TaxTMI 
TaxTMI 
2014 (5) TMI 972
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....ted as a Judicial Member of the ITAT on 9.2.1998 and Mr. S.K. Yadav (hereafter "Yadav") was selected on 21.3.1998 (after undergoing a two years probationary period from 21.3.1996). The grievance in both cases arises from an order of the Central Government, dated 23.11.2009 appointing four members of the ITAT as Vice-Presidents, allegedly overlooking the two petitioners. Those appointed were K.L. Karwa, Judicial Member (Lucknow), O.K. Narayanan, Accountant Member (Ahmedabad), Bhartvaja Shankar (Chandigarh) and G.C. Gupta, Judicial Member (Hyderabad) - all referred to hereafter collectively as "the private respondents". Subsequently, after receiving the minutes of the meetings of the Selection Committee on 5.9.2009 and 9.9.2009, and in view of the proposal to appoint Shri D.K. Tyagi as a Vice- President of the ITAT, the grievance was again made by the petitioners. 3. The conditions of service and rules applicable to ITAT members are prescribed by the Income-Tax Appellate Tribunal Members (Recruitment and Conditions of Service Rules), 1963 (hereinafter "the Service Rules"), made by the President under the proviso to Article 309 of the Constitution. Rule 8 classifies the post of a Vic....
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.... rejected all three grounds. On the first ground, the CAT held that the observations in its earlier decision, in G.E. Veerabhadrappa v. Union of India, OA No. 463/2009, to the effect that the appointment to the post of Vice-President was by way of direct recruitment was obiter, and thus, the question was considered afresh. Holding that the appointment of Vice-Presidents is not by direct recruitment, the decision of the CAT proceeded as follows: "From the reading of the relevant rules referred to above, what clearly emerges is that whereas everyone having the requisite qualifications as mentioned in rule 4 is entitled and has a right to be considered for appointment as Member, the selection of President, Senior Vice-President and Vice-President of the Tribunal Members. Once, President, Senior Vice-President and Vice President are to be appointed by way of selection by the selection committee so constituted under rule 7C from only amongst those who are already Members, it cannot be a case of direct recruitment. It would indeed be a case of promotion by way of selection. We have already mentioned tha....
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....pay scale of Member and Vice- President has been bracketed would not make the post of Member equivalent to that of Vice-President and there would be no question in teeth of the rules as mentioned above for a senior Member to be automatically appointed as Vice-President. Even the senior most Member has to go through a process of selection as envisaged under rule 7C. It is in consideration of the provisions of the rules that we have said hereinbefore that the mere fact that the selection committee was not informed of the pay scale of Member and that of Vice-President to be the same as per recommendations of the 6 CPC and non-amendment of the rules or non-information of the amendment in the rules in that regard would be of no meaning and consequence. Further, in view of DR-22(III) promotion in the same pay scale can be made." 9. On the third ground, relying on the decisions of the Supreme Court in N Suresh Nathan and Ors. v. Union of India, AIR 2010 SC 2171; General Manager, Uttaranchal Jal Sansthan v. Laxmi Devi and Ors., (2009) 7 SCC 205, as also a decision of CAT, Chennai, in Uttam Bir Singh Bedi v. Union of India, (OA No. 1001/2009, decided on 12.3.2010), the CAT rejected the con....
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....tion committee did not prepare any chart or sheet of comparison regarding performance of Members would not mean that comparative merit was not considered by the selection committee. It is absolutely inherent in the method of selection that the respective merit of all the Members would have been considered. There was no requirement at all to make a mention of the respective merits of the Members under consideration for appointment on the post of Vice-President, Mention of comparative merit may: not have been made, and it appears to us was rightly not made, as that would be rather counterproductive. To illustrate, if a particular Member was not found meritorious enough to be appointed as Vice- President because of some of his attributes which may be adverse, an argument would surface that unless such an attribute was to be put to the concerned Member, the same could not be taken into consideration. Making mention of such attributes would also result into bitterness. We are of the firm view that when selection by a high powered committee and there are not even allegations of any bias or favouritism, lest there being any material for the same, the selection made by such committee would....
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....Guman Singh v. State of Rajasthan, (1971) 2 SCC 452, and N. Suresh Nathan v. Union of India and Ors., (2010) 5 SCC 692 nsels argued that merit constitutes the sum total of various qualities and attributes, including past performance and other relevant factors, which cannot all lie within the limited content of the ACRs placed before the Selection Committee. Moreover, it was argued that even in a selection based on merit, the Selection Committee is nonetheless obligated to consider seniority of the candidates, which remains an important factor in such decisions. 14. Further, learned counsels argued that the findings of CAT are inconsistent, because if the decision that the selection process is regulated by the Service Rules and not by the Office Memoranda of the Department of Personnel and Training is accepted, Rule 7 clearly states that selection is to be by merit. Concededly, in the absence of any comparison charts as regards the comparative merit of the candidates, or any other material placed before the Selection Committee, the decision of the committee is liable to be set aside. For this, reliance is placed on the decision of the Supreme Court in Union of India v. SK Goel & Or....
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....out the country, as well as the knowledge and input provided by the President, who had occasion to interact with the candidates routinely and therefore in a position to assess whoever was most suitable to be appointed. The ASG emphasised that since the position or post involved was essentially judicial, the collective experience of the Chairman and the President, ITAT was sufficient in the circumstances. It was emphasized that the petitioners could only claim a right to be considered and not an overriding entitlement, solely based on their ACR gradings to be appointed to the post of Vice President. No allegations of mala fides, legal or personal had been levelled or proved; there was no violation of statute or binding norms. In the absence of these, the Committee, which had fairly considered the candidature of all the officers, could not be faulted for having recommended the selected officers, for appointment. Analysis and Findings 18. Before entering the various questions that arise in this case, an understanding of the selection process, service rules and hierarchy amongst the members of the ITAT is relevant. 19. As noted above, the Service Rules outline four different categor....
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....ally superior to that of accountant and judicial members. Subsequently, after the recommendation of the 6th CPC, the Government of India abolished the different between the pay scales of members and Vice-Presidents, by merging both the scales in the new pay band/scale of Rs. 75,000- with annual increment of 3%-i.e. Rs. 80,000. Thus, after the implementation of the recommendations of the 6th CPC, there is pay parity as between the post of member and Vice- President. 22. The question that arises before the Court, therefore, is whether the manner of selection, including the decision-making process adopted by the Selection Committee, is consistent with the terms of the Service Rules, or whether it is perverse and thus liable to be set aside. 23. In Lalit Mohan Deb and Ors. v. Union of India and Ors., [1963] 3 SCC 862 and Dayaram Asanand Gursahani v. State of Maharashtra and Ors., [1984] 3 SCC 36, Union Of India & Anr v S.S. Ranade 1995 (4) SCC 462 the Supreme Court held that appointment to the selection grade having regard to the position of the rules in those cases did not constitute promotion. These decisions were considered and explained in State Of Rajasthan vs Fateh Chand Soni 1....
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..... Amongst the 14 members, Mr. SK Yadav was at Serial No. 5, and Mr. R.P. Tolani at Sr. No. 6, in terms of the seniority. 4 of the 5 members chosen for the post of Vice-President were ranked below in the seniority list, at Serial Nos. 8, 10, 12 and 14). 27. It is important at this stage, to consider the minutes of the Selection Committee meeting, which provide an insight into the decision-making process. On 9.9.2009, the operative meeting of the Selection Committee, the minutes recorded as follows: "... The Committee examined the character rolls of the following members of the Tribunal ... The above Officers have been reported to be free from Vigilance angle by the Department of Legal Affairs. On the basis of available character rolls, knowledge and suitability, the Committee recommends the following for the post(s) mentioned below ..." 28. Later, a confidential memorandum from the Ministry of Law and Justice, Department of Legal Affairs, on 17.9.2009, to the Appointments Committee of the Cabinet, indicated that the selection process had been completed, with the proposal of appointing the five members chosen by the Select....
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....the Indian Administrative Service/Indian Police Service (Appointment by promotion) Regulations, 1955 which prescribed that "selection for inclusion in such list shall be based on merit and suitability in all respects with due regard to seniority" Mathew. J. in Union of India v. Mohan Lal Capoor & Ors., 1974 (1) SCR 797, has said :- ".... for inclusion in the list, merit and suitability in all respects should be the governing consideration and that seniority should play a secondary role. It is only when merit and suitability are roughly equal that seniority will be a determining factor, or if it is not fairly possible to make an assessment inter se of the merit and suitability of two eligible candidates and come to a firm conclusion, seniority would tilt the scale." Similarly, Beg J. (as the learned Chief Justice then was) has said :- "Thus, we think that the correct view, in conformity with the plain meaning of words used in the relevant rules, is that the "entrance" or "inclusion" test for a place on the select list, is competitive and comparative applied to all eligible candidates and not minimal like pass marks at an examination. The Selec....
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....heir capacity as members of the ITAT placed before the Selection Committee. The only material before the Selection Committee was the Annual Confidential Reports ("ACRs") of the candidates. It is on this basis that the selection of five candidates was made, as the minutes of the Selection Committee records, on the basis of "available character rolls, knowledge and suitability." 34. Considering, first, the argument of the petitioners that the decision of the Selection Committee disregarded the inter se seniority of the candidates, by selecting 4 candidates who were below the petitioners in the seniority list admitted by both parties. The argument here is that amongst those graded 'fit', by the relevant benchmark, in their ACRs, no supersession is permissible. For this, the petitioners' argue that since Rule 7C of the Service Rules is silent on the procedure, or more accurately, the criterion for selection, the rules in Department of Personnel and Training Office Memorandum F. No. 35034/7/97-Estt(D), dated 8th February, 2002 are to be considered applicable by virtue of Rule 13 of the Service Rules which states that "[t]he conditions of service of a member in respect of matters for wh....
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....e previous nomenclature, and prescribes a clear procedure for 'selection', as grading followed by seniority, it is important first and foremost to note the terms of Rule 7C, which is the primary rule applicable in this case. Rule 7C notes that the: "Selection Committee ... based on merit, shall recommend persons for appointment as ... Vice- Presidents." (emphasis supplied)." 38. Thus, Rule 7C itself gives specific guidance on the criterion on which the Selection Committee is to base its decision, leaving little scope for either the Selection Committee to devise its own criterion (as the order of the CAT indicates) or incorporate the Office Memorandum dated 8th February, 2002 (as the petitioner argues). While, concededly, the Selection Committee may decide - in its discretion - what constitutes 'merit' for the purposes of appointing an individual to the post of Vice-President, the fact that the criterion is merit, and merit alone, is prescribed within Rule 7C, which is mandatory and cannot be departed from. 39. It is true, as the Supreme Court noted in Indira Sawhney v. Union of India, (1992) 3 SCC 217, that "[p]romotion by selection, though....
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....pertaining really to the area of policy making. It was, therefore, permissible for the respondent to have their own criteria for adjudging claims on the principle of seniority-cum- merit giving primacy to merit as well, depending upon the class, category and nature of posts in the hierarchy of administration and the requirements of efficiency for such posts." 42. In this case, seniority is not completely excluded from the selection process. The zone of consideration prepared as the first step in the process was on the basis of seniority, as the minutes of the Selection Committee clearly recorded. However, there is no independent requirement - either statutory or constitutional - to consider seniority. Even independently, given the array of responsibilities assumed by the Vice-President of the ITAT, the importance of merit cannot be downplayed in any manner. Indeed, a similar question came up before the Supreme Court in RR Das v. Union of India, 1986 Supp (1) SCC 617, where the Court noted as follows: "Indeed the amended provision Regulation 5 minimised the role of seniority in the process of selection and importance and....
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.... which has the expertise on the subject. The Court has no such expertise. The decision of the Selection Committee can be interfered with only on limited grounds, such as illegality or patent material irregularity in the constitution of the Committee or its procedure vitiating the selection, or proved mala fides affecting the selection etc." 44. Similarly, and directly relevant to this case, the Supreme Court held in Major General IPS Dewan v. Union of India, (1995) 3 SCC 383, that: "18. Sri Ramaswamy then relied upon the decision in The Manager, Government Branch Press and Anr. v. D.B. Belliappa, (1979) ILLJ 156 SC in support of his submission that administrative orders affecting the rights of citizens should contain reasons therefore. We are afraid, the said principle cannot be extended to matters of selection. Unless the rules so require, the Selection Committee/Selection Board is not obliged to record reasons why they are not selecting a particular person and/or why they are selecting a particular person, as the case may be." 45. The Court, in view of the above decisions, has to be cautious in ensuring t....
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....from the record - constituted the only basis on which the decision was made. Thus, in this case, the ACR grading was important. The ACR remarks for the five years preceding the selection process indicate that Mr.Tolani had five 'Very Good' remarks, Mr.Yadav had one 'Very Good' and four 'Good' remarks. Amongst the candidates selected for the post, their grading was as follows: (1) five 'Good', (2) four 'Very Good' plus one 'Outstanding', (3) two 'Very Good' plus three 'Good', (4) five 'Very Good', and (5) One 'Average' plus one 'Good' plus three 'Very Good'. 48. Thus, on the basis of this grading - which was the only material that the Selection Committee had to assess merit - the conclusion that the two petitioners were not selected, whilst others, with a lower cumulative grading, were, appears to be anomalous. This is not to say that the two petitioners are more merited or qualified than those selected by the Selection Committee. That determination lies outside the domain of the Court. While the Selection Committee determines which candidate possesses greater merit, such a determination must be based on some objective fact which is capable of leading to that conclusion. Needless t....
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....idates, its determination ordinarily should be based on some independent material or input. Absent any external evidence of the merit of the candidates, it would seem unclear how the Selection Committee decided to select those with lower grading in their ACRs. Having decided not to consider any independent material, the reasonableness of the Selection Committee's conclusion contrary to the ACRs placed before has to be considered. The observations of the Supreme Court in State Bank of India v. Kashinath Kher, (1996) 8 SCC 762, are extremely pertinent here, as the Court considers exactly how such a selection process can be fair and comprehensive without restricting the prerogative of the DPC to consider the merit. In that case, the Court considered the process adopted by the DPC in selecting individuals for promotion from the Middle Management Grade Scale II to Scale III in the Bhopal Circle of the State Bank of India, and in setting aside the decision of the DPC held: "16. It would also appear from the record that the confidential reports submitted were adopted in toto by the Committee considering promotion without any cross ve....
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....g the two writ petitioners. The decisions in IPS Dewan (supra) and Samar Singh (supra), considered above, consider this proposition in detail. Being an administrative body, the Selection Committee is not obliged - as in a quasi-judicial setting - to provide reasons for its decision. Nevertheless, the decision-making process should be fair and reasonable, and ensure that promotions are made on the basis of the statutory criteria, and through a fair consideration of the relative merit of the candidates to the posts in question. Thus, if "inferences drawn (that) are such that no reasonable person can reach such conclusions." (Badrinath v Government of Tamil Nadu and Ors., (2000) 8 SCC 395), then the Court must exercise its jurisdiction under Article 226 to quash the decision-making process. 53. Leaving the precise factors and material to be considered in making such appointments to the Selection Committee, it is important to note that in this case no attempt was made to conduct an independent assessment of the candidates. Only one source of information, the ACRs, was before the Committee, and no additional material was sought or at any time brought on record. The Minutes of the meeti....
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....idates and to assess their continued efficiency with adequate knowledge of case-law. The remaining 25 per cent of the points in the service shall be filled by promotion strictly on the basis of merit through the limited departmental competitive examination for which the qualifying service as a Civil Judge (Senior Division) should be not less than five years. The High Courts will have to frame a rule in this regard." (emphasis supplied) 55. Thus, while "it would not be possible or practical to measure the respective merits for the purpose of seniority with mathematical precision by a barometer and some formula doing largest good to the largest number had to be evolved" (Joginder Nath v. Union of India, [1975] 2 SCR 533), Courts have - in analogous instances of promotion - identified various factors that speak of a candidate's merit, and lead to a comprehensive consideration of the comparative merit of the candidates. This line of thought applies equally to highposts such as that of ITAT, Vice President, where the screening of the candidates should be thorough and detailed. As noted above, this is not to dictate the precise factors relevant, or to indicate a preferred procedure for ....