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CASE NO.: Appeal (civil)  4722 of 2006

PETITIONER: Bhagwandas Tiwari & Ors.

RESPONDENT: Dewas Shajapur Kshetriya Gramin Bank  & Ors.

DATE OF JUDGMENT: 08/11/2006

BENCH: ARIJIT PASAYAT & LOKESHWAR SINGH PANTA

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

ARIJIT PASAYAT, J.

       Leave granted.

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

       Factual position is almost undisputed and essentially is  as follows:

       The aforesaid writ petition was filed by ten persons who  at the relevant point of time were employees of the Dewas  Shajapur Kshetriya Gramin Bank (hereinafter referred to as  the ’Bank’).  Challenge in the writ petition was to the order of  promotion issued by respondent No.1-Bank and to the  promotion granted to respondents 2 to 8.  The writ petitioners  and respondents 2 to 8 were at the relevant point of time were  working as officers in Junior Management Grade I.  On  26.11.1999, the bank issued a promotion policy whereby  applications were invited from the officers working in Junior  Management Grade I for being considered to the next  promotional post known as Middle Management II.  In terms of  the policy, the promotion was to be made on the basis of  seniority-cum-merit and the policy also provided criteria for  consideration of cases for promotion. The relevant clause is  clause 7 of the second schedule of the Regional Rural Banks  (Appointment and Promotion of Officers and others Employees)  Rules, 1988 (in short the ’Rules’).  The said Rule came into  operation with effect from 28.9.1988 and it was framed by the  Central Government. Respondent No.1-Bank has been  established under the provisions of Regional Rural Banks Act,  1976 (in short the ’Act’). Under Section 29 of the Act the  Central Government is empowered to make rules after  consultation with the National Bank for carrying out the  provisions of the bank. Clause (b)(a) of sub-section (2) of  Section 29 was inserted by Regional Rural Bank’s  (Amendment) Act, 1987 (in short the ’Amendment Act’)  empowering the Central Government to make Rules relating to  the manner in which the officers and employees of Regional  Rural Bank shall be appointed in exercise of power conferred

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under Section 29 read with Section 17 of the Act.  As per Rule  5 of the Rules all vacancies are to be filled up on deputation,  promotion or direct recruitment in accordance with the  provisions contained in the second schedule.  Clause 7 of the  schedule deals with the promotion as Area Manager or Senior  Managers.  Clause 7 reads as follows:

"Area Managers or Senior Managers: (a) Source of recruitment Hundred percent by promotion  from amongst confirmed officers  working in the bank.   Promotions will be on the basis  of seniority-cum-merit.  If  suitable officers are not  available internally, these posts  could be filled by taking  temporarily officers of the  sponsor banks and other banks  or organizations on deputation.    (b) Qualifications and eligibility (i) A Graduate of recognized  University or any equivalent  qualifications recognized as  such by Government of India,  preference being given to  Agriculture or Commerce or  Economics graduates.

(ii) Eight years service as an  officer in the regional rural bank  concerned.  Provided that the  Board may, with the prior  approval of National Bank, relax  the period not exceeding two  years, if suitable candidates of  requisite experience are not  available.   Note: The post of Area Managers  and Senior Managers will be  equivalent in rank and will be inter changeable.

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

       Standard prescribed as per Circular is as follows:

"(7) Standard:  Standard of selection in promotion procedure shall be  as under:- (a) Performance of work                 -Maximum 30 Marks (work performance for the  last 3 years)

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

(c) Interview                           -Maximum 30 Marks

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                                                       _______________

               Total maximum marks     -         100 Marks                                                         _______________

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

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

       Learned Single Judge did not accept this contention and  dismissed the writ petition. It was held that in view what has  been stated by this Court in B.V. Sivaiah and Ors. v. K.  Addanki Babu and Ors. (1998 (6) SCC 720), the stand adopted  by the bank was in order. Reference was made to paragraphs  16, 18 and 37 of B.V. Sivaiah case (supra) to hold that  criterion of seniority-cum-merit was really applied.  While  applying the said criterion, seniority alone is not to be  considered, and merit cannot be ignored.  A reference was also  made to the decision in Jagathigowda, C.N. v. Chairman,  Cauvery Gramina Bank (1996 (9) SCC 677).

       The Division Bench upheld the judgment of learned  Single Judge by observing that the doctrine has been rightly  applied in the present case. Though there was no mention in  the Circular that the employee has to secure more than 45  marks out of 60, that appears to be the intention.          Stand of the appellants before the High Court was  reiterated at the time of hearing of this appeal.

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

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

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seniority will be a determining factor, or if it is  not fairly possible to make an assessment  inter se of the merit and suitability of two  eligible candidates and come to a firm  conclusion, seniority would till the scale".

Similarly, Beg J. (as the learned Chief Justice then was) has  said (SCC p.851, para 22): "22.    Thus, we think that the correct view, in  conformity with the plain meaning of words  used in the relevant rules, is that the  entrance" or "inclusion" test, for a place on  the select list, is competitive and comparative  applied to all eligible candidates and not  minimal like pass marks it an examination.  The Selection Committee has an unrestricted  choice of the best available talent, from  amongst eligible candidates, determined by  reference a reasonable criteria applied in  assessing the facts revealed by service records  of all eligible candidates so that merit and not  here seniority is the governing factor."

On the other hand, as between the principles of seniority  and merit, the criterion of ’seniority-cum-merit’ lays greater  emphasis on seniority. In State of Mysore and Anr. v. Syed  Mahmood and Ors. (1968 (3) SCR 363), while considering Rule  (a)(b) of the Mysore State Civil Services General Recruitment  Rules, 1957 which required promotion to be made by selection  on the basis of seniority-cum-merit, this Court has observed  that the rule required promotion to be made by selection on  the basis of "seniority subject to the fitness of candidate to  discharge the duties of post from among persons eligible for  promotion". It was pointed out that where promotion is based  on seniority-cum-merit, the officer cannot claim promotion as  a matter of right by virtue of his seniority alone and if he is  found unfit to discharge the duties of the higher post, he may  be passed over and an officer junior to him may be promoted. In State of Kerala and Anr. v. N.M. Thomas and Ors.  (1976 (2) SCC 310), A.N. Ray, C.J. has thus explained the  criterion of "seniority-cum-merit" (SCC p.335, para 38):- "With regard to promotion the normal  principles are either merit-cum-seniority or  seniority-cum-merit. Seniority-cum-merit  means that given the minimum necessary  merit requisite for efficiency of administration,  the senior though the less meritorious shall  have priority."

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

"We thus arrive at the conclusion that the  criterion of "seniority-cum-merit" in the  matter of promotion postulates that given the  minimum necessary merit requisite for  efficiency of administration, the senior, even  though less meritorious, shall have priority  and a comparative assessment of merit is not  required to be made.  For assessing the  minimum necessary merit, the competent  authority can lay down the minimum

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standard that is required and also prescribe  the mode of assessment of merit of the  employee who is eligible for consideration for  promotion.  Such assessment can be made by  assigning marks on the basis of appraisal of  performance on the basis of service record  and interview and prescribing the minimum  marks which would entitle a person to be  promoted on the basis of seniority-cum- merit."     

       The impugned judgment of the learned Single Judge and  Division Bench of the High Court missed one basic factor. The  circular nowhere refers to the minimum marks being relatable  to criteria A and C and nowhere there is a stipulation of  obtaining minimum 35 marks as a compulsory measure. If  really the intention was to apply the said minimum marks to  said criteria it would have been specifically provided that way.   It is noted by the High Court that in the circular or in the  115th or 117th report of the respondent No.1-Bank there was  no mention about this aspect.  The doctrine of reading down  the provisions has really no application to the facts of the  case.  If the stand of respondents is accepted, it would mean  addition of a condition which is not specifically provided for.   That is impermissible.                         In all services, whether public or private there is  invariably a hierarchy of posts comprising of higher posts and  lower posts.  Promotion, as understood under the service law  jurisprudence, is advancement in rank, grade or both and no  employee has right to be promoted, but has a right to be  considered for promotion.  The following observations in Sant  Ram Sharma v. State of Rajasthan and Ors. (AIR 1967 SC  1910) are significant:

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

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

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factor, while in the latter merit is the determinative factor.  In  The State of Mysore and Anr. v. Syed Mahamood and Ors. (AIR  1968 SC 1113), it was observed that in the background of Rule  4(3)(b) of the Mysore State Civil Services (General Recruitment)  Rules, 1957 which required promotion to be made by selection  on the basis of seniority-cum-merit, that the rule required  promotion to be made by selection on the basis of "seniority  subject to fitness of the candidate to discharge the duties of  the post from among persons eligible for promotion". It was  pointed out that where the promotion is based on seniority- cum-merit the officer cannot claim promotion as a matter of  right by virtue of his seniority alone and if he is found unfit to  discharge the duties of the higher post, he may be passed over  and an officer junior to him may be promoted. But these are  not the only modes for deciding whether promotion is to be  granted or not.           These aspects were highlighted in K. Samantaray v.  National Insurance Co. Ltd. (AIR 2003 SC 4422), and in State  of U.P. v. Jalal Uddin and others  (2005 (1) SCC 169).   

       There is no basis, in the instant case, for the stand that  for assessing merit a minimum number of marks has been  prescribed. The contention that minimum marks were 45 out  of 60, means that an employee is to secure 75% of marks.   Such a high percentage can not be a measure of prescribing  minimum marks to assess merit. It obviously would be a case  of shifting the focus to merit-cum-seniority. In para 37 of   Sivaiah case (supra), this Court noted that minimum marks  prescribed for assessing merit do not depart from the  seniority-cum-merit principle. But the factual position is  different here.  There is no mention that 45 marks out of 60  relate to the prescription of minimum marks for assessing the  merit. In Jalal Uddin’s case (supra) it was noted that in  seniority-cum-merit greater emphasis is on seniority though it  is not the determinative factor. In the case of merit-cum- seniority, merit becomes a determinative factor.  In fact, the  position noted by this Court in paragraphs 19, 20, 24 and 25  of Sivaiah case (supra) dealt with almost identical fact  situation, apart from paragraph 16 of the judgment.    

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

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