tition No369 of 1989
Under Article 32 of the Constitution of India
K Madhava Reddy B Rajeswar Mehta Dave and Ms Neelam for the Petitioners
MK Ramamurthi MA Krishnamurthy Mrs C Ramamurthy GVS Surayanarayana Raju in person TVSN Chari Jagan Rao DRK
Reddy GVS Surayanarayana for the Respondents
The Judgment of the Court was delivered by RANGANATH MISRA J
Promotee Engineers of the Roads  Buildings Wing of the Andhra Pradesh Engineering Service are the petitioners in this application under article 32 of the Constitution and challenge is to the Government circular of 1281988 Annexure A fixing the guideline for the drawing up of the seniority list pursuant to a direction issued by this Court in a batch of writ petitions decision whereof is reported in Siva Reddy  Ors
vs State of Andhra Pradesh  Ors
While petitioners are promotees the respondents are direct recruits
Petitioners allege that they had put in continuous service of 6 7 years by 1982 and their services having been regularised in the post of Deputy Executive Engineer in the year 1974 75 direct recruits appointed in the year 1982 cannot under any law be placed above them
As noticed in Siva Reddy s case supra substantive vacancies in the category of Assistant Engineers had to be filled up from two sources 37 12 by direct recruitment and the remaining 62 12 by transfer of Supervisors and Draughtsmen and by promotion of Junior Engineers
Direct recruits had complained that notwithstanding this prescrip tion there had been no recruitment of Assistant Engineers and the promotees from the other two modes had come into the cadre far in excess of the limit provided by the Rules
The Chief Engineer by his order dated June 8 1984 regularised the temporary service of promotees of the years 1972 73 1973 74 and 1974 75 in the cadre of 142 Assistant Engineers later designated as Deputy Executive Engineers
They had therefore asked the quashing of the regularisation and drawing up of a seniority list on the basis of the ratio fixed under r 31 of the Special Rules
This Court in paragraph 5 of the judgment stated Reopening of the question of inter se senior ity on the basis of non enforcement of the rules from the very beginning may create hardship and that would be difficult to miti gate but we see no justification as to why the benefit of the scheme under the rules should not be made available to direct recruits at least from 1982
When the State Government by rules duly framed prescribed the method of re cruitment and put the scheme into operation it had the obligation to comply with it
The explanation offered by the State Government for non compliance of the requirements of the rules does not at all impress us
We there fore direct that as on December 31 1982 the State Government must ascertain the exact substantive vacancies in the category of Assistant Engineers in the service
On the basis that 37 12 per cent of such vacancies were to be filled up by direct recruitment the position should be worked out
Promotees should be confined to 62 12 per cent of the substantive vacancies and in regard to 37 12 per cent of the vacancies the shortfall should be filled up by direct recruitment
General Rules shall not be applied to the posts within the limits of 37 12 per cent of the substan tive vacancies and even if promotees are placed in those posts no seniority shall be counted
The State Government shall take steps to make recruitment of the shortfall in the direct recruitment vacancies within the limit of 37 12 per cent of the total substantive vacancies up to December 31 1987 within four months from today by following the normal method of recruitment for direct recruits
The seniority list in the cadre of Assistant Engineers shall be redrawn up as directed by the Tribunal by the end of September 1988 keeping the directions referred to above in view   With a view to implementing this direction the State Govern ment came out with the impugned order dated 1281988 marked Annexure A 
In Siva Reddy s case this Court found that promotees had exceeded the quota and even got regularised in respect of the posts in 143 excess of the limit
Taking into consideration the fact that regularisation had been done after the promotees had put in some years of service and disturbing regularisation would considerably affect the officers concerned regularisation was not interfered with
This Court s intention obviously was not to take away the benefit of regularisation in re spect of the officers belonging to the promotee group in excess of their quota but the Court did not intend to allow such regularised officers in excess of the quota to also have the benefit of such service for purposes of seniority
A reading of the judgment in Siva Reddy s case clearly indicates that this Court intended what the Government have laid down by way of guideline
We see no justification to interfere with the Government direction
A draft seniority list on the basis of such direction has already been drawn up and has been circulated
We are told that objections have been received and would be dealt with in usual course by the appropriate authorities
This writ petition had been enter tained in view of the allegation that the Government direc tion was on a misconception of what was indicated in the judgment and in case there was any such mistake the same should be rectified at the earliest
Now that we have found that the Government order is in accord with the Court direc tion this writ petition must be dismissed and individual grievances if any against the draft seniority list would we hope be considered on the basis of objections filed by the competent authority
There shall be no order as to costs
NPV Petition dismissed


Summary:
The assessee manufacturer of strawboard claimed con cessional rates of income tax development rebate at higher rate under section 33 and deduction under section 80 E of the Income Tax Act 1961 for the assessment years 1965 66 1966 67 and 1967 68 on the ground that the manufacture of strawboard was a priority industry
The claim was rejected by the Income Tax Officer on the ground that the assessee could not be described as a priority industry and that the manufacture of strawboard was not covered by the words paper and pulp  in the relevant Schedules pertaining to the assessment years 1966 67 and 1967 68
The assessee s appeals were dismissed by the Appellate Assistant Commissioner
In second appeals the Appellate Tribunal accepted the assessee s plea that the manufacture of strawboard was a priority industry and held that the assessee was entitled to the statutory rebates claimed by it
On a reference made at the instance of the Revenue the High Court held that the strawboard industry was covered within the expression paper and pulp  appearing in the relevant Schedules of the income Tax Act
Dismissing the appeals by the Revenue this Court HELD When provision is made in the context of a law providing for concessional rates of tax for the purpose of encouraging an industrial activity a liberal construction should be put upon the language of the statute
775E F 773 The provision for rebate has been made for the purpose of encouraging the setting up of new industries and the industries are those described in the Schedules relevant to the respective assessment years
When the Schedules refer to paper and pulp  they in fact intend to refer to the paper and pulp industry
The expression has been used com prehensively
775D E The expression paper and pulp  in the Industries Development and Regulation Act 1951 includes paperboard and strawboard
Newsprint paperboard and strawboard have been specifically mentioned in the relevant entry in order to make it clear that they are included within the meaning of the word paper 
The process or  manufacturing straw board is identical with the process of manufacturing paper
775G H 776A In the circumstances there is no doubt that the straw board industry is part of the paper and pulp industry and the assessee whose undertaking was registered in terms of section 10 of the Industries Development and Regulation 1951 is entitled to the rebates claimed by it
775E