Can Seniority Guidelines Override Preference For Chartered Accountants In Appointments For Public Sector Enterprises? Delhi HC Refers To Larger Bench

The Delhi High Court has referred to a larger bench the issue of whether Seniority Guidelines based on pay scales/Board Level positions can override the preference for Chartered Accountants in the job advertisement for the post of Director (Finance) in Public Sector Enterprises (PSEs).

Justice Jyoti Singh was dealing with a petition challenging the appointment of Directors (Finance) in Telecommunications Consultants (India) Ltd. (TCIL) and Bharat Electronics Limited (BEL). 

“The fulcrum and heart of the dispute therefore lies in the question whether the preference to a Chartered Accountant as a part of the educational qualification can be sacrificed or overlooked by inter-se seniority premised on higher pay scale/Board Level position and the answer, in my view, is an emphatic ‘No’.”

The central issue was the interplay between Seniority Guidelines established through an I.M dated 31.01.2018 and a 'preference' clause in the Advertisements related to educational qualifications for the post of Director (Finance). 

The petitioner, who was not shortlisted for the interview, approached the Court arguing that her non-selection is illegal, as her higher pay scale and Board Level position should have been given preference over juniors with lower pay scales based on the Seniority Guidelines. However, the respondents contended that these Guidelines only establish seniority among applicants from different organizations based on their pay scales and positions, whereas the shortlisting should focus on mandatory qualifications, including preference for Chartered Accountants.

Thus the key question before the Court was: Can higher pay scales or Board Level positions take precedence over educational qualifications, considering the nature of the post, the preference for Chartered Accountants, and the absence of such preference in the advertisements?

The appointment procedure for Director (Finance) was analysed, guided by the Public Enterprises Selection Board (PESB) Guidelines dated 29.08.2017 for Board Level Appointments. The Respondents stated that revised educational qualifications, which prioritise Chartered Accountants, were approved before the advertisements were issued.

Upon examining if the preference for Chartered Accountants can be outweighed by higher pay scales or Board Level positions, the Single Judge highlighted that qualifications are determined by the employer and that the focus on Chartered Accountants was tailored to the specific job requirements. It was reiterated that the Court cannot intervene in selection processes unless there are allegations of malafides or statutory violations. 

“It needs no reiteration that the preference clause has been included keeping in mind the nature of the post, the job requirement and the functionality of the post in question and is uniformly applicable to all CPSEs. In the scope of judicial review under Article 226 of the Constitution of India, it is neither open nor appropriate for this Court to question the wisdom of PESB in taking the said decision.” 

It added that the power to prescribe qualifications includes the power to prescribe additional or desirable qualifications or even stipulate a preferential educational qualification to suit the nature of posts required to be filled.

The court concluded that preference for a Chartered Accountant as a part of the educational qualification cannot be sacrificed or overlooked by inter-se seniority premised on a higher pay scale/Board Level position.

It added that the only objective of the Seniority Guidelines was to fix the inter-se seniority amongst applicants from different CPSEs based on pay scales/Board Level positions for the purpose of shortlisting. However, the Guidelines cannot be stretched to override the preference clause of Chartered Accountant, which was provided to suit the requirement of the post in question.

Referring to the PESB Guidelines dated 29.08.2017 and the requisite educational qualifications stipulated in the advertisements, the court observed that the preference for Chartered Accountants was a deliberate choice by PESB, evident in the Advertisements and known to the petitioner. This decision aimed for consistency across Public Sector Enterprises and was emphasized in the application advisory.

The court was also informed that the PESB approved revised educational qualifications for the Director (Finance) post, favouring Chartered Accountants, as stated in the I.M dated 19.08.2021, and this preference was evident in the Advertisements, except for the top three internal candidates shortlisted based on seniority and experience.

Finally, the Court acknowledged a contradictory decision of the Coordinate Bench where it had held that Seniority Guidelines will have an overriding effect on the preferential clause of Chartered Accountant and only when two candidates are otherwise equally placed i.e., with the same pay scales and/or Board Level positions, the preference clause of shortlisting the Chartered Accountant can be invoked.

Noting that the said judgment was challenged and is pending consideration before the Division Bench, the court framed the following issues for larger bench reference:

a) Whether preference can be given to a candidate based on higher pay scales and/or Board Level position for shortlisting the candidates for selection to the post of Director (Finance) in the absence of any such preferential clause in the Advertisements or even in the I.M dated 31.01.2018?

b) Can “Seniority Guidelines” dealing with interpolation of applicants as per their inter-se seniority premised on pay scales/Board Level positions override an exclusive clause in the Advertisement under the ‘Qualification’, giving preference to Chartered Accountants which finds genesis in Guidelines dated 29.08.2017 and PESB decision dated 19.08.2021 and is tailor-made to suit the Job Description of the post in question?

c) Does the conjoint reading of the preference clause pertaining to Chartered Accountant and the Seniority Guidelines lead to an interpretation that only when applicants have the same pay scales and/or Board Level positions, it is permissible to give preference to one based on his/her qualification of Chartered Accountancy?

Case Title: Geeta Sharma vs Public Enterprises Selection Board & Ors.

Citation: 2023 LiveLaw (Del) 698

Counsel for the Petitioner: Mr. Joby P. Varghese and Mr. Upmanyu Sharma, Advocates

Counsel for the Respondent: Ms. Manisha Agrawal Narain, Central Government Standing Counsel with Mr. Sandeep Singh Somaria and Ms. Rakshita Goyal, Advocates for R-1 and R-3. Mr. Sandeep Sethi, Senior Advocate with Mr. Sanjay Kapur, Mr. Devesh Dubey, Ms. Megha Karnwal and Mr. Surya Prakash, Advocates for R-2 and R-5. And  Mr. Amit Meharia, Mr. Abinash Agarwal, Ms. Poonam Shekhawat For R-2 9W.P.(C) 15784/2022 & C.M. APPL. 49156/2022, 8491/2023)

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