Supreme Court holds absorption on policy option preserves past seniority; sets aside Division Bench order and directs fresh seniority list

A two-judge Bench of Justices J.K. Maheshwari and Rajesh Bindal heard appeals challenging a Division Bench judgment of the Kerala High Court that had reversed a Single Judge’s decisions on inter-se seniority of staff shifted from the Directorate of Health Services (DHS) to the Directorate of Medical Education (DME). The appeals arose from disputes over whether employees who exercised an option to be absorbed in DME ought to have their seniority reckoned from their original DHS appointment or from the date they joined DME, invoking Rule 27(a) and 27(c) of the Kerala State and Subordinate Service Rules (KS&SS Rules) and Rule 8 of Appendix I to G.O. (P) No. 548/2008.

The Court held that the transfers were by way of absorption pursuant to a government policy abolishing dual control, and thus did not attract the proviso to Rule 27(a) which applies to transfers “on request”. The Court clarified that where posts and liens were shifted and employees exercised an option in furtherance of a policy decision, their past service could not be wiped out and their seniority must be “maintained” as per Rules 27(a) and 27(c). The Court, in its reasoning, observed: “The appellants exercised the option for absorption by transfer from DHS to DME in line with the policy decision taken by Government of Kerala and not on their own volition. Such being the situation, it cannot be considered as a case of transfer based on voluntary choice or own request. Their seniority and inter-se seniority shall be maintained as per Rule 27(a) and 27(c) of Part II of KS&SS Rules read with clarificatory letter dated 24.04.2010 with reference to Rule 8 of Appendix I to G.O. dated 25.10.2008.” The Court added that the Government had specifically stated in Rule 8 that “the seniority of the staff opted to Department of Medical Education will be maintained as per Rule 27(a) and Rule 27(c) of Part II, KS&SSR.”

Background The dispute dated to the State’s policy to abolish dual control between DHS and DME by G.O. (Ms.) No. 124/2007 and subsequent orders, culminating in G.O. (P) No. 548/2008 dated 25.10.2008 which provided Appendix I (rules for filing option) and Appendix II (option form and declaration). DHS employees were given an opportunity to opt for absorption into DME; 3,072 options were found valid out of posts proposed to be shifted. A clarificatory letter dated 24.04.2010 stated that seniority of absorbed employees would be reckoned “as per Rules 27(a) & 27(c) of Part II, KS&SS Rules”, i.e., from date of order of promotion for promotees and date of first effective advice for direct recruits.

Absorbed employees challenged any attempt to treat their move as an ‘own-request’ transfer; a Single Judge accepted that Rule 8 required maintenance of past service and allowed writ petitions by absorbed employees, directing DME to finalize inter-se seniority accordingly. Original DME employees appealed; the Division Bench held that furnishing an option amounted to a request for inter-departmental transfer and applied the proviso to Rule 27(a), directing seniority to be fixed from the date of joining DME. The State and absorbed employees then approached the Supreme Court.

The Supreme Court examined the scheme of the G.O.s, the Appendix rules and option form (which included a declaration that an optee “will not put forth any claim in future to return to Health Services Department”), and service-rule definitions of transfer and absorption. Relying on statutory text, committee records and precedent, the Court concluded that the transfer effected here was absorption in public interest following a policy decision, not a voluntary request triggering the proviso. The Court set aside the Division Bench judgment, restored the Single Judge’s approach and directed the State to draw the seniority list of DME employees — original and absorbed — reckoning seniority of absorbed employees in accordance with the judgment and the clarificatory letter. Pending interlocutory applications stood disposed of.

Case Details: Case No.: CIVIL APPEAL NOS. 3994-3997 OF 2024 (2025 INSC 33) Case Title: GEETHA V.M. & ORS. v. RETHNASENAN K. & ORS. Appearances: For the Petitioner(s): Mr. V. Giri, Senior Advocate (for absorbed employees); Mr. Jaideep Gupta (for State) For the Respondent(s): Mr. Raghenth Basant, Senior Advocate (for original DME employees)