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CASE NO.:

Appeal (civil) 322 of 2007

PETITIONER:

P.V. George & Ors

RESPONDENT:

State of Kerala & Ors

DATE OF JUDGMENT: 23/01/2007

BENCH:

S.B. Sinha & Markandey Katju

JUDGMENT:

J U D G M E N T

[Arising out of S.L.P. (Civil) No.8305 of 2006]

W I T H

CIVIL APPEAL NO. 323 OF 2007

[Arising out of S.L.P. (Civil) No.8744 of 2006]

S.B. SINHA, J :

Leave granted.

Application of the doctrine of prospective overruling in service

matters is in question in these appeals which arises out of a judgment and

order dated 31.03.2006 passed by a Division Bench of the Kerala High

Court whereby and whereunder on interpretation of a Full Bench decision in

Subaida Beevi v. State of Kerala [2005 (1) KLT 426] it was held to have no

prospective operation.

Appellants were working in the Government Presses, Kerala. The

Government of Kerala framed rules for the employees of Kerala

Government Presses Subordinate Services to which cadre the appellants

belonged. It consisted of several branches. Admittedly, there are several

categories and sub-categories of employees working therein The mode of

appointment as also the qualifications therefor has been prescribed in the

rules. By reason of a Government order dated 01.07.1980, the rule framed

in terms of SRO No. 1030 of 1976 was amended prescribing a ratio of 1 : 1

for the purpose of promotion between diploma-holders and certificate-

holders by adding a Note thereto, which reads as under :

"Note : Promotion of persons qualified under Item

2(a) and 2(b) above shall be made in the ratio 1 : 1

starting with promotion of persons qualified under Item

2(a). If no person qualified under Item 2(a) is available

for promotion, the turn of promotion will be given to the

person qualified under Item 2(b) and vice versa.

Provided that no senior diploma holder shall be

superseded by a junior certificate holder and provided

that the benefit of turn under the ratio of 1 : 1 forfeited by

the certificate holder by virtue of the promotion the

senior diploma holder, shall be restored to the certificate

holder in the arising vacancy."

A further proviso was appended thereto by a Government order dated

30.08.1984 in term of SRO No. 1044 of 1984, which reads as follows :

"Provided further that the benefit of the ratio of 1 :

1 forfeited by the certificate holder by virtue of the

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promotion of the senior diploma holder shall be restored

to the certificate holder in the next arising vacancy."

Constitutionality of the said provision was challenged before the

Kerala High Court, whereupon a Division Bench thereof in Daniel v. State

of Kerala [1985 KLT 1057], declared the same to be ultra vires, stating :

"In the light of the decisions of the Supreme Court

in A.I.R. 1974 SC 1, AIR 1974 SC 1631, 1983 KLT 987,

1983 KLT 878, 1981 (2) Kerala 527 and 1975 KLT 1, we

have no doubt at all that this classification on

microscopic distinction could not be allowed. We would

therefore strike down the notes to Branch Nos. 1 and 9 to

Ex. P-2"

The correctness of the said decision was questioned before another

Division Bench of the said Court in Writ Appeal No.149 of 1990. By a

judgment dated 14.01.1992, Paripoornan, J. (as His Lordship then was),

held :

"Having heard counsel at length, we are of the

view, that since the service involved in the present cases

is the same as the one which came up for consideration in

Daniel's case (1985 KLT 1057) and the Rules are also

the same, the judgments appealed against, do not require

interference. It is agreed that the Bench decision in

Daniel's case (1985 KLT 1057) considered the identical

rules in the same service (Government Presses

Subordinate Service), which in issue in these two O.Ps.

as well. Even so, learned Government Pleader, Mr. V.C.

James, very forcefully submitted that the Bench decision

in Daniel's case (1985 KLT 1057) is not good law, or, at

any rate, requires reconsideration in view of the later

Bench decision of this Court in Balakrishnan v. State of

Kerala (1990 (1) KLT 66). We are unable to accept this

plea for more reasons than one. The service rules, which

came up for consideration in the later decision,

Balakrishnan's case (1990 (1) KLT 66) is "Engineering

Service (Radio and Electrical Branches) Rules, 1967".

The import and impact in evaluating and upholding the

reason for fixing the ratio in the later case are entirely

different. The perspective is also different. That apart,

the earlier bench decision in Daniel's case (1985 KLT

1057) does not appear to have been brought to the notice

of the learned Judges, who rendered the decision in

Balakrishnan's case (1990 (1) KLT 66). Prima facie, the

later decision should be considered to be one rendered

per inqurium. In these circumstances, we are satisfied

that the ratio of the earlier bench decision in Danil's case

(1985 KLT 1057) should govern the fate of the present

two Original Petitions. That is what has been done by

the two learned Judge of this Court.

In these circumstances, we are of the view that no

interference is called for in these writ appeals. The

judgments appealed against are confirmed. The writ

appeals are dismissed. There shall be no order as to

costs."

It is, however, not in dispute that Jagannadha Rao, J. (as the His

Lordship then was) in Ravindran v. State of Kerala [1992 (1) KLT 524],

took a different view, opining :

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"In the present case the Government has filed a

counter stating that after considering various aspects, the

Government prescribed the necessary qualification for

the various supervisory posts 'according to the

requirement of duties and functions of the post'. It is

also stated that special rules were made for the petitioner

and other similarly situated persons. It is also stated that

Government considered that seniors who are not diploma

holders may be prejudiced by the rules as they stood in

1976, and that the ratio of 1 : 1 fixed for promotion

between the certificate holders and diploma holders is

quite reasonable and rational and hence valid. Having

regard to the technical nature of the posts in the

government presses we do not think that the ratio

prescribed between diploma holders and certificate

holders is in any way unreasonable. In view of the

subsequent decision of the Supreme Court in Roop

Chand's case, AIR 1989 SC 307, and also in view of the

two judgments of the Division Bench in Balakrishnan's

case and in Cheru's case, O.P. No. 1851 of 1984, we are

not inclined to follow the decision of the Division Bench

in Daniel v. State of Kerala, 1985 KLT 1057."

The conflict in the said decisions was noticed and eventually referred

to a Full Bench in the Subaida Beevi (supra) by another Division Bench of

the said Court. By a judgment dated 04.11.2004, the Full Bench held that

the amended special rules for the Government Presses Subordinate Services

Rules were not suffering from any infirmity and fixation of ratio of 1 : 1 for

promotion to higher posts between diploma-holders and certificate-holders

needs no interference. Whereas the decision in Daniel (supra) was expressly

overruled, the decision in Ravindran (supra) was upheld, holding :

"We hold that the impugned amendment made in

the Special Rules for the Government Presses

Subordinate Service providing ratio of 1 : 1 for

promotion to higher posts between diploma holders and

certificate holders is not discriminatory and it is not

violative of articles 14 and 16 of the Constitution of

India. Government is bound to effect promotions on the

basis of the amended Special Rules."

A special leave petition filed thereagainst was dismissed by this

Court by an order dated 04.03.2005.

Appellants were issued notices as to why they shall not be reverted

from the post of Assistant Superintendent pursuant to or in furtherance of the

said decision of the Full Bench of the Kerala High Court. Legality of the

said notices was questioned by the appellants herein in a writ petiton. By

reason of the impugned judgment, the said writ petition has been dismissed

by the High Court, opining :

"\005Since the Government has accepted the Full Bench

decision and has taken steps, but, did not implement the

same, only because of the stay order passed in the other

writ petitions and has undertaken, since the vacation of

the stay order, the judgment would be implemented, the

contempt petitions are closed recording the undertaking

that the judgment will be implemented within three

months from today. With the above observations, all the

writ petitions are dismissed and the contempt court

petitions are closed."

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Mr. C.S. Rajan, learned Senior Counsel appearing on behalf of the

appellants, submitted that the High Court committed a manifest error insofar

as it failed to take into consideration that in service matters ordinarily

doctrine of prospective overruling would apply. Reliance in his behalf has

been placed on Managing Director ECIL, Hyderabad v. B. Karunakar

[(1993) 4 SCC 727], R.K. Sabharwal v. State of Punjab [(1995) 2 SCC

745], Union of India and Others v. Virpal Singh Chauhan and Others

[(1995) 6 SCC 684], Ashok Kumar Gupta v. State of U.P. [(1997) 5 SCC

201], Ajit Singh-II v. State of Punjab [(1999) 7 SCC 209], Baburam v. C.C.

Jacob [(1999) 3 SCC 362], E.A. Sathyanesan v. V.K. Agnihotri and Others

[(2004) 9 SCC 165], M. Nagaraj & Others v. Union of India & Others

[(2006)10 SCALE 301].

It was furthermore submitted that the promotions were given to the

appellants when the law laid down by the Kerala High Court in Daniel

(supra) and Ravindran (supra) were in force and, thus, as the law was

declared by the Full Bench only in the year 2005, the same was not

applicable in their case.

Mr. Uday U. Lalit, learned Senior Counsel appearing for the

respondents, would, however, support the judgment.

For the views we propose to take, it is not necessary for us to consider

all the decisions relied upon by Mr. Rajan. The legal position as regards the

applicability of doctrine of prospective overruling is no longer res integra.

This Court in exercise of its jurisdiction under Article 32 or Article 142 of

the Constitution of India may declare a law to have a prospective effect. The

Division Bench of the High Court may be correct in opining that having

regard to the decision of this Court in L.C. Golak Nath and Others v. State of

Punjab and Another [AIR 1967 SC 1643) the power of overruling is vested

only in this Court and that too in constitutional matters, but the High Courts

in exercise of their jurisdiction under Article 226 of the Constitution of

India, even without applying the doctrine of prospective overruling,

indisputably may grant a limited relief in exercise of their equity

jurisdiction.

We are, however, in this case not concerned with such a situation.

The law was in a state of flux in the sense that as far back as in the year

1992, the two Division Benches took contrary views; while one applied the

ratio laid down in Daniel's (supra), another refused to follow the same.

The Full Bench of the Kerala High Court upheld the views of the

Division Bench of the said Court in Ravindran (supra) and overruled Daniel

(supra).

The Full Bench of the High Court indisputably did not say that the

promotions which had already been granted would not be disturbed. The

judgment of the Full Bench attained finality as special leave petition filed

thereagainst was dismissed. Rules as amended by the State of Kerala on

01.07.1980 and 30.08.1984 were upheld.

If the said Rules ultimately were held to be constitutional, it was

required to be given effect to. The law declared by a court is ordinarily

affects the rights of the parties. A court of law having regard to the nature of

adversarial system of our justice delivery system exercises adjudicatory role.

Legal consequences are determined in respect of the matters which had

taken place in the past.

It may be true that when the doctrine of stare decisis is not adhered to,

a change in the law may adversely affect the interest of the citizens. The

doctrine of prospective overruling although is applied to overcome such a

situation, but then it must be stated expressly. The power must be exercised

in the clearest possible term. The decisions of this Court are clear pointer

thereto.

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As would be noticed by us hereafter in Dr. Suresh Chandra Verma

and Others v. The Chancellor, Nagpur University and Others [(1990) 4 SCC

55], this Court held :

"The second contention need not detain us long. It

is based primarily on the provisions of Section 57(5) of

the Act. The contention is that since the provisions of that

section give power to the Chancellor to terminate the

services of a teacher only if he is satisfied that the

appointment "was not in accordance with the law at that

time in force" and since the law at that time in force, viz.,

on March 30, 1985 when the appellants were appointed,

was the law as laid down in Bhakre's case which was

decided on December 7, 1984, the termination of the

appellants is beyond the powers of the Chancellor. The

argument can only be described as naive. It is

unnecessary to point out that when the court decides that

the interpretation of a particular provision as given earlier

was not legal, it in effect declares that the law as it stood

from the beginning was as per its decision, and that it

was never the law otherwise. This being the case, since

the Full Bench and now this Court has taken the view

that the interpretation placed on the provisions of law by

the Division Bench in Bhakre's case was erroneous, it

will have to be held that the appointments made by the

University on March 30, 1985 pursuant to the law laid

down in Bhakre's case were not according to law. Hence,

the termination of the services of the appellants were in

compliance with the provisions of Section 57(5) of the

Act."

The ratio laid down by this Court, as noticed hereinafter, categorically

shows the effect of a decision which had not been directed to have a

prospective operation. The legal position in clear and unequivocal term was

stated by a Division Bench of this Court in M.A. Murthy v. State of

Karnataka & Others [(2003) 7 SCC 517] in the following terms :

"Learned counsel for the appellant submitted that

the approach of the High Court is erroneous as the law

declared by this Court is presumed to be the law at all

times. Normally, the decision of this Court enunciating a

principle of law is applicable to all cases irrespective of

its stage of pendency because it is assumed that what is

enunciated by the Supreme Court is, in fact, the law from

inception. The doctrine of prospective over-ruling which

is a feature of American jurisprudence is an exception to

the normal principle of law, was imported and applied for

the first time in L.C. Golak Nath and Ors. v. State of

Punjab and Anr. In Managing Director, ECIL, Hyderabad

and Ors., v. B. Karunakar and Ors., the view was

adopted. Prospective over-ruling is a part of the

principles of constitutional canon of interpretation and

can be resorted to by this Court while superseding the

law declared by it earlier. It is a device innovated to

avoid reopening of settled issues, to prevent multiplicity

of proceedings, and to avoid uncertainty and avoidable

litigation. In other words, actions taken contrary to the

law declared prior to the date of declaration are validated

in larger public interest. The law as declared applies to

future cases. (See Ashok Kumar Gupta v. State of U.P.

and Baburam v. C.C. Jacob. It is for this Court to indicate

as to whether the decision in question will operate

prospectively. In other words, there shall be no

prospective over-ruling, unless it is so indicated in the

particular decision. It is not open to be held that the

decision in a particular case will be prospective in its

application by application of the doctrine of prospective

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over-ruling. The doctrine of binding precedent helps in

promoting certainty and consistency in judicial decisions

and enables an organic development of the law besides

providing assurance to the individual as to the

consequences of transactions forming part of the daily

affairs. That being the position, the High Court was in

error by holding that the judgment which operated on the

date of selection was operative and not the review

judgment in Ashok Kumar Sharma's casa No. II. All the

more so when the subsequent judgment is by way of

Review of the first judgment in which case there are no

judgments at all and the subsequent judgment rendered

on review petitions is the one and only judgment

rendered, effectively and for all purposes, the earlier

decision having been erased by countenancing the review

applications. The impugned judgments of the High Court

are, therefore, set, aside.

The effect of declaration of law, the rue of stare decisis and the

consequences flowing from a departure from an earlier decision has been

considered in great details by the House of Lords in National Westminster

Bank plc v. Spectrum Plus Limited and Others [(2005) UKHL 41]: [2005

(3) WLR 58], opining :

"8. People generally conduct their affairs on the basis

of what they understand the law to be. This

'retrospective' effect of a change in the law of this

nature can have disruptive and seemingly unfair

consequences. 'Prospective overruling', sometimes

described as 'non-retroactive overruling', is a

judicial tool fashioned to mitigate these adverse

consequences. It is a shorthand description for

court rulings on points of law which, to greater or

lesser extent, are designed not to have the normal

retrospective effect of judicial decisions.

9. Prospective overruling takes several different

forms. In its simplest form prospective overruling

involves a court giving a ruling of the character

sought by the bank in the present case. Overruling

of this simple or 'pure' type has the effect that the

court ruling has an exclusively prospective effect.

The ruling applies only to transactions or

happenings occurring after the date of the court

decision. All transactions entered into, or events

occurring, before that date continue to be governed

by the law as it was conceived to be before the

court gave its ruling.

10. Other forms of prospective overruling are more

limited and 'selective' in their departure from the

normal effect of court decisions. The ruling in its

operation may be prospective and, additionally,

retrospective in its effect as between the parties to

the case in which the ruling is given. Or the ruling

may be prospective and, additionally, retrospective

as between the parties in the case in which the

ruling was given and also as between the parties in

any other cases already pending before the courts.

There are other variations on the same theme.

11. Recently Advocate General Jacobs suggested an

even more radical form of prospective overruling.

He suggested that the retrospective and

prospective effect of a ruling of the European

Court of Justice might be subject to a temporal

limitation that the ruling should not take effect

until a future date, namely, when the State had had

a reasonable opportunity to introduce new

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legislation: Banco Popolare di Cremona v Agenzia

Entrate Uffficio Cremona (Case C-475/03, 17

March 2005), paras 72-88."

[See also Lord Rodger of Earsferry - 'A Time for Everything under the Law

: Some Reflections on Retrospectivity' [(2005) 121 LQR 55, 77].

Lord Nicholls of Birkenhead speaking for the House of Lords clearly

held that the power to apply prospective overruling is available to the House

of Lords also.

In Queen (on the Application of Ernest Leslie Wright) v. Secretary of

State for the Home Department [(2006) EWCA Civ. 67], it was observed :

"42. The English law in this respect is developing

rapidly. Prospective rulings seemed anathema to

Lord Wilberforce in Launchbury v Morgans

[1973] AC 127, 137 and Lord Goff of Chieveley in

Kleinwort Benson Ltd v Lincoln City Council

[1999] 2 AC 349, 379. By the time of Regina v

Governor of Brockhill Prison, ex p Evans (No. 2)

[2001] 2 AC 19, Lord Slynn at p. 26 H considered

that the effect of judicial rulings being prospective

might in some situations be "desirable and in no

way unjust", though Lord Steyn at p. 28 B thought

the point was a "novel one". With some

perspicacity Lord Hope of Craighead foresaw at p.

36 that "the issue of retrospectivity is likely to

assume an added importance when the Human

Rights Act 1998 is brought into force". Lord

Hobhouse at p.48 F would have none of it. The

latest in this line of authority seems to be In re

Spectrum Plus Ltd (in liquidation) [2005] UKHL

41, [2005] 3 WLR 58 where the danger was

acknowledged that prospective overruling "would

amount to judicial usurpation of the legislative

function", per Lord Nicholls at para. 28 but

nonetheless he noted that, especially in the human

rights field, " 'Never say never' was a wise judicial

precept", (para. 42).

43. The question has attracted interest in the academic

journals. See Arden L.J., "Prospective

Overruling", (2004) LQR 7; Lord Rodger of

Earlsferry, "A Time for Everything under The Law;

Some Reflections on Retrospectivity", (2005) 121

LQR 57 and Duncan Sheehan and T. T. Arvind,

"Prospective Overruling and Fixed/Floating

Charge Debate", (2006) 122 LQR 20."

In service matters, this Court on a number of occasions have passed

orders on equitable consideration. But the same would not mean that

whenever a law is declared, it will have an effect only because it has taken a

different view from the earlier one. In those cases it is categorically stated

that it would have prospective operation.

We are not oblivious that in Union of India v. Madras Telephone SC

& ST Social Welfare Association [2006) 9 SCALE 626], this Court

observed that where the rights had been determined in favour of some

employees in a duly constituted proceeding, which determination had

attained finality, a subsequent judgment of a Court or Tribunal taking a

contrary view would not adversely affect the applicants in whose cases the

orders had attained finality.

The rights of the appellants were not determined in the earlier

proceedings. According to them, merely a law was declared which was

prevailing at that point of time; but the appellants were not parties therein.

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Thus, no decision was rendered in their favour nor any right accrued

thereby.

In E.A. Sathyanesan (supra), a Division Bench of this Court) of

which one of us was member) noticed :

"In view of the aforementioned authoritative

pronouncement we have no other option but to hold that

the Tribunal committed a manifest error in declining to

consider the matter on merits, upon, the premise that

Sabharwal and Ajit Singh-I had been given a prospective

operation. The extent to which the said decisions had

been directed to operate prospectively, as noticed above,

has sufficiently been explained in Ajit Singh-II and

reiterated in M.G. Badappanavar (spura)."

Moreover, the judgment of the Full Bench has attained finality. The

special leave petition has been dismissed. The subsequent Division Bench,

therefore, could not have said as to whether the law declared by the Full

Bench would have a prospective operation or not. The law declared by a

court will have a retrospective effect if not otherwise stated to be so

specifically. The Full Bench having not said so, the subsequent Division

Bench did not have the jurisdiction in that behalf.

We, therefore, do not find any merit in these appeals, which are

dismissed accordingly. However, in the facts and circumstances of the case,

there shall be no order as to costs.