CASE NO.: Appeal (civil) 7717 of 1994 PETITIONER: MAHARASHTRA VIKRIKAR KARAMCHARI SANGATHAN RESPONDENT: STATE OF MAHARASHTRA AND ANR. DATE OF JUDGMENT: 12/01/2000 BENCH: S.P. KURDUKAR & S.S.M. QUADRI JUDGMENT:

JUDGMENT 2000 (1) SCR 166 The Judgment of the Court was delivered by <NAME>, J. Civil Appeal No, 7717 Of 1994.

This is a third round of litigation whereby a challenge to the seniority list of the Sales Tax Inspectors in <ORG>, Maharashtra, was made by promotees/departmental candidates (for short 'the promotees) against the direct recruits in respect of their placements in the seniority list. These two civil appeals in strict sense cannot be said to be connected involving identical questions of inter se seniority save and except that they relate to the fixation of seniority of the Sales Tax Inspectors in their cadre in <ORG> of Maharashtra. Civil Appeal No. 7717 of 1994 is filed by the Maharashtra Vikrikar Karamchari Sangathan, the appellant (for short 'the promotees') assailing the legality and correct-ness of the judgment and order dated 23rd March, 1994 passed by <ORG>, Bombay Bench in Original Applica- tion No. 690-A of 1993 (for short '<ORG>')- This <ORG> was filed by the promotees challenging the correctness of the final seniority list notified and published on 28th December, 1992 and amended on 29th October, 1993. This seniority list of Sales Tax Inspectors came to be prepared as on 31st of December, 1987. To be more precise, the dispute relates to the fixation of seniority of promotees and direct recruits for the block 1991 to 31st December, 1987. <ORG> (for short '<ORG>) dismissed the <ORG> principally on the ground that the contentions raised therein are barred by principles of res-judicata as well as constructive res-judicata. However, with a view to avoid the remand, in case the higher courts hold that the <ORG> is not barred by the principles of res-judicata or constructive res- judicata, the <ORG> disposed of the controversy raised in <ORG> on merits too.

2, Civil Appeal No. 6316 of 1997 is filed by the State of Maharashtra impugning the judgment and order dated 23rd February, 1989 rendered by <ORG> in Writ Petition No. 2742 of 1987. The dispute in this civil appeal pertains to the determination of seniority of Sales Tax Inspectors who were promoted (on absorption) from two different sources, namely, <ORG> and <ORG>, Bombay. The dispute thus in this civil appeal is confined to the inter-se seniority of promotees from these two sources.

3, We may first deal with Civil Appeal No. 7717 of 1994. The facts which are necessary for the disposal of the appeal may be stated briefly as under :-

Prior to 6th September, 1971, the recruitment to the posts of Sales Tax Inspectors (for short 'STIs') was made through three sources, (1) by promotion from clerks, (2) by transfer from other departments and (3) by direct recruitment Till this time, no quota was prescribed for these three different sources of recruitment. The seniority of all these three sets of STIs was determined pursuant to the general provisions relating to seniority contained in the government resolution dated July 29,1963.

4. For the first time, <ORG> in exercise of powers conferred by provisions of Article 309 of the Constitution of India, framed the rules called Maharashtra Sales Tax Inspectors Recruitment Rules, 1971 (for short 'Rules 1971') which came into force w.e.f. September 6, 1971. Suffice is to refer to Rule 2 thereof. It deals with the appointments to the posts of Sales Tax Inspectors from two sources, namely direct recruits and by promotion in the ratio of 60:40 as far as practicable. (Emphasis sup-plied).

Rule 2 reads thus :-

2. Appointment to the posts of Sales Tax Inspectors shall be made either :

(a) by promotion of suitable clerks in the Sales Tax Depart-ment, who have passed at least Part ! of the Departmental Ex-amination prescribed for the Sales Tax Inspector or for the Higher Clerical staff in <ORG> or who have been exempted from passing the Departmental Examination prescribed for Sales Tax Inspectors or for the High Clerical Staff.

Provided that the Clerks who have passed Part I of the Departmental Examination for Sales Tax Inspector and who have been promoted to the posts of Sales Tax Inspectors are required to pass Part II of the Departmental Examination for Sales Tax Inspector also, according to the rules made in that behalf, failing which they shall be liable to be reverted.

The ratio of persons appointed by promotion as provided above and by nomination as provided below shall, as far as practicable, be 40:60. The ratio shall not apply to temporary vacancies not exceeding one year which may be filled by promotion. Such promo-tions shall, however, be treated as stopgap promotions and will not entitle the promotees to seniority by virtue thereof.

Note : In the period from the date on which these rules come into force to the date on which the results of the first Departmental Examination of Sales Tax Inspectors under the unified Departmen-tal Examination Rules are declared, promotions made to the post of Sales Tax Inspector shall be purely provisional and persons so promoted shall be required to pass the prescribed Departmental Examination within the prescribed period from the date the Departmental Examination rules come into force, failing which they shall be liable to be reverted :

(b) by nomination, on the result of a competitive examination held by <ORG>, from among can-didates who -

(i) possess a degree in Arts, Science, Commerce, Law or Agriculture of a recognised University or any recognised equivalent qualifications;

and

(ii) have attained the age of 18 years and have not attained the age of 24 years, on the first day of the month immediately following the month in which the posts are advertised by the <ORG>;

Provided that the upper age limit shall be relaxed upto 30 years in the case of persons serving in <ORG>.

Thereafter, the State of Maharashtra in exercise of powers conferred under Article 309 of the Constitution of India framed the Rules for regulating the seniority amongst government employees. The said Rules were called Maharashtra Civil Services (Regulation of Seniority) Rules, 1982 (for short 'Rules 1982'). These rules came into force w.e.f. June 21, 1982, Rule 4 is relevant in the present controversy and it reads thus :

"4. General Principles of Seniority : (1) Subject to the other provisions of these rules, the seniority of a Government servant in any post, cadre or service shall ordinarily be determined on the length of his continuous service there.

Provided that, for the purpose of computing such service, any period of absence from the post, cadre or service due to leave, deputation for training or otherwise or on foreign service or temporary officiation in any other post shall be taken into account, if the competent authority certified that the <ORG> servant concerned would have continued in the said post cadre or service during such period, had he not proceeded on leave or deputation Or been appointed temporarily to such other post.

Provided further that, the service, if any, rendered by him as a result of a fortuitous appointment shall be excluded in computing the length of service and for the purposes of seniority he shall be deemed to have been appointed to the post in the cadre of service on the date on which his regular appointment is made in accordance with the provisions of the relevant recruitment rules.

(2) Notwithstanding anything contained in sub rule (1) :

(a) the inter se seniority of direct recruits selected in one batch for appointment to any post, cadre or service, shall be determined according to their ranks in the order of preference arranged by <ORG> or in the case of recruitment by nomination directly made by the competent authority, the said authority, as the case may be, if the appointment is taken up by the person recruited within thirty days from the date of issue of the order of appointment or within such extended period as the competent authority may in its discretion allow.

(b) the inter se seniority of <ORG> servants promoted from a Select List shall be in the same order in which their names appear in such Select List. If the Select List is prepared in two parts, the first part, containing the names of those selected unconditionally and the second part containing the names of those selected provisionally. AH persons included in the first part shall rank above those included in all second part.

Provided that, if the order in which the names are arranged in the Select List is changed following a subsequent review of it, the seniority of the <ORG> servants involved shall be re-arranged and determined afresh in conformity with their revised ranks.

(c) the seniority of a transferred Government servant vis-a-vis the Government servant in the posts, cadre or service to which he is transferred shall be determined by the competent authority with due regard to the class and pay scale of the post, cadre or service from which he is transferred, the length of his service therein and the circumstances leading to his transfer.

(3) Where the dates of appointment in posts, cadre or service of any two or more persons determined after assigning the deemed dates, if necessary, are identical the person senior in age shall be considered as senior for the purpose of deter-mining the seniority."

Rule 3 contains several definitions and we are concerned with for a defini- tions.

3(D)"Deemed date" means the date assigned to a Government servant in accordance with the provisions of Rub 5;

3(E) "Direct recruit" means, in relation to any post, cadre or service, a person appointed by nomination thereto;

3(F) "fortuitous appointment' means a temporary appointment made pending a regular appointment in accordance with the provisions of the relevant recruitment rules;

3(H)Promotee" means, In relation to any post, cadre or service, a Government servant appointed thereto by promotion from a lower post, cadre or service;

5, The State of Maharashtra again in exercise of its powers conferred by Article 309 of the Constitution of India carried out the amendments to the Rules 1982, We may reproduce the relevant amendments to Rules 4 and 6 which read as under :

"2, in Rule 4 of the Maharashtra Civil Services (Regulation of Seniority) Rules, 1982 (hereinafter referred to as "the principle rules", in sub-rule (1) in the second proviso, after the words, ''a fortuitous appointment" the following shall be inserted, namely :-

"except in a case where the competent authority certifies that, it was not expedient/possible or practicable to make a regular ap-pointment strictly in accordance with the ratio of recruitment as prescribed in the relevant recruitment rules, with the brief reason recorded therefor."

3. xxx xxx xxx

4. In Rule 6 of the principle Rules, after the existing proviso, the following proviso shall be added, namely :-

"provided further that, appointment shall not be deemed to be fortuitous if the authority competent to make appointment certified while preparing the annual gradation list that the temporary appointment had to be made, as candidates for regular appointment by nomination or as the case may be, persons fit for promotion from the lower cadre, were not available at all or in adequate numbers."

6. This is how the relevant rules were holding the field when the impugned seniority list as amended came to be published in the year 1992 and 1993, It is clear from the certificate of the Addl. Commissioner of Sales Tax dated 21st February, 1992 (Ex.K) that from 6th September, 1971 to 31st December, 1987, total 1750 posts of Sales Tax Inspectors became vacant. Under the Recruitment Rules, 1050 posts for the direct recruits were required to be filled in accordance with-the ratio of 60:40. However, during the said period, only 346 direct recruits were available and they were appointed. Balance of 704 posts of Sales Tax Inspectors came to be filled by temporary promotions because no candidates were available for direct recruitment for the said posts. From this certificate, it is amply clear that between 6th of September, 1971 and 31st December, 1987, the quota rule was not observed and the departmental candidates came to be promoted as Sales Tax Inspectors beyond their prescribed quota of 40%. Obviously, these promotions were treated by <ORG> as temporary promotions. The principle issue which needs to be considered in this appeal is how to determine the seniority amongst the promotees and direct recruits who were promoted and appointed as STIs during this block. The contention raised on behalf of the promotees (appellants) is that the quota rule was broken down and as a result thereof, the promotees were required to be appointed in view of the exigencies of service and if so appointed, their promotions cannot be termed as for-tuitous/temporary/ad hoc and that they will be entitled to earn the seniority and placement in the impugned seniority list from the date they were so promoted and working as STIs. As against this, the contention raised on behalf of the direct recruits was that the promotees who were promoted/appointed in the vacancies falling in the quota of direct recruits (60%), such promotions of the promotees were fortuitous in excess of their quota and notwithstanding that they were so appointed and working as STIs in the vacancies reserved for direct recruits as per the quota rule, they cannot get the seniority from the date of promotion or officiation and that they will get their placement in the seniority list in accordance with their quota i.e. 40% and until they are accommodated in their quota (40%) as regular promotees, their date of promotion or officiation will not be counted for the purposes of fixing their seniority vis-a-vis direct recruits. The quota rule was never broken down. The direct recruits further prayed that the present O.A. is barred by principles of res judicata as also the constructive res judicata by virtue of the judgment dated 3rd September, 1992 rendered by <ORG> in T.P. No. 822 of 1991. The direct recruits, therefore, prayed that present O.A. has no substance and the same be dismissed.

7. It would be necessary to refer to the earlier proceedings which were finally disposed of by the <ORG>, Bombay Bench, and this Court upheld the said judgment while dismissing the SLP filed by promotees/departmental candidates.

8. The first proceeding in point of time was filed by the promotees bearing Writ petition No. 2742 of 1987 challenging the seniority list of the STIs in <ORG> wherein the direct recruits were also arrayed as respondents. The <ORG> vide its judgment and order dated 23rd February, 1989 quashed the seniority list and directed the concerned authority to prepare a fresh seniority list.

9. Following the directions of <ORG> in its order dated 23rd February, 1989, a fresh seniority list was prepared and issued on 12th April, 1989. The direct recruits were not satisfied with this seniority list prepared and issued on 12th April, 1989 as according to them, the same was prepared in contravention of the Statutory Rules 1971, framed by the State of Maharashtra in the years 1971, 1982 and 1988. To vindicate their grievances in respect of their erroneous placement in the seniority list issued on 12th April, 1989, two direct recruits petitioned the State of Maharashtra bearing Writ Petition No. 4852 of 1989 to which some of the promotees were also impleaded as respondents. Some similarly situated promotees filed the intervention application which was allowed. Writ Peti- tion No. 4852 of 1989 was then transferred to the <ORG>, Bombay Bench in view of the constitution of the <ORG>. It came to be listed as T.P. No. 822 of 1991. The State of Maharashtra as well as the promotees filed their responses to the transferred petition. The State of Maharashtra pleaded that the seniority list issued on 12th April, 1989 was in accordance with the statutory rules and the promotions given to the promotees in excess of their quota were required to be treated as fortuitous promotions and since they were not regularly appointed as STIs, they will be pushed down below the direct recruits for the respective unit years of appointments in accordance with quota rule. According to the State of Maharashtra, the promotions given to the promotees in excess of quota were temporary/ad hoc and or stop-gap arrangement without reckoning the period of their officiation as STIs for the purposes of fixing their seniority, 10, The promotees strongly relied upon circular issued by the govern-ment on 2nd September, 1989 regarding the seniority of <ORG> with reference to the rules and principles of seniority between the promotees and direct recruits. In addition, they also relied upon a certificate dated 21st February, 1992 issued by the <ORG> under the amended seniority rules declaring promotees in excess of quota as regular promotees. There is a dispute as regards the correct reading and inter- pretation of this certificate dated 21st February, 1992.

11. After hearing the parties, the <ORG> by its detailed reasoned order dated 3rd September, 1992 quashed the seniority list dated 12th April, 1989 after setting/concluding the issues and directed the concerned authority to prepare a fresh seniority list in terms of its order as also in accordance with the rules notified from time to time. The promotees moved this Court in SLP (c) ...... (CC No, 18427/92), but, however, this Court on 10th December, 1992 dismissed the same as under :-

"IA No. 1 for permission to file SLP is allowed. The SLP is dismissed on merits,"

12, In view of the decision of the <ORG> dated 3rd September, 1992 and on SLP confirmed by this Court on 10th December, 1992, a fresh seniority list was issued on 28th December, 1992 and was finalised on 29th October, 1993. The appellants/promotees who were aggrieved by the said seniority list filed O.A. No. 690-A of 1993 before the <ORG>, <ORG>. The direct recruits were also made parties to this O.A. <ORG>, <ORG>, vide its impugned Judgment dated 23rd March, 1994 dismissing the O.A. It is against this order passed by <ORG>, <ORG>, the appellants have filed this CM Appeal No. 7717 of 1994.

13. The impugned judgment principally proceeded on the footing that the contentions raised by the appellants were barred by principle of res judicata in view of the earlier decision of the <ORG>, <ORG> rendered on 3rd September, 1992 whereunder the seniority list dated April 12,1989 came to be quashed. The <ORG> then directed concerned authority to prepare a fresh seniority list in terms of directions contained in its order dated September 3, 1992. The <ORG> also considered in its impugned judgment the merits of the claim set up by the appellants and while negating the same on merits issued certain directions contained in para-graph 50 thereof. The <ORG> gave the findings on merits in order to avoid the order of remand in the event the higher court comes to the conclusion that the contentions raised by the appellants in. O.A. No. 690-A of 1993 are not barred by res- judicata or constructive res- judicata. Before we deal with the rival contentions on merits, it would be appropriate to set out relevant contentions and the findings recorded thereof by the <ORG>, <ORG> in its judgment dated September 3, 1992 as to whether the contentions raised in the present proceedings are barred by res- judicata/constructive res judicata.

14. The principle of res judicata is sought to be applied on the footing that the identical contentions were raised in Transfer Petition No. 822 of 1991 and, therefore, such contentions cannot be re-agitated in the present QA. It may be true that the appellants have got a fresh cause of action because the seniority list was prepared in 1993 by following the decision in Transfer Petition Case No. 822 of 1991 but it will not alter the situation in view of the fact that identical contentions/issues were sought to be re-agitated in O.A. No. 690-A of 1993. All these contentions/issues were concluded not only by the <ORG> Bombay Bench, but by this Court also in SLP (C) No.......(CC No. 18427 of 1992). Certainly findings on such issues must operate as res judicata in the present proceedings otherwise the very rule of res judicata will be defeated

15. As stated earlier, Transfer Application No. 822 of 1991 (Writ Petition No. 4852 of 1989) was filed by two direct recruits against the State of Maharashtra, the Commissioner of Sales Tax and <NAME> who was a promotee. To this O.A., four more promotees got themselves impleaded as interveners and filed their counter affidavit opposing the said T.P. The contention raised on behalf of direct recruits was that the promo-tions given to the promotees in excess of their quota as laid down in the Rules 1971 be treated as fortuitous beyond their prescribed quota. The appellants contended that since direct recruits were not adequately avail-able for appointments in terms of the quota rule, the promotions were required to be given during the respective years for administrative reasons as <ORG> could not be allowed to suffer because of non availability of direct recruits. This contention is based on the principle that quota rule was broken down and, therefore, the Government had to resort to departure from the quota rule due to administrative exigencies. If such promotions were given to the promotees they could not be said to be fortuitous/ad hoc/temporary or stop-gap arrangement. On this topic both the parties relied upon the Rules 1971, the Rules 1982 and various decisions of this Court. The <ORG> after analysing the relevant rules and the decisions of this Court came to the following conclusions :

1. It cannot be held that the quota rule has not been followed continuously for number of years.

2. 1971 quota rule has not been broken down.

3. Inter se seniority is to be guided by quota rule.

4. It is reasonable to implement the principles of pushing down.

5. Promotions in excess of quota are liable to be fortuitous.

6. Promotions in excess of quota in the year of promotion will aot get seniority in that year.

7. Promotees in excess of quota will get seniority in subsequent year when they can get place in their quota (pushing down principle).

8. Year is taken as unit for deciding the quota.

16. The <ORG> while coining to the above conclusions noticed that (1) there was no material on record to indicate that the quota rule was broken down and, therefore, the promotions given to the promotees in excess of quota rule will have to be treated as regular promotions and not being fortuitous/ad hoc/temporary/stop-gap arrangement. The <ORG> also found that the government had failed to show that despite their sincere efforts, they could not adhere to the quota rule because of non-availability of eligible candidates for direct recruitment. (2) The words "as far as practicable" appearing in Rule 2 of Rules 1971 could not be equated with impossible and for that the <ORG> had referred to the number of vacancies that fell to the share of direct recruits. It was noticed that during the period from 6th September, 1971 to 31st December, 1987, 1050 posts fell to the share of direct recruits as per the quota rule, but, however, only 346 direct recruits were appointed. Except for the year when recruitment was not permitted by the government for the rest of the years either the requisitions were not sent on time or the number of candidates for direct recruits was restricted by the <ORG>, For some years, no requisitions were sent to <ORG>. (3) No material was produced on record to indicate that govern-ment ever took a conscious decision to deviate from the quota rule as it was broken down and, therefore, promotees were required to be promoted in excess of their quota. The number of posts for direct recruits falling vacant were 704 for the said block. (4) The Government had taken no active steps in the direction of direct recruitment. The promotions given to the promotees in excess of their quota were either fortuitous/fid hoc/tem-porary or stop-gap arrangement and, therefore, notwithstanding that such promotees were officiating for long period, they will have to be pushed down in the seniority list below the direct recruits for the respective year/s of recruitment.

Consistent with these findings, the <ORG> concluded thus :

"It has not been explained by the respondents whether the seniority list published by the Additional Commissioner, <ORG>, vide his letter dated 12th April, 1989 is in accordance with the instructions issued by the <ORG> vide <ORG> letter dated 2nd September, 1989. Therefore, the <ORG> will have to forthwith cancel the impugned seniority list published on 12th April, 1989 and to prepare a fresh seniority list of the <ORG> Inspectors in accordance with the law. It is needless to soy that the appointments made in excess of the quota will have to be treated as fortuitous. Therefore, the respondents are directed to revise the seniority list and republish it in accordance with the law laid down by <ORG> as well as the letter No. VIKRANT -1087/41/87/Administration-7 dated 2nd September, 1989 addressed to Additional Commissioner, <ORG>, Bombay, within a period of six months, from the date of this order."

17. As stated earlier, promotees challenged this order in SLP bearing CC No. 18427 of 1992 and the same carne to be dismissed on December 10, 1992. In view of the finality attained by the judgment and order dated September 3, 1992 passed by the <ORG> <ORG>, the Government issued a fresh seniority list on December 28, 1992 which was finalised on October 29, 1993. In this seniority list, the promotees were pushed down below the direct recruits as per the directions contained in the judgement of the <ORG> dated September 3, 1992. It is this seniority list which was challenged by the appellants before the <ORG> <ORG>, in Original Application No. 690-A of 1993. The <ORG> <ORG>, vide its judg-ment and order dated 23rd March, 1994 dismissed the said O.A.

18. Mr. <NAME>, the learned Senior Counsel appearing in support of this appeal urged that the phrase used in Rule 2 "as far as practicable" proves beyond any pale of doubt that there is no fix quota between promotees and nominees and the said explanation "as far as practicable" cannot be given a restrictive interpretation and it cannot be gainsaid that no definite quota exists between the promotees and nominees and any departure thereof would amount to breach of quota rule. In support of this submission, he drew support from the decision of this Court in <CITATION> ,  2 SCC 715, wherein the words "as far as practicable" have been interpreted as under :-

"The other important feature was that the proviso fixing the ratio, far from being imperative, permitted <ORG> to exercise its discretion according to the demand of the exigencies, by using the expression "as far as practicable". The case of the appellants is that the said expression was inserted in the proviso with the object of avoiding fractions in arithmetical calculations of number of posts available to the two groups, and for no other purpose. We do not see any reason to so restrict the scope and meaning of the expression "as far as practicable". A similar expres-sion in identical terms used in certain other rules came up for consideration in <CITATION> and it was held that if it became non-feasible and impracticable for the <ORG> to fill up the requisite quota by direct recruits after making a serious efforts to do so, it was free to fill the posts by promotions of suitable hands, if the filling up of the vacancies was administratively neces-sary and could not wait. Similar is the position here, and the Rule 1 of the 1960 Rules must be held to be realistic and flexible, true to life rather than abstractly absolute."

19. While construing the phrase "as far as practicable", in the manner suggested by the respondents, it must be indicated that serious efforts were made with all promptness on the part of the <ORG> to secure the hands to fill up the required number of vacancies from the open market.

20, This submission was also raised in Transfer Petition No. 822 of 1991 and while construing the said expression, <ORG>, referred to the judgment in <CITATION> ,  1 SCC 308 and held that having regard to the facts and circumstances of the case and in particular the inaction on the part of the <ORG> Government in recruiting the direct recruits during this block, it could not be said that the <ORG> in tune with the mandate of the rule had made serious efforts to secure the hands to fill up the required number of vacancies from the open market. The <ORG> in paragraph 7 has concluded :

"According to him between the period 6th September, 1971 to 31st December, 1987, 2561 posts of Sales Tax Inspectors have been filled, out of which only 335 posts have gone to direct recruits and the remaining 2226 have gone to promotees and thus 1202 promotees have been promoted in excess of quota. The total percentage of direct recruitment would come hardly to 13% as against the 60% described in Rule 2 of Maharashtra Sales Tax Inspectors (Recruitment) Rules, 1971."

21, In view of these findings, a similar contention sought to be raised in the present proceedings cannot be entertained and the <ORG>, in our opinion, has rightly negatived the said contention on the ground of res judicata. An equally unsustainable contention was raised on behalf of the appellant that the aforesaid finding is per incuriam and as such the prin- ciple of res judicata will have no application. Reliance was placed on the decision of this Court in <CITATION> ,  2 SCC 715, <CITATION> ,  1 SCC 101 and <CITATION> ,  2 SCC 602. We wonder how this contention can be accepted in view of the specific finding recorded by the <ORG> in its judgment dated September 3, 1992 which is quoted herein above. This submission cannot be sustained and hence rejected.

22. It was then contended on behalf of the appellants that neither the recruitment rules of 1971 nor the seniority rules of 1982 provided for carrying forward the vacancies falling in either category. In the absence of such rule which specifically provide for carrying forward the vacancies falling in either category, no such carry forward rule could be implied either in Recruitment Rules or in the Seniority Rules. This contention need hot detain us any longer because such a contention was available to the appellants in the earlier proceedings, namely, Transfer Petition No, 822 of 1991 and the same was not put in. issue. That not having been done, it must follow that such a contention is barred by principle of constructive res judicata. Neither the contesting respondents nor the appellants ever raised this contention at any stage of the proceedings in Transfer Petition No. 822 of 1991. It would, therefore, be too late to raise such a contention when the seniority list has been finalised pursuant to the judgment of the <ORG> Bombay Bench in Transfer Petition No. 822 of 1991. The reliance placed on behalf of the appellants on the decision of this Court in <CITATION> ,  2 SCC 157, therefore, does not advance the case of the appellants.

23. It was then contended on behalf of the appellants that in the year 1988, the Recruitment Rules were amended and as per the amended rules, cases where appointments are not made strictly in accordance with the ratio of recruitment as prescribed in the Rules 1971, such appointments will not be fortuitous appointments if the competent authority certified that it was not expedient/possible or practicable to make a regular appointment strictly in accordance with the ratio. In support of this submission, reliance was placed on the certificate dated 21st February, 1992 issued by <ORG> in terms of the amended Rules. The legality and correctness of the said certificate, counsel urged, cannot be challenged. The certificate reads thus :

"In accordance with the said Rules dated 23rd September, 1988, it is hereby certified that from 6th September, 1971 to 31st Decem-ber, 1987, total 1750 posts of Sales Tax Inspectors became vacant. Under the recruitment rules, 1050 posts, for Direct recruits were required to be filled in according to the ratio of 60:40. However, during the said period only 346 direct recruits were available and they were appointed. Balance of 704 posts of Sales Tax Inspectors to be filled in by temporary promotions because no candidates were available for direct recruitment for posts of Sales Tax Inspectors." (Emphasis supplied)

24. We fail to understand how, on the face of finding noted above, this certificate would advance the case of the appellants. Further the certificate recites that the balance of 704 posts of Sales Tax Inspectors "to be filled in by temporary promotions" because no candidates were available for direct recruitment for the post of Sales Tax Inspectors. On the contrary, this certificate unmistakably indicates that although it was issued on 21st February, 1992, the promotions given to the promotees in excess of their quota for the respective unit years were treated as temporary promotions. No document is brought to our notice to indicate that <ORG> has ever taken any decision much less the conscious decision in accordance with law to treat the promotions of these promotees (in excess of the quota) on regular basis. In the absence of any such decision on the part of the Government, it would be wrong to assert that such promotions were on regular basis and not fortuitous/temporary/ad hoc or stop-gap arrangement. This certificate, therefore, is of no consequence. This certificate was issued on 21st February, 1992 when the Transfer Petition No, 822 of 1991 was pending before the <ORG> when it rendered its judgment on September 3, 1992. It does not appear that either of the parties ever produced the same in the earlier proceedings. The respon-dents were therefore justified in contending that this issue cannot be agitated in the present proceedings as it is barred under the principle of constructive res judicata. Even on merits of this certificate, we have already indicated that the appellant cannot draw any support therefrom to contend that the promotions were on regular basis. It was contended by Mr. <NAME>, learned Senior Counsel appearing for the respondents that this certificate was issued by the Addl. Commissioner of Sales Tax after the service of notices in Transfer Petition No, 822 of 1991. Of course, there is no prohibition/bar as such but, this would only indicate an afterthought attempt to lend support to the appellants. This contention must also stand rejected.

25. It was then contended by Mr. <NAME> that the respondents 3 and 4 in Transfer Petition No. 822 of 1991 were not sued in a representative capacity on behalf of all the promotees. No leave under Order 1 Rule 8 CPC was obtained by the petitioners therein (direct recruits). In view of this relevant circumstances, at the most, it would be an inter partis judgment and would not bind the appellants save and except the respondents Nos. 3 and 4. This submission was strongly opposed on behalf of the non-official respondents. It was contended by Mr. <NAME>, the learned Senior Counsel that the petitioners in T.P. Case No. 822 of 1.991 sued the respondent Nos. 3 and 4 in a representative capacity and, therefore, the law laid down by the <ORG> Bombay Bench in Transfer Petition No. 822 of 1991 must bind all the promotees who are similarly situated. This contention raised on behalf of appellants was negatived by the <ORG> in its impugned judgment and held that the said Transfer Petition by the direct recruits was in the representative capacity. No such specific contention appears to have been taken up in the present civil appeal. We see no reason to doubt the findings of the <ORG> in this behalf which is supported by Mr. <NAME>.

26. Lastly, it was contended on behalf of the appellants that some of :the appellants have put in more than 17 years of service when few of the direct recruits were either schooling and/or not born in the cadre. If the appellants were to be pushed down, it will cause a great hardship to them. We are unable to subscribe to this contention because if there is patent violation of the quota rule, the result must follow and the appellants who remained in the office for all these years cannot take the advantage of this situation. This submission is, therefore, devoid of any substance.

27. Thus, we concur with the findings recorded by the <ORG> on the issue of res judicata and consequently, the O.A. No. 690-A of 1993 will have to be dismissed on this ground alone for the reasons recorded herein above. We accordingly do so. If this be so, the findings of the <ORG> in the impugned judgment on merits and certain directions issued therein and in particular para 50 would be of no consequence. Accordingly, any such direction in the operative portion of the impugned judgment based on para 50 will be non est. Principle of pushing down will have to be adhered to so long as the Rules of 1971 and Rules of 1982 as interpreted by <ORG> and this <ORG> hold the field. The seniority of such pushed down STIs vis-a-vis the direct recruits appointed after 31st December, 1987 is left open as it was not the subject matter of O.A. Consequently, challenge to the im-pugned seniority lists issued on 28th December, 1992 and finalised on 29th October, 1993 as on 31st December, 1987 must fail. We must make it clear that subject matter of challenge before the <ORG> was in respect of im-pugned seniority list issued on December 28, 1992 and final seniority list issued on October 29, 1993. It is expressly made clear that this judgment is confined to the seniority list as on 31st December, 1987 and no more.

28. In view of the aforesaid discussion, we find no merit in this appeal and the same is dismissed. In the circumstances of the case, parties are directed to bear their own costs.

I.A. No. 7 of 1997 & I.A. No. 8 of 1998.

In view of our order in the main appeal, I.A. No. 7 of 1997 and I.A. No. 8 of 1998 are allowed.

Civil Appeal No. 6316 of 1997 This Civil Appeal by Special Leave is filed by the State of Maharashtra challenging the legality and correctness of the judgment and order dated February 23,1989 passed by <ORG> of <ORG> in Writ Petition No. 2742 of 1987. This writ petition was filed by the first respondent <NAME>, the Sales Tax Inspector (for short 'STI') on behalf of himself and other similarly situated STIs who were promoted to the posts of STIs prior to September 1, 1980. To this writ petition, State of Maharashtra and the Commissioner of <ORG> along with other 35 respondents were arrayed as respondents.

The challenge in this writ petition was to the provisional seniority list of STIs as on April 1, 1984 issued by <ORG> on April 28, 1987. It is this provisional seniority list which was quashed by <ORG> by this impugned order and <ORG> was directed to prepare a fresh seniority list of STIs in accordance with the directions contained therein.

A few facts leading to the present proceedings are as under :

Prior to April 1974, the staffing pattern amongst Class III employees in <ORG>, Maharashtra State was (1) Clerk (2) Sales Tax Inspectors and (3) Selection Grade Inspectors. Prior to the said date, the post of Clerk was divided into Junior Clerk and Senior Clerk. The posts of STIs are filled up by promotion as well as nomination in equal ratio. Promotion to the STI from the cadre of Clerk was made from the suitable candidates on the basis of the certificate issued by <ORG> about his suitability. The post of Sales Tax Inspector is a selection post.

Earlier, the work of recovery of sale tax was entrusted to <ORG> of the Government of Maharashtra. <ORG> vide their Resolutions passed in 1976 and 1978 decided to transfer the said work to <ORG> and accordingly in the year 1980, they implemented the said decision. Resultantly, 462 posts in <ORG> for the recovery of sale tax dues were abolished and equal number of posts were created on the establishment of <ORG>. A question arose as to how to equate these posts with various corresponding posts in <ORG> in terms of the Govern-ment resolution dated September 25, 1978. The posts were equated as under :

The post of <NAME>/Senior Clerk in the service of <ORG> was equated with the post of Senior Clerk in <ORG> as the scale for both these posts was identical i.e. Rs. 335-15-500-20-580- BB-20-680.

Consistent with this Government Resolution, the employees in <ORG> came to be absorbed in <ORG> permitting them to exercise the option in this behalf. While determining the seniority of such absorbed employees vis-a-vis the employees in <ORG> working on the post of Senior Clerks, the Govern-ment of Maharashtra, <ORG> by Resolution dated June 18, 1980 determined the norms of fixation of the seniority and it reads thus :

"So far as terms and conditions regarding fixation of seniority are concerned, the seniority of the revenue staff in the post of absorp-tion should be fixed from the date from which such persons are working regularly in the equated posts prior to their absorption, for all purposes, including promotions, confirmation, etc. The total length of service in the equivalent posts in the Revenue Depart-ment in which a person was working regularly prior to absorption should be taken into account for fixation of seniority in the post of absorption."

36 employees from <ORG> came to be absorbed in <ORG> in terms of the order dated December 12, 1980. The said order also recites that the seniority of the <ORG> staff in the post of absorption will be separately fixed from the date from which such persons were working regularly in the equated posts prior to their absorption for all purposes including promotions, confirmations, etc. These 36 employees who were absorbed in <ORG> were holding the posts of Senior Clerk/<NAME>, <NAME>, Entertain-ment Duty Inspectors etc, in <ORG> and since their scale was found to be equivalent to the Senior Clerk in the Sales Tax Depart-ment, they were absorbed in the cadre of Senior Clerk in <ORG>. These employees are the respondents at serial Nos. 2 to 36 in this appeal.

The respondents herein (the writ petitioners) and other similarly situated clerks and Senior Clerks who were working in <ORG> were promoted from October 15, 1976 onwards to the posts of STIs against regular vacancies. Respondents 2 to 36 who were absorbed from <ORG> in <ORG> in the cadre of Senior Clerk were also promoted to the post of Sales Tax Inspectors in August, 1981. The total number of Clerks and Senior Clerks working in <ORG> came to be promoted from October 15, 1976, were about 200 in number. The seniority list of the Senior Clerks of <ORG> as on September 1, 1980 was prepared and published on May 15, 1982 by <ORG> wherein respondents 2 to 36 herein were included. From the provisional seniority list so published, it appears that such of the Clerks/Senior Clerks working in <ORG> and promoted prior to September 1, 1980 were not included in the seniority list. The <ORG> issued a circular enclosing the list of persons in <ORG> who were promoted from the post of Senior Clerks between 1980 and 1982.

From the material placed on record, it is noticed that the employees who were initially working in <ORG> and were absorbed in <ORG> were making representations to <ORG> to reckon their seniority in the cadre of STIs by taking into account their service/seniority in the cadre of Senior Clerk in their parent department. <ORG>, however, published the provisional seniority list on April 28, 1987 whereby respondents 2 to 36 herein were included in the said provisional seniority list. It is this provisional seniority list which was challenged by the first respondent on behalf of himself and similarly situated STIs who were promoted between 1976 and 1980. The first respondent pleaded that on the date when the respondents 2 to 36 were absorbed, the first respondent and other similarly situated persons were already promoted as STIs and, therefore, the provisional seniority list was not only erroneous but also violative of Ar-ticles 14 and 16 of the Constitution.

The appellants herein and also the respondents 2 to 36 contested the claim of the first respondent on the ground that in view of the decision of the Government to absorb the Senior Clerks/<NAME>, <NAME>, Entertainment Duty Inspectors etc. on the equivalent posts in the cadre of Senior Clerk in <ORG>, they are entitled to reckon their seniority in the parent department as they were absorbed along with their seniority. It was, therefore, necessary to prepare a common seniority list of the Clerk/Senior Clerks of <ORG> as well as the ab- sorbed employees from <ORG>. The promotions to the post of STIs be governed by the seniority subject to other rifles, regulations and government orders. The provisional seniority list prepared by the State of Maharashtra suffers from no infirmity and the writ petition be dismissed.

The learned Division Bench of <ORG> after con-sidering the rival contentions found that the provisional seniority list pub-lished by <ORG> on April 28,1987 is contrary to law and the same cannot be sustained. <ORG> opined that the post of Sales Tax Inspector being a selection post and unless <ORG> finds the Senior Clerk suitable, no promotion to such selection post could be made. The first respondent and other similarly situated persons were selected by <ORG> and came to be promoted to the STIs from October 15,1976 onwards. The absorbed employees from <ORG> might be entitled for appropriate placements in the seniority list of Clerks and Senior Clerks in <ORG> but, however, it cannot be ignored that such absorbed employees came to be promoted as STIs much after the respondent No. 1 and other similarly situated persons were promoted. As stated earlier, the first respondent and other similarly situated persons were promoted between 1976 and 1980 whereas respondent Nos. 2 to 36 were selected by <ORG> and came to be promoted in the year 1981 and thereafter. The Government Resolution dated June 18, 1980 specifically recites that the seniority of the absorbed employees should be fixed in the equated post i.e. in the present case in the cadre of Senior Clerk. The Resolution nowhere provides that seniority can have any effect while determining the seniority in the higher cadre of Sales Tax Inspector, The effect of the impugned provisional seniority list dated April 28, 1987 would be that the respondent Nos. 2 to 36 who were absorbed personnel and who were promoted as the Sales Tax Inspectors after 1981 would be senior to those STIs like the first respon-dent and other similarly situated persons who were promoted after selec-tion prior to September, 1980. It was, therefore, an error on the part of the Government to ignore the date of selection and appointment of the first respondent and other similarly situated employees to the post of STIs and treat them as junior to respondent Nos. 2 to 36 who were selected sub-sequently. If such course is followed, the action of <ORG> and the Commissioner of Sales Tax would be violative of Articles 14 and 16 of the Constitution. <ORG> accordingly set aside the impugned provisional seniority list and directed <ORG> to prepare fresh seniority list in accordance with the directions contained in the impugned judgment.

Mr. <NAME>, the learned Advocate appearing for the State of Maharashtra took us through the impugned judgment as well as the relevant documents on record but was unable to persuade us to take a different view than the one taken by <ORG>, As indicated earlier, the respondent No. 1 and other similarly situated persons were selected by <ORG> and came to be promoted between 1976 and 1980 whereas the respondent Nos. 2 to 36 were selected by <ORG> and came to be promoted in 1981 and thereafter. If this be so, in our opinion, the provisional seniority list has been rightly quashed by <ORG>. Thus, the appeal is devoid of any substance.

In the result, the appeal to stand dismissed with costs.


JUDGMENT <NAME>, J.

1. This is a reference under Section 64(1) of the Estate Duty Act, 1953. It relates to the Assessment of Estate duty on the accountable persons of the estate of <NAME>, who died on the 11th July, 1959. The deceased was the absolute owner, inter alia, of premises No. 1, Queens Park, Calcutta. On July 1, 1954, he gifted this property by way of settlement on four trustees namely <NAME>, <NAME>, <NAME> and <NAME> for the objects mentioned in the Indenture of Trust. The trustees were to hold the property for the absolute use and benefit of the deceased's two sons, <NAME> and <NAME>, in equal shares during their respective lives and upon the death of any of or both the sons, to be held for the use of the wife or wives of such son or sons with remainder to the male children of the two sons in equal share per stirpes. Provision had been made in the deed of settlement empowering the trustees to grant, amongst other things, lease of the trust property as they thought fit.

2. On the 2nd July, 1954, the trustees leased out the upper portion of the premises to the settlor <NAME> on a monthly rental of Rs. 150/- for a period of five years. The lease was to take effect from the 1st July, 1954, i.e. from the same date as the date of the gift itself. The lease expired on the 30th June, 1959, and as stated above, the deceased died 11 days thereafter, on the 11th July, 1959. The said property continued to be occupied by the deceased as a continuing tenant for the last 11 days of his life.

3. Before the Assistant Controller of Estate Duty two alternative contentions were raised on behalf of the accountable persons. The first contention was that no part of the property could be deemed to pass under Section 10 of the Estate Duty Act. The alternative contention was that only the upper portion of the house could be deemed to pass. The Assistant Controller rejected both the contentions. He took the view that the entire property did pass on the donor's death because continued possession and enjoyment of the property was not immediately assumed by the donees and thenceforward retained to the entire exclusion of the donor or to the entire exclusion of any benefit to him by contract or otherwise.

4. The Appellate Controller of Estate Duty gave his decision against the assessees on the same ground.

5. <ORG> decided the appeal partially in favour of the applicants. It held that upon the donor's death only that part of the property which had been leased out to the donor would be deemed to pass to the accountable persons. The other portion of the property was exempt from estate duty because to that extent bona fide possession and enjoyment had had been assumed by the donees and thenceforward retained by them to the entire exclusion of the donor. The <ORG> also held that it was unrealistic to separate the property in its intangible form from the rights and interests attached to it.

6. On behalf of the Controller of Estate Duty the following question of law was suggested for reference to this Court:

"Whether, oh the facts and in the circumstances of the case, the <ORG> was right in holding that in terms of Section 10 of the Estate Duty Act only that portion of the property at No. 1, Queens Park, Calcutta, which was occupied by the deceased by virtue of the lease dated the 2nd July, 1954, could be deemed to pass on his death and the value thereof only was to be included in the principal value of the estate?"

7. The accountable persons, on the other hand, framed the following question:

"Whether on the facts and in the circumstances of the case <ORG> is right in holding that the deceased was not entirely excluded from bona fide possession and enjoyment of the part or portion of the property at 1, Queens Park, Calcutta, occupied by him by reason of the lease dated July 2, 1954, within the meaning of Section 10 of the Estate Duty Act?"

8. The <ORG> was of opinion that the questions raised on behalf of the parties were counterparts of each other and framed the following question of law and referred it to this Court for opinion:

"Whether on the facts and in the circumstances of the case and on a true interpretation of the provisions of Section 10 of the Estate Duty Act, the <ORG> was justified in holding that only that portion of the property at 1, Queens Park, Calcutta, which was in the occupation of the deceased could be deemed to pass on the death of the deceased and not the whole of the property?"

9. Learned counsel for the Controller argued that having regard to the framing of the question by the <ORG> it was not open to the applicants to contend that no portion of the property was dutiable. From the statement of the case relevant portions whereof I have referred to already, it seems to me, that this argument is of no substance. The <ORG> by the question it has framed intended to cover all the aspects of this case. Just as the Controller can urge that the whole of the property is liable to estate duty the applicants can also submit that no portion of the property is dutiable. The <ORG> it appears has taken into consideration the question suggested by the Controller and the applicants respectively and tried to frame a question of its own. Both the questions have been set out in the statement of the case and then the <ORG>'s question is put forward. In these circumstances, to my mind, it is unreasonable to hold that the applicants before us are debarred from contending that no portion of the property is liable to estate duty.

10. Mr. <NAME>, learned counsel for the applicants, has argued that, the question at issue depends upon the true construction of Section 10 of the Estate Duty Act, 1953, which reads-

"Property taken under any gift whenever made shall be deemed to pass on the donor's death to the extent that bona fide possession and enjoyment of it was not immediately assumed by the donee and thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise."

11. In the words of <NAME> in Attorney General v. <NAME> (1911) 2 KB 688 at p. 699:

"I think gramatically the words must be construed thus: 'Property taken under any gift, whenever made, of which property bona fide possession and enjoyment shall not have been assumed by the donee immediately upon the gift, and of which property bona fide possession and enjoyment shall not have been thenceforward retained by the donee to the entire exclusion of the donor from such possession and enjoyment or of any benefit to him by contract or otherwise."

12. Therefore, according to Mr. <NAME>,' the first thing to be determined is: what is the property taken under the gift? The nature of the right to the property given is important.

13. Mr. <NAME> then relied on a passage in the judgment of Lord <NAME> of Killowen in Commr. for Stamp Duties, New South Wales v. <ORG> (1943) AC 425 at p. 440. Lord <NAME> has said:

"The linking of possession with enjoyment as a composite object which has to be assumed by the donee indicates that the possession and enjoyment contemplated is beneficial possession and enjoyment by the object of the donor's bounty."

14. Learned Counsel proceeded to quote thereafter the following passage from the speech of Lord Simonds in <CITATION> , (1952) AC 15 at p. 29:

"I venture to think that much of the argument that was addressed to the <ORG> in this case and much of the confusion that has arisen in the past op this admittedly difficult branch of the law have been due to the failure to bear in mind that that of which enjoyment is to be assumed and retained and from which there is to be exclusion of the donor and any benefit to him by contract or otherwise is that which is truly given, a proposition which is obvious enough in the case ot two separate estates but more difficult to follow and apply where trusts are declared of a single property which are not completely exhaustive in favour of a donee."

15. For the propositions aforesaid Mr. <NAME> has also relied on the cases of <NAME> v. Commr of Stamp Duties, 1934 AC 61 and the dictum of <ORG> in the case Lang v. <NAME>, (1912) 13 CLR 503.

16. Mr. <NAME> submitted to us that having ascertained the property taken under the gift and whether the donee assumed bona fide possession and enjoyment of that property the next step is to find whether the donor had thenceforth been excluded from the possession and enjoyment of such property.

17. The 'possession and enjoyment' of the property contemplated. Mr. <NAME> says, is the legal possession and enjoyment and not factual or physical and the principle is "the cedent or donor must be entirely excluded from some enforceable right of a benefit of that which was part of his properly before the cession": in other words, an enjoyment by the donor of the same kind as before: vide Lord Advocate v. <NAME> (1906) 8 F. 579 re-affirmed in 1911-2 KB 688 (Supra).

18. In order to bring the case within the scope of the Section, it is not sufficient, states Mr. <NAME>, to take the situation as a whole and find that the donor has been allowed to enjoy substantial advantages which have some relation to the property given: it is necessary to consider the nature and source of each of the advantages and determine whether or not it is a benefit of such a kind as to come within the section: <NAME> v. Commr. of Stamp Duties, New South Wales 1954 AC 57.

19. Mr. <NAME> submits that, the possession and enjoyment from which the <ORG> has not been excluded (or to which he has been inducted) must trench upon or impair and diminish the rights of the donee, in the subject-matter of the gift If a new right in the tangible property is created which does not affect the rights of the donee then the Section is not attracted.

20. Learned counsel then urged that, in order that duty may be levied the burden of proof is upon the taxing authority who must bring the subject within the charge i.e., establish that there was not an entire exclusion of the donor or of any benefit to him by contract or otherwise. The Section does not impose an obligation to pay the duty leaving the accountable person to bring himself within the exception: vide <NAME>'s case 1911-2 KB 688 (Supra).

21. It follows, according to learned counsel, that if there is any doubt as to the nature of the 'possession and enjoyment' granted to the donor being that which he had before the cession then the duty is not exigible.

22. In this case, Mr. <NAME> argued, the gift was of the full right of ownership which did not contain any right as a tenant at the time the gift was made. Therefore, the benefit that may have been conferred on the donor a day after was not referable to the gift itself. The source of the possession and enjoyment under the lease was the lease and not the freehold right which had been given. Before the lease is given the tenant's right does not come into existence and it would be erroneous to say that the leasehold interest in the property was comprised in the freehold interest before the creation of the lease. Hence, the lease when granted does not in any way prejudice or trench upon or impair 'posssession and enjoyment' which the lessor had before the creation of the lease.

23. In the foregoing paragraphs I have set out all the points canvassed before us by learned counsel for the applicants. The law on the subject including the present trend of decisions of <ORG> has been summarised in <NAME>'s "Death Duties", 13th Edition, Volume 1, at pages 210 to 221.

24. For purposes of the present reference the provisions in the Indian Act ( Section 10 of the Estate Duty Act, 1953) and those in the British Act ( Section 59(3) of the Finance Act (1909-1910) and in the Australian Act ( Section 11 of the Administration and Probate Act, 1903), are substantially the' same. The difference, that is there, relevant for us in this reference would be discussed later in this judgment. I propose to rely on the observations made in <NAME>'s book confining myself, however, to the points that arise for our consideration in the instant case.

25. Estate duty is payable in respect of all gifts, made by the deceased in his life time unless, inter alia, (1) the transfer of the property to the donee was only completed; (2) the donee assumed bona fide possession and enjoyment of the property and thenceforward retained such possession and enjoyment; and (3) the deceased was thenceforward entirely excluded from the possession and enjoyment thereof and also from any benefit by contract or otherwise.

26. The first condition is satisfied if the pro perty is vested in trustees for the donee, even though the donor is one of the trustees 1943 AC 425 or the sole trustee 1954 AC 57. This condition has undoubtedly been satisfied in the instant case.

27. For the purpose of the second condition, it is necessary that the donee shall (a) assume, and (b) thenceforward retain the possession and enjoyment of the property. It seems that the donee, or person on his behalf, must assume and retain actual possession and enjoyment, and not merely the legal right thereto; Stamp Duties Commr. of New South Wales v. <ORG>. 1956 AC 512. But presumably where the donor occupies land or enjoys chattels for full consideration such as the payment of a full rent, the receipt of the rent or other consideration by the donee will be regarded in English Law as possession and enjoyment by him if the death was on or after the 29th July, 1959, in view of Section 35(2) of the Finance Act, 1959, which runs thus:

"In the case of property being an interest in land, or being chattels retention or assumption by the said other person or actual occupation of the land or actual enjoyment of an incorporeal right over the land, or actual possession of the chattels shall be disregarded if for full consideration in money or money's worth."

28. Our attention has not been drawn to any provision in the Indian Act similar to the provision in Section 35(2) of the English Finance Act of 1959. There is a finding by the Appellate Controller at page 29 of the paper book that bonafide possession and enjoyment of the property was perhaps assumed by the donees immediately upon the gift." <ORG> also must have come to the same conclusion otherwise its order cannot be justified.

29. In this reference the crux of the matter appears to be whether condition No. 3 stated above has been satisfied. This condition has two limbs: the deceased must be entirely excluded (i) from the property and (ii) from any benefit by contract or otherwise.

30. The distinction between the two limbs or conditions, which has not always been made clear in the earlier cases, some of which have been cited by Mr. <NAME>, was sharply drawn by <ORG> in <NAME> v. Commr. of Stamp Duties of New South Wales, 1958 AC 435, a decision on a similarly worded clause of a New South Wales Statute. In this case, the deceased gave his son a farming property, "Mia Mia", in 1934; in 1935 the deceased the son and another son entered into a partnership agreement as graziers and Stock dealers, on the terms, inter alia, that the deceased should be the Manager and that his decision should be final in all matters relating to the conduct of the business; that the capital should consist of the live stock and plant owned by the partners; that the business should be conducted on their respective holdings (including "Mia Mia"); and that the land held by each partner should be his sole property and he should have the sole and free right to deal with it as he might think fit. The partnership continued till the death of the deceased in 1952, and the property "Mia Mia" was held dutiable as a gift not to his entire exclusion. The main points were:

(1) the deceased was not in fact excluded from the property, but as a partner enjoyed rights over it.

(2) There was an initial out-right gitf of the property not of the property shorn of certain rights (contrast 1934 AC 61).

(3) It was immaterial that the partnership agreement was later than the gift, since the Section required that possession and enjoyment should thereafter be retained to the exclusion of the donor 1956 AC 512.

(4) It was also immaterial that the partnership was "an independent commercial transaction", and that the donor gave full consideration for his rights. If a donor gives a donee a freehold and the donee gives the donor a lease, even at a full rent, the donor is not excluded from the property. ((1912) 13 CLR 503, which was approved).

(5) The question whether the partnership agreement was "related" or "referable" to the gift did not arise: the question is relevant only to the "second limb" of the clause.

(6) It was immaterial that the donee could make no better use of the property. "Where the question is whether the donor has been entirely excluded from the subject matter of the gift that is the single fact to be determined. If he has not been so excluded, the eye need look no further to see whether his non-exclusion has been advantageous or otherwise to the donee." The remarks of Lord <NAME> in 1954 AC 57 do not relate to the "first limb", but to the "second limb" of the clause. In this last mentioned case residence on the property in a managerial capacity had not been regarded as a "reservation" but, in the light of the <NAME> decision it cannot be considered authoritative on the "first limb".

31. It appears from point No. 4 above that <ORG> in <NAME>'s case 1958 AC 435 has fully approved of the decision of <ORG> in (1912) 13 CLR 503. This is the case which has to be carefully considered by us in determining whether Section 10 of the Estate Duty Act, 1953, applies to the facts in the present reference.

32. Section 11 of the Administration and Probate Act, 1903, (Vict) ran as follows:

"Every conveyance or assignment, gift, delivery or transfer of any estate real ot personal and whether made before or after the commencement of this Act, purporting fo operate as an immediate gift inter vivos whether by way of transfer, delivery, declaration of trust or otherwise shall-

(a) if made within twelve months immediately preceding the death of the person so dying; or

(b) if made at any time relating to any property of which property bona fide possession and enjoyment shall not have been assumed by the donee immediately upon the gift and thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise be deemed to have made the property to which the same relates chargeable with the payment of the duty payable under the Administration and Probate Acts, as though part of the estate of the donor."

33. In <NAME>'s case (1912) 13 CLR 503 a testa trix was the owner in fee of land in her actual pos session and enjoyment, which she worked as a single property. More than 12 months before her death she gave to her three sons blocks of this land each of which was surrounded by other of the land of the testatrix. The gift was made by conveyances of so much of the land as was under the general law, and by transfers of So much of it as was under the Transfer of Land Acts. On the same day upon which the conveyances and transfers were executed, each of the sons executed a lease for five years of the land given to him to the testatrix at a fair and reasonable rent. After the gifts the lands given continued to be in the actual physical occupation of the testatrix, and to be worked by her with her other lands in the same way as before the gifts. The testatrix died before the expiration of the leases.

34. Let us compare these facts with the salient facts in the reference before us. On the 1st July, 1354, the deceased made a gift of the property by way of settlement on trustees. On the 2nd July, 1954, the trustee leased out the upper portion of the premises to the deceased with effect from the 1st July, 1954, on a monthly rental of Rs. 150/-for a period of five years. The lease expired on the 30th June, 1959; the deceased continued as a tenant; and died on the 11th July, 1959.

35. In <NAME>'s case (1912) 13 CLR 503 <ORG> held that the land so given was chargeable with the payment of the duty payable under the Administration and Probate Acts as though part of the estate of the testatrix.

36. Viscount <NAME> in <NAME>'s case 1958 AC 435 has fully considered the effect of the decision in <NAME>'s case, (1912) 13 CLR 503 and makes the following observations:

"As long ago as 1912 in Lang v. <NAME> (1912) 13 CLR 503 (a case whether a testatrix gave certain blocks of land to her son and on the same day took leases from them of the same land) <NAME>, <NAME> said: 'the lease, however, gave to the doner possession and enjoyment of the land itself, which is a simple negation of exclusion, and bring the case within the statutory liability. It was argued that as the rent was the full value, the lessee's possession and occupation were not a benefit. The argument is unimportant because the lease, at whatsoever rent, prevents the entire exclusion of the donor'. This view of the sub-section has never been departed from and their Lordships respectfully adopt the words of <NAME>, <NAME> in the present case. It is irrelevant that the donor gave (if he did give) full consideration for his right as a member of the partnership to possession and enjoyment of the land that he had given to his son.": Vide 1958 AC 435 at p. 447.

37. I have given my anxious consideration to the arguments of Mr. <NAME> that unless something is carved out of the subject-matter of the gift and given to the donor the liability under the statute is not attracted. To my mind the correct view is that so far as the upper portion of premises No. 1, Queens Park is concerned the lease gave to the donor possession and enjoyment of the property itself which is a negation of exclusion and brings the case within the statutory liability. The lease at whatsoever rent prevents the entire exclusion of the donor envisaged by Section 10 of the Estate Duty Act, 1953. This was the view of <NAME>, J. in <NAME>'s case, (1912) 13 CLR 503 approved by <ORG> in <NAME>'s case, 1958 AC 435 and it is this view which applies to the portion of premises No. 1, Queens Park, leased out by the trustees to the donor. As to whether the other portion of the property was also affected by this lease we shall consider later in this judgment.

38. The principles decided in <NAME>'s case, (1912) 13 CLR 503 has, however, been substantially negatived in England, as respects, deaths on and after the 29th July, 1959. Under Section 35(2) of the Finance Act, 1959, the donor's actual occupation of the land, enjoyment of an incorporeal right over the land (e.g. Shooting or fishing rights or a right to take timber), or possession of the chattels is to be disregarded if for full consideration in money or moneys worth. But as I have said no such provision exists in the Indian Statute. There is no difficulty, it seems, therefore, in drawing upon the principles laid down in <NAME>'s case, (1912) 13 CLR 503 for construing the relevant provisions in lection 10 of the Estate Doty Act, 1953. Accord-ingly, it appears, that subject to Section 3542 ) of the English Finance Act, 1959, in the case of land and chattels, the condition regarding entire exclusion of the donor from the property would be infringed where the donor's benefit consists of any form of possession or enjoyment of the gifted property itself, or of property representing it. In other words, the "first limb" of the condition may be infringed if the donor occupies OK enjoys the property or its income, even though he has no right to do so which he could legally enforce against the donee. It is not entirely easy to reconcile this view with the decisions in <NAME>'s case, (1906) 43 ScLR. 465 and in <NAME>'s case, (1911) 2 KB 688 (the. decision on which Mr. <NAME> placed strong reliance) in which cases the deceased either released with the decision in <NAME>'s case, (1906) 43 SC LR 465) or made an absolute gift of (the <NAME>), a house and furniture to a relative, without any stipulation, but continued to live there as the donee's guest until his death more than five years later, and it was held that duty was not chargeable. In the <NAME> case, 1911-2 KB 688 <NAME> in his remarks at p. 700 of the report, appears to have considered that the deceased's exclusion from the property itself (the first limb of the condition) would, like his exclusion "from any benefit by contract or otherwise" (the second limb), be achieved unless he had "some enforceable right". It is submitted in <NAME>'s book that if by this expression <NAME> meant a legally enforceable right against the donee, his view cannot be sustained, so far as the first limb is concerned, in the light of the contrary authority noted above. The requirement of enforceability in this sense, derived apparently from the word "contract" in the second limb, seemingly has no relevance to the first limb. It may be observed, however, that although in cases like the Permanent Trustee case 1956 AC 512 the donee could at any time have terminated the arrangement under which the deceased was not excluded, nevertheless, so long as the arrangement continued, the deceased had a specific right; whereas in the <NAME> case, (1906) 43 ScLR 465 and the <NAME> case, 1911-2 KB 688 it appears that there was no specific arrangement at all and the deceased was simply the guest of the donee. In <NAME> case, (191!) 2 KB 688 for example. <NAME> said (at p. 701 of the report) that there was no understanding that the deceased should be permitted to reside in the house.

"in the sense of an arrangement, or as it is called an honourable understanding, which is not legally enforceable. I have no doubt that neither the donor nor the donee contemplated for. one moment that the former would under any circumstances be turned out of the house: but there was no discussion on the point, and the donor befors he executed the Deed was fully aware that after executing the Deed he would be at the defendant's mercy, and was fully content to rely upon the affection which the defendant Bore towards his grand-uncle and benefactor. Upon this affection, and not upon Any contract or honourable understanding, the donor was content to rely. . . ." The difference indicated may, according to the Editor of <NAME>'s book, be sufficient to distinguish the two lines of cases. It is also stated in this text book that, notwithstanding the sweeping character of the term "entire exclusion", there must, it is thought, be some limit to its meaning: the condition cannot be infringed merely because the donor paid occasional visits to the donee, and the <NAME> and <NAME>'s decisions ((1906) 43 Sc LR 465 and 1911-2- KB 688) if still valid, indicate that more permanent residents as a guest does not offend the condition, at any rate if there was no "honourable understanding". On the other hand, specific rights of lodging in the property secured to the donor at the time of the transfer are a Breach of the condition: <CITATION> , 1936 IR 342, where the deceased retained the right to the exclusive use of a room and "the right of his support therein."

39. I have discussed alt the authorities which appear to me to be relevant for answering the question raised in this reference. These authorities lead me to the following conclusions:

(a) In order to avoid the mischief of Section 10 of the Estate Duty Act, 1953, it must be established that the donee not only assumed bona fide possession and enjoyment of the property taken under the gift but also thenceforward retained the said property to the entire exclusion of the donor or any benefit to him by contract or otherwise.

(b) The single factor to be considered is whether the donor has been entirely excluded from the subject matter of the gift.

(c) If the donor has not been entirely excluded then it is not at all relevant to consider whether the non-exclusion of the donor has been advantageous to the doaee or not. In other words, it is immaterial that the donee was receiving full consideration for what the donor was enjoying or possessing.

(d) Possession and enjoyment by the donor have to be judged in the light of the factual position alone.

(e) The "benefit to him by contract or otherwise" must, however, be based on enforceable rights.

39a. Applying the above principles to the facts of this case I reiterate that the upper portion of premises No. 1, Queens Park, Calcutta, which was leased out by the trustees to the donor, does not escape the consequences indicated in Section 10 of the Estate Duty Act. We have now to consider whether this section can be attracted to the whole of the property on the facts of this case.

40. Section 10 of the Estate Duty Act, 1953, provides as we have already seen, that property taken under any gift, whenever made, shall be deemed to pass on the donor's death to the extent that bona fide possession and enjoyment of it was not immediately assumed by the donee and thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise.

41. The expression "to the extent" introduced into the Indian Statute is a departure from the provisions in the British and Australian Acts. So far as this aspect of the question is, therefore, concerned no assistance can be derived from decisions in other countries. Mr. <NAME>, learned counsel for the Controller says that this expression does not indicate any quantum or degree of curtailment of interest. It is merely descriptive of the nature of the property given to the donee. I am not inclined to accept this argument. That is not the plain meaning of the expression at all and there is no reason why the meaning should be strained in the manner suggested by Mr. <NAME>. In any event the doubt, if any, has been resolved by the statement of objects and reasons whh respect to Section 10 of the Estate Duty Act, 1953, circulated to the members of <ORG>. The statement runs thus:

"This clause brings under charge property given in gift, but in which the donor retains some interests by contract or otherwise. Where the donor retains such interests in a part of the property only, estate duty is payable on that part only ....."

42. It is abundantly clear, therefore, that in this case estate duty is payable by the accountable persons only on that portion of premises No. 1, Queens Park, Calcutta, which was in the occupation of the deceased as a lessee.

43. The answer to the question framed is in the affirmative. Each party will bear and pay its own costs of the reference. Certified for the counsel as against respective clients.

<NAME>, J.

44. I agree.


PETITIONER: UNION OF INDIA Vs. RESPONDENT: COL. J. N. SINHA AND ANR. DATE OF JUDGMENT: 12/08/1970 BENCH: <NAME>, K.S. BENCH: <NAME>, K.S. SHAH, J.C. CITATION: 1971 AIR 40 1971 SCR (1) 791 1969 SCC (2) 662 CITATOR INFO : R 1972 SC2185 (12) F 1973 SC 698 (11) R 1973 SC1252 (14) RF 1975 SC2057 (8) RF 1976 SC2433 (7) R 1976 SC2581 (18) F 1977 SC 854 (9) R 1978 SC 597 (218) R 1978 SC 851 (65,66) R 1980 SC 563 (16,18,21,22,25,27,31) R 1981 SC 594 (5) RF 1981 SC 818 (22,29) R 1984 SC 630 (4) R 1985 SC1416 (99) RF 1986 SC 555 (6) R 1987 SC 65 (2) RF 1987 SC 593 (23) RF 1987 SC1933 (10) R 1989 SC2218 (5) RF 1990 SC1004 (8) R 1990 SC1368 (22) RF 1991 SC 101 (22,152,261) RF 1991 SC 564 (6) R 1992 SC1020 (12,16,17,23,24,25,29,31) ACT: Constitution of India 1950, Arts. 309, 310-Rules made under Art.309- Pleasure doctrine embodied in Art. 310- Fundamental Rule 56(j) embodies pleasure doctrine-Compulsory refirement at age of 50 after a certain number of years of service does not have civil consequences Rules of natural justice cannot be invoked in such case-Rules of natural justice operate only in areas not covered by law validly made. HEADNOTE: The first respondent joined the post of Extra Assistant Superintendent in <ORG> in 1938. Later he was taken into the Class I Service of <ORG> and rose to the post of Deputy Director. He also officiated as -Director. On August 13, 1969 the President of India pleased by an order under Rule 56(j) of the Funda- mental Rules to compulsorily retire the first respondent from Government service. No reasons were given in the order. The appellant challenged the order by a writ petition in <ORG>. The failure on the part of the concerned authority to give opportunity to the first respondent to show cause against his compulsory retirement was held by <ORG> to have amounted to a contravention of the principles of natural justice. Against the judgment of <ORG> <ORG> appealed. HELD : Rules of natural justice are not embodied rules nor can they be elevated to the position of fundamental rights. As observed by this Court in <NAME>'s case these rules can operate only in areas not covered by any law validly made. If a statutory provision can be read consistently with the principles of natural justice, the <ORG> should do so because it must be presumed that the legislatures and the statutory authorities intend to act in accordance with the principles of natural justice. But on the other hand a statutory provision either specifically 'or by necessary implication excludes the application of any or all the principles of natural justice then the court cannot ignore the mandate of the legislature or the statutory authority and read with the concerned provision the principles of natural justice. Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not depends upon the express words of the provision conferring the power, the nature of the power conferred, the purpose for which it is conferred and the effect of the exercise of the power. [794 G-795 C] Fundamental Rule 56(i) does not in terms require that any opportunity should be given to the concerned Government servant to show cause against his compulsory requirement. It says that the appropriate authority has the absolute right to retire a government servant if it is of the opinion that it is in the public interest to do so. If that authority bona fide forms that opinion the correctness of that opinion cannot be challenged before courts, though it is open to an aggrieved party to contend that the requisite opinion has not been formed or the decision is based on collateral grounds or that it is an arbitrary decision. The respondent had not challenged the impugned order on any of these grounds. [795 D-F] Compulsory retirement does not involve any civil consequence. A person retired under Rule 56(i) does not lose any of the rights acquired 792 by him before retirement. The rule is not intended for taking any penal action against government servants. It merely embodies one of the facets of the pleasure doctrine embodied in Art. 310 of the Constitution. The rule holds the balance between the, rights of the individual government servant and the interests of the public. While a minimum service is guaranteed to the government servant, the government is given power to energise its machinery and make it more efficient by compulsorily retiring those who in its opinion should not be there in public interest. Three months notice is provided to enable the retired employee to find out other suitable employment. [795 G-796 B] On the above view of the law, namely, that no notice to show-cause was required, the appeal must be allowed. <CITATION> , A.I.R. 1965 S.C. 280. <CITATION> , A.I.R. 1970, S.C. 150, <CITATION> .,  2 S.C.R. 625 distinguished. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 381 of 1970. Appeal-from the judgment and order dated December 22, 1969 of <ORG> in Civil Writ No. 746 of 1969. <NAME>, Attorney-General and <NAME>, for the appellant.

<NAME>, <NAME>, and <NAME>, for respondent No. 1.

<NAME>, for respondent No. 2.

The Judgment of the Court was delivered by. <NAME>, J. 'In this appeal by certificate the only question that was canvassed before us was as regards the validity of the order contained in memorandum No. F. 16-42/68-S-1, dated August 13, 1969 issued by the Government of India, <ORG>, retiring the 1st respondent compulsorily from government service in exercise of the powers conferred under cl. (j) -of Fundamental Rule 56 with effect from August 14 1969. That order was attacked before <ORG> on various grounds. <ORG> rejected some of those grounds. It did not find it necessary to decide ' a few others but accepting the contention of the respondent that in making the order, the appellant -had violated the principles of natural justice, it held that the impugned order is invalid <ORG> accordingly issued a writ of certiorari quashing that order.

Before us the only contention presented for -our decision was whether <ORG> was right in holding that in making the impugned order the appellant had violated the principles of natural justice. No other contention was taken before us. Hence we shall address ourselves only to that question.

Before proceeding to examine the contention above-formulated it is necessary to set out the material facts. The 1st respondent. herein Col. <NAME> successfully competed in the examination held by <ORG> in 1938 for the post of Extra-Assistant Superintendent in <ORG>. After selection, he was appointed as an Extra-Assistant Superintendent. He worked as probationer for a period of three years and thereafter he was confirmed in that post in 1941. During the second world war, he Volunteered for active-service in the army and was granted an emergency Commission in the army. He was granted a regular commission in the army with effect from October 23, 1942.

In exercise of the powers conferred by the proviso to Art. 309 of the Constitution, the President of India made on August 17, 1950 rules called the Survey of India (Recruitment from Corps of Engineering Officers) Rules, 1950 for regulating the recruitment and conditions of service of persons appointed from <ORG> of <ORG> to <ORG> Rule 2 of the said Rules provides for the recruitment of Military Officers to <ORG> and Rule 3 provides that the recruited officers will be on probation for two years which may be extended by the <ORG> on the advice of the Surveyor General. The 1st respondent was taken into <ORG> under Rule 2 of the aforesaid 1950 Rules as Deputy Superintendent Surveyor with effect from June 1951. Thereafter the President of India in .exercise of the powers under the proviso to Art. 309 , made on July 1, 1960 the Survey of India Class I (Recruitment) Rules, 1960 for regulating the recruitment of <ORG>. The 1st respondent was subsequently promoted firstly as Superintending Surveyor and then as Deputy Director. After sometime he was promoted as Director and lastly as Director (Selection Grade). The last mentioned promotion was made with effect from October 27, 1966. On May 17, 1969, Fundamental Rule 56(j) was amended. Thereafter on August 13, 1969, <ORG> issued the impugned order. The 1st respondent was given three months pay and allowances in lieu of three months notice prescribed in Fundamental Rule 56(1). The 1st respondent being aggrieved by that order, challenged the validity of the same. As mentioned earlier, <ORG> accepted his plea. <ORG> has appealed against that order.

Fundamental Rule 56(j) reads "Notwithstanding anything contained in this Rule the appropriate authority shall, if it is of the opinion that it is in the public interest so to do have the absolute right to retire any Government servant by giving him notice of not less than three months in writing or three months pay and allowances in lieu of such notice

(i) if he is in Class I or Class II Service or post the age limit for the purpose of direct recruitment to which is below 35 years, after he has attained the age of 50 years.

(ii) In any other case after he has attained the age of 5 5 years.

Provided that nothing in this clause shall apply to a Government servant referred to in clause (e) who entered Government service on or before 23rd July, 1966 and to a Government servant referred to in clause (f ) ."

The order impugned merely says that in pursuance of cl. 5 6 ,the President was, pleased to decide that in public interest the 1st respondent should retire from government service with effect from August 13, 1969 and that he would be given three months pay and allowances in lieu of three months notice provided in the said rule. No reasons are given for compulsorily retiring the 1st respondent. Admittedly no opportunity was given to him to show cause against his compulsory retirement. The failure on' the part of the concerned authority to give an opportunity to the 1st respondent to show cause against his compulsory retirement was held by <ORG> to have amounted to a contravention of the principles of natural justice. The validity of Fundamental Rule 56(j) was not questioned before <ORG> nor before us. Its validity is not open to question in view of the decision of this <ORG> in <CITATION> (1). Fundamental Rule 56(j) in terms does not require that any

-opportunity should be given to the, concerned government servant 'to show cause against his compulsory retirement. A government -servant serving under <ORG> holds his office at the pleasure of the President as provided in Art. 310 of the Constitution. But this "Pleasure" doctrine is subject to the rules or law -made under Art. 309 as well as to the conditions prescribed under Art. 311. Rules of natural justice are not embodied rules nor can they be elevated to the position of fundamental rights. As observed by this Court in <CITATION> (2) "the aim of rules of natural justice is to secure justice or to put it negatively to -prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law but supplement it." It (1) A. I. R. 1965 S. C. 280 (2) A. I. R. 1970 , S. C. 150.

is true that if a statutory provision can be read consistently with the principles of natural justice. the courts should do so because it must be presumed that the legislatures and the statutory authorities intend to act in accordance with the principles of naural justice. But if on the other hand a statutory provision either specifically or by necessary implication excludes the application of any or all the principles of natural justice then the court cannot ignore the mandate of the legislature or the statutory authority and read into the concerned provision the principles of natural justice. Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not depends upon the express words of the provision conferring the power, the nature of the power conferred, the purpose for which it is conferred / and the effect of the exercise of that power. Now coming to the express words of Fundamental Rule 56(j), it says that the appropriate authority has the absolute right to retire a government servant if it is of the opinion that it is in the public interest to do so. The right conferred on the appropriate authority is an absolute one. That power can be exercised subject to the conditions mentioned in the rule.' one of which is that the concerned authority must be of the opinion that it is in public interest to do so. If that authority bona fide forms that opinion, the correctness of that opinion cannot be challenged before courts. It is open to an aggrieved party to contend that the requisite opinion has not been formed or the decision is based on collateral grounds or that it is an arbitrary decision. The 1st respondent challenged the opinion formed by the government on the ground of mala fide. But that ground has failed. <ORG> did not accept that plea. The same was not pressed before us. The impugned order was not attacked on the ground that the required opinion was not formed or that the opinion formed was an arbitrary one. One of the conditions of the 1st respondent's service is that the government can choose to retire him any time after he completes fifty years if it thinks that it is in public interest to do so. Because of his compulsory retirement he does not lose any of the rights acquired by him before retirement. Compulsory retirement involves no civil consequences. The aforementioned rule 56(j) is not intended for taking any penal action against the government servants. That rule merely embodies one of the facets of the pleasure doctrine embodied in Art. - 3 1 0 of the Constitution. Various considerations may weigh with, the appropriate authority while exercising the power conferred under the rule. In some cases, the government may feel that a particular post may be more usefully held in public interest by an officer more competent than the one who is holding. It may be that the officer who is holding the post is not inefficient but the appropriate authority may prefer to have a more efficient officer. It may further be that in certain key posts public interest may require that a person of undoubted ability and integrity should be there. There is no denying the fact that in all organizations and more so in government organizations, there is good deal of dead wood. It is in public interest to chop off the same. Fundamental Rule 56(j) holds the balance between the rights of the individual government servant and the interests of the public. 'While a minimum service is guaranteed to the government servant, the government is given power to energise its machinery and make it more efficient by compulsorily retiring those who in its opinion should not be there in public interest.

It is true that a compulsory retirement is bound to have some adverse effect on the government servant who is compulsorily retired but then as the rule provides that such retirements can be made only after the officer attains the prescribed age. Further a compulsorily retired government servant does not lose any of the benefits earned by him till the date of his retirement. Three months' notice is provided so as to enable him to find out other suitable employment.

In our opinion <ORG> erred in thinking that the compulsory retirement involves civil consequences. Such a retirement does not take away any of the rights that have accrued to the government servant because of his past service. It cannot be said that if the retiring age of all or a section of the government servants is fixed at 50 years, the same would involve civil consequences. Under the existing system there is no uniform retirement age for all government servants. The retirement age is fixed not merely on the basis of the interest of the government servant but also depending on the requirements of the society. <ORG> was not justified in seeking support for its conclusion from the decision of this <ORG> in <CITATION> and ors.(1) and <CITATION> (').

In <NAME> case(') Dr. <NAME> date of birth was refixed by the government without giving her proper opportunity to show that the enquiry officer's report was not correct. It is under those circumstances this Court held that the order refixing the date of birth was vitiated for failure to comply with the principles of natural justice. Therein the impugned order took away some of the existing rights of the petitioner.

In <NAME>'s case('), a committee consisting of Chief Conservator of, Forest, Kashmir and others was appointed to recommend names of the officers from <ORG> for (1) [1967] 2 S. C. R. 625.

(2) A.I.R. 1970 S.C. 150.

being selected for the Indian, <ORG>. The Chief Conservator of Forests, Kashmir was one of the candidates for selection. Further it was established therein that some of the officers who competed with him had earlier challenged his seniority and consequently his right to be the Chief Conservator and that dispute was pending. Under those circumstances this Court held that there -was contravention of the principles of natural justice.

For the reasons mentioned above, we are unable to agree with the conclusion reached by <ORG> that the impugned order is invalid. We accordingly allow this appeal, set aside the judgment and decree of <ORG> and dismiss the writ petition. In the circumstances of the case we make no order as to costs.

[The <ORG> by order dated November 18, 1970 and January 19, 1971 on an application for review filed by the respondent vacated its order dismissing the writ petition. Instead, the proceedings were remanded to the High <ORG> for decision on such points as were not, dealt with and decided in the judgment of that court. Ed.] G.C. Appeal allowed. Proceedings remanded.