Statement In Advertisement Contrary To Service Regulations Won't Create Right In Favour Of Applicants: Supreme Court

The Court further held that "regulations framed by statutory authorities have the force of enacted law and in the event of a conflict between an executive instruction, an office of memorandum in this case and statutory regulations, the latter prevails."

A two-judge bench comprising Justice DY Chandrachud and Justice AS Bopanna, while dealing with a case pertaining to a DACP (Dynamic Assured Career Progression) scheme contravening with the provisions of ESIC Recruitment Regulations, has held that ESIC Recruitment Regulations 2008 and 2015 have statutory effect as per S.97(3) of the ESI Act and thus, as per settled law, the regulations which have been framed by statutory authorities shall override the scheme since there can be no estoppel against regulations that have statutory backing.

Facts

The facts of the case pertain to a writ petition filed in Karnataka High Court against an order of Central Administrative Tribunal, Bengaluru which held that the ESIC regulations 2015 were not relevant in the adjudication of the matter in question.

The matter in question pertained to proceedings that were instituted before the Central Administrative Tribunal, Bengaluru by respondents in the current matter who had joined as Assistant Professors at ESIC Model Hospital, Rajajinagar, Bengaluru between 7 February 2012 and 26 June 2014. Their contention was that a scheme issued by Central Government on 29 October 2008 had contemplated that an Assistant Professor was to be promoted as an Associate professor once they had completed two years in the service on the post of Assistant Professor and thus, on completion of two years in service, the respondents applied to CAT, Bengaluru seeking such promotion, in February 2017. CAT, Bengaluru held that ESIC regulations were not applicable in the matter and directed the appellant (ESIC) to consider the respondents for promotion under the DACP scheme. The appellants then challenged the order of the CAT via a writ petition in the High Court of Karnataka, which also dismissed the writ petition holding that since the ESIC Recruitment Regulations 2015 came into effect after the respondents were recruited, they would be entitled to the benefit of promotion as per the DACP scheme. High Court of Karnataka also ruled that the DACP scheme had statutory effect under S.17 of the ESI Act and that ESIC Recruitment Regulations, 2015 had departed from the DACP scheme without any approval from the Central government.

Arguments from Appellants

Mr. Santhosh Krishnan, the counsel for appellants submitted that the appellant is an autonomous statutory corporation incorporated under the ESI Act, within the administrative control of Ministry of Labour and Employment of the Government of India and by virtue of S.97 of the ESI Act, the appellant has the power to frame its own regulations. And as per the ESIC Recruitment Regulations of 2015, minimum five years of service as an Assistant Professor was mandatory to be promoted as an Associate professor. The Counsel further stated that the respondents had joined on different dates from 7 February 2014 to 26 June 2016 and were governed by ESIC Recruitment Regulations, 2008 and these regulations themselves stipulated four years of qualifying service for promotion to an Associate professor from the post of Assistant professor. And none of the respondents would have completed four years of service by July 2015, which is when the new ESIC recruitment Regulations came into effect, and these regulations stipulated minimum five years of service as an assistant professor to be promoted to an Associate Professor. Thus, the counsel submitted that as per ESIC recruitment regulations 2008, the respondents only became eligible for promotion after the ESIC regulations 2015 had come into effect and thus, ESIC Recruitment Regulations, 2015 could not be ignored.

The counsel cited the apex court's judgments in C. Sankarnarayanan v. State of Kerala which had held that "there is no estoppel against legislative action concerning service conditions" and the apex court judgment in Union of India v. Ashok Kumar Agarwal, which had held that, "government issued memorandums or executive instructions can be used only to supplement the statutory rules but not to supplant them".

The Counsel also admitted that appellants had mistakenly submitted in front of CAT that the ESIC Recruitment Regulations 2015 would not apply in the matter, however, such incorrect concession also would not amount to estoppel against a statutory regulation. Referring to Malik Mazhan Sultan v. UPSC and Ashish Kumar v. State of UP, the learned Counsel further submitted that it is trite law that if an advertisement is inconsistent with recruitment rules, then the rules shall prevail.

Arguments from Respondents

Mr. Yatindra Singh and Mr. Anand Sanjay M Nuli, the counsels for respondents submitted that by an office memorandum issued in August 2008, the DACP was extended to all medical doctors and by another memorandum in October, 2008, the DACP scheme was further extended to various sub-cadres of the Central Health Service inclusive of teaching cadre and thus, as per S.17(2)(a) of the ESI Act, the DACP scheme would be binding on the appellant.

The counsel further averred that not only the ESIC regulations, 2008 were issued without Central government's approval, there were several advertisements issued between August 2011 and 2013 stating, "promotional avenues in the department are available under DACP guidelines of the Govt. of India" and that the contesting respondents had only joined the services of the appellant pursuant to such recruitment advertisements. The Counsels further submitted that even the ESIC Recruitment Regulations 2015 were issued without obtaining prior approval from the Central government which was mandated under S.17(2)(a) of the ESI Act and DACP has statutory force under ESI Act and since central government's approval was not taken for aforementioned regulations, they would not override the DACP scheme. The Counsel also made the court aware that the doctors and teaching staff were being promoted as per DACP scheme so this arbitrary denial of DACP scheme to the respondents was violative of A.14 of the Constitution.

Judgment

After analysing the rival submissions made, the Court first looked at S. 17(2)(a) of the ESIC Act, 1948 (which speaks of method of recruitment, salary and allowances) and S.97 of the ESI Act (which talks about power of corporation to make regulations) and after referring to its judgments in Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi, Pepsu Road Transport Corporation, Patiala v. Mangal Singh & Ors., and Sant Ram Sharma v. State of Rajasthan, among others, concluded that both the ESIC Regulations 2008 and 2015 have statutory effect as per S.97(3) of the ESI Act considering the preamble to ESIC Recruitment Regulations, 2015 clearly stipulated that the prior approval of Central Government, as mandated by S. 17(2) of the ESI Act was duly sought. The Court further held that "regulations framed by statutory authorities have the force of enacted law and in the event of a conflict between an executive instruction, an office of memorandum in this case and statutory regulations, the latter prevail."

The Court also clarified that the DACP scheme which had seemingly facilitated promotion from Assistant Professor to Associate Professor on completion of two years of service as an Assistant professor shall not be applicable to the contesting respondents because of pre- existence of ESIC Regulations having statutory backing which shall override the DACP Scheme.

The apex court further averred, after referring to judgments in Malik Mazhar Sultan v. UP Public Service Commission, that "an erroneous advertisement would not create a right in favour of applicants who act on such representation." Regarding the respondents' contention that the advertisements had implied applicability of DACP Scheme even before the 2015 regulations came into effect, the Court held that "a subsequent amendment to recruitment regulations would override the conditions prescribed in the advertisement."

"The advertisements issued by the appellant mentioned that the DACP Scheme would be applicable for its recruits. However, it is a settled principle of service jurisprudence that in the event of a conflict between a statement in an advertisement and service regulations, the latter shall prevail".

Further expressing its disapproval at the lack of proper instructions tendered by the counsel for appellants in front of CAT, the court stated that there could be no estoppel against regulations having statutory effect. Thus, the Court, while observing that CAT and High Court failed to notice the applicability of ESIC, 2015 regulations to the promotions to respondents' teaching cadre, allowed the appellant's appeal to set aside the impugned judgment and directed that the revised seniority list of teaching cadre at the appellant corporation must reflect the court's orders.

Case Title : The Employees State Insurance Corporation versus Union of India and others

Citation  : 2022 LiveLaw (SC) 78

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