JUDGMENT

BHAGWATI, J.:—The Reserve Bank of India is the appellant in Civil Appeal No. 1231 of 1973. This appeal, on certificate, is directed against a judgment of the High Court of Delhi allowing Writ Petition No. 690 of 1972 filed by some of the employees of the Reserve Bank challenging the validity of the combined seniority Scheme issued by the Reserve Bank of India by its Circular dated 13th May, 1972. This judgment of the High Court is also assailed by the All India Reserve Bank Employees Association (hereinafter referred to as the Association) by preferring Civil Appeal No. 1408 of 1974 after obtaining certificate from the High Court. Both these appeals have been heard together since they are directed against the same judgment and all the arguments raised on behalf of the appellants are also common except one additional argument advanced on behalf of the Association in Civil Appeal No. 1408 of 1974. The facts giving rise to these two appeals are a little important and it is necessary to state them in order to appreciate the questions arising for determination in the appeals.

2. The primary purpose for which the Reserve bank of India was originally constituted was "to regulate the issue of bank notes and the keeping of the reserves with a view to securing monetary stability in India and generally to operate the currency and the credit system of the country to its advantage." But in courseof time other functions came to be added as a result of various statutes passed by the Parliament from time to time to meet the economic needs of the country. The administrative machinery of the Reserve Bank for carrying out these diverse functions was at the material time divided into the following five groups of departments (1) Group I: General Side, that is, Banking Department, Issue Department, Public Debt Division and Exchange Control Department; (2) Group II: Department of Banking Operations, Development and Industrial Finance Department and Department of Non-banking Companies; (3) Group III: Agricultural Credit Department, (4) Group IV; Economic Department and Department of Statistics and (5) Group V: Industrial Development Bank of India. The departments falling within the first group were known as the general departments, while the departments falling within the other four groups were known as the specialised departments. Though recruitment to these different groups of departments was made on a common basis, each group of departments was treated as a separate unit for the purpose of determining the seniority and promotion of the employees within that group and this was done on centrewise basis. The result was that there was a separate seniority list for the employees in each group of departments at each centre of the Reserve Bank and the employees could seek confirmation and promotion only in the vacancies arising within their own group of departments at their own centre.

3. There were two grades of clerks in each group of departments, namely, Grade I and Grade II. The pay scales of Grade I and Grade II clerks in all the groups of departments were the same and their conditions of service were also identical. There was automatic promotion from Grade II to Grade I and when a clerk from Grade II was promoted to officiate in Grade I, he got an additional officiating allowance of Rupees 25/- per month. While Grade I and Grade II clerks in the specialised departments were invariably graduates, those in the general departments were not always so. Some out of them were graduates, while others were non-graduates. There were also several categories of non-clerical posts in the general as well as specialised departments. They were in Grade II and the pay scale of this Grade was the same as that of Grade II clerks in the general and specialised departments. It appears from the Circular of the Reserve Bank dated 13th May, 1963 that Stenographers, Typists and Coin/Note Examiners, though falling within the category of non-clerical staff, were somet