HARIHARAN & ORS.versusHARSH VARDHAN SINGH RAO & ORS

944                       [2022]
               SUPREME COURT     9 S.C.R. 944
                              REPORTS                       [2022] 9 S.C.R.


A                            HARIHARAN & ORS.
                                        v.
                  HARSH VARDHAN SINGH RAO & ORS.
                         (Civil Appeal No. 9228 of 2022)
B                              December 14, 2022
              [S. ABDUL NAZEER AND ABHAY S. OKA, JJ.]
            Service Law: Seniority – On 7 September 2016, a modified
      seniority list of the Income Tax Inspectors in the cadre of the Gujarat
      region was issued – In the said list, the direct recruits of CGLE
C
      2010 were interspaced with promotees of the year 2009-2010 – On
      the basis of clarification issued by CBDT, a revised seniority list
      dated 13 February 2018 was published – Direct recruits appointed
      against vacancies of the year 2009-2010 were interspaced with the
      promotees of the recruitment year 2010-2011 – Respondents nos.1
D     to 18, the direct recruits, filed writ petition before the High Court
      for challenging seniority list dated 13 February 2018 – By impugned
      judgment, seniority list dated 13 February 2018 was quashed and
      the seniority list of 7 September 2016 was restored – Clarification
      added that only those direct recruits who were eligible and qualified
      in the recruitment year 2009-2010, shall be interspaced with 53
E
      promotees who were promoted vide DPC dated 29 June 2009 –
      These promotees filed instant appeal – Held: Four issues framed
      for consideration – Whether the recruitment year is a financial year
      or calendar year – Whether the decision of this Court in K.
      Meghachandra’s case is per incuriam or in the alternative, whether it
F     requires reconsideration – Whether the inter-se-seniority of the direct
      recruits and the promotees in the facts of this case could be
      determined as per the decision in N.R. Parmar’s case – Whether, in
      the facts of this case, the process of recruitment of direct recruits
      commenced in the very recruitment year in which the vacancies arose
      – Matter referred to larger Bench of five Hon’ble Judges – The
G
      interim relief granted on 13 July 2018 vacated – Effect shall be
      given to the impugned judgment subject to the final outcome of this
      appeal or reference – Reference to larger bench.
            Union of India & Ors. v. N. R. Parmar & Ors. 2012
            (13) SCC 340 : [2012] 13 SCR 555; K. Meghachandra
H
                                       944
 HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                          945
                       ORS.

      Singh & Ors. v. Ningam Siro & Ors. 2020 (5) SCC 689               A
      : [2019] 16 SCR 651; Mervyn Coutindo & Ors. v.
      Collector of Customs, Bombay & Ors. [1966] 3 SCR
      600; Hon’ble Punjab & Haryana High Court at
      Chandigarh v. State of Punjab & Ors. 2019 (12) SCC
      496 : [2018] 13 SCR 91; Arvinder Singh Bains v. State
                                                                        B
      of Punjab & Ors. 2006 (6) SCC 673 : [2006] 2 Suppl.
      SCR 886; M. Subba Reddy & Anr. v. A.P. State Road
      Transport Corporation & Ors. 2004 (6) SCC 729 :
      [2004] 1 Suppl. SCR 7; Union of India & Ors. v. S.D.
      Gupta & Ors. 1996 (8) SCC 14 : [1996] 2 SCR 471-
      referred to.                                                      C
                       Case Law Reference
[2012] 13 SCR 555               referred to             Para 5
[2019] 16 SCR 651               referred to             Para 8
[1966] 3 SCR 600                referred to            Para 11          D
[2018] 13 SCR 91                referred to            Para 11
[2006] 2 Suppl. SCR 886         referred to            Para 11
[2004] 1 Suppl. SCR 7           referred to            Para 19
[1996] 2 SCR 471                referred to            Para 28          E

      CIVIL APPELLATE JURISDICTION : Civil Appeal No.9228
of 2022.
      From the Judgment and Order dated 11.05.2018 of the High Court
of Gujarat at Ahmedabad in Special Civil Application No.3212 of 2018.   F
      With
      Diary No.12422 of 2022.
      Vikramjit Banerjee, ASG, Huzefa Ahmadi, Nidhesh Gupta, Sr.
Advs., Ms. Aastha Mehta, Ms. Vishakha, Sharukh Alam, Mishra Saurabh,
                                                                        G
Anmol Chandan, Shashank Bajpai, Ayush Anand, Sughosh Subramaniam,
Abhishek Singh, Prashant Sinha, Siddhartha Sinha, Raj Bahadur Yadav,
Ms. Pallavi Singh, V. K. Verma, Ms. Vriti Gujral, Tarun Verma, Rajat
Srivastav, Ms. Japneet Kaur, Ms. Rita Jha, Ms. Pallavi Singh, Sameer
Singh, Ms. Neelam Singh, Dr. Sushil Balwada, J. P. N. Shahi, Ms. J.
Kiran, Rameshwar Prasad Goyal, Advs. for the appearing parties.         H
946             SUPREME COURT REPORTS                            [2022] 9 S.C.R.


A          Satyavi Kram, Ms. Lekha G.V., Zeeshan Diwan, Shrutanjaya
      Bhardwaj, Jasir Aftab, Advs. For the Intervenors.
             The Judgment of the Court was delivered by
             ABHAY S. OKA, J.
B           1. Leave granted in Special Leave Petition (C) No.16161 of 2018.
      Delay in filing Special Leave Petition (C) Diary No.12422 of 2022 is
      condoned and leave is granted in the said Special Leave Petition as well.
             2. In Civil Appeal arising out of SLP (C) No.16161 of 2018, the
      appellants who are original respondents nos.11 to 14 before the High
C     Court of Gujarat, have challenged the judgment and order dated 11th
      May 2018 passed by a Division Bench of the High Court of Gujarat on
      a writ petition under Article 226 of the Constitution of India filed by
      respondents nos.1 to 18.
           FACTUAL ASPECTS IN CIVIL APPEAL ARISING OUT
D     OF S.L.P.(C) NO.16161 OF 2018
              3. Few factual details will have to be noted. The dispute is a
      typical dispute between promotees and direct appointees over inter-se-
      seniority. Here, the dispute is about the posts of Inspectors in the Income
      Tax Department in the State of Gujarat. On 7th February 1986 and 3rd
      July 1986, Office Memoranda (for short, ‘OM’) were issued by the
E
      Ministry of Personnel, Public Grievances and Pension. Both the OMs
      record that the principle of rotation of quota will be followed for
      determining the inter-se-seniority of promotees and direct recruits. It is
      mentioned therein that when direct recruits are not available, the
      promotees would be bunched together at the bottom of the seniority list
F     below the last position up to which it is possible to determine seniority on
      the basis of rotation of quota with reference to the actual number of
      direct recruits who become available. It is provided therein that the unfilled
      direct recruitment quota vacancies would be carried forward and added
      to the corresponding direct recruitment vacancies of the next year. It is
      also provided that these additional direct recruits selected against the
G
      carried forward vacancies of the previous year, should be placed en
      bloc below the last promotee or direct recruit, as the case may be, in the
      seniority list based on the rotation of quota for that year. Prior to these
      two OMs, there was an OM dated 22nd November 1959, which provided
      for fixing the seniority of direct recruits and promotees based on the
H     rotation of quota.
  HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                                    947
              ORS. [ABHAY S. OKA, J.]

        4. In the facts of the case, we may note here that the relevant            A
Recruitment Rules of 1969 provided that the quota of departmental
promotees and direct recruits to the posts of Inspector will be 2:1. There
is no dispute that the rule of rotation of quota or rota and quota is applicable
for fixing their inter-se-seniority. On 7th February 2000, Office Note
was issued by the Department of Personnel and Training (for short,
                                                                                   B
‘DoPT’). By the said office note, it was directed that if the examination
is not held in the vacancy year, the seniority of the vacancy year cannot
be granted to direct recruits. There was a further clarificatory OM issued
on 3rd March 2008 by DoPT, which clarified that when the appointment
against unfilled vacancies is made in subsequent years either by direct
recruitment or promotion, the persons so appointed shall not get seniority         C
of the earlier year. However, they should be given the seniority of the
year in which they were appointed on a substantive basis.
       5. On 26th June 2009, the Chief Commissioner of Income Tax,
Ahmedabad filled in 53 posts of Income Tax Inspectors by promotion on
the basis of the recommendations of the Departmental Promotion                     D
Committee (DPC). By a communication dated 20th November 2009, the
Chief Commissioner of Income Tax, Ahmedabad forwarded a requisition
for making appointments to 46 direct posts (35 current and 11 carried
forward) enclosing therewith the details in the prescribed proforma. The
DoPT by the letter dated 15th January 2010 granted NOC for 482
vacancies in the grade of Income Tax Inspector. Accordingly, by a letter           E
of the same date, the Department of Revenue of the Ministry of Finance
forwarded the said NOC to the Secretary of the Staff Selection
Commission (SSC). However, the examination for recruitment was not
conducted to fill up the vacant posts of Income Tax Inspectors for the
recruitment year 2009-10 in the same year. Accordingly, SSC initiated              F
the process by holding a meeting with the officers for the conduct of the
Combined Graduate Level Examination, 2010 (short, ‘CGLE-2010’). The
Central Board of Direct Taxes (CBDT) proposed tentative vacancies
of 482 posts of Income Tax Inspectors for CGLE-2010. An
advertisement was published on 30th January 2010 inviting applications
for CGLE-2010. On 26th April 2010, CBDT communicated to SSC that                   G
vacancies for the recruitment year 2009-10 were included for selection
through SSC CGLE-2010. On 10 th May 2010 and 31 st July 2010,
examinations were conducted by SSC for Tier-I and Tier-II. On 27th
October 2010, CBDT finally submitted 846 vacancies as confirmed
vacancies to SSC. Before the said letter was addressed, the Chief                  H
948               SUPREME COURT REPORTS                          [2022] 9 S.C.R.


A     Commissioner of Income Tax, Ahmedabad informed CBDT that total of
      72 vacancies should be taken for the State of Gujarat. The result was
      declared on 7th January 2011 and SSC recommended total 822 candidates.
      On 27th November 2012, a decision of this Court in the case of Union of
      India & Ors. v. N.R.Parmar & Ors.1 was pronounced. This Court
      dealt with a contingency where the requisition for filling in the vacancies
B
      of direct recruits was issued in the same recruitment year and the
      advertisement for recruitment was published in the same recruitment
      year when the vacancies had arisen, but the examination could not be
      conducted in the same recruitment year. This Court held that in such a
      case, the direct recruits would be entitled to seniority in the recruitment
C     year when the requisition was made and advertisement was issued.
              6. On 25th May 2014, a draft seniority list of the Income Tax
      Inspectors for the State of Gujarat was issued and on the basis of the
      draft seniority list, the final seniority list was issued on 29th May 2014.
      Further, on 7th September 2016, a modified seniority list of the Income
D     Tax Inspectors in the cadre of the Gujarat region was issued. In the said
      list, the direct recruits of CGLE-2010 were interspaced with promotees
      of the year 2009-10. There were several representations made against
      the said seniority list by the promotee candidates. On 17th January 2018,
      CBDT issued a clarification stating that insofar as the fixing of inter-se-
      seniority of CGLE-2010 direct recruits with promotee officers was
E     concerned, the direct recruits may be interpolated with the promotees of
      the same recruitment year in accordance with OMs issued on 3rd July
      1986 and 4th March 2014. The said clarification was communicated by
      CBDT to all Principal Chief Commissioners of Income-Tax. On the
      basis of the said clarification, a revised seniority list dated 13th February
F     2018 was published. As per the said seniority list, the direct recruits
      recruited against vacancies of the year 2009-10 were interspaced with
      the promotees of the recruitment year 2010-11. Respondents nos.1 to
      18 who were direct recruits, filed a writ petition before the High Court
      of Gujarat for challenging the said seniority list dated 13th February 2018.
      A prayer was made in the writ petition for setting aside the clarification
G     dated 17th January 2018 and the consequent seniority list dated 13th
      February 2018. A consequential prayer was made for restoring the
      seniority list dated 7th September 2016. By the impugned judgment, the
      seniority list dated 13th February 2018 was quashed and the seniority list
      1
          2012 (13) SCC 340
H
    HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                              949
                ORS. [ABHAY S. OKA, J.]

of 7th September 2016 was restored with a clarification that only those        A
direct recruits who were eligible and qualified in the recruitment year
2009-10, shall be interspaced with 53 promotees who were promoted
vide DPC dated 29th June 2009.
       7. On 13th July 2018, notice was issued in the Special Leave
Petition no.16161 of 2018 which is the subject matter of the present           B
Civil Appeal and by an interim order, the status quo as of that date was
ordered to be maintained. The appellants who were respondents in the
writ petition before the High Court, are the promotees who were promoted
vide DPC dated 29th June 2009.
         SUBMISSIONS IN BRIEF                                                  C
       8. Mr. Huzefa Ahmadi, the learned senior counsel appearing for
the appellants firstly submitted that the decision of this Court in the case
of N. R. Parmar1 has been overruled by a larger Bench of three Hon’ble
Judges of this Court in the case of K. Meghachandra Singh & Ors. v.
Ningam Siro & Ors.2 on 19th November 2019. However, it was clarified           D
that the decision will apply prospectively. His submission is that a
recruitment year is a calendar year and not a financial year. The learned
senior counsel submitted that in the present case, the advertisement for
recruitment was not issued in the year 2009 and the examination was
conducted in 2010. He pointed out that in the case of N.R. Parmar1, the
advertisement was issued in the same recruitment year in which                 E
vacancies arose. He pointed out that a requisition was sent on 21st January
2010 to SSC for 482 vacancies of Income Tax Inspectors for 2009-10.
However, in the next requisition letter dated 22nd November 2010 which
was for CGLE-2010, carried forward vacancies (482) of 2009-10 were
mentioned. This requisition was made for total 844 vacancies which             F
included even vacancies of the recruitment year 2010-11. Based on the
observations made in paragraph 33 of the decision in N. R. Parmar’s
case1, the learned senior counsel would submit that in terms of the said
decision, the vacancies arising during a particular year, should be reported
in the same year and the advertisement for recruitment should also be
published in the same year. He urged that in the present case, all these       G
conditions have not been fulfilled.
     9. Inviting our attention to the decision of this Court in the case of
K. Meghachandra2, he submitted that now this Court has categorically
2
    2020 (5) SCC 689                                                           H
950                SUPREME COURT REPORTS                          [2022] 9 S.C.R.


A     held that the seniority of direct recruits will be reckoned only from the
      date of appointment and not from the stage when the requisition for their
      appointment was sent. The learned senior counsel also pointed out that
      CBDT by the letter dated 27th May 2019 clarified that in view of
      subsequent decision of the High Court of Delhi, the decision in the case
      of N.R. Parmar1 shall be implemented prospectively with effect from
B
      27th November 2012. The learned senior counsel also pointed out that
      when there was no advertisement and no requisition issued for the
      vacancies of the year 2009, the vacancies of the year 2009 were combined
      in CGLE-2010. Therefore, relative merit of selected candidates cannot
      be determined for assigning the seniority in different recruitment years,
C     the reason being that there was only one merit list of CGLE-2010. He
      also pointed out that the final position of vacancies was intimated to SSC
      for the first time by the letter dated 27th October 2010. Therefore, the
      direct recruits who were recruited on the basis of CGLE-2010 from the
      quota of earlier year, cannot be interspaced between the promotees of
      the year 2009. He submitted that now seniority cannot be disturbed after
D
      lapse of eleven or twelve years.
             10. Mr. Nidhesh Gupta, the learned senior counsel appearing for
      respondents nos.1 to 5, 7, 8, 10 to 13, 15 to 18 and 29 to 39 firstly submitted
      that even the decision in the case of K. Meghachandra2 protects the
      case of the said respondents (direct appointees) as it is specifically
E     observed that the decision will apply prospectively and it will not affect
      inter-se-seniority fixed on the basis of the decision of this Court in the
      case of N. R. Parmar1.
             11. He pointed out that this Court in the case of K. Meghachandra2
      held that seniority cannot be granted from the date when the candidate
F     was not born in the cadre. He submitted that it is a well settled position
      of law that the said principle does not apply when the seniority is to be
      determined in accordance with rotation of vacancies between direct
      recruits and promotees based on quota of vacancies reserved for both
      the categories. He relied upon the decision of a Constitution Bench of
G     this Court in the case of Mervyn Coutindo & Ors. v. Collector of
      Customs, Bombay & Ors3. He submitted that in the said decision, the
      Court upheld rotational system of fixing seniority. He submitted that
      attention of the Bench of three Hon’ble Judges which decided the case
      of K.Meghachandra2 was not invited to the case of Mervyn Coutindo3.
      3
H         1966 (3) SCR 600
    HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                               951
                ORS. [ABHAY S. OKA, J.]

He would, therefore, submit that the decision of this Court in the case of      A
K. Meghachandra2 is per incuriam. He submitted that the object of
rotational system of fixing seniority is to blend the talent with experience
and to augment the efficiency. He submitted that as held by this Court in
the case of Hon’ble Punjab & Haryana High Court at Chandigarh
v. State of Punjab & Ors.4, seniority has to be determined on the basis
                                                                                B
of roster and not on the basis of the date of joining of a particular stream.
He pointed out that in the judgment of this Court in the case of Arvinder
Singh Bains v. State of Punjab & Ors.5,it was held that making the
date of joining as the basis for determining seniority would lead to
discretion in the hands of the Government and the possibility of misuse.
The reason being that selection process of promotees is shorter as              C
compared to that of direct recruits. Therefore, injustice to the direct
recruits cannot be compounded by relegating them below the direct
recruits.
       12. He relied upon various OMs starting from OM dated 3rd July
1986 till OM dated 13th August 2021, which clearly provide for seniority        D
to be determined according to the rotation of vacancies. The learned
senior counsel submitted that though a case is sought to be made out
that a recruitment year is a calendar year and not a financial year, even
the appellants have proceeded on the footing that it is the financial year.
He relied upon several documents in that behalf.
       13. He submitted that the relevant year for determining seniority        E
is the year in which recruitment requisition is sent. He pointed out the
letter dated 20th November 2009 enclosing therewith the requisite
proforma for requisition of Income Tax Inspectors which clearly included
35 current and 11 carried forward vacancies of the direct appointees.
He pointed out that the subsequent letter addressed to the Secretary of         F
SSC is of 21st January 2010 which was issued in recruitment year 2009-
10 itself which included vacancies of 2009-10. Even the advertisement
was issued in recruitment year 2009-10, as the same was issued on 30th
January 2010. He would, therefore, submit that the recruitment year in
the present case was 2009-10. He submitted that segregation of
vacancies for 2009-10 and 2010-11 was already done as is apparent               G
from the seniority list dated 7th September 2016.
       14. He submitted that OM dated 7th February 1986 cannot be
applied and the same will apply when there is an earlier examination or
4
    2019 (12) SCC 496
5
    2006 (6) SCC 673                                                            H
952            SUPREME COURT REPORTS                           [2022] 9 S.C.R.


A     selection which is followed by a subsequent examination or selection.
      He submitted that in the facts of the case, in the year 2009-10, there
      was no examination or selection conducted for direct recruits. The
      expression ‘direct recruits do not become available’ used in OM dated
      7th February 1986 means that though the selection process is held during
      the relevant year, the candidates do not become available.
B
             15. Lastly, he pointed out that as a matter of fact, a large number
      of direct recruits have been promoted since then. He submitted that as
      the decision of this Court in the case of K. Meghachandra2 is per
      incuriam, being contrary to the binding precedent of a larger Bench in
      the case of Mervyn Coutindo3, the decision in the case of N.R. Parmar1
C     will prevail.
             16. Mr. Vikramjit Banerjee, the learned Additional Solicitor General
      representing the Income Tax Department and Union of India submitted
      that a new OM has been issued on 13th August 2021 by DoPT, clarifying
      that as the decision in the case of K. Meghachandra2 will have
D     prospective operation, cases of inters-se-seniority of direct recruits and
      promotees shall not be disturbed during the period between the date of
      the decision in N.R. Parmar’s case1 and the date of decision in K.
      Meghachandra’s case2. He submitted that in view of the said OM, the
      cases of inter-se-seniority between officers joined between 27 th
      November 2012 and 18th November 2019 shall be governed by the
E     provisions of OMs dated 7th February 1986/3rd July 1986 read with OM
      dated 4th March 2014. He submitted that a departmental OM dated 26th
      October 2021 has been issued as per OM of DoPT dated 13th August
      2021.
             17. He submitted that Income Tax Department is adversely
F     affected due to the order of status quo,passed in this appeal, as162 out
      of 486 sanctioned posts of Income Tax Officers (ITOs) are vacant. He
      submitted that this had drastically affected service to the taxpayers. He
      submitted that 109 Income Tax Inspectors are likely to be deputed for
      election duty of Gujarat Assembly Elections. He submitted that non-
      convening of DPC for ITOs is having cascading effects as there are
G     least number of promotions in Group ‘C’ cadre. He submitted that if this
      Court is inclined to refer the question to a larger Bench, the interim
      order may be clarified or vacated as the functioning of the Department
      is really affected by the interim order.
             18. The learned senior counsel appearing for the appellants, by
H     way of rejoinder, submitted that direct recruits are selected by SSC by
    HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                                953
                ORS. [ABHAY S. OKA, J.]

open examination which is conducted annually. Therefore, SSC follows             A
the calendar year as opposed to the financial year. He submitted that as
no recruitment occurred in 2009, the results of the 2010 examination will
determine the seniority of carried forward candidates. He also pointed
out various documents in support of his contention that a recruitment
year will have to be taken as a calendar year.
                                                                                 B
         CONSIDERATION OF SUBMISSIONS
       19. We have carefully considered the submissions. The first issue
which arises for consideration is whether the decision of this Court in K.
Meghachandra’s case2 is per incuriam or in the alternative, whether it
requires reconsideration being in conflict with the decision of the              C
Constitution Bench in the case of Mervyn Coutindo3 and the decision
of a Bench of three Hon’ble Judges in the case of M. Subba Reddy &
Anr. v. A.P. State Road Transport Corporation & Ors6. The next issue
will be assuming that the decision of this Court in N.R. Parmar’s case1
stands overruled, in view of its prospective overruling, whether the inter-
se-seniority of the direct recruits and the promotees in the facts of this       D
case could be determined as per the decision in N.R. Parmar’s case1.
This is in the context of the fact that the seniority was fixed after the
decision in the case of N.R. Parmar1and before 19th November 2019
i.e. when the decision in K. Meghachandra’s case2 was rendered. The
third issue to be decided is whether the recruitment year is a financial         E
year or a calendar year. Lastly, a factual issue will have to be decided
whether, in the facts of this case, the process of recruitment of direct
recruits commenced in the very recruitment year in which the vacancies
arose.
         THE CONCEPT OF RECRUITMENT YEAR                                         F
       20. In the facts of the case, there is no dispute that as far as the
posts of Income Tax Inspectors are concerned, the principle of rota and
quota or rotation of quota will apply. The posts of Income Tax Inspectors
are being filled in by direct recruits and promotees in the proportion
already fixed. Therefore, a roster will apply where the points will be for
                                                                                 G
direct recruits and promotees as per the proportion fixed. Before we go
into various legal issues, which we have flagged above, it will be
appropriate if we discuss the factual issues first. For the decision on the
factual issues, it is necessary to decide whether the recruitment/requisition/
6
    2004 (6) SCC 729                                                             H
954            SUPREME COURT REPORTS                           [2022] 9 S.C.R.


A     vacancy year is the same as the financial year. The appellants have
      tried to contend that a recruitment year will be a calendar year. We must
      note here that no such case has been made out in the Civil Appeal arising
      out of Special Leave Petition (C) No.16161 of 2018. In the synopsis on
      pages F and G, the appellants themselves have referred to the financial
      year while referring to the vacancies available in a particular year. The
B
      appellants made a representation dated 25th November 2016 in which
      they described the recruitment years as the financial years i.e 2009-10
      and 2010-11. The letter dated 3 rd August 2016 addressed by the
      Directorate of Income Tax, New Delhi to the Principal Chief
      Commissioner of Income Tax, Ahmedabad treats a recruitment year as
C     a financial year. In fact, it incorporates a clarification issued by ITGOA
      which in turn, refers to the recruitment year on the footing that it is a
      financial year. The appellants have annexed as ‘Annexure P-12’ to reply
      affidavit in I.A.No.161060 of 2019, a clarification dated 7th November
      2014 issued by the CBDT to All Principal Chief Commissioners of Income
      Tax, which refers to vacancy years as financial years right from 1986-
D
      87 till 2013-14. Along with the letter dated 3rd August 2010, the Office of
      the Chief Commissioner of Income Tax forwarded to the CBDT, the
      details of the confirmed vacancies in the post of Income Tax Inspectors
      as on 31st March 2011 in the prescribed proforma. In the prescribed
      proforma, under the column ‘year’ (year of vacancies), financial years
E     2009-2010 and 2011-2012 have been mentioned. 35 vacancies of Income
      Tax Inspectors have been shown against the year 2009-10. In the counter
      affidavit of private respondents, reliance has been placed on the OM
      dated 8th May 2017 issued by the DoPT. Paragraph 5 of the said OM
      specifically records that in partial modification of the OMs issued on
      10th April 1989, 16th June 2000 and 20th May 2014, the vacancy year
F
      may be shifted to a calendar year from the year 2018, wherever the
      vacancy year based on financial year was being followed. The documents
      on record clearly show that as far as the posts of Income Tax Inspectors
      are concerned, the vacancy or recruitment year was always reckoned
      as the financial year.
G            21. The appellants have placed reliance on the advertisement of
      CGLE-2010. We have perused the said advertisement. It does not refer
      to any particular recruitment or vacancy year and it does not record
      whether the examination is being held for the vacancies of a particular
      recruitment year. Reliance is also placed on the fact that CGLE is always
H     referred to with reference to the calendar year and not the financial
 HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                               955
             ORS. [ABHAY S. OKA, J.]

year. This is hardly of any relevance. SSC acts as per the requirements      A
of the concerned department. SSC is not concerned in any manner with
the recruitment year. Its job is to conduct the process of recruitment as
per the instructions of the concerned department. There is material on
record to show that the Income Tax Department always treated the
vacancy year or recruitment year as a financial year.
                                                                             B
       22. We have, therefore, no manner of doubt that till the year 2018,
in relation to the recruitment and vacancies to the posts of Income Tax
Inspectors, the financial year was being treated as the recruitment year
or vacancy year.
       COMMENCEMENT OF THE PROCESS FOR THE
RECRUITMENT YEAR 2009-10 FOR DIRECT RECRUITS                                 C
       23. The letter dated 20th November 2009 addressed by the Chief
Commissioner of Income Tax, Ahmedabad to an officer of CBDT, refers
to the fact that there were 35 vacancies of direct recruits. The agency
for recruiting direct recruits to the post of Income Tax Inspectors is
admittedly SSC. The Government of India addressed a letter to the            D
Secretary of SSC on 21st January 2010 stating that for CGLE-2009/10,
approximately 482 vacancies were available. Thus, the requisition issued
to SSC was for filling in 482 vacancies of the year 2009-10. The notice
of CGLE-2010 was published on 31st January 2010. The last date for
filing applications was 2nd March 2010. The letter dated 3rd August 2010     E
addressed by the Chief Commissioner of Income Tax, Ahmedabad to
CBDT records that as on 31st March 2011, there will be 35 backlog
vacancies for direct recruits for the year 2009-10. In this letter, it was
stated that there were total 74 vacancies for the posts of Income Tax
Inspectors, out of which, 35 vacancies were of the year 2009-10. The
same vacancy position has been mentioned in the letter dated 20th            F
November 2009 referred above. The documents on record clearly indicate
that these 35 posts of direct recruits for the recruitment year 2009-10
were sought to be filled in on the basis of CGLE-2010 notified on 31 st
January 2010 which was held on 16th May 2010. The notice of CGLE-
2010 records that the last date for submitting applications was 2nd March
                                                                             G
2010. The advertisement mentions that the applicants should be qualified
as on 2nd March 2010, which is a date within the recruitment/vacancy
year 2009-10. Thus, on facts, it can be concluded that the process of
recruiting direct recruits to 35 posts of Income Tax Inspectors of the
vacancy/recruitment year 2009-10 commenced in the same year 2009-
10.                                                                          H
956            SUPREME COURT REPORTS                           [2022] 9 S.C.R.


A           CASES OF N.R.PARMAR1 AND K. MEGHACHANDRA2
             24. Now, we turn to the decision in N.R. Parmar’s case1. This
      Court dealt with the issue of inter-se-seniority between the promotee
      Income Tax Inspectors and direct recruits. As noted in paragraph 9 of
      the decision, the controversy pertained to the vacancies for the year
B     1993-94. The vacancies of promotees were filled in the same year. SSC
      issued the advertisement in May/June 1993 for filling in the posts of
      direct recruits for the year 1993-94. Though the written test was
      conducted in December 1993, viva-voce was conducted in October 1994.
      The result was declared in June 1995 and the direct recruits joined in the
      year 1995. The Administrative Tribunal held that the date on which the
C     SSC made the selection of the direct recruits, will be the material date
      for fixing their seniority. The High Court interfered with the order of the
      Tribunal by passing an order of remand. Ultimately, the direct recruits
      succeeded before the Tribunal. The writ petitions challenging the order
      of the Tribunal passed on remand were filed before the High Court. The
D     said petitions were transferred to this Court.
             25. Perusal of the decision in the case of N.R. Parmar1 shows
      that this Court considered and interpreted OMs dated 22nd December
      1959, 7th February 1986, 3rd July 1986 and 3rd March 2008. Apart from
      these OMs, this Court considered various Office Notes as well as
E     correspondence. This Court held that the OM dated 3rd March 2008 has
      to be ignored to the extent to which the same is in derogation of OMs
      dated 7th February 1986 and 3rd July 1986. In paragraph 52, this Court
      recorded its conclusions, which reads thus:
            “52. Having interpreted the effect of the OMs dated 7-2-1986
F           and 3-7-1986 (in paras 25 to 29 hereinabove), we are satisfied,
            that not only the requisition but also the advertisement for direct
            recruitment was issued by SSC in the recruitment year in which
            direct recruit vacancies had arisen. The said factual position, as
            confirmed by the rival parties, is common in all matters being
            collectively disposed of. In all these cases the advertised
G           vacancies were filled up in the original/first examination/
            selection conducted for the same. None of the direct recruit
            Income Tax Inspectors herein can be stated to be occupying
            carried-forward vacancies, or vacancies which came to be
            filled up by a “later” examination/selection process. The
            facts only reveal that the examination and the selection
H
 HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                                    957
             ORS. [ABHAY S. OKA, J.]

      process of direct recruits could not be completed within                    A
      the recruitment year itself. For this, the modification/
      amendment in the manner of determining the inter se
      seniority between the direct recruits and promotees,
      carried out through the OM dated 7-2-1986, and the
      compilation of the instructions pertaining to seniority in
                                                                                  B
      the OM dated 3-7-1986, leave no room for any doubt, that
      the “rotation of quotas” principle would be fully applicable
      to the direct recruits in the present controversy. The direct
      recruits herein will therefore have to be interspaced with
      promotees of the same recruitment year.”
                                                          (emphasis added)        C
       26. It is necessary to consider the findings rendered by the High
Court in the impugned judgment. The High Court has expressly relied
upon the decision of this Court in the case of N.R. Parmar1. By applying
the said decision to the facts of the case, the High Court held that:
                                                                                  D
      i.     Requisition for 35+11 vacancies for direct recruits was sent
             to CBDT in the recruitment year 2009-10 itself;
      ii.    The recruitment for the said vacancies could not be held
             during the recruitment year 2009-10 for the reasons for
             which the candidates were not responsible;
                                                                                  E
      iii.   It is not the case that the eligible candidates for filling in the
             posts of direct recruits were not available in the year 2009-
             10;
      iv.    The seniority list dated 7th September 2016 which was
             prepared in terms of the decision of this Court in the case
             of N.R. Parmar 1 was required to be restored with a                  F
             clarification that those direct recruits who were eligible in
             the recruitment year 2009-10 should be interspaced with
             53 promotees appointed during the year 2009-10; and
      v.     The seniority list dated 7th September 2016, which was the
             final seniority list, could not be modified without giving an        G
             opportunity of being heard to the affected candidates.
             Therefore, the amended seniority list dated 13th February
             2018 was illegal.
      27. Now, coming to the decision of the Bench of Hon’ble three
Judges in the case of K.Meghachandra 2, this Court was dealing with               H
958            SUPREME COURT REPORTS                          [2022] 9 S.C.R.


A     the Manipur Police Service Rules, 1965 (for short, ‘the MPS Rules’).
      This Court was dealing with the issue of the dispute over the seniority in
      the cadre of Manipur Police Service, Grade-II Officers between the
      direct recruits and promotees. After referring to Rule 28 of the MPS
      Rules, a finding was recorded that the Rule expressly provided that the
      seniority shall be reckoned only from the date of appointment and not
B
      from the stage when the requisition for the appointment was issued. In
      paragraph 34, this Court held thus:
            “34. The judgment in N.R.Parmar [2012 (13) SCC 340] is now
            to be considered in some detail as this is heavily relied on by the
            appellants’ counsel. At the outset, it must however be cleared
C           that the cited case had nothing to do with the MPS Rules,
            1965 and that litigation related to the Income Tax Inspectors
            who were claiming benefits of various Central Government
            OMs (dated 22-12-1959, 7-2-1986, 3-7-1986 and 3-3-2008).
            The judgment was rendered in respect of the Central
D           Government employees having their own Service Rules.
            The applicable Rules for the litigants in the present case
            however provide that the seniority in the service shall be
            determined by the order in which appointments are made
            to the service. Therefore, the memorandums concerned
            referred to in N.R. Parmar [2012 (13) SCC 340] which deal
E           with general principles for determination of seniority of
            persons in the Central Government service, should not
            according to us, have any overriding effect for the police
            officers serving in the State of Manipur.”
                                                             (emphasis added)
F
            In paragraph 38, this Court held thus:
            “38. At this stage, we must also emphasise that the Court
            in N.R.Parmar [2012 (13) SCC 340] need not have observed
            that the selected candidate cannot be blamed for
G           administrative delay and the gap between initiation of
            process and appointment. Such observation is fallacious
            inasmuch as none can be identified as being a selected
            candidate on the date when the process of recruitment had
            commenced. On that day, a body of persons aspiring to be
            appointed to the vacancy intended for direct recruits was
H
HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                                959
            ORS. [ABHAY S. OKA, J.]

   not in existence. The persons who might respond to an                     A
   advertisement cannot have any service-related rights, not
   to talk of right to have their seniority counted from the
   date of the advertisement. In other words, only on
   completion of the process, the applicant morphs into a
   selected candidate and, therefore, unnecessary observation
                                                                             B
   was made in N.R. Parmar [2012 (13) SCC 340] to the effect
   that the selected candidate cannot be blamed for the
   administrative delay. In the same context, we may usefully refer
   to the ratio in Shankarsan Dash v. Union of India [Shankarsan
   Dash v. Union of India, (1991) 3 SCC 47 : 1991 SCC (L&S) 800]
   , where it was held that even upon empanelment, an appointee              C
   does not acquire any right.”
                                                      (emphasis added)
   In paragraph 39, this court observed:
   “39. The judgment in N.R.Parmar [2012 (13) SCC 340] relating              D
   to the Central Government employees cannot in our opinion,
   automatically apply to the Manipur State Police Officers, governed
   by the MPS Rules, 1965. We also feel that N.R. Parmar1 had
   incorrectly distinguished the long-standing seniority determination
   principles propounded in, inter alia, Jagdish Ch.Patnaik [Jagdish
   Ch.Patnaik v. State of Orissa, (1998) 4 SCC 456 : 1998 SCC                E
   (L&S) 1156], Suraj Parkash Gupta v. State of J&K [Suraj Parkash
   Gupta v. State of J&K, (2000) 7 SCC 561 : 2000 SCC (L&S)
   977] and Pawan Pratap Singh v. Reevan Singh [Pawan Pratap
   Singh v. Reevan Singh, (2011) 3 SCC 267 : (2011) 1 SCC (L&S)
   481] . These three judgments and several others with like                 F
   enunciation on the law for determination of seniority makes it
   abundantly clear that under service jurisprudence, seniority cannot
   be claimed from a date when the incumbent is yet to be borne in
   the cadre. In our considered opinion, the law on the issue is correctly
   declared in Jagdish Ch. Patnaik [Jagdish Ch. Patnaik v. State of
   Orissa, (1998) 4 SCC 456 : 1998 SCC (L&S) 1156] and                       G
   consequently we disapprove the norms on assessment of inter se
   seniority, suggested in N.R. Parmar [Union of India v. N.R.
   Parmar, (2012) 13 SCC 340 : (2013) 3 SCC (L&S) 711].
   Accordingly, the decision in N.R. Parmar1 is overruled.
   However, it is made clear that this decision will not affect              H
960            SUPREME COURT REPORTS                           [2022] 9 S.C.R.


A           the inter se seniority already based on N.R. Parmar1 and
            the same is protected. This decision will apply prospectively
            except where seniority is to be fixed under the relevant
            rules from the date of vacancy/the date of advertisement.”
                                                              (emphasis added)
B            28. With the greatest respect to the Hon’ble Bench which dealt
      with K.Meghachandra’s case2, we find that the attention of the Bench
      was not invited to the binding decision of the Coordinate Bench in the
      case of M. Subba Reddy6. This decision was rendered by a Bench of
      three Hon’ble Judges. This Court in the case of M. Subba Reddy6 dealt
C     with the issue of the fitment of the promotees to the posts of Assistant
      Traffic Manager and Assistant Mechanical Engineer in the integrated
      seniority list. The majority judgment refers to the relevant Service
      Regulations which provide that seniority is reckonable from the date of
      appointment to service or grade. Paragraphs 6 and 7 of the said decision
      read thus:
D
            “6. Mr Rakesh Dwivedi, learned Senior Counsel appearing on
            behalf of the appellants submitted that the appellants had a right
            to be promoted within their quota during the years 1981 to 1987,
            when vacancies for promotees’ quota became available. During
            this period, no direct recruits were available. Direct recruits
E           became available in July 1988, November 1990 and June 1992.
            Appellant M. Subba Reddy was regularised from 27-12-1986 vide
            order dated 9-9-1988, when no direct recruits were available and,
            therefore, it was improper for the Corporation to place direct
            recruits above the promotees. It is the case of the appellants
F           that the direct recruits cannot claim appointments from the
            date of the vacancy in their quota before their selection. It
            has been contended that Item 3 of Annexure ‘A’ (Section B)
            prescribes the method of recruitment in the manner in which
            vacancy is allocated. According to the learned counsel it does not
            involve rota for the purposes of seniority. It prescribes only quota,
G           therefore, rota cannot be implied. It was urged that seniority is
            dealt with only by Regulation 3 of the Service Regulations, 1964
            and not by Regulation 34 of the Recruitment Regulations, 1966.
            Reliance was placed in this connection on Regulation 34 as
            amended on 15-9-1995. It was submitted that in view of the said
H           amendments, Annexure ‘A’ refers to only allocation of vacancy
HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                             961
            ORS. [ABHAY S. OKA, J.]

   and not for determination of seniority. It was to be determined        A
   only by Regulation 3 of the Service Regulations. The non-
   availability of candidates in a particular category, it was
   urged, may be on account of ban on recruitment or on any
   other ground. Therefore, in the present case, where
   promotees were regularised in the promotion quota when
                                                                          B
   direct recruits were not available, the quota in Item 3(1) of
   Annexure ‘A’ will not apply. It was submitted that in any
   event, allocation of vacancy under the said clause was not
   rigid and it cannot be a basis for denying seniority to the
   promotees from the date of regularisation. Reliance was
   placed on the judgment of this Court in the case of Direct Recruit     C
   Class II Engg. Officers’ Assn. v. State of Maharashtra [(1990) 2
   SCC 715 : 1990 SCC (L&S) 339 : (1990) 13 ATC 348 : AIR 1990
   SC 1607].
   7. We do not find any merit in the above arguments. The appellants
   have not challenged the validity of the above regulations. As stated   D
   above, it has been contended before us on behalf of the appellants
   that Item 3(1) of Annexure ‘A’ (Section B) prescribes method of
   recruitment and the manner in which vacancy is to be allocated,
   which does not involve rotation for the purposes of seniority; that
   Item 3(1) of Annexure ‘A’ (Section B) prescribes only quota and
   rota cannot be implied. However, the appellants before the             E
   High Court unequivocally submitted that under the above
   regulations, promotions and direct recruitments were
   required to be made in the ratio of 1:1 and that the said
   regulations provided for a cycle in which vacancies were to
   be rotated. (See affidavit of M. Subba Reddy dated 28-12-1994.)        F
   In the said affidavit, it is further submitted that in the
   absence of direct recruits, the slots reserved for direct
   recruits were liable to be adjusted with the promotees
   immediately and subsequently arrived direct recruits should
   be given their positions in the seniority list subsequently
   in a bunch. In our view, the averments of the appellants               G
   before the High Court, if accepted, would result in complete
   violation of the quota-and-rota rule embodied in the above
   regulations, which cannot be permitted. As stated above, the
   appellants were promoted originally subject to the conditions
   envisaged in Regulation 34 and, therefore, they cannot claim           H
962      SUPREME COURT REPORTS                            [2022] 9 S.C.R.


A     seniority by ignoring the said regulations and on the basis of their
      officiating services. They were promoted temporarily under
      Regulation 30 which provides for ad hoc promotions. Regulation
      34 ensures induction of qualified direct recruits. But for Regulation
      34, candidates from feeder posts would be temporarily promoted
      to the slots reserved for direct recruits and on their regularisation,
B
      the quota prescribed for direct recruits will be defeated. Regulation
      34 has been enacted to protect quota prescribed for direct recruits.
      As stated above, Regulation 3 of the Service Regulations has to
      be read with Regulations 30 and 34 of the said Recruitment
      Regulations. The appellants were promoted on temporary basis
C     under Regulation 30 with the clear understanding that the period
      of officiation will not give them any right over direct recruits in
      future. It is for this reason that Regulation 30(6) states that if a
      temporary promotee is subsequently promoted in accordance with
      the regulations, his probation will commence in the higher category
      only from the date of subsequent promotions. For the same reason,
D
      Regulation 34 states that revertees shall be subsequently
      considered for repromotion against the quota of vacancies reserved
      for being filled by promotion. Therefore, Regulation 34 protects
      the quota prescribed for direct recruits. On reading Regulation
      3 of the Service Regulations with Regulations 30 and 34 of
E     the Recruitment Regulations, it becomes clear that neither
      the date of promotion nor the date of selection is the
      criterion for fixation of seniority. The fixation of seniority
      under the above regulations depends upon the number of
      vacancies falling in a particular category. Therefore, the
      rule of rota is inbuilt in the quota prescribed for direct
F
      recruits and for promotees in terms of Item 3 of Annexure
      ‘A’ (Section B) to the Recruitment Regulations. In the
      present case, the above regulations prescribe a quota of
      1:1, which leads to rota for confirmation. The fixation of
      seniority under the above regulations depends upon the
G     number of vacancies against which promotees became due
      for promotion. In the case of Devendra Prasad Sharma v. State
      of Mizoram [(1997) 4 SCC 422 : 1997 SCC (L&S) 1053] Rule
      25(iii) stated that the relative seniority of direct recruits and of
      promotees shall be determined according to rotation of vacancies
      between direct recruits and promotees based on the quota of
H
HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                              963
            ORS. [ABHAY S. OKA, J.]

   vacancies reserved for direct recruitment and promotion. Rule           A
   25(iii) is similar to Item 3(1) of Annexure ‘A’ (Section B). It was
   held by this Court that in cases where there is rotation of
   vacancies between direct recruits and promotees based on
   quota of vacancies, the rotation has to be considered in
   accordance with the vacancies as and when they accrue
                                                                           B
   under the rules. Therefore, the quota rule needs to be
   strictly adhered to, if not, it would lead to absurdity. If the
   contention of the appellants is accepted, it would mean that
   the entire group of direct recruits will have to be placed
   below the entire group of promotees. We are of the opinion
   that having fixed the quota between the two sources of                  C
   recruitment, there is no discretion with the Corporation to
   alter the quota or to deviate from the quota. In the
   circumstances, there is no merit in the argument of the appellants
   that Item 3(1) of Annexure ‘A’ (Section B) prescribes only quota
   and not rota and that the said item was not for determination of
                                                                           D
   seniority. In the case of S.G. Jaisinghani v. Union of India [AIR
   1967 SC 1427] this Court held that having fixed the quota between
   two sources of recruitment, it is not open to the Government to
   alter the quota or to deviate from the quota. In the case of Union
   of India v. S.D. Gupta [(1996) 8 SCC 14 : 1996 SCC (L&S) 811
   : AIR 1996 SC 3325] the respondents were promotee Extra                 E
   Assistant Directors (Class III) in Central Water Commission
   Engineering Class I Service. The Recruitment Rules were made
   w.e.f. 15-10-1965. In the earlier litigation, the Tribunal found that
   one Shri V.P. Misra, Extra Assistant Director was promoted on ad
   hoc basis on 31-3-1978 and he was required to be confirmed with
                                                                           F
   effect from the date on which vacancy was available to him in
   the quota of promotees. The vacancy had admittedly arisen in the
   quota of promotees on 3-5-1979. Shri V.P. Misra was fitted in
   that vacancy. While doing so, the Department applied the principle
   of rota and quota and determined the inter se seniority of
   promotees and direct recruits. Consequently, the promotees were         G
   pushed down in the order of seniority which led to the second
   round of litigation. The question which arose for determination
   before this Court was whether fitment of seniority determined by
   the Department was in accordance with the rules. The Court
   found that 60% of the vacancies were to be filled by direct recruits
                                                                           H
964                SUPREME COURT REPORTS                       [2022] 9 S.C.R.


A             and 40% by promotees. Among the 40% quota, there was a further
              demarcation in the ratio of 25% and 15% between promotees
              and transferees. Admittedly, the promotees were entitled to their
              fitment within 25% quota. Vacancies for the promotees had arisen
              on 3-5-1979 and, therefore, V.P. Misra was entitled to that vacancy
              which arose on that date. However, as stated above, in the
B             integrated list, the promotees were pushed down. It was
              contended on behalf of the promotees that the direct
              recruits were not borne in the service when the promotees
              were promoted and equity requires that the promotees
              cannot be pushed down. This Court rejected the said
C             argument by observing that the object of direct recruitment
              is to blend talent and experience. So long as the system
              continues, consequences are inevitable. Although the direct
              recruits were recruited later, their fitment in the order of
              seniority had to be determined with reference to rota and
              quota prescribed under the rules. In such a case, there was
D             no illegality even when promotees were pushed downwards
              in the order of seniority. In our view, the judgment of this Court
              in S.D. Gupta case [(1996) 8 SCC 14 : 1996 SCC (L&S) 811 :
              AIR 1996 SC 3325] squarely applies to the facts of the present
              case.”
E                                                              (emphasis added)
              It was held that although certain direct recruits were recruited
      subsequent to the promotees, their fitment in the order of seniority had
      to be determined with reference to rota and quota or ‘rotation of quota’
      prescribed under the Rules. It was held that there was no illegality when
      the promotees were pushed downwards in the order of seniority. This
F     Court quoted with approval its earlier judgment in the case of Union of
      India & Ors. v. S.D. Gupta & Ors7. In this case, by applying the
      principle of rota and quota, the inter-se-seniority of the promotees and
      direct recruits was fixed. This Court, in the said case, held that though
      direct recruits were recruited subsequent to the appointment of promotees,
G     the fitment of direct recruits and promotees must be determined with
      reference to the rota and quota prescribed. In paragraph 8, this Court
      dealt with an argument that the direct recruits were not born in the
      service when the promotees were promoted and therefore, the promotees
      should not be pushed down. In paragraph 8, this Court held thus:
      7
          1996 (8) SCC 14
H
 HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                                 965
             ORS. [ABHAY S. OKA, J.]

      “8. It is then contended that the direct recruits were not born in       A
      the service when the promotees were promoted and equity requires
      that they cannot be pushed down. The object of direct
      recruitment is to blend talent and experience to augment
      efficiency when direct recruits, though came from green
      pastures, were imbued with dedication and honesty. So long
                                                                               B
      as system continues, consequences are inevitable. The
      question of equity does not arise. Shri Krishnamani then
      contended that direct recruits are shown temporary and so they
      cannot be similar to promotee substantive appointees. The quota
      of 60% of direct recruits is to substantive vacancies, though their
      initial appointment is temporary; on completion of period of             C
      probation they become substantive appointees. That is the settled
      principle of law in this behalf. The Tribunal, therefore, is not right
      in giving direction to consider their fitment vis-à-vis the order
      passed by this Court in their quota above the direct recruits.”
                                                        (emphasis added)       D
       29. Now, we turn to the decision of the Constitution Bench in the
case of Mervyn Coutindo3. This Court decided a petition under Article
32 of the Constitution of India filed by the Appraisers in the Customs
Department. The Constitution Bench noted that the system which
prevailed for recruitment to the posts of Appraisers was that 50% of           E
posts were reserved for direct recruits and the remaining 50% were
filled in by promotion from sub-ordinate officers in the Customs
Department. The contention raised in the petition was that this system
had resulted in discriminatory treatment to the promotees in as much as
the promotees who had rendered much longer service in the cadre of
Appraisers were put in seniority below the direct recruits with much           F
shorter service. There was one more grievance in the petition with which
we are not concerned. The Apex Court referred to the circular/OM
dated 12th September 1959 which is referred in the OMs dated 7th
February 1986 and 3rd July 1986. After considering the submissions, the
Constitution Bench held thus:                                                  G
      “6. Before we come to what has been done in 1963 in the matter
      of fixing seniority of Appraisers, we may refer to two other
      circulars. The first is a circular of the Board issued in 1953. That
      circular in our opinion has nothing to do with the question of fixing
      of seniority as between direct recruits and promotees. Its main          H
966      SUPREME COURT REPORTS                           [2022] 9 S.C.R.


A     value is that it emphasises that the proportion fixed for direct
      recruits and promotees should be rigidly maintained. It also directs
      that promotion to higher grades should be made on the basis of a
      combined seniority list of both direct recruits and promotees. Then
      there is another circular of 1955. That circular again emphasises
      the rotational system and says that it has been decided that
B     “inter se seniority of direct recruits and promotees in the
      grade of Appraisers should be determined in the order in
      which the vacancy in that grade is filled by a direct recruit
      or by a promotee according to the quota fixed for such
      appointments”. Stress has been laid on behalf of the
      petitioners on the words “is filled” in this circular, and it is
C
      urged that this means that until the direct recruit is actually
      recruited and fills the vacancy meant for a direct recruit he
      cannot get seniority from before the date he fills the vacancy
      merely on the ground of rotational system of fixing seniority.
      We do not think that this is the meaning of the words “is
D     filled” used in this circular. We have already said that this
      circular also emphasises the rotational system in the matter
      of fixing of seniority and all that it means is that vacancies
      should be filled either by direct recruits or by promotees
      according to the quota fixed for such appointments.
      7. This brings us back to the circular of 1959, and the main question
E
      in that connection is the meaning to be assigned to the words
      “seniority determined accordingly”, in the explanation to principle
      6 relating to relative seniority of direct recruits and promotees.
      As we read these words, their plain meaning is that seniority
      as between direct recruits and promotees should be
F     determined in accordance with the roster, which has also
      been specified, namely, one promotee followed by one direct
      recruit and so on. Where therefore recruitment to a cadre
      is from two sources, namely, direct recruits and promotees
      and rotational system is in force, seniority has to be fixed
      as provided in the explanation by alternately fixing a
G     promotee and a direct recruit in the seniority list. We do
      not see any violation of the principle of equality of
      opportunity enshrined in Article 16(1) by following the
      rotational system of fixing seniority in a cadre half of which
      consists of direct recruits and the other half of promotees,
      and the rotational system by itself working in this way cannot
H
HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                                967
            ORS. [ABHAY S. OKA, J.]

   be said to deny equality of opportunity in government                     A
   service. The anomalies which have been referred to in the
   petition arise not on account of there being anything opposed
   to equality of opportunity in government service by the use
   of the rotational system; they arise out of the fortuitous
   circumstance that in this particular service of Appraisers,
   for one reason or another, direct recruitment has fallen short            B
   of the quota fixed for it. It is merely because of this
   fortuitous circumstance that anomalies to which reference
   has been made in the petition have arisen. There is no doubt
   that if direct recruitment had kept pace with the quota fixed
   therefor there would have been no anomalies in fixing the
                                                                             C
   seniority list. The question therefore narrows down to this: Can
   it be said that there is denial of equality of opportunity which arises
   out of this fortuitous circumstance and which is not a vice inherent
   in the rotational system? We are not prepared to say that the
   rotational system of fixing seniority itself offends equality of
   opportunity in government service. Any anomalies which may have           D
   resulted on account of insufficient recruitment of direct recruits
   in the past cannot in our opinion be a ground for striking down the
   rotational system, which, as we have said, does not itself amount
   to denial of equality of opportunity in the matter of employment in
   government service. It is regrettable that some anomalies
   have appeared because of insufficient recruitment of direct               E
   recruits in the past in this particular service. But that in
   our opinion can be no reason for striking down the seniority
   list prepared in 1963 which is undoubtedly in strict
   accordance with the rotational system based on the fixed
   quotas for recruitment of direct recruits and promotees.
   The order of the Board of 1963 on the basis of which the                  F
   impugned seniority list of Appraisers has been prepared
   clearly lays down that “the principle of determination of
   seniority of the direct recruits and the promotees inter se
   in the prescribed ratio of 1:1 should be worked out”. This
   order is in accordance with the circular of 1959 and as we                G
   have said already, there is no inherent vice in the principle
   of fixing seniority by rotation in a case where a service is
   composed in fixed proportion of direct recruits and
   promotees.”
                                                      (emphasis added)
                                                                             H
968             SUPREME COURT REPORTS                           [2022] 9 S.C.R.


A            30. The argument made before us is that the decision in the case
      of K. Meghachandra2 will have to be ignored on the ground that it is
      per incuriam as the attention of the Bench which decided the case was
      not invited to the binding decisions of the Constitution Bench in the case
      of Mervyn Coutindo3 and a Coordinate Bench in the case of M. Subba
      Reddy6. Prima facie, we find substance in the argument that the attention
B
      of the Bench which decided the case of K. Meghachandra2 was not
      invited to the aforesaid binding precedents. Therefore, we are of the
      view that the appropriate course of action will be to refer the question to
      a larger Bench. We are dealing with a case where the ‘rotation of quota’
      or rota and quota system is being followed. If the promotees are recruited
C     in the relevant recruitment year, but the process of recruitment of the
      direct recruits which commenced in the same recruitment year could
      not be completed in the same year, the direct recruits appointed
      subsequently will have to be interspaced between the promotees of the
      same recruitment year. In such a case, it cannot be said that direct
      recruits were not available during the recruitment year. Their appointment
D
      could not be made during the same year, though the process of
      appointment commenced in the same year. But, if the process of
      recruitment of the direct recruits is completed in the same recruitment
      year but an adequate number of candidates could not be selected, the
      shortfall should be carried forward to the next recruitment year. In such
E     cases, the candidates who are selected against shortfall vacancies will
      have to be bunched below the promotees of the earlier years. Unless
      such a procedure is followed, the rotation of quota system will be defeated.
             31. Coming to the facts of the case, though process of recruitment
      of direct recruits to the post of Income Tax Inspectors commenced in
F     the recruitment year 2009-10, the same could not be completed in the
      same recruitment year. This is not a case where an adequate number of
      direct recruits could not be recruited even though the recruitment was
      done in the recruitment year itself. In this case, those who were eligible
      for direct recruitment were deprived of the opportunity as the process
      of recruitment could not be completed during the same recruitment year
G     2009-10 due to no fault on their part. The documents annexed to the
      counter affidavit show that the segregation of vacancies for 2009-10
      and 2010-11 has been properly made.
            32. In any event, the decision in the case of K. Meghachandra2
      has a prospective operation. The seniority list of 7th September 2016
H
 HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                                   969
             ORS. [ABHAY S. OKA, J.]

was made in terms of the decision in the case of N. R. Parmar1. Hence,           A
the same could not have been altered on 13th February 2018 when the
said decision was in force.
      33. Thus, our conclusion can be summarised as under:
      i.     The decision in the case of K. Meghachandra2 requires
             reconsideration by a larger Bench in view of the fact that          B
             the binding decision of a Constitution Bench in the case of
             Mervyn Coutindo 3 and another binding decision of a
             Coordinate Bench in the case of M. Subba Reddy6were
             not placed for consideration before the Bench which decided
             the case of K. Meghachandra2 ;                                      C
                                                                        2
      ii.    Even assuming that the case of K. Meghachandra was
             correctly decided, paragraph 39 of the decision shows that
             the decision in the case of N.R. Parmar 1 has been
             prospectively overruled by observing that the decision will
             not affect the inter-se-seniority already fixed on the basis        D
             of the case of N.R. Parmar1 and the same was protected.
             It is also held that the decision will apply prospectively except
             where seniority is to be fixed under the relevant Rules from
             the date of vacancy / the date of advertisement. In this
             case, as on the date when the case of N.R. Parmar1 was
             decided, there was no rule which required that the inter-se-        E
             seniority of direct recruits and promotees to the post of
             Income Tax Inspectors should be fixed from the date on
             which a person is born in the cadre. In the facts of the
             case, the seniority list was correctly published on 7 th
             September 2016 in terms of the decision in the case of N.R.         F
             Parmar1 by interspacing those direct recruits who were
             eligible in the recruitment year 2009-10 and were appointed
             against the vacancies of the said year with 53 promotees
             who were promoted vide DPC dated 29th June 2009. The
             seniority list was later on modified on 13th February 2018
             without giving an opportunity of being heard to the affected        G
             direct recruits.
       34. At this stage, we may note here the factual aspects stated in
the affidavit dated 12th October 2022 filed by Shri Anurag Chandra,
Deputy Commissioner of Income Tax in the Office of the Principal Chief
                                                                                 H
970            SUPREME COURT REPORTS                            [2022] 9 S.C.R.


A     Commissioner of Income Tax, Gujarat. The affidavit refers to the interim
      order dated 13th July 2018 in the Civil Appeal arising out of S.L.P. (C)
      No.16161 of 2018, by which status quo as of that date with respect to
      the posts held, was ordered to be maintained. The affidavit notes that as
      a result of the interim order, the promotion to the cadre of Income Tax
      Officers from the cadre of Income Tax Inspectors could not take place.
B
      As a result, 33.33% of posts in the cadre of Income Tax Officers are
      vacant as the same cannot be filled in. As noted earlier, the decision in
      the case of K.Meghachandra 2 applies prospectively i.e. from 19 th
      November 2019. Prima facie, the seniority fixed based on the decision
      in the case of N.R. Parmar1 has to be given effect. Therefore, while
C     we are recommending a reference to a larger Bench, interim relief will
      have to be vacated and seniority will have to be fixed on the basis of the
      impugned judgment, subject to the final outcome of the appeal or the
      decision of the larger Bench, as the case may be.
            35. Hence, we pass the following order:
D           i. We are of the considered view that the following questions
            need to be decided by a larger Bench of five Hon’ble Judges:
                a. Whether the decision in the case of K. Meghachandra2
                can be said to be a binding precedent in the light of the law laid
                down by the Constitution Bench in the case of Mervyn
E               Coutindo3 and the law laid down by a Coordinate Bench in the
                case of M. Subba Reddy6?
                b. In absence of specific statutory rules to the contrary, when
                the ‘rotation of quota’ rule is applicable, whether the seniority
                of direct recruits who were recruited in the recruitment process
F               which commenced in the relevant recruitment year but ended
                thereafter, can be fixed by following ‘rotation of quota’ by
                interspacing them with the direct recruits of the same
                recruitment year who were promoted earlier during the same
                year?
G           ii. We direct the Registry to place this petition before Hon’ble the
            Chief Justice of India for appropriate orders.
            iii. The interim relief granted on 13th July 2018 stands vacated.
            Effect shall be given to the impugned judgment subject to the final
            outcome of this appeal or reference, as the case may be. We also
H           clarify that the seniority of promotees and direct recruits who
  HARIHARAN & ORS. v. HARSH VARDHAN SINGH RAO &                                 971
              ORS. [ABHAY S. OKA, J.]

       may be appointed hereafter will be subject to the final outcome of       A
       the decision of this appeal or the decision in reference, as the
       case may be. Accordingly, concerned persons shall be informed
       in writing by the Income Tax Department.
       36. In the Civil Appeal arising out of Special Leave Petition (C)
Diary No.12422 of 2022, the challenge is to the judgment and order              B
dated 6th February 2018 passed by the High Court of Judicature at Patna
which follows the decision in the case of N.R. Parmar1 dealing with the
issue of appointment of Income Tax Inspectors pertaining to the
recruitment year 2009-10. This appeal be heard along with the main
appeal.
                                                                                C

Devika Gujral                                              Directions issued.
(Assisted by : Mr. Shubhanshu Das, LCRA)



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