Holding

The Court upheld the validity of the 1973 Seniority Rules, the seniority list, and the statutory classification of Income‑Tax officers into Group‑A and Group‑B, finding them constitutionally sound and within legislative competence.

Summary

The petitioners, Group‑A Income‑Tax officers promoted from Group‑B, challenged the 1973 Seniority Rules and the accompanying seniority list, alleging that the rules were based on a mistaken finding that promotions exceeded the statutory quota and that the classification of officers into Group‑A and Group‑B violated Articles 14 and 16 of the Constitution. The Court examined the historical evolution of recruitment quotas, the weightage granted to promotees, and the methodology used by the Government to calculate vacancies, finding that the petitioners' calculations were erroneous and that the quota had indeed been exceeded. It held that the 1973 Seniority Rules and the seniority list were validly framed pursuant to the Supreme Court’s earlier direction in the Gupta cases and were not unconstitutional. The Court also affirmed the legislative power to classify Income‑Tax officers into two groups under Section 117 of the Income Tax Act, noting the distinct functions, powers, and appointment authorities of the two classes. Consequently, the petitions seeking to set aside the rules, the seniority list, and the classification were dismissed.

Issues considered

The constitutionality of the 1973 Seniority Rules and the seniority list prepared under them.
Whether the classification of Income‑Tax officers into Group‑A and Group‑B under Section 117 of the Income Tax Act violates Articles 14 and 16 of the Constitution.
The validity of the recruitment and promotion quota (direct recruit vs promotee) and the three‑year weightage granted to promotees.
The correctness of the Government's method of calculating vacancies and quota compliance for the period 1951‑1958.
The validity of the amendments to Sections 116, 117, 118 and 120 of the Income Tax Act and the 1988 Recruitment Rules.

Legislation cited

Direct Tax Laws (Amendment) Act, 1987
Income Tax Act, 1961s. 116, s. 117, s. 118, s. 120

Subjects

seniority rulesquotapromotionclassificationIncome Tax OfficersGroup AGroup BArticles 14Articles 16constitutional validityseniority listrecruitment rulespublic serviceadministrative law

Judgment

HUNDRAJ KANYALAL SAJNANI ETC.
A v.
UNION OF INDIA AND ORS.

MARCH 16, 1990

B (SABYASACHI MUKHARJEE CJ., B.C. RAY, L.M.
SHARMA, P.B. SAWANT AND K. RAMASWAMY JJ.]

Indian Income-Tax, 1961/l.T.O. Group A and Group-B-
Recruitment Rules I988 and Seniority Rules, 1973. Sections 116, 117,
118 and 120-Group A and Group B Officers of lncome Tax
Department-Classification-Whether constitutional-Seniority List of
c 1973-Whether valid.

The main petition has been filed by the Income-tax Officers
Gronp-A, challenging the Seniority Rules of 1973, which were framed
by the Department pursuant to the directions given by this Court in an
D earlier case B.S. Gupta v. Union of India, (1975] Supp. SCR 491. The
circumstances that led to the filing of the instant petitions may be stated .,
thus:

The Government by virtue of the Rules propounded in its letter
dated 29th September 1944, re-organised the Income-tax services into
E Class I and Class II. The said Rules inter alia laid down that recruit-
ment to the cadre of Income-tax Officers Gronp-A shall be from two
sources i.e. direct recruitment and promotion,. the qnota for the two
being 80% and 20% respectively. In 1945, the Government framed fresh
recruitment rules wherein it was provided that the recruitment from
-.
the said sources will be made as per the directions of the Government,
F in effect, keeping the recruitment quotas in abeyance. In September,
1949, the Government framed Seniority Rules and it was laid down that
the promotees who had been certified by the Federal Public Commis-
sion, in any calendar year, shall be senior to all direct recruits who
completed their probation during that year or after and are confirmed
with effect from the date in that year or after. In the year 1950, the
G Seniority Rules were again revised and the concerned Rule l(f)(ili) was
amended .. By its letter dated 18.10.1951, the Government revised the
quotas of direct recruits and promotees, in that, in the case of direct
rC.:ruits the quota was reduced from 80% to 66-2/3% while in the case of
promotees, the quota was enhanced from 20% to 33-1/3% and also
amended the Rule J(f)(iii) of 1950 Rules. This revision, in effect, gave 3
H years' weightage in seniority to the promotees. These rules continued to

994
H.K. SAJNANI v. U .0.1. 995

operate till 1959. Between 1959 and 1960, 114. posts were npgraded to
A
,,_ those of Income Tax Officers Group 'A' and the promotees were
appointed to the said posts during that period.

One Jaisinghani, a direct recruit challenged the constitutional
validity of Rule l(l)(iii) and (iv) of 1952, Seniority Rules by means of a
writ petition in the High Court, which gave 3 years' weightage to the B
promotees in the matter of ilxation of their seniority and the implemen-
tation of quota. The High Court rejected the writ petition. In appeal,
this Court held that the quota having been fixed by the Government in
exercise of the powers conferred on it under Rule 4 of the 1945 Rules,
the same was valid. The Court also upheld the weightage given to the
promotees under the 1952 Rules. The Court further directed that roster
system should be adopted by framing an appropriate rule for working c
out the quota system between the direct recruits and promotees. It may
be mentioned that the court gave this direction because it was of opinion
).-
that the promotees were in excess of the prescribed quota for each of the
years 1951 to 1956, and that they had been illegally appointed. It was
therefore directed that the seniority of Jaisinghani and others similarly D
placed be re-adjusted and the Government should prepare a fresh
seniority list in accordance with law.

Pursuant to the direction given by the Court, the government
"' prepared seniority list which was challenged in the Delhi High Court by two
separate writ petitions one by B.S. Gupta, a promotee of 1962 and E
another by M.C. Joshi, a direct recruit. The High Court dismissed the
writ petition of Gupta bot substantially allowed the one ftled by Joshi. In
appeal this court by its order dated 16.8.1972 in Gupta's case AIR 1972
SC 262; held that seniority list was valid with regard to the promotions
made upto January IS, 1959 hut the same was not valid for the period
;. thereafter. The court accordingly set aside the list to the extent it F
concerned the period from 16.1.1959 and directed the Department to
prepare a fresh seniority list in accordance with the observations aud
directions of this Court. The court came to the conclusion that with the
upgrading of large number of posts and appointments of the promotees,
the quota rule had collapsed and with that seniority rule giving weigh-
tage to the promotees bad collapsed. The court held that quota rule G
came to an end on 16.1.1959. In pursuance of the aforesaid direction,
the government frame the impugned 1973 Rules and prapared a fresh
< seniority .list on February 1973, giving retrospective effect to the
Rules from 15.1.1959. The Government also challenged the quota of
direct recruits and promotees, making it 50% for each of them i.e. I :I.
Seniority of officers upto 15.1.59 was ilxed as per old Rules and the H
996 SUPREME COURT REPORTS [ 1990] 1 S.C.R.

seniority from 16.1.1959 was fixed as per new rules; 73 promotees
·~-
A
though promoted between 1956-58 could not be accommodated under
the old rules, their seniority was fixed under the new rules. .'

In the present petitions, the petitioners contend· that this Court
gave its direction in Gupta's case [1975] l, SCR 104; because for want
B of sufficient material the court had come to the conclusion that the
quota for recruitment of direct recruits and promotees had broken
down as the promotees were appointed in excess of their entitlement
though the requisite material showing the contrary was in possession of
the government, which was suppressed. It is asserted by them that the
~
material shows that in fact the appointment of the promotees was short •
of their quota. Hence they claim that not only the 1973 Rules be set
c aside but the appointments of the promotees be made and their senio-
rity be rixed according to the rules prevailing prior of the said Rules. In
the connected writ petitions, besides these contentions, validity of ,.(
amendment of Sec. 117 of the Income Tax Act; and classification of
Income '(['ax Officers in Group A and Group B ollicers have also been
D questioned.

Dismissing the writ petitions this Court held:
~
HELD: It is clear from the table that the petitioners promotees
have .calculated the posts in the sanctioned strength not only in Grade
E II but also in Grade I Posts when the posts available to them for pro-
motion were only in grade II. Hence, their further calculations of the
working strength, the vacancies and the quota available to them in the
.
~

vacancies and of the dificiencies or the excess in the quota are
erroneous. J1009F]

Even the Government had independently come to the conclusion
1
F
as early as in 1986 that neither the Rules of seniority nor the Seniority
""'
List of 1973 had done injustice to the promotees. In fact, the Rules of
1973 had rised the quota of the promotees from 33-1/3% to 50%. The
seniority of the promotees was adjusted upto 15th January, 1959 on the
basis of the earlier quota Rule and the Seniority of those who were
G appointed later and of those who were found in excess of their quota
upto that date, were adjusted according to the new Rule. HOI6F-GJ
,;r-
What this Court wanted to convey in the earlier part of its judg-
ment was that when the Government decides to fill in the vacancies, it is
not necessary to defer the appointments from one source pending the
Ji appointments from the other source. But that is when the Government
H.K. SAJNANI v. U.0.1. 997
l
~ \\ !fecides to fill in the vacancies and not before it. [IOI7F]
~
A
Power is vested in the legislature to appoint different classes of
officers and this carries with it also the power to demarcate their
duties, functions and responsibilities. Whether in fact there is such a

. '
....,;
. division of powers, functions and responsibilities or not, has nothing to do
with the validity of the power to make the classification. [IOI9H; I020A]

The distinction between Group-A and Group-B Officers has been
in existence from the very beginning. The distinction has been main-
B

tamed statutorily with distinct powers and jurisdiction, hierarchical
lJosition and eligibility qualifications. The sources of their appoint-
ment and the authorities vested with the power to appoint them have·
also been different. The distinction between the two further has been C
made on the basis of the class of work and the responsibility entrus-
ted to each. The work which is of more than a routine nature and which
involves a detailed investigation either on account of the class of
assessees or of the complexities of the returns filed, is entrusted to
the officers belonging to Groups Group-A (now Assistant Commis- o
sioners) while the assessment work of a summary nature or of re-
turns involving simple transactions is entrusted to Officers belonging
to Group-B (now ITOs). [I023C-E]

By the very nature of the operation involved, the administration

- has to have the power to classify the work and to appoint personnel with
different skill and talent to, execute the different types of work. The
legislature being mindful of this need has deliberately created .the two
E

classes of officers as is evident from the provisions of Section ll7 even
prior to its present amendment. Even after the amendment the said
distinction has been maintained. After 1987 amendment the situation
has further changed and the dotes, functions, jurisdiction and powers F
of the officers have been rationalised clearly demarcating the spheres of
work. In an organisation of this kind, with country wide offices dealing

- with various categories of assessees and incomes, some dislocation func·
tional overlapping and want of uniformity in the assignment of work
during some period is not unexpected; and it does appear that during
some period, the situation in the Department was out of joint. That is
why steps were taken to straighten it out by amending the Income Tax
G

Act and making the rules and issuing the relevant notifications, cir-
culars and orders. !I024B; 1026B-C]

If during this period on account of the exigencies of service, some
ad hoc appointments· of Group B officers were made to Group A posts, H
998 SUPREME COURT REPORTS [ 1990) 1 S.C.R.

and Grade II or Group B officers were required to perform the same func-
A tions and discharge the same duties as Group A officers, they can at
best claim the emoluments of Group A officers, but certainly not the
equalisation of the two posts of that account. [10260-E]

S.G. Jaisinghani v. Union of India and Ors., [1967) 2 SCR 703;
B B.S Gupta etc. v. Union of India and Ors/ etc., [1975) 1 SCR 104;
Kamal Kanti Dutta and Ors. v. Union of India and Ors., [1980) 3 SCR
811; K.M. Bakshi v. Union of India, AIR 1962 SC 1139; Federation of
All India Customs and Central Excise Stenographers (Recognised) and
Ors. v. Union of India and Ors., [1988) 3 SCC 91; V. Markandeya and
~rs. v. State of Andhra Pradesh and Ors., [1989) 3, SCR 191, referred •
to.
c
ORIGINAL JURISDICTIO~: Writ Petition Nos. 4146 of 1978
and 546-47 of 1983.

(Under Article 32 of the Constitution of India.)
D
Rajinder Sachhar, Govind Das, T.S. Krishnamurthy Iyer, A.K.
Sanghi, Ravinder Bana, R.B. Misra, Miss A. Subhashini, Bhisamber
Lal and Miss Gitanjali Mohan for the appearing parties.

The Judgment of the Court was delivered by
E
SAW ANT, J. These three petitions raise some common issues,
and hence they are being disposed of by this common judgment.

W.P. No. 4146of 1978.

F This petition is filed by the promotee Income Tax Officers
Group-A seeking to challenge the Seniority Rules of 1973 on the
ground that they were framed pursuant to a direction given by -this
Court in Bishan Sarup v. Union of India & Ors., [1975] Suppl. SCR
491 decided on August 16, 1972. According to the petitioners, the said
direction was given because for want of sufficient material, the Court
G had come to the conclusion that the quota for recruitment of the direct
recruits and the promotees had broken down as the promotees were
~
appointed in excess of their entitlement in the quota. According to the I
petitioners, the requisite material showing the contrary was in the
possession of the Government but did not come forth, then. Tl)e said
material shows that in fact the appointments of the promotees were
H short of their quota. The petitioners, therefore, claim that not only the
H.K. SAJNANI v. U.0.1. [SAWANT, J.) 999

Seniority Rules of 1973 should be set aside, but the appointments of
A
the promo tees be made and their seniority be fixed, according to the
Rules prevailing prior to the said Rules.

2. The relevant facts necessary to dispose of the petition are as
follows.

, Pursuant to the Rules propounded in their letter of September 29,
B

1944, the Government reorganised the existing Income Tax services
into Class-I and Class-II. The Rules, among other things, laid down
th.at the recruitment to the cadre of Income Tax Officers-Group-A
will be from two sources, viz., direct recruitment and promotion, the
quota for the two being 80%-20% respectively:
c
In 1945, the Government framed fresh Recruitment Rules for
the said cadre of Class-I and Class-II ITOs. Rule 3 of the said Rules
reiterated that the recruitment to the said cadre will be from the two
sources, viz., direct recruitment and promotion. Rule 4 of the said
Rules, however, provided that the recniltment from the said sources D
will be made as per the discretion of the Government. This provision
had the effect of virtually keeping in abeyance the recruitment quotas
for the direct recruits and the promotees laid down in the Recruitment
RulesofSeptember29, 1944.

On September 9, 1949, the Government framed Seniority Rules. E
Rule l(f)(iii) thereof provided .that the promotees who had been
certified by the Federal Public Service Commissio~ in any calendar
r year shall be senior to all direct recruits who completed their probation
during that year or after, and arc confirmed with effect from the date
).. in that year or after. On January 1, 1950, the Seniority Rules were
revised and the aforesaid Rule l(f)(iii) was amended as follows: F

"(f) The seniority of direct recruits recruited on the results
of the examinations held by the Federal Public Service
Commission in 1944, and subsequent years, shall be
reckoned as follows:
G
(i) Direct recruits of an earlier examination shall rank
above those recruited from subsequent examination.

(ii) Direct recruits of any one examination shall rank inter
se in accordance with the ranks obtained by them at that
examination. H
1000 SUPREME COURT REPORTS (1990] 1 S.C.R.

(iii) The promotees who have been certified by the Com-
A mission in any calendar year shall be senior to all direct
recruits who complete their probation during that year or
after and are confirmed with effect from a date in that year
or after.

B Provided that a person initially recruited as Class-II
Income Tax Officer, but subsequently appointed to Class I
on the results of a competitive examination conducted by
the Federal Public Service Commission shall, if he has pas-
sed the departmental examination held before his appoint-
ments to Class I service, be deemed to be promotee for the
purpose of seniority."
c
3. By its letter of October 18, 1951, the Government revised the
qaotas of direct recruits and promotees (which was earlier laid down in
their letter of September 29, 1944), from 80% and 20% to 66-2/3%
and 33-1/3%. On September 5, 1952 the Government also revised
D further the Seniority Rule l(f)(iii) of January 24, 1950 as follows:

"(f) The seniority of direct recruits recruited on the results
of the examinations held by the Federal Public Service
Commission in 1944, and subsequent years, shall be
reckoned as follows:
E
(i) Direct recruits of an earlier examiation shall rank above
those recruited from a subsequent examination.

(ii) Direct recruits of any one examination shall rank inter
se in accordance with the ranks obtained by them at that
F Examination.

(iii) Officers promoted in accordance with the recommen-
dation of the Departmental Promotion Committee before
the next meeting of the Departmental Promotion Commit-
tee shall be senior to all direct recruits appointed on the
G results of· the examinations held by the Union Public
Service Commission during the calendar year in which the
Departmental Promotion Committee met and the three I
previous years."
.
It will thus be clear that this revision,.among other things, gave
H to the promotees, a wrightage of three years in seniority. These Rules
continued to operate till 1959.
H.K. SAJNANI v. U.0.1. [SAWANT, J.] 1001

4. It appears that between 1959 and 1960, about 114 posts were
A
upgraded to those of Income Tax Officers Group-A, and the pro-
motees were appointed to the said posts during the relevant period.

5. One Jaisinghani, a direct recruit challenged the constitutional
validity of Seniority Rule l(f)(iii) and (iv) of 1952 Seniority Rules
which had in effect given three years' weightage to the promotees in B
the matter of fixation of their seniority, and also the improper
implementation of the quota by the Government, by filing a writ peti-
tion before the Punjab High Court. The High Court rejected the writ
petition, and in the appeal filed against the said decision, this Court,
by its decision in S.G. Jaisinghani v. Union of India & Ors., [1967] 2
SCR 703 held that the quota was fixed by the Government by its letter
of October 15, 1951 in exercise of the power given to it urider Rule 4 of c
the Recruitment Rules of 1945 and hence it was valid and proper. The
Court also upheld the weightage given to the promotees under the
Seniority Rules of 1952. The Court, however, directed that for future
years, the roster system should be adopted by framing an appropriate
rule for working out the quota between the direct recruits and the D
promotees, and that a roster should be maintained indicating the order
in which appointments are made by direct recruitment and by promo-
tion, in accordance with the percentage fixed under the statutory
Rules for each source of recruitment. The Court gave these directions
because the Court came to the conclusion that the promotees were in
excess of the prescribed quota for each of the years 1951 to 1956 and E
onwards, and that they had been illegally so promoted. The Court
further held that the appellant Jaisinghani was entitled to a writ com-
manding the respondents to adjust the seniority of the appellant and
other officers similarly placed like him, and to prepare a fresh seniority
list in accordance with law after adjusting the recruitment for the
period 1951 to 1956 and onwards, in accordance with the quota rule F
prescribed in the Government-letter of October 18, 1951. The Court,
however, made it clear that the said order would not affect such Class-
II officers who haci been appointed permanently as Assistant Commis-
sioners of Income Tax.

i• 6. Pursuant to the direction given by the Court, the Government G
prepared a Seniority List on July, 15, 1968. This Seniority List was
'
~
challenged in Delhi High Court in two separate writ petitions, one
filed by one B.S. Gupta, a promotee of 1962 and another by one M.C.
Joshi, a direct recuit. The Delhi High Court by its decision of July 29,
1970 dismissed Gupta's petition and substantially allowed Joshi's peti-
tion and gave directions to prepare a fresh seniority List. Against the H
1002 SUPREME COURT REPORTS [ 1990] 1 S.C.R.

decision in both the petitions, Gupta filed two separate civil appeals.
A
By its decision dated August 16, 1972 in the said appea:s in B.S. Gupta
case (supra) briefly known as 1st Gupta case, this Court held that the
Seniority List was valid with regard to the promotions made upto
January 15, 1959, since it was prepared on the baisis of the quota rule
of October 18, 1951 and the Seniority Rule l(f)(iii) of 1952 Seniority
B Rules. The Court, however, held that the said List would not be valid
for the period thereafter. The Court, therefore, set aside the said list
to the extent it concerned the period from 16.1.1959 onwards and
directed the Department to prepare a fresh seniority list, in the light of
the observations made in the judgment. The Court also directed that
the seniority list from January 15, 1959 should be prepared in accor-
dance with a seniority rule to be framed afresh by the Government.
c The Court observed that the proceedings will have to be kept pending
till such seniority list was prepared and filed before the Court. It is
necessary to state here that the Court had given the said direction
because it had come to the conclusion that with the upgrading of a
large number of posts and the appointments of the promotees made to
ID them, the quota rule had collapsed, and with that, the seniority Rule
giving weightage to the promotees had also collapsed. The decision to
upgrade 100 posts was taken in January 1959 and the remaining 114
posts in the year 1960. The Court, therefore, held that the quota rule
came to an end on January 16, 1959 when sanction to upgrade 100
temporary posts was given by the President and with that went the
IE seniority Rule.

7. In pursuance of the above direction, the Government framed
the impugned Seniority Rules of 1973, and prepared a fresh seniority -i
list on February 9, 1973, giving retrospective effect to the said Rules I
from January 15, 1959. The gist of the 1973 Seniority Rules was that
F the seniority of the direct recruits and promotees appointed on and ...l.
from January 16, 1959 was to be fixed as follows: First promotee and
then direct recruit and so on. The result of these Rules was that not
only the seniority Rule but also the quota of the direct recruits and the
promotees was changed from 66-2/3% and 33.1/3% to 50% and 50%
or l: 1. It may be mentioned here that the new seniority list was pre-
G pared by fixing the seniority upto 15th January, 1959 according to the
old Seniority Rules, and the seniority from 16th January, 1959 on the
basis of the new Rules. However, 73 of the promotees who were
promoted in excess of their quota between 1956-58 could not be
accommodated as per the earlier quota rule, in the list of seniority
prepared upto 15th January, 1959, and hence the seniority of the said
f1I 73 promotees was fixed according to the new seniority Rules which
H.K. SAJNANI v. U.0.1. (SAWANT, J.I 1003

applied to the appointments made from 16th January, 1959. Both the
new Rules and the new Seniority List were filed in this Court as per the A
earlier direction.

8. The same Shri B.S. Gupta challenged both the validity of the
new Seniority Rules of 1973 and as well as the new Seniority List. This
Court by its decision dated 16th April, 1974 in Bishan Sarup Gupta etc. B
etc. v. Union of India & Ors. etc. etc., [1975] l SCR 104, known as 2nd
Gupta case, upheld both the Seniority Rules as well as the Seniority
List.

9. It further appears that one Kamal Kanti Dutta and others had also
filed an independent writ _petition challenging the Seniority List of
February 9, 1973. It was dismissed by this Court by its decision dated c
23rd April, 1980 in Kamal Kanti Dutta & Ors. v. Union of India &
Ors., [1980] 3 SCR .811 upholding the validity of the said Seniority
List. While disposing of the said writ petition, this Court made the.
following observations on which a strong reliance is placed by the
present petitioners: D
"It shall have been noticed that we have refused to recon-
sider our decisions not so much because of the view taken
in the various cases cited by the learned Solicitor General,
like Sajjan Singh v. State of Rajasthan, [1965] I SCR 933,
947, 948 that this Court should not review its decisions too E
readily, as because on merits, we see no justification for
reconsidering the judgment already rendered by this
Court. No fresh facts are brought to our notice by way of
- ..
)
discovery of new and important evidence which would
justify reconsideration of the decisions already rendered by
this Court after the most careful examination of the F
competing contentions. The Report of the Rajya Sabha
Committee on petitions shows, as already indicated that
the relevant files are still"not traceable"

That judgment was by a majority with Justice D.A. Desai delivering a
dissenting judgment. Since the petitioners here are relying also upon G
some observations made in the dissenting judgment, we may repro-
duce them here:

"In the light of the materials now placed especially the files
which were withheld from the Court and the Committee,
the onlr, view that I express is that enough" compelling and H
1004 SUPREME COURT REPORTS [1990] 1 S.C.R.

necessary material has been placed on record making out a
A
strong case for reconsideration of these decisions."

The Committee referred to in the aforesaid observation is the
Rajya Sabha Petition Committee.

B 10. The present petition had also come to be dismissed erron-
eously along with the Writ Petition of Kamal Kanti Dutta (supra). It
was restored for hearing on September 9, 1980.

11. On July 28, 1982, the Parliamentary Committee on Subor-
dinate Legislation published its 12th Report wherein it referred to a
letter of February 4, 1976 from the Minister of State for Finance. The
C Committee stated that the Seniority Rules of 1973 were unfair and
hence they should be scrapped with effect from January 15, 1959 and
that fresh equitable seniority rules be framed. The Commitiee recom-
mended that the artificial distinction between the ITO Group-A and
Group-B should be abolished as they were performing identical func-
D lions and were working on interchangeable posts. The Committee also
recommended the grant of the same weigbtage in seniority to the
promo tees from 15th January, 1959 as was available to them before
that date. The Committee, further recommended an increase in the
quota of promotions from Group-B to Group-A on account of an
unprecedented stagnation of Group-B service, as a direct result of the
E Seniority Rules of 1973. It does not appear that these recommenda-
tions were accepted. We are referring to these recommendations of the
Committee because the petitioners have made a reference to them and
not because they are legally binding.

12. Thereafter, on February 16, 1983, the accompanying Writ -··., .
p Petitions, viz., Nos. 546-47 of 1983 were filed challenging (i) the vali-
dity of Section 117 of the Income Tax Act, 1961, (ii) the classification
of Income Tax Officers in Group-A and Group-B Officers, (iii) the
Seniority Rules of 1973 and (iv) the Seniority List prepared on their
basis.

G The last two reliefs claimed in the said petitions are common to
the present petition and hence they will be disposed of along with the
judgment in the present case. The first two reliefs and the reliefs
claimed incidental thereto will be dealt with separately.

13. It is further necessary to note that while admitting the
H accompanying petitions, the Court bad passed the following order:
H.K. SAJNANI v. U.0.J. (SAWANT, l.] 1005

"Subject to the specific condition that the petitioners shall
A
not be permitted to reopen whatever classification was
made in the c~dre of ITOs, in the past as also inter se
seniority between direct recruits and promotees which had
been upheld by the decisions of this Court in S.C. Jaising-
hani, B.S. Gupta and KK Dutta's case, rule nisi limited to
the question whether the classifiction of ITOs, into Group- B
A and Group-B u/s. 117 of the IT Act, 1961 is violative of
Articles 14 and 16 of the Constitution. Even if the issue is
answered in affirmative, the petitioners will be entitled to
the relief, if any, only prospectively for future implementa-
tion of the decisions from the date of the judgment in the
Petition. This order will not preclude any contention that
can and may be raised in the Writ Petition No. 4146/78- c
H.K. Sajnaniv. UOI & Ors., to be examined on merits."

14. On May 3, 1983, this Court passed an order in CMP Nos.
13200 and 6762 of 1983 in both the present and the accompanying writ
petitions as follows: D

"In allowing prayer (i) of CMP No. 6762/83, we direct Writ
Petition Nos. 546-47 /83 be heard alongwith Writ Petition.
No. 4146/78 and that the grounds challenging the validity
of seniority rule 1973 as taken in Writ Petition Nos. 546-47 I
83 are allowed to be taken in Writ Petition No. 4146/78,in E
so far as the prayer (iii) of CMP is concerned, we direct the
Government to file a statement in this Court before July
15, 1983 as to the result of the examination of the recom-
mendation of the Committee on Subordinate Legislation
and decision and other measures taken by the Government
thereon." F

15. On February 27, 1985, the Court gave direction to the
Government in CMP No. 1903 of 1983 in the present Writ Petition to
allow the petitioners inspection of the files relating to the vacancies.
The inspection was completed on October 7, 1985 which according to
the petitioners shows the following facts: (i) that the relevant record is G
· available and was always available with the Government and that its
production was deliberately withheld from this Court, (ii) that the
promotions were all within quota and that there was no excess. Rather
there was a deficiency in promotions, (iii) that the quota rule was
adhered to from year to year right from the year 1951 upto the date of
the judgment in the 1st Gupta case (supra), (iv) that the quota rule did H

'
1006 SUPREME COURT REPORTS [1990] 1 S.C.R.

A not collapse on 15.1.1959, (v) that as required by the exigencies of the
service, the quota rule was amended/relaxed in the years 1958 and
1959, (vi) that in applying the quota rule in pursuance of the man-
damus, the Government did not follow the principles decided by this
Court in 1st Gupta case (supra) and committed the following errors:

(a) The Government did not apply the quota to the vacancies
existing at a particular point of time. Instead of doing so, it
misinterpreted the quota rule of 66-2/3% and 33.1/3% as if it
required that a ratio of 2: 1 had to be maintained in the cadre of
Income Tax Officers and as if there had to be one promottee
against evry 2 direct recruits. This erroneous interpretation was
applied in clear breach of the principle laid down by this Court in
-
•
the ]st Gupta case (supra).

(b) Another error committed by the Government in applying
the quota rule in violation of the principles decided by this Court
in the 1st Gupta Case (supra) was that the substantive vacancies
D in the temporary posts which were a regular part of the cadre and
which eventually became perrnanent were not taken into account
while aplying the quota rule, with the result that the promotees
were denied their share in such vacancies. The most harmful
thing done by the Government was that it did not take into
account substantive vacancies in temporary posts till 1963 for
applying the quota rule and worked out the excess in promotions
ignoring such vacancies. But, they started taking into account
those very vacancies for direct recruitment from 1963 onwards. If
such vacancies were taken into account prior to 1963 and the
quota rule was applied to them, there would have been no excess
in promotions as was erroneously worked out. On the contrary, '
F there was a deficiency in promotions because of the incorrect
application of the quota rule.

( c) The promotees were not given their full quota even in the
perrnanent vacancies which should have bee given to them
irrespective of whether the direct recruitment was made in full.
There was under utilisation of quota of direct recruits with the
result that the promotees were denied their legitimate share even
in perrnanent vacancies. In these circumstances, the actual
appointments were taken as vacancies and were bound to result
inevitably into excess of promotions.

H 16. On the basis of these facts, which according to the petition-
H.K. SAJNANI v. U.0.1. [SAWANT, J.] 1007

ers were revealed in their inspection, their case is that their.allegation,
A
that the relevant files were available and yet were not produced before
the Court and the further allegation that there were no excess promo-
tions were borne out. This shows that the direction given in the ]st
Gupta case (supra) to frame new rules and, hence, the new Seniority
Rules of 1973 framed pursuant to these directions, were unwarranted,
unjust and illegal. B

17. The petitioners further contend that the principle that the
vacancies mean those the Government wants to fill is not compatible
with the principle laid down in the 1st Gupta case (supra) that the
promotees should get their share of the quota irrespective of whether
the direct recruits' quota is filled, or not. But in the present case, the
contrary has happened, viz., the promotees' quota is calculated on the c
basis of the appointments of the direct recruits causing thereby
injustice to the promotees by depriving so many of them of .their
chances of promotion which were otherwise available.

18. It is also the contentiqn of the petitioners that in fact, there D
were vacancies and the Govenment wanted to fill those vacancies. This
is evidenced by the fact that when new posts were created for the
,4. purpose of assessment work, the direct recruits were not available and
hence, the promotions were made from Groilp-B to Group-A, and
even Group-B Officers were appointed against Group-A posts and
they performed identical functions as of Group-A Officers. This con- E
tention has also a bearing on the issue involved in Writ Petitions Nos.
546-47 of 1983 and.we will deal with i_t in that context, later.

19. While these petitions were pending, the Government on
January 24, 1988 amended the Income Tax Act, 1961 with effect from
April I, 1988 and, among other things, changed the designation of F
Income Tax Officers and Assistant Commissioners as follows:

Pre-Amendment Post-Amendment

(a) Income Tax Officers Income Tax Officers
(Group-B) G
(b) Income Tax Officers Assistant Commissioners
(Group A)
(c) Assistant Commisioners Deputy Commissioner<:

The amendment also substituted Sections 116, 117, 118 and 120 with H
1008 SUPREME COURT REPORTS [1990) 1 S.C.R.

effect from the same date, i.e., April 1, 1978 and authorised the Cent-
A ral Board of Direct Taxes to issue notifications authorising Chief Com-
missioners and Commissioners of Icome Tax to classify the work of
newly designated Income Tax Officers and Assistant Commissioners,
and to provide for the jurisdiction of the Income Tax Officers and
Assistant Commissioners on the basis of quantum of income. Accord-
B ing to the petitioners, this was done to destroy the cause of action Writ
Petition Nos. 546-47 of 1983.

20. On May 12, 1988, the Government framed New Rules of
Recruitment, among other things, providing for quota of 50% each to
the promotees and direct recruits. In consequence, an application for )
amendment of Writ Petitions Nos. 546-47 of 1983 was filed raising
c additional grounds.

21. It will thus be apparent that the whole foundation of the case
of the petitioner-promotees in the present petition is that the Seniority
Rules of 1973 were m3de by the Government pursuant to the direction
o of this Court in the 1st Gupta case (supra) on August 16, 1972 and that
direction was given by this Court because 0n the basis of the material
produced by the Government, this Court had come to the conclusion
that the promotees were promoted in excess of their quota. According
to them, however, the new material which they have discovered shows
that in fact there were not only no excess promotees but in fact there
E was a shortfall in their promotions as per their entitlement in the
~~· -
22. Both on behalf of the Government as well as the respondent-
Union of India and the direct recruits, it is pointed out to us that the 1
so-called new material produced on behalf of the petitioner-promotees
F far from proving their allegation, supports the conclusion to which this
Court had arrived at in the 1st Gupta case (supra). In this connection,
it is pointed out that admittedly, there were at the relevant time Class-
! and Class-II posts of Income Tax Officers corresponding to Group-A
and Group-B posts. Class-I or Group-A consisted of Grade-I and
Grade-II Officers whereas Class-II or Group-B consisted of Grade-II
G Officers. Group-B Officers were entitled to be promoted first to
Group-A Grade-II posts. Hence, the vacancies available for promo-
tion to the promotees which ought to be taken into consideration at
any point of time are the vacancies in Grade-II posts of Class-I or
Group-A. However, it is obvious from page 32 of Volume-II of their
petition, that the petitioner-promotees have taken into consideration
H vacancies not only in Grade-II posts but also in Grade-I posts to show
H.K. SAJNANI v. U.O.l. (SAWANT, J.] 1009

that in fact not only they were not promoted in excess but their promo-
tions were short of the vacancies which were available to them in their
A
quota. We may reproduce herein below the relevant table of the sanc-
tioned strength, the vacancies, the quota for promotees, the actual
number of promotions made and their deficit or excess in the quota
since 1951 to 1958 as calculated by the petitioners on the said page 32.
According to the petitioners, the figures in the table are taken from B
the newly discovered files:

VACANCY POSITION FROM 1951- 1958
YearSanccionedstrength Total Working Strength Total Vacancies OuotaActualDeficit
Grade I Grade II Gr. I Gr. II of pro-No. of ( - )
mot- pro- or c
ions mot- Excess
ions (+)

1951 216 + 200 416 77 + 98 175 241 80
1952 224 + 221 445 83 + 113 196 249 83 49 (-) 34
D
1953 224 + 221 445 130 + 129 ~ 259 186 62 38 (-) 24
1954 224 + 221 445 169 + 157 ~ 326 119 40 31 (-) 9
1955 224 + 221 445 154 + 217 ~ 371 74 25 24 (-) 1
1956 224 + 221 445 187 + 214 ~ 401 44 15 25 (+) 10
1957 287 + 248 535 224 + 184 ~ 408 127 42 26 (-) 16 E
1958 290 + 248 538 213 + 202 ~ 415 123 41 28 (-) 13
97-10 ~ 87 Net Deficiency

23. It is clear from the above table that the petitioner-promotees
have calculated the posts in the sanctioned strength not only in Grade- F
II posts but also in Grade-I posts. When the posts available to them for
promotion were only in Grade-II. Hence, their further calculations of
the working strength, the vacancies and the quota available to them in
the vacancies and of the deficiencies or the excess in the quota are
erroneous. On behalf of the Government, the following calculations
have been made for the relevant period from 1951 to 1958 on the basis G
of the actual vacancies in the sanctioned strength of Grade-II posts of
Group-A (Class-I). These calculations show that in fact during the said
period, the promotees were promoted to Grade-II posts of Group-A
(Class-I) in excess to the extent of 93. Therefore, the deficiency of 97
which they have shown in their appointments during the said period is
obviously wrong. The said table first handed over ot us by Shri Govind H
1010 SUPREME COURT REPORTS [1990] 1 S.C.R.

A Das, Counsel for the Government is prepared on the basis of the very
same figures· on page 32 of the Writ Petition. It, now, forms an an-
nexure ,!to the additional affidavit dated 2'.lrd January' 1990-filed by <me
Ravi Kumar, Under Secretary, Department of Revenue, Ministry of
Finance. The table is as follows:
a Year Sanctioned strength Working V acanciesQuota Actual Excess
Gnide II Class I Strength
Gr. no. I
Of promo-promotion
tion 33% as stated
·-,..
at32

1951 200 98 102 34
')
1952 221 113 108 36 49 13
c
1953 221 129 92 31 38 7

1954 221 157 64 21 31 10

1955 221 217 4 24 23

1956 221 214 7 2 25 23
D
1957 248 184 64 22 26 4

1958 248 202 46 15 28 13

93

E 24. The figures shown in the above table are self explanatory.
Confronted with these figures, the petitioners came out with another
•chart the relevant extract of which is as follows: •
Total Vacancies Direct Recruits Promotees
Year. SanctionedWorking_~ VacanciesQuota Actuals Excess/ Quota Actual Excess/ 1
strength strength in Gr. II shortage promo- shortage
F in Gr. II in Gr. II tions ...._
2 3 4 5 6 7 8 9 10

1952. 221 113 108 72 33 (-)39 36 49 ( +) 13

1953 221 129 92 61 28 (-)33 31 38 ( +) 7
1954 221 157 64. 43 52 ( +) 9 21 31 (+)JO
G
1955 221 217 4 3 53 (+) 50 24 (+)23

1956 221 214 7 5 48 (+) 43 2 25 (+)23

1957 1248 184 64 43 27 (-) 16 21 26 (+) 5 /
1958 1248 202 46 31 99 (+) 68 15 28 ( +) 13

H 385 258 340 +1!2 127 221 + 94
H.K. SAJNANI v. U.0.1. [SAWANT, J.] 1011

By producing this chart the attempt of the petitioners, is to show that
A
the direct recruits were appointed in excess of their quota to the extent
of 82 during the relevant period. The interesting feature of this chart,
however, is that the petitioners admit that they were also appointed in
excess of their quota during the period to the extent of 94 as against 93
shown in the chart prepared on behalf of the respondent Union of
India (the difference of one being on account of the calculation of the B
excess as 5 for the year 1957 as against 4 calculated by the respondents
for the same year). On the basis of this chart, it is contended that in
view of the fact that both direct recruits and promotees were
appointed in excess of their quota, it could not he said that the quota
had broken down.

25. In the first instance, the chart prepared by the petitioners
c
themselves shows that the conclusion which was arrived at by this
Court in the 1st Gupta case that the promotees were appointed in
excess of their quota is correct, and demolishes the very foundation of
their case in the present petition namely, that the newly discovered
· material shows that not only they were not appointed in excess of their D
quota, but were in fact short of it. Secondly, assuming that their
• figures of the appointment of direct recruits during the relevant period
are correct (since so far, it was never their contention that the direct
recruits were appointed in excess of their quota and, therefore, the
respondents had no opportunity to meet it), that only strengthens the
conclusion of this Court in the 1st Gupta case that the quota-rule had E
broken down. The quota-rule does not collapse only when the appoint-
ments from one source alone are disproportionately deficient or in
excess.

26. It was then contended on behalf of the petitioners that the
Government's method of working out the vacancies was wrong. It is F
not necessary for us to go into this allegation and to find out the
correct way of working out the vacancies. This is so because firstly, the
petitioners have come to this Court by the present petition on the basis
of the vacancies worked out by the Government but which vacancies
according to the petitioners, were suppressed. Secondly, their own
chart shows that the vacancies were worked out by the Government by G
deducting the annual working strength from the sanctioned strength,
every year. The quota of the promotees shown by the petitioners in
their chart is further on the basis of the vacancies so arrived at and is
not on the. basis of the appointment of the direct recruits as is alleged
by them which allegation is the basis of their other contention in the
0
.Petition. Thirdly, it is to be remembered that in the present petition it H
1012 SUPREME COURT REPORTS [1990) 1 S.C.R.

is the petitioners' contentions that the new figures of the deficiencies in
A the promotions have been worked out by the petitioners on the basis of
the notings made in the missing files which were not available at the
time this Court decided the 1st Gupta case (supra). Hence, even as-
suming that these notings have an intrinsic evidentiary value to prove
the annual vacancies available on the relevant dates, the petitioners'
B contentions stand disproved even on the basis of the said notings.
Lastly, and this according to us is an equally damaging fact as far as the
petitioners' present case is concerned, the figures of the sanctioned
. strength and the vacancies which are worked out by this Court in the
1st Gupta case (supra) are ahnost identical with the figures shown by
the petitioners themselves in their new chart with only a negligible l
difference at some points. This fact strikes at the very root of the
C present petition because the only ground on which the petitioners have
approached this Court by way of this petition is that the figures of the
annual vacancies were suppressed by the respondents from this Court
and it is this suppression which had led this Court to come to the
conclusion that the promotees were in excess of their quota and to give
D a direction to frame the new Seniority Rule and to prepare the fresh
Seniority List. The so called new material, on the other hand, proves
that the directions given in the 1st Gupta case (supra) were based on
proper calculations and were justified.

27. It is also not correct to say that this Court had given the
E direction in question only because there was an absence of material to
show the annual vacancies in a year. This is clear from the following
passage in the decision in the 1st Gupta case (supra) at pp 501-502:

"In the absence of any material which gives us the 1
actual vacancies in a year, we think that in order to imple-
ment the mandamus as far as it can possibly be done, it
would be reasonable to accept the figures of appointments
in those years as substantially representing the actual
vacancies. There is also a subsidiary reason why those
figures may reasonably be accepted. It is true that the
quota rule referes to vacancies but the vacancies are those
G vacancies which the Government wants to fill. It is the
prorogative of the Government, reflected further in Rule 4
referred to above, whether any vacancy may be filled at all
or not. Even if there are 100 vacancies in a particulr year
the Government is not bound to fill all those vacancies. It
may fill only 90 of them and nobody can insist that the
H Government shall fill up all the vacancies. Therefore, when
H.K. SAJNANI v. U.0.1. [SAWANT, J.] 1013

the quota rule refers to vacancies it is implicit in the rule
that the vacancies are vacancies which the Government A
wants to fill, whatever may be the actual number of vacan-
cies. The actual appointments are, therefore, in the
absence of any evidence to the contrary, the correct mea-
sure of the vacancies which the Government wanted to fill.
From that point of view also it will be permissible to pro- B
ceed on the footing that the actual appointments represent
the actual vacancies which the Government wanted to fill.
For example, if in the year 1953, 53 posts were filled by
direct recruits and 38 by promotees the total vacancies
sought to be filled would be 91 in which case the promotees
would be entitled to 30 vacancies. That is how the Govern-
ment has proceeded to determine the excess for each year c
from 1953 to 1957 as shown at Annexure 'N' (p. 26 Vol. I in
C.A. No. 2060(n) 1971). In our opinion the procedure
adopted by the department in determining the excess
number of promotees appointed in the several years is sub-
stantially correct. Annexure 'N' begins with the year 1953. D
It should begin with the year 1952 and not 1953. Indeed the
5 year period starts from 1951 and ends with 1956 but since
there was no promotion in 1951 the quetion of excess in
that year does not arise. For the purposes of the mandamus
the seniority list will have to be resettled from the year 1952
showing not merely the excess from the years 1953 to 1956 E
but from 1952 to 1956. At the end of 1956 the progressive
total of the excess over the quota will be known and this
excess, as already pointed out, is liable to be absorbed in
the quota of the years succeeding 1956."
(Emphasis supplied)
F
This is apart from the fact that as we have shown earlier, in fact
the actual vacancies worked out by the Court approximated the actual
appointments. And in any case, the quota for the promotees worked
out on the basis of the said vacancies and the calculation of the excess
of promotions on the basis of the said quota was very nearly correct
and the so called new material would not have made any difference to G
. \ the conclusion which was arrived at in that case.
~ 28. The other contention of the petitioners, namely, that while
calculating the vacancies, the Government had calculated only the
permanent posts and not the temporary posts has also no substance in
it. It is not suggested that the figures of the sanctioned and the working H
1014 SUPREME COURT REPORTS [1990] .1 S.C.R.

A strength of and the vacancies in Grade-II posts of Group-A (Class-I)
shown by the petitioners on page 32 of their petition or in the new
chart do not include temporary posts. What is more, in fact in the Jst
Gupta case (supra) one of the contentions of the direct recruits was
that the quota rule shold relate to vacancies only in permanent posts
and not temporary posts. That contention was not accepted in that
B case either by the promotees or the Government. The court also
pointed out in that case that there was nothing in the Rules of 1945 or
the quota Rule of 1951 which said that the vacancies must be vacancies
in permanent posts. The Court observed that indeed the whole cadre
had consisted of pefl!lanent and temporary posts for years, and there
was a difference between permanent vacancies in permanent and
temporary posts on the one hand and the permanent and temporary
C posts on the other. It was also pointed out that all the direct recruits
from 1948 onwards were initially appointed against temporary posts.
The Court had, therefore, rejected in that case the direct recruits'
contention that the vacancies referred to in the quota Rule were
vacancies only in the permanent posts. This shows that the Govem-
D ment had always counted the vacancies both in the permanent and the
temporary posts and the promotees had accepted this as a fact then.
There is no material placed before us to show that this was not so then.
On the contrary, whatever material the petitioners have annexed to
their petition and to which our attention was invited shows that in fact
the Government had always calculated the vacancies on the basis of
E the sanctioned strength of both the permanent and temporary posts.
We may refer only to two Annexurns in this connection. The extract
from File No. 20(22)56/Ad. VI which is Annexure 7 on page 125 of the "
petition shows that as on Ist July, 1956 the total sanctioned strength of
Grade II posts of ITO (Class I) were calculated as 248 consisting of 207
permanent and 41 temporary posts. So also the nothing from File No.
F 22/4/58/Ad. VI which are Annexure 11 on page 155 of the petition
mention the actual strength of Grade-II posts of ITO (Class I) as 248 •
which consists of 207 permanent and 41 temporary posts. Both the
charts producea by the petitioners which we have discussed earlier
show the sanctioned strength of the said cadre for the years 1957 and
1958 each as 248. The vacancies and the quota of the direct recruits_
G and promotees have also been worked out by the petitioners on the
basis,of this strength in both the said charts. This material. therfore,
belies the petitioners' contention that the Government had not taken
into consideration the temporary posts for working out the vacancies
during the relevant period.

H In his affidavit dated January 31, 1967 filed in Jaisinghani case
H.K. SAJNANI v. U.0.1. [SAWANT, J.] 101,5
'

,,,_ (supra), Shri R.C. Dutta, the then Finance Secretary had further
clearly stated that the vacancies were calculated with reference to the A
following information: (i) addition to cadre strength, temporary or
permanent as the case may be, and (ii) vacancies arising during a
particular period as a result of death, retirement, promotion, resigna-
tion, removal etc. of the officers in particular posts. This has been the
stand of the respondent-Union of India from the beginning, and B
beyond making a bare allegation to the contrary, the petitioners have
not placed any material in support of their said contention. The Chart
produced by them on the contrary proceeds on the footing that the
vacancies in both the temporary and the permanent posts had to be
calculated. · •
'
29. Much has also been made of the fact that the Parliamentary c
Committee on Subordinate Legislation had, as pointed out above,
.... recommended the reconsideration of the Seniority Rules and the
Seniority List of 1973, as allegedly they had done injustice to the pro-
motees. Apart from the fact that the said recommendations have not
legally binding effect, they were also not accepted by the Government. D
In his letter of October 31, 1976 addressed to the Chairman of the
Committee on Subordinate Legislation, the tben Minister of Finance
had stated as follows:
~
"I have gone through the Eighth Report of the Com-
mittee on Subordinate Legislation submitted to the Lok E
Sabha on 7th May, 1986.
-
;

2. I am afraid, however, there is hardly any scope for the
Government to take any significant action in the matter as
the alleged grievances of the promotee--0fficers of the
,>. Income-tax Department are unreal and imaginary. In the F
past, the prospects, position and power enjoyed by the
promotees happened to be better only because of a sys-
.tematic and persistent violation of Rules. The said viola-
'tion of Rules itself led to prolonged litigation which
repeatedly went upto the Supreme Court. It was finally laid

., to rest in B.S. Gupta's case when the Supreme Court
approved the Seniority Rules, 1973 and Seniority List.
These Rules and the Seniority List were prepared in ac-
cordance with the Supreme Court's own directive and were
approved by it after giving ample opportunities to both the
G

sides to present their case. These Rules were declared by
the Supreme Court to be 'just and fair'. It is significant that H
1016 SUPREME COURT REPORTS [ 1990] 1 S.C.R.

the promotees themselves admittedly could not propose a
A -..(
better alternative. The Seniority Rules, therefore, call for
no change.

3. As for quota, originally the promotees were given ony
20% of the Group 'A' vacancies. Unfilled vacancies were
B to be carried over as part of direct recruitment quota for
the subsequent year. The intention obviously was to main-
tain certain standard of quality in the personnel sanctioned
to the service. Between 1951 to 1958 the quota was raised
to 1/3rd in favour of the promotees. In 1973, the promotion
quota was raised to 30% which is the highest in any service •
under the Central Government.
c
4. The question of weightage is inextricably linked with that
of quota. The weightage allowed to the promotees earlier -"'
was in view of the low quota of 20% or 33-1/2% available
to them at that time. When the Rules were revised and thee
D quota of promotees was enhanced to 50% the weightage
given in the matter of promotion was simultaneously with-
drawn. The Supreme Court itself upheld its abolition and
observed that the promotees could not "after obtaining the '
A_
benefit of a higher percentage of recruitment to Class I
service, legitimately object to the abolition of weightage
E enjoyed formerly in the matter of seniority."

The letter is annexed to the additional Affidavit of Ravi Kumar
-
~

(supra).

It will thus be seen that even the Government had independently ...._
F come to the conclusion as early as in 1986 that neither the Rules of
Seniority nor the Seniority List of 1973 had done injustice to the pro-
motees. In fact, the Rules of 1973 had raised the quota of the pro-
mo tees from 33-1/3% to 50%. The seniority of the promotees was
adjusted upto 15th January, 1959 on the basis of the earlier quota Rule

,
and the seniority of those who were appointed later and of those who
G were found in excess of their quota upto that date, were adjusted
according to the new Rules.

30. Two other contentions advanced on behalf of the petitioners
on the basis of the alleged new material were that firstly, while
calculating the vacancies in the post of Grade-II Officers in Group-A,
H the vacancies in all the posts above the said post were not taken into
H.K. SAJNANI v. U.0.1. [SAWANT, J.) 1017

account, and secondly, the number of vacancies should not have been
~ equated with the number of posts the Government filled but should
A
have been calculated on the basis of their actual existence. According
to the petitioners, if both these factors had been taken into considera-
tion at the time of the decision in the 1st Gupta case (supra), the Court
would not have found promotees in excess of their quota. To some
extent these contentions are interlinked. B
--""'!'
The first contention proceeds firstly on the basis that the
notings in the relevant files made by the Officer concerned have an
intrinsic evidentiary value to prove the actual vacancies in the different
~
categories and seeondly presumes that the number of vacancies as
' calculated in Grade-II posts of Group-A there did not already reflect
the vacancies in the higher posts. In the absence of sufficient material c
before us, it is not possible to accept such presumption.
)..

The second contention need not even be considered in the pre-
sent case, for as has b.een pointed out earlier, the actual vacancies
approximated the appointments made during the relevant period. D
Hence, whether the quota was calculated on the basis of the actual
vacancies or on the basis of the appointments made, it would have
,.J, made no difference to the conclusion that this Court had arrived at in
the 1st Gupta case (supra) that the promotions were in excess of the
quota. What is more, even this argument has been answered by this
Court in that case as shown above, and we see no reason to differ from
-
. the view taken there on the point. There appears to be an obvious
confustion on the part of the petitioners with regard to what this Court
E

- )._
has stated in the earlier part of the judgment in the 1st Gupta case
(supra). Read with the passage which we have quoted from the said
judgment, what this Court wanted to convey in the earlier part of the
judgment was that when the Government decides to fill in the vacan- F
cies, it is not necssary to defer the appointments from one source
pending the appointments from the other source. But that is when the
Government decides to fill in the vacancies and not before it.

31. In the result, we find no substance in the petition and dismiss
the same. The Rule stands discharged. In the circumstances, however, G
there will be no order as to costs.

' WRIT PETITION NOS. 546-47 OF 1983.

32. As stated earlier while narrating the facts of the earlier peti-
tion, these petitions are filed by two Income Tax Officers for them- H
1018 SUPREME COURT REPORTS [1990] 1 S.C.R.
•
A selves and as the representatives of the All India Federation of Income -4,
Tax Gazetted Service Assocition. The Federation represents all the
Group-B ITOs and all ITOs in Group-A, Assistant Commissioners
0

and Commissioners promoted from Group-B. Among the parties to
the petitions is respondent No. 4-the Indian Revenue Service Associ-
ation representing directly recruited Group-A Officers and Assistant
B Commissioners and Commissioners promoted from directy recruited
Group-A ITOs. >"-

33. The main grievance of the petitioners is that the classifica-

C
tion of ITOs into two classes, namely, Group-A and Group-Bis dis-
criminatory and violative of Articles 14 and 16 of the Constitution
because (a) the classification is not made on an intelligible differentia
-,
and (b) the differentia has no relationship to the object sought to be
achieved by the Income Tax Act, 1961 inasmuch as the Officers
belonging to the two Groups do identical work and perform identical
functions. It is also the contention of the petitioners that their work
and posts are interchangeable, and in practice they form one cadre. By
D maintaining the differentiation, allege the petitioners, the Govern-
ment in effect is denying equal opportunity, equal pay and equal status
to Officers doing identical work and performing identical functions.
To attack the classification, the petitioners had also challeged the con-
stitutional validity of Section 117 of the Income Tax Act, 1961 before
its amendment by the Direct Tax Laws (Amendment) Act, 1987. After
E the amendment of the said section by the amending Act of 1987, they
have amended their petition and have challenged not only the
amended provision of the said section but also the amendment made to
-.--
Section 116, 118 and 120, and the Recruitment Rules of 1988 and the
notifications, circulars and orders issued pursuant thereto. The attack
against the amended sections and the Rules of 1988, notifications etc.
Ji' is on the ground that they are violative vf Articles 14 and 16 of the
Costitution. In addition, they have also challenged the amended provi-
sions on the ground that they are ma/a fide and are enacted to destroy
the cause of action in their petition. In this context, they have also
attacked the Seniority Rules and Seniority List of 1973.

dJ 34. In support of their contention that the amended provisions
of the Act are ma/a fide they contend that by amending the Act, the
Government took the power to itself to frame the new Recruitment
Rules of 1988 and to issue the relevant notifications, circulars and
orders whereby the classification of the Income Tax Officers in Class-I
and Class-II could be justified. In this connection, it is pointed out that
Ilf it is by virtue of these new powers that the Government for the first
H.K. SAJNAN! v. U.OJ. ISAWANT, J.] 1019

time got an authority to demarcate the jurisdiction of the powers of
A
Class-A and Class-B ITOs and thus to justify the said classification. In
the absence of the amendment and the Rules, Notifications, Circulars
and Orders issued pursuant thereto, the said classification was unjusti-
fiable in law and was liable to be struck down. It is, therefore, also
contended that the said classification assuming it is justified, can only
act prospectively from 1st April, 1988 from which date it is brought B
into operation, and would not justify the classification of Officers prior
to the said date, and hence those Officers who belonged to Group-B
on the day prior to the coming into operation of the amended provi-
sions, should be treated as belonging to Group-A.

35. We are not impressed by this contention. In the first in-
stance, the presumption underlying this contention is that the provi- c
sions of the Act prior to its amendment by the amending Act of 1987
did not permit such classification, which presumption is patently incor-
rect. While the provisions of sub-section (1) of Section 117 prior to its
amendment gave power to the Central Government to appoint, among
others, the Income Tax Officers of Class-I service, the provisions of D
sub-section (2) thereof vested power in the Commissioner to appoint
as many ITOs of Class-II service as might be sanctioned by the Central
Government. It was, however, contended that in spite of these clear
provisions of sub-sections (1) and (2) of the unam-;,nded Section 117,
they had to be read down to deny the power to appoint ITOs of
Class-II or Group-B. This was so because, according to the petitioners, E
- the provisions of Sectios 116, 118 and 124 as they stood then, only
referred to Income Tax Officers as one class and did not make a
distinction between them as Class-I and Class-II Officers. In the first
- instance, it is an elementary rule of the interpretation of Statutes that
no provision of a statute should be read as redundant. No reason is
ascribed by the petitioners to ignore the specific provisions of Section F
117( 1) and (2) except that the two classes of officers mentioned therein
were not referred to in the other provisions of the Act. Secondly, when
the legislature had made a special provision for the two classes vesting
in two different authorities the power to appoint them, it must be
presumed that the legislature had a definite objective in view. While
making the provision for Class-II ITOs, the legislature seemed to be G
aware of the fact that there may be different categories of assessees
and assessments requiring different standards of equipment, s~ill and
talent to deal with them, and it was therefore necessary to invest the
Central Government with the power to_appoint and to sanction the
appointment of the different classes of officers to meet the require-
ment. !his power vested by the legislature to appoint different classes H
1020 SUPREME COURT REPORTS [ 1990] 1 S.C.R.

of officers carried with it also the power to demarcate the duties,
A
functions and responsibilities of the two. Whether in fact there is such
a division of powers, functions and responsibilities or not, has nothing
to do with the validity of the power to make the classification. If in
spite of such classification, the different classes in fact exercised the
same powers and performed the same duties and functions, it may
B invite abolition of the classification. But it cannot invalidate the power
to classify. Hence, we arc not impressed by the contention that the
legislature had no power to classify the Income Tax Officers into two
classes under the unamended provisions of the Act.

36. If therefore the legislature had itself classified the Officers
into two grades or categories and given the power to the Government
c to appoint, and/or to sanction their appointments, as the case may be,
under the unamended provisions of the Act, it can hardy be argued
that the amending Act was passd mala fide to destroy the cause of
action in the present petitions. This is apart from the fact that no
legislation can be challenged on the ground that it is mala fide. Hence
D the challenge to the amended provisions of the Act and the Rules,
notifications, circulars and orders issued pursuant to it, must fail. It is
not further suggested that the Rules, notifications, circulars, orders
etc. are ultra vires-the Act. There is, therefore, no merit in this attack.

37. Coming now to the second contention· which is the main
E foundation of the present petitions, namely, that the Officers of the
two classes in fact perform the same functions and duties, and exercise
the same powers and have the same jurisdiction and, therefore, there
is no justification for the said classification, it is first necessary to
examine the facts relied upon by the petitioners in support of this
contention. According to the petitioners, the Officers of the two clas-
F ses were always performing the same duties and function, and exercis-
ing the same power and jurisdiction. Their posts were also inter-
changeable. In fact, many of the Officers belonging to Group-B func-
tioned as Officers belonging to Group-A. Even after the amendment,
which has demarcated the jurisdiction of the two classes on the basis of
income, the basic function of making the assessment remain the same
G and there is no change in the nature of job performed by them. It is also
submitted that once a case comes under the jurisdiction of an Income
Tax Officer, the Officer continues to exrcise his jurisdiction over the
said case even if in subsequent years the same assesee files a return of
higher income. Hence, the very classification of Officers based on the
return of income is totally arbitrary and violative of the petitioners'
B fundamental rights under Articles 14 and 16 of the Constitution. It is
H.K. SAJNANI v. U.0.1. [SAWANT, J.] 1021
....
further pointed out that in fact the number of regular promotions from
A
Group-B to Group-A during the period 1973 to 1982 were only 585 as
against the ad hoc promotions of 1197 during the same period. Simi-
larly, during the period 1982 to 1985, the numbr of regular promotions
were 262 as against the further ad hoc promotions of 200 during the
same period. This shows that the Income Tax Officers of Group-B
were doing the work of Officers belonging to Group-A in a large B
number though on an ad hoc basis. This further shows that a.lthough
--f there was a need for regular promotion of the Officers from Group-B
to Group-A, the Government was using Group-B Officers in a large
number to perform the duties of Group-A Officers without giving
- '
them regular promotion and was thus maintaining an artificial distinc-
tion between the two groups without justification.
c
38. As has been stated in the affidavit filed on behalf of respon-
dents 1 & 2, although both Group-A and Group-B Officers have equal
powers, the ITOs of Group-A are generally placed in-charge of
important wards and cases carrying higher responsibilities, whereas
the Officers belonging to Group-B are normally entrusted with less D
important wards and cases. A large majority of them have to deal with
summary assessments only. It is further pointed out that under the
Act, prior to its amendment of 1987, the power to appoint the Officers
belonging to Group-A, i.e. Class-I was vested in the Central Govern-
ment while the power to appoint Officers belonging to Group-B, i.e.,
Class-II was vested in the Commissioner of Income Tax. The same E
distinction in the appointing authorities continues even after the
amendment. The Assistant Commissioner, i.e., the former ITOs of
Group-A are appointed by the Central Government whereas the
power to appoint Income Tax Officers, i.e., the former Group-B
Officers, can be vested by the Central Government in the Board or a
~·· Director General or a Chief Commissioner or a Director or Commis- F
sioner. The respondents further deny that there was ever an inter-
changeability of the two posts, and contend that they always remained
separate. They point out that in fact, the post of Group-A. Officers
has two grades, i.e., Grade-I and Grade-II. Grade-II post of Group-A
has always been a promotional post for Group-B Officers. Their scales
of pay have also been different and have been fixed keeping in view G
the distinction between the two Groups which belong to .two different
··--( cadres. This Court had in fact in K.M. Bakshi v. Union of India, AIR
1962 SC 11.39 gone into the matter pertaining the distinction between
the two Groups of Officers, and had upheld the said classification.

39. There is further no dispute that the posts of Income Tax H
1022 SUPREME COURT REPORTS [1990] 1 S.C.R.

A Officer Group-A junior scale or Grade-II, are filled 50% by direct
recruitment through the Civil Service Examination held by the Union
Punblic Service Commission and 50% by promotion on the basis of
selection by the Departmental Promotion Committee from Income
Tax Officers Group-B who have rendered not les than 5 years' service
in that post. The appointments to the posts of Income Tax Officers
B Group-B are made 100% by promotion from Income Tax Inspectors
who belong to Grade-C or Class-III service. The appointment to the
posts of lncome Tax Inspectors are made 33-1/3% by direct recruit-
ment and 66-2/3% by promotion from the lowr group of Class-C
service. The result has been that the present strength of about 2,500
ITOs of Group-B consists of all but 185 promotees (who were
C recruited ad hoc only in one year, i.e., in 1969) from the lower Group-
-
;

e posts. What is more, as pointed out above, the Income Tax Officers
Group-B, and Income Tax Officers Group-A junior scale, belong to
two different cadres and not to the same cadre of Income Tax Officer.
Hence those who joined the lower Group-C service cannot claim
equality in conditions of service with Group-A Officers who are either
D recruited directly on the basis of the Civil Services Examination or are
promoted from Group-Bon the basis of seniority-cum-merit.

40. It is also pointed out on behalf of the respondents that after
changing the designation of the Income Tax Authorities and designat-
ing the former ITOs of Group-A and Group-B as Assistant Commis-
£ sioners and ITOs respectively, their jurisdictions have been regulated.
The basic principle followed in demarcating the jurisdiction of the two
classes of Officers is the quantum of the return of income/loss as on 1st
April of the Financial Year. If the return of income/Joss is of Rs.5
lakhs and above, it goes to the Deputy Commissioner; if of Rs.2 lakhs
and above but below Rs.5 lakhs, it goes to the Assistant Commissioner
F (i.e., the former Group-A Officers); and if it is below Rs.2 lakhs, it
goes to the Income Tax Officers (the former Group-B Officers). It is
also pointed out that the Government has since issued a notification on
March 30, 1988 making the Income Tax Officers and Tax Recovery
Officers subordinate to the Assistant Director or Assistant Commis-
sioner. Further, whereas Assistant Commissioners of Income Tax
<lJ (former ITOs of Group-A) are now empowe.red to writ off a sum upto
Rs.1,000 if they are convinced that the amount is irrecoverable, in
similar circumstances, the ITOs, i.e., former Officers belonging to
Group-B, are empowered to writ off an amount upto Rs.500 only.
When the assessment is made under sub-section (3) of Section 143 or
Section 147 for the relevant assessment year, the power to issue notice
!fl under Section 148 is vested only in an Assessing Officer of the rank of
H.K. SAJNANI v. U.0.1. [SAWANT, J.] 1023

Assistant Commissioner or Deputy Commissioner. Section 274(2) of the
A
>- Act prescribes monetary limits regarding the powers of the Income
Tax Officer and Assistant Commissioner for imposing penalty. That
provision shows that Income Tax Officer (i.e., the form.r Group-B
Officer) has authority to impose penalty upto Rs.10,000, whereas the
Assistant Commissioner (former Group-A Officer) has the authority
to impose penalty upto Rs.20,000 without the prior approval of the B
Deputy Commissioner.
--<\
41. The material placed on record by the respondents, thus,
shows that the distinction between Group-A and Group-B Officers has
... been in existence from the very begining. The distinction has been
·' maintained statutorily with distinct powers and jurisdiction, hierar-
chical position and eligibility qualifications. The sources of their
c
appointment and the authorities vested with the power to appoint
.I.. them have also been different. The distinction between the two further
has been made on the basis of the class of work and the responsibility
entrusted to each. The work which is of more than a routine nature
and wlµch involves a detailed investigation either on account of the 0
class of the assessees or of the complexities of the returns filed, is
entrusted to the Officers belonging to Group-A (now Assistant Com-
missioners) while the assessment work of a summary or routine nature
). or of the assessees filing routine returns or returns involving simple
transactions is entrusted to Officers belonging to Group-B (now
ITOs). Although, therefore, apparently the outfit of the function and E
its procedural part is the same, in practice the assessments differ from

~-
assessees to assessees, summoning different degrees of knowlege,
application of mind, resourcefulness, acumen and talen to scrutinize
them. Hence, merely because sometimes, on account of the exigencies
of work the Officers belonging to Group-B were entrusted with the
~ work of the Officers of Group-A, it cannot be claimed that the two F
posts are of an equal rank. The handling of the higher category of work
may entitle an Officer of the lower rank to emoluments of the higher
post. But that cannot obliterate the distinction between the two posts.
To accept the plea of. the petitioners to equate the two posts or to
merge them on that account, is to negate the whole statutory scheme
and also to ignore the fact that the Group-B post (i.e., the present post G
of the ITO) is an intermediate post between that of the Income Tax
---< Inspector and the Group-A post (i.e, the present post of Assistant
Commissioner) which is a promotional post for Officers belonging to
Group-B. The Group-A post is further a selection post and the pro-
motee has to satisfy certain qualifications to be eligible for being con-
sidered for the said post. The two posts, therefore, always belonged to H
1024 SUPREME COURT REPORTS [1990] 1 S.C.R.

A two ~ifferent cadres carrying different scales of pay and other service
cond11tons. Thus, I.his is not a case of the two posts being equal in
status or of belongmg to the same class. The distincton between the
~wo is ord<i!ned by the Statute and is necessary for its proper
1mplementalton. By the very nature of the operation involved the
administration has to have the power to classify the work ..;d to
B appoint personnel with different skill and talent to execute the diffe-
rent types of work. The legislature being mindful of this need has
deliberately created the two classes of officers as is evident from the
provisions of Section 117 even prior to its present amendment. Even
after the amendment the said distinction has been maintained. The
fact that this distinction has all along been real and not nominal is clear
from the difference in the power and jurisdiction statutorily vested in
c the two classes of Officers. Hence, the intention of the legislature to
-•
have the two classs of Officers to discharge different types of work is
manifest and in practice the distinction has always been maintained. It -'.
is only when the exigencies of the work required that some officers
belonging to Group-B were promoted on ad-hoc basis to the posts of
D Group-A officers. Such exigencies occur in every organisation, and to
cope up with them the authorities have to improvise. That, however,
cannot equate the two unequal posts.

42. The very same argument for equating these two classes of A
Officers was advanced in K.M. Bakshi v. Union of India, (supra). It
E was pointed out by this Court in that case that the Income Tax services
were reconstituted by an order of the Government of India dated
September 29, 1944, and later on in 1953, Section 5 of the Income Tax ~
Act was amended to give effect to this reconstitution. One of the .
features of the reconstitution was that in place of one class of Income .
Tax Officers two classes came into existence, namely, Class-I and
F Class-II ITOs. Class-I Officers were eligible to be promoted to the ~
higher post of Commissioners and Assistant Commissioners, and
Class-II Officers could obtain such promotion only after having first
reached the status of Class-I Officers. A percentage of the vacancies in
the posts of Class-I Officers was to be filled by promotion of Class-II
Officers, and the rest by direct rectuitment. It was also pointed out
G that Class-I post being a promotional post for Class-II Officers, the
two posts were not equal. Dealing with the argument of eual pay for
equal work, the Court pointed out that if that argument were to be ;>---
accepted literally, even the incremental scales of pay fixed dependent
upon the duration of an Officer's service could not be justified. It
appears that in that case the Court was called upon to deal with a bland
H assertion that the two posts were equal and it was not contended that
H.K. SAJNANI v. U.0.1. [SAWANT. J.] 1025

the duties and functfons discharged by them were equal in nature and
A
hence the Court had no occasion to deal with the said contention. We
have already pointed out above that there is a difference in the nature,
scope and responsibility of the duties entrusted to the two Officers
justifying the differentiation. This is apart from the fact that the matter
has now been set at rest by the Rules, notifications, circulars and
orders which have been issued demarcating clearly the functions and B
jurisdiction of the two.

43. As has been held in Federation of All India Customs and
Central Excise Stenographers (Recognised) & Ors. v. Union of India &
Ors., [1988] 3 SCC 91 the differentiation in two classes can be justified
on the basis of "the nature and the type of the work done ......... .
The same amount of physical work may entail different quality of c
work, some more sensitive, some requiring more tact, some less-it
varies from nature and culture of employment. The problem about
equal pay cannot always be translated into a mathematical formula. If
• it has a rational nexus with the object sought for .......... a certain
amount of value judgment of the administrative authorities who are D
charged with fixing the pay-scales has to he left with them and it
cannot be interfered with by the Court unles it is demonstrated that
either it is irrational or based on no basis or arrived ma/a fide either in
law or in fact". The Court there found that in the light of the aver-
ments made and the facts pointed out, it was not possible to say that
the differentiation there was based on no rational i'iexus with the E
object sought to be achieved. The Court noted that the differentiation
was justified on the dissimilarity of the responsibility, confidentiality
and the relationship with public etc. though there was similarity in the
functional work. The court further observed there that often the dif-
ference in the functions and the responsibilities is a matter of degree
and the administration is required to make a value judgment while F
classifying the posts and fixing the different conditions of service for
them. So long as the value judgment is made bona fide, it is not
questionable. The same view has been reiterated by this Court in V.
Markendeya & Ors. v. State of Andhra Pradesh & Ors., [1989] 3 SCC
191.
G
44. At the cost of repetition, we may state that in the present
case the distinction between the two posts is made by the statute itself
and that distinction has been in existence since long. The appointing
authorities of the two posts are different. In fact, the Group-A post
(the present post of the Assistant Commissioner) had two grades, viz.,
Grade-I and Grade-II, and Grade-II post was a promotional post for H
1026 SUPREME COURT REPORTS [1990] 1 S.C.R.

officers belonging to Group B (the present ITO). The nature of work
A
entrusted to the two classes of posts, the responsibility which goes with
.....
it and the power and jurisdiction vested in them vary. The mere fact
that some Group B officers are capable. of performing the work of
Group-A officers and in fact on some occasions in the past they were
appointed ad hoc or otherwise, to discharge the work of Group A
B officers cannot equate the two posts. Such a demand, to say the least,
is irrational for if this contention is accepted, in no organisation the
hierarchy of posts can be justified. After the 1987 Amendment,
further, the situation has changed and the duties, functions, jurisdic-
•
~
lion and power of the officers have been rationalised clearly demarcat-
ing the spheres of work of the two. In an organisation of this kind, with
contrywide offices dealing with various categories of assessees and
- •
c incomes, some dislocation, functional overlapping and want of uni-
formity in the assignment of work during some period is not unex-
~-
peeled; and it does appear that during some period, the situation in the
Department was out of joint. That is whv steps were taken to straigh-
ten it out by amending the Act and making the rules and issuing the
D relevant notifications, circulars and orders. If during this period on
account of the exigencies of service, some ad hoc appointments of
Group B officers were made to Group A posts, Grade-II or Group-B
officers were required to perform the same functions and discharge the .........
same duties as Group-A officers, they can at best claim the emolu- '
ments of Group A officers, but certainly not the equalisation of the
E two posts on that account.

-~
45. Since the alleged equality of posts was the foundation of the
other contentions raised in the petitions, the said contentions must
also fail and need not be dealt with separately. The contentions which
are common to the earlier petition have already been dealt with.
,..._
F 46. In the circumstances, we find no substance in these petitions.
The petitions are, therefore, dismissed and the rule granted in each is
discharged with no order.as to costs.
47. Before parting with these petitions, we cannot help observ-
ing that although the issues raised in all these petitions were set at rest
by this Court conclusively earlier, the petitioners thought it necessary
Cl to tax the precious time of the Court by approaching it once again on
grounds which were least justified. We hope and trust that this decison r
puts a final lid on the alleged grievances of the petitioners and no new
pretexts are found hereafter to take up the same contentions under
other garbs.
H Y.Lal Petitions dismissed.