JUDGMENT <NAME>, C.J.

1. The assessee company was incorporated on the 29th of December, 1945, and it obtained a certificate of commencement of business on the 20th of April, 1946. The business of the assessee company was that of running an oil mill.

2. The assessee company was assessed to tax on its business profits for the assessment year 1947-48 and it claimed various expenses as allowable deductions aggregating to Rs. 27,884-11-9. The view taken by the Income-tax Officer was that the assessee company had only commenced business when it purchased the groundnut mill on the 1st of November, 1946, and therefore he disallowed all the expenses which were incurred prior to the 1st of November, 1946. The assessee company went in appeal to the Appellate Assistant Commissioner and substantially the view taken by the Appellate Assistant Commissioner was that the expenses incurred after getting the certificate of commencement of the business should be treated as expenses incurred for the purpose of carrying on the business in the year of account, and therefore barring the sum of Rs. 3,616 in respect of which the assessee had not appealed, the Appellate assistant Commissioner allowed the balance of Rs. 24,269. The department appealed to the <ORG> and the <ORG> took the view that the first purchase of raw material for the purposes of being crushed in the mill which was to be erected was made at the end of September, 1946. They also took the view that some time must have been taken in making arrangements for the purchases and therefore the material date they fixed was the 1st of September, 1946, and they disallowed the expenses previous to the 1st of September, 1946, and allowed expenses subsequent to that date. Therefore it is to be noticed that the three Income-tax authorities had fixed three different dates as the relevant dates. The Income-tax Officer fixed the date as the 1st of November, 1946, on the basis of the purchase of the ground-nut oil mill, the Appellate Assistant Commissioner fixed the 20th of April, 1946, as the date on which the certificate of commencement of business was granted to the company and the <ORG> fixed the 1st of September, 1946, as the date on the basis that some time should be allowed to the assessee company prior to the actual purchase of raw materials. The assessee company asked the <ORG> to make a reference to this Court. The <ORG> having declined, we directed the assessee company to make a reference and to refer to us the following question :

"Whether the mere fact that the first transaction of purchase of raw material took place in September, 1946, is by itself a justification for holding that expenses made from April, 1946, were not for purpose of business of the company ?"

3. Now, having perused the statement of the case, we are inclined to agree with the <ORG> that the appropriate question which should have been referred to us was :

"Whether there was evidence before the <ORG> to hold that the assessee company commenced its business as from 1st of September, 1946 ?"

4. The question that we asked the <ORG> to refer carried in it an implication that the only fact that the <ORG> took into consideration was that the first transaction of purchase of raw materials took place at the end of September, 1946. That underlying assumption seems to be incorrect because in the statement of the case of <ORG> points out that there were many other facts taken into account in fixing the date of the commencement of the business like certificate of commencement of business, the date of the purchase of the mills, the details of the expenses given in the order of the Appellate Assistant Commissioner and so on.

5. Mr. <NAME> has placed strong reliance on the judgment of the Appellate Assistant Commissioner and also on the various items of expenses which have been allowed by the Appellate Assistant Commissioner, and the whole gravamen of Mr. <NAME>'s charge against the <ORG> is that the <ORG> has overlooked the nature of these expenses and has not applied its mind to them, and Mr. <NAME> says that the order of the <ORG> makes it clear that they did not take into consideration these expenses. Now, when we took at the order of the <ORG>, in para. 1 the <ORG> says this :

"Business can only be said to have commenced when some activity in relation to carrying on the business is done. It may be the purchase of raw material, placing an order for raw material, sales and so on."

6. Therefore they are giving illustrations of what a business activity may be. When we asked them to submit a statement of the case they have amplified and elaborated this statement which appeared in para. 1 of the statement and have elaborated the statement. They have told us that they have taken into consideration the details of the expenses given in the order of the Appellate Assistant Commissioner. Now, we are not prepared to reject the statement of a responsible body like <ORG> when it informs us that in arriving at its decision the details of the expenses were taken into consideration. Therefore the question that we have ultimately to answer and which is the real question that arises on the order of the <ORG> is : "whether there was evidence before the <ORG> for holding that the assessee company commenced its business as from the 1st of September, 1946 ?"

7. Now, it is rather unfortunate that in the order of the <ORG> and also in the question which they themselves have suggested really arises they should have used the expression "commenced" although in fairness to the <ORG> it may be pointed out that the very interesting question which has been debated at the <ORG> was never urged, argued or even suggested before the <ORG>, and the question that has been raised before us is that there is a distinction and a clear distinction between a person commencing a business and a person setting up a business, and that for the purposes of the Indian law what we have to consider is the setting up of a business and not the commencement of a business.

8. Now, turning to our statute, the deductions claimed are under Section 10(2) and they are in relation to a business and in order that those deductions can be allowed, the business must be carried on by the assessee. In this case it is not disputed that the business was carried on in the relevant previous year which is the financial year 1946-47, but the important question that has got to be considered is from which date are the expenses of this business to be considered permissible deductions and for that purpose the section that we have got to look to is Section 2(11) and that section defines the "previous year" and for the purpose of a business the previous year begins from the date of the setting up of the business. Therefore it is only after the business is set up that the previous year of that business commences and in that previous year the expenses incurred in the business can be claimed as permissible deductions. Any expenses incurred prior to the setting up of a business would obviously not be permissible deductions because those expenses would be incurred at a point of time when the previous year of the business would not have commenced. We must therefore look at the decision of the <ORG> as really referring to the setting up of the business in the language of Section 2(11) and not expenses connected with the commencement of the business. Mr. <NAME> says that if that be the correct approach, then the <ORG> has misdirected itself in considering the commencement of the business and not the setting up of the business. Let us try and understand whether there is any difference between the two expressions "setting up" and "commenced" and if so, what is the difference. It has often been said that the English language does not contain synonyms and every English expression must mean something different, however slight the difference, from any other expression. English language is full of nuances and if possible we must give a different meaning to the expression "setting up" from the expression "commenced", Mr. <NAME> very strongly relied on a judgment of Mr. Justice <NAME> reported in Birmingham and <ORG> v. <ORG>. In that case the assessee company was incorporated on the 20th of June, 1913, and between that date and the 6th of October, 1913, the directors arranged for the erection of works and the purchase of plant and machinery, and entered into agreements relating to the purchase of products to be used in the business and to the sale of finished products. On the 6th of October, 1913, the installation of plant and machinery being completed, the company commenced to receive raw materials for the purpose of manufacture into finished products. For the purpose of excess profits tax a question arose as to the computation of average amount of capital employed by the company during the accounting period and the company contended that it commenced business on the date of its incorporation, viz., on the 20th of June, 1913, and that the pre-war standard should be based on the profits shown by revised accounts for the period 20th June, 1913, to 30th June, 1914, and Mr. Justice <NAME> held, upholding the view of the Commissioners, that he business of the company had commenced on the 6th of October, 1913. Now, this is indeed a very strong case on facts in support of the Commissioner, because the view taken by Mr. Justice <NAME> is that everything that had been done by the company before the installation of the plant and machinery was completed was preparatory to the commencement of the business and it was only when the company actually started receiving raw materials for the purpose of manufacture into finished products, the plant and machinery being ready, that it could be said that the assessee company had commenced business, and this is what the learned Judge says at page 97 :

"Referring to their minutes having looked round, and having got their machinery and plant, and having also employed their foremen, and having got their works erected and generally got everything ready, then they began to take the raw materials and to turn out their products."

9. Therefore if this case were to be applied to the present assessee, then we would be driven to the conclusion that, if anything, the <ORG> has taken a view of the case very favourable to the assessee because on the facts of this case it would seem that the Income-tax Officer was right in holding that the net expenses prior to the 1st of November, 1946, should not be allowed as permissible deductions. That is why it is important to consider whether the expression used in the Indian statute for setting up a business is different from the expression Mr. Justice <NAME> was considering, viz., "commencing of the business." It seems to us, that the expression "setting up" means, as is defined in the Oxford English Dictionary, "to place on foot" or "to establish", and in contradistinction to "commence". The distinction is this that when a business is established and is ready to commence business then it can be said of that business that it is set up. But before it is ready to commence business it is not set up. But there may be an interregnum, there may be an interval between a business which is set up and a business which is commenced and all expenses incurred after the setting up of the business and before the commencement of the business, all expenses during the interregnum, would be permissible deductions under Section 10(2). Now, applying that test to the facts here, the company actually commenced business only on the 1st of November, 1946, when it purchased a ground-nut oil mill and was in a position to crush ground-nuts and produce oil. But prior to this there was a period when the business could be said to have been set up and the company was ready to commence business, and in the view of the <ORG> one of the main factors was the purchase of raw materials from which an inference could be drawn that the company had set up its business; but that is not the only factor that the <ORG> has taken into consideration. The <ORG> has, as pointed out in the statement of the case, scrutinised the various details of the expenses given in the order of the Appellate Assistant Commissioner and having scrutinised those expenses the <ORG> has come to the conclusion even on an interpretation more favourable to the assessee than the one we are giving to the expression "setting up" that these expenses do not show that the business was set up prior to the 1st of September, 1946. In our opinion, it would be difficult to say that the decision of the <ORG> is based upon a total absence of any evidence. As we have often said, we are not concerned with the sufficiency of evidence on a reference. It is only if there is no evidence which would justify the decision of the <ORG> that a question of law would arise which would invoke our advisory jurisdiction which after all is a very limited jurisdiction.

10. We will, therefore redraft the question submitted by the <ORG> as follows : "whether there was evidence before the <ORG> to hold that the assessee company set up its business as from 1st of September, 1946 ?" and we will answer that in the affirmative. No order as to costs. Notice of motion dismissed with costs.

11. Reference answered in the affirmative.


PETITIONER: <ORG>. Vs. RESPONDENT: THE COMMERCIAL TAX OFFICER, <ORG>. DATE OF JUDGMENT: 18/10/1960 BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA DAS, S.K. HIDAYATULLAH, M. GUPTA, K.C. DAS SHAH, J.C. CITATION: 1961 AIR 412 1961 SCR (2) 14 CITATOR INFO : R 1964 SC1372 (3,12,13) RF 1974 SC1362 (5) R 1978 SC 945 (13,15) R 1978 SC1496 (12) RF 1980 SC1227 (6) D 1981 SC1649 (13) E&R 1985 SC1293 (84) RF 1989 SC 516 (17,18) C 1989 SC1316 (13) F 1990 SC 27 (7) ACT: Sales Tax--Hydrogenated groundnut oil (Vanaspati), if groundnut oil--Madras General Sales Tax (Turnover and Assessment) Rules, 1939, rr. 4, 5 and 18. HEADNOTE: The appellant purchased groundnuts out of which it manu- factured groundnut oil ; it also refined the oil and hydrogenated it converting it into Vanaspati. It sold the oil in all the three states. Under the Madras General Sales Tax Act, 1939, and the Turnover and Assessment Rules, for determining the taxable turnover the appellant was entitled to deduct the purchase price of the groundnuts from the proceeds of the sale of all groundnut oil. <ORG> held that the appellant was entitled to the deduction in respect of the sales of unrefined and refined groundnut oil but not in respect of the sales of hydrogenated oil on the ground that Vanaspati was not " groundnut oil " but a product of groundnut oil. Held, that the appellant was entitled to the deduction in respect of the sales of hydrogenated groundnut oil also. The hydrogenated groundnut oil continued to be " groundnut oil " notwithstanding the processing which was merely for the purpose of rendering the oil more stable. To be groundnut oil two conditions had to be satisfied-it must be from groundnut and it must be " oil ". The hydrogenated oil was from groundnut and in its essential nature it remained an oil. It continued to be used for the same purposes as groundnut oil which had not undergone the process. A liquid state was not an essential characteristic of a vegetable oil ; the mere fact that hydrogenation made it semisolid did not alter its character as an oil. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 498 of 1958. Appeal from the judgment and order dated February 11, 1955, of <ORG> in T. R. C. No. 120 of 1953 arising out of the judgment and order dated December 29, 1952, of <ORG>, Madras, in Tribunal Appeal No. 857 of 1951.

<NAME>, <NAME> and <NAME>, for the appellants.

<NAME>, Advocate-General for the State of Andhra Pradesh., <NAME>, <NAME> and <NAME>, for the respondent.

1960. October 18. The Judgment of the Court was delivered by AYYANGAR J.-This appeal on a certificate under Art. 133 of the Constitution granted by <ORG> raises for consideration principally the question whether hardened or hydrogenated groundnut oil (commonly called Vanaspati) is " groundnut oil " within the meaning of Rule 18(2) of the Madras General Sales-Tax (Turnover and Assess- ment) Rules, 1939.

<ORG> appellant in this appeal-has a factory of considerable size at Kurnool in the State of Andhra Pradesh. The company purchases groundnuts and groundnut kernels within the State and manufactures groundnut oil and also refined oil as well as hydrogenated oil all of which it sells. The appeal is concerned with the assessment to salestax of this company for the year 1949-50. Section 3 of the Madras General Sales-Tax Act, 1939, enacts: " 3. (1) Subject to the provisions of this Act,-

(a) every dealer shall pay for each year a tax on his total turnover for such year; and

(b) the tax shall be calculated at the rate of three pies for every rupee in such turnover.

(2)............................................. (3)............................................. (4) For the purposes of this section and the other provisions of this Act, turnover shall be determined in accordance with such rules as may be prescribed: Provided that no such rules shall come into force unless they are approved by a resolution of <ORG>.

(5) The taxes under sub-sections (1) and (2) shall be assessed, levied and collected in such manner and in such installments, if any, as may be prescribed: Provided that-

(i) in respect of the same transaction of sale, the buyer or the seller, but not both, as determined by

(ii) where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him." Rules were made by virtue inter alia of these provisions entitled " The Madras General Sales-Tax Turnover and Assessment Rules, 1939 ". Of these, those relevant to the present context are Rules 4 & 5. Rule 4 reads: "4.(1) Save as provided in sub rule (2) the gross turnover of a dealer for the purposes of these rules shall be the amount for which goods are sold by the dealer. (2) In the case of the undermentioned goods the gross turnover of a dealer for the purposes of these rules shall be the amount for which the goods are bought by the dealer-

(a) groundnut-".

The result of the combined operation of s. 4(1)&(2) in the' case of those who purchased groundnut and having crushed them sold the oil obtained was, that they had to pay tax on both their purchases of groundnut and their sales of oil produced therefrom. This was considered by the rule making authority to be an unfair burden and relief was accordingly provided by Rules 5 and 18 of the same rules, the material portions of which ran:

" 5. (1) The tax or taxes under section 3...... shall be levied on the net turnover of a dealer. In determining the net turnover the amounts specified in clauses (a) to (1) shall, subject to the conditions specified therein, be deducted from the gross turnover of a dealer. Clause (k) of this rule reads:

(k) in the case of a registered manufacturer of groundnut oil and cake, the amount which he is entitled to deduct from his gross turnover under rule 18 subject to the conditions specified in that rule."

(This rule was amended by a notification dated November 9, 1951, by the addition of the words " groundnut oil ", but this modification of the rule is not relevant to the present case which is concerned with the assessment of a period anterior to the modification). Rule 18 referred to here reads, to quote only the material words:

" 18. (1) Any dealer who manufactures groundnut oil and cake from groundnut and/or kernel purchased by him may, on application to the assessing authority having jurisdiction over the area in which he carries on his business, be registered as a manufacturer of groundnut oil and cake. (2) Every such registered manufacturer of groundnut oil will be entitled to a deduction under clause (k) of sub-rule (1) of rule 5 equal to the value of the groundnut and/or kernel, purchased by him and converted into oil and cake if he has paid the tax to the <ORG> on such purchases: Provided that the amount for which the oil is sold is included in his net turnover:

Provided further that the amount of the turnover in respect of which deduction is allowed shall not exceed-the amount of the turnover attributable to the groundnut and/or kernel used in the manufacture of oil and included in the net turnover.

Explanation.-For the purpose of this sub-rule(a) 143 lb. of groundnut shall be taken to be equivalent to 100 lb. of kernel;

(b) 143 lb. of groundnut or 100 lb. of kernel when converted into oil will normally be taken to yield 40 lb. of oil; and

(c) one candy of oil shall be taken to be equivalent to 500 lb. of oil."

Then follow other provisions not relevant for the purposes of the present appeal.

The appellant was registered as a manufacturer of groundnut oil under r. 18(1). That the appellant purchased the groundnuts, the value of which was claimed as a deduction in the turnover within the <ORG> and paid tax on such purchase to the <ORG> was not in dispute. Nor was there any controversy that the sale price of the oil expressed out of and sold either as raw groundnut oil, refined oil or hydrogenated oil was, included in the turnover of the appellant.

The Deputy Commercial Tax Officer, <NAME>, who completed the assessment of the appellant accepted the figures of purchases and sales submitted by it, and dealing with the claim for the deduct-ion of the purchase price of. the groundnuts from the proceeds of the sale of all oil by the company-raw, refined and hydrogenated-granted a deduction in respect of the purchase price of the groundnuts attributable to the unrefined oil sold by the appellant, but held that the appellant was not entitled to the deduction claimed in respect of the refined and hydrogenated oil for the reason that it was only unrefined or unprocessed groundnut oil that was connoted by the expression groundnut oil' in rule 5(1)(k) read with rule 18(1) and (2) of the Turnover and Assessment Rules. This order of the Deputy Commercial Tax Officer was affirmed by the Commercial Tax Officer on appeal and the appellant filed a further appeal to <ORG>. The second appellate authority upfield the contention of the appellant in regard to the sale of refined oil but rejected it in so far as it related to the sales of hydrogenated oil. The matter was thereafter brought up before <ORG> by a Tax Revision Case filed under s. 13(b)(1) of the Act and the learned Judges upheld the view of the <ORG> and disallowed the claim of the appellant to the deduction claimed in regard to the sales turnover of hydrogenated oil. They granted the certificate under Art. 133 which has enabled the appellant to file an appeal to this Court. The claim of the appellant to the deduction under r. 18(2) on the sales of refined groundnut oil is no longer in dispute. The ground upon which both the <ORG> as well as <ORG> decided against the allowance of the deduction in respect of the sales of hydrogenated oil, while upholding the appellants' case as regards refined oil may be briefly stated thus: The exemption or deduction from the sale-turnover under r. 18(2), is on its terms applicable only to the sale of the oil in the form in which it is when extracted out of the kernel. When raw groundnut oil is converted into refined oil, there is no doubt processing, but this consists merely in removing from raw groundnut oil that constituent part of the raw oil which is not really oil. The elements removed in the refining process consist of free fatty acids, phosphotides and unsaponifiable matter. After the removal of this nonoleic matter therefore, the oil continues to be ground. nut oil and nothing more. The matter removed from the raw groundnut oil not being oil cannot be used, after separation, as oil or for any purpose for which oil could be used. In other words, the processing consists in the non- oily content of the raw oil being separated and removed, rendering the oily content of the oil 100 per cent. For this reason refined oil continues to be groundnut oil within the meaning of rules 5(1)(k) and 18(2) notwithstanding that such oil does not possess the characteristic colour, or taste, odour, etc. of the raw groundnut oil. But in the case of hydrogenated oil which is prepared from refined oil by the process of passing hydrogen into heated oil in the presence of a catalyst (usually finely powdered nickel), two atoms of hydrogen are absorbed. A portion of the oleic acid which formed a good part of the content of the groundnut oil in its raw state is converted, by the absorption of the hydrogen atoms, into stearic acid and it is this which gives the characteristic appearance as well as the semi-solid-condition which it attains. In the language of the <ORG>, an inter-molecular or configurational chemical change takes place which results in the hardening of the oil. Though it continues to be the same edible fat that it was before the hardening, and its nutritional properties continue to be the same, it has acquired new properties in that the tendency to rancidity is greatly removed, is easier to keep and to transport. Both the <ORG> as well as the learned Judges of <ORG> held that the hydrogenated oil (or Vanaspati) ceased to be groundnut oil by reason of the chemical changes which took place which resulted in the acquisition of new properties including the loss of its fluidity. In other words, they held that Vanaspati or hydrogenated oil was not " groundnut oil " but a product of groundnut oil, manufactured out of groundnut oil and therefore not entitled to the benefit of the deduction under r. 18(2).

The arguments of Mr. <NAME> for the appellants were briefly two: (1) The reasons behind the rules 5(k) & 18(2) which were designed to afford relief against what would amount practically to double taxation of the same assessee both when he purchased and when he sold the goods, required that the appellants' claim should be allowed. (2) Hydrogenated groundnut oil was no less groundnut oil than either refined or even unrefined oil. The fact that the quality of the oil had been improved does not negative its continuing to be oil and the materials before the departmental authorities and the <ORG> established that it continued to be oil and was nothing more.

The argument based on the reason of the rule can. not carry the appellant far, since in the present case it is an exemption from tax which he invokes and of which he seeks the benefit. If the words of the rule are insufficient to cover the case, the reason behind the rule cannot be availed of to obtain the relief Nor could it be said to be a case of double taxation of the same goods at the purchase and sale points which is forbidden by s. 3(5) of the Act. If the view adopted by the learned Judges of <ORG> that hydrogenated groundnut oil is not " groundnut oil " but a product of groundnut oil were correct, learned Coun. <NAME> cannot urge that he would still be entitled to the deduction for which provision is made in r. 18(2).

Consequently it is the second of the submissions alone which really requires to be examined. In doing so it would be convenient to consider the reasoning on the basis of which the view' that hydrogenated oil was not " groundnut oil " was sought to be sustained before us.

The learned Advocate-General of Andhra Pradesh who appeared for the respondent-Commercial Tax Officer sought to support the decision of <ORG> by two lines of reasoning. The first was that the exemption applied only to the sale of the oil as it emerged from the presser and that any processing of the oil including refining, in order to remove even' the impurities and free fatty acids, took it out of the category of " groundnut oil " as used in the rule. In support of this submission he referred us to the Table of Conversion of groundnuts and kernel into oil set out in the Explanation to r. 18(2), extracted earlier, and submitted that the 40 lb. of oil for every 100 lb. of kernel was based on the yield of raw groundnut oil and that this was an indication that nothing other than raw groundnut oil was intended to be covered by the expression " groundnut oil " in the rule. We must however point out that this last submission has no factual basis to support it. It is not known whether the proportion of 40 lb. of oil for every 100 lb. of kernel represents the average weight of oil extractable from different varieties of groundnut kernels or is the average of the different types of oils which may be produced out of different varieties of kernels. In the absence of any definite data in this regard it is impossible to accept the argument that the Table of Conversion justifies any particular construction of what was meant by " groundnut oil " in the main part of the rule.

Nor is the learned Advocate-General well-founded in his submission that the processing of the oil in order to render it more acceptable to the customer by improving its quality would render the oil a commodity other than " groundnut oil " within the meaning of the rule, For instance, if the oil as extracted were kept still in a vessel for a period of time, the sediment normally present in the oil would settle at the bottom leaving a clear liquid to be drawn out. The learned Advocate-General cannot go so far as to say, that if this physical process was gone through, the oil that was decanted from the sediment which it contained when it issues out of the expresser, ceased to be di groundnut oil " for the purposes of the rule. If the removal of impurities by a process of sedimentation does not render groundnut oil any the less so, it follows that even the process of refining, by the application of chemical methods for removing impuri ties in the oil, would not detract from the resulting oil being " groundnut oil " for the purpose of the rule. It may be mentioned that processes have been discovered by which even on extraction from the oil mill, the oil issues without any trace of free fatty acids. It could hardly be contended that if such processes were adopted what comes out of the expresser is not groundnut oil. The submission of the learned Advocate-General based on a contention that the <ORG> and the learned Judges of <ORG> erred in holding that even refined groundnut oil was " groundnut oil " for the purpose of the rule, must be rejected. The next question is whether if beyond the process of refinement of the oil, the oil is hardened, again by the use of chemical processes it is rendered any the less groundnut oil ". In regard to this, the learned Advocate-General first laid stress on the fact that while normally oil was a viscous liquid, the hydrogenated oil was semi-solid and that this change in its physical state was itself indicative of a substantial modification of the identity of the substance. We are unable to accept this argument. No doubt, several oils are normally viscous fluids, but they do harden and assume semi-solid condition on the lowering of the temperature. Though groundnut oil is, at normal temperature, a viscous liquid, it assumes a semi-solid condition if kept for a long enough time in a refrigerator. It is therefore not correct to say that a liquid state is an essential characteristic of a vegetable oil and that if the oil is not liquid, it ceases to be oil. Mowrah oil and Dhup oil are instances where vegetable oils assume a semi-solid state even at normal temperatures. Neither these, nor cocoanut oil which hardens naturally on even a slight fall in temperature, could be denied the name of oils because of their not being liquid. Other fats like ghee are instances where the physical state does not determine the identity of the commodity.

The next submission of the learned Advocate General was that in the course of hydrogenation the oil absorbed two atoms of hydrogen and that there was an inter- molecular change in the content of the substance. This however is not decisive of the matter. The question that has still to be answered is whether hydrogenated oil continues even after the change to be " groundnut oil ". If it is, it would be entitled to the benefit of the deduction from the turnover, or to put it slightly differently, the benefit of, the deduction from the turnover cannot be denied, unless the hydrogenated groundnut oil has ceased to be " groundnut oil ". To be groundnut oil, two conditions have to be satisfied. The oil in question must be from groundnut and secondly the commodity must be " oil ". That the hydrogenated oil sold by the appellants was out of groundnut not being in dispute, the only point is whether it continues to be oil even after hydrogenation. Oil is a chemical compound of glycerine with fatty acids or rather a glyceride of a mixture of fatty acids-principally oleic, linoleic, stearic and palmitic, the proportion of the particular fat varying in the case of the oil from different oil-seeds and it remains a glyceride of fatty acids even after the hardening process, though the relative proportion of the different types of fatty acids undergoes a slight change. In its essential nature therefore no change has occurred and it remains an oil-a glyceride of fatty acids- that it was when it issued out of the press.

In our opinion, the learned Judges of <ORG> laid an undue emphasis on the addition by way of the absorption of the hydrogen atoms in the process of hardening and on the consequent inter-molecular changes in the oil. The addition of the hydrogen atoms was effected in order to saturate a portion of the oleic and linoleic constituents of the oil and render the oil more stable thus improving its quality and utility. But neither mere absorption of other matter, nor inter-molecular changes necessarily affect the identity of a substance as ordinarily understood. Thus for instance there are absorptions of matter and inter-molecular changes which deteriorate the quality or utility of the oil and it might be interesting to see if such additions and alterations could be taken to render it any the less " oil ". Groundnut oil when it issues out of the expresser normally contains a large proportion of unsaturated fatty acids-oleic and linoleic-which with other fatty acids which are saturated are in combination with glycerine to form the glyceride which is oil. The unsaturated fatty acids are unstable, i. e., they are subject to oxidative changes. When raw oil is exposed to air particularly if humid and warm, i.e., in a climate such as obtains in Madras, oxygen from the atmosphere is gradually absorbed by the unsaturated acid to form an unstable peroxide (in other words the change involves the addition of two atoms of oxygen) which in its turn decomposes breaking up into aldehydes. It is this oxidative change and particularly the conversion into aldehydes that is believed to be responsible for the sharp unpleasant odour, and the characteristic taste of rancid oil. If nothing were done to retard the process the rancidity may increase to such extent as to render it unfit for human consumption. The change here is both additive and inter- molecular, but yet it could hardly be said that rancid groundnut oil is not groundnut oil. It would undoubtedly be very bad groundnut oil but still it would be groundnut oil and if so it does not seem to accord with logic that when the quality of the oil is improved in that its resistance to the natural processes of deterioration through oxidation is increased, it should be held not to be oil.

Both the <ORG> as well as <ORG> have pointed out that except for its keeping quality without rancidity and ease of packing and transport without leakage, hydrogenated oil serves the same purpose as a cooking medium and has identical food value as refined groundnut oil. There is no use to which the groundnut oil can be put for which the hydrogenated oil could not be used, nor is there any use to which the hydrogenated oil could be put for which the raw oil could not be used. Similarly we consider that hydrogenated oil still continues to be " groundnut oil " notwithstanding the processing which is merely for the purpose of rendering the oil more stable thus improving its keeping qualities for those who desire to consume groundnut oil. In our opinion the assessee-company was entitled to the,, benefit of the deduction of the purchase price of the kernel-or groundnut, under r. 18(2), which went into the manufacture of the hydrogenated groundnut oil from the sale turnover of such oil.

One other point which is involved in the appeal relates to the claim of the appellant to a deduction in respect of the freight-charges included in the price of the commodity. Under r. 5(1)(g) of the Turnover and Assessment Rules, in determining the net turnover of a dealer he is entitled to have deducted from his gross turnover " all amounts falling under the following two heads, when specified and charged for by the dealer separately, without excluding them in the price of the goods sold :

(i) freight;

(ii)....................

The appellant claimed exemption on a sum of Rs. 3,88,377-13- 3 on the ground that it represented the freight in respect of the goods sold by the appellant asserting that they had been charged for separately. The assessing-officer rejected the claim and this rejection was upheld by the departmental authorities and by <ORG>. It would be seen that in order to claim the benefit of this exemption the freight should (1) have been specified and charged for by the dealer separately, and (ii) the same should not have been included in the price of the goods sold. The learned Judges of <ORG> held that neither of these conditions was satisfied by the bills produced by the appellant. We consider, the decision of <ORG> on this point was correct. In the specimen bill which the learned Counsel for the appellants has placed before us, after setting out the quantity sold by weight (23,760 lb.) the price is specified as 15 annas 9 pies per lb. and the total amount of the price is determined at Rs. 23 388-12-0. From this the railway freight of Rs. 1,439-12-0 is deducted and the balance is shown as the sum on which sales-tax has been computed.

From the contents of this invoice it would be seen that the appellant has charged a price inclusive of the railway freight and would therefore be outside the terms of r. 5(1)(g) which requires that in order to enable a dealer to claim the deduction it should be charged for separately and not included in the price of goods sold. The conditions of the rule not having been complied with, the appellant was not entitled to the deduction in respect of freight. The result therefore is that the appeal is allowed in part and the order of <ORG> in so far as it denied to the appellant the benefit of the deduction in the turnover provided by r. 18(2) of the Turnover and Assessment Rules is set aside.

In view of the appellant having succeeded only in part, there will be no order as to costs in this appeal. Appeal allowed in part.


CASE NO.: Appeal (civil) 501-502 of 2001 PETITIONER: <NAME> RESPONDENT: <NAME> (D) by <ORG>. DATE OF JUDGMENT: 31/10/2002 BENCH: S.N. VARIAVA & <NAME>. JUDGMENT:

J U D G M E N T ARUN KUMAR, J.

These appeals are directed against a common judgment dated 24.12.1999 of <ORG> disposing of two Revision Petitions. Briefly the facts giving rise to the present appeals are that the appellant was a tenant in the suit premises since before its purchase by the respondent- landlords. In May 1990, by mutual consent of the parties rent of the suit premises was enhanced to Rs.500/- per month. Admittedly, rent up to October, 1990 was received by the landlords, thereafter as per the case of the respondents, tenant defaulted in payment of rent. The appellant filed suit for injunction in <ORG> praying that the landlords be restrained from threatening to dispossess the appellant from suit premises. In the said suit, an interim injunction was granted in favour of the appellant. On 1st November, 1993, the landlords issued a default notice alleging that the tenant had committed default in payment of rent and was, therefore, liable to eviction. The tenant replied to the said notice on 20th November, 1993 denying any default on his part in payment of rent. Ultimately, on 7th February, 1994, an eviction petition was filed before <ORG> by the landlords on two grounds viz., (i) default in payment of rent and (ii) personal need of the landlords for occupying the premises.

On 15th March, 1994, the tenant made an application under Section 8 (5) of The Tamil Nadu Building (Lease & Rent Control Act), 1960 (hereinafter referred to as the "Act"), for permission to deposit the amount of rent in <ORG>. The Rent Controller allowed the said application vide order dated 25th April, 1995. The Eviction Petition filed by the landlords was dismissed on the same date. The Rent Controller held that it could not be said that tenant had committed default in payment of rent. The Rent Controller further observed that even assuming there was default on the part of the tenant, it could not be said to be willful default, therefore, the eviction petition was dismissed. No finding was given on the second ground for eviction regarding personal need of the landlords for occupying the premises. The landlords filed appeals before <ORG> against both the orders of the Rent Controller. Both the appeals were allowed by <ORG>. <ORG> held that the tenant had committed default in payment of rent. It relied on admission on the part of the tenant himself as available in the evidence of the tenant that at least from May, 1993, no rent had been paid. The tenant is said to have deposited the rent in <ORG> during the pendency of the proceedings. However, the question for consideration before <ORG> was whether the tenant had committed default in payment of rent? <ORG> held that the tenant had committed default, and therefore, the eviction petition was allowed. It was observed by <ORG> that even after the petition had been filed by the landlords, the tenant did not think of offering the rent to the landlords. Further the tenant did not issue notice as required under Section 8(2) of the Act calling upon the landlords to notify the <ORG> where the tenant could make the deposit of rent. On the basis of the evidence on record, <ORG> held that the tenant had committed default in payment of rent, and therefore, the eviction petition was allowed. No finding was however recorded on the second ground of eviction. Based on the failure of the tenant to follow procedure and deposit rent of suit property under Section 8(2) of the Act it was held that the tenant having failed to comply with the procedure prescribed in that behalf under the Act the decree for eviction had to follow. The tenant filed Civil Revision Petitions against both the orders of <ORG> in the High <ORG>. Both the revision petitions were dismissed by the High <ORG> vide the impugned judgment dated 24.12.1999. Hence the present appeals by the tenant.

The sole question for consideration in these appeals is whether the provisions of Section 8 of The Tamil Nadu Building (Lease & Rent Control Act), 1960 are to be strictly complied with by the tenant before he can seek benefit under the said provisions regarding deposit of rent in the Court. In this connection, relevant provisions of Section 8 of the Act need to be quoted :

"Section 8 : [Landlord liable to give receipt for rent or advance] :

Sub-section (1).

(2) Where a landlord refuses to accept, or evades the receipt of, any rent lawfully payable to him by a tenant in respect of any building, the tenant may, by notice in writing, require the landlord to specify within ten days from the date of receipt of the notice by him, a bank into which the rent may be deposited by the tenant, to the credit of the landlord.

Provided that such bank shall be one situated in the city, town or village in which the building is situated of if there is no such bank in such city, town or village, within ( five kilometers) of the limits thereof.

Explanation It shall be open to the landlord to specify from time to time by a written notice to the tenant and subject to the proviso aforesaid, a bank different from the one already specified by him under this sub-section.

(3) If the landlord specifies a bank as aforesaid, the tenant shall deposit the rent in the bank and shall continue to deposit in it any rent which may subsequently become due in respect of the building.

(4) If the landlord does not specify a bank as aforesaid, the tenant shall remit the rent to the landlord by Money Order, after deducting the money order commission.

(5) If the landlord refuses to receive the rent remitted by Money Order under sub-section (4), the tenant may deposit the rent before the Controller and continue to deposit with him any rent which may subsequently become due in respect of the building."

It would be seen from the above provisions that while the landlord is required to issue a notice of default, on refusal by landlord to accept rent, the tenant is required to call upon the landlord by way of a notice to specify the name of a <ORG> in which rent could be deposited by the tenant to the credit of the landlord. If the landlord specify the name of the <ORG> to deposit the rent, there is an obligation on the part of the tenant to make the deposit of arrears of rent in the account of the landlord. However, if the landlord does not specify the name of a <ORG> inspite of being called upon by the tenant through a notice, the tenant is required to send the amount of arrears through a money order to the landlord after deducting the commission payable on the money order. If the landlord still refuses to accept the rent, the tenant is entitled to file an application before the Rent Controller seeking permission to deposit the arrears of rent under sub- section (5) of Section 8 of the Act.

Mr. <NAME>, the learned counsel for the appellant argued that since the appellant-tenant had deposited the arrears of rent in <ORG>, it should be taken as compliance of Section 8 of the Act. This would mean there is no default on the part of tenant in payment of rent and therefore, no eviction order could have been passed against the appellant on that ground. According to the learned counsel, the <ORG> should not take a technical view of the matter and should appreciate that it was on account of refusal of the landlords to accept the rent sent by way of money orders that the tenant was driven to move the <ORG> for permission to deposit the arrears of rent. Since there is a substantial compliance of Section 8 in as much as the arrears of rent stand deposited in <ORG>, a strict or technical view ought not to have been taken by the High <ORG>. We are unable to accept this contention advanced on behalf of the appellant by the learned counsel. The rent legislation is normally intended for the benefit of the tenants. At the same time, it is well-settled that the benefits conferred on the tenants through the relevant statutes can be enjoyed only on the basis of strict compliance of the statutory provisions. Equitable consideration have no place in such matters. The statute contains express provisions. It prescribes various steps which a tenant is required to take. In Section 8 of the Act, the procedure to be followed by the tenant is given step by step. An earlier step is a pre-condition for the next step. The tenant has to observe the procedure as prescribed in the statute. A strict compliance of the procedure is necessary. The tenant cannot straight away jump to the last step i.e. to deposit rent in court. The last step can come only after the earlier steps have been taken by the tenant. We are fortified in this view by the decisions of this <ORG> in <CITATION> reported in 1996 (1) SCC 243 and <CITATION> reported in 1996 (6) SCC 228.

The counsel for appellant did not dispute that the tenant had not fulfilled the conditions prescribed in Section 8 of the Act before making deposit of rent in <ORG>. Hence similar circumstances and while dealing with almost similar provisions contained in the Rajasthan Premises (Control of Rent & Eviction) Act 1950, this <ORG> in <CITATION> (supra) held:

"8. In the present case, the appellant is seeking to avail of the benefit of the legal fiction under Section 19-A (4) of the Act. It is settled law that a legal fiction is to be limited to the purpose for which it is created and should not be extended beyond that legitimate field. [See:

<ORG> v. State of Bihar (1955) 2 SCR 603 at p.646. The appellant can avail of the benefit of Section 19-A (4) if the deposit of Rs.3600 made by him in <ORG>), Udaipur, on 29.10.1982, by way of rent for the months of May 1982 to October 1982, can be treated as a payment under Section 19-A (3)

(c) so as to enable the appellant to say that he was not in default in payment of rent. Under Section 19-A (3) (c) the tenant can deposit the rent in the court only if the conditions laid down in the said provision are satisfied. It is the admitted case of the appellant that these conditions are not satisfied in the present case. The deposit which was made by the respondent in court on 29.10.1982 cannot, therefore, be regarded as a deposit made in accordance with clause (c) of sub-section (3) of Section 19-A and the appellant cannot avail of the protection of sub-section (4) of Section 19-A and he must be held to have committed default in payment of rent for the months of May 1982 to October 1982. This means that the decree for eviction has been rightly passed against the appellant on account of default in payment of rent for the period of six months."

Again in <CITATION> , (supra) with reference to similar provisions contained in the A.P. Buildings (Lease, Rent and Eviction) Control Act, 1960, this Court observed that when the landlord is evading payment of rent, the tenant has to follow the procedure prescribed under Section 8 of the Act i.e. to issue notice to the landlord to name the <ORG> and if he does not name the <ORG>, the tenant has to file application before the Rent Controller for permission to deposit rent. The tenant did not follow that procedure. Omission to avail of the prescribed procedure disentitles the tenant to plead that there was no willful default on his part. The landlord was, therefore, entitled to seek eviction on the ground of willful default in payment of rent on the part of the tenant.

Admittedly the tenant did not follow the procedure prescribed under Section 8 . The only submission that was advanced on behalf of the appellant was that since the deposit of rent had been made, a lenient view ought to be taken. We are unable to agree with this. The appellant failed to satisfy the conditions contained in Section 8 . Mere refusal of the landlord to receive rent cannot justify the action of the tenant in straightaway invoking Section 8 (5) of the Act without following the procedure contained in the earlier sub-sections i.e. sub-sections (2), (3) and (4) of Section 8 . Therefore, we are of the considered view that the eviction order passed against appellant with respect to the suit premises on the ground of default in payment of arrears of rent needs no interference. The impugned judgment of <ORG>, therefore, does not call for interference. These appeals are dismissed. We are informed that the landlords have already taken possession of the suit premises in pursuance of <ORG> judgment.


JUDGMENT <NAME>, J.

1. The property in suit was first mortgaged by its owner to <NAME> and his two brothers in the year 1886. In 1894 the land was again mortgaged to <NAME> for Rs. 2500. In the meantime it would appear that <NAME>'s two brothers must have died because in 1895 <NAME> brought a suit upon the mortgage of 1886 and obtained a decree. The mortgage amount claimed was Rs. 2000. <NAME> obtained permission to bid at the sale of the property, and also applied to the Court that that sale should be ma subject to his own second mortgage of 1894. It appears that this application was at first rejected, but the sale-certificate shows that the property was sold subject to <NAME>'s second mortgage of Rs. 2500, and was purchased by <NAME> himself for Rs. 1791. <NAME> is the grandfather of the present minor plaintiff. <NAME> appears to have had two sons, <NAME>, the father of the plaintiff, and <NAME>, whose widow is the defendant in this suit. <NAME> predeceased <NAME>. The defendant's husband survived <NAME> by a short time, both dying in the year 1904. Therefore, the family appears to have consisted before the death of <NAME>, of <NAME>, his son <NAME>, and his grandson, the plaintiff. On the death of <NAME> the family consisted of <NAME> and the plaintiff, and on the death of <NAME> the ordinary result would have been that all the joint family property would have come into the sole and exclusive ownership of the minor plaintiff. But in 1905 it appears that a partition was sanctioned by <ORG> between the minor plaintiff and his aunt, the defendant, the latter taking in the proportion of 6/16ths. Speaking for myself I must record my surprise that any arrangement of that sort should have been come to sanctioned by <ORG>, since on the facts, which have been stated on appeal, it appears to me perfectly clear that the minor was entitled to the whole of the joint family property, whatever it may have been, and the defendant merely to maintenance.

2. Reverting to what happened in 1895, when <ORG> redeemed the first mortgage of 1886, it would appear that as a result of that sale and his purchase, the property, which was the subject-matter of that mortgage and his own subsequent mortgage of 1894, became his exclusive property, or that of the joint family of which he was a member.

3. It has been contended on behalf of the plaintiff that having regard to the terms of the sale-certificate, we are bound to hold that <NAME> kept alive the charge represented by his second mortgage of Rs. 2500 upon this property in his own interest within the language and intention of Section 101 of the Transfer of Property Act.

4. Now, when the partition of 1905 was effected a very curious procedure was adopted, as apparently the officer entrusted with making lots put up all the documents, which had the appearance of being valuable securities, in sixteen packets, of which the defendant drew six and the plaintiff ten. Very unfortunately, I think, one of those lots contained the sale-certificate of 1895, and the other the mortgage-deed of 1894. The former was drawn by the defendant, who has ever since been in actual possession of the property. The latter was drawn by the minor plaintiff, who now seeks to enforce it against the defendant, as though the relations subsisting between them were the ordinary relations of mortgagor and mortgagee.

5. In our opinion, it is clear that after what has occurred in 1895. <NAME> could have had no right to sue himself in a double capacity as mortgagee under the mortgage of 1894, and mortgagor under the sale-certificate of 1895. We think that as he could have had no cause of action against himself, it is impossible that those who claim under him as heirs should have any cause of action against each other upon the same materials. For these reasons, we are of opinion, that the decision of the lower appellate Court is right and ought to be confirmed with all costs.


JUDGMENT <NAME>, J.

1. It appears that the assessee is a trust. The assessment year in this reference is 1960-61. There was a trust. It applied for refund under Section 48 of the Indian I.T. Act, 1922, for the assessment year 1960-61, the relevant accounting period ending on March 31, 1960. The income derived by the trust was from dividends. The asses-see had paid on March 9, 1960, a sum of Rs. 18,950 to another trust called <ORG>. While the <ORG> scrutinised the statement filed, he came across this item. According to him, this <ORG> was a private trust. He observed that the assessee could not prove that the donation was for any public charitable or religious purpose. He, therefore, taxed the sum of Rs. 10,850 at the maximum rate.

2. Before the <ORG>, on appeal, the assessee contended that the donation to the trust was made under the belief that it was a charitable trust and that if a donation was made in good faith, it could not be said that the money had been applied for non-charitable purposes. In the alternative, it was pointed out that in the case of <ORG> the <ORG> had held, in his order for the assessment year 1961-62, dated April 28, 1964, that the trust was a religious and charitable trust although he had dismissed the appeal of the said trust on the ground that the deed of endowment was not a valid document. The <ORG> in disposing of these contentions held that for getting the benefit of exemption, the onus was on the assessee to prove that the money contributed had been applied for religious am haritable purpose and that the assessee had failed to do so. Hence, the claim was considered to be not tenable.

3. Thereafter, the assessee went up on appeal to the <ORG>. It was submitted that the conclusion drawn by the <ORG> authorities was wrong and that the trust had been held to be a valid public charitable trust by the <ORG> in its order in ITA No. 4143 of 1964-65, dated April 18, 1967. It was, therefore, urged that the basis of the reasoning of the <ORG> and the <ORG> could no longer be taken as valid. The <ORG> submitted that the conclusion of the <ORG> authorities on the materials on record was correct.

4. The <ORG> held, after considering the order dated April 18, 1967 in ITA No. 4143 of 1964-65, that the assessee could not be charged with having paid the amount for a non-charitable purpose. It, therefore, accepted the assessee's claim.

5. It appears further that on December 30, 1959, a deed of trust had been executed in the case of <ORG> and the deed of trust was found to contain public charitable and religious objects. The <ORG> on February 8, 1961, held, when certain amounts were transferred to the accounts of the trust, that it could be said that the trustees held the amount for religious or charitable purpose and that the exemption under Section 4(5)(i) in respect of the income of the said trust would come into operation as on that date. It is the conclusion regarding the nature or character of the said trust which was followed in the order under reference. The <ORG>, on the present occasion, could not go into the question as to whether the terms of the Lakshmi Nath Seva Trust deed were in any manner void or uncertain as the trust deed was not before it in the present occasion.

6. In those circumstances, the following question has been referred to us :

"Whether, on the facts and in the circumstances of the case, the conclusion of the <ORG> that the assessee was entitled to exemption in respect of the sum of Rs. 10,850 paid to <ORG> is right in law ?"

7. It may be that the <ORG> held (as it did,) in the facts and circumstances of the case that the case of <ORG> was pending on a reference in <ORG>. We are shown a copy of judgment of the Hon'ble Mr. Justice <NAME> and the Hon'ble Mr. Justice <NAME> delivered on March 6, 1975, from which it appears that ITR No. is 125 of 1966 (<ORG>, West Bengal-I v. <ORG>), wherein the question was as follows :

"Whether, on the facts and in the circumstances of the case, the <ORG> erred in refusing to permit the <ORG> to raise a contention that the <ORG>ees had a discretion to apply the income of the <ORG> for both charitable and non-charitable objects and, hence, the assessee is not entitled to exemption of its income under Section 4(3) of the Indian Income-tax Act, 1922 ?"

8. The matter was, therefore, remitted to the <ORG> to decide the question whether <ORG> was a charitable trust or not.

9. Learned advocate for the <ORG> on instruction states that as far as his instruction went the <ORG> had held that the said <ORG> was a public charitable trust. He could not enlighten us any further whether the <ORG> had taken any steps or not thereafter. If that is the position, and, further, in view of the fact that it is not disputed that the factual contention of the assessee was that it had paid on good faith to the representative, it is also not disputed before us, that whether it was charitable trust or not and whether it received money from the assessee for charitable purpose or not is not relevant for us ; in the facts and circumstances of the case, we are of the opinion that the conclusion of the <ORG> that the assessee was entitled to exemption in respect of the sum of Rs. 10,850 paid to Shri <ORG> was right in law.

10. The question is, therefore, answered in the affirmative and in favour of the assessee;

11. In the facts and circumstances of the case, each party will pay and bear its own costs.

<NAME>, J.

12. I agree.


PETITIONER: V. B. BADAMI ETC. Vs. RESPONDENT: STATE OF MYSORE & ORS. DATE OF JUDGMENT17/09/1975 BENCH: <NAME>, A.N. (CJ) BENCH: <NAME>, A.N. (CJ) MATHEW, KUTTYIL KURIEN CHANDRACHUD, Y.V. CITATION: 1980 AIR 1561 1976 SCR (1) 815 1976 SCC (2) 901 CITATOR INFO : RF 1980 SC2056 (73) R 1984 SC1291 (29) R 1984 SC1595 (24,64) F 1987 SC2359 (3,6,23) F 1990 SC1256 (11,32) E 1990 SC1607 (26) F 1991 SC 235 (6) RF 1991 SC1244 (9) RF 1991 SC1406 (16) ACT: Mysore Administrative Service (Recruitment) Rules. 1957-Direct Recruits and promotes-Quotes fixed-A promotee temporarily appointed against direct recruitment against direct recruitment vacancy-Whether could claim a right of seniority in the post as against a direct recruit. HEADNOTE: The Mysore Administrative Service (Recruitment) Rules, 1957 classified class I posts into two categories: senior scale posts and the junior. scale posts. ,. Two- thirds of the junior class I post were filled by promotion from Class II '' Officers and the balance of one-third by direct recruitment by <ORG>. The Mysore Administrative Service (Cadre) Rules, 1958 fixed the cadre strength at 12 senior scale posts and 1 35 junior scale posts, all of which were permanent. By the Mysore Recruitment of Gazetted Probationers Rules, 1959 the quota for direct recruitment to <ORG> was increased from one-third to two-thirds for a period of five years consequence of which the quota for promotees had been reduced to one third. Rule 17(b) of the 1957-Recruitment Rules empowered the <ORG> to fill up posts-temporarily by promotion against vacancies for direct recruits but such promotees were liable to be reverted after the appointment of direct recruits. In exercise of this power, the eight appellants along with 51 other were promoted to officiate as junior Class I officers in the 59 vacancies (39 for promotees and 20 for direct recruits). In 1962, the <ORG> appointed direct recruits to 20 of the junior Class I posts but to avoid any hardship to the officiating promotees and to avoid audit objections, the <ORG> sanctioned 20 temporary posts to accommodate the probationer for the two year period of their training. At the end of two years, and on completion of probation, in 1964 the <ORG> terminated the probation of the direct recruits, as a result of which they became entitled, under Rule 9 of the <ORG> Service Probation Rules. 1957. to be confirmed as full members of the service. They were accordingly confirmed in the 20 substantive vacancies exist in within their quota. The <ORG>, however, did not renew the temporary vacancies after the direct recruits had been confirmed in the permanent vacancies. In January, 1972, a Gradation List was published in which the direct recruits (respondents) were shown as senior to the appellants. The numbers of the respondents in the list were 214 to 236 whereas those of the appellants were 273 to 280. The appellants challenged the seniority of the respondents in writ petitions on the ground mainly that the respondents were recruited only to the 20 temporary posts created and that the appellants and 51 others were appointed to 59 permanent vacancies. <ORG> dismissed the writ petitions. Dismissing the appeal to this Court, ^ HELD: The contention of the appellant that the respondents were recruited to temporary vacancies is wrong. Respondents (direct recruits ) were entitled to the vacancies within their quota which had not been filled up and they were senior to the appellants. [821D; 825F] (1) The principles generally followed in working out the quota rule are, (i) Where rules prescribe quota between direct recruits and promotees confirmation or substantive appointment can only be in respect of clear vacancies in the permanent strength of the cadre. (ii) confirmed persons are senior to those who are officiating; (iii) as between person appointed in officiating capacity. seniority is to be counted on the length of continuous service: (iv) direct recruitment is possible only by competitive examination which is the Prescribed procedure under the rules In promotional vacancies the Promotion is either 4-L1127SCI/75 816 by selection or on the principle of seniority-cum merit. A promotion could be made in respect of a temporary post or for a specified period, but direct recruitment has generally to be made only in respect of a clear permanent vacancy, either existing or anticipated to raise at or about the period of probation is expected lo be completed; (v) if promotions are made to vacancies in excess of the promotional quota, the promotions may, not be totally illegal but would be irregular. the promotees cannot claim any right to hold promotional posts unless the vacancies fall within their quota.. If the promotees occupy any vacancies which are within the quota of direct recruits, when the direct recruitment takes place, the direct recruits will occupy the vacancies within their quota. Promotees who are occupying the vacancies within the quota of direct recruits will either be reverted or they will be absorbed in the vacancies within their quota. in the facts and circumstance of the case and (vi) as long as the quota rule remains neither promotees can be allotted to any of' the substantive vacancies of the quota of direct recruits nor direct recruits can be allotted to promotional vacancies. and (vii) quotas which are fixed are unalterable according to exigencies of the situation. They can only be altered by fresh determination of quotas under the relevant rules. One group cannot claim the quota fixed for the other group either on the ground that the quotas are not filled up or that because there had been a number in excess of the quota the same should be absorbed depriving the other group of quota. [822H, 823A-C; 824 <CITATION> A.I.R. 1972 S.C. 2627; <CITATION>  2 S.C.R. 703; <CITATION> A.I.R. 1975 S.C. 483 and <CITATION> . [ 1972] 3 S.C.R. 898. referred to. (2) The cadre, in the present case, consisted only of permanent posts through out the period. After the rules came into force the promotees were in excess of' the quota but when in 1962 direct recruitment was made there were 20 direct recruitment vacancies in the quota which were not filled up. The promotees, however, being 2 in excess were not entitled to confirmation against the vacancies within the quota of the direct recruits. The promotees were promoted on officiating basis. On the completion of the period of training of the 20 direct recruits there was no renewal of the temporary posts and, therefore. the temporary posts which were created for the direct recruits during their period of probation could not be taken into account ill working out the quota rule and for adjustment of seniority. In fact, they were created due to certain exigencies and were outside the cadre. [821 D-G] (3) The promotees had not been deprived of their appointment and they had not been subjected to any reversion. The implementation of the quota. rule has resulted in the adjustment of seniority consistent with the quota. The confirmations had been issued having regard to the permanent strength of the cadre and the quota. [821H; 822A] (4) It is impossible to hold that the direct recruits were temporary employees outside the permanent cadre of the service. Rule 9 of the Mysore <ORG> Servant's Probation Rules excludes temporary posts from the cadre. It also provides for confirmation of a probationer as full member of the service in any substantive vacancy in the permanent cadre of such class.[822C-D] <NAME> v. Union of India A.T.R. 1972 S.C. 2627: <CITATION> . A.I.R. 1974 S.C. 1908 and <CITATION> A.I.R. 1975 S.C. 483, referred to. (5) There was no quota rule for the period between I November. 1956 and 1 December., 1957. During the period from 2 September, 1957 and 10 September, 1959 (the dates on which the 1957 and 1959 Rules came into force) many persons were promoted from Class II. Since two thirds of the vacancies during this period were promotional vacancies, persons promoted to those vacancies could not be disturbed. However, those promotees who were in excess of the two-third vacancies would be pushed down to the vacancies in the subsequent 817 period Again, during the same period direct recruits equal in number to those one-third vacancies should be placed next after the promotees placed in the first set of two- thirds vacancies. If the direct recruits were in excess of the quota they would be shifted to the subsequent period. [823G-H: 824A] (b) During the period II September, 1959, to 26 October, 1964, (direct recruitment vacancies became two- third and the promotional vacancies one-third, as a result of which the excess promotees during the previous period would be first absorbed in the promotional vacancies and subsequent promotees would hereafter be absorbed. The resulting position was that direct recruitment vacancies between 11 September 1959 and 26 October, 1964, the date of confirmation of the respondents (direct recruits) could not be occupied by the promotees. The fact that direct recruits were confirmed would not, therefore, rob them of their quota which remained unfilled from 2 December, 1957 onwards. The <ORG>, therefore, rightly confirmed the direct recruits and the appellate by adjustment of vacancies within their respective quotas and determined their seniority in accordance with Rule 2(b) of the Seniority Rules. [824 B.D.] JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1359 to 1365 of 1973.

From the Judgment and order dated the 15th day of December, 1972 of <ORG> in Writ Petitions Nos. 192,193. 478, 670, 940, 1303 and 1809 of 1972.

5. <NAME> and <NAME>, for the appellants in all the appeals.

<NAME> and <NAME>, for respondent No. 1 in all the appeals.

<NAME>, <NAME>, <NAME> and <NAME>, for Respondents Nos. 2, 3, 5, 6, 13 and 15 in C.A. 1359/73 The Judgment of the Court was delivered by <NAME>, C.J.: These appeals are by special leave against the judgment dated 15 December, 1972 of <ORG>. The appellants in the writ petition asked for quashing the Gradation List of Officers published by the <ORG> on 13 January, 1972. The consequential prayer is for assigning correct ranks to the appellants.

The principal question is the relative seniority between direct recruits and promotees to the cadre of Assistant Commissioners of Mysore Administrative Service Class I (Junior Scale). By a notification dated 13 January, 1972 the Government published <ORG> which was prepared as on 1 January, 1972. In <ORG> respondents No. 2 to 24 were placed at serial No. 214 to 236. The appellants are placed in <ORG> at serial No. 273 to 280. The appellants challenge the seniority of the respondents in <ORG>.

On 2 December, 1957 the Mysore Administrative Service (Recruitment) Rules 1957 (hereinafter referred to as the 1957 Recruitment Rules) framed under Article 309 of the Constitution came into force and the previous Rules were superseded. Under the 1957 Recruitment Rules Class I posts were divided into two categories. One was the senior scale post and the other was the junior post. The junior scale posts were to be filled up in the proportion of 66.2/3 per cent by pro- motion from Class II officers and 33.1/3 per cent by direct recruitment be competitive examination to be held by <ORG>.

By notification dated 23 January, 1958 issued under Article 309 of the Constitution the Governor constituted the Mysore Administrative Service (Cadre) Rules with effect from 1 November, 1956 (hereinafter referred to as the Cadre Rules). The cadre consisted only of permanent posts comprising 12 Senior Scale posts and 135 Junior Scale Posts. The Cadre did not include temporary posts.

It may be stated here that the initial cadre strength of Assistant Commissioners Class I Junior Scale posts was filled by persons allotted to the new State of Mysore on 1 November, 1956 when the new State of Mysore was formed. The allottees exceeding the strength of the cadre were gradually adjusted against substantive vacancies. Till 2 December, 1957 the Government did not frame special rules of recruitment applicable to <ORG>. Consequently all the vacancies arising until 2 December, 1957 were filled by promotion.

On 2 December, 1957 the 1957 Recruitments Rules came into existence for filling 66.2/3 per cent posts by promotion and 33.1/3 per cent posts by direct recruitment. In September, 1959 the Government issued the Mysore Recruitment of Gazetted Probationers Rules, 1959 (hereinafter referred to as the 1959 Probationers Rules) whereby the quota for direct recruitment to <ORG> was increased from one-third to two-thirds for a period of five years and the quota for promotion was reduced from two thirds to one-third.

Pending finalisation of the inter-State seniority lists of Officers allotted to the new State of Mysore on 1 November, 1956 to the cadre of Assistant Commissioners the Government could not by reason of pending proceedings in courts in respect thereof confirm officers working as Assistant Commissioners for a long time. In order to meet the exigencies of service._, officers in Class II service were promoted on officiating basis as Assistant Commissioners in Class I service (Junior Scale) from time to time Under Rule 17(b) of the 1957 Recruitment Rules the Government could fill up posts temporarily by promotion in vacancies reserved for direct recruits but such promotees became liable to be reverted after appointment of officers by direct recruitment. The Government permitted many officers from Class II including the appellants to officiate as Assistant Commissioners in Class I service subsequent to 1 November 1956. The earliest to be promoted on officiating basis among those promotees was <NAME> on 30 November, 1959 who is numbered 268 in the Gradation List as on 1 January, 1972.

In September, 1959 the Government initiated steps for the first time for appointment of officers by direct recruitment to fillup the vacancies within the quota prescribed for direct recruits. The advertisement referred to 20 vacancies for the posts of Assistant Commissioners Class I and two vacancies for Assistant Controllers in <ORG>. These vacancies for direct recruits had arisen (luring the period immediately prior to the issue of the notification. These vacancies arose between 2 December, 1957 when the 1957 Recruitment Rules came into existence and 11 September, 1959 when the 1959 Probationers Rules came into force. The notification made it clear that the appointment of probationers by direct recruitment was subject to the 1957 Recruitment Rules the Mysore Government Servants Probation Rules, 1957, and the 1959 Probationers Rules. <ORG> conducted the competitive examination and selected 17 among respondents No. 2 24 for appointment as Assistant Commissioners Class I (Junior Scale) on probation. It may be stated here that the other six respondents were allotted to the service as a result of judgment of this Court. There is no dispute that all the 23 persons being respondents No. 2 to 24 are treated as direct recruits.

Respondents No. 2 to 24 were appointed on probation by order dated 26 October 1962. They were required to undergo training and probation for a period of two years. During the said period their appointments were provisional and liable to termination on one month's notice, as was the case of recruitment of probationers. In order to cause minimum prejudice to the officiating promotees and in order to meet the audit objections by reason of lack of provision in the 1957 Recruitment Rules for training reserves the <ORG> sanctioned 20 temporary posts to accommodate the probationers for the period of their training.

On completion of the period of probation the <ORG> issued a declaration under Rule 5 of the Mysore <ORG> Servants Probation Rules 1957 that the respondents had satisfactorily completed the period of probation on 26 October, 1964. Consequent upon such declaration each of the respondents became entitled under Rule 9 of the <ORG> Servants Probation Rules, 1957 to be confirmed as a full member of the service in the class or category for which he was selected at the earliest opportunity to any substantive vacancy which may exist or arise in the permanent cadre of such class or category. Respondents became entitled to be full members of the service and to confirmation in the permanent cadre against vacancies existing within their quota since the promulgation of the 1957 Recruitment Rules.

The <ORG> action declaring respondents to have satisfactorily completed the probation under Rule S of the Probation Rules resulted in the confirmation of the respondents in substantive vacancies with effect from 26 October, 1964. The creation of temporary posts for the duration of the training of respondents No. 2 to 24 as probationers was not renewed in 1964. The actual confirmation was delayed because of the finalisation of inter-State seniority lists of the allottees.

The appellants contended first that the word "vacancies occurring in the 1957 Recruitment Rules means not only vacancies in the permanent posts but also in temporary posts, and, therefore, the quota rule applies to vacancies in all posts whether permanent or temporary. Or what construction it is said that upto 10 September, 1959 there were 59 vacancies and though the quota was for 39 promotions and 20 for direct recruitment there were in fact 59 promotions and no direct recruitment with the result that 59 promotees filled up all the vacancies permanent or temporary.

The second contention of the appellants was that the respondents were directly recruited as Assistant Commissioners on 26 October, 1962 against temporary vacancies created with effect from 26 October, 1962 are not entitled to claim seniority over the appellants who had been promoted earlier than them and whose promotion was within the quota of 59 vacancies.

The third contention was that the direct recruits were not entitled to count their seniority from a date anterior to the date of their recruitment by taking advantage of the fact that the vacancies required to be filled up by direct recruitment had not been actually filled up by direct recruitment. but had been filled up actually by promotion.

The fourth contention was that all the Assistant Commissioners who were directly recruited or promoted to the posts of Assistant Commissioners formed one class and their inter seniority in the cadre of Assistant Commissioners has to be determined on the basis of length of service rendered by them in the category in order to have equality.

The fifth contention was that the respondents who were appointed on temporary basis and the appellants who were promoted on officiating basis were entitled to have their seniority determined in accordance with the provisions of Rule 2(c) of the Mysore Government Servants (Seniority) Rules 1957, Rule 2(c) is as follows:-

"Seniority inter-se of persons appointed on temporary basis will be determined by the dates of their continuous officiation in that grade and where the period of officiation is the same the seniority inter-se in the; lower grade shall prevail".

The sixth contention was that the respondents were appointed on temporary basis with effect from 26 October, 1962 against temporary posts created for them and they could not claim seniority to appellants for these reasons. Under Rule 5 of the Mysore Government Servants Probation Rules, 1957 the probationers are deemed to have satisfactorily completed their probation on the issue of an order to that effect. The respondents who were confirmed in substantive vacancies could be confirmed only in vacancies which might exist or arise after 26 October, 1964 and not earlier. The respondents were confirmed against substantive vacancies which arose from 12 September, 1960 onwards. Both the 1957 Recruitment Rules and the 1959 Probationers Rules contemplate observance of quota rule at the time of appointment and promotion. The question of enforcement of quota rules does not apply at the time of confirmation. The quota rule will only apply when the vacancies are filled up either by direct recruitment or promotion. The appellants are promoted prior to the direct recruitment of the respondents, and therefore, they are entitled to claim seniority.

One of the most important matters to be kept in the forefront is that the permanent cadre strength of <ORG> is 147 of which senior duty posts are 12 and the junior posts 135.

The substantive vacancies which arose between 2 December, 1957 and 10 September, 1959 were classified into vacancies which were required to be filled up by direct recruitment and by promotion, in the ratio of 1/3 and 2/3 respectively in accordance with the 1957 Recruitment Rules which came into force on 2 December, 1957. The substantive vacancies which arose from 11 September, 1959 to 26 October 1964, the date when the direct recruits were confirmed were classified as direct recruitment and promotional vacancies on two thirds and one third basis respectively in accordance with the 1959 Probationers rules which came into existence on 11 September, 1959. The substantive vacancies which arose between 26 October 1964 upto 1 September, 1965 have been classified as direct recruitment and promotional vacancies on two thirds and one third basis respectively in accordance with the 1959 Probationers Rules which continued to be operative upto 11 September, 1965. From 11 September, 1965 to 8 October, 1971 the quota for direct recruitment became one third and for promotional vacancies it was two third.

The contention of the appellants that the respondents were recruit ed to temporary vacancies is wrong for these principal reasons.

First, the cadre here consists only of permanent posts. the cadre does not consist of any temporary post. The total number of vacancies between 2 December, 1957 and 10 September, 1959 were 59 under the quota 39 were promotional vacancies and 20 were direct recruitment vacancies. There were in fact 59 promotees. They were 20 in excess of their quota. There was however no direct recruitment during that period. Again, between 11 September, 1959 and 10 September, 1965 the total number of vacancies were 208. Under the quota system 71 were promotional vacancies and 137 were direct recruitment vacancies. There were in fact 168 promotees during the period. Therefore 97 promotees were in excess of their quota. Out of the 137 direct recruitment quota only 20 were filled up during the period. In this background it appears that when in 1962 direct recruitment was made there were 20 direct recruitment vacancies in the quota which were not filled up. The promotees however, being 20 in excess were not entitled to confirmation, against the vacancies within the quota of the direct recruits. The promotees were promoted on officiating basis. Therefore, when the respondents were appointed by direct recruitment on probation under order dated 26 October, 1962 they were required to undergo training and probation? for a period of two years. In order to meet the audit objections by reason of lack of provisions in the Recruitment Rules for training reserves the Government sanctioned 20 temporary posts to accommodate the probationers for the period of their probation. On the completion of the period of training there was no renewal of the temporary posts. Therefore the temporary posts which were created for the direct recruits during their period of probation cannot be taken into account in working out the. quota rule and for adjustment of seniority.

It may also be stated here that the promotees had not been deprived of their appointment and they had not been subjected to any reversion. The implementation of the quota rule has resulted in the adjustment of seniority consistent with the quota. The confirmations had been issued in the case of promotees and direct recruits having regard to the permanent strength of the cadre and the quota.

Second, the advertisement of <ORG> inviting direct recruits stated that the posts "are likely to be made permanent". The order of appointment of the respondents as gazetted Probationers on selection be <ORG> stated that the respondents were appointed as probationer Assistant Commissioners. The order of appointment refers obviously to the 1959 Probationers Rules.

Third, Rule 9 of the Mysore Government Servants Probation Rules states that a probationer who has been declared to have satisfactorily completed his probation has to be confirmed as a full member of the service at the earliest opportunity in any substantive vacancy which may exist or arise in the permanent cadre of the service in respect of which he has been recruited as a probationer. This Rule excludes temporary posts from the cadre. It is, therefore, impossible to hold that the direct recruits were temporary employees outside the permanent cadre of the service.

Counsel on behalf of the appellants contended that the quota rule applies to vacancies in all posts, whether permanent or temporary and relied on the decisions of this Court in <CITATION> (1), <CITATION> , Delhi & Ors.(2) and <CITATION> (3). In all these cases the cadre comprised of both permanent and temporary posts. In <NAME> case (supra) the cadre consisted of permanent and temporary posts. In <NAME>'s case (supra) cadre post as defined in the Rules includes a temporary post. In <NAME>'s case (supra) it was said that a cadre might consist only of permanent posts or sometimes also of temporary posts. In the present case Rule 9 of the Probation Rules of 1957 provides for confirmation of a probationer as a full member of the service in any substantive vacancy in the permanent cadre of such class. This rule establishes the exclusion of temporary posts from the cadre.

<CITATION> (4) this Court said on the construction of Rule 4(2) of the relevant Cadre Rules in that case that <ORG> might add for a period to the cadre one or more posts. But the posts 53 added could not become cadre posts. The temporary posts which are created due to exigencies of the service are posts which are outside the cadre. In working out the, quota rule, these principles are generally followed. First, where rules prescribe quota between direct recruits and promotees confirmation or substantive appointment can only be in respect of clear vacancies in the permanent strength of the cadre. Second, confirmed persons are senior to those who are officiating. Third, as between persons appointed in officiating capacity, seniority is (1) A. r. R. 1972 S. C. 2627 (2) A.I.R. 1974 S.

C. 1908.

(3) A. 1. R. 1975 S. C. 483. (4) [1974] 2 S. C. R.

348. to be counted on the length of continuous service. Fourth, direct recruitment is possible only by competitive examination which is the prescribed procedure under the rules. In promotional vacancies, the promotion is either by selection or on the principle of seniority-cum merit. A promotion could be made in respect of a temporary posts or for a specified period but a direct recruitment has generally to be made only in respect of clear permanent vacancy either existing or anticipated to arise at or about the period of probation is expected to be completed. Fifth, if promotions are made to vacancies in excess of the promotional quota, the promotions may not be totally illegal but would be irregular. The promotees cannot claim any right to hold the promotional posts unless the vacancies fall within their quota. If the promotees occupy any vacancies which are within the quota of direct recruits, when direct recruitment takes place the direct recruits will occupy the vacancies within their quota. Promotees who were occupying the vacancies within the quota of direct recruits will either be reverted or they will be absorbed in the vacancies within their quota in the facts and circumstances of a case.

The quota between promotees and direct recruits is to the fixed with reference to the permanent strength of 135 Junior Duty posts. Persons who were allotted the Junior Duty posts under the States Reorganisation Act are to be accommodated within the permanent cadre strength of 135 posts. If they are in excess of the number then the excess will have to be accommodated in the promotional vacancies during the sub sequent period commencing from 2 December, 1957 to 10 September, Persons No. 1 to 164 in the Gradation List consist of persons who were allotted under the States Reorganisation Act on 1 November, 1956. the ranks of those 164 persons were determined in accordance with the final inter-State Seniority List. Persons No. 165 to 184 are promotees who were allotted to substantive vacancies arising from 1 November, 1956 to 1 December, 1957 on the basis of their continuous service in the cadre. There was no quota rule for the period 1 November" 1956 to 1 December 1957. Therefore, neither the promotions of those persons nor their relative seniority can be disturbed.

Persons No. 185 to 213 are promotees. Persons No. 214 to 236 are direct recruits. Persons No. 237 to 280 are also promotees. From 2 December, 1957 when the 1957 Recruitment Rules came into existence till 1 September, 1959 when the 1959 Probation Rules came into force the <ORG> promoted many persons from Class II. Two-thirds of the total vacancies for the period 2 December, 1957 to 10 September, 1959 were promotional vacancies. Therefore all persons promoted to those two-thirds vacancies cannot be disturbed. Those promotees who are in excess of the two thirds vacancies will be pushed down to the vacancies in the subsequent period. The remaining one-third vacancies were for direct recruitment. Direct recruits equal in number to those one-third vacancies should be placed; next after the promotees placed in the first two-thirds vacancies between 2 December, 1957 and 10 September 1959. If direct recruits are in excess of the quota they will similarly be shifted to the subsequent period.

The next period is from 11 September, 1959 to 26 October, 1964. From 11 September, 1959 the promotional vacancies became one-third and direct recruitment vacancies became two-thirds. The excess promotees during the previous period will be first absorbed in the promotional vacancies and thereafter promotees during the period will be absorbed. Again, if there would be excess promotions they will be shifted to the following period.

The important principle is that as long as the quota rule remains neither promotees can be allotted to any of the substantive vacancies of the quota of direct recruits nor recruits can be allotted to promotional vacancies. The result is that direct recruitment vacancies between 11 September, 1959 and 26 October, 1964 cannot be occupied by any promotees. The fact that direct recruits were confirmed on 26 October, 1964 will not rob the direct recruits of their quota which remained unfilled from 2 December, 1957.

The <ORG> confirmed the direct recruits and the appellants by adjustment of vacancies within their respective quota and determined their seniority in accordance with Rule 2(b) of the Seniority Rules. Seniority is based on confirmation as full member of the service ill the substantive vacancy.

<CITATION> (1) it was said that when the quota was fixed for the two sources of recruitment the quota could not be altered according to exigencies of the situation. It was held there that the promotees who had been promoted in excess of the prescribed quota should . be held to have been illegally promoted. In <NAME> case (supra) it was held that when it was ascertained that not more than 1/3 of the vacancies were to go to the promotees and the rest to the direct recruits, the ratio was not made dependent on whether any direct recruit was appointed in any particular year or not the promotees were entitled to 1/3 of the vacancies in any particular year, whether or not there was direct recruitment by competitive examination in that year.

Two principles are established in the decision referred to. One is that quotas which are fixed are unalterable according to exigencies of situation. quotas which are fixed can only be altered by fresh determination of quotas under the relevant rule. The other is that one group cannot claim the quota fixed for the other group either on the ground that the quotas are not filled up or on the ground that because there has been a number in excess of quota the same should be absorbed depriving the other group of quota.

<CITATION> .(2) t he two appellants were promoted in the years 1958 and 1959. The respon-

(1) [1967] 2 S. C. R. 703. (2) [1972] 3 S. C. R.

898.825 dents were appointed by direct recruitment in 1962, 1963 and 1964 the respondents were confirmed in their posts before the appellants. The appellants contended that the respondents who were directly appointed after the appellants had been promoted were not to be confirmed in permanent posts before the appellants. It was held that the direct recruits were confirmed against permanent vacancies within their quota. The earlier confirmation of direct recruits though appointed later was upheld on the ground that they fell within their quota of permanent vacancies.

<NAME>'s case (supra) on which the appellants relied also held that each quota would have to be worked independently on its own force. In that case the Assistant Executive Engineers who were initially entitled to 3/4th and subsequently to 2/3rd of the vacancies while Assistant Engineers who were entitled initially to 1/4th and subsequently to l/3rd of such vacancies were held to be entitled to their respective quotas independent of the fact whether any person from one class or the other was promoted or not. It was illustrated by saying that if there were three vacancies in a year, two would go to the Assistant Executive Engineers and one would go to the Assistant Engineers and even if there were not eligible Assistant executive Engineers who could be promoted to fill in two vacancies belonging to their quota, one vacancy is to be filled up by promotion of an Assistant Engineer, if he was eligible. Similarly, if two vacancies belonging to the quota of Assistant Executive Engineers are to be filled by Assistant Engineer for want of availability of eligible Assistant Executive Engineers the appointment of Assistant Engineers to fill in those two vacancies would be irregular because they would have to be pushed down to later years when their appointment could be regularised as a result of absorption in their lawful quota for those years.

For the foregoing reasons, we hold that the respondents No. 2 to 24 were entitled to the vacancies within their quota which had not been filled up and they are senior to the appellants. We affirm the judgment of <ORG> and dismiss the appeals. Parties will pay and bear their own costs in these appeals.

P. R. Appeals dismissed.