ivil Appeal No 1643 of 1984
From the Judgment and Order dated 67
1982 of the Allahabad High Court in Writ Petition No 1499 of 1974 GL Sanghi Mrs section Dixit and Pradeep Misra for the Appel lants
Kuldip Singh Additional Solicitor General Ashok K Srivastava CV Subba Rao Mrs Sushma Suri and A Subba Rao for the Respondents
The Judgment of the Court was delivered by DUTT J
This appeal by special leave is directed against the judgment of the Allahabad High Court dismissing the writ petition of the appellants whereby they challenged inter alia the validity of rule 3282 of the Railway Estab lishment Code as amended by the Railway 82 Board by Advance Correction Slip No 70
The appellants were appointed Trade Apprentices in Locomotive Component Works for short LCW  in or about January 1959
There was a merger of LCW with Diesel Locomo tive Works Varanasi for short DLW  on August 1 196 1 as a result of which all the members of the staff of LCW were taken over by DLW
On July 19 1962 the appellants were appointed Skilled Artisans after successfully complet ing a training for three years and a half
The regular channel of promotion to higher posts from the post of Skilled Artisan is in the following order 1
Skilled Artisan
Highly Skilled Grade II
Highly Skilled Grade I 4
Chargeman C 5
Chargeman B 6
Chargeman A 7
Assistant Foreman
Foreman
It is apparent from the above channel of promotion that the next higher post to which the appellants could be pro moted was the post of Highly Skilled Grade II
In September 1963 the appellants were however promoted to the post of Instructor C which is equivalent to the post of Chargeman C
There is a controversy between the parties as to whether the post of Instructor C was an ex cadre post or not
According to the appellants it was an interchangeable post with Chargeman C
We shall have occasion to consider the question later in this judgment
It may be stated however that there is no dispute that the post of Instructor C is a selection post and the appellants were selected and promoted to existing vacancies in that post
The next post to which the appellants were promoted on September 22 1964 is the post of Chargeman B upon their selection by a constituted Selection Board on a regular basis
Some of the respondents who are direct recruits also competed with the appellants for the post of Chargeman 83 B but they could not qualify themselves in the written test
To complete the narrative it may be stated that the appellants have now been promoted to the post of Chargeman A
On August 11 1966 the General Manager of DLW prepared certain seniority lists including a seniority list of Chargeman B on the basis of the rules or guidelines framed by him
The said seniority list was challenged by certain direct recruits by filing writ petitions before a learned Single Judge of the Allahabad High Court
The learned Single Judge quashed the seniority list and also the guidelines or rules framed by the General Manager DLW on the basis of which the seniority list was prepared
The principal ground on which the seniority list and the rules or guidelines framed by the General Meeting DLW were quashed by the learned Single Judge was that the General Manager DLW was not the General Manager of the Railway and as such he had no authority to frame rules or guidelines for the purpose of preparation of the seniority list
Further the learned Judge held that the said rules or guidelines dated August 11 1966 were violative of Articles 14 and 16 of the Consti tution of India
Several appeals were preferred against the judgment of the learned Single Judge including one preferred by the Railway Administration before the Division Bench of the High Court
While upholding the finding of the learned Single Judge that the General Manager DLW was not competent to frame rules or guidelines the Division Bench could not agree with the finding of the learned Single Judge that the said rules or guidelines were violative of Articles 14 and 16 of the Constitution
It was observed that there would have been no objection if the General Manager DLW had utilised the relevant statutory rules in drawing up the seniority list but admittedly the rules in question were ignored
Further the Division Bench pointed out that all the concerned employees in the writ petition agreed before the learned Single Judge that the seniority list might be prepared on the basis of the relevant rules contained in the Railway Establishment Code and the Railway Establishment Manual
The Division Bench also found that the DLW project was not a temporary project but appeared to be a permanent project
Upon the above findings the Division Bench upheld the quashing of the seniority list and directed the General Manager DLW to prepare a fresh seniority list in the tight of the statutory provisions contained in the Railway Estab lishment Code and the Railway Establishment Manual
After the aforesaid judgment of the Division Bench of the High 84 Court what the Railway Board did before preparation of any seniority list by the General Manager DLW was to issue Advance Correction Slip No 70 inserting rules 324 to 328 in the Railway Establishment Manual after rule 323 in Chapter III
Of the rules so inserted that which vitally affected the appellants is rule 3282 which provides as follows 3282
Selection and promotions made in the Diesel Locomotive works from 181961 up to the date of notification of these rules shall not be valid
 The Rules were amended by the Board by virtue of its power under rule 157 which provides that the Railway Board have full powers to make rules of general application to non gazetted railway servants under their control
The date of notification of the amended Rules is March 11 1973
In view of rule 3282 the promotions which were granted to the appellants from August 1 1961 up to March 11 1973 shall not be valid
Needless to say rule 3282 has vitally affected the appellants by making invalid all the promotions given to them between the said period
As a result the appellants were reverted back to the position of Skilled Artisans
The General Manager DLW by his circular dated December 78 1973 directed the appellants to appear at the trade test
it was further directed that if the staff concerned would fail to appear in the trade test they would be passed over for fixation of seniority in the Highly Skilled Grade Il although the appellants had in 1962 crossed the position of Highly Skilled Grade Il
The appellants made a represen tation against the said circular to the General Manager DLW on December 12 1973
That representation was turned down by the General Manager on the ground that in view of the said rule 3282 the claim for either higher positions or exemption from passing any trade test was not tenable
It was also stated that if the appellants would fail to appear in the trade test they would be passed over for fixation of seniority in the Highly Skilled Grade Il
Being aggrieved by the introduction of the said rule 3282 directly affecting the appellants and also the said circular of the General Manager DLW requiting the appel lants to appear at the trade test for the purpose of prepa ration of the seniority list in Highly Skilled Grade II the appellants filed a writ petition before the High Court
The High Court overruled the contention of the appellants that the new rules which have been inserted in the Railway Establish 85 ment Manual including rule 3282 by the Advance Correction Slip No 70 by the Railway Board by virtue of its power under rule 157 of the Railway Establishment Code were invalid
The High Court held that the said rules were quite valid and were not arbitrary or discriminatory as contended on behalf of the appellants
In regard to the promotions of the appellants
The High Court took the view that they were only interim and provisional and not regular promotions under the normal rules and that such provisional selection and promotions conferred no rights on the appellants to hold the posts to which they were promoted
Upon the above find ings the High Court dismissed the writ petition
Hence this appeal by special leave
Mr Sanghi learned Counsel appearing on behalf of the appellants has challenged before us the validity of rule 3282 as inserted in the Railway Establishment Manual by the Advance Correction Slip No 70
It has been already noticed that in view of the said rules the promotions of the appellants up to the position of Chargeman A stand set aside and the appellants are reverted back to their original position of Skilled Artisan
In other words the length of service of the appellants for a period of about nine years has been completely wiped out by rule 3282
The High Court took the view that the promotions which were granted to the appellants were by way of interim meas ure and did not confer on them any title to the posts to which they were promoted
In support of that view the High Court has referred to the order of the General Manager DLW dated May 1416 1962 which reads as follows As an interim measure all supervisory tech nical posts in the Mechanical Department will be treated as ex cadre posts and promotions will be regulated by selection
 Before considering the question of the validity of rule 3282 we may first of all examine whether the promotions of the appellants up to the post of Chargeman B were by way of interim measures as found by the High Court andor whether such promotions are permissible by the Rules or not
In this connection we may refer to the circular of the Railway Board dated May 27 1963 regarding the procedure to be followed for filling up selection posts non gazetted
The Board directed that if the requisite number of staff was not available in the grade next to the grade for which the selection was being held the administration could go to the lower grade in order to make up four 86 times the number required to be called up for selection but in no case can the eligibility be extended to staff in the grade lower than three times
This circular of the Board is quite consistent with rule 2 16 of the Railway Establishment Manual
Rule 216 also provides for a similar procedure
The direction of the Board read with the provision of rule 2 16 clearly empowers the administration to select persons from two grades lower than the post to which promotion was to be made
The next circular dated November 2 1963 of the General Manager DLW regarding the formation of panel for promotion of mechanical supervisors and instructors is significant
The said circular clearly provided that all staff in Mechan ical Department including instructoral staff under the Principal Technical Training School in two grades below the grade for which selection was going to be held were eligi ble
The Skilled Artisans having not less than one year s service were permitted to apply for the post of Instructor in the grade of Rs205 280 AS which is equivalent to that of Chargeman C
In the channel of promotion which has already been noticed above the feeder post for promotion to the post of Chargeman C is Highly Skilled Grade I but in view of the said circular dated May 27 1963 of the Board read with rule 2 16 of the Railway Establishment Manual persons holding posts two grades below the post to which the promotion was to be made that is the post of Instructor which is equivalent to the post of Chargeman C were allowed to apply for the same
The reason for the said circular or the said rule is that at all times suitable candidates might not be available and just to avoid administrative inconven ience the promotions are given from posts below the feeder post
The said circular of the General Manager DLW dated November 2 1963 does not show that the promotion to the posts of selection andor promotion to the posts of Instruc tors would be by way of interim measure or ad hoc arrange ment
In the absence of any such indication it will not be unreasonable to presume that such promotions were anything other than by way of interim measure or ad hoc arrangement as contended on behalf of the respondents
In view of the said circular dated November 2 1963 the appellants applied for the posts of Instructors and they were selected after the requisite tests
In the office order No 3421 dated December 30 1963 appointing the appellants to the post of Instructor Machinist Gr
C it is clearly stated that they are appointed to the post of Instructor Machinist Gr
C against existing vacancies
Again a similar circular dated July 18 1964 was issued from the office of the General Manager DLW with regard to the filling up of 87 the posts of Chargeman B in the scale of Rs250 380 AS
It was clearly stated in the circular that the staff in the Mechanical Department in two grades below the grades for which the selections would be held were eligible to apply
The appellants applied for the post and had to appear at the written and viva voce examinations
Some of the private respondents also appeared in the said examinations along with the appellants but they failed while the appellants succeeded and were empanelled for appointment to the post of Chargeman Machinist B
In view of such an empanelment the appellants were appointed Chargemen B in the grade of Rs 250 380 against existing vacancies sometime in February 1965
We may now refer to a very significant document which is office order No 25 dated January 22 1966
In that order it is stated that the staff mentioned therein will have their paper lien maintained in the ShopsDivision as men tioned against each and will seek their promotions in their respective DivisionShops
In the list annexed to the said order the present designation of the first appellant has been mentioned as Instructor B   and his revised position or designation as Chargeman B
In the last column under the heading placed where lien is kept it is stated that his lien is kept under the production Engineer PE
The present and revised designation of the appellant Nos 2 and 3 have been shown as Chargeman B The place of lien of the appellant No 2 has been stated to be under the Production Engineer while that of the third appellant has been stated to be under the Works Manager B
It is urged on behalf of the respondents that the said officer order No 25 does not show that the appellants have any lien on the posts of Chargeman B It only mentions that they have a lien on certain places
We are unable to accept this contention
A person may have lien on a post and not a lien on a place
And all that the said order means that they have lien on the post of Chargman B but in certain places under either the Production Engineer or the Works Manager
There can be no doubt that a person appointed to a post on an ad hoc basis cannot have any lien on the post
It is only when a person appointed on a permanent basis he can claim lien on the post to which he is so appointed
It is therefore not correct to say that the appellants were appointed or promot ed to the post of Instructor C or Chargeman C on an ad hoc basis or by way of an interim measure as held by the High Court in the impugned judgment
If they were appointed on ad hoc or purely temporary basis they could not have been promoted to the post of Chargeman B and the said order No 25 dated January 22 1966 would have been quite inconsistent with such ad hoc or temporary appointments
88 At this stage it will be pertinent to refer to the counter affidavit of the Railway Administration in the previous writ proceedings
In paragraph 15 of the counter affidavit it has been stated inter alia that the post of Junior Instructor carries the same scale of pay as Charge man C  and that the two posts being of the same rank and scale staff of the one post could be transferred to the other post and vice versa
This statement in the counter affidavit of the Railway Administration clearly indicates that the post of Instructor C and Chargeman C are inter changeable posts
Further it is stated as follows Respondent Nos 8 to 11 which include the three appellants herein in the first instance offered for the post of Instructors in grade Rs205 280 equivalent to Chargeman C  grade and they were selected by duly constituted Selection Board
Subsequently they offered for the post of Chargeman B grade Rs250 280 AS and were promoted as such after having been selected by a Selection Committee
Respondents Nos
8 to 11 were appointed to grade Rs205 280 and subsequently to grade Rs250 280 after having been selected by a duly constituted Selection Board      In the circumstances we are of the view that the appel lants were not appointed on an ad hoc or a purely temporary basis by way of interim measure as held by the High Court but they were appointed on a permanent basis in the post of Instructor or Chargeman Grade C which are interchangeable posts and thereafter promoted to the post of Chargeman Grade B
The appointment or promotion of the appellants to the post of Chargeman C from the post of Skilled Artisan or to Chargeman B were made in accordance with the circular of the Railway Board andor in accordance with rules 216 of the Railway Establishment Manual
It cannot therefore be said that the appellants were promoted to the post of Chargeman C illegally or in violation of any rule
There is a controver sy between the parties as to whether the post of Instructor C is an ex cadre post or not
It is submitted on behalf of the respondents that the post of Instructor C being an ex cadre post the appellants could not be appoint ed or promoted to the post of Chargeman C
This contention is unsound and is fit to be rejected
It is the clear case of the Railway Administration as pointed out above that the posts of Instructor C and Chargeman C are interchange able posts
Even assuming that the post of Instructor C is an ex cadre post nothing turns out on that inasmuch as according to 89 the Railway Administration itself the two posts being of the same rank and scale the staff of one post could be transferred to the other post and vice versa
The appellants might have been appointed to the post of Instructor C but they were transferred to the post of Chargeman C and there fore there was no difficulty in promoting them to the post of Chargeman B
Now we may consider the question as to the propriety otherwise of rule 3282 as inserted in the Railway Estab lishment Manual by the Railway Board in exercise of its power under rule 157 of the Railway Establishment Code
It has already been noticed that in the previous writ proceed ings the Division Bench of the High Court quashed the sen iority list and directed the General Manager DLW to pre pare a fresh seniority list in the light of statutory provi sions contained in the Railway Establishment Code and the Railway Establishment Manual
The Principal ground for quashing the seniority list was that the General Manager DLW had no authority to frame guidelines or rules for the purpose of preparing the seniority list
It has also been noticed that while the learned Single Judge took the view that the guidelines or rules framed by the General Manager were violative of Articles 14 and 16 of the Constitution the Division Bench took a contrary view and after consider ing the rules or guidelines in detail came to the finding that none of the guidelines or rules framed by the General Manager was contrary to the provisions of Articles 14 and 16 of the Constitution
Indeed the Division Bench was of the view that no objection could be taken to the said rules or guidelines but it had to quash the seniority list framed on the basis of such guidelines or rules inasmuch as the Gener al Manager had no authority to frame such rules or guide lines
Accordingly the Division Bench directed the General Manager to prepare the seniority list in accordance with the existing statutory rules
It is curious that instead of preparing the seniority list in accordance with the existing statutory rules as directed by the High Court the Railway Board amended the rules and inserted by the Advance Correction Slip No 70 among others rule 3282 which has been extracted above
That rule wipes out not only the promotion granted to the appellants up to the post of Chargeman Grade B but also the length of service of the appellants for about nine years
The appellants have been directed by the order dated decem ber 78 1973 of the General Manager to appear in a trade test in respect of the post of Highly Skilled Artisan Grade Il otherwise their seniority in the said post will be passed over
In other words the appellants are in a way 90 reverted to the post of Skilled Artisan which they were holding before their promotion to the post of InstructorChargeman C
No reason appears to have been given for the introduction of rule 3282 by the Advance Correc tion Slip No 70
It was not the case of the Railway Admin istration in the previous writ proceedings that the promo tions that were given to the appellants were purely on an ad hoc basis
The High Court in the previous writ proceedings did not also find that the appellants  promotion to the post of InstructorChargeman C or to the post of Chargeman B were on ad hoc basic
We have after considering the relevant facts come to the finding that the appellants were regular ly promoted to the post of Chargeman C and thereafter to Chargeman B
In the circumstances we do not find any justi fication for the Railway Board to incorporate a new rule that is rule 3282 to the serious prejudice of the appel lants
The Railway Administration was to comply with the order of the High Court and in compliance with the order it should have prepared the seniority lists in accordance with the existing rules
It is not the case of the Railway Admin istration that under the existing rules the seniority list could not be prepared
There is therefore no reasonable justification for the Railway Board to insert in the Railway Establishment Manual rule 3282
There can be no doubt that by virtue of rule 157 of the Railway Establishment Code the Railway Board has the power to frame rules but such rules must be framed with certain objects in view and must not be arbitrary
The Court is always entitled to examine whether a particular rule which takes away the vested fight of a railway employee or seriously affects him with retrospective effect has been made to meet the exigencies of circum stances or has been made arbitrarily without any real objec tive behind it
In the instant case we do not find any objective or purpose behind the framing of rule 3282 to the serious prejudice of the appellants
In other words rule 3282 is arbitrary and therefore cannot be allowed to be operative to the detriment of the appellants
The only justification for rule 3282 as advanced by the learned Counsel for the respondents is that as the appellants were promoted on ad hoc basis to the posts of Chargeman C and Chargeman B they had no fight to hold these posts and accordingly they were to be reverted to the post of Skilled Artisan
This contention of the respondents does not find support from the counter affidavit filed by the Railway Administration in the previous writ petition nor does it appear from any order or circular of the Railway Board or the Railway Administration in support of the same
Moreover we have on a conspectus of the facts and circumstances and the circulars of the Railway Administration come to the finding that the appellants were not promoted on an ad hoc basis
For the reasons aforesaid the appeal is allowed and the judgment of the High Court is set aside
It is directed that the respondents Nos 1 and 2 shall not give effect to rule 3282 as inserted in the Railway Establishment Manual by the Advance Correction Slip No 70 in the cases of the appellants and the respondents Nos
3 to 6
The impugned orders dated December 78 1973 and January 7 1974 are quashed
The respondents Nos 1 and 2 are further directed to fix the seniority of the appellants and the said respond ents Nos
3 to 6 on the basis of their promotions to the posts of InstructorChargeman C and Chargeman B
There will be no order as to costs
NVK Appeal allowed


Summary:
The respondent Marketing Board entered into a contract with the appellant for the construction of their office building
The agreement stipulated that the Superintending Engineer of the Marketing Board would be appointed as the sole Arbitrator in case of a dispute
A dispute arose in regard to the completion of the construction and it was decided to refer the matter to arbitration
On 11th March 1983 the respondent appointed Shri Gupta Superintending Engineer of the Marketing Board as Arbitrator
While the Arbitrator was seized of the dis pute the Chairman of the Marketing Board purported to revert him to his parent department
On 6th April 1984 the Arbitrator made his award which was in favour of the appellant
On 2nd May 1984 the appel lant applied to the Sub Judge for making the award a rule of the Court
In the meanwhile on 24th May 1984 the State Government passed an order confirming that Shri Gupta con tinued in the post as Superintending Engineer
On 28th February 1985 the Marketing Board passed a resolution giving effect to the said direction of the Government and extending the deputation tenure of Shri Gupta to 3rd Septem ber 1985
On 30th July 1985 the Trial Court made the award a rule of the Court
In the appeal to the High Court it was urged that on 6th April 1984 the date on which the Arbitrator made his Award the Arbitrator had lost jurisdiction since he had been transfered on 4th April 1984 from the post of Superintend ing Engineer of the Marketing Board to his 850 parent department in the State Government
The High Court accepted this plea and reversed the order of the Trial Court and set aside the Award
In the appeal by the contractor to this Court the question was whether the Arbitrator Shri Gupta had juris diction to make the award on 6th April 1984 or had lost jurisdiction because of the order dated 4th April 1984 reverting him to his parent department
Allowing the appeal HELD 1
Shri Gupta was on deputation with the Marketing Board up to September 4 1984
He was prematurely required by the Chairman of the Marketing Board by order dated 4th April 1984 to revert to his parent department
The State Government however ordered on 24th May 1984 that Shri Gupta would continue on deputation with the Board
In fact Shri Gupta did not even resume a post in his parent depart ment
852A B 2
The necessary consequences of the order of the State Government continuing Shri Gupta on deputation with the Marketing Board was to nullify the order dated 4th April 1984 passed by the Chairman purporting to revert him to his parent department
It is clear from the records that Shri Gupta was paid his salary by the Marketing Board for the entire month of April 1984 a circumstance which establishes that he was continuing with the Board when he made the Award
Shri Gupta must therefore he deemed to have enjoyed jurisdiction as Arbitrator on 6th April 1984 when he made the Award
The deputation of Shri
Gupta with the Marketing Board did never terminate
852B D