THE EMPLOYEES’ STATE INSURANCE CORPORATION versus UNION OF INDIA & ORS.

THE EMPLOYEES’ STATE INSURANCE CORPORATION

UNION OF INDIA & ORS.

(Civil Appeal No. 152 of 2022)

JANUARY 20, 2022

[DR. DHANANJAYA Y CHANDRACHUD AND A. S.

BOPANNA, JJ.]

ESIC Recruitment Regulations 2015: Respondent 3 to 25joined the service of the ESIC Model Hospital as Assistant Professorson different dates, between 07 February 2014 and 26 June 2016 –The advertisements issued by the appellant mentioned that the DACPScheme would be applicable for its recruits – On completing twoyears in the post of Assistant Professor, Respondents 3 to 25 maderepresentations to the appellant seeking promotion to the grade ofAssociate Professor, and instituted proceedings claiming the benefitof the DACP Scheme – CAT directed the appellant to consider theircase under DACP scheme – Appellant filed writ petition challengingthe order of CAT – High Court dismissed the writ petition – Onappeal, held: On the dates when the contesting respondents joinedthe service of the appellant, their promotions were governed by theESIC Recruitment Regulations 2008 which came into effect on 2May 2009 and mandated four years of qualifying service forpromotion from Assistant Professor to Associate Professor – Whenthe contesting respondents had completed two years of service, theywere governed by the ESIC Recruitment Regulations 2015 whichcame into effect on 5 July 2015 and mandated five years ofqualifying service for promotion from Assistant Professor toAssociate Professor – Thus, the DACP Scheme facilitating promotionon the completion of two years of service is not applicable to thecontesting respondents, when the regulations have statutory effectthat overrides the Office Memorandum dated 29 October 2008 whichimplemented the DACP Scheme – The ESIC Recruitment Regulations2015 have precedence over the Office Memorandum dated 29October 2008 which implemented the DACP Scheme in respect ofofficers of the Central Health Service under the Union Ministry ofHealth and Family Welfare – The concession by the counsel of theappellant before the CAT does not stand in the way of the appellant

CDEF

Asupporting the correct position of law before this Court – Therecan be no estoppel against statute or regulations having statutoryeffect.

Service law: Appointment/recruitment – It is settled principleof service jurisprudence that in the event of conflict between aBstatement in an advertisement and service regulations, the lattershall prevail.

Allowing the appeal, the Court

HELD: 1. The ESIC Recruitment Regulations 2008 wereissued by the ESIC in the exercise of its powers under SectionC97(1) and Section 17(3) of the ESI Act. These regulationsintroduced the cadre of Specialist (Teaching) in the ESIC andgoverned all appointments to the teaching faculty posts in ESICMedical Colleges. The ESIC Recruitment Regulations 2008embodied requirement of four years’ service as AssistantDProfessor for promotion as an Associate Professor. The ESICRecruitment Regulations 2015 which were made on 5 July 2015stipulated requirement of five years’ service as AssistantProfessor for promotion to the post of Associate Professor. Thepreamble of the ESIC Recruitment Regulations 2015 notes thatthese regulations were to supersede the ESIC RecruitmentERegulations 2008 and were made with the approval of the CentralGovernment. The ESIC Recruitment Regulations 2008 and 2015have statutory effect by virtue of Section 97(3) of the ESI Act. Itis settled law that regulations framed by statutory authorities havethe force of enacted law. [Paras 12, 13][387-G-H; 388-A-B, F]FSukhdev Singh v. Bhagatram Sardar Singh Raghuvansh(1975) 1 SCC 421 : [1975] 3 SCR 619; Sant RamSharma v. State of Rajasthan AIR 1967 SC 1910 : [1968]SCR 111; Himalayan Coop. Group Housing Society v.Balwan Singh (2015) 7 SCC 373 : [2015] 4 SCR 616 –followed.GPepsu Road Transport Corporation, Patiala v. MangalSingh and Others (2011) 11 SCC 702 : [2011] 6 SCR564; Union of India v. Majji Jangamayya (1977) 1 SCC606 : [1977] 2 SCR 28 – referred to.

2. On the dates when the contesting respondents joinedthe service of the appellant- 07 February 2014 till 26 June 2016- their promotions were governed by the ESIC RecruitmentRegulations 2008 which came into effect on 2 May 2009 andmandated four years of qualifying service for promotion fromAssistant Professor to Associate Professor. When the contestingrespondents had completed two years of service, they weregoverned by the ESIC Recruitment Regulations 2015 which cameinto effect on 5 July 2015 and mandated five years of qualifyingservice for promotion from Assistant Professor to AssociateProfessor. Thus, the DACP Scheme facilitating promotion on thecompletion of two years of service is not applicable to thecontesting respondents, when the regulations have statutoryeffect that overrides the Office Memorandum dated 29 October2008 which implemented the DACP Scheme. [Para 19][393-F-H]

3. The advertisements issued by the appellant mentionedthat the DACP Scheme would be applicable for its recruits.However, it is settled principle of service jurisprudence that inthe event of conflict between statement in an advertisementand service regulations, the latter shall prevail. The contestingrespondents urged that the advertisements indicated theapplicability of the DACP Scheme before the ESIC RecruitmentRegulations 2015 were issued. However, subsequentamendment to recruitment regulations would override theconditions prescribed in the advertisement. [Paras 20, 22][394-A-B; 395-B]

Malik Mazhar Sultan v. U.P. Public Service Commission(2006) 9 SCC 507 : [2006] 3 SCR 689; Ashish Kumarv. State of Uttar Pradesh (2018) 3 SCC 55 : [2018] 1SCR 695; Rajasthan Public Service Commission v.Chanan Ram (1998) 4 SCC 202 : [1998] 1 SCR 1099– referred to.

4. The contesting respondents submitted that the appellantis estopped from urging that the DACP Scheme is not applicableto the Teaching Cadre at the ESIC since they have taken thisstance before the CAT and in its writ petition before the HighCourt. While this Court expresses its disapproval at the lack ofproper instructions being tendered to the Counsel of the

[2022] 1 S.C.R.

Aappellant, there can be no estoppel against statute or regulationshaving statutory effect. [Para 23][396-A-B]

Nedunuri Kameswaramma v. Sampati Subba Rao AIR1963 SC 884: [1963] SCR 208 – referred to.

5. The CAT and the High Court failed to notice theBapplicability of the ESIC Recruitment Regulations 2015 to thepromotions of the Teaching Cadre in the appellant corporation.The ESIC Recruitment Regulations 2015 have precedence overthe Office Memorandum dated 29 October 2008 whichimplemented the DACP Scheme in respect of officers of theCCentral Health Service under the Union Ministry of Health andFamily Welfare. The concession by the Counsel of the appellantbefore the CAT does not stand in the way of the appellantsupporting the correct position of law before this Court.[Para 26][398-B-C]

DC Sankarnarayanan v. State of Kerala (1971) 2 SCC361 : [1971] 0 Suppl. SCR 654; Union of India v. AshokKumar Aggarwal (2013) 16 SCC 147 : [2013] 12 SCR629; State of Uttar Pradesh v. U.P. Rajya Khanij VikasNigam Sangharsh Samiti (2008) 12 SCC 675 : [2008]7 SCR 536; Raminder Singh v. State of Punjab (2016)E16 SCC 95 : [2016] 5 SCR 310; Y V Rangaiah v. JSreenivasa Rao 1983 (3) SCC 284; State of UP v.Mukesh Narain (2013) 4 SCC 169 : [2013] 4 SCR 534;B L Gupta v. MCD (1998) 9 SCC 223; P Aggarwal v.State of U.P. (1987) 3 SCC 622 : [1987] 3 SCR 427;FDirector of Elementary Education, Odisha v. PramodKumar Sahoo (2019) 10 SCC 674 – referred to.

Case Law Reference

THE EMPLOYEES’ STATE INSURANCE CORP. v. UNION OF INDIA

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 152 of2022.

From the Judgment and Order dated 05.09.2019 of the High Courtof Karnataka at Bengaluru in Writ Petition No.24808 of 2018 (S-CAT).E

Santosh Krishnan, Yakesh Anand, Ms. Sonam Anand, Advs. forthe Appellant.

Yatindra Singh, Sr. Adv., Anand Sanjay M Nuli, M/s Nuli & Nuli,Advs. for the Respondents.

The Judgment of the Court was delivered by

DR. DHANANJAYA Y CHANDRACHUD, J.

AIntroduction...............................................................3*BSubmissions..............................................................5*CAnalysis..................................................................12*DConclusion..............................................................26*

Ed. Note - [*]denotes the actual pagination in the Original Judgment.

378SUPREME COURT REPORTS

AA Introduction

1. Leave granted.

2. The Employees’ State Insurance Corporation[1] is in appeal againsta judgment of Division Bench of the Karnataka High Court dated 5September 2019. The Division Bench rejected the petition filed by theBappellant against the promotion of the contesting respondents -Respondent 3 to 25, to the post of “Associate Professor” under theDynamic Assured Career Progression[2] Scheme as opposed to theappellant’s recruitment regulations.

3. ESIC, the appellant, is statutory body constituted under theCEmployees’ State Insurance Act 1948[3]. The recruitment and promotionof its teaching staff are governed by the Employees’ State InsuranceCorporation (Medical Teaching Faculty Posts) Recruitment Regulations2015[4] which came into effect on 5 July 2015. Respondent 3 to 25[5] joinedthe appellant as Assistant Professors at ESIC Model Hospital, Rajajinagar,

DBengaluru. They joined service between 7 February 2012 and 26 June2014. The Central Government, through the Central Health ServiceDivision of the Ministry of Health and Family Welfare, had issued theDACP Scheme through an Office Memorandum dated 29 October 2008.The DACP Scheme contemplated promotion as Associate Professorupon completion of two years of service in the post of Assistant ProfessorEas an officer under the Ministry of Health and Family Welfare. Aftertwo years of service as Assistant Professor on 2 February 2017, thecontesting respondents sought promotion under the DACP Scheme andinstituted proceedings before the Central Administrative Tribunal[6],Bengaluru.F4. On 7 February 2018, the CAT relied on the submission by theCounsel for the appellant and held that the ESIC Recruitment Regulations2015 were not relevant for adjudication of the matter. The CAT alsorelied on letter dated 23 September 2014 addressed by the Joint Directorof ESIC to the Dean of ESIC which mentioned the implementation ofthe DACP Scheme to the Medical Officer Cadres. Thus, the CAT directedG

1 “ESIC” (interchangeably referred to as the appellant)

2 “DACP”

3 “ESI Act”

4 “ESIC Recruitment Regulations 2015”

5 interchangeably referred to as “contesting respondents”H6 “CAT”

the appellant to consider the contesting respondents for promotion underthe DACP Scheme.

5. The appellant challenged the order of the CAT in writ petitionbefore the High Court of Karnataka. The High Court dismissed thepetition on 5 September 2019 by holding that:

(i)Since the contesting respondents were recruited before theESIC Recruitment Regulations 2015 came into effect, theywould get the benefit of the DACP Scheme;

(ii)The DACP Scheme has statutory effect under Section 17of the ESI Act. The ESIC Recruitment Regulations 2015have departed from the DACP Scheme without seekingCthe prior approval of the Central Government; and

(iii)Counsel for the appellant conceded that the appellant wouldimplement the DACP Scheme and the ESIC RecruitmentRegulations 2015 do not apply.

Submissions

6. Mr Santhosh Krishnan, appearing on behalf of the appellanthas urged the following submissions:

(i)The appellant is an autonomous statutory corporationincorporated under the ESI Act. It is within theadministrative control of the Ministry of Labour andEmployment of the Government of India;

(ii)Section 97 of the ESI Act confers power on the appellantto frame its own regulations. The terms and conditions ofservice of Assistant Professors are governed by the ESICRecruitment Regulations 2015. These regulations stipulatethat minimum of five years of qualifying service asAssistant Professor is mandatory for promotion asAssociate Professor. The ESIC Regulations 2015 cannotbe overridden by the DACP Scheme;

(iii)The Office Memorandum dated 29 October 2008implementing the DACP Scheme is applicable to employeesof the Ministries and Departments of the CentralGovernment, but not statutory body like the ESIC. Thetext of the DACP Scheme makes it clear that the OfficeMemorandum applies to employees of the Ministry ofHealth, subject to an appropriate amendment in the

380SUPREME COURT REPORTS

Arecruitment rules. Thus, the DACP Scheme does notoverride or supersede statutory regulations made under theESI Act;

(iv)Section 17(2) permits the ESIC to depart from the conditionsof service applicable to employees of the CentralBGovernment, subject to prior approval of the CentralGovernment. Section 97(3) empowers the ESIC to frameregulations that are deemed to have the same effect asstatutory provisions;

(v)The contesting respondents joined the ESIC Medical CollegeCand PGIMSR, Rajajinagar, Bengaluru as AssistantProfessors on different dates between 7 February 2014 and26 June 2016. These Respondents were governed by theEmployees’ State Insurance Corporation (Medical TeachingFaculty Posts) Recruitment Regulations, 2008[7];

D(vi)The High Court incorrectly held that the conditions forpromotion from Assistant Professor to Associate Professorwere governed by the DACP Scheme on the ground thatthe ESIC Recruitment Regulations 2015 were inapplicableto the contesting respondents. The ESIC RecruitmentRegulations 2008 were gazetted on 2 May 2009 andEstipulated four years of qualifying service for promotionfrom Assistant Professor to Associate Professor. Therefore,none of the contesting respondents would have completedfour years of service before the ESIC RecruitmentRegulations 2015 came into effect, i.e. on 3 July 2015;

F(vii)Under the ESIC Recruitment Regulations 2008, thecontesting respondents became eligible for promotion afterthe ESIC Recruitment Regulations 2015 came into effect.Thus, the operation of ESIC Regulations 2015 in regard totheir service conditions cannot be ignored and there can beno estoppel against legislative action. This Court, in CGSankarnarayanan v. State of Kerala[8], has held that thereis no estoppel against legislative action concerning serviceconditions;

7 “ESIC Recruitment Regulations 2008”H8 (1971) 2 SCC 361

(viii) It is settled law that in the event of an inconsistency orAconflict between statutory provision and an executiveinstruction, the former must be given effect. This Court inUnion of India v. Ashok Kumar Aggarwal[9] has held thatgovernment-issued memorandums or executive instructionscan be used only to supplement the statutory rules but notBto supplant them;

(ix)The appellant’s counsel mistakenly made concessionbefore the CAT when they stated that the ESIC RecruitmentRegulations 2015 would not govern the matter. However,this incorrect concession does not amount to estoppel againstCstatutory regulation. This has been held by this Court inState of Uttar Pradesh v. U.P. Rajya Khanij VikasNigam Sangharsh Samiti[10];

(x)The High Court has incorrectly recorded that the ESICRecruitment Regulations 2015 were issued without approvalDfrom the Central Government. The preamble to the ESICRecruitment Regulations 2015 explicitly states that theregulations were made after approval of the CentralGovernment;

(xi)The submission of the contesting respondents that theadvertisement issued by the appellant contemplated theapplication of the DACP Scheme, is irrelevant to theadjudication of the matter. It is settled law that if anadvertisement is inconsistent with recruitment rules, the ruleswould prevail, as held by this Court in Malik MazharSultan v. UPSC[11], Ashish Kumar v. State of UP[12] andRaminder Singh v. State of Punjab[13];

(xii)The applicability of the DACP to non-teaching staff of theESIC is irrelevant since the ESIC Recruitment Regulations2015 specifically govern “Medical Teaching Faculty Posts”;and

9 (2013) 16 SCC 14710 (2008) 12 SCC 67511 (2006) 9 SCC 507, para 2112 (2018) 3 SCC 55, para 2713 (2016) 16 SCC 95, paras 24 and 25

A(xiii) Except in three cases, the contesting respondents have beengranted promotions upon completion of five years of regularservice, in accordance with the ESIC RecruitmentRegulations 2015.

7. Mr Yatindra Singh, Senior Counsel and Mr Anand Sanjay MBNuli, appearing on behalf of the contesting respondents, Respondent 3to 25, has urged the following submissions:

(i)The Office Memorandum dated 29 August 2008 extendedthe DACP Scheme to all Medical doctors, whether belongingto Organized Services, or holding isolated posts. It alsoCdirected all Ministries/Departments to implement the DACPScheme. By another Office Memorandum dated 29 October2008, the Government of India extended the DACP Schemeto various sub-cadres of the Central Health Service,including the teaching cadre. Under Section 17(2)(a) of theESI Act, the DACP Scheme is binding on the appellant;

(ii)The ESIC Recruitment Regulations 2008, which stipulatefour years of qualifying service for promotion from AssistantProfessor to Associate Professor, were issued without theapproval of the Central Government;

E(iii)The appellant has issued advertisements on 19 August 2011,12 December 2012 and once in 2013 for the post of AssistantProfessor by stating “Promotional avenues in theDepartment are available under DACP guidelines of Govt.of India”. The contesting respondents joined the servicesof the appellant as Assistant Professors in Pay Band-3 withFa grade pay of Rs. 6600/- pursuant to various recruitmentadvertisements of the appellant;

(iv)On 23 September 2011, the appellant addressed letter tothe Dean of ESIC Dental College by stating that “the existingrecruitment regulations are under active process of revisionGvis-à-vis provisions of the DACP Scheme”;

(v)The ESIC Recruitment Regulations 2015 were issuedwithout obtaining prior approval from the CentralGovernment, as contemplated under Section 17(2)(a) of theESI Act;

(vi)After the contesting respondents instituted an applicationAbefore the CAT, the Assistant Director (Med), CSIC,Headquarter Office addressed letter to the MedicalSuperintendent of the ESIC Model Hospital, Rajaji Nagar,Bangalore on 26 December 2017 stating that “a proposalfor considering promotion under DACP Scheme…. is underBprocess”;

(vii)The appellant admitted before the CAT and even in its writpetition before the High Court that the DACP Scheme isapplicable to its employees and that it is willing to be boundby the DACP rules. The argument that the DACP SchemeCis inapplicable to the contesting respondents is being raisedfor the first time before this Court;

(viii) The DACP Scheme has statutory force under Section 17of the ESI Act. The DACP Scheme was made on 29October 2008, before the enforcement of the ESICDRecruitment Regulations 2008 on 2 May 2009. Since theESIC Recruitment Regulations 2008 were issued withoutapproval of the Central Government mandated under Section17(2)(a) of the ESI Act, they do not override the DACPScheme;

(ix)The ESIC Recruitment Regulations 2015 were also issuedwithout the “prior approval” mandated under Section17(2)(a) of the ESI Act. The appellant has not furtheredany evidence to indicate that prior approval was taken andthis has been noted by the High Court;

(x)The appellant is estopped from denying the applicability ofthe DACP Scheme to the contesting respondents since theymade such representation in their recruitmentadvertisements. The contesting respondents have acted onsuch representations to quit their existing jobs. Reliance isplaced on decision of this Court in Y V Rangaiah v. JSreenivasa Rao[14];

(xi)Even if the ESIC Recruitment Regulations 2015 were heldto be validly issued, the contesting respondents had already

completed two years of service before they came intoeffect, on 5 July 2015. Therefore, the contesting respondentsshould be considered for promotion in accordance with theDACP Scheme, in view of the decisions of this Court inState of UP v. Mukesh Narain[15 ]and L Gupta v.MCD[16];

(xii)All the contesting respondents had three or more years ofteaching experience before they joined the appellant asAssistant Professors. The qualifying service of five yearsunder the ESIC Recruitment Regulations 2015 should begiven reasonable interpretation and the cumulativeCexperience of more than five years should be held sufficientfor promotion;

(xiii) The doctors and medical teaching staff in the CentralGovernment are being promoted in accordance with theDACP Scheme. The arbitrary denial of the DACP SchemeDto the contesting respondents’ Teaching Cadre of theappellant violates Article 14, especially when they are alsodischarging functions of attending to patients and performingspecialised clinical work; and

(xiv) In other legal proceedings, the appellant has taken the stanceEthat the DACP scheme is applicable to its employees witheffect from 01 March 2008 itself.

8. The rival submissions will now be analysed.

AnalysisF9. The crux of the dispute is about determining the applicablerules/regulations for promotion of the contesting respondents from thepost of Assistant Professor to Associate Professor namely, the ESICRecruitment Regulations 2008, the DACP Scheme or the ESICRecruitment Regulations 2015. On 29 October 2008, the Sixth CentralPay Commission recommended the extension of the DACP Scheme toGall doctors in employment of the Central Government. Therecommendations were accepted by the Union Ministry of Health andFamily Welfare through an Office Memorandum dated 29 October 2008

15 (2013) 4 SCC 169H16 (1998) 9 SCC 223

which extended the DACP Scheme to Medical and Dental Doctors inthe Central Government. In continuation of the Office Memorandum,the Government of India issued another Office Memorandum dated 29October 2008 detailing promotion under DACP in various cadres underthe Ministry of Health and Welfare. The Scheme enabled promotionfrom the post of Assistant Professor to Associate Professor after twoyears of service:

“B. Teaching Sub Cadre

(emphasis supplied)

10. The controversy in the present appeal arises out of theinterpretation of Section 17(2)(a) of the ESIC Act 1948 and theapplicability of the Office Memorandum dated 29 October 2008 againstthe ESIC Recruitment Regulations 2008 and the subsequently issuedESIC Recruitment Regulations 2015. Section 17 of the ESI Act 1948Gprovides as follows:

“17. Staff.—(1) The Corporation may employ such other staff ofofficers and servants as may be necessary for the efficienttransaction of its business, provided that the sanction of the CentralGovernment shall be obtained for the creation of any post the

[2022] 1 S.C.R.

Amaximum monthly salary of which exceeds such salary as maybe prescribed by the Central Government.

(2)(a) The method of recruitment, salary and allowances,discipline and other conditions of service of the membersof the staff of the Corporation shall be such as may beBspecified in the regulations made by the Corporation inaccordance with the rules and orders applicable to theofficers and employees of the Central Government drawingcorresponding scales of pay:

Provided that where the Corporation is of the opinion thatCit is necessary to make departure from the said rules ororders in respect of any of the matters aforesaid, it shallobtain the prior approval of the Central Government:

Provided further that this sub-section shall not apply to appointmentof consultants and specialists in various fields appointed on contractbasis,

(b) In determining the corresponding scales of pay of the membersof the staff under clause (a), the Corporation shall have regard tothe educational qualifications, method of recruitment, duties andresponsibilities of such officers and employees under the CentralGovernment and in case of any doubt, the Corporation shall referEthe matter to the Central Government whose decision thereonshall be final…….”

(emphasis supplied)

11. Section 97 of the ESI Act empowers the ESIC to frameregulations. The regulations are deemed to have the same effect asFstatutory provisions:

“97. Power of Corporation to make regulations.—(1) TheCorporation may, subject to the condition of previouspublication, make regulations, not inconsistent with thisAct and the rules made thereunder, for the administrationGof the affairs of the Corporation and for carrying into effectthe provisions of this Act.

(2) In particular and without prejudice to the generality of theforegoing power, such regulations may provide for all or any ofthe following matters, namely—

(xvi) the appointment of medical practitioners for the purposesof this Act, the duties of such practitioners and the form ofmedical certificates;

(xxi) the method of recruitment, pay and allowances, discipline,superannuation benefits and other conditions of service of theofficers and servants of the Corporation other than the [DirectorGeneral and Financial Commissioner;

(xxiii) any matter in respect of which regulations are requiredor permitted to be made by this Act.

(2-A) The condition of previous publication shall not apply to anyregulations of the nature specified in clause (xxi) of sub-section(2).

(3) Regulations made by the Corporation shall be publishedin the Gazette of India and thereupon shall have effect as ifenacted in this Act.

(4) Every regulation shall, as soon as may be, after it is made bythe Corporation, be forwarded to the Central Government andthat Government shall cause copy of the same to be laid beforeeach House of Parliament, while it is in session for total periodof thirty days, which may be comprised in one session or in two ormore successive sessions, and if, before the expiry of the sessionimmediately following the session or the successive sessionsaforesaid, both Houses agree in making any modification in theregulation or both Houses agree that the regulation should not bemade, the regulation shall thereafter have effect only in suchmodified form or be of no effect, as the case may be, so, however,that any such modification or annulment shall be without prejudiceto the validity of anything previously done under that regulation.”

(emphasis supplied)

12. The ESIC Recruitment Regulations 2008 were issued by theESIC in the exercise of its powers under Section 97(1) and Section17(3) of the ESI Act. These regulations introduced the cadre of Specialist(Teaching) in the ESIC and governed all appointments to the teachingfaculty posts in ESIC Medical Colleges. The ESIC Recruitment

ARegulations 2008 embodied requirement of four years’ service asAssistant Professor for promotion as an Associate Professor. The ESICRecruitment Regulations 2015 which were made on 5 July 2015 stipulateda requirement of five years’ service as Assistant Professor for promotionto the post of Associate Professor. The preamble of the ESIC RecruitmentRegulations 2015 notes that these regulations were to supersede theBESIC Recruitment Regulations 2008 and were made with the approvalof the Central Government:

“….ln exercise of the powers conferred by sub-section (1) ofSection 97, read with clause(xxi) of sub-section (2) and sub-section(2A) of the said section and sub-section (3) of section 17 of theCEmployees’ State Insurance Act, 1948 (34 of 1948) and insupersession of the Employees State Insurance Corporation(Medical Teaching Faculty posts) Recruitment Regulations, 2008published in the Gazette of India vide No.A-12(11 )11/2008-Med.-IV dated the 2[nd] May, 2009, except as respects things done orDomitted to be done before such supersession, the Employees’State Insurance Corporation hereby makes, with theapproval of the Central Government, the followingregulations for regulating the method of recruitment to themedical teaching faculty posts in the Employees’ StateInsurance Corporation’s medical colleges, namely:- …”E

(emphasis supplied)

13. The ESIC Recruitment Regulations 2008 and ESICRecruitment Regulations 2015 have statutory effect by virtue of Section97(3) of the ESI Act. It is settled law that regulations framed by statutoryFauthorities have the force of enacted law. Constitution Bench inSukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi[17]considered the regulations framed by several statutory authoritiesconsidered as “State” within the terms of Article 12. Chief Justice NRay held that the regulations have the same effect of law and bind thestatutory authorities:G

“21. The characteristic of law is the manner and procedure adoptedin many forms of subordinate legislation. The authority makingrules and regulation must specify the source of the rule and

regulation making authority. To illustrate, rules are always framedin exercise of the specific power conferred by the statute to makerules. Similarly, regulations are framed in exercise of specific powerconferred by the statute to make regulations. The essence of lawis that it is made by the law-makers in exercise of specific authority.The vires of law is capable of being challenged if the power isabsent or has been exceeded by the authority making rules orregulations.

23. The noticeable feature is that these statutory bodies have nofree hand in framing the conditions and terms of service of theiremployees. These statutory bodies are bound to apply the termsand conditions as laid down in the regulations. The statutory bodiesare not free to make such terms as they think fit and proper.Regulations prescribe the terms of appointment, conditions ofservice and procedure for dismissing employees. These regulationsin the statutes are described as “status fetters on freedom ofcontract”. The Oil and Natural Gas Commission Act in Section12 specifically enacts that the terms and conditions of theemployees may be such as may be provided by regulations. Thereis legal compulsion on the Commission to comply withthe regulations. Any breach of such compliance would be abreach of the regulations which are statutory provisions.In other statutes under consideration viz. the LifeInsurance Corporation Act and the Industrial FinanceCorporation Act though there is no specific provisioncomparable to Section 12 of the 1959 Act the terms andconditions of employment and conditions of service areprovided for by regulations. These regulations are not onlybinding on the authorities but also on the public.”

14. two-judge Bench of this Court in Pepsu Road TransportCorporation, Patiala v. Mangal Singh and Others[18 ]interpreted asimilar power to frame regulations under the Road Transport CorporationsAct 1950. This Court held that regulations made under the statute havethe force of law:

A“29. It is well-settled law that the regulations made under the statutelaying down the terms and conditions of service of the employees,including the grant of retirement benefits, have the force of law.The regulations validly made under the statutory powers are bindingand effective as the enactment of the competent legislature. Thestatutory bodies as well as general public are bound to complyBwith the terms and conditions laid down in the regulations as alegal compulsion. Any action or order in breach of the terms andconditions of the regulations shall amount to violation of theregulations which are in the nature of statutory provisions andshall render such action or order illegal and invalid.”C15. Respondent 3 to 25 joined the service of the ESIC ModelHospital, Rajajinagar, Bengaluru as Assistant Professors on differentdates, between 07 February 2014 and 26 June 2016. On completing twoyears in the post of Assistant Professor, Respondent 3 to 25 maderepresentations to the appellant seeking promotion to the grade ofDAssociate Professor, claiming the benefit of the DACP Scheme. ThePreamble to the ESIC Recruitment Regulations 2015, recites that theprior approval of the Central Government, as necessitated by Section17(2) of the ESI Act was duly sought. In the event of conflict betweenan executive instruction, an office memorandum in this case, and statutoryregulations – the latter prevail. Constitution Bench in Sant Ram SharmaEv. State of Rajasthan[19] considered the applicability of the letters issuedby the Government of India detailing the administrative practice forpromotions, against the Indian Police Service (Regulation of Seniority)Rules, 1954. The Constitution Bench held that:7. We proceed to consider the next contention of Mr N.C.FChatterjee that in the absence of any statutory rules governingpromotions to selection grade posts the Government cannot issueadministrative instructions and such administrative instructionscannot impose any restrictions not found in the Rules alreadyframed. We are unable to accept this argument as correct. It isGtrue that there is no specific provision in the Rules laying downthe principle of promotion of junior or senior grade officers toselection grade posts. But that does not mean that till statutoryrules are framed in this behalf the Government cannot issue

administrative instructions regarding the principle to be followedin promotions of the officers concerned to selection grade posts.It is true that Government cannot amend or supersedestatutory rules by administrative instructions, but if the rulesare silent on any particular point Government can fill upthe gaps and supplement the rules and issue instructionsnot inconsistent with the rules already framed.”

(emphasis supplied)

16. In Union of India v. Ashok Kumar Aggarwal[20 ]a two judgeBench of this Courtspeaking in the context of service regulationsgoverning departmental enquiry re-iterated that an office order or officememorandum cannot contravene statutory rules. Justice S Chauhannoted the position in law in the following terms:

“59. The law laid down above has consistently been followedand it is settled proposition of law that an authority cannotissue orders/office memorandum/executive instructions incontravention of the statutory rules. However, instructionscan be issued only to supplement the statutory rules butnot to supplant it. Such instructions should be subservientto the statutory provisions. (Vide Union of India v. MajjiJangamayya [(1977) 1 SCC 606 : 1977 SCC (L&S) 191] , P.D.Aggarwal v. State of U.P. [(1987) 3 SCC 622 : 1987 SCC (L&S)310 : (1987) 4 ATC 272] , Paluru Ramkrishnaiah v. Union ofIndia [(1989) 2 SCC 541 : 1989 SCC (L&S) 375 : (1989) 10 ATC378 : AIR 1990 SC 166] , C. Rangaswamaiah v. KarnatakaLokayukta [(1998) 6 SCC 66 : 1998 SCC (L&S) 1448] and JointAction Committee of Air Line Pilots’ Assn. of India v. DG ofCivil Aviation [(2011) 5 SCC 435 : AIR 2011 SC 2220] .)”

(emphasis supplied)

17. In P Aggarwal v. State of U.P.[21] two judge Bench of thisCourt declined to grant primacy to an Office Memorandum issued bythe Government of Uttar Pradesh which purportedly amended the methodof recruitment of Assistant Civil Engineers in the U.P. Public ServiceCommission without amending the relevant regulations. The Court held:

20 (2013) 16 SCC 147

21 (1987) 3 SCC 622

DEF

A“20. The office memorandum dated December 7, 1961 whichpurports to amend the United Provinces Service ofEngineers (Buildings and Roads Branch) Class II Rules,1936 in our opinion cannot override, amend or supersedestatutory rules. This memorandum is nothing but anadministrative order or instruction and as such it cannotBamend or supersede the statutory rules by adding somethingtherein as has been observed by this Court in Sant RamSharma v. State of Rajasthan [AIR 1967 SC 1910 : (1968) 1SCR 111 : (1968) 2 LLJ 830] . Moreover the benefits thathave been conferred on the temporary Assistant Engineers whoChave become members of the service after being selected by thePublic Service Commission in accordance with the service rulesare entitled to have their seniority reckoned in accordance withthe provisions of Rule 23 as it was then, from the date of theirbecoming member of the service, and this cannot be taken awayby giving retrospective effect to the rules of 1969 and 1971 as it isDarbitrary, irrational and not reasonable.”

(emphasis supplied)

18. The contesting respondents have referred to certain lettersand to an internal communication of the appellant to urge that the DACPEScheme was to be implemented for promotions at the appellant. However,these letters, similar to the Office Memorandum dated 29 October 2008implementing the DACP Scheme, would not have the force of law untilthey were enforced through an amendment to the recruitment regulations.In considering similar factual situation, three-judge Bench of thisCourt in Union of India v. Majji Jangamayya[22] held that:F

“31. The second question is whether the requirement of 10 years’experience was statutory rule. The High Court held that therequirement of 10 years’ experience is not statutory rule.Counsel for the respondents contended that therequirement of 10 years’ experience is statutory becauseGthe letter dated January 16, 1950 is by the Government ofIndia and the Government of India has authority to framerules and one of the letters dated July 21, 1950 referred toit as formal rule. The contention is erroneous because

there is distinction between statutory orders andadministrative instructions of the Government. This Courthas held that in the absence of statutory rules, executiveorders or administrative instructions may be made.(See CIT v. A. Raman & Company [AIR 1968 SC 49 : (1968) 1SCR 10 : 67 ITR 11] )

34. Counsel on behalf of the respondents contended that therequirement of 10 years’ experience laid down in the letter datedJanuary 16, 1950 had the force of law because of Article 313.Article 313 does not change the legal character of document.Article 313 refers to laws in force which mean statutory laws. Anadministrative instruction or order is not statutory rule. Theadministrative instructions can be changed by the Government byreason of Article 73(1)(a) itself.

36. The expression “ordinarily” in the requirement of 10 years’experience shows that there can be deviation from therequirement and such deviation can be justified by reasons.Administrative instructions if not carried into effect for goodreasons cannot confer right. (See P.C. Sethi v. Union ofIndia [(1975) 4 SCC 67 : 1975 SCC (L&S) 203 : (1975) 3 SCR201] .)….”

(emphasis supplied)

19. On the dates when the contesting respondents joined the serviceof the appellant - 07 February 2014 till 26 June 2016 - their promotionswere governed by the ESIC Recruitment Regulations 2008 which cameinto effect on 2 May 2009 and mandated four years of qualifying servicefor promotion from Assistant Professor to Associate Professor. Whenthe contesting respondents had completed two years of service, theywere governed by the ESIC Recruitment Regulations 2015 which cameinto effect on 5 July 2015 and mandated five years of qualifying servicefor promotion from Assistant Professor to Associate Professor. Thus,the DACP Scheme facilitating promotion on the completion of two yearsof service is not applicable to the contesting respondents, when theregulations have statutory effect that overrides the Office Memorandumdated 29 October 2008 which implemented the DACP Scheme.

A20. The advertisements issued by the appellant mentioned thatthe DACP Scheme would be applicable for its recruits. However, it is asettled principle of service jurisprudence that in the event of conflictbetween statement in an advertisement and service regulations, thelatter shall prevail. In Malik Mazhar Sultan v. U.P. Public ServiceCommission[23] two-judge Bench of this Court clarified that anBerroneous advertisement would not create right in favour of applicantswho act on such representation. The Court considered the eligibilitycriteria for the post of Civil Judge (Junior Division) under the U.P. JudicialService Rules, 2001 against an erroneous advertisement issued by theU.P. Public Service Commission and held:C“21. The present controversy has arisen as the advertisementissued by PSC stated that the candidates who were within theage on 1-7-2001 and 1-7-2002 shall be treated within age for theexamination. Undoubtedly, the excluded candidates were of eligibleage as per the advertisement but the recruitment to the serviceDcan only be made in accordance with the Rules and the error, ifany, in the advertisement cannot override the Rules and create aright in favour of candidate if otherwise not eligible according tothe Rules. The relaxation of age can be granted only if permissibleunder the Rules and not on the basis of the advertisement. If theinterpretation of the Rules by PSC when it issued theEadvertisement was erroneous, no right can accrue on basis thereof.Therefore, the answer to the question would turn upon theinterpretation of the Rules.”

21. In Ashish Kumar v. State of Uttar Pradesh[24 ]a two-judgeBench of this Court followed the decision in Malik Mazhar SultanF(supra) in interpreting an advertisement issued by the Director, SocialWelfare Department, Uttar Pradesh for the position of psychologist.This Court declined to give precedence to the erroneous qualificationsprescribed in the advertisement against the relevant recruitment rulesand held:G“27. Any part of the advertisement which is contrary to thestatutory rules has to give way to the statutory prescription. Thus,looking to the qualification prescribed in the statutory rules, the

23 (2006) 9 SCC 507 [“Malik Mazhar Sultan”]H24 (2018) 3 SCC 55

appellant fulfils the qualification and after being selected for thepost denying appointment to him is arbitrary and illegal. It is wellsettled that when there is variance in the advertisement and in thestatutory rules, it is the statutory rules which take precedence….”

22. The contesting respondents urged that the advertisementsindicated the applicability of the DACP Scheme before the ESICRecruitment Regulations 2015 were issued. However, subsequentamendment to recruitment regulations would override the conditionsprescribed in the advertisement. In Rajasthan Public ServiceCommission v. Chanan Ram[25] two-judge Bench of this Courtheldthat an earlier advertisement becomes infructuous after subsequentamendment to the service rules:

“13. Under these circumstances, therefore, it is difficult toappreciate how the Division Bench of the High Court couldpersuade itself in agreeing with the submission of the learnedcounsel for the respondent-writ petitioner that despite this changeof cadres and the provision for recruitment on new posts the oldadvertisement of 5-11-1993 Annexure P-1 seeking to considerthe candidature of applicants for erstwhile 23 advertised vacanciesin the posts of Assistant Directors (Junior) in the AgriculturalMarketing Service of the State of Rajasthan would still be pursuedfurther and recruitment should be effected for these 23 erstwhilevacancies as per the old advertisement. It is easy to visualise thateven if such an earlier advertisement of 5-11-1993 was proceededwith further it would have resulted into stalemate and an exercisein futility. No appointment could have been given to theselected candidates to the posts of Assistant Directors(Junior) after 1995 amendment of Rules as there were nosuch posts in the hierarchy of State Service. Consequentlyit must be held that on account of the amendments to theRajasthan Agricultural Marketing Service Rules the earlieradvertisement dated 5-11-1993 had become infructuous andotiose. Only on this short ground the writ petition of therespondent-writ petitioner should have been dismissed byconfirming the order of dismissal of the writ petition earlier passedby the learned Single Judge…….”

(emphasis supplied)

A23. The contesting respondents submitted that the appellant isestopped from urging that the DACP Scheme is not applicable to theTeaching Cadre at the ESIC since they have taken this stance beforethe CAT and in its writ petition before the High Court. While this Courtexpresses its disapproval at the lack of proper instructions being tenderedto the Counsel of the appellant, there can be no estoppel against statuteBor regulations having statutory effect. In Nedunuri Kameswarammav. Sampati Subba Rao[26]a three-judge Bench of this Court decided acentral point of the dispute in favour of party, irrespective of theconcession of its Counsel since it was on point of law. Justice MHidayatullah (as the learned Chief Justice then was), speaking on behalfCof the Court observed:

“20. From the above analysis of the documents, it is quite clearthat the documents on the side of the appellant established thatthis was Karnikam service inam, and the action of the Zamindarin resuming it as such, which again has presumption ofDcorrectness attaching to it, clearly established the appellant’s case.Much cannot be made of concession by counsel that thiswas Dharmilainam, in the trial court, because it was aconcession on point of law, and it was withdrawn. Indeed,the central point in the dispute was this, and the concessionEappears to us to be due to some mistake or possiblyignorance not binding on the client. We are thus of opinionthat the decision of the two courts below which had concurrentlyheld this to be jeroyti land after resumption ofthe Karnikam service inam, was correct in the circumstances ofthe case, and the High Court was not justified in reversing it.”

(emphasis supplied)

24. In Himalayan Coop. Group Housing Society v. BalwanSingh[27 ]a three-judge Bench of this Courtclarified the law of agencywith respect to client-lawyer relationships. The Court held that whileGgenerally admissions of fact by counsel are binding, neither the clientnor the court is bound by admissions as to matters of law or legalconclusions:

26 AIR 1963 SC 884H27 (2015) 7 SCC 373

“32. Generally, admissions of fact made by counsel are bindingupon their principals as long as they are unequivocal; where,however, doubt exists as to purported admission, the court shouldbe wary to accept such admissions until and unless the counsel orthe advocate is authorised by his principal to make such admissions.Furthermore, client is not bound by statement or admissionwhich he or his lawyer was not authorised to make. lawyergenerally has no implied or apparent authority to make anadmission or statement which would directly surrender orconclude the substantial legal rights of the client unlesssuch an admission or statement is clearly proper step inaccomplishing the purpose for which the lawyer wasemployed. We hasten to add neither the client nor the courtis bound by the lawyer’s statements or admissions as tomatters of law or legal conclusions. Thus, according togenerally accepted notions of professional responsibility, lawyersshould follow the client’s instructions rather than substitute theirjudgment for that of the client. We may add that in some cases,lawyers can make decisions without consulting the client. Whilein others, the decision is reserved for the client. It is often saidthat the lawyer can make decisions as to tactics without consultingthe client, while the client has right to make decisions that canaffect his rights.”

(emphasis supplied)

25. Recently, two-judge Bench of this Court in Director ofElementary Education, Odisha v. Pramod Kumar Sahoo[28]observedthat concession on question of law concerning service rules wouldnot bind the State:

“11. The concession given by the learned State Counsel beforethe Tribunal was concession in law and contrary to the statutoryrules. Such concession is not binding on the State for the reasonthat there cannot be any estoppel against law. The rules providefor specific grade of pay, therefore, the concession given by thelearned State Counsel before the Tribunal is not binding on theappellant.”

398SUPREME COURT REPORTS

AThe concession of the Counsel for the appellant before the CATdoes not preclude the finding on the law that is arrived at by this Court.

Conclusion

26. The CAT and the High Court failed to notice the applicabilityof the ESIC Recruitment Regulations 2015 to the promotions of theBTeaching Cadre in the appellant corporation. The ESIC RecruitmentRegulations 2015 have precedence over the Office Memorandum dated29 October 2008 which implemented the DACP Scheme in respect ofofficers of the Central Health Service under the Union Ministry of Healthand Family Welfare. The concession by the Counsel of the appellantCbefore the CAT does not stand in the way of the appellant supporting thecorrect position of law before this Court.

27. The contesting respondents did not challenge the ESICRecruitment Regulations 2008 or the ESIC Recruitment Regulations 2015before the CAT or the High Court. The argument on lack of prior approvalDas per Section 17(2) of the ESI Act is obviated by the preamble to theESIC Recruitment Regulations 2015. The contesting respondents haveonly supported the applicability of the DACP Scheme to claim promotionas Associate Professor after two years of service. The advertisementsfor recruitment mentioning the DACP Scheme would have no effectsince they were in contravention of the applicable recruitment regulations.ETherefore, for the above reasons, we are of the view that the appealshould be allowed.28. The appeal is accordingly allowed and the impugned judgementand order of the Division Bench of the Karnataka High Court dated 5September 2019 is set aside. As consequence, the revised seniority listFof the Teaching Cadre at the appellant corporation should reflect thepromotions of the contesting respondents in accordance with the ESICRecruitment Regulations 2015 and not the DACP Scheme.

29. The appeal is disposed of in the above terms.

30. Pending application(s), if any, shall stand disposed of.

Devika Gujral

Appeal allowed.