Sarva U.P. Gramin Bank & Ors. v. Manoj Kumar Chak
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,
E 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
F 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.
G 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.
H 4. There are currently about 82 Regional Rural Banks (for
SARVA U.P. GRAMIN BANK & ORS. v. MANOJ 569
KUMAR CHAK [SURINDER SINGH NIJJAR, J.]
short "RRBs") sponsored by various nationalized banks, set up A
under the R~gional 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 C
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 D
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. G
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 H
A 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
B 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
C 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
D 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
E criterion for promotion on all the posts was specified as
seniority-cum-merit. With regard to the post of Area I 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
F 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
G provided for "interview and assessment of performance reports
for t11e 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
SARVA U.P. GRAMIN BANK & ORS. v. MANOJ 571
KUMAR CHAK [SURINDER SINGH NIJJAR, J.]
though, the 1988 Rules have been promulgated in consultation A
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 C
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 D
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 8. 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 h.as 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 G
over and the officer junior to him may be promoted. The
aforesaid judgment of this Court was delivered on 17th July,
1998.
1. (1998) 6 SCC720. H
572 SUPREME COURT REPORTS [2013) 2 S.C.R.
A 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
B 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
(b) Classification
(C) Source of appointment
(d) Whether promotion to be
made on seniority basis or
seniority-cum-merit - basis.
( e) Eligibility
Scale II Officer
Group 'A'
100 % by promotion
Promotion shall be made on
the basis of seniority cum
merit
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.
SARVA U.P. GRAMIN BANK & ORS. v. MANOJ
KUMAR CHAK [SURINDER SINGH NIJJAR, J.]
573
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 o
Reports for the preceding five
years as an officer in Scale I/
Field Supervisor.
(g) Compo$ition of
Committee
The committee (for considering
promotion) shall consist of the E
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
' F
National Bank Member. G
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 H
A process of selection by the concerned committee.
(h} Reckoning of the
minimum eligibility
(i} Number of candidates
To be considered for
Promotion
0) Selection process for
Promotion
(A} Written Test
(B} Interview
(C} Performance
Appraisal Reports
The minimum eligibility in
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.
The number of candidates to
be considered for promotion
from officer Scale I to officer
Scale lshall be restricted to
four times the number of
vacancies available for
promotion.
The Selection shall be on the
basis of performance in the
written test, interview and
perforlmance appraisal
reports for preceding five
years as per the division of
marks given below.
60 Marks
20 Marks
20 Marks
G TOTAL MARKS 100 MARKS
(A} Written.test (60 marks} The candidates shall be
required to appear for written
test comprising of two parts
H viz. part (A} covering Banking
SARVA U.P. GRAMIN BANK & ORS. v. MANOJ 575
KUMAR CHAK [SURINDER SINGH NIJJAR, J.]
Law and Practice of Banking A
and Part (B) covering Credit
Policy Credit Management
including priority Sector,
Economics andManagement.
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
promoiion in different cadres - clarification thereof', to all its
Sponsored Regional Rural Banks.
Present Litigation:
10
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 H
A 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.
B 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
C 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,
D 2009. The aforesaid Circulars were also challenged in Writ
Petition Nos. 55913, 50638, 50629, 51003 and 50633 of2010.
16. All the aforesaid writ petitions were clubbed and
decided by the High Court of Judicature at Allahabad by a
E 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
F 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
G 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 8. V. Sivaiah
(supra), can lay down minimum standards required and
also prescribe mode of assessment of merit of the
H employees eligible to be considered for promotion. The
SARVA U.P. GRAMIN BANK & ORS. v. MANOJ 577
KUMAR CHAK [SURINDER SINGH NIJJAR, J.]
assessment can be made by assigning marks on the A
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 B
right to be corisidered 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 C
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 E
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 G
of the appellants. Mr. Dhruv Mehta, learned senior counsel
appearing for the appellants submitted that the Circular dated
30th November, 2009 and 12th July, 201 O were not ultra vires
of the RRB Rules, 1998. The two Circulars have only
578 SUPREME COURT REPORTS (2013] 2 S.C.R.
A 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 I
meted out to the case where "adverse remarks" have been
B recorded against an officer during the preceding 5 years, i.e.,
period under consideration for promotion. H~ 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
. C 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
0 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
E 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
F 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
G 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
H 2. (1968) 1 SCR 111.
SARVA U.P. GRAMIN BANK & ORS. v. MANOJ 579
KUMAR CHAK [SURINDER SINGH NIJJAR, J.]
of such a process will lead to infusion of arbitrariness in the A
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 B
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 c
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 0 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 E
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 F
Civil Appeal No. 6072 of 2012, Ram Ashish Dixit Vs.
Chairman, Purvanchal Gramin Bank & Ors.
~O. The next submission of Mr. Dhruv Mehta was that the
employee only has a right to be considered for promotion and G
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
3. c2001> 1 sec 335. H
A 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
8 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
C 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/
D 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
E threshold, in view of the fact that they had been either punished
or graded 'D' in the 5 year$ 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
F 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/
G penalty or whose performance has been outstanding, very good
or good during the said period. The classification made on the
basis ofthe service record is a reasonable classification and
has a nexus with the object sought to be achieved namely
4. AIR 1968 SC 1113.
H s. c2011) 3 sec 422
SARVA U.P. GRAMIN BANK & ORS. v. MANOJ 581
KUMAR CHAK [SURINDER SINGH NIJJAR, J.]
promotion to the next grade/cadre. In support of this, he relies A
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 B
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 C
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 0 "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 E
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. F
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:- G
State of T.N. Vs. Thiru K.S. Murugesan & Ors. 7; L. Rajaiah
Vs. Inspector General of Registration & Stamps,
a. (1991) 4 sec 109.
7. (1995) 3 sec 273. H
582 SUPREME COURT REPORTS [2013) 2 S.C.R.
A 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
B 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
C 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
o 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
E 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
F 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 cpmplete
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
G 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
s. (1996) s sec 246.
H 9. (1995) 3 sec 273.
SARVA U.P. GRAMIN BANK & ORS. v. MANOJ 583
KUMAR CHAK [SURINDER SINGH NIJJAR, J.]
made by making the necessary amendment in the Rules and A
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 B
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 C
give/deny "pr9motion 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 : D
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 E
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 F
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 G
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 H
A 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-
B 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,
C 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
D 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
E 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
F "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
G assessing the minimum necessary merit, the competent
authority can lay down the minimum standard that is
required and also prescribe the mode of assessment o~
merit of the employee who is eligible for consideration for
promotion. Such assessment can be made by assigning
H marks on the basis of appraisal of performance on the.
SARVA U.P. GRAMIN BANK & ORS. v. MANOJ 585
KUMAR CHAK [SURINDER SINGH NIJJAR, J.]
basis of service record and interview and prescribing the A
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 B
RRB Rules, 1998 clearly provided that officers holding post in
8 years as an officer on regular basis in the RRB shall be
con·sidered 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/ C
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 o
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 E
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 F
"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 Js not automatic
with reference to seniority alone. Merit will also play a G
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 H
586 SUPREME COURT REPORTS .[2013] 2 S.C.R.
A 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
B 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
c 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
D . 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
E 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
F 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 orc;ler to succeed in the written test,
a candidate has to secure a minimum 40% marks in each part
G of the written test consisting of 30 marks each. It is only when
all the candidates within the zone of consideration have
participated in tha 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
H candidates is determined, the promotion shall be made on the
SARVA U.P. GRAMIN BANK & ORS. v. MANOJ 587
KUMAR CHAK [SURINDER SINGH NIJJAR, J.]
basis of seniority irrespective of the better performance of the A
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 B
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 c
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 D
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 ttJat the
promotion should be given to the officer from the original
date even when the penalty imparted is of reduction in E
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 F
and more so, to a selection post, depends upon several
circumstance~. To qu.alify 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 G
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
.H
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 pe,.-ialty 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 ofhis/het performance appraisal by the DPC. The fact that
the officer/employee has been departmentally punisheCI would
form part of the service record and can be taken into account
by the DPC. In such circumstances, the employee cannot
G 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 whet,!1er such an employee is "eligible" to be
H considered in terms of Rule 2(e).
SARVA U.P. GRAMIN BANK & ORS. v. MANOJ 589
KUMAR CHAK [SURINDER SINGH NIJJAR, J.]
35. The observations in Rajendra Kumar Srivastava A
(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, B
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 C ·
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 D
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- E
cum-merit."
These observations also make it clear that whilst
assessing the eligibility of the ~ndidates, 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 F
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 G
test/interview and performance appraisal. This is the function
of the Selection Committee i.e. Departmental Promotion
Committee.
36. There i~ no doubt that punishment and adverse service
record are relevant to determine the minimum merit by the H
A 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
B contours defining the term "bare minimum merit" in the following
words:
c·
"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
F 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.
G 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
H was to be considered for promotion in September, 1999.
SARVA U.P. GRAMIN BANK & ORS. v. MANOJ 591
KUMAR CHAK [SURINDER SINGH NIJJAR, J.]
However, he was denied consideration for promotion in view A
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 B
increment for 3 years is a punishment imposed upon the
appet1ants, 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 C
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 0 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 E
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." F
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 G
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 H
A 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.
B 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
c for performing the duties of the higher post.
40. There is another very good reason for not accepting
the submissions ma de 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
D 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
G 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.
R.P. Appeals dismissed.