PETITIONER:
RESERVE BANK OF INDIA
Vs.
RESPONDENT:
N. C. PALIWAL & OTHERS
DATE OF JUDGMENT24/08/1976
BENCH:
BHAGWATI, P.N.
KHANNA, HANS RAJ
FAZALALI, SYED MURTAZA
CITATION:
1976 AIR 2345 1977 SCR (1) 377
1976 SCC (4) 838
ACT
Constitution of India, 1950, Art. 14--Combined Seniority
Scheme introduced ,by the Reserve Bank of India to equalise
opportunities of confirmation and promotion of Clerks--Some
clerks affected adversely by unforeseen circumstances--If
violative of equal opportunity clause--Right of State to
integrated cadres and lay down principles of seniority.
HEADNOTE
At every centre of the Reserve Bank of India there were five
departments, the General Department and four Specialised
Departments. There was a separate seniority list for the
employees in each Department at each centre and confirmation
and promotion of employees was only in the vacancies arising
within their Department at each centre. There were two
grades of clerks in each Department, namely, Grade I and
Grade 11. The pay scales of Grade I and Grade II clerks in
all the departments were the same and their conditions of
service were also identical. There was automatic promotion
from Grade II to Grade I and when a clerk from Grade H was
promoted to officiate in Grade I, he got an additional
officiating allowance of Rs. 25/- per month. There were also
several categories of non,clerical posts in the General as
well as Specialised Departments, and their pay scale was
the same as that of Grade II clerks. In view of expanding
activities in the Specialised Departments, there were great-
er opportunities for confirmation and promotion for employ-
ees in the Specialised Departments than in the General
Department. This gave rise to dissatisfaction amongst
employees in the General Department and they claimed equal
opportunities by having a combined seniority list for all
the clerks for confirmation and promotion. The Reserve Bank,
sought to justify the separate seniority lists on the ground
that the work in each department was of a special nature and
inter-transferability was undesirable and hard to achieve.
As a result of the recommendation Of the National Tribunal,
however, the Reserve Bank introduced the Optee Scheme of
1965 as h first step towards equalization of opportunities.
Under the Scheme, the option to go over to the Specialised
Departments was confined to confirmed Grade 11 clerks and
officiating Grade I clerks in the General Department. If he
exercised the option, he was eligible to be selected. If he
was selected, he would be entitled to be absorbed only as
Grade II clerk in one of the Specialised Departments with
the result that if he was an officiating Grade I clerk in
the General Department at the time of the exercise of the
option, he would lose the benefit of officiation in Grade I
in the General Department as also the monetary benefit of
Rs. 25/-. His seniority in the cadre of Grade II clerks in
the Specialised Department in Which he was absorbed would be
determined on the basis of his length of service calculated
from the date of his recruitment if he was a graduate when
he joined service, or from the date of his graduation if he
became a graduate whilst in service.
The petitioners in the present case and some others
were, at the time of introduction of the Optee Scheme,
confirmed Grade II clerks in the General Department and some
of them were officiating in the General Department as Grade
I clerks. They exercised the option under the Optee Scheme
land were absorbed substantively as confirmed Grade II
clerks in one or the other of the Specialised Departments.
The clerks, other than the petitioners were in due course,
in order of seniority, promoted as officiating Grade I
clerks in their respective Specialised Departments. But
before the turn of the petitioners for promotion came, a
new’ Scheme was introduced on May 13, 1972 as a result of
continuous agitation by the employees for full equalisation
of opportunities between the General Department and the
Specialised Departments. This Scheme was known as the
Combined Seniority Scheme, and it superseded the Optee
Scheme. It consisted of two parts. One part provided for
the integration of the clerical staff of the General Depart-
ment with the clerical staff of the Specialised Departments,
and the other,
378
for the integration of the non-clerical staff with the
clerical staff in all the Departments. The Combined Seniori-
ty Scheme gave an option to the non-clerical employees to be
transferred to posts in the clerical cadre, but in the
interest of efficiency, prescribed a qualification that only
those employees in non-clerical cadres would be transferred
who arc either graduates or have passed both parts of Insti-
tute of Bankers Examination. For determining their seniori-
ty vis-a-vis those in the clerical cadre, the Combined
Seniority Scheme adopted the rule that one third of their
total non-clerical service until 7th May, 1972 (the date on
which agreement was reached between the Bank and its employ-
ees in the terms of the Combined Seniority Scheme) or the
date of acquiring the qualification should be taken into
account.
The petitioners successfully challenged the Combined
Seniority Scheme in the High Court. The High Court held
that the Scheme was violative of Arts. 14 and 16 of the
Constitution, because: (1) The position which obtained when
the Combined Seniority Scheme was brought into force was
that the petitioners were still confirmed Grade 11 clerks in
the Specialised Departments, while some of the Grade II
clerks in the General Departments, who were junior to them
and who had either not exercised the option, or having
exercised the option, were not selected, were promoted
as Grade 1 Clerks in the General Departments. The result
was that these Grade 11 clerks who had been promoted as
Grade I Clerks in the General Department were equated to
Grade I Clerks in the Specialised Departments. Therefore,
according to the petitioners, the Combined Seniority Scheme
had the effect of prejudicing the promotional opportunities
assured to the petitioners under the Optee Scheme and hence
the Combined Seniority Scheme discriminated against the
petitioners in relation to the clerical staff in the General
Department who either did not exercise the option under the
Optee Scheme or having exercised the option, were not
selected; (2) it discriminated against the petitioners
vis-a-vis others who had opted under the Optee Scheme of
1965 and who had obtained promotion as Grade I clerks in
their respective Specialised Departments before the intro-
duction of the Combined Seniority Scheme; and (3) (a) the
Scheme treated alike the non-clerical staff as well as the
clerical staff by integrating them together in one cadre
with a combined seniority list though they formed two dis-
tinct and separate classes, and thus violated the equali-
ty clause; (b) by permitting, in the case of non-clerical
staff, one-third of the total non-clerical service until 7th
May, 1972 or the date of acquiring the qualification, to be
taken into account for the purpose of seniority, the Bank
laid down a wholly irrational and unjust principle of sen-
iority in the integrated service and violated the equal
opportunity clause and; (c) the seniority of the petitioners
was adversely affected by the integration without giving any
opportunity to them and thus the introduction of the Com-
bined Seniority Scheme violated the principles of natural
justice.
Allowing the appeal to this Court and upholding the
validity of the Combined Seniority Scheme.
HELD: (1) Assuming that the Reserve Bank is State under
Art. 12, and therefore subject to Arts. 14 and 16, by the
mere introduction of the Optee Scheme no promise or assur-
ance could be spelt out on the part of the Bank not to take
any steps towards integration of other employees not
covered by the Optee Scheme. The Reserve Bank could not,
on any principle of law or by any process of implication, be
held bound to hold its hands in the matter of further inte-
gration, until the petitioners were promoted in the Specia-
lised Departments. The only object of the Optee Scheme was
to equalise the promotional opportunities of Grade II
clerks in the General Departments with those of Grade II
clerks in the Specialised Departments by giving an option to
the former to be absorbed in the latter. This object was
carried out as soon as the petitioners and other Grade II
clerks in the General Departments opted to be transferred to
the Specialised Departments. Then they became Grade I1
clerks in the Specialised Departments having the same promo-
tional opportunities as the original Grade 1I clerks in the
Specialised Departments. There was no assurance given by the
Bank that the promotional opportunities available to Grade
II clerks in the Specialised Departments will not be dimin-
ished. The Combined Seniority Scheme affected the promo-
tional opportunities of all Grade II clerks in the Specia-
lised Departments, irrespective of whether they were origi-
nal or transferee Grade II clerks. It did not discriminate
between transferee Grade II clerks and original
379
Grade II clerks. There was no breach of the principle that
the promotional opportunities of transferee Grade 11 clerks
should be equal to those of original Grade II clerks. The
fact that some of the Grade II clerks, junior to the peti-
tioners, had become Grade I clerks in the General Depart-
ments, and so could be equated only with Grade I clerks in
the Specialised Departments is a wholly fortuitous result.
It might cause heart-burning amongst the petitioners that
they still continue to be Grade II clerks but whenever
services are integrated, some hardship is bound to result as
a necessary consequence of integration. [389 F; 391 B--G]
(2) The Reserve Bank did not undertake that it will not
take any steps for bringing about total integration of the
clerical services until all the transferee Grade II clerks
were promoted. The Reserve Bank was entitled to introduce
the Combined Seniority Scheme at any time it thought fit and
its validity cannot be assailed on the ground that it was
introduced at a time when some of the transferee Grade II
clerks still remained to be promoted and so was discrimina-
tory against them. The fact that some transferee Grade II
clerks had already obtained promotion as Grade I clerks in
the Specialised Departments by the time the Combined Senior-
ity Scheme was introduced, is all part of the exigencies of
service and in law no grievance can be made against it. [392
D--E]
(3) (a) The integration of different cadres into one
cadre cannot be said to involve any violation of the equali-
ty clause. It is entirely a matter for the State to decide
whether to have several different cadres or one integrated
cadre in its services. That is a matter of policy which
does not attract the applicability of the equality clause.
The integration of non-clerical with clerical service sought
to be effectuated by the Combined Seniority Scheme cannot,
in the circumstances, be assailed as violative of the prin-
ciple of quality. [393 F]
Kishori Mohanlal Bakshi v. Union of India AIR 1962 S.C. 1139
referred to
(b) It is open to the State to lay down any rule which
it thinks appropriate for determining seniority in service
and it is not competent to the Court to strike down such a
rule on the ground that in its opinion another rule would
have been better or more appropriate. The only enquiry
which the Court can make is whether the rule laid down by
the State is arbitrary and irrational so that it results in
inequality of opportunity amongst employees belonging to the
same class. [393 G-H]
In the present case the employees from non-clerical
cadres were being absorbed in the clerical cadre, and,
therefore, a rule for determining their seniority vis-a-vis
those already in the clerical cadre had to be devised. To
ignore their .entire non-clerical service would have been
unjust to them, and to take into account their entire non-
clerical services would be unjust to those in the clerical
service. The Bank therefore, decided that one third of the
non-clerical service rendered by the employees coming from
non-clerical cadres should be taken into account for the
purpose of determining seniority. It strikes a just balance
between the conflicting claims of non-clerical and clerical
staff and cannot be condemned as arbitrary or discriminato-
ry. [394 A--B]
Anand Parkash Saksena v. Union of India [1968] 2 S.C.R. 611,
referred to.
(c) (i) The contention that there was violation of princi-
ples of natural justice was not raised before the High
Court; (ii) Even if the contention is allowed be raised in
this Court, there was no question of any existing seniority
of the petitioners being disturbed by changing the rule of
seniority. The problem was fitting into the clerical cadre
employees coming from non-clerical cadres. For that purpose,
a new rule was required to be made. The rule did not affect
the petitioners’ seniority, and hence, there was no question
of giving the petitioners an opportunity to make representa-
tion against it. [394 E]
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1231 of
1973 and 1408 of 197.
(From the Judgment and Order dated 11-5-1973 of the
Delhi High Court in Civil Writ No. 690/72).
380
B. Sen, and L N. Shroff for the Appellant (in Appeal
No. 1231/73)
S.V. Gupte, P.P. Rao and A.K. Ganguli for Respondent
Nos. 1 ,. 2, 4, 6-18, 20, 22, 23, 25-32, 34 and 35.
M.K. Ramamurthi, C. N. Murti and R. C Pathak for Re-
spondent 36.
M.K. Ramamurthi, C.N. Murti and R. C: Pathak for the
Appellant (in Appeal No. 1408/74).
P.P. Rao and A.K. Ganguli for Respondents 1.2, 4, 6-18,
20, 22, 23, 25, 32, 34 & 35.
B. Sen and I. N. Shroff for Respondent 36.
The Judgment of the Court was delivered by
BHAGWATI, J.---The Reserve Bank of India is the appel-
lant in’ Civil Appeal No. 1231 of 1973. This appeal, on
certificate, is directed against a judgment of the High
Court of Delhi allowing Writ Petition No. 690 of 1972 filed
by some of the employees of the Reserve Bank challenging the
validity of the combined seniority Scheme issued by the
Reserve Bank of India by its Circular dated 13th May, 1972.
This judgment of the High Court is also assailed by the
All India Reserve Bank Employees Association (hereinafter
referred to as the Association) by preferring Civil Appeal
No. 1408 of 1974 after obtaining certificate from the High
Court. Both these appeals have been heard together since
they are directed against the same judgment and all the
arguments raised on behalf of the appellants are also common
except one additional argument advanced on behalf of ,the
Association in Civil Appeal No. 1408 of 1974. The facts
giving rise to these two appeals are a little important and
it is necessary to state ,them in order to appreciate the
questions arising for determination in the appeals.
The primary purpose for which the ,Reserve Bank of India
was originally constituted was "to regulate the issue of
bank notes and the keeping of the reserves with a view to
securing monetary stability in India and generally to oper-
ate the currency and the credit system of the country to its
advantage". But in course of time other functions came to
be added as a result of various statutes passed by the
Parliament from time to time to meet the economic needs of
the country. The administrative machinery of the Reserve
Bank’ for carrying out these diverse functions was at the
material time divided into the following five groups of
departments: (1) Group I: General Side. that is, Banking
Department, Issue Department, Public Debt Division and
Exchange Control Department; (2) Group II: Department of’
Banking Operations, Development and InduStrial Finance
Department and Department of Non-banking Companies; (3)
Group III: Agricultural Credit Department, (4) Group IV:
Economic Department and Department of Statistics and (5)
Group V: Industrial Development Bank of India. The depart-
ments falling within the first group were known as the
general departments, while the departments falling within
the other four groups were known as the specialised depart-
ments. Though recruitment to these different groups of
departments was
381
made on a common basis, each group of departments was treat-
ed as a separate unit for the purpose of determining the
seniority and promotion of the employees within that group
and this was done on centrewise basis. The result was
that there was a separate seniority list for the employees
in each group of departments at each centre of the Reserve
Bank and the employees could seek confirmation and promotion
only in the vacancies arising within their own group of
departments at their own centre.
There were two grades of clerks in each group of
departments, namely, Grade I and Grade II. The pay scales
of Grade I and Grade II clerks in all the groups of depart-
ments were the same and their conditions of service were
also identical. There was automatic promotion from Grade II
to Grade I and when a clerk from Grade II was promoted to
officiate in Grade I he got an additional officiating allow-
ance of Rs. 25/- per month. While Grade 1 and Grade II
clerks in the specialised departments were invariably gradu-
ates, those in the general departments were not always so.
Some out of them were graduates, while others were non-
graduates. There were also several categories of non-
clerical posts in the general as well as specialised depart-
ments. They were in Grade II and the pay scale this Grade
was the same as that of Grade II clerks in the general and
specialised departments. It appears from the Circular of
the Reserve Bank dated 13th May, 1963 that Stenographers,
Typists and Coin/ Note Examiners, though falling within the
category of non-clerical staff, were sometimes transferred
as Grade II clerks and by this circular, it was decided that
"with effect from 1st July, 1963, the transfer of staff
from one category to another should be governed" by the
principles there set out. Two categories of transfers were
contemplated by this Circular: one was transfer by selection
and the other was transfer on grounds of health. The first
category of transfers by selection required that the Stenog-
rapher, Typist or Coin/Note Examiner seeking transfer would
have to be a graduate or should have passed both parts
of the Institute of Bankers’ Examination and his applica-
tion for transfer would be considered by the manager from
the point of view of his record of service and his suitabil-
ity for transfer to the clerical grade and he would then
have to appear for interview before a selection board and
it was only if he was selected that he would be transferred
as Grade II clerk. But once he was transferred as Grade II
clerk, his seniority in the new cadre would be counted
from the date on which he joined service, as a Typist or
Coin/Note Examiner and in the case of a Stenographer, from
the date on which he jointed service as a Typist or as a
Stenographer in case he was directly recruited as such
"provided that the said date shall not_ be earlier than the
date on which the transferee acquired the degree or banking
qualification by reason of which he became eligible for
such transfer: that is to say, in the case of a Coin/Note
Examiner/ Typist/Stenographer who graduates or acquires the
banking qualifications after the date of his joining serv-
ice, he will be deemed to have joined service "only o, the
date he acquired the said qualification".
382
The second category of transfers was on grounds of health.
However, that is not material for our purpose and we need
not consider it.
It seems that in view ’of the expanding activities of
the Reserve Bank in the Specialised Departments, there were
greater opportunities for confirmation and promotion for
employees in the specialised departments as compared to
those available to employees in the general departments.
This gave rise to dissatisfaction amongst employees in
the general department and they claimed for equalising the
confirmation and promotional opportunities by having a
combined seniority list for all employees in Class III
irrespective of the departments to which they belonged
basing promotions on such combined seniority list. This
question was also raised by the Association before the
National Tribunal consisting of Mr. Justice K.T. Desai and
it was pleaded by the Association that "all promotions
should be made strictly according to the combined seniority
irrespective of the cadre of department". The Reserve Bank,
on the other hand, sought to justify the maintenance of
separate seniority lists for various departments on the
ground that the work in each department was becoming more
and more of a special nature and inter-transferability was
not only undesirable in the best interest of the Bank, but
it was also hard to achieve. The National Tribunal, while
not accepting the demand of the Association and expressing
its inability to give any direction to the Reserve Bank in
regard to this question, made the following observations
in its Award:
" I can only, generally, observe that it is
desirable that wherever it is possible, without
detriment to the interests of the Bank and without
affecting the efficiency, to group employees in
a particular category serving in different depart-
ments at one Centre together for the purpose of
being considered for promotion a common seniority
list of such employees should be maintained. The
same would result in opening up equal avenues of
promotion for a large number of employees and there
would be lesser sense of frustration and greater
peace of mind among the employees."
These observations of the National Tribunal were ap-
proved by Hidayatullah, J., as he then was, speaking on
behalf of this Court in All India Bank Employees Association
v. Reserve Bank of India(1) at page 57.
In view of these observations of the National Tribu-
naI, which were endorsed by this Court, the Reserve Bank
took the first step towards equalising the confirmation
and promotional opportunities of employees in the General
Departments by introducing the Optee Scheme of 1965 by a
Circular dated 29th June, 1965. Clause (1) of the Scheme
provided that all vacancies in Grade II Clerks occurring in
Specialised Departments in each centre upto 30th June,
1970 would be treated as expansion vacancies to be filled up
by transfer of confirmed Grade II Clerks including officiat-
ing Grade I Clerks in the
(1) [1966] 1 S.C.R. 25.
383
General Departments. The manner in which these vacancies
shall be filled was set out in clauses (2) and (3) which
read inter alia as follows:
"A circular will be issued inviting applica-
tions in form ’A’ from confirmed graduate Clerks
Grade 1I (including officiating Clerks Gr. I) of
the General Side (Group 1) for the preparation of a
panel of suitable employees who are willing to opt
for transfer to any of the Departments in Groups
II, 1II and V at each centre under the optee
scheme.--As regards the non-clerical staff trans-
ferred to the clerical cadre, only those who have
been absorbed against permanent vacancies of clerks
Gr. II on the General Side will be eligible to
opt for transfer.
(i) The panel will be a consolidated one,
i.e., separate panels will not be prepared for each
of the Departments in Groups II, 1II and V at each
centre.
(ii) The option exercised by the employees
will be subject to the approval of the ’Manager’
depending on their past record of service and
suitability for transfer to departments in Groups
II, III and V.
(iii) (a) The position of employees on the
panel, recruited directly as clerks Gr. II from the
waiting list of graduate clerks Gr. II will be
determined according to their dates of recruitment.
(b) In the case of employees recruited from the
waiting list of undergraduate clerks Gr. II who
have become graduates while in service, and in the
case of non-clerical graduate staff transferred
to the clerical cadre, their position in the
panel will be determined according to their dates
of graduation.--
(iv) As and when vacancies arise in the Depart-
ments in Groups II, III and V at each centre, they
will be filled up by drawing on the panel, the
first vacancy going to the first person on the
panel, the second to the second and so on. An
employee will have no choice of the Department to
which he will be posted. The posting will be made
in the order in which the vacancies arise.
(v) Officiating clerks Gr. I will be trans-
ferred only in their substantive capacity as
clerks Gr. II
(vi) (a) The seniority of the optees on
transfer to the Departments in Groups II, III and V
will be determined on the basis that their trans-
fers to the concerned Departments have been made in
the interest of the Bank, that is to say, the
substantive position of the transferee in the
seniority list of the Department concerned will
be fixed above and employee who joined service
after the date of his recruitment
384
or date of graduation as the case may be and
below the employee who joined service before the
date of his recruitment/graduation ....
(c) The above method of fixation will, howev-
er be subject to the provision that if a substan-
tively junior employee in the Department to which
the transferee is posted is already officiating in
that Department in a higher grade on a longterm
basis on the date the transferee reports for duty
that officiating employee will be considered senior
to the transferee. The inter-se seniority of the
transferee posted to the same Departments in Group
II, III and V will be fixed in the order in which
their names are listed in the panel ....
(viii) The panel will be revised annually."
It will be seen that under the Scheme the option
to go over to the Specialised Departments was
confined to confirmed Grade II Clerks. and offici-
ating Grade 1 Clerks in the General Departments.
But there also, every Grade II Clerk and Officiat-
ing Grade I Clerk was not entitled to be absorbed
in the Specialised Departments as of right, but he
had to go through a process of selection and the
option exercised by him was "subject to the approv-
al of the Manager depending on his past record of
service and suitability for transfer" to the Spe-
cialised Departments. If he exercised the option
and was selected, he would be entitled to be ab-
sorbed only as Grade II Clerk in one of the Specia-
lised Departments with the result that if he was an
officiating Grade I Clerk in the General Depart-
ments at the time of the exercise of the option, he
would lose the benefit of officiation in Grade I in
the General Departments as also the monetary bene-
fit of Rs. 25/- per month which he was getting
during such officiation. His seniority in the cadre
of Grade II Clerks in the SpeciaIised Department in
which he was absorbed would be liable to be deter-
mined on the basis of his length of service calcu-
lated from the date of his recruitment if he was
also a graduate when he joined service or from
the date of his graduation if he became a graduate
whilst in service. The rationale behind this
provision obviously was that graduation being_
regarded as essential qualification for being a
Grade II Clerk in the Specialised Departments, the
length of service from the date of graduation
alone. should be taken for the purpose of determin-
ing the seniority of transferees from the General
Departments.
The petitioners in Writ Petition No. 690 of 1972, who
may for the sake of convenience be hereafter referred to as
the petitioners. were, at the time of the introduction of
the Optee Scheme of 1965, confirmed Grade II Clerks in the
General Departments and some of them were officiating in the
General Departments as Grade I Clerks. Though most of the
petitioners were recruited as Grade II Clerks from the
beginning, so far as petitioners 4, 9, 16, 18, 19, 23 and 26
were concerned, they were originally recruited to non-cleri-
cal posts and subsequently transferred as Grade II clerks
by selection and that is how at the date when the Optee
Scheme of 1965 came into force, they were confirmed Grade II
Clerks in ’the General Departments. The
385
petitioners exercised the option under the Optee Scheme of
1965 and were absorbed substantively as confirmed Grade 1I
Clerks in one or the other of the Specialised Departments.
Obviously, the consequence was that those of the petition-
ers who were officiating as Grade I Clerks in the General
Departments lost their officiating position as a result of
this transfer together with the attendant monetary benefit
of Rs. 25/- per month.
Besides the petitioners, there were also other confirmed
Grade I[ Clerks and Officiating Grade I Clerks in the
General Departments who, having exercised the option and
being selected, were taken over as confirmed Grade I1 Clerks
in the Specialised Departments. Some of them--a few--were,
in due course, in order of seniority, promoted as Officiat-
ing Grade I Clerks in their respective Specialised Depart-
ments. But before the turn of the petitioners for promo-
tion could arrive, a new Scheme was brought into force to
which we shall presently refer. It appears that the Asso-
ciation was not satisfied with the Optee Scheme of 1965 as
it did not go far enough and equalised opportunities for
only a section of the employees in the General Depart-
ments, namely confirmed Grade II Clerks and Officiating
Grade I Clerks, leaving the rest in the same disadvantageous
position as before. The Association, therefore, continued
to press its demand for complete equalisation of opportu-
nities and in 1969, the Reserve Bank took one further step
with a view to partly satisfying that demand. The Reserve
Bank introduced another Scheme called the Optee Scheme of
1969 for transfer of confirmed Grade I Clerks in the Gener-
al Departments to the Specialised Departments to the extent
of one-third of the long term normal vacancies of Grade I
Clerks arising in the Specialised Departments during the
period from 1st February, 1969 to 30th June, 1970. But this
also did not satisfy the Association for what the Associa-
tion desired was full equalisation of opportunities between
the General Departments and the Specialised Departments.
The Association continued to agitate for acceptance of its
demand and ultimately, as a result of negotiations, an
agreement dated 7th May, 1972 was arrived at between the.
Reserve Bank and the Association by which the demand of the
Association was substantially conceded and the principle of
a combined seniority list was accepted by the Reserve Bank.
The petitioners and some other employees were, however,
not members of the Association and they refused to accept
the terms of this agreement and hence the Reserve Bank
issued a Circular dated 13th May, 1972 introducing d Scheme
for combined seniority list and switched over from non-
clerical to clerical cadre with effect from 7th May,
1972. This Scheme was substantially in the same terms as
the agreement dated 7th May, 1972 and we shall hereafter,
for the sake of convenience, refer to this Scheme as the
Combined Seniority Scheme.
The Combined Seniority Scheme consisted broadly 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 and the other, for the switch-
over and integration of the non-clerical staff with the
clerical staff in all the Departments of the Reserve Bank
386
Clauses (8) and (9) dealt with the first part and they
provided inter alia as follows:
"8. Combined Seniority between clerical staff in dif-
ferent departments
The seniority lists of the staff mentioned below work-
ing in the general side and Specialised Departments (i.e.
in all the Groups 1 to V of the Department-wise grouping)
will be merged into one with effect from 7th May, 1972 in
accordance with the provisions of clause 10 in the manner
set out below:
(a) All Clerks Grade II, Field Investigators and
Clerks Grade I (with less than one year total
officiating service) will be placed in the combined
seniority list, relative seniority of an employee
being fixed according to the date of his first
appointment as Clerk/Field Investigator.
(b) All confirmed Clerks Grade I, Clerks Grade I
officiating as such on 7th May, 1972 with one year
or more total officiating service, Assistants
(temporary, officiating as well as confirmed) and
Field Inspectors will be placed in the combined
seniority list ranking as a group above the employ-
ees listed under sub-clause (a) above. The relative
seniority of an employee will be fixed on the
basis of the total length of service put in by him
from the date he first started officiating as Clerk
Grade I/Field Inspector after deducting therefrom
periods during which he reverted as clerk Grade
II/Field Investigator otherwise than on account
of proceeding on leave.
(c) Fixation of seniority as referred to in sub-
clauses (a) and (b) above will be subject to the
proviso that the inter-se position as between two
employees in the existing groupwise/departmentwise
seniority lists is not disturbed to the detriment
of any senior employee within the same
group/department except as provided for in clause 6
and sub-clause (e) below.
(d) x x x x
(e)’ The seniority of class III personnel having
been fixed as provided for in sub-clauses (a) and
(b) above the seniority of an optee, selected
clerk in the existing specialised departments
whose seniority compared to his juniors in the
existing General side is adversely affected will be
protected to the extent of his entitlement had he
not opted/been selected under the optee/select-
ed scheme: Provided that he shall apply in this
regard in writing within one month from the date
of notification of the combined seniority list.
Applications
387
for such adjustments will not be entertained after
expiry of the period stipulated above.
9. (i) (a) Employees officiating as Clerks Grade I
on 7lb May, 1972.
An employee officiating as a Clerk Grade I as
on 7th May 1972 will continue to officiate without
prejudice to the claims of employees whose position
may be above him in the. combined seniority list.
he reverts, his next promotion will be according to
his substantive seniority in the combined list.
Reversion only on account of proceeding on leave
will not be deemed as reversion for the purpose
this clause.
(b) Promotion as Clerks Grade I between 7th May
1972 and the notification of the combined seniority
list.
Promotions during this period will be made with
reference to the existing departmental/groupwise
seniority list but without prejudice to the claims
of seniors in the combined seniority list. When
the combined seniority list, becomes available, a
review of all such promotions made in the interre-
gum will be made and senior employees not officiat-
ing in the higher grades will be promoted by re-
placing the junior employees. The review will be
completed within a period of two weeks.
(c) Promotions as Clerks Grade I thereafter.
Promotions will be made from the combined seniority
list"
The second part Was provided for in clauses (1) to
(7) and these clauses, so far as material read
thus:
"1. Combined seniority between clerical staff and
eligible non-clerical stall opting for switchover:
(a) All employees in Class III non-clerical cadre
substantively in the categories that have been
listed as groups I, Iii, IV and V in the annexure
(Reference is not to the department-wise groups)
who are graduates or have passed both parts of
Institute of Bankers Examination will be eligible
to exercise an option in accordance with sub-clause
(a) or (b) of clause 2 to be transferred, automat-
ically and without any screening, to posts in the
clerical cadre which are vacant and are other than
of a purely stop gap or short term nature, subject
to subclause (b) below. Actual transfer to posi-
tions involving clerical duties will be effected in
a phased manner as laid down in clause 7.
(b) On such option being exercised within the
period of two months as per clause 2 (a), or one
month as per clause 2 (b) as the case may be, the
position of such optee will be fixed in the com-
bined seniority list by counting for the purpose of
seniority in the clerical cadre onethird of his
total non-clerical service in Class III in the
388
Bank until 7th May 1972 or the date of acquiring
the qualification i.e. the date of publication of
the results of the examination, as the case may be
(vide clauses 3(a) and 3(b).
2. (a) x x x x
(b) Any employee who acquires the qualifica-
tion for eligibility after the 7th May 1972, will
have, within one month of acquiring the said
qualification, to exercise his option whether he
desires to switch over to the clerical cadre with
his seniority being determined as per clause I(b).
The option once exercised shall be final subject
to the right of revocation and with the same
consequences, as at subclause (a) above. Those
eligible but not exercising the option within the,
aforesaid period of one month shall lose ’the
right of option thereafter.
3. (a) The notional seniority in the clerical
cadre of those employees who are eligible for
switchover on the 7th May 1972 and exercise their
option under clause 2(a) will be fixed with effect
from 7th May 1972.
(b) In respect of employees who acquire the
eligibility qualification in future and exercise
their option under clause 2(b), their notional
seniority in the clerical cadre will be fixed
with effect from the date of acquiring such quali-
fication viz. date of publication of the results
of the examination.
(c) Fixation of seniority whether under sub-clause
(a) or (b) will, however, be subject to the proviso
that the inter-se position as between two employ-
ees in the concerned seniority list of non-cleri-
cal employees as it stood immediately before the
7th May 1972 or the date of acquiring the
qualification for switchover is not disturbed to
the detriment of a senior employee as in the
relevant seniority list.
(Illustration for fixation of seniority is Enclo-
sure. I)
4.(a) An employee opting for switchover will, for
the, purpose of compilation of the combined sen-
iority list, be deemed to be a member of ’the
clerical cadre with effect from the date as at
clauses 3(a)and 3(b), as the case may be.
(b) Until such time as he is actually transferred
to the clerical cadre an optee from the non-cleri-
cal grade in which he is placed at the time of
option and will accordingly remain eligible for
promotion in the non-clerical cadre;
Provided that an employee officiating in a category that is
listed as group II, VI, VII or VIII of Annexure as the ease
may be confirmed in that category only if he revokes his
earlier option before confirmation, for which he will have
an opportunity."
389
_It may be pointed out that though the Optee Scheme of 1965
was originally intended to be operative only upto 30th
June, 1970, it was .continued right upto the time that the
Combined seniority Scheme came into force. The effect of
the Combined Seniority Scheme was .that it superseded the
Optee Scheme of 19’65. The petitioners were ,aggrieved by
the Combined Seniority Scheme since according to them it
affected their chances of confirmation and promotion and
placed them in a disadvantageous position and accordingly
they filed Civil Writ No. 690 of 1972 in the Delhi High
Court challenging the validity of the Combined Seniority
Scheme on various grounds relatable to Articles 14 and 16 of
the Constitution. These grounds of challenge found favour
with the Division Bench of the Delhi High Court which heard
the petition and the Division Bench quashed and set aside
the Combined Seniority Scheme on the view that it was viola-
tive of Articles 14 and 16 of the Constitution. The three
main grounds on which the Division Bench found fault with
the Combined Seniority Scheme were first, that it discrimi-
nated against the petitioners vis-a-vis. the others who had
opted under the Optee Scheme of 1965 and who had obtained
promotion as Grade I Clerks in their respective Specialised
Departments before the introduction of the Combined Seniori-
ty Scheme;secondly, it discriminated against the petitioners
in relation to the . clerical staff in the General Depart-
ments who either did not exercise the option under the Optee
Scheme of 1965 or having exercised the option, were not
selected and thirdly, it treated alike the non-clerical
staff as well as the clerical staff by integrating them
together in one cadre with a combined seniority list, though
they formed two distinct and separate classes unequal to
each other. The Division Bench accordingly allowed the
petition and struck down the Combined Seniority Scheme.
Two appeals were thereupon preferred to this Court after
obtaining a certificate of fitness from the Delhi High
Court, Civil Appeal No. 1231 of 1973 by the Reserve Bank and
Civil Appeal No. 1408 of 1974 by the Association. Both the
Reserve Bank and the Association seek to sustain the validi-
ty of the Combined Seniority Scheme in these appeals sub-
stantially on the same grounds.
We will assume for the purpose of these appeals that the
Reserve Bank is a "State" within the meaning of Article 12
of the Constitution and hence subject to the limitations
imposed by Article 14 and 16. It was in fact so held by the
Delhi High Court and this view was not seriously assailed
before us on behalf of the Reserve Bank. The question
which, therefore, requires to be considered is whether the
Combined Seniority Scheme in any way falls foul of Articles
14 and 16. The Delhi High Court relied on three grounds for
invalidating the Combined Seniority Scheme under Articles 14
and 16 and the same three grounds were also canvassed before
us in these appeals, but we do not think there is any sub-
stance in them. We shall examine these grounds in the order
in which they were advanced before us.
The first ground was that the Combined Seniority Scheme
discriminated unjustly against the petitioners vis-a-vis
those confirmed Grade II Clerks and Officiating Grade I
Clerks in the General Departments who either did not exer-
cise the option under the Optee Scheme
390
of 1965, or, having exercised the option, were not selected.
The argument of the petitioners under tiffs head of chal-
lenge was that the Optee Scheme of 1965 was introduced by
the Reserve Bank for the purpose of improving the promotion-
al opportunities of Grade II Clerks in the General Depart-
ments by absorbing them in the cadre of Grade II Clerks in
the Specialised Departments where there were greater
promotional opportunities by reason of a larger number of
posts in the higher grades. That was the implied assurance
given by the Reserve Bank as part of the Optee Scheme of
1965 and the petitioners, acting on this assurance, exer-
cised the option to be transferred as confirmed Grade II
Clerks in the Specialised Departments, some of them even
giving up their officiating position as Grade I Clerks and
losing in the process the officiating monetary allowance of
Rs. 25/- per month. The Reserve Bank was, in the circum-
stances, precluded from introducing the Combined Seniority
Scheme which had the effect of prejudicing the promotional
opportunities assured to the petitioners, until the peti-
tioners got their promotion to higher posts in the Specia-
lised Departments in accordance with such assurance. The
position, however, which obtained when the Combined Senior-
ity Scheme was brought into force was that the petitioners
were still confirmed Grade II Clerks in the Specialised
Departments, while, as compared to them, some of the Grade
II Clerks in the General Departments, who were junior to the
petitioners and who had either not exercised the option or,
having exercised the option, were not selected were already
promoted as Grade 1 Clerks in the General Departments. In
this situation, the effect of the Combined Seniority Scheme
was that though theoretically, by reason of cl. (8)(c), the
petitioners were given seniority over these Grade II Clerks
who had been promoted as Grade I Clerks in the General
Departments, the latter retained their higher Grade I in the
Combined Seniority Scheme and thus secured an advantage over
the petitioners. This was the anomalous and unjust result
brought about by the Combined Seniority Scheme and that,
according to the petitioners, introduced a serious infirmi-
ty. This argument, we are afraid, is more an argument of
hardship than of law and we do not think we can accept it.
When the petitioners opted to be transferred to the
Specialised Departments under the Optee Scheme of 1965, they
obviously did so as they thought that they would have
quicker chances of promotion in the Specialised Department
than in the General Departments. But it appears that
before their turn for promotion as Grade I Clerks in the
Specialised Departments could come, some vacancies occurred
in the cadre of Grade I Clerks in the General Departments
and naturally they were filled up by promotion of Grade II
Clerks in the General Departments. Some of these Grade II
Clerks who were promoted were junior to the petitioners,
but they got an opportunity for promotion as the petitioners
went out of the General Departments by exercising the option
to be transferred to the Specialised Departments. This was a
wholly fortuitous possibly not anticipated by the petition-
ers or perhaps the petitioners might have thought that they
would have an advantage in the matter subsequent promotions
to posts higher
391
than Grade I Clerks. Be that as it may, the fact remains
that this was the position which obtained at the date when
the Combined Seniority Scheme was introduced by the Reserve
Bank. The question is, was there anything which prevented
the Reserve Bank from doing so ?
We fail to see how from the mere introduction of the
Optee Scheme of 1965, any promise or assurance could be
spelt out on the part of the Reserve Bank not to take any
steps towards integration of other employees not covered by
the Optee Scheme of 1965. The Reserve Bank could not, on
any principle of law or by any process of implication, be
held bound to hold its hands in the matter of further inte-
gration, until the petitioners were promoted in the Specia-
lised Departments. And the question would again.be: promoted
how far--one stage or two stages or more than that ? It is
obvious that the only object of the Optee Scheme of 1965 was
to equalise the promotional opportunities of Grade II Clerks
in the General Departments with those of Grade II Clerks in
the Specialised Departments by giving an option to the
former to be absorbed in the latter. This object was car-
ried out as soon as the petitioners and other Grade II
Clerks in the General Departments opted to be transferred to
the Specialised Departments. Then they became Grade H Clerks
in the Specialised Departments having the same promotional
opportunities as the original Grade II Clerks in the Specia-
lised Departments. There was no assurance given by the
Reserve Bank that the promotional opportunities available to
Grade II Clerks in the Specialised Departments will not be
diminished. The Combined Seniority Scheme affected the
promotional opportunities of all Grade II Clerks in the
Specialised Departments, irrespective of whether they were
original or transferee Grade II Clerks. It did not discrim-
inate between transferee Grade II Clerks and original Grade
II Clerks and treated them alike in bringing about total
integration of the employees in the several Departments.
There was no breach of the principle that the promotional
opportunities of transferee Grade II Clerks should be
equal to those of original grade II Clerks. Both were ef-
fected equally by the Combined Seniority Scheme. Now under
the Combined Seniority Scheme, the integration could only be
on grade to grade basis and, therefore, if by the time the
Combined Seniority Scheme came into force, Grade II Clerks,
junior to tile petitioners, had become Grade I Clerks in the
General Departments, they could be equated only with Grade I
Clerks in the Specialised Departments and to this equation,
no valid objection could be taken on behalf of the petition-
ers. Undoubtedly, it would cause heart-burning amongst the
petitioners to find that Grade II Clerks, junior to them in
the General Departments, have become Grade I Clerks in the
integrated service, while they still continue to be Grade II
Clerks, but that is a necessary consequence of integration.
Whenever services are integrated, some hardship is bound to
result. Reasonable anticipations may be belied.
The second ground on which the petitioners challenged
the validity of the Combined Seniority Scheme was that it
discriminated against the petitioners vis-a-vis other Grade
II Clerks who had opted under the Optee Scheme of 1965 and
obtained promotion as Grade I Clerks in their respective
Specialised Departments before the introduction of the
9--1104SCI/76
392
Combined Seniority Scheme. The contention of the petition-
ers was that some of the Grade I1 Clerks who had opted under
the Optee Scheme of 1965 were promoted as Grade I Clerks,
while the petitioners continued as Grade II Clerks and
before their turn for promotion could arrive, the Combined
Seniority Scheme was brought into force and that prejudi-
cially affected their promotional opportunities and thus
brought about unjust discrimination between persons belong-
ing to the same class. This contention has no force and
must be rejected. We have already discussed and shown that
it was competent to the Reserve Bank to introduce the Com-
bined Seniority Scheme for the purpose of integrating the
clerical staff in all the departments and the Reserve Bank
was not bound to wait until all the transferee Grade II
Clerks under the Optee Scheme of 1965 were promoted as Grade
I Clerks in their respective Specialised Departments. There
was not such assurance given by the Reserve Bank when it
introduced the Optee Scheme of 1965. What it did was merely
to equalise the opportunities Grade II Clerks in the General
Departments with those of Grade II Clerks in the Specialised
Departments. The Reserve Bank did not undertake that it
will not take any steps for bringing about total integration
of the clerical services until all the transferee Grade II
Clerks were promoted. The Reserve Bank was entitled to
introduce the Combined Seniority Scheme at any time it
though fit and the validity of the Combined Seniority
Scheme cannot be assailed on the ground that it was intro-
duced at a time when some of the transferee Grade II Clerks
still remained to be promoted and was discriminatory against
them. It may be that some transferee Grade I1 Clerks had
already obtained promotion as Grade I Clerks by the time the
Combined Seniority Scheme was introduced, while others like
the petitioners had not. But that cannot be helped. It is
all part of the incidence of service and in law, no griev-
ance can be made against it.
That takes us to the last ground of challenge which
relates to integration of non-clerical with clerical serv-
ices. This ground of challenge was advanced under three
heads: first, non-clerical services and clerical services
were wholly different from each other and by integrating
them into one cadre, the Reserve Bank failed to recognise
their differences and treated unequals as equals, thereby
offending the equality clause of the Constitution secondly,
by permitting, in case of non-clerical staff, one-third of
the total non-clerical service until 7th May, 1972 and in
case of those who become graduates or pass both parts of
institute of Bankers Examination subsequent to 7th May, 1972
until the date of acquiring such qualification to be taken
into account for the purpose of seniority, the Reserve Bank
laid down a wholly irrational and unjust principle of sen-
iority in the integrated service and thereby violated the
equal opportunity clause and lastly, the seniority of the
petitioners was adversely affected by the integration with-
out giving any opportunity to them to represent against it
and the Combined Seniority Scheme was, therefore, in viola-
tion of the principles of natural justice. We have careful-
ly examined these three heads of challenge, but we do not
find any substance in them. They are based on a misconcep-
tion of the true nature of the process involved in integra-
tion of non-clerical with clerical services. There was, as
already
393
pointed out above, a non-clerical cadre in each Department
of the Reserve Bank and it was decided by the-Reserve Bank
that the nonclerical cadres in all the Departments should be
integrated with the clerical cadre. With that end in view,
the Combined Seniority Scheme gave an option to all employ-
ees in non-clerical cadres to be transferred to posts in the
clerical cadre, but in the interest of efficiency, pre-
scribed a qualification that only those employees in non-
clerical cadres would be entitled to be transferred who are
either graduates or have passed both parts of Institute of
Bankers Examination. Now, when the employees from non-
clerical cadres are admitted in the clerical cadre, some
rule would have to be made for determining their seniori-
ty vis-a-vis those in the clerical cadre. They would have
to be fitted into the clerical cadre and for that purpose,
some rule would have to be devised for determining how they
shall rank in seniority. The Combined Seniority Scheme
adopted the rule that for determining the seniority of non-
clerical staff who exercised the option and were admit-
ted in the clerical cadre, one-third of their total non-
clerical service "until 7th May, 1972 or the date of acquir-
ing qualification" should be taken into account. This was
the manner in which the Combined Seniority Scheme sought to
bring about integration of non clerical with. clerical serv-
ices in the several departments of the Bank.
Now, the first question which arises for consideration is
whether the Reserve Bank violated the constitutional princi-
ple of equality in bringing about integration of non-cleri-
cal with clerical services. We fail to see how integration
of different cadres into one cadre can be said to involve
any violation of the equality clause. It is now well set-
tled, as a result of the decision of this Court in Kishori
Mohanlal Bakshi v. Union of India(1) that Article 16 a
fortiori also Article 14 do not forbid the creation of
different cadres for government service. And if that be so,
equally these two Articles cannot stand in the way of the
State integrating different cadres into one cadre. It is
entirely a matter for the State to decide whether to have
several different cadres or one integrated cadre in its
services. That is a matter of policy which does not attract
the applicability of the equality clause. The integration of
non-clerical with clerical services sought to be effectuated
by the Combined Seniority Scheme cannot in the circumstances
be assailed as violative of the constitutional principle
of equality.
Then we come to the question of the rule of seniority
adopted by the Combined Seniority Scheme. Now there can be
no doubt that it is open to the State to lay down any rule
which it thinks appropriate for determining seniority in
service and it is not competent to the Court to strike down
such rule on the ground that in its opinion another rule
would have been better or more appropriate. The only en-
quiry which the Court can make is whether the rule laid down
by the State is arbitrary and irrational so that it results
in inequality of opportunity amongst employees belonging to
the same class. Now, here, employees from non-clerical
cadres were being absorbed in the clerical cadre and, there-
fore, a rule for determining their seniority vis-a-vis
(1) A.I.R. 1962 S.C. 1139.
394
those already in the clerical cadre had to be devised.
Obviously, if the non-clerical service rendered by the’
employees from non-clerical cadres were wholly ignored, it
would have been most unjust to them. Equally, it would have
been unjust to employees in the clerical cadre, if the
entire non-clerical service of those coming from non-cleri-
cal cadres were taken into account, for non-clerical service
cannot be equated with clerical service and the two cannot
be treated on the same footing. Reserve Bank, therefore,
decided that one-third of the non-clerical service ren-
dered by employees coming from non-clerical cadres should be
taken into account for the purpose of determining seniority.
This rule attempted to strike a just balance between the
conflicting claims of non-clerical and clerical staff and it
cannot be condemned as arbitrary or discriminatory. Vide:
Anand Parkash Saksena v. Union of India.(1)
The last contention of the petitioners was that seniori-
ty is a civil right and the State cannot interfere with it
to the prejudice of an employee without giving an opportuni-
ty to him to be heard and since the Combined Seniority
Scheme adversely affected the seniority of the petitioners
in the clerical cadre without giving them an opportunity to
represent against it, it was void and inoperative. There
are two answers to this contention and each is, in our
opinion, fatal. In the first place, we do not find from the
judgment of the High Court that this contention was at any
time advanced before the High Court and, in the circum-
stance.s, we do not think it would be fight to permit it to
be raised for the first time before this Court. Secondly,
even if this contention were allowed to be raised, we do not
think it can be sustained. Here, there was no question of
any existing seniority being disturbed by change in the rule
of seniority. The problem was of fitting into the clerical
cadre employees coming from non-clerical cadres and for that
purpose, a new rule was required to be made which would
determine the seniority of these new entrants vis-a-vis
those already in the clerical cadre. Such rule did not
affect seniority and hence there could be no question of
giving the petitioners an opportunity to make representation
against it.
These were the only contentions urged before us against
the constitutional validity of the Combined Seniority Scheme
and since there is no substance in them, we think that the
High Court was in error in striking down the Combined Sen-
iority Scheme. We accordingly allow the appeals, set aside
the judgment and order of the High Court and uphold the
validity of the Combined Seniority Scheme. There will be no
order as to costs.
V,P.S. Appeals
allowed.
(1) [1968] 2 S.C.R. 611, 622.
395