Supreme Court of India

Bhagwandas Tiwari & Ors vs Dewas Shajapur Kshetriya Gramin Bank & ... on 8 November, 2006

Equivalent citations: AIR 2007 SUPREME COURT 994, 2007 AIR SCW 773, 2007 LAB. I. C. 1284, 2007 (2) AIR KAR R 449, (2008) 1 JAB LJ 306, (2007) 6 ALLMR 18 (SC), 2006 (11) SCALE 593, (2007) 51 ALLINDCAS 150 (SC), 2007 (2) SRJ 224, 2006 (12) SCC 574, (2007) 112 FACLR 975, (2007) 1 PAT LJR 159, (2007) 1 SCT 461, (2007) 2 SERVLR 297, (2007) 1 SUPREME 937, (2006) 11 SCALE 593, (2007) 1 JLJR 143, (2007) 2 BANKCLR 190

Author:
Arijit Pasayat

Bench:
Arijit Pasayat
,
Lokeshwar Singh Panta

CASE NO.:
Appeal (civil) 4722 of 2006

PETITIONER:
Bhagwandas Tiwari & Ors.

RESPONDENT:
Dewas Shajapur Kshetriya Gramin Bank & Ors.

DATE OF JUDGMENT: 08/11/2006

BENCH:
ARIJIT PASAYAT & LOKESHWAR SINGH PANTA

JUDGMENT:

J U D G M E N T
(Arising out of S.L.P. (C) No. 6780 of 2004

ARIJIT PASAYAT, J.

Leave granted.

Appellants call in question legality of the judgment
rendered by a Division Bench of the Madhya Pradesh High
Court, Indore Bench. By the impugned judgment the view
taken by the learned Single Judge in Writ Petition No.799 of
2000 decided on 25.6.2001 was upheld.

Factual position is almost undisputed and essentially is
as follows:

The aforesaid writ petition was filed by ten persons who
at the relevant point of time were employees of the Dewas
Shajapur Kshetriya Gramin Bank (hereinafter referred to as
the 'Bank'). Challenge in the writ petition was to the order of
promotion issued by respondent No.1-Bank and to the
promotion granted to respondents 2 to 8. The writ petitioners
and respondents 2 to 8 were at the relevant point of time were
working as officers in Junior Management Grade I. On
26.11.1999, the bank issued a promotion policy whereby
applications were invited from the officers working in Junior
Management Grade I for being considered to the next
promotional post known as Middle Management II. In terms of
the policy, the promotion was to be made on the basis of
seniority-cum-merit and the policy also provided criteria for
consideration of cases for promotion. The relevant clause is
clause 7 of the second schedule of the Regional Rural Banks
(Appointment and Promotion of Officers and others Employees)
Rules, 1988 (in short the 'Rules'). The said Rule came into
operation with effect from 28.9.1988 and it was framed by the
Central Government. Respondent No.1-Bank has been
established under the provisions of
Regional Rural Banks Act,
(in short the 'Act'). Under
Section 29
of the Act the
Central Government is empowered to make rules after
consultation with the National Bank for carrying out the
provisions of the bank. Clause (b)(a) of sub-section (2) of

Section 29
was inserted by Regional Rural Bank's
(Amendment) Act, 1987 (in short the 'Amendment Act')
empowering the Central Government to make Rules relating to
the manner in which the officers and employees of Regional
Rural Bank shall be appointed in exercise of power conferred
under
Section 29
read with
Section 17
of the Act. As per Rule
5 of the Rules all vacancies are to be filled up on deputation,
promotion or direct recruitment in accordance with the
provisions contained in the second schedule. Clause 7 of the
schedule deals with the promotion as Area Manager or Senior
Managers. Clause 7 reads as follows:

"Area Managers or Senior Managers:

(a) Source of recruitment
Hundred percent by promotion
from amongst confirmed officers
working in the bank.

Promotions will be on the basis
of seniority-cum-merit. If
suitable officers are not
available internally, these posts
could be filled by taking
temporarily officers of the
sponsor banks and other banks
or organizations on deputation.

(b) Qualifications and eligibility

(i) A Graduate of recognized
University or any equivalent
qualifications recognized as
such by Government of India,
preference being given to
Agriculture or Commerce or
Economics graduates.

(ii) Eight years service as an
officer in the regional rural bank
concerned. Provided that the
Board may, with the prior
approval of National Bank, relax
the period not exceeding two
years, if suitable candidates of
requisite experience are not
available.

Note: The post of Area Managers
and Senior Managers will be
equivalent in rank and will be
inter changeable.

(c) Mode of selection
Interview and assessment of
performance for the preceding
three years period as officer for
promotion."

Standard prescribed as per Circular is as follows:

"(7) Standard: Standard of selection in promotion procedure shall be
as under:-

(a) Performance of work -Maximum 30 Marks
(work performance for the
last 3 years)

(b) Period of service -Maximum 40 Marks
(2 marks per year for the
completed period of service
subject to maximum 40 marks)

(c) Interview -Maximum 30 Marks

_______________

Total maximum marks - 100 Marks
_______________

In order to be selected for promotion, obtaining minimum 45 marks shall
be compulsory."

Grievance of the writ petitioners was that the principle of
promotion on the basis of seniority-cum-merit was given a go-
by and the respondent No.1-bank adopted the policy of merit-
cum-seniority by fixing criteria that only those employees who
have secured 45 marks out of 60 in respect of criterion A and
C i.e. Performance of work and interview shall be selected for
promotion.

According to the appellants there was no such
requirement in the Circular and only requirement was
obtaining minimum 45 marks in order to be selected for
promotion. By prescribing minimum of 45 marks out of 60,
basis shifted from seniority-cum-merit to merit-cum-seniority.

Learned Single Judge did not accept this contention and
dismissed the writ petition. It was held that in view what has
been stated by this Court in
B.V. Sivaiah and Ors. v. K.
Addanki Babu and Ors.
(1998 (6) SCC 720), the stand adopted
by the bank was in order.

Reference was made to paragraphs
16, 18 and 37 of
B.V. Sivaiah
case (supra) to hold that
criterion of seniority-cum-merit was really applied. While
applying the said criterion, seniority alone is not to be
considered, and merit cannot be ignored.

A reference was also
made to the decision in
Jagathigowda, C.N. v. Chairman,
Cauvery Gramina Bank
(1996 (9) SCC 677).

The Division Bench upheld the judgment of learned
Single Judge by observing that the doctrine has been rightly
applied in the present case. Though there was no mention in
the Circular that the employee has to secure more than 45
marks out of 60, that appears to be the intention.

Stand of the appellants before the High Court was
reiterated at the time of hearing of this appeal.

Learned counsel for the respondents on the other hand
submitted that there was no departure from the criterion of
seniority-cum-merit. A candidate was required to obtain 45
marks out of 60 because there was no question of obtaining
marks so far as service is concerned, that was only a
conclusion.

The principle of "merit-cum-seniority" lays greater
emphasis on merit and ability and seniority plays a less
significant role. Seniority is to be given weight only when merit
and ability are approximately equal.
In the context of Rule 5(2)
of the Indian Administrative Service/Indian Police Service
(Appointment by Promotion) Regulations, 1955 which
prescribed that "selection for inclusion in such list shall be
based on merit and suitability in all respects with due regard
to seniority" Mathew J. in
Union of India v. Mohan Lal Capoor
and Ors.
(1973 (2) SCC 836), has said:-

"For inclusion in the list, merit and
suitability in all respects should be the
governing consideration and that seniority
should play a secondary role. It is only when
merit and suitability are roughly equal that
seniority will be a determining factor, or if it is
not fairly possible to make an assessment
inter se of the merit and suitability of two
eligible candidates and come to a firm
conclusion, seniority would till the scale".

Similarly, Beg J. (as the learned Chief Justice then was) has
said (SCC p.851, para 22):

"22. Thus, we think that the correct view, in
conformity with the plain meaning of words
used in the relevant rules, is that the
entrance" or "inclusion" test, for a place on
the select list, is competitive and comparative
applied to all eligible candidates and not
minimal like pass marks it an examination.
The Selection Committee has an unrestricted
choice of the best available talent, from
amongst eligible candidates, determined by
reference a reasonable criteria applied in
assessing the facts revealed by service records
of all eligible candidates so that merit and not
here seniority is the governing factor."

On the other hand, as between the principles of seniority
and merit, the criterion of 'seniority-cum-merit' lays greater
emphasis on seniority.
In
State of Mysore and Anr. v. Syed
Mahmood and Ors.
(1968 (3) SCR 363), while considering Rule

(a)(b) of the Mysore State Civil Services General Recruitment
Rules, 1957 which required promotion to be made by selection
on the basis of seniority-cum-merit, this Court has observed
that the rule required promotion to be made by selection on
the basis of "seniority subject to the fitness of candidate to
discharge the duties of post from among persons eligible for
promotion". It was pointed out that where promotion is based
on seniority-cum-merit, the officer cannot claim promotion as
a matter of right by virtue of his seniority alone and if he is
found unfit to discharge the duties of the higher post, he may
be passed over and an officer junior to him may be promoted.

In
State of Kerala and Anr. v. N.M. Thomas and Ors.

(1976 (2) SCC 310), A.N. Ray, C.J. has thus explained the
criterion of "seniority-cum-merit" (SCC p.335, para 38):-

"With regard to promotion the normal
principles are either merit-cum-seniority or
seniority-cum-merit. Seniority-cum-merit
means that given the minimum necessary
merit requisite for efficiency of administration,
the senior though the less meritorious shall
have priority."

The above position was highlighted in
Sivaiah
case
(supra). At para 18 of
the said judgment
it was noted as
follows:-

"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."

The impugned judgment of the learned Single Judge and
Division Bench of the High Court missed one basic factor. The
circular nowhere refers to the minimum marks being relatable
to criteria A and C and nowhere there is a stipulation of
obtaining minimum 35 marks as a compulsory measure. If
really the intention was to apply the said minimum marks to
said criteria it would have been specifically provided that way.
It is noted by the High Court that in the circular or in the
115th or 117th report of the respondent No.1-Bank there was
no mention about this aspect. The doctrine of reading down
the provisions has really no application to the facts of the
case. If the stand of respondents is accepted, it would mean
addition of a condition which is not specifically provided for.
That is impermissible.

In all services, whether public or private there is
invariably a hierarchy of posts comprising of higher posts and
lower posts. Promotion, as understood under the service law
jurisprudence, is advancement in rank, grade or both and no
employee has right to be promoted, but has a right to be
considered for promotion. The following observations in
Sant
Ram Sharma v. State of Rajasthan and Ors.
(AIR 1967 SC
1910) are significant:

"The question of a proper promotion policy
depends on various conflicting factors. It is
obvious that the only method in which
absolute objectivity can be ensured is for all
promotions to be made entirely on grounds of
seniority. That means that if a post falls
vacant it is filled by the person who has
served longest in the post immediately below.
But the trouble with the seniority system is
that it is so objective that it fails to take any
account of personal merit. As a system it is
fair to every official except the best ones; an
official has nothing to win or lose provided he
does not actually become so inefficient that
disciplinary action has to be taken against
him. But, though the system is fair to the
officials concerned, it is a heavy burden on
the public and a great strain on the efficient
handling of public business. The problem,
therefore, is how to ensure reasonable
prospect of advancement to all officials and at
the same time to protect the public interest in
having posts filled by the most able man? In
other words, the question is how to find a
correct balance between seniority and merit in
a proper promotion-policy."

The principles of seniority-cum-merit and merit-cum-
seniority are conceptually different. For the former, greater
emphasis is laid in seniority, though it is not the determinative
factor, while in the latter merit is the determinative factor.
In

The State of Mysore and Anr. v. Syed Mahamood and Ors.
(AIR
1968 SC 1113), it was observed that in the background of Rule
4(3)(b) of the Mysore State Civil Services (General Recruitment)
Rules, 1957 which required promotion to be made by selection
on the basis of seniority-cum-merit, that the rule required
promotion to be made by selection on the basis of "seniority
subject to fitness of the candidate to discharge the duties of
the post from among persons eligible for promotion". It was
pointed out that where the promotion is based on seniority-
cum-merit the officer cannot claim promotion as a matter of
right by virtue of his seniority alone and if he is found unfit to
discharge the duties of the higher post, he may be passed over
and an officer junior to him may be promoted. But these are
not the only modes for deciding whether promotion is to be
granted or not.

These aspects were highlighted in
K. Samantaray v.
National Insurance Co. Ltd.
(AIR 2003 SC 4422), and in
State
of U.P. v. Jalal Uddin and others
(2005 (1) SCC 169).

There is no basis, in the instant case, for the stand that
for assessing merit a minimum number of marks has been
prescribed. The contention that minimum marks were 45 out
of 60, means that an employee is to secure 75% of marks.
Such a high percentage can not be a measure of prescribing
minimum marks to assess merit. It obviously would be a case
of shifting the focus to merit-cum-seniority.
In para 37 of

Sivaiah
case (supra), this Court noted that minimum marks
prescribed for assessing merit do not depart from the
seniority-cum-merit principle. But the factual position is
different here. There is no mention that 45 marks out of 60
relate to the prescription of minimum marks for assessing the
merit.

In
Jalal Uddin
's case (supra) it was noted that in
seniority-cum-merit greater emphasis is on seniority though it
is not the determinative factor. In the case of merit-cum-
seniority, merit becomes a determinative factor.

In fact, the
position noted by this Court in paragraphs 19, 20, 24 and 25
of
Sivaiah
case (supra) dealt with almost identical fact
situation, apart from paragraph 16 of the judgment.

Appellants have no grievance so far as respondents 2, 3
and 4 are concerned as their date of joining is earlier and they
have secured higher marks. The appeal stands dismissed, so
far as they are concerned.

The appeal is bound to succeed to the extent indicated.
The respondent no.1 shall issue fresh orders for promotion in
line with the judgment after working out the necessary details.
There will be no order as to costs.