UNION OF INDIA vs. NADEEM ASHRAF MOHAMMED USMAN MERCHANT

C/SCA/1442/2009 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 1442 of 2009

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE MOHINDER PAL =========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ UNION OF INDIA & 3....Petitioner(s) Versus NADEEM ASHRAF MOHAMMED USMAN MERCHANT....Respondent(s) ================================================================ Appearance: MRS MAUNA M BHATT, ADVOCATE for the Petitioner(s) No. 1 - 4 RULE SERVED for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE MOHINDER PAL

Date : 31/07/2014 ORAL JUDGMENT Page 1 of 10

C/SCA/1442/2009 JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The Income Tax department has, in this petition, challenged the judgement of Central Administrative Tribunal, Ahmedabad ('the Tribunal' for short) dated 17.09.2008 in Original Application No. 351 of 2006. 2. Brief facts are as under: The respondent herein was, at the relevant time, working as an Inspector of Income Tax with the department. For promotion to the post of Income Tax Officer (ITO for short) from the cadre of Inspectors, rule of the department require passing of departmental test. Such departmental examinations were governed by the Departmental Examination Rules for Income Tax Inspectors, 1998 ('Rules of 1998' for short). Rule IV of the Rules 1998 permit the maximum of 10 chances to any candidate. Rule VI prescribed pass percentage which, till the year 2006, provided as under: RULE-VI: PASS PERCENTAGE (a) A candidate will be declared to have passed the examination if he/she secures 50% marks (45% in case of SC/ST Candidates) in each of the papers 1 to 3 and 55% (50% of SC/ST candidates) in the aggregate. If any SC/ST candidate does not intend to avail of the concession in passing marks, he can reappear in subjects of his choice to improve his performance provided he/she has not got promotion to the grade of I.T.O having qualified the Page 2 of 10

C/SCA/1442/2009 JUDGMENT examination on the basis of concessional passing marks. (b) A candidate who secures the minimum pass marks in one subject in a particular examination will be exempted from appearing in that paper in the subsequent examinations.” 3. It appears that the department conducted yearly examinations on the basis of such Rules of 1998. The fresh Rules were enacted in the year 2004. However, such rules were kept in abeyance pending notification of new recruitment rules for all cadres. It was clarified that as and when the recruitment rules are notified, new examinations rules will be framed. 4. In the year 2004-05, no examination was conducted. The examination for the year 2006 was conducted on the basis of the existing Rules of 1998. On 29.05.2008, the department conveyed to all the Chief Commissioners of Income Tax, the decision of the Central Board of Direct Recruitment to approve amendment of Rule VI in the Rules of 1998 w.e.f. 26.05.1998. Relevant portion of such communication reads as under: “2. I am directed to communicate that the Central Board of Direct Taxes (CBDT) has approved the amendment of Rule VI of the Departmental Examination Rules for ITOs, 1998 w.e.f. 26.05.08. As per this amendment a candidate will be declared to Page 3 of 10

C/SCA/1442/2009 JUDGMENT have completely passed the Departmental Examination for ITOs, if he secures a minimum of 50% (45% in the case of SC/ST candidate) in each of the following subjects: (i) Income Tax Law (2 papers) Combined aggregate of 50% (45% in the case of SC/ST candidate) in both papers. (ii) Other Taxes (iii) Book keeping (iv) Office Procedure (v) Examination of Accounts & Language Test Paper 3. Further, a candidate who has secured 50% (45% in the case of SC/ST candidates) or more marks in a particular subject or subjects in one examination, will be exempted from appearing in that subject or those subjects in the subsequent examinations. For the purpose of reckoning 50% marks (45% in the case of SC/ST candidate) in a particular subject, I.T. Law-I and I.T. Law-II will be treated as one subject. 4. This amendment would be effective for the Departmental Examination held in 2007 and the subsequent examinations. The amended provision would not be applicable for the Departmental Examination held in 2006 and the examination held prior to 2006.” 5. Petitioner approached Central Administrative Tribunal by filing Original Application No. 351 of 2006 and challenged the clarification of the department dated 07.09.2006, by virtue of which, he was held not eligible to appear for any further examination. He Page 4 of 10

C/SCA/1442/2009 JUDGMENT prayed that he be permitted to appear in the examination of the year 2006 and he if passes, be promoted. 6. It seems that pending such petition, the Department itself reconsidered the issue of limiting the chances of candidates who had already exhausted maximum 10 attempts. The petitioner and other similarly situated employees were allowed to sit in the examination of the year 2006. The petitioner appeared but failed in the examination. The matter before the Tribunal should, have ended here. The sole prayer was for allowing the petitioner to appear in the examination of 2006 even the interim relief was to this effect. 7. Though there were no further pleadings, no amendments, the Tribunal strangely expanded the scope of the petition and considered issues which were completely unrelated and not brought on record through any form of pleadings. Apparently, the Department amended the Rules of 1998 by decision of CBDT communicated under letter dated 29.05.2008 by the Department to all Chief Commissioners of Income Tax. Relevant portion of this communication reads as under: “2. I am directed to communicate that the Central Board of Direct Taxes (CBDT) has approved the amendment of Rule VI of the Departmental Page 5 of 10

C/SCA/1442/2009 JUDGMENT Examination Rules for ITOs, 1998 w.e.f. 28.5.08. As per this amendment, a candidate will be declared to have completely passed the Departmental Examination for ITOs, if he secures a minimum of 50% (45% in the case of SC/ST candidate) in each of the following subjects: (i) Income Tax Law (2 papers) Combined aggregate of 50% (45% in the case of SC/ST candidate) in both papers (ii) Other Taxes (iii) Book keeping (iv) Office Procedure (v) Examination of Accounts

& Language

Test paper 3. Further, a candidate who has secured 50% (45% in the case of SC/ST candidates) or more marks in a particular subject or subjects in one examination, will be exempted from appearing in that subject or those subjects in the subsequent examinations. For the purpose of reckoning 50% marks(45% in the case of SC/ST candidate) in a particular subject, I.T. Law-I and I.T. Law-II will be treated as one subject. This amendment would be affective for the Departmental Examination held in 2007 and the subsequent examinations. The amended provision would not be applicable for the Departmental Examination held in 2006 and the examinations held prior to 2008.” 8. It can thus be seen that for the examination held in the year 2007 and subsequent examinations, the amended Rule was applied, under which, any Page 6 of 10

C/SCA/1442/2009 JUDGMENT candidate who had secured 50% or more marks in a particular subject, would be exempted from appearing in that subject in subsequent examinations. This was in relaxation of previous requirement of 60% marks for exemption. 9. Before the Tribunal, the petitioner argued that such relaxation should have been applied to the examination of the year 2006 also and not doing so, resulted into discrimination. The Tribunal, in the impugned judgement, in a detailed discussion substantially upheld this contention of the petitioner and directed the Department to reconsider the issue. 10.In our opinion, the Tribunal committed serious error in giving such directions. First and foremost there were absolutely no pleadings to this effect. Without any averments on record without corresponding prayers in the petition, the Tribunal simply could not have expanded the scope of the petition and travelled much beyond the pleadings on record. We may recall, the petitioner's sole grievance in the original application filed before the Tribunal was that, he was denied additional chance to appear in the departmental examination of the year 2006. This was already relaxed in favour of the petitioner and other similarly situated candidates. There was, thereafter, no further scope for granting any relief to the Page 7 of 10

C/SCA/1442/2009 JUDGMENT petitioner, his sole relief having already been accepted by the Department. 11. Secondly, the Rules of 1998 were statutory rules framed in exercise of powers under Article 309 of the Constitution. Amendment to such Rules also therefore had statutory force. The petitioner did not even challenge the validity of the Rules. No declaration was prayed that rules in its effect were discriminatory or ultra virus Article 14 of the Constitution. It is well settled that a statutory provision which is the act of parliament or a rule framed

subordinate

legislation

enjoys presumption of constitutionality. Unless shown to be unconstitutional by the person urging that a statutory provision is ultra virus, the Court would not presume against its validity. The Tribunal without declaring such Rules ultra virus directed the department to act contrary to such Rules. 12.Even otherwise there was sufficient reason why such modified rule was not applied to the examination prior to the year 2007. It is true that the amendment was made in May 2008. Such amendment, in the nature of relaxation, was applied to the examination conducted in the year 2007 and later examinations. In that sense, the amendment of the Rule was given retrospective effect. Such retrospective effect was limited to the examination of the year 2007. The Page 8 of 10

C/SCA/1442/2009 JUDGMENT legitimate question may also arise therefore why such retrospectivity was not extended beyond the year 2007. However, the reasons were also presented before the Tribunal. For example, in the communication dated 07.09.2006 by the Government of India to the Chief Commissioners of Income Tax, it was stated as under: “4. The present examination being held in October 2006 will be the last examination under the old syllabus and erstwhile eligibility criteria for all employees including those who may appear for the first time and fail to clear the examination completely. All employees will have to switch over to the new syllabus and new examination rules and will have to clear their Departmental Examination afresh for promotion or confirmation, without any carry forward for any paper(s) cleared under old rules, thereafter.” 13. Thus, the examination of the year 2007 was conducted under new syllabus. Fresh eligibility criteria therefore had to be prescribed. The old criteria were applied till the year 2006. If a candidate appeared in the examination of 2006 but failed as per the prevailing criteria, cannot make a grievance that his case was not considered on the basis of relaxed standard which was applied to later examinations since such later examinations were conducted under new syllabus. There was, thus, a clear rational on behalf of the Department applying such amended Rules to the examination of the year Page 9 of 10

C/SCA/1442/2009 JUDGMENT 2007 and onwards but not to the examination of the year 2006. 14. In the result, petition is allowed. Impugned judgement of the Tribunal dated 17.09.2008 is quashed. Rule is made absolute. (AKIL KURESHI, J.) (MOHINDER PAL, J.) Jyoti Page 10 of 10