Seniority not to be disturbed: Supreme Court

In a recently reported decision [H.S. Vankani v. State of Gujarat, AIR 2010 SC 1714] the Supreme Court has declared that under service laws, 'seniority' is a civil right of the government servant and should not be raked up to lead to disputes. Observing that it was a vital factor affecting the performance of civil servants, the Supreme Court went on to analyse the role played by seniority as a consideration in government employment to hold that once settled, it should not be disturbed so as to lead to contentious situations. 

The Bench inter alia observed as under;

23. We are of the view that the Government has committed a grave error in unsettling the inter se seniority of the graduates and non-graduates which was settled as early as in the year 1982. The State Government in its letter dated 12.10.1982 had taken the view that two years’ training was imparted to non-graduates of 1979-81 batch and one year training was imparted only to graduates of 1980-81 batch since candidates with lesser qualification required through training compared to the candidates with higher qualification. Due to this basic difference in the educational qualification between the 1979-81 and 1980-81 batches, the Government took a conscious decision that it was not proper to unsettle the settled seniority even if there was delay in the appointment of non-graduates. Subsequent to that decision, three gradation lists were published, recognizing the seniority of the respondents over the appellants. Neither the Government order dated 12.10.1982 nor the Gradation lists were challenged before any forum which in our view had attained finality. After a period of two years yet another representation was submitted which was rejected by the Conservator of Forests vide his communication dated 5.3.1987 referring to the earlier Government order dated 12.01.1982. Fresh gradation list was published on 1.1.1989 where also respondent’s seniority was recognized. Representations dated 23.05.1989 and 03.05.1990 preferred by the appellants were also not favourably considered by the Government or the Chief Conservator of Forests. The Under Secretary of the Forest and Environment-Department had however put up a note on 29.09.1993 evidently under pressure from the candidates of the 1979-81 batch misinterpreting rule 14 of the 1969 Rules, stating the candidates of 1979-81 batch should be placed above the candidates of 1980-81 batch. Rule 14 of the Rules determines the inter se seniority of the candidates of a particular batch and does not determine the inter-se seniority between two batches, whose educational qualification, years of training and the date of joining, etc. differ. Rule 14 of 1969 Rules and Rule 22 of 1974 Rules also further reemphasis that fact. The note put up by the Under Secretary on 29.09.1993 is, therefore, contrary to Rule 14 of 1969 Rules and Rule 22 of the 1974 Rules.

24. 1969, 1974, and 1979 Rules clearly stipulate how the seniority has to be reckoned. Rule 14 of 1969 Rules and 22 of 1974 Rules are in pari materia which states that seniority of the Rangers shall be governed by their respective ranks in the final examination at the Rangers College irrespective of their joining the service and on successful completion of the training course the candidates shall be appointed as Rangers if they pass with higher standard certificate. Both the groups are governed by these rules in the matter of their intra seniority and the government had rightly settled the seniority vide orders dated 12.10.1982 and 05.03.1987 and the gradation lists were also rightly published. The Government in our view have committed a grave error in unsettling the settled seniority vide its proceedings dated 29.9.1993.

25. Seniority is a civil right which has an important and vital role to play in one’s service career. Future promotion of a Government servant depends either on strict seniority or on the basis of seniority-cum-merit or merit-cum-seniority etc. Seniority once settled is decisive in the upward march in one’s chosen work or calling and gives certainty and assurance and boosts the morale to do quality work. It instills confidence, spreads harmony and commands respect among colleagues which is a paramount factor for good and sound administration. If the settled seniority at the instance of one’s junior in service is unsettled, it may generate bitterness, resentment, hostility among the Government servants and the enthusiasm to do quality work might be lost. Such a situation may drive the parties to approach the administration for resolution of that acrimonious and poignant situation, which may consume lot of time and energy. The decision either way may drive the parties to litigative wilderness to the advantage of legal professionals both private and Government, driving the parties to acute penury. It is well known that salary they earn, may not match the litigation expenses and professional fees and may at times drive the parties to other sources of money making, including corruption. Public money is also being spent by the Government to defend their otherwise untenable stand. Further it also consumes lot of judicial time from the lowest court to the highest resulting in constant bitterness among parties at the cost of sound administration affecting public interest. Courts are repeating the ratio that the seniority once settled, shall not be unsettled but the men in power often violate that ratio for extraneous reasons, which, at times calls for departmental action. Legal principles have been reiterated by this Court in Union of India and Another v. S.K. Goel and Others (2007) 14 SCC 641, T.R. Kapoor v. State of Haryana (1989) 4 SCC 71, Bimlesh Tanwar v. State of Haryana, (2003) 5 SCC 604. In view of the settled law the decisions cited by the appellants in G.P. Doval’s case (supra), Prabhakar and Others case, G. Deendayalan, R.S. Ajara are not applicable to the facts of the case.

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Takeover Regulations Advisory Committee submits report

A SEBI press release informs us that The Takeover Regulations Advisory Committee constituted under the Chairmanship of C. Achuthan submitted its to SEBI proposing to overhaul the "Take Over Code" working towards the mandate of greater investor protection and benefit in the securities market. This Report of the Takeover Regulations Advisory Committee, running  into about 140 pages, has proposed draft regulations to replace the existing law governing substantial acquisition of shares and takeovers.

The Report inter alia proposes to change the law relating to (i) Triggers for open offers, (ii) Indirect Acquisitions, (iii) Offer Size, (iv) Voluntary Open Offer, (v) Option to delist, (vi) Exemptions from open offer obligations, (vii) Offer price, (viii) Mode of payment, (ix) Competing offers, (x) Execution of the agreement that triggers open offer, and certain other governance issues. 

Ever since the release of the Report, the market has been ripe with the implications of the proposed law. Even though the same is yet only in the stage of being released for public comments, the media has already garnered a view on the proposed changes. We personally liked the view on The Mint.

Arbitrator cannot go beyond agreement: Supreme Court

Holding that arbitrator being itself a constituent of an agreement to such effect, it was not within the prerogative to go beyond the categorical stipulations of the agreement, the Supreme Court in a recent declaration revisited the law on the issue to hold that the position was well settled in terms of its previous decisions. The Court made a reference to its earlier decisions to hold that the arbitrator derived its authority from the agreement and his terms of reference being determined by the agreement, he could not pass an award against or beyond the contractual stipulations. 

The Supreme Court declared the law to this effect in the following terms;

16. That brings us to the question whether an Arbitrator can make an award contrary to the terms of the contract executed between the parties. That question is no longer res integra having been settled by a long line of decisions of this Court. While it is true that the Courts show deference to the findings of fact recorded by the Arbitrators and even opinions, if any, expressed on questions of law referred to them for determination, yet it is equally true that the Arbitrators have no jurisdiction to make an award against the specific terms of the contract executed between the parties. Reference may be made, in this regard, to the decision of this Court in Steel Authority of India Ltd. v. J.C. Budharaja, Government and Mining Contractor, (1999) 8 SCC 122 where this Court observed :

“ …….. that it is settled law that the arbitrator derives authority from the contract and if he acts in manifest disregard of the contract, the award given by him would be an arbitrary one; that this deliberate departure from the contract amounts not only to manifest disregard of the authority or misconduct on his part, but it may tantamount to mala fide action…...” 

…… It is true that interpretation of a particular condition in the agreement would be within the jurisdiction of the arbitrator. However, in cases where there is no question of interpretation of any term of the contract, but of solely reading the same as it is and still the arbitrator ignores it and awards the amount despite the prohibition in the agreement, the award would be arbitrary, capricious and without jurisdiction. Whether the arbitrator has acted beyond the terms of the contract or has travelled beyond his jurisdiction would depend upon facts, which however would be jurisdictional facts, and are required to be gone into by the court. The arbitrator may have jurisdiction to entertain claim and yet he may not have jurisdiction to pass award for particular items in view of the prohibition contained in the contract and, in such cases, it would be a jurisdictional error….” 

17. It was further observed: 

“…..Further, the Arbitration Act does not give any power to the arbitrator to act arbitrarily or capriciously. His existence depends upon the agreement and his function is to act within the limits of the said agreement…..”

18. In W.B. State Warehousing Corporation & Anr. v. Sushil Kumar Kayan & Ors. (2002) 5 SCC 679, again this Court observed:

“……. If there is a specific term in the contract or the law which does not permit the parties to raise a point before the arbitrator and if there is a specific bar in the contract to the raising of the point, then the award passed by the arbitrator in respect thereof would be in excess of his jurisdiction….”

19. In Bharat Coking Coal Ltd. v. Annapurna Construction (2003) 8 SCC 154, this Court reiterated the legal position in the following words:

“There lies a clear distinction between an error within the jurisdiction and error in excess of jurisdiction. Thus, the role of the arbitrator is to arbitrate within the terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled beyond the contract, he would be acting without jurisdiction, whereas if he has remained inside the parameters of the contract, his award cannot be questioned on the ground that it contains an error apparent on the face of the record.”

20. In MD, Army Welfare Housing Organisation v. Sumangal Services (P) Ltd. (2004) 9 SCC 619 also this Court took the similar view and observed:

“An Arbitral Tribunal is not a court of law. Its orders are not judicial orders. Its functions are not judicial functions. It cannot exercise its power ex debito justitiae. The jurisdiction of the arbitrator being confined to the four corners of the agreement, he can only pass such an order which may be the subject-matter of reference.

21 Reference may also be made to the decisions of this Court in Associated Engineering Co. v. Government of Andhra Pradesh & Anr. (AIR 1992 SC 232), Jivarajbhai Ujamshi Sheth & Ors. v. Chintamanrao Balaji & Ors. (AIR 1965 SC 214), State of Rajasthan v. Nav Bharat Construction Co. (AIR 2005 SC 4430), Food Corporation of India v. Surendra, Devendra & Mahendra Transport Co. (2003) 4 SCC 80, which sufficiently settle the law on the subject.

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Claimant to establish enhancement of therapeutic effect for patent: High Court

In a recently reported decision [Glochem Industries Ltd. v. Cadila Healthcare Ltd. AIR 2010 Bom 76] the Bombay High Court has declared that the applicant has to establish that in terms of the Patents Act, 1970 in the application for patent that the discovery in the pharmacology field (the subject-matter of the patent application) has resulted in the 'enhancement of therapeutic value' so as to succeed in obtaining a grant of patent. The High Court being of the view that such an examination was not undertaken by the authority granting the patent, set aside the order and directed a fresh examination in order to ascertain whether there had been enhancement of any therapeutic effect by the application. 

The High Court inter alia observed as under;

11. The Order impugned before us not only suffers from the above infirmity but we also find force in the submission of the Petitioners that the Respondent No.4 ought to have considered the dictum of the Madras High Court in the case of Novartis AG v/s. Union of India & ors. Reported in (2007) 4 Madras Law Journal 1153. In the said case while examining the question regarding the validity of the Amendment Act which amended Section 3(d) of the Act, the Court proceeded to examine the purport of the amended provision i.e., Section 3(d). It is held that from the language of Section 3(d) when considered along with the parliamentary debates, it was clear that Section 3(d) as it appears in the statute book is the result of parliamentary debates and not mere reproduction of the provision in the Ordinance. The Court then considered the validity of the provision on the touchstone of Article 14 of the Constitution. While doing so, it considered the purport of Section 3(d) along with explanation and in the first place held that the amended section not only covers the field of pharmacology but also other fields. In other words, it is a comprehensive provision covering all fields of technology including the field of pharmacology. It then went on to observe that the explanation would come in aid only to understand what is meant by the expression “resulting in the enhancement of a known efficacy” in the amended section. The Court has unambiguously held that the explanation would operate only when discovery is made in the pharmacology field. After referring to the reported decisions, it then went on to observe that the explanation creates a deeming fiction that all derivatives of a known substance would be deemed to be the same substance unless they differ significantly in properties with regard to efficacy. It has noted that it is clear from the amended Section and the explanation that in the pharmacology field, if a discovery is made from a known substance, the duty is cast upon the patent applicant to show that the discovery has resulted in the enhancement of the known therapeutic efficacy of that substance. The Court further opined that the explanation places emphasis on the expression ‘efficacy’. It held that it only means that the derivatives should contain such properties which are significantly different with regard to efficacy of the substance from which the derivative is made. It concluded that sum and substance of amended section read with explanation, it prescribes the test to decide whether the discovery is an invention or not, is that, the Patent applicant should show the discovery has resulted in enhancement of known therapeutic efficacy of that substance and if the discovery is nothing other than the derivative of a known substance, then, it must be shown that the properties in derivatives differ significantly with regard to efficacy. The Division Bench has observed thus:-

“... As we understand the amended section, it only declares that the very discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance, will not be treated as an invention. The position therefore is, if the discovery of a new form of a known substance must be treated as an invention, then the Patent Applicant should show substance so discovered has a better therapeutic effect...”

The Respondents herein have not questioned the correctness of the above-stated legal position before us.

13. According to the Petitioners, none of these factors which have weighed with the Respondent No. 4 are germane to answer the core issue as to whether the substance so discovered has a “better therapeutic effect”. The real question to be answered has not been dealt with by the Respondent No.4 in the impugned order at all. We are in agreement with this submission. Considering the exposition of the Madras High Court, the Respondent No. 4 ought to have examined whether the factors noted in the impugned order had the effect of enhancement of known efficacy of stated substance in the context of “better therapeutic effect” which is the legislative intent behind the amendment of Section 3(d) and not recognise the alleged invention merely because of its new form or some other advantages or is better in some respect. These matters though crucial have not been examined by the Respondent No. 4 at all.

18. We may once again clarify that although the Petitioners have raised several objections before the authority as also referred to in the present petition, however, confined the argument only in the context of Section 25(1)(f) read with Section 3(d) of the Act to the effect that the alleged invention of the Respondent No. 1 was not an invention as it does not result in the enhancement of the known therapeutic efficacy of the stated substance. Accordingly, we have confined ourselves only to the grounds pressed into service by the Counsel across the bar with reference to the said grievance. Be that as it may, as we are relegating the parties before the authority, the Respondent No. 4 would examine the matter afresh confined to the grievance made before this Court and not on any other issues.

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Action contrary to Court order invalid: Supreme Court

Holding that action taken contrary to an order passed by a court remains a nullity, the Supreme Court in a recent decision declared that the action of the State Government of allotting the law despite there being an interim order against such a move was not enforceable. We had covered a similar issue where we had pointed out the settled law that one much approach the court with clean hands. As a step further, the Supreme Court in this decision declared that even the actions which have been undertaken remain to be unenforceable in law if contrary to a court order.

The Bench explained the law in the following terms;

23. In Mulraj Vs. Murti Raghunathji Maharaj, AIR 1967 SC 1386, this Court considered the effect of action taken subsequent to passing of an interim order in its disobedience and held that any action taken in disobedience of the order passed by the Court would be illegal. Subsequent action would be a nullity. 

24. In Surjit Singh Vs. Harbans Singh, AIR 1996 SC 135, this Court while dealing with the similar issue held as under: 

“In defiance of the restraint order, the alienation/assignment was made. If we were to let it go as such, it would defeat the ends of justice and the prevalent public policy. When the Court intends a particular state of affairs to exist while it is in seisin of a lis, that state of affairs is not only required to be maintained, but it is presumed to exist till the Court orders otherwise. The Court, in these circumstances has the duty, as also the right, to treat the alienation/assignment as having not taken place at all for its purposes.”

25. In All Bengal Excise Licensees Association Vs. Raghabendra Singh & Ors, AIR 2007 SC 1386, this court held as under:

“A party to the litigation cannot be allowed to take an unfair advantage by committing breach of an interim order and escape the consequences thereof..... the wrong perpetrated by the respondents in utter disregard of the order of the High Court should not be permitted to hold good.”

26. In Delhi Development Authority Vs. Skipper Construction Co. (P) Ltd. & Anr. AIR 1996 SC 2005, this court after making reference to many of the earlier judgments held:

“On principle that those who defy a prohibition ought not to be able to claim that the fruits of their defiance are good, and not tainted by the illegality that produced them.”

27. In Gurunath Manohar Pavaskar Vs. Nagesh Siddappa Navalgund, AIR 2008 SC 901, this Court while dealing with the similar issues held that even a Court in exercise of its inherent jurisdiction under Section 151 of the Code of Civil Procedure, 1908, in the event of coming to the conclusion that a breach to an order of restraint had taken place, may bring back the parties to the same position as if the order of injunction has not been violated.

28. In view of the above, it is evident that any order passed by any authority in spite of the knowledge of the interim order of the court is of no consequence as it remains a nullity.

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