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ition No. 159 of 1977 (Under Article 32 of the Constitution) AND CIVIL APPEAL No. 1275 of 1975 Appeal by special leave from the Judgment and order dated 28 9 1973 of the Delhi High Court in Civil Writ No. 536/70.
AND WRIT PETITION NOS.
1211 of 1977 and 3795 of 1978 (Under Article 32 of the Constitution) Dr. Y. section Chitale, P. H. Parekh and C. B. Singh for the Petitioners in W.P. 159/77 and appellants in C.A. 1275/75.
M. K. Ramamurthi, Janardhan Sharma and Jitendra Sharma for the Petitioners in W.P. 1211/77.
J. M. Khanna for the Petitioners in W.P. 3795/78 and RR 6, 12, 13 and 16 in the Appeal.
U. R Lalit, E. C. Agrawala and Miss A. Subhashini for R. 1 in W.P. 159/77, 3795/78.
M. Mudgal for RR 12, 14 and 18 in W.P. 159/77.
H. B. Datar and B. P. Singh for RR 2 5 in CA 1275/75, RR 27 213 (Chandrachud, C. J.) 30, 38 40, 42, 44, 47, 49 52 in W.P. 159/77 and R. 4 in W.P. 3795/78.
C. N. Murthy and R. Vasudevan for RR 19 21 and 24 in CA.
1275/75, RR 42, 44, 118 and 150 in WP No. 1211/77.
In person (R. 53 in W. P. 159/77).
COUNSEL FOR THE PARTIES APPEARING PURSUANT To NOTICE: O. P. Sharma, J. M. Khanna, A. Subba Rao and B. P. Singh in Writ Petition No. 159/77.
C. N. Murthy and R. Vasudevan in W.P. No. 1211/77 and RR at Sl.
42 44 and 115 118 of published Notice in W.P. No. 159/77.
Jitendra Sharma in W. P. No. 1211/77 The Judgment of the Court was delivered by CHANDRACHUD, C. J.
This is a group of Writ Petitions and an Appeal involving the questions, mainly, (i) whether the petitioners and the appellants recruited directly as Assistant Executive Engineers, Executive Engineers, Superintending Engineers and, may be, as Chief Engineers were appointed to regular cadres in the Ministry of Ship ping and Transport (Roads Wing), Government of India, or whether they were appointed to ex cadre posts; and (ii) whether they can be put into a separate class for the purpose of regulating their seniority and promotional opportunities in relation to others who were appointed to similar posts on the basis of the result of the Combined Engineering Services Examination.
The petitioners and the appellants (whom we will refer to as the 'petitioners ') were appointed after a viva voce test only, or to use the language of the current controversy, they were appointed after being successfully interviewed by the Union Public Service Commission.
The latter mode of expression helps to highlight that no "examination" as such was involved in their selection and appointment as in the case of those others who now figure in the array of respondents.
Some of the respondents herein, who were then working as Assistant Executive Engineers in the Ministry of Shipping and Transport II (Roads Wing), filed a Writ Petition (C.W. 536 of 1970) in the Delhi High Court against 51 officers, including the present petitioners, who 214 were working either as Assistant Executive Engineers or as Executive Engineers in the same Wing.
Their contention was that the appointment of these 51 officers being contrary to the recruitment rules was illegal or alternatively, that they were appointed to ex cadre posts and not to the 'Central Engineering Service '.
It was therefore claimed that none of those officers was eligible for promotion to the post of Executive Engineer until the respondents were first appointed to those posts and that the respondents were entitled to be confirmed with immediate effect ill preference to those officers immediately on the availability of permanent vacancies.
A similar Writ Petition (C.W. 537 of 1970) was filed in the Delhi High Court by three Executive Engineers, who are amongst the present respondents, contending that whereas their appointment after passing a competitive examination held by the U.P.S.C. was in accordance with the recruitment rules, the present petitioners were appoint ed to ex cadre posts after a mere interview, that such a method of recruitment was not permissible under the rules, that the petitioners herein were appointed for the limited purpose of assisting in the execution of certain projects and that those who were appointed in accordance with the rules were entitled to be treated as senior to those who were not.
It was for these reasons contended that Executive Engineers who were appointed by the interview method can neither be confirmed nor promoted unless and until they were brought into the cadre and appointed to the regular cadre posts.
The Rules which arc alleged to have been breached by the appointment of the petitioners were made by the President under the proviso to article 309 of the Constitution.
They were notified on October 16, 1959 and were called 'the Central Engineering Service (Roads) of the Ministry of Transport and Communication .
Department of Transport (Roads Wing), Class T, Recruitment Rules, 1959 '.
The Rules, evidently, did not provide for appointment to the Central Engineering Service after a mere interview of a candidate by the Union Public Service Commission.
But they were amended by a notification dated August 2 1966 issued by the President under the proviso to article 309 of the Constitution.
By the amendment, clause (d) was added to rule 3 as a result of which appointments could be made 3 to the Central Engineering Service by direct recruitment through the Commission in accordance with Part VI of the Rules.
Part VI of the amended Rules called 'Direct recruitment by selection through the Commission provided that in special circumstances direct recruitment by selection of suitable candidates, with such qualifications, with in such age limits, and satisfying such other conditions as are consi 215 dered necessary at any time in the interest of the service, to the posts mentioned in Appendix IV, shall be made by the Commission by open advertisement notwithstanding anything contained in the rules.
Certain other consequential amendments were made to the 1959 Rules by the 1966 Amendment.
The question which arose for decision of the Delhi High Court in the two writ petitions was whether the appointments of the petitioners herein, who were appointed prior to August 2, 1966 were illegal and if not, whether they were appointed to cadre posts or ex cadre posts.
on behalf of the Government of India a counter affidavit was filed in the High Court by Shri Harbans Singh, Under Secretary in the Ministry of Transport (Roads Wing), denying that the petitioners were appointed to ex cadre posts or that they were treated by the Ministry as being outside the regular cadre of Engineering Service.
Counsel for the Union of India submitted in the High Court that all posts of junior Class I Assistant Engineers Consultant (as the Assistant Executive Engineers were then called) created in the Ministry of Transport, Roads Wing, were posts in the service properly so called whether the appointments were made on a permanent basis or temporary basis.
Counsel for some of the petitioners contended in the High Court that the amendment made in 1966 to the 1959 Rules was retrospective and therefore the appointments of the petitioners could be considered to have been made in accordance with the rules to the posts borne on the cadre of the Engineering Service.
The Delhi High Court was faced with a problem of priorities.
If it were to accept the Government of India 's contention that the petitioners were appointed to cadre posts, their appointments might have been required to be treated as illegal since appointments to posts borne in the cadre could not be made by the interview method under the 1959 Rules.
Any finding or indication to such effect would have paved the way for a challenge to the very legality of the petitioners ' appointments and eventually to their exit from the Engineering Department altogether.
On the other hand, accepting the respondents ' contention that all of them had to be confirmed and promoted in preference to the petitioners would, while legalising the petitioner 's appointments? virtually amount to denial of promotions to them in higher posts.
By its judgment dated September 28, 1973 a Division Bench of the Delhi High Court held that the Rules of 1966 had no retrospective operation.
Relying upon a decision of this Court in R. N. Nanjundappa vs T. Thimmaiah and Anr.
the High Court further held 216 that in any case, an illegal appointment could not be regularised by making a rule under the proviso to Article 309 of the Constitution.
But in order to save the petitioners ' appointments from the challenge of illegality, the High Court rejected the Government 's contention that they were appointed to cadre posts in the Central Engineering Service.
It held that the petitioners were appointed to temporary posts without any right to become permanent, for the purposes of projects like the International Development Association Loan Programme, Emergency Road and Bridge Works Programme and Lateral Road Project and Strategic Roads Work.
Since the temporary appointments of the petitioners were outside the service and against ex cadre posts, rule 3 of the 1959 Rules was regarded as having no application and therefore, the petitioners ' appointments could not in any way be said to be illegal.
The High Court relied upon a decision of this Court in Champaklal Chimanlal Shah vs The Union of India and held that the Government has to employ temporary servants to satisfy the needs of urgent contingencies and such appointments are perfectly legitimate.
So long as such temporary servants work against ex cadre posts and are even promoted to higher ex cadre posts, no member of the Service, according to the High Court, could have a justifiable grievance.
While the writ petitions were being argued in the High Court, orders expressed in the name of the President were issued on August 28, 1973 by which persons appointed as Assistant Executive Engineers on the basis of interviews held by the U.P.S.C. were to be 'deemed to have been inducted ' into the Engineering Service as Assistant Executive Engineers with effect from August 2, 1966.
On the same date, provisional joint seniority lists were issued separately for different categories of Class I Technical Gazetted officers in the Roads Wing of The Ministry and representations from the concerned officers were invited within a period of one month.
The parties requested the High Court to dispose of the writ petitions without taking into consideration the effect and legality of the Presidential order dated August 28, 1973 and the provisional seniority lists circulated on that date.
Accordingly, the High Court did not pronounce upon the same.
In C.W. 536 of 1970 filed by 4 Assistant Executive Engineers who were appointed by competitive examination, against 4 Executive Engineers and 47 Assistant Executive Engineers who were appointed be the interview method, the High Court passed the following order: "To summarise the position, it may be stated that respondents 2 to 52 were not appointed to the Service or to 217 any posts borne on the cadre of the Service.
Their appointments were to ex cadre posts and outside the Service and those appointments were valid.
The orders by which respondents 2 to 6 were promoted as Executive Engineers are not liable to be quashed as it could not be shown that the promotions were made to the posts borne on the cadre of the Service or that as a result of those promotions the respondents came to be appointed to the Service.
Their initial appointments 35 well as promotions have been outside the service and not to any posts borne on the cadre of the Service.
There is also no question of giving any directions for not promoting any of the respondents to the posts of Executive Engineers so long as the promotions are not to posts borne on the cadre of the Service.
As respondents 2 to 52 were not appointed to the Service or to any posts borne on the cadre of the Service, the only relief to which the petitioners are entitled is that the Union of India shall not, so long as the said respondents are not legally appointed to the Ser vice or to any posts borne on the cadre of the Service, treat them as having been appointed to the Service or promote them to any posts that may be included in the cadre of the Service." C.W. 537 of 1970 was filed by 3 Executive Engineers against 1(3 Executive Engineers, 2 of whom were promoted as Superintending Engineers.
All the three petitioners in that writ petition were appointed by competitive examination, two in 1957 and one in 1958, that is to say, before the making of the 1959 Rules.
Respondents 2 to 11 to that writ petition were appointed by the, interview method.
The question whether the petitioners in that writ petition, having been appointed prior to 1959 Rules, could be deemed to have been appointed to the regular cadre of the Central Engineering Service was not considered by the High Court since the legality of their appointment was not in issue.
While dismissing the writ petition the High Court held. "As respondents 2 to 11 were not appointed to the service and no posts have so far been declared to be posts borne on the cadre of the Service it follows that they are holders of ex cadre posts outside the Service.
The promotion of any one of them to the higher post of Planning officer or Superintending Engineer cannot legally be objected to by the petitioners.
Even if somehow the petitioners can be regarded to have been 218 appointed to the Service, as was asserted on their behalf, still respondents 2 to 11 having been directly selected as Executive Engineers against ex cadre posts can in their turn aspire for promotion to higher ex cadre posts. .
The appointments of respondents 2 to 11 to ex cadre posts, were in no way invalid.
" In both the writ petitions the High Court made a significant observation, to which events leading to the present proceedings may perhaps be traced, that if it was desired by the Government of India, that persons who were appointed against ex cadre posts should also become members of the regular Service, the service shall have to be reconstituted by providing, amongst other matters, for the initial constitution of the Service, future recruitment and determination of inter se seniority.
On May 31, 1974 the Government of India in the Ministry of Shipping and Transport (Roads Wing) issued a Memorandum saying L that in view of the judgments of the High Court in the two writ petitions, the provisional inter se Seniority Lists dated August 28, 1973 of all Class I Technical Gazetted officers appointed to the various grades in the Roads Wing were being withdrawn and cancelled.
On the same date, that is, on May 31, 1974 the President issued a Memorandum in each individual case cancelling the orders issued under an earlier Memorandum dated August 28, 1973.
By the latter Memorandum orders were issued in each individual case that officers appointed by the interview method will be deemed to have been inducted into Central Engineering Service (Roads) Class I Service as temporary officers in the particular grade with effect from August 2, 1966 being the date on which the 1959 Rules were amended so as to provide for appointment by the interview method.
The Memorandum of May 31, 1974 contains a recital to the effect that it had become necessary to issue it in view of the judgment of the Delhi High Court in Writ Petition No. 536 of 1970 holding that the Assistant Executive Engineers could not be treated as having been appointed to any post borne on the cadre of the Central Engineering Service.
On March 1, 1976 the Government of India issued a Notification saying that having regard to the judgments of the High Court in Civil Writ Petitions 536 and 537 of 1970, the Government after a most careful consideration had decided to set up 2 Services for Technical Class I officers of the Roads Wing, one to be called the Central Engineering Service (Roads), Group A, comprising of officers appointed by the method of examination/promotion, and the other, to be called the 219 Central Engineering Pool, Group A, comprising of officers appointed by the method of interview.
The recruitment Rules for the two Ser vices were published in the issue of the Gazette of India, dated February 28, 1976.
Two Lists, one showing the names of officers appoint ed to the two Services on the date of the commencement of the new Rules and the other showing the inter se seniority of the officers of the two Services, were circulated to the officers concerned with a request to bring to the notice of the Government any factual errors or omissions and to submit representations, if so advised, against the proposed Seniority Lists within one month.
We will notice the relevant rules before proceeding to consider the validity of the petitioners ' contentions.
On October 16, 1959, the President in the exercise of powers conferred by the proviso to article 309 of the Constitution made rules called 'the Central Engineering Service (Roads) of the Ministry of Transport & Communications, Department of Transport (Roads Wing) Class I, Recruitment Rules, 1959 '.
At the time of promulgation of these Rules, Assistant Executive Engineers used to be called Assistant V Engineers Consultant and Executive Engineers as Divisional Engineers Consultant.
Part II of the Rules containing rules 3 to 5 dealt with the method of recruitment to the Central Engineering Service (Roads).
Rule 3 provided that Recruitment to the Service shall be made by any of the following three methods: (a) By competitive examination m accordance with Part III of the Rules; (b) by promotion in accordance with Part IV of the Rules; and (c) by transfer of an officer in Government service in accordance with Part V of the Rules.
Rule 4 (b) provided that no appointment shall be made to the Service or to any post borne on the cadre of the Service by any method not specified in rule 3.
By rule 4(c) Government was given the power to determine, subject to the provisions of sub rule (3), the methods of recruitment to be employed for the purpose of filling any particular vacancy in the Service or such vacancies therein as may be required to be filled during any particular period and the number of candidates to be recruited by such method.
Rule 4(d) provided for reservation in the ratio of 2/3: 1/3 to Assistant Engineers Consultant and Assistant Engineers, Grade I (Class II) respectively in the matter of promotion to or for selection for the post of Divisional Engineer Consultant.
Rule 4(d) contained an important qualification to the effect that if sufficient number of suitable candidates were not available for promotion from the grade of Assistant Engineer Consultant and Assistant Engineer Grade I to the grade of Divisional Engineer Consultant, the remaining vacancies in the grade of Divisional Engineer Consultant were to be filled by transfer in accordance with Part V of the Rules.
220 Part III of the Rules containing rules 6 to 18 dealt with recruitment to the Service by competitive examination.
Part IV containing rule 19 dealt with recruitment by promotion to the grade of Divisional Engineer Consultant, Class I. Sub rule (2) of rule 19 provided that if sufficient number of officers were not available to fill the quota of either of the two categories mentioned in rule 19 (1) (i) the remaining vacancies in each category were to be filled either in accordance with Part V of the Rules or through the Commission.
Part V of the Rules which dealt with recruitment by transfer of an officer in Government service provided that the Government may, in special cases and after consulting the Commission where such consultation was necessary under the Union Public Service Commission (Exemption from Consultation) Regulations, transfer or take on deputation an officer in Government service in India to a post borne on the cadre of the Service.
On August 2, 1966 the Rules of 1959 were amended in exercise of powers conferred by the proviso to article 309 of the Constitution.
The first significant amendment made in 1966 was the addition of clause (d) to rule 3 of the 1959 Rules.
By that clause an additional method or recruitment was provided, namely, 'By direct recruitment through the Commission in accordance with Part VI ' of the Rules.
Consequential amendments were made to clauses (c) and (d) of rule 4 of the 1959 Rules.
By rule 4 of the Amendment Rules, the concluding words "or through the Commission" of rule 19(2) of the 1959 rules were omitted.
Lastly, a new part, Part VI, was added to the 1959 Rules under the heading "Direct recruitment by selection through the Commission".
The newly added Part VI provided that In special circumstances, direct recruitment by selection of suitable candidates, with such qualifications, within such age limits, and satisfying such other conditions as are considered necessary at any time in the interest of the service, to the posts mentioned in Appendix IV, shall be made by the Commission by open advertisement notwithstanding anything contained in these rules.
The Central Engineering Pool Group 'A ' of the Ministry of Ship ping and Transport (Roads Wing) Rules, 1976 and the Central Engineering Service (Roads) Group 'A ' of the Ministry of Shipping and Transport (Roads Wing) Rules, 1976 made under the proviso to article 309 of the Constitution were notified on February 24, 1976.
We will refer to the former as the 'Pool Rules ' and to the latter as the 'CES Rules '.
221 Turning first to the Pool Rules, rule 2(a) defines "Pool" as the "Central Engineering Pool, Group 'A ', constituted under rule 3".
Rule ' '(e) provides that "Regular continuous Service" means service rendered on a continuous basis after regular appointment to a grade on the recommendations of the Departmental Promotion Committee, or in consultation with the Commission, as the case may be.
Part II of the Pool Rules which deals with the constitution of the Central Engineering Service Group 'A ' provides that there shall be constituted a pool, to be known as the "Central Engineering Pool Group 'A ' ", consisting of persons appointed to the Roads Wing by the competitive selections by the method of interview through the Commission before the commencement of the Pool rules The note appended to rule 3 contains a clarification to the effect that the regular continuous service of the officers in the respective grade in the Ministry of Shipping and Transport (Roads Wing) prior to their appointment to the Pool will count for the purposes of qualifying service for promotion and confirmation in the Pool in the grade of Assistant Executive Engineers, Executive Engineers, Superintending Engineers and, Chief Engineers (Level I and Level II posts).
By rule S, the authorised strength of the various grades of posts in the pool shall be such as may be determined and notified by the Government from time to time, provided that the Government may, for reasons to be recorded in writing and in consultation with the Commission, keep in abeyance such number of posts in such grades as are included in the table below rule 4 and operate them as "isolated posts" outside the Pool.
Appointments to the "isolated posts" are to be made by selection or promotion, as the case may be, on the recommendation of a duly constituted Departmental Promotion Committee, from an integrated list of officers working in the next lower grade in the Pool and in the Central Engineering Service (Roads), Group 'A '.
The list is to be drawn up on the basis of the length of their regular continuous service in their respective grades.
The qualifying service for promotion is the same as laid down in Part III.
By rule 6, recruitment to the grades of Executive Engineer, Superintending Engineer and Chief Engineer (Level II and Level I) in the Pool shall be made by promotion in accordance with Part III, provided that a vacancy in these grades, whenever it occurs, shall first be filled by transfer of an officer of the Pool holding a corresponding post in the "isolated category of posts" in accordance with the proviso to rule 5.
Part III of the Pool Rules deals with recruitment by promotion to the grades of Executive Engineer, Superintending Engineer and Chief 222 Engineer.
These promotions are required to be made on the recommendations of the Departmental Promotion Committee The CES Rules contain provisions governing appointments to the Central Engineering Service as contrasted with appointments to the posts in the Pool.
By rule 3 of the CES Rules a new Service called the "Central Engineering Service (Roads), Group 'A ' " is constituted of (a) persons who were holding posts in the various grades included in the Central Engineering Service (Roads) Class I immediately before the commencement of the 1959 Rules, (b) persons who were appointed to the old Service on or after the date of commencement of the 1959 Rules, except those who have been appointed to the Pool Service and (c) persons who may be appointed to the new Service after the commencement of the new Rules.
Rule 3 (3) contains a proviso regarding isolated posts which is similar to the proviso to rule 5 of the Pool Rules.
By rule 3 (4), recruitment to the Service after the initial constitution thereof has to be made either by competitive examination or by promotion or by selection or by transfer or deputation of an officer in Government service or by direct recruitment through the Commission.
The proviso to this sub rule says that a vacancy in the grades of Executive Engineer, Superintending Engineer and Chief Engineer (Level II and Level I), whenever it occurs, shall first be filled by the appointment of an officer of the Service holding a corresponding post in the "isolated category of posts" in accordance with the proviso to sub rule (3).
The validity of these rules is assailed before us in these Writ Petitions and the Appeal.
The main grievance of the petitioners is that though they were appointed to their posts long before the contesting respondents, they will rank much below the latter in the list of seniority and will consequently be denied promotional opportunities to the higher posts.
It is contended on behalf of the petitioners that their segregation into a separate class called the Pool is totally unscientific and is in violation of the provisions of articles 14 and 16 of the Constitution.
The petitioners made no grievance against the creation of the category of 'isolated posts ' but their contention is that the classification made between the Pool officers and the Service officers is discriminatory and bears nexus with the ' object to be achieved by it.
If the object of the classification is to ensure higher efficiency in the Central Engineering Service, it is contended that the petitioners, who have rendered meritorious service for the past many years and for longer periods than The contesting respondents, cannot ' be put into a separate class thereby denying to them an equal opportunity for promotion to higher posts along with those junior officers who are put into the class of Service 223 Officers.
Shri Chitale, who led the argument on behalf of the petitioners, demonstrated to us by a comparative examination of the allocation of posts made by the Government to the two categories in the exercise of the power conferred upon it by the 1976 Rules, that ' whereas, 15 posts of Superintending Engineers are available for 19 Executive Engineers in the Service Class, in so far as the Pool officers are concerned only 17 posts in the grade of Superintending Engineer have been allocated for as many as 69 Executive Engineers.
Out of 15 posts of Superintending Engineers available for the Service category, 13 are put in the Service class and 2 in the isolated category.
Out of 17 posts of Superintending Engineers available for Pool officers, 8 are put in the Pool and 9 in the isolated category.
This broadly is the grievance or the petitioners.
As against this, Shri Lalit appearing on behalf of the Union of India contends that the judgment rendered by the Delhi High Court in the two writ petitions left no option to the Government save to classify The petitioners in a separate category.
Counsel says that in spite of the contention of the Government that the petitioners were appointed to cadre posts in the regular Service, the Delhi High Court held in the writ petitions that petitioners were appointed to ex cadre posts and that if their appointments were to be treated as having been made to cadre posts, the appointments would be illegal, being in contravention of the rules then hl force.
The High Court having held that the petitioners were appointed to ex cadre posts, there is a valid basis for classifying the petitioners in a separate category qua others whose appointments were made in accordance with the rules.
It is denied on behalf of the Government that any substantial prejudice is likely to result to the petitioners on account of the classification made by the 1976 Rules.
In fact, Shri Lalit urged as one of his strongest points that granting everything in favour of the petitioners, the classification did not bring about such hostile discrimination against the petitioners that this Court should take notice of it.
It is argued that it is not the 1976 Rules which have created two distinct classes but such classes existed independently or the rules, by reason of the fact that persons like the petitioners were appointed contrary to the rules while the contesting respondents were appointed in conformity with the rules.
There is no obligation on the Government, it is contended, to integrate two distinct and different classes of employees in order to bring about equality between them.
Shri H. B. Datar appearing for some of the contesting respondents supported the arguments advanced on behalf OF the Government of India and contended that since the appointments of the petitioners who 224 were appointed by the interview method were at any rate under a cloud the Government was driven to classify them separately in order to protect their tenure which was essentially precarious and insecure.
The object of classifying the petitioners separately, far from being to subject them to hostile discrimination, is to confer upon them a status which could easily and justifiably be denied to them.
The Government, according to Shri Dadar, has been more than fair to the petitioners firstly, by condoning the illegality which had crept into their appointments and secondly, by allocating to them a sufficient number of posts of promotion.
No grievance could be made by the petitioners that the Government is generous but not generous enough.
We are not disposed to accept Shri Chitale 's contention in its entirety that any great prejudice has been occasioned to the petitioners as a result of the classification made by the 1976 Rules.
Out of 4 posts of Superintending Engineers, the Pool officers are occupying 27 whereas the Service officers hold 13 only.
The break up is as follows.
out of these 40, 19 are placed in the isolated category.
These lg posts and 8 posts of Superintending Engineers in the Pool are occupied by the Pool officers.
There is a historic reason for this state of affairs.
Recruitment on a very large scale was made by the interview method in 1962, 1964 and 1965 for the execution of the International Development Association programme, Emergency road and bridge works programme, Lateral Road Project and Strategic Road works in Gujarat and Rajasthan.
Most of the petitioners have a longer standing, though not in the regular cadre, and naturally they are occupying even the two posts in the isolated category which are meant for officers belonging to the regular cadre.
It is also necessary to remember, while assessing the strength of the petitioners ' grievance of hostile discrimination that the so called Pool created by the 1976 Rules consists of stagnant water.
There is going to be no fresh recruitment to the Pool posts and therefore, allocations to the Pool will always be shared by a definite and predictable number of officers.
On the other hand, the other wing is a living and growing service to which recruitment will continue to be made in years to come.
Allocations to that wing will of course have to be in pro portion to the total number of officers working therein but in the very nature of things there are budgetary constraints on the creation of additional posts.
Even though this is so, we are unable to accept the contention that persons holding similar posts and having similar responsibilities to discharge can be classified into different categories for the mere reason that some of them were recruited directly by the interview method and some were recruited directly on the result of a com 225 petitive examination.
Were it permissible to make such classifications, ingenuity may suggest the nature of curriculum in different years as the basis of classification.
If subjection to different kinds of tests as a condition of eligibility produces qualitative difference in the ability of persons recruited to similar posts, it may perhaps become necessary to limit the promotional opportunities, in regard to the relatively higher posts, to those whose abilities are remarkably higher.
But, it is nobody 's case and the Government has made no grievance that the petitioners who were appointed by the interview method are in any way inferior in ability, efficiency or educational qualifications to those who were appointed after a written competitive examination In the matter of experience too, the petitioners are in no way inferior to the contesting respondents.
Both the sides urged, though for different reasons, that at least some of the Executive Engineers can be justifiably treated differently.
On behalf of the Government Shri Lalit urged that 10 out of 69 Executive Engineers from the 1962 batch were parties to the Delhi High Court judgment in Writ Petition 536 of 1970 (out of which Civil Appeal 1275 of 1975 arises).
The Delhi High Court having held that their appointments are to ex cadre posts, no grievance, it is urged, can be made by them at any rate, if they are treated differently.
On the other hand, Shri Chitale contended that the appointment of those Executive Engineers was in accordance with rule 19(2) of the 1959 Rules since they were appointed because no one was available from the Department for being promoted as Executive Engineer We do not want to add to the confusion in which these matters, like Most of the service matters abound, by putting our seal of approval on a sub classification amongst Executive Engineers depending on whether their appointments were within or without the scope of rule 19(2).
It is in the interest of all concerned to evolve a uniform pattern which will, in so far as is reasonably possible, cause injustice to none.
Though classification which proceeds merely on the basis that G: certain persons were recruited after going through one test and certain others after going through another test would be unscientific.
it cannot be said on the facts of the instant case that there can be no valid basis or justification for classifying the various officers of the Roads Wing into separate categories.
As we have stated earlier, the appointments of some of the petitioners and some of the respondents were made in violation of the rules which were in force at the relevant time.
It is in respect of that class of person that the Delhi High 226 Court was driven to hold that they must be deemed to have been appointed to ex cadre posts.
Persons for whose appointments the necessary legal sanction was wanting, were liable to be put out of employment but in order to prevent any such harsh consequence, the Delhi High Court came to record the finding that they must be held to have been appointed to ex cadre posts.
T. hat finding must be taken to have been affirmed in these proceedings, with the result that no action will lie hereafter for a declaration or any similar relief asking that their appointments are illegal.
But, the fact remains that persons who were appointed contrary to the rules but to ex cadre posts were taken initially for purposes of certain projects to which we have already referred.
Their pre carious tenure was continued from time to time but that will not furnish justification for treating them on the same footing as others whose appointments were made strictly in accordance with the rules and who were appointed to posts borne on the cadre of the Central Engineering Service.
A division of these two classes of officers into separate categories will remove possible injustice to those who were appointed to cadre posts in that, their promotional opportunities will not be blocked or hindered by ex cadre officers who were recruited on a large scale to meet an urgent necessity.
Such a classification will also minimise the injustice which would otherwise have been caused to those who were appointed to ex cadre posts.
Taking all relevant aspects of the matter into consideration we propose to pass the following order which, it must be stated, was discussed by us quite at some length with all the learned counsel appearing in the case.
In fairness to them we must say that the order which we propose to pass does not proceed from their consent though they have helped to shape it.
(1) All persons appointed in accordance with any of the modes of appointment prescribed by rule 3 or rule 19(2) of the 1959 Rules must be taken to have been appointed to the regular cadre of the Central Engineering Service.
It will not be permissible to classify them separately as 'pool ' officers or other wise.
(2) Those whose appointments are not in accordance with any of the modes of appointment prescribed by rule 3 or rule 19(2) of the 1959 Rules, shall be taken to have been appointed to ex cadre 227 posts.
Such persons may be classified into a separate category from those referred to in clause (1) above (3) The Central Government will scrutinise the cases of all persons involved in the present proceedings, who have been placed in the 'pool '.
The Government shall, upon such scrutiny, decide whether the appointment in each particular case was made in conformity with rule 3 or rule 19(2) of the 1959 Rules.
All persons concerned may, if they so desire, submit their representations to the authorities concerned before 1st October, 1979.
On consideration of the representations and upon examination of the relevant material, the Central Government shall make a declaration before 1st January, 1980 whether any and which appointment was in accordance with rule 3 or rule 19(2) of the 1959 Rules and which was against the same.
The classification of the officers concerned under clauses (1) and (2) above will depend upon and be governed by the declaration to be made by the Government.
(4) Cases of all persons, who according to the declaration to be made by the Government are wrongly placed in the 'pool ', shall be reviewed by the Government or by the appropriate authority as the case may be.
However, all promotions made prior to 31 5 1974 will remain undisturbed.
Promotions made after that date shall be reviewed by the appropriate authority, as expeditiously as possible, in the light of the declarations made by the Government so as to give to such officers the promotions which are due to them.
This order takes note of the grievance of those persons also who have been placed in the 'pool ' but who contend that they have been wrongly included therein, since their appointments were in accordance with the 1959 Rules as they stood at the time of their recruitment.
The Writ Petitions and the Appeal shall stand disposed of in, terms of this order.
There will be no order as to costs.

Output:
The Central Engineering Service (Roads) of the Ministry of Transport and Communications, Department of Transport (Roads Wing) Class I Recruitment Rules 1959 provided that recruitment to the service shall be made by competitive examination, by promotion and by transfer as provided for in Parts III, IV, V of the Rules.
The Rules provided that no appointment shall be made to the service or to any post borne on the cadre of the service by any method, not specified in Rule 3.
The Rules empowered the Government to determine the methods of recruitment for filling any particular vacancy in the service.
An amendment introduced on August 2, 1966 to Rule 3 of the 1959 Rules provided an additional method of recruitment viz. direct recruitment through the UPSC in accordance with Part VI of the Rules.
This Part provided that in special circumstances recruitment by selection of candidates to the posts mentioned in Appendix IV shall be made by the Commission by open advertisement, notwithstanding anything contained in the Rules.
Right from the inception selection of officers for Class I posts was made by an examination conducted by the UPSC.
After the introduction of r. 3(d) in the 1959 Rules in August 1966, 951 persons were recruited by the UPSC by way of interviews without written examination.
Some of the respondents who were officers selected by written examination impugned the appointment of the 51 officers including the petitioners who were working as Assistant Executive Engineers or Executive Engineers in the same wing on the ground that the appointment of these 51 officers was contrary to the Recruitment Rules in that they were appointed in contravention of the 1959 Rules or in the alternative they contended that they should be treated to have been appointed to ex cadre posts and for this reason they were not eligible for promotion to the posts of Executive Engineers, until the respondents were first appointed to those posts.
Lastly the respondents contended that they were entitled to be confirmed in preference to the petitioners.
A similar writ petition was filed by three Executive Engineers (among the present respondents) alleging that their recruitment by the method of examination was in accordance with the Recruitment Rules but that the petitioners were appointed by 210 mere interviews, a method not permissible under the Rules and therefore those who were appointed by interview method could neither be confirmed nor promoted unless they were brought into the cadre and appointed to the regular cadre posts.
The High Court held that the Rules of 1966 had no retrospective operation and that therefore an appointment made in contravention of the rules could not he regularised by making a rule under the proviso to article 309.
It also held that the petitioners were appointed to temporary posts without any right to become permanent but since the temporary appointments were outside the service and against ex cadre posts, Rule 3 of he 1959 Rules had no application and for that reason their appointments could not be said to be illegal.
While the writ petitions were being argued orders were issued on August 28, 1973 by which persons who were appointed as Assistant Executive Engineers by way of interview were deemed to have been inducted into the Engineering Service as Assistant Executive Engineers with retrospective effect from August 2, 1966 i.e. the date of induction of r. 3(d) into the 1959 Rules.
Provisional seniority list was separately made for the different categories of officers.
This order of August 28, 1973 was not however questioned before the High Court.
In view of the decision of the High Court the Government withdrew and cancelled the provisional inter se seniority list dated August 28, 1973 and at the same time it issued a Notification to the effect that the officers appointed by the interview method would be deemed to have been inducted into the Central Engineering Service (Roads) Class T Service as temporary officers in the grade with effect from August 2, 1966.
On March 1, 1976 the Government issued a notification stating that it had decided to set up two services called the Central Engineering Service (Roads) Group 'A ' comprising of officers appointed by the method of examination/ promotion and the other Central Engineering Pool, Group 'A ' comprising of officers appointed by the method of interview.
Rules in respect of both the services were published and the inter se seniority list of officers of the two services were circulated to the concerned officers.
The Central Engineering Service Rules constituted a new service called the Central Engineering Service (Roads) Group 'A ' consisting of (a) persons who were holding posts in the various grades included in the Central Engineering Service (Roads) Class I immediately before the commencement of the 1959 Rules; (b) persons who were appointed to the old service on or after the date of commencement of the 1959 Rules, except those who have been appointed to the Pool Service; and (c) persons who may be appointed to the new service after the commencement of the new Rules The Central Engineering Pool Group 'A ' consisted of persons appointed to the Roads Wing by competitive examination by the method of interview through the UPSC before the commencement of the Pool Rules.
A note appended to r. 3 contained a clarification that the regular tenure service cf the officers in the respective grade prior to their appointment to the Pool would count for the purposes of qualifying service for promotion and confirmation in the Pool in the different grades.
Rule 5 authorised Government to 211 keep in abeyance certain posts and operate them as Isolated Posts outside the Pool.
Promotions to higher posts in Pool were to be made on the recommendations of the Departmental Promotion Committee.
In their writ petitions the petitioners contended that though they were appointed to the posts long before the respondents they were ranked much below the latter in the list of seniority and that consequently they would be denied promotional opportunities to the higher posts, that their segregation into a separate class called the Pool is totally unscientific and was in violation of Articles 14 and 16 of the Constitution; and that the classification made between the Pool officers and Service officers is discriminatory and bore no nexus with the object sought to be achieved by it. ^ HELD: 1.
Out of 40 posts of Superintending Engineers the Pool officers were occupying 27 posts whereas Service officers held only 13 posts.
There is a historical reason for this state of affairs.
Recruitment on a very large scale was made by the interview method in 1962, 1964 and 1965 fol.
execution of certain urgent works.
Most of the petitioners had a longer standing though not in a regular cadre, and naturally they were occupying even the two posts in the isolated category which were meant for officers belonging to the regular cadre.
[224D E] 2.
The so called Pool created by the 1976 Rules consisted of stagnant water.
There is to be no fresh recruitment to the Pool pos(s and.
therefore, allocations to the Pool would always be shared by I definite and predictable number of officers.
On the other hand, the other wing was a living and growing service to which recruitment continued to be made in subsequent years.
Allocations to that wing would have to be in proportion to the total number of officers working therein but in the very nature of things there were budgetary constraints on the creation of additional posts.
1224 F G] 3.
It cannot be said that persons holding similar posts and having similar responsibilities to discharge could be classified into different categories for the mere reason that some of them were recruited directly by the interview method and some were recruited directly on the result of a competitive examination.
Were it permissible to make such classification, ingenuity may suggest the nature of curriculum in different years as the basis of classification.
If subjection tc different kinds of tests as a condition of eligibility produces qualitative difference in the ability of persons recruited to similar posts, it may perhaps become necessary to limit the promotional opportunities, in regard to the relatively higher posts to those whose abilities are remarkably higher.
The Government had made no grievance that the petitioners who were appointed by the interview method were in any way inferior in ability, efficiency or educational qualifications to those who were appointed after a written competitive examination.
In the matter of experience too, the petitioners were in no way inferior to the respondents.
[224H 225C] 4.
Though classification which proceeds merely on the basis that certain persons were recruited after going through one test and certain others after going through another test would be unscientific, it cannot be said on the facts of the case that there could be no valid basis or justification for classifying the various officers of the Roads Wing into separate categories.
The appointments 212 of some of the petitioners and some of the respondents were made in violation of the Rules which were in force at the relevant time.
It is in respect of that class of persons that the High Court held that they must be deemed to have been appointed to ex cadre posts.
Persons for whose appointments the necessary legal sanction was wanting, were liable to be put out of employment but in order to prevent any such harsh consequence, the High Court came to record the finding that the must be held to have been appointed to ex cadre post.
That finding must be taken to have been affirmed in these proceedings, with the result that no action would lie hereafter for a declaration or any similar relief asking that their appointments were illegal.
[225G 226B] 5.
The fact remains that persons who were appointed contrary to the Rules, but to ex cadre posts, were taken initially for purposes of certain projects.
Their precarious tenure was continued from time to time but that would not furnish justification for treating them on the same footing as others whose appointments were made strictly in accordance with Rules and who were appointed to posts borne on the cadre of the Central Engineering Service.
A division of these two classes of officers into separate categories would remove possible injustice to those who were appointed to cadre posts in that, their promotional opportunities would not be blocked or hindered by ex cadre officers who were recruited on a large scale to meet an urgent necessity.
Such a classification would also minimise the injustice which would otherwise have been caused to those who were appointed to ex cadre posts.
[226 C E]


Input:
Civil Appeal No. 50 of 1957.
Appeal by special leave from the judgment and order dated September 23, 1955, of the Bombay High Court in Income tax Reference No. 19 of 1955.
R. J. Kolah and I. N. Shroff for the appellant.
H. N. Sanyal, Additional Solicitor General of India, K. N. Rajagopala Sastri and D. Gupta, for the respondent.
May 12.
The Judgment of the Court was delivered by BHAGWATIJ.
This appeal with special leave arises out of a judgment and order of the High Court of Judicature at Bombay dated September 23, 1955, delivered in Income Tax Reference No. 19 of 1955 made by the Income tax Appellate Tribunal (hereinafter referred to as " the Tribunal ") to the Pligh Court under section 66(1) of the Indian Income tax Act (XI of 1922) (hereinafter referred to as " the Act ") whereby the High Court directed the Tribunal to submit a supplementary statement of case on the points mentioned therein.
The appellant is a limited liability company manufacturing textile goods at Bhavnagar which was an Indian State during the assessment years 1943 44 and 1944 45.
For the said assessment years the appellant was held to be a non resident, its years of account 251 being calendar years 1942 and 1943.
For the assessment years 1943 44 and 1944 45 (account years 1942, and 1943), the Income tax Officer computed the British ' Indian Income of the appellant on a proportionate basis under section 4(1)(a) of the Act.
In the account year 1942 its total sales amounted to Rs. 66,14,852 out of which sale proceeds amounting to Rs. 35,92,157 as detailed below were held by the Income tax Officer to have been received in British India: Cheques on the Imperial Bank issued by the Supply Department of the Government of India Rs. 2,58,987 Sale proceeds received through Tri kainlal Mahasukhram Rs. 20,24,190 Other cheques received at Bhavnagar but drawn on Banks in British India Rs. 13,08,980 Rs. 35,92,157 The Income tax Officer computed the income of the appellant at Rs. 27,11,136 on a proportionate basis, i.e., proportionate to the sales in and outside British India.
He held that the income amounting to Rs. 14,72,267 was received in British India under section 4(1)(a) of the Act.
There was no dispute in regard to the sale proceeds received through Trikainlal Mahasukhram.
In respect of the assessment year 1944 45 corresponding to the account year 1943 the Income tax Officer held that the sale proceeds amounting to Rs. 16,72,693 received by the appellant by cheques from the Supply Department of the Government of India on British India Banks were taxable under section 4(1)(a) of the Act.
The figure of Rs. 16,72,693 according to the appellant, was a mistake for Rs. 12,97,631.
The appellant had contended that the amounts had been received at Bhavanagar, by cheques drawn on banks in British India.
The Revenue had not disputed the fact that the cheques had been actually received at Bhavnagarbut had contended that payments by cheques, though such cheques were received at Bhavnagar, 252 were received in British India at the time and the place where the cheques were ultimately cashed and honoured by the banks on which the cheques were drawn and that until such encashment of the cheques, the monies could not be said to have been received by the appellant.
The Appellant preferred appeals to the Appellate Assistant Commissioner, Ahmedabad Range, against this order of the Income tax Officer for the said two assessment years.
The Appellate Assistant Commissioner by his two separate orders confirmed the orders of the Income tax officer and held that the cheques were not legal tender and were not monies or monies worth as such and that the receipt of cheques at Bhavnagar was not receipt of money.
The receipt of money according to the Appellate,.
, Assistant Commissioner, took place on actual payments by the drawee Banks and he therefore held that the said amounts were taxable under section 4(1)(a) of the Act.
A further appeal was taken by the appellant.
to the Tribunal against the said orders of the Appellate Assistant Commissioner and the Tribunal by its consolidated order for both the years, dated July 17, 1952, held that the cheques for the said amounts of Rs. 2,58,987 and Rs. 13,08,987 in respect of the assessment year 1943 44, were received at Bhavnagar and that the sale proceeds were also received in Bhavnagar.
The Tribunal stated inter alia as follows: There is no evidence that the cheques from Government were received in Bhavnagar.
It is not the Department 's case that the assessee company has a registered office elsewhere.
The presumption is that the letters containing the cheques were addressed to the assessee company at Bhawagar We therefore hold that the cheques were received from Government at Bhavnagar and that the money was also received in Bhavnagar.
" In doing so, the Tribunal followed the Judgment of the Bombay High Court in the case of Kirloskar Brothers Ltd. vs Commissioner of Income tax Bombay (1).
In view of the fact however that an appeal had been filed (1) 253 in this Court against that decision of the Bombay High Court the Tribunal further stated: " We might point out that in case the Supreme Court does not uphold the Bombay High Court decision in Kirloskar case an enquiry will have to be made as to whether the assessee company 's banks at Ahmedabad acted as the assessee company 's agents for collecting the money due on the cheques.
" In respect of the assessment year 1944 45, the Tribunal, after directing the Income tax Officer to verify the correctness of the figure of the amounts received by the appellant by cheques from the Government (i. e., whether it was Rs. 12,97,631 as contended for by the appellant or Rs. 16,72,693 as held by the Income tax Officer or any other figure), held that the cheques representing the said amount were received at Bhavnagar and the monies or sale proceeds were also received in Bhavnagar.
The Tribunal also held that another amount of Rs. 5,53,447 in respect of the said latter year, being the aggregate amount of the cheques received at Bhavnagar from other merchants was also received in Bhavnagar.
It may be pointed out that neither did the Incometax Officer, when the proceedings were before him, or when the proceedings were before the Appellate Assistant Commissioner, nor did the Revenue, when the proceedings were before the Tribunal, at any stage contend that the cheques aggregating to the said amounts in the said two years were not received at Bhavnagar because of the alleged posting of the cheques in British India and/or by reason of the allega tion that the cheques were sent by post and/or that the post office was the agent of the appellant and that too, in spite of the decision in the case of Kirloskar Bros. Ltd. which decision had already been pronounced by then and where the said question had been debated and argued by the Revenue.
The only ground urged by the Revenue at all material stages was that because the amounts which were received, from the merchants or the Government, were received by cheques drawn on Banks in British India which were ultimately encashed in British India, the monies could not be 254 said to have been received in Bhavnagar though the cheques were in fact received at Bhavnagar.
Being aggrieved by the said decision of the Tribunal, the respondent (Commissioner of Income tax) filed two applications under section 66(1) of the Act requesting the Tribunal to draw up a statement of the case and refer the question of law arising out of the order of the Tribunal to the High Court.
In the said applications the facts which were admitted and/or found by the Tribunal and which were necessary for drawing up a statement of the case were stated as under: " Regarding items of Rs. 2,58,987 and Rs. 12,97,631 received from the Government of India in the accounting years relevant to the assessment for 1943 44 and 1944 45 respectively the amounts were received by cheques drawn on the Imperial Bank of India.
No evidence was produced by the assessee at any stage even before the Appellate Tribunal, that the cheques were received at Bhavnagar, nor was any evidence produced to show that these cheques were received as unconditional discharge of debtor 's liability.
These cheques were collected by the Company 's bankers in 'British India.
The Income tax Officer, therefore, held that the amount was received in British India.
The Appellate Assistant Commissioner confirmed the Income tax Officer 's action.
The Tribunal, however, relied upon the Bombay High Court decision in Kirloskar Brothers ' case and held that the amount was received in Bhavnagar. " " As regards items of Rs. 13,08,980 and Rs. 5,53,447 received in the accounting years relevant to the assessments for 1943 44 and 1944 45 respectively, the relevant facts are that the company received these cheques and sent them to their bankers in Ahmedabad for collection. .
The Tribunal, held that the sale proceeds were received at Bhav nagar on the basis of the Bombay High Court 's decision in the Kirloskar Brothers ' case without enquiring as to whether the cheques were received by the company in unconditional discharge of the drawer 's liability.
255 On these facts the respondent submitted that the following questions of law arose out of the order of the Tribunal: " (1) Was there any evidence on the record to justify the Tribunal 's finding that the mere receipt by the assessee of cheques of Rs. 2,58,987 and Rs. 13,08,980 in Bhavnagar amounted to receipt of the above amounts in Bhavnagar even though the said cheques had actually been cashed in British India and the proceeds thereof were credited to the assessee 's accounts with certain Banks in British India ? (ii) Whether in the circumstances of this case, the income, profits and gains in respect of the sales amounting,to Rs. 15,67,967 made to the Government of India and other customers were received in British India within the meaning of section 4(1)(a) of the Indian Income tax Act.
" A similar statement of facts which were admitted and/or found by the Tribunal was also made in regard to the assessment year 1944 45 and similar questions of law were asked to be referred as in the case of the assessment year 1943 44 except in regard to the change in the figures necessitated by the differences in the amounts received.
These reference applications being Reference Applications Nos. 615 and 616 of 1952 53 were kept pending until the decision of this Court in the case of Commissioner of Income tax vs Kirloskar Bros. (1).
This Court decided that appeal and the companion appeal The Commissioner of Income tax, Bombay South vs Messrs. Ogale Glass Works Ltd. (2) on April 17, 1954.
and the said Reference Applications were thereafter heard and decided by the Tribunal on November 3, 1954.
It is worthy of note that the decision of this Court in the said two cases proceeded on the basis that on the particular facts of those appeals the Post Office had acted as the agent of the assessee and that though the cheques were in fact received by post by the assessees outside British India, nevertheless, by reason (1) [1954]25 I.T.R. 547.
(2) 256 of the fact that the assessees in the said two appeals had expressly requested the Government to remit the amounts by cheques, the assessees had constituted the Post Office their agent to receive, on their respective behaves, the said cheques which were posted by the Government at Delhi having addressed them to the assessees outside British India.
In spite of the said decisions, the Revenue did not urge before the Tribunal that the said aspect of the matter should in the present case also be referred to the High Court for its decision and the Reference applications were heard on the materials which were on the record before the Tribunal when it made its orders dated July 17, 1952.
The said order of the Tribunal was based on the facts admitted and/or found by the Tribunal as stated in the Reference Applications made by the Revenue as aforesaid and this aspect of the case, viz., whether any portion of these cheques were received by post and if so whether there was any request by the appellant express or implied that the amounts of those cheques should be remitted to Bhavnagar by post, had certainly not been canvassed before any of the income tax authorities or before the Tribunal and did not find its place in the order of the Tribunal and any question of law appertaining thereto could not be said to arise out of the said order of the Tribunal.
On the materials as they stood on the record then, the Tribunal drew up on November 5, 1952, a statement of case in which all the facts and events above referred to were set out.
Besides the same the Tribunal also referred in para.
8 thereof to two letters on the record which showed that the cheques from the Supply Department were received by post.
It also annexed a sample agreement form on record between the appellant and its customers other than the Government and annexed thereto the copies of the Appellate Assistant Commissioner 's orders for the assessment years 1943 44 and 1944 45.
The two letters showing that the cheques from the Supply Department were received by post were evidently put in with a view to show that the order of the Tribunal dated July 17, 257 1952, was correct in making the presumption that the letters containing the cheques were addressed to the, appellant at Bhavnagar and in holding that the cheques were received from the Government at Bhavnagar.
There was no other reason, so% far as the record then stood, to make any reference to the said two letters.
Out of the facts stated above the Tribunal raised the following question of law: Whether the receipt of the cheques in Bhavnagar amounted to receipt of sale proceeds in Bhavnagar? " The said Reference was heard by the High Court on September 23, 1955, and judgment was delivered the same day whereby the High Court held that it was not possible to answer the question in the absence of materials as to whether the cheques which were received in Bhavnagar were posted by the Government at the request of the appellant and the High Court observed : " The question that has been submitted to us by the Tribunal is whether the receipt of the cheques in Bhavnagar amounted to receipt of sale proceeds in Bhavnagar.
This question over looks the important aspect which was dealt with both by us in Kirloskar 's case and also by the Supreme Court.
Assuming that the cheques were received in Bhavnagar, the question still, remains as to whether if the cheques were received by post, the post office was constituted the agent of the asseessee or not.
The mere receipt of cheques by post in Bhavnagar is not conclusive of the question raised by the Tribunal.
Unless we are in a position to say whether the cheques were sent to Bhavnagar by post without there being a request express or implied by the assessee the mere receipt of the cheques in Bhavnagar would not constitute receipt of sale proceeds in Bhavnagar.
When we look at the statement of the case there is no reference at all to this aspect of the case.
" The High Court further observed that the burden would be upon the Revenue to establish that the cheques which were received by post were so received at the request express or implied of the appellant and 258 that therefore the Post Office was the agent of the appellant.
But it observed in this context: " But we cannot shut out the necessary inquiry which even from our own point of view is necessary to be made in order that we should satisfactorily answer the question raised in the Reference.
It must not be forgotten that under sec.
66(4) of the Income tax Act we have a right independently of the conduct of the parties to direct the Tribunal to state further facts so that we may properly exercise our advisory jurisdiction.
" In the result, the High Court directed that a supplementary statement of case should be submitted by the Tribunal on the following points: " On the finding of the Tribunal that all the cheques were received in Bhavnagar, the Tribunal to find what portion of these cheques were received by post, whether there was any request by the assessee, express or implied, that the amounts which are the subject matter of these cheques should be remitted to Bhavnagar by post.
Mr. Johi concedes that to the extent that the cheques were not received by post but by hand, the receipt will be for the purpose of tax in Bhavnagar.
" The appellant filed a petition in the High Court on November 22, 1955, for the grant of a certificate under section 66A(2) of the Act to appeal to this Court from the said judgment and order of the High Court.
This application was dismissed by the High Court by its order dated December 8, 1955, with the result that the appellant presented on December 22, 1955, a petition in this Court for special leave to appeal from the said judgment of the High Court dated September 23, 1955.
This Court by its order dated March 12, 1956, granted special leave to appeal, such leave being limited to the question whether the High Court had jurisdiction under section 66(4) of the Act to call for a supplemental statement of case.
This is how the appeal has come up for hearing and final disposal before us.
We have narrated the facts and events leading up to this appeal in such detail in order that we may 259 have the proper perspective and the background against which the High Court directed the Tribunal to submit a supplementary statement of case on the points mentioned therein.
The appeal raises an important question as to the nature, scope and extent of the jurisdiction vested in the High Court under section 66(4) of the Act and we shall now address ourselves to that question.
The relevant provision of sec.
66 of the Act may now be referred to : " 66.
(1) Within sixty days of the date upon which he is served with notice of an order under sub section (4) of section 33 the assessee or the Commissioner may, by application in the prescribed form, accompanied where application is made by the assessee by a fee of one hundred rupees, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order, and the Appellate Tribunal shall within ninety days of the receipt of such application draw up a statement of the case and refer it to the High Court: Provided that, if, in the exercise of its powers under sub section (2), the Appellate Tribunal refuses to state a case which it has been required by the assessee to state, the assessee may, within thirty days from the date on which he receives notice of the refusal to state the case, withdraw his application and, if he does so, the fee paid shall be refunded.
(2) If on any application being made under sub section
(1) the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be may, within six months from the date on which he is served with notice of the refusal, apply to the High Court, and the High Court may, if it is not satisfied of the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it, and on receipt of any such requisition the Appellate Tribunal shall state the case and refer it accordingly. . . . . . . 260 (4) If the High Court is not satisfied that the statements in a case referred under this section are sufficient to enable it to determine the question raised thereby, the Court may refer the case back to the Appellate Tribunal to make such additions thereto or alterations therein as the Court may direct in that behalf.
" It is clear on a plain reading of the terms of section 66(1) that the only question of law which the assesssee or the Commissioner can require the Tribunal to refer to the High Court is " any question of law arising out of the order of the Tribunal " so that if the question of law which the assessee or the Commissioner requires the Tribunal to so refer to the High Court does not arise out of its order the Tribunal is not bound to refer the same.
What has therefore to be looked at in the first instance is whether the question of law thus required to be referred arises out of the order of the Tribunal.
The Tribunal no doubt has got before it #he facts which are admitted and/or found by the Tribunal and which are necessary for drawing up a statement of the case and it is the facts admitted and/or found by it that would form the basis on which the statement of case would be drawn and references of the question of law made by the Tribunal to the High Court.
If such facts were not there whether in the order of the Tribunal or in the record before it there would certainly not be any foundation for the raising of any question of law either in the abstract or otherwise and it is only a question of law which would arise out of such facts which are admitted and/or found by the Tribunal that would be the substratum of the reference to the High Court.
The facts admitted aD.d/or found by the Tribunal would really be the foundation or the basis on which such questions of law could be raised and neither party would be entitled to require the Tribunal to refer to the High Court any question of law which could not thus arise out of the order of the Tribunal.
Section 66(2) which gives the power to the High Court to require the Tribunal to state the case and refer the question of law to it also proceeds on the same basis and even 261 where the High Court exercises the power under section 66(2) it can only require the Tribunal to state the case on any question of law arising out of such order. ' The scope and subject matter of the reference under section 66(2) therefore is co extensive with that of the reference under section 66(1) of the Act and the High Court has no power or jurisdiction under section 66(2) to travel beyond the ambit of section 66(1).
Section 66(2) comes into play only when the Tribunal refuses to state the case on the ground that no question of law arises and if the High Court is not satisfied of the correctness of the decision of the Tribunal, it has got the power and jurisdiction to require the Tribunal to state the case and refer the same to it.
On the conditions of section 66(1) and section 66(2) being thus complied with the statement of case has to be drawn up by the Tribunal and the question of law arising out of its order referred to the High Court for its opinion.
This statement of case which is based, as stated above, on the facts which are admitted and/or found by the Tribunal may not contain sufficient material to enable the High Court to determine the question raised thereby and in that case the High Court under section 66(4) is vested with the jurisdiction to refer the case back to the Tribunal to make such additions thereto or alterations therein as the Court may direct in that behalf only for the purpose of determining the question referred to it.
If the question actually referred does not bring out clearly the real issue between the parties, the High Court may reframe the question so that the matter actually agitated before the Tribunal may be raised before the High Court.
But section 66(4) does not enable the High Court to raise a new question of law which does not arise out.
of the Tribunal 's order and direct the Tribunal to investigate new or further facts necessary to determine this new question which had not been referred to it under section 66(1) or section 66(2) and direct the Tribunal to submit a supplementary statement of case.
This power and jurisdiction which is vested in the High Court is to be exercised within the four corners of section 66.
If under section 66(1) and section 66(2) the statement of case has to be 262 drawn up on the basis of the facts which are admitted and/or found by the Tribunal and this is the requirement also of para.
3 of the prescribed form the scope of such statement of case cannot, in our opinion, be in any manner enlarged by the power which is given to the High Court under section 66(4) to make such additions thereto or alterations therein in the statement of case as the Court may direct in that behalf.
The jurisdiction of the High Court under section 66 is a consultative or advisory jurisdiction.
In order to satisfactorily discharge that advisory jurisdiction the High Court must have before it all the facts which are admitted and/or found by the Tribunal properly set out in the Statements in the case.
It is only in those cases where the statement of case referred to the High Court under section 66(1) and section 66(2) are not sufficient to enable the High, Court to determine the question raised thereby that the High Court is empowered to refer the case back to the Tribunal, so that the Tribunal within the four corners of section 66(1) and section 66(2) may make such additions to those statements or alterations therein as may be directed by the Court.
Even though the terms of section 66(4) are wide enough to comprise " such additions thereto or alterations therein as the Court may direct in that behalf " the scope of such directions has got to be read in the context of and in conjunction with the provisions of section 66(1) and section 66(2) and under the guise of that direction the High Court cannot refer the case back to the Tribunal to find new facts or embark upon a new line of enquiry which would enable either the assessee or the Commissioner to make out a case which had never been made during the course of the proceedings before the Income tax authorities or the Tribunal so far.
Such additions thereto or alterations therein as the Court may direct in that behalf are additions of facts to the statement of case or alterations therein which though they were part of the record before the Income tax authorities or the Tribunal were not incorporated in the statement of case drawn up by the Tribunal either because such facts or statements though contained in the record were not found by the Tribunal or were omitted to be incorporated in the statement of case drawn up by it.
263 That this is the scope, nature and extent of the jurisdiction of the High Court under section 66(4) of the Act is amply borne out by the authorities.
In Craddock (H. M. Inspector of Taxes) vs Zevo Finance Co. Ltd.( ').
Lord Greene, M. R. observed at p. 277: " The Crown, therefore, failed before the Commissioners to establish the only measure of value for which it was contending.
It was, however, suggested that this difficulty could be avoided by sending the matter back to the Commissioners, so as to give the Crown an opportunity of setting up a different measure of value supported by different evidence.
Even assuming that this was the only difficulty in the way of the Crown 's argument, it would not, in my opinion, have been proper to take this course.
The Crown failed in its contention on a matter of fact and it must abide by.
the result: it would be contrary to all principle to give it another chance to establish by fresh and different evidence a quite different contention which, if it was desired to rely upon it, ought to have been advanced in the first instance.
Our task is to deal with the case on the basis of the facts as found by the Commissioners upon the submissions made to them, and on this basis the value of the investments has not been established.
" I In Commissioner of Income tax, West Bengal vs State Bank of India (2), Chakravartti, C.J., who delivered the judgment of the High Court at Calcutta said at p. 551 : " We intimated to Mr. Meyer as soon as he formulated his points that he could not be allowed to take the first of them, since it did not appear to have been taken on behalf of the Department at any stage of the proceedings and certainly not before the Tribunal.
It could not, therefore, be said to arise out of the Tribunal 's order.
The practice followed in this Court in references under section 66(1) of the Act has always been to limit the party, at whose instance a reference has been made, to the points raised and canvassed before the Tribunal.
Questions (1) , 277.
(2) , 551, 264 are often framed in a general form, such as whether the assessment for a particular year made in a certain manner was valid in view of the provisions of a certain section of the Act.
A question framed in that form might be said to comprise all possible contentions to which the terms of the relevant section might give rise, but this Court has always refused to treat matters arising out of questions so framed as entirely at large.
It has adopted and acted on that view for the reason that this Court is only an advisory body and the advice which it can be properly asked to give is only advice on matters which had been in contention before the Tribunal and which had been decided in one way or another such advice being sought in order that the parties interested might know whether the decision on those conten tions had been in accordance with law.
In hearing a reference under section 66(1), this Court does not sit in appeal from the assessment and it is not called upon to give its advice on matters which the Tribunal was not asked to decide and which the Tribunal neither decided, nor included in the statement of case for the opinion of this Court.
" The Bombay High Court also expressed the same opinion in the case of Industrial Development and Investments Co., Ltd. vs Commissioner of Excess Profits Tax, Bombay (1), Chagla, C.J., who delivered the judgment of the Court pointed out to the Tribunal what the correct procedure was with regard to the submission of a statement of the case and observed: " It is true that very often the Tribunal may not refer to all the evidence and all the facts in its appellate order.
We quite appreciate the difficulty of the Tribunal as it has to deal with a large number of cases, and it may be that in many cases the decision may seem obvious to the Tribunal and it might dispose of an appeal by a very short order.
If a statement of the case is, subsequently called for, naturally the Tribunal would want to elaborate it, , decision by pointing out various materials and pieces of evidence to which it had not referred in , 695.
265 the appellate order.
But all that can be referred to in the Statement of the case are materials and evidence which were before the Tribunal when it heard the appeal.
A statement of the case is not intended for the purpose of buttressing up the order of the Appellate Tribunal or further fortifying it by requisitioning to its aid materials and evidence which were not before the Tribunal but which it discovers by investigation after the order was passed in appeal.
" Much more so would be the case where no such material and evidence were at all in existence when the High Court in exercise of its jurisdiction under section 66(4) of the Act referred the case back to the Tribunal and asked it to make such additions thereto or alterations therein as the Court may direct in order to enable it to determine the question raised thereby.
Adopting such a procedure would involve, in effect, raising fresh issues and taking fresh evidence in order that fresh facts may be found which facts certainly were not there at the time when the matter was heard before the Income tax authorities or before the Tribunal in the first instance.
Two more decisions may be referred to in this context.
One is a decision of the Bombay High Court in Vadital Ichhachand vs Commissioner of Income tax, Bombay North, Kutch and Saurashtra, Ahmedabad (1) where Tendolkar, J., dealt with an argument advanced by Counsel that the Court should send the matter back to the Tribunal for determining the quantum of penalty, and observed: Then Mr. Palkhivala says that we should, therefore, send this matter back to the Tribunal for determining that question.
We do not find any power in this Court under the provisions of section 66 of the Income tax Act to remand a matter back to the Tribunal for determining what might have been left undetermined by them, because they took a particular view of the law.
We have merely the jurisdiction to answer the question of law referred to us, and we are not concerned with any questions which are pure questions of fact or its determination by the Tribunal.
" 34 (1) , 573.
266 The other is the decision of this Court in Commissioner of Income tax vs Bhurangya Coal Co. (1), where Venkatarama Aiyar, J., dealt with a similar argument which was addressed before this Court at p. 805 : " The matter then came before the High Court of Patna on a reference under section 66(1) of the Income tax Act, at the instance of the appellant.
There the contention was raised that the differentiation between movable and immovables on which the judgment of the Tribunal rested had not been made at any time in the prior stages of the proceedings and that was a matter on which further evidence would have to be taken to ascertain the intention of the parties and that, therefore, the matter should be remanded for further enquiry to the Appellate Tribunal.
The learned Judges refused to accede to this contention for the reason that no such appli cation was made before the Tribunal and that it was a point which ought not to be allowed to be taken for the first time in the High Court.
On behalf of the appellant, it is stated that the question as to what are immovables and what are movables, arises only on the judgment of the Tribunal and that, therefore ' an opportunity ought to be given for an investigation of this aspect of the question.
We are not impressed by this argument.
Surely, before the Tribmnal there must have been a discussion as to the position with reference to the movables as distinct from the immovables, under the transaction and if the appellant considered that in view of that distinction, further enquiry was called for, it was incumbent upon it to apply to the Tribunal itself to order it and not having done so, it had no right to call upon the High Court to remand the matter for that purpose.
In our opinion the High Court was justified in declining to entertain this point.
" If there is no power in the High Court to remand the case to the Tribunal for fresh findings of facts on further enquiry in the manner stated above, much less would the High Court have the power while exercising its jurisdiction under section 66(4) of the Act to (1) , 805, 267 refer the case back to the Tribunal to make such additions thereto or alterations therein as the Court may direct as would require the Tribunal to embark upon a fresh line of enquiry which had never been canvassed at any time before the Income tax authorities or the Tribunal in the first instance and record fresh findings on evidence adduced by the parties in that behalf.
Our attention was drawn on behalf of the Revenue to the observations of Fazl Ali, J. (as he then was) in the Commissioner of Income tax, Bihar & Orissa vs Visweshwar Singh( ') where the learned Judge dealt with the procedure adopted by the Commissioner of Income tax in sending up the reference in question.
The High Court sent the matter back to the Commissioner in order that he may re state the statement of case.
When the matter went back to the Commis sioner he sent up a restatement of the case, but unfortunately without hearing the assessee.
The High Court sent the re stated case back to the Commissioner once again in order that the case might be re stated with such further finding of fact as the Commissioner may consider necessary after hearing the assessee.
The matter then went back to another Commissioner who instead of re stating the case, as he was ordered by the High Court to do, sent up a letter to the High Court stating that he had not heard the party in regard to the opinion of the Commissioner, and that in any event he should not consider that he had power within section 66(4) to vary an opinion given under section 66(2) if no new facts were admitted.
The learned Judge pointed out that the Commissioner was in duty bound to carry out the order of the High Court and he should have re heard the parties, admitted such further evidence as he considered relevant on the point at issue and re stated the case with his opinion thereon.
It is not clear, however, from the record as to whether the re hearing of the parties and the recording of such further finding as was considered relevant on the point at issue embraced a fresh line of enquiry which had not been entertained at any earlier stage of the proceedings or was merely (1) ,554.
268 by way of elucidation of the very same points at issue which had been canvassed earlier but had not been thrashed out completely and properly reflected in the finding of the Tribunal.
These observations, in our opinion, do not make any difference to the position that we have adopted herein, viz., it is not open to the High Court in the exercise of its jurisdiction under section 66(4) of the Act to raise a new question and to require the Tribunal to entertain a fresh line of enquiry, hear the parties in regard to the same and record fresh finding of fact which would enable either the assessee or the Commissioner to advance a case which had never been made by it before the Income tax authorities or the Tribunal and which therefore could not be said to arise out of the order of the Tribunal.
The decision of the Privy Council in Sir Sunder Singh Majithia vs Commissioner of Income tax, C. P. and U. P. (1) was also referred to by the Revenue in this context.
In that case the question of law which was formulated was in the following terms: ,, In all the circumstances of the case, having regard to the personal law governing the assessee and the requirements of the Transfer of Property Act (IV of 1882) and the Stamp Act (II of 1899) has the deed of partnership dated February 12, 1933, brought into existence a genuine firm entitled to registration under the provisions of section 26 A of the Act.
" The High Court while answering this question did not advert to the relevant aspect of the question and this result was brought about because the Commissioner had taken pains to state some matters very fully,.
but he had not found the material facts as he should have done.
The various essential facts were not found and stated by the Commissioner and the Privy Council observed that the referred question could not be answered until the High Court had exercised its powers under sub section
4 of section 66 of the Act and left it to the discretion of the High Court to specify the particular additions and alterations which the Commissioner should be directed to make.
Here also (1) ,461. 269 the nature, scope and extent of the jurisdiction of the High Court under section 66(4) of the Act was not specific , ally discussed and the only order which was passed was that the case be remanded to the High Court for disposal after taking such action under sub section (4) of section 66 of the Act as the High Court might think fit in the light of the judgment.
The same observations which we have made earlier while discussing the case of Commissioner of Incometax vs Visweshwar Singh (1) would apply to this case also and the observations of the Privy Council really do not militate against the position as we have laid down above.
On the facts of the present case before us it is abundantly clear that the only question which was canvassed before the Income tax authorities and the Tribunal before it made its order dated July 17, 1952, was whether the cheques which were received at Bhavnagar having been cashed in British India, the monies in respect of the same should be said to have been received in British India and the Tribunal had held following the case of Kirloskar Brothers ' Case that the cheques were received from the Government at Bhavnagar and the receipt of money in respect of these cheques from Banks in British India related back to the receipt of the cheque at Bhavnagar and therefore was also received in Bhavnagar.
At no time was the question as regards the posting of the cheques in British India (Delhi) at the request, express or implied, of the appellant and the consequent receipt of the sale proceeds in British India ever mooted before the Income tax authorities or the Tribunal before the Tribunal made its order on July 17, 1952, or even in the reference applications filed on September 15, 1952, nor was the said question mooted before the Tribunal when it heard the reference and drew up the statement of case on November 5, 1954, even though this Court had pronounced its decision in Kirloskar Brothers ' Case (1) and the Commissioner of Income tax, Bombay South vs Messrs. Ogale Glass Works Ltd. (2) on April 19, 1954.
The facts admitted and/or (1) , 554.
(2) (3) 270 found by the Tribunal as stated in the said applications for reference took count of the position as it had been adopted by the Revenue in all these proceedings and it could not by any stretch of imagination be urged that the question now sought to be mooted was ever in the minds of the Revenue.
The question of law which was referred by the Tribunal to the High Court for its decision was: Whether the receipt of the cheques at Bhavnagar amounted to receipts of sale proceeds in Bhavnagar." and it was only based on the facts admitted and/or found by the Tribunal which had relevance only to that question and not to the question which was sought to be mooted by the High Court in its judgment under appeal.
If the latter question was allowed to be entertained the question would have to be recast as under: " Whether the posting of the cheques in British India at the request, express or implied of the appellant, amounted to receipt of sale proceeds in British India.
" a question quite distinct and separate from the question of law which was actually referred by the Tribunal to the High Court in the statement of the case drawn on November 5, 1954.
We are, therefore, of opinion that the High Court was in error in not deciding the reference before it and answering the question on the facts disclosed in the statement of case.
We are also of opinion that in the circumstances of this case the High Court had no jurisdiction under section 66(4) to direct the Tribunal to submit a supplementary statement of case on the points mentioned in its judgment.
The result, therefore, is that the appeal will be allowed and the matter remanded to the High Court to arrive at its decision on the question of law referred to it in the statement of case already submitted to it by the Tribunal.
The respondent will pay the appellant 's costs throughout.
Appeal allowed.

Output:
This appeal by special leave was directed against the order of the High Court asking the Income tax Appellate Tribunal under section 66(4) Of the Income tax Act to submit a supplementary ' statement of case on points, which were never raised by the parties nor decided by the Income tax Authorities or the Tribunal.
The only question canvassed before them was whether certain cheques, which were received by the assessee at Bhavnagar having been cashed in British India, the monies in respect of them could be said to have been received in British India.
The Tribunal held that the monies related back to the receipt of the cleques and were as such received at Bhavnagar.
The question was whether the receipt of the cheques at Bhavnagar amounted to receipt of the sale proceeds at Bhavnagar. ' The High Court held that the mere receipt of the cheques by post at Bhavnagar was not conclusive in absence of a further finding as to whether the cheques were sent by post without any request, express or implied, having been made by the assessee and observed as follows " But we cannot shut out the necessary inquiry which even from our own point of view is necessary to be made in order that we should satisfactorily answer the question raised in the Reference.
It must not be forgotten that under sec.
66(4) of the Income tax Act we have a right independently of the conduct of the parties to direct the Tribunal to state further facts so that we may properly exercise our advisory jurisdiction.
" Held, that the High Court had misconceived its powers under section 66(4) of the Act and its decision must be set aside.
Section 66(4) of the Indian Income tax Act, which must be read with sections 66(1) and 66(2) Of the Act, did not empower the High Court to raise a new question of law which did not arise out of the Tribunal 's order or direct the Tribunal to investigate new and further facts necessary to determine the new question which had not been referred to it under s 66(1) or section 66(2) of the Act and direct the Tribunal to submit supplementary statement of case.
Such additions and alterations in the statement of case as section 66(4) of the Act empowered the High Court to direct, could 250 relate only to such facts as already formed part of the record but were not included by the Tribunal in the statement of the case.
Craddock (H. M. Inspector of Taxes) vs Zevo Finance Co. Ltd., ; Commissioner of Income tax, West Bengal vs State Bank of India, ; Industrial Development and Investments Co., Ltd. vs Commissioner of Excess Profits Tax, Bombay, [1957] 31 I.T.R. 688; Vadilal Ichhachand vs Commissioner of Income tax, Bombay North, Kutch and Saurashtra, Ahmedabad, and Commissioner of Income tax vs Bhurangya Coal Co. [195S] , referred to.
Commissioner of Income tax, Bihar & Orissa vs Visweshwar Singh, and Sir Sunder Singh Majithia vs Commissioner of Income tax, C. P. and U. P. [1942] 10 I.T.R. 457, considered.