Supreme Court of India

Rani Laxmibai Kshetriya Gramin Bank& ... vs Manoj Kumar Chak Etc on 9 April, 2013

Equivalent citations: AIR 2013 SUPREME COURT 2473, 2013 (6) SCC 287, 2013 AIR SCW 3138, 2013 LAB. I. C. 2465, 2013 (4) ALL LJ 279, (2013) 3 ESC 393, (2013) 4 ALLMR 415 (SC), (2013) 6 ADJ 22 (SC), 2013 (2) SERVLJ 480 SC, 2013 (4) ALLMR 415, 2013 (5) SCALE 486, 2013 (4) KCCR 315 SN, 2013 (6) ADJ 22 NOC, (2013) 137 FACLR 984, (2013) 3 SCT 177, (2013) 3 SERVLR 427, (2013) 5 SCALE 486, (2013) 3 ALL WC 2760, (2013) 2 CURLR 337, AIRONLINE 2013 SC 592

Author:
H.L. Gokhale

Bench:
H.L. Gokhale

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

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 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
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 sub-section (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.

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.

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
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.

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 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 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
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.

(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 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 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
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
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-cum-merit.
The employee, however, cannot be excluded and denied his
right to be considered by the selection committee for
promotion.

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.

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 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 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 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-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 adverse remarks such as Grade ‘D’, would not
be violative of
Article 14
and
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
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 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 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 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
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.

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-cum-merit. 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 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
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 seniority-cum-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 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 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
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 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).

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
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 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 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 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. 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 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.

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[1] (1998) 6 SCC 720

[2] (1968) 1 SCR 111

[3] (2010) 1 SCC 335

[4] AIR 1968 SC 1113

[5] (2011) 3 SCC 422

[6] (1991) 4 SCC 109

[7] (1995) 3 SCC 273

[8] (1996) 8 SCC 246

[9] (1995) 3 SCC 273

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