A) ABSTRACT / HEADNOTE

This judgment addresses whether the option exercised by employees of the Directorate of Health Services (DHS) to join the Directorate of Medical Education (DME), pursuant to a governmental policy abolishing dual control, should be treated as:

(i) an absorption/transfer in public interest or

(ii) a transfer on request attracting the proviso to Rule 27(a) of the Kerala State and Subordinate Service Rules, 1958 (KS&SS Rules), and consequentially from which date their inter-se seniority in DME must be reckoned.

The appellants were DHS employees whose posts (and liens) were shifted to DME by G.O. measures; they furnished options in prescribed form (Appendix II) and were absorbed into DME. The Division Bench treated those options as inter-departmental transfers on request and applied the proviso to Rule 27(a) thereby fixing seniority from date of joining DME whereas the Single Judge and this Court held that the transfers were transfers by absorption in public/administrative interest and, under Rule 27(a) read with Rule 27(c) and Rule-8 of Appendix I to the G.O., the absorbed employees retain seniority reckoned from their original appointment/first effective advice.

The Supreme Court emphasised:

(i) the distinction between option and request,

(ii) the scope of the proviso to Rule 27(a) (limited to transfers on request or mutual request),

(iii) the nature of absorption where the post itself moved and employees were absorbed as part of a policy decision to eliminate dual control. The Division Bench’s reversal of the Single Judge was set aside; the State directed to draw seniority lists preserving the absorbed employees’ earlier service for seniority purposes.

Keywords: Transfer; Absorption; Option; Proviso to Rule 27(a); Inter-se seniority; Directorate of Health Services; Directorate of Medical Education; Dual control; Government Order; Seniority maintenance.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The State of Kerala confronted operational dysfunction arising from a dual control regime: medical college hospitals were administratively under the Directorate of Medical Education (DME) but their nursing, paramedical and ministerial staff remained under Directorate of Health Services (DHS). Committees and Estimates Committee reports recommended consolidation under DME to align administrative, academic and disciplinary control with functional requirements. To implement that policy the State issued a sequence of Government Orders culminating in G.O. (P) No. 548/2008/H&FWD dated 25.10.2008 which (inter alia) shifted numerous sanctioned posts from DHS to DME, constituted an Option Cell, prescribed Rules for filing option (Appendix I) and an Option Form (Appendix II), and provided 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 & SS Rules.”

The process involved scrutiny of options, shifting of liens, and the State’s ultimate direction by G.O. dated 17.06.2009 to transfer identified posts and employees. A clarificatory letter of 24.04.2010 reiterated seniority would be reckoned for promotees from date of promotion order and for direct recruits from first effective advice, i.e., consistent with Rules 27(a) & 27(c). Disputes then arose between absorbed employees (DHS staff who filed options and were moved to DME) and original employees of DME over whether exercise of option equated to an inter-departmental transfer on request invoking the proviso to Rule 27(a) (seniority from date of joining DME) or whether absorption in public interest preserved prior service for seniority. The High Court split: Single Judge upheld maintenance of past seniority for optees; Division Bench treated options as requests and fixed seniority from joining DME. This appeal resolved that interpretive conflict.

D) FACTS OF THE CASE

The State created DME in 1983 to manage medical colleges and collegiate hospitals; however, staff appointments and disciplinary control for many categories remained with DHS, creating delays and administrative friction. Successive Estimates Committee reports (1998-2004) and internal committees recommended transfer of hospital staff to DME and giving existing DHS staff the option to switch. G.O. dated 01.06.2007 initiated the process; committees framed draft rules and option forms.

The decisive Order 25.10.2008 (G.O. (P) No. 548/2008) directed that ministerial, nursing and paramedical posts then working with DME be brought under DME subject to submission of options per Appendix I & II. The Option Form required a declaration that the employee, if accepted, would not later claim return to DHS. An Option Cell scrutinised submissions: 3072 valid options against 6022 shifted posts were forwarded. G.O. dated 17.06.2009 directed transfer of identified 3096 posts in 57 categories. Liens of forwarded employees were ordered transferred.

The conflict concerned seniority: absorbed employees asked seniority be preserved (per Rule 8 of Appendix I), whereas original DME employees contended that furnishing the option amounted to a personal request for inter-departmental transfer and thus proviso to Rule 27(a) applied seniority to be reckoned from date of joining in DME. During litigation promotions were stayed; clarificatory letter of 24.04.2010 sought to settle seniority consistent with Rule 27(a) & (c). Single Judge upheld absorbed employees’ claim; Division Bench reversed. Supreme Court examined whether the process constituted absorption in public interest or transfer on request.

E) LEGAL ISSUES RAISED

i. Whether the option exercised by DHS employees to join DME under G.O. dated 25.10.2008 must be treated as a transfer on request within the proviso to Rule 27(a) of KS&SS Rules?
ii. If not, from which date shall the inter-se seniority of absorbed employees in DME be reckoned?
iii. Whether a transfer by absorption effected in public interest can be equated with an own-request transfer for seniority consequences?
iv. Whether Rule 8 of Appendix I and the clarificatory letter dated 24.04.2010 correctly interpret and preserve the seniority of absorbed employees under Rules 27(a) & 27(c)?

F) PETITIONER / APPELLANT’S ARGUMENTS

i. The transfer followed a State policy decision to abolish dual control; employees were given choice (option) as a protective measure—this is absorption in public/administrative interest, not an individual request;
ii. The posts (with lien) were shifted to DME; absorbed employees did not seek personal advantage by requesting transfer but acted pursuant to the State scheme; seniority must be maintained as per Rule 8 of Appendix I and protected by the State;
iii. Application of the proviso to Rule 27(a) would force absorbed staff to forgo prior service despite the Government’s intention and contrary to the express formulation of Appendix I and subsequent clarificatory letter;
iv. The functional reality—post moving with employee—distinguishes absorption from voluntary inter-departmental transfers; the State envisaged preservation of past service and promotional entitlement.

G) RESPONDENT’S ARGUMENTS

i. Furnishing an option and specifying stations requested for posting signified an inter-departmental transfer by request; therefore the proviso to Rule 27(a) applies and seniority must be reckoned from date of joining DME;
ii. Precedent (notably K.P. Sudhakaran & Anr. v. State of Kerala & Ors., (2006) 5 SCC 386) demonstrates that transfers on own request result in forfeiture of prior seniority; clause mechanisms under Rule 27 govern such contingencies;
iii. Allowing absorbed employees to retain old seniority prejudices original DME employees who had no option and distorts promotion prospects and cadre strength.

H) JUDGMENT

The Supreme Court analysed statutory language, G.O. materials, rule-making intent, definitions and comparative authorities. Central to the decision was the distinction between an employee’s request for transfer and an option exercised under a governmental policy of absorption. Rule 27(a) establishes seniority from the date of first appointment subject to a proviso applicable where transfers occur on request or mutual request; Rule 27(c) addresses appointment seniority for Commission-advised posts. The Court observed that the proviso is a narrowly tailored exception designed to address voluntary transfers and not to impair transfers effected for administrative exigency or public interest.

The G.O. scheme (Appendices I & II) manifested a conscious governmental choice to shift posts and liens to DME and to permit employees to elect absorption—coupled with the explicit statement in Rule 8 that seniority shall be maintained per Rules 27(a) & 27(c) thereby protecting previous service. The Option Form’s declaration (undertaking not to seek return) and the mechanism of Option Cell and transfer of lien supported the characterization as absorption.

The Court relied on statutory definitions (KSR Rule 36), lexicographic authorities on option and absorption, and the Punjab & Haryana High Court Full Bench decision in Kartar Singh v. State of Punjab (1989 SCC OnLine P&H 482) which recognized that absorption carries benefit of prior service in the absorbing department. Conversely, K.P. Sudhakaran was addressed and distinguished: that case dealt with transfers on employees’ own request and thereby sits within the proviso’s scope. The Court concluded the Division Bench erred in equating an option offered under a policy of abolition of dual control with an individually motivated request.

Consequently, the Single Judge’s approach and the Government clarificatory position were upheld: absorbed employees’ seniority and inter-se seniority must be maintained as per Rule 27(a) and 27(c) with reference to earlier appointment/promotion dates and first effective advice as appropriate. The Division Bench judgment was set aside and the State directed to prepare seniority lists accordingly.

a. RATIO DECIDENDI

The controlling principle is that the proviso to Rule 27(a) applies only where transfer occurs on request or by mutual application; it is a narrow exception to the general rule that seniority is determined from the date of first appointment. A transfer by absorption executed pursuant to a governmental policy in public interest and where posts themselves are shifted with lien and the State prescribes the option mechanism does not fall within that proviso. Therefore, employees absorbed under such policy retain their earlier service for seniority and inter-se ranking as per Rules 27(a) and 27(c) and consistent with the G.O.’s Rule 8 and the clarificatory letter.

b. OBITER DICTA 

The Court elaborated on distinctions between option and request citing lexicons: option is freedom to choose; request is a petition or demand these semantic distinctions inform service law interpretation. The judgment observed that transfer in public interest is an incidence of service and the Government, as the best judge of public administrative allocation, may shift posts and effect absorption. The Court also commented on procedural safeguards (Option Cell, scrutiny) as indicia of state-driven reorganisation rather than individual job-seeking. The discussion reaffirmed service law doctrine that voluntary transfers may be denied retrospective seniority to protect the cadre, whereas reorganisational absorption will not.

c. GUIDELINES 

i. Where posts are shifted by Government order and liens are transferred, the process is to be treated as absorption unless there is clear evidence it was simply an employee’s own request.
ii. If a G.O. or Appendix expressly provides maintenance of seniority (as Rule 8 did), administrative authorities must respect and implement that mandate when preparing inter-se seniority lists.
iii. Clarificatory communications (e.g., dated 24.04.2010) interpreting rules in favour of preservation of prior service carry weight and should guide exercise of executive function unless contrary to statutory rule.
iv. Proviso to Rule 27(a) must not be mechanically applied to every option/choice offered in a reorganisational scheme; courts should examine substance over form (post movement, lien transfer, policy objective).
v. In future absorptions, administrative orders should explicitly state seniority consequences to avoid litigation and must ensure transparent option mechanics (scrutiny, list by category, date references).

I) CONCLUSION & COMMENTS

The judgment clarifies and fortifies a principled distinction in service jurisprudence between transfers on request and transfers by absorption pursuant to policy-driven administrative restructuring. The Court rightly emphasised substance posts shifted with lien, assembled option machinery, government intent to abolish dual control over form (employee signature on option form). Practically, this preserves legitimate expectations of absorbed employees and prevents penalising them for acquiescing to a State-initiated reorganisation that benefits public administration.

The decision aligns with sound administrative principles: when the State restructures cadres for public interest and protects incumbents by providing an option, it should not later allow technical rule-reading to erode protected seniority and promotional prospects. At the same time the ruling balances original employees’ concerns by requiring implementation in accordance with Rule 27(a) and 27(c) modalities, thereby mandating orderly seniority lists and guarding promotional integrity. For administrators, the case is a reminder to draft G.O.s that are explicit about seniority consequences in reorganisations and to effect transfers with transparent linkage between post movement and employee lien.

The judgment also clarifies that precedents concerning own-request transfers (e.g., K.P. Sudhakaran) remain good law but are contextually distinguishable where the State drives absorption for administrative exigency. Overall, the ruling reduces avoidable litigation by insulating policy-driven absorptions from automatic application of proviso consequences meant for voluntary transfers.

J) REFERENCES

a. Important Cases Referred

i. Geetha V.M. & Ors. v. Rethnasenan K. & Ors., Civil Appeal Nos. 3994-3997 of 2024, Supreme Court of India, Judgment dated 03.01.2025, [2025] 1 S.C.R. 515.
ii. K.P. Sudhakaran & Anr. v. State of Kerala & Ors., (2006) 5 SCC 386. (as cited in the judgment).
iii. Kartar Singh v. State of Punjab, 1989 SCC OnLine P&H 482 (Full Bench). (as cited in the judgment).

b. Important Statutes / Instruments Referred

i. Kerala State and Subordinate Service Rules, 1958 — Rule 27(a), Rule 27(c).
ii. Kerala Service Rules, 1959 — Definition of Transfer (Rule 36).
iii. G.O.(P) No. 548/2008/H&FWD dated 25.10.2008, Appendix I (Rule 8) & Appendix II (Option form).
iv. G.O.(P) No. 167/2009/H&FWD dated 17.06.2009 (transfer order).
v. Clarificatory letter dated 24.04.2010 (seniority interpretation).