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Wednesday, September 7, 2011

To sum up, the BCR scheme was an upgradation scheme to give relief against stagnation. It did not involve creation of any new posts. It did not 23 involve advancement to a higher post. It did not involve any process of selection for conferment of the benefit of higher pay-scale. The upgradation was given to the senior most 10% of BCR scale employees in Grade III strictly as per seniority. BCR scheme as per circular dated 16.10.1990 was thus a scheme for upgradation simplicitor without involving any creation of additional posts or any process of selection for extending the benefit. Such a scheme of upgradation did not invite the rules of reservation.


                                             1






                                                                              Reportable




                     IN THE SUPREME COURT OF INDIA




                      CIVIL APPELLATE JURISDICTION




                     CIVIL APPEAL NOS.5286-87 OF 2005








Bharat Sanchar Nigam Ltd.                                           ... Appellant




Vs.




R. Santhakumari Velusamy & Ors.                                     ... Respondents




                                          With




   CIVIL APPEAL NOS.3405, 4542, 4543, 4544, 4545 and 4546 of 2006










                                  J U D G M E N T










R.V.RAVEENDRAN, J.








       The   appellant,   Bharat   Sanchar   Nigam   Ltd.,   is   the   successor   of   the 




Department   of   Telecommunications,   Ministry   of   Communications,   and 




Government of India (for short `government' or `telecom department'). The 




question involved in these matters is whether rules of reservation will apply 




to upgradation of posts.



                                          2






2.     There were four grades of employees of telecom departments known 




as   Telegraphists   or   Telecom   Operating   Assistants   in   the   Telecom 




Department. Promotions from one grade to a higher grade were on the basis 




of  seniority/departmental   examination.   The   telecom   department  introduced 




an `One Time-Bound Promotion' scheme (`OTBP scheme' for short) in the 




year 1983-84 under which regular employees who had completed 16 years 




of service in a grade, were placed in the next higher grade. After some years, 




the   employees   unions   demanded   a   second   time-bound   promotion   on 




completion of 26 years of service in the basic grade, as Group C and Group 




D cadres were only entitled to one-time bound promotion. The government 




decided that a second time bound promotion was not feasible. However, to 




provide relief from stagnation in the grade, the government decided to have 




a   Biennial   Cadre   Review   (`BCR'   for   short)   under   which   a   specified 




percentage   of   posts   could   be   upgraded   on   the   basis   of   functional 




justification. 










3.     The   BCR   scheme   was   accordingly   introduced   vide   Circular   dated 




16.10.1990. It was made applicable to those cadres in Group C and Group D, 




for which one-time bound promotion scheme on completion of 16 years of 




service in the basic grade was in force. Under the said scheme, employees 




who were in regular service as on 1.1.1990 and had completed 26 years of 



                                                       3






satisfactory   service   in   the   basic   cadres,   were   to   be   screened   by   a   duly 




constituted   Committee   to   assess   their   performance   and   determine   their 




suitability for advancement and if they were found suitable, to be upgraded 




in the higher  scale.  The  upgradation  was restricted  to 10% of the posts in 




Grade III. We extract below the relevant terms of the BCR from the Circular 




dated 16.10.1990:




       ".......




       (iii)       Biennial Cadre Reviews will be conducted in respect of the eligible 


       cadre at the level of circles who control these cadres. 




       (iv)        At   the   time   of   review   the   number   of   officials   who   have  


       completed/would   be   completing   26   years   of   service   in   the   basic   cadres  


       including   time   spend   in   higher   scale   (OTBP)   will   be   ascertained.   The  


       persons   will   be   screened   by   the   duly   constituted   Review   committee   to  


       assess the performance and suitability for advancement. 




       (v)         In   the   Biennial   cadre   review,   suitable   number   of   posts   will   be 


       created by upgradation based on functional justification. 




       (vi)        Creation   of   posts   by   upgradation   will   be   in   the   scales   indicated 


       below: 




         Basic scale of the  Scale   after   OTBP               Scale         after         BCR         on 


         cadre                      after   16   years   of     completion   of   26   years   or 


                                    basic grade                 more 


         750-940                    800-1150                    950-1400


         825-1200                   950-1400                    1200-1800


         975-1540                   1320-2040                   1400-2600


         975-1600                   1400-2300                   1600-2660 


                                                                (10%   of   the   posts   in   the   pay 


                                                                scale of 1600-2660 will be in 


                                                                the pay scale of Rs.2000-3200


         1320-2040                  1600-2600                   1640-2900 


                                                                (10%   of   the   posts   in   the   pay 


                                                                scale of 1640-2900 will be in 


                                                                the   pay   scale   of   Rs.2000-


                                                                3200)



                                                 4






      (vi)             xxx               xxx               xxx




      (viii)    Necessary posts will be created by upgradation under the powers 


      of CGMs in consultation with their accredited finance. 




      (ix)      The first Biennial Cadre Review for eligible cadres/officials may 


      be conducted immediately covering the period upto 30.6.1992 to ascertain 


      the eligible officials who have completed/will be completing 26 years of 


      services or more as on the crucial dates, namely,  the date  of the review 


      01.1.1991,   01.7.1991   and   01.1.1992.   The   number   of   posts   needed   or 


      provide for the promotion of the eligible persons will be determined and 


      will be sanctioned/activated in four instalments the first immediately, the 


      second on 01.9.1991, the third on 01.7.1991 and the fourth on 01.1.1992. 


      With these posts, it should be possible be provide for promotion of those 


      employees who have completed 26 years of service or more on the above 


      crucial dates, subject to their otherwise being found fit. The criterion for 


      promotion will be seniority, subject to selection. 




      Order implementing the first instalment of cadre review should be issued 


      before 30.11.1990. 




      In the second cadre review, which will cover the period from 1.7.1992 to 


      30.6.1994,   which   should   be   completed   before   01.7.1992,   the   required 


      number   of   posts   needed   to   be   released   in   half   yearly   instalments   on 


      1.7.1992, 1.1.1993, 1.7.1993 and 1.1.1994 to cater for promotion of those 


      who would have completed 26 years of service on the four crucial dates, 


      will be ascertained and sanctions released in appropriate instalment so that 


      the promotions of eligible personnel could be notified on due dates. 




      ......"








4.    The   Government   issued   the   following   clarification   regarding 




designations by circular dated 11.3.1991: 




                State of Entry                                      Grade allotted




      (i)       Initial Entry (Basic grade)                         Grade I


      (ii)      OTBP scale                                          Grade II


      (iii)     BCR scale                                           Grade III


      (iv)      10% of posts in BCR pay scales                      Grade IV


                to be placed in pay scale of 2000-3200



                                               5






By letter dated 7.5.1993, the telecom department clarified that there were no 




sanctioned   posts   in   regard   to   10%   BCR   and   the   number   of   posts   depend 




upon   the   number   of   BCR   officials   available;   and   that   therefore   no   local 




officiating arrangement could be made if an official in the 10% BCR retired 




before the next review.








5.      By   circular   dated   13.12.1995,   the   government   formulated   the 




procedure   regarding   promotion   to   Grade   IV.   Under   the   said   procedure, 




promotions   to   Grade   IV   were   to   be   based   on   seniority   in   the   basic   grade 




from   among   the   officers   in   Grade   III   subject   to   fitness   determined   in   the 




usual   manner   of   OTBP.   By   a   clarificatory   Circular   dated   1.3.1996,   the 




government   issued   a   clarification   that   promotion   to   Grade   IV   would   be 




given from among officials in Grade III on the basis of their seniority in the 




basic grade, subject to fulfillment of other conditions and that normal rules 




of reservation would apply to promotions in Grade IV. 










6.      The circular of the telecom department dated 1.3.1996 applying rules 




of reservations to promotions to Grade IV under BCR was challenged by the 




All   India   Non  SC/ST   Telecom  Employees   Association   on   the  ground  that 




principles of reservation would not apply for upgradation of existing posts 




which did not carry any change in duties and responsibilities. The Central 



                                             6






Administrative   Tribunal,   Ahmedabad   Bench   by   its   order   dated   11.4.1997 




(OA No.623/1996 -  All India Non-Schedule Caste/Schedule Tribe Telecom  




Employees Association v. Union of India) held that the department could not 




apply   reservation   rules   while   upgrading   the   posts   under   the   BCR   scheme 




and   directed   the   department   to   take   appropriate   action   for   effecting 




promotions   to   the   upgraded   posts   without   applying   the   reservation   roster. 




The   writ   petition   (SCA   No.7576   of   1997)   filed   by   the   government 




challenging   the     said   order   of   the   Tribunal   (Ahmedabad   Bench)   was 




dismissed by the Gujarat High Court by order dated 24.3.1999. In view of 




the said decision, the Government issued an order dated 8.9.1999 directing 




that a Review DPC be held and all ineligible officers wrongly promoted to 




Grade   IV   by   application   of   reservation   roster   as   per   office   order   dated 




1.3.1996, should be reverted back and all eligible officers should be placed 




in Grade IV and their pay should be fixed notionally. As a consequence of 




the   said   Circular   dated   8.9.1999,  the   contesting   respondents   were   reverted 




from Grade IV to Grade III. 










7.     Feeling aggrieved, the contesting respondents filed applications before 




the Madras Bench of the Tribunal. They challenged the validity of the said 




order dated 8.9.1999 and sought its quashing and also sought a direction to 




the government to permit them to continue in Grade IV. Similar applications 



                                                        7






were   filed   before   the   Tribunal's   Bangalore   Bench.   A   Full   Bench   of   the 




Tribunal at Bangalore allowed the applications by order dated 26.4.2000. It 




held : 








           "Through   the   mechanism   of   grant   of   time-bound   advancements   to   the 


           higher scales of pay with different designations, or through appointments 


           to   posts   which   are   upgraded   with   higher   scales   of   pay   within   a   given 


           cadre, entailing creation of additional posts or not, essentially what takes 


           place  is a process of advancement/appointment  to these higher scales of 


           pay. We are convinced that this process can only be treated as promotion 


           in the light of the principle laid down by the Hon'ble Supreme Court that 


           an appointment to a higher scale of pay even at the same post and even 


           without involving any additional responsibilities can still be a promotion. 


           Even if in a given situation, the creation of the upgraded posts with higher 


           scales of pay do not result in a net addition to the existing number of posts 


           in   that   cadre,   but   is   specifically   and   explicitly   created   to   remove 


           stagnation, to follows that those upgraded posts involving higher scales of 


           pay are in effect a substitute for promotion. It is so because either through 


           a   regular   promotion   in   terms   of   the   Cadre   and   Recruitment   rules   or 


           through the creation of the upgraded posts in the same cadre with a higher 


           scale of pay what is sought to be achieved is the provision of opportunities 


           for career advancement which, in the circumstances, is synonymous with 


           promotional   opportunities.   Once   this   basic   objective   for   the   creation   of 


           upgraded posts is understood and appreciated, we are of the firm opinion 


           that   such   provisions   for   career   advancement   through   appointments   to 


           upgraded posts cannot be treated for the purpose of reservation of special 


           categories like SCs and STs differently from appointments to posts which 


           are  designated   in  particular  as  promotional  posts.   In our  view, it   is also 


           absolutely   immaterial   as   to   whether   the   mode   of   appointment   to   these 


           upgraded   posts   with   higher   scales   of   pay   is   by   selection   or   by   merely 


           applying  the criterion of seniority subject  to fitness. In fact, it is evident 


           that appointments to a number of posts which are specifically designated 


           as promotional posts are also made on the basis of seniority-cum-fitness. 


           Therefore,   the   adoption   of   that   latter   criterion   for   appointment   to   a 


           upgraded   post   by   itself   cannot   make   such   an   appointment   as   non-


           promotional   appointment.   On   this   score   drawing   a   distinction   between 


           upgradation   and   promotion   based   on   the   nomenclature   only   does   not 


           appear to be tenable."



                                              8






8.     The   Full   Bench   of   the   Tribunal   differed   from   the   decision   of   its 




Ahmadabad   Bench   and   held   that   the   decision   of   the   Gujarat   High   Court 




affirming the said decision was also of no assistance  as it was at variance 




with the decisions of this Court in Union of India vs. S.S. Ranade - 1995 (4) 




SCC 462, Lalit Mohan Deb v. Union of India - 1973 (3) SCC 862, State of  




Rajasthan vs. Fateh Chand Soni  - 1996 (1) SCC 562, and  Ram Prasad vs.  




D.K. Vijay  - 1999 (7) SCC 251. It held that the BCR upgradation to Grade 




IV in the telecom department amounted to promotion, attracting reservation 




for SCs and STs.










9.     Following   the   said   decision   of   the   Full   Bench   of   the   Tribunal,   the 




Madras   Bench   of   the   Tribunal   by   order   dated   25.7.2000   allowed   the 




applications   filed   by   the   contesting   respondents   herein   and   directed   the 




government   to   restore   the   contesting   respondents   to   their   promoted   posts 




which   they   were   holding   before   the   order   dated   8.9.1999.   The 




Telecommunication Department challenged the said order of the Tribunal by 




filing a batch of writ petitions before the Madras High Court. The Madras 




High   Court,   by   the   impugned   order   dated   18.10.2004,   dismissed   the   writ 




petitions upholding the order of the Tribunal.



                                              9






10.     The said order is challenged in these appeals by special leave by the 




appellant. The appellant has put forth the following contentions :








(i)     There is a clear distinction between upgradation and promotion. While 




promotion involves advancement in rank, grade or both and is always a step 




towards advancement to higher position, grade or honour, upgradation does 




not involve promotion to a higher position and the pedestal of the employee 




remains   the   same   and   the   employee   is   merely   conferred   some   financial 




benefits by granting a higher pay scale, to overcome stagnation. The BCR 




scheme   introduced   as   per   order   dated   16.10.1990   was   a   scheme   of 




upgradation and not promotion.








(ii)    Where   there   is   only   upgradation   of   existing   posts,   with   creating 




additional posts, principles of reservation would not apply. The Tribunal and 




the   High   Court   committed   a   serious   error   by   treating   upgradation   as   a 




promotion   to   which   reservation   rules   would   apply.   The   Tribunal   and   the 




High Court ought to have followed the decision of this Court in  All India  




Employees  Association  (Railways)  vs.  V.K.  Agarwal  - 2001  (10)  SCC  165 




and the decision of the Gujarat High Court dated 24.3.1999 in Special Civil 




Application   No.7576   of   1997   -  Union   of   India   vs.   All   India   Non   SC/ST  




Telecom Employees Association. 










11.     Article 16(4) enables the State to make any provision for reservation 




of   appointment   or   posts   in   favour   of   any   backward   classes   of   citizens. 




Article   16(4A)   enables   the   State   to   make   any   provision   for   reservation   in 




matters of promotion, with consequential seniority, to any class or classes of 



                                                         10






posts   in   the   services   under   the   State   in   favour   of   Scheduled   Castes   and 




Scheduled   Tribes,   which   in   the   opinion   of   the   State,   are   not   adequately 




represented in the services under the State. As upgradation involves neither 




appointment   nor   promotion,   it   will   not   attract   reservation.   Upgradation 




involves mere conferment of financial benefits by providing a higher scale 




of pay. If there is mere upgradation of posts, as contrasted from promotion, 




reservation   provisions   would   not   apply.   [See   :  All   India   Employees  




Association (Railways) vs. V.K. Agarwal - 2001 (10) SCC 165 and Union of  




India vs. V. K. Sirothia  - 2008 (9) SCC 283]. In  V.K. Agarawal  this Court 




held :




          "It   appears   from   all   the   decisions   so   far   that  if   as   a   result   of  


          reclassification or readjustment, there are no additional posts which are  


          created and it is a case of upgradation, then the principle of reservation  


          will not be applicable. It is on this basis that this Court on 19.11.1998 had 


          held that reservation for SC and ST is not applicable in the upgradation of 


          existing posts and CA No.1481 of 1996 and the connected  matters  were 


          decided   against   the   Union   of   India.   The   effect   of   this   is   that   where   the 


          total   number   of   posts   remained   unaltered,   though   in   different   scales   of 


          pay, as a result of regrouping and the effect of which may be that some of 


          the employees who were in the scale of pay of Rs.550-700 will go into the 


          higher scales, it would be a case of upgradation of posts and not a case of 


          additional vacancy or post being created to which the reservation principle 


          would apply. It is only if in addition to the total number of existing posts  


          some additional posts are created that in respect of those additional posts  


          the   reservation   will   apply,   but   with   regard   to   those   additional   posts   the 


          dispute does not arise in the present case. The present case is restricted to 


          all existing employees who were redistributed into different scales of pay 


          as a result of the said upgradation."  






                                                                                 (emphasis supplied)



                                                     11






The   decision   of   this   Court   in  V.K.   Sirothia  arose   from   a   decision   of   the 




Allahabad Bench of the Tribunal which expressed a similar view (in  V.K.  




Sirothia vs. Union of India - O.A. No.384/1986). The Tribunal held : 




        "The   restructuring   of   posts   was   done   to   provide   relief   in   terms   of 


        promotional avenues. No additional posts were created. Some posts out of 


        existing total were placed in higher grade to provide these avenues to the 


        staff who were stagnating. The placement of these posts cannot be termed 


        as creation of additional posts. There were definite number of posts and 


        the total remained the same. The only difference was that some of these 


        were in a higher grade. It was deliberate exercise of redistribution with the 


        primary   object   of   betterment   of   chance   of   promotion   and   removal   of 


        stagnation."









The Union of India challenged the said order of the Tribunal and this Court 




by a brief order dated 19.11.1998 (Union of India vs. V.K. Sirothia  - 2008 




(9) SCC 283) dismissed the appeal by a brief order. The relevant portion of 




the said order is extracted below :




        "The finding of the Tribunal that "the so-called promotion as a result of 


        redistribution of posts is not promotion attracting reservation" on the facts 


        of the case, appears to be based on good reasoning. On facts, it is seen that 


        it   is   a   case   of   upgradation   on   account   of   restructuring   of   the   cadres, 


        therefore,  the question of reservation  will not arise. We do not find any 


        ground to interfere with the order of the Tribunal."










12.     We may next consider the concepts of `promotion' and `upgradation'. 




In  Lalit   Mohan   Deb,  this   Court   explained   the   difference   between   a 




promotion post and a selection grade :




        "It is well recognised that a promotion post is a higher post with a higher 


        pay. A selection  grade has  higher pay but in the same post. A selection 


        grade   is   intended   to   ensure   that   capable   employees   who   may   not   get   a 


        chance of promotion on account of limited outlets of promotions should at 



                                                   12






       least   be   placed   in   the   selection   grade   to   prevent   stagnation   on   the 


       maximum   of   the   scale.   Selection   grades   are,   therefore,   created   in   the 


       interest of greater efficiency."








In Tarsen Singh vs. State of Punjab - 1994 (5) SCC 392, this Court defined 




`promotion' thus :




       "Promotion   as   understood   under   the   service   law   jurisprudence   means 


       advancement in rank, grade or both. Promotion is always a step towards 


       advancement to a higher position, grade or honour."










13.    In  S.S. Ranade  the scope and meaning  of the word `promotion' was 




considered.   The   issue   in   that   case   was   whether   a  Commandant   (Selection 




Grade) held a higher rank than a Commandant and consequently entitled to 




be superannuated at a later age of 58 years instead of 55 years. This Court, 




following the decision in Lalit Mohan Deb, held as follows:




       "Undoubtedly,   a   Commandant   who   becomes   a   Commandant   (Selection 


       Grade) secures a promotion to a higher pay scale. But it is a higher pay 


       scale in the same post. The use of the word 'promotion' in Rule 6 and the 


       Constitution   of   a   Departmental   Promotion   Committee   for   selection   of 


       Commandant (Selection Grade) in Rule 7, do not necessarily lead to the 


       conclusion that the promotion which is contemplated there is necessarily a 


       promotion to a higher post. Promotion can be either to a higher pay scale  


       or to a higher post. These two Rules and the use of the word 'promotion' 


       there do not conclude the issue.




                                    xxx             xxx           xxx




       In   the   present   case,  an   element   of   selection   is   involved   in   granting  


       selection grade because there is no automatic promotion to the selection  


       grade pay scale. But this factor is not decisive. In the present case also, as 


       in   the   above   cases,   Selection   Grade   posts   are   created   entirely   for   the 


       purpose of granting some relief to those who have very limited avenues of 


       getting promotion to a higher post. That is why a higher pay or pay scale is 


       granted in the same post. Thus, by its very nature, a selection grade post 


       cannot   be   considered   as   a   higher   post   for   the   purposes   of   Rule   9. 


       ...Because the creation of a selection  grade in the same post stands on a 



                                                    13






       very   different   footing.   By   its   very   nature   a   selection   grade   provides   a 


       higher  pay or  a higher  pay scale  in  the  same  post.  The  beneficiary  of  a 


       selection   grade   does   not   thereby   occupy   a   post   which   is   higher   in   rank 


       than the post earlier occupied by him."




                                                                        (emphasis supplied)










On facts, this Court found that the respondent therein required a promotion 




which   resulted   in  occupation   of  a   post   which  was   higher   in  rank  than   the 




post earlier occupied, to get the relief of longer service. This Court held that 




though his promotion from Commandant to Commandant (Selection Grade), 




resulted in a promotion to a higher pay scale, that was not sufficient to grant 




relief to the respondent therein as his promotion to selection grade did not 




involve advancement to a higher post.










14.    In  Fateh   Chand   Soni,  this   Court   following  Ranade  defined 




`promotion' thus:  




       "The High Court, in our opinion was not right in holding that promotion 


       can  only be to  a higher  post  in the service  and appointment  to  a higher 


       scale of an officer holding the same post does not constitute promotion. In 


       the   literal   sense   the   word   "Promote"   means   "to   advance   to   a   higher 


       position, grade, or honour". So also "Promotion" means "advancement of 


       preferment   in   honour,   dignity,   rank   or   grade".   [See:   Webster's 


       Comprehensive  Dictionary,   International   Edition,  p.  1009].  "Promotion"  


       thus   not   only   covers   advancement   to   higher   position   or   rank   but   also  


       implies advancement to a higher grade. In service law also the expression  


       "Promotion" has been understood in the wider sense and it has been held  


       that "Promotion can be either to a higher pay scale or to a higher post." 


                                                                          (emphasis supplied)



                                                          14






15.     The distinction between  upgradation  and  promotion  was spelt out by 




a   Full   Bench   of   the   Kerala   High   Court   in  N.G.   Prabhu   vs.   Chief   Justice,  




Kerala High Court  - 1973 (2) Lab. IC 1399, thus :




        "Promotion is, of course, appointment, to a different post carrying a higher 


        scale   of  pay  in   the   service.   If,  to   better   the   conditions   of   service   of   the 


        incumbents in posts in the same category the scale  of pay of all the posts 


        in   the   category   is  raised,   the   incumbents   would   naturally   get   the   higher 


        scale of pay. But in such a case it may not be proper to characterize the 


        event as a promotion to higher posts though a benefit of a higher scale of 


        pay is obtained by all concerned. In other words, if the upgradation relates 


        to   all   the   posts   in   a   category   naturally,   there   is   no   sense   in   calling   it   a 


        promotion of all the persons in that category. That is because there is no 


        question   of   appointment   from   one   post   to   another.   Parties   continued   to 


        hold same posts but get a higher scale of pay. It may be that it is not all the 


        posts in a particular   category that  are so upgrade, but only a part of it. 


        Normally, the benefit of such upgradation would go to the seniors in the 


        category.   They   would   automatically   get   a   higher   scale   of   pay.   That   is 


        because though their posts continue in the same category a higher scale of 


        pay is fixed for those posts. It is appropriate then to say that the seniors 


        have   been   nominated   to   the   higher   grade   which   has   been   so   created   by 


        upgradation. This phenomenon does not differ from the case where all the 


        posts   are   upgraded   and,   it   appears   to   us   that   those   who   get   the   higher 


        grade cannot be said to have been `promoted' because here again there is 


        no   question   of   appointment   from   one   post   to   another.   They   continue   to 


        hold   the   same   post,   but   because   of   seniority   in   the   same   post   they   are 


        given   a   higher   scale   of   pay.   When   a   person   is   nominated   to   the   higher 


        scale   of   pay   from   time   to   time   based   on   seniority,   it   may   perhaps   be 


        loosely termed as a promotion."  










16.     But even in cases where no additional posts were created, but where a 




process of selection was involved in the upgradation, the process has to be 




considered not as an upgradation simplicitor, but a process of promotion and 




therefore the principles of reservation would be attracted. We may refer to 




the Constitution Bench decision of this Court in Ram Prasad (supra) where 




this   Court   held   that   appointment   from   senior   scale   to   selection   scale   is   a 



                                                      15






promotion   though   it   may   not   be   a   promotion   to   a   higher   position   and 




consequently   the   reserved   candidates   are   entitled   to   be   promoted   to   the 




selection   scale   by   way   of   roster   points.   For   this   purpose,   the   Constitution 




Bench relied upon the decision of Fateh Chand Soni.








17.     In  Fateh Chand Soni  (supra),  the issue was whether  seniority  in the 




selection grade (in the Rajasthan Police Service) was to be fixed on the basis 




of date of appointment to the selection scale or on the basis of seniority in 




the senior scale irrespective of the date on which appointment was made to 




the selection scale. This Court held that appointment to the selection scale of 




an   officer   in   the   senior   scale   in   the   service   constituted   promotion   and 




seniority  in  the  selection  scale   had  to  be  fixed   on  the  basis  of  the  date  of 




selection   and   a   person   selected   and   appointed   as   a   result   of   an   earlier 




selection would rank senior to a person who is selected and appointed as a 




result of a subsequent selection. We note below the reasoning of this Court :








        "In Lalit Mohan Deb v. Union of India, the pay scale of all the Assistants 


        in the Civil Secretariat in Tripura was Rs.80-180 and on the basis of the 


        recommendations   of   the   Second   Pay   Commission   appointed   by   the 


        Government of India the scales were revised and 25% of the posts were 


        placed   in   the   Selection   Grade   in   the   scale   of   Rs.   150-300   and   the   rest 


        continued in the old pay scale of Rs.80-180. For the purpose of filling the  


        Selection Grade posts, a test was held and those who qualified in the said  


        test were appointed to the Selection Grade. The Assistants in the Selection 


        Grade and the Assistants in the old pay scale were doing the same type of 


        work.   This   Court   observed   that   "provision   of   a   Selection   Grade   in   the 


        same category of posts is not a new thing" and that "a Selection Grade is 


        intended to ensure that capable employees  who may not get a chance of 


        promotion on account of limited outlets of promotions should at least be 



                                                     16






       placed in the Selection Grade to prevent stagnation on the maximum of the 


       scale" and that "Selection Grades are, therefore created in the interest of 


       greater   efficiency".  The   Court   took   note   of   the   fact   that   the   basis   for  


       selection   of   some   of   the   Assistants   to   the   Selection   Grade   scale   was  


       seniority-cum-merit   which   is   one   of   the   two   or   three   principles   of  


       promotion   widely   accepted   in   the   administration   and,   therefore,   the  


       creation of Selection Grade in the category of Assistants was not open to  


       challenge.   In   that   case,   the   Court   had   proceeded   on   the   basis   that   the  


       appointment to the higher grade amounted to promotion.




       The   Rules   governing   appointment   to   the   Selection   Scale   in   the   Service 


       also  envisage that  such  appointment  constitutes  promotion.  The  relevant 


       provision   is   contained   in   Rule   28(A)   of   the   Rules   which   prescribes   the 


       criteria, eligibility and procedure for promotion to Junior, Senior and other 


       posts encadred in the Service. Under sub-rule (5) of Rule 28(A) promotion 


       from the lowest post or category of post in the Service to the next higher 


       post or category of post in the Service is required to be made strictly on 


       the basis of seniority-cum-merit. Sub-rule (6) of Rule 28(A) provides that 


       selection   for   promotion   to   all   other   higher   posts   or   higher   categories   of 


       posts in the Service shall be made on the basis of merit and on the basis of 


       seniority-cum-merit in the proportion of 50:50."






                                                                         (emphasis supplied)






18.    In  Dayaram Asanand Gursahani v. State of Maharashtra  - 1984 (3) 




SCC 36 a three Judge Bench of this Court held :




       ".........As   mentioned   earlier,   the   selection   grade   post   is   not   a   post   to 


       which   promotion   has   to   be   made   nor   is   there   any   efficiency   bar   rule 


       attached   to  it.   Further  it   is  not  shown   that   the  Governor  had  issued  any 


       executive instructions as it had been done in Sant Ram Sharma v. State of  


       Rajasthan and Anr.  (1968) 1 SCR 111 and in  Lalit Mohan Deb and Ors.  


       v. Union of India and Ors.  (1973) 3 SCC 862 enabling the High Court to 


       withhold increments in the extended pay scale which is in this case called 


       as selection grade pay scale. The pay scale to which a judicial officer is 


       entitled   is a  condition   of service  which  can  be  regulated  by a  statute   or 


       rules  made  under  the  proviso   to  Article 309 or  by executive  instructions 


       issued   under   Article 162 of   the   Constitution.   It   cannot   come   within   the 


       range   of  the  expression   'control'   in  Article 235  of  the  Constitution.   (See 


       B.S. Yadav and Ors. etc. v. State of Haryana and Ors. etc.  (1981) 1 SCR 


       1024). It is only where there is such a law, rule or executive instruction, 


       the High Court may act under Article 235 of the Constitution to sanction it 


       or to refuse to sanction it. We are of the view that in the present case the 


       mere nomenclature given to the extended pay scale as the selection grade 


       pay   scale   does   not   lead   to   the   inference   that   there   is   an   element   of 


       selection   involved   in   sanctioning   it.   In   the   circumstances   it   should   be 



                                                     17






        treated as just an extended pay scale which forms part of the pay scale of 


        Rs.   900-1800   as   clarified   in   two   Government   orders   sanctioning   the 


        selection grade posts. ........."










The aforesaid decision in Dayaram Asanand Gursahani was distinguished in 




Fateh Chand Soni on the following reasoning : 




        "The   High  Court  has  referred   to the   decision  of this  Court  in  Dayaram  


        Asanand Gursahani v. State of Maharashtra and Ors. [1984] 2 SCR 703, 


        wherein,   after   considering   the   resolution   of   the   State   Government 


        sanctioning  the post of District Judge  in the Selection Grade, this Court 


        has held that the said resolution did not indicate that there was any process 


        of promotion by selection or otherwise from the cadre of District Judges to 


        the Selection Grade District Judges. In the particular facts of that case it 


        was held that mere nomenclature given to the extended pay scale as the 


        Selection Grade pay Scale does not lead to the inference that there is no 


        element of selection involved in sanctioning it and that it should be treated 


        as   just   an   extended   pay   scale   which   forms   part   of   the   pay   scale.   The 


        position in the present case is, however, different. Here the Selection Scale 


        is a separate scale and is not an extension of the Senior Scale. Moreover 


        appointment   to the   Selection  Scale  is made   by selection  on  the  basis  of 


        merit   and   seniority-cum-merit   in   accordance   with   Rule   28(A)   of   the 


        Rules."








19.     In   view   of   the   decisions   in  Dayaram   Asanand   Gursahani,   Fateh  




Chand Soni  and  Ram Prasad,  the position that emerges is  that even where 




the upgradation does not involve appointment to a different or higher post, 




but   is   as   a   result   of   a   promotional   process   involving   selection,   then   the 




principles of reservation are attracted.    







20.     In  Union   of   India   vs.   Pushpa   Rani  -   2008   (9)   SCC   242,   this   Court 




examined   the   entire   case   law   and   explained   the   difference   between 




upgradation and promotion thus :



                                             18










"In legal parlance, upgradation of a post involves transfer of a post from 


lower to higher grade and placement of the incumbent of that post in the 


higher grade. Ordinarily, such placement does not involve selection but in  


some   of   the   service   rules   and/or   policy   framed   by   the   employer   for  


upgradation of posts, provision has been made for denial of higher grade  


to an employee whose service record may contain adverse entries or who  


may   have   suffered           punishment.        The   word   `promotion'   means 


advancement   or   preferment   in   honour,   dignity,   rank,   grade.   Promotion 


thus   not   only   covers   advancement   to   higher   position   or   rank   but   also 


implies   advancement   to   a   higher   grade.  In   service   law,   the   word  


`promotion' has been understood in wider sense and it has been held that  


promotion can be either to a higher pay scale or to a higher post. 




Once it is recognized that additional posts becoming available as a result 


of restructuring of different cadres are required to be filled by promotion 


from amongst employees who satisfy the conditions of eligibility and are 


adjudged   suitable,   there   can   be   no   rational   justification   to   exclude 


applicability of policy of reservation while effecting promotions, more so 


because it has not been shown that procedure for making appointment by 


promotion   against   such   additional   posts   is   different   than   the   one 


prescribed for normal promotion. 






Policy contained in Letter dated 9.10.2003 has been framed with a view to 


strengthen   and   rationalize   the   staffing   pattern.   For   this   purpose,   the 


Ministry of Railways undertook review of certain cadres. The basis of the 


review   was   functional,   operation   and   administrative     requirement   of   the 


Railways.   This   exercise   was   intended   to   improve   efficiency   of 


administration by providing incentives to existing employees in the form 


of better promotional avenues and at the same time requiring promotees to 


discharge more onerous duties. The policy envisaged that additional posts  


becoming available in the higher grades as a sequel to restructuring of  


some of the cadres should be filled by promotion by considering such of  


the employees who satisfy the conditions of eligibility including minimum  


period   of   service   and   who   are   adjudged   suitable   by   the   process   of  


selection.   This   cannot   be   equated   with   upgradation   of   posts   which   are  


required to be filled by placing existing incumbents in the higher grade  


without subjecting them to the rigor of selection. It has therefore to be held 


that   the   Railway   Board     did   not   commit   any  illegality   by   directing   that 


existing instructions with regard to the policy of reservation of posts for 


SC   and   ST   will   apply   at   the   stage   of   effecting   promotion   against   the 


additional   posts.   The   Tribunal   committed   serious   illegality   by   striking 


down para 14 of letter dated  9.10.2003. Matters relating to creation and 


abolition   of   posts,   formation   and   structuring/restructuring   of   cadres, 


prescribing the source/mode of recruitment  and qualifications, criteria of 


selection,   evaluation   of   service   records   of   employees   fall   within   the 


exclusive domain of employer. What steps should be taken for improving 



                                                     19






       efficiency   of   the   administration   is   also   the   preserve   of   the   employer. 


       Power   of   judicial   review   can   be   exercised   in   such   matters   only   if   it   is 


       shown that the action of the employer is contrary to any constitutional or 


       statutory provision or is patently arbitrary or is vitiated by mala fides. The 


       court cannot sit in appeal over the judgment of the employer  and ordain 


       that   a  particular   post   be   filled   by  direct   recruitment   or   promotion   or   by 


       transfer.   The   court   has   no   role   in   determining   the   methodology   of 


       recruitment or laying down the criteria of selection. It is also open to the 


       court to make comparative evaluation of the merit of the candidates. The 


       court cannot suggest the manner in which the employer should structure or 


       restructure   the   cadres   for   the   purpose   of   improving   efficiency   of 


       administration."


                                                                             (emphasis supplied) 










In  Pushpa   Rani,   this   Court   while   considering   a   scheme   contained   in   the 




letter   dated   9.10.2003   held   that   it   provided   for   a   restructuring   exercise 




resulting in creation of additional posts in most of the cadres and there was a 




conscious decision to fill-up such posts from promotion from all eligible and 




suitable   employees   and,   therefore,   it   was   a   case   of   promotion   and, 




consequently, reservation rules were applicable. 










21.    On   a   careful   analysis   of   the   principles   relating   to   promotion   and 




upgradation in the light of the aforesaid decisions, the following principles 




emerge :








(i)    Promotion is an advancement in rank or grade or both and is a step 




towards   advancement   to   higher   position,   grade   or   honour   and   dignity. 




Though in the traditional sense promotion refers to advancement to a higher 




post, in its wider sense, promotion may include an advancement to a higher 




pay scale without moving to a different post. But the mere fact that both - 



                                               20






that is advancement  to a higher  position and advancement  to a higher pay 




scale - are described by the common term `promotion', does not mean that 




they are the same. The two types of promotion are distinct and have different 




connotations and consequences. 








(ii)     Upgradation merely confers a financial benefit by raising the scale of 




pay   of  the   post   without   there   being   movement   from  a   lower   position   to  a 




higher position. In an upgradation, the candidate continues to hold the same 




post without any change in the duties and responsibilities but merely gets a 




higher pay scale.








(iii)    Therefore, when there is an advancement to a higher pay scale without 




change of post, it may be referred to as upgradation or promotion to a higher 




pay   scale.   But   there   is   still   difference   between   the   two.   Where   the 




advancement   to   a   higher   pay-scale   without   change   of   post   is   available   to 




everyone   who   satisfies   the   eligibility   conditions,   without   undergoing   any 




process   of   selection,   it   will   be   upgradation.   But   if   the   advancement   to   a 




higher pay-scale without change of post is as a result of some process which 




has elements of selection, then it will be a promotion to a higher pay scale. 




In   other   words,   upgradation   by   application   of   a   process   of   selection,   as 




contrasted from an upgradation simplicitor can be said to be a promotion in 




its wider sense that is advancement to a higher pay scale. 








(iv)     Generally,   upgradation   relates   to   and   applies   to   all   positions   in   a 




category, who have completed a minimum period of service. Upgradation, 




can also be restricted to a percentage of posts in a cadre with reference to 




seniority (instead of being made available to all employees in the category) 



                                                   21






and   it   will   still   be   an   upgradation   simplicitor.   But   if   there   is   a   process   of 




selection or consideration of comparative merit or suitability for granting the 




upgradation   or   benefit   of   advancement   to   a   higher   pay   scale,   it   will   be   a 




promotion.   A   mere   screening   to   eliminate   such   employees   whose   service 




records may contain adverse entries or who might have suffered punishment, 




may   not   amount   to   a   process   of   selection   leading   to   promotion   and   the 




elimination   may   still   be   a   part   of   the   process   of   upgradation   simplicitor. 




Where   the   upgradation   involves   a   process   of   selection   criteria   similar   to 




those applicable to promotion, then it will, in effect, be a promotion, though 




termed as upgradation.   A








(v)     Where the process is an upgradation simplicitor,  there  is no need to 




apply   rules   of   reservation.   But   where   the   upgradation   involves   selection 




process and is therefore a promotion, rules of reservation will apply.








(v)     Where there is a restructuring of some cadres resulting in creation of 




additional   posts   and   filling   of   those   vacancies   by   those   who   satisfy   the 




conditions  of eligibility  which  includes  a  minimum   period  of service,  will 




attract the rules of reservation. On the other hand, where the restructuring of 




posts does not involve creation of additional posts but merely results in some 




of the existing posts being placed in a higher grade to provide relief against 




stagnation, the said process does not invite reservation.   










22.     In this  case,   the BCR  scheme did  not involve  creation  of additional 




posts but merely restructured the existing posts as a result of which 10% of 




the posts in Grade III were placed in a higher grade (Grade IV) to give relief 



                                               22






against stagnation. This is evident from the terms of the BCR scheme and 




the   clarification   contained   in   the   letter   dated   7.5.1993   that   no   posts   were 




sanctioned, as far as 10% BCR was concerned.










23.     In   this   case,   the   BCR   scheme   dated   16.10.1990   provided   that   the 




persons who had completed 26 years of service would be screened by a duly 




constituted Review Committee to assess the performance and suitability for 




advancement.   The   screening   was   for   the   limited   purpose   of   finding   out 




whether the service record of the employee contained any adverse entries or 




whether the employee had suffered punishment. The screening process did 




not   involve   consideration   of   comparative   merit   nor   involve   any   selection. 




The 10% posts were upgraded strictly by seniority subject to screening. This 




is evident from the terms of BCR scheme and the Circular dated 13.12.1995 




which   provided   that   the   promotions   to   Grade   IV   were   to   be   based   on 




seniority in the basic grade from among the officers in Grade III, subject to 




fitness   determined   as   per   OTBP   manner,   that   is   screening   to   ascertain 




whether   there   are   any   adverse   comments   or   punishment   against   the 




employee concerned.








24.     To sum up, the BCR scheme was an upgradation scheme to give relief 




against stagnation. It did not involve creation of any new posts. It did not 



                                              23






involve   advancement   to   a   higher   post.   It   did   not   involve   any   process   of 




selection for conferment of the benefit of higher pay-scale. The upgradation 




was   given   to   the   senior   most   10%   of   BCR   scale   employees   in   Grade   III 




strictly as per seniority. BCR scheme as per circular dated 16.10.1990 was 




thus a scheme for upgradation simplicitor without involving any creation of 




additional posts or any process of selection for extending the benefit. Such a 




scheme of upgradation did not invite the rules of reservation. 










25.    We accordingly allow these appeals, set aside the orders of the High 




Court   and   the   Tribunal   and   dismiss   the   Original   Applications   challenging 




the order of the telecom department dated 8.9.1999.      










                                                       .................................J.


                                                       (R V Raveendran)










New Delhi;                                             .................................J.


September 6, 2011.                                     (Markandey Katju)