S.K. CHAKRABORTHY AND ORS.versusUNION OF INDIA & ORS.

                    S.K. CHAKRABORTIIY AND ORS.
                                                                             A
                                  v.
                        UNION OF INDIA & ORS.

                                JULY 11, 1988

         [SABYASACHI MUJ<HA.RJI AND L.M. SHAR.\fA, JJ.J                      B

           Civil Services; Indian Railway Establishment Code, Vol.I Rule
     I58-Production Control Organisation, Kharagpur-Memorandum
     No. 476-/3-I0065 dated 4-5/ IOI I979 directing that Railway Board's
     circular No E(NG) 59-SRG-22 dated 22.4.1963 declaring all posts in
     PCO ex-cadre be implemented-Effect of-Railway Board's circular C
     No. E(NG) 1-79-PMT-242 (DC/JCM) dated J3.9.I984 excepting
     PCO, Integral Coach Factory-Whether disc_riminatory .
..
          Constitution of India, 1950: Article 14-Class disposition for-
     bidden-Reasonable classification for the purpose of disposition
     permissible-Twin tests of classification founded on intelligible dif-   D
     fe~entia-To have a rational nexus to object sought to be achieved.

           Rule 158 of the Indian Railway Establishment Code, Vol. I,
     empowers the General Managers to make rules with regard to the non-
     gazetted railway servants provided they are not inconsistent with any
     rules made by the President or the Railway Board. The Railway Board E
     brought out a circular dated 22.4.1963 laying down the rules for
     determination of seniority of workshop staff employed in the Produc- .
     lion Control Organisation and declaring all posts therein as ex-cadre.
     Due to the stiff opposition of organised labour the said circular could
     not be implemented in the Kharagpur workshop. The Superintendent,
     however, after discussing the question with the organised labour issued F
     a memorandum on 21. 7.1973 stating that all posts in the PCO would be
     cadre posts. Subsequently, by a circular dated 9.7.1978 the Railway
     Board declared that the staff from shop-floors posted in the PCO would
     receive special pay of 10% of their pay but this would not be available to
     the staff who were permanently absorbed in the PCO or directly
     recruited in the PCO. Upon this, representations were made by the G
     labour to the Railway Board for implementing its circular dated
     22.4.1963 so that the staff of the PCO would be eligible for the special
     pay. In pursuance of the meetings held with .the labour, the memo-
     randum dated 4-5/10/1979 was issued which declared that the Railway
     Board's circular of 1963 would be implemented in the PCO and that all
     posts would be treated as ex-cadre posts. By another circular issued on H
                                      425
      426        SUPREME COURT REPORTS                [1988] Supp. 1 S.C.R.

      13.9.1984 the Railway Board allowed the PCO at the Integral Coach
 A    Factory, Southern Railway, to continue on cadre basis.

          Aggrieved by the said circular, the petitioners, who at the rele-
    v:mt time were all employees of PCO at Kharagpur, carried the matter
    before the Central Administrative Tribunal and contended; (i) that
  B their posts could· not be declared as ex-cadre because vesJed rights
    which had accrued in their favour could not be affected, and (ii) they
    could not be treated differently from those of the Integral Coach
    Factory. This was hostile discrimination and amounted to violation of
    their rights. The Tribunal rejected both the contentions.

            Dismissing the special leave petition,
 c
         HELD: I. Administrative re-organisation is permissible and as a
   result of the same rights may be affected but the vested rights could not
   be taken away. In the instant case inasmuch as the memorandum dated
   21st July, 1973 WB> inconsistent with the circular issued by the Railway
 D Board in 1963 no right vested in the petitioners and hence no question.of
   affecting vested rights arise. [429C-DJ

            T.R. Kapur & Ors. v. State of Haryana & Ors. [1986] JT 1092
      referred to.

  E         2.1 Article 14 of the Constitution forbids class disposition but
      permits reasonable classification for the purpose of disposition which
      classification must satisfy the twin tests of classification being founded
      on an intelligible differentia which distinguishes persons or things that
      are grouped together from those that are left out of the group and that
      differentia must have a rational nexus to the object sought to be
 F    achieved by the disposition. [430A-B]

            D.S. Nakara & Ors. v. Union of India, [1983] 2 SCR 165, refer-
      red to.

            2.2 The circular of 1984 of the Railway Board was issued pur-
 G    suant to the negotiations with the staff in the Departmental Council of
      Ministry of Railways. The existing arrangement in the PCO of Integral
      Coach Factory was not disturbed because the recognised Unions there
      did not want it to be so disturbed; whereas in the PCO ofKharagpur the
      recognised Unions had already agreed that the Railway Board's circu-
      lar dated 22.4.1963 would be implemented and that all posts in that
. H   PCO would be treated as ex-cadre. [429F-G]
             S.K. CHAKRABORTHY v. U.0.1. IMUKHARJI, J.]               427

      2.3 The Railway Board is fully competent to bring about neces-         A
sary changes in the staff pattern of the various units under its control
for the purp0se of steamlining the oganisation and improving the effi-
ciency of the administration. There was, therefore, a good ground for
this differentiation which has a rational nexus with the object of
streamlining the organisation. This differentiation caunot be con-           B
demoed as violative of the rule of equality. It does not amount to hostile
discrimination. [429G-H]

      CIVIL APPELLAIB JURISDICTION: Special Leave Petition
(Civil) No. 3584 of 1987. ·

    From the Judgment and Order dated 8.12.1986 of the Central               C
Administrative Tribunal, Calcutta in T.A. No. 1143of1986.

      Mrs. C. Markandeya for the Petitioners. (Not present)

     B. Datta, Additional Solicitor General, C.V. Subba Rao and              D
A.K. Srivastava for the Respondents.

      The Judgment of the Court was delivered by

      SABYASACHI MUKHARJI, J. This is an application for leave
to appeal under Article 136 of the Constitution, directed against the
                                                                      E
judgment and order of the Central Administrative Tribunal, Calcutta
Bench (Justice Ashamukul Pal and Mr B. Mukhopadhyay) dated 8th
December, 1986. The Tribunal had dismissed the challenge made by
the petitioners herein to t!w memorandum of 1979 declaring that the -
posts in Production Control Organisation (for short-PCO) in Kharag-
                                                                      F
pur would be treated as ex cadre.

      There are 75 applicants in this case. At the relevant time they all
were employees of the PCO at Kharagpur Railway Workshop of South
Eastern Railway. The petitioners contend that these posts could not be
declared as ex cadre posts because veste<;I rights of the petitioners
                                                                             G
could not have been affected. Secondly, it was contended that they
were treated differently from the employees of the Integral Coach
Factory on the Southern Railway and those of PCO there continued to
hold the cadre posts. This is hostile discrimination and aI..:iounts to
violation of the fundamental rights of the petitioners. The Tribunal by
its impugned order rejected both the contentions.
                                                                             H
    428        SUPREME COURT REPORTS               [1988) Supp. 1 S.C.R.

        The PCO was in existence from the time of the B.N. Railway.
A The staff of the PCO were either directly recruited or drafted from
  different shops of the workshop. In 1958 the PCO was considerably
  expanded. After considering the question the Railway Board brought
  out a Circular dated 22.4.1963 laying down the rules for determination
  of seniority of workshop staff employed in the PCO. It was laid down
B in the Circular that all posts in the PCO should be treated as ex-cadre
  posts. This is Annexure 'B' to the writ application which was ulti-
  mately disposed of by the Tribunal. The Circular, however, could not
  be implemented in the Kharagpur workshop on account of the stiff
  opposition of organised labour. In the premises the local authorities
  could not implement the Circular of 1963. The question was discussed
  with the organised labour in a meeting held on 4th June, 1973 and in
C pursuance of the decision taken in that meeting the memorandum
  dated 21st July, 1973 which is also Annexure 'B' was issued by the
  Superintendent. It was evidently stated that all posts in PCO would be
  cadre posts.

D          It may, however, be reiterated that this was in violation of the
    order of 1963. Another memorandum was issued by the same autho-
    rity on 15th December, 1973 which not only declared all posts in PCO
    to be cadre posts but also laid down that an option would be given to
    the persons already working in the PCO to revert to the shops. It
    appears that the question of having incentive schemes for the staff of
E   the PCO was under consideration of the Railway Board and by a
    Circular dated 9. 7 .1978 the Railway Board declared that the staff from
    shop-floors posted in the PCO would receive special pay of 10% of
    their pay but this would not be available to the staff who were perma-
    nently absorbed in the PCO or directly recruited in the PCO. It
    appears that this brought a change in the attitude of the labour and
F   representations were made to the Railway Board for implementing its
    Circular dated 22.4.1963 so that the staff of the PCO woul\l be eligible
    for the special pay. Joint meetings were held with the labour on 4th
    and 22nd September, 1979 and in pursuance of the decisions taken in
    these meetings the memorandum dated 4-5/10/79 at Annexure (I) was
    issued which declared that the Railway Board's Circular of 1963 would
                                                                               I
G   be implemented in the PCO and that all posts would be treated as
    ex-cadre posts. This was impugned before the Tribunal.

          It was contended that the vested rights which accrued in favour
    of the petitioners by the operation of the memoranda dated 21st July
    and 15th December, 1973 were affected by declaring that the posts in
H   PCO would be on cadre basis. These were issued, it appears, in viola-
             S.K. CHAKRABORTHY 1•. U.0.1. [MUKHARJ!, J.]               429

tion of the clear directives of 1963 of the Railway Board. Hence, these A
Circulars were in violation of Rule 158 of the Indian Railway Estab-
lishment Code, Vol. I, which lays down that the General Managers of
the Indian Railways have full powers to make rules with regard to non-
gazetted railway servants under their control provided they are not
inconsistent with any rules made by the President or the Railway
Board.                                           • ·                    B

      It, however, appears that the memorandum dated 21st July, 1973
was clearly inconsistent with the Circular issued by the Railway Board
in 1963 for the former stipulated that all posts in the PCO would be
cadre posts. Both these memoranda were issued as a result of the
meeting with the workers. In that view of the matter, in our opinion, it
cannot be contended that vested rights have been affected. Adminis-           c
trative re-organisation is permissible and as a result of the same rights
may be affected but the vested rights could not be taken away. See in
this connection the observations of this Court in T.R. Kapur & Ors. v.
State of Haryana & Ors., [1986] IT 1092. Here, however, inasmuch as
the memorandum dated 21st July, 1973 was inconsistent with the                D
Circular issued by the Railway Board, no right vested in the petitioners
and, hence, no question of affecting vested rights arises.

      The second ground was that there was discrimination against the
petitioners referred to the Railway Board's Circular dated 13th
September, 1984 which made an exception for the Integral Coach                E
Factory at the Southern Railway and allowed the PCO to continue on
cadre basis. It was submitted that this was a case of discrimination. It
appears that the impugned Circular of 1984 of the Railway Board was
issued pursuant to the negotiations with the staff in the Departmental
Council of Ministry of Railways. The existing arrangement in the PCO
of Integral Coach Factory was not disturbed because the recognised            F
Unions ,there did not want it to be so disturbed; whereas in the PCO of
Kharagpur the recognised Unions had already agreed, as appears from
the impugned memorandum at Annexure 'I' that the Railway Board's
Circular dated 22.4.1963 would be implemented in the Kharagpur,
PCO and that all posts in the PCO would be treated as ex-cadre posts.
The Railway Board is fully competent to bring about necessary                 G
changes in the staff pattern of the various units under its control for the
purpose of streamlining the organisation and improving the efficiency
of the administration. Hence, there was a good ground for this dif-
ferentiation which has a rational nexus with the object of streamlining
the organisation. This differentiation cannot be condemned as viola-
tive of the rule of equality. It does not amount to hostile discrimina-       H
    430         SUPREME COURT REPORTS                [19881 Supp. 1 S.C.R.

A   tion. Article 14 of the Constitution forbids class disposition but
    permits reasonable classification for the purpose of disposition which
    classification must satisfy the twin tests of classification being founded
    on an intelligible differentia which distinguishes persons or things that
    are grouped together from those that are left out of the group and that
B   differentia must have a rational nexus to the object sought to be
    achieved by the disposition.

          See D.S. Nakara & Others v. Union of India, [198312 S.C.R. 165
    at 179.

           Further, the Tribunal modified certain portions of the impugned
C memorandum and directed that the provisions should be made for
 ,. those who opt to continue in the PCO a! Kharagpur after the issue of the
     Circular dated 13. 9. 1984 so that they may be given an opportunity to
     exercise their option in this regard and be provided with avenue for
     promotion within the PCO. Previously, in 1963 such option was pro-
D vided and it was stipulated that employees permanently absorbed in
     the PCO or directly recruited in the PCO who did not exercise option
     in favour of transfer, they would be considered for promotion along
     with others to higher grade posts in the PCO only. In our opinion, it
   . was done to help the petitioners.

E         In the aforesaid view of the matter, the Tribunal was right in
    rejecting the contentions urged on behalf of the petitioners. The
    challenge to the Tribunal's order, therefore, cannot be entertained.

          Before concluding it is worthwhile to note that none appeared
    for the petitioners when the matter was called on. The matter was
    called twice. We have disposed of the matter on perusing the order of
F   the Tribunal and also upon considering the submissions made by the
    respondents. The application, therefore, fails and dismissed. No order
    as to costs.

    P.S.S.                                                Petition dismissed.