1. The activities of generation, transmission and distribution of electricity in the State of Andhra Pradesh was being carried out by the A.P. Electricity Board (for short ‘the Board’), constituted in accordance with the provisions of the Electricity (Supply) Act, 1948 (for short ‘the Act’). With a view to regulate the conditions of service of the employees, the Board issued regulations from time to time, in exercise of powers conferred upon it, under Clause (c ) of Section 79 of the Act. The A.P. State Electricity Board Service Regulations (for short ‘the Regulations’) Parts I and II, which are comparable to Fundamental Rules and State Subordinate Service Rules, respectively, relating to Government services, were issued through B.P.M.S.Nos.547 and 548, dated 21.08.1967, and they came into force with effect from 04.03.1970. Regulations - Part III, which deal with the classification and control of services in the Board were issued through B.P.M.S.No.89, dated 02.02.1970, and they came into force on 04.03.1970.

2. In the year 1998, the Legislatures of the State of Andhra Pradesh enacted the A.P. Power Reforms Project Act, 1998, through which the Board was divided into many entities through the process of incorporation of the companies and they were assigned the respective functions of generation, transmission and distribution of electricity. The Service Regulations framed by the Board were adopted through office orders issued in the year 1999, by the respective companies.

3. The post of Assistant Engineer (A.E) is in category III of Clause (2) of Annexure-I to Service Regulations - Part III. Initially, when the Rule was framed, the appointment to the posts of A.Es was through direct recruitment alone. In the year 1994, the Board amended the Annexure through B.P.M.S.No.354, dated 12.12.1994 by providing for appointment by transfer of Graduate Sub-Engineers against 10% of the vacancies. Clause (3) of the provision so introduced mandates that Sub-Engineers, who are appointed against 10% vacancies, by transfer, shall take the lowest rank, as on the date of appointment, below the junior most A.E, or trainee.

4. In the years 2003, 2004 and 2005, the respective distribution companies (for short ‘the respondents’) issued notifications, inviting applications to select the candidates to the posts of A.Es., through direct recruitment. However, it was mentioned that the appointment shall be purely on contractual basis, for a limited period. Simultaneously, appointment by transfer from the category of Sub-Engineers was also taken up against 10% of vacancies for some years, and of higher percentage, for one year. Over the period, the appointment of A.Es on contractual basis was treated as the one, made under regular basis and their services were regularised. On a representation made by that category of Engineers, the benefit of contractual service rendered by them, was also treated as regular, holding good, for the purpose of reckoning their seniority.

5. In this regard, the Transmission Corporation, one of the respondents, issued T.O.O.No.231, dated 23.12.2008 directing that the service rendered by the A.Es on contract basis till their services were regularised, be treated as regular for the purpose of fixing seniority, without any financial and pensionary benefits. The same agency issued memo dated 23.09.2009, clarifying that the expression “Engineer/Assistant Engineer (Trainee)” occurring in clause (3) of Category III, of Class I of Annexure I of Regulation- Part III shall include “Assistant Engineer (Contract)” also, and thereby, brought the A.Es appointed on contractual basis, within the purview of the Regulations.

6. On account of the uncertainty as to the nature of appointment of A.Es through the process of direct recruitment, the Sub-Engineers, who are appointed by transfer as A.Es were treated as seniors in a provisional seniority list prepared on 22.01.2008. Representations were made by the association of A.Es, taking o