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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 2970-2975 OF 2013
[Arising out of SLP (C) NOS.9181-9186 OF 2011]
Rani Laxmibai Kshetriya Gramin Bank & Ors. ...Appellants
VERSUS
Manoj Kumar Chak ...Respondent
WITH
CIVIL APPEAL NOS. 2989-2992 OF 2013
[Arising out of SLP (C) NOS.9306-9309 OF 2011]
Vidur Gramin Bank & Ors. ...Appellants
VERSUS
Paramjeet Singh & Ors.
...Respondents
WITH
CIVIL APPEAL NOS. 2976-2988 OF 2013
[Arising out of SLP (C) NOS.9432-9444 OF 2011]
Rani Laxmibai Kshetriya Gramin Bank
(now Sarva U.P. Gramin Bank & Ors.) ...Appellants
VERSUS
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Siraj Ahmed Khan & Ors. ...Respondents
WITH
CIVIL APPEAL NOS. 2993-3010 OF 2013
[Arising out of SLP (C) NOS.9284-9301 OF 2011]
Sarva UP Gramin Bank & Ors. ...Appellants
VERSUS
Sanjeev Kumar & Ors. ...Respondents
J U D G M E N T
SURINDER SINGH NIJJAR,J.
1. Leave granted in all the Special Leave Petitions.
2. These appeals are directed against the common judgment
and final order dated 8th December, 2010 passed by the
High Court of Judicature at Allahabad in Writ Petition Nos.
58206 of 2005 and in connected Writ Petition Nos. 58214,
59016, 59018, 59035 and 59758 of 2005, whereby the
High Court has allowed all the Writ Petitions and set aside
the Circular No. 17 of 2009 dated 30th November,
2009 and Circular dated 12th July, 2010 in so far as they
make a provision to exclude the employees from
2Page 3
consideration for promotion, who are otherwise eligible to
be considered for promotion and are within the zone of
consideration, on the basis that they have either obtained
the ‘D’ rating in the annual performance report or have
been penalized for any misconduct in the preceding 5
years.
Background:-
3. Before we take up for consideration, the issues involved, it
would be appropriate to briefly notice the background
leading to the present litigation.
4. There are currently about 82 Regional Rural Banks
(for short “RRBs”) sponsored by various nationalized
banks, set up under the Regional Rural Banks Act, 1976
(for short “the RRB Act, 1976”). There are about 67,000
employees of the Bank, spread all over India mostly in the
interiors.
5. To ensure uniformity amongst all the RRBs, Section 29
read with Section 17 of the RRB Act, 1976 empowers the
Central Government to lay down the terms and conditions
3Page 4
of service of employees of all the banks. Section 17 of the
RRB Act, 1976 empowers the RRBs to appoint such
number of officers and other employees as it may consider
necessary or desirable in such manner as may be
prescribed for the efficient performance of its functions
and to determine the terms and conditions of their
appointment and service. Section 24 of the Act lays down
that in the discharge of its functions, RRBs shall be guided
by such directions in regard to matters of policy involving
public interest and the Central Government may, after
consultation with the National Bank for Agriculture and
Rural Development (for short “NABARD”), may prescribe.
Under Section 29 of this Act, the Central Government has
been empowered to make rules after consultation with the
NABARD and the Sponsor Banks for carrying of the
provisions of the RRB Act, 1976. By Clause (ba) of subsection (2) of Section 29, which was inserted by the
Regional Rural Banks (Amendment Act), 1988, the Central
Government was empowered to make rules relating to the
manner in which the officers and other employees of the
RRBs shall be appointed.
4Page 5
6. Till the year 1988, there were no statutory rules governing
the promotion of employees of RRBs and the same were
governed by various Circulars issued by the Central
Government and NABARD. On 1st December, 1987,
NABARD issued guidelines to all RRBs vide letter No.
IDD.RRB.NO. C-78/316(GEN)/87-88, explaining the
concept of promotion by “Seniority-cum-Merit” as
envisaging promotion by seniority with due considerations
to minimum merit/fitness prescribed. Further, it was
stipulated that “this rule envisages promotion by seniority
with due considerations to minimum merit/fitness
prescribed. Fitness implies that there is nothing against
an officer; no disciplinary action is pending against him
and none is contemplated. The officer has neither been
reprimanded nor any adverse remarks have been
conveyed to him in the reasonable recent past”. Although
the aforesaid Circular was issued in relation to promotion
of Managers to the post of Area/Sr. Manager, it was
observed that the similar procedure may be followed in
case of the promotion of Sr. Clerk and internal promotion
to Field Supervisor and Manager Posts.
5Page 6
7. The Central Government vide a Notification
dated 28th September, 1988 framed statutory rules, known
as Regional Rural Banks (Appointment and Promotion of
Officers and other Employees) Rules, 1988 (for short “the
RRB Rules, 1988). These rules were made in exercise of
the powers conferred on the Central Government by
Section 29 read with Section 17 of the RRB Act, 1976 after
consultation with the NABARD and the Sponsor Banks
specified in the First Schedule of the Rules.
8. Second Schedule of the aforesaid Rules laid down the
criteria for appointment to different categories of posts
whether by direct recruitment or by promotion in all the
RRBs. The criterion for promotion on all the posts was
specified as seniority-cum-merit. With regard to the post
of Area / Senior Manager, Clause 7 of Schedule 2 provided
that the appointment on the aforesaid post shall be made
100% by promotion from amongst confirmed officers
working in the Bank. Promotion will be on the basis of
seniority-cum-merit. If suitable officers are not available
internally, these posts are to be filled by deputation in
another banks or organization on deputation.
6Page 7
9. Clause 7(c) pertains to the mode of selection, which
provided for “interview and assessment of performance
reports for the preceding 3 years period as officer for
promotion”. It is relevant to note here that in these rules,
the provisions pertaining to merit/fitness contained in the
NABARD Circular dated 1st December, 1987 were not
incorporated. Even though, the 1988 Rules have been
promulgated in consultation with NABARD and the Sponsor
Banks.
10. In spite of the promulgation of the RRB Rules, 1988, the
RRBs continued to make promotions by taking into
consideration the criteria laid down in the 1987 Circular in
addition to the provisions contained in the RRB Rules,
1988. This led to the actions of the RRBs being challenged
by way of Writ Petitions in Andhra Pradesh High Court and
Madhya Pradesh High Court. Both the Andhra Pradesh as
well as the Madhya Pradesh High Court held that if
seniority-cum-merit criterion is adopted for the purposes
of seniority, then the first senior most eligible employee
has to be tested to find out whether he possesses the
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minimum required merit for holding the higher post and
only if he is not found suitable or fit, his immediate junior
may be tested for the purpose of promotion. These
decisions of the High Courts were challenged by the
various RRBs as well as the promoted officers whose
promotion has been set aside by this Court.
11. The controversy was laid at rest by this Court in the
judgment delivered in the case of B.V. Sivaiah & Ors. Vs.
K. Addanki Babu & Ors.1
This Court distinguished the
principle of “Merit-cum-Seniority” and the principle of
“Seniority-cum-Merit”. It has been held that the principle of
“Merit-cum-Seniority” lays greater emphasis on merit and
seniority plays a less significant role. Seniority is to be given
weight only when merit and seniority are approximately
equal. As between two officers of “seniority-cum-merit”, the
criterion of seniority-cum-merit lays greater emphasis on
seniority. However, this Court added a caveat that an officer
can not claim promotion as a matter of right by virtue of
seniority alone and if he is found unfit in the discharge of
duties of the higher post, he may be passed over and the
1
(1998) 6 SCC 720
8Page 9
officer junior to him may be promoted. The aforesaid
judgment of this Court was delivered on 17th July,
1998.
12. Thereafter on 29th July, 1998, in exercise of the powers
conferred by Section 29 read with Section 17 of RRB Act,
1976, in supersession of the RRB Rules, 1988, the Central
Government, after consultation with the National Bank and
Sponsor Bank specified in the Second Schedule, promulgated
the Regional Rural Banks (Appointment and Promotion of
Officers and other Employees) Rules, 1998. The relevant
provision for appointment by promotion as a Scale II officer is
as under:-
“2.
(a) Name of Post Scale II Officer
(b) Classification Group ‘A’
(C) Source of appointment 100 % by promotion
(d) Whether promotion to be Promotion shall be made
made on seniority basis on the basis of seniority
or seniority-cum-merit -cum-merit
basis.
(e) Eligibility Officer holding post for
eight years as an officer
on regular basis in the
Regional Rural Bank
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shall be considered for
promotion to Scale-II
post in that bank :
Provided that no officer
shall be considered for
promotion unless he has
been confirmed in
feeder grade post:
Provided further that the
Board may, with the
prior approval of
National Bank relax the
qualifying service for a
period not exceeding
two years, if eligible
officers are not
available.
Note:
(I) The officers eligible for promotion to the post of Area
Managers/Senior Managers/Officers Scale-II on or before
publication of this notification, shall continue to be
considered for promotion to Scale-II officer Post.
(II) The service of the incumbents, who are holding the
post eligible for promotion before publication of this
notification, shall continue to be counted for the purpose
of promotion to the Scale II officer post.
(f) Mode of Selection The selection of the
candidates shall be made
by the committee on the
basis of written test,
interview and assessment
of Performance Appraisal
Reports for the preceding
five years as an officer in
Scale I/Field Supervisor.
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(g) Composition of Committee The committee (for
considering promotion)
shall consist of the
following persons, namely,
i) The chairman of the
concerned Regional Rural
Bank-Chairman
(ii) A director nominated
the sponsor bank-Member.
(iii) A director nominated
by the National Bank
Member.
Note: If none of the members of the Committee belongs to
Scheduled Castes/Scheduled Tribes, the Board may nominate
a person belonging to Schedule Castes or Schedule Tribe as an
additional member and such person shall participate in the
process of selection by the concerned committee.
(h) Reckoning of the The minimum eligibility in
minimum eligibility terms of the number of
years of service for
promotion shall be reckoned
as on the 1st April of the year
in which the vacancy is
expected to arise or has
actually arisen.
(i) Number of candidates The number of
candidates to be
To be considered for considered for promotion from
Promotion officer Scale I to officer Scale II
shall be restricted to four times
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the number of vacancies
available for promotion.
(j) Selection process for The Selection shall be on the
Promotion basis of performance in the
written test, interview and
perforlmance appraisal reports
for preceding five years as per
the division of marks given
below.
(A) Written Test 60 Marks
(B) Interview 20 Marks
(C) Performance 20 Marks
Appraisal Reports
TOTAL MARKS 100 MARKS
(A) Written test (60 marks) The candidates shall be
required to appear for written
test comprising of two parts
viz. part (A) covering Banking
Law and Practice of Banking
and Part
(B) covering Credit Policy
Credit Management including
priority Sector, Economics and
Management.
60 marks allotted to written
test shall be further divided as
under :
Part ”A” 30 Marks
Part “B” 30 Marks
A list of only those candidates,
who secure a minimum of 40%
marks in each part shall be
1Page 13
prepared and such candidates
shall be called for interview. “
13. The Rules also provide that the written test shall be in
two parts viz. Part A and Part B, each consisting of 30
marks. It was provided that the list of those candidates
shall be prepared, who secure a minimum of 40% marks in
each part and such candidates shall be called for interview.
Thus the Rules had clearly introduced the minimum
necessary merit as laid down by this court in the case of
B.V. Sivaiah (supra). However, it appears that one of the
Sponsor Banks, namely Punjab National Bank issued
guidelines dated 27th February, 1999 laying down the
“procedure to be adopted in RRBs for promotion in different
cadres – clarification thereof”, to all its Sponsored Regional
Rural Banks.
Present Litigation:
14. Thereafter, the individual officers of erstwhile RRBs
filed 13 Writ Petitions before the High Court in the year
2004-2005 on the ground that the Circular sought to debar
totally from consideration for promotion, officers against
whom disciplinary action was pending or contemplated as
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well as those, who had been reprimanded or had obtained a
‘D’ rating in their annual performance reports in the
preceding 5 years before the selection process commences.
15. Whilst the aforesaid matters were still pending, it
appears that the Punjab National Bank and Bank of Baroda
issued another clarification by the Circular No. 17 of 2009
dated 30th November, 2009. The aforesaid circular entitled
“Appointment and Promotion of Officers and other
Employees of RRBs” reiterated the provision contained in
the Notification dated 29th July, 1998. Pursuant to the
aforesaid, Sarva U.P. Gramin Bank issued a Circular dated
12th July, 2010 incorporating the clarification contained in
the Circular dated 12th July, 2010, subsequently reiterated
on 30th November, 2009. The aforesaid Circulars were also
challenged in Writ Petition Nos. 55913, 50638, 50629,
51003 and 50633 of 2010.
16. All the aforesaid writ petitions were clubbed and
decided by the High Court of Judicature at Allahabad by a
common judgment dated 8th December, 2010. By the
aforesaid judgment, the High Court quashed the Circular
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No. 17 of 2009 dated 30th November, 2009 and Circular
dated 12th July, 2010. The appellant bank was directed to
consider the claim of the respondents (Writ Petitioners) for
promotion in accordance with the procedure and method of
punishment provided by the competent authority for
selections. The High Court in its judgment concluded :-
“1. Where a person is eligible to be considered for
promotion, his exclusion, on the ground that he has
suffered minor or major penalties, cannot be a
ground to exclude him from consideration. The
competent authority, as held in K.V. Janakiram
(supra) and B.V. Sivaiah (supra), can lay down
minimum standards required and also prescribe
mode of assessment of merit of the employees
eligible to be considered for promotion. The
assessment can be made by assigning marks on the
basis of appraisal of performance on the service
record and interview. The competent authority may
also prescribe minimum marks which would entitle a
person to be promoted on the basis of seniority-cummerit. The employee, however, cannot be excluded
and denied his right to be considered by the
selection committee for promotion.
1Page 16
2. The persons, who have been awarded censure
entry or other minor punishments, thus cannot be
excluded from the zone of consideration for
promotion. The question of assessment on merit is to
be made by the Selection Committee at the time of
selection and not before that by eliminating the
person who is within the zone of consideration.
3. We are further of the opinion that the circulars
issued by the bank cannot override the statutory
Rules nor can supplement it to the extent that the
persons, who are otherwise eligible to be considered
for promotion, will be rendered ineligible and will not
be given a chance to be considered for promotion.”
17. Aggrieved by the aforesaid observations and the
decision of the High Court, the appellant bank has filed the
present appeals.
SUBMISSIONS :
18. We have heard very lengthy submissions by the
learned counsel for the parties.
1Page 17
19. We may first briefly notice the submissions on behalf
of the appellants. Mr. Dhruv Mehta, learned senior counsel
appearing for the appellants submitted that the Circular
dated 30th November, 2009 and 12th July, 2010 were not
ultra vires of the RRB Rules, 1998. The two Circulars have
only supplemented the RRB Rules, 1998, where they are
silent. The Circulars do not have the effect of supplanting
the RRB Rules, 1998. He elaborated that the aforesaid
Rules do not provide for and/or are silent with regard to the
treatment to be given /meted out to the case where
“adverse remarks” have been recorded against an officer
during the preceding 5 years, i.e., period under
consideration for promotion. He submitted that the Sponsor
Banks have merely reiterated the earlier Circular issued by
the NABARD on 1st December, 1987, which was
subsequently clarified on 27th February, 1999. The Circulars
dated 30th April, 2009 and 12th July, 2010 have merely
reiterated the earlier position. The appellant bank had only
reiterated the aforesaid guidelines after the amalgamation
of the small RRBs into one RRB (appellant bank) vide
Notification dated 30th November, 2007. However, these
guidelines were being followed by erstwhile RRBs also prior
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to amalgamation. Learned senior counsel relied on the
judgment in the case of Sant Ram Sharma Vs. State of
Rajasthan & Ors.2
to submit that it was permissible for the
appellant bank to fill up the gaps and supplement the rules
and issue instructions which were not inconsistent with the
statutory rules. Learned senior counsel further submitted
that the aforesaid Circulars have been issued in order to
bring about uniformity as different RRBs were following
different procedures for making promotions on similar
posts. Since the Rules of 1998 are silent with regard to
non-consideration of officers, who have adverse remarks
against them in the preceding 5 years, it was necessary to
lay down uniform guidelines. He emphasised that DPC
under the RRB Rules, 1998 consists of :- (a) Chairman, RRB,
(b) Director nominated by Sponsor Banks and (c) Director
nominated by NABARD. In the absence of uniform
guidelines, DPC consisting of individuals will be conferred
with power to decide whether an individual officer despite
having been punished in the preceding 5 years should be
recommended/selected for promotion or not. According to
Mr. Dhruv Mehta, introduction of such a process will lead to
2
(1968) 1 SCR 111
1Page 19
infusion of arbitrariness in the process of promotion. In
such circumstances, the promotion of a particular officer, in
spite of having been punished, will be based entirely on the
perception of individual members of DPC. This could lead to
more litigation by the officers, who are not
selected/approved for promotion in spite of having a clean
record. He points out that without the aforesaid guidelines,
an officer, even though, he has been punished for gross
misconduct, would have to be promoted in case he obtains
minimum 40% marks in the written test, because in other
parameters, namely interview and performance appraisal,
the RRB Rules, 1998 do not prescribe minimum marks.
Debarring such a person from promotion would not be
arbitrary as the rationale behind such procedure is to weed
out the unfit at the initial stage. In support of this
submission, the learned senior counsel relied on the
observations made by this Court in the case of Rajendra
Kumar Srivastava & Ors. Vs. Samyut Kshetriya
Gramin Bank & Ors.3 The instructions, according to him,
merely prescribe minimum merit necessary for discharging
the function of the higher post. Therefore, the procedure
3
(2010) 1 SCC 335
1Page 20
prescribed in the Circulars would not violate the concept of
promotion by seniority-cum-merit. Learned senior counsel
further submitted that same procedure will be followed in
cases, where an officer has been communicated adverse
remarks and graded as ‘D’ in the 5 years preceding the
selection process. In support of this submission, the
learned counsel relied on certain observations made by this
Court in Civil Appeal No. 6072 of 2012, Ram Ashish Dixit
Vs. Chairman, Purvanchal Gramin Bank & Ors.
20. The next submission of Mr. Dhruv Mehta was that the
employee only has a right to be considered for promotion
and does not have an absolute right to be promoted only on
the basis of seniority. Learned senior counsel reiterated
that criteria of “fitness”, i.e., a candidate should not be
found to be “unfit to discharge the duties of higher post” is
a condition implicit in the criteria of promotion on the basis
of “seniority-cum-fitness” criteria.
21. Learned senior counsel has further submitted that
different rules prescribed different criterias for adjusting the
suitability of candidates for promotion viz. “seniority-cum-
2Page 21
fitness”, “seniority-cum-merit” and “merit-cum-seniority”.
However, the “fitness” of a candidate to discharge duties of
higher post, has to be considered necessary, relevant and
an implicit condition of promotions in all the above criterias.
He draws support for the aforesaid submission from the
judgment of this Court in the case of State of Mysore &
Anr. Vs. Syed Mahmood & Ors.4
and Haryana State
Warehousing Corporation & Ors. Vs. Jagat Ram &
Anr.5
22. Mr. Dhruv Mehta then submitted that the
employee/officers, who have not been promoted in view of
the guidelines dated 30th November, 2009 and 12th July,
2010, had not been debarred from consideration as they
were, in fact, considered along with all the other officers,
who had completed the requisite period of service but have
been weeded out/eliminated at the threshold, in view of the
fact that they had been either punished or graded ‘D’ in the
5 years preceding the selection. Learned senior counsel
further submitted that non-promotion of those officers, who
have either been punished or have been recipient of
4
AIR 1968 SC 1113
5
(2011) 3 SCC 422
2Page 22
adverse remarks such as Grade ‘D’, would not be violative
of Article 14 and 16 of the Constitution of India. The
candidates, who have been imposed penalty/punishment or
whose performance is assessed as unsatisfactory during the
period under consideration for promotion can not be placed
at par with the candidates, who have not been imposed any
punishment/penalty or whose performance has been
outstanding, very good or good during the said period. The
classification made on the basis of the service record is a
reasonable classification and has a nexus with the object
sought to be achieved namely promotion to the next
grade/cadre. In support of this, he relies on the judgment of
this Court in the case of Union of India & Ors. Vs. K.V.
Jankiraman & Ors.6
23. Mr. Dhruv Mehta has also brought to the attention of
this court the “subject wise bifurcation” of the present
special leave petitions, which appears to have been
premised on the basis of different levels of punishment
imposed on the writ appellants/respondents herein which
6
(1991) 4 SCC 109
2Page 23
rendered them ineligible from consideration for promotion.
The bifurcation is as under :
(i) SLP (C) No. 9284-9301/2011: The concerned employees
in this bunch were rendered ineligible for consideration
for promotion due to imposition of punishment on them
during the preceding five years.
(ii)SLP (C) No. 9181-86/2011: The assessment of the
concerned employees in this bunch was rendered
“unsatisfactory”, i.e., they were rated “D” in any one
year out of preceding five years.
(iii) SLP (C) No. 9432-9444/2011: Some punishment was
imposed on the employees herein during the preceding
five years and also, their performance was rated as
unsatisfactory, i.e., they were rated “D”.
(iv) SLP (C) 9306-9309/2011: Issues raised by the writ
petitioners herein were not same/similar to the lead
matter therein.
24. Lastly, he submits that this Court in a catena of
judgments has held that an employee can be validly
debarred from consideration for promotion during the rigour
2Page 24
of punishment. He has made a reference to the following
judgments:-
State of T.N. Vs. Thiru K.S. Murugesan & Ors.7
, L.
Rajaiah Vs. Inspector General of Registration &
Stamps, Hyderabad & Ors.8 and Collector of
Thanjavur Distt. & Ors. Vs. S. Rajagopalan &
Ors.9
25. On the other hand, learned senior counsel for the
respondent, Mr. Fakhruddin, submitted that the submissions
made by the appellants about the usurpation of the power
of selection of the management by the members of the DPC
clearly indicates that the two Circulars have not been issued
bonafide and are in fact intended to whittle down the role
and powers of Independent Selection Committee prescribed
in the statutory rules of 1998. The function of selection has
been statutorily conferred on the DPC, and can not be
permitted to be usurped by the Bank Management. He
further submitted that by virtue of Section 29 and Section
17 of the RRB Act, 1976, the powers to determine the
7
(1995) 3 SCC 273
8
(1996) 8 SCC 246
9
(1995) 3 SCC 273
2Page 25
service conditions including promotions of the employees of
the RRBs are vested in the Central Government. Therefore,
the two Circulars can not be permitted to prevail over the
provision of the statutory rules of 1998. Mr. Fakhruddin
emphasised that Government of India has promulgated the
aforesaid rules in consultation with NABARD and the
Sponsor Bank. Even then, no provision has been made in
the aforesaid rules to debar the employees/officers for
being considered for promotion amongst them who fall in
the zone of consideration, on the basis that they have been
either penalized or given an unsatisfactory/’D’ rating annual
performance appraisal report. It is submitted by all the
learned counsel appearing for the respondent that the RRB
Rules, 1998 are in consonance with the observations made
by this Court in the case of B.V. Sivaiah (supra) and is a
complete code, which does not need to be supplemented by
any instructions. It is further submitted that in the guise of
laying down minimum marks as a benchmark to determine
the suitability/fitness/merit for promotion, the appellants
have introduced the criteria of merit-cum-seniority in the
place of seniority-cum-merit. Such change in the criteria
could only be made by making the necessary amendment in
2Page 26
the Rules and not by issuing guidelines/Circulars by the
Sponsor Banks or NABARD.
26. Learned senior counsel further submitted that the two
Circulars are wholly arbitrary since even the employees who
had been only given the lowest penalty of censure or
reprimand can be eliminated at the threshold, from being
considered for promotion. It is further submitted by the
learned counsel for the respondent that blanket debarment
will have the effect of giving an unbridled/untrampled power
in the hands of the superiors of an employee. Such power
can be abused and misused to give/deny “promotion to a
particular employee/officer due to personal reasons and
likes and dislikes of a particular officer”. Learned senior
counsel, therefore, submitted that the High Court has
correctly quashed the aforesaid two Circulars.
CONSIDERATION/CONCLUSIONS :
27. We have given due consideration to the submissions
made by the learned counsel for the parties. It is by now
settled beyond cavil that statutory rules can be
supplemented but can not be supplanted. This is the ratio
2Page 27
of law laid down in the case of Sant Ram Sharma (supra).
It has been reiterated by this Court in a catena of
subsequent judgments. It is, however, not necessary to
burden the present judgment by making a copious
reference to the other decisions which merely reiterated the
same ratio.
28. We have noticed earlier that till 1988, there were no
statutory rules governing the promotions of the employees
of RRB. The promotions in these banks were governed by
various Circulars issued by the Government, NABARD and
the Sponsor Banks. One such Circular is
dated 1st December, 1987, which provided that the word
“merit”, provides that criteria of seniority-cum-merit
envisages promotion by seniority with due consideration to
minimum merit/fitness prescribed. However, the Circular
further provided that fitness implies that there is nothing
against an officer, no disciplinary action is pending against
him and none is contemplated. The officer has neither been
reprimanded nor any adverse remarks have been conveyed
to him in the reasonable recent past.
2Page 28
29. The aforesaid Circular is prior in time to the RRB Rules,
1988. The aforesaid rules clearly provided that promotion
shall be made by following the criteria of seniority-cummerit. Rule also provides that any officer/employee having
8 years of service as an officer/employee shall be eligible to
be considered for promotion. The criteria for determining
the minimum merit required of the candidate for promotion
is to be ascertained on the basis of his performance in the
written test, interview and his assessment in the
performance appraisal report. There is no provision in the
Rules that an employee/officer, who has been punished in
the 5 years preceding the selection process or has been
given an adverse remark or graded ‘D’ shall not be
considered for promotion at all. The Circular dated 1st
December, 1987 was, therefore, clearly contrary to the
1988 statutory rules, and, therefore, ceased to have any
legal effect from the date of the enforcement of the rules.
30. It is a matter of record that the RRB Rules, 1988 were
superseded by the RRB Rules, 1998. The aforesaid rules
incorporated the principle of minimum merit as enunciated
2Page 29
by this Court in B.V. Sivaiah (supra). In Paragraph 18 of
the aforesaid judgment, this Court observed as follows:-
“18. We thus arrive at the conclusion that the
criterion of “seniority-cum-merit” in the matter of
promotion postulates that given the minimum
necessary merit requisite for efficiency of
administration, the senior, even though less
meritorious, shall have priority and a
comparative assessment of merit is not required
to be made. For assessing the minimum
necessary merit, the competent authority can lay
down the minimum standard that is required and
also prescribe the mode of assessment of merit
of the employee who is eligible for consideration
for promotion. Such assessment can be made by
assigning marks on the basis of appraisal of
performance on the basis of service record and
interview and prescribing the minimum marks
which would entitle a person to be promoted on
the basis of seniority-cum-merit.”
31. Following the aforesaid observations, the RRB Rules,
1998 have introduced a detailed procedure for determining
the minimum merit for promotion to the next higher
post/grade. The RRB Rules, 1998 clearly provided that
officers holding post in 8 years as an officer on regular basis
in the RRB shall be considered for promotion to the next
higher post. The aforesaid rule does not provide that any
employee/officer, who has suffered a punishment or has
received an adverse appraisal/Grade ‘D’ in the performance
2Page 30
appraisal, shall not be eligible. However, the Circulars
dated 30th November, 2009 and 12th July, 2010 enables the
appellant banks to eliminate such employees, which is
clearly contrary to the provisions contained in the statutory
service rules. The procedure prescribed under the aforesaid
two Circulars clearly has the effect of supplanting the
provision of eligibility, which is not permissible.
32. Such an additional provision can not be justified on the
basis that it would form part of the minimum merit required
to be considered for promotion. In our opinion, the reliance
placed in support of this proposition on the judgment in the
case of Rajendra Kumar Srivastava (supra) is wholly
misplaced. In the aforesaid judgment, this Court has
observed as follows:-
“11. It is also well settled that the principle of
seniority-cum-merit, for promotion, is different from
the principle of “seniority” and the principle of
“merit-cum-seniority”. Where promotion is on the
basis of seniority alone, merit will not play any part
at all. But where promotion is on the principle of
seniority-cum-merit, promotion is not automatic with
reference to seniority alone. Merit will also play a
significant role. The standard method of senioritycum-merit is to subject all the eligible candidates in
the feeder grade (possessing the prescribed
educational qualification and period of service) to a
process of assessment of a specified minimum
3Page 31
necessary merit and then promote the candidates
who are found to possess the minimum necessary
merit strictly in the order of seniority. The minimum
merit necessary for the post may be assessed either
by subjecting the candidates to a written
examination or an interview or by assessment of
their work performance during the previous years, or
by a combination of either two or all the three of the
aforesaid methods. There is no hard-and-fast rule as
to how the minimum merit is to be ascertained. So
long as the ultimate promotions are based on
seniority, any process for ascertaining the minimum
necessary merit, as a basic requirement, will not
militate against the principle of seniority-cum-merit”
33. These observations clearly apply at the time when the
eligible persons are being considered for promotion by the
DPC. Eligibility under the rules is on the basis of minimum
length of service – eight years, unless relaxed by two years
confirmation in the lower/feeder post. It is not possible to
accept the submission of Mr. Dhruv Mehta that bare
minimum merit can be determined even before the list of
candidates is placed before the DPC for consideration of
their merit. Rule (2e) clearly provides firstly for the
determination of the eligibility, as noticed above. The
criteria for promotion (seniority-cum-merit) is provided in
Rule 2(d). Rule 2(f) provides for “mode of selection”. It is
clearly provided that “the selection of the candidates shall
3Page 32
be made by the committee…………”. The second part of
Rule 2(f) provides the criteria for determination of the bare
minimum merit. In fact, for this very reason, the rules
themselves provide that in order to succeed in the written
test, a candidate has to secure a minimum 40% marks in
each part of the written test consisting of 30 marks each. It
is only when all the candidates within the zone of
consideration have participated in the selection procedure
and their performance is assessed on the basis of written
test, interview, and past performance i.e. performance
appraisal that the minimum merit would become relevant.
When the bare minimum merit of the candidates is
determined, the promotion shall be made on the basis of
seniority irrespective of the better performance of the junior
candidates in the written test/interview/performance
appraisal.
34. Similarly, the reliance placed by Mr. Dhruv Mehta on
the judgment of this Court in K.V. Jankiraman’s case
(supra) is also misplaced. In this judgment, this Court
considered the circumstances under which the banks could
resort to the “sealed cover procedure”, when considering
3Page 33
the claims of the eligible candidates for promotion. The
court also examined the impact of departmental
punishment for assessment of the suitability of an employee
for promotion. The relevant ratio of this Court is as under :
“29. According to us, the Tribunal has erred in
holding that when an officer is found guilty in the
discharge of his duties, an imposition of penalty is all
that is necessary to improve his conduct and to
enforce discipline and ensure purity in the
administration. In the first instance, the penalty short
of dismissal will vary from reduction in rank to
censure. We are sure that the Tribunal has not
intended that the promotion should be given to the
officer from the original date even when the penalty
imparted is of reduction in rank. On principle, for the
same reasons, the officer cannot be rewarded by
promotion as a matter of course even if the penalty
is other than that of the reduction in rank. An
employee has no right to promotion. He has only a
right to be considered for promotion. The promotion
to a post and more so, to a selection post, depends
upon several circumstances. To qualify for
promotion, the least that is expected of an employee
is to have an unblemished record. That is the
minimum expected to ensure a clean and efficient
administration and to protect the public interests. An
employee found guilty of a misconduct cannot be
placed on par with the other employees and his case
has to be treated differently. There is, therefore, no
discrimination when in the matter of promotion, he is
treated differently. The least that is expected of any
administration is that it does not reward an
employee with promotion retrospectively from a date
when for his conduct before that date he is penalised
in praesenti. When an employee is held guilty and
penalised and is, therefore, not promoted at least till
the date on which he is penalised, he cannot be said
to have been subjected to a further penalty on that
account. A denial of promotion in such circumstances
is not a penalty but a necessary consequence of his
conduct. In fact, while considering an employee for
promotion his whole record has to be taken into
3Page 34
consideration and if a promotion committee takes
the penalties imposed upon the employee into
consideration and denies him the promotion, such
denial is not illegal and unjustified. If, further, the
promoting authority can take into consideration the
penalty or penalties awarded to an employee in the
past while considering his promotion and deny him
promotion on that ground, it will be irrational to hold
that it cannot take the penalty into consideration
when it is imposed at a later date because of the
pendency of the proceedings, although it is for
conduct prior to the date the authority considers the
promotion. For these reasons, we are of the view that
the Tribunal is not right in striking down the said
portion of the second sub-paragraph after clause (iii)
of paragraph 3 of the said Memorandum. We,
therefore, set aside the said findings of the Tribunal.”
These observations make it abundantly clear that
promotion can be justifiably denied to eligible candidate at
the time of his/her performance appraisal by the DPC. The
fact that the officer/employee has been departmentally
punished would form part of the service record and can be
taken into account by the DPC. In such circumstances, the
employee cannot possibly claim to have been subjected to a
further penalty on the basis of the misconduct which led to
his punishment. This, however, would not permit the
management to debar an employee from being considered
for promotion at the stage of considering whether such an
employee is “eligible” to be considered in terms of Rule 2(e).
3Page 35
35. The observations in Rajendra Kumar Srivastava
(supra) also do not support the submissions made by
Mr. Dhruv Mehta. In paragraph 13, it is observed as follows :
“13. Thus it is clear that a process whereby
eligible candidates possessing the minimum
necessary merit in the feeder posts is first
ascertained and thereafter, promotions are made
strictly in accordance with seniority, from among
those who possess the minimum necessary merit
is recognised and accepted as complying with the
principle of “seniority-cum-merit”. What would
offend the rule of seniority-cum-merit is a process
where after assessing the minimum necessary
merit, promotions are made on the basis of merit
(instead of seniority) from among the candidates
possessing the minimum necessary merit. If the
criteria adopted for assessment of minimum
necessary merit is bona fide and not
unreasonable, it is not open to challenge, as being
opposed to the principle of seniority-cum-merit.
We accordingly hold that prescribing minimum
qualifying marks to ascertain the minimum merit
necessary for discharging the functions of the
higher post, is not violative of the concept of
promotion by seniority-cum-merit.”
These observations also make it clear that whilst
assessing the eligibility of the candidates, determination of
bare minimum merit is not envisaged. There is, in fact, a
complete segregation of Rule 2(e) from Rule 2(f).
Determining the eligibility of candidate is in the nature of a
ministerial function. The management merely has to see
that the candidate possesses the minimum length of service
and that he/she is confirmed in the feeder cadre. The
3Page 36
determination of bare minimum merit is on the basis of the
performance in the written test/interview and performance
appraisal. This is the function of the Selection Committee
i.e. Departmental Promotion Committee.
36. There is no doubt that punishment and adverse
service record are relevant to determine the minimum merit
by the DPC. But to debar a candidate, to be considered for
promotion, on the basis of punishment or unsatisfactory
record would require the necessary provision in the
statutory service Rules. There is no such provision under
the 1998 Rules.
37. In B.V.Sivaiah (supra), this Court laid down the broad
contours defining the term “bare minimum merit” in the
following words :
“We thus arrive at the conclusion that the criterion of
‘seniority-cum-merit’ in the matter of promotion
postulates that given the minimum necessary merit
requisite for efficiency of administration, the senior,
even though less meritorious, shall have priority and
a comparative assessment of merit is not required to
be made. For assessing the minimum necessary
merit, the competent authority can lay down the
minimum standard that is required and also
prescribe the mode of assessment of merit of the
employee who is eligible for consideration for
promotion. Such assessment can be made by
3Page 37
assigning marks on the basis of appraisal of
performance on the basis of service record and
interview and prescribing the minimum marks which
would entitle a person to be promoted on the basis of
seniority-cum-merit.”
From the above, it becomes clear that the
determination of the bare minimum criteria is the function
of the DPC and cannot be taken-over by the management at
the time of determining the eligibility of a candidate under
Rule 2(e).
38. The reliance placed by Mr. Dhruv Mehta on the
judgment of this court in the case of Ram Ashish Dixit
(supra) is also misconceived. In the aforesaid case, the
officer had been considered for promotion during the
pendency of the departmental proceedings to Middle
Management Grade II. However, the result was kept in a
sealed cover. After finalization of the proceedings, the
appellants requested the authority to open the sealed
cover. He was, however, informed that he can not be
promoted in view of the bank Circular dated 28th March,
1998 as he had been punished. Subsequently, again his
case was to be considered for promotion in September,
1999. However, he was denied consideration for promotion
3Page 38
in view of the conditions contained in Circular dated 28th
March, 1998. It was submitted on behalf of the appellants
that the punishment imposed upon the staff of the Bank can
not be treated to be an ineligibility for promotion since the
eligibility for promotion is prescribed under the RRB Rules,
1988. It was submitted on behalf of the bank (respondent
therein) that since stoppage of increment for 3 years is a
punishment imposed upon the appellants, during the
period, he would be undergoing punishment, he could not
have been considered to be eligible for promotion.
Therefore, according to the bank, respondent had been
rightly held to be ineligible under Circular dated 28th March,
1998. It was also claimed by the bank that the Circular is
supplementary in nature and can not be said to be in any
manner inconsistent and ultra vires of the rules. In
answering the rival submissions, this Court held as under:-
“The criteria for promotion from Junior Manager
Grade-I to Middle Management Grade-II is on the
basis of the seniority-cum-merit. Clearly
therefore, the fact that the appellant has been
punished for a misconduct, the same would form
a part of his record of service which would be
taken into consideration while adjudging his
suitability on the criteria of seniority-cum-merit.
If on such assessment of his record of service the
appellant is not promoted, it cannot be said to be
by way of punishment. It is a non-promotion on
3Page 39
account of the appellant not reaching a suitable
standard to be promoted on the basis of the
criteria.”
39. We also do not find any merit in the submission of
Mr. Dhruv Mehta that the Circular No.17 of 2009
dated 30th November, 2009 and Circular dated 12th July,
2010 are to ensure that the individual members of the DPC
do not recommend for promotion an individual officer
despite having been punished in the preceding 5 years.
Such curtailment of the power of the DPC would have to be
located in the statutory service rules. The 1998 Rules do not
contain any such provision. The submission needs merely to
be stated, to be rejected. We also do not find any merit in
the submission of Mr. Mehta that without the aforesaid
guidelines, an officer, even though, he has been punished
for gross misconduct would have to be permitted to be
promoted as no minimum marks are prescribed for
interview or performance appraisal. In our opinion, it is
fallacious to presume that under the 1998 Rules, once an
officer gets the minimum marks in the written examination,
he would be entitled to be promoted on the basis of
seniority alone. There is no warrant for such a presumption.
3Page 40
The misconduct committed by eligible employee/officer
would be a matter for DPC to take into consideration at the
time of performance appraisal. The past conduct of an
employee can always be taken into consideration in
adjudging the suitability of the officer for performing the
duties of the higher post.
40. There is another very good reason for not accepting
the submissions made by Mr. Dhruv Mehta.
Different
rules/regulations of the banks provide specific punishments
such as “withholding of promotion, reduction in rank,
lowering in ranks/pay scales”.
However, there is another
range of penalty such as censure, reprimand, withholding of
increments etc. which are also prescribed under various
staff regulations.
To debar such an employee from being
considered for promotion would tantamount to also
inflicting on such employee, the punishment of withholding
of promotion. In such circumstances, a punishment of
censure/ reprimand would, in fact, read as
censure/reprimand + 5 years debarment from promotion.
Thus the circulars issued by the bank debarring such
employees from being considered would be clearly contrary
4Page 41
to the statutory rules. The circulars clearly do not fall within
the ratio in Sant Ram’s case (supra).
41. In our opinion, the observations made by this Court in
the case of Ram Ashish Dixit (supra) are a complete
answer to the submissions made by the learned counsel for
the appellants, Mr. Dhruv Mehta. Therefore the High Court,
in our opinion, has rightly quashed the aforesaid two
Circulars and directed that the respondent be considered for
promotion in accordance with the applicable rules.
42. We, therefore find no merit in the civil appeals filed by
the appellant-bank, and are accordingly dismissed. No
costs.
……..….…………………J.
[Surinder Singh
Nijjar]
………………………….J.
[H.L. Gokhale]
New Delhi;
April 09, 2013.
4Page 42
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