# [2007] 4 S.C.R. 1

- **Citation:** [2007] 4 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 2007-03-15
- **Case number:** Civil Appeal No. 1391 of2007
- **Bench:** B.P. Singh, Al Tamas Kabir
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/2007-4-s-c-r-1-22732
- **Pages:** 25

## Headnote

Service· Law.
~
Seniority List-Federation registered as cooperative society adopting c
3 tier structure with Regional Unions in second tier-Many employees of
Federation transferred to Regional Unions-Transfer of employees from
federation to Unions not regulated by rules or norms laid down by
management-Employees transferred getting promotions in Unions-Decision
taken to close down Unions and revised staffing structure of Federation D
finalized-Voluntary Retirement Scheme ojJered to surplus employeesCommon seniority list of employees of federation and Unions prepared
,;
indicating surplus employees-Seniority list challenged by some employees
declared surplus-Held, promotions granted not governed by any promotion
policy and also arbitrary and unreasonable-Determination of seniority by
reference to promotions not governed by any rule not justified-In the facts E
and circumstances, held, seniority to be reckoned by reference to length of
service in the Federation by reference to date of initial appointmentConstitution of India, 1950-Articles 14 and 16.
Appellant-Federation registered as cooperative society under the A.P. F
Cooperative Societies Act adopted a 3 tier structure with the Federation at
-r
top and two Regional Unions in the second tier and cooperative societies at
village level in the third tier. Many employees of Federation transferred to
the Regional Unions. High Court on 6.6.2000 in petition filed by some of such
transferred employees had held that they continued to be employees of the
Federation and entitled to all service benefits. In view of mounting losses, a G
decision was taken in the year 2001 to restructure the Federation and to close
-..'
down both the Unions and a revised staffing structure of the Federation of
I
manpower of 159 employees based on a broad Five Year Business Plan was
.,;
finalized resulting in many of the employees being rendered surplu~. It was
also resolved to offer Voluntary Retirement Scheme (VRS) for the surplus H
..
I
·~ .
2
SUPREME COURT REPORTS
[2007] 4 S.C.R.
A manpower of the Federation and the Unions as per the approved pattern. A
common seniority list indicating surplus employees was prepared. Majority
of employees declared surplus accepted VRS Scheme.
Respondent were also declared surplus employees and they along with
some other employees filed various writ petitions challenging order of
B Federation declaring them surplus. Single Judge dismissed the writ petitions
inter alia holding that employees transferred to Regional Unions continued
to be employees of Federation and their services in the Union must be treated
as on deputation only; that Federation was right in consolidating and issuing
a common seniority list of its employees; and that the principles applied by
C Federation for determination of seniority were not arbitrary. Respondents
filed writ appeals challenging the order of the Sittgle Judge. Division Bench
allowed the appeals inter alia holdin-g that criteria fixed for determining interse seniority was not just and reasonable; that only the relative seniority in
the respective cadres of the Federation of employees sent on deputation to
D the Unions could be taken into consideration, and their promotion in the excadre post in the Unions had nothing to do with their seniority in their parent
cadre under the Federation; that there was no clear cut promotion policy
either in the Federation or the Unions and since the promotions were granted
in an irrational manner, not much importance could be attached to the
promotions granted in the Unions; and that seniority of employees had to be
E determined by reference to date of their initial appointment. Hence the present
appeals by the Federation.
Appellant-Federation inter alia contended that soine hardship,
inconvenience or injustice is bound to result to some members offhe service
even when a rule is framed with care, objectivity and foresight ; and that in
F working the VRS the principle followed was the rule of seniority

## Text

_Characters 0–39,811 of 66,932. This is a partial read: ask again with offset=39811 for what follows._

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A.P. COOPERATIVE OIL SEEDS GROWERS FEDERATION LTD.
A
/
HYDERABAD, ANDHRA PRADESH
"
D. ACHYUTA RAO AND ORS.
MARCH 15, 2007
B
[B.P. SINGH AND AL TAMAS KABIR, JJ.]
Service· Law.
~
Seniority List-Federation registered as cooperative society adopting c
3 tier structure with Regional Unions in second tier-Many employees of
Federation transferred to Regional Unions-Transfer of employees from
federation to Unions not regulated by rules or norms laid down by
management-Employees transferred getting promotions in Unions-Decision
taken to close down Unions and revised staffing structure of Federation D
finalized-Voluntary Retirement Scheme ojJered to surplus employeesCommon seniority list of employees of federation and Unions prepared
,;
indicating surplus employees-Seniority list challenged by some employees
declared surplus-Held, promotions granted not governed by any promotion
policy and also arbitrary and unreasonable-Determination of seniority by
reference to promotions not governed by any rule not justified-In the facts E
and circumstances, held, seniority to be reckoned by reference to length of
service in the Federation by reference to date of initial appointmentConstitution of India, 1950-Articles 14 and 16.
Appellant-Federation registered as cooperative society under the A.P. F
Cooperative Societies Act adopted a 3 tier structure with the Federation at
-r
top and two Regional Unions in the second tier and cooperative societies at
village level in the third tier. Many employees of Federation transferred to
the Regional Unions. High Court on 6.6.2000 in petition filed by some of such
transferred employees had held that they continued to be employees of the
Federation and entitled to all service benefits. In view of mounting losses, a G
decision was taken in the year 2001 to restructure the Federation and to close
-..'
down both the Unions and a revised staffing structure of the Federation of
I
manpower of 159 employees based on a broad Five Year Business Plan was
.,;
finalized resulting in many of the employees being rendered surplu~. It was
also resolved to offer Voluntary Retirement Scheme (VRS) for the surplus H
..
I
·~ .
2
SUPREME COURT REPORTS
[2007] 4 S.C.R.
A manpower of the Federation and the Unions as per the approved pattern. A
common seniority list indicating surplus employees was prepared. Majority
of employees declared surplus accepted VRS Scheme.
Respondent were also declared surplus employees and they along with
some other employees filed various writ petitions challenging order of
B Federation declaring them surplus. Single Judge dismissed the writ petitions
inter alia holding that employees transferred to Regional Unions continued
to be employees of Federation and their services in the Union must be treated
as on deputation only; that Federation was right in consolidating and issuing
a common seniority list of its employees; and that the principles applied by
C Federation for determination of seniority were not arbitrary. Respondents
filed writ appeals challenging the order of the Sittgle Judge. Division Bench
allowed the appeals inter alia holdin-g that criteria fixed for determining interse seniority was not just and reasonable; that only the relative seniority in
the respective cadres of the Federation of employees sent on deputation to
D the Unions could be taken into consideration, and their promotion in the excadre post in the Unions had nothing to do with their seniority in their parent
cadre under the Federation; that there was no clear cut promotion policy
either in the Federation or the Unions and since the promotions were granted
in an irrational manner, not much importance could be attached to the
promotions granted in the Unions; and that seniority of employees had to be
E determined by reference to date of their initial appointment. Hence the present
appeals by the Federation.
Appellant-Federation inter alia contended that soine hardship,
inconvenience or injustice is bound to result to some members offhe service
even when a rule is framed with care, objectivity and foresight ; and that in
F working the VRS the principle followed was the rule of seniority determined
/ by reference to length of service in the grade and such a rule cannot be said
to be unreasonable.
Respondent inter alia contended that norms applied for reckoning
seniority were arbitrary and unreasonable based on.promotions which were
G granted without reference to rules or norms; and that in declaring surplus
employees the principle of last come first go must be applied.
Disinissirig the appeals, the Court
H
HELD: 1. It is no doubt true that service rules, however, meticulously
+
....
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A.P. COOP. OIL SEEDS GROWERS FED. LTD. HYDERABAD. ANDHRA PRADESH ,._ D. ACHYUT RAO
3
framed, there is always a chance of some hardship being caused to a particular A
section of the employees, but as long the rules are just, fair and reasonable,
even if two views are possible, the mere fact that some hardship, inconvenience
or injustice results to some members of the service, is not a ground to strike
down the rule. It is not safe to test the constitutionality of a service rule on
the touchstone of fortunes of an individual. If the rule otherwise appears to be B
fair, just and reasonable and does not suffer from the vice of Articles 14 and
16 of the Constitution or any constitutional guarantee, the mere fact that some
little hardship or injustice is caused to someone, is no ground to strike down
the rule altogether. !Para 31) 117-E-FJ
Kamal Kanti Dutta and Ors. v. Union of India and Ors., [1980) 4 SCC c
38 and Reserve Bank of India and Ors. v. C.N. Sahasranaman and Ors., [1986)
Supp. SCC 143, referred to.
2. The transfer of employees from the Federation to the Unions was not
regulated by rules framed or norms laid down by the Management. The D
transfers were made on ad hoc basis in the absence of rules and similarly
promotions were also granted without reference to rules or norms. No rules
were framed governing the grant of promotions on transfer of employees from
the Federation to the Union, or from one Union to another. All the employees
with whom this Court is concerned were appointed to posts in the Federation E
and, therefore, it was rightly contended that they were employees of the
Federation and no distinction could be made merely because they were
officiating against posts in one or the other Union. The matter was put beyond
controversy by a decision of the High Court which attained finality holding
that all the employees must be treated as the employees of the Federation and
not the Unions. They, therefore, belonged to the same service under one F
employer namely the Federation and their inter-se seniority had to be
determined on that basis. So far as the inter-se seniority in the Federation is
concerned, though not formally determined, it must be held, in the absence of
rules, that seniority must be reckoned by reference to the length of service
in the Federation. This is precisely what the High Court has held.
G
(Paras 40 and 41] (21-E-H; 22-A-BJ
3.1. It is no doubt true that even in the absence of rules promotions may
be granted, but it must be shown that the promotions granted are just and
fair and that they do not offened Articles 14 and 16 of the Constitution of
India or any .other constitutional guarantee. If promotions are granted
arbitrarily without following norms or Guidelines, such promotions will have H
4
SUPREME COURT REPORTS
[2007] 4 S.C.R.
A to be ignored in determining the seniority of the employees concerned, firstly
"
for the reason that there. are no rules govern_ing grant of promotion, and
secondly because the gra!lt of promotions are arbitrary and vio_lative of the
principles enshrined in Articles 14 and 16 of the Constitution of India.
!Para 421122-C-D)
B
3.2. Admittedly no seniority rules had been framed when promotions
had been granted in the Unions. The management ·acted in exercise of its
authority to grant promotions. The action of the Management in granting
promotions must be determined on the touchsto?e of Articles 14 and 16 of
the Constitution of India. If the grant of promotions is found to be arbitrary
c or unreasonable it must be held that such promotions will not affect the right
of seniority of the persons concerned, since the promotions were granted
neither in accordance with any rule nor by following norms consistent with
principles incorporated in Articles 14 and 16 of the Constitution oflndia.
The High Court has very critically analysed the facts of the case. I has found
as a fact that there was no clear cut promotion policy either in the Federation
D or in the Unions. An Operator was promoted as Shift Supervisor; a Chemist
was promoted as Assistant Grade-I; a Driver was promoted as Senior
Assistant and another Chemist was promoted as Executive Quality Control
and also Quality Control Officer .• Thus, _the High Court concluded that the
employees had been promoted to various.posts without there being any
E stipulated of promotion and without following any procedure prescribed by
rules of promotion. Thus determination of their seniority by reference to
promotions which were not governed by any rule and were at best fortuitous
could not be justified. Where promotions are not granted in accordance with
the rules or fair and reasonable norms laid down for the purpose, and the
promotions are at·best fortuitous, such an uncertain event cannot be made
F the basis for determining seniority which is a valuable right of an employee.
Seniority, therefore, must be determined by rule_s validly framed or norms
+.-
enunciated and/or followed which are consistent with ,t_he principles enshrined
in Articles 14 a111d 16 of the Constitution of India.
f Para 431122-E, F, G, H; 23-A, B, DJ
G
S.B. Patwardhan and Anr. v. State of Maharashtra and Ors., 119771 3
sec 399, relied on.
"}
4. While the employees were ~ransferred ~o !he Unions much earlier
and were granted promotions in due course in tlie Unions, the question o~
their seniority inter-se and the principles to be applied in determining
H seniority were evolved for the first time when the closure of the Union was
I
A.P. COOP OIL SEEDS GROWERS FED. LTD. HYDERABAD. ANDHRA PR o\DESH r D. ACHY UT RAO
5
/
being considered necessitating retrenchment of surplus employees. It was at A
this stage that the cadre strength was first determined and thereafter norms
were sought to be evolved in the light of which seniority was to be determined
and junior employees in excess of the determined cadre strength to be given
the benefits of YRS. It was really a process of working backwards. Rules and
norms were sought to be evolved later governing promotions which were B
granted much earlier without reference to such rules or norms, but which
were to determine the inter-se seniority of the employees for the purpose of
}.
retrenchment. !Para 44) 123-E-FI
-..
5. The High Court was right in holding that the promotions earlier
granted in the Unions and the norms later laid down by the Federation could c
not be applied to determine the inter-se seniority of the employees of the
Federation. The only rule which in the facts of.the case, could be safely applied
to determine seniority was to reckon seniority by reference to length of
service in the Federation. As a necessary corollary, the date of initial
appointment in the Federation was decisive in determining seniority. Thus
applied, seniority must be determined by reference to the date of initial D
appointment and not by reference to dates of promotion granted in the Unions
unguided by rules framed of norms declared which could be said to be fair
and reasonable applying the test of Articles 14 and 16.
!Para 45) 123-G-H; 24-A-B)
Commissioner of Commercial Taxes, Board of Revenue, Madras and Anr. E
v. Ramkishan Shrikishan Jhaver, 11968) 3 SCR 1; AIR (1968) SC 59, R.L.
Gupta and Anr. v. Union of India and Ors., 11988) 2 SCC 250; Krishan Lal v.
State of J & If., 119951 4 SCC 422; Sub-Inspector Roop/al and Anr. v. Lt.
Governer through Chief Secretary, Delhi and Ors., [2000] 1 SCC 641;
Chairmen, Puri Gramya Bank and Anr. v. Ananda Chandra Das ans Ors., F
(1994) 4 sec 301; Bimlesh Tanwar v. State of Haryana and Ors., 12003) 5
SCC 604; P. Srinivas v. M Radhakrishna Murthy and Ors., 120041 2 sec
459; G. Varandani v. Kurukshetra University and Anr., f2003) 10 SCC 14
and The State of Punjab v. Jagdip Singh, f196414 SCR 964 =AIR (1964) SC
521 and Hussain Sasan Saheb Kaladgi v. State of Maharashtra, ( 1988) 4 SCC
168, cited.
G
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1391 of2007.
~
From the Judgment and Order dated 27.4.2004 of the High Court of
Judicature of Andhra Pradesh at Hyderabad in W.A. Nos. 1786-1787/2003.
WITH
H
A
6
SUPREME COURT REPORTS
[2007] 4 S.C.R.
Civil Appeal Nos. 1392-1398/2007 .
. P.P. Rao, M.N. Rao, K. Subba Rao, T.V. Ratnam, Y. Ramesh ~nd Y. Raja
Go pa la· Rao for the Appellants.
H.S. Guraraja R,ao, Rapjit Kumar, K. M.~rut~i Rao, J(. Jla.dha, Anjani
B Aiyagari, S.U.K. Sagar, T. Sl;ldhakar ~eddy, Bina Madh.ava,n, .He~~I K. Sheth
for M/s. Lawyer's Knit.&. Co. f<;>r th,e Respo,n~.ents.
The Judgment of the Court was delivered by
B:P. ~I~~f!, J. Special Ie,ave grante.d.
c
l. In. this batch of appeals _the common judgm~r.it ar.id or~er of the High
Court of Judicature of Af.i~dhra Pr~~esh _at Hyde~a-~ad dated .Apr,il 27, 2Q.OT4 lias
been assai.led. The High Court by its aforesai.d common judgment and order
allowed several wr.it appeals -~g~i.nst.which th·~.!iPPe.Iiant, A.P. C<;>9perativ~ Oil
Seeds Growers Federation Ltd. (hereinafter referred to as 'the Federation') has
D preferred app~~I~. n'ie ~~spo,n~e.~ts .;~o~e ~~i1,~ppe,ai~ w~re .aiio~e.d .. by the.
High Court are D. AchY.\l!a R~o, fy1ghd. A-.m':~r ,A.Ii, :ryt. S!!~hagri)\ao, K.V.N.
Rao, Shekqar Goud and l).S .. R,a,o. T,ney.~h~ll.hereiqa.fter.l:ie re.ferred to as the
'contesting respoi:id~r;its'.
E
2. D. Achyuta ~ao h~d. pr~fe~red W~it Pe,t,i~i?.n N_os.,9565
1a~d 13985 <;>f
2003 which were dismissed by the learned Single Judge .but the writ appeals
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being :Nos. 1786 and 1787 of 2903 were allowed by the High Court against
which ~he Fed,er!ltion has p;eferred :~he,~pp~alS:aris\~g ?.~t of SLP (c)°Nos.
15912-159p of2Q04.
F
3. Mohd. Anwar Ali had preferred Writ Petiti<?n Nos. 9669 ~nd 13~41 of
2003 which were also dismissed by the learned ~ingle Judge but the writ
).
appeals preferred by him being Writ Appeal.Nos. 1784 and 1785 of2003 were
allowed by.the impugned COfTlmC?njudgment.:if!d p~der of the High Court. The
appeals .arising ~ut of SLP (C) Nos. 15923 .~rid 159~4 9f 2004 .have been
preferred by t~e Federation against tre, ~foresaid jμdgm~nt a!~owing .the
G appeals of Mopd. Anwar Ali ..
4. M. Seshagri Rao preferr:d Writ Petition Nos. 9671 a~d 13172 of 2003
which were also dismissed by the learned Single Judge but.the writ appeals
'
1
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~.- •
I
, ~
.
.
being Nos. 1791 .and 17?4 of 2003 preferred by him w.ere.allowed by the
impugn~d comm~n judg'!l_e,nt and order of the High C<?urt. The cro~s-?bjections
H
.I,.
A.P. COOP. OIL SEEDS GROWERS FED. LTD. HYDERABAD. ANDHRA PRADESH•·. D. ACHYUT RAO JB.P. SINGH. J.j 7
/
had been preferred by the Federation which were dismissed by the High A
Court. The appeals arising out of SLP ( c) Nos. 15046 to 15051 of 2004 have
been preferred by the Federation challenging the impugned judgment and
order of the High Court allowing the writ appeals. The Federation has also
filed appeals arising out of SLP ( c) No. 15926 and 15927 of 2004 against the
order dismissing its cross-objections.
B
5. K.V.N. Rao had preferred Writ Petition Nos. 9670 and 13163 of2003
which were dismissed by the learned Single Judge. The appeals preferred
being writ appeals being Nos. 1795 and 1792 of 2003 were allowed by the
impugned common judgment and order of the High Court. The cross-objections
preferred by the Federation were also dismissed. The appeals arising out of c
SLP (c) Nos. 15920 to 15921 of2004 have been preferred by the Federation
against the impugned judgment and order of the High Court.
6. Shekhar Goud has preferred Writ Petition Nos. 10039 and 15270 of
2003 which were dismissed by the learned Single Judge. The writ appeals
preferred by him being Nos. 1793 and 1796 of 2003 were allowed. The D
Federation has impugned the common judgment and order of the High Court
in the appeals arising out of SLP ( c) Nos. 15918 and 15919 of 2004.
7. Lastly U.S. Rao has filed similar Writ Petitions being No. 9633 of2003
which was dismissed by the learned Single Judge. The writ appeal preferred
by him being No. 1801 of2003 was allowed. The Federation has impugned the E
judgment and order of the Hig.h Court in the appeal arising out of SLP ( c) No.
15917 of2004.
8. The questions that arise for consideration in these appeals relate to
the Voluntary Retirement Scheme (hereinafter referred to as 'the YRS') offered F
by the Federation to its employees having regard to the reduced cadre
strength. It is the case of the Federation that only those of the employees
were retained who came within the cadre strength detennined in accordance
with the norms enunciated by the Federation and the remaining employees
were offered the benefit of the VRS. The six contesting respondents in these
appeals had challenged their inclusion in the list of surplus employees whose G
services were to be discontinued. Initially a large number of writ petitions
were filed but the factual position as it emerges today is that the strength of
~
the cadre is I 59 and, therefore, 163 employees out of 322 had to be declared
surplus. Out of those declared surplus 13 7 accepted the YRS while 26 went
to court. The contesting respondents before us are amongst those who
H
challenged the order of the Federation declaring them surplus. When these
8
SUPREME COURT REPORTS
[2007] 4 S.C.R.
A appeals came up before us we were informed that the writ appeals preferred
by 20 others were still pending before the High Court and, therefore, we had
directed that those appeals may also be disposed of so that all the matters
could be heard together, if necessary. Accordingly those writ petitions have
been heard and disposed of by the High Court and the aforesaid 20 writ
B petitioners have also accepted the YRS pursuant to the order of the High
Court dated 14th September, 2005. Thus the dispute is confined to the 6
contesting respondents before this Court whose writ appeals were allowed by
the High Court.
9. Shorn of unnecessary details the facts of the case are as follows:-
C
The appellant-Federation was registered as a cooperative society under
the A.P. Cooperative Societies Act with the object of bringing about increase
in production of oil seeds. The appellant-Federation started its operation in
the year 1983 with a 2 tier structure, namely the Federation at the State level
and cooperative societies at the village level. The vegetable oil project was
D funded by the National Dairy Development Board (for short 'NDDB') with a
view to promote the Primary Cooperative Societies and the establishment of
processing units. On its suggestion the appellant-Federation adopted a 3 tier
structure with the Federation at the top and two Regional Unions in the
second tier. In the third tier, were the cooperative societies at village level. It
appears from the record that many of the employees of the appellant-Federation
E were transferred to the Regional Unions. This was challenged by 21 employees
who filed Writ Petition No.24907 of 1996 contending that they were not the
employees of the Regional Uni_ons but were employees of the Federation. The
Unions were distinct legal entities since they were also independently registered
as cooperative societies. They had been transferred to those Unions against
F their wishes and without their consent. The aforesaid writ petition was allowed
by judgment and order of June 6, 2000. It was held that the writ petitioners
continued to be the employees of the appellant-Federation. There was no
contract of employment between them and the Management of the Regional
Unions. The employer~employee relationship had not been severed and,
therefore, in law, they continued to be the employees of the appellantG Federation. There was no employer-employee relationship between them and
the aforesaid two Regional Unions. Accordingly the appellant-Federation was
directed to treat them as their employees and extend to them all service
benefits.
10. The appellant-Federation preferred Writ Appeal No. 798 of 2000.
H The said appeal was later dismissed as having become infructuous in view
.\..
A.P. COOP OIL SEEDS GROWERS FED. LTD HYDERABAD. ANDHRA PRADESH 1·. 11. AOIYUT RAO IB.P. SINGH. J.I 9
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of the changed circumstances. This fact has been noticed by the High Court A
in its impugned judgment and order.
11. After the re-organization, the Federation looked after the marketing
and oil palm development activity while the Regional Unions were entrusted
with the management of the processing facilities of conventional oil seeds.
All the assets and liabilities of the facilities were transferred to the Regional B
Units. It is not disputed that the Regional Unions suffered huge losses.
Having regard to the mounting losses, a Joint Committee Meeting of the
appellant-Federation and the two Regional Unions was held on April 13, 2001
to consider the restructuring of the appellant-Federation and the two Regional
Unions. A decision was taken to close down both the Unions and to take c
necessary steps in that direction. A time bound programme for closing down
of the Unions was prepared and a revised staffing structure of the Federation
based on a broad Five Year Business Plan was to be finalized. With this in
view a plan of action was agreed upon and the Federation appointed a
Consultant for the purpose of valuation of the assets of the two Regional
Unions. The Board of Directors of the Federation in its 74th Meeting held on D
May 13, 2002 approved the decision taken by the Joint Committee for the
closure of the two Regional Unions and the manpower of 161 employees for
,A
the restructured Federation was worked out based on the Five Year Business
Plan. The NDDB vide its letter dated July 2, 2002 agreed in principle to the
closure of the two Regional Unions without prejudice to their invoking the E
Government guarantees for recovery of their outstanding loans. In the Board
Meeting of May 13, 2002 it was also resolved to offer VRS for the surplus
manpower of the Federation and the Unions as per the approved pattern. The
Federation submitted its proposal to the Government for financial assistance
to implement this scheme. The Government vide its G.O. dated July 23, 2002
exercising its power conferred by Section 3 of the A.P. Cooperative Societies F
Act appointed the Principal Secretary, Public Enterprises Department, and
conferred upon him the necessary powers for privatization/restructuring,
winding-up under the Public Sector Reforms Programme and also conferred
powers of the Registrar under the A.P. Cooperative Societies Act and the
Rules made therein. The Government also appointed liquidators for the G
aforesaid two Regional Unions vide its letter dated September 25, 2002. So far
as the restructuring of the Federation was concerned, cadre strength of 159
,.J
employees was proposed resulting in many of the employees in different
categories being rendered surplus. A Circular was issued by the appellantFederation on December 12, 2002 recording the fact that a common seniority
list of the employees had been prepared for the appellant-Federation and the H
10
SUPREME COURT REPORTS
[2007) 4 S.C.R.
A Regional Unions. The norms laid down in the said Circular were as follows:-
.,
B
c
"(a) ~he principle adopted for fixing the seniority cadre-wise is on the
basis of date of joining of the employee in the previous immediate
lower cadre.
(b)
In the case of employees who were recruited as Field Officers and
where ranking was prescribed during the recruitment, the same
ranking is maintained for the seniority in the present cadre.
(c ) Wherever employees from various designations have been
promoted to a common single care, seniority is fixed, based on
the difference in the pay scales of these various designations i.e.
the designation carrying higher pay scale is made senior.
(d) . Wherever the date of joining is same, the date of birth is taken
into account i.e., the employee with more age is placed as senior.
(e)
This seniority list is fixed for the regular/permanent employees
D
only.
E
F
G
(t)
This seniority list is subjected to the final settlement of the
disciplinary cases/court cases (pertaining to promotions only or
these having a bearing on seniority only) pending, if any, against
any employee."
12. The employees were invited to submit their objections, if any, to the
said seniority list. Later the norms were slightly modified on January 3, 2003
when the Board resolved as follows :~
"The Board approved.norms adopted for preparing the final common
seniority list of all the employees except that in case of promotions,
when the date of joining is the same, the seniority of the employees
as per the feeder channel is to be protected rather than fixing the
seniority on the date of birth. Wherever, the date of joining is different,
on promotion, the seniority is to be fixed depending on the date of
joining in the promoted cadre."
13. After considering the objections filed by some of the employees the
appellant-Federation prepared a common seniority list indicating surplus
employees and proposing to offer VRS benefits to them. On May 7, 2003 the
.
'I
VRS was announced giving option to the employees likely to be affected
thereby to accept the benefits under the VRS. The scheme was made effective
H from July I, 2003. The cut-off date for VRS benefit was June 30, 2003.
l r
A.P COOP. OIL SEEDS GROWERS FED. LTD. HYDERABAD. ANDHRA PRADESH 1· D. ACHYUT RAO j)J.P. SINGH. J.j ) )
14. On May 19, 2003 the staffing pattern was approved by the Registrar A
of Cooperative Societies. The total revised cadre strength was determined as
159 consisting of about 29 categories of posts, many of them promotional
posts and some posts to which recruitment was made both by promotion and
direct recruitment. All the posts were treated as selection posts.
15. This gave rise to a large number of writ petitions being filed before B
the High Court including the writ petitions filed by the contesting respondents.
16. Several issues were raised before the learned Single Judge who
heard the writ petitions. One of the submissions urged on behalf of the writ
petitioners was that all the employees appointed by appellant-Federation C
whose services had been transferred to the two Regional Unions continued
to be the employees of the Federation and, therefore, they could not be
treated as employees of the two Regional Unions whicr were separate
cooperative societies under the A.P. Cooperative Societies Act. The appellantFederation and the two Regional Unions being three separate incorporated
bodies, they were independent of each other and, therefore, by mere deputation D
of the employees of the Federation to work in the Regional Unions, the
employer-employee relationship which existed between the writ petitioners
and the appellant-Federation was not severed. Despite their transfer to the
Regional Unions, they continued to be the employees of the appellantFederation.
17. The appellant-Federation contested the claim of the writ petitioners
and submitted that many of the employees transferred to the two Regional
Unions had been given promotion to the higher posts in the Unions and,
therefore, they could not be treated as deputationists. The Unions were also
E
part and parcel of the appellant-Federation and, therefore, the promotions F
made by the Unions must be considered in that light. Those promoted in the
Unions could not compare their cases with their seniors working in the
appel I ant-Federation.
18. The submission urged on behalf of the writ petitioners was upheld
by the learned Judge who held that in view of the earlier decision in Writ G
Petition No. 24907/1996 holding the transferred employees to be the employees
of the appellant-Federation, it could not contend otherwise as long as the
7'
judgment held the field. (As noticed earlier that judgment has since attained
finality). The learned Judge also held that 'the three cooperative societies,
namely, the Federation and the two Regional Unions were three separate H
12
SUPREME COURT REPORTS
[2007] 4 S.C.R.
A bodies incorporated as cooperative societies under the A.P. Cooperative
Societies Act with separate regulations, bye-laws and separate governing
bodies. It was, therefore, not correct to contend that the two Regional Unions
were part and parcel of the Federation. In the facts and circumstances of the
case the employees of the appellant-Federation continued to be its employees
B and their services in the Unions must be treated as on deputation only. They
had a lien on their posts in the Federation and their service conditions,
seniority, pay-scale etc. were also protected as employees of the appellantFederation.
19. The learned Judge further held that the Circular and the Notification
C dated May 7, 2003 were valid. He held that though the seniority list of the
employees of the .Federation and the two Regional Unions had been published
and approved by the Registrar of Cooperative Societies, the same was never
acted upon. The Federation was, therefore, right in consolidating and issuing
a common seniority list of the Federation employees consisting of three lists
D of the employees of the Federation and inviting objections. He also held that
the staffing pattern approved by the Registrar which took effect from May
5, 2003 was authorized under Section 116-C of the A.P. Cooperative Societies
Act and the mere fact that the approval was granted on May 19, 2003 with
effect from May 5, 2003 did not invalidate the approval given.
E
F
20. The learned Judge rejected the submission urged on behalf of the
writ petitioners that the service regulations and the bye-laws of the Federation
did not prescribe any rule for determination of seniority of its. employees. He
held that since the Board of Directors of the appellant~Federation approved
uniform procedure regarding the determination of seniority which were reflected
in the tentative seniority list as well as the final seniority list, which it was
authorized to do, the same could not be faulted unless it was shown to be
discriminatory, unjust or inequitable. He held that the principles applied by
the Federation for determination of seniority were not arbitrary_. He also
rejected the contention urged on behalf of the writ petitioners that since they
have been promoted to higher posts and were on probation, they could not
G be deemed to be confirmed against that post till their probation was declared.
Factually their probation was never declared and they were never confinned
against the promotional post in accordance with the regulations. Thus they
continued to retain a lien on the lower post from which they were promoted.
He held that the transferred employees had held the promotional post for over
H 2 years while the maximum period of probation was 2 years. They had,
therefore, to be treated as confinned. It did not matter whether their probation
.-1.
·t
!
..1
)
AY. COOP 011. SEEDS GROWERS FED. LTD. HYDF.RAB.o\f>. ANDllR . .\ PRADESH r. D. ACUYUT RAO IB.P. SINGll .. l.j 13
was declared formally. Such a question could only arise in the case of new A
entrants and not those promoted on probation. In this view of the matter he
rejected the contention of the writ petitioners that they should be considered
for appointment against the lower post over which they held a lien and which
post they held before promotion. The learned Judge thereafter considered the
individual cases of the writ petitioners but it did not find any merit in them l3
except in the writ petition filed by one K. Ranga Rao. However, while dealing
with 19 promotions between 1994 to 1999 the learned Judge held that on
equitable considerations if the-promotions given by the Unions are ignored
and the cases of the employees working in the Unions are treated on par with
the Federation employees taking into account that they were also promoted
on par with the Federation employees w .e.f. July 21, 1999, there will be no C
chain reaction or any change for upsetting the entire exercise made by the
Federation. The learned Judge prepared a list which showed that by treating
July 21, 1999 as the deemed date of promotion, very few employees would
be rendered surplus.
2 I. Accordingly the writ petitions preferred by the contesting D
respondents herein and many other writ petitions were dismissed by the
learned Single Judge.
22. The judgment and order of the High Court was challenged in writ
appeals by some of the writ petitioners.
E
23.
It was submitted in the appeals by the contesting respondents
herein that the appellant-Federation gave a complete go bye to the service
regulations and fixed the seniority in a most arbitrary and illegal manner. As
a result, employees who entered the service of the Federation earlier were
declared surplus while persons junior to them were retained. The service F
conditions of the employees had not been approved by the Registrar of
Cooperative Societies as required under Section 116-C of the Cooperative
Societies Act. The regulations framed by the appellant-Federation did not
contain the method and manner of fixation of seniority and in fact no seniority
list had been published. The employees who had been transferred to the G
Unions were promoted at different times and all this was beyond the knowledge
of the employees concerned. No promotion rules had been framed for promotion
from one category to another. The appellant-Federation submitted in reply
that the Managing Committee of the Society was fully empowered to take
decision in respect of fixation of seniority since it had powers to frame service
conditions. It further submitted that once the initial service regulations are H
_l
14
SUPREME COURT REPORTS
[2007] 4 S.C.R.
A approved by the Registrar, Cooperative Societies, the subsequent changes in
:,
the services rules and regulations need not be approved by him. Thus when
the decision was taken by the Board of Management of the Federation with
regard to principles to be applied to determine seniority, it did not require
approval of the Registrar of Cooperative Societies. The Board had in its 76th
B Meeting fixed the criteria for determination of seniority.
24. The High Court in the Writ Appeals negatived the contention that
as and when the existing service rules are amended or additional service rules
are framed, the approval of the Registrar, Cooperative Societies is not necessary.
It held that if the interpretation as contended by the appellant-Federation
C were to be accepted the very purpose of getting approval of the rules relating
to service conditions by the statutory authority shall be frustrated because
in that even after getting the approval initially, the Federation may amend the
rules in whatever way it liked and completely defeat the very purpose for
which Section 116-C was framed. The learned Judges of the appellate Bench,
therefore, did not agree with the finding of the learned Single Judge, but
D having regard to the developments that had taken place in the meantime, they
did not consider it advisable to direct the appellant-Federation to seek approval
of the Registrar of Cooperative Societies afresh. The Unions were lying
closed for several years and, therefore, it was not advisable to resort to the
time consuming process of seeking fresh approval of the Registrar of
E Cooperative Societies. The learned Judges, therefore, considered it advisable
to decide the matter themselves.
25. The High Court considered the provisions of the Service Regulations
which came into effect on June I, 1983. After considering the various provisions
contained therein it was observed that in the instant case a very different
p
situation emerged on account of the fact that the employees who were initially
appointed in a particular cadre we~~ transferred to the two Regional Unions
where they were again promoted to the higher posts. It was not clear as to
whether the employees were promoted to higher posts on the basis of channels
created or on the basis of any criteria determined by the respective Unions.
It was also not discernible from the material placed on record whether any
G proper selection committee had been constituted for promoting the employees
on the basis of merit. The fact remained that the employees were promoted
to higher posts both at the level of the Federation and the two Regional
Unions. In view of the fact that they were to be reintegrated and seniority
had to be fixed for the purpose of determining which of the employees were
H rendered surplus, the appellant-Federation was required to undertake an
\
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AP. ('OOP Oil. SEEDS GROWERS FF.O l TD HYDER.A.BAD . .\NOHRA PRADESH 1· 0. ACll'r'UT RAO IB.P SINGl-I. J.I 15
exercise. While the learned Single Judge had found that the criteria fixed for A
assessing the inter-se seniority was just and reasonable and did not require
any interference, the learned Judges of the appellate bench, however, found
it otherwise. It was found that the promotions were granted without reference
to any channel of promotion determined by the Management. The same
applied to employees who were sent to the Unions and were promoted there. B
The High Court was of the view that so far as the employees of the appcllantFederation are concerned, who were sent on deputation to the two Regional
Unions, their promotion in the Unions had nothing to do with their position
in the appellant-Federation. Their service in the Unions must be considered
as service in ex-cadre posts since it was unrelated to his status as an
employee of the appellant-Federation. There was no material whatsoever to C
establish that the promotions were made to posts approved by the Registrar·
of Cooperative Societies. The employees had to be treated as the employees
of the appellant-Federation in view of the judgment in Writ Petition No.24907
of 1996. Thus only their relative seniority in the respective cadres of the
appellant-Federation could be taken into consideration, and their promotion D
in the ex-cadre post in the Unions had nothing to do with their seniority in
their parent cadre under the appellant-Federation. Thus it could not be said
that such of the employees who were promoted in pursuance of the interim
directions of the High Court were treated as probationers and consequently
they were deemed to have been confirmed on those posts. On the other hand
their transfer from the appellant-Federation to the Unions and their positions
at the relevant time in their parent cadre had relevance. If any of the employees
of the appellant-Federation was promoted who was junior to the transferred
employee, it became imperative that the promotion and seniority of such
transferred employee ought to be protected irrespective of their promotion in
E
the Union. The fact that promotions were not challenged for many years F
could not be a ground for rejecting their claim since such promotions granted
in the Unions could not be treated as promotions in the parent cadre in the
appellant-Federation. Such promotions, therefore, could not affect their service
conditions in the appellant-Federation. The High Court, therefore, concluded
that the writ petitioners were entitled to challenge the promotions given to G
j~nior employees while working on transfer in the Regional Unions.
26.