Holding

The 1990 amendment restricting promotion of diploma‑engineers to a 3:1 ratio is constitutionally valid and does not breach Articles 14 and 16, and vacancies existing three months before its commencement must be filled under the old rules by promoting eligible diploma‑engineers.

Summary

The case concerned the validity of the 1990 amendment to the Madras Corporation Engineering Service Rules which introduced a 3:1 ratio favouring graduate engineers over diploma‑engineers for promotion to Assistant Executive Engineer. The petitioners (graduate engineers) challenged the amendment as violative of Articles 14 and 16 of the Constitution, while the respondents (diploma‑engineers) argued that vacancies that arose before the amendment should be filled under the unamended rules and that Section 87 of the Madras City Municipal Corporation Act was mandatory. The Supreme Court held that a classification based on academic qualification for promotion is permissible and does not infringe Articles 14/16, affirming the amendment’s validity. It also interpreted Section 87 as directory and directed that vacancies created within three months before the amendment be filled by promoting eligible diploma‑engineers before any graduate promotion, with retrospective seniority but no salary arrears. The appeal was allowed and the High Court order set aside.

Issues considered

The 1990 amendment imposing a 3:1 promotion ratio for graduates over diploma‑engineers violates Articles 14 and 16 of the Constitution.
Whether vacancies that arose prior to the amendment must be filled under the pre‑amendment rules.
Whether Section 87 of the Madras City Municipal Corporation Act, 1919 is mandatory or directory in the context of vacancy filling.

Legislation cited

Madras City Municipal Corporation Act, 1919s. 87

Subjects

Articles 14Article 16Promotion quotaClassification by qualificationRule‑making authorityMadras Corporation Engineering Service RulesSection 87Equality before lawAdministrative efficiency

Judgment

P. MURUGESAN AND OTHERS A
v
STATE OF TAMIL NADU AND OTHERS

FEBRUARY 3, 1993

(LALIT MOHAN SHARMA, 0., B.P. JEEVAN REDDY B
AND A.S. ANAND, JJ.]

Civil Services-Madras Corporation Engineering Service Rules,
1969--Promotion to the posts of Assistant Executive Engineer-Ratio 3:1
between graduate engineers (Assistant Engineers) and diploma-holder en-
gineers (Junior Engineers)--whether violative of Articles 14, 16 of the Con- c
stitution.

Madras City Municipal Corporation Act, 1919--Section 87-¥acancies
arose prior to Madras Corporation Engineering Service (Amendment) Rules,
1990--whether to be filled according to unamended Madras Corporation D
Engineering S~rvices Rules, 1969-Supreme Court's direction.

Under the Madras Corporation Engineering Service Rules, 1969, the
recruitment to the posts of Assistant Engineers was by (1) direct recruit-
ment, (b) by promotion from the category of Supervisors and (c) by
appointment on deputation. E
The graduate Supervisors were required to put in a minimum or five
years service in the category or Supervisors for becoming eligible for
promotion, whereas the diploma-holder-Supervisors were required to put
in a minimum service of ten years as Supen'isors.
F
In the category of Supervisors, in the matter of pay scales too,
distinction was maintained between graduates and diploma-holders; while
the pay-scale or the category of Supervisors was Rs. 325-650, the graduates
were started at the initial pay of Rs. 400. From 1972 onwards, the pay
scales prescribed for the graduates and the diploma-holders were dif- G
· ferent.

In 1978, the diploma-holder-Supervisors were designated as Junior
Engineers, while the degree-holder-Supervisors were designated as Assis-
tant Engineers. The Posts of Assistant Engineers were re-designated as
Assistant Executive Engineers. H
405
406 SUPREME COURT REPORTS [1993) 1 S.C.R.
A In 1978 certain promotions were made to the category or Assistant
Executive Engineers by applying the ratio or 3:1 between the graduate-en- ~
gineers (Assistant Engineers) and the diploma-holder-engineers (Junior
Engineers).

The respondents-Junior Engineers challenged the promotions in
B writ petitions in the High Court, which was dismissed by a Single Judge.

On appeal, a Division Bench of the High Court quashed the promo-
tions holding that as the Madras Corporation Engineering SerVice Rules,
1969 did not provide for any ratio, the Corporation could not prescribe
C the ratio or 3:1 by a mere resolution or by an executive order.

The Special Leave Petition prererred against the "judgment or the
Division Bench or the High Court was dismissed by this Court on
25.1.1990.

D The State Goverumeat thereafter amended the 1969 Rules in 1990
providing for the ratio or 3:1 between the degree-holders and the diploma·
holders in the matter or promotion to the posts or the Assistant Executive
Engineers. The 1990 Amendment Rules also provided that a Junior En·
gineer (diploma-holder) who acquired an engineering degree or its
E equivalent during his service would be eligible for appointment as Assis·
tant Executive Engineer, ir he puts in three years or service in the Corpora-
tion Engineering Subordinate Service after obtaining the degree.

The diploma-holders questioned the validity or the 1990 Amendment
Rules, in writ petitions before the High Court.
F
The Single Judge dismissed the writ petitions and upheld the validity
or the 3:1 ratio. On appeal, the Division Bench quashed the amendment
introducing the ratio or 3:1, against which the present appeal was filed by
the graduate Engineers.
G The appellants contended that the Assistant Engineers and the
Junior Engineers constituted different categories though performing
similar functions and discharging similar responsibilities; that their pay·
scales were different; that the Statutory Rules of 1969 made a distinction,
between the two categories inasmuch as while only Ove years' qualifying
H service was prescribed for the Assistant Engineers (graduates), ten years
MURUGESAN v. STATE OF TAMIL NADU 407
was prescribed for the Juuior Engineers (diploma-holders); that in such A
a situation imposing of an additional restriction upon the promotional
chances of Junior Engineers by the 1990 Amendment Rules was neither
incompetent nor discriminatory; that Section 87 of the Madras City
Municipal Corporation Act was not mandatory but only directory•.

The respondents-diploma-holders submitted that in the category of B
Supervisors graduates were appointed by direct recruitment and diploma-
bolders by promotion from the category of Overseers; that the Assistant
Engineers as well as Junior Engineers performed identical functions and
discharged identical responsibilities; that they were inter-transferable;
that In such a situation prescription of a quota between them for promo- C
tion to the higher category was discriminative and was violative of Articles
14 and 16 of the Constitution; that once the diploma-holders were required
to put in ten years' service as against live years' service in the case of the
graduates, in the category of Supervisors for becoming eligible for promo-
tion as Assistant Execntive Engineers, the eligible graduates and the
eligible diploma-holders became equals in all respects and there should D
not be any distinction thereafter for the purpose of promotion; that at any
rates In view of the provisions in Section 87 of the Madras City Municipal
Corporation Act, the vacancies which arose prior to the coming into force
of the 1990 Amendment Rules should be filled up in accordance with the
unamended Rules, i.e. without reference to the quota. E
Allowing the appeal, this Court,

HELD : 1.01. It is held by the constitution Bench in Tri/old Nath
Khosa that a distinction made on the basis of academic qualification for
the purpose of promotion to higher category is not violative of Articles 14 F
and 16. Jn the said case, a rule barring the non-graduate-engineers from
promotion to the category of executive engineers was upheld. If the
diploma-holders can be barred altogether from promotion as held in
Tri/oki Nath Khosa, it is difficult to appreciate how and why is the rule
making authority precluded from restricting the promoti\)n. The rule G
making authority may be of the opinion, having regard to the efficiency of
the administration and other relevant circumstances that while it is not
necessary to bar the diploma-holders from promotion altogether, their ·
chances of promotion should be restricted. [416E, 4170]

1.02. There would be no justification in principle for holding that the H
408 SUPREME COURT REPORTS (1993) 1 S.C.R.
A rule-making authority has only two options namely either to bar the
diploma-holders altogether from prometion or to allow them equal oppor·
tunity with the graduate engineers in the matter of promotion. It must be ~
remembered that the power of rule-making under the proviso to Article
309 has been held to be legislative in character. [419C]

B 1.03. If so, the test is whether such a restrictive view is permissible
vis-a-vis a legislature. If not, it is equally impermissible in the case of the
rule-making authority under the proviso to Article 309. The only test that
such a rule has to pass is that of Articles 14 and 16. [4190)

C 1.04. Since 1969 the graduate supervisors and non-graduate Super-
visors Mre treated differently in the matter of pay, designation and in the
matter of promotion, though they were discharging identical functions and
duties. It is thus clear that though they belonged to one class Ibey repre-
sented two different categories, while it is true, they performed similar
duties and discharged similar responsibilities. [419G)
D A
1.05. It cannot be said that it is not permissible to the rule-making
authority, if it thinks it necessary in the interests of administration to limit
the promotional chances of non-graduates to one out of four vacancies, on
the basis of academic qualifications. (4208)
E
1.06. The distinction was also in the matter of promotion and not
for any other purpose. If that distinction is not discrimination, it is
difficnlt to see bow and why another distinction now created (quota rule)
is discriminatory. [4220)

F B.S. Vadera v. Union of India, AIR 1969 SC 118; State of Jammu &
Kashmir v. Triloki Nath Khosa, [1974) 1 SCR 771; State of Mysore & Anr.
v. P. Narasing Rao, [1968) 1 SCR 407; Union of India v. Dr. (Mrs.) S.B.
Kohli, AIR 1973 SC 811; Roop Chand Adlakha and Ors. v. D.D.A. and Ors.,
(1988) 3 Supp. SCR 253 and Shamkant Narayan Deshpande v. Maharashtra
G Industrial Development Corporation & Anr., 1992 (2) Scale 857, referryd to.

Mohammad Shujat Ali & Ors. etc. v. Union of India and Ors. etc.,,
(1975) 1 SCR 449, explained.

Roshan Lal Tandon v. Union of India, [1968) l SCR 185; Mervyn v.
H .Collector of Bombay, AIR 1967 SC 52= [1966) 3 SCR 600; H.C. Sha1711a
MURUGESAN v. STATE OF TAMIL NADU 409
and Others v. Municipal Corporation of Delhi and Others, (1983) 3 SCR A
372; Punjab State Electricity Board and Anr. v. Ravinder Kumar Shanna
and Ors., (1987) 1 SCR 72 and N. Abdul Basheer & Ors. etc. etc. v. K.K.
Kanmakaran & Ors., [1989] 3 SCR 201, distinguished.

2.01. Section 87 of the Madras City Municipal Corporation Act does
indicate and manifest the concern of the Legislature that the vacancies B
occurring in the Corporation Service should not be kept unfilled for a
period of more than three months. Sub-section (3) which provides for the
consequence of default on the part of the council to abide by sub-section
(1) emphasises the concern of the Legislature. So also does sub-section
(2). Sub-section (4) says that if there is going to be any delay or ifa suitable c
or qualified person is not available, the council may appoint a person on
temporary basis. [424H, 425A)

2.02. The vacancies occurring prior to three months before the date
of commencement of the imp11gned amendment ooght to have been filled
in accordance with the rules then obtaining. [4258] D
2.03. Having regard to the particular facts and circumstances of the
present case, it is directed that the Corporation shall ascertain the vacancies
in the category of Assistant Executive Engineers, that have arisen three
months prior to the coming into force of the impugned amendment (intro-
E
ducing the quota of 3:1 as between degree:holders and diploma-holders )
and shall work out the vacancies which would have gone to the diploma-
holders if unamended Rules had been followed. The Corporation shall also
ascertain which of the diploma-holders would have been promoted in those
vacancies. Such diploma-holders will be promoted in the existing and future
vacancies. Until these diploma-holders are so promoted to the category of F
Assistant Executive Engineers, no degree-holders shall be promoted. After
these diploma-holders are so promoted, it is obvious, the amended Rules
shall be applied and followed. As and when a diploma-holder is promoted in
pursuance of this direction, his promotion shall be given effect to from the
date he ought to have been promoted. Such diploma-holder promotees shall G
be entitled to the benefit of seniority and pay-fixation Rowing from such
retrospective promotions, but they shall not be entitled to th,e.arrears of
'dilTerence in salary for the period they have not actually worked as Assistant
Executive Engineers. [425E-H]

Ramgiah v. Srinivasa Rao, [1983) 3 SCC 284; P. Ganeshwar Rao v. H
410 SUPREME COURT REPORTS [1993] 1 S.C.R.
A State of Andhra Pradesh, [1988] Supp SCC 740; P. Mahendran and Others
v. State of Kamataka and Ors., [1990] 1 SCC 411 and Devin Katti & Ors. ~
v. Kamataka Public Service Commission and Others, [1990] 3 SCC 157,
referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 406 of
B 1993.

From the Judgment and Order dated 29.7.1992 of the Madras High
Court in Writ Appeal No. 518 of 1991.

C M.K. Ramamurthi, Ms. Chandan Ramamurthi, M.A. Chainasamy
and Krishnamoorthy for the Appellants.

R. Thyagarajan, S. Navaneethan, V. Balachandran, S. Srinivasan,
P.R. Seetharaman, R. Mohan, A.T.M. Sampath and N. Kannadasan for the
Respondents.
D
The Judgment of the Court was delivered by

B.P. JEEVAN REDDY, J. Heard the Counsel for the parties. Leave
granted.

E The dispute is between the degree holders and the diploma holders
in the engineering service under the Madras Municipal Corporation.

The Corporation of Madras is governed by the Madras City
Municipal Corporation Act, 1919. It employs a good number of engineers
F in connection with the discharge of its duties. Till 1%5, there was only one
category of supervisors. Recruitment to this category was by direct recruit-
ment of graduate engineers as well as by promotion from the lower
category 9f overseers. Diploma holders were not eligible for direct appoint-
ment as supervisors; they were first appointed to the category of overseers
and then promoted as supervisors. The category above the supervisors was
G that of assistant engineers. Supervisors, whether directly recruited
(graduates) or promotees (diploma-holders) were required to put in 20
years' service in the category of supervisors io become eligible for promo-
tion to the category of assistant engineers. No distinction was made as
between the degree holders (graduates) and diploma-holders in the matter
H of promotion or in the matter of eligibility criteria.
MURUGESAN i·. STA~OF TAMIL NADU (REDDY, J.] 411
In the year 1965, say the a pellants (who are all graduate engineers), A
the Corporation resolved (on 7..65) to follow the rule in vogue in State
Government service and apply 'the ratio of 3:1 between graduates and
diploma-holders in the matter of promotion to the category of assistant
engineers. The respondents who are all diploma-holders, deny that any
such resolution was passed. According to them it was only a recommenda-
B
tion of the Ad-hoc Committee constituted by the Corporation and that the
said recommendation was never accepted as such by the Corporation. The
respondents rely upon the Division Bench judgment dated 21.12.89 in writ
appeal No. 990 of 1984 etc. holding that no such ratio was actually enforced
in the Corporation Engineering Service. Be that as it may, some time prior
to 1969, the Act was amended empowering the Government to frame rules C
regulating the recruitment and conditions of service of the employees of
the Corporation. In exercise of the said power, the Government of Tamil
Nadu framed rules called Madras Corporation Engineering Service Rules
(contained in G.0.M.S. No. 31 RD-LA dated 7.1.69). These rules applied
only to class lA, lB and class II of engineering services under the Car- D
poration and riot to other posts. The post of assistant engineer was in
category III in class-II. Recruitment to this category was by (a) direct
recruitment (b) promotion from the category of supervisors and (c) by
appointment on deputation from the Government department. So far as
promotion is concerned, a distinction was made as between degree-holders
and diploma-holders. The graduate supervisors were required to put in a E
minimum of five years service in the category of supervisors for becoming
eligible for promotion, whereas the diploma-holder-supervisors were re-
quired to put in a minimum service of ten years as supervisors to become
eligible for such promotion. At about this time, a practice developed
whereunder graduate-supervisors were referred to as Junior engineers. The F
diploma-holders-supervisors (who are necessarily promotees in the
category of supervisors) continued to be referred to as supervisors.

In the year 1978 the Government ofTan;til N.adu altered the desig-
nations of the categori~ relevant before us by G.O.M.S. No. 954 dated
2.6.1978. Para-2 of theiG~O. stated that the diploma-holder-supervisors G
shall be designated a5 junior engineers while the degree-holders-super-
visors (who had come to be known as junior engineers meanwhile) would
be desi$'11lted as assistant engineers. Consequently the erstwhile post of
assistant engineer was re-designated as assistant executive engineer. By
G.O.M.S. No. 907 dated 20.5.1981, this change. in designation was given H
4U SUPREME COURJ REPORTS (1993) 1 S.C.R.
A effect to and incorporated in the Statutory Rules issued in 1969 (Madras
Corporation Engineering Service Rules).

The recruitment and conditions of service of assistant engineers and
juniors (formerly known together as Supervisors) were governed by the
B by-laws made by the Corporation. In the matter of pay scales too, a
distinction was being maintained between graduates and diploma-holders
even when they were in the same category of Supervisors. The pay scale
admissible to the category of supervisors was 325-650 but the graduates
were given a higher start-their initial pay was fixed at 400. No such
treatment was given to the diploma-holders. According to the appellants
C there was yet another distinction from 1972 onwards; the pay-scales
prescribed for the graduate engineers and dip!Oma-holder-engineers were
different as per the particulars mentioned in para 33 of the S.L.P. They
point out that in the counter filed to the Special Leave Petition, the
respondents have not denied the said averment; they merely stated in para
D 20 of their counter that the "allegations in paragraphs 33 to 36 are of no
avail to the petitioner."

Whether in pursuance of the Resolution of 1965 or otherwise, certain
promotions were made to the category of assistant executive engineers, in
the year 1978, applying the ratio of 3:1 as between graduate-engineers and
E diploma-holder-engineers. We may refer to these two categories ......\
hereinafter as assistant engineers and junior engineers, since that was the
designation given to them by G.O.M.S. No. 954 dated 2.6.1978. The said
promotions were questioned by diploma-holders in a batch of writ petitions
(2810 of 1978 etc.) in the Madras High Court. It was dismissed by a learned
F Single Judge. On appeal, however, a Division Bench of that court held
Gudgment dated 21.12.1989 in Writ Appeal No. 990 of 1984 etc.) that
inasmuch as the Statutory Rules framed in 1969 did not provide for any
such ratio, it is not open to the Corporation to prescribe such a ratio by a
mere resolution or by an executive order. Accordingly, the Division Bench
G quashed the said promotions. A Special leave petition preferred against
the said judgment in this Court was dismissed on 25.1.1990. It is then that
the Government of Tamil Nadu stepped in and amended the 1969 Rules
providing for the said ratio of 3:1 by way ofG.O.M.S. No. 138 (Municipal
Administration and Water Supply) dated 9th February, 1990. So far as
relevant herein, the said G.O. prescribed the "ratio of 3:1 between the
H degree holders and diploma holders" in the matter of promotion to the
MURUGESAN v. STATE OF TAMIL NADU [REDDY, J.] 413
assistant executive engineers. It was further provided that a junior engineer A
{diploma-holder) who acquired an engineering degree or its equivalent
during his service as junior engineer will be eligible for appointment as
assistant executive engineer if he puts in three years of service in the
Corporation Engineering Subordinate Service after obtaining the engineer-
ing degree or its equivalept. The result of this amendment was that a B
two-fold distinction came to be made between graduates and diploma-
holders in the matter of promotion to the post of assistant executive
engineers. In addition to the hitherto existing distinction in the matter of
length of qualifying period of service {10 years for diploma-holders/junior
engineers as against 5 years for degree-holders/assistant engineers), the
new restriction imposed by the said amendment was that the diploma C
holders/junior engineers were restricted to only one out of four posts of
assistant executive engineers; the remaining three were ·reserved for
graduates/assistant engineers. (Of course, according to the appellant such
a ratio was in vogue as a matter of fact since 1965. the respondents deny
this assertion. Be that as it may, the ratio - or quota, as it may be called - D
was statutorily imposed by the said amendment.

The validity of the 1990 amendments, in particular the introduction
of ratio of 3:1, was questioned by diploma-holders in the Madras High
Court in a batch of Writ Petitions being Writ Petition 2943 of 1990 etc. A
learned Single Judge dismissed the batch by his Judgment and Order dated E
21.3.1991, upholding the validity of the said ratio. On appeal, a Division
Bench took a contrary view and quashed the amendment introducing the

- ratio of 3:1. In this appeal, the correctness of the view taken by the Division
Bench is called in question.

Mr. M.K Ramamurthy, learned counsel for the appellants' submitted
F
that classification on the basis of academic qualifications is a well accepted
basis for the purpose of promotion and that the Division Bench of the
Madras High Court was in error in holding otherwise. He submitted that
assistant engineers and junior engineers constituted different categories
though performing similar functions and discharging similar respon- G
sibilities. Their pay-scales were different-at any rate from 1972. Even
earlier, the pay fJXation formula was different in the case of graduates. Even
the Statutory Rules of 1969 made a distinction between the two categories
inasmuch as while only five years' qualifying service was prescribed for
graduates, ten years' qualifying service was prescribed for diploma-holders. H
414 SUPREME COURT REPORTS (1993) 1 S.C.R.
A In sui;h a situation imposing an additional restriction upon the promotional
chances of diploma hold~rs by the impugned amendment is neither incom-
petent nor can it be characterised as discriminatory. He submitted that
right from 1972 onward, a clear distinction was being observed between
the graduates and diploma-holders and that the impugned amendment is
but another step in the same process.
B
On the other hand the learned counsel for the respondents-diploma-
holders submitted that wheiher graduates or diploma-holders, they were
all in the category of supervisors till the year 1981. There was only one
category of supervisors to which graduates were appointed by direct
C recruitment and diploma-holders by promotion from the lower category of
overseers. They performed identical functions and discharged identical
responsibilities. They were inter-transferable. On some occasions,
graduates (assistant engineers) were posted to assist a diploma holder
Gunior engineer) in discharging certain duties. Even after 1978 when the
D graduates-supervisors werti'designated as assistant engineers and diploma,
holders-supervisors were designated as junior engineers, the same situation
continued. In such a situation prescription of a quota as between them for
promotion to the higher category is discriminatory and is violative of
Articles 14 and 16 of the Constitution. Learned coun~el submitted that in
any event once the diploma-holders were required to put in ten years'
E service (as against five years' service in the case of graduates) in the
category of supervisors for becoming eligible for promotion as assistant
executive engineers, the eligible graduates and the eligible diploma-holders
became equals in all respects. No distinction is permissible thereafter in
the matter of and for the purpose of promotion. Creating such a distinction,
F imposing a disability upon the diploma-holders, is not only unjust and
inequitable, it is also a clear case of hostile discrimination. Lastly and
alternatively counsel submitted that the vacancies which arose prior to the
coming into the force of the impugned amendment, at any rate, should be
filled up in accordance with the unamended Rules. It is pointed out that
the impugned amendment is only prospective in operation. Section 87 of
G the Act is relied upon in this behalf.

It is true that theory of classification should not be carried too far
lest it may subvert, perhaps submerge, the precious guarantee of equality,
as pointed out by Chandrachud, J. in State of Jammu & Kashmir v. Triloki
H Nath Khosa, [1974) 1 SCR 771. Minute and microcosmic classification
MURUGESAN v. STATE OF TAMIL NADU [REDDY, J.j 415
should not be permitted nor should the Court countenance "mini classifica- A
tions based on micro distinctions", as pointed out by Krishna Iyer, J. in the
same case. Looked at from this broad angle, it may appear there is some
force in what the respondents contend viz., that. once the graduate-en-
gineers and diploma-holder-engineers constitute one class, perform same
.duties and discharge same responsibilities, placing a restriction on the B
diploma holders alone (limiting their chances of promotion to one out of
four promotions, as has been done by the impugned Amendment) is not
justified but this may be a too simplistic way of looking at the issue. We
cannot fail to take note of the fact that right from 1974 i.e., since the
decision of the Constitutions Bench in Triloki Nath Kilosa this Court has
been holding uniformily that even where direct recruits and promotees are C
integrated into a common class, they could for purposes of promotion to
the higher .cadre be classified on the basis of educational qualifications.

In the Kashmir Engineering Service, the post of assistant engineer
could be filled both by direct recruitment as well as by promotion. There D
were degree-holders and also diploma-holders in the category. By the
Kashmir Civil Services (Revised Pay) Rules, 1968 it was provided that a
diploma-holder-assistant engineer shall not cross the stage of Rs. 610 in
the scale of Rs. 300-30-540-EB-35-610-EB-35-750, which was the scale
applicable to assistant engineers. In 1970, Jammu and Kashmir Engineering
(Gazetted) Service Recruitment Rules, 1970 were issued providing that the E
post of executive engineer (the next higher post) shall be filled only by
promotion from among the assistant engineers, who possessed a bachelor's
degree in engineering or its equivalent qualification provided they have put
in seven years'· '·service in the assistant engineer's category.. Assistant en-
gineers who were not degree-holders were thus barred from promotion to F
the category of executive engineers. Both the Rules, namely 1968 Pay Rules
and 1970 Recruitment Rules were questioned by diploma-holders in the J
& K High Court. Though a learned Single Judge dismissed the writ
petition, his judgment was reversed in appeal by the Division Bench. The
Division Bench was of the opinion that where the employees were grouped
together and integrated into one unit without reference to their qualifica- G
tions, they form a single class in spite of initial disparity in the matter of
their educational qualifications and that no discrimination is permissible to
be made between them on the basis of such qualifications. On appeal this
Court reversed the Judgment of the Division Bench. Two judgments were
delivered, one by Chandrachud J. on behalf of himself A.N. Ray, C.J. and H
-{'

416 SUPREME COURT REPORTS [1993] 1 S.C.R.
A D.G. Palekar, and the other by Krishna Iyer, J. for himself and Bhagwati
J. Chandrachud J. while affirming the principle that a classification niust
be truely founded on substantial differences which distinguished persons
grouped together from those left out of the group and that such differential
attributes must bear a just and ·rational relation to the object sought to be
achieved, stated the scope of the Judicial scrutiny in such matters in the
B
following words :

"Judicial scrutiny can therefore extend only to the con-
sideration whether the classification rests on a reasonable
basis whether it bears nexus with the object in view. It
c cannot extend to embarking upon a nice or mathematical
evaluation of the basis of classification, for were such an
inquiry permissible it would be open to the courts to
substitute their own judgment for that of the legislature
or the rule-making authority on the need to classify or the
desirability of achieving a particular object."
D
The learned Judge held that judged from the above stand-point it
was impossible to accept the proposition that the classification of Assistant
Engineers into Degree-Holders and Diploma-Holders rests on any unreal
or unreasonable basis. They accepted the plea that the said classification
E was brought about with a view to achieving administrative efficiency in the
Engineering services. The higher academic qualifications, the learned
Judge held, is atleast presumptive evidence of a higher mental equipment.
The learned Judge said "what is relevant is that the object to be achieved
here is not a mere pretence for an indiscriminate imposition of inequalities
F and the classification cannot be characterized as arbitrary or absurd. That
is the farthest that judicial scrutiny can extend." The learned Judge referred
to the earlier decision of this Court in State of Mysore & Anr. v. P. Narasing
Rao, (1968] 1SCR407 and the Union of India v. Dr. (Mrs.) S.B. Kohli, AIR
1973 SC 811 to demonstrate that a distinction made on the basis of
G academic qualifications was always upheld by this Court. Indeed, in the
latter case, the relevant rule required that a professor of orthopaedics must
have a post-graduate degree in the particular speciality. It was upheld as
a relevant requirement, The learned Judge then explained the decision in
Roshan Lal Tandon v. Union of India (upon which substantial reliance was
placed by the respondents in that case) as an authority certainly for the
H proposition that "no discrimination could be made between promotees and
MURUGESAN v. STATE OF TAMIL NADU [REDDY, J.] 417
direct recruits by reference to the source from which they were drawn" but A
that it does not bar a classification based upon academic qualifications. In
the words of Chandarchud. J. Roshanlal Tandon's case is thus no authority
for the proposition that if direct recruits and promotees are integrated into
one class, they cannot be classified for purposes of promotion on a basis
other than the one that they were drawn from different sources." Having B
thus distinguished Roshan/a/ Tandon's case and Menyn v. Collector of
Bombay, AIR 1967 S.C. 52, the learned Judge concluded :

"We are therefore of the opinion that though persons
appointed directly and by.promotion were intregrated into
a common class for Assistant Engineers, they could, for c
purposes of promotion to the cadre of Executive En-
gineers, be classified on the basis of educational qualifica-
tions. The rule providing that graduates shall be eligible
for such promotion to the exclusion of diploma-holders
does not violate articles 14 and 16 of the Constitution and
D
must be upheld."

This decision clearly supports the appellants' contention and goes to sustain
the validity of the impugned amendment. If the diploma-holders can be
barred altogether from promotion, it is difficult to appreciate how and why
is the rule making authority preciuded from restricting the promotion. The E
Rule making authority may be of the opinion, having regard to the efficien-
cy of the administration and other relevant circumstances that while it is
not necessary to bar the diploma-holders from promotion altogether, their
chances of promotion should be restricted. On principles, there is no basis
for the contention that only two options are open to a rule making F
authority-either bar the diploma-holders altogether or allow them un-
restricted promotion on par with the graduates. This aspect has been
emphasised by Venkatachaliah J. in Roop Chand Adlakha and Ors. v.
D.DA. and Ors., [1988] 3 Supp. SCR 253 in the following words.

"If Diploma-Holders - of course on the justification of the
G
job-requirements and in the interest of maintaining a
certain quality of technical expertise in the cadre - could
validily be excluded from the eligibility for promotion to
the higher cadre, it does not necessarily follow as an
inevitable corollary that the choice of the recruitment H
418 SUPREME COURT REPORTS (1993) 1 S.C.R.

A policy is limited only two choices, namely either to con-
sider them "eligible" or "not eligible". State, consistent with
the requirements of the promotional-posts and in the
interest of the efficiency of the service, is not precluded
from conferring eligibility on Diploma-Holders condition-
ing it by other requirements which may, as here, include
B
certain quantum of service-experience. In the present
case, eligibility-determination was made by a cumulative-
criterion of a certain educational qualification plus a par-
ticular quantum of service experience. It cannot, in our
opinion, be said, as postulated by the High Court, that the
c choice of the State was either to recognise Diploma'
Holders as "eligible" for promotion or wholly exclude them
as 11 not-eligible'.'·

Counsel for the respondents however placed strong reliance upon
D certain observations made by Bhagwati, J. in Mohammad Shujat Ali & Ors.
etc. v. Union of India and Ors. etc., (1975) 1 SCR 449. After referring to
the facts of, and the principles enunciated in, T.N. Khosa the learned Judge
made the following observations:

E "But where graduates and non-graduates are both
regarded as fit and, therefore, eligible for promotion, it is
difficult to see how, consistently with the claim for equal
opportunity, any differentiation can be made between
them by laying down a quota of promotion for each and
F giving preferential treatment to graduates over non-
graduates in the matter of fixation of such quota. The
result of fixation of quota of promotion for each of the
two categories of Supervisors, would be that when a vacan-
cy arises in the post of Assistant Engineer, which, accord-
ing to the quota is reserved for graduate Supervisors, a
G non-graduate supervisor cannot be promoted to that
vacancy, even if he is senior to all other graduate Super-
visors and more suitable than they. His opportunity for
promotion would be limited only to vacancies available for
non-graduate Supervisors. That would clearly amount to
H denial of equal opportunity to him."
MURUGESAN v. STATE OF TAMIL NADU [REDDY, J.] 419
..). On the basis of the above observations it is argued that once the A
diploma-holders are also held eligible for promotion, it is not permissible
for the rule-making authority to make any distinction between graduates
and diploma-holders. We cannot agree. As a matter of fact; this court in
Shujat Ali case upheld the validity of the Andhra Pradesh rule which made
a distinction between the graduate supervisors and non-graduate super-
visors in the ·matter of promotion to the higher categories on the ground B
that in the erstwhile States of Andhra and Hyderabad, graduate supervisors
~
were always treated as distinct and separate from the non-graduate super-
visors, their pay scales were different; they were never really integrated into
one class and graduate supervisors were called Junior Engineers. Accord-
ingly, it was held that reducing the chances of promotion of non-graduate
supervisors vis-a-vis graduate supervisors was not discriminatory. (As we
c
shall presently point out, the factual situation in Madras Corporation
Engineering service is similar). The observations quoted above cannot be
~ read in isolation nor can they be read as running counter to the ratio of
T.N. Khosa. Both decisions were rendered by Constitution Benches. In any
event, the facts and circumstances of the case before us are akin to those D
in Shujat Ali. Secondly as explained hereinbefore there would be no
justification in principle for holding that the rule-making authority has only
two options namely either to bar the diploma-holders altogether from
promotion or to allow them equal opportunity with the graduate engineers
,>-.. in the matter of promotion. It must be remembered that the power of
rule-making under the proviso to Article 309 bas been held to be legislative E
in character. Vadera - A.I.R. 1%9 S.C. 118. If so, the test is whether such
a restrictive view is permissible vis-a-vis legislature. If not, it is equally
impermissible in the case of the rule-making authority under the proviso
to Article 309. The only test that such a rule has to pass is that of Articles
14 and 16 - and to that aspect we may turn now. F
)'
The facts of this case, narrated hereinbefore, clearly disclose that
long prior to the impugned amendment, a clear distinction was being
maintained between these two categories. The 1969 Rules, as originally
issued, prescribed a five years' qualifying service for graduate engineers
while prescribing ten years' qualifying service for diploma holders, though G
~
earlier it was twenty years for both uniformly. No one ever questioned it.
The graduates were designated as Assistant Engineers while Supervisors
were designated as junio; engineers in the year 1978. This distinctive
designations were recognised by and incorporated into the Statutory Rules
(1%9 Rules) in the year 1981. No grievance was made on that count. Even H
420 SUPREME COURT REPORTS (1993] 1 S.C.R.
A when both of them were in the same pay scale, the graduates were being
given a higher start at Rs. 400 straightway, while no such benefit was given
to a promotee. Further, from 1972 onwards, it appears, their very pay-
scales were different. It is thus clear that though they belonged to one class
they represented two different categories, while it is true, they performed
similar duties and discharged similar responsibilities. It is asserte(j by the
B Respondent's counsel that there is also a common seniority list but this fact
is denied by the appellant. According to them, there were two separate .
seniority lists till 1979 and that when in 1979 a single seniority list was
prepared, it was objected to by the graduates. Be that as it ·may, the
question still remains whether it is not permissible to the rule-making
C authority, if it thinks it necessary in the interests of administration to limit
the promotional chance::i of non-graduate to one out or four vacancies, on
the basis of academic qualifications. In the light of the Constitution Bench
decision in Triloki Nath Khosa, we cannot say that it is not permissible.

D In Shamkant Narayan Deshpande v, Maharashtra Industrial Develop-
ment Corporation & Ors.., 1992 (2) Scale 857 a Bench consisting of P .B.
Sawant and G.N. Ray, JJ. took the same view as we do in this case. We
also agree with the basis upon which the learned Judges di.stinguished the
decision in H.C. Sharma and .Ors. v. Municipal Corporation of Delhi and
Others, [1983] 3 SCR 372.
E
The learned counsel for respondents relied upon the decision in
Punjab State Electricity Board and Anr. v. Ravinder Kumar Sharma and Ors., .
[1987] 1 SCR 72, a decision rendered by a Bench ·comprising A.P. Sen and
B.C. Ray, JJ .. the category of line-men in the service of the Punjab State
F Electricity Board comprised both diploma-holders and others who may be
referred to as non-diploma-holders. They censtituted one single category
having a common seniority list. By means of the Rules issued under the
proviso to Article 309, a quota was prescribed for diploma-holders, :he
result of which was that diploma-holders who were far junior to the
non··diploma-holders we~e promoted ignoring the non-diploma-holders.
G The rule was held to be bad by the learned Subordinate Judge, Patiala. On
appeal, the Additional District Judge, Pati ala affirmed the judgment. It was
affirmed by the High Court as well. The matter was brought to this Court.
This court affirmed the judgment of the High Court. A persual of the
judgment shows that the attention of the Bench was not diawn either to
H T.N. Khosa or to other decisions. Reference was made only to the obser-
MURUGESAN v. STATE OF TAMIL NADU [REDDY, J.] 421
vations in Shujat Ali quoted hereinbefore and it was held that the distinc- A
tion· made between the diploma-holders and non-diploma-holders was
discriminatory and bad. Apart from the distinction on facts between that
case and the case before us, it is evident that non-consideration of the T .N.
K)losa and other decisions relevant under the subject has led to the laying
down of a proposition which seems to run counter to T.N. Khosa. With
B
great respect to the learned Judges who decided that case, we are unable
to accept the broad proposition flowing from the case.

The counsel for the respondents then relied upon N. Abdul Basheer
& Ors. etc. etc. v. KK. Karunakaran & Ors., (1989] 3 SCR 201 a decision of
a Bench of three learned Judges. On an examination of the facts of that C
case, it was held by Pathak, C.J. speaking for the Bench, that the history
of the evolution of the Kerala Excise and Prohibition Subordinate Service
does not show that the graduates and non-graduates were treated as two
separate categories. The following observations bring out the factual posi-
tion found in that case.
D
nThe history has varied with the circumstances Prevailing
before and after the reorganisation of the State on 1
November, 1956. Originally when more emphasis was laid
on the induction of graduates, the ratio of graduate to
non-graduate officers was maintained at 3:1 but from 9 E
September, 1974 the' ratio was changed inversely to 1:3.
More non-graduates were now inducted into the Service.

- The trend shows, if anything, that it ran in favour of
absorbing more non-graduates. The conditions pertaining
to the service, and respecting which the constitution of the F
service varied from time to time, showed fluctuations. A
consistent or coherent policy in favour of graduates was
absent. This is not a case where the cadre of officers was
kept in two separate divisions. It was a single cadre, and
they were all equal members of it. There is no evidence
that graduate Preventive Officers enjoyed higher pay than G
non-graduate Preventive Officers. The High Court has
noted that the nature of the duties of Preventive Officers
whether graduate or non-graduate was identical, and both
were put_ to field work. Non-graduate Preventive Officers
were regarded as competent as graduate Preventive Of- H
422 SUPREME COURT REPORTS (1993] 1 S.C.R.
A ficers. There is no evidence of any special responsibility
being vested in graduate Preventive Officers. Once they
were promoted as Excise Inspectors there was no distinc-
tion between graduate and non-graduate Excise lnspec-
tors. tt

B It is thus clear that the facts of that case were entirely different and
it is those facts which influenced the decision holding that no distinction
can be made between graduates and non-graduates inspectors in the matter
of promotion. The said decision, however, cannot be read as containing
any proposition contrary to T.N. Khosa. We are, therefore, of the opinion
C that the principle of the said decision cannot help the respondents. So far
as the factual situation is concerned, the facts of the case before us do
show, as discussed hereinbefore, that since 1%9 the graduate supervisors
and non-graduate supervisors were treated differently in the matter of pay,
designation and in the matter of promotion though they were discharging
identical functions and duties.
D
It may also be noticed in this connection that in the government
service, the ratio of 3:1 as between graduates and diploma-holders has been
in vogue since prior to 1965 and the corporation has been trying to
implement the said ratio in its service too.
E
Another argument urged by the learned counsel for the Respondents
is that by precribing a longer qualifying period of service for diploma-
holders, they have been equated with the graduates and that thereafter no
further distinction is permissible. We cannot agree. The distinction
aforesaid was also in the matter of promotion and not for any other
F purpose. If that distinction is not discrimination, it is difficult to see how
and why another distinction now created (quota rule) is discriminatory.
Suppose, if these two requirements (i.e., longer qualifying service and
quota rule) had been introduced at the same time, there could h_ave been
no room for the present argument. The rule woulg_liave-beeii g~od. How
G does it become bad, if they are introduced ·at atfferent times? Both relate
to their eligibility and chances of promotion. To wit, the basic question is
- if they can be barred altogether from promotion, <!SJield--in T.N. -Khosa,
why can't their chances of promotion be restricted, curtailed or hedged in.

Sri Thyagarajan, learned counsel for respondents 3 to 8 (diploma-
H holders) raised an alternative contention based upon Section 87 of the
MURUGESAN v. STATE OF TAMIL NADli [REDDY, J.] 423
Madras City Municipal Corporation Act. Section 87 reads as follows : A
"87. TIME WITHIN WHICH VACANCY IN CERTAIN
POSTS MUST BE FILLED UP :

(1) If a vacancy occurs in any office included in (* *)
Class I,B or Class II, or any new office in Class 1-B or B
Class II is created, the council shall within three monthi;
appoint any qualified and suitable person to hold such
office.

(2) If the State Government refuse to confirm the
appointment so made, the council shall appoint some
c
other qualified and suitable person within forty-five days
from the receipt of the order refusing confirmation.

(3). In default of any appointment being made in
. accordance with sub-section (1) or sub-section(2), as the D
case may be, the State Government may appoint a person
who in their opinion, is qualified and suitable to hold the
office and such person shall be deemed to have been
appointed by the council.

(4) Pending an appointment under sub-section (1) or E
sub-section (2), the council may appoint a person to hold
the office temporarily and assign to him such salary as it
may think fit :

Provided always that the salary so assigned shall not F
exceed the maximum fixed by the State Government by
rules in respect of the office."

The contention of the learned counsel is this: sub-section (1) of
Section 87 obligates the council to fill up a vacancy within three months of
occurrence of a vacancy by a qualified and suitable person. Sub-section (3) G
provides the consequence of the· default of the council in making an
appointment within the time prescribed by sub-section (1). In such even-
-4.. tuality the State Government becomes entitled to appoint a person, who in
their opinion is qualified and suitable for such office and the person so
appointed shall be deemed to have been appointed by the council. Sub- H
424 SUPREME COURT REPORTS (1993] l S.C.R.
A section (4) empowers the council to make a temporary appointment pend-
ing an appointment under section (1) or sub-section (2). [Sub-section (2)
says that if the State Government refuses to confirm the appointment made -""'
by the council under sub-section (1), the council shall have to appoint some
other qualified and suitable person within forty-five days from the date of
B receipt of the order of the Governmen\ refusing confirmation]. The counsel
contends that in view oft' ,e said provision, the vacancies which arose three
months prior to the date of the commencement of the impugned amend-
ment should be filled according to the unamended rules i.e., without
reference to the quota. He relies upon the decisions of this Court in
Rangiah v. Srinivasa Rao, (1983] 3 sec 284; P. Ga11eshwar Rao v. State of
c A11dhra Pradesh, (1988] Supp. SCC 740; P. Mahendran a11d Others v. State
of Kamataka a11d Ors., (1990 ] I SCC 411 and Devin Kalli & Others v.
Kamataka Public Service Commission and Others, [1990] 3 SCC 157.

On the other hand the learned counsel for the appellant submits
D firstly, that this argument was not raised before the High Court and should
not be allowed to be raised at this stage for the first time, secondly, he says
Section 87 is not mandatory but only directory. The learned counsel also
argues that in pursuance of the judgment of the learned Single Judge dated
21.3.1991 (upholding the validity of the impugned amendment and giving
E certain directions in the matter of making promotions to the post of
assistant executive engineer) and also because stay was refused by the
Division Bench of High Court in the Writ Appeals preferred against the
said judgment, the Corporation promoted thirty degree-holders including
six appellants on 5.6.1991. In fact, it is stated, by an order dated 30.4.1991,
F the Division Bench allowed the Corporation to make promotions pending
the Writ Appeals, of course, subject to the result of the writ appeals. It is
submitted further that by another Order passed in May, 1992, the Corpora-
tion promoted another twelve degree-holders and three diploma-hold~rs.
It is alw brought to our notice that in the Special leave petition preferred
against the judgment of the Division Bench, this Court stayed the reversion
G of the appellants/petitioners by its order dated 14.9.1992 which order was
continued by another order dated 21.9.1992. It is submitted that in the
above circumstances a direction of the nature sought for by respondents 3
to 8 will mean the reversion of the appellants who have been promoted in
pursuance of the order of the learned Single Judge. It is pointed out if this
H
'
MURUGESAN v. STATE OF TAMIL NADU [REDDY, J.] 425
Court is upholding the impugned amendment, it would not be just to A
permit the reversion of degree-holders on the ground urged by the respon-
dents for the first time in this appeal.

In our opinion Section 87 does indicate and manifest the concern of
the Legislature that the vacancies occurring in the Corporation Service
B
should not be kept unfilled for a period of more than three months.
Sub-section (3) which provides for the consequence of default on the part
of the council to abide by sub-section ( 1) emphasises the concern of the
Legisiature. So also does sub-section (2). Sub-section (4) says that if there
is going to be any delay or if a suitable or qualified person is not available,
the council may appoint a person on temporary basis. The said provision C
is, therefore, analogous to, and indeed more specific than rule 4 of the
Andbra Pradesh Registration and Subordinate Service Rules considered in·
Rangiah v. Srinivasa Rao. Accordingly it must be held that the learned
counsel for respondents 3 to 8 is right in his submission that the vacancies
occurring prior to three months before the date of commencement of the D
impugned amendment ought to have been filled in accordance with the
rules then obtaining. At the same time we cannot fail to recognise the force
in the argument of the learned counsel for the appellants that the respon-
dents not having raised the said contention in the High Court i.e., before
the learned Single Judge or the Division Bench should not be allowed to E
raise the same in this Court for the first time. On a balancing of the
contending equities, we are of the opinion that the following direction
would be the appropriate one in the particular facts and circumstances of
this case. The direction is this :

The Corporation shall ascertain the vacancies in the category of
F
Assistant executive engineers, that have arisen three months prior to the
coming into force of the impugned amendment (introducing the quota of
3:1 as between degree-holders and diploma-holders) and shall work out
the vacancies which would have g()ne to the diploma-holders if unamended
Rules had been followed. The Corporation shall also ascertain which of G
the diploma-holders would have been promoted in those vacancies. Such
diploma-holders will be promoted in the vacancies that may be existing as
on today and those that may arise in future. Until these diploma-holders
are so promoted to the category of Assistant Executive Engineers, no
degree-holders shall be be promoted. After these diploma-holders are so H
426 SUPREME COURT REPORTS [1993) 1 S.C.R.
A promoted and thereafter, it is obvious the amended Rules shall be applied
and followed. It is further directed that as and when a diploma-holder is
promoted in pursuance of this direction, his promotion shall be given effect
to from the date he ought to have been promoted. Such diploma-holders-
promotees shall be entitled to the benefit of seniority and pay-fixation
B flowing from such retrospective promotions, but they shall not be entitled
to the arrears of difference in salary for the period they have not actually
worked as Assistant Executive Engineers.

For the reasons recorded hereinabove the appeal is allowed subject
to the direction made in the preceding paragraph. The Order of the
C Division Bench of the Madras High Court in Writ Appeal No. 518 of 1991
is set aside. There shall be no orders to costs.

V.P.R. Appeal allowed.

)