The main legal point established in the judgment is that retrospective withdrawal of essential clauses in a circular, which forms part of the service contract, is arbitrary and unreasonable and takes away vested rights.

1. The two petitioners were in Indian Defence Services (Air Force) employed under Short Services Selection. Thereafter, they joined the Bihar Administrative Service, Junior Selection Grade in the years 1989-93 respectively. On joining the Bihar Administrative Service, their seniority was determined as per the prevalent Government policy decision, as contained in circular dated 26th August, 1972 (Annexure-2). This circular, inter alia, provided giving benefit of their past services in the Defence for calculating their seniority in the Bihar Administrative Service. Their seniority was, accordingly, determined. Now after 12 years of their service, and three and half decades after issuing the 1972 circular (supra), wisdom has dawned on State Government once again and they have by their circular dated 2.3.2005 (Annexure-9) sought to explain that the policy decision of 1972 was incorrect and wrong and the clause laying down conditions for determination of seniority of Ex-servicemen in the 1972 circular was deleted. Consequently, the benefit which was earlier promised and given to Ex-servicemen joining Bihar Government Service stood withdrawn. This was not left to be done prospectively but it was done retrospectively from the date when this criteria for grant of seniority was laid down that is with retrospective effect from 1972 itself. The result was that both the petitioners seniority in the gradation list was redetermined and now the petitioners lost considerable seniority. It is these actions that are challenged in the present writ application. State has filed counter affidavit stating that in 1967, pursuant to decision of Government of India to give a sort of rehabilitation package to Indian Soldiers involved in Chinese and Pakistani aggressions, certain benefits were extended to defence personnels. 1972 policy decision was taken apparently in ignorance thereof which was realised in 2005 that is after three and half decades and, as such, the principles and the policy for determination of seniority as laid down in 1972 were deleted with retrospective effect.

2. Having heard the learned counsel for the parties and considering the matter and with their consent, I think it appropriate to dispose of this writ application at this stage itself.

3. In deciding principles for determining seniority and/or in laying down principles for determining seniority, the State is competent to fix various criteria. The criteria fixed, if not otherwise arbitrary, are rules for determination of seniority. In the present case, a reference to the decision of the Government as reflected in the circular of 1972 (Annexure-2) would show that the State Government was conscious of various confusions that were arising in matter of fixing seniority in respect of its employees in different cadres. The circular is clear that in order to clear confusions and lay down a clear cut principles to be followed in determining inter se seniority, various principles were laid down for different contingencies. The one with which we are concerned was contained in clause 3(vi) thereof which dealt with specifically Ex-servicemen. It clearly provided that Exservicemen joining State Services would get the benefit of their past services but would rank lower than direct recruits of the same year. This being the basis and the principle for determining seniority, the petitioners joined the State Services as indicated above in 1989 and 1993 respectively. Those were the rules of policy as available to them and considering the same to be just, the petitioners joined. In other words, these policy principles for determining seniority was a part of the bargain which the petitioners entered into with the State Government, service being a contractual obligation. Having joined the service, their seniority was determined in the cadre in view of the provisions of 1972 circular accordingly. Twelve years after they joined service and three and half decades after the 1972 circular by the