Holding

The combined seniority scheme and the administrative circulars are within the Central Board’s statutory powers and do not violate Articles 14 and 16 of the Constitution.

Summary

The case concerned a challenge by 25 Group I officers of the Reserve Bank of India to an Administrative Circular (No. 8, 7 January 1978) and an Office Order (No. 679, 27 April 1978) that introduced a combined seniority list and inter‑group mobility for officers across Groups I, II and III, with retrospective effect from 22 May 1974. The petitioners claimed the scheme violated Articles 14 and 16 of the Constitution and was ultra‑vires the Reserve Bank of India Act because the Bank lacked power to alter the 1948 Staff Regulations by circulars. The Court examined whether the 1948 Regulations were statutory, whether the Central Board could issue administrative circulars on service conditions under section 7(2) of the Act, and whether the combined seniority scheme infringed the equality guarantees. It held that the Staff Regulations were not framed under section 58, that the Board’s power under section 7(2) allowed it to issue such circulars, and that the scheme was a policy matter not subject to the equality clause. Consequently, the combined seniority list was deemed lawful and the petitions were dismissed.

Issues considered

The Reserve Bank of India (Staff) Regulations, 1948, are they statutory provisions made under section 58 of the RBI Act?
Does the Central Board of Directors have authority, under section 7(2) of the RBI Act, to issue administrative circulars altering service conditions without recourse to section 58?
Do the Administrative Circular No. 8, the Office Order, and the combined seniority list violate Articles 14 and 16 of the Constitution?
Is the retrospective application of the combined seniority scheme arbitrary, irrational or violative of the equality clause?

Legislation cited

Constitution of Indias. Article 14, s. Article 16
Reserve Bank of India Act, 1934s. 58(1), s. 58(2), s. 7(1), s. 7(2)

Subjects

seniority listinter‑group mobilityequality clauseArticle 14Article 16Reserve Bank of India Actadministrative circularultra viresservice conditionspublic sector employmentretrospective effect

Judgment

411
A
V.T. KHANZODE & ORS.
V.

RESERVE BANK OF INDIA & ANR. B
March 5, 1982

[Y.V. CHANDRACHUD, C.J., S. MURTAZA FAZAL ALI AND
A.O. Ko!HAL, JJ.J

Seniority-Draft combined seniority list fixed by the Administrative Circular c
No. 8 dated January 7, 1978, Office Order No. 679 dated April 27, 1978 by the
Reserve Bank, whether violative of Articles 14 and 16 of th• Constitution of
India.

Reserve Bank of India Act, (Act II) of 1974-Section 58(1) & (2), scope of-
Whether the power to·makt regulations emanate .from section 58(1)-Competency
of tlu! Central Board of Director~ to make regulations and to issue administrative D
Circulars in respect of service conditions of staff.

Retrospectivity of the operation of tlu s1niority scheme, ralidity of.

Under the Reserve Bank of India (Staff) Regulations, 1948 framed under
section S8 of the Reserve Bank of India Act 1934, the terms and conditions of
service of the staff (including officers) in the Reserve B""* were revised and E
regulated from time to time.

Ever since the date of the Staff Regulations ot 1948 and even prior thereto,
there were 0 groups" constituted for the different departments of the Reserve
Bank, and officers were required to exercise irrevocable options for service in any
particular Group, Those who had opted for a service in a particular Group were
to be normally eligible for promotion io that Group only. The grouping was (i
revi1ed with effect· from April 1951 when employees were asked to exercise their
option with regard to the Group of their choice. In 1951, the various depart-
ments of the Bank were rc classified into three Groups, Group I, Group II and
4

Group III. This system of grouping continued until 1955, in which year the
Ban'k found it necessary to 'reorganise the Agricultural Credit Department.
Accordingly, the staff attachect to the various departments were regrouped into
Groups I, ii, Ill, and IV, with effect from April I, 1957. In each of these G
Groups, there are six grades of officers based on pay scales, namely, Grades A,
B, C, D, E and F, the lowest being Grade A and the highest being Grade F.
Each Group had its own seniority list, that is to say, there were four separate
seniority lists, ooe for each group. The latest of such lists prior to the draft ·
com~inep seniority list of 1978 is dated July I, 1976. .
H
Earlier to the said list dated luly I, 1976, the Reserve Bank"had constituted
a Cadre Review Olmmi ttee in 1970 followed by another Committee. On the
SUPREME COURT REPORTS {i 982j j s.C.lt.
A basis of the report submitted by the Cadre Review Committee in October 1972,
the Bank issued an Administrative Circular No. 15 dated May 22, 1974 specifying
the decisions taken by it in the light of the recommendations made by the
Committee. One such decision which the Bank took was to prepare a common
seniority list for and to provide for inter-group mobility at the lowest Jevel of
officers in each group, namely, Grade A officers, including those who were pron10-
ted to Grade Bon or after January l·, 1970. With regard to. higher grades (in-
B cluding officers in Grade B promoted prior to January I, 1970), the Bank decided
to retain the "groupwise seniority as at present". The inter-group mobility in
Grades C and D was to be introduc~d only to a limited extent, namely, «on a
. swap basis". It was first to be introduced in Grade C and thereafter to be ex-
tended "in due course'' to the officers in Grade D. The two higher Grades,
namely, Grades E and F were left unt01:JChed and no intention was expressed in
the above circular to introduce either combined seniority or any scheme for
c inter-mobility in these grades. In accordance with the decisions expressed in the
Administrative Circular dated May 22, 1974 tho Bank published· separate senio-
rity lists of officers in Grade Band above for the years 1974, 1975 and 1976.

By the Administrative Circular No. ·3 dated January 7, 1978, the Bank.
stated that it had decided to combine the seniority of all officers on the basis of
their total length of service (including officiating service) in Group I (Section A),
Group II and Group III. The seniority of all officers in each of the three Groups
was to be combined with effect from May 22, 1974 on the basis of their total
length of service, ·including officiating service, in the grade in which they were
then posted on a reQ,ular basis. The Circular introduced combined seniority
with retrospective effect from May 22, 1974 (the date or Administration Circular
No. 15) as it was "fair and equitable to the officers as a class". The effect of
E this decision is that the group-wise system of seniority Which was in existence
for more than 27 years stands substituted by a combined seniority for officers in
Group I (Grade A) and in Groups II and IJJ with retrospective effect. That bas
adversely affected the existing seniority of officers, particularly of those in
/ Group I, who are now placed many places below their existing position of senio-
rity, some by several hundred places.

F Hence these twenty five petitions under Art. 32 by the petitioners, all of / '
,
whom are officers in Group I, and who are given their due seniority as on July l, .
1976.

Dismissing the petitions, the Court

HELD: 1:1. The Administrative Circular No. 8 dated 7-1-1978, the Office
G Order No. 679 dated 22-4-1978 and the draft combined seniority list are not vio-
lative of the rights of the petitioners under Articles 14 and 16 of the Constitution.
Whether there should be a combined seniority in different cat1res or groups is a
matter of policy which does not att1act the applicability of the equaJity
clause. [442 D·F] •
H
R6Serve Bank of lndia v. N. C. Paliwal, [1977] l SCR 377, applied and
followed.
V.t. KHANZODB V. RBSBRVB BANK 413
1:2. The historical events make it clear that the various Departments of
the Reserve Bank were grouped and regrouped from time to time. Such adjust·
A
meats in the administrative affairs of the Bank are a necessary sequel to the
growing demands of new situations which are bound to arise in any developing
economy, The group system has never been a closed or static chapter and the
officers of the various groups were not kept, as it were, in quarantine. The
group system has been a continuous process of trial and error and the impugned
scheme of inter-group mobility has emerged as the best solution of the experience B
of the past. Combined seniority has been recommended by two special commit-
tees, whose reports reflect the expertise and objectivity which was brought to
bear on their sensitive task. [441 B-D]

1:3. Inter-group mObility and common seniority are a safe and sound
solution to the conflicting demands of officers belonging to Group I on one hand
and those of Groups II and III on the other. Private interest of employees of
public undertakings cannot override public interest and an effort has to be made
c
to harmonize the two considerations. No scheme governing service matter can
be fool-proof and some section or the other of employees is bound to feel aggrie-
ved on the score of its expectations being falsified or remaining to be fulfilled.
[441 D·B)
Arbitrariness, irrationality, perversity and malafid.es will of course render
any.scheme unconstitutional but the fact that the scheme does not satisfy the
D
expectations of every employee is not evidence of these. Vested interests are
prone to hold on to their acquisitions and the Group I officers have to surrender
a part of the benefits which had accrued to them in a w'ater-tight system of
grouping. Combined seniority is indispensable for the smooth functioning of
the Bank and no organisation can function smoothly if one section of its officers
has an unfair advantage over others in matters of promotional opportunities. E
The reports of the Cadre Review Committee and the Tbareja Committee show
that combined seniority has emerged as the most acceptable solution as a matter
of administrative, historical and functional necessity". Further, the conclusion to
which these committees came were considered by the Bank when Shri M. Nara-
simhan, later India's Executive Director in the World Bank, was the Governor
and it was after Dr. I.G. Patel, Formerly Secretary, Economic Affairs, Govt. of
India and Deputy Administrator, United Nations Development Programme, took F
over as Governor in Oecembcr 1977 that the final devjsion was taken by the
Central Board to introduce inter-group mobility and combined seniority.
(441 B-H, 442 A·B)
' ).
2. As regards the retrospective operation given to Scheme with effect from
May 22, 1974, it does appear that the Board has struck a via media between two
extreme contentions advanced by officers belonging to Group I and those belong-
G
ing to Groups II and III. But that was inevitable and it was the best solution
in the peculiar circumstances of the case. Io order to rectify the imbalances
and anomalies caused by the compartmentalised and group-wise seniority, it was
necessary to give retrospective effect to the Combined Seniority List. Officers
belonging to Group I urged that the Scheme should be brought into effect from H
January I, 1976, while those belonging to Groups II and III wanted the Scheme
to be brought into effect from January 1, 1970. The Central Board struck a
balance by choosing the date May 22, 1974, because that was the dato on which
414 SUPkllME c!Jbkt ltEPbitts [19811 ~ s.c.k.
the decision in regard to combining the seniority retrospectively with effect from
January 1, 1970 in regard to Grade 'A' and part of Grade 'B' officers was annou-
nced. It was, again, on that date that the Bank bad announced that a simi-
lar decision in regard to the remaining grades of officers was under its considera-
tion. Thus, at least on May 22, 1974 it was known to officers of all grades that
a combined seniority list was due to be brought into force. If a certain section
of officers succeeded in obtaining promotional benefits thereafter, the imbaJance
B introduced thereby in the services of the Bank and the consequent dissatisfaction
had to be rectified. That could only be done by not recosnising the accelerated
promotions obtained in the intervening period by a certain class of officers. Any
scheme of seniority is bound to produce isolated aberrations and that fact can-
not justify the argument that the entire scheme is for that reason vioJative of the
guarantee of equality. [442 F-H, 443 A-DJ

c
3:1. The power to frame service conditions is not derived from clause (j)
of section 58(2) of the Reserve Bank of India Act, 1934. Section 58(2)
(j) refers to staff funds and superannuation funds and it cannot comprise
service conditions. Clause (j) cannot be split up to read: "the constitution
and management of staff: and superannuation funds for the officers and
servants of the Bank". It hardly makes any sense that way. What the cla~se
D means is : "the constitution and management of staff ai:;i.d superannuation funds
for the officers and servants of the Bank". An important subject like the service
conditions of the staff cou1d not have been provided for in such a dubious and
indirect mann'er. Nor indeed, could it have been described as "constitution and
management of staff:'. A rule of seniority cannot properly fall under such a
head. [426 A-DJ

E
Restrv• Bank Employ..• Association v. Union of India, 1980 (2) S.L.R. 167
approved.

3:2. Where a specific power is conferred without prejudice to the genera-
lity of a power already conferred, the specific power is only illustrative and can-
F not restrict to width of the general power. Therefore, the ambit of the general
power conferred by sub-~tion (I) cannot be. attenuated by limiting it to matters
.,ecified in subMsection (2) of section SB, the provisions whereof are not exhaus-
tive of the power of the CentraJ Board to make regulations. [426 D-F]

Emperor v. Shibnalh Banerjee, 12 I.A. 241; Omp.arkash v. Union of India,
A.J.R. 1971 SC 771, 773, 774, referred to.
G
4:1. The doctrine of ullra vlres in relation to the powers of a statutory
corporation has to be understood reasonably and so understood, "whatever may
fairly be regarded as incidental to, or consequential upon, those things which
the Legislature bas authorised ought not (unle1§ expressly prohibited) to be held
by judicial construction to be ultra vires". The Central -Board of DireCtors of
H the lleserve Bank has the power to make service regulations under section 58(1)
of the Act. The Board is vested with power to make regulations in order to
provide for all matters for which provision is necessary or convenient for the
V.T. KHANZODE V. RESERVE BANK 415
purpose of giving effect to the provisions of the Act and it is not only conve- A
nient but manifestly necessary to provide for the service conditions of the Bank's
staff in order to give effect to the .provisions of the Act. It cannot be denied
that the power to provide for service conditions of the staff is at least incidental
to the obligation to carry out the purposes for which Bank was constituted.
[426 G-H, 427 A-DJ

Armour v. Liverpool Corporation, 1939 (I) Cb.D. 422, 434, 435; Attorney B
General v. Great Eastern Ry. Co., 5 Appeal Cases 473, quoted with approval.

4:2. There is no doubt that a statutory corporation can do only such acts
as are authorised by the statute creating it and that, the powers of such a corpo-
ration cannot extend beyond what the statute provides ~xpressly or by necessary
implication. If an act is neither expressly or impliedly authorised by the statute
which creates the corporation, it must be taken to be prohibited. But, section c
58(1) being in the nature of an enabling provision under w~ich the Central Board
"may" make regulations in order to provide for all matters for which it is neces~
sary or convenient to make provisions for the purposes of giving effect to the
provisions of the Act, the Central Board has the power to frame reg.ulation rela-
ting to the conditions of service of the Bank's staff. If it has that power, it may
exercise it in accordance with section 58(1) or by acting appropriately in the exer-
cise of its general power of administration and superioteiidence. D
[428'E·F,G-H, 429A]

4:3. By section 7(2) of tbe Reserve Bank of India Act, tbe general svperin-
tendence and direction of the affairs and business of the Bank are entrusted to .
the Central Board of Directors, which is empowered to exercise all powers and
do all acts and things which may be exercised or done by the Bank. Matters
relating to the service conditions of the staff are, pre-eminently, matters which E
relate to the affairs of the Bank. It would therefore be wrong to deny to the
Central Board the power to issue administrative directions or circulars regulating
the conditions of service of the Bank's staff. To read into the provisions of
section 58 (1) a prohibition against the issuance of such administrative directions
or circulars is patently to igaore the scope of wholesome powers conferred upon
' the Central Board of Directors by section 7 (2) of tbe Act. While issuing the
F
administrative circular governing the staff's conditions of service, the Central
Board of Directors has neither violated any statutory injunction nor indeed has
it exercised a power which is not conferred upon it by the statute. The circular
is strictly within tbe confines of section 7 (2). [429 A-E,G-H, 430 AJ

Sukhdev Singh v. Bhogotrom, [1975] 3 SCR 619, reiterated.

4:4. So long as staff regulations are not framed under section 58 (I), it G
is open to the Central Board to issue administrative circulars regulating the
service conditions of the staff, in the exercise of power conferred by section 7 (2)
of the Act. The power to frame rules or regulations does not nec1ssarily imply
dhat no action can be taken administratively ill regard to a subject-matter on
which a rule or regulation can be framed, un~il it is so framed. The oniy precau-
tion to observe in the cases of statutory corporations is that they must act within H
the framework of their charter. Its express provisions and necessary implica-
tions mu•t at all events be observed scrupulously. [430 A-B, 431 A-Bl
416 SUPREME COURT REPORTS (1982) 3 S.C.R.

A T. Ca/ee v. U. Jormanik Siom, [1961] 1 SCR 750; B.N. Nagarajan v. State of
Mysore, [1966] 3 SCR 682, explained and applied.

4:5. Any action taken by the Central Board of Directors under section
7 (2) is subject to the directions given by the Central Government under section
7 (1), just as any regulation framed by it under section 58 is subject to the
B previous sanction of the Central Government. In either case, the Central Board
has to abide by the decision or directions of the Central Government. There
can, therefore; be no apprehension that, by taking action under section 7 (2),
the Central Board may circumvent the condition on which the power confer red
by section 58 can be exercised by it. The overall authority of the Central
Government acts as a restraining influence on any action taken by the Central
Board, whether it acts under one or the other provision of the Act. [431 B-D)
c
S:l. A consideration of the entire material on the subject, including the
correspondence that- has transpired between the Reserve Bank and the Central
Government and in particular the Memorandum of January 21, 1949, makes it
clear that the Staff Regulations of 1948 were not framed in the exercise of power
conferred by section 58 of the Act and that they were not made with the
D previous sanction of the Central Government. Whereas section 58 (1) envisages
the making of regulations "with the previous sanction of the Central Govern-
ment", the Regulations of 1948 do not purport to have been made with such
sanction. Indeed, in so far as the ex facie aspect of the matter is concerned,
the Regulations of 1948 have not been made under section 58 at all. The state-
ment contained in paragraph 9 of the counter affidavit of the Deputy Manager
dated March 30, 1980 that the Memorandum. of January 21, 1949 contains a
E - "factual mistake" to the effect that the Staff Regulations (which would include
the Regulations of 1948) were made with the approval of the Central Goverment,
correctly clarifies the position. It is one thing to infer that the Regulations had
the approval of the Central Government since no objection was raised by it to
the making of the Regulations and quite another that they were made with its
previous sanction. [431 F-H, 433 B-D)

F
Reserve Bank Employees Association v. Union of India, 1980 (2) S.L.R. 167
(Cal.); Emptror. v. Shibnath Barer;ee,· 721.A. 241; Om Parkash v. Union of India
A.I.R. 1971 S.C. 771, 773, 714; Rerer>e Bank of India v. N.C. Pliwal,[1977] 1
SCR 377; Bimal Kumar Shome v. P.C. Bhattacharya, Misc. Petition No. 206 of
1967 decided on August 6, 1969 (Bombay H.C.) R.M. Joshi v. The Reserve Bank
of India, Civil Writ No. 876 of 1974 dedcided on March 19, 1980 by a Full
G Bench (Delhi H.C.), approved

5:2. Since the Staff Regulations of 1948 are in the nature of administra-
tive directions, it was cpmpetfnt to the Central Board to alter or amend them by
an administrative circular. No lack of statutory powers is involved in that
process. Under section 7(2), the .Central Board has the power to provide for
H service conditions of the Bank's staff by administration circulars, so long as they
Po not impinge upon any Regulations made 1,1nder section 58 of the Act.
. I433 F-G, 434 AJ
v.T. KHANZODE v. RESERVE BANK (Cha,ndrachud, C.J.) 417

ORIGINAL JURISDICTION: Writ Petitions Nos. 4158-4182 A
of 1978.

(Under article 32 of the Constitution of India)

F.S. Nariman, B.R. Agarwala and P.G. Gokha/e for the
Petitioners.
B
B. Sen, 1.N. Shroff and H.S. Parihar for Respondents
Nos. 1 & 2.

~----....._ R.K. Garg, S. Balakrishnan and M.K.D. Namboodiry for Res·
pondent No. 3.
c
P.R. Mridul, Mrs. Shobha Dikshit and Mrs. Urmila Kapoor
for the intervener.

The Judgment of the Court was delivered by

CHANDRACHUD, C.J. These are 25 petitions under Article 32 D
of the Constitution of India challenging the decision of the Reserve
Bank of India as regards the introduction of common seniority.and
inter-group mobility amongst different grades of officers gelonging
to Group I (Section A), Group II and Group III, with retrospective
eflect from May 22, 1974. That decision or order is contained in
Administration Circular No. 8 dated January 7, 1978 as also in E
Office Order No. 679 dated April 27, 1978 and has been acted upon
in the draft combined seniority list of officers in Grade 'B' (appointed
as such prior to January 1, 1970) and in Grades 'C', 'D', 'fl' and 'F'
The contention of the petitioners is that the aforesaid circular, office
order and combined seniority list are violative of their fundamental
F
rights under Articles 14 and 16 of the Constitution, and are also
ultra vires the power, jurisdiction and competence of the Reserve
Bank of India, being without the authority of law and in contraven·
tion of the provisions of the Reserve Bank of Indfa Act, 1934.

The facts leading upon the impugned decision dated G
January 7, 1978, the office order dated April 27, 1978, and
the draft combined seniority list are as follows : The· Reserve
Bank of India (Respondent No. I) was established under the
Reserve Bank of India Act, 1934, hereinafter referred to as "the
Act". Under the Reserve Bank of India (Staff) Regulations, 1948 H
framed under .section 58 of the Act, the terms and conditions of
service of the staff (including officers) of !lie respondent Bank werQ
418 SUPREME COURT REPORTS (1982] 3 S.C.R.
A revised and regulated. These Regulations were ameneded from
time to time. Provisions regarding record of service, seniority and
promotion are contained in Regulations 27 to 30 (Chapter III),
which read thus :

"27. Record of Service : A record of service shall be main-
B tained by the Bank in respect of each employee
at such place or places and shall he kept in such form
and shall contain such information as may be speci-
fied from time to time by the Chief Manager.

c • 28. Seniority : An employee confirmed in the Bank's
.
.

service shall ordinarily rank for seniority in his grade
according to his date of confirmation in the grade and
an employee on probation shall ordinarily rank for
seniority among the employees selected along with I
him in the same batch according to the ranking
D assigned to him at the time of selection.

29. Promotion: All appointments and promotions shall
be made at the discretion of the Bank and notwith-
"' standing his senioritX in a grade, no employee shall
have a right to be appointed or promoted to any
E particular post or grade.

30. (I) An employee transferred from one appointment
to another .or confirmed in a grade or appoint-
ment higher than his substantive grade or
F a11pointment, shall be liable to be reverted with-
out notice at any time within one year· of such
transfer or confirmation.
---
,_?/

(2) An 'employee who has been appointed to officiate
in a higher grade or appointment, or whose con-
firmation in a higher grade or appointment is
G
subject to his undergoing probation for any speci-
fied period or otherwise, shall be liable to be
reverted without notice at any time when be is so
officiating or undergoing probation.
H
(3) Nothing in sub-regulations (!) and (2) shall affect
the provisions of Regulation 47.''
·-.
'' /

v.T. KHANZODE v:RESERVE BANR (Chandrachud, C.J.) 419'

. Ever since the daie of the Staff Reg.ulations of 1948 and A
even prior thereto, there were "groups" constituted 'for. the dilfe-.
rent departments of the Reserve Bank, and officers were required to
exercise irrevocable options for service in any particular Group.
a
Those who had opted for service in a particular Group. were to be
· normally eligible for promotion in that Group. only. .The grouping B
was revised with effect from April, 1951 when employees were.· asked
to exerci•e their option with regard to the Gronp·,of their choice.
In 1951, the various departments of the Bank were re-classified into
three Groups, Group I, Group II ·and Group. III. This system~-
•, · of gronping continued until 1955, in which year the Bank foun~ it·
~--'- necessary ·to· reorganise the °AgriculturaL-Credit . Department.-. c
Accordingly, the staff attached to the various. departments - were ..
regrouped into Groups I, II, III and IV; with ·effect from -Ap.ril 1,··--
1957.. In _eacli of these Groups, there are. six grades .·of, officers·.
based on pay scales, namely, , Grades A, ·B, C, ·n, E and· F,.
the lowest -~being Grade A . and · the highest being . Grade
F. · Each. Group . had its ·own. seniority List, that · is to say,· D
there were four separate seniority lists, one for . each group~ . The.
latest of such lists, prior to. the impugned combined . seniority lisi, is
dated July I, 1976.

· The Reserv~ Bank had co~~tituted a Cadre Rbview. Commi~tee
·in 1970, comprising Shri , Justice J.L. Nain, then a sitting Judge of•
the Bombay High Court, Shri V. Isvaran, I.C.S. (Retd.). and Prof.'
N.S. Ramaswamy, a Management Expert. , The Committee_ submit-
ted a report in Octob~r 1972, on the basis of which the Bank issued.
Administration_Circular No. IS, dated May 22, 1974, specifying the .
decisions taken by it in the .light of the recommendations made by_ F
the Committee.. One such decision which the Bank took wa• ia
prepare a common seniority list for· and to provide for inter group ·
mobility at the lowest level officers in each group, -namely, Grade A ·
'officers, including those who were •promoted to Grade B on or after
January I, 1970.: With regard ·to higher grades (including officers.
iri .Grade B promoted prior to ·January I, ·J970); the Bank decided G
to retain the "groupwise seniority as at present". The inter'group
mobility in Grades C and D was to be introduced only to a limited,
extent, namely, "on a swap basis" : · It was first to be introduced in .
Grade C and thereafter to· be extended "in due course" to ·the .
_officers in Grade D. The two higher· Grades.viz. Grades E and F H
were left u111011ched 1111d no intention was expressed in the above·
•
_ SUPREME COURT REPORTS ' · ·-(1982} f s,c.11..

A circular to . introduce either combined seniority. or _any scheme for
inter-mobility in these grades. In _accordance_ with the decisions
expressed in the aforesaid' circular. dated May 22, · 1974, the Bank-
published separate seniority lists of officers in Grade B and above
for the years 1974; 1975 and 1976. The. petitioners, all of whom
are officers in Group I, were given their due seniority "as of July I,
B . 1976. '
.
By the impugned Administration Circular No. 8, dated
January ·7, 1978, the Bank stated that it had decided to combine the
I
i seniority of all officers on ·the basis of their total length of service
including officiating service) in Group I (Section A), Group II and
I' 0
Group III. The seniority o( all officers in each of the three Groups
was to be combined with effect -from May 22, 1974 on-the basis of - . .:;_.
their -total -length . of -service, including officiating_ service, in the
grade· in which they were then posted on -a regular basis .. The
Circular introduced combined seniority with retrospective effect from
D May 22, 1974 (the date of Administration Circurlar :r-i:o. 15) as it was
."fair and equitable to the officers as a class".- ·

· · Briefly stated, the effect of this decisions is that the group-wise
system of seniority which_ was in existence for more than 27 years
E stands substituted . by a combined seniority for officers in Group I
(Grade A) and in Groups II and III with retrospective effect.-· That ·
has adversely aff~cted 'the existing seniority of officers; particularly
of those in Group I, who are now placed many places below their

F
existing position of seniority, some by several hundred places.

According to the petitioners, the Reserve Bank has no power, ·
competency or jursdiction to introduce the impugned scheme which
_
.
\
\
_,,;---
•.

discriminates against officers in higher posts; adversely affecting
_ their _vested and existing rights of seniority. .The scheme, according
to them, is _without any rational and far from furthering the efficient
functioning .of the Bank, it will -affect it adversely by compelling
G - officers to leave positions in which they had acquired long and
valuable experience and work in posts for which they possess no
expertise. ' For example, for the Department of Banking Operations
and Development (in Group IO. the emphasis :was laid o!l the
commercial banking experience of officers whereas, for recruitment
H_ and selection in the Agricultural Credit Department (in Group III),
the emphasis was on experience in co-operation and agricultural
- _, finance. That is why the Bank had laid the p_re-condition that the
V.T. KHANZODE v. RESERVE BANK (Chandrachud, C.J.) 421

A
selected officer should give a specific and irrevocable undertaking to
serve in the G~oup for which he was selected. Anot.her grievance
of the petitioners is that although the Bank has stated in paragraph
9.2.1 of the impugned Circular that the seniority of officers will be
combined on the basis of their total length of service, the seniority
list bas in fact, been prepared in a very arbitrary and inequitous B
manner. In a large number of cases, it is alleged, the actual service
·rendered by the officers concerned has been arbitrarily reduced and
adjusted in the length of service of other officers, and the latter have
been notionally treated as officiating in higher grades from dates
much prior to their actual promotions to those grades. In some
cases, on the other hand, officiation in higher posts has been wholly c
ignored. This has generally resulted in accelerated and discrimi-
natory benefit being conferred upon officers mostly belonging to
Groups II and III, vis-a-l'is the petitioners and the other officers in
Group I. The petitioners apprehend I.hat a large number of
officers who have been promoted since January I, 1976 against
normal vacancies in their own departments on the basis of their D
experience and expertise of the relative work are likely to be reverted
and replaced by officers from other groups, mostly from Group III,
who were selected for the specific job requirements of that group
and who have no experience of the work done in the Group I
departments. The petitioners also challenge the retrospective effect
given to the impugned circular from May 22, 1974 as irrational and E
arbitrary. Further, according to them, the said circular dated
January 7, 1978, the Office Order dated April 27, 1978 and the
combined seniority list are violative of. the Reserve Bank (Staff)

-
Regulations. 1948.
F
·~
In reply to the writ petition, a counter-affidavit has ceen filed
on behalf of the Reserve Bank by Shri S. L. Jathar, Deputy Manager
in the Department of Administration and Personnel, Central Office,
Bombay. The case of the Bank, as disclosed in that affidavit is as
follows: The Reserve Bank of India (Staff) Regulations, 1948, are
G
not statutory in character, not having been framed under section 58
of the Reserve Bank of India Act, 1934, The said Staff Regulations
did not provide for the division of the staff of the Bank into different
groups but only categorised them as Officers, Personal Assistants,
etc. In view of the growing need for specialisation in departments H
handling research work and developmental activities, a functional
segregation of departments into four groups, with ~roup-wise
422 SUPREME COURT REPORTS [1982] 3 s.c.R.
A
seniority for Officers, was introduced in the year 1951. Appendix
XII to the Report of the 'Reserve Bank of India ·Cadre Review
Committee', which refers to the grouping of the departments from
time to time, shows that the groupings were not static and fixed but
were changed as and when necessary. Group I was composed of
B General Departments dealing with the day-to-day operational
functions of the Bank including accounts and organisational mattres,
Group II of Departments dealing with regulatory and .inspection
functions over the money market; Group III of Departments dealing
with the Co-operatives and agricultural Credit institutions; and
Group IV of Research Departments. Each Department had a seperate
c line of seniority and although the· Bank had the right under the Staff
Regulations to post any employee to any group, each group operat·
ed as an independent seniority unit and the employees were eligible
for promotion within their group only. It was, however, noticed
that the group system had resulted in glaring inequalities in promo-
tional opportunities in the various Departments, because of the
0 accelerated pace of expansion of Departments in some of the Groups
wherein relatively junior employees were able to secure earlier
promotions and confirmations. So far as the non-officers staff was
concerned, the Bank took several steps from time to time to equalise
their chances of promotion. Finally, in pursuance of an agreement
with the All-India Reserve Bank Employees' Association, which is
E a representative Association of Class III employees of the
Bank, the Bank introduced a combined scheme for clerical
staff in May 1972 under which, the separate seniority lists of
clerical employees in Class III were merged into one list with effect
from 7th May, 1972, irrespective of their respective groups. The
validity of that Scheme was challenged in several High Courts and
F
the matter came up on appeal to this Court from a decision of the
Delhi High Court which bas struck down the Scheme. This Court;
in Reserve Bank of India v. N.C. Pa/iwa/( 1 ) upheld the Scheme. The
'Cadre Review Committee' whose report was received by the Bank
on October 11, 1972 recommended, broadly, the gradual introduc-
G tion of inter-mobility of officers in different groups and the framing
of a common seniotity list, except for officers in specialised groups
like Economists, statisticians, Lawyers and Engineers. According to
the Committee, the most rational basis for drawing up a common
seniority list was to go by the date of entry of each officer in a grade
H in a continuous officiating capacity. The Bank announced its decision
as regards the Committee's recommend!ltions, by the Administra-

(I) [1977] I SCR 377,
V.T. KilANZODE v. RESERVE BANK (Chandrachud, C.J.) 4~~

tive Circular dated May 22, 1974. Io December 1975;the Bank A
appointed a Departmental Committee under Shri C.L. Thareja, the
then Chief Manager of the Bank, to work out the modalities of
integration of the group-wise seniority lists of officers in the higher
grades which had not yet been integrated. That Committee submit-
ted its report on December 15, 1976. It unanimously recommended
simultaneous introduction of combined to seniority for all grades but, B
its members could not agre@ on the date to b1. adopted for integration
of the group-wise ~eniority lists. The Chairman and one member
favoured January I, 1976 as the date of integration while the
remaining two members favoured January I, 1970. A Committee
of the Central Boaril of the Bank decided to appoint May, 22 1974
as the date for integration as a via media and also because, it was on e
that date that the Bank had announced to its officers its decision on
combined seniority, mobility and interchangeability. Fixation of
January I, 1970. as the date for integration would have adversely
affected the intere;ts of Group I officers while the other date January
I, 1976, would have adversely affected the interests of officers in D
other groups.

That is the answer made by the Reserve Bank to the petition.
Originally, the writ petition was filed against two respondents only;
(I) The Reserve Bank of India and (2) the Chief Manager, Reserve
Bank of India; Department of Administration & Personnel, Central E
Office, Bombay. The petitioners did not implead to the petition any
of the officers belonging to the other groups who are likely to be
affected if the relief sought by the petitioners is granted. Later, by
an order dated July 24, 1978, respondents 3 and 4 were allowed to
join in the petition on their own application. Respondent 3, Shri
M.P. Saxena, was then the Deputy Chief Officer, Department of
Banking Operations and Development, New Delhi, while respondent
4, Shri S. Acharya, was Deputy Chief Officer, Agricultural Credit
Department, Chandigarh.

Respondent 3, whose counter-affidavit has been adopted by 0
•
responc'ent 4, has raised a preliminary objection to the maintaina-
bility of the writ petition on the ground that hundreds of officers
similarly situated who are all specifically identifiable and who would
be prejudicially affected if the prayers in the writ petitions are
granted, have not been impleaded as respondents. According to H
him, this is a case of a few privileged persons trying to retain their
undue privileges at the cost ·of a scheme introduced to improve the
SUPREME COURT REPOltTS (J9SiJ J S.C.R.
A operational efficiency of the Institution and for the common good of
the officers as a class. Respondent 3 has also raised the objection
that no writ petition can lie under article 32 to enforce or challenge
service conditions which are purely contractual.

B The contentions raised by re&pondent 3 in his counter-affidavit
may be summed up thus : Groupings and re· groupings of depart-
ments have been undertaken by the Reserve Bank as and when the
need arose in the context of changing requirements, and all such
groupings and regroupings have been done as a result of administra·
tive decisions and given effect to through appropriate Administra-
tion Circulars. While the expedient of group-wise promotions
based on group-wise seniority lists served the immediate convenience
over a period of time, this artificial segregation resulted in compart·
mentalised approach to questions of policy, impairing thereby the.
overall efficiency of the institution as a whole. Further, it also led
to other anomalies and imbalances, more particularly in promo-
D tional opportunities of the staff attached to different groups.
In some groups, expansion was quicker and greater than
in others. It is in order to meet this situation that several measures
were initiated by the Bank and by the Associations of employees of
various categories. Since these measures did not meet the situation
adequately, the Bank initated a dialogue with the respective Associa-
E tions for introducing a combined seniority for the various grades in
different groups. For officers at the base level, namely, 'A' Grade
(direct recruits), the Bank had maintained a common list of seniority

F
in place of groupwise lists since 1968. Thereafter, groupings and
regroupings have been a continuous process to meet the needs of the
changing situations, and the present scheme of combined seniority
which is one such, has come about as a matter of administrative,
and historical and functional necessity. The implementation of the
-
scheme of inter-group mobility is being stalled by the Bank's

• internal administration, which was controlled solely by a small
section of officers drawn from Group-I, which all along had unfair
G advantage of accelerated promotions as compared with officers in
Groups II and III. Thus, the petitioners' plea is an attempt to
perpetuate the unfair and unequal privileges which they had enjoyed
over the years without any justification and with detriment to
Bank's interests a fact which has been recognised by an impartial
H tribunal like the Cadre Review Committee. The Staff R1igulations
of 1948 are in the nature of standardised contractual conditions of
service. They were not framed under section 58 of the Act and
v.t. KHANZObE v. RESERVE BANK (Chandrachud, C.J.) 42S

therefore, it is competent to the Bank to alter them by administra-
tive circulars.

On these pleadings, the three main questions which arise for
our consideration are, firstly, whether the Reserve Bank of India
(Staff) Regulations, 1948 are statutory in character; secondly,
whether it is competent to the Bank to provide for conditions of B
service of its staff by administrative circulars; and, thirdly, whether
the impuged circular and seniority list offend against the provisions
of articles 14 and 16 of the Constitution. The contention of the
petitioner is that the Regulations were framed under section 58 of
the Reserve Bank of India Act, 1934; that they cannot be altered by
administrative circulars; that conditions of service cannot be framed c
by administrative circulars but must be framed by Regulations made
under section 58 of the Act; and that, the impugned circular and
seniority list violate' their right to equal treatment in the matter of
their service conditions and career. The Reserve Bank and the
contesting respondents have joined issue with the petitioners on all
these questions.
D

Turning to the first question, section 58(1) of the Reserve Bank
of India Act, 1934 provides that :

"The Cen.tral Board may, with the previous sanction of
the Central Government, make regulations consistent with E
this Act to provide for all matter for which provision is
necessary or convenient for the purpose of giving effect to
the provisions of this Act."

Sub-section (2) of section 58 provides that in particular and without F
prejudice to the generality of the foregoing provision, such regula-
tions may provide for all or any of the matters mentioned in the
various clauses of that sub-section. Clause (j) refers to "the consti-
tution and management of staff and supernnuation funds for the
oflicers and servants of the Bank'', while clause (r) refers to the
subject : "generally, for the efficient conduct of the business of the G
Bank". Sub-sections (3) and (4) were inserted in section 58 by Act
51 of 1974. By sub-section (3). any regulation made under section
58 shall have effect from such earlier or. later date as may be speci-
fied in it. Sub-section (4) requires that every Regulation shall, as
soon as may be. after it is made by the Central Board, be forwarded H
to the Central Government which, in turn, shall cause a copy of the
same 'to be laid before each House of Parliament. Thereafter, the
426 SUPREME COURT R~PORTS [1982] 3 s.C.k.

A Regulation takes effect in accordance with the modifications, if any,
made by the Parliament.

A side argument may be disposed of briefly. It was suggested
on behalf of the petitioners, though faintly, that the power to frame
service conditions is derived from clause ij) of section 58 (2) of the
8 Act. It is impossible to accept this contention. That clause cannot
be split up to read : ''the constitution and management of staff; and
superannuation funds fr.r the officers and servants of the Bank". It
hardly makes any sense that way. What the clause means is : "the
constitution and management of staff funds and superannuation funds
for the officers and servants of the Bank''. An important subject
c like the service conditions of the staff could not have been provided
for in such a dubious and indirect manner. Nor indeed, could it
have been. described as "constitution and management of staff." A
rule of seniority cannot properly fall under such a head. We
endorse the view taken by the Calcutta High Court in Reserve Bank
Employees Association v. Union of lndia(') that section 58 (2) (j)
D refers to staff funds and superannuation fun9s and that it cannot
comprise service conditions.

But, the provisions of sub.section (2) of section 58 cannot be
taken to be exhaustive of the power of the Central Board to make
·regulations. It is well-settled that where a specific power is confer-
E re,1 without prejudice to the generality of a power already conferred,
the specific power is only illustrative and cannot restrict the width
of the general power. (See Emperor v. · Shibnath Barerjee;(') Om
Parkash v. Union of India('). Therefore, the ambit of the general
power conferred by sub-section (I) cannot be attenuated by limiting
F it to matters specified in sub-section (2) of Section 58. ...
Section 58 (I) of the Act confers power on the Central Board
of Directors of the Bank to make regulations in order to provide for
all matters for which provisions is µecessary or convenient for the
purpose of giving effect to the provisions of the Act. It seems to
us clear that it is not only convenient but mainfestly necessary to
G
provide for the service conditions of the Bank's staff in order to
·give effect to the provisions of the Act. The Act was passed in
order to constitute a Bank for achieving economic purposes of the

H (I) 1980 (2) S. L.R. 167 Cal.
(2) 72 I.A. 241.
(3) A.l.R. 1971 SC 771, 773, 774.
V.f. KltANZODE v. RESEl\VB BANK (Chandrachud, C.J.) 427
A
highest national importance : regulating the issue of Bank notes,
keeping reserves with a view to !!eCuring monetary "stability in India
and generally to operate the currency and credit system of the
country to its advantage. It is, in our view, not open to any question
either on the basis of reason or authority that the power to provide
for service conditions of the staff is at least incidental to the obli- B
gation to earry out the purposes for which the Bank was constituted.
As observed in Armour v. Liverpool Corporation,(') "To assist in
removing from the minds of its employees the fear of an un protect·
ed old ·age, to foster their happiness and contentment and to procure
their good and efficient service, these are objects which, even if
economic considerations alone count, are incidental, if not vital, to c
• the proper carrying on of any undertaking as well by a municipal as
any other corporation." The doctrine of ultra vires in relation to
the powers of a statutory corporation has to be understood reasona·
bly and so understood, "whatever may fairly be regarded as inci-
dental to, or consequential upon, those things which the Legislature
has authorised ought not (unless expressly prohibited) to be held D
by judicial construction, to be ultra vires." (See J.ttorney-General
v. Great Eastern Ry. Co.(') The Central Board has, therefore,
the power to make service regulations· under section 58 (I) of the
Act.
l!l
Shri Nariman pleads for such a power but his purpose in
doing so is to urge · that section 58 (7) is the sole repository of the
power of the Central Board to provide for the conditions of service
of the Bank's staff. He contends that statutory corporations like the
Reserve Bank of India have no inherent or residuary powers and
that they must seek and find their powers and obligations in the
F
Charter of their creation Therefore, the argument proceeds, it is
imperative that regulations governing terms and conditions of service
of the Bank's staff must be framed under section 58 (1) only and
cannot be framed by administrative circulars issued in the exercise
of any non-statutory power authority.
G

In support of this submission, reliance is placed 'by the learned
counsel on the statement of law contained in paragraphs 1326 and
If
(1) 1939 (1) Ch.D. 422, 434, 435.
(2) 5 Appeal Cases 473.
428 SUPREME COURT RilPORTs [1982] 3 s.c.il..
A 1333 (pages 775 and 779) of Halsbury's Laws of England, Fourth
edition. In paragraph 1326 it is stated that :

"Corporations may be either statutory or non-statutory
and a fundamental distinction exists between the powers
and liabilities of the two classes. Statutory corporations
B have such rights and can do such acts only as are authorised
directly or indirectly by the statutes creating them; non-
statutory corporations, speaking generally, can do every-
thing that an ordinary individual can do unless restricted
directly or indirectly by statute".
c
Paragraph 1333 says that :

"The powers of a corporation created by statute are
limited and circumscribed by the statutes which regulate it,
and extend no further than is expressly stated therein, or
D is necessarily and properly required for carrying into effect
the purposes of its incorporation, or may be fairly regarded
as incidental to, or consequential upon; these things which
the legislature has authorised. What the statute does not
expressly or impliedly authorise is to be taken to be prohi-
• bited."
E
There is no doubt that a statutory corporation can do only such
acts as are authorised by the statute creating it and that, the powers
of such a corporation cannot extend beyond what the statute pro-
vides -expressly or by necessary implication. If an act is neither
expressly or impliedly authorised by the statute which creates the
F corporation, it must be taken to be prohibited. This cannot, how-
ever, produce the result for which Shri Nariman contends. His
contention is not that the Central Board has no power to frame staff
regulations but that it must do so under section 58 (I) only. On
that argument, it ls material to note that section 58 (I) is in the
nature of an enabling provision under which the Central Board
G
"may" make regulations in order to provide for all matters for
which it is necessary or convenient to make provision for the purpose
of giving effect to the provisions of the Act. This provision does
not justify the argument that staff regulations must be framed under
H it or not at all. The substance of the matter is. that the Central
Board has the power to frame regulations relating to the conditions
of service of the Bank's staff. If it has that power, it may exercise
V,t, ICHANZODB v. i\.ESERVE BANK (Chandrachud, C.J.) 429

it either in accordance with section 58 (1) or by acting appropriately A
in the exercise of its general power of administration and superin-
tendence.

The statement of law in Halsbury puts emphasis on the limita-
tion on powers of statutory corporations in the light of the pro- B
visions of statutes under which they are constituted; From that
point of.view, the provisions of section 7 (2) of the Act are impor-
tant. By that section, the general superintendence and direction
of the affairs and busin.ess of the Bank are entrusted to the Central
Board of Director~, which is empowered to exercise all powers and
do all acts and things which may be exercised or done by the ~ank. c
Matters relating to the service conditions of the staff are, pre-
eminently, matters which relate to the affairs of the Bank. It would
therefore be wrong to deny to the Central Board the power to issue
administrative directions or circulars regulating the conditions of
service of the Bank's staff. To read into the provisions of sec-
tion 58 (1) a prohibition against the issuance of such administrative D
directions or circulars is patently to ignore the scope of wholesome
powers conferred upon the Central Board of Directors by sec-
tion 7 (2) of the Act. Indeed, this section brings the impugned
circular and senioritY, list within the rule mentioned in Halsbury ;
they have the authority of the statute.
E

In this behalf, reliance is also placed by Shri Nariman on a
decision of a Constitution Bench of this Court in Sukhdev Singh

- v. Bhagatram,(1 ) Ray, C.J., who spoke for three members of the
Bench, observea in his judgment that the powers of statutory bodies
are derived, controlled and restricted by the statutes which create F
them and that any action of such bodieS' in excess of their power
or in violation of the restrictions placed on their powers is
ultra-vires. The concurring judgment of Mathew, J. also contains
observations to the same effect (see pages 628, 630 and
659 of the Report). This enunciation of law is to the same
G
effect as in Halsbury and our answer is the same. While issning
the administrative. circular governing the staff's conditions of
service, the Central Board of Directors has neither violated any
statutory injunction nor indeed has it exercised a power which is
H
(I) [197S] 3 S.C.R 619.
430 SUl>REM~ COURT lUlPoRTS [19821 ~ s.c.tt
A not conferred upon it by the statute. The circular is strictly within
the confines of section 7 (2).

So long as staff regulations are not framed under section 58
(!), it is open to the Central Board to issue administrative circulars
regulating the service conditions of the staff, in the exercise of
B power conferred by section 7 (2) of the Act. In T. Cojee v. U.
Jormanik Siem,(') a District Council was constituted under the Sixth
Schedule to the Constitution, for the United Khasi and Jaintia Hills
District in the Tribal Areas of Assam. The rules in the Sixth
Schedule empowered the District Council to make Jaws with respect ~-
to various matters regarding the administration of the District,
c including the appointment or succession of Chiefs and Headmen.
No law was however made regulating such appointments. Even so,
it was held by this Court that the District Council had the power to
appoint or remove administrative personnel under the general power
of administration vested in it by the Sixth Schedule. Delivering the
leading judgment of the Bench, Wanchoo, J., said that where execu-
D tive power impinges upon the rights of citizens, it will have to be
backed by an appropriate law; but where executive power is con-
cerned only with the personnel of the adminis'tration, it is not
necessary that there must be laws, rules or regulations governing the
appointment of those who could carry on the administration under
the control of the District Council. The District Council had there-
E fore the power to appoint officers by virtue of the fact that the
administration was vested in it. In B.N. Nagarajan v. State of
Mysore(') Rule 3 of the Mysore State Civil Services (General
Recruitment) Rules, 1957 provided that recruitment to the State
Civil Services shall be made by a competitive exam,ination or by
F promotion and that the method of recruitment and qualifications
shall be as set forth in the Rules specially made in that behalf. It __ _,.,V
was urged before this Court that no recruitment' could be made to
any service until the rules were made. That argument was rejected
on the ground that it is not obligatory under the proviso to art. 309 ,_
to make rules of recruitment before a service can be constituted and
G that it was not necessary that there must be a law in existence before
the executive is enabled to function. It is true that reliance was
placed in that case on the provisions of art. 162, by which the
executive power of a State extends to the matters with respect to

H (I) [1961] I S.C.R. 750.
(2) [1966] 3 S.C.J,l. 682.
V.T. KHANZODE v. RESERVE BANK (Chandrachud, C.J.) 431

which the legislature of the State has power to make laws. But the A
decision is useful for illustrating that the power to frame rules or
regulations does not necessarily imply that no action can be taken
administratively in regard to a subject matter on which a rule or
regulation can be framed, until it is so framed. The only precaution
to observe in the cases of statutory corporations is that they must
act within the framework of their charter. Its express provisions B
and necessary implications must at all events be observed scrupu-
lously.

It may bear mentioning that any action taken by the Central Board
of Directors under section 7(2) is subject to the directions given ~y the
Central Government under section 7(1) just as any regulation fra.med c
by it under section 58 is subject to the previous sanction of the Central
Government. In either case, the Central Board has to abide by the
decision or directions of the Central Government. There can there-
fore, be no apprehension that, by taking action under section 7 (2),
the Central Board may circumvent the condition on which the power D
conferred by section 58 can be exercised by it. The overall authority
of the Central Government acts as a restraining influence on any
action taken by the Central Board, whether it acts under one or the
other provision of the Act.

• E
Having seen that the Central Board has the power to provide for
service conditions of the staff by issuing administrative circulars, the
next question for consideration is whether the Staff Regulations of
1948 were issued under section 58 of the Act. The importance of

- this question lies in the fact that, quite clearly, if the 1948 Regula-
tions are statutory, they cannot be altered by administrative circulars
and, in that event, the impugned circular will not have the effect of
·· superseding them. Having considered the entire material on this
subject including the correspondence that has transpired between the
F

Reserve Bank and the Central Govermeot, we find it difficult to take
the view that the Staff Regulations of 1948 were framed in the
exercise of power conferred by section 58. One fact which stands
out in this regard is that whereas section 58 (I) envisages the making
G
of regulations :'with the previous sanction of the Central Govern-
ment'', the Regulations of 1948 do not purport to have been made
with such sanction. Indeed, iu so far as the exfacie aspect of the
matter is concerned, the Regulations of 1948 do not purport to H
have been made under section 58 at all. It is true that this by itself
is not conclusive because, failure to mention the source of power
432 SUPREME COURT REPORTS [1982) 3 S.C.R.

A cannot invalidate the exercise of power, if the power is possessed by
the authority which exercises it. But, the common course of the
manner in which the Central Board exercises its power when it
pnrports to do so under section 58 is not without relevance and has
an important bearing on the question under consideration. The
Employees' Provident Fund Regulations of 1935, the Note Issue
8 Regulations of 1935 the General Regulations of 1949, the Scheduled
Banks' Regulations of 1951 and the Guarantee Fund Regulations,
which were all framed under section 58, contain a preamble reciting
that they we re framed under that section and that they were framed
with the pre vious sanction of the Central Government. By way of
illustration, we may cite the preamble of the Reserve Bank of India
c General Regulations, 1949, which runs thus:

"In exercise of the powers conferred hy section 58 of
the Reserve Bank of India Act, 1934 (II of 1934) and iri
supersession of the Reserve Bank of India General Regula-
tions, 1935, the Central Board of the Reserve Bank of
D India, with the previous sanction of the Central Govern-
ment, is pleased to make the following Regulations ... "

It is significant that such a recital is conspicuously absent in the
Regulations of 1948. That renders it safe and reasonable to accept
E the statement contained in the counter affida¥it filed on behalf of
the Reserve Bank by Shri Shamrao Laxman Jathar Deputy Manager
in the Department of Administration and Personnel to the effect that
the Staff Regulations of 1948 are not statutory in character, not
having been made under section 58 of the Act of 1934. The rejoinder
affidavit dated July 16, 1979 filed on behalf of the petitioners by
F Shri Jamnadas Gupta reiterates the contention that the Regulations
of 1948 were framed under section 58 (I) with the sanction of the
Central Government. Support is sought to that contention from
the correspondence annexed to the affidavit filed in support of the
writ petition and the correspondence annexed to the rejoinder. Of
particular importance is the statement contained in the 'Memo-
G randum to the Central Board" dated January 21, 1949, submitted by
the then Governor of Reserve Bank, Sbri C.D. Deshmukh, on the
subject of "Reserve Bank of India Regulations" .. That Memorandum
contains a list of regulations which were made by the Central Board
"with the approval of the Central Government". The very first
H item in the list is "Reserve Bank of India (Staff) Regulations".
Having considered the correspondence bearing on the subject and
particularly the aforesaid Memor<1ndum, we see no reason to doubt
V.T. KHANZODB v. RESERVB BANK (Chandrachud, C.J.} 433

the contention of the Bank that the Regulations of 1948 were not
A
framed under section 58 and that they were not made with the pre-
vious sanction of the Central Government. The then Governor of
the Reserve Bank of India, Shri C. D. Deshmukh, a distinguished
Economist and Civilian, was perhaps justified in assuming from the
correspondence that the Central Government bas no objection'to B
the proposed regulations, wbfoh explains his statement, that they
were made with t: e "approval" of the Central Government. But,
it is one thing to infer that the Regulations had the approval of the
Central Government since no objection was raised by it to the
making of the regulations and quite another that they were made
with its previous sanction. The supplementary affidavit dated March, c
1980 which was filed on behalf of the Reserve Bank by Sbri Pradeep
Madhav Joshi, Deputy Manager in the Department of Administra-
tion and Personnel, has dealt fully with the correspondence on the
subject of previous sanction of the Central Government to the
Regulations of 1948. We are inclined to accept the statement
contained in paragraph 9 of the said affidavit that the Memorandum D
of January 21, 1949 contains a "factual mistake" to the effect that
the Staff Regulations, (which would include the Regulations of 1948)
were made with the approval of Central Government. We therefore
conclude that the Reserve Bank of India (Staff) Regulations of 1948
were not made under s~ction 58 of the Act and that, in fact, the
Central Board bad not obtained the sanction of the Central Govern- E
ment to the making of those Regulations.

The High Courts of Bombay,(') Calcutta and Delhi(') have all

-
taken the view that the Staff Regulations of 1948 are not statutory,
iii not having been 'framed under section 58 of the Act. We endorse
the correctness of that view. F
'~~
ll . --
' Since the Staff Regulations of 1948 are in the nature of ad-
ministrative directions, it was competent to the Central Board to
, alter or amend them by an administration· circular. No lack of
statutory powers is involved in that process. Under section 7 (2),
the Central Board bas the power to provide for service conditions of G
the Bank's staff by administration circulars, so long as they do

{l) Misc. Petition No. 206 of 1967 (Bimal Kumar Shorn• v. P.C. Bhattacharya)
decided on August 6, 1969. (Bombay H.C.J
H
(2) Civil Writ No. 876 of 1974 (R.M. Joshi v. The Reserve Bank oj India)
decided on March 19, 198Q by a Full J!ench (Delhi H.C.)
434 SUPREME COURT REPORTS (1982) 3 S.C.R.

A not impinge upon any Regulations made under section 58 of the
Act.

It now remains to be considered whether the impugned
Administration Circular, No. 8, dated January 7, 1978; Office Order
B No. 679, dated April 27 1978; and the· draft Combined Seniority List
of officers prepared pursuant thereto,_ are violative of the petitioners'
right to equality in the matter of their service conditions. The salient
features of the impugned Ad ministration Circular mav be summa-
rized th~s : . ·

c (a) A common seniority and inter.group mobility is
introduced simultaneously in all Grades of officers
attached to Group I (Section A) and Groups II
and III.

D (b) The seniority of all officers is combined as on
May 22, 1974, on the basis of their total length of
service (including officiating service), in the grade
to which they were then posted on a regular basis.
In doing so, the existing infer se seniority of the
officers in the respective groups is maintained and
E the subsequent supersessions for promotion or
confirmation in the respective groups are suitably
.reflected. The date of confirmation is not taken

-
into account for th,is purpose.

(c) The Circular covers all officers in Group I (Section
F A) and Groups II aud III who were appointed to
Grade 'B' prior to January I, 1970 as well as
officers in the higher grades 'C', 'D', 'E' and 'F'.
The Circular does not cover officers in Sections B
to L of Group I, technical officers in Group III
and officers attached to Group IV.
G
(d) All promotions to Grade 'C' and above which
were made on a provisional basis after January 1,
1976 are to be reviewed individually in order to
ascertain as to which of the officers may be allow-
H ed to continue in the higher grade on the basis of
their seniority and suitability. Consequential
adjustments 11re to be made in a phased and
V.T. KHANZODE V. RESERVE BANK (Chandrachud, C.J.) 435

gradual manner in order to ensure that the opera· A
tional efficiency of the various departments and
the Bank's requirements of a specialised staff of
officers are not adversely affected.

(e) Officers promoted to higher grades prior to
January I, 1976 are to be allowed to retain their B
existing. grades, though not necessarily the same
posts, and their seniority is to be adjusted under a
common seniority scheme.

(f) Officers appointed to officiate in the higher grade
on a provisional basis on or after January I, 1976 c
and who are all 0 wed to continue in such grade
on the basis of their seniority and suitability, are
\
~I to be considered for confirmation in the normal
co·urse.

(g) · Officers who are in a lower grade but "ho rank
D •
higher in seniority in the common seniority list
than those who are already 0°fficiating or confirm-
ed in the higher grade, are to be considered for
promotioµ on the basis of their suitability.

(h) All future promotions to Grade 'C' and to the E
higher grades are to be made on the basis of the
common seniority list, subject to selectivity.

(i) Wherever possible, the transfer of officers from
one department or gropp to another in the same •
-' - grade has to be encouraged in order to enable a
broader diffusion of experience and to prepare a
F

wider base for development of officers in different
departments.

(j) All promotions from Grade 'B' to 'C' are to be G
i made on the basis of seniority-cum-suitability,
I
with greater emphasis on suitability. The selec·
lions for this purpose are to be made by the
Reserve Bank of India Services Board.
-•. ff
(k) Selections for promotions to Grade 'D' and above
are to b~ Jll\lde by a Comll1Hle~ of \~e Qeputy
/
436 SUPREME COURT REPORTS [1982] 3 s.c.R

A Governors, who are to give greater consideration
to merit apart from the aptitude and experience of
the officers concerned.

Office Order No. 679, dated April 27, 1978 was issued in
pursuance of the aforesaid Circular. The Bank announced
B by it that the tentative Combined Seniority List of officers in
Grade 'B' (appointed prior to January I, 1970) and Grades 'C', 'D',
'E' and 'F' would be available for inspection upto May 12, 1978.
Officers aggrieved by the tentative Seniority List were asked to
submit their representations within fifteen days. The tentative
Combined Seniority List shows the proposed position occupied
c seniority-wise by 644 officers belonging to Group I (Section A) and
Groups II and III.

These writ petitions 'were filed by the petitioners on June l 0,
1978 in order to challenge the Administration Circular, the Office
Order and the Combined Seniority List referred to above. The 25
petitioners are all officers in Group I.

The case of the petitioners is that the Administrative Circular and
the draft Combined Seniority list are violative of their rights under
articles 14 and 16 of the Constitution because; (a) The combined
E fixation of seniority has the effect of treating unequals as equals in
so far as officers belonging to different groups are concerned, whose
appointment, recruitment, promotion and seniority had all along
been fixed, accepted and acted upon on a group-wise basis; and (b)
Recruitment, selection and promotion of officers having been made
on a group-wise basis from time to time and their seniority having
F been fixed accordingly, the seniority is now fixed retrospectively from
an arbitrary date viz., May 22, 1974.

These contentions, particularly the first, have to be answered
in the light of historical data governing the constitution and manage-
G ment of Services under the Reserve Bank, from time to time. Without
an awareness of the history leading to the events which the petitioners
have challenged as unconstitutional, it will not be possible either
to appreciate their contention. or to provide an answer to it.

H the Reserve Bank of India was constituted on April J,
1935 under the Reserve Bank of India Act, 1934. The main
purpose c;if constituting
' - , . -
,
the
~ . Bank,
- . M stated in the Preamble
-----··-~---·-~~- ~ .
. "-, .
V.T. !W'.l<ZOr"' v ..'tF.SERVE BANK' (Chandrachud, C.J.) 437

A
of the Act was "To regulate ·the issue of bank notes and '
the keeping · of reserves with a. view to securing monetary
stability· in India and generally to operate the currency · and
credit system of the country to its advantage." In course of time:
'new fonctions came to be added as' a result of new moasures so as
to meet the growing needs of an expanding economy. · Dufing the B
first decade after.the ini:eptionof the Bank in '1935, these' functions
were carried out through three departments : The Banking Depart-
ment, the Issue· Department and the Agricultural Credit Department. '
- The Agricultural Credit Department was trifurcated irito three branches
with effect from August I, 1945 : (i) the Agricultural Credit
'- Department, (ii) ·the. Department of Research and Statististics c
,and (iii)' the Department· of Banking Operations;· The first two
branches, which were of a specialised nature, were grouped together ·
for the purposes of promotions of officers while the third branch
was grouped for that purpose with. the banking group on tht>
General Side. ' '· All promotions were. made from two separate
·common seniority lists,' one for the specialised· or 'technical group D
and the other for the ·banking· group. · The departments were
. regrouped again. into three Groups, with effect from .April l, ! 951.
Group I consisted of Staff attached to the Department of Research
and Statistics, Group II of the Staff attached to the Department of
Banking Operations, the Department of Banking Development· and
.·~
the Agricultural Credit · Department and Group III· of the Staff E
attached to the other Departments on the General Side. The Staff
attached to the Agricultural· Credit Department was reconstituted
into a new Group, namely, Group IV with effect from April l, 1955.
.'I The Industrial Finance Department and the Dep4rtment · of Non ..
Banking Companies were added to Group II . in September 1957' .· F
'. and March 1966, respectively. ·Group V was created for the staff
of the Industrial Department Bank of India with effect from April 1,
1965. The composition of the five Groups was readjusted on· that
date to ensure greater administrative efficienCY.·

G
· This system of grouping had many drawbacks 'bearing on the
promotional opportunities of Officers in the various Groups.· To
mention but a few, the drawbacks were : (i) Unequal size· of one
Group as compared to another, (ii) ·Uneven · expansion in· one·
Group as ·Compared to another, and (iii) Earlier confirmations of · H
Officer~ in one Group as coml'ar~d \o \~o~' in a,nother. ·
.. '
•- ·~I _, ___.

438 SUPREME COURT REPORTS . (1982] 3 s.c;' 1

A In 1955, Group I was the largest of all the three Groups on
the basis of the total number of officers in Grades 'B' and above .in ·
each of the three · Groups. The . subsequent'. expansion in staff
· strength bas been greater in Groups II and III . than in Group I
with the result that by the end of 1975, the total strength of Officers
in Grade 'B' and above was the smallest in Group·J as. compared to··
·B
the other Groups. .The number of officers in Grade •A', however~
continu.es to be the largest in Group I on account of the operational
nature of its functions. While the iricrease in the total ·num her of
a
-officers in Grade· 'B' and above in. Gro"up I over period of twenty
years was 280%, the corresponding increase in Groups II arid III was .
·C .451% and 1100% respectively. However, t~e large expansion in_,.
.Groups II and III was mairily at the junior officers 'level' particularly
. in •Grade 'B'. As regards senior officers i.e: officers in Grades 'D',
· 'E' and .'F' while the expansion ·in Groups I and II could be
.. regarded as more or less equal, the expansidn. in Group III, parti-
. cularly in Grade 'D' was marked. In spite of this, the total number
D of posts of senior officers and the percentage of such posts as com-
. pared with those of junior ·officers . continued . to be smaller i.n ·
Groups II and III. Officers in .Groups II and III also took a longer •
. time generally for confirmation as the posts against.which they were
promoted were either initially sanctioned on a temporary basis and
· . continued as such for quite sometime .before they were made perma- ·
E nent or the vacancies were caused by' deputation of regular officers
to commercial banks,. state co-operative. banks, etc. for ·which no
permanent_va=ancies w:re created. On the other hand, Group I had
more or less its normal growth during these years and there was a
· smooth flow of normai vacancies .. · The officers recruited in the early
. years of the Ban\: had also gradually started reaching the age of ~ \'·
F superannuatio,; and there was a regular flow of· retirement vacan-·
cies. The Officers in Group I bad, · therefore, their confirmation
·quickly and thereby derived distinct ben~fits. . ·

Under the Bank's rules, .. the seniority of an Officer in a parti- .
cular grade was ordinarily dependent on the date of his confirmation
G in that grade and although for the purpose of promotion, the senio-
rity of an officer was given weightage only whhin the same group
for a notional comparison of seniority of officers in different Groups
· an officer who was confirmed earlier in one Group as compared
with another wlio was confirmed later in another Group had an
H . edge over tho;.!attc:( if! ~alters of servi9e benefits, Such comparison~

·'
V.T. KHANZODB v. RESERVE llANK (Chandrachud, C.J.) 439

arising from promotional imbalances in the various groups caused A
resentment among the affected officers. This state of affairs had
long agitated the minds of the officers in Groups II and III and they
brought this state of affairs to the management's notice by various
representations beginning from 1968.

The Management of the Bank took several steps from time to B
time to correct the promotional imbalances but these steps did not
touch even the fringe of the problem, especially since, the ad·hoc
schemes and proposals were mainly. aimed at correcting imbalances
that the lower level. Ultimately, in face of growing discontentment
amongst officers belonging to Groups II and III, the Management
decided to refer the question to the Cadre Review Committee (CRC) c
which was appointed by the Bank in May 1970. The Committee
was, among other things, required to examine and make recommen-
dations for the changes desirable in the existjng constitution of the
cadres of officers; having due rega;d to the ueed to provide reason-
able prospects of increments and promotion and to ensure such
degree of inter-changeability as administrative efficiency and exigen· D
cies of the Bank's services demanded. The Committee, under the
Chairmanship of Shri J. L. Nain, a sitting Judge of the Bombay
High Court, submitted its report in October 1972.

The Cadre Review Committee expressed the view that there
was irrationality in the way the groupings had been done and the E
way in which seniority was being maintained •group-wise and that
Group I had an unfair advantage in matters of promotion over
Groups II and III. The Comm.ittee further held that as certain

- departments were inordinately large as compared to others, this by
itself, in the context of absence of inter group mobility brought
about imbalances in promotional opportunities. The Committee - F
also recognised that mobility from one group to another would not
only facilitate removing the imbalances in promotional opportunities
,
but that it would also lead to "better operational efficiency". The
Committee stressed the need for a common seniority list for each
grade of officers throughout the Bank, except in respect of the
Economic and Statistics Departments and among lawyers, engineers G
and other technical sections of officers. It recommended a system
of promotion from a lower grade to higher grade which would
ensure, among other things, to the.';largest extent possible; equality
of opportunity of promotion among all officers in t4e ~llQlC grade'' u.. '
- '. ,·:·r.-. · .... ·.... 1._3·.,..;_.~;

., J'
•..

440 SUPREME CoURT REPORTS . ·(i9s2j 3s.c.ii..
A . and effective operation of• mobility of officers between different
departments and groups. In "regard to the operation of the combined
'eniority scheme, the Committee recommended its immediate intro-
duction for' A' and 'B' grades and within a period of two years.for
the 'C' grade. · In regard to the rest of the grades, namely, 'D', 'E'
and 'F', the Committee recommended the application of this
B principle mutatis mutandis and left · it to the discretion of the Bank
to introduce it as and wheh it chose, taking ·into consideration the
exigencies of the situation. ·The Committee was also of the· view
. that it was necessary that mobility and inter-changeability as between
groups among all grades of officers should be introduced in the
~-"
shortest time possible.
c'
. Following th'e . recommendations of .the Cadre ·: Review
Committee, the Bank introduced through an administrative circular
. (No. 15, dated 22.5.1974), a combined seniority for' A' and part of
'D' 'grades, with retrospective effect. · 1n ·regard _to 'C' and 'D'
D Grades, the circular provided.for mobility and interchangeability on
. a swap basis, but the Officers'. Association protested against it and
demanded immediate and simultaneous. introduction of combined
.
seniority and interchari geability for the rest of the grades ·also.
' . . . . ''

· Following the perslstent demand· ~ade ·by the majority of the
E officers,. the Bank appointed a Committee comprising Shri c. L.
Thareja; the then Chief. Manager, as Chairman, Shri K: Madhava
Das,· Chief 'office~,· ·Agricultural Credit Depart~ent, Shri 'P. N.
Khamia, Chief Officer, Department of Banking. Operations and
Development, and Shri T. ri. Katara, Manager, Bombay Office, to
work out the modalities of. the implementation of the combined
. seniority scheme for grade~ 'C' to 'F' and to determine the operati~e
F
. date for.con!bining the seniority.' The Bant- 'decided that pendir{ll
the submission of the .report by this Committee, all future promo-
.. tions namely those effected from I.l.1976, will be p~rely ad hoc and
provisional. . . ' ·-

G
The Thareja Committee, like the Cadre Review Committee;
unanimously recommended the introduction of co~bined seniority
simultaneously forall grades of officerS. However, on the question
of the operative date, it was divided in its· views. : Whereas Shri
Thareja and Shri Katara, both Group I officers, recommended that -
H
the scheme be given retrospective effect· from January 1, 1976, the··
-
v.r. KHANZODE v. RESERVE BANK (Chandrachud, C.J.) 441

other two members representing Groups II and III, were-0f the A
view that it should be given effect from January 1, 1970. The Bank,
by the impugned circular, accepted May 22, 1974 as the date from·
which the combined seniority list was to have effect.

B
It is clear from this narration of historical events that the
various Departments of the Reserve Bank were grouped ·and re-
grouped from time to time. Such adjust men ts in the admiqj,strative •
affairs of the Bank are a necessary sequel to the growing aemands
of new situations which are bound to arise in any developing
economy. The group system has never been a closed or static c
chapter and it is wrong to think that the officers of the various
groups were kept, as it were, in quarantine. The group system has
been a continuous process of trial and error and the impugned
scheme of inter-group mobility has emerged as the best solution out
of the experience of the past. Combined seniority has been recom-
mended by two special committees, whose reports reflect the exper- D
tise .and objectivity which was brought to bear on their sensitive
task. It is clear that inter-group mobility and common seniority
are a safe and sound solution to the conflicting demands of officers
belonging to Group I on one band and those of Groups II and III
on the other. Private interest of employees of public undertakings
cannot override public interest and an effort has to be made to E
harmonize the two ·considerations. No scheme governing service
·matters can be fool-proof and some section or the other employees
is bound to feel aggrieved on the score of its expectations being
falsified or remaining to be fulfilled. · Arbitrariness, irrationality,
perversity and mala fides will of course render any scheme uncons-
titutional but the fact that the .scheme does not satisfy the expect~ F
tions of every employee is not evidence of these. Vested interests
arc prone to hold ·on to their a•uisitions and we understand
) ,the feelings of Group I officers who have to surrender a pai:t
of the ,benefits which had accrued to them in . a water-tight
system of grouping. Combined seniority is indispensable
for the smooth functioning of the Bank and · no organisation G
can function smoothly if one section of its officers has an
1.1nfair advantage over others in matters of promotional oppor-
.. ,, .tunities. The reports of the Cardre Review Committee· and the
Thareja Committee show !bat com_bined seniority has ·emerged as
H
.A the. mo.st accepiable solution as a matter of. administrative, his~
t9ricai. and functional -n~cessity. We see no justification for und6ing
442 SUPREME cOURT REPORTS [1982i ~ s.c.k.
A what these committees have achieved after an objective and integral
exaifiination of the whole issue. We may mention that the con·
clusion to which these committees came were considered by the
· Bank when Shri M. Narasimhan, later India's Executive Director in
the World Bank, was the Governor and it was after Dr. I.G. Patel,
Formerly Secretary, Economic Affairs, Govt. of India and Deputy
B Administrator, United Nations Development Programme, took over
as Governor in December 1977 that the final decision was taken by
the Central Board to introduce inter-group mobility and combined
seniority .
•
•
In Reserve Bank of India". N.C. Pa/iwal, a Combined Seniority
c Scheme was introduced by the Reserve Bank of India, consisting of
two parts, one part provided for the integration of the clerical staff
of the General Departments with the clerical staff of the Specialised
Departments, while the other provided for the switchover and integ-
ration of the non·clerical staff with the clerical staff in all the
D Departments of the Bank. The Delhi High Court set aside the
Scheme on the ground that it violated Articles 14 and 16 of the
Constitution. While setting aside the judgment of the High Court,
this Court held that the integration of different cadres into one
cadre did not involve violaiion of the equality clause and that
neither Article 14 nor Article 16 forbids creation of different cadres
E in Government service. Whether there should be a combined
seniority in different cadres or groups was, according to the Court,
a matter of policy which did not attract the applicability of the
equality clause. The intergration. of non-clerical with clerical
services which was effectuated by the Combined Seniority Scheme
was, in the circumstances, held to be not violative of the guarantee
contained in Articles 14 and 16.

As regards the rctrospecliire operation given to the Scheme
with effect from May 22, J974, it does appear that the Board has
struck a via media between two extreme contentions advanced by
G officers belonging to Group I and those belonging to Groups II and
III. But that was inevitable and we consider it as the best solution
in the peculiar circumstances of the case. In order to rectify the im-
balances and anomalies caused by the comparimentalised and group-
wise seniority, it was necessary to give retrospective effect to the
H Combined Seniority List. Officers belonging to Group I urged that
the Scheme should be brought into effect from January I, 1976,
while those belonging to Groups II and III wanted the Scheme to
\l,'i', ltilANZoDE r. RBSBilVB BANK (Chandrachud, C}.) 443
be brought into effect from January I, 1970. The Central Board A
struck a balance by choosing the date May 22, 1974, becaust! that
was the date on which the decision in regard to combining the
seniority retrospectively with effect from January I, 1970 in regard
to Grade 'A' and part of Grade 'B' officers was announced. It was,
again, on that date that the Bank had announced that a similar
decision in regard to the remaining grade, of officers was under its B
considerations. Thus, at least on May 22, 1974 it was known to offi-
cers of all grades that a combined seniority list was due to be brought
into force. Jf a certain section of officers succeeded in obtaining pro-
motional benefits thereafter, the imbalance introduced thereby
in the services of the Bank and the consequent dissatisfaction had
to be rectified. That could only be done by not recognising the c
accelerated promotions obtained in the intervening period by a
certain class of officers. Shri Nariman has drawn our attention to
various individual cases of officers in Group I whose old seniority
• has gone down by several steps in the new Scheme. As we have
stated earlier, any scheme of seniority is bound to produce isolated
aberrations. That cannot justify the argument that the entire
D
Scheme is for that reason violative of the guarantee of equality.

We are, therefore, of the opinion that the impugned Adminis-
tration Circular, the Office Order and the Combined Seniority List
are not violative of the rights of the petitioners under Articles 14
and 16 of the Constitution.
ll

For these reasons, the Writ Petitions are dismissed, but there
will be no order as to costs.

S.R. Petitions dismissed. F