Option 2, S. P. Gupta vs. President of India, is the judgement associated with the primacy of the Chief Justice of India and the Collegium of Judges in the appointment and transfer of the higher judiciary. This judgement, also known as the "First Judges case," was delivered in 1981 by a bench of seven Supreme Court judges.

In this case, the Supreme Court held that the role of the Chief Justice of India is of immense importance in the appointment and transfer of judges. It established the "primacy of the Chief Justice of India" in the decision-making process and recognized the Chief Justice of India as the head of the Judiciary.

However, it is important to note that this judgement was later modified by the "Second Judges case" (1993) and the "Third Judges case" (1998), which further elaborated on the Collegium system and expanded the role of the Chief Justice of India and the Collegium of Judges in the appointment and transfer of judges.

Therefore, while the provided answer is generally correct, it is crucial to understand that the S. P. Gupta case was only the initial step in establishing the primacy of the Chief Justice of India and the Collegium system in the appointment and transfer of the higher judiciary.