Holding

The Railway Board's circular is not in conflict with para 167 of IREM; it supplements the manual, and the termination of the respondents' services is lawful, subject to an additional exceptional examination opportunity.

Summary

The respondents were appointed as Accounts Clerks Grade I in the Northern Railway and placed on probation, required to pass the departmental examination prescribed in Appendix II of the Indian Railways Establishment Manual (IREM) within a stipulated period. The Railway Board issued a circular on 24 June 1986 limiting the candidates to two attempts within three years, with provision for an additional chance on recommendation. The respondents failed to pass within the allowed attempts and were terminated; they challenged the termination before the Central Administrative Tribunal, which held the circular conflicted with IREM and quashed the termination orders. On appeal, the Supreme Court examined whether the circular was inconsistent with para 167 of IREM and held that it merely supplemented the manual and was not in conflict. Consequently, the termination was deemed lawful, but the Court directed the Railway Board to grant an exceptional additional examination opportunity to the respondents. The appeals were allowed with modifications, and the parties were each to bear their own costs.

Issues considered

Whether the Railway Board's circular dated 24 June 1986 is in conflict with paragraph 167 of the Indian Railways Establishment Manual.
Whether the termination of the respondents' services for failure to pass the prescribed examination was lawful.

Subjects

service lawprobationterminationrailwayexaminationcircularIndian Railways Establishment Manualappointmentconfirmationdisciplinary action

Judgment

A UNION Of INDIA AND ORS.
v.
RAJ KUMAR GUPTA AND ORS. ETC. ETC.

. MARCH 23, 1995

B (K. RAMASWAMY AND B.L. HANSARIA, JJ.)

Service law

Indian Railways Establishment Manual-Para 167-Appendix-
f
I

C II-Para 4(a).

Railway Board's Circular dated 24.6.1986-Accounts Clerk Grade-
l-Recruitment of-Condition of passing test during probation for confinna-
tion-Failure to pass test within the prescribed time-Held liable to be
discharged from service-Direction issued to give another chance-Circular
D held not in conflict with Para 167. ·

The respondents were selected and appointed as Accounts Clerks
Grade-I in the Northern Railway. In terms of Para 167 of Indian Railways
Establishment Manual (IREM), during probation they were required to _.(-
pass the test prescribed in Appendix-II and in para 4(a) therein. The
E .letters of appointment clearly indicated that they were required to pass the
test within the period of probation for confirmation and in the event of
their failure to pass the prescribed examination within the time prescribed
under the relevant para of IREM and the Railway Board's Circular dated
24.6.1986 they were liable to be discharged. On respondents' failure to pass
F the prescribed test their services were terminated. They challenged their
termination before the Tribunal which held that the Circular dated 24.6.86
was in conflict with Para 167 of IREM and consequently quashed the
termination orders.

In appeals to this Court on the question whether Railway Board's
G Circular dated 24.6.86 was in conflict with Para 167 of IREM :
Allowing the appeals, this Court.

HELD : 1. The ~ilway Board's circular dated 24.6.86 is not in
conflict with para 167 of Indian Railways Establishment Manual. It is not
H in supersession but to supplement the yawning gaps therein. It tvisages
.1000 '
f
,)

U.O.I. v. R.K. GUPTA 1001

that direct recruit Accounts Clerks Grade-I are eligible for two chances to A
pass the examinations prescribed in Appendix-II within a period of three
years from the date of entering into service. Failure to qualify in the
examination within the two attempts render them ineligible for confirma-
tion. Thereby, they become liable to be discharged from service. It is true
that Appendix-II in para 4(a) as a general rule gives three normal chances B
to the railway servants to take the examinations and exceptions have been
provided giving power to the Financial Adviser and Chief Accounts Officer
to permit a candidate to take the examination for the fourth time and in
deserving cases and in very exceptional circumstances the General
-~ Manager is given discretion to permit the employees to take the examina-
tion for the· fifth and the last time. The last two chances cannot be taken C
to be automatic or as of right. They are exceptional and are within the
discretionary zone. [1004•G-H, 1005-A-B]

2. All, except a few respondents, had availed of three chances and they
did not pass the examinations prescribed in Appendix II of the Manual.
Therefore, they are liable to be discharged from service. There is no ii- D
legality in the action taken by the appellants. However, in view of the fact
that para 4(a) of the Appendix itself gives right to the employee to take three
maximum normal chances for passing prescribed tests, the appellant is
directed to give another chance as an exceptional circumstance to take the
examination. Such candidates who pass the examination will be considered E
for confirmation. If they do not pass, appropriate ordres would be issued to
discharge them from service. (1005-E-FJ

State of Kamataka v. B.V. Thimmappa, (1994) Supp. 1 S.C.C. 124,
distinguished.
F
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 4480-
4483 of 1995 etc. etc.

From the Judgment and Order dated 31.7.91 of. the Central Ad-
ministrative Tribunal, Lucknow in O.A. Nos. 115, 127, 118 and 86of1990. G
Altaf Ahmed, Additional Solicitor General, T.C. Sharma, V.K.
Verma, Arvind K. Sharma, Mrs. Indu Goswami and C.V.S. Rao with him
for the Appellants.

P.P. Rao, Govind Mukhote, M.N. Krishnamani, Raj Kumar Gupta, H
1002 SUPREME COURT REPORTS (1995] 2 S.C.R.

A Rajesh, Jitendra Mohan Sharma, Arvind Verma, Dhruv Mehta, K.L.
Mehta, S. K,ulshreshta, R.K. Lacham, M.V. Goswami and C.P. Lal with
them for the Respondents.

The following Order of the Court was delivered :

B Leave granted.

These appeals by special leave are filed against different orders of
the Central Administrative Tribunal, Lucknow Bench in O.A. No. 115/90
and batch.
c Pursuant to an advertisement for direct recruitment to the posts of
Accounts Clerks Grade I, the respondents applied for and appeared in
written examination as well as interview and were selected and appointed
as Accounts Clerk Grade I between April- June 1986 and were put on
probation. Under para 167 ·of the Indian Railways Establishment ManU;al
D (IREM), during probation they are required to pass the tests prescribed
in appendix 2 and in paragraph 4(a) therein. The letters of appointment
also would clearly indicate that they are required to pass the test within
the period of probation for confirmation. Since they did not pass the
prescribed test within the time or extended attempts, their services came
E to be terminated by individual proceedings issued against them. Impugning
those proceedings, the 0.As. came to be filed. The Tribunal in the im-
- pugned orders dated 31.7.1991 etc. held that the circular of the Railway
Board dated 24.6.1986 prescribing the conditions under which the respon-
dents are required to pass the tests, was in conflict with para 167 of IREM.
F Accordingly, it quashed the termination orders. Thus these appeals.
Shri Altaf Ahmed, learned Additional Solicitor General, contended ,___.._., '-,__
that para 167(1) of the l.R.E.M. and the circular do not run in collision
course; the circular is supplementary to para 167 of IREM and that the ____l_.
Tribunal committed grievous error of law in holding that the circular is
G inconsistent with para 167 of IREM. Shri P.P. Rao, learned senior counsel
and the counsel following him submitted that the respondents were ap-
pointed by direct recruitment to the posts of Accounts Clerk Grade I there -r
is no provision in para 167 which gives power to terminate the services of
the respondents. Even though they did not pass the prescribed test, they
H would be entitled to continue as unconfirmed probationers and the
U.0.1. v. R.K. GUPTA 1003.
i-
Tribunal was right in its conclusion. In support thereof, they placed A
reliance on State of Kamataka v. B.V. Thimmappa, (1994) Supp 1SCC124.
The question, therefore, is whether the circular issued by the Railway
Board is in conflict with para 167 (1) of IREM.

Relevant part of para 167 reads thus :
B
"Directly recruited clerks Grade I will be on probation for one year
and will be eligible for confimiation only after passing the prescribed
· departmental examination in Appendix II. Necessary facilities will
be given to them to enable them to acquire the knowledge of the
rules and procedure." C
(Emphasis supplied)

Para 4(a) Of Appendix-II reads thus:
'
"4(a) Normally no railway servant will be permitted to take the
examination more than thrice, but the Financial Adviser and Chief D
Accounts Officer may in deserving cases permit a candidate to
take the examination for a fourth time, and in very exceptional
cases the General Manager may permit a candidate to take the
> examination for the fifth and the last time."
E
The circular dated 24.6.1986 reads as under:

"Under the extent orders on the subject, directly recruited
clerks grade I are required to be given maximum of two chances,
to appear at the Appendix 2 (IREM) examination withfu a period
of three years from the date of entering service, and those who fail F
to qualify themselves within these two attempts render themselves
eligible for discharge from service. In a few cases, additional
chance was given to some candidates on the basis of the recom-
mendation of the FA & CAO/GM of the Railways. However, with
a view to bring in uniformity, as also to make the concerned G
employees fully aware of the extent rules in this respect (so that
the availability of additional chance is not taken for granted) Board
under their letters No. 84-AC.111/20/34 dated 4.9.1985 and
10.2.1986, reiterated the 'position, and directed the Railways that
they may approach the Board for retaining the staff in service H
1004 SUPREME COURT REPORTS (1995) 2 S.C.R.

A beyond three years, or for permitting them to sit in Appendix 2
(IREM) examination beyond three years or for the third time in
the said examination relaxation of the extent rules, provides there
were compelling reasons for such relaxation."

The aforesaid shows that para 167 prescribes that directly recruited Ac-
B counts Clerks Grade I will be on probation for one year and will be eligible
for confirmation only after their passing the prescribed departmental ex-
aminations specified in Appendix-II. The .letters of appointment clearly

c
indicate the condition subject to which the respondents are required to be
confirmed. They read thus :

"You have been selected in Accounts Department of N.Rly for
/
appointment in temporary post of Jr. Accounts Asstt. (CGI) in
scale Rs. 1200-30-1560-EB40-2040 (NPS). As such it is proposed
to appoint you in this office temporarily on a temporary post under
D the following terms & conditions :-

(A) You will be on one year probation from the date of your
appointment and will be confirmed after qualifying Appendix 2A
(IREM) Exam.

E · (B) During the probation period you will have to undergo a three
months condensed training. During this training period you will be
entitled for Rs. 1200 as salary & allowance admissible under the
rules.

(C) If you don't qualify the exam. as mentioned in (A) above and
F
if your progress is unsatisfactory the period of training may be
extended. However, if you don't qualify the above said exam. in
two chances within a period of three years of your service you may
be terminated from railway service." ~ ..

G Thus the circular is not in conflict with the para 167. It is not in superses-
sion but supplemented the yawning gaps therein. It came to be issued for
that purpose which envisages that direct recruit Accounts Clerks Grade -
I are eligible for two chances to pass the examinations prescribed in
Appendix-II within a period of three years from the date of entering into
H service. Thus failure to qualify in the examination within the two attempts
j
U.O.I. V. R.K. GUPTA 1005
render them ineligible for confirmation. Thereby, they become liable to be A
discharged from service. It is true that Appendix II in para 4{a) as a general
rule gives three normal chances to the railway servants to take the ex-
aminations and exceptions have been provided giving power to the Finan-
cial Adviser and Chief Accounts Officer to permit a candidate to take the
examination for the fourth time and in deserving cases and in very excep- B
tional circumstances the General Manager is given discretion to permit to
take the examination for the fifth time and the last time. The last two
chances cannot be taken to be automatic or as of right. They are excep-
tional and are within the discretionary zone. In the counter affidavit filed,
the appellants sought to explain exceptional circumstances in which the
power could be exercised by the Financial Adviser and the Chief Accounts
c
Officer and the General Manager with which we are not concerned in these
cases. The question is whether the circular is in conflict with para 167 of
IREM. On a conjoint reading of the relevant rules, we find that there is
no conflict and the circular is to supplement the rule to fill in the yawning
gaps in para 167 of IREM. D

It would appear that all the, except a few, respondents had availed
of three chances and they did not pass the examinations prescribed in
Appendix II of the Manual. It is not possible to accept the contention of
Shri Rao that despite their failure to pass the test, they would continue as E
non-confirmed probationers and that the authority have no power to
terminate or discharge their services. The letters of appointment clearly
indicate that in the event of their failure to pass the prescribed examination
within the time prescribed under the relevant para of IREM and the
circular, they are liable to be discharged. The right to continue in service
would arise only on their confirmation after passing the examination.
F
Therefore, making an order of confirmation, on their passing the examina-
tion, would give a right to the direct recruit Accounts Grade I clerk to
cvntinue in service. On his failure to pass the examination within the
prescribed chances, he becomes liable to the discharged from service.
G,
The ratio in Thimmappas's case (supra) has no application to the
facts in this case. Therein the respondents were already members of the
1-
service in lower cadre and they were promoted to the higher cadre and
were required to pass the prescribed tests and the consequences for failure
to pass the prescribed tests was provided. Therefore, on their failure to H
1006 SUPREME COURT REPORTS (1995] 2 S.C.R.

.A pass the tests, they were ineligible for further promotion~ Considering the
rule a~d the specified consequences this Court held that the promotee who
did not pass the prescribed tests was not liable to be reverted to the
substantive lower posts. They would remain as hang overs to the posts
without further rights. The ratio therein cannot be applied to the direct
B recruit who is not a member of the service until he is confirmed in the
service. The confirmation would come into effect only on passing the
prescribed test. Therefore, the respondents are liable to be discharged
from service. We find no illegality in the action taken by the appellants.

However, in view of the fact that .para 4(a) of the Appendix itself
C gives right to the employee to take three maximum normal chances for
passing prescribed tests, we direct the appellant to give another chance as
an exceptional circumstance to take the examination. The appellants are
directed to give advance notice of the date on which the examination would
be conducted and also should give reasonable facilities for preparation so
D that the respondents would adequately prepare for the examination. It is
open to the appellant to the conduct the examination according to its
procedure. Such candidates who pass the examination will be considered
for confirmation. If they do not pass, appropriate orders would be issued
to discharge them from service.
E
It is brought to our notice that one Prem Shankar Sharma, Respon-
dent No. 4 in one of the appeals, is a confirmed fitter as was ordered on
7.3.1984. He became a direct recruit as Accounts Clerk Grade I. He
undertakes that he is willing to go back as a fitter, instead of appearing for
the examination. We think that he being a confirmed fitter, justice would
F require that he may be permitted to revert back to his original post as a ,
confirmed fitter and the appellants are directed to adjust him as a fitter _.__..,.....,-"'<...._
maintaining his old seniority as a fitter.

It is further brought to our notice that some of the respondents could
G not appear for examinations on medical grounds. It would appear that the
authorities have counted that as one of the chances availed of. According
to us, if it were a case where they had sought to appear but due to medical
--~
grounds could not actually take the examination, the authorities would not
consider the same as one of chances availed of and appropriate benefit
H may be given to such candidates and that too on proof of medical certifi-
I
U.0.I. v. R.K. GUPTA 1007
cate already filed by prescribed/competent doctor. A
} The appeals are allowed with modifications as indicated above. In
the circumstances, parties are directed to bear their own costs.

I. As for substitution are allowed.
B
CA. 4338195 @SLP(C) 3247/94:

Leave granted.

The appeal is allowed ·in view of the above judgment and the appel-
lant also is entitled to a further chance.
c
T.N.A. Appeals allowed.