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PETITIONER: SRI JAGATHIGOWDA, C.N.& ORS.

       Vs.

RESPONDENT: CHAIRMAN CAUVERY GRAMINA BANK& ORS.

DATE OF JUDGMENT:       31/07/1996

BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) AHMAD SAGHIR S. (J)

CITATION:  1996 SCALE  (5)678

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T Kuldip Singh, J.      Special leave granted.      A learned  single Judge  of the  Karnataka  High  Court allowed the  bunch-petitions filed  by the  respondents  and quashed the  promotions made  by the  Cauvery Gramina  Bank, Mysore (the  Bank) to  the cadre  of Senior  Managers on the short ground  that the  guidelines issued to the Bank by the National Bank  for Agricultural  and Rural  Development (the NABARD) were   not  followed while  making the promotions. A Division Bench  of the High Court upheld the judgment of the learned single  Judge. The appellants-affected officers-have challenged by  way of  this appeal  the correctness  of  the judgment of  the  learned  single  Judge  and  that  of  the Division Bench of the High Court.      The Bank  was sponsored by the State Bank of Mysore and established in  October 1976  under the  Regional Rural Bank Act. 1976.  The NABARD was established in the Year 1982 with a view  to look after the agricultural and rural development in the  country. The NABARD has been issuing guidelines from time to  time regarding  the conditions  of service  of  the employees of  the rural  banks in  the country.  The  NABARD issued  a   circular  dated   December  31,  1984  providing guidelines for appointments/promotions in the rural banks to the posts  of  Senior  Managers/Area  Managers  and  General Managers. The relevant part of the circular is as under:      "Area Managers/Senior Managers:      a) Source  of Recruitment : 100% by      promotion  from   amongst  officers      working in 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/

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    organizations on deputation."      NABARD issued  another circular  dated  April  7,  1986 which clarified  the procedure and provided for the standard to be  adopted for  promotions in  the rural banks in India. The relevant part of the circular is as under:      "For  effecting   promotions,   the      Board may  constitute one  or  more      staff     selection      committees      depending on the scale of the posts      for which  the candidates are to be      interviewed,  for  the  purpose  of      selecting the employees of the bank      for promotion  to higher posts. The      Committee  should   have  at  least      three  official  directors  of  the      Board excluding  Chairman, of which      one should  be  from  the  National      Bank or  the Reserve  Bank and  one      each from  sponsor Bank  and  State      Govt. respectively. Also one member      from  SC/ST   community  should  be      represented in  such committees  as      indicated in  our  circular  letter      dated 9-12-1985.  The selection  of      the eligible  candidates should  be      based on  performance of respective      candidates   in   the   bank.   The      recommendation  of  the  committees      should thereafter have the approval      of  the   Board  before   effecting      promotions."      The Bank  issued its  own guidelines  by  the  circular dated July  17, 1986  for appointment  to the  posts of Area Managers/Senior  Managers   and  invited  applications  from eligible  officers  to  be  considered  for  promotion.  The relevant part of the circular is reproduced hereunder:      "The question  of strengthening the      supervisory support at the field as      well as  at the  Head Office  level      consequent on  growth in the volume      of   business    and   geographical      coverage has  been examined  by the      Government of India in consultation      with   the    NABARD.   They   have      approved, in principle, creation of      the posts  of Area  Managers/Senior      Managers as  and when  required and      justified by  the volume and nature      of business.  In the  light of  the      guidelines issued  by the NABARD in      this regard, the Board of Directors      have approved  creation  of  a  few      posts   of    Area   Managers   and      upgradation of a few managers posts      at Head  office to  Senior Managers      posts.      The following  guidelines have been      laid down  for appointment  to  the      posts   of   Area   Managers/Senior      Managers.      SOURCE OF RECRUITMENT      a. 100%  by promotion  form amongst      the eligible officers:      b. Seniority-cum-merit;      c. If  suitable  officers  are  not

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    available  internally,   the  posts      could be filled- in by the officers      of the sponsor      ...................................      All the eligible officers are being      advised separately  to  appear  for      promotional interview."      The NABARD  issued further  guidelines on  December  1, 1987 and  February 10,  1988 but  these instructions are not relevant for  our purpose  because the  selection in dispute was held in the year 1986.      On July 23, 1986 the Chairman of the Bank constituted a Director’s Committee  to  consider  the  cases  of  eligible officers for promotion in the light of the guidelines issued by the  NABARD from  time to  time. The Committee called for interview 32 officers in accordance with their seniority. In the interview  the  marks  were  awarded  according  to  the performance appraisal  forms. The  officers who  obtained 85 marks out  of 150,  were shortlisted  for  promotion.  As  a result of  the recommendations  of the  Director’s Committee the promotion orders were issued on July 31, 1986.      The main  contention of  the appellants before the High Court was  that the  promotions were  made by the Director’s Committee  primarily   on  the   basis  of  the  performance appraisal forms  which were  regularly maintained in respect of each of the officers working in the Bank. The performance appraisal comprised  of matters  such as  dimension of work, general  intelligence,   job   knowledge,   initiative   and resourcefulness etc.  The performance  appraisal forms  were regularly maintained  in  the  course  of  the  service  and contained  a   clause  regarding   overall  suitability  for promotion.      The appellants  were  promoted  on  the  basis  of  the service record  maintained  by  the  Bank  in  the  form  of performance appraised.  Some of the senior officers who were not found  suitable  on  comparative  consideration  of  the performance  appraisal,  challenged  the  promotion  on  the ground  that   the  procedure   adopted  by  the  Director’s Committee was  in violation  of the guidelines issued by the NABARD.  The  precise  ground  of  challenge  was  that  the promotions were not made on the basis of seniority-cum-merit but by  way of  selection on  the basis of interview held by the Committee. A learned single Judge quashed the promotions holding that  the Bank  violated the  guidelines  of  NABARD issued in the Year 1984. The learned Judge further held that the April  1986 guidelines were not applicable to promotions in the  cadre of Senior Managers. It was not disputed before the learned  judge that  the  service  record  of  the  writ petitioners was adverse.      The judgment  of the learned single Judge was upheld by the Division  Bench of  the High  Court. The  Division Bench came to  the conclusion  that the  service record  of recent past should  have been  taken into consideration and in case there was nothing adverse against an officer he could not be denied promotion  on the  ground  that  some  other  officer junior to  him was  more meritorious. According to the Bench the promotions  were made  on the basis of selection as much as marks were assigned on the basis of performance appraisal and interview.      We have  heard  learned  counsel  for  the  parties  at length. We are of the view that the learned single Judge and also the  Division Bench  of the High Court fell into patent error in  quashing the promotions made by the Bank. The High Court has  failed to  appreciate that  the  NABARD  circular dated April  7, 1986  clarified  the  earlier  circular  and

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specifically provided  that "the  selection of  the eligible candidates should  be based  on  performance  of  respective candidates in  the bank".  The guidelines  are applicable to all the  employees of  the rural  banks. The High Court fell into patent  error in  holding that  the guidelines were not applicable to  the impugned  promotions. We  are of the view that the  cumulative reading of the two guidelines issued by the NABARD  (quoted above) clearly shows that the promotions were to  be made  on the basis of the comparative assessment of the performance appraisal of the officers concerned. This has precisely  been done  by the Director’s Committee of the Bank. Even otherwise the procedure adopted by the Director’s Committee was  just and fair. The instructions of the NABARD being in the nature of guidelines the promotions made by the Bank cannot  be set  aside unless the same are arbitrary and unfair. It  is settled  proposition of  law that  even while making promotions  on the  basis of  seniority-cum-merit the totally of  the service  record of the officer concerned has to be  taken into  consideration. The  performance appraisal forms are maintained primarily for the purpose that the same are taken  into consideration  when the  person concerned is considered for promotion to the higher rank. The High Court, with  respect,   was  not  justified  in  holding  that  the performance appraisal  could not taken into consideration by the Director’s  Committee while considering the officers for promotion to the higher rank.      We allow  the appeal,  set aside  the judgment  of  the learned single  Judge and  also of the Division Bench of the High Court. We uphold the promotions made by the Bank so far as the  appellants and  other similarly situated persons are concerned. The  writ  petitions  filed  by  the  respondents before the High Court shall stand dismissed. No costs.