Holding

The 2005 recruitment rules were not retrospective, and the transfers that reduced the petitioners' pay scale violated the applicable service rules, natural‑justice requirements, and Articles 14, 16 and 311, leading to dismissal of the appeal.

Summary

The petitioners, appointed as Assistant Deputy Educational Inspectors, were transferred to lower‑pay posts, resulting in loss of salary and seniority. They challenged the transfers before the Maharashtra Administrative Tribunal, which dismissed their applications, and the High Court later set aside the tribunal’s orders. On appeal, the Supreme Court examined whether the 2005 recruitment rules governing the Maharashtra Education Service were retrospective and thus applicable to the transfers, and whether the executive power to transfer employees could be exercised without compliance with existing rules and natural‑justice requirements. The Court held that the 2005 Rules were not given retrospective effect, so the transfers violated the service rules, the principles of natural justice, and constitutional guarantees under Articles 14, 16 and 311. Consequently, the appeal was dismissed with costs.

Issues considered

Whether transfer orders demoting employees from a higher to a lower pay scale violate service rules and constitutional provisions.
Whether the Maharashtra Education Service Recruitment Rules, 2005, apply retrospectively to transfers made before their promulgation.
Whether the executive power to transfer public servants can be exercised without adherence to extant service rules and principles of natural justice.
Whether such transfers constitute punishment punishable under Article 311 of the Constitution.
Whether the High Court was correct in setting aside the tribunal's orders.

Legislation cited

Constitution of Indias. Article 14, s. Article 16, s. Article 309, s. Article 311

Subjects

service lawtransfer orderspay scaleMaharashtra Education ServiceArticle 14Article 16Article 311natural justiceretrospective rulesconstitutional lawpublic service

Judgment

A TEJSHREE GHAG ETC. ETC.
v.
PRAKASH PARASHURAM PATIL AND ORS. ETC. ETC.

MAY 17, 2007

B [S.B. SINHA AND MARKANDEY KA TJU, JJ.]

Service Law:

Transfer-Transfer of incumbents from higher time scale to lower time
C scale-Incumbents suffering loss ofpay-Co-employees also transferred from
lower to higher scale-Transfer orders set aside by High Court-Co-employees
case that the terms and conditions of service governed by Rules of 2005, thus
order of High Court not sustainable-On appeal held: Terms and conditions
of services of employees unless altered expressly would be governed by Rules
D in existence at the time when the impugned orders were passed-Rules of
2005 not given retrospective effect-Executive power of passing transfer
orders can be exercised only in terms of extant Rules-Also principles of
natural justice were to be complied with-Thus, order ofHigh Court upheld-
Maharashtra Education Service Administrative Officer of Municipal School
Board, _Assistant Deputy Educational Inspector, Assistant Project Officer,
E Assistant Teacher in Junior Colleges of Education, Coordinator, Councellor,
Extension Officer in State Council of Educational Research and Training
Pune, Lecturer in Junior Colleges, Programme Assistant, Science Supervisor,
District Science Supervisor, Subject Assistant, Subject Expert and Technical
Assistant (Recruitment) Rules, 2005.
F In the cadre of Maharashtra Education Service Group 'C' there were
16 categories of posts. Pursuant to an advertisement in 1991, respondents
were directly appointed as Assistant Deputy Education Inspector. Thereafter,
appointments were made for the post of Assistant Teacher, Physical Education
Teacher and Science Supervisor. No seniority list was published. A purported
G seniority list was published in the year 2001 only. Objections were invited.
Respondents were transferred to the post of Asstt Project Officer/Asstt
Teacher 'nd Asstt. Teacher/Asstt. Project Officer were transferred to the
posts of ADEL As a result the quantum of pay of the respondent was reduced.
Respondents challenged the transfer order. Original applications were

H 214
TFJSHREE GHAG ETC. v. PRAKASH PARASHURAM PATEL 215
_,_
~ dismissed and also the Review applications were dismissed. Private A
respondents filed writ petitions. The order of the tribunal and the order in
Review petitions were set aside. Hence the present appeal.

Dismissing the appeal, the Court

HELD: 1.1. The cadre of Maharashtra Education Service Group 'C' B
consists of 16 categories of posts. All posts at all material times were not
treated to be equivalent at least in the matter of scale of pay. It is stated that
a decision l.1 sar dion three tier scale of pay to full time teachers teaching in
higher school was taken by the State Government. According to it if the
direction of the High Court is given effect to, the same would violate the
conditions of service of the employees concerned working in the Education C
Department and only in that view of the matter Maharashtra Education Service
Administrative Officer of Municipal School Board, Assistant Deputy
Educational Inspector, Assistant Project Officer, Assistant Teacher in Junior
Colleges of Education, Coordinator, Councellor, Extension Officer in State
Council of Educational Research and Training Pone, Lecturer in Junior D
Colleges, Programme Assistant, Science Supervisor, District Science
Supervisor, Subject Assistant, Subject Expert and Technical Assistant
(Recruitment) Rules, 2005 have been framed. By reason of2005 Rules the
effect of the judgment of the High Court is not sought to be taken away. It was
not given retrospective effect. Rules framed by the State had also not been
brought to the notice of the High Court. E
[Para 9, 10 andl4) [219-D, E, B, C; 220-A]

1.2. Respondents were holders of posts on which they were employed.
The posts carried the scales of pay prescribed therefor. The terms and
conditions of their service, thus, unless altered expressly, would be governed F
by the rules which were in existence at the time when the impugned orders
were passed. It is true that the State has the power to alter the terms and
conditions of service even with retrospective effect by making rule framed ;
under proviso appended to Article 309 of the Constitution of India, but it is ~
also well-settled that the rules so made ordinarily should state so expressly.
(Paras 11 and 12) [219-F, G] ' G

1.3. The orders of transfer were passed by Authority in purported
exercise of its executive power. Executive power can be exercised only in terms
of the extent Rules. Where executive order results in civil consequences,
principles of natural justice are required to be complied with prior thereto. It
is not a case where an order of transfer was passed by way of change of place H
216 SUPREME COURT REPORTS (2007] 7 S.C.R.

A of employment within an organization simpliciter. An order of transfer
ordinarily should be in terms of the existing rules. Transfer may even be
incidental to the conditions of service, but thereby nobody can be deprived of
his existing right. Existence of a power and exercise thereof are two different
concepts. An Executive power in absence of any statutory rules cannot be
B exercised which would result in civil or penal consequences. Such exercise
of power must, moreover, be bona fide. It cannot be done for unauthorized
purpose. An Executive order passed for unauthorized purpose would amount
to malice in law. An order of transfer cannot prejudicially affect the status of
an employee. If orders of transfer substantially affect the status of an
employee, the same would be violative of the conditions of service and, thus,
/
C illegal. Tra'nsfers must be made to an equivalent post The orders of transfer
impugned before the Tribunal in any even could not have been passed without
complying with the principles of natural justice.
[Paras 15 and 17] (220-B-E; 221-C, D)

Ramadhar Pandey v. State of U.P. & Ors., (1993) Supp. 3 SCC 35;
D Hussain Sasan Saheb Kaladgi v. State of Maharashtra, (1988) 4 SCC 168
and P.C. Wadhwa v. Union of India and Anr., (1964] 4 SCR 598, relied on.

Vice-Chancel/or, L.N. Mithi/a University v. Dayanand Jha, (1986) 3
SCC 7: Prasar Bharti & Ors. Amarjeet Singh & Ors. (2007) 2 SCALE 486,
referred to.
E
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2697 of2007.

From the Final Judgment and Order dated 22.3.2006 of the High Court
of Judicature at Bombay ili WP. Nos. 86, 87, 88, 155, 166, 3088, 3089 & 3114
of2004.
F
C. Balakrishna, P.V. Daware and Dr. Kailash Chand for the Appellant.

Indu Malhotra, Arjun Suresh, A.P. Mayee and V.N. Raghupathy for the
Respondents.

G The Judgment of the Court was delivered by

S.B. SINHA, J. 1. Leave granted.

2. This appeal is directed against the judgment and order dated 22.03 .2006
passed by the High Court of Bombay in various writ petitions filed by the
H private respondents herein whereby and whereunder the order of the Tribunal
TEJSHREE GHAG ETC. v. PRAKASH PARASHURAM PATEL [S.B. SINHA, J .] 217
dated 13.03.2002 as also the order passed in the Review Petition arising A
therefrom dated 14.08.2003 were set aside.

3. The said writ petitions came up for consideration by the High Court
in the following circumstances.

4. In the Education Department of the State of Maharastra there exists B
a cadre of Assistant Teachers. There are 16 categories of posts in the said
cadre. Respondents were directly appointed as Assistant Deputy Education
Inspector (for short, "ADEi") pursuant to an advertisement issued by the
State of Maharashtra on 0 I.I 0.1992. Advertisements for other posts in the
same cadre were also issued, namely, for the posts of Asstt. Teacher, Physical C
Education Teacher, Science Supervisor etc. pursuant whereto appointments
were made in the said post. However, no seniority list was published for a
long time. A purported seniority list was published only on 09.08.2001.
Allegedly, before publishing the said final seniority list objections were invited.

5. Respondents, as noticed hereinbefore, who were appointed as D,
Assistant Deputy Education Inspector, were transferred to the post of Asstt.
Project Officer/Ass«. Teacher and those who had been working as Asstt.
Teacher/Asstt. Project Officer were transferred to the posts of ADEi.
Indisputably, by reason of such orders of transfer, the respondents suffered
civil consequences as the quantum of their pay was reduced.
E
6. Original applications were filed by them before the Maharashtra
Administrative Tribunal, alleging :

(i) Orders for transfer on the basis of provisional seniority list was
without jurisdiction;.
(iI) Those who were holding the posts of Asstt. Teacher could not F
have been transferred as ADEi as they were not qualified therefor;
and

(ill) By reason of such transfers, the pay scale of the respondents
would be reduced
G
7. By reason of an order dated 13.03.2002 the said original applications
were dismissed. Review applications filed thereagainst were also dismissed.
The High Court, however, in the writ petitions filed by the respondents in
terms of its judgment dated 22.03.2006 which is impugned before us upon
noticing the scales of pay payable to the different classes of employees, inter lI
218 SUPREME COURT REPORTS (2007] 7 S.C.R.

A a/ia, opined :
"What emerges from the above discussion is that the post of'·
A.D.E.I had been recognized as distinct post under the recruitment
rules. The appointment to the said posts is both by promotion as well
as by direct recruitment. The promotion is from the post amongst
B others of Assistant Masters, A.D.E.I.s have promotional avenue to
the post of Deputy Education Inspector to which posts the other
posts in Grade III are not entitled for consideration. The post of
A.D.E.I. as set out earlier carries higher pay scale than those other
posts. In these circumstances, the respondent authorities could not
have clubbed these posts under a common seniority or for that matter
c made the posts transferable from one to another. This would be
treating holders of dissimilar posts as belonging to one class, which
they are not. This will also be in violation of the recruitment rules and
affecting the promotional avenue of A.D.E.I.s. Though there is no
right to promotion, there is right to be considered. By the action of
transfer, this right of the Petitioner has been affected. This clearly
amounts to an infringement of Article 14 and 16 of the Constitution
of India."

8. It was furthermore held that transfer of persons holding substantive
posts carrying lower time scale of pay would be violative of Article 14, 16 and
E 311 of the Constitution of India. It was stated :

"The order entailed loss of pay as well as loss of seniority and
postponement of future chances of promotion. It is in that context the
Apex Court held in that case that the effect of reduction in rank, the
appellant suffered loss of pay and also suffered loss of seniority as
F also postponement of future chances of promotion to the senior scale.
On the facts, therefore, the court held that the appellant was not
reverted for administrative reasons for unavailability of post but for
different reasons. The act of the Respondent State therefore, in
transferring the petitioner from the higher time scale to lower time
G scale would attract Article 311 of the Constitution of India. A reduction
in the rank may be by way of punishment or it may be an innocuous
thing. If the Government servant has a right to a particular rank, then
the very reduction from that rank will operate as a penalty, for he will
then lose the emoluments and privileges of that rank. In such cases
the test for determining whether the reduction in such cases is or is
H not by way of punishment is to find out if the order for the reduction
TEJSHREE GHAG ETC. v. PRAKASH PARASHURAM PATEL [S.B. SINHA, J.] 219

also visits the servant with any penal consequences. In the instant A
case, the Petitioners suffer penal consequences inasmuch as the
petitioner's are loosing their emoluments and privileges of the rank'~

9. Mr. C. Balakrishna, learned counsel appearing on behalf of the
appellants, would, inter alia, submit that the terms and conditions of service
of the employees being governed by the statutory rules, the impugned B
judgment cannot be sustained. Our attention in this behalf has been drawn:
to the notification dated 27.05.2005 making rules in terms of proviso to Article
309 of Constitution of India called 'Maharashtra Education Service
Administrative Officer of Ml!nicipal School Board, Assistant Deputy
Educational Inspector, Assistant Project Officer, Assistant Teacher in Junior, C
Colleges of Education, Coordinator, Councellor, Extension Officer in State
Council of Educational Research and Training Pune, Lecturer in Junior Colleges,
Programme Assistant, Science Supervisor, District Science Supervisor, Subject
Assistant, Subject Expert and Technical Assistant (Recruitment) Rules, 2005'
(Rules). It was contented that in terms of the said rules, the respondents were 1

not entitled to hold the posts of Assistant Deputy Education Inspector. D
10. It is not in dispute that the cadre of Maharashtra Education Service
Group 'C' consists of 16 different categories of posts. All posts at all material
I
times were not treated to be equivalent at least in the matter of scale of pay. '
It is stated that a decision to sanction three tier scale of pay to full time
teachers teaching in higher school was taken by the State Government. E
According to it if the direction of the High Court is given effect to, the same
would violate the conditions of service of the employees concerned working i
in the Education Department and only in that view of the matter 2005 Rules
have been framed.

I I. Respondents herein were holders· of posts on which they were
F
employed. The posts carried the scales of pay prescribed therefor.

12. The terms and conditions of their service, thus, unless altered
expressly, would be governed by the rules which were in existence at the time
when the impugned orders were passed. It is true that the State has the power G
to alter the terms· and conditions of service even with retrospective effect by
making rule framed under proviso appended to Article 309 of the Constitution
of India, but it is also well-settled that the rules so made ordinarily should
state so expressly.
I
13. It has been contended that 2005 are retrospective in nature or have H
220 SUPREME COURT REPORTS [2007) 7 S.C.R.

A retroactive operation.
14. By reason of the said rules the effect of the judgment of the High
Court is not sought to be taken away. It was not given retrospective effect.
Rules framed by the State had also not been brought to the notice of the High
Court.
B
IS. The orders of transfer were passed by Authority in purported
exercise of its executive power. Executive power can be exercised only in terms
of the extant rules. It is well-settled that where executive order results in civil ,L
l
consequences, principles of natural justice are required to be complied with
prior thereto. It is not a case where an order of transfer was passed by way
C of change of place of employment within an organization simpliciter. An order
of transfer ordinarily should be in terms of the existing rules. Transfer may
even be incidental to the conditions of service, but thereby nobody can be
deprived of his existing right. Existence of a power and exercise· thereof are
two different concepts. An Executive power in absence of any statutory rules
D cannot be exercised which would result in civil or penal consequences. Such
exercise of power must, moreover, be bona fide. It cannot be done for 1

unauthorized purpose. An Executive order passed for unauthorized purpose ..
'y

would amount to malice in law. An order of transfer cannot prejudicially affect
the status of an employee. If orders of transfer substantially affect the status
of an employee, the same would be violative of the conditions of service and,
E thus, illegal. Transfers must be made to an equivalent post. [See Ramadhar
Pandey v. State ofU.P. & Ors., [1993]Supp. 3 SCC 35 Hussain Sasan Saheb
Kaladgi v. State ofMaharashtra, [1988] 4 SCC 168 and P.C. Wadhwa v. Union
ofIndia and Anr., [1964] 4 SCR 598]

F 16. In Vice-Chancellor, L.N. Mithila University v. Dayanand Jha, [1986]
3 sec 7, it was held:

" ... The true criterion for equivalence is the status and the nature and
responsibility of the duties attached to the two posts. Although the
two posts of Principal and Reader are carried on the same scale of pay,
G the post of Principal undoubtedly has higher duties and responsibilities.
Apart from the fact that there are certain privileges and allowances
attached to it, the Principal being the head of the college has many
statutory rights, such as: (i) He is the ex officio member of the Senate.
(ii) He has the right to be nominated as the member of the Syndicate. .
(iii) As head of the institution, he has administrative control over the
H college Professors, Readers, Lecturers and other teaching and non-
TEJSHREE GHAG ETC. v. PRAKASH PARASHURAM PATEL [S.B. SINHA, J.] 221
teaching staff. (iv) The Principal of a constituent college is also the A
-'" ex officio member of the Academic Council of the university. (v) He
has the right to act as Centre Superintendent in the university
examinations. It is thus evident that the High Court was right in
holding that the post of Reader could not be regarded as an equivalent
post as that of Principal in the legal sense. Maybe, when the affairs
of a college maintained by the university are mismanaged, the Vice~
B
Chancellor may, for administrative reasons, transfer a Professor or
Reader of any department or college maintained by it to the post of
the Principal of such college, but the converse may not be true.
While the Professors and Readers by reason of their learning and
erudition may enjoy much greater respect in society than the Dean c
or Principal of a college, it does not follow that the post of Principal
must be treated as equivalent to that of a Reader for purposes of
Section 10(14) of the Bihar State Universities Act, 1976, as amended."

- 17. The orders of transfer impugned before the Tribunal in any event
could not have been passed without complying with the principles of natural D
justice.
"'...
18. We are not oblivious of the decision of this Court in Prasar Bharti
& Ors. v. Amarjeet Singh & Ors., [2007] 2 SCALE 486, wherein order of
transfers, if not otherwise arbitrary and irrational and thus violative of Article
14 of the Constitution of India, was upheld. E

19. In this case we are not concerned with enforcement of the Rules.
They were brought in force at a latter stage. It is for the State to apply the
provisions of the said rules only if any occasion arises therefor but keeping
in view the fact that the said rules have not been given a retrospective effect,
the impugned orders cannot be supported by reason thereof or otherwise.
F
../..
20. We, therefore, do not find any merit in this appeal. It is accordingly
dismissed with costs. Counsel's fee assessed at Rs. 10,000/-.

NJ. Appeal dismissed.
G