*THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY + Writ Petition Nos.29418/2010; 23380/2009; 28932/2008 ;11500/2010; 19503/2010; 23466/2010; 26099/2010; 23033/2010; 28643/2010; 29081/2008; 958/2009; 5941/2010; 6206/2010; 2473/2009 & 11667/2009 (COMMON ORDER) %18-10-2011 # B.Gopalu & others ..petitioners And $ A.P. TRANSCO, Hyderabad, rep. by the Chairman and Managing Director & others ..Respondents !Counsel for the petitioners : Sri S. Ramchandara Rao, Sr.Counsel, Sri M. Surender Rao, Sri J.R.Manohara Rao, Sri B.V. Rama Rao, Sri K. Srinivasa Murthy ^Counsel for respondents : Sri Vedula Venkat Ramana, Sr. Counsel, Sri G. Vidya Sagar, Sri P. Lakshma Reddy Sri K. Vasudeva Reddy, Sri C. Raghu, Sri M. Ravindranath Reddy < Gist: > Head Note: Citations: 1) (2006) 4 SCC 1 2) 2010 (10) SCC 247 3) 2009 (4) SCC 170 4) 1990 (2) SCC 715 5) AIR 1977 (SC) 251 THE HON’BLE MR JUSTICE L. NARASIMHA REDDY Writ Petition No.29418 of 2010 and batch COMMON ORDER: 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. 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. 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. 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. 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. 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 objection to such a course of action. A revised provisional seniority list was issued on 01.07.2008 placing the direct recruit A.Es for the years 2003, 2004 and 2005, above the A.Es, appointed by transfer in those years. That list was challenged in W.P.Nos.1264 and 2189 of 2009. The writ petitions were disposed of, directing that the ﬁnal seniority list be prepared in accordance with the service regulations, and in particular, the amendment caused through B.P.M.S.No.354 dated 12.12.1994. Ultimately, a ﬁnal seniority list was prepared on 30.09.2010, in which the A.Es, who were appointed on contractual basis, but were treated as having been directly recruited, were placed above the Sub-Engineers, appointed as A.Es by transfer, for the respective years. This batch of writ petitions is ﬁled by the Assistants Engineers, appointed by transfer. They challenge the orders issued by the Transmission Corporation, treating them as Juniors to the A.Es, appointed initially on contractual basis, and regularised thereafter; and the consequences that have ﬂown from the said action. The petitioners contend that the orders of appointment issued to the A.Es., appointed on contract basis are clear and speciﬁc to the eﬀect that the engagement is for a limited period, that it does not confer any right for being regularised and that the procedure prescribed under the regulations was not followed. They submit that whatever may have been the justiﬁcation for the TRANSCO or the Distribution Companies (for short ‘the Companies’), in treating the contractual services of such employees, as regular, and on a time scale of pay, there was absolutely no basis for them in treating the contractual service as holding good for seniority also. It is their further case that by the time the orders of regularization were issued in favour of contractual A.Es., the petitioners were appointed by transfer on regular basis, and in that view of the matter, they ought to have been treated as seniors to the said employees. The companies, on the one hand, and the A.Es., initially appointed on contract basis, who are impleaded as respondents in various writ petitions, on the other hand, ﬁled separate counter- affidavits. Their common case is that Regulations - Part III mandate that appointment to 90% of the posts of A.Es., must be through direct recruitment and a detailed procedure, such as holding of written test, conducting of interviews etc., is provided therefor. According to them, the prescribed procedure, in its entirety, was followed at the time of making appointments against the posts earmarked for direct recruitment for the years 2003, 2004, 2005 also, but on account of the speciﬁc directions issued by the Government, as a result of the reforms, the orders of appointment were issued, treating the employment on contractual basis. They submit that the service regulations provide for ﬂexibility in the matter of appointment to various posts and for regularisation thereof, with the passage of time. They submit that appointment of A.Es, by transfer, of qualiﬁed Sub-Engineers, cannot take place independently, and as per the relevant provisions, the persons so appointed have to take their seniority after the A.Es. appointed against vacancies, meant for direct recruitment. The respondents contend that the anomalies that have crept into the provisional seniority list, at one point of time have been corrected, and that the ﬁnal seniority list accords with the service regulations and other provisions pertaining to seniority. The arguments on behalf of the petitioners were advanced by Sri S.Ramchandara Rao, learned Senior Counsel, Sri M.Surender Rao, Sri J.R.Manohara Rao, Sri B.V.Rama Rao, Sri K.Srinivasa Murthy, learned counsel. The gist of their argument is that the seniority of an employee in an organisation has to be reckoned from the date on which, he came to be appointed on regular basis, and that in the instant case, for the concerned years of recruitment, Sub-Engineers were appointed by transfer as A.Es., earlier to the appointment of A.Es., against the vacancies earmarked for direct recruitment. Elaborating this, they submit that no direct recruitment in its strict sense has taken place and that the candidates were appointed on contractual basis. They submit that the mere fact that A.Es., who were engaged on contractual basis were treated as having been regularly appointed 2 or 3 years later, does not make them seniors, vis-à-vis the Sub-Engineers, appointed as A.Es., by transfer. Learned counsel submit that true purport of Annexure I of part III as amended through B.P.M.S.No.354 dated 12.12.1994, would be that the Sub-Engineers appointed as A.Es. by transfer must take their seniority immediately, after A.Es., whose services were regularised by that time, the former came to be apointed. Learned counsel further submit that the service regulations part I, and part II, do not permit commencement of probation for any employee, before a date on which the appointment was made on regular basis. According to them, even where the contractual on non-regular service is treated as regular, under Regulation 3(d) of part I, it must be, for all purposes, and not selectively, for seniority alone. By making reference to various other provisions, learned counsel submit that there was no occasion for the respondents for invoking Regulation 26(a) of Part II, and that at any rate, the seniority of an employee cannot be counted from a date anterior to the one, on which the probation was commenced. Placing reliance upon the judgments rendered by the Supreme Court and this Court, they submit that the service rendered by an employee on ad hoc or contractual basis cannot be reckoned for the purpose of determining the seniority. It is also stated that memo, dated 23.09.2009, through which the expression “Assistant Engineer (Contract)” was added to Annexure I part III amounts to amendment of the regulations and the same cannot be sustained in law. A further plea is raised to the eﬀect that the amendment if at all, would operate prospectively and cannot aﬀect the rights, that have accrued to the petitioners before the date on which, the memo was issued. Arguments on behalf of the respondents were advanced by Sri Vedula Venkat Ramana, learned Senior Counsel, Sri G.Vidya Sagar, Sri P. Lakshma Reddy, learned Standing Counsel for the Transco and Companies; Sri K. Vasudeva Reddy, Sri C. Raghu and Sri M. Ravindranath Reddy, learned counsel. Their case is that the appointment to the post of A.Es., used to be exclusively through direct recruitment from the beginning, and that it is only in the year 1994, that a small fraction of it was permitted to be ﬁlled through appointment of qualiﬁed Sub- Engineers, by transfer. They submit that the appointment of qualiﬁed Sub-Engineers at any given time, cannot take place independently, and that appointments through both the procedures must be done simultaneously. Learned counsel submit that the steps for ﬁlling posts of A.Es. through direct recruitment, were initiated in the years 2003, 2004 and 2005, strictly in accordance with the prescribed procedure, but at the instance of the State Government, orders of appointment in favour of direct recruitees were issued indicating that they are contractual, in nature. It is stated that the Regulations provide for appointment of diﬀerent kinds and that even where such appointments are made in deviation from the Rules, power and discretion is conferred upon the authorities to treat the appointments as regular. Reference is made to various provisions of the Regulations - Parts I, II and III, and it is stated that notwithstanding the nature of orders of appointment, the candidates so selected are direct recruitees, for all practical purposes. Learned counsel submit that the probation of the writ petitioners was commenced only after the services of the contractual A.Es. were treated as regular and the former cannot claim seniority over the latter. It is also urged that Annexure I to Regulation Part III treats the recruitment at a given point of time, as a single exercise, and appointment through direct recruitment on the one hand, and by transfer, on the other hand, are diﬀerent facets thereof, and that they cannot be treated as separate exercises, in the context of determination of seniority among the candidates so appointed. They too placed reliance upon certain decided cases and assert that no illegality has taken place in the entire process, and that the impugned proceedings do not suffer from any legal infirmity. The core issue that arises for consideration in this batch of writ petitions is in relation to the seniority, between the A.Es., appointed against vacancies earmarked for direct recruitment, initially on contractual basis, on the one hand; and those, appointed from as A.Es the category of Sub-Engineers, by way of transfer; on the other hand. To resolve this, it becomes necessary to address the following questions, viz., a) Whether, the appointment to the posts of A.Es. at a given point of time, must take place simultaneously through direct recruitment as well as by appointment by transfer, or whether the process of appointment by transfer to such posts can take place independently, or in isolation; b) whether it is permissible to make appointments on contractual basis against the vacancies earmarked for direct recruitment and if so, whether such appointments can be treated as regular, at a later point of time; and c) whether it is permissible under the Regulations to treat the contractual service rendered by A.Es., as the one, on regular basis, for the purpose of seniority, vis-à-vis the A.Es., appointed by transfer from the category of Sub- Engineers. The broad purport of the Regulations that govern the service conditions of the employees of the erstwhile A.P. State Electricity Board and the present Generation, Transmission Corporations and Distribution companies has already been indicated. The services in the company are broadly categorized into Engineering Service, Account service, Security Service and General Service. The subject- matter of these writ petitions pertains to the Engineering Service, which is dealt with under Annexure - I to Part III of the Service Regulations. The post of Assistant Engineers occurs in Category II of Class II of the Engineering Services. The method of appointment is as under: Asst. Engineers (i) Direct recruitment. (ii) By transfer from Graduate Sub- Engineers with minimum of four years service in the category of Sub-Engineer or four years service in all in the category of Sub- Engineer, Asst. Supervisor, Sub- Overseer, Lineman, Tester etc., subject to the following conditions. (1) Such recruitment, from among graduate Sub- Engineers shall be limited to 10% of the vacancies at the time of each recruitment. (2) They are not entitled for any service weightage. (3) They have to take the lowest rank as on the date of appointment below the junior most Asst. Engineer/Trainees as on that date. Till the year 1994, the appointment to the post of Engineers was exclusively through direct recruitment. In that year, the provision was amended to the eﬀect that the appointment by transfer from the category of Sub-Engineers, subject to their holding graduation degree in Engineering, can be made limited to 10% of the vacancies. Till the year 2002, the appointment through both the methods, was taking simultaneously, though in certain years, the percentage was varied in favour of the Sub-Engineers. In the year 2003, the notiﬁcation issued for direct recruitment to the post of A.Es., stipulated that the appointments shall be made on contractual basis. This is stated to be on the insistence by the State Government, in the light of the reforms, it has undertaken. Though the entire procedure stipulated for direct recruitment, viz., conducting written test and interviews was followed, appointments were made on contractual basis, stipulating that the contract would be in force for a period of one year, the emoluments will be on consolidated basis and that no right would accrue to a candidate to seek appointment on regular basis. The appointments by transfer against 10% vacancies, on the other hand, have taken place as usual. This pattern was continued in the next two years. In the year 2005, the percentage in favour Sub-Engineers has been increased substantially by relaxing the relevant provision. The contractual appointments came to be treated as regular after sometime. According to the writ petitioners, no direct recruitment, as contemplated under the Regulations has taken place for the three years, referred to above, and in that view of the matter, their appointments by transfer need to be treated independently. If this is done, they would be entitled to take seniority immediately after the regularly appointed A.E., which obviously means the Engineer, who has been appointed in the year 2002. It is not uncommon that the service rules of various organizations provide for diﬀerent methods of appointment/recruitment from diﬀerent sources, to the same post. The allocation of percentages to the respective sources brings about a phenomenon, called in the ordinary parlance, as “quota”. Each source is allocated a particular number of vacancies and candidates from one source cannot be recruited/appointed/promoted against the posts earmarked for the other source. The rules also stipulate as to the manner in which the seniority among the candidates appointed through diﬀerent sources to the same category of posts must be determined. Generally, the candidates appointed by transfer or promotion are required to take their seniority, after the last candidate appointed through direct recruitment in a given year of recruitment. Here itself, it is necessary to take into account, the concept of rotation. This is adopted whenever it becomes necessary to ensure meticulous and perfect blend of the candidates appointed through diﬀerent sources to the same post, particularly when the vacancies that occur at each point of time are relatively low and the chances for candidates from a particular source for selection are brighter, compared to those from other sources. Take for instance, promotion to the post of Superintendent in an establishment is from the post of Senior Assistant, Accountants and Senior Stenographer is in the ratio of 5:3:2 as per the relevant rules. The administration may allocate the places in the roster for each category, lest any imbalance occurs. It may so arrange the posts in a unit of 10 vacancies in such a way that candidates from one source are not placed either at an extremely advantageous or extremely disadvantageous position. Through a catena of decisions, the Supreme Court held that the concept of rotation, on the one hand, and the one, of quota, on the other hand, do not coexist. In the instant case, Clause (1) of the table extracted above, becomes relevant. It reads: “Such recruitment, from among graduate Sub-Engineers shall be limited to 10% of the vacancies at the time of each recruitment.” It is axiomatic that the number of posts, representing 10% available for graduate Sub-Engineers must be reckoned with reference to “the vacancies at the time of each recruitment”. The phrase “each recruitment” naturally takes in its fold, all the vacancies that are available at a given point of time. It is difficult to assume that the appointment by transfer of the graduate engineers to the post of A.Es. can take place independent of the general recruitment. The petitioners are not able to cite any instance where appointment by transfer was made, without there being direct recruitment against 90% of vacancies. An extreme example or instance, can exist only when the appointing authority takes a conscious and speciﬁc decision to do away with the process of direct recruitment altogether for an year of recruitment and to proceed exclusively with the appointment by transfer of the Sub-Engineers. It is not in dispute that the steps to ﬁll the vacancies earmarked for direct recruitment on the one hand, and those, meant for Sub-Engineers on the other hand, have been initiated, simultaneously in the years 2003, 2004 and 2005. It is a diﬀerent matter that the candidates that were considered against the posts earmarked for direct recruitment were issued orders of contractual appointment. Whether one goes by the text of the relevant rule or the practice in vogue in relation to the appointments of this nature, the inescapable conclusion is that the expression “each recruitment” would take in its fold, the direct recruitment, as well as the appointment by transfer of a graduate Sub-Engineers. The second question happens to be the most intricate. It is a matter of record that the candidates that were appointed against the vacancies earmarked for direct recruitment in the years 2003, 2004 and 2005 were issued orders of appointment, almost in the form of a contract. In fact, the respective notiﬁcations made that aspect clear. The petitioners contend that an appointment made on contract basis cannot be treated as an appointment made under the Regulations, much less can it be regularized in such a way, as to be detrimental to the interests of the candidates appointed from the other source. In this context, it becomes necessary, to take note of certain provisions of the Regulations. Rule 2 of Part I of the Service Regulations reads: “Except where it is otherwise expressed or implied, these regulations with such amendments as may be eﬀected by the Board from time to time shall apply to the monthly paid (on time- scale of pay) employees of the Government of Andhra Pradesh who have opted for service under the Board and to the monthly paid employees recruited on and after 01.04.1959. (proviso is omitted, since it is not necessary)” Rules 3 (a) and (b) permitted the Board to avail the services of Central and State Governments on deputation basis. Rules 3 (c ) and (d) deal with the appointment on contractual basis. It reads: (c) “The Board may also appoint any person or persons on contract on such terms as may be considered necessary and in such cases the conditions and classiﬁcations of the service of such persons shall, except in so far a they are not governed by the terms of contract, be regulated by the provisions of the regulations framed by the Board. (d) The Board may absorb a person appointed on contract basis into the Board corresponding cadres in the Board’s Service on a permanent basis. Such persons may, in the discretion of the Board, be given credit for the full period of their contract service or part thereof and thereupon such service shall be taken into account for all purposes, including seniority, probation, leave and pension.” Rule 2 of Part II of the Regulations reads: “Scope of the Service Regulations (Part-II) These regulations shall apply to all employees of the Board including those employed under contracts and on deputation from Government who draw their pay once a month in a time scale of pay. All employees of the Board Services to whom these regulations apply, shall be bound by the regulation in force from time to time. The Board shall have authority to amend these regulations at any time and from time to time.(proviso is omitted, since it is not necessary)” The phrase “appointment to a service” is deﬁned under Regulation 4 (1). It reads: “Appointment to a service:- A person is said to be appointed to a service when in accordance with these regulations or in accordance with the regulations applicable at the time, as the case may be, he discharges for the ﬁrst time the duties of a post borne on the cadre of such service or commences the probation, instruction or training prescribed for members thereof. Explanat ion: The appointment of a person holding a post borne on the cadre of one service to hold additional charge of a post borne on the cadre of another service or to discharge the current duties