force simultaneously. This conclusion appears inevitable from
the circumstance that the Chief Commissioners were directed
to await issuance of Notification notifying the Rules before orders E
of promotions were issued based on the Rules which were the
Draft Recruitment Rules. It is not indicated in the Order dated
28.10.2002 that promotion to the post of Inspector was to be
made under 1979 Rules. What was, in fact, contemplated was
that the process, viz., the holding of the DPC for the post of F
Inspector, was to begin and operationalised under the Draft
Rules but the actual orders of promotion were to be issued only
after the Rules were actually brought into force. The Draft
Recruitment Rules for the Tax Assistant was also sent by letter
dated 06.11.2002. In the Order dated 14.11.2002, it is
specifically, inter alia, ordered that promotion orders in respect G
of the post of Inspector (Central Excise)/Preventive Officer/
Examiner of Customs may be issued on the basis of the
Recruitment Rules after the allotment of GSR Number by the
Government of India Press. Thus, the green signal was given
to go ahead with the issuance of promotion order for the post H
78 SUPREME COURT REPORTS [2020] 5 S.C.R.

A of Inspector, inter alia, based on the Recruitment Rules, after
the allotment of the GSR, which means the Notification of the
Rules. What actually happened was, however, as follows:
The Inspector Rules and the Senior Tax Assistant Rules
were not published and brought into force on the same date. The
B Inspector Rules came to be finalised and published on
29.11.2002. It is brought into force on 07.12.2002. The STA
Rules, though published on 16.01.2003, was brought into force
on 20.01.2003. [Paras 72-75] [148-E-H; 149-A-B; 150-A-C]
2.1 WHEN CADRE RESTRUCTURING TOOK PLACE
C Turning back to Note 1 to the 2002 Inspector Rules, it is
noticed that promotion under Clause (a) was to be operative for
a period of two years from the date on which the restructured
Cadre in Clause (b) comes into existence. If the interpretation
sought to be placed by the appellants is accepted, and it is held
D that the restructured cadre of Senior Tax Assistant came into
force with effect from 19.07.2001, the result would be that
promotion under Clause (a) would be limited by a period of two
years from 19.07.2001. In other words, no promotion could be
ordered from the Feeder Category mentioned in Clause (a) in
Column 12 of the 2002 Inspector Rules after 18.07.2003. This
E also means that promotions could be, therefore, effected during
the period commencing from 19.07.2001. This produces the
anomalous result that promotions are to be countenanced under
the 2002 Rules, retrospectively from 19.07.2001. What is more,
according to the appellants, promotions were banned during the
F period. This, in our view, completely militates against the idea
that the restructured Cadre came into being from 19.07.2001.
The Court is not oblivious and has indeed expressly articulated
the circumstances from communication dated 19.07.2001 which
probablised the appellant’s contention that restructuring became
a reality from 19.07.2001. But, the Court, at this juncture, must
G
also notice that the actual distribution of posts in different
formations was postponed. It may not be in apposite, at this
juncture, to also notice another factual aspect. There is a definite
case for the respondents that the Data Entry Operator Grade
‘B’ and ‘C’ continued as such and they were only re-designated
H as Senior Tax Assistant or Tax Assistant on the enforcement of
D. RAGHU AND OTHERS v. 79
R. BASAVESWARUDU AND OTHERS

the 2003 Rules and not before such enforcement. In fact, it was A
also not seriously disputed before us that this was indeed the
case on the ground. The Court may also find light from the STA
Rules. Rule 5 declares that “all the persons appointed on
regular basis at the commencement of the Rules in the Grade
of Assistant, Tax Assistant, U.D. Clerk (Special Pay), Data Entry
B
Operator Grade ‘B’ and Grade ‘C’, shall be deemed to have
been appointed as Senior Tax Assistant under these Rules”.
No doubt, the Rule contemplated that the persons to be deemed
to have been appointed as Senior Tax Assistant under the 2003
Rules, were the categories. What is more relevant is, they are
referred to as the persons appointed at the commencement of C
“these Rules”. The words used are “persons appointed”. The
intention appears to be to indicate that the persons were
appointed and working on the commencement of the Rules,
which is on 20.01.2003. It is those persons, who were referred
to by the designation, which were the posts which were held by D
them prior to the restructuring. In other words, appellants, who
were working as Data Entry Operator Grade ‘B’, upon being
promoted in the year 2000, were indeed persons who were
appointed on regular basis as Data Entry Operator Grade ‘B’
as on 20.01.2003, when the Rules, admittedly, were brought into
force. Further support is found for the view that the appellants E
became Senior Tax Assistant upon Rules being brought into
force from the further limbs of Rule 5. Sub-Rules (ii), (iii) and
(iv) deal with the issue of inter se seniority of the different
erstwhile restructured categories from which the designated
category of Senior Tax Assistant was born. Those Assistants, F
who were drawing salary of pay scale of 5000-8000, and Data
Entry Operator Grade ‘C’, drawing the same pay scale, were re-
designated as Senior Tax Assistants in the same scale. They
were to rank at the top of the seniority list of the newly created
posts of Senior Tax Assistants. Just below them were put the
categories of Data Entry Operator Grade ‘B’ and Tax Assistants, G
both drawing the pay scale of 4500-7000, and they have been
placed in the higher pay scale of 5000-8000 and they were to
be placed below the Data Entry Operator Grade ‘C’. Similarly,
at the bottom of the pyramid, there is the post of Upper Division
Clerk with special pay, who were to be placed below all the above H
80 SUPREME COURT REPORTS [2020] 5 S.C.R.

A categories as aforesaid. Note 1, in Column 12 of the 2002
Inspector Rules provides that the promotion in Clause (a) was
to be operative for a period of two years from the date on which
the restructured cadres, mentioned under Clause (b) above,
comes into existence. Had it been the case where the
restructured cadre in Clause (b) had already come into
B
existence, by virtue of order dated 19.07.2001, the Law Giver
would have used language indicating the past tense. The Law
Giver, thus, contemplated that the restructured cadre in Clause
(b), which includes cadre of Senior Tax Assistants, had not come
into existence and it was to come into existence. It came into
C existence, indeed, in the future, viz., on 20.01.2003. On a
consideration of the Government Orders and, more importantly,
the Statutory Rules that the conclusion appears to be inevitable
that restructured cadre actually came into force in the cadre of
Senior Tax Assistant with the Rules being brought into force on
D 20.01.2003. Quite apart from the fact that this is the legal
interpretation that flows, we are also supported by the fact on
the ground that the appellants appeared to continue till after the
Rules were brought into force with the designation as Data Entry
Operators Grade ‘B’. A perusal of Rule 5(v) of the STA Rules
2003 would also show reference to ‘present employees’ and they
E were to pass the departmental examination ‘within two years’.
Failure was to result in their being rendered ineligible for future
increments. Certainly, the period of two years would commence
only from 20.01.2003. If so, the ‘present employees’, including
the appellants continued as Data Entry Operator Grade ‘B’ till
F 20.01.2003. The view that the STA Cadre emerged only on
20.01.2003, is supported by official understanding, as reflected
in proceedings dated 21-04-2003. The principle of
contemporanea expositio is apposite in the facts. [Paras 81-85]
[153-F-H; 154-A-H; 155-A-H; 156-A-B]

G 3.1 APPELLANTS RIGHTS AS SENIOR TAX
ASSISTNATS ON RESTRUCTURING
The Tribunal proceeded on the basis that the restructuring
became complete with the issuance of the order dated
19.07.2001. It must be noted that the Original Application came
H to be filed on 19.11.2002 at a time when the Inspector Rules
D. RAGHU AND OTHERS v. 81
R. BASAVESWARUDU AND OTHERS

had not even been finalized as the Rules came to be finalized A
only on 29.11.2002 and, in fact, brought into force till later on
07.12.2002. Undoubtedly, the Note contemplated, giving persons
in Clause (a), viz., those falling in the pre-restructured cadre,
the benefit of taking into consideration the service rendered in
the restructured Cadre, for being promoted as Inspector. The
B
persons falling in the restructured Cadre, were not conferred
with such advantage. However, by the time the Original
Application came to be heard, the Senior Tax Assistants Rules
2003 came into force with effect from 20.01.2003. Under Rule
5 of the 2003 Rules, the persons working as Data Entry Operator
Grade ‘B’, inter alia, stood re-designated as Senior Tax C
Assistants and they were also given the benefit of reckoning the
past service and calculating the qualification of experience of two
years under the Inspector Rules, 2002. In fact, the Tribunal has
also taken note of the 2003 Rules. Both the persons in the pre-
structured cadre and those in the restructured cadres, were, by
D
virtue of Note 1 to Column 12 to the 2002 Rules and Rule 5(i)
of the Senior Tax Assistants Rules 2003, respectively, were
given the benefit of counting service as provided therein. The
Tribunal, in fact, has gone on to find that the Senior Tax
Assistants under Rule 5(i) of the 2003 Rules were entitled to
reckon their service as Data Entry Operator Grade ‘B’ for E
eligibility for promotion as Inspector. The Tribunal goes on to
find that the unified restructured cadre of Senior Tax Assistants
alone would be eligible for promotion as Inspector. The
integrated seniority is to be worked out in terms of Rule 5 of
the 2003 Senior Tax Assistant Rules. This is based on the
F
premise that with effect from 19.07.2001, the restructuring of
Senior Tax Assistant came into force and all the earlier Cadres
stood merged. [Para 87] [157-A-G]
3.2 The Original Application has been allowed in part. It
is necessary to notice that the effect of granting the said relief
and also the effect of not granting the reliefs in paragraph 8(b). G
Granting of the Relief 8(c) would mean that this Court would also
have to accept that under the 2002 Inspector Rules, it is only
the restructured Cadre, which would be entitled for promotion
to the cadre of Inspector. To put it differently, the persons falling
in Category (a), which corresponds to feeder categories, under H
82 SUPREME COURT REPORTS [2020] 5 S.C.R.

A the 1979 Rules, would not be entitled for promotion as Inspector.
It is now necessary to look at their prayer, i.e., 8(b) and the
effect of not granting any relief thereunder. Prayer 8(b) was
sought by the appellants to set aside the Recruitment Rules
communicated vide 28.10.2002, as confirmed vide Gazette of
India Notification dated 29.11.2002, incorporating the
B
unconscionable conditions under Clause (a) and Note 1 of
Column 12 of the 2002 Inspector Recruitment Rules. This
prayer is also based on the restructuring process, having effect
from 19.07.2001. The Tribunal has not granted the relief in
paragraph 8(b) of the Original Application. This means that the
C persons in Category (a) of Column 12 of the Inspector Rules,
cannot be affected. The result is that it exposes the fallacy in
grant of Relief 8(c). In fact, there are two basic flaws. In the first
place, the restructuring did not come into effect on issue of
communication dated 19.07.2001. The restructuring came into
effect only with the issuance of Rules. This by itself takes away
D the entire basis of the Tribunal’s Order. Secondly, the Tribunal
has not declared the Statutory Rule infirm, which was the specific
relief sought for by the appellants in Relief 8(b). In other words,
Clause (a) of Column 12 and the Note, in the 2002 Inspector
Rules impugned on the one hand, continues on the Statute Book,
E whereas, the declaration is purportedly granted under paragraph
8(c), which necessarily involves declaring that only persons
re-designated under the restructured cadres in Clause (b) as
Senior Tax Assistants, inter alia, would be entitled to be
considered for promotion as Inspector of Central Excise and
Customs. In fact, the Order of the Tribunal at Chandigarh also
F did not involve granting any exclusive right to the persons in
the restructured Cadre falling in Clause (b). The decision of the
Bombay High Court also does not reflect any such reasoning.
It is well-settled that when Statutory Rules are challenged, they
are upheld, or if warranted, declared ultra vires or read down, if
G possible. The Order of the Tribunal is specific that what is
granted, is the relief contained in paragraph 8(c) of the Original
Application. Resultantly, Clauses (a) and (b) continued to be on
the Statute Book. The Tribunal has rather allowed the Original
Application partly and found that the appellants are also entitled
to be considered for promotion as Inspector. In Arriving at this
H conclusion, the Tribunal has drawn support undoubtedly from the
D. RAGHU AND OTHERS v. 83
R. BASAVESWARUDU AND OTHERS

views expressed by the Central Administrative Tribunal, A
Chandigarh, the Central Administrative Tribunal, Madras and the
High Court of Bombay. [Paras 88, 89] [158-C-H; 159-A-D]
4.1 WHETHER STA COULD ADD SERVICE AS DATA
ENTRY OPERATORS AND WHETHER PERSONS IN
CLAUSE (A) HAD AN EXCLUSIVE RIGHT FOR TWO B
YEARS?
The appellants are right that they are entitled to count the
previous service. The words used in Rule 5 are unambiguous
and clear. In this regard, the Court must also deal with the yet
another contention based on the differences between Rule 5 of C
the Senior Tax Assistant Recruitment Rules, 2003 and Rule 4
of the Tax Assistant Rules, 2003. It may be true that there is
some difference but, in our view, the words used differently in
the two provisions, are not meant to take away the right, which
was conferred on persons who were on restructuring to be D
designated as Senior Tax Assistants and Tax Assistants. In Rule
5, what is contemplated is that the service rendered by Data
Entry Operators Grade ‘B’ and ‘C’, inter alia, before
commencement of the Rules is to be taken about for eligibility
for promotion to the next higher grade. No doubt, in Rule 4, of
the Tax Assistant Rules, the Rule Maker has become more E
articulate. They have referred to the words like ‘respective
post’, before commencement of Rules and ‘regular service’
which expressions are conspicuous by their absence in Rule 5
of the Senior Tax Assistant Rules. Better wisdom prevailed on
the Law Giver in the course of few months to attain clarity in F
thought and expression but the Court would not be gleaning the
intention of the Law Giver, if it were oblivious to the context
and the object with which the entire exercise of restructuring
was carried out. They would also amount to introducing an
element of discrimination between the Senior Tax Assistants and
the Tax Assistants in the conferring of benefits. Of foremost G
importance is that the view the Court has taken is warranted
by even the plain words used in Rule 5. Rule 5 clearly indicates
that the service which was rendered by a Data Entry Operator
Grade ‘B’ and ‘C’, inter alia, prior to the commencement of the
Rules, would be considered for promotion. This leaves us in no H
84 SUPREME COURT REPORTS [2020] 5 S.C.R.

A doubt that the intention was to allow the Data Entry Operator
both Grade ‘B’ and ‘C’, inter alia, to tag their previous service
that is prior to 20.01.2003 for the purpose of calculating the
requisite period of service under the 2002 Inspector Rules. It
would appear that what was contemplated was that the Inspector
Rules and the STA Rules would be brought into force at the same
B
time. If it had so happened, the following consequences would
have followed. Not only would STA would be a feeder category
but STA would have been able to count their previous service
as Data Entry Operator Grade ‘B’, inter alia. Still further, under
Note 1, promotion under Clause (a), was to be operative for a
C period of two years, from the date the restructured cadre, under
Clause (b), was to come into existence. Apart from indicating
that the restructured cadre ‘was to come into force’ and,
therefore, it had not come into force as on 19.07.2001 as
contended by the Data Entry Operators, the promotion from
Clause (a) being predicated on the point of time when the
D
restructured cadre came into force, if the STA Rules were also
brought into force from 07.12.2002, the service rendered by
persons under the restructured Grade could have been availed
of by persons in Clause (a) from 07.12.2002.

E As regards the argument that under the 2002 Inspector
Rules, persons in Clause
(a) were given an exclusive right to be promoted for a
period of two years, little merit is seen in the same. Clause (c)
of Column 12 provides for promotion from the categories
F thereunder, in the absence of persons falling in Clause (b). No
such rider is found in Clause (b). If the STA Rules had been
brought into force on 07.12.2002, then, it is clear that adding
two years as Data Entry Operator Grade ‘B’, the appellants
would certainly be eligible, particularly, keeping in mind the
intent in Order dated 28.10.2002. There can be doubt that
G nothing stands in the way of appellants and others similarly
situated being considered from 20.01.2003 by adding the service
as Data Entry Operator Grade ‘B’. Both, persons in Clause (a)
and persons in Clause (b), subject to being possessed of
qualifications, could compete for the vacancies. The right of
those in Clause (a), would come to an end from 19.01.2005.
H
D. RAGHU AND OTHERS v. 85
R. BASAVESWARUDU AND OTHERS

There can be no doubt that the STA Rules came into effect on A
20.01.2003. The restructured cadre of STA became a reality from
20.01.2003. [Paras 92-96] [160-G-H; 161-A-H; 162-A-E]
4.2 The problem, however, arises as what is to be done
qua vacancies of Inspector which were purportedly filled-up as
on 20.01.2003 pursuant to Notice dated 05.11.2002 which was B
impugned in O.A. 1362 of 2002. The Tribunal has not interfered
with the notice dated 05.11.2002 but it has found that it was not
in accordance with the Rules (apparently Inspector Rules 2002
which superseded the 1979 Rules). But this is again premised
on the restructuring becoming a reality with effect from
19.07.2001. This, has been found to be erroneous. Persons in C
Clause (a), under the 2002 Rules, could be promoted for a
period of two years from the date the restructured categories
under Clause (b) came into force. Thus, the promotion involving
2002 Rules from Clause (a) could be for a two year from
20.01.2003 as the restructured category came into force only on D
20.01.2003, even according to the respondents. Thus, for both
categories in Clauses (a) and (b) (STAs), their eligibility under
2002 Rules, commenced only from 20.01.2003. If so, the
question would be the effect of promotion already made as noted
by the Tribunal itself. As on 05.11.2002, the 1979 Rules
governed promotions. The status of the draft Recruitment Rules E
is no longer res integra. While, promotion can be based on draft
Recruitment Rules, it cannot be done, if the draft Rules are in
the teeth of existing Statutory Rules. [Paras 97-100] [162-E-H;
163-A-C]
4.3 Vacancies were filled- up as per notice dated 05.11.2002 F
from persons falling under Clause (a), who corresponded to the
feeder category in the 1979 Rules. The appellants have not laid
any challenge to the Order of the Tribunal. The ban on direct
recruitment was to come to an end on 31.12.2002. There were
242 vacancies of Inspectors in Hyderabad Commissionerate. It G
is true that under letter dated 28.10.2002, and even read with
letter dated 14.11.2002, what was contemplated was promotion
under the draft Recruitment Rules for Inspector and STA.
Promotion orders were to be made only after GSR Number were
made for the Draft Rules, meaning thereby, after it was finalised.
They were intended, as already found, to be operated at the H
86 SUPREME COURT REPORTS [2020] 5 S.C.R.

A same time, thus, rendering both categories in Clauses (a) and
(b), to be considered. Having regard to the fact that vacancies
were not filled-up, as can be seen from communications dated
10.09.2001 and 05.06.2002, in the light of the restructuring that
took place in the Department, it would appear that a conscious
decision was taken to not fill- up the vacancies arising from the
B
restructuring based on 1979 Rules. Instead, communication
dated 28.10.2002 clearly would show that the vacancies were to
be filled-up, based on the proposed new Recruitment Rules. This
being the case, the High Court was in error in proceeding on
the basis that the principle in Y.V.Rangaiah would apply. Till
C 07.12.2002, the STA was not even in Feeder Category. It
has also been held that the STA Cadre is born on 20.01.2003.
There is a case for the respondents that the ban on direct
recruitment (which is also a method of appointment) was to come
to an end. There was a need to have Inspectors in a larger
number of vacancies. The STA Cadre could not have been used
D
to fill the vacancies. The finding that from 19.07.2001, the
restructured Cadre came into being, is unsustainable. In such
circumstances, though it may be true, intention was to fill-up the
vacancies after both sets of Rules were operationalised,
promotions were made. As to whether it is legal, the answer can
E be that promotion, as per extant Rules, given in vacancies prior
to the new Rules, is recognized. This is not a case where the
Authority was denying promotion to vacancies based on the
earlier Rules. It is also noticed that based on such promotion,
further promotions have been given. The appellants were
directed to be considered for vacancies, which were filled-up
F
after. The Court cannot, in the circumstances, be persuaded to
hold that the Tribunal was right in directing the respondents to
revise the seniority qua promotion made earlier. [Paras 102-104]
[163-G-H; 164-A-H]
5. LEGALITY AND CORRECTNESS OF HIGH COURT
G
DIRECTING VACANCIES TO BE FILLED WHICH
EXSISTED PRIOR TO 07.12.2002
The High Court was not right in directing filling-up of
vacancies prior to 07.12.2002, based on the 1979 Rules, as after
H the 2003 Rules came into force, going by the intention of the
D. RAGHU AND OTHERS v. 87
R. BASAVESWARUDU AND OTHERS

Authority, the right to promotion would be based on the new A
Rules, even if the vacancies arose prior to the new Rules. That
is to say, when the High Court disposed of the matter, if any
vacancy remained to be filled-up in the Cadre of Inspector, then,
as the STA Rules had come into existence on 20.01.2003, the
STAs armed with the right to add service as Data Entry Operator
B
Grade ‘B’, were entitled to be considered. However, it is here
that the impact of the matter, having been pending in this Court
for more than a decade, and, in the meantime, the judgment being
implemented and further promotions being made, cannot be lost
sight of, even in an Appeal, which is maintained by grant of
Special Leave, as in this case. It is open to the Court to decline C
to interfere. The Court bears in mind the principles laid down
by this Court in Taherakhatoon (D) By Lrs. v. Salambin
Mohammad and would not disturb the direction to fill-up the
vacancies which arose prior to 07.12.2002, as directed. [Para
106] [165-D-H]
D
6. VACANCIES OF INSPECTOR WHICH AROSE
AFTER 07.12.2002
Both persons in Clauses (a) and (b)(STA Cadre) became
entitled to be considered for promotion under the two sets of
Rules with effect from 20.01.2003. Certainly, the appellants E
having worked as Data Entry Operator Grade ‘B’ are entitled
to add the period of service as Data Entry Operators Grade ‘B’.
Thus, vacancies of Inspector, to be filled-up by promotion, must
be filled-up by considering both on the basis of the seniority,
under Rule 5 of the 2003 STA Rules. The appellants would be
entitled also to be considered for promotion based on the same F
on the basis of the entitlement, as aforesaid. [Para 107] [166-C-
E]
7.1 CIVIL APPEAL NO. 1976 OF 2009
Under the 1979 Rules, on the basis of an amendment, the G
post of Tax Assistant (old) was incorporated by GSR 314 dated
12.07.1996. Thereunder, post of Tax Assistant (old) was included
in the 1979 Rules. Promotion to the post was to be from the
post of U.D. Clerk with three years’ service subject to their
passing a departmental exam with minimum marks of 40 per
cent. There are other rights given to Senior Clerks under the H
88 SUPREME COURT REPORTS [2020] 5 S.C.R.

A Note. Under the 1979 Rules, the post of U.D. Clerk was to be
filled-up 50 per cent from direct recruitment and 50 per cent by
promotion. One of the feeder categories was L.D. Clerks with
seven years’ service which was relaxable up to five years. The
second Feeder Category was Women Searchers recruited prior
to 09.05.1975 with five years’ combined service as Women
B
Searcher and L.D. Clerk and who have passed departmental or
promotional exam. The 1979 Rules, insofar as it related to the
post of U.D. Clerks and Tax Assistants, continued to remain in
force even after the promulgation of the Inspector Rules, 2002
and the Senior Tax Assistant Rules. It is when the Tax Assistant
C Rules were made in supersession of the 1979 rules so far as it
related to the post of U.D. Clerk and L.D. Clerk that the 1979
Rules ceased to apply. Thus, 1979 Rules continued to be in force
in regard to the post of U.D. Clerk and L.D. Clerk till
05.05.2003. Under the 2003 Tax Assistant Rules, brought into
force w.e.f. 05.05.2003, as contended by the official respondents
D
before the Tribunal, the persons working as U.D. Clerks, were
to be established as initial cadre of Tax Assistants. So also, the
L.D. Clerks, upon passing the examination, were to become Tax
Assistants. The posts of U.D. Clerk and L.D. Clerk are Group
‘C’ posts. No doubt, the ban, which was imposed on direct
E recruitment, was to continue till 31.12.2002 (See Order dated
19.09.2002). By Order dated 28.10.2002, the draft Recruitment
Rules for Inspector and Senior Tax Assistants was communicated
and the process was to be set in motion and promotion was to
await the issue of Notification. [Paras 112-115] [169-B-H; 170-
A-B]
F
7.2 As far as the post of Tax Assistant is concerned, by
the order dated 06.11.2002, all the Chief Commissioners were
forwarded the draft Recruitment rules for Tax Assistants which
was approved by the Ministry. The Commissioners were to
initiate necessary action for the process of DPC, etc. The issue
G of any order passed under the draft Tax Assistant Recruitment
Rules was to await issue of Notification of the said Rules.
However, on 14.11.2002, it ordered, inter alia, that DPC in the
remaining Grades except DOSL-222 may be held on the basis
of the existing Recruitment Rules and the promotion orders
H issued by 25.11.2002. As far as the post of L.D. Clerks and old
D. RAGHU AND OTHERS v. 89
R. BASAVESWARUDU AND OTHERS

Tax Assistants is concerned, the vacancies, which existed as on A
06.11.2002, were to be filled-up under the existing Recruitment
Rules (See letter dated 14.11.2002). The orders were to be
issued by 25.11.2002. By 25.11.2002, the Tax Assistant Rules
were not even finalised, leave alone brought into force. The Tax
Assistant Rules came into force only by publication on
B
03.05.2003 and brought into force two days thereafter, i.e., on
05.05.2003. Going by letter dated 14.11.2002, the principle that
vacancies must be filled-up in accordance with the existing
Rules, would appear to apply. The intention of the Authority
would also appear to be the same as is evident from Clause (3)
of Order date 14.11.2002. In such circumstances, there is no C
scope for any ambiguity and the Court is unable to find fault with
the order of the High Court. [Paras 116-118] [170-B-G]

8. SUMMARY OF CONCLUSIONS IN C.A. NOS.1970-
1975 OF 2009
D
1) Promotion to the post of Inspector was governed by the
1979 Rules till 07.12.2002.

2) Under the 1979 Rules, Data Entry Operators were not
among the feeder categories for promotion as Inspector.
E
3) By 19.07.2001, Cabinet approved restructuring of
certain posts including the post of Inspector. The number of
posts of Inspector fell from a little over 22000 to a little over
18000. Thereunder, the post of Data Entry Operator Grade ‘B’
among other categories, were merged and the cadre of Senior F
Tax Assistants emerged. However, the restructured cadre of
Senior Tax Assistants, did not come into being.

4) The restructured Cadre of Senior Tax Assistants was
born with the bringing into force of the Senior Tax Assistant
Rules 2003, on 20.01.2003. Data Entry Operators Grade ‘B’, G
among other categories, were re-designated as Senior Tax
Assistants under Rule 5.

5) The Inspector Rules 2002, was brought into force on
07.12.2002 superseding the 1979 Rules relating to Inspectors. H
90 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 6) The post of Senior Tax Assistant, which was not among
the feeder categories under the 1979 Rules, became one of the
feeder categories for promotion as Inspector, under Inspector
Rules, 2002 under Clause (b) of Column 12.
7) There was a ban of promotion to the posts of Inspector.
B This is clear from communications dated 10.09.2001, 03.01.2002
and 05.06.2002. The communication dated 28.10.2002 read with
communication dated 14.11.2002, establish that the Draft
Recruitment Rules which were finalized on 29.11.2002 and
brought into force on 07.12.2002 as far as Inspectors are
concerned and Draft Recruitment Rules finalized and brought
C into force on 20.01.2002 as far as Senior Tax Assistants are
concerned, were to be basis for promotion to the post of
Inspector. As per Order dated 28.10.2002, Departmental
Promotion Committee (DPC), was to operate, based on the draft
rules but no promotion orders were to be issued till the draft
D rules were finalized. With order dated 04.11.2002 even the
promotion orders were permitted. The authority apparently
contemplated simultaneous bringing into force of the Inspector
Rules and the STA Rules.
8) The High Court was in error in holding that it has to
E be necessarily held that the vacancies which arose prior to the
revised Recruitment Rules coming into force has to be filled-
up under then existing Rules (the 1979 Rules) relying upon case
law including Y.V. Rangaiah (supra). There was a conscious
decision taken to not fill-up vacancies based on the
restructuring, and what is more, letters dated 28.10.2002 and
F 14.11.2002 show that promotion to the post of Inspector was to
be effected based on the new recruitment rules.
9) It is while so, that in the Hyderabad Commissionerate,
by Notice dated 05.11.2002, persons falling under Clause (a) of
Column 12 of the ‘Draft Inspector Rules’ who also corresponded
G to the feeder categories under the ‘extant’ Statutory Rules, the
1979 Rules, alone were called for selection as Inspector.
10) The benefit of reckoning service under Note 1 to
categories in Clause (a) would be available only after the
restructuring came into effect which was on 20.01.2003. This also
H indicates that the powers that be contemplated simultaneous
D. RAGHU AND OTHERS v. 91
R. BASAVESWARUDU AND OTHERS

operation of the ‘Inspector Rules’ and the Senior Tax Assistant A
Rules.
11) However, the Inspector Rules and the Senior Tax
Assistant Rules were enforced with a gap of about six weeks.
12) The appellants even proceeding on the basis that they
B
were to be treated as Senior Tax Assistant as on 07.12.2002,
were not having the two years’ experience required under the
2002 Inspector Rules.
13) With the 2003 Senior Tax Assistant Rules brought into
force on 20.01.2003 under Rule 5(1), the appellants who were
C
working as Data Entry Operators Grade ‘B’ could take into
consideration their service as Data Entry Operators Grade ‘B’
for reckoning the period of two years stipulated under the 2002
Inspector Rules. In this regard, the finding of the Tribunal is
correct. Appellants in O.A. have stated that they were promoted
as Data Entry Operator Grade ‘B’ in April 2000. If so, their D
service as such would count and even as on 07.12.2002, they
would have 2 years’ service as contemplated under the 2002
Rules. As on 20.01.2003, certainly, they would be eligible to be
considered for promotion as Inspectors.
14) The Tribunal not having granted prayer 8(b), the Draft E
Recruitment Rules, 2002 relating to Inspectors as finalized which
was impugned remained intact. The Tribunal clearly erred in
granting the declaration, as sought for in paragraph 8(c),
recognizing exclusive right to the restructured Cadre.
15) The restructuring Order under letter dated F
19.07.2001, fructified and became complete and effective relating
to the post of Senior Tax Assistant only on 20.01.2003. The
findings to the contrary by the Tribunal stood correctly set aside
by the High Court.
16) The Tribunal has not interfered with the promotion G
already granted to persons drawn from the categories other than
the Senior Tax Assistant pursuant to Notice dated 05.11.2002.
17) Ban of Direct Recruitment was to end on 31.12.2002.
In respect of promotion made earlier and not interfered with,
the Tribunal could not have directed review of seniority based H
92 SUPREME COURT REPORTS [2020] 5 S.C.R.

A on later promotions as Inspector. The appellants cannot be given
seniority based on later promotions qua promotions given, which
cannot be termed illegal, when as on the date of earlier
promotions, appellants were not even in the cadre. Promotion
from Senior Tax Assistant could have been made only 20.01.2003
at the earliest. Even the categories in Clause (a) could have
B
been promoted under the 2002 Inspector Rules, vide Note 1
only for two years starting from the date the restructured Cadre
in Clause (b) come into force, i.e., 20.01.2003.
18) The contention that persons in Clause (a) of Column
12 of the Rules, who were also in the feeder categories for
C
promotion under 1979 Rules, had an exclusive right to be
considered for promotion for a period of two years is rejected.
19) While promotions can be made based on Draft
Recruitment Rules, it cannot be so made, if the Draft Rules are
D in the teeth of existing Statutory Rules [V. Ramakrishnan and
others]. In this case, however, under Orders dated 28.10.2002
and 14.11.2002, what was contemplated was processing by DPC
under the Draft Recruitment Rules and issue of the promotions
orders after the Draft Rules were finalized.

E 20) However, till 07.12.2002, under the 1979 Rules, being
also feeder categories under the said rules, those in Clause (a)
Column 12, 2002 Inspector Rules could be promoted. While it
may be contrary to what was contemplated by the Central
Authority (as evident from letters dated 28.10.2002 and
14.11.2002) promotions were made, which could not be termed
F illegal. Even the Tribunal has not set aside the promotions.
21) The High Court has directed the filling-up of vacancies
prior to 07.12.2002 as per the 1979 Rules. In this regard, having
regard to the fact that the vacancies were not filled-up as per
the ban, as can be seen from 10.09.2001 and 05.06.2002, and it
G
was specifically contemplated under letter dated 28.10.2002 that
vacancies arising from restructuring be filled- up, as per the new
Recruitment Rules, the principle in Y.V. Rangaiah may not apply
and it was the Rules as on date of filling-up the vacancies, that
would count. As on the date of the High Court Order, the STA
H Rules 2003, had come into force on 20.01.2003. Thus, vacancies
D. RAGHU AND OTHERS v. 93
R. BASAVESWARUDU AND OTHERS

existing prior to 07.12.2002 and which were not filled-up, must A
be filled-up by considering STA (Appellants) including their
service as Data Entry Operators Grade ‘B’.
22) But it is here that the impact of the matter remaining
pending, and in the meantime, implementation of the judgment
and what is more, further promotions being made cannot be lost B
sight of. The Court bears in mind the principle laid down in
Taherakhatoon (D) By Lrs. and would not disturb the directions
to fill-up vacancies which arose prior to 07.12.2002, as directed.
23) However, in case of vacancies of Inspector, which arose
after 07.12.2002, the appellants would, undoubtedly, have a right C
to be considered as explained hereinbefore. In regard to such
vacancies, the matter must be looked into and seniority fixed,
based on Rule 5 of the STA Rules. The persons working in
Clause (a) are also entitled to be considered for a period of two
years from 20.01.2003 under the Inspector Rules to be D
considered for promotion. [Para 119] [170-G-H; 171-A-H; 172-
A-H; 173-A-H; 174-A-H; 175-A-D]
9. RELIEF IN CIVIL APPEAL NOS. 1970-1975 OF 2009
Civil Appeals Nos. 1970-1975 of 2009 are disposed of as
follows: E

The restructured cadre of Senior Tax Assistants came into
force on 20.01.2003. Appellants are not entitled to have seniority
determined in respect of vacancies of Inspector which arose
prior to 07.12.2002. The appellants are eligible to be considered
for promotion from 20.01.2003 and they are entitled to add their F
service as Data Entry Operator Grade ‘B’ for the purpose of the
2002 Inspector Rules and considered for vacancies to be filled
by promotion, which arose after 07.12.2002. The persons in
Clause
(a) under Column 12 of the 2002 Rules, are also entitled G
to be considered for two years from 20.01.2003. Seniority is to
be considered based on Rule 5 of the STA Rules. The exercise,
as above, if not carried out already shall be carried out. Further
promotions based on the above will be granted. However, it is
directed that the promotions shall be notional where promotions H
94 SUPREME COURT REPORTS [2020] 5 S.C.R.

A have already been effected, however, entitling the parties to
seniority and pensionary benefits. The above exercise shall be
completed at the earliest. [Para 120] [170-D-G]
10. Civil Appeal No. 1976 of 2009 will stand dismissed.
Union of India through Govt. of Pondicherry and
B
Another v. V. Ramakrishnan and Others (2005) 8 SCC
394 : [2005] 4 Suppl. SCR 291 ; Taherakhatoon (D)
By LRS. v. Salambin Mohammad (1999) 2 SCC 635 :
[1999] 1 SCR 901 – relied on.
Y.V. Rangaiah and Others v. J. Sreenivasa Rao and
C
Others (1983) 3 SCC 284 – held inapplicable.
P. Ganeshwar Rao and Others v. State of A.P. and
Others (1988) Suppl. SCC 740 : 1988 Suppl. SCR
805 ; P. Mahendran and Others v. State of Karnataka
and Others (1990) 1 SCC 411 : [1989] 2 Suppl. SCR
D
385 ; A.A. Calton v. Director of Education (1983) 3
SCC 33 : [1983] 2 SCR 598 ; N.T. Devin Katti and
Others v. Karnataka Public Service Commission and
Others (1990) 3 SCC 157 ; K. Ramulu (Dr.) and
Another v. (Dr.) S. Suryaprakash Rao and Others
E (1997) 3 SCC 59 : [1997] 1 SCR 287 ; Deepak
Agarwal and Another v. State of U.P. and others (2011)
6 SCC 725 : [2011] 4 SCR 149 ; M.I. Kunjukunju and
Others v. State of Kerala and Others (2015) 11 SCC
440 ; State of Tripura and Others v. Nikhil Ranjan
F Chakraborty and Others (2017) 3 SCC 646 –
referred to.
Case Law Reference
(1983) 3 SCC 284 held inapplicable Para 38
[1988] Suppl. SCR 805 referred to Para 46
G
[1989] 2 Suppl. SCR 385 referred to Para 46
[1983] 2 SCR 598 referred to Para 46
(1990) 3 SCC 157 referred to Para 46

H [1997] 1 SCR 287 referred to Para 48
D. RAGHU AND OTHERS v. 95
R. BASAVESWARUDU AND OTHERS

[2011] 4 SCR 149 referred to Para 49 A
(2015) 11 SCC 440 referred to Para 53
(2017) 3 SCC 646 referred to Para 54
[2005] 4 Suppl. SCR 291 relied on Para 100
[1999] 1 SCR 901 relied on Para 106 B

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1970-
1975 of 2009.
From the Judgment and Order dated 02.03.2005 of the High
Court of Andhra Pradesh at Hyderabad in Writ Petition Nos. 7963, C
11090, 18501, 20108, 20890 of 2004 and Writ Petition (SR) No. 119787
of 2004 in Writ Petition No. 4444 of 2005.
With
Civil Appeal No. 1976 of 2009.
D
C. U. Singh, P. S. Patwalia, Devadatt Kamat, K. Radhakrishnan,
Sr. Advs., Brahamadandi Ramesh, Mrs. K. Radha, K. Maruthi Rao,
Praveen Agrawal, M.Vijaya Bhaskar, Mohan Rao, Abhijit Sengupta,
Rajesh Inamdar, Javedur Rahman, Aditya Bhatt, Aswin G. Raj, Rauf
Rahim, Ms. Shrinidhi Rao, Ms. Sunita Rani Singh, Ms. Sakshi Kakkar
(for B. Krishna Prasad), Sridhar Potaraju, Ms. Shweta Parihar, E
Ms. Shiwani Tushir, Ms. G. Usha Sri, T. Vishnu Menon, Mrs. Anjani
Aiyagari, T. V. Ratnam, V. N. Raghupathy, Advs. for the appearing
parties.
The Judgment of the Court was delivered by
F
K. M. JOSEPH, J.
1. Civil Appeal Nos. 1970-1975 of 2009 and Civil Appeal No.
1976 of 2009, having been heard together, and as there are certain
common issues, they are being disposed of by the following common
Judgment. G
2. In Civil Appeal Nos. 1970-1975 of 2009, the controversy
revolves around the entitlement to promotion to the post of Inspector
of Central Excise. In Civil Appeal No. 1976 of 2009, on the other hand,
the controversy relates to the right to be promoted to the post of U.D.
Clerk and Tax Assistant in the Central Excise Department. Both these H
96 SUPREME COURT REPORTS [2020] 5 S.C.R.

A cases arise out of Original Applications (O.A.s) filed before the Central
Administrative Tribunal (CAT), Hyderabad and the Orders of the
Tribunal in the cases being questioned in a batch of Writ Petitions. As
far as Civil Appeal Nos. 1970-1975 of 2009 are concerned, the CAT
allowed O.A. 1362 of 2002 and directed the appellants in Civil Appeal
B Nos. 1970-1975 of 2009 to be considered for promotion to the post of
Inspectors. They were originally recruited as Data Entry Operators
(DEOs) Grade ‘A’ and had been working as Data Entry Operators
Grade ‘B’ from the year 2000. In short, the appellants, as applicants
before the Tribunal, had called in question the legality of Notice dated
05.11.2002 seeking to confine the promotion to the post of Inspector,
C to category of Tax Assistant, Upper Division (UD) Clerk, Stenographer
Grade-II, etc., with certain years of experience, for promotion. Six Writ
Petitions came to be filed, including by the Union of India and the official
respondents, challenging the said verdict by which the appellants were
also directed to be considered. A Division Bench of the High Court
D proceeded to consider the matter. Justice G. Bikshapathy wrote an
opinion allowing the Writ Petitions, setting aside the Order of the
Tribunal. The other learned Judge, who constituted the Division Bench,
wrote a separate concurring Judgment, and thus, the Writ Petitions
came to be allowed. What is found by the High Court is that the Writ
Petitioners were having a legal right, under the erstwhile Rules which
E
were made in the year 1979, to be considered for promotion to the
vacancies which arose prior to the Rules which came to be made with
effect from 07.12.2002 in regard to the post of Inspector. The High
Court also found that it was only when the Rules were made in the
year 2003 that the restructuring in the Department, to which the Cabinet
F gave its approval on 19.07.2001, came into effect. Regarding vacancies
arising after 07.12.2002, it was left undecided.
3. As far as Civil Appeal No. 1976 of 2009 is concerned, it arises
from O.A. 1040 of 2003, again decided by the CAT, Hyderabad.
4. The impugned Order of the High Court reveals that the High
G
Court allowed the Writ Petition filed against the Order of the Tribunal
following the Judgment of the High Court in the Writ Petitions which
formed the subject matter of the controversy relating to Inspectors and
which is the subject matter of Civil Appeal Nos. 1970-1975 of 2009.
In other words, following the principle that the vacancies must be filled-
H up in accordance with the extant Rules, the court found that promotions
D. RAGHU AND OTHERS v. 97
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

to the post of U.D. Clerk and Tax Assistant must be effected on the A
basis of the rights crystallized under the 1979 Rules, as amended.
A LOOK AT THE RULES
THE 1979 RULES REGARDING POST OF INSPECTOR
5. In 1979, the Rules known as the Central Excise and Land B
Customs Department Group ‘C’ Posts Recruitment Rules, 1979, came
to be enacted (in short, ‘the 1979 Rules’). The Rules were made under
Article 309 of the Constitution of India. In the said Rules, apart from
the post of Inspector (Senior Grade)(inter alia) with a scale of pay of
Rs. 550-25-750-E.B.-30-900, which is shown as a post to be filled-up
by promotion, there is the post of Inspector (Ordinary Grade). It is this C
post which has generated the controversy in Civil Appeal Nos. 1970-
1975 of 2009.
6. The Method of Recruitment is mentioned as follows:
a) 75 per cent by Direct Recruitment; D
b) 25 per cent by Promotion. Column 12, which relates to the
Grade from which Feeder Category for promotion is shown as follows:
In case of recruitment by promotion/deputation/transfer
grade from which promotion/ deputation/ transfer to be
made E
12
Promotion:
By selection from amongst:
(i) Upper Division Clerks with 5 years service. F

(ii) Upper Division Clerks with 13 years of total
service as UDC and Lower Division Clerk taken
together subject to the condition that they should
have put in a minimum of two years service in
the grade of Upper Division Clerks; G

(iii) Stenographers (Senior Grade) with 2 years
service.
(iv) Stenographers (Senior Grade) or Steno (Ordinary
Grade) with 12 years service as Stenographer/
H
98 SUPREME COURT REPORTS [2020] 5 S.C.R.

A
Upper Division Clerk and Lower Division Clerk
if any taken together subject to the condition that
they should have put in a minimum of two years
service as Stenographer (Ordinary Grade) or
Upper Division Clerk.
B (v) Woman searcher with 7 years service in the
grade.
(vi) Draftsman with 7 years service in the grade.Note:
Candidates will be required to possess such
physical standard and pass such written test and
C practical tests and confirm to such age limits as
may be specified by the Central Board of Excise
and Customs from time to time.
THE ELECTRONIC DATA PROCESSING DISCIPLINE
(GROUP-E TECHNICAL POST) RECRUITMENT RULES,
D
1992
7. On 03.04.1992, Rules were made regulating the method of
recruitment for Group ‘C’ (Technical Post) in the Electronic Data
Processing Discipline of the field formations of the Central Board of
Excise and Customs (CBEC). The posts included the post of Data Entry
E Operator Grade ‘A’, Data Entry Operator Grade ‘B’ and the post of
Data Entry Operator Grade ‘C’. Under Rule 5 under the heading “Initial
Constitution”, persons appointed on regular basis as Key Punch
Operator, Terminal Operator and Lower Division Clerk performing the
duties of Terminal Operator before the commencement of these Rules
F were to be deemed to have been appointed as Data Entry Operator
Grade ‘A’ and to rank enblock senior to those appointed after the
commencement of these Rules. The post of Data Entry Operator Grade
‘A’ was to be filled-up by Direct Recruitment. The educational
qualification was shown as 12th Standard Pass or equivalent. The post
of Data Entry Operator Grade ‘B’ was to be filled-up by promotion,
G failing which, by transfer on deputation. As far as promotion is
concerned, Data Entry Operators Grade-A, with six years Regular
Service in the Grade, were rendered eligible for being considered for
promotion. As far as Data Entry Operators Grade ‘C’ is concerned,
again the post was to be filled-up by promotion, failing which, by transfer
H on deputation, Data Entry Operators Grade ‘B’, with 3 years Regular
D. RAGHU AND OTHERS v. 99
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

Service, were declared eligible for being considered for promotion as A
Data Entry Operator Grade ‘C’. There is also the post of Data Entry
Operator Grade ‘D’, to be filled-up by promotion, failing which, by
transfer on deputation. Data Entry Operator Grade ‘C’, with four years
regular service, was Feeder Category for promotion as Data Entry
Operator Grade ‘D’.
B
THE 1996 AMENDMENT TO THE 1979 RULES
8. On 12.07.1996, the 1979 Rules came to be amended. Under
the said amendment, the post of Tax Assistant was included. 1497 posts
were shown as the number of posts, subject to variation dependent on
workload. The scale of pay was indicated as Rs. 1350-30-1440-40-1800- C
E.B.-50-2200. The post was to be filled-up by promotion. The Feeder
Category was to be U.D. Clerk, with three years regular service in
the Grade, subject to their passing of Departmental Examination, with
minimum marks of 40 per cent and above, in each paper.
THE CENTRAL EXCISE AND LAND CUSTOMS D
DEPARTMENT INSPECTOR (Group ‘C’ POSTS)
RECRUITMENT RULES, 2002
9. By Notification dated 29.11.2002, Rules were made in
supersession of the 1979 Rules. The Rules are called the Central Excise
and Land Customs Department Inspector (Group ‘C’ posts) Recruitment E
Rules, 2002 (hereinafter referred to as ‘Inspector Rules, 2002’, for
short). The Rules were to come into force on the date of publication in
the Official Gazette. It is not in dispute that the publication of the
Gazette is effected on 07.12.2002.
F
10. In regard to the post of Inspector (Central Excise), under
Column 11, viz., Method of Recruitment, the Rules proclaim that 66.23
per cent is to be filled-up by Direct Recruitment and 33.13 per cent is
to be filled-up by promotion. Column 12 is significant and we refer to
the same. It reads as follows:
G
In case of recruitment by promotion/deputation/absorption,
grade from which promotion/ deputation/ absorption to be
made
12
H
100 SUPREME COURT REPORTS [2020] 5 S.C.R.

A
Promotion:
(a) By selection from those candidates working in the
following restructured cadres;
(i) Tax Assistant with 2 years service as Tax
B Assistant or 5 years service as Tax Assistant and
Upper Division Clerk put together;
(ii) Upper Division Clerk or stenographer Grade III
with 5 years service;
(iii) Upper Division clerk with 13 years of total service
C as Upper Division Clerk and Lower Division
Clerk taken together subject to the condition that
they should have put in a minimum of 2 years
service in the grade of Upper Division Clerk;
(iv) Stenographer Grade II with 2 years service;
D
(v) Stenographer Grade II or Stenographer Grade III
with 12 years service as Stenographer or Upper
Division Clerk and Lower Division Clerk, if any,
taken together subject to the condition that they
have completed a minimum of 2 years service as
E Stenographer Grade III or Upper Division Clerk.
(vi) Woman searcher with 7 years service in the
grade;
(vii) Draftsman with 7 years service in the grade.

F (b) By selection from those candidates working in the
following restructured cadre:
(i) Senior Tax Assistant with 2 years regular service
in the grade;
(ii) Stenographer Grade II with 2 years regular
G service in the grade;
(iii) Women searcher with 7 years service in the
grade;
(iv) Draftsman with 7 years service in the grade.
H
D. RAGHU AND OTHERS v. 101
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

A
(c) Failing the method of recruitment specified under
Clause (b) above, by selection from those
candidates working as Tax Assistant and
Stenographer Grade III having not less than 10
years service including the service to be included
for this purpose under the provisions of the rules B
regulating the method of recruitment to the post
of Tax Assistant:
Note 1 : Promotion under Clause (a) above shall
be only operative for a period of two years from
the date on which the restructured cadres C
mentioned under Clause (b) above comes into
existence.
The service rendered under the new grade in the
restructured cadres shall be counted towards
considering the eligibility for promotion under D
Clause (a) above.
Note 2: Candidates shall be required to pass such
written test as may be determined by the Central
Board of Excise and Customs from time to time.
The maximum age of eligibility for the E
departmental candidates shall be 45 years which
shall be relaxable to 47 years in the case of
candidates belonging to the Scheduled Castes or
Scheduled Tribes category. However, those of the
officials who were not considered for such
promotion upto the age of 45 to 47 years, as the F
case may be, shall be granted the benefit of
relaxation in age limit upto 50 years in order to
enable a fair opportunity of a minimum of two
chances. However, those officials who were
considered for promotion upto the age limit of 45to G
47 years, as the case may be, on two or more
occasions and were not found fit for promotion
shall not be eligible for this relaxation.

H
102 SUPREME COURT REPORTS [2020] 5 S.C.R.

A
Note 3: Candidates shall be required to pass
physical tests and confirm the physical standards
as specified in Column 8.
Note 4: The eligible officers under Clause (a), (|b)
and 9c) above shall be required to pass through
B
an interview before promotion.
Note 5: Where juniors who have completed their
qualifying or eligibility service are being considered
for promotion, their seniors would also be
considered provided they are not short of the
C
requisite qualifying or eligibility service by more
than half of such qualifying or eligibility service
or two years, whichever is less and have
successfully completed their probation period for
promotion to the next higher grade alongwith their
D juniors who have already completed such
qualifying or eligibility service.

CORRIGENDUM DATED 24 TH APRIL, 2003 TO
INSPECTOR RULES, 2002

E 11. Under the same, in Clause (a) of Column 12, which we have
already extracted, for the word “restructured” in third line, it was to
be read as “pre-structured”. The result of this amendment is that
Clause (a) under Column 12 of the Inspector Rules, 2002, was to be
read as by selection of those candidates working in the “pre-structured
cadres”.
F
THE CENTRAL EXCISE AND CUSTOMS DEPARTMENT
SENIOR TAX ASSISTANT (GROUP ‘C’ POSTS)
RECRUITMENT RULES, 2003(in short S.T.A. Rules, 2003)
12. The Rules made on 16.01.2003, came into force on the date
G of publication of the Gazette and the publication was effected on
20.01.2003. Rule 5, around which debate ensued before us, reads as
follows:
“5. Initial constitution.-(i)All the persons appointed on the regular
basis at the time of commencement of these rules to the Grade
H of Assistant, Tax Assistant, Upper Division Clerk (Special Pay),
D. RAGHU AND OTHERS v. 103
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

Data Entry Operator Grade ‘B’ and ‘C’ shall be deemed to have A
been appointed as Senior Tax Assistants under these rules. The
service rendered by them before commencement of these rules
shall be taken into account for deciding the eligibility for promotion
to the next higher grade.
(ii) Assistants(Rs. 5000-8000) and Data Entry Operator Grade B
‘C’ (Rs. 5000-8000) are being redesignated as Senior Tax
Assistants in the same scale of pay. Therefore, the Assistants
and Data Entry Operator Grade ‘C’ shall be placed enblock senior
to the other categories. However, their inter-se-placement shall
be done according to the date from which they had actually been
appointed to these grades on regular basis subject to the condition C
that their inter se placement in their respective category shall not
be altered.
(iii) The Data Entry Operator Grade ‘B’ (4500-7000) and Tax
Assistants (4500-7000) have been placed in their higher scale
of 5000-8000 and they shall be placed below the Assistant and D
Data Entry Operator Grade ‘C’ and their inter-se placement shall
be fixed in accordance with the date of regular appointment to
the respective grade subject to the condition that their inter-se
placement in respective category shall not be disturbed.
(iv) Upper Division Clerk with special pay shall be placed below E
Assistant, Data Entry Operator Grade ‘c’, Data Entry Operator
Grade ‘B’ Tax Assistants.
(v) The present employees would be required to pass the required
or suitable departmental examination, as specified by the
Competent Authority, from time to time, in Computer Application
F
and relevant procedures within two years falling which they would
not be eligible for further increments.”
THE CENTRAL EXCISE AND CUSTOMS DEPARTMENT
TAX ASSISTANT (GROUP ‘C’ POSTS) RECRUITMENT
RULES, 2003
G
13. Lastly, we may notice the Central Excise and Customs
Department Tax Assistant (Group ‘C’ Posts) Recruitment Rules, 2003,
hereinafter referred to as the 2003, Tax Assistant Rules. Rules are seen
to be made on 02.05.2003 and they came into force on their publication
in the Official Gazette on 05.05.2003. Rule 4 alone is relevant for our
purpose. H
104 SUPREME COURT REPORTS [2020] 5 S.C.R.

A “4. Initial Constitution.-(1) The person appointed on regular basis
and holding the post of Upper Division Clerk and Data Entry
Operator Grade A on the commencement of these rules shall
deemed to have been appointed as Tax Assistant under these
rules and the service rendered by such persons in the respective
B posts before commencement of these rules shall be taken into
account as regular service rendered on the post of Tax Assistant
for the purpose of promotion etc.

(2) The person holding the post of Data Entry Operator Grade -
A appointed under these rules as Tax Assistant shall, within two
C years from the date of such appointment as Tax Assistant, pass
the Departmental Examination as conducted by the competent
authority, falling which he shall not be entitled to get any further
increment.

D (3) Any person, who holds a post of Lower Division Clerk on
regular basis and falls within the seniority list as determined by
the appointing authority at the commencement of these rules shall,
on passing the Departmental Computer Proficiency examination
conducted by the appointing authority, be deemed to have been
promoted with effect from date of passing such examination on
E
the post of Tax Assistant.

(4) The Upper Division Clerks and Data Entry Operator Grade
– A shall be placed en-block senior and, their inter se placement
shall be fixed in accordance with the date of regular appointment
F to the respective grade subject to the condition that their inter
se placement in the respective grade shall not distributed.

(5) Lower Division Clerks shall be placed below Upper Division
Clerks and Data Entry Operator Grade – A.”
G 14. The Method of Recruitment is Direct Recruitment in regard
to 90 per cent of the vacancies and 10 per cent posts to be filled-up by
promotion. Feeder categories, in regard to promotion, are shown as
Lower Division Clerks, Head Hawaldars, who had rendered seven
years of service in the Grade on regular basis and who possesses certain
H qualifications which are mentioned therein.
D. RAGHU AND OTHERS v. 105
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

IN-BETWEEN THE RULES A
15. On 11.03.1988, one-third of the posts of U.D. Clerks came
to be abolished and a Grade of Tax Assistant came to be created. Tax
Assistants also became part of the Feeder Cadre to the post of
Inspector, inter alia. On 05.08.1988, Central Board of Excise and
Customs (CBEC) clarified, inter alia, that Tax Assistants, with two B
years’ experience in the Grade or five years’ combined service in U.D.
Clerk and Tax Assistant, were to be eligible for promotion.
Stenographers, Women Searchers, Draftsmen, etc., were also declared
eligible for promotion as Inspector. They are the old Tax Assistants and
not to be confused with the Tax Assistants under the 2003 Rules.
C
16. The next crucial development took place in the following
background. The Data Entry Operators performed essentially technical
functions and the very concept was linked with the object of bringing
about computerization in the Department. As noticed the initial
constitution consisted of Key Punch Operators, Terminal Operators and
Lower Division Clerks performing duties of Terminal Operators, who D
were deemed to have been appointed as Data Entry Operator Grade
‘A’. The Data Entry Operators began to complain that promotional
avenues for Data Entry Operator Grade ‘A’, which is the entry post,
was limited to promotions as Data Entry Operators Grade ‘B’, ‘C’ and
at the top of the pyramid, Data Entry Operator Grade ‘D’. Persons E
working in the Ministerial Cadre, including U.D. Clerks, Stenographers,
etc., were eligible under the 1979 Rules, for being promoted to the
Executive Post, viz., the post of Inspector, inter alia. Data Entry
Operators complained that they would stagnate in the post of Data Entry
Operator for years without promotion. It would appear that the post of
Data Entry Operator Grade ‘D’ is not available in all the F
Commissionerates and only certain Commissionerates had the post of
Grade ‘D’. It is pursuant to this simmering discontent being noticed
apparently that the Union Cabinet decided to go in for cadre
restructuring in the Central Excise and Customs Department. Since,
much may turn on the purport of the said decision, articulated in letter G
dated 19.07.2001, we advert to the same:
“I am directed to say that the Central Government has approved
the restructuring of Customs & Central Excise Department. As
a result of restructuring there has been a change in the number
of nomenclature of the various grades/ posts. The revised number H
106 SUPREME COURT REPORTS [2020] 5 S.C.R.

A and designation of the various posts at different level in Customs
and Central Excise Department has been indicated in Annexure
– I.
2. All the post at different levels as per Annexure-I stand
sanctioned with immediate effect. Wherever there is a reduction
B in the number of posts at any level, such reduction will be
effective after the existing incumbents of the posts are promoted
to the higher level or the post fall vacant on account of retirement
etc. The number of categories of the post other than those
referred to in Annexure ‘I’ have been kept in their existing
C strengths and in their existing pay scales only.
3. No direct recruitment may be made to various grades for the
year 2001-2002 without approval of Ministry/ Department as the
Cabinet has approved a one time relaxation for filling of all
vacancies by promotion in all Cadres.
D 4. The formation-wise distribution of post at different levels will
be notified separately.
5. The details of the other Posts that have been included in the
restructuring have not been proposed to be altered on the scale
or strengths are indicated in Annexure -II.
E
6. The Cadres/ Post which have not been included in the
Restructuring Proposal are indicated in Annexure – III.
7. This issue in pursuance to the approval conveyed vide Cabinet
Secretariat note No. 28/CM/2001 (1) dated 16.07.2001.
F
Yours faithfully
Sd/-
(K.C. Jain)
G Dy. Secretary to the Govt. of India
ANNEXURE – I
REVISED NUMBER OF POSTS AT DIFFERENT LEVELS
IN THE CUSTOMS AND CENTRAL EXCISE
H DEPARTMENT ON RESTRUCTURING
D. RAGHU AND OTHERS v. 107
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

S.NO. POST EXISTING
PAY SCALE
POST
REDESIGNATED AS
PAY
SCALE
SANCTIONED
STRENGTH
A
A’ EXEC
1. Chie f Commissioner 22400-24500 Chief Commissioner 22400- 47
24500
2. Commissioner 18400-22400 Commissioner 18400- 290
22400
3. Additional Commissioner 14300-18300 Additional 14300- 300
Commissioner 18300
4. Joint Commissioner 12000-16500 Joint Commissioner 12000- 276
16500
5. Deputy Commissioner 10000-15200 Deputy Commissioner 10000- 701
B
15200
6. Assistant Commissioner 8000-13500 Assistant 8000- 690
Commissioner 13500
B’ EXEC
7. SUPDT.CEX/S.I.O 6500-10500 SUPDT. 6500- 9437
/I.O.A.D. D. 10500
8. SUPDT. CUS 6500-10500 SUPDT. 6500- 2520
10500
9. Appraise r 6500-10500 Appraiser 6500- 809
10500 C
C’ EXEC
10. Inspe ctor/PO/ 6500-9000 Inspectors 5500-9000 18053
Examiner
A’ MIN
11. CAO 8000-13500 CAO 8000- 155
13500
B’ MIN
12. AO/ACAO/EAO 6500-10500 6500- 972
10500
13. Sr .PA 6500-10500 Sr.PA 6500- D
10500
14. Programmer New 6500- 20
10500
15. Others* 177
C’ MIN
16. DOS L-I 5500-9000 DOS L-I 5500-9000 631
17. DOS L-II 5000-8000 DOS L-II 5000-8000 1353
18. DEO-GR. D 5500-9000 ASTT. PROG 5500-9000 60
19. SR. TAX NEW 5000-8000 3152
Assistant E
20. TAX ASSISTANT NEW 4000-6000 5525
21. LDC 3050-4590 LDC 3050-4590 717
22. STENO GR. – I 5500-9000 STENO GR.-I 5500-9000 244
23. STENO GR. – II 5000-8000 STENO GR- II 5000-8000 490
24. STENO GR.-III 4000-6000 STENO GR.-III 4000-6000 490
25. OTHERS* 803
C’ EXEC (OTHERS)
26. DRIVERS – I 4500-7500 DRIVERS-I 4500-7500 414
27. DRIVERS – II 4000-6000 DRIVERS – II 4000-6000 526
28. DRIVERS – III 3200-6000 DRIVERS-III 3200-6000 1130 F
29. ARMOURER 3200-4900 ASI (Weapon) 3200-4900 51
30. OTHERS* 55
31. HAVALDAR 2650-4900 HAVALDAR 2650-4900 4326
32. SEPOY 2550-3540 SEPOY 2550-3540 9339
33. OTHERS* 1071

TOTAL 65161

NOTES: G
1. The posts in the grade of Supdts. Also include of S.I.O.,
A.A.D.I.O. of various directorates (S.I. No.).
2. The posts in the grade of inspector also include the post of
P.O. and Examiner and intelligence Officer (S.I. No. 10). H
108 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 3. The post in the grade of A.O. also include the post of
A.C.A.O. and E.A.O. (Sl. No. 12).
4. The existing post in the cadres of Asst., Tax Asst., UDC (Sp
Pay), DEO Gr. (C) and DEO Gr.(B) have been merged into an
redesignated as Sr. Tax Asst. (Sl. No. 19).
B 5. The existing posts in the cadres of UDC, DEO(A) and LDC
(except 717 posts of LDC for the promotion of Group D) have
been merged and redesignated as Tax Asstt. (New) (S.I. No.
20)
6. The cadre of O.S. has been abolished and the post have been
C merged in the posts of A.O. (Sl. No. 19)
7. Other posts which exists in the department and are not
reflected in the above table have been kept in existing strengths
in the existing pay scales only.

D 8. Details of Others posts are given in Annexure II (Sl. No. 15,
25,30 & 33).
Sd…
(K.C.Jain)
Dy. Secretary to Govt. of India”
E
17. On 10.09.2001, the CBEC directed a freeze on promotion.
It reads as follows:
“New Delhi, the 10.09.01
To,
F
All Chief Commissioners/Commissioners of Customs and Central
Excise,
All Directors Generals/Directors of Customs and Central Excise
Narcotics Commissioner, C.B.N. Gwalior
G
Subject: Holding of DPC for promotion to the grade of Group
‘B’ & ‘C’ in C.B.E.C. Department – reg.
Sir,
I am directed to say that the issue of holding of DPCs in
H respect of Group ‘B’ & ‘C’ posts as well as making direct
D. RAGHU AND OTHERS v. 109
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

recruitment to the various posts pending distribution of posts of A
various field formations is being undertaken by the
Implementation Cell in Pursuant to sanction issued by Board’s
letter F.No.A-11019/72/99-Ad.IV dated 19.07.2001 conveying the
approval of the Cabinet to the restructuring of Customs and
Central Excise Department has been considered by the Board.
B
2. It is felt that if the DPCs for group ‘B’ & ‘C’ are conducted
by the cadre authorities it may lead to widening of imbalances
in promotion prospects or create imbalances. The Board have,
therefore, decided that the holding of DPC of group ‘B’ & ‘C’
post may be frozen and no DPC may be held for Group ‘B’ &
‘C’ post till the distribution of posts under various level is C
completed and instructions are issued by the Board in this regard.
3. As you are aware that Board have already imposed a ban
for filling up of posts of LDCs and Sepoys vide their letter F.No.
A-11012/27/2000-Ad. IV dated 10.04.2001, it is reiterated that
these instructions may be strictly adhered to and it is further D
stated that no direct recruitment may be made to any grade till
further orders of the Board/ Department of Revenue.
4. The receipt of this letter may please by acknowledged.
Yours faithfully, E
SD/-
(Y.P. Vashishat)
Under Secretary to the Govt. of India”
18. Thereafter, there is communication dated 19.09.2001, which F
will be adverted to later on.
19. It is necessary to note what is alleged to be an Order of the
CBEC, lifting the ban on promotion, dated 03.01.2002:
“New Delhi, the 3rd Jan, 2002
G
To,
All Chief Commissioners/ Commissioners of Customs and Central
Excise,
All Directors Generals/ Directors of Customs and Central Excise.
Narcotics Commissioner, C.B.N. Gwalior H
110 SUPREME COURT REPORTS [2020] 5 S.C.R.

A Subject: Holding of DPC for promotion to the grade of Group
‘B’ & ‘C’ in C.B.E.C. Department – reg.
Sir,
I am directed to refer to Board’s letter of even number dated
10.9.2001 imposing a ban on holding of DPCs for Group ‘B’ &
B ‘C’ posts. The Board have received representations against the
aforesaid ban on promotions.
2. The matter has been considered by the Board and it has
been decided that where ever the DPC, have already been held,
the panel prepared by the DPCs may be given effect and the
C resultant vacancies in the feeder cadre may also be filled up.
Where the DPCs have not been held, the DPCs may be held on
the basis of pre-revised strength i.e. the strength existing before
the cadre restructuring and the resultant vacancies may be filled
up.
D 3. Action may be taken on priority basis under intimation to
the Board.
Yours faithfully,
SD/-
E (Y.P. Vashishat)
Under Secretary to the Govt. of India”
20. The communication dated 05.06.2002 by the CBEC purporting
to allocate posts to each zone, and communicating the sanctioned
strength, needs to be noticed:
F
“F. No. A-11013/4/2002-Ad.IV
Government of India
Ministry of Finance
Department of Revenue
G Central Board of Excise & Customs
Dated: 05th June, 2002
To All Chief Commissioners of Central Excise and Customs,
All Chief Commissioners of Customs,
H All Chief Commissioners of Customs (Preventive),
D. RAGHU AND OTHERS v. 111
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

All Directors General, A
All Directors.
Chief Departmental Representative, CEGAT
Chairman, Settlement Commission.
Subject:Allocation of posts in Group ‘A’, ‘B’, ‘C’ and ‘D’ amongst
various Zones/Commissionerates and Directorates Gen. / B
Directorates – reg.
Sir,
I am directed to refer to Ministry’s letter F. No A-11019/72/
99-Ad.IV dated 19th July 2001, notifying the revised sanctioned
C
strength at different levels in the Central Excise & Customs
department consequent to approval of cadre restructuring of
Central Excise and Customs departments by the Union Cabinet.
2. I am further directed to say that the allocation of staff to
the Zones / Commissionerate / Directorates Gen. / Directorates
D
at different levels has been decided by the Board and approved
by the Government has been detailed in the enclosed Folder. The
allocation indicated herein supersedes all earlier allocations in
respect of the Cadres/Categories in the enclosed folder. The
number and categories of posts in the Central Excise & Customs
department other than those referred to in the enclosed Folder E
remains unaltered.
3. Separate staff strength has been allocated for the offices
of Chief Commissioner, Commissioner (Appeals) and
Commissioner (Adjudication) for which no separate staff had
been allocated till now. The staff allocated to these formations F
has been shown along with the allocation to the Commissionerate
in which city it is located. The model adopted for the allocation
is indicated in Annexure – IV of the enclosed folder.
4. I am also directed to request all Chief Commissioners and
other Heads of Department to carefully study the details of G
reorganization of the Customs and Central Excise formations and
bring to the notice of the Board any discrepancies or any aspects
that may require review or may not have been taken into account,
to enable necessary corrective steps may be taken at an early
date with the approval of appropriate authority. H
112 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 5. I am further directed to say that the sanctioned strength
now indicated supersedes all previous sanction issued so far. The
sanctioned strength now indicated will accordingly form your
sanctioned strength of Group ‘A’, ‘B’, ‘C’ & ‘D’ posts. As
indicated in the preceding paras, the Chief Commissioners are
requested to study the allocation of posts within their respective
B
jurisdiction and send proposal which are considered necessary
within the overall sanctioned strength provided to the
Commissionerates within their jurisdiction.
6. I am also directed to inform that the Cadre Control which
is presently vested with respective Commissioners in particular
C
Zones will continue to vest with them for the present in order to
ensure that there is no dislocation in the cadre management at
the field level. Switch over of cadre control from Commissioners
to Chief Commissioners would be effected from a date to be
specified after the new formations come into existence.
D
7. It has been decided to extend the ban on direct recruitment
imposed, in terms of para 3 of Deptt’s letter F. No. A-11019/72/
99 Ad.IV dated 19.07.2001 upto 31.12.2002. However, the ban
would be applicable only to the posts that have been included in
the cadre restructuring. It has also been decided that the ban on
E direct recruitment would not apply to compassionate ground
appointments made with the approval of the Board.
8. The Detailed instructions/ orders/ Recruitment Rules
governing the manner of filling up of the vacancies at all levels
will be issued separately. No vacancy in respect of the posts
F included in the cadre restructuring should be filled up till such
time as further orders are issued.
Yours faithfully
Encls.: As above
G (Y.P.Vashishat)
Under Secretary to the Govt. of India”
21. Still further, on 19.09.2002, the CBEC initiated process for
filling-up of vacancies based on the post restructuring strength and
permitting convening of Departmental Promotion Committees (DPCs)
H where the revised Recruitment Rules stood circulated. It was, however,
D. RAGHU AND OTHERS v. 113
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

clarified that promotion orders would be issued only on the directions A
of the Ministry. That ban on Direct Recruitment was to continue. The
Order reads as follows:
“New Delhi, Dated 19th September, 2002
To
All Chief Commissioner of Central Excise, B
All Chief Commissioner of Customs,
All Chief Commissioners of Customs (Preventive),
All Director General,
All Directors,
The Chief Department Representative CEGAT C
The Chairman, Settlement Commission.
Sir,
Subject: Filling up of posts in Group B, C and D – reg.
I am directed to refer to Ministry’s letter F.No.A-11013/4/ D
2002-Ad. IV dated 05.06.2002 on he allocation of posts in Group
‘A’, ‘B’, ‘C’ and ‘D’ amongst various Commissionerates and
Directoraes General/ Directorates. So far as Group ‘A’ posts
suitable action is being taken by the Board. As for remaining
posts, you have already been advised o hold DPCs for promotion
to the grade of Superintendents of Central Excise, E
Superintendents of Customs (Prev) vide our letter no. F.A.600/
11/23-2002-Ad. III B dated 26th June, 2002 and to the grade of
AO/ACAO/EOA Group ‘B’ vide letter F.No.A.32012/3/2002-
Ad.IIB dated 15th July, 2002. The cadre of O.S. is to be merged
with the cadre of A.O. and all the existing O.S. are only to F
redesignated as Administrative Officer. Since the pay scale of
both he cadres is same, the re-designation can be done by an
administrative order.
2. It has now been decided to initiate the process of filling up
of vacancies that has arisen on account of cadre restructuring
G
in all remaining cadres up to Grade ‘B’. You are directed to
ensure that DPCs are converted in respect of all grades where
Recruitment Rules except for change in the number of posts, as
also grades where revised Recruitment Rules have been
circulated. You may accordingly hold DPCs immediately for filling
up vacancies in various grades, and ensure that by 30 th H
114 SUPREME COURT REPORTS [2020] 5 S.C.R.

A September, 2002 the lists are kept ready. It is clarified that
promotion orders may be issued only on receipt of further
directions from the Ministry.
3. The ban imposed on direct recruitment in terms of para-3
of letter F.No.A.11019/72/99-Ad.IV dated 19.07.2001 is
B applicable up to 31.12.2002. IT is clarified that this ban applies
only to the posts that have arisen in the cadre restructuring and
that the ban will not apply to posts in the lower grades which
are not to be filled by promotion, and can only be filled up by
promotion, and can only be filled up by Direct Recruitment.
Requisite steps for filling up Direct Recruitment posts may also
C
be initiated immediately in accordance with existing instructions
on the subject so as to ensure that Direct Recruitment vacancies
can immediately be filled up after 31.12.2002 of Board’s letter
of 05.06.2002.
4. Further, in suppression of the instruction contained in para
D
7 & 8 of Board’s letter of 05.06.2002 the Commissioners are
also permitted to make compassionate ground appointments as
well as inter Commissionerate transfers, with the approval of
Chief Commissioners, in accordance with existing instructions on
the subject. The instructions contained in paras (7) & (8) of
E Board’s letter of even no. dated 05.06.2002 stand modified to
this extent.
Yours faithfully,
(NISHA MALHOTRA)
Jt. Secy. (Admn.)”
F
22. The communication dated 28.10.2002 is the next development.
It reads as follows:
“Dated 28th October, 2002
To
G All Chief Commissioner of Customs & Central Excise
Subject:Draft Recruitment Rules – Circulation of reference and
necessary action-Reg.
Sir,
H Please find enclosed Draft Recruitment Rules for Group ‘C’ Posts
D. RAGHU AND OTHERS v. 115
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

of Inspector (Central Excise & Land Customs), Inspector A
(Examiner), Inspector (Preventive Officer) & Senior Tax
Assistant as approved by the Ministry. Notifications, notifying
these Rules will be issued shortly. Meanwhile you may initiate
the necessary action to start the process for DPC etc. You may,
however, await issue of notifications before issue of any orders
B
of promotions based on these Rules.
Draft of the Recruitment Rules of Tax Assistants will also be
sent shortly as they are being finalized in consultation with law
Ministry.
Yours faithfully, C
Sd……

(B.K. Gupta)
O.S.D. (Admn.) CBEC
D
Enclosures: As above”
23. On 06.11.2002, the Draft Recruitment Rules for Tax Assistant
came to be forwarded with the caveat that promotion orders be not
issued until the Rules were notified:
“Dated 6th November, 2002 E

To
All Chief Commissioner of Customs & Central Excise
Sir,
Subject: Draft Recruitment Rules – Circulation of reference and F
necessary action-Reg.
—
In continuation of this office letter dated 28.10.2002 forwarding
of Draft Recruitment Rules of Group “C” Post of Inspector G
(Central Excise and land Customs), Inspector (Examiner),
Inspector (Preventive Officer) & Senior Tax Assistant, please
find enclosed Draft Recruitment Rules for Tax Assistant (Group
“C”) as approved by the Ministry. The Notification for notifying
these Rules will be issued shortly. Meanwhile you may get
circulated these Draft Rules to all the Commissionerates, initiate H
116 SUPREME COURT REPORTS [2020] 5 S.C.R.

A the necessary action to start the process for DPC etc. Confirm
the issue of Notification notifying these Rules before issue of any
order based on these Rules.
Yours faithfully
Enclosures: As above
B
(B.K. Gupta)
O.S.D. (Admn.) CBEC”
24. On 14.11.2002, the CBEC permitted issuance of promotion
orders subject to certain conditions:
C “New Delhi the 14th November 2002
To
All Chief Commissioner
All Director General
All Director under CBEC
D
Subject : Cadre restructuring of Customer and Central Excise –
regarding promotion in the Grade ‘B’, ‘C’ and ‘D’ posts.
Sir,
I am directed to refer to Minister’s letter F. No. A-11013/01/
E 2002-AdIV dated 19th September, 2002 regarding holding of
DPC’s in all grade where Recruitment Rules Exits, us also in
grades where revised recruitment rules have been circulated. In
terms of Para 2 of the said letter, it was directed to hold the
DPC’s by 30th September, 2002 and keep the list ready for issue.
F It was also clarified that promotion orders may only be issued
on receipt of further directions from Ministry.
2. In view of the above, you are requested to issue the
promotion orders in respect of remaining Group ‘B’, ‘C’ and ‘D’
posts as stated below:-
G (i) promotion orders in respect of Sepoy, Havaldar, Head
Havaldar, Tax Assistant, Senior Tax Assistant and
Inspector of Central Excise/Preventive Officer/
Examiner of Customs may be issued on the basis of
Recruitment Rules after allotment of GSR No by the
H Government of India Press. Wherever not yet allotted.
D. RAGHU AND OTHERS v. 117
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

(ii) DPC in respect of Appraisers and Administrative A
Officer may be held on the basis of existing Recruitment
Rules and promotion orders may be issued.
(iii) DPC in respect of remaining grades except DOS L-II
may be held on the basis of existing Recruitment Rules
and Promotion orders may be issued by 25.11.2002. B
(iv) Promotion in the grade of DOS L-II may be made only
after the new recruitment rules are circulated by the
Ministry.
Yours faithfully C

(Angra Ram)
Under Secretary to the Government of India”
25. Thereafter, as already noticed, the Inspector Rules, 2002 D
came to be notified on 07.12.2002. We may further notice that the
Senior Tax Assistant (STA) Rules came to be notified on 20.01.2003.
On 21.04.2003, the following decision was taken by the CBEC:
“New Delhi, the 21st April, 2003
To, E

All Chief Commissioners of Central Excise,
All Chief Commissioners of Customs,
All Director Generals,
All Commissioner of Central Excise/Customs/Directors under
CBEC F

Subject:Cadre Restructuring of Customs and Central Excise –
Fixation of date of Existence of restructured cadres-reg.
Madam,
G
I am directed to say that clarification have been sought by
field formations regarding the date of existence of restructured
cadres. The matter has been examined in the Board and it has
been decided that the restructured cadres would come into
existence from the dates on which the new/amended rules are
notified. Accordingly H
118 SUPREME COURT REPORTS [2020] 5 S.C.R.

A (a) The restructured cadre of Inspector (Central excise),
Inspector (Preventive Office) and Inspector (Examiner)
came into effect on and from 07.12.2002 i.e., the date
of publication of Recruitment Rules.
(b) The restructured cadre of Senior Tax Assistant came
B into existence on and from 20.01.2003 i.e. the date of
publication of Recruitment Rule.
Yours faithfully,
SD/-
(Y.P. VASHISHAT)
C Under Secretary to the Govt. of India”
THE SPATE OF LITIGATION
26. The position, as noticed, led to a scenario where the erstwhile
Data Entry Operators Grade ‘B’ and ‘C’, who came to be re-
designated as Senior Tax Assistants (STAs) and who were not invited
D to participate in the promotional exercise for the post of Inspector,
launched litigation in various Tribunals across the country.
THE PROCEEDING IN THE CHANDIGARH TRIBUNAL
27. O.A.1221 of 2002 came to be filed before the Tribunal at
E Chandigarh. The applicants were Data Entry Operators Grade ‘A’, who
were promoted in the year 2000 as Data Entry Operators Grade ‘B’.
They contended that they being Data Entry Operators Grade ‘B’, were
deemed to have been appointed as Senior Tax Assistants and were
eligible to be considered for the post of Inspector. They were also placed
in the higher Grade of Rs.5000 to 8000 and were senior to the U.D.
F Clerks. The applicants Complained that though they were eligible to
be considered for promotion to the post of Inspector, Central Excise
along with the candidates of the pre-structured cadre, they were not
being considered. The Tribunal found merit in the contention of the
applicants and held as follows:
G “10. There is no doubt that the Data Entry Operators Grade B
have now been redesignated as Senior Tax Assistants
Recruitment Rules, 2002. It is also very clearly mentioned in the
notification in para 4(i) that the service rendered by them before
commencement of these rules shall be taken into consideration
H for deciding the eligibility for promotion to the next higher grade.
D. RAGHU AND OTHERS v. 119
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

According to the Inspector Recruitment Rules, 2002, under A
Clause (b)(i) of schedule to these rules, Senior Tax Assistants
with 2 years regular service are eligible for consideration for
promotion. In other words, Data Entry Operators Grade b with
2 years service as Data Entry Operator and/or Senior Tax
Assistants are eligible promotion. There is no such condition in
B
the Recruitment Rules, that the categories of employees covered
under clause (b) under column 12 of the schedule are required
to put in 2 years of service exclusively as Senior Tax Assistant.
Their past service as Data Entry Operators is also required to
be taken into consideration. In fact the respondents are relying
on the provision made in Note 1 under col.12 to emphasize that C
the Senior Tax Assistants will be considered for promotion only
after 2 years from the date of restructured cadres come into
existence. Note 1 reads as under:
Note 1: Promotion under clause (a) above shall be operative only
for a period of two years from the date or which the restructured D
cadres mentioned under clause (b) above come into existence.”
A close reading of the above Note would reveal that it is in
respect of employees covered under Clause (a) and is not
relevant to the employees under Clause (b). It is therefore, wrong
to interpret the provision made in the above Note that Data Entry E
Operators (now redesignated as Sr.Tax Assistants) are not
eligible for promotion for a period of 2 years. In fact, Senior Tax
Assistant have been given higher grade of Rs.5000-8000 and they
are senior to the UDCs according to the Senior Tax Assistant
Recruitment Rules, 2002, while UDCs have been considered for
promotion for the post of Inspector, there does not appear to be F
any justification for denying senior Tax assistants their legitimate
right for consideration for promotion.
11. Note 2 under col.12 specifically provides that the candidates
shall be required to pass such written test as may be determined
by the Central Board of Excise and Customs from time to time. G
The judgment in the case of Madan Singh & ors (supra) cited
by the learned counsel for the applicant is, therefore,
distinguishable to the extent that the departmental examination
is prescribed in the relevant rules in the instant case. Senior Tax
Assistants are, therefore, required to pass the written test before H
120 SUPREME COURT REPORTS [2020] 5 S.C.R.

A they are considered for promotion to the post of Inspector as
has been done in the case of other categories employees. As
Sr. Tax Assistants are senior to UDCs, they should also have
been given an opportunity to appear in the departmental written
examination and if they had passed, they should have been
considered for promotion to the post of Inspector. Non-
B
consideration of Sr. Tax Assistants for promotion is, therefore,
in violation of the relevant Rules.”
28. On the basis of the aforesaid discussion, the Tribunal directed
applicants to be considered for promotion as Inspector, in terms of the
relevant Rules, considering the service rendered by them as Data Entry
C
Operator Grade ‘B’, after giving them an opportunity to appear in the
departmental examination, as provided in Note 2 in the Schedule to the
Inspector Rules, 2002, inter alia.
29. The next, in the chronological order, is the Order dated
29.08.2003 passed by the CAT at Bombay. This decision went against
D
the reasoning adopted by the Chandigarh Bench, which we have already
noted. However, the High Court of Bombay, by its Judgment dated
07.10.2003, allowed the Writ Petitions filed against Order dated
29.08.2003. The High Court found the reasoning of the Chandigarh
Bench appealed to it. No doubt, it related to filling-up the post of
E Inspector (Customs). The Special Leave Petition filed against the
Judgment of the High Court of Bombay came to be dismissed on
09.02.2004 by this Court. In the interregnum, CAT, Madras, by Orders
dated 04.09.2003 and 12.09.2003, adopted the view accepted by the
Chandigarh Bench. Finally, CAT, Ahmedabad also, by its decision dated
F 07.05.2004, accepted the view propounded by the CAT, Chandigarh.
THE LITIGATION BEFORE US
ORIGINAL APPLICATION NO. 1362 OF 2002
30. The applicants, as already noticed, are the appellants in the
Civil Appeal Nos. 1970-1975 of 2009. They approached the Tribunal
G on the following allegations, inter alia. They had been appointed as
Data Entry Operator Grade ‘A’ between October, 1993 to March, 1994.
On completion of six years’ service, they came to be promoted as Data
Entry Operator Grade ‘B’. After completing the desired
computerization, they were entrusted with regular work relating to the
H Executive Side. This included technical work, statistics, preventive audit
D. RAGHU AND OTHERS v. 121
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

and other legal work. They claimed that they were at par with the A
existing Tax Assistants. After the Fifth Central Pay Commission, they
stood equated with the Tax Assistants. There were grievances raised
relating to promotional avenues not being on par as between the Data
Entry Operators and the Tax Assistants. There was reference made
to the Order dated 19.07.2001. It was pointed out that the official
B
respondent had communicated the Draft Recruitment Rules, which
contained “an unconscionable condition”. The unconscionable condition
referred to was the incorporation of Clause (a) that those working as
Tax Assistants with two years of service, etc., were given preference
for promotion over the restructured categories. They contended that
Order dated 19.07.2001 had already come into force. They pointed out C
that there was no meaning in considering the pre-structured Cadre of
Tax Assistants and U.D. Clerks, etc., after the restructuring [Apparently,
they felt aggrieved by the invitation to the Tax Assistants and U.D.
Clerks, based on the provisions contained under 2002 Rules (Column
12, Clause (a))]. The proposed promotion was dubbed as an attempted
D
backdoor entry. It was only the restructured Cadre of Senior Tax
Assistant (STA) alone, which was eligible for promotion as Inspector.
The pre-structured Cadre should not be allowed to steal a march over
the applicants, who were already placed in the higher scale. The
unconscionable part of the Rules was dubbed as violative of Articles
14 and 16 of the Constitution of India. In the grounds, they attacked E
Note 1 to 2002 Rules found in Column 12. The Note was alleged to
have given “leverage to the Tax Assistants and the U.D. Clerks and
Stenographers to count their pre-structured service”. Being new Cadre,
they could not have required period of two years under the restructured
Cadre. The Draft Recruitment Rules were impugned as being issued
F
with “malafide intention” for creating avenues for the “ineligible Lower
Division Cadre”. It is also contended that Draft Rules had not been
finalised, and only after finalisation, the matter could be proceeded with.
31. The reliefs sought were as follows:
“(a) to set aside the intimation letters C.No.II/3/21/2002 Con. G
Sec. C.No. II/3/16/2003-Con. Sec. & C.No. II/03/52/
2002 Estt. All dated 5.11.2002 conducting physical Test/
interviews, in the absence of finalization of draft
recruitment rules, on the basis of the unconscionable
conditions stipulated in the draft recruitment rules for
the purpose of promoting the in-eligible candidates, H
122 SUPREME COURT REPORTS [2020] 5 S.C.R.

A depriving the applicants from their due promotion to the
posts of inspector of Customs and Central Excise,
declaring the same as arbitrary, illegal, unwarranted,
misconceived, frivolous and in violation of Articles 14
& 16 of the Constitution of India.
B (b) to set aside that part of recruitment rules communicated
vide F.No. A 12018/48/2000-Ad. III-B dated 28.10.2002
of R-1, incorporating certain unconscionable conditions
under Clause (a), as confirmed vide Gazette of India
Notification dated 29.11.2002 and note(1) of clause (b)
of column 12 of Group ‘C’ Recruitment Rules 2002, for
C
eligibility condition for promotion to the cadre of
inspector of Customs and Central Excise, providing
illegal opportunities to the cadres that were existing prior
to the restructured cadre when the restructured process
has already been affected w.e.f. 19.7.2001, giving
D leverage to the ineligible candidates to march over the
eligible candidates of DEOs Grade ‘B’ cadre for
promotion to the cadre of Inspector of Customs and
Central Excise, declaring that part of the said draft rules
as arbitrary, illegal, un-warranted, misconceived,
E malafide and against the principles of natural justice and
in violation of Articles 14 & 16 of the Constitution of
India;
(c) to declare that the applicants who were working as
DEOs in Gr. ‘B’ in the scale 4500-7000 even before
F re-structuring deemed to have been merged into the
cadre of Sr. Tax Assistants in the scale of 5000-8000
as enumerated under the restructured scheme
communicated vide R-1 Letter F. No. A-11019/72/99
Ad. IV dated 19.7.2001 communicating the approval of
restructuring by the Ministry with immediate effect
G enclosing Annex. I therewith showing the cadres and
the strength, duly directing the respondents to consider
the cases of the applicants for promotion to the cadre
of Inspectors, Customs and Central Excise, by way of
100% promotion under one time relaxation scheme on
H par with those Assistants, DEO Grade ‘C’, Tax
D. RAGHU AND OTHERS v. 123
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

Assistants, DEO Grade ‘B’ and UDC(Special Pay), A
who were redesignated as Senior Tax Assistants under
the restructuring of cadres who are only to be
considered for promotion to the cadre of Inspectors of
Central Excise & Customs; with all consequential
benefits; and be pleases to pass such other and further
B
order, or orders as the Hon’ble Tribunal may deem fit
and proper in the circumstances of the case.”
32. In the reply by the official respondents, it was, inter alia,
pointed out as follows:
The post of Inspector was covered by 1979 Rules. Feeder C
categories were, as we had noted earlier. There was, in other words,
reference to the 1979 Rules as amended in 1996. Regarding the Order
dated 19.07.2001, the stand of the Government was that it was only
approval of the Ministry for restructuring process. It was contended
that it was incorrect to say that the new Cadre of Senior Tax Assistants
and Tax Assistants were created from 19.07.2001. The restructuring D
became effective only after the formulation of the Recruitment Rules.
The Order dated 19.07.2001 was silent as regards mode of restructuring
and the process after merger. In regard to the claim of the appellants
of parity with U.D. Clerks, it was pointed out that the appellants could
not compare themselves with the U.D. Clerks for promotion as E
Inspector. The initial scale of Data Entry Operator Grade ‘A’ (Entry
Post) was Rs.1150-1500 prior to the Fifth Central Pay Commission,
whereas, the pay of U.D. Clerk was Rs.1200-2040. The educational
qualification required for being an U.D. Clerk was Graduation. For a
Data Entry Operator Grade ‘A’, on the other hand, the educational
qualification was pass in the Intermediate Course. It was further F
contended that the nature of duty was also different. The U.D. Clerks
were selected on staff selection conducted on all-India basis. The Data
Entry Operators Grade ‘A’ were employed through Employment
Exchanges. As far as conditions in Column 12, which were challenged
by the applicants, viz., the requirement of two years’ service, which
was dubbed as unconscionable, it was contended that the condition G
relating to two years’ service was necessary to cover fair process for
different categories. The Cadre of Inspector was a basic work force.
Promotions were effected on the basis of promotion to the post of
Superintendent, on all-India basis, leading to large number of vacancies
in the post of Inspector. In the Andhra Pradesh zone, there were 242 H
124 SUPREME COURT REPORTS [2020] 5 S.C.R.

A vacancies of Inspector. The applicants, it was contended, did not fall
in the feeder categories. The contention of the applicants that they were
doing various other works, was denied and it was contended that the
Data Entry Operators were basically doing the work of data entry and
when they were doing the other work, the nature of work was typing
on computers.
B
ORDER OF THE TRIBUNAL IN O.A. NO. 1362 OF 2002
33. After setting out the pleadings, noting the contentions and also
the orders passed by the Central Administrative Tribunal, Chandigarh,
the Madras Bench and also the Division Bench of the Bombay High
C Court, the Tribunal proceeded to enter the following findings, inter alia:
a. The above decisions referred, viz., by the Tribunals and
the Bombay High Court, were found to have been
rendered on careful considerations of the Rules notified
on 29.11.2002. The Tribunal agreed with the
D interpretation.
b. The Tribunal proceeded to, therefore, express its inability
to accept the contention of the respondents that the
action initiated by sending the impugned intimation letter
dated 05.11.2002, confining the consideration of selection
E for promotion to the post of Inspector only to candidates
in the pre-structured Cadre, was in accordance with the
provisions of the Rules.
34. It is further held that the further contention of the respondents
that the 1979 Rules entitled them to fill-up the vacancies, could not be
accepted, since the restructuring of the cadres had coming to effect
F
on 19.7.2001 itself.
35. The existing Assistants, Tax Assistants, U.D. Clerks (Special
Pay), DEOs Grade ‘B’ and ‘C’ were found to have been merged and
re-designated as Senior Tax Assistants (STAs). It was found that the
restructuring cadres came into effect from the date of issue of letter
G
dated 19.07.2001. Therefore, any further promotions to be effected
from restructured cadres was to be only in accordance with the Rules
promulgated under Article 309, viz., the Inspector Recruitment Rules,
2002. It was done in the supersession of the 1979 Rules. It was found
that the Authorities were not justified in resorting to fill-up the existing
H vacancies in 242 posts in the Cadre of Inspector by following the old
D. RAGHU AND OTHERS v. 125
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

Rules of 1979 which were superseded by the new Rules, by initiating A
the process of selection before the new Rules, came to be notified in
the Gazette after the date of restructuring of cadres came into force
i.e. on 19.07.2001, thereby confining the selection only to the pre-
structured category. The Tribunal did not agree with the contention of
the respondents that the restructuring of the Cadre came into force only
B
with effect from 16.01.2003 (apparently the date of publication of the
Senior Tax Assistant (STA) Rules). The contention of the appellants
was accepted that the appellants must be deemed to have been
absorbed into the Cadre of Senior Tax Assistants in the scale of pay
Rs. 5000-8000 under the restructured scheme with effect from
19.07.2001. Therefore, for the purpose of promotion to the Cadre of C
Inspector, appellants became eligible for consideration under the new
Rules framed which came into force with effect from 07.12.2002.
Therefore, the Authorities were to consider the appellants for promotion
to the cadre of Inspector of Central Excise and Customs based on the
new Rules and not on the basis of the old Rules prevailing in respect
D
of pre-structured cadres. Rejecting the contention of the respondents
that the restructuring did not come into effect on 19.07.2001, as the
Rules relating to all the restructured cadres were formulated
subsequently, it was further found that since in Rule 5 of the Senior
Tax Assistant Rules, it has been clarified that the service rendered by
them before the amendment of the Rules was to be taken into E
consideration for promotion to the next higher cadre, it was found that
in view of the said Rules, the Senior Tax Assistants could take into
consideration their service as Data Entry Operator Grade ‘B’, and
therefore, Data Entry Operator Grade ‘B’ with two years’ service in
the said post was eligible for promotion. There was no condition in
F
Clause (b) that the employees were to put in two years’ service
exclusively as Senior Tax Assistants. It is further found as follows:
“The learned counsel for the applicants has also relied upon a
decision of the Supreme Court reported in 1998 SCC (L&S) page
1075 in the case of Rajasthan Public Service Commission Vs.
Chanan Ram and another, in support of his contention that on G
cadre restructuring coming into force, the earlier cadres stand
abolished. He further submitted that after merging of various
cadres into restructured cadre of Senior Tax Assistant, the
uniformity of restructured cadre of Senior Tax Assistant alone
would be eligible for promotion to the cadre of Inspector of H
126 SUPREME COURT REPORTS [2020] 5 S.C.R.

A Customs and Central Excise. It is also pointed out by him that it
is incumbent on the part of the respondents to work out the
placement of the categories mentioned under sub para (3)of para
4 of the Recruitments rules of Senior Tax Assistants for working
out the inter se seniority from among the integrated cadres and
basing on such seniority, promotion to the cadre of Inspector of
B
Customs and Central Excise has to taken place. According to
him, even for the one time measure standard relaxation by way
of 100% by promotion to the cadre of Inspector of Excise, the
method shown in the recruitment rules of Senior Tax Assistants
for the purpose of inter se seniority placement of various cadres
C has to be followed and promotion to the next higher cadre of
Inspector of Central Excise has to be given on the basis of such
integrated seniority list as per sub-para (3) of Para 4 of the said
recruitment rules. We agree with the above contentions of the
learned counsel for the applicants, since we have taken the view
that with effect from 19.7.2001 the restructuring of Senior Tax
D
Assistants came into force ad all the earlier cadres of Assistant,
Tax Assistant/ UDC (Spl. Pay), DEOs Gr. B and C have been
merged and redesignated as Senior Tax Assistant, the promotion
from the said cadre to the next cadre of Inspector of Customs
and Central Excise is to be considered only on the basis of the
E new recruitment rules which came into force. In this view of
the matter, we find that all the applicants became eligible for
consideration for promotion to the post of Inspector of Customs
and Central Excise and the service rendered by them in the
predesignated cadre for two years is also to be taken into
consideration.
F
The learned Standing Counsel for the respondents submitted that
the selection process initiated on 5.11.2002 for promotion to the
post of Inspector of Central Excise and Customs from the other
categories of employees other than the DEOs Gr.B and Gr.C
has been finalised and the existing vacancies were filled up. Since
G
it is now found that the applicants are also eligible for
consideration for the promotion to the said post, we find it
necessary to dispose of this O.A. by directing the official
respondents to consider the cases of the applicants also for
promotion to the post of Inspector of Customs and Central Excise
H in terms of the relevant rules, taking into consideration the service
D. RAGHU AND OTHERS v. 127
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

rendered by them as DEO Gr.B after giving them an opportunity A
to appear in the Departmental Examination as notified in Note 2
in the schedule to the Inspector Recruitment Rules 2002 and in
case they are successful and are finally selected as Inspectors,
as per Rules, they should be promoted as Inspectors and assign
suitably seniority vis-à-vis other categories of staff who have
B
already been promoted.
In the result, this O.A. is allowed in part. The respondents are
directed to consider the cases of the applicants for promotion to
the post of Inspector of Customs and Central Excise in terms of
the relevant recruitment rules taking into consideration the service
C
rendered by them as Data Entry Operators Gr. B after giving
them opportunity to appear in the departmental examination as
provided in Note 2 in the schedule to the Inspector. Recruitment
Rules, 2002. In case, they are successful and are finally selected
as Inspectors, as per rules, they should be promoted as Inspectors
and assigned suitably seniority vis-à-vis other categories of staff D
who have already been promoted by the revision of seniority as
per the provisions of Rule 5 of Rules relating to recruitment of
Grade C Senior Tax Assistants in the Central Excise and Customs
Department. The declaration sought for by the applicants in para
8(C) of the O.A. is granted as prayed for.” E
36. As already noticed, the High Court came to the conclusion
that the decision dated 19.07.2001 was an approval, in principle, for
the restructuring. The restructuring came into force with effect from
the date on which Statutory Rules in 2003 were framed. It was further
found that in regard to the existing vacancies, the erstwhile Rules of F
1979 held the field and governed the parties.
37. We heard learned Counsel for the parties. Shri C.U. Singh,
learned Senior Counsel, led the arguments on behalf of the appellants.
We also heard Shri P.S. Patwalia, learned Senior Counsel on behalf of
the party respondents and Shri K. Radhakrishnan, learned Senior Counsel G
on behalf of the Government of India besides Shri Sridhar Potaraju,
learned Counsel on behalf of some of the party respondents.
38. The learned Senior Counsel for the appellants, undoubtedly,
after referring to the Rules and the Government decisions, contended
that this is a clear case where the High Court was in error in proceeding H
128 SUPREME COURT REPORTS [2020] 5 S.C.R.

A on the basis that the vacancies must be filled-up on the basis of the
1979 Rules. He pointed out that the principle enunciated in Y.V.
Rangaiah and others v. J. Sreenivasa Rao and others1 is, by no means,
a universal or unexceptionable norm. The decision was rendered in the
special facts of the case. He drew our attention to the body of case
law flowing from this Court, which has enunciated the principle that
B
despite the fact that there exists Statutory Rules and unfilled vacancies,
it is very much open to the Government, when it is mulling change, to
take a conscious decision, though supported by reasons, to leave
vacancies unfilled and to take a call at a relevant point of time.
39. As regards the effect of 2002 Rules and the 2003 STA Rules,
C it was the contention of Shri C.U. Singh that the Court may bear in
mind the backdrop in which the restructuring came about as persons
who were appointed as Data Entry Operators were found stagnating
in comparison to their colleagues working in the ministerial cadre.
Perceiving merit in their genuine grievances, the Government decided
D to completely restructure. It is accordingly that certain categories, which
included Data Entry Operator Grade ‘B’ and ‘C’, were designated as
Senior Tax Assistants. This is evidenced by the proceedings dated
19.07.2001. The restructuring attained completeness from the said
decision, as correctly found by the Tribunal. The Order of the Tribunal
has not been properly appreciated by the High Court, it is complained.
E Our attention has been drawn to the view taken by the Chandigarh
Bench and the High Court of Bombay, in particular. It is further
impressed upon us that this Court lend its seal of approval to the view
expressed by the High Court of Bombay. He pointed out, thus, that the
Tribunal at Chandigarh, Madras, High Court of Bombay and the Tribunal
F at Ahmedabad, have spoken in one voice about the rights of the erstwhile
cadre of Data Entry Operators to be treated as Senior Tax Assistants.
They were entitled to count their previous service also for the purpose
of calculating the period of two years’ service as required in the 2002
Inspector Rules for promotion.
G 40. Per contra, the learned Senior Counsel Shri P.S. Patwalia,
K. Radhakrishnan, Senior Counsel and Shri Sridhar Potaraju, learned
Counsel stoutly defended the Order of the High Court. It is their
contention that quite apart from the fact that in terms of the principle
laid down in Y.V. Rangaiah (supra) that existing vacancies should be

H 1
(1983) 3 SCC 284
D. RAGHU AND OTHERS v. 129
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

filled-up under the old Rules, the Data Entry Operators were not in A
the feeder categories for promotion as Inspector under the 1979 Rules
in 2002. They come into Feeder Category for promotion only when the
Rules were framed in the year 2002, which was brought into force on
07.12.2002. Even proceeding under the said Rules, Shri P.S. Patwalia
would point out that they would have to gain experience and work for
B
two years as STA and they were certainly not eligible for being
considered when the Government decided to fill the vacancies on
05.11.2002. Therefore, apart from the principle enunciated in Y.V.
Rangaiah (supra), they would make the mark in terms of the Rules only
on completion of two years’ service from January 2003 as Senior Tax
Assistants. Our Attention is drawn to 2002 Inspector Rules to point out C
that what is required under the said Rules is that the Senior Tax
Assistants, with two years Regular Service in the Grade, alone, would
be eligible. Having regard to the pay-scale of a Senior Tax Assistant, it
is not open to the appellants to contend that the requirement of Regular
Service in the Grade, would be fulfilled, by taking into consideration
D
the previous service rendered by them in the erstwhile Cadre of Data
Entry Operator. It is also contended that the Memorandum dated
19.07.2001 also embodies a decision, in principle, in this regard. Our
attention is drawn to Memorandums dated 05.06.2002 and 28.10.2002.
It is only on issuance of the Rules that the restructuring happened. The
Rules were brought into force in the year 2003. It is further contended E
that all the Data Entry Operators Grade ‘A’, ‘B’ and ‘C’ continued as
such and were only re-designated as Tax Assistants or Senior Tax
Assistants upon the enforcement of the 2003 Rules and not before. The
pay-scale of Senior Tax Assistants was Rs.5000-8000. The appellants
belonging to Data Entry Operator Grade ‘B’ did not draw the pay-scale
F
of a Senior Tax Assistant, though, the Grade of Data Entry Operator
Grade ‘C’ was same as that of the STA. Reliance was placed on the
Memorandum of the Government of India dated 21.04.2003, which
categorically states that restructured Cadre of STA came into force
only on 20.01.2003.
41. Under the 2002 Inspector Rules, there is a clear scheme. G
The earlier Ministerial Staff, who were eligible for promotion under the
repealed Rules, continued to remain eligible under the 2002 Rules. The
eligibility was for a period of two years. The period of two years started
from the day on which the restructured cadres came into force. For
the first two years, the earlier Ministerial Staff were eligible. During H
130 SUPREME COURT REPORTS [2020] 5 S.C.R.

A that period, the Rules contemplated that the restructured Cadres would
acquire eligibility. Rule 5 of the 2003 STA Rules is sought to be
explained away by pointing out, it would only mean that if any of the
Ministerial Staff, who had been Tax Assistants/U.D. Clerks (Special
Pay), who came into the restructured Cadre of Senior Tax Assistants,
fall short of two years or five years under Part 12(a) of the 2002
B
Inspector Rules, then, their previous service, as also service after
restructuring, would count towards their eligibility. In this regard, he drew
our attention to Note 1 of the 2002 Rules. Distinction is sought to be
drawn between Rule 5 of the Senior Tax Assistant Rules, 2003 and
Rule 4 of the Tax Assistant Rules, 2003. The Grade of Senior Tax
C Assistant is higher than the Grade of Data Entry Operator Grade ‘B’,
both in terms of status and pay-scale.
42. Thus, it is contended that the service rendered by the Officers,
prior to there being restructuring, could not be counted for the purpose
of Clause (12)(b) of the 2002 Inspector Rules. As regards the question
D as to whether there was a ban on appointment, it is contended that
though, initially a ban was imposed vide Memorandum dated 10.09.2001
by Memorandum dated 03.01.2002, the ban was clearly lifted. It is
contended that the letter dated 05.06.2002 extended the ban relating to
Direct Recruitment but it did not affect letter dated 03.01.2002, which
had removed the ban. Reliance is also placed on letter dated 28.10.2002.
E It is contended also that since there was no ban during the period 2001-
2002 and 2002-2003, and seeking to draw support from the O.M. dated
08.09.1998, which provides for a model calendar for holding of DPCs,
the principle in Y.V. Rangaiah (supra), is pressed into service. It is
pointed out that promotions had already been made on the basis of the
impugned judgment of the High Court and resultant vacancies were
F
also filled-up by implementation Orders dated 26.09.2005, 17.05.2006
and 19.07.2006. Even the erstwhile Data Entry Operator Grade ‘B’,
re-designated as Senior Tax Assistants, have been promoted as
Inspectors. Many of the contesting parties have further been promoted
as Superintendents. The judgment of the High Court of Bombay has
G not been implemented. The Order of the CAT, Chandigarh Bench, is
sought to be faulted. It is pointed out that the Draft Recruitment Rules
dated 28.10.2002 were taken as Final Recruitment Rules and the entire
judgment proceeds on the said basis. It also failed to examine the scope
of Clauses (a) and (b) in Column 12 as also the Note below Column
12 of the 2002 Inspector Rules. The High Court of Bombay also did
H not refer to and consider the effect of the 2002 Rules.
D. RAGHU AND OTHERS v. 131
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

43. The Data Entry Operators were not in the category on A
01.01.2001, for the Recruitment Year 2001-2002 and, on 01.01.2002,
for the Recruitment Year 2002-2003, and therefore, they were not
eligible.
AMENDMENT OF LAW AND FILLING-UP OF OLD
VACANCIES B
44. The appellants would point out that it is not a universal
principle that vacancies must be filled-up in accordance with the
unamended Rules. He would point out that the view taken by this Court,
in this regard, may be noticed.
45. In Y.V. Rangaiah (supra), this Court was dealing a case under C
the Andhra Pradesh Registration and Subordinate Service Rules. The
Rule in question, inter alia, contemplated preparation of a panel every
year in September. That apart, the Government also issued very clear
instructions, which emphasised prompt preparation of panels being
essential for increasing administrative efficiency and filling of vacancies D
without delay. Instead of filling-up vacancies on the 01.09.1976, there
was delay and the panel came to be drawn-up in 1977 by which time
an amendment to the Rules purported to take away rights of the Lower
Division Clerks for promotion and the Feeder Category was sought to
be confined to the U.D. Clerks. It was in the said factual context that
the court proceeded to lay down as follows: E

“9. Having heard the counsel for the parties, we find no force in
either of the two contentions. Under the old rules a panel had to
be prepared every year in September. Accordingly, a panel
should have been prepared in the year 1976 and transfer or
promotion to the post of Sub-Registrar Grade II should have been F
made out of that panel. In that event the petitioners in the two
representation petitions who ranked higher than Respondents 3
to 15 would not have been deprived of their right of being
considered for promotion. The vacancies which occurred prior
to the amended rules would be governed by the old rules and G
not by the amended rules. It is admitted by counsel for both the
parties that henceforth promotion to the post of Sub-Registrar
Grade II will be according to the new rules on the zonal basis
and not on the State-wide basis and, therefore, there was no
question of challenging the new rules. But the question is of filling
the vacancies that occurred prior to the amended rules. We have H
132 SUPREME COURT REPORTS [2020] 5 S.C.R.

A not the slightest doubt that the posts which fell vacant prior to
the amended rules would be governed by the old rules and not
by the new rules.”
46. It suffices, for our purpose, to note that the view taken by
the Court, in the said case, came to be followed in subsequent judgments,
B viz., P. Ganeshwar Rao and others v. State of A.P. and others2; P.
Mahendran and others v. State of Karnataka and others3; A.A. Calton
v. Director of Education4and N.T. Devin Katti and others v. Karnataka
Public Service Commission and others5.
47. On the other hand, there is another line of decisions which
C is relied upon by the appellants. Very briefly, the principle is this:
Despite availability of vacancies, if the Appointing Authority
consciously takes a decision to keep unfilled the vacancies for good
reasons, the Rules, as on the day of consideration of the matters relating
to promotion, would govern the situation.
D 48. The representative of this view would be the decision by the
Bench of three Judges inK. Ramulu (Dr.) and another v. (Dr.) S.
Suryaprakash Rao and others6 and P. Ganeshwar Rao(supra). In K.
Ramulu (Dr.) (supra), the Government had taken a decision to amend
the Rules in question. It also took a conscious decision not to fill the
E vacancies till the amendment. For the years 1995-1996, there was no
panel prepared. Essentially on the said facts, this Court held as follows:
“12. The same ratio was reiterated in Union of India v. K.V.
Vijeesh [(1996) 3 SCC 139 : 1996 SCC (L&S) 683] (SCC paras
5 and 7). Thus, it could be seen that for reasons germane to the
F decision, the Government is entitled to take a decision not to fill
up the existing vacancies as on the relevant date. Shri H.S.
Gururaja Rao, contends that this Court in Y.V. Rangaiah v. J.
Sreenivasa Rao [(1983) 3 SCC 284 : 1983 SCC (L&S) 382]
had held that the existing vacancies were required to be filled
up as per the law prior to the date of the amended Rules. The
G mere fact that Rules came to be amended subsequently does not

2
(1988) Supp. SCC 740
3
(1990) 1 SCC 411
4
(1983) 3 SCC 33
5
(1990) 3 SCC 157
6
H (1997) 3 SCC 59
D. RAGHU AND OTHERS v. 133
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

empower the Government not to consider the persons who were A
eligible prior to the date of amendment. It is seen that the case
related to the amendment of the Rules. Prior to the amendment
of the Rules two sources were available for appointment as Sub-
Registrar, namely, UDCs and LDCs. Subsequently, Rules came
to be amended taking away the right of the LDCs for
B
appointment as Sub-Registrar. When the vacancies were not
being filled up in accordance with the existing Rules, this Court
had pointed out that prior to the amendment of the Rules, the
vacancies were existing and that the eligible candidates were
required to be considered in accordance with the prevailing Rules.
Therefore, the mere fact of subsequent amendment does not take C
away the right to be considered in accordance with the existing
Rules. As a proposition of law, there is no dispute and cannot be
disputed. But the question is whether the ratio in Rangaiah case
[(1983) 3 SCC 284 : 1983 SCC (L&S) 382] would apply to the
facts of this case. The Government therein merely amended the
D
Rules, applied the amended Rules without taking any conscious
decision not to fill up the existing vacancies pending amendment
of the Rules on the date the new Rules came into force. It is
true, as contended by Mr H.S. Gururaja Rao, that this Court has
followed the ratio therein in many a decision and those cited by
him are P. Ganeshwar Rao v. State of A.P. [1988 Supp SCC E
740 : 1989 SCC (L&S) 123 : (1988) 8 ATC 957] , P. Mahendran
v. State of Karnataka [(1990) 1 SCC 411 : 1990 SCC (L&S)
163 : (1990) 12 ATC 727] , A.A. Calton v. Director of Education
[(1983) 3 SCC 33 : 1983 SCC (L&S) 356] , N.T. Devin Katti v.
Karnataka Public Service Commission [(1990) 3 SCC 157 :
F
1990 SCC (L&S) 446 : (1990) 14 ATC 688] , Ramesh Kumar
Choudha v. State of M.P. [(1996) 11 SCC 242 : (1996) 7 Scale
619] In none of these decisions, a situation which has arisen in
the present case had come up for consideration. Even Rule 3 of
the General Rules is not of any help to the respondent for the
reason that Rule 3 contemplates making of an appointment in G
accordance with the existing Rules.
13. It is seen that since the Government have taken a conscious
decision not to make any appointment till the amendment of the
Rules, Rule 3 of the General Rules is not of any help to the
respondent. The ratio in the case of Ramesh Kumar Choudha H
134 SUPREME COURT REPORTS [2020] 5 S.C.R.

A v. State of M.P. [(1996) 11 SCC 242 : (1996) 7 Scale 619] is
also not of any help to the respondent. Therein, this Court had
pointed out that the panel requires to be made in accordance with
the existing Rules and operated upon. There cannot be any
dispute on that proposition or direction issued by this Court. As
stated earlier, the Government was right in taking a decision not
B
to operate Rule 4 of the General Rules due to their policy decision
to amend the Rules. He then relies on para 14 of the unreported
judgment of this Court made in Union of India v. S.S. Uppal
[(1996) 2 SCC 168 : 1996 SCC (L&S) 438 : (1996) 32 ATC 668]
. Even that decision is not of any help to him. He then relies
C upon the judgment of this Court in Gajraj Singh v. STAT [(1997)
1 SCC 650 : (1996) 7 Scale 31] wherein it was held that the
existing rights saved by the repealed Act would be considered
in accordance with the Rules. The ratio therein is not applicable
because the existing Rules do not save any of the rights acquired
or accruing under the Rules. On the other hand, this Court had
D
pointed out (in Scale para 23) thus: (SCC pp. 664-65, para 22)
“Whenever an Act is repealed it must be considered, except
as to transactions past and closed, as if it had never existed.
The effect thereof is to obliterate the Act completely from
the record of Parliament as if it had never been passed; it
E never existed except for the purpose of those actions which
were commenced, prosecuted and concluded while it was an
existing law. Legal fiction is one which is not an actual reality
and which the law recognises and the court accepts as a
reality. Therefore, in case of legal fiction the court believes
F something to exist which in reality does not exist. It is nothing
but a presumption of the existence of the state of affairs which
in actuality is non-existent. The effect of such a legal fiction
is that a position which otherwise would not obtain is deemed
to obtain under the circumstances. Therefore, when Section
217(1) of the Act repealed Act 4 of 1939 w.e.f. 1-7-1989, the
G law in Act 4 of 1939 in effect came to be non-existent except
as regards the transactions, past and closed or saved.””
49. In Deepak Agarwal and another v. State of U.P. and others7,
one of the two appellants was a Statistical Officer. The other one was

H 7
(2011) 6 SCC 725
D. RAGHU AND OTHERS v. 135
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

a Technical Officer. The Rules prior to their amendment included them A
in the Feeder Category for the promotion to the post of Deputy Excise
Commissioner. The amendment, by which they stood deprived of their
right to be considered for promotion, was made considering work
experience, duties and qualifications of Statistical Officer and Technical
Officers rendering them unfit to be considered for the higher post. The
B
question, which fell for consideration, was posed in paragraph 18 as
follows:
“18. The short question that arises for consideration is as to
whether the appellants were entitled to be considered for
promotion on the post of Deputy Excise Commissioner under the
C
1983 Rules, on the vacancies, which occurred prior to the
amendment in the 1983 Rules on 17-5-1999.”
50. This Court noticed that there was no statutory duty cast on
the State to complete the selection process within a prescribed period.
It further noted the statutory provision enabling the State to leave a
particular post unfilled. It was still further found that the promotion to D
the vacancies had been made under the amended Rules. The principle
laid down in Y.V. Rangiah (supra) came to be distinguished in the
following words:
“24. We are of the considered opinion that the judgment in Y.V.
Rangaiah case [(1983) 3 SCC 284 : 1983 SCC (L&S) 382] E
would not be applicable in the facts and circumstances of this
case. The aforesaid judgment was rendered on the interpretation
of Rule 4(a)(1)(i) of the Andhra Pradesh Registration and
Subordinate Service Rules, 1976. The aforesaid Rule provided
for preparation of a panel for the eligible candidates every year F
in the month of September. This was a statutory duty cast upon
the State. The exercise was required to be conducted each year.
Thereafter, only promotion orders were to be issued. However,
no panel had been prepared for the year 1976. Subsequently, the
Rule was amended, which rendered the petitioners therein
G
ineligible to be considered for promotion. In these circumstances,
it was observed by this Court that the amendment would not be
applicable to the vacancies which had arisen prior to the
amendment. The vacancies which occurred prior to the amended
Rules would be governed by the old Rules and not the amended
Rules.” H
136 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 51. Still further, we may notice the following statement of the
law contained hereunder:
“26. It is by now a settled proposition of law that a candidate
has the right to be considered in the light of the existing rules,
which implies the “rule in force” on the date the consideration
B took place. There is no rule of universal or absolute application
that vacancies are to be filled invariably by the law existing on
the date when the vacancy arises. The requirement of filling up
old vacancies under the old rules is interlinked with the candidate
having acquired a right to be considered for promotion. The right
to be considered for promotion accrues on the date of
C consideration of the eligible candidates. Unless, of course, the
applicable rule, as in Y.V. Rangaiah case [(1983) 3 SCC 284 :
1983 SCC (L&S) 382] lays down any particular time-frame,
within which the selection process is to be completed. In the
present case, consideration for promotion took place after the
D amendment came into operation. Thus, it cannot be accepted that
any accrued or vested right of the appellants has been taken
away by the amendment.”
52. This Court proceeded to follow the judgment in K. Ramulu
(Dr.) (supra).
E 53. In M.I. Kunjukunju and others v. State of Kerala and others8,
the Court proceeded to lay down that when Recruitments Rules were
amended with retrospective effect, pending process of selection, the
selection must proceed in accordance with amended Rules. The Court,
inter alia, took the view that a candidate, on making an application to
F the post pursuant to the advertisement, do not acquire any vested right
of selection (See paragraph 19).
54. In State of Tripura and others v. Nikhil Ranjan Chakraborty
and others9, the Court, following Deepak Agarwal (supra), took the view
that a candidate only has a right to be considered in the light of the
G extant Rules, on the date of which, the consideration for promotion takes
place and there is no Rule of an absolute application that vacancies
must invariably be filled-up under the existing law when they arose.
We may only refer to paragraph 9:
8
(2015) 11 SCC 440
9
H (2017) 3 SCC 646
D. RAGHU AND OTHERS v. 137
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

“9. The law is thus clear that a candidate has the right to be A
considered in the light of the existing rules, namely, “rules in force
on the date” the consideration takes place and that there is no
rule of absolute application that vacancies must invariably be filled
by the law existing on the date when they arose. As against the
case of total exclusion and absolute deprivation of a chance to
B
be considered as in Deepak Agarwal [Deepak Agarwal v. State
of U.P., (2011) 6 SCC 725 : (2011) 2 SCC (L&S) 175] in the
instant case certain additional posts have been included in the
feeder cadre, thereby expanding the zone of consideration. It is
not as if the writ petitioners or similarly situated candidates were
totally excluded. At best, they now had to compete with some C
more candidates. In any case, since there was no accrued right
nor was there any mandate that vacancies must be filled
invariably by the law existing on the date when the vacancy
arose, the State was well within its rights to stipulate that the
vacancies be filled in accordance with the Rules as amended.
D
Secondly, the process to amend the Rules had also begun well
before the Notification dated 24-11-2011.”
ANALYSIS
55. The post of Inspector, which is at the centre stage of the
controversy in Civil Appeal Nos. 1970-1975 of 2009, is mentioned as E
the post of Inspector (Ordinary Grade) in the 1979 Rules. The Feeder
Category, in regard to the post of Inspector, was:
a. Upper Division Clerks with five years’ service;
b. Upper Division Clerks with 13 years of total service as
Upper Division Clerk and Lower Division Clerk, taken F
together subject to the condition that they have a
minimum of two years’ service in the Grade of Upper
Division Clerk;
c. Stenographers (Senior Grade) with two years’ service;
G
d. Stenographers (Senior Grade) or Stenographers
(Ordinary Grade) with twelve years’ service as
Stenographer/Upper Division Clerk and Lower Division
Clerk, if any, taken together subject to a minimum of
two years’ service as Stenographers (Ordinary Grade)
or Upper Division Clerk Grade; H
138 SUPREME COURT REPORTS [2020] 5 S.C.R.

A e. The next category, eligible was, Women Searchers with
seven years’ service in the Grade;
f. Draftsmen with seven years’ service in the Grade.
56. Later on, by an amendment, the post of Tax Assistant was
created out of the Cadre of Upper Division Clerks (This must be
B referred to as the old Cadre of Tax Assistants in contrast with the Cadre
of Tax Assistants as a result of restructuring and by Rules dated
03.05.2003). The old Tax Assistants were also, by virtue of Order dated
19.03.1988, rendered eligible for consideration as Inspector.
57. On the other hand, the Data Entry Operators, a Cadre, which
C was thought of and created to bring about computerization in the Excise
and Customs Department, came into being and came to be governed
by the Rules made in the year 1992. There were four Grades. The
Entry Grade was Data Entry Operator Grade ‘A’, and Data Entry
Operator Grade ‘A’ with six years’ service, could aspire for promotion
D as Data Entry Operator Grade ‘B’. Likewise, Data Entry Operator
Grade ‘B’ could aspire to be entitled as Data Entry Operator Grade
‘C’. At the top of the pyramid, was the post of Data Entry Operator
Grade ‘D’.
58. It is seen from the above that the Data Entry Operators were
E not eligible to be considered for promotion as Inspector. The post of
Inspector is a Group ‘C’ post. The Data Entry Operators were also
Group ‘C’ but in the technical branch. The Upper Division Clerks,
Stenographers, Women Searchers, Draftsmen, etc., who constituted the
feeder categories, were holding posts in the Ministerial Category. The
post of Inspector was a Group ‘C’ post in the Executive Category. The
F
holders of the post in the Ministerial Cadre were in the Feeder Category
for promotion to the Executive post but holders of posts of Data Entry
Operators, though a Group ‘C’ post, but being in the technical side, they
constituted a different and separate Cadre. There was no avenue for
them to get further promotions by getting promoted as an Inspector.
G
59. According to the Data Entry Operators, they were actually,
after the period of computerization was over, doing various other works
and had gained experience which entitled them to be considered for
promotion as Inspector. This issue apparently engaged the attention of
the Government. Government Decided to bring about restructuring.
H Accordingly, the decision regarding restructuring is seen captured in the
D. RAGHU AND OTHERS v. 139
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

proceedings dated 19.07.2001. As to what is the effect of the same, A
will be the heart of the controversy. Hence, we deem it appropriate to
dissect the said proceedings in detail.
60. The Order dated 19.7.2001, recites that Government has
approved restructuring. It is further stated that as a result of the
restructuring, there has been a change in number and nomenclature of B
the various Grades and posts. The revised pay and designation of the
various posts at different levels, in both the Customs and Central Excise
Departments, has been indicated in Annexure-1. The post of Inspector
is at Serial No.10. It refers to the post of Inspector, Preventive Officer
and Examiner. The existing pay is shown as Rs.5500-9000. The
restructured post has been shown as Inspector. The pay-scale remains C
the same. The sanctioned strength is shown as 18053. The Notes are
significant and they read as follows:
“Notes:
1. The posts in the grade of Superintendents also include D
posts of SIO, AAD, IO of various directorates (Sl. No.
7).
2. The posts in the grade of Inspectors also include the
posts of P.O. and Examiner and Intelligence Officers
(Sl. No. 10).
E
3. The posts in the grade of AO also include the posts of
ACAO and EAO (Sl. No. 12)
4. The existing posts in the cadres of Asst., Tax Asstt.
UDC (Sp Pay), DEO Gr(C) and DEO Gr (B) have been
merged into and redesignated as Sr. Tax Asstt (Sr. No. F
19).
5. The existing posts in the cadres of UDC, DEO(A) and
UDC (except 717 posts of LDC for the purpose of
promotion of Group D) have been merged and
redesignated as Tax Asstt. (neew) (Sl No. 20). G
6. The cadre of OS has been abolished and the posts have
been merged in the posts of A.O. (Sl. No. 12).
7. Other posts which exist in the department and are not
reflected in the above table have been kept in their
existing strength in the existing pay scales only. H
140 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 8. Details of other posts are given in Annexure II (Sl. No.
15, 25, 30 and 33).”
61. No doubt, at Serial No.4, the expression used in existing posts
‘have been’ merged into and re-designated as Senior Tax Assistant
(New).
B 62. The post of Senior Tax Assistant is shown as ‘New’ with a
pay-scale of Rs.5000-8000. The sanctioned strength is shown as 3152.
So also, the post of Tax Assistant is shown as ‘New’. The sanctioned
strength is shown as 5525. The pay-scale is Rs.4000-6000. Coming back
to the body of the communication, it is stated that all the posts at different
C levels, as per Annexure-1, stand sanctioned with immediate effect. It
is next stated that whenever there is a reduction in the number of posts
at any level, such reduction will be effective after the existing incumbents
are promoted to the higher level or the post falls vacant on account of
retirement, etc. For the year 2001-2002, no Direct Recruitment was to
be made without approval of the Ministry/Department as the Cabinet
D had approved a one-time relaxation for filling-up of all the vacancies
by promotion in all the cadres. Next, it is stated that the formation-wise
distribution of posts, at different levels, will be notified separately. The
other posts included in the restructuring proposal but where there is no
proposal for alteration of the scale or strength, were included in
E Annexure-2. The post of Inspector does not figure in Annexure-2.
63. At first blush, on a perusal of the decision, as embodied in
the communication dated 19.07.2001, the view, we may tentatively take,
would be that Government has not only approved the restructuring, but
it has intended it to be effective. It is not in dispute that the post of
F Inspector was formerly the post of Inspector/Preventive Officer/
Appraiser. In place of these three posts, there was only to be the post
of Inspector. In terms of the sanctioned strength, it is common case
that there was formerly in excess of 22000 posts of Inspector. The
number of posts, in fact, came down to 18053 as a result of
restructuring. The restructuring has also resulted in abolishing of certain
G posts, as for instance, the post of O.S.. Certain posts came to be merged
and new posts have emerged. Of interest to us, in resolving the dispute,
are the cadres of Assistant, Tax Assistant, U.D. Clerk (Special Pay),
Data Entry Operator Grade ‘C’ and Grade ‘B’, which merged, and the
post of Senior Tax Assistant, emerged. In place of the enumerated posts,
H as above, it was contemplated that the post of Senior Tax Assistant
D. RAGHU AND OTHERS v. 141
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

will take their place. The existing posts of U.D. Clerk, Data Entry A
Operator Grade ‘A’ also underwent a merger and, in their place,
emerged the post of Tax Assistant (New).
64. A perusal of the proceeding dated 19.07.2001 also drives
home the point that the posts in different levels, consequent upon
restructuring, have been articulated in Annexure-1. What is more, they B
stood sanctioned with immediate effect. These circumstances,
undoubtedly, do point to the restructuring exercise being not one only
in principle but also to have effect immediately. Even more, in this
direction, is the further decision that as a result of restructuring, there
has been reduction in the number of posts and if there is a person,
holding the post, the restructuring in the form of reduction, was not to C
come into force except after the person holding the post was to either
retire or he was promoted to the next higher post. An illustration would
clarify the point. As noticed, prior to the restructuring, there were more
than 22000 posts of Inspector. The number of posts of Inspector was
reduced to a little over 18000. What would happen to the persons who D
were holding the posts of Inspector in excess of 18000, is, what is
provided in the order. The person holding the posts of Inspector, in
excess of the reduced sanctioned strength, would continue to hold the
post till either retirement or he was promoted, whereafter, the post would
die a natural death. The expression used in Note 4 also indicates that
the posts were merged and re-designated. Undoubtedly, these aspects E
do provide circumstances for us to hold that the decision of the Cabinet,
as provided in the communication dated 19.07.2001, was not just a
principle set in motion towards achieving the target of actual
restructuring, but it itself exhaustively brought about the restructuring
per se.
F
65. The next letter is dated 25.07.2001. Therein addressing all
Chief Commissioners of Customs/Central Excise and Commissionerate
besides Director Generals, it is stated that the cadre restructuring
proposal has been approved. In addition to the communication, a number
of activities had to be initiated, including the issuance of Customs and
Excise notifications, indicating jurisdiction and also distribution of posts G
in various Grades among the Commissionerates and Customs House.
An implementation Cell was constituted consisting of seven members.
The next communication is dated 10.9.2001. It reads as follows:
“I am directed to say that the issue of holding of DPCs in respect
of Group ‘B’ & ‘C’ posts as well as making direct recruitment H
142 SUPREME COURT REPORTS [2020] 5 S.C.R.

A to the various posts pending distribution of posts of various field
formations is being undertaken by the Implementation Cell in
pursuant to sanction issued by Board’s letter F.No. A-11019/72/
99-Ad.IV dated 19.07.2001 conveying the approval of the Cabinet
to the restructuring of Customs and Central Excise Department
has been considered by the Board.
B
2. It is felt that if the DPCs for group ‘B’ & ‘C’ are conducted
by the cadre authorities it may lead to widening of imbalances
in promotion prospects or create imbalances. The Board have,
therefore, decided that the holding of DPC of group ‘B’ & ‘C’
post may be frozen and no DPC may be held for group ‘B’ &
C ‘C’ post till the distribution of posts under various level is
completed and instructions are issued by the Board in this regard.
3. As you are aware that Board have already imposed a ban for
filling up of post of LDC and Sepoys vide their letter F.No.A-
11012/27/2000-Ad.IV dated 10.04.2001. It is reiterated that these
D instructions may be strictly adhered to and it is further stated that
no direct recruitment may be made to any grade till further orders
of the Board/ Department of Revenue.
4. The receipt of this letter may please be acknowledged.”

E (Emphasis supplied)
66. It may be noticed that by the said letter the holding of DPC
for Group ‘B’ and Group ‘C’ posts was frozen till the distribution of
posts under various levels was completed and instructions were
received. The next communication is dated 19.09.2001.
F “As you are aware, some reports have earlier been called from
the field formations by this Directorate with regard to sanctioned
and working strength of different cadres and additional
requirements, if any, keeping in view the model structure of the
new Commissionerates which was circulated (copy again
enclosed for ready reference). It is observed that either reports
G
have not been received of where received, there are some
deficiencies. Many commissionerates have still projected
requirements of OS, UDCs, Examiners, DEO etc. which cadres
have already been merged into new cadres and will not exist
under the new dispensation. Similarly some of the
H Commissionerates have accepted the model structure without
D. RAGHU AND OTHERS v. 143
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

considering the actual requirement. As stated in earlier A
communications, the model structure indicates average
requirement for one Commissionerate and it may not be possible
to apply it across the board. Airport and Preventive Customs
Commissionerates may not require 19 or 12 Appraisers whereas
they may need more Supdts. and Inspectors than indicated in the
B
model structure. It is therefore, necessary to adjudge the actual
requirement of staff of different cadres keeping in view the
quantum and nature of work handled by the particular
Commissionerates and the principles governing the cadre
restructuring proposals which envisage the deptt. To be officer-
oriented, technology driven with reduced manual processing of C
documents by greater use of computers and reducing interface
with tax-payers. This means a reduction in man-power in
general.

2. It is, therefore, requested that precise information in the
proforma I to III annexed to this letter may please be provided. D
Proforma I relates to existing sanctioned strength prior to cadre
review for each cadre. In case, any cadre which is existing but
has been left out in the proforma the same may be added at the
end of proforma. This proforma has to be in reference to cadres
existing prior to the cadre restricting exercise. Proforma II seeks E
information on actual requirement of staff of each cadre which
will exist after the coming into effect of the cadre restructuring
proposal. While providing information in this proforma the
following points should be carefully considered:
F
(i) Since new Zones are being created by bifurcating or
trifurcating the existing Zone, the staff proposed in this
proforma will be for the same overall jurisdiction for
which staff indicated in proforma I was sanctioned. Any
deviation may please be indicated as footnote to this
proforma. This means where one zone has been divided G
into three zones, the staff strength of cadres not
affected by the restructuring exercise would remain
same for all three zones i.e. total strength of such cadre
in three zones would be equal of strength in earlier
combined zone. H
144 SUPREME COURT REPORTS [2020] 5 S.C.R.

A (ii) Requirement in this proforma should be in the reference
to cadres which will exist henceforth. For example,
requirement of Sr. Tax Assistants should be adjudged
with reference to the work earlier handled by Tax
Assistants, Special Pay UDCs, DEOs Grade B and C
B as all these cadres have been merged into the cadre of
Sr. Tax Assistants. Similarly requirement of AOs should
include the requirement for work earlier handled by OS
as the cadre of OS has been merged with cadre of AO.
Similarly, all POs/Examiners/Inspectors will be
designated as Inspector only. A chart showing the
C merger/abolition of cadres and increase/decrease in the
no. of posts is enclosed.

(iii) While indicating requirements for the Zone, it may be
ensured that where no. of posts have been reduced the
D requirement of staff has to reduce proportionally for the
Zone. For example, the number of Inspector level posts
having been reduced from 21222 to 18053, the Zones’
sanctioned strength has also to be reduced in the same
ratio. Similarly where posts have been increased (for
example, superintendents and Appraisers), the
E requirement can be increased proportionately. In case
of any deviation required in any Zone in this regard, full
justification should be provided in a separate note. Since
total no. of posts in any cadre cannot be more than posts
approved for the country as a whole, the Chief
F Commissioners should consider the requirements
projected work carefully. It may please be noted that
purpose of this exercise is to allocate the staff already
sanctioned to Zones/Commissionerates and not to
consider sanction of additional staff. Proposals for
G additional staff should not therefore be made while
furnishing the information.

(iv) Staff required for the Chief Commissioners’ office and
for Commissioner(Appeal)/Adjn. should also be
adjudged keeping in view the modern tools of
H administration available.
D. RAGHU AND OTHERS v. 145
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

(v) Wherever requirement of any cadre for the new Zones/ A
Commissionerates exceeds the staff managing the same
jurisdiction at present, the proposal for additional staff
should be supported by the study conducted by the
S.I.U. If in any formation S.I.U. has recommended
reduction in staff, the same should also be indicated.
B
3. Proforma III seeks information on staff sanctioned and
required for handling Customs work falling in the jurisdiction of
Central Excise Commissionerates under the proposals for re-
organization forwarded by the Chief Commissioners.
Requirement of staff projected must be supported by the statistics
C
of work being handled by the Customs Division/ICD/CFS etc.
The staff sanctioned/required this work should not be included
in the data provided in proforma I and II and a confirmation to
this effect recorded in the proforma. However, if no staff has
been sanctioned for customs work earlier and the work was being
managed by staff sanctioned for Central Excise work, this may D
be indicated in this proforma and staff sanctioned should be
included in proforma I with suitable remarks. The staff required
should be only with reference to designations which will be
functional after implementation of the proposal.
4. In respect of each Commissionerate, the name of the cadre E
controlling Commissionerate should also be informed alongwith
details of cadres controlled by them.
5. Since giving effect to the proposal of restructuring including
promotions etc., is dependant on the information being sought,
you are requested to ensure that carefully compiled information F
complete in all respects is made available within a week’s time.”
The chart is omitted.
67. On 03.01.2002, the following communication is seen sent:
“I am directed to refer to Board’s letter of even number dated G
10.09.2001 imposing a ban on holding of DPCs for Group ‘B’ &
‘C’ posts. The Board have received representations against the
aforesaid ban on promotions.
2. The matter has been considered by the Board and it has been
decided that wherever the DPCs may also be filled up. Where H
146 SUPREME COURT REPORTS [2020] 5 S.C.R.

A the DPCs have not been held, the DPCs may be held on the
basis of re-revised strength i.e. the strength existing before the
cadre restructuring and the resultant vacancies may be filled up.
3. Action may be taken on priority basis under intimation to the
Board.”
B 68. In proceeding dated 02.04.2002, promotion was effected to
the post of Tax Assistant from the post of U.D. Clerk. According to
Shri C.U. Singh, this was by way of filling-up the posts in terms of
Order dated 03.01.2002. Further proceedings to be noticed is dated
05.06.2002. Therein reference is made to 19.07.2001 while notifying
C the revised sanctioned strength at different levels consequent to approval
of cadre restructuring. It is further stated that the allocation of staff to
the zones Commissionerates, Director General and Directorate at
different levels has been decided by the Board and approved by the
Government as detailed in the enclosed folder. The allocation superseded
all earlier Notifications in respect of Cadre categories in the enclosed
D
folder separately. All the Chief Commissioners and other Head of
Departments were required to carefully study the detail of reorganisation
of the formation and to bring to the notice of the Board any discrepancy
that may require review or may not have been taken into account for
corrective action. Cadre control was to vest to the respective
E Commissioners in the particular zones and it is further stated that the
ban on direct recruitment was to continue till 31.12.2002. The ban was
to applicable only to posts including in the cadre restructuring. Finally,
in paragraph 8, it is stated as follows:
“The detailed instructions/orders/ recruitment rules governing the
F manner of filling up of the vacancies at all levels will be issued
separately. No vacancy in respect of the posts included in the
cadre restructuring should be filled up till such time as further
orders are issued.”
(Emphasis supplied)
G
69. It may be noted at once that though there is case for the
respondents that the ban on restructuring was lifted by letter dated
03.01.2002, such contention appears to be categorically belied by the
prohibition against filling-up of any vacancy in respect of posts included
in the cadre restructuring, till such time, as further orders are issued.
H Though vacancies may have arisen, which could be filled-up under the
D. RAGHU AND OTHERS v. 147
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

1979 Rules, this appears to be a case where a conscious decision was A
taken not to fill-up the vacancies in the wake of the restructuring
process which was undertaken by the Government. Though a contention
is taken that the post of Inspector is not part of the cadre restructuring,
we are of the view that there may not be merit in the said contention.
The post of Inspector emerged as re-designated post in place of the
B
erstwhile post of Inspector/Preventive Officer/Appraiser. More
importantly, that it was a part of the restructuring, is clear from the
fact that the number of posts fell from a little over 22000 to a little
over 18000. Therefore, the post of Inspector was a post which can be
treated as included in cadre restructuring. The taboo against filling-up
of the vacancy, is clearly reflected in the communication dated C
05.06.2002. On 26.6.2002, urgent direction is issued to hold DPC to
the post of Superintendent of Central Excise and Superintendent of
Customs. Therein, it is, inter alia, stated as follows:
“I am further directed to say that while drawing up the panel
for promotion to the cadre of Superintendents of Central Excise D
from the Grade of Inspectors of Central Excise and
Superintendents of Customs (Preventive) from the grade of
Preventive Officers, the vacancies arising on account of the
cadre restructuring scheme as also regular vacancies arising on
account of retirement etc., during the year 2002-2003 may be
E
taken into account after observing the procedure for DPC etc.
However, posts indicated in the cadre restructuring scheme shall
be filled up only after necessary orders are issued by the Ministry
in this regard.
I am also directed to draw your attention to this Ministry’s letter
F
F.No.A. 32012/9/89-Ad.II B dated 26.06.1990 (Copy enclosed)
and to say that this year orders of promotion instead of being
issued on the last working day of June may issued on the 1st
working day of July 2002.”
70. The next letter to notice is the letter dated 19.09.2002. Therein,
G
after referring to letter dated 26.06.2002, it is stated that it was decided
to initiate the process for filling-up vacancies that have arisen on account
of cadre restructuring in all remaining cadres up to Grade ‘B’. It was
directed to ensure that apparently DPC was convened in respect of all
Grades for the change of number of posts, as also Grades, where
revised Recruitment Rules have been circulated. On 23.09.2002, H
148 SUPREME COURT REPORTS [2020] 5 S.C.R.

A promotion orders in respect of Superintendents were allowed to be
issued. On 28.10.2002, the Draft Recruitment Rules for Group ‘C’ post
of Inspector and Senior Tax Assistant was communicated to all Chief
Commissioners, both, Customs and Central Excise. It was further stated
that Notifications notifying the Rules will be issued shortly. Direction
was given to start the process of DPC. Thus, it could be said that by
B
the issuance of this communication, the Government decided to proceed
with the recruitment by promotion to the post of Inspector.
71. A perusal of the communication dated 28.10.2002, reveals
the following:
C All chief Commissioners were favoured with Draft Recruitment
Rules for the Group ‘C’ post of Inspector (Central Excise and Land
Customs), Inspector (Examiner) and Inspector (Preventive Officers).
Besides the Draft Recruitment Rules for the post of Senior Tax
Assistant, as approved by the Ministry, was also dispatched to the Chief
Commissioners. It is specifically stated that the Notifications, notifying
D the Rules, will be issued shortly. The Chief Commissioners were told
that they may initiate necessary action to process for DC (apparently
DPC). The next sentence is of crucial significance. It reads as follows:
“You may however await issue of notification before issue of
any order of promotion based on these Rules.”
E
72. This communication establishes further, the following aspects:
Restructuring the post of Inspector, contemplated under the order
dated 19.07.2001, had not yet come into being. This is because there
is reference to the post of Inspector (Central Excise & Customs),
F Inspector (Examiner) and Inspector (Preventive Officer). If the post
of Inspector, as contemplated under the Order dated 19.07.2001, had
already come into existence with the issuance of the Order dated
19.07.2001, there was no occasion to continue to refer to pre-designated
posts from which the post of Inspector emerged.
73. Still further, what was obviously contemplated was that the
G
post of Inspector was to be filled-up after the process of restructuring
was over. In other words, the Rules relating to Inspector and the Rules
relating to recruitment of Senior Tax Assistants, was to be brought into
force simultaneously. This conclusion appears inevitable from the
circumstance that the Chief Commissioners were directed to await
H issuance of Notification notifying the Rules before orders of promotions
D. RAGHU AND OTHERS v. 149
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

were issued based on the Rules which were the Draft Recruitment A
Rules. It is not indicated in the Order dated 28.10.2002 that promotion
to the post of Inspector was to be made under 1979 Rules. What was,
in fact, contemplated was that the process, viz., the holding of the DPC
for the post of Inspector, was to begin and operationalised under the
Draft Rules but the actual orders of promotion were to be issued only
B
after the Rules were actually brought into force. The Draft Recruitment
Rules for the Tax Assistant was also sent by letter dated 06.11.2002.
By letter dated 14.11.2002, it is directed as follows:
“I am directed to refer to Minister’s letter F.No.A-11013/01/
2002-AdIV dated 19th September 2002 regarding holding of
C
DPC’s in all grade where Recruitment Rules exist, as also in
grades where revised recruitment rules have been circulated. In
terms of Para 2 of the said letter, it was directed to hold the
DPC’s by 30th September, 2002 and keep the list ready for issue.
It was also clarified that promotion orders may only be issued
on receipt of further directions from Ministry. D
2. In view of the above, you are requested to issue the promotion
orders in respect of remaining Group ‘B’, ‘C’ and ‘D’ posts as sated
below:-
(i) promotion orders in respect of Sepoy, Havaldar, Head
E
Havaldar, Tax Assistant, Senior Tax Assistant and
Inspector of Central Excise/Preventive Officer/
Examiner of Customs may be issued on the basis of
Recruitment Rules after allotment of GSR No by the
Government of India Press, Wherever not yet allotted.
F
(ii) DPC in respect of Appraisers and Administrative
Officer may be held on the basis of existing Recruitment
Rules and promotion orders may be issued.
(iii) DPC in respect of remaining grades except DOS L-II
may be held on the basis of existing Recruitment Rules
G
and Promotion orders may be issued by 25.11.2002.
(iv) Promotion in the grade of DOS L-II may be made only
after the new recruitment rules are circulated by the
Ministry.”
(Emphasis supplied) H
150 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 74. In the Order dated 14.11.2002, it is specifically, inter
alia,ordered that promotion orders in respect of the post of Inspector
(Central Excise)/Preventive Officer/Examiner of Customs may be
issued on the basis of the Recruitment Rules after the allotment of GSR
Number by the Government of India Press. Thus, the green signal was
given to go ahead with the issuance of promotion order for the post of
B
Inspector, inter alia, based on the Recruitment Rules, after the allotment
of the GSR, which means the Notification of the Rules.
75. What actually happened was, however, as follows:
The Inspector Rules and the Senior Tax Assistant Rules were
C not published and brought into force on the same date. The Inspector
Rules came to be finalised and published on 29.11.2002. It is brought
into force on 07.12.2002. The STA Rules, though published on
16.01.2003, was brought into force on 20.01.2003.
WHEN CADRE RESTRUCTURING TOOK PLACE
D 76. The next question, however, which would arise as to when
was the cadre restructuring actually effectuated. In this regard, we have
already noticed the contents of the communication dated 19.07.2001.
We have also pointed out the circumstances which tends to indicate
that not only the Cabinet took a decision to bring about restructuring in
E the Central Excise and Customs Department in principle but evidencing
an actual sanctioning of posts with immediate effect in various cadres.
We have also noticed how the Government has provided that in case
of reduction in strength, as a result of the restructuring, persons holding
posts in excess of the revised and reduced strength, were permitted to
continue till their promotion or retirement, etc.. We have noticed the
F
language used in Note 4 also. The time is now ripe for us to have a
look at the Statutory Rules. The contention of the respondents and the
finding of the High Court is that restructuring came into effect only
with the issuance of the Statutory Rules in the case of Senior Tax
Assistants on 16.01.2003, which was published in the Official Gazette
G on 20.1.2003. Therefore, the actual restructuring became a reality only
on 20.01.2003, runs the argument of the respondents.
77. Inspector Rules, 2002 came into force on 07.12.2002. The
Senior Tax Assistant Rules came into force with effect from
20.01.2003. In Column 12 to the Schedule to the 2002 Inspector Rules,
H which deals with how promotion is to be effected; Clause (a) contains,
D. RAGHU AND OTHERS v. 151
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

apparently, those categories, which were among the feeder categories A
under the 1979 Rules. In fact, Clause (a) itself recites by selection from
those candidates working in the pre-restructured cadre. No doubt, the
words ‘pre-structured’ is added by Corrigendum in 2003. Clause
(b) provides for selection from those candidates working in the
restructured cadre. The third Feeder Category is to operate, failing the
B
method of recruitment specified under clause(b). It is apposite that we
notice, at this juncture, Note 1. For the purpose of convenience, it is
recapitulated again. It reads as follows:
In case of recruitment by promotion/ deputation/absorption,
grade from which promotion/deputation/absorption to be C
made.
12
Promotion: (a) By selection from those candidates working
in the following restructured cadres:
Note 1: Promotion under Clause (a) above shall be only D
operative for a period of two years from the date on which
the restructured cadres mentioned under Clause (b) above
comes into existence.
The service rendered under the new grade in the
restructured cadres shall be counted towards considering E
the eligibility for promotion under Clause (a) above.
78. It is strenuously argued before us on behalf of the
respondents that Note 1 reveals the Legislative intent that the feeder
categories, mentioned in Clause (a), would be given the right exclusive
in nature, thereby excluding those categories in Clause (b). This F
exclusive right, it is pointed out, was to last only for a period of two
years. We may shift focus also to the STA Rules of 2003. We may
advert to it as much may turn on its purport:
“5. Initial constitution.-(i) All the persons appointed on the regular
basis at the time of commencement of these rules to the Grade G
of Assistant, Tax Assistant, Upper Division Clerk (Special Pay),
Data Entry Operator Grade B’ and ‘C’ shall be deemed to have
been appointed as Senior Tax Assistants under these rules. The
service rendered by them before commencement of these rules
shall be taken into account for deciding the eligibility for promotion
to the next higher grade. H
152 SUPREME COURT REPORTS [2020] 5 S.C.R.

A (ii) Assistants (Rs. 5000-8000) and Data Entry Operator Grade
‘C’ (Rs. 5000-8000) are being redesignated as Senior Tax
Assistants in the same scale of pay. Therefore, the Assistants
and Data Entry Operator Grade ‘c’ shall be placed enblock senior
to the other categories. However, their inter-se placement shall
be done according to the date from which they had actually been
B
appointed to these grades on regular basis subject to the condition
that their inter se placement in their respective category shall not
be altered.
(iii) The Data Entry Operator Grade ‘B’ (4500-7000) and Tax
Assistants (4500-7000) have been placed in their higher scale
C
of 5000-8000 and they shall be placed below the Assistant and
Data Entry Operator Grade ‘C’ and their inter-se-placement shall
be fixed in accordance with the date of regular appointment to
the respective grade subject to the condition that their inter-se-
placement in respective category shall not be disturbed.
D
(iv) Upper Division Clerk with special pay shall be placed below
Assistant, Data Entry Operator Grade ‘C’, Data Entry Operator
Grade ‘B’ Tax Assistants.
(v) The present employees would be required to pass the required
or suitable departmental examination, as specified by the
E
Competent Authority, from time to time, in Computer application
and relevant procedures within two years falling which they would
not be eligible for further increments.”
79. We may notice that under the 2003 STA Rules, Rule 5
contemplated the initial constitution of the Cadre of Senior Tax
F
Assistants. It was to consist of the former categories of Tax Assistant,
U.D. Clerk (Special Pay), Data Entry Operator Group ‘B’ and ‘C’.
The future method of recruitment was by way of 100 per cent promotion
from Tax Assistants, as provided in Column 12 of the said Rules. It is
also necessary to notice Rule 4 of the Tax Assistant Rules 2003, which
G was brought into force with effect from 05.05.2003.
“4. Initial constitution:- (1) The person appointed on regular basis
and holding the post of Upper Division Clerk and Data Entry
Operator Grade A on the commencement of these rules shall
deemed to have been appointed as Tax Assistant under these
H rules and the service rendered by such persons in the respective
D. RAGHU AND OTHERS v. 153
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

posts before commencement of these rules shall be taken into A
account as regular service rendered on the post of Tax Assistant
for the purpose of promotion etc.
(2) The person holding the post of Data Entry Operator Grade-
A appointed under these rules as Tax Assistant, shall, within two
years, from the date of such appointment as Tax Assistant, pass B
the Departmental Examination as conducted by the competent
authority, failing which he shall not be entitled to get any further
increment.
(3) Any person, who holds a post of Lower Division Clerk on
regular basis and falls within the seniority list as determined by C
the appointing authority at the commencement of these rules shall,
on passing the Departmental Computer Proficiency examination
conducted by the appointing authority, be deemed to have been
promoted with effect from date of passing such examination on
the post of Tax Assistant.
D
(4)The Upper Division Clerks and Data Entry Operator Grade -
A shall be placed en-block senior, and their inter se placement
shall be fixed in accordance with the date of regular appointment
to the respective grade subject to the condition that their inter
se placement in the respective grade shall not be disturbed.
E
(5) Lower Division Clerks shall be placed below Upper Division
Clerks and Data Entry Operator Grade -A.”
80. The dispute, as to when the restructuring was completed, must
be resolved on a conspectus of the decision dated 19.07.2001 and the
subsequent decisions, as expressed in communications which we have F
adverted to, and the combined effect of all these Rules.
81. Now, turning back to Note 1 to the 2002 Inspector Rules,
we notice that promotion under Clause (a) was to be operative for a
period of two years from the date on which the restructured Cadre in
Clause (b) comes into existence. If the interpretation sought to be placed
G
by the appellants is accepted, and we are to hold that the restructured
cadre of Senior Tax Assistant came into force with effect from
19.07.2001, the result would be that promotion under Clause (a) would
be limited by a period of two years from 19.07.2001. In other words,
no promotion could be ordered from the Feeder Category mentioned
in Clause (a) in Column 12 of the 2002 Inspector Rules after 18.07.2003. H
154 SUPREME COURT REPORTS [2020] 5 S.C.R.

A This also means that promotions could be, therefore, effected during
the period commencing from 19.07.2001. This produces the anomalous
result that promotions are to be countenanced under the 2002 Rules,
retrospectively from 19.07.2001. What is more, according to the
appellants, promotions were banned during the period. This, in our view,
completely militates against the idea that the restructured Cadre came
B
into being from 19.07.2001. We are not oblivious and we have indeed
expressly articulated the circumstances from communication dated
19.07.2001 which probablised the appellant’s contention that
restructuring became a reality from 19.07.2001. But, we, at this
juncture, must also notice that the actual distribution of posts in different
C formations was postponed. It may not be in apposite, at this juncture,
to also notice another factual aspect. There is a definite case for the
respondents that the Data Entry Operator Grade ‘B’ and ‘C’ continued
as such and they were only re-designated as Senior Tax Assistant or
Tax Assistant on the enforcement of the 2003 Rules and not before
such enforcement. In fact, it was also not seriously disputed before us
D
that this was indeed the case on the ground. We may also find light
from the STA Rules. Rule 5 declares that “all the persons appointed
on regular basis at the commencement of the Rules in the Grade of
Assistant, Tax Assistant, U.D. Clerk (Special Pay), Data Entry Operator
Grade ‘B’ and Grade ‘C’, shall be deemed to have been appointed as
E Senior Tax Assistant under these Rules”. No doubt, the Rule
contemplated that the persons to be deemed to have been appointed
as Senior Tax Assistant under the 2003 Rules, were the categories,
which we have already indicated. What is more relevant is, they are
referred to as the persons appointed at the commencement of “these
Rules”. The words used are “persons appointed”. The intention appears
F
to be to indicate that the persons were appointed and working on the
commencement of the Rules, which is on 20.01.2003. It is those
persons, who were referred to by the designation, which were the posts
which were held by them prior to the restructuring. In other words,
appellants, who were working as Data Entry Operator Grade ‘B’, upon
G being promoted in the year 2000, were indeed persons who were
appointed on regular basis as Data Entry Operator Grade ‘B’ as on
20.01.2003, when the Rules, admittedly, were brought into force.
82. We find further support for the view that the appellants
became Senior Tax Assistant upon Rules being brought into force from
H the further limbs of Rule 5. Sub-Rules (ii), (iii) and (iv) deal with the
D. RAGHU AND OTHERS v. 155
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

issue of inter se seniority of the different erstwhile restructured A
categories from which the designated category of Senior Tax Assistant
was born. Those Assistants, who were drawing salary of pay scale of
5000-8000, and Data Entry Operator Grade ‘C’, drawing the same pay
scale, were re-designated as Senior Tax Assistants in the same scale.
They were to rank at the top of the seniority list of the newly created
B
posts of Senior Tax Assistants. Just below them were put the categories
of Data Entry Operator Grade ‘B’ and Tax Assistants, both drawing
the pay scale of 4500-7000, and they have been placed in the higher
pay scale of 5000-8000 and they were to be placed below the Data
Entry Operator Grade ‘C’. Similarly, at the bottom of the pyramid, there
is the post of Upper Division Clerk with special pay, who were to be C
placed below all the above categories as aforesaid.
83. We also bear in mind that the language used in Note 1, in
Column 12 of the 2002 Inspector Rules. It provides that the promotion
in Clause (a) was to be operative for a period of two years from the
date on which the restructured cadres, mentioned under Clause (b) D
above, comes into existence. Had it been the case where the
restructured cadre in Clause (b) had already come into existence, by
virtue of order dated 19.07.2001, the Law Giver would have used
language indicating the past tense. The Law Giver, thus, contemplated
that the restructured cadre in Clause (b), which includes cadre of Senior
E
Tax Assistants, had not come into existence and it was to come into
existence. It came into existence, indeed, in the future, viz., on
20.01.2003.
84. We are, thus, of the view that on a consideration of the
Government Orders and, more importantly, the Statutory Rules that the
F
conclusion appears to be inevitable that restructured cadre actually came
into force in the cadre of Senior Tax Assistant with the Rules being
brought into force on 20.01.2003. Quite apart from the fact that this is
the legal interpretation that flows, we are also supported by the fact
on the ground that the appellants appeared to continue till after the Rules
were brought into force with the designation as Data Entry Operators G
Grade ‘B’. A perusal of Rule 5(v) of the STA Rules 2003 would also
show reference to ‘present employees’ and they were to pass the
departmental examination ‘within two years’. Failure was to result in
their being rendered ineligible for future increments. Certainly, the period
H
156 SUPREME COURT REPORTS [2020] 5 S.C.R.

A of two years would commence only from 20.01.2003. If so, the ‘present
employees’, including the appellants continued as Data Entry Operator
Grade ‘B’ till 20.01.2003. The view that the STA Cadre emerged only
on 20.01.2003, is supported by official understanding, as reflected in
proceedings dated 21-04-2003. The principle of contemporanea
expositio is apposite in the facts.
B
APPELLANTS RIGHTS AS SENIOR TAX ASSISTNATS ON
RESTRUCTURING
85. Having found that restructuring was effective from the date
of the promulgation of the Statutory Rules in case of Senior Tax
C Assistant w.e.f. 20.01.2003, and also having found that there was a
ban on carrying out promotions under the earlier Rules, as evident from
a perusal of communications dated 10.09.2001, 03.01.2002 and
05.06.2002, and thus, it manifested a conscious decision on the part of
the Government not to fill the vacancies in accordance with the earlier
D Recruitment Rules, viz., 1979 Rules, the question arises as to what is
the nature of the right which the appellants had. It must be remembered
that the appellants filed the Original Application before the Tribunal
taking exception to the Notice dated 05.11.2002. Now, let us analyse
the reasoning of the Tribunal with reference to the case set up by the
parties. The case of the appellants must be understood as follows:
E
The restructured cadre has come into existence on
19.07.2001.
Promotion to the post of Inspector could be made only
from the restructured cadres while so the draft recruitment
F rules came to be issued on 28.10.2002.
86. In the said Rules, preference was sought to be given to the
pre-structured cadres, which included the old tax assistants with a
certain number of years. It was Clause (a) to Column 12 of the 2002
Inspector Rules, which was alleged as unconscionable and violative of
G Articles 14 and 16 of the Constitution of India. It was the further
complaint that Note 1 in Column 12 of the 2002 Inspector Rules was
also flawed insofar as the persons in the pre-structured cadre, viz., those
falling in Clause (a), were enabled to steal a march by being promoted,
taking into consideration their service in the new Grade in the
restructured Cadre for the eligibility for promotion under Clause (a).
H The only Cadre, which was eligible for promotion after the order dated
D. RAGHU AND OTHERS v. 157
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

19.07.2001, was the restructured Cadre, including the Cadre of Senior A
Tax Assistants, ran the argument.
87. The Tribunal proceeded on the basis that the restructuring
became complete with the issuance of the order dated 19.07.2001. It
must be noted that the Original Application came to be filed on
19.11.2002 at a time when the Inspector Rules had not even been B
finalized as the Rules came to be finalized only on 29.11.2002 and, in
fact, brought into force till later on 07.12.2002. Undoubtedly, the Note
contemplated, giving persons in Clause (a), viz., those falling in the pre-
restructured cadre, the benefit of taking into consideration the service
rendered in the restructured Cadre, for being promoted as Inspector.
The persons falling in the restructured Cadre, were not conferred with C
such advantage. However, by the time the Original Application came
to be heard, the Senior Tax Assistants Rules 2003 came into force with
effect from 20.01.2003. Under Rule 5 of the 2003 Rules, the persons
working as Data Entry Operator Grade ‘B’, inter alia, stood re-
designated as Senior Tax Assistants and they were also given the benefit D
of reckoning the past service and calculating the qualification of
experience of two years under the Inspector Rules, 2002. In fact, the
Tribunal has also taken note of the 2003 Rules. Both the persons in
the pre-structured cadre and those in the restructured cadres, were,
by virtue of Note 1 to Column 12 to the 2002 Rules and Rule 5(i) of
the Senior Tax Assistants Rules 2003, respectively, were given the E
benefit of counting service as provided therein. The Tribunal, in fact,
has gone on to find that the Senior Tax Assistants under Rule 5(i) of
the 2003 Rules were entitled to reckon their service as Data Entry
Operator Grade ‘B’ for eligibility for promotion as Inspector. The
Tribunal goes on to find that the unified restructured cadre of Senior F
Tax Assistants alone would be eligible for promotion as Inspector. The
integrated seniority is to be worked out in terms of Rule 5 of the 2003
Senior Tax Assistant Rules. This is based on the premise that with effect
from 19.07.2001, the restructuring of Senior Tax Assistant came into
force and all the earlier Cadres stood merged. We notice also the
following findings by the Tribunal: G
The Tribunal noticing the contention of the respondents that the
selection process initiated on 05.11.2002 has been finalized from
categories other than of the employees i.e. Data Entry Operator Grade
‘B’ and ‘C’ and the existing vacancies were filled-up, it was, thereafter,
found by the Tribunal as it is now found that the appellants were also H
158 SUPREME COURT REPORTS [2020] 5 S.C.R.

A eligible, the Original Application was to be disposed of by directing the
appellants be considered eligible for promotion after considering the
service rendered by them as Data Entry Operator Grade ‘B’. The
Original Application was accordingly disposed of directing the appellants
be considered for promotion based on the years of service on the post
of Data Entry Operator Grade ‘B’ after allowing them to appear for
B
the examination contemplated in Note 2 under the 2002 Inspector Rules.
The further relief granted was to direct to promote them if they were
successful and to fix the seniority based on Rule 5. The declaration
which was sought for by the appellants in paragraph 8(c) of the Original
Application, which we have already extracted, was granted.
C 88. Thus, the Original Application has been allowed in part. It is
necessary to notice that the effect of granting the said relief and also
the effect of not granting the reliefs in paragraph 8(b). Granting of the
Relief 8(c) would mean that this Court would also have to accept that
under the 2002 Inspector Rules, it is only the restructured Cadre, which
D would be entitled for promotion to the cadre of Inspector. To put it
differently, the persons falling in Category (a), which corresponds to
feeder categories, under the 1979 Rules, would not be entitled for
promotion as Inspector.
89. It is now necessary to look at their prayer, i.e., 8(b) and the
E effect of not granting any relief thereunder. Prayer 8(b) was sought
by the appellants to set aside the Recruitment Rules communicated vide
28.10.2002, as confirmed vide Gazette of India Notification dated
29.11.2002, incorporating the unconscionable conditions under Clause
(a) and Note 1 of Column 12 of the 2002 Inspector Recruitment Rules.
This prayer is also based on the restructuring process, having effect
F from 19.07.2001. The Tribunal has not granted the relief in paragraph
8(b) of the Original Application. This means that the persons in
Category (a) of Column 12 of the Inspector Rules, cannot be affected.
The result is that it exposes the fallacy in grant of Relief 8(c). In fact,
there are two basic flaws. In the first place, as we have noticed, the
G restructuring did not come into effect on issue of communication dated
19.07.2001. The restructuring came into effect only with the issuance
of Rules, for reasons, which we would have already explained. This
by itself takes away the entire basis of the Tribunal’s Order. Secondly,
the Tribunal has not declared the Statutory Rule infirm, which was the
specific relief sought for by the appellants in Relief 8(b). In other words,
H Clause (a) of Column 12 and the Note, in the 2002 Inspector Rules
D. RAGHU AND OTHERS v. 159
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

impugned on the one hand, continues on the Statute Book, whereas, A
the declaration is purportedly granted under paragraph 8(c), which
necessarily involves declaring that only persons re-designated under the
restructured cadres in Clause (b) as Senior Tax Assistants, inter alia,
would be entitled to be considered for promotion as Inspector of Central
Excise and Customs. In fact, the Order of the Tribunal at Chandigarh
B
also did not involve granting any exclusive right to the persons in the
restructured Cadre falling in Clause (b). The decision of the Bombay
High Court also does not reflect any such reasoning. It is well-settled
that when Statutory Rules are challenged, they are upheld, or if
warranted, declared ultra vires or read down, if possible. The Order
of the Tribunal is specific that what is granted, is the relief contained C
in paragraph 8(c) of the Original Application. Resultantly, Clauses (a)
and (b) continued to be on the Statute Book. The Tribunal has rather
allowed the Original Application partly and found that the appellants
are also entitled to be considered for promotion as Inspector. In Arriving
at this conclusion, the Tribunal has drawn support undoubtedly from the
D
views expressed by the Central Administrative Tribunal, Chandigarh,
the Central Administrative Tribunal, Madras and the High Court of
Bombay.
WHETHER STA COULD ADD SERVICE AS DATA ENTRY
OPERATORS AND WHETHER PERSONS IN CLAUSE (A)
HAD AN EXCLUSIVE RIGHT FOR TWO YEARS? E

90. What is to be the eligibility condition flowing from the
requirement in Clause (b) that Senior Tax Assistants should have put
in two years’ service in the Grade. It is the contention of the respondents
that what is contemplated by the Law Giver is that only persons
mentioned in Clause (a) to Column 12, who were incidentally persons, F
who fell in the feeder category under the 1979 Rules, are to be
considered for filling-up vacancies for a period of two years, and it is
therefore their contention that the right of persons mentioned in Clause
(b) arises only after the expiry of two years, and till then, the persons,
who are qualified in Clause (a), are alone to be considered during these G
two years. It is also seen that the use of the word ‘Grade’ is referred
to, to contend that appellants, who were working as Data Entry Operator
Grade ‘B’, were not in the same Grade, in terms of the pay-scale to
which they became entitled upon the restructuring coming into effect
w.e.f 20.01.2003. In other words, appellants, who were on a lower pay-
scale than the Senior Tax Assistants, and thus only after 20.01.2003, H
160 SUPREME COURT REPORTS [2020] 5 S.C.R.

A when the actual restructuring became a reality, the appellants would
commence working in the Grade, meaning the post with the scale of
pay attached to the post of Senior Tax Assistant.
91. On the other hand, the case of the appellants is that a perusal
of the Rule 5 of Senior Tax Assistant Recruitment Rules, 2003, would
B show that the appellants were entitled to take into consideration the
service which was rendered by them prior to 2003. We also notice
another aspect, viz., there is the case for the respondents that Note 1
to Column 12 contemplates that the service rendered by persons, falling
in Clause (a) in the restructured cadre, could be considered for the
purpose of calculating the period required under Column 12. Therefore,
C an attempt is made to contend that the provisions of Rule 5 must also
be understood in the said vein. Let us look at the issue with concrete
examples:
(i) An U.D. Clerk is eligible to be considered for promotion
as Inspector under Clause (a). He has to, however, put
D in certain number of years.
(ii) The U.D. Clerk, who has less than requisite service as
on 20.01.2003, in order that he be considered for
promotion as an eligible person under Clause (a), it is
quite clear that he can add the service after 20.01.2003
E as Senior Tax Assistant to the previous service and make
a claim for being considered. The latter part of Note 1
to Column 12, in our view, is only to clothe persons
falling in Clause (a) with the right to add the service in
the restructured Cadre. But that is not to say that Rule
F 5 of the Senior Tax Assistant Recruitment Rules, 2003,
has the same object.
92. Coming back to the issue, as to whether a person falling within
the four walls of Rule 5 of the 2003, Rules can stake a claim for
counting the previous service prior to 20.01.2003, we are of the view
G that the appellants are right that they are entitled to count the previous
service. The words used in Rule 5 are unambiguous and clear. In this
regard, we must also deal with the yet another contention based on
the differences between Rule 5 of the Senior Tax Assistant Recruitment
Rules, 2003 and Rule 4 of the Tax Assistant Rules, 2003. It may be
true that there is some difference but, in our view, the words used
H differently in the two provisions, are not meant to take away the right,
D. RAGHU AND OTHERS v. 161
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

which was conferred on persons who were on restructuring to be A
designated as Senior Tax Assistants and Tax Assistants.
93. In Rule 5, what is contemplated is that the service rendered
by Data Entry Operators Grade ‘B’ and ‘C’, inter alia, before
commencement of the Rules is to be taken about for eligibility for
promotion to the next higher grade. No doubt, in Rule 4, of the Tax B
Assistant Rules, the Rule Maker has become more articulate. They
have referred to the words like ‘respective post’, before commencement
of Rules and ‘regular service’ which expressions are conspicuous by
their absence in Rule 5 of the Senior Tax Assistant Rules. Better wisdom
prevailed on the Law Giver in the course of few months to attain clarity
in thought and expression but we would not be gleaning the intention C
of the Law Giver, if we were oblivious to the context and the object
with which the entire exercise of restructuring was carried out. They
would also amount to introducing an element of discrimination between
the Senior Tax Assistants and the Tax Assistants in the conferring of
benefits. Of foremost importance is that the view we have taken is
D
warranted by even the plain words used in Rule 5. Rule 5 clearly
indicates that the service which was rendered by a Data Entry Operator
Grade ‘B’ and ‘C’, inter alia, prior to the commencement of the Rules,
would be considered for promotion. This leaves us in no doubt that the
intention was to allow the Data Entry Operator both Grade ‘B’ and
‘C’, inter alia, to tag their previous service that is prior to 20.01.2003 E
for the purpose of calculating the requisite period of service under the
2002 Inspector Rules. It would appear that what was contemplated was
that the Inspector Rules and the STA Rules would be brought into force
at the same time. If it had so happened, the following consequences
would have followed. Not only would STA would be a feeder category
but STA would have been able to count their previous service as Data F
Entry Operator Grade ‘B’, inter alia. Still further, under Note 1,
promotion under Clause (a), was to be operative for a period of two
years, from the date the restructured cadre, under Clause (b), was to
come into existence. Apart from indicating that the restructured cadre
‘was to come into force’ and, therefore, it had not come into force as G
on 19.07.2001 as contended by the Data Entry Operators, the promotion
from Clause (a) being predicated on the point of time when the
restructured cadre came into force, if the STA Rules were also brought
into force from 07.12.2002, the service rendered by persons under the
restructured Grade could have been availed of by persons in Clause
(a) from 07.12.2002. H
162 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 94. As regards the argument that under the 2002 Inspector Rules,
persons in Clause (a) were given an exclusive right to be promoted for
a period of two years, we see little merit in the same. Clause (c) of
Column 12 provides for promotion from the categories thereunder, in
the absence of persons falling in Clause (b). No such rider is found in
Clause (b). If the STA Rules had been brought into force on 07.12.2002,
B then, it is clear that adding two years as Data Entry Operator Grade
‘B’, the appellants would certainly be eligible, particularly, keeping in
mind the intent in Order dated 28.10.2002. There can be doubt that
nothing stands in the way of appellants and others similarly situated being
considered from 20.01.2003 by adding the service as Data Entry
C Operator Grade ‘B’. Both, persons in Clause (a) and persons in Clause
(b), subject to being possessed of qualifications, could compete for the
vacancies. The right of those in Clause (a), would come to an end from
19.01.2005.
95. The effect of STA Rules, 2003 coming into force only on
20.01.2003 qua vacancies that existed prior to 20.01.2003, the effect
D
of promotion made from other categories, and the direction by the
Tribunal to consider appellants for promotion and apply Rules as to
seniority.
96. There can be no doubt that the STA Rules came into effect
on 20.01.2003. The restructured cadre of STA became a reality from
E 20.01.2003.
97. The problem, however, arises as what is to be done qua
vacancies of Inspector which were purportedly filled-up as on
20.01.2003 pursuant to Notice dated 05.11.2002 which was impugned
in O.A. 1362 of 2002. The Tribunal has not interfered with the notice
F dated 05.11.2002 but it has found that it was not in accordance with
the Rules (apparently Inspector Rules 2002 which superseded the 1979
Rules). But this is again premised on the restructuring becoming a reality
with effect from 19.07.2001. This, we have found to be erroneous.
98. The Tribunal notices the contention of respondents that
G selection has been finalised for categories other than Data Entry
Operator Grades ‘B’ and ‘C’ and existing vacancies were filled-up.
Thereafter, the Tribunal, on the basis that it found appellants were also
eligible, directed appellants to be considered taking into consideration
their service as Grade ‘B’ and with opportunity to take the exam. If
they were found successful and selected as Inspector, suitable seniority
H was to be assigned based on Rule 5.
D. RAGHU AND OTHERS v. 163
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

99. Here, it is necessary to notice that persons in Clause (a), A
under the 2002 Rules, could be promoted for a period of two years
from the date the restructured categories under Clause (b) came into
force. Thus, the promotion involving 2002 Rules from Clause (a) could
be for a two year from 20.01.2003 as the restructured category came
into force only on 20.01.2003, even according to the respondents. Thus,
B
for both categories in Clauses (a) and (b) (STAs), their eligibility under
2002 Rules, commenced only from 20.01.2003.
100. If so, the question would be the effect of promotion already
made as noted by the Tribunal itself. As on 05.11.2002, the 1979 Rules
governed promotions. The status of the draft Recruitment Rules is no
longer res integra. While, promotion can be based on draft Recruitment C
Rules, it cannot be done, if the draft Rules are in the teeth of existing
Statutory Rules. In this regard, we may notice the following discussion
in Union of India through Govt. of Pondicherry and another v. V.
Ramakrishnan and others10:
“28. Valid rules made under proviso appended to Article 309 of D
the Constitution operate so long the said rules are not repealed
and replaced. The draft rules, therefore, could not form the basis
for grant of promotion, when Rules to the contrary are holding
the field. It can safely be assumed that the principle in Abraham
Jacob; (1998) 4 SCC 65 : 1998 SCC (L&S) 995, Vimal Kumari; E
(1998)4 SCC 114: 1998 SCC(L&S) 1018 and Gujarat Kishan
Mazdoor Panchayat; (2003)4 SCC 712 : 2003 SCC (L&S) 565
that draft rules can be acted upon, will apply where there are
no rules governing the matter and where recruitment is governed
by departmental instructions or executive orders under Article
162 of the Constitution.” F

101. The Tribunal granted relief by giving the declaration under
8(c), which we have found unwarranted. The High Court has found
that regarding the vacancies prior to 07.12.2002, it is to be filled-up as
per the 1979 Rules.
G
102. Thus, it is clear that vacancies were filled- up as per notice
dated 05.11.2002 from persons falling under Clause (a), who
corresponded to the feeder category in the 1979 Rules. The appellants
have not laid any challenge to the Order of the Tribunal.
10
2005(8) SCC 394 H
164 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 103. It is to be remembered that the ban on direct recruitment
was to come to an end on 31.12.2002. There were 242 vacancies of
Inspectors in Hyderabad Commissionerate. It is true that under letter
dated 28.10.2002, and even read with letter dated 14.11.2002, what was
contemplated was promotion under the draft Recruitment Rules for
B Inspector and STA. Promotion orders were to be made only after GSR
Number were made for the Draft Rules, meaning thereby, after it was
finalised. They were intended, as already found, to be operated at the
same time, thus, rendering both categories in Clauses (a) and (b), to
be considered. We are of the view that having regard to the fact that
vacancies were not filled-up, as can be seen from communications dated
C
10.09.2001 and 05.06.2002, in the light of the restructuring that took
place in the Department, it would appear that a conscious decision was
taken to not fill-up the vacancies arising from the restructuring based
on 1979 Rules. Instead, communication dated 28.10.2002 clearly would
show that the vacancies were to be filled-up, based on the proposed
D new Recruitment Rules. This being the case, the High Court was in
error in proceeding on the basis that the principle in Y.V. Rangaiah
(supra) would apply.
104. Till 07.12.2002, the STA was not even in Feeder Category.
We have also held that the STA Cadre is born on 20.01.2003. There is
E
a case for the respondents that the ban on direct recruitment (which is
also a method of appointment) was to come to an end. There was a
need to have Inspectors in a larger number of vacancies. The STA
Cadre could not have been used to fill the vacancies. The finding that
from 19.07.2001, the restructured Cadre came into being, is
F unsustainable. In such circumstances, though it may be true, intention
was to fill-up the vacancies after both sets of Rules were operationalised,
promotions were made. As to whether it is legal, the answer can be
that promotion, as per extant Rules, given in vacancies prior to the new
Rules, is recognized. This is not a case where the Authority was denying
G promotion to vacancies based on the earlier Rules. We also notice that
based on such promotion, further promotions have been given. The
appellants were directed to be considered for vacancies, which were
filled-up after. We cannot, in the circumstances, be persuaded to hold
that the Tribunal was right in directing the respondents to revise the
seniority qua promotion made earlier.
H
D. RAGHU AND OTHERS v. 165
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

LEGALITY AND CORRECTNESS OF HIGH COURT A
DIRECTING VACANCIES TO BE FILLED WHICH
EXSISTED PRIOR TO 07.12.2002
105. The High Court has left open the question about entitlement
to promotion to vacancies after 07.12.2002. It has directed all vacancies,
which are prior to 07.12.2002, to be filled-up as per the 1979 Rules. B
While, we agree that the STA cadre was born on 20.01.2003, clearly,
the whole purpose was to simultaneously operate the Rules, both relating
to Inspector and STAs. This would have resulted in STA being
considered with the experience they had as Data Entry Operator Grade
‘B’ also. This, as already noticed, was a case where the Authority C
clearly intended to fill-up the vacancies of Inspector under the new
Recruitment Rules. However, the vacancies, which were filled-up,
cannot be subjected to a review based on Rules relating to seniority in
Rules 5(i) of the STA Rules, based on promotion orders on dates, when
on the dates, on which the vacancies stood filled-up, the appellants were D
not even in the cadre.
106. But the High Court was not right in directing filling-up of
vacancies prior to 07.12.2002, based on the 1979 Rules, as after the
2003 Rules came into force, going by the intention of the Authority, the
right to promotion would be based on the new Rules, even if the E
vacancies arose prior to the new Rules. That is to say, when the High
Court disposed of the matter, if any vacancy remained to be filled-up
in the Cadre of Inspector, then, as the STA Rules had come into
existence on 20.01.2003, the STAs armed with the right to add service
as Data Entry Operator Grade ‘B’, were entitled to be considered.
F
However, it is here that the impact of the matter, having been pending
in this Court for more than a decade, and, in the meantime, the
judgment being implemented and further promotions being made, cannot
be lost sight of, even in an Appeal, which is maintained by grant of
Special Leave, as in this case. It is open to the Court to decline to
interfere. We bear in mind the principles laid down by this Court in G
Taherakhatoon (D) By Lrs. v. Salambin Mohammad11 and would not
disturb the direction to fill-up the vacancies which arose prior to
07.12.2002, as directed.

11
(1999) 2 SCC 635] H
166 SUPREME COURT REPORTS [2020] 5 S.C.R.

A VACANCIES OF INSPECTOR WHICH AROSE AFTER
07.12.2002
107. As noted, the High Court has left open the question about
entitlement to vacancies after 07.12.2002. The STA rules came into
force on 20.01.2003. The restructured cadre of STA came into force
B on that said day. We have already found that STAs are entitled to count
their previous service as Data Entry Operators Grade ‘B’ for the
purpose of promotion under 2002 Inspector Rules. Even, persons in
Clause (a) of the 2002 Inspector Rules, would be entitled to be
considered for promotion under 2002 Rules from the date on which the
restructured cadre in Clause (b) came into force. Thus, both persons
C in Clauses (a) and (b)(STA Cadre) became entitled to be considered
for promotion under the two sets of Rules with effect from 20.01.2003.
Certainly, the appellants having worked as Data Entry Operator Grade
‘B’ are entitled to add the period of service as Data Entry Operators
Grade ‘B’. Thus, vacancies of Inspector, to be filled-up by promotion,
D must be filled-up by considering both on the basis of the seniority, under
Rule 5 of the 2003 STA Rules. The appellants would be entitled also
to be considered for promotion based on the same on the basis of the
entitlement, as aforesaid.
CIVIL APPEAL NO. 1976 OF 2009
E 108. The appellants challenge the common judgment passed by
the High Court in Writ Petition No. 2378 of 2005 and Writ Petition No.
45 of 2005. The appellants filed this Appeal with the leave of the Court
as they were not parties to the Writ Petitions. The Writ Petitioners, two
each in the two Writ Petitions, were the four applicants (hereinafter
F referred to as ‘the applicants’) in O.A. 1040 of 2003 filed before the
CAT, Hyderabad.
109. The case in brief, set up by the four applicants before the
Tribunal, was as follows:
Applicant nos. 1 and 2 were appointed as Lower Division Clerk
G (L.D.) and they were working as such. Applicant nos. 3 and 4 were
appointed as L.D. Clerks and were working as U.D. Clerks. Applicant
nos. 1 and 2 set the claim for promotions as U.D. Clerk under the
Recruitment Rules of 1979. Applicant nos. 3 and 4, on the other hand,
claimed promotion as Tax Assistant under the said Rules. There is
reference to the various orders, which we have already referred to in
H
D. RAGHU AND OTHERS v. 167
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

connection with the post of Inspector, including order dated 19.07.2001. A
It is the further case that the respondents who, it may be noted, were
official respondents, had conducted DPC for all other cadres upto
Inspectors and issued promotion orders. Only with regard to the post
of Inspector, promotion orders were not issued before 31.12.2002 in
view of the stay passed in O.A. 1362 of 2002. The stay was vacated
B
on 31.12.2002 and the promotion orders were issued on the same day.
It is further stated that promotions were given to the extent of 214 on
31.12.2002. Due to the delay, U.D. Clerks were not being considered
for promotion as Tax Assistants and L.D. Clerks for U.D. Clerks. There
is discrimination. Meanwhile, new Recruitment Rules, i.e., STA Rules
2003 and Tax Assistant Rules 2003, which we have already referred C
to, have come into force in the process of restructuring and re-
designating of the posts. The said Rules are prospective in nature. The
old Rules prevailed till the new Rules came into force. Even if the DPC
is conducted after 31.12.2002, the vacancies that will be considered
would be only those which have arisen on or before 31.12.2002. The
D
restructuring cannot take away the accrued rights. They sought
promotion as per the old Rules. A direction was sought to promote them
under the Rules as U.D. Clerks and Tax Assistants from the date of
their eligibility and availability of vacancies with all consequential
benefits.
110. In their reply, the stand taken by the respondents to the O.A. E
was as follows, inter alia:
Since restructuring was directed, it was further directed that no
vacancy included in the restructuring, should be filled-up. The STA Rules
2003 and the Tax Assistant Rules 2003 came into force. On the
publication of the said Notification of the STA Rules of 2003 on F
20.01.2003, further promotions were regulated as per the Notification.
Under the Tax Assistant Rules 2003, under Section 4, all the U.D. Clerks
were deemed to have been re-designated as Tax Assistants and their
promotions have to be regulated further in the said cadre only. As far
as L.D. Clerks were concerned, under the 2003 Tax Assistant Rules, G
on passing departmental examination, they were to be deemed to have
been promoted as Tax Assistants. Thus, the stand was that Applicant
nos. 1 and 2 would, on passing departmental examination under the 2003
Rules, become Tax Assistant, whereas, Applicant nos. 3 and 4, who
were U.D. Clerks, were deemed to have been appointed as Tax
Assistants in the very same pay-scale and they have to work out the H
168 SUPREME COURT REPORTS [2020] 5 S.C.R.

A promotions under the said cadre. Delay was attributed to court cases.
It was denied that Department has not followed instructions in Order
dated 19.07.2002 as all the vacancies, which arose before the
restructuring, were duly filled-up under the old Rules. It is lastly pointed
out that the chain vacancies in the Inspector cadre, upon filling up the
post of 373 posts of Superintendent, were filled-up by following the
B
Recruitment Rules notified on 29.11.2002 superseding the earlier
Recruitment Rules. Filling-up of the post was done by from those
candidates working in the pre-structured cadre. The consideration of
the pre-structured cadre was to be operative for two years from the
date on which the restructured cadre came into force. The said
C promotions were part of restructuring following the amended Rules. The
Draft Recruitment Rules were also notified for the restructured Cadre
and, as such, the contention of the applicants that the said promotions
were done following the earlier Rules and as such they were entitled
to be considered based on the earlier Recruitment Rules, was pointed
as untenable and liable to be rejected (Thus, it may be noted that the
D
stand taken in this O.A. by the official respondents was the persons
who were promoted as Inspectors, were give promotions in terms of
their being part of the pre-structured cadre). The Tribunal dismissed
the O.A. by Order dated 10.12.2004 after noticing the contentions and
noticing the arguments based on Y.V. Rangaiah (supra) among the other
E decisions and found that there is no case for grievance. Noticing that
with regard to one of the grievances, viz., need to pass ministerial staff
examination, it was already redressed by deleting this requirement for
promotion as Senior Tax Assistant. Through proceedings dated
04.06.2001, the further contention relating to seniority was also dealt
with by noticing that since the date of their entry into the feeder cadre
F
would be one of the relevant factors and it had not been finalised, the
applicants could represent against the seniority. It also drew support
from another order passed by Tribunal in two other O.A.s dated
15.10.2004 (O.A.s 834-835 of 2009) and found that the issue involved
was one and the same and agreed with it. It was found that the
G applicants had been placed on the higher pay-scale.
111. The High Court, in the two Writ Petitions, filed by the four
Applicants, allowed the same drawing support from the judgment
rendered in the case relating to the Inspectors and it found that
promotions to the post of U.D. Clerk and Tax Assistant was to be made
H as per the old Rules in respect of the vacancies which arose prior to
D. RAGHU AND OTHERS v. 169
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

05.05.2003. Substantially, the contention, appellants have taken, is based A
on Dr. Ramulu (supra). The contention is also that the intention and
the conscious decision of the Government was not to fill-up any
vacancies by way of 100 per cent promotions until the amended
Recruitment Rules were notified in the Official Gazette. There is also
a case for the appellants that the order of the High Court runs counter
B
to the judgment of the Bombay High Court and the orders of the
Tribunal which we have already referred to in connection with other
cases.
112. Under the 1979 Rules, on the basis of an amendment, the
post of Tax Assistant (old) was incorporated by GSR 314 dated
12.07.1996. Thereunder, post of Tax Assistant (old) was included in the C
1979 Rules. Promotion to the post was to be from the post of U.D.
Clerk with three years’ service subject to their passing a departmental
exam with minimum marks of 40 per cent. There are other rights given
to Senior Clerks under the Note. We have already extracted the Tax
Assistant Rules 2003. It is the appellants case that it is established law D
that vacancies created due to cadre restructuring shall be filled in
accordance with new Recruitment Rules. There is reference, in fact,
to order dated 26.09.2005, implementing the orders of the High Court.
113. Under the 1979 Rules, the post of U.D. Clerk was to be
filled-up 50 per cent from direct recruitment and 50 per cent by E
promotion. One of the feeder categories was L.D. Clerks with seven
years’ service which was relaxable up to five years. The second Feeder
Category was Women Searchers recruited prior to 09.05.1975 with five
years’ combined service as Women Searcher and L.D. Clerk and who
have passed departmental or promotional exam.
F
114. It may be noted that the 1979 Rules, insofar as it related to
the post of U.D. Clerks and Tax Assistants, continued to remain in force
even after the promulgation of the Inspector Rules, 2002 and the Senior
Tax Assistant Rules. It is when the Tax Assistant Rules were made in
supersession of the 1979 rules so far as it related to the post of U.D.
Clerk and L.D. Clerk that the 1979 Rules ceased to apply. Thus, 1979 G
Rules continued to be in force in regard to the post of U.D. Clerk and
L.D. Clerk till 05.05.2003.
115. Under the 2003 Tax Assistant Rules, brought into force w.e.f.
05.05.2003, as contended by the official respondents before the Tribunal,
the persons working as U.D. Clerks, were to be established as initial H
170 SUPREME COURT REPORTS [2020] 5 S.C.R.

A cadre of Tax Assistants. So also, the L.D. Clerks, upon passing the
examination, were to become Tax Assistants. The posts of U.D. Clerk
and L.D. Clerk are Group ‘C’ posts. No doubt, the ban, which was
imposed on direct recruitment, was to continue till 31.12.2002 (See
Order dated 19.09.2002). By Order dated 28.10.2002, which we have
already extracted, the draft Recruitment Rules for Inspector and Senior
B
Tax Assistants was communicated and the process was to be set in
motion and promotion was to await the issue of Notification.
116. As far as the post of Tax Assistant is concerned, by the
order dated 06.11.2002, all the Chief Commissioners were forwarded
the draft Recruitment rules for Tax Assistants which was approved by
C the Ministry. The Commissioners were to initiate necessary action for
the process of DPC, etc. The issue of any order passed under the draft
Tax Assistant Recruitment Rules was to await issue of Notification of
the said Rules. However, on 14.11.2002, it ordered, inter alia, that DPC
in the remaining Grades except DOSL-222 may be held on the basis
D of the existing Recruitment Rules and the promotion orders issued by
25.11.2002.
117. As far as the post of L.D. Clerks and old Tax Assistants is
concerned, the vacancies, which existed as on 06.11.2002, were to be
filled-up under the existing Recruitment Rules (See letter dated
E 14.11.2002). The orders were to be issued by 25.11.2002. By 25.11.2002,
the Tax Assistant Rules were not even finalised, leave alone brought
into force. The Tax Assistant Rules came into force only by publication
on 03.05.2003 and brought into force two days thereafter, i.e., on
05.05.2003. Going by letter dated 14.11.2002, the principle that
vacancies must be filled-up in accordance with the existing Rules, would
F appear to apply. The intention of the Authority would also appear to be
the same as is evident from Clause (3) of Order date 14.11.2002.
118. In such circumstances, there is no scope for any ambiguity
and we are unable to find fault with the order of the High Court.

G SUMMARY OF CONCLUSIONS IN C.A. NOS.1970-1975 OF
2009
119. Summary of Conclusions in C.A. Nos. 1970-1975 of 2009,
is as follows:
1) Promotion to the post of Inspector was governed by the
H 1979 Rules till 07.12.2002.
D. RAGHU AND OTHERS v. 171
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

2) Under the 1979 Rules, Data Entry Operators were not A
among the feeder categories for promotion as Inspector.
3) By 19.07.2001, Cabinet approved restructuring of certain
posts including the post of Inspector. The number of
posts of Inspector fell from a little over 22000 to a little
over 18000. Thereunder, the post of Data Entry B
Operator Grade ‘B’ among other categories, were
merged and the cadre of Senior Tax Assistants emerged.
However, the restructured cadre of Senior Tax
Assistants, did not come into being.
4) The restructured Cadre of Senior Tax Assistants was C
born with the bringing into force of the Senior Tax
Assistant Rules 2003, on 20.01.2003. Data Entry
Operators Grade ‘B’, among other categories, were re-
designated as Senior Tax Assistants under Rule 5.
5) The Inspector Rules 2002, was brought into force on D
07.12.2002 superseding the 1979 Rules relating to
Inspectors.
6) The post of Senior Tax Assistant, which was not among
the feeder categories under the 1979 Rules, became one
of the feeder categories for promotion as Inspector, E
under Inspector Rules, 2002 under Clause (b) of Column
12.
7) There was a ban of promotion to the posts of Inspector.
This is clear from communications dated 10.09.2001,
03.01.2002 and 05.06.2002. The communication dated F
28.10.2002 read with communication dated 14.11.2002,
establish that the Draft Recruitment Rules which were
finalized on 29.11.2002 and brought into force on
07.12.2002 as far as Inspectors are concerned and Draft
Recruitment Rules finalized and brought into force on
20.01.2002 as far as Senior Tax Assistants are G
concerned, were to be basis for promotion to the post
of Inspector. As per Order dated 28.10.2002,
Departmental Promotion Committee (DPC), was to
operate, based on the draft rules but no promotion orders
were to be issued till the draft rules were finalized. With
H
172 SUPREME COURT REPORTS [2020] 5 S.C.R.

A order dated 04.11.2002 even the promotion orders were
permitted. The authority apparently contemplated
simultaneous bringing into force of the Inspector Rules
and the STA Rules.
8) The High Court was in error in holding that it has to be
B necessarily held that the vacancies which arose prior
to the revised Recruitment Rules coming into force has
to be filled-up under then existing Rules (the 1979 Rules)
relying upon case law including Y.V. Rangaiah (supra).
There was a conscious decision taken to not fill-up
vacancies based on the restructuring, and what is more,
C letters dated 28.10.2002 and 14.11.2002 show that
promotion to the post of Inspector was to be effected
based on the new recruitment rules.
9) It is while so, that in the Hyderabad Commissionerate,
by Notice dated 05.11.2002, persons falling under Clause
D (a) of Column 12 of the ‘Draft Inspector Rules’ who
also corresponded to the feeder categories under the
‘extant’ Statutory Rules, the 1979 Rules, alone were
called for selection as Inspector.
10) The benefit of reckoning service under Note 1 to
E categories in Clause (a) would be available only after
the restructuring came into effect which was on
20.01.2003. This also indicates that the powers that be
contemplated simultaneous operation of the ‘Inspector
Rules’ and the Senior Tax Assistant Rules.
F 11) However, the Inspector Rules and the Senior Tax
Assistant Rules were enforced with a gap of about
six weeks.
12) The appellants even proceeding on the basis that they
were to be treated as Senior Tax Assistant as on
G 07.12.2002, were not having the two years’ experience
required under the 2002 Inspector Rules.
13) With the 2003 Senior Tax Assistant Rules brought into
force on 20.01.2003 under Rule 5(1), the appellants who
were working as Data Entry Operators Grade ‘B’ could
H take into consideration their service as Data Entry
D. RAGHU AND OTHERS v. 173
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

Operators Grade ‘B’ for reckoning the period of two A
years stipulated under the 2002 Inspector Rules. In this
regard, the finding of the Tribunal is correct. Appellants
in O.A. have stated that they were promoted as Data
Entry Operator Grade ‘B’ in April 2000. If so, their
service as such would count and even as on 07.12.2002,
B
they would have 2 years’ service as contemplated under
the 2002 Rules. As on 20.01.2003, certainly, they would
be eligible to be considered for promotion as Inspectors.
14) The Tribunal not having granted prayer 8(b), the Draft
Recruitment Rules, 2002 relating to Inspectors as
finalized which was impugned remained intact. The C
Tribunal clearly erred in granting the declaration, as
sought for in paragraph 8(c), recognizing exclusive right
to the restructured Cadre.
15) The restructuring Order under letter dated 19.07.2001,
fructified and became complete and effective relating D
to the post of Senior Tax Assistant only on 20.01.2003.
The findings to the contrary by the Tribunal stood
correctly set aside by the High Court.
16) The Tribunal has not interfered with the promotion
already granted to persons drawn from the categories E
other than the Senior Tax Assistant pursuant to Notice
dated 05.11.2002.
17) Ban of Direct Recruitment was to end on 31.12.2002.
In respect of promotion made earlier and not interfered
with, the Tribunal could not have directed review of F
seniority based on later promotions as Inspector. The
appellants cannot be given seniority based on later
promotions qua promotions given, which cannot be
termed illegal, when as on the date of earlier promotions,
appellants were not even in the cadre. Promotion from G
Senior Tax Assistant could have been made only
20.01.2003 at the earliest. Even the categories in Clause
(a) could have been promoted under the 2002 Inspector
Rules, vide Note 1 only for two years starting from the
date the restructured Cadre in Clause (b) come into
force, i.e., 20.01.2003. H
174 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 18) We reject the contention that persons in Clause (a) of
Column 12 of the Rules, who were also in the feeder
categories for promotion under 1979 Rules, had an
exclusive right to be considered for promotion for a
period of two years.
B 19) While promotions can be made based on Draft
Recruitment Rules, it cannot be so made, if the Draft
Rules are in the teeth of existing Statutory Rules [V.
Ramakrishnan and others (supra)]. In this case, however,
under Orders dated 28.10.2002 and 14.11.2002, what
was contemplated was processing by DPC under the
C Draft Recruitment Rules and issue of the promotions
orders after the Draft Rules were finalized.
20) However, till 07.12.2002, under the 1979 Rules, being
also feeder categories under the said rules, those in
Clause (a) Column 12, 2002 Inspector Rules could be
D promoted. While it may be contrary to what was
contemplated by the Central Authority (as evident from
letters dated 28.10.2002 and 14.11.2002) promotions
were made, which could not be termed illegal. Even the
Tribunal has not set aside the promotions.
E 21) The High Court has directed the filling-up of vacancies
prior to 07.12.2002 as per the 1979 Rules. In this regard,
having regard to the fact that the vacancies were not
filled-up as per the ban, as can be seen from 10.09.2001
and 05.06.2002, and it was specifically contemplated
F under letter dated 28.10.2002 that vacancies arising
from restructuring be filled-up, as per the new
Recruitment Rules, the principle in Y.V. Rangaiah
(supra) may not apply and it was the Rules as on date
of filling-up the vacancies, that would count. As on the
date of the High Court Order, the STA Rules 2003, had
G come into force on 20.01.2003. Thus, vacancies existing
prior to 07.12.2002 and which were not filled-up, must
be filled-up by considering STA (Appellants) including
their service as Data Entry Operators Grade ‘B’.
22) But it is here that the impact of the matter remaining
H pending, and in the meantime, implementation of the
D. RAGHU AND OTHERS v. 175
R. BASAVESWARUDU AND OTHERS [K. M. JOSEPH, J.]

judgment and what is more, further promotions being A
made cannot be lost sight of. We bear in mind the
principle laid down in Taherakhatoon (D) By Lrs. (supra)
and would not disturb the directions to fill-up vacancies
which arose prior to 07.12.2002, as directed.
23) However, in case of vacancies of Inspector, which arose B
after 07.12.2002, the appellants would, undoubtedly,
have a right to be considered as explained hereinbefore.
In regard to such vacancies, the matter must be looked
into and seniority fixed, based on Rule 5 of the STA
Rules. The persons working in Clause (a) are also
entitled to be considered for a period of two years from C
20.01.2003 under the Inspector Rules to be considered
for promotion.
RELIEF IN CIVIL APPEAL NOS. 1970-1975 OF 2009
120. Civil Appeals Nos. 1970-1975 of 2009 are disposed of as D
follows:
The restructured cadre of Senior Tax Assistants came into force
on 20.01.2003. Appellants are not entitled to have seniority determined
in respect of vacancies of Inspector which arose prior to 07.12.2002.
The appellants are eligible to be considered for promotion from E
20.01.2003 and they are entitled to add their service as Data Entry
Operator Grade ‘B’ for the purpose of the 2002 Inspector Rules and
considered for vacancies to be filled by promotion, which arose after
07.12.2002. The persons in Clause (a) under Column 12 of the 2002
Rules, are also entitled to be considered for two years from 20.01.2003.
Seniority is to be considered based on Rule 5 of the STA Rules. The F
exercise, as above, if not carried out already shall be carried out. Further
promotions based on the above will be granted. However, we direct
that the promotions shall be notional where promotions have already
been effected, however, entitling the parties to seniority and pensionary
benefits. The above exercise shall be completed at the earliest. G
121. Civil Appeal No. 1976 of 2009 will stand dismissed.
122. There shall be no order as to costs in all the appeals.

Divya Pandey Appeals disposed of.
H