Promotions granted arbitrarily without established rules or norms violate Articles 14 and 16 of the Constitution and cannot determine seniority for retrenchment. In the absence of valid rules, seniority must be reckoned based on the date of initial appointment in the parent organization.

Headnote:(A) Constitution of India - Articles 14 and 16 - A.P. Cooperative Societies Act - Section 116-C - Seniority and Promotions - Determination of seniority for the purpose of declaring surplus employees under a voluntary retirement scheme - Where promotions are granted arbitrarily without adhering to rules, regulations, or norms, such promotions cannot be the basis for determining inter-se seniority - Promotions made without stipulated channels or fair procedure are fortuitous and violate the principles of equity and constitutional guarantees under Articles 14 and 16. (Paras 38, 42)

(B) Service Law - Principle of Seniority - In the absence of validly framed rules or fair and reasonable norms, seniority must be reckoned by reference to the length of service in the parent organization - Date of initial appointment is the decisive factor in determining seniority when promotions in transferred units are found to be arbitrary. (Paras 37, 44)

Facts of the case:
Employees of a state-level federation were transferred to regional units. It was legally established that these employees continued to be employees of the federation on deputation. Due to financial losses, the regional units were closed, and the federation underwent restructuring, reducing its cadre strength. To implement this, a voluntary retirement scheme was offered to surplus employees. The federation determined seniority based on the dates of promotions granted while employees were working in the regional units. This was challenged on the ground that such promotions were granted without any formal rules, selection committees, or stipulated channels of promotion, and were therefore arbitrary.

Findings of Court:
The court found that the promotions granted in the regional units were irrational and arbitrary, noting instances where employees were promoted to posts entirely unrelated to their previous roles. Since these promotions were not governed by any rules or fair norms, they were deemed fortuitous. The court held that seniority is a valuable right and cannot be dependent on such uncertain events. The attempt by the federation to evolve seniority norms retrospectively to justify retrenchment was rejected.

Issues: Whether the federation's method of determining seniority based on promotions granted in the regional units was valid, and whether the date of initial appointment in the parent federation should be the sole criterion for seniority in the absence of formal promotion rules.

Ratio Decidendi: Promotions granted without rules or fair procedures are arbitrary and violate Articles 14 and 16 of the Constitution. Such promotions cannot affect the right of seniority of the employees. In the absence of valid rules, seniority must be determined by the length of service in the parent organization, making the date of initial appointment the decisive factor for determining who is rendered surplus.

Result: Appeals dismissed.

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JUDGMENT

B.P. SINGH, J.

Special leave granted.

In this batch of appeals the common judgment and order of the High Court of Judicature of Andhra Pradesh at Hyderabad dated April 27, 2004 has been assailed. The High Court by its aforesaid common judgment and order allowed several writ appeals against which the appellant, A.P. Cooperative Oil Seeds Growers Federation Ltd. (hereinafter referred to as the Federation) has preferred appeals. The respondents whose writ appeals were allowed by the High Court are D. Achyuta Rao, Mohd. Anwar Ali, M. Seshagri Rao, K.V.N. Rao, Shekhar Goud and U.S. Rao. They shall hereinafter be referred to as the contesting respondents.

D. Achyuta Rao had preferred writ petition Nos. 9565 and 13985 of 2003 which were dismissed by the learned Single Judge but the writ appeals being Nos. 1786 and 1787 of 2003 were allowed by the High Court against which the Federation has preferred the appeals arising out of SLP ) Nos. 15912-15913 of 2004.

Mohd. Anwar Ali had preferred writ petition Nos. 9669 and 13941 of 2003 which were also dismissed by the learned Single Judge but the writ appeals preferred by him being Writ Appeal Nos. 1784 and 1785 of 2003 were allowed by the impugned common judgment and order of the High Court. The appeals arising out of SLP ) Nos. 15923 and 15924 of 2004 have been preferred by the Federation against the aforesaid judgment allowing the appeals of Mohd. Anwar Ali.

M. Seshagri Rao preferred writ petition Nos. 9671 and 13172 of 2003 which were also dismissed by the learned Single Judge but the writ appeals being Nos. 1791 and 1794 of 2003 preferred by him were allowed by the impugned common judgment and order of the High Court. The cross-objections had been preferred by the Federation which were dismissed by the High Court. The appeals arising out of SLP ) 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) No. 15926 and 15927 of 2004 against the order dismissing its cross-

objections.

K.V.N. Rao had preferred writ petition Nos. 9670 and 13163 of 2003 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 SLP ) Nos. 15920 to 15921 of 2004 have been preferred by the Federation against the impugned judgment and order of the High Court.

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 Federation has impugned the common judgment and order of the High Court in the appeals arising out of SLP ) Nos. 15918 and 15919 of 2004.

Lastly U.S. Rao has filed similar writ petitions being No. 9633 of 2003 which was dismissed by the learned Single Judge. The writ appeal preferred by him being No. 1801 of 2003 was allowed. The Federation has impugned the judgment and order of the High Court in the appeal arising out of SLP ) No. 15917 of 2004.

The questions that arise for consideration in these appeals relate to the Voluntary Retirement Scheme (hereinafter referred to as the VRS) offered 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 determined 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 services were to be discontinued.

Initially a large number of writ petitions were filed but the factual position as it

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Judicial Analysis

2007 Supreme(SC) 355

Promotions granted arbitrarily without established rules or norms violate Articles 14 and 16 of the Constitution and cannot determine seniority for retrenchment. In the absence of valid rules, seniority must be reckoned based on the date of initial appointment in the parent organization.

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Cases Referred (9)

Judicial Analysis