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To answer this question, let's understand each statement and the constitutional articles mentioned.
Statement I: This statement is correct. The Supreme Court of India has indeed held in several judgments that the reservation policies made under Article 16(4) of the Constitution of India are not absolute and need to be balanced with Article 335. The Supreme Court has stated that the need for maintaining efficiency of administration is the underlying principle in Article 16(4) and thus it cannot be ignored while granting reservations.
Article 16(4) of The Constitution of India allows the state to make special provisions for the reservation of appointments or posts in favor of any backward class of citizens which, in the opinion of the State, are not adequately represented in the services under the State.
Article 335 talks about the claims of the members of the Scheduled Castes and the Scheduled Tribes to services and posts to be taken into consideration consistently with the maintenance of efficiency of administration.
Statement II: This statement is incorrect. Article 335 does not define 'efficiency of administration' but it states that the said efficiency should be maintained while considering reservation policies.
Therefore, the correct option is: Statement-I is correct, but Statement-II is incorrect. The explanation is that while Statement-I correctly presents a view endorsed by the Supreme Court on the relationship between Articles 16(4) and 335, Statement-II is incorrect as Article 335 does not define 'efficiency of administration'.