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Supose i have RAC 1 and u hav a confirmd ticket...
U dint board the train... TTE will see the chart... RAC 1 Me.. he comes to me and say.. Ur ticket is confirmed.. berth this...
So RAC 1 and 2 gets confirmed seats...
Next vacant seat to RAC 3...
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TTE will allot for those comming under his chart only.. matlab I hav a RAC 5 and you have RAC 9 alloted in Diff coaches say S1 me and you in S7...
If the TTE in ur coach has vacant seats he can allot you and if the TTE in ma coach doesnt have any seats unoccupied, he cant allot me..

All is on the discretion of TTE. Rules say he will allot berths to RAC passengers as and when berths are available. In this way, a big loophole is left open and TTEs do not follow transparancy by willfully concealing from public what all berths are vacant (esp. by "No show"). He allots the same to whoever approaches him and offers him a bribe.
I have seen cases were vacant berths were given to WL passengers (as they gave Rs 250 each), and not to RAC people (who denied giving any bribe, even Rs 50/-, for this unethical practice)
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regards preference of RAC status, once chart is prepared, all RAC holders stand at same position (i.e. RAC 2 does not have any special preference over RAC 45). This is also another loophole. (For eg. there are 5 vacant berths and 24 persons. which all persons would get full berth, depends entirely on discretion of TTE)
MERA RAILWAY MAHAN!!!