Holding

Rule 19 restricts appointment to Class I posts to selection or deputation; promotion is not a permissible mode of appointment.

Summary

The Uttar Pradesh State Tourism Development Corporation (UTTDC) governed appointments to its posts by Rule 19 of its 1981 Rules, which stipulates that Class I posts may be filled only by selection or deputation. Respondent No.1, I.B. Misra, a Manager Grade‑I, filed a writ petition seeking a selection process for the vacancy of General Manager, a Class I post, challenging the corporation’s practice of filling the post by deputation. The Allahabad High Court interpreted Rule 19 to allow promotion as a third mode of appointment, ordering the corporation to conduct a selection and to end the incumbent’s deputation. The Supreme Court held that Rule 19 expressly limits appointment to Class I posts to selection or deputation and contains no provision for promotion, thereby rejecting the High Court’s construction. Consequently, the Supreme Court set aside the High Court’s orders, dismissed the writ petition, and allowed the appeals.

Issues considered

Whether Rule 19 of the U.P. State Tourism Development Corporation Rules, 1981 permits promotion as a mode of appointment to Class I posts such as General Manager.
Whether the High Court's interpretation of Rule 19 to include promotion is legally valid.
Whether the corporation’s practice of appointing the General Manager by deputation is arbitrary in view of the statutory scheme.

Subjects

recruitmentselectiondeputationpromotionRule 19Class I postinterpretation of statutespublic service appointmentsadministrative law

Judgment

A U.P. STATE TOURISM DEVELOPMENT CORPORATION LTD.
.......
v.
l.B. MISRA AND ORS. ..
JANUARY 18, 1995

B (S.C. AGRAWAL AND G.N. RAY, JJ.]

Se1Vice Law-U.P. State Tourism Development Corporation Rules, \
1981-Rule 19-Recruitment-Post of General Manager in U.P. State
Tourism Corporation-Class I Post-Appointment by selection or by deputa-
c tion-Post cannot be filled by promotion.

The respondent No. 1 jointed the U.P. State Tourism Development
Corporation on the post of Manager Grade II and was promoted as
Manager Grade IA vacancy occurred on the post of General Manager in
the Corporation and the respondent No. 1 filed Writ Petition for directing
D the respondents to hold selection to the said post in accordance with the
,..
U.P. State Tourism Development Corporation Rules, 198i. The said post
of General Manager was being filled by deputation of officers in the State
Services of the Government of Uttar Pradesh.

The High Court allowed the petition commanding the respondents
E to make selection on the post of General Manager in accordance with
observations made in the judgment. It was held that rule 19 should be read
to the extent that Class I posts must be filled by promot~;.n from amongst
the eligible officers of the Corporation on the basis of seniority-cum-merit.
.?'
It was stated that only when no suitable candidate would be available for
F promotion to the post, th~ appointment to be made on deputation, failing
which the appointment could be made by direct selection. Review Petition
filed against the judgment was dismissed. Hence these appeals. The appel·
lants submitted that for the post of General Manager a person with high ..
administrative capacity was required and for that reason the post had been
a- filled by taking on deputation officers from different departments of the
Government who were working on various responsible positions involving /- ;..
high level of administrative abilities. I

Allowing the appeal, the Court

H HELD: The appointment to the post of General Manager in the U.P.
368
U.P. STATETOURlSM DEV. CORPN. 1•. I.B. MISRA (S.C. AGRAWAL. .T.] 369

State Tourism Dev~lopment Corporation is governed by Rule 19 of the U.P. A
State Tourism Development Corporation Rules 1981. Appointment on
Class I posts is restricted to two methods only, namely by selection or by
deputation. There is no provision in Rule 19 of the rules providing for
promotion as a mode of appointment for class I posts. The post of General
Manager in the Corporation being a class I post, it was not permissible B
for the Corporation to fill up the post by promotion. The fact that ever
since 1981 no appointment had been made by selection and all appoint-
ments on the post of General Manager had been made on deputation would
not justify construing Rule 19 as permitting mode of appointment to the
post by promotion. [374-A, 375-C-D]
c
Gujarat Housi11g Board E11gi,11eers Associatio11 a11d A11r. v. State of
Gujarat & Ors., JT (1993) 6 SC 469, distinguished. ·

Cou11cil of Scie11tific a11d l11dust1ial Research a11d Anr. v. KGS Bhatt
and Anr., [1989) 4 SCC 635 and Dr. Ms. Hussain v. Union of India, [1990)
Supp SCC 69, referred to. 0
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 818-19
of 1995.

From the Judgment and Order dated 24.3.94 & 13.5.94 of the Al-
lahabad High Court in W.P. No. 677/92 .& R.P. No. 65(W) of 1994. E

R.K. Jain, Ms. Lalita Kohli and Manoj Swamp for the Appellant.

Arun Jaitley, Ms. Indu Malhotra and Ms. Shirin Jain for the Respon-
~- dents.
F
The Judgment of the Court was delivered by

S.C. AGRAWAL, J. Leave granted.

These appeals relate to appointment bn the post of General Manager
in the U.P. State Tourism Development Corporation (hereinafter referred G
to as 'the Corporat~on') which is a company registered under the Com-
panies Act and is an undertaking of the Government of Uttar Pradesh. The
said appointment is governed by Rule 19 of the U.P. State Tourism
Development Corporation Rules, 1981 (hereinafter referred to as 'the
Rules'). The post of General Manager is a class one post in the Corpora- H
370 SUPREME COURT REPORTS [1995] 1 S.C.R.

A tion. I.B. Misra respondent No. 1, joined .the Corporation on the post of
Manager Grade-II in 1978. In March, 1984 he was promoted as Manager
Grade-I. He was selected for appointment on the post of Project Officer
by the Corporation in 1989 but as he was not appointed on the said post
he filed a Writ l>etition No. 4733 of 1991 which is pending before the
B Lucknow Bench of the Allahabad High Court. While the said Writ Petition
was pending a vacancy occurred on the post of General Manager in the
Corporation and respondent No. 1 filed Writ Petition No. 677 of 1992
giving rise to these appeals in the Allahabad High Court Court, Lucknow
Bench, wherein he prayed that direction, order or a writ of mandamus be
issued directing the respondents in the said Writ Petition to hold selection
C for. the said post of General Manager in accordance with the Rules. It
appears that the said post of General Manager is being filled by having on
deputation officers in the State services of the Government of Uttar
Pradesh. The High Court by its judgment dated March 24, 1994 allowed
the said Writ Petition filed by respondent No. 1 and issued a writ in the
D nature of mandamus commanding the respondents in the said Writ Petition
to make selection on the post of General Manager in accordance with
observations made in the said judgment within a period of four months and
it was further directed that the deputation of the present incumbent
holding the post of General Manager in the Corporation would come to
an end after the expiry of four months. Review Petition filed by the
E appellant against the said judgment was dismissed by the High Court by
order dated May 30, 1994. These appeals have been filed by the appellant
against the said orders dated March 24, 1994 and May 30, 1994 passed by
the High Court.

The question arising for consideration in these appeals relates to the
F interpretation of the Rule 19 of the Rules which reads as under :
"Rule 19. Sources of Recruitment:

Appointment to various posts under, the Corporation shall be
made by the appointing authority by any one of the following
G
methods:

(a) By direct recruitment.

(b) By promotion of Corporation employees through a
.·
H departmental test or an interview or selection by any
-{

U.P.STATETOURISMDEV. CORPN. v. l.B.MISRA(S.C.AGRAWAL,J.) 371

other manner prescribed by the Managing Director A
from time to time.

(c) By deputation from Government or any other
Central/State Corporation and other statutory body.

l d) By employment on contract basis. B

( e) From any other source as approved by the Board.

All Class I posts in the Corporation shall be selection posts and
will be filled by selection or by deputation. Such of those Corpon~- C
tion employees who are eligible in terms of qualifications, age and
experience, may also compete for selection.

Fifty percent of the class II posts will be filled by open market
selection and 50 percent reserved for the employees of the Cor-
poration. If however, it is found that sufficient number of D
employees are not available for filling in the quota by promotion
on the basis of merit, the Corporation may, fill those posts also by
open market selection. There will thus be no rigidity about quo~a
for direct recruitment or by promotion and there will not be any
accumulation or carry out to subsequent years. Promotions within
the various posts falling under class III will be made fifty percent E
by promotion from within the Corporation employees, provided,
suitable candidates are available, and fifty percent by promotion
from open market selection. In all the cases of promotions the
criteria of merit-cum-seniority for holding the higher posts will
apply and no person shall have a right to be promoted on the basis F ,
of seniority alone. Class III posts at the lowest stage will be filled
15 percent by promotion from class IV provided suitable can-
didates with requisite qualifications are available from amongst the
Class IV employees and rest by open market. The Corporation
may fill these posts also by open market on the non availability of G
the sufficient number of employees of filling in the quota for
promotion.

Notwithstanding anything contained in the above rules regar<il-
ing source of recruitment the Board will have full powers to modify
the source of recruitment or the stipulated percentages for direct H
372 SUPREME COURT REPORTS [1995) 1 S.C.R.

recruitment/pn:imotion and the Board's decision shall, in such
I
A .Jc·
cases, be final."

The said Rule, in clauses (a) to (e), prescribes five. methods for
making appointments on the various posts-under the Corporation. But in so
far as Class I posts are concerned, it is specifically mentioned that the said
B posts shall be selection posts and must be filled either by selection or by
deputation. In other words, appointment on Class I posts is restricted to
two methods only, i.e., (i) by selection or (ii) by deputation. The employees
of the Corporation who are.. eligible in terms of qualifications, age and
experience can also compete for such selection. In the matter of appoint-
C ment Class I posts differ from Class II and 'Class III posts. As regards Class
II posts the Rule postulates that 50 per cent posts have to be filled by open
market selection and 50 per cent have to be reserved for the employees of
the Corporation by promotion on the basis of merit. Insofar as Class III
posts are concerned, the Rule lays down that 50 per cent posts are to be
filled by promotion from within the Corporation employees on the basis of
D merit-cum-seniority and 50 per cent from open market selection. But 15
per cent of Class III posts at lowest stage are to be filled by promotion
from class IV employees and rest from open market. It would thus appear
that while appointment by promotion is envisaged on Class II and Class III
posts, there is no provision for appointment by promotion on Class I posts.
E
On behalf of respondent No. 1 it was urged before the High Court
that ever since 1981 the post of General Manager has been filled by
deputation of officers in State services and no appointment has been made
by selection even though Rule 19 makes provision for appointment on Class
I post by selection. It was also urged that the persons who have been _.>t
F appointed by deputation on the post of General Manager ever since 1981 .
did not possess the qualifications required for the post of General Manager
and, in this connection, reliance was placed on the qualifications that were ;!'
mentioned in the advertisement inviting applications for the post of Ii
I)
General Manager when the said post was advertised in the year 1987. The
G said qualifications were as follows :
"Graduate in any discipline or three years diploma in Hotel ,.,..,.. ...•
'
Management from a recognised Institute with minimum 15 y,ears
experience as Senior Manager in hotel industry."

H It was also urged on behalf of respondent No. 1 that on the proper
.,,,,
U.P.STATETOURISMDEV. CORPN. v. l.B. MISRA (S.C. AGRAWAL,J.J 373

construction of the rules, the Corporation sh~uld first consider suitable A
..,. candidates for appointment by process of selection and, only if no can-
didate was found suitable, the Corporation could resort to the mode of
appointment by deputation and it was not permissible for the Corporation
to completely ignore the mode of appointment by selection and to continue
making of appointments on the post of General Manager by deputation.
B
On behalf of the appellant it was submitted that advertisement which
... was issued in year 1987 was for an additional post of General Manager
Iii +- which was proposed to be created in connection with the policy to expand
the chain of hotels ir.. the State of Uttar Pradesh as a part of tourism
promotion but the said proposal to establish a chain of hotels was not c
approved by the Government and the post was not created. It has been
submitted that for the post of General Manager a person with high ad-
ministrativt? capacity is required and for that reason the post has been filled
by taking on deputation officers from different departments of the Govern-
ment who were working on various responsible positions involving high
~·
level of adm!nistrative abilities. D

While construing the provisions of Rule 19 the High Court has held:

"In nutshell, we are of the view that rule-19 should be read to the
extent that Class-I posts must be filled by promotion from amongst
the eligible officers of the Corporation on the basis of seniority
E
merit. Only when no suitable candidate would be available for
promotion to the said post from amongst the eligible officers of
the Corporation, the appointment may be made on deputation
from amongst the persons qualified for the said post on certain
qualifications, which may be laid down by the Corporation, failing F
which the appointment can be made by direct selection from
amongst the candidates called for interview."

In taking the said view the High Court has placed reliance on the
decision of this Court in Gujarat Housing Board Engineers Association &
Ahr. v. State of Gujarat & Ors., JT 1993 (6) S.C. 469. We find it difficult to G
......._
..;,J endorse the said view of High Court. As pointed out earlier, Rule 19 makes
a distinction between the appointment on Class I posts on the one hand
and Class II and Class III posts on the other. While in respect of Class II
and Class III posts provision has been made for appointment by promotion
from amongst the employees of the Corporation, there is no such provision H
374 SUPREME COURT REPORTS [1995) 1 S.C.R. ~

A for app_ointment by promotion in respect of Class I posts and appointment
on Class I posts can only be made by two modes, namely by selection or T
I

by deputation. The employees of the Corporation who are eligible in terms
of qualifications, age and experience can, however, compete for selection.
In these circumstances, we are unable to appreciate how the High Court
could construe Rule 19 as providing that Class I posts should be filled by
B promotion of eligible officers of the Corporation on the basis of seniority-
cum-merit and that only if no suitable candidate would be available for
promotion from amongst the eligible officers of the Corporation that the ..
appointment should be made on deputation and failing this, the appoint- -+ ~

ment can be made by direct selection from amongst the candidates com-
c peted. The High Court appears to have carved out a third mode of
appointment on the post of General Manager (which is a Class I post)
namely, by promotion, though Rule 19 does not provide for such mode of
I '
appointment. In our opinion, such a construction is not permissible. ~·

The decision in Gujarat Housing Board Engineers Association & Anr.
D v. State of Gujarat, (supra) on which reliance has been placed by the High ·~-

Court in coming to the aforesaid conclusion stands on a different footing.
In that case, in clause (1) of Regulation 3 of the Gujarat Housing Board
Services Classifications of and Recruitment Regulations, 1981, there were
three modes for appointment to the post of Assistant Housing Commis-
E sioner (Technical), (now Superintendent Engineer) namely, (i) promotion
of employees working as Executive Engineer in Board's Higher Services
on the basis of seniority-cum-merit; (ii) by calling Executive Engineer on
deputation from State Building and Communication Department; and (iii)
by direct selection from amongst the candidate called for interview. Jn
>
F clause (3) of Regulation 3 of the said Regulations, it was expressly
provided : "If a suitable candidate is not available for appointment by
promotion from among the Executive Engineers of the Housing Board, a
panel of names of Executive Engineers having at least 4 years standing
experience from the State B & C Department may be called for with a
proviso that no departmental inquiry should be pending against him. One
G of the vacancy will be selected by the Board and the selected candidate
·will be appointed by the Board." -~
\-
~

This Court construed clause (1) of Regulation 3 in the light of clause
(3) of the said Regulation to hold that the post must be filled by promotion
H of eligible Executive Engineers of the Housing Board on the/ basis of
U.P. STATE TOURISM DEV. CORPN. v. LB. MISRA (S.C. AGRAWAL, J.) 375

seniority-cum-merit and it is O!!lY if no suitable candidate is available from A
amongst the Executive Engineers of the Housing Board that the appoint-
ment should be made on deputation from a~ongst the Executive Engineers
of the State Building and Communication Department and failing this, the
appointment can be made by direct selection amongst the candidates called
for interview. The language used in Rule 19 of the Rules is, however,
different from that used in Regulation 3 of the Gujarat Housing Board B
Services Classifications of and Recruitment Regulations, 1981 which was
considered by this Court in Gujarat Housing Board Engineers Association
>
T & Anr. v. State of Gujarat, (supra). There is no provision in Rule 19 of the
Rules providing for promotion as a mode of appointment. Moreover, in
Rule 19 there is no provision similar to clause (3) of Regulation 3 of the C
said Regulations and it is left to the Corporation to make appointment on
Class I post either by selection or by deputation. The fact that ever since
1981 no appointment has been made by selection and all appointments on
the post of General Manager have been made on deputation would not
justify construing Rule 19 in the way the High Court has construed it.
D
It is no doubt true that as a result of appointments that have been
made on the post of General Manager by deputation the other mode of
appointment, namely, by selection, as provided in Rule 19, has been
rendered otiose. Shri R.K. Jain, the learned senior counsel appearing for
the appellant, has submitted that the Corporation has preferred appoint-
ment on the post of General Manager by deputation in order to secure E
officers having high level of administrative ability from the State Govern-
ment because for the post of General Manager a person with high ad-
ministrative capacity is needed and further inore an officer appointed on
deputation, if he is not found suitable for the job, can be sent back at any
time but this may not be possible if regular appointment is made by F
selection. Having regard to the aforesaid submissions made by Shri Jain we
are unable to hold that the Corporation has been acting arbitrarily in
making appointments on the post of General Manager by deputation and
in not resorting to the process of selection for making such appointment.

0
The High Court has observed that the present policy of making
appointment on the post of General Manager by deputation would result
in impairing the efficiency of the person holding a post just below the post
of General Manager because he knows that he would never be appointed
on the post of General Manager and would have to stagnate on that post
for ever. The High Court has pointed out that avenue of promotion is one fl
\)-

37~ SUPREME COURT REPORTS (1995] 1 S.C.R. t
A of the methods by means of which a person shows his skill and efficiency.
These observations are in consonance with the law laid down by this Court.
In Council of Scientific and lndustlial Research & Anr. v. K.G.S. Bhatt & ~

Anr., (1989] 4 SCC 635, it has been observed :

"A person is recruited by an organisation not just for a job, but for
B a whole career. One must, therefore, be given an opportunity to
advance. This is the oldest and most important feature of the free
enterprise system. The opportunity for advancement is a require-
ment for progress of any organisation. It is an incentive for per- <
sonnel development as well. Every management must provide -+
realistic opportunities for promising employees to move upward.
c The organisation that fails to develop a satisfactory procedure for
promotion is bound to pay a severe penalty in terms of administra-
tive costs, misallocation of personnel, low morale, and ineffectual
performance, among both non-managerial employees and their
supervisors. There cannot be any modern management must less
D any career planning, manpower development, management
development etc. which is not related to a system of promotions." .,..l_

Similarly in Dr. Ms. O.Z. Hussain v. Union of India, [1990] Supp. SCC 688,
it has been said :

E "This Court, has on more than one occasion, pointed out that
provision for promotion increases efficiency of the public service
while stagnation reduces efficiency and makes the service ineffec-
tive. Promotion is thus a normal incidence of service."

But this does not justify reading into Rule 19 the requirement that .?:
F appointment on the post of General Manager should be made by promo-
tion and if no suitable person was available appointment may be made by ,
deputation. That is a matter which appertains to the promotion pQljg to
be adopted by the Corporation. It is expected that the Corporation while
revising its promotion policy will keep in view these observations.
G
ln the result the appeals are allowed. The Judgment dated March 24,
1994 and the order dated May 13, 1994 passed by the High Court are set
.A-
aside and the Writ Petition filed by respondent No. 1 is dismissed. But in
the circumstances of the case, there is no order as to costs.
'-
A.G. Appeals allowed.