PETITIONER: COMMISSIONER OF INCOME-TAX, PUNJAB Vs. RESPONDENT: <ORG>. DATE OF JUDGMENT: 30/04/1970 BENCH: <NAME>, J.C. BENCH: <NAME>, J.C. HEGDE, K.S. GROVER, A.N. CITATION: 1970 AIR 1734 1971 SCR (1) 452 1970 SCC (2) 192 CITATOR INFO : RF 1975 SC1282 (10) D 1985 SC 114 (8) RF 1988 SC 361 (9) D 1989 SC 501 (16) ACT: Income-tax Act , 1922, ss. 22(1) , 22(3) and 22(2A) -Voluntary return showing loss filed after statutory period laid down in s. 22 (1)--Benefit of s. 22(2A) whether can be given to assessee-Whether loss can be carried forward-Return whether can be treated as one under s. 22(3) . HEADNOTE: The assessee was a private company incorporated under the Indian Companies Act , 1913. In January 1956 the company voluntarily filed returns under s. 22(3) of the Income--tax Act, 1922 showing losses for the assessment years 1953-54 and 1954-55. No notice had been served on the company under s. 22(2) of the Act. The income-tax Officer held that since the returns had been filed after the statutory period the company was not entitled to carry forward the losses for both the years in the subsequent assessments. The Appellate Assistant Commissioner dismissed the company's appeal and its application for condoning the delay in filing the returns in question. The <ORG> held that the company was not entitled to the benefit of carrying forward the losses as it had not filed the returns in accordance with s. 22(2A) of the Act. <ORG>, in reference, held that a voluntary return showing loss could be validly filed at any time before assessment was made on the strength of the provision in s. 22(3) of the Act and the assessee was entitled to have such loss carried 'forward under s. 24(2) . The Commissioner of Income-tax appealed to this Court, HELD: Per <NAME> and <NAME>, JJ.-The appeal Must be dismissed. (i) In view of this Court's decision in <NAME> case the income-tax Officer could not have ignored the returns and had to determine the losses shown by the assessee. Section 24(2) confers the benefit of losses being set off and carried forward and there is no provision in s. 22 under which losses have to be determined for the purposes of s. 24(2) . Section 22(2A) does not place any limitation on that right. It simply says that in order to get the benefit of s. 24(2) the assessee must submit his loss return within the time specified by s. 22(1) . That provision must be read with s. 22(3) for the purpose of determining the time within which a return has to be submitted. It can wellbe said that s. 23(3) is merely a proviso to s. 22(1) . Thus a returnsubmitted at any time before the assessment is made is a valid return.In considering whether a return made is within time sub-s. (1) of s. 22must be read along with sub-s. (3) of that section. A return whether it is a return of income, profits or gains or loss must be considered as having been made within the time prescribed if it is made within the time specified in s. 22(3) . In other words if s. 22(3) is complied with s. 22(1) also must be held to have been complied with. If compliance has been made with the latter provision the requirements of s. 22(2A) would stand satisfied. [463 F-H. 464 A-B] (ii) The argument that a great deal of inconvenience will result of a voluntary return can be entertained at any time in accordance with 453 s. 22(3) when loss is involved and in order to give the assesses the benefit of the carry forward of the loss a number of assessments would have to be reopened, could not be accepted. A voluntary return cannot in any case be filed beyond the period specified in s. 34(3) of the Act. It cannot be overlooked that even if two views are possible the view which is favorable to the assessee must be accepted while construing the provisions of a taxing statute.[464 <CITATION> , 36 I.T.R. 569, applied. <CITATION> , 49 I.T.R. 846. approved. <CITATION> , 20 I.T.R. 432, Commissioner of Income-tax,- West Bengal v. <NAME>, 33 I.T.R. 630 and <CITATION> , 26 I.T.R. 105, referred to. Per <NAME>, J. (Dissenting) :-The clause "'if he is to be entitled to the benefit of the carry forward of loss" in.sub-s. (2A) of s. 22 clearly means that the right to carry forward loss suffered under the head of income computable under s. 10 may only be exercised if the voluntary return is filedwithin the period specified in sub-s. (1). Sub- Section 3 cannot be readas implying that notwithstanding the restrictions placed by sub-s. (2A)return disclosing loss of income computable under s. 10 will not onlybe entertained but the loss determined and declared under S. 24(3) so as to enable assessee to carry it forward. If a return of loss may be filed at any time in pursuance of a general notice under sub-s. (1), sub-s. (2A) will serve no purpose whatever, The limitation placed upon the right to file return of loss is clearly intended to avoid practical difficulties in the administration of the Act. If the interpretation placed by <ORG> be accepted, a tax-payer may avoid making returns pursuant to notice under sub-s. (1) and when sought to be assessed in subsequent years he may claim to bring before. the authorities transactions relating to many previous years which be has not disclosed. [458 G-H; 459 A-C] it was certainly held by this Court in <NAME> case that a return disclosing income below the taxable limit or disclosing such loss cannot be rejected by the Income-tax Officer as not being return of income but that does not mean that the assessee may after filing volun- tary return of loss income under the head "profits and gains of business" after the period specified in s. 22(1) claim that the loss be determined and carried forward. [459 D-E] Case-law referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 859 and 860 of 1966.

Appeals from the judgment and order dated April 6, 1966 of <ORG> in Income-tax Reference No. 42 of 1962.

<NAME>, Solicitor-General and <NAME>, for the appellant (in both the appeals).

<NAME>, <NAME>, and <NAME>, for the respondent (in both the appeals).

12Sup.Cl/70-15 The Judgment of <NAME> and <NAME>, <NAME>. was delivered by <NAME>, <NAME>, J. gave a dissenting Opinion.

<NAME>, J. The Kulu Valley Transport Co. ?(P) Ltd.hereinafter called 'the Company'--did not file returns of income in respect of the assessment year 1953-54 and 1954-55 within the period specified in the general notice under s. 22(1) of the Income-tax Act, 1922. In January 1956 the Company filed voluntary returns disclosing loss of income in the course of its business amounting to Rs. 151,520/- and Rs. 48,977 respectively for the two years in question. The Income-tax Officer refused to determine the loss, observing-

"This is a loss case and the return has been filed after the statutory time. The Company is therefore not entitled to the benefit of carry forward of loss in the subsequent assessments. The case is, therefore, filed."

Against the order of the Income-tax Officer, appeals were preferred to the Appellate Assistant Commissioner. That Officer rejected the Company's request for extension for filing the returns, and dismissed the appeals, observing--

"The return made under s. 22(2A) can only be taken to be a return under sub-s. (1) of s. 22 for the purpose of this Act, if it is made within the Saturday time prescribed in sub-s. (2A) of s. 22 ."

<ORG> in second appeal held that the expression "all the provisions of this Act shall apply as if it were a return under sub-section ( in sub-s. (2A) only applies to a valid return i.e., return which is filed with the time limit prescribed under sub-s. ( 1). The <ORG> ejected the contention that a voluntary return disclosing loss of income submitted after the expiry of the period for filing a return under sub-s. (1) may be deemed to be a return under sub-s. (3), an the loss disclosed therein must be determined under sub-s. (2) of s. 24 to qualify the assessee to carry it in the following year. At the instance of the assessee the <ORG> referred the following question to <ORG> "Whether the losses of Rs. 1,51,520 and of Rs. 48,977 returned by the assessee in January 1956 for the assessment years 19.53-54 and 1954-55 respectively requite in law to be determined and carried forward under s. 24(2) of the Income-tax Act?"

4 5 5 <ORG> answered the, question in the affirmative. The Commissioner of Income-tax has appealed to this Court with certificate granted by <ORG>. Sub-section (2A) of s. 22 which was added to S. 22 by s.14 of Act 25 of 1953 with effect from April 1, 1952, provides:

notice under subsection (2) has sustained a loss of profits or gains in any year under the head "Profits and gains of business, profession, or vocation", and such los s of any part thereof would, ordinarily have been carried forward under sub-section (2) of section 24 , he shall, if he is to be entitled to the benefit of the carry forward of loss in any subsequent assessment, furnish within the time specified in the general notice given under subsection (1) or within such further time as the Income-tax Officer in any case may allow, all the particulars required under the prescribed form of return of total income . . . . in the same manner as he would have furnished a return under sub-section (1) had his income exceeded the maximum amount not liable to income-tax in his case, and all the provisions of this Act. shall apply as if it were a return Under sub-section ( 1.)."

On the plain words used by the <ORG>, sub-s. (2A) applies only where the return is filed within the time specified in the general notice under sub-s. (1) or within such further time as the Income-tax Officer may allow. A return not filed within the time prescribed by sub-s. (1) or time extended by the Income-tax Officer does not comply with the requirement of sub-s. (2A), and the assessee cannot claim that the loss be determined and carried forward. The, <ORG> however held that a voluntary return filed after the expiry of the period specified in sub-s. (1) but before the assessment is made must still be entertained as a return filed under sub-s.(3), even if it returns a loss of income under the head "Profits and gains of business, profession or vocation". In the view of the <ORG>, sub-s. (3) of S. 22 applies to all returns whether disclosing profit or loss, and whether made voluntarily or pursuant to a notice under sub-s. (2), and on that account even if the return is filed beyond the period prescribed by S. 22(1), and discloses a loss the Income-tax Officer was bound to determine the loss so that it may be carried forward in the following year. In reaching that conclusion the <ORG> purported to rely upon Commissioner of Income-tax, Bombay City 11 v. <NAME> L12Sup.Cl/70-16 4 5 6 Karsondas(1) and <CITATION> (1). The view expressed by the <ORG> cannot, in my judgment, be sustained. The assessee who has sustained loss of income under the head "Profits and gains of business, profession or vocation" and who has not been served with a notice under sub-s. (2) may qualify for carrying forward the loss in any subsequent year of assessment must furnish within the time specified in the general notice under sub-s. (1) or such time as may be extended by the Income-tax Officer a return in the prescribed form disclosing that loss. Under a return filed not in compliance with a notice under sub-s. (2) disclosing loss and filed beyond the time specified in the general notice or extended time, the assessee cannot claim to carry forward the loss. The view expressed by the <ORG> renders sub-s. (2A) otiose.

It is implicit in the conclusion reached by <ORG> that the right to carry forward loss which is expressly restricted by sub-s. (2A) may still be exercised under sub- s. (3). In determining whether the view expressed by <ORG> is permissible, it is necessary to refer to the decisions of the <ORG> under s. 22 before it was amended by Act 25 of 1953. It was held in interpreting s. 22 before it was amended that a return filed beyond the period specified in the general notice, if filed before the assessment is made, must, if it disclosed profit exceeding the maximum exempt from tax, be dealt with according to the provisions of the Act. There was a conflict of decisions on the question whether a return could be filed voluntarily disclosing income below the limit of exemption. In <NAME> v. Commissioner of Incometax(3) it was held that a return disclosing profit below the maximum exempt from tax was a valid return : <ORG> in <CITATION> (4) expressed a contrary view. This court in <NAME> case(1), agreeing with <ORG> held that a return disclosing income below the taxable limit submitted voluntarily in answer to the general notice under S. 22 (1) of the Income-tax Act is a good return : it is a return such as the assessee considers represents his true income, and that a return in answer to the general notice under S. 22(1) or in answer to a notice under s. 22(2) of the Income-tax Act may by virtue of s. 22(3) be filed at any time before assessment. A return voluntarily made before the assessment cannot be ignored by the Income-tax. Officer. In <NAME> case(1) the assessee had returned without a notice under s. 22(2) income which was less than the (1) 36 I.T.R. 569. (2) 49 I.T.R.

846. (3) 32 I.T.R. 458. (4) 20 I.T.R.

432. 4 5 7 maximum exempt from tax. But the case did not deal with a return in which loss was disclosed by the assessee. <CITATION> : No. 4(1) the assessee Company had submitted a "nil return" pursuant to a notice under s. 22(2) . The Income-tax Officer computed the income of the, Company under S. 23 (1) of the Income-tax Act , 1922 as "nil". Proceedings were later started under S. 34 of the Income-tax Act to assess the income which the Income-tax Officer believed to have escaped assessment. The assessee then claimed that the loss of profits sustained by it in the previous year should be determined in the proceeding under S. 34 and such loss should be allowed to be, carried forward and set off against the income which may be determined for the year for which the notice under S. 34 was issued. <ORG> decided the case on a point which is not relevant here. The case was carried to this Court in appeal. <CITATION> (1) this Court herd that where no return was filed by an assessee at any stage of the case disclosing any income, profits or gains at aft and proceedings were later started under s. 34 , the assessee could not claim in the course of those proceedings that a certain loss of a previous year should be determined and recorded. The Court observed at pp. 85 & 86:

"There is no provision in the Act which entitles the assessee to have a loss recorded or computed, unless something is to be done with the loss. Thus, under Section 24(1) a loss can be set off against an income, profit or gain and under subsection (2) the balance of a loss can be carried forward to a following year on the conditions set out there. Except for this, there is nothing else that can IN called in aid.

But under sub-section (2) the loss can be carried forward when "the loss cannot be wholly set off under sub-section (1)" and in that event only the "portion not so set off" can be carried forward. We are therefore thrown back on sub-section (1). Sub-section (1) provides that where an assessee sustains a loss of profits or gains in any year under any of the heads mentioned in Section 6 he shall be entitled to have the amount of the loss "set off against his income, profits or gains under any other head in that year." Therefore, before any question of set-off can arise, there must be(1) a loss under one or more of the heads mentioned in Section 6 , and, (2) an income, profit or gain under some other head. It follows that when there (1) 18 I.T.R. 906.

(1) 23 I.T.R. 82.

is no income under any head at all, there is nothing against which the loss can be set off in that year and unless that can be done sub- section (2) does not come into play."

The <ORG> held that loss of income will not be determined, unless the assessee has more heads of income than one, and the loss under one head is to be set off against income under any other head in that year of account. It was implicit in the judgment, that the taxing authorities will not determine loss under the head "Profits and gains of business, profession or vocation" when the assessee has no other source of income.

The <ORG> apparently realized the hardship involved in preventing a person who has only one source (such source being profession, business or vocation) of income from carrying forward the loss to the subsequent years of assessment and incorporated by Act 25 of 1953, with effect from April 1, 1952, sub-s. (2A) and enabled the assessee to carry forward the loss when he made a return within the time specified in sub-s. (1), even if there was no other source of income. The <ORG> by the same Act amended sub-s. (2) of s. 24 and added the words "so much of the loss as is not so set off or the whole loss where the assessee had no ,other head of income" after the words "cannot be wholly set off under sub-section (1) ". This was intended to supersede a part ,of the decision of this <ORG> in Anglo-French <ORG>'s case (1).

Sub-sections ( 1), (2), (2A) and (3) of. S. 22 must be interpreted in this background. Undeniably sub-s. (3) confers upon the assessee a right to submit a return at any time before the assessment is made. Such a return must be voluntary or pursuant to a notice under sub-s. (2). The return may disclose income or loss : if however the return was made before the Act was amended by the incorporation of sub-s. (2A) in s. 22 , and it disclosed loss only, according to the decision of this <ORG> loss will not be determined if there be a single source of income. If it be a return filed not pursuant to a notice under sub-s. (2) of S. 22 , and dis- closes a loss of income under the head "Profits and gains of business" the loss will be determined and carried forward only if it is made within the period specified in sub-s. (1) or the period extended by the Income-tax Officer. The clause "if he is to be entitled to the benefit of the carry forward of loss" in sub-s. (2A) clearly means that the right to carry forward loss suffered under the head of income computable under s. 10 may, only be exercised if the voluntary return is filed within the period specified in sub-s. (1). Sub-section (3) cannot in my judgment be read as implying that (1)23 I.T.R. 82.

4 5 9 notwithstanding the restrictions placed by sub-s. (2A) a return disclosing loss of income computable under s. 10 will not only be entertained but the loss determined and declared under s. 24(3) so as to enable the assessee to carry it forward. If a return of loss may be filed at any time in pursuance of a general notice under sub-s. (1), sub-s. (2A) will serve no purpose whatever. The limitation placed upon the right to file a return of loss in clearly intended to avoid practical difficulties in the administration of the Act. If the interpretation placed by <ORG> be accepted, a tax-payer may avoid making returns pursuant to notice under sub-s. (1), and when sought to be assessed in subsequent years he may claim to bring before the authorities transactions relating to many previous years which he has not disclosed.

The view which I am taking-was suggested in <CITATION> (1); and also in <NAME> case(2) at p. 855.

It is true as held by this <ORG> in <NAME> case(3) that a return disclosing income below the taxable limit or disclosing loss cannot be rejected by the Income- tax Officer as not being a return of income. The view to the contrary in <CITATION> (4 ) is erroneous. But that does not mean that the assessee may after filing a voluntary return of loss income under the head "Profits and gains of business" after the period specified in s. 22 (1) claim that the loss be determined and carried forward.

In the present case no notice under sub-s. (2) was issued to the Company, and the Company made a voluntary return. The return was strictly governed by the terms of sub-s. (2A) of s. 22 and upon such a return the Company could not claim that loss of income be determined and carried forward. I would therefore answer the question in the negative. <NAME>, J. These appeals arise from a judgment of <ORG> answering the following question which had been referred to it by <ORG> in the affirmative and in favour of the assessee "Whether the losses of Rs. 1,51,520/- and of Rs. 48,977/- returned by the assessee in January 1956 for the assessment years 1953-54 and 1954-55 respectively require in law to be determined and carried forward under s. 24(2) of the Income tax Act ?"

(1)52 I.T.R. 609.

(3)36 I.T.R. 569.

(2) 49 I.T.R. 846.

(4) 33 I.T.R. 630, The assessee <ORG> is a private company incorporated under the Indian Companies Act 1913 having its registered office at Pathankot. In January 1956 the ,company voluntarily filed returns under s. 22(3) of the Income tax Act 1922, hereinafter called the "Act", showing losses of Rs. 1,51,520/- and Rs. 48,977/- for the assessment years 1953-54 and-1954-55 respectively. No notice had been served on the company under s. 22 (2) of the Act. The Income-tax Officer held that since the returns had been filed after the statutory period the company was not entitled to carry forward the losses for both the years in the subsequent assessments. Before the Appellate Assistant Commissioner two main points were urged. The first was that the delay in the submission of the returns should have been condoned and secondly the returns should have been treated as having been made under s. 22(3) in which case also they would be valid returns under s. 22(2A) by reading sub- sections (3) and (1) of s. 22 together. The Appellate Assistant Commissioner did not find any sufficient or reasonable cause for condoning the delay. On the second point he decided against the company. The <ORG> agreed with the view of the Appellate Assistant Commissioner and on the main point held that the company was not entitled to the benefit of carrying forward the losses as it had not filed the returns in accordance with section 22(2A) of the Act. Section 24(2) contains substantive provisions relating to carrying forward of the loss. It provides that where any assessee sustains a loss or profit or gains in any year being a previous year in any business, profession or vocation and the loss cannot be wholly set off under sub-s. (1) (of s. 24 ) so much of the loss as is not so set off or the whole loss where the assessee had no other head of income shall be carried forward to the following year. Sub- section 2A of s. 22 was inserted by the Income, tax (Amend- ment) Act 1953 with effect from April 1, 1952.

"If any person who has not been served with a notice under sub-section (2) has sustained a loss of profits or gains in any year under the head "Profits and gains of business, profession or vocation", and such loss or any part thereof would ordinarily have Ben carried forward under sub-section (2) of s. 24 , he shall, if he is to be entitled to the benefit of the carry forward of loss in any subsequent assessment, furnish within the time specified in the general notice given under sub-section (1) or within such further time as the Income- tax Officer in any case may allow, all the particulars required under the prescribed form of return of total income and total world income in the same manner as he would have furnished a return under subsection (1) had his income exceeded the maximum amount not liable to income tax in his case, and all the provisions of this Act shall apply as if it were a return under sub-section (1)."

According to s. 22(1) the Income-tax Officer was to give public notice on or before the, first day of May in each year by publication in the prescribed manner requiring every person whose total income during the previous year exceeded the maximum amount which was not chargeable to income tax to furnish within such period not being less than 60 days as might be specified in the notice a return of his total income and total world income during that year. The Income- tax Officer could in his discretion extend the date for the delivery of the return. Under s. 22 (2) if the Income-tax Officer was of the opinion that income of any person was of. such amount as to render him liable to income tax he could serve a notice on him requiring him to furnish within such period not being less than 30 days a return showing his total income and-total world income during the previous year. The date for delivery of the return could again be extended in the discretion of the Income-tax Officer. Section 22(3) provided that if any person had not furnished a return within the time allowed by or under sub-s.(1) or sub-s. (2) or having furnished a return under either of those sub-sections discovered any amount or wrong statement therein, he could furnish a return or a revised return at any time before the assessment was made. Thus the scheme of S. 22 is that a public or general notice is to be given every year by the Income-tax Officer or he could even give an individual or special notice. But if a person has not furnished a return within the time allowed by or under the first two sub-sections of S. 22 he could furnish a return at any time before the assessment is made. It is well settled by now that a return can always be filed at any time before the assessment is made. The Income-tax Officer has to make the assessment on that return and he could not choose to ignore it. The question that immediately arises is whether in case of a voluntary return in which loss has been shown and determined the Income-tax Officer can decline to give the benefit under s. 24(2) of carrying forward the loss on the ground that the assessee did not comply with the provisions of S. 22(2 A) of the Act . in other words when there is an express provision in that sub-section which must be availed of if the assessee is to be entitled to the benefit of carrying forward of loss in any subsequent assessment can he take advantage of the provisions of S. 22(3) and claim that since he has filed a voluntary return before any assessment has been made and if it be determined that he has suffered a lose he is entitled to carry forward that loss.

The argument on behalf of the assessee is-that s. 24(2) con- fers the right to carry forward the loss to the following year pro-

46 2 vided the conditions contained in the sub-section are satisfied. There is no further requirement that has to be fulfiled so far as the substantive law is concerned. Section 22(2A) is merely a procedural provision and it also provides that once a return has been furnished in accordance therewith all the provisions of the Act become applicable as if it were a return under sub-section (1). That would attract s. 22(3) and therefore a voluntary return can be filed even after the period mentioned in sub-s. (2A) has expired so long as the assessment has not taken place. It is pointed out that supposing a return is filed showing income X but the Income-tax Officer in the assessment proceedings holds that there has been a loss and the assessee was mistaken in showing a profit, the assessee in such circumstances can certainly claim the benefit of S. 24(2) . If that is possible there is no reason or justification for holdingthat although he could claim the benefit of S. 24(2) by filing a voluntary return in the given illustration he would be deprived of that benefit if he filed a return voluntarily showing a loss except in compliance with s. 22(2A) . On the other hand the contention on behalf of the revenue is that S. 22 before its amendment in the year 1953 did not make any provision for the filing of a loss return voluntarily. Under s. 22(1) returns which were invited were only of taxable income. No return which in the opinion of the person making it was a loss return was intended to be filed under s. 22(1) . It was only under s. 22(2) that the return that was required to be filed was in pursuance of the individual notice given by the Income-tax Officer. Since by this notice a return in the prescribed form had to be filed by a person to whom the notice was issued whether it was of profit or loss, a loss return could therefore be filed only in pursuance of a notice served under s. 22(2) but not voluntarily. It is by virtue of the provisions contained in s. 22(2A) that a loss return can be filed where a person has not been served under sub-s. (2) in order to get the benefit of the carrying forward of the loss under s. 24(2) . This is indeed expressly provided by sub-s. (2A) of s. 22 .

It would appear that the position before the amendment in 1953 with regard to the filing of a voluntary return of loss was not clear. Although apparently under the provisions of s. 22 there was no bar to the filing of such a return in the same way as the return showing profit could be filed under s. 22(3) there was conflict of judicial opinion on the point. <ORG> had held in Commissioner of Agricultural income tax v. <NAME>) and Commissioner of Income tax, West Bengal v. Govindlal(2) that voluntary returns showing a loss could not be regarded as returns at all and the Income-tax Officers was not required to make any assessment on them. The Bombay High (1) 20 I.T.R. 432.

(2) 33 I.T.R. 630.

Court, however, had taken a different view in <CITATION> tax, Bombay City(1). In that case the return which had been filed voluntarily was below the taxable limit. According to <ORG> such a return could be validly filed under s. 22(3) and the Income-tax Officer could not ignore it so long as the return had been filed before any assessment had been- made. In Commissioner of Income tax, <CITATION> (2) which was an appeal against that decision this Court while upholding the Bombay view observed :

"It is a little difficult to understand how the existence of a return can be ignored, once it has been filed. A return showing income below the taxable limit can be made even-in answer to a notice under s. 22(2) . The notice under section 22(1) requires in a general way what a notice under section 22(2) requires of an individual. If a return of income below the taxable limit is a good return in answer to a notice under s. 22(2) , there is no reason to think that a return of a similar kind in answer to a public notice is no return at all".

The amendment in 1953 seems to have been made to clarify the law about the filing of a return showing a loss voluntarily. It was declared that such a return could be validly made. The time which was specified for filing the return was on the same lines as in sub-s. (1) of s. 22 and all the provisions of the Act were to apply as if it was a return under sub-s.(1).

Now the question which was submitted for the opinion of <ORG> in the present case, consisted of two parts, viz. (1) whether the loss returned by the assessee for the assessment years in question was required in law to be determined by the Income-tax Officer and (2) whether those losses could be carried forward after being set off under S. 24 (2) of the Act. The first part of the question stood concluded by the decision of this Court in <NAME> case(1). The Income-taxOfficer could not have ignore& the return and had to determine those losses. Section 24(2) confers the benefit of losses being set off and carried forward and there is no provision in s. 22under which losses have to be determined for the purpose of S.24 (2) The question which immediately arises is whether S. 22(2) (A) places any limitation on that right. This sub-section which has been reproduced before simply says that in order to get the-benefit of s. 24(2) the assessee must submit his loss return within the time specified by s. 22(1) . That provision must be read with s. 22(3) for the purpose of determining the time within which a return has to be submitted. It can well be said that s. 22(3) is merely a (1) 26 I.T.R. 105.

(2) 36 I.T.R. 569.

proviso to S. 22(1) . Thus a return submitted at any time before the assessment is made is a valid return. In considering whether a return made is within time sub-s. (1) of S. 22 must be read along with sub-s. (3) of that section. A return whether it is a return of income, profits or gains or of loss must be considered as having been made within the time prescribed if it is made within the time specified in S. 22(3). In other words if S. 22(3) is complied with S. 22(1) also must be held to have been complied with. If compliance has been made with the latter provision the requirements of s. 22 (2) (A) would stand satisfied. On behalf of the revenue it is pointed out that a great deal of inconvenience will result if a voluntary return can be entertained at any time in accordance with S. 22(3) when loss is involved and in order to give the assessee the benefit of the carry forward of the loss of number of assessments would have to be reopened. It is difficult to accede to such an argument merely on the ground of 'inconvenience. Moreover it is common ground that a voluntary return cannot be filed beyond the period specified in s. 34(3) of the Act. It cannot be overlooked that even if two views are possible the view which is favorable to the assessee must be accepted while construing the provisions of a. taxing statute.

In the judgment under appeal reliance was placed on a deci- sion of the <ORG>, <ORG> in <CITATION> (1) and in our opinion the view taken therein is sound and must be upheld.

The appeals fail and are dismissed with costs. One hearing fee.

ORDER In accordance with the decision of the majority, these appeals fail and are dismissed with costs, one hearing fee. <ORG>

(1) 49 I.T.R. 846.


<NAME>, J.

1. This is a petition to sot aside an award made originally by arbitrators appointed by <ORG>, subsequently confirmed by the board of appeal of that body, and duly filed in <ORG>.

2. The prayers of the petition pray (a) that the award may be set aside, (6) in the alternative (1) that it may be set aside so far as it relates to the ready transactions, and (2) that it may be remitted back so far as it relates to the forward transactions.

3. At the outset of the case, Mr. <NAME>, who appeared for the petitioners, informed me that he did not propose to challenge the award so far as it related to the forward transactions, and that inasmuch as the award made dealt separately with the ready and forward transactions and was clearly separable in regard to each, he should only ask the <ORG> to set the award aside so far as it related to the ready transactions, if I should be of opinion that he succeeded in proving that the arbitrators had no jurisdiction to enter upon the arbitration in relation to the ready transactions between the parties.

4. The petition begins by alleging that the petitioners dealt in cotton at Khamgarn and other places, and that the respondents are members of <ORG>, and are doing business in Bombay as brokers and commission agents in cotton subject to the rules and regulations of the said association. In paragraph 3 it is alleged that the petitioners had dealings with the respondents both in forward and in ready cotton, and as regards the ready transactions it is stated in paragraph 4 that three separate lots of bales were entrusted to the respondents by the petitioners for sale. Disputes, as appears from the petition, took place between the parties, the details of which it is unnecessary to enter into. Arbitration was claimed by the respondents who named their arbitrator by their letter dated December 19, 1928. The petitioners did not reply to that letter till January 2,1929, and in that letter they contended that there was no agreement to refer to arbitration any disputes or differences so far as the ready transactions were concerned and they declined to go to arbitration in respect of those transactions.

5. The petitioners having failed to appoint an arbitrator, <ORG> appointed two arbitrators under by-law 88 (6) of the by-laws of the association. The petitioners contended before the arbitrators that there was no submission by them in respect of the ready transactions, and they objected to the arbitrators dealing with the disputes so far as the ready transactions were concerned.

6. There was for a time some controversy before me as to whether the petitioners, notwithstanding their protest to the jurisdiction of the arbitrators so far as the ready transactions were concerned, nevertheless entered into the merits of the dispute before them. Mr. <NAME>, who had deposed to two affidavits in answer to the petition, was called before me, and in cross-examination he very frankly admitted, contrary to what had been stated by him in his affidavit dated August 12, 1929, that he could not remember whether the petitioners had themselves entered into the merits or whether it was not rather the arbitrators who had insisted in going into the merits of the dispute.

7. The arbitrators overruled the objection of the petitioners, and made an award which has been filed in <ORG>, The petitioners appealed against that award, as they are permitted to do under the by-laws of the association, to the board of appeal, which dismissed the appeal and confirmed the award of the arbitrators. The document dismissing the appeal and confirming the award is also filed in <ORG>.

8. Mr. <NAME> contended on behalf of the petitioners that there was no submission within the meaning of Section 4 of the Indian Arbitration Act so far as the ready cotton transactions were concerned. In answer to this, Mr. <NAME>, who appeared for the respondents, submitted, having regard to certain letters and the evidence of the witness called before rue, that there was a valid submission within Section 4 of the Indian Arbitration Act. Alternatively, he contended that there was a compulsory reference to arbitration, having regard to the terms of Bombay Act No. XIV of 1922 and the memorandum and articles and by-laws of <ORG>, in view of the contract which he contends was entered into between the parties Mr. <NAME>, on the other hand, contended that the contract, which was in fact made between the parties, made no reference to the articles of association of <ORG>, and that, apart from the articles of association, the by-laws were not of such a character as to embrace the transaction, to use a neutral expression, which I will explain later, which was in fact entered into between the parties,

9. There was a third point raised by Mr. <NAME>, which I will dispose of immediately, namely, that the petitioners had by their conduct waived their right to object to the jurisdiction of the arbitrators and of the board of appeal. He first based his argument in regard to waiver on the hypothesis that the petitioners had before the arbitrators gone into the merits. But on the evidence of the witness, to which I have referred, I am satisfied that this was not the case. Apart from that, Mr. <NAME> contended that by exercising a right of appeal to the board of appeal, which was merely, as he said, a right and not an obligation, instead of applying at once to the <ORG> to set the award aside, the petitioners had thereby waived their right to object to the jurisdiction. I am unable to assent to this argument. I think it is well-established by authority that once parties appearing before arbitrators object to the jurisdiction, they do not waive their rights by proceeding with the case before the arbitrators and defending themselves as best they may : see <ORG>, 11th Edn., at pages 431. and 482, and the authorities there collected. In particular, I would refer to the remarks of Lord <NAME> in <NAME> v. <NAME> (1880) 6 Q.B.D. 63 where he said (p. 65):-

...in arbitrations, where a protest is made against jurisdiction, the party protesting is not bound to retire ; he may go through the whole case, subject to the protest he has made.

Having made their protest, 1 am clearly of opinion that the petitioners were entitled not merely to defend themselves before the arbitrators but to go through the whole case by exercising the right of appeal which is given to them by Sub-clause (E) of bylaw 8b of the by-laws of the association. The point of waiver, therefore, in my opinion, fails.

10. I will now turn to the question whether there was a submission within the meaning of Section 4 of the Indian Arbitration Act of 1899. The relevant part of that section is in these terms:-

In this Act, unless there is anything repugnant in the subject Of context....

(b) 'submission' means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not.

In the case before me, the evidence which has been called coupled with the documents which have been put in, establish this to my satisfaction. Mr. <NAME> had an interview at Khamgaon with a partner of the petitioners, <NAME> and another person, <NAME>, who is stated to have acted as the financier and broker of the petitioners. At that interview there was a discussion as to the terms on which the respondents would be prepared to do cotton business with the petitioners. Mr. <NAME> handed to Mr. <NAME> a copy of the usual terms upon which the respondents do their business. It is headed " Particulars as regards Charges and Terms ". That document is divided into two parts. The first part deals with the ready transactions, and contains this provision : " all sales and every work and business are done in accordance with the rules of <ORG>". There is a similar reference to the rules of the association in the document in regard to forward transactions. Then at the very end of the document, there are these words:-

N.B. if there be any kind o£ dispute or objection raised or if there be any disagreement, the same will be decided by arbitration in accordance with the rules of <ORG>, So also there will be no jurisdiction of any other Court than that of Bombay.

A copy of that document was left by Mr. <NAME> with Mr. <NAME>. That interview took place some time in January 1928.

11. After that interview, a representative of the petitioners, whose name Mr. <NAME> could not recollect, called upon the respondents in Bombay and interviewed Mr. <NAME>, and a further discussion took place as to the terms on which the respondents would be prepared to do business. I should have mentioned that Mr. <NAME> stated that at the interview between him and Mr. <NAME>, various modifications of the terms of the document which had been handed to Mr. <NAME> were discussed. There was a further discussion as to these modifications when the petitioners' man came to Bombay. It is, in my opinion, quite unnecessary to detail those terms, because they all ultimately appeared in one of the documents to which I am now going to refer.

12. On February 9, 1928, the respondents wrote a letter to the petitioners. In that letter they referred to the visit of the petitioners' man to their office and to the interview that Mr. <NAME> had had with the petitioners at Khamgaon. The letter then states: "He handed to you our printed form of memo of charges in which are contained the terms on which we do business". The letter then goes on to set out certain modifications of the terms and then says: " Except the above, please note that the rest of the terms and charges will be according to our printed form ".

13. On February 18, 1928, the petitioners wrote to the respondents. They began by saying : "There is no letter from you". Whether they had not by this time received the letter of February 9,1928, the receipt of which by them has not been disputed, or whether that is a formula which is common in correspondence in this country, I am unable to say. The letter goes on to refer to the conversation between Mr. <NAME> and <NAME> and asks the respondents to let them know " by return post whether you are willing to do business according to the talk you had with our <NAME> in respect of charges, etc., and hundis. After hearing from you, we will consign you bales of Sheogam and Khamgaon cotton..." That letter, in my opinion, is an offer in writing by the petitioners to do business with the respondents provided they heard from them that the terms upon which they were prepared to do the business were in accordance with the previous conversation. There followed a letter from the respondents to the petitioners dated February 20, 1928, acknowledging receipt of the letter of the 1.8th instant to which I have referred. The letter dated February 20, 1928, says : "you have shown your willingness to send us your cotton for which we are much thankful to you and are greatly pleased. " It goes on to say : " We will accept hundis according to the talk that had taken place and will obtain good rates". Then it goes on: "We have enclosed herewith our form (printed) of charges. But we will charge commission and brokerage at eight annas (i. e., half per cent). Please note that we will accept and send hundis (for an amount) equivalent to 85%". That letter encloses the printed form of the terms upon which business will be done, and makes it plain that the business is to be done upon those terms apart from the variations which are made in writing in that letter.

14. It is admitted that there was no acceptance in writing by the petitioners of those terms, It is common ground that business resulted. It is contended by Mr. <NAME> that inasmuch as there was no acceptance in writing of the terms, there cannot be said to be a written agreement between the parties within the meaning of Section 4 of the Indian Arbitration Act, and that accordingly there has boon no submission. I was referred by counsel to a number of authorities. In <NAME> v. <NAME> or <ORG>  1 Ch. 881 Mr. Justice <NAME> dealt with the question whether a submission must be an agreement signed by both parties. He reviewed the authorities and said as follows (p. 902) : -

The result of these decisions is, I think, that if the submission is in writing and is binding on both parties us their agreement or as the equivalent in law to an agreement between them the statute is satisfied.

In <ORG> v. The King [1920] 2 K.B. 214 it was held by <ORG> that, in the circumstances of that case, there was no written agreement to submit differences to arbitration. Bat at page 223, Lord Justice <NAME> said as follows :-

It is not necessary that both parties should have signed the written agreement ; if a person has accepted a written agreement and acted upon it he is bound by it for this purpose, although ho may not have set his hand to the document: <NAME> v. <ORG> [1892] 1 Q.B. 144.

15. The latter was an action upon an insurance policy which had been executed by the insurance company but not by the <ORG>. The <ORG> brought an action against the company on the policy and an application was made to stay the suit upon the ground that the policy contained an arbitration clause. It was argued for the plaintiff that there had been no submission because the agreement had not been signed by both the parties. That contention was overruled by the Court, which held that the policy was an agreement in writing between the parties, and that the plaintiff had acted upon it although he had not signed it

16. <CITATION> . (1928) I.L.R. 56 Cal. 118 the question whether an agreement to submit to arbitration must be signed by both parties was considered by Chief Justice <NAME> and Mr. Justice <NAME>. In the judgment of the learned Chief Justice the authorities are reviewed. In that case the plaintiff had signed an indent which contained an arbitration clause. That indent had not been signed by the defendants or by any one on their behalf. The offer contained in the indent was telegraphed by the defendants' agent from India to Manchester, though the terms of the indent were not referred to. Further telegrams passed and business resulted. Chief Justice <NAME> was clearly of opinion that the indent formed part of the contract entered into between the parties, and that the arbitration clause was binding on the defendants although it had not been signed by them.

17. I may here refer to the case of Morgan v. William Harrison, Limited [1907] 2 Ch. 137, There lessees had been in possession of a colliery under a lease which contained an arbitration clause. They had power to request the lessors to extend the lease provided they did so within a certain period before the expiration of the lease. They failed to exercise this right in time, and wrote a letter asking for an extension. That letter amounted to an offer which was not accepted by the lessors, who made a counter-offer in a letter signed by their manager, the effect of which was that the lessees were to be at liberty to remain in possession as tenants-at-will until an arrangement could be come to. There was no acceptance in writing of that counter-offer, but the lessees stayed on it was held that that counter-offer must have been made with reference to the terms of the lease, and that, accordingly, the arbitration clause contained in that lease continued to apply to the parties. But it is important to observe that the acceptance of that counter-offer was attributable to the conduct of the lessees in remaining in possession of the mine.

18. I am free to confess that I have felt great doubt as to whether M. 4 of the Indian Arbitration Act does not require the agreement between the parties to be in writing in the sense that both offer and acceptance must appear in a written document or documents between the parties. On the whole, however, having regard to the authorities to which I have referred, I am not satisfied that this is the meaning of the expression "written agreement" within Section 4 of the Act. I have come to the conclusion that, provided it appears clear from any document or documents that the parties are willing to do business upon certain terms which have been reduced to writing, the acceptance of those terms by conduct may be proved orally. In this case, I am satisfied by the evidence of Mr. <NAME> that no further communication passed between the parties after the letter of February 20 and that by their conduct the petitioners assented to the terms which are contained in the respondents' memo of charges and that letter. It must be borne in mind that in their letter of February 18 the petitioners had written to the respondents requesting the respondents to inform them in writing upon what terms they would be willing to do business, and that the respondents so informed them in writing of all the terms in the letter of the 20th. Thereafter the petitioners assented to those terms by conduct. In my opinion, that is sufficient to constitute a written agreement within the meaning of Section 4 of the Indian Arbitration Act.

19. I will now deal with another point which was argued by counsel. It is common ground that the by-laws of <ORG> do not require ready transactions to be in writing. Bombay Act No. XIV of] 922, called the Bombay Cotton Contracts Act, 1922, defines " contract" in Section-2,as follows: " ' Contract' means a transaction in cotton to be -carried-out in whole or in part in Bombay." It is to be observed that the words used are wide, namely, " a transaction in cotton to be carried out." Section 3 provides that " the Board may, subject to the sanction of the Governor in <ORG>, make by-laws for the regulation and control of transactions in cotton," Sub-clause (i) being as follows-" providing for arbitration and appeals against awards." Section 4 is in these terms:-

The constitution and administrative machinery set out in the Articles of Association of the Association are declared to be lawful.

It has been contended by Mr. <NAME> on behalf of the respondents that the effect of the words " are declared to be lawful" is to subject all transactions in cotton in Bombay to the provisions of the articles of association of <ORG>. He submits that unless this effect is given to that section, no meaning can be attributed to the words "are declared to be lawful", inasmuch as the constitution and administrative machinery set out in the articles would be lawful under the Indian Companies Act . In my opinion, there is great force in this contention, and inasmuch as I am unable to attribute any reasonable meaning to those words at all except that for which Mr. <NAME> contends, on the whole I think his argument in that regard is sound. Section 5 provides that any contract (whether either party thereto is a member of the association or not) which contravenes any by-law of the association is void. It is contended by Mr. <NAME> in reference to that section that though the section merely says that any contract contravening any by-law is void, the implication necessarily involved therein is that any transaction entered into must be entered into in accordance with the by-laws, otherwise it is a nullity. Section 7 provides that contracts for the purchase and sale of cotton entered into on the dates as therein referred to "under the rules or by-laws of the association shall be subject to the provisions of this Act and of by-laws made thereunder". Mr. <NAME> has pointed out that the words there are " contracts for the purchase and sale of cotton", and Mr. <NAME> has drawn a distinction between those words and the much wider words of the definition of 'contract' comprised in Section 2 (a).

20. Under Article 96 of the articles of association of <ORG> it is provided that:-

Whenever any difference arises between Members or Associate Members or Special Associate Members or between one or more of them and another or others who are not Members or Associate Members or Special Associate Members touching or in connection with the cotton trade or any transaction therein it shall be referred to arbitration in such manner as shall be prescribed by the by-laws.

Mr. <NAME> in view of the vary wide provision of that clause has admitted that if the effect of Section 4i of the Act is to make this Clause 96 applicable to all cotton transactions, then the arbitrators in this case would have jurisdiction to enter into the reference in respect of ready transactions whether the submission was in writing or not. He, however, contends that that is not the proper meaning to be attributed to Section 4 of the Act. As I have already indicated, I am unable to agree with him and I hold that the arbitrators had jurisdiction even if the submission was not in writing.

21. Next, upon the supposition that he was wrong in his contention that Article 96 of the articles of association did not apply to this case, Mr. <NAME> referred to the wording of by-law 38(A) of the rules and by-laws, He contended that, assuming that the evidence establishes, as I have held it does, that the parties agreed to enter into transactions, both forward and ready, subject to the by-laws of the association, then by-law 38 (A) does not apply to the facts of the present case. The relevant words of by-law 38 (A) are as follows :-

All disputes...arising out of, or in relation to (a) contracts (whether forward or 'ready' and whether between members or between a member and a non-member) made subject to these by-laws or (b) the rights and/or responsibilities of commission agents, muceadums and brokers not parties; to such contracts, shall be referred to the arbitration of two disinterested persons one to be chosen by each party.

Mr. <NAME> contended with regard to (a) that the word " contracts" there meant contracts of purchase and sale between principal and principal. He submitted that it would have no application to a case of this kind, where an up-country constituent forwarded to Bombay bales of cotton to be sold by respondents for and on his behalf as agents. I am unable to assent to this contention having regard to the definition of "contract" contained in Section 2 (a) of the Bombay Cotton Contracts Act.

22. Then Mr. <NAME> contended that Clause (6) which relates to the rights and/or responsibilities of commission agents also had no application to this case on the ground that it referred to rights and/or responsibilities in connection with contracts of purchase and sale. Here again, I am unable to assent to this contention. In my opinion this sub-clause refers to rights and/or responsibities in connection with transactions in cotton to be carried out in whole or in part in Bombay. This would clearly cover the despatch of the bales of cotton in this case by the petitioners from Kharngaon to Bombay for sale by the respondents. In my opinion, therefore, the parties having agreed, as I hold that they did, to refer their disputes to arbitration in accordance with the by-laws of <ORG>, the arbitrators had jurisdiction, whether the submission was in writing or not.

23. Mr. <NAME> has contended that these by laws themselves amount to a submission in writing, coupled with the agreement between the parties to abide by them. These by-laws have statutory effect having regard to the Bombay Cotton Contracts Act. It has been laid down that a statute is an instrument in writing: see the opinion of Lord <NAME> in <ORG> v. <NAME> (1877) 2 App. Cas. 743, 763. In my opinion this argument of Mr. <NAME> is well founded. Accordingly, I think that even on this part of the case, there would be a submission within the meaning of Section 4 of the Indian Arbitration Act.

24. One further point remains. Mr. <NAME> has contended that unless there is a written agreement and submission within the meaning of Section 4 of the Indian Arbitration Act, the award could not properly be filed as contemplated by Section 15 of the Act. He therefore, contended that upon this assumption it ought to be set aside. I, however, pointed out to him that, even if I were wrong in my conclusion that there was a valid submission within Section 4 of the Indian Arbitration Act, I was nevertheless clearly of opinion that, having regard to the Bombay Cotton Contracts Act, there was a valid statutory agreement by these parties to refer their disputes to arbitration in accordance with the by-laws of the <ORG>, and that the award would, as regards the ready transactions, be valid and binding, even though it could not properly be filed under the Indian Arbitration Act , I further pointed out that if the award were set aside, this would prevent the respondents from enforcing it by action. Mr. <NAME> thereupon conceded that in that event the proper course would have been to ask that the award should be taken off the file. That has not been asked for in the present petition, and I should not feel disposed at this stage, particularly having regard to the form of the petition and the affidavits in answer, this point never having been raised except in the course of the argument, to allow any amendment of the petition in this respect.

25. In the result this petition will be dismissed with costs.


PETITIONER: STATE OF WEST BENGAL AND <ORG>. Vs. RESPONDENT: AGHORE NATH DEY AND <ORG>. DATE OF JUDGMENT02/04/1993 BENCH: <NAME>, <NAME> (J) BENCH: <NAME>, <NAME> (J) SAWANT, P.B. KASLIWAL, N.M. (J) CITATION: 1993 SCR (2) 919 1993 SCC (3) 371 JT 1993 (2) 598 1993 SCALE (2)365 ACT: Civil Services. West Bengal Engineering Services Rules 1959. Rules 4,9,10-12--Overseer estimators appointed Sub Assistant Engineer appointed temporary Assistant Engineers on ad hoc basis--Claim to seniority based on direct recruitment as Assistant Engineer or as promotee from cadre of Sub Assistant Engineer--Tenability of--period of ad hoc appointment whether be taken into account for seniority. HEADNOTE: By Notification No. 94 dated 20th August, 1959 the Governor of West Bengal made Rules under the proviso to Article 309 of the Constitution of India for the regulation of recruitment to the Engineering Services under <ORG> of the State <ORG>. Under these Rules, recruitment to the permanent posts of Assistant Engineers was to be made under Rule 9, while Rule 10 governed recruitment to the temporary posts of Assistant Engineers. Rule 11 provided for emergency appointment by advertisement and interview through <ORG>, on the basis of a competitive examination conducted by <ORG>. Accordingly, any appointment to a permanent or temporary post of Assistant Engineer, which was not made in accordance with Rule 9, or 10 or 11 was, therefore, not in accordance with these Service Rules. The respondents in the appeals were petitioners in the writ petitions in <ORG>.. They were duly appointed Sub- Assistant Engineers who were earlier called Overseer Estimators and though Initially diploma holders having obtained the prescribed degree were eligible for appointment as Assistant Engineers. They were appointed temporary Assistant Engineers on ad hoc basis, initially for a period of six months in the <ORG> 1974 to 1976 and in <ORG> 920 between 1972 to 1978. They claimed seniority on the basis of their direct recruitment to the post of Assistant Engineer, and not as promotee from the next below cadre of Sub-Assistant Engineers In the promotion quota specified for them in the Rules. Their initial ad hoc appointment was extended periodically upto 26.2.1980, and during this period, several opportunities were given to these persons to appear before <ORG> to satisfy the condition attached to the ad hoc appointment, but none of them complied with the requirement, declining throughout to appear before <ORG>. The State <ORG> requested <ORG> to permit regularisation of the services of these ad hoc appointees as Assistant Engineers, without being selected for regular appointment by <ORG> but <ORG> by several letters turned down that re- quest. The <ORG>, finally took the decision on 26th February, 1980 to regularise these persons as Assistant Engineers, and, consequently took three simultaneous steps on 26-2-1980 viz. (1) the requirement in the rules of consultation with <ORG> being dispensed with, (2) absorbtion as temporary Assistant Engineers and (3) a service rule under Article 309 providing for seniority as temporary Assistant Engineers with effect from the same date i.e. 26-2-1980. This statutory rule clearly provided, that all persons appointed regularly in accordance with rules, prior to 26-2-1980, as Assistant Engineers would rank above the ad hoc appointees so absorbed with effect from 26-2-1980 and the <ORG> implemented this decision. The question before <ORG> related to the fixation of seniority of these Sub Assistant Engineers appointed ad hoc temporary Assistant Engineers for a specified period in the <ORG> and <ORG>, vis-a- vis the direct recruits in the cadre of Assistant Engineers appointed regularly according to rules in the department prior to the regularisation of the ad hoc appointees. The writ petitions were dismissed by a Single Judge of <ORG>, but the writ appeals were allowed by <ORG> resulting in grant of the relief claimed by the ad hoc appointees. In the appeals to this Court by the State of West Bengal, and the adversely affected direct recruits who were respondents in the writ petitions filed by the ad hoc appointees, it has been urged that the claim of 921 the respondents for seniority being given to them retrospectively from the date of their initial ad hoc appointment, made contrary to the rules, in spite of their regularisation being made expressly from 26-2-80, is wholly untenable and against the decisions of this Court particularly the <ORG> decision on <CITATION> ., 2 SCR 900 =  2 SCC 715, and that <ORG> of <ORG> com- mitted an error in reversing the judgment of <ORG> which had dismissed the writ petitions. The appeals were contested by the respondents by submitting that the initial ad hoc appointment of the writ petitioners was made by a mode permissible under the Service Rules, that appointment was made in relaxation of the rules by the <ORG> which is implicit in the action taken, the initial ad hoc appointment must, therefore, be equated to the regular appointment made under the Rules, and on this equation there is no justification for discrimination between the initial ad hoc appointees and regular appointees coming in by direct recruitment thereafter in accordance with the rules. It was further submitted that the case fell squarely within the ambit of conclusion (B) of the summary In <ORG> case. Allowing the appeals, this Court, HELD : 1. There is no dispute between promotes and direct recruits, the claim of the writ petitioners being based only as direct recruits in the Cadre of Assistant Engineers, and not as promotees from the lower cadre of Sub-Assistant Engineers to which they had earlier belonged. The present is, therefore, not a case of a dispute relating to the surplus promotees, who were given promotion regularly in accordance with rules, but in excess of the quota fixed for them under the rules. In the present case, all the writ petitioners are persons who were given ad hoc temporary appointments for a fixed period, which was extended from time to time till their regularisation on 26-2-1980, and that too by relaxation of the condition of selection by <ORG>, which was an express condition of their ad hoc appointment and a requirement for regular appointment under the Rules. Assuming the relaxation made in their case by the State <ORG> on 26-2-1980 to be valid, they could be treated as regularly appointed only with effect from 26-2-1980 when the 922 relaxation was given to them, and an order was made simultaneously absorbing them in the cadre of Assistant Engineers, also framing a rule at the same time under Article 309 providing for fixation of their seniority only from that date. Accordingly, there is no foundation for the claim that they could be treated at par with the direct recruits, regularly appointed prior to 26-2-1980. [934 C-E] 2. Prior to the steps taken by the State <ORG> on 26-2- 1980 for regularisation, there was no basis on which the writ petitioners could claim to be regularly appointed as Assistant Engineers; and, therefore, the manner in which they were regularised, including the mode of fixation of their seniority with effect from 26-2-1980, is decisive of the nature of their regular appointment. This alone is sufficient to negative their further claim. They can make no grievance to any part of that exercise, made only for their benefit [934 F-G] 3. The claim of the writ petitioners (respondents in all these appeals) for treating their entire period of service prior to 26-2-1980 as regular service for the purpose of seniority, and fixation of their seniority accordingly, is untenable. 1937-A] 4. Rule It of the 1959 Rules provides for appointments to be made during emergency, and lays down that such appointments can be made only by advertisement and interview, through <ORG>. Admittedly, this express requirement in Rule 11 was not followed or fulfilled subsequently, and, therefore, the initial ad hoc appointments cannot be treated to have been made according to the applicable rules. These ad hoc appointments were clearly not in accordance with the rules, and were made only as a stop-gap arrangement for fixed period, as expressly stated in the appointment order itself. [937-C] 5. Conclusions (A) and (B) of the <ORG> in the Maharashtra Engineer's case have to be read harmoniously, and conclusion (B) cannot cover cases which are expressly excluded by conclusion (A). It is. clear from conclusion (A) that to enable seniority to be counted from the date of initial appointment and not according to the date of confirmation, the incumbent of the post has to be initially, appointed 'according to the rules'. The corollary set out in conclusion (A), then is, that 'Where the initial appointment is only ad hoc and not according to rules and made as a stop- gap arrangement, the officiation in such posts cannot be taken into 923 account for considering the seniority. The case of the writ petitioners squarely falls within this corollary in conclusion (A), which says that the officiation in such posts cannot be taken into account for counting the seniority. [935 D-F] 6. Conclusion (B) was added to cover a different kind of situation, wherein the appointments are otherwise regular except for the deficiency of certain procedural requirements laid down by the rules. This is clear from the opening words of the conclusion (B), namely, if the initial appointment is not made by following the procedure laid down by the rules and the later expression 'till the regularisation of his service in accordance with the rules'. Conclusion (B) must be so read as to reconcile with conclusion (A). [936-B] 7. Decision about the nature of the appointment, for determining whether it falls in this category, has to be made on the basis of the terms of the initial appointment itself and the provisions in the rules. In such cases, the deficiency in the procedural requirements laid down by the rules had to be cured at the first available opportunity, without any default of the employee, and the appointee must continue in the post uninterruptedly till the regularisation of his service, in accordance with the rules. In such cases, the appointee is not to blame for the deficiency in the procedural requirements under the rules at the time of his initial appointment. In such cases also, if there be any delay in curing the defects on account of any fault of the appointee, the appointee would not get the full benefit of the earlier period on account of his default, the benefit being confined only to the period for which he is not to blame. This category of cases is different from those covered by the corollary in conclusion (A) which relates to appointment only on ad hoc basis as a stop-gap arrangement and not according to rules. [936 E-G] 8. It is, therefore, not correct to say, that the present cases can fall within the ambit of conclusion (B), even though they are squarely covered by the corollary in conclusion (A). [936-H] 9. There is, therefore, no escape from the conclusion that the present cases fall squarely within the ambit of the corollary in conclusion (A), of, <ORG>' case and, therefore, the period of ad hoc service of writ petitioners (respondents) on the post of Assistant Engineer prior to 26-2-1980, cannot be counted for reckoning their seniority. [937-E] 924 <CITATION> .,  2 SCR 900 =  2 SCC 715, explained and followed. [932- <CITATION> .,  2 SCR 936 and <CITATION> .,  1 SCR 211, referred to. [932-H] JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3607-11 of 1988.

From the Judgment and Order dated 12.7.1988 of <ORG> in F.M.A.T. Nos. 2301, 2326 and 2327 of 1986. <NAME>, Dr. <NAME>, <NAME>, <NAME>, <NAME>, <NAME> and <NAME> for the Appellants. <NAME>, <NAME>, <NAME> for the Respondents.

The Judgment of the Court was delivered by <ORG> These appeals involve for decision a common question, relating to fixation of seniority of certain Sub- Assistant Engineers appointed ad hoc temporary Assistant Engineers for a specified period in the P.W.D. and <ORG> of the Government of West Bengal, vis-a-vis the direct recruits in the cadre of Assistant Engineers appointed regularly according to rules in these departments prior to the regularisation of the ad hoc appointees. The question was raised by the ad hoc appointees who were regularised subsequently, by filing writ petitions in <ORG> claiming revision of their seniority, reckoned from the date of their initial ad hoc appointment. These writ petitions were dismissed by <ORG> of <ORG> but the writ appeals were allowed by a division bench, resulting in grant of the relief claimed by the ad hoc appointees. It is these judgments, involving the common question of the merit of the claim of the ad hoc appointees for seniority, reckoned from the date of their initial ad hoc appointment, in he facts and circumstances of the case, which are challenged in these appeals.

Civil Appeal No. 3607 of 1988 is by the State of West Bengal while Civil Appeal No. 3610 of 1988 is by the adversely affected direct recruits who were respondents in the writ petition filed by the ad hoc appointees in the P.W.D. Civil Appeal No. 3608 of 1988 is by the State of West Bengal while Civil Appeal No. 3611 of 1988 is by the adversely affected direct recruits who were respondents in the writ petition filed by the ad hoc appointees in <ORG>. Civil Appeal No. 3609 of 1988 is a similar matter, also relating to <ORG>.

The material facts are only a few, and may be stated with reference to the <ORG>, pointing out the minor difference on facts between the ad hoc appointments made in the <ORG> and <ORG>, which are not significant on the conclusion reached. In exercise of the powers conferred by the proviso to Article 309 of the Constitution of India, the Governor of West Bengal made Rules by Notification No. 94 dated 20th August, 1959 for the regulation of recruitment to the Engineering Services under <ORG> of the Government of West Bengal. In the present case, we are concerned with the cadre of Assistant Engineers, for which the relevant rules are :

"Rule 4:

There will be an examination held by <ORG>, West Bengal, for recruitment to posts of Assistant Engineer. A certain proportion of such posts as may be determined by <ORG> from time to time, will be filled up by candidates, in order of merit, who will be given a higher initial pay of Rs. 325 per month in the time-scale of pay for Assistant Engineers. In order to be eligible for such higher initial pay a candidate must secure 66 per cent or above of the total marks in the said examination.

Rule 9:

Recruitment to the permanent posts of Assistant Engineer shall be made as follows

(a)Forty per cent of vacancies by direct recruitment on the results of a competitive examination to be conducted by <ORG>, West Bengal as mentioned in rule 4 supra:

Qualifications :

(i)A degree in Civil Engineering of a recognised University or any other qualification in Civil Engineering exempting a candidate from appearing in Sections A and B of Associate Membership Examination of <ORG> (India).

(ii)One year's post graduate practical training or study or research or practica l engineering experience.

(iii)Age not more than 27 years on the 1st August of the year in which the recruitment examination is held.

The age limit shall in the case of candidates who have been in the employ of the <ORG> or <ORG> or of <ORG> or any other statutory body recognised for the purpose by the <ORG> and are not out of such employment for more than a year on the said date be releasable to the extent of the actual period spent (continuously) in such employment. This relaxation of age limit will not be permitted to a candidate who had already appeared in the examination thrice.

No candidate will be allowed to take more than three chances.

Departmental candidates are' eligible to apply provided they fulfill the requisite qualifications.

(b)Forty per cent by selection from amongst directly recruited temporary Assistant Engineers who have rendered two years satisfactory service, selection wing made by <ORG>, West Bengal.

(c)Twenty per cent by promotion of confirmed Overseer Estimators.

Rule 10 Recruitment to temporary posts of Assistant Engineer shall be made as follows-.-

(a) Eighty per cent of the vacancies are to be filled by direct recruitment on the results of a competitive examination referred to in rule 9(a) above.

(b) Twenty percent by promotion of confirmed Overseer Estimators.

Rule 11 Notwithstanding anything contained in these rules the Governor may in case of emergency fill up vacancies in the posts of Assistant Engineer both permanent and temporary by advertisement and interview, through <ORG>, West Bengal. Rule 12 An Overseer Estimator shall not be promoted as a temporary Assistant Engineer unless he has rendered 10 years services. To be eligible fo r promotion he must pass a written and oral examination which will be conducted by <ORG>, West Bengal, and will be of the same standard as Professional Examination referred to in Chapter VI of the Service (Training and Examination) Rules, West Bengal, Overseer Estimators who have been confirmed in their posts and have tendered 8 years' service including temporary service in that post shall be eligible to sit for such examination, a panel of Overseer Estimator fit for promotion as temporary Assistant Engineers shall be maintained in consultation with <ORG>, West Bengal." Under these Rules, recruitment to the permanent posts of Assistant Engineers was required to be made under Rule 9, while Rule 10 governed recruitment to the temporary posts of Assistant Engineers. Rule 11 provided for emergency appointment by advertisement and interview through <ORG>. It is clear from these Rules that appointments to all the posts, permanent and temporary were to be made according to the prescribed procedure, on the basis of a competitive examination conducted by <ORG>; and even the appointments made in an emergency governed by Rule 11 were to be made 'by advertisement and interview through <ORG>'. Any appointment to a permanent or temporary post of Assistant Engineer, which was not made in accordance with Rule 9 or 10 or 11 was, therefore, not in accordance with these Rules. The writ petitioners in all these matters were duly appointed Sub-Assistant Engineers who were earlier called Overseer Estimators as described in the Rules, and though initially diploma holders, having obtained the prescribed degree, were eligible for appointment as Assistant Engineers. The writ petitioners (respondents in these appeals) were appointed temporary Assistant Engineers on ad hoc basis, initially for a period of six months in the PWD between. 1974 to 1976 and in <ORG> between 1972 to 1978. According to writ petitioners themselves, their claim for seniority is based on direct recruitment to the post of Assistant Engineer, and not as promotee from the next below cadre of Sub-Assistant Engineers in the promotion quota specified for them, in the Rules. It is, therefore, the claim of the writ petitioners for seniority from the date of their initial ad hoc appointment, as direct recruits, and not as promotees in the promotion quota, which has to be considered. The ad hoc appointment of all the writ petitioners was in identical terms and, therefore, it is sufficient to refer merely to the relevant part of one such notification dated 10th May, 1974, as illustrative of the nature of their ad hoc appointment. The relevant part of the notification is as under "The Governor is pleased to appoint the following Sub-Assistant Engineers of the P.W.D. now posted in the Directorates/offices mentioned against each as tempy. Assistan t Engineers in <ORG> under <ORG>, on ad hoc basis, for a period of 6 (six) months with effect from the dates of joining or until further orders whichever is earlier.

4. The appointment is purely on ad hoc basis and he will have to revert to the post of S.A.E. if he is not selected for regular appointment as Assistant Engineer through the P.S.C."

The initial ad hoc appointment was extended periodically, on the same terms, during the entire period upto 26.2.1980. During this period, several opportunities were given to these persons to appear before <ORG> to satisfy the condition attached to their ad hoc appointment, but none of the writ petitioners complied with the requirement, declining throughout to appear before <ORG>. Strangely, <ORG> requested <ORG> to permit regularisation of the services of these ad hoc, appointees as Assistant Engineers, without being selected for regular appointment by <ORG>, but <ORG> firmly turned down that request. The <ORG>'s letters dated 4.5.1978, 10.10.1979 and 22.11.1979 contain such refusal.

The <ORG>, even then, took the decision on 26th February, 1980 to regularise these persons as Assistant Engineers, and, consequently, took three simultaneous steps on 26.2.1980: the requirement in the rules of consultation with the <ORG> was dispensed with, for them; they were absorbed as temporary Assistant Engineers; and rule under Article 309 was made, providing for their seniority as temporary Assistant Engineers, with effect from the same date i.e. 26.2.1980. This rule clearly provided, that all persons appointed regularly in accordance with rules, prior to 26.2.1980, as Assistant Engineers would rank above the ad hoc appointees so absorbed with effect from 26.2.1980. This decision of the <ORG> has also been implemented. Surprisingly, the grievance, even then, of the writ petitioners is, that their seniority should be reckoned not only from 26.2.1980, as has been done, but from the date of their initial ad hoc appointment made temporarily in the above manner, notwithstanding the conditions attached to that appointment under the rules, and their failure to fulfill the same.

It is sufficient to refer to certain portions of the <ORG>'s reply dated 4th May, 1978 to <ORG> proposal for regularisation of ad hoc appointments, reiterating the strong objection of <ORG> that 'the appointments had been ab initio irregular, illegal and unconstitutional.' Relevant extract from the reply is as under:-

"2. It appears that the cases of 27 of 36 ad hoc appointments of Assistant Engineer (29 in the Civil Branch and 7 in the Electrical Branch) under <ORG> as made between May, 1974 and June, 1975 were earlier reported to the <ORG> in January, 1975. The <ORG> informed Government that the appointments had been ab initio irregular, illegal and unconstitutional and requested Government to make regular recruitment to the posts after advertisement (vide Secretary's D.O. No. 370-PSC dated the 8th March, 1975). The <ORG> also brought the irregularity to the notice of the Chief Secretary whose reply in this regard was as follows (vide Chief Secretary's letter No. 938/75-CS dated the 22nd August, 1975 issued by <ORG> :

'...The ad hoc appointments in question were made by <ORG> in the exigencies of public service pending recruitment of Assistant Engineers through <ORG>, West Bengal and on the express condition that the concerned of- ficers would have 'lo revert if they failed to be selected by <ORG> for appointment as Assistant Engineers."

3.It appears that of the 29 ad hoc Assistant Engineers (Civil) only 3 applied in response to the <ORG>'s subsequent advertisement. None of them however appeared at the preliminary written test held by the Com- mission in that connection. As regards the 7 posts of Assistant Engineers (Electrical) it appears that all the 7 ad hoc appointees applied in response to the <ORG>'s advertisements issued in 1975 but that none of them was able to obtain even the pass mark at the interviews. In the above context it is not clear how Government can now sponsor a proposal for regularisation of the appointment of these ad hoc appointees."

In this reply it was finally said that the illegality of these ad hoc appointments could not be cured. It was after the strong stand taken by the <ORG>, that the State Government took the aforesaid action on 26.2.1980 to dispense with the requirement of consultation with the <ORG>, and regularise appointments of ad hoc appointees with effect from 26.2.1980. The Rules for seniority made by the notification dated 26.2.1980 issued in exercise of the power conferred by the proviso to Article 309 of the Constitution, are as under "1. These rules may be called the Seniority Rules for the Assistant Engineers recruited in <ORG> otherwise than through <ORG>, West Bengal during the period from May 1974 t o June,1976.

2. The Assistant Engineers under <ORG> who were recruited otherwise than through <ORG>, West Bengal during the period from May 1974 to June 1976 and who were excluded from the purview of <ORG>, West Bengal under this department notification No. 1299- F dated 26.2.1982, shall be deemed to be junior to any Assistant Engineer who was selected by <ORG>, West Bengal and was appointed on a date prior to 26th February, 1980. The inter-seniority in respect of the Assistant Engineers who are covered by the said notification shall be determined on the basis of select list, if any. In the absence of any such select list the inter-se seniority should be determined on the basis of their length of service as Assistant Engineer in the <ORG>."

(emphasis supplied) These ad hoc appointees having obtained the benefit of regularisation with effect from 26.2.1980 without being selected by the <ORG>, and being given the benefit of seniority from the date of their regularisation on 26.2.1980, have challenged the Government's action and claimed seniority with effect from the date of their initial ad hoc appointment, of this nature. It may, here be mentioned, that in case of the ad hoc appointees in <ORG>, even a rule for seniority being given to them from 26.2.1980 was not made, as was done for the ad hoc appointees in the <ORG>, and yet they have also been given the same benefit. They make the same grievance, inspite of this.

On behalf of the appellants, State of West Bengal and the direct recruits aggrieved by the judgment of <ORG> of <ORG>, it has been urged that the claim of the writ petitioners (respondents in these appeals) for seniority being given to the, retrospectively from the date of their initial ad hoc appointment, made contrary to the rules, in spite of their regularisation being made expressly from 26.2.1980, is wholly untenable and against the decisions of this Court, particularly the constitution bench decision in Direct Recruit Class II Engineering Officer's <CITATION> .,  2 SCR 900 =  2 SCC 715. On this basis, it was submitted that <ORG> of <ORG> committed an error in reversing the judgment of <ORG>, by which the writ petitions had been dismissed. In reply <NAME> appearing for the writ petitioners (respondents in all these appeals) submitted, that the initial ad hoc appointment of the writ petitioners was made by a mode permissible under the rules; that appointment was made in relaxation of' the rules by the <ORG> which is implicit in the action taken; the initial ad hoc appointment must, therefore, be equated with a regular appointment made under the rules; and on this equation there is no justification for discrimination between the initial ad hoc appointees and regular appointees coming in by direct recruitment thereafter in accordance with rules. It was submitted that the initial ad hoc appointment being, therefore, in the nature of regular appointment, made during an emergency, after selection by a Committee consisting of five Chief Engineers, these persons are entitled to count their entire service including the ad hoc period prior to 26.2.1980, for the purpose of their seniority. <NAME> relied on the decisions of this Court in <CITATION> . 2 SCR 936 and <CITATION> .  1 SCR 211 to support his submission. <NAME> further submitted, that the case of the writ petitioners fell squarely within the ambit of conclusion (B) of the summary in <ORG> case (in para 44 of the SCR = para 47 of SCC.

The question, therefore, is whether <NAME> is right in his submission that this case falls within the ambit of the said conclusion (B) in <ORG> case. The submission of the other side is that this case falls, not within conclusion (B) but the corollary mentioned in con- clusion (A), of that decision. Conclusions (A) and (B), which alone are material, are as under :-

"(A) Once an incumbent is appointed to a post according to rule, his seniority has to be counted from the date of his appointment and not according to the date of his confirmation. The corollary of the above rule is that where the initial appointment is only ad hoc and not according to rules and made as a stop-gap arrangement, the officiation in such post cannot be taken into account for considering the seniority.

(B)If the initial appointment is not made by following the procedure laid down by the rules but the appointee continues in the post uninterruptedly till the regularisation of his service in accordance with the rules, the period of officiating service will be counted."

It is not necessary to deal at length with the decisions of this court in <NAME> and <NAME> in view of the later constitution bench judgment in <ORG> case, wherein all the relevant earlier decisions have been considered before summarising the conclusions (in para 44 of SCR = para 47 of SCC).

We may, however, briefly refer to the decisions in A. Janardhana and <NAME>, since <ORG> has strongly relied on them. It may be mentioned that both these decisions related to inter-se seniority of direct recruits and promotees, the two channels for appointment to the posts, where there was a quota prescribed for the two channels leading to rota for confirmation, and the seniority was based on the date of confirmation, according to rules. The dispute arose as a result of promotions being made in excess of the promotees quota, in the case of the surplus promotees. It was in that context, that the question of taking into account longer period of continuous officiation for the purpose of fixing inter-se seniority of direct recruits and promotees, came up for consideration. Those cases are clearly distinguishable. In the present case, there is no dispute between promotees and direct recruits, the claim of the writ petitioners being based only as direct recruits in the cadre of Assistant Engineers, and not as promotees from the lower cadre of Sub- Assistant Engineers to which they had earlier belonged. The present is, therefore not a case of a dispute relating to the surplus promotees, who were given promotion regularly in accordance with rules, but in excess of the quota fixed for them under the rules. In the present case, all the writ petitioners are persons who were given ad hoc temporary appointments for a fixed period, which was extended from time to time till their regularisation on 26.2.1980, and that too by relaxation of the condition of selection by <ORG>, which was an express condition of their ad hoc appointment and a requirement for regular appointment under the Rules. Assuming the relaxation made in their case by <ORG> on 26.2.1980 to be valid, as the same is not disputed before us, they could be treated as regularly appointed only with effect from 26.2.1980 when the relaxation was given to them, and an order was made simultaneously absorbing them in the cadre of Assistant Engineers, also framing a rule at the same time under Article 309 providing for fixation of their seniority only from that date. Accordingly, there is no foundation for the claim that they could be treated at par with the direct recruits, regularly appointed prior to 26.2.1980. The admitted facts, which are the foundation of the claim of the writ petitioners, are sufficient to negative their claim. It is obvious that prior to the steps taken by <ORG> on 26.2.1980 for their regularisation in this manner, there was no basis on which the writ petitioners could claim to be regularly appointed as Assistant Engineers; and, therefore, the manner in which they were regularised, including the mode of fixation of their seniority with effect from 26.2.1980, is decisive of the nature of their regular appointment. This alone is sufficient to negative their further claim. They can make no grievance to any part of that exercise, made only for their benefit.

The constitution bench in <ORG> case, while dealing with <NAME>, emphasised the unusual fact that the promotees in question had worked continuously for long periods of nearly fifteen to twenty years on the posts without being reverted, and then proceeded to state the principle thus :

"We, therefore, confirm the principle of counting towards seniority the period-of continuous officiation following an appointment made in accordance with the rules prescribed for regular substantive appointments in the service.' The constitution bench having dealt with <NAME> in this manner, to indicate the above principle, that decision can not be construed to apply to cases where the initial appointment was not according to rules.

We shall now deal with conclusions (A) and (B) of the constitution bench in <ORG> case, quoted above.

There can be no doubt that these two conclusions have to be read harmoniously, and conclusion (B) can not cover cases which are expressly excluded by conclusion (A). We may, therefore, first refer to conclusion (A). It is clear from conclusion (A) that to enable seniority to be counted from the date of initial appointment and not according to the date of confirmation, the incumbent of the post has to be initially appointed ,according to rules'. The corollary set out in conclusion (A), then is, that 'where the initial appointment is only ad hoc and not according to rules and made as a stop-gap arrangement, the officiation in such posts cannot be taken into account for considering the seniority. Thus, the corollary in conclusion (A) expressly excludes the category of cases where the initial appointment is only ad hoc and not according to rules, being made only as a stop-gap arrangement. The case of the writ petitioners squarely falls within this corollary in conclusion (A), which says that the officiation in such posts cannot be taken into account for counting the seniority. This being the obvious inference from conclusion (A), the question is whether the present case can also fall within conclusion (B) which deals with cases in which period of officiating service will be counted for seniority. We have no doubt that conclusion (B) cannot include, within its ambit, those cases which are expressly covered by the corollary in conclusion (A), since the two conclusions cannot be read in conflict with each other.

The question therefore, is of the category which would be covered by conclusion (B) excluding therefrom the cases covered by the corollary in conclusion (A). In our opinion the conclusion (B) was added to cover a different kind of situation, wherein the appointments are otherwise regular, except for the deficiency of certain procedural requirements laid down by the rules. This is clear from the opening words of the conclusion (B), namely, 'if the initial appointment is not made by following the procedure laid down by the rules' and the later expression 'till the regularisation of his service in accordance with the rules'. We read conclusion (B), and it must be so read to re-councile with conclusion (A), to cover the cases where the initial appointment is made against an existing vacancy, not limited to a fixed period of time or purpose by the appointment order itself, and is made subject to the deficiency in the procedural requirements prescribed by the rules for adjudging suitability of the appointee for the post being cured at the time of regularisation, the appointee being eligible and qualified in every manner for a regular appointment on the date of initial appointment in such cases. Decision about the nature of the appointment, for determining whether it falls in this category, has to be made on the basis of the terms of the initial appointment itself and the provisions in the rules. In such cases, the deficiency in the procedural requirements laid down by the rules has to be cured at the first available opportunity, without any default of the employee, and the appointee must continue in the post uninterruptedly till the regularisation of his service, in accordance with the rules. In such cases, the appointee is not to blame for the deficiency in the procedural requirements under the rules at the time of his initial appointment, and the appointment not-being limited to a fixed period of time is intended to be a regular appointment, subject to the remaining procedural requirements of the rules being fulfilled at the earliest. In such cases also, if there be any delay in curing the defects on account of any fault of the appointee, the appointee would not get the full benefit of the earlier period on account of his default, the benefit being confined only to the period for which he is not to blame. This category of cases is different from those covered by the corollary in conclusion (A) which relates to appointment only on ad hoc basis as a stop-gap arrangement and not according to rules. It is, therefore, not correct to say, that the present cases can fall within the ambit of conclusion (B), even though they are squarely covered by the corollary in conclusion (A).

In view of the above, it is clear that the claim of the writ petitioners (respondents in all these appeals) for treating their entire period of 'service prior to 26.2.1980 as regular service for the purpose of seniority, and fixation of their seniority accordingly, is untenable. The submission of <NAME> that their initial ad hoc appointment must be treated as having been made in accordance with the rules since the selection by an alternative mode, namely, by a committee of five Chief Engineers was resorted to on account of the emergency, cannot be accepted. Rule 11 of the 1959 Rules provides for appointments to be made during emergency, and lays down that such appointments during emergency can be made only 'by advertisement and interview, through <ORG>, West Bengal.' Admittedly, this express requirement in Rule 11 was not followed or fulfilled subsequently, and, therefore, the initial ad hoc appointments cannot be treated to have been made according to the applicable rules. These ad hoc appointments were clearly not in accordance with the rules, and were made only as a stop-gap arrangement for fixed period, as expressly stated in the appointment order itself. Thus, there is no escape from the conclusion that the present cases fall squarely within the ambit of the corollary in conclusion (A), of <ORG> case and, therefore, the period of ad hoc service of writ petitioners (respondents) on the post of Assistant Engineer prior to 26.2.1980, cannot be counted for reckoning their seniority.

Consequently, these appeals are allowed. The impugned judgments of <ORG> of <ORG>, are set aside, and those of <ORG> dismissing the writ petitions are restored. No costs.

<NAME>

Appeals allowed.