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  131st 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 23rd September, 1988 and the Letter no. 823 dated  7th 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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