Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6691 OF 2001

Rajendra Kumar Srivastava & Ors. ... Appellants

v.

Samyut Kshetriya Gramin Bank & Ors. … Respondents

J U D G M E N T

R.V.RAVEENDRAN, J.

The appellants are employees of the first respondent Bank, having

been appointed between 1979 and 1982. By notification dated 28.9.1988,

the Central Government in exercise of powers conferred under section 17

read with section 29 of the Provincial Rural Banks Act, 1976 framed the

“Regional Rural Banks (Appointment and Promotion of Officers and

Other Employees) Rules, 1988 (‘Rules’ for short). Rule 5 of the Rules

provided that all vacancies should be filled up by deputation, promotion

or direct recruitment, in accordance with provisions contained in the

Second Schedule to the Rules. Entry 7 in the Second Schedule related to

recruitment to the posts of Area Manager or Senior Manager (in Scale II).

It provided that all the posts of Area Managers and Senior Managers

should be filled by promotion from among the confirmed officers (in

Scale I) working in the bank on the basis of seniority-cum-merit. It

prescribed the educational qualification (graduate) and minimum period

of service in the feeder cadre (eight years as an officer in the concerned

regional rural bank). It also prescribed the mode of selection by

promotion as “Interview and assessment of performance reports for the

preceding three years period as officers”. Sub-Rule (4) of Rule 10

provided that the Staff Selection Committee shall follow the procedure

determined by the Board for selecting candidates for appointment or

promotion, in accordance with the guidelines issued by the Central

Government from time to time.

2.At the 131

st

meeting of the Board of Directors of the first

respondent bank held on 29.11.1996, the following procedure for

promotion of officers from scale I to scale II was approved :

“After considering the guidelines contained in the Government of

India’s letter dated 23

rd

September, 1988 and the Letter no. 823 dated

7

th

October, 1996 of the National Bank, the Board passed a

resolution that 60 points be earmarked on the basis of work done

during the previous three years in the Selection procedure for

promotion on the Scale II posts and 40 points be given for interview

and in this manner the promotion procedure should be completed.

Also, an information in this behalf be given to the National Bank.”

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In pursuance of the above, the eligible candidates (officers Scale I),

including appellants were considered and interviewed on 16.12.1996 and

17.12.1996 and a select list was published on 20.12.1996 promoting 64

officers (respondents 4 to 67) from scale I to scale II with effect from

20.12.1996.

3.Appellants 1 to 7 were not selected. Many who were selected, were

their juniors. The appellants allege that their service and conduct were

good and there were no adverse entries against them and therefore, they

ought to have been promoted from Officer scale I to scale II. They

therefore filed a writ petition before the Allahabad High Court (WP

No.3151/1997), for quashing the entire promotion process of the first

respondent bank from scale I to scale II culminating in the order dated

20.12.1996 and for a direction to the first respondent bank to undertake

the promotion process afresh. The appellants also sought quashing of the

resolution of the Board of Directors dated 29.11.1996 prescribing the

promotion procedure.

4.The respondent bank resisted the said petition by filing a counter

defending the promotions. During arguments, the High Court secured the

original records from the bank to ascertain the procedure followed by the

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bank in the selection. The High Court also directed that the relevant

documents be brought on record. Accordingly, the relevant documents

were filed by the Bank with an additional affidavit, wherein the Bank

described the selection procedure followed by it, as follows :

“That when the proposal for promotion came before the Board, the

department of personnel under the direction of the Chairman

prepared complete summary giving the past history and the

proposals for selection procedure. A thick booklet was prepared and

in chapter V of the same the details for the procedure for selection

were given. This book was part of the agenda put before the Board

of Directors in its meeting of 23.9.1996 in which the process was

approved with certain modification. A copy of the proceedings of the

Board meeting is Annexure A to this affidavit.

That the whole matter has to be again presented before the Board in

its meeting dt. 29.11.96, as in the meantime a letter was received

from NABARD giving certain directions. The Board in this meeting

adopted the process given in chapter V with certain modifications in

the process as desired in the letter of the NABARD dated 7.10.1996

is Annexure B to this affidavit and a copy of the NABARD letter

dated 7.10.1996 is Annexure C to this affidavit.

That the Chapter V of the Booklet which has been approved by the

Board with modifications is also being filed as Annexure D to this

affidavit.

That in the end of chapter V it is provided that the qualifying marks

will be 78% and those who will secure 78% or above would be

eligible for promotion.

That the selection Committee put these marks obtained on the

seniority list and according to seniority those who were found

eligible they have been promoted. This was done in accordance with

the principle of seniority cum merit. As such there is nothing wrong

in following this procedure.

That none of those petitioners could secure 78% marks and hence

they were not selected.”

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The High Court, after considering the material made available and

respective contentions, passed the impugned order dated 4.7.2001,

whereby it upheld the process of selection. It held that the two stage

process adopted by the bank - the first preparing a list of candidates who

secured the minimum of 78 marks (aggregate) in the performance

appraisal and interview, and the second promoting the candidates who

secured the minimum marks, strictly on the basis of seniority - satisfied

the seniority-cum-merit criteria for promotion. The said decision is

challenged in this appeal by special leave.

5.It is contended by the appellants that the concept of promotion by

seniority-cum-merit, did not contemplate prescribing of minimum

qualifying marks for assessment of performance/interview, before

applying the principle of seniority for promotion. It is contended that

restricting the promotion to only those who secured the minimum

qualifying marks, was violative of the seniority-cum-merit principle. It is

further contended that even if any qualifying marks could be prescribed

for assessing the minimum necessary merit required to meet the

efficiency of administration, the fixation of an extremely high mark of 78

out of 100 as qualifying marks, had the effect of converting the criteria of

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promotion from seniority-cum-merit to merit-cum-seniority. The

appellants placed strong reliance on the decisions of this Court in B.V.

Sivaiah v. K. Addanki Babu [1998 (6) SCC 720] and Bhagwandas Tiwari

v. Dewas Shajapur Kshetriya Gramin Bank [2006 (12) SCC 574] in

support of their contentions.

6.On the contentions urged, the following two questions arise for our

consideration :

(i)Whether minimum qualifying marks could be prescribed for

assessment of past performance and interview, where the

promotions are to be made on the principle of seniority-cum-merit?

(ii)Whether the first respondent bank was justified in fixing a high

percentage (78%) as the minimum qualifying marks (minimum

merit) for promotion?

Re : Question (i)

7.In State of Kerala vs. N. M. Thomas – 1976 (6) SCC 310, a seven-

Judge Bench of this Court defined the concept of ‘seniority-cum-merit’.

This Court held that “seniority-cum-merit” means that given the

minimum necessary merit requisite for efficiency of administration, the

senior though the less meritorious shall have priority.” In Union of India

vs. Lt. Gen. Rajendra Singh Kadyan – 2000 (6) SCC 698, this Court

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observed that “seniority-cum-merit” postulates the requirement of certain

minimum merit or satisfying a benchmark previously fixed, and subject

to fulfilling the said requirement, the promotion is based on seniority. It

was pointed out that requirement of assessment of comparative merit was

absent in the case of ‘seniority-cum-merit’.

8.It is also well settled that the principle of seniority-cum-merit, for

promotion, is different from the principle of ‘seniority’ and 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

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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.

9.In Sivaiah (supra), a three-Judge bench of this Court held that

while the principle of seniority-cum-merit laid greater emphasis on

seniority, the principle of merit-cum-seniority laid greater emphasis on

merit and ability, with seniority playing a less significant role. This Court

held :

“We thus arrive at the conclusion that the criteria 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.”

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10.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.

Re : Question (ii)

11.The next question is whether fixing of 78% as minimum qualifying

marks (that is as the minimum necessary merit) is unreasonable and

arbitrary. The Rules in this case provide that the mode of selection is by

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interview and assessment of performance reports for the preceding three

years as officer Scale I. The seniority list of officers in scale I was

published on 4.12.1996. Thereafter, the promotion process was held by

earmarking 60 marks for assessment of performance Reports (at the rate

of 20 marks per year) and 40 marks were allotted for interview. The

officers possessing the minimum qualifying marks of 78%, were then

promoted on the basis of seniority. What should be the minimum

necessary merit for promotion, is a matter that is decided by the

management, having in mind the requirements of the post to which

promotions are to be made. The employer has the discretion to fix

different minimum merit, for different categories of posts, subject to the

relevant Rules. For example, for promotions at lower levels, it may fix a

lesser minimum qualifying marks and fix a comparatively higher

minimum qualifying marks for higher posts. In the first respondent Bank,

the post of officer-Grade II (Area Managers and Senior Managers) is a

very senior position, next only to the top post of General Manager. As the

officers promoted to Scale II were required to head larger branches or

departments in the Head Office, shouldering higher responsibilities and

virtually competing with commercial banks, it cannot be said that the

fixing the minimum qualifying marks at 78% is excessive, unreasonable

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or arbitrary. We may refer to the following observations of this Court in

K. Samantaray vs. National Insurance Col. Ltd. – AIR 2003 SCC 4422,

in this context :

“It is for the employer to stipulate the criteria for promotion, the

same pertaining really to the area of policy-making. It was, therefore,

permissible for the respondent to have their own criteria for

adjudging claims on the principle of seniority-cum-merit giving

primacy to merit as well, depending upon the class, category and

nature of posts in the hierarchy of administration and the

requirements of efficiency for such posts.”

12.Another aspect requires to be noticed. Where the assessment of

minimum merit is with reference to previous performance record (Annual

Confidential Records) and/or by interview, as contrasted from a written

examination, prescription of 78% as minimum, will not be considered as

unreasonably high.

13.In Sivaih (supra), this Court held that prescribing a minimum of 50

marks out of 100 for interview was not violative of the principle of

seniority. This Court held :

“During the course of hearing of the appeal, the learned counsel for

the respondent-Bank has placed before us the relevant documents

relating to the impugned selection and promotion. On a perusal of

the said documents, we find that 50 marks out of the total of 100

marks were prescribed as the minimum qualifying marks for

interview and only those who had obtained the qualifying marks in

interview were selected for promotion on the basis of seniority. It

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was, therefore, a case where a minimum standard was prescribed for

assessing the merit of the candidates and those who fulfilled the said

minimum standard were selected for promotion on the basis of

seniority. In the circumstances, it cannot be said that the selection

has not been made in accordance with the principle of “seniority-

cum-merit.”

Whether the guidelines/rules adopted for assessing the minimum

necessary merit by prescribing marks under several heads or by

prescribing a specific minimum mark, is reasonable or arbitrary, would

depend upon the facts of each case. If it is demonstrated that the

minimum marks were fixed with the intention of favouring someone or to

specifically exclude someone, the courts may interfere. Similarly, where

the minimum marks are shown to have been fixed to defeat or nullify the

mode of seniority-cum-merit for promotion, there may be a cause for

interference. In other cases, there is very little scope to interfere with the

procedure adopted to ascertain the minimum required merit.

14.In Bhagwandas Tiwari (supra), this Court reiterated the principle

laid down in Sivaiah (supra) and State of UP vs. Jalal Uddin (2005 (1)

SCC 169] that principles of seniority-cum-merit and merit-cum-seniority

are conceptually different and that in seniority-cum-merit greater

emphasis is on seniority though it may not be the only determinative

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factor. It then held on the facts of that case, that the method adopted

therein fixing 75% as minimum marks, violated the principle of seniority-

cum-merit. Reliance is placed by the appellants on the following

observations of this Court:

“The contention that minimum marks were 45 out of 60, means that

an employee is to secure 75% of marks. Such a high percentage

cannot be a measure for prescribing minimum marks to assess merit.

It obviously would be a case of shifting the focus to merit-cum-

seniority principle. It obviously would be a case of shifting the focus

to merit-cum-seniority principle. In para 37 of Sivaiah case, this

Court noted that minimum marks prescribed for assessing merit do

not depart from the seniority-cum-merit principle. But the factual

position is different here. There is no mention that 45 marks out of

60 relate to the prescription of minimum marks for assessing the

merit.”

The appellants contend that the Rules considered in Bhagwandas Tiwari

and in this case are the same and therefore, the effect of the decision in

Bhagwandas Tiwari is that wherever minimum qualifying marks is fixed

as 75% or more, the seniority-cum-merit rule would be violated.

15.We have carefully examined the decision in Bhagwandas Tiwari.

Even if the Rules applicable and mode of selection prescribed (“interview

and assessment of performance for the preceding three years period as

officers for promotion”) are the same in both cases, the criteria and

standards adopted for assessing the minimum necessary merit are

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completely different. We extract below the standards adopted for

promotion in this case and in Bhagwandas Tiwari :

“Standards adopted in this case Marks allotted

(i) Work performance during the previous years 60

(ii) Interview 40

--------------

Total 100

=========

The minimum marks for eligibility for promotion : 78%.

Standards adopted in the case of Bhagwandas :

(a) Work performance during the previous 3 years 30

(b) Period of service (at the rate of 2 marks per year 40

For competed period of service subject to a

Maximum of 40)

(c) Interview 30

--------------

Total 100

========

In order be selected for promotion, obtaining 45 marks shall be

compulsory”

It would thus be seen that the schemes for assessing minimum necessary

marks are completely different in the two cases. While work performance

carried only 30 marks in Bhagwandas’s case, it carried 60 marks in this

case. While period of service carried 40 marks in Bhagwandas’s case, no

marks are provided for ‘period of service’ in this case. While the marks

for interview were 30 in Bhagwandas’s case, it is 40 in this case. The

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minimum qualifying marks was 78 out of 100 in this case. In

Bhagwandas, the minimum qualifying marks prescribed was 45 marks

out of 100. But ignoring the requirement of 45 out of 100, the selection

Committee adopted a minimum of 45 out of 60 (that is aggregate of

marks for work performance and Interview only) ignoring the marks

of 40 for period of service though that was the highest segment. This

Court was persuaded to interfere in that case, as the guidelines which

prescribed the minimum qualifying marks as 45 out of 100 was ignored

and the committee changed the minimum qualifying marks to 45 out of

60, thereby ignoring the marks secured for the period of service. Thus,

the decision in Bhagwandas Tiwari will not assist the appellants.

14.We therefore find no merit in this appeal and it is accordingly

dismissed.

….…………………..J.

(R V Raveendran)

New Delhi; ……………………..J.

November 17, 2009. (P. Sathasivam)

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