http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 21  

PETITIONER: RESERVE BANK OF INDIA & ORS.

       Vs.

RESPONDENT: C.N. SAHASRANAMAN & ORS.

DATE OF JUDGMENT30/04/1986

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) PATHAK, R.S.

CITATION:  1986 AIR 1830            1986 SCR  (2) 881  1986 SCC  Supl.  143     1986 SCALE  (1)939  CITATOR INFO :  RF         1987 SC1399  (20)  D          1987 SC2086  (19,30)

ACT:      Centre-wise seniority  and  promotion  through  written departmental  examinor  -  Reserve  Bank  of  India  (Staff) Regulations 1948 - Administrative Circular No. 8 and 9 dated 13.5.1972, clause  II(a)(i) of  the Scheme  for Promotion  - Staff Officers  Grade II  (Now designated  Grade A)  covered under - Whether part of the scheme is violative of guarantee of equality  before law  and  equal  opportunity  in  Public employment  as  enshrined  in  Article  14  and  16  of  the Constitution -  Industrial Disputes  - Settlement  by direct negotiations or through collective bargaining value of.

HEADNOTE:      The Reserve  Bank of India had its offices at nearly 15 centres throughout  India. The  service  conditions  of  the employees of  the Reserve  Bank are  governed by the Reserve Bank of  India (Staff)  Regulations, 1948 and Administrative orders passed  from time  to time  and  also  by  Industrial Disputes Awards or Settlements by negotiations or settlement by collective  bargaining. In  the  Reserve  Bank  separrate departmentwise, Groupwise seniority and promotion for cadres of officers  and non-officers  (Award Staff)  was  prevalent from time to time.      In September 1962, the issue of maintenance of combined seniority list  at each centre for the purpose of promotions was referred  to the  National industrial  Tribunal presided over by  Justice K.T. Desai. The recommendations of the said Desai Award  were approved by the Supreme Court in All India Reserve Bank  Employees’  Association  v.  Reserve  Bank  of India, [1966]  1 S.C.R. 25 @ 57 and Reserve Bank of India v. N.C. Paliwal  & Ors.,  [1977] 1  S.C.R. 377.  In  1970,  the Supervisory Staff  in class I was upgraded to staff officers in class  I pursuant  to the  Memorandum of Settlement dated 9th January, 1970 between 882 the Bank  and the  All India  Supervisory Staff Association, subject to certain conditions. The channel of promotion from the post  of clerk (Grade II) is staff officer (Grade A) and further from that post to the staff officer (Grade B) and so

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 21  

on upto  Grade F. Prior to 6th June 1970, oral interviews of all the  eligible candidates  were held for being considered for promotion.  Then  Administrative  circular  No.  20  was introduced for the first time for departmental promotions of clerk Grade  I/(Assistant) etc. to the post of Staff Officer Grade II  (Sub-Accountants & Research Superintendent) in all the groups.  On 7th  May 1972,  the Bank  took several steps towards equalising promotional opportunities of employees by introducing the  Optee Scheme  of 1965,  the Optee Scheme of 1966 and finally by entering into a Memorandum of Settlement dated 7th  May  1972  with  the  Association  accepting  the principle of  maintenance of  a combined  seniority.  On  or about 7th  May 1972,  the  Bank  formulated  a  "Scheme  for Promotion;  Staff   Officer  Grade  II"  after  giving  full opportunity to  the Association  to make its suggestions. On 7th May  1972 the Bank and the Association further agreed by exchange of correspondence that the ratio of direct recruits to the total strength of staff officers Grade II shall be at 17.5% -  82.5%. On  13th May  1972, the  Bank introduced the Administrative Circular  No. 8  on  "Scheme  for  Promotion: Staff  Officers   Grade  II".  On  the  same  day  the  Bank introduced simultaneously  the Administrative Circular No. 9 on "Scheme  for combined Seniority List and Switch over from non-clerical to  clerical cadre  with effect  from  7th  May 1972, Both the circulars are binding on all employees of the Bank in  view of  the decision  of the Supreme Court in N.C. Paliwal’s case.  On May  22, 1974,  the Bank took a decision based on  the recommendations  of the cadre Review Committee under the  Chairmanship of  Mr. Justice J.L. Naim and issued Administrative circular  No.15 to prepare a common seniority List and  to provide  for inter group mobility at the lowest level of  officers in  Grade A  with effect from 1st January 1970. On  or about  7th January  1978, the Bank took further decision, based  on the  recommendations of  two  Committees headed  by   Mr.  Justice   Naim  and  Mr.  Justice  Thareja respectively and  issued Administrative  Circular No.  8  to combine the seniority of all officers in Grade ’B’ and above with effect  from 22nd  May 1974  with a  view  to  equalise opportunity  for   promotions  among   officers.  Both   the circulars Nos.  15 of  1974 and  8 of 1978, were approved by the Supreme Court in V.T. Khanzode & Ors. v. Reserve Bank of India & Anr., reported in [1982] 2 S.C.C. 7. 883 %      The respondents  who were  grade II  clerks working  at Nagpur  Reserve  Bank  ever  since  their  employment  which commenced somewhere between 1960 and 1965 who were aggrieved by Part  of Clause  II(a)(i) of  the scheme  for promotion - Staff  Officers   Grade  II   covered  under  Administration Circular No.  8 challenged  its validity averring that under the new  scheme chance to appear in the examination depended not  on   relative  merits   but  merely  on  the  fortuitus circumstances, namely,  the number of vacancies occurring in a particular  centre in a panel year which had no nexus with the purpose  of promotion  viz. to secure efficient cadre of staff officers.  The High  Court accepted  the pleas  of the respondents and  by its  order dated  19th March 1981 struck down that  part of  clause II(a)(i)  of  the  scheme  listed "Number of  candidates for the qualifying test". As a result no examination  could be held for panel years 1980-81, 1981- 82 and 1983-84. Hence the appeal by special leave.      Allowing the  appeal and  approving the modified scheme of 1984  as per  the orders  and directions  of the  Supreme Court including holding a referendum, the Court, ^

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 21  

    HELD: 1.  In service  jurisprudence there cannot be any service rule which would satisfy each and every employee and its  constitutionality  has  to  be  judged  by  considering whether it  is fair,  reasonable and  does  justice  to  the majority of  the employees  and fortunes of some individuals is not  the touch-stone.  Further, whether  there  has  been denial  of   equality  of  the  view  of  promotion  or  any constitutional right  infringed or  not  cannot  be  judged, where interest  of large  number of people are concerned, in the abstract. [909 D-E; B-C]      Kamal Kanti  Dutt &  Ors. v.  Union of  India  &  Ors., [1980] 3 S.C.R. 811 referred to.      2. Circular  No. 9  is a counterpart of Circular No. 8. Circular No.  8 having been held valid, by the Supreme Court Circular No.  9 must  also follow to be good. Circular No. 9 cannot stand in vaccum and in isolation. It is a step to the fulfilment of  the object  to be achieved by Circular No. 8. Viewed in that point of view and as a feasibility and having regard to  the factors  and in  regard  to  the  history  of Reserve Bank  employees, the  scheme as modified by the Bank and as 884 accepted by vast majority indeed an over willing majority of the workmen  is a proper and just scheme and does not suffer from the  vice of  article 14  or article  16 or  any  other constitutional guarantees. [909 F-G]      3.1 Settlement  of disputes  by direct  negotiations or settlement through  collective bargaining  is always  to  be preferred for it is best suited for indusrial peace which is the aim  of legislation  for settlement  of labour disputes. [909 H; 910 A]      New Standard  Engineering Co.  Ltd. v. N.L. Abhyankar & Ors., [1978]  2 S.C.R. 798 and Tata Engineering & Locomotive v. Their Workmen, [1982] 1 S.C.R. 929 referred to.      3.2 The  reference held  pursuant to the orders of this Court  dated   2nd  May,  1984  undoubtedly  indicates  that majority of the employees are in favour of acceptance of the modified settlement.  In matters of service conditions it is difficult to  evolve as ideal set of norms governing various conditions of  services and in grey area where service rules operated,  if   more  than  one  view  is  possible  without sacrificing  either  reasons  or  commonsense  the  ultimate choice  has   necessarily  to   be  conditioned  by  several considerations ensuring  justice to  as many as possible and injustice to  as few.  These principles however, significant do not  authorise the  majority of  the employees to trample upon  the   constitutional  guarantees   or  rights  of  the individuals or minority employees. Majority cannot thwart or barter away the constitutional rights of the minorities. The constitutional guarantees  are to  protect this very danger. But in judging the content of the constitutional rights, the entire perspective  of the  equality of opportunity here and denial of equal right in public employment have to be viewed in a  fair, reasonable  and just perspective. Viewed in that light,  it   is  true  there  may  be  individual  instances exemplifying  injustices   by  postponing  or  delaying  the chances of promotions of the contesting respondents yet that does not  deny them their constitutional right in its proper measure, and  the considerations  that have weighed with the making of  the modified  scheme and  in light  of the  other considerations it  must be  observed that with whatever care and objectivity  or  foresight  any  rule  is  framed,  some hardship, inconvenience or injustice might to result but the paramount  consideration   is  the   reconciliation  of  the conflicting claims of two important

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 21  

885 constituents of  service -  one which  brings fresh clerical employees and  the other mature experience. There has been a happy merger  of these  two  considerations  in  the  scheme proposed and  in that merger, no violation of the guaranteed rights of  the opposing respondents have occurred. [910 C-H; 911 A-B]      3.3 The  promotion scheme  having  been  evolved  after careful consideration  and having  been  in  operation  ever since the  inception of the Bank with modification from time to time as a result of the negotiations under the Industrial Disputes Act  should not  be modified  drastically. In  such matters one should hasten slowly. [911 B-C]      4.1 The promotion on the basis of centrewise seniority, in the  instant case  is constitutionally valid, inasmuch as the appellant  bank is an undertaking which comes within the Industrial Disputes  Act, 1947  and the  class III employees are fully covered by the definition of the term "workman" in section 2(s)  of the  said Act  and one  of  the  principles normally applicable  in fixing their terms and conditions of service is industry-cum-region principle. [893 G-H]      Ramachandra  Shankar   Deodhar  &   Ors.  v.  State  of Maharashtra & Ors., [1974] 2 S.C.R. 216 distinguished.      Hindustan Antibiotics  v. Workmen,  [1967] 1 S.C.R. 652 and All-India Reserve Bank Employees’ Association v. Reserve Bank of India, [1966] 1 S.C.R. referred to.      4.2 The  integration of different cadres into one cadre could not  be said  to involve any violation of the equality clause. The  right of  promotion should not be confused with mere chance  of promotion. Though the right to be considered for promotion  was a  condition of  service, mere chances of promotion were  not. It is clear therefore, that the chances of promotion  in some  areas occur  more  often  in  smaller centres than  in other bigger centres like Bombay, Calcutta, Delhi but that is fortutious and would not really affect the question,  and   violate  articles   14  and   16   of   the Constitution. The  justice of  the case  should be judged in conjunction with  other factors, the convenience, the future of the family etc. [899 G; 903 E-F] 886      Kamal Kanti  Dutt &  Ors. v.  Union of  India  &  Ors., [1980] 3  S.C.R. 811,  at pages 841-842; Mohd. Shujat Ali v. Union of  India, [1975]  1 S.C.R.  449 and  Reserve Bank  of India v. C.T. Dighe, [1982] 1 S.C.R. 107 at 121-122 referred to.      4.3 Regulation  31 of the Reserve Bank of India (Staff) Regulations 1948 is subject to the condition that "unless in any case  it  be  otherwise  distinctly  provided."  In  the instant  case,  it  has  been  distinctly  provided  in  the appointment letters  as to  where the class III employees of the Bank are liable to serve. All appointment letters issued to all  staff members  appointed in class III and below ever since the  inception of  the Bank  contained,  identical  or similar provision  specifying the  offices in  which of  the Bank these  employees are required to work. Therefore, there was  definite  provision  contrary  to  as  contemplated  by Regulation  31   of  the   Reserve  Bank  of  India  (Staff) Regulation 1948  and therefore  the  general  provisions  of Regulation 31 would not have any application. [904 B-C; D-E]      4.4 If  an All-India  cadre is  enforced in  respect of Class III employees, it would result in injustice to all the employees  in  that  class  at  the  injustice  to  all  the employees in  that  class  at  the  smaller  centres  for  a considerably long  period  of  time  leading  to  industrial unrest. The  result of  applying the  principles of  an All-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 21  

India cadres  for this  class of employees would be that the senior-most in  that whole  cadre All-India wise would alone have to  be considered  for promotion. In such a case, for a considerable long  time, only employees of the older offices namely, Bombay, Nagpur, Madras, Calcutta and Delhi will have to be  considered, they  being by  far senior most among the All-India employees and such a consideration and empanelling would continue  for a  very long time as the principal basis of the  settlement was  not one  of promotion  on merit  but rather  an   upgradation  on   mere  seniority,   the   only qualification being  an examination  to  determine  fitness. Once fitness  was determined  by the examination the ranking in that  examination did  not come  into play thereafter and the successful  candidates were  again listed  according  to centrewise  seniority  in  the  matter  of  upgradation  and promoted as and when vacancies at that centre occur. [905 A- E]

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3234 of 1981. 887      From the  Judgment and  Order dated 19th March, 1981 of the Bombay High Court in Writ Petition No. 2334 of 1980.      G.B. Pai and R.H. Parihar for the Appellant.      C.N. Sahasranaman  in person,  S.P. Sharma  in  person, K.T.A.  Anantha  Raman,  R.  Basu  Devan,  A.K.  Goel,  Ajit Pudissery, M.S. Gupta and V.J. Francis for the Respondents.      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI,  J. In  the Reserve  Bank of India separate  Departmentwise   and   Groupwise   seniority   and promotion for  cadres of  Officers and  non-Officers  (Award Staff) was  prevalent.  This  would  be  apparent  from  the decision of  this Court  in Reserve  Bank of  India v.  N.C. Paliwal & Ors., [1977] 1 S.C.R. 377 as well as V.T. Khanzode and Ors.  v. Reserve Bank of India and Anr., [1982] 2 S.C.C. 7.      In September,  1962, need  was felt  for maintenance of combined seniority  list at  each centre for the purposes of promotions  recommended   by  National  Industrial  Tribunal presided over by Mr. Justice K.T. Desai. The recommendations of the  said Desai  Award for centre-wise combined seniority were approved  by this Court in 1966. See in this connection the  observations   in  All  India  Reserve  Bank  Employees Associations v. Reserve Bank of India, [1966] 1 S.C.R. 25 at 57 and  Reserve Bank  of  India  v.  N.C.  Paliwal  &  Ors., (supra).      In 1970,  the Supervisory Staff in Class I was upgraded to Staff  Officers in  Class I pursuant to the Memorandum of Settlement dated  9th January, 1970 between the Bank and the All India  Supervisory Staff Association, subject to certain conditions.      Administrative Circular No. 20 dated 6th June, 1970 was issued  on   introduction   of   written   examination   for departmental promotions  of clerk Grade I/Assistants etc. to the post  of Staff  Officers Grade  II (Sub-Accountants  and Research Superintendents)  in all  the groups. This circular was not made operative. 888      On 7th  May, 1972,  the Bank took several steps towards equalising  promotional   opportunities  of   employees   by introducing the  Optee Scheme  of 1965,  the Optee Scheme of 1966 and  finally by  entering into Memorandum of Settlement

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 21  

dated 7th  May, 1972  with  the  Association  accepting  the principle of  maintenance of  a combined seniority list at a centre. See  in this  connection the observations in Reserve Bank of India v. N.C. Paliwal, (supra).      On or about 7th May, 1972, the Bank formulated a Scheme for Promotions  : Staff  Officer Grade II’ after giving full opportunity to  the Association  to make its suggestions. On 7th May,  1972, the  Bank and the Association further agreed by exchange  of correspondence  that  the  ratio  of  direct recruits to  the total  strength of  Staff Officers Grade II should be at 17.5% : 82.5%. Reference in this connection may be made  to Annexure  II &  III to the further Affidavit for the bank  filed on  27th August,  1982 and  which are in the appeal Paper Book at p. 134 onwards.      On  13th   May,   1972,   the   Bank   introduced   the Administrative Circular  No.  8  dated  13th  May,  1972  on ’Scheme for  Promotions -  Staff Officers Grade II’ which is binding on  all employees  of the  Bank. On the same day the Bank introduced  simultaneously the  Administrative Circular No. 9  on ’Scheme for Combined Seniority List and switchover from non-clerical  to clerical  cadre’ with  effect from 7th May, 1972 which is binding on all employees of the Bank. The Constitutional valdity  of this  scheme was  upheld by  this Court in Reserve Bank of India v. N.C. Paliwal (supra).      On 22nd  May, 1974,  the Bank took a decision, based on the recommendations  of the Cadre Review Committee under the Chairmanship  of  Mr.  Justice  J.L.  Nain  and  issued  the Administrative Circular  No. 15  dated  22nd  May,  1974  to prepare a  common seniority  list and  to provide  for inter group mobility  at the lowest level of officers in Grade ’A’ with effect from 1st January, 1970. See V.T. Khanzode & Ors. v. Reserve Bank of India, (supra).      On or  about 7th  January, 1978,  the Bank took further decision, based  on the  recommendations of  two Committees, one headed  by Mr.  Justice Nain  and another  headed by Mr. Thareja, 889 and issued  Administrative Circular No. 8 dated 7th January, 1978 to  combine the  seniority of all officers in Grade ’B’ and above  with effect  from 22nd  May, 1974  with a view to equalise opportunity  for promotions among officers. In this connection, reference  may also  be made  to V.T. Khanzode & Ors. v. Reserve Bank of India, (supra).      This appeal  arises from  a decision  of  the  division bench of  the Bombay  High Court,  Nagpur dated  19th March, 1981 whereby  it has struck down a part of clause (II)(a)(i) of ’the  Scheme for Promotion - Staff Officers Grade II (now designated  Grade  ’A’)  covered  under  the  Administration Circular No.  8 dated  13th May,  1972. It  may be mentioned that as  a result  no examination  could be  held for  panel years 1980-81, 1981-82, and 1982-83.. The said clause was as follows :           "II.  Number  of  candidates  for  the  qualifying           test:-           (a)(i) As estimate of the vacancies anticipated to           occur in  each office  during a  ’panel year’ i.e.           1st September  to 31st  August will be declared by           the Bank  in advance  and the number of candidates           in that  office to be called for the test in order           to fill  those vacancies  in that  office will not           exceed twice  the number of such vacancies subject           to sub-clause....."      It may  be mentioned  that the decision was rendered in respect of  a petition under Article 226 of the Constitution by three  petitioners who  were Grade  II clerks  working at

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 21  

Nagpur  Reserve  Bank  ever  since  their  employment  which commenced somewhere  between 1960  to 1965. The Reserve Bank has its  offices at  nearly 15 centres throughout India. The service conditions  were governed  by the  Reserve  Bank  of India  (Staff)   Regulations,   1948   (hereinafter   called "Regulations").      The High  Court by  its order which is under appeal has set aside  the impugned  part of  the scheme.  It  would  be necessary to refer to the said judgment briefly.      It may  be mentioned  that this  judgment of  the  High Court was  delivered on 19th March, 1981. This Court granted special leave  against the  said judgment  on 4th  December, 1981. Then 890 after that  on  5th  March,  1982,  this  Court  upheld  the constitutional validity of the Administrative Circular No. 8 dated 7th  January, 1978  to combine  the  seniorty  of  all Officers. See V.T. Khanzode & Ors. v. Reserve Bank of India, (supra). This Court further directed on 29th July, 1982 that in the  interest of justice All India Reserve Bank Employees Class III  Workmen Associations  and All  India Reserve Bank Workers Organisation  be added as the party-respondents, and the appeal  was heard  for some time. Then this appeal after hearing was  adjourned and  this Court  directed the Reserve Bank to frame a new scheme for promotion by order dated 20th October, 1982.  On  13th  December,  1982,  the  Bank  filed further affidavit,  inter alia,  annexing revised  draft  of clause II  to the  Scheme for  Promotion of  Staff  Officers Grade ’A’ annexed to the Administrative Circular No. 8. This was submitted  for acceptance  on behalf  of the  appellants before  us.  The  amendment  was  opposed  by  the  opposing respondents by their Affidavits-in-Opposition.      On 21st  March, 1983,  it  is  stated,  that  the  Bank entered into  a settlement  by exchange  of letters with All India Reserve Bank Employees Association which is recognised and representative Union of Class III Workmen employees. The Bank thereafter  filed a  Rajoinder setting  out  principles governing recruitment  and promotion of Staff Officers Grade ’A’ on 22nd February, 1983 including the modification of the existing scheme  mutually agreed  between the  Bank and  the Association. On  2nd May, 1984, this Court directed that the settlement between  the Bank and the Association be referred to Class  III employees and opinion of the majority shall be taken on  the basis  of referendum  by secret ballot and the result of  the referendum  should be  communicated  to  this Court on  16th  July,  1984  and  the  appeal  to  be  heard thereafter. The  result of  the referendum  by secret ballot was filed  by the  Bank by  an Affidavit. The summary of the result of the referendum seems to be as follows :      "PARTICULARS       TOTAL VOTES         PERCENTAGE TO      ------------         -----------         --------------                              CAST              AGGREGATE NO.                                             OF VOTES CAST      -----------        -----------         --------------      No. of votes      accepting the      Settlement             11,309              67.67% 891      No. of votes not      accepting the      Settlement              5,277              31.58%      No. of votes      declared invalid          126              00.75%                           ---------           ---------                             16,712             100.00%

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 21  

                        ----------           ---------- Total number of eligible voters : 18,953 Total votes polled       :16,712 (88.18%)"      The main  question which needs determination is whether part of  the  scheme  mentioned  before  introduced  by  the Reserve Bank  of India is violative of guarantee of equality before law  and of equal opportunity in public employment as enshrined in  articles 14  and 16  of the  Constitution. The High Court  noted that  the point  arose at  the instance of three petitioners who were Grade II working at Nagpur branch of Reserve  Bank ever since their employment which commenced somewhere between 1960 to 1965.      The Reserve  Bank has  its offices at nearly 15 centres throughout India.  The channel of promotion from the post of Clerk (Grade II) is Staff Officer (Grade A) and further from the post to the Staff Officer (Grade B) and so on upto Grade F. Prior  to 6th  June, 1970,  oral interviews  of  all  the eligible candidates  were  held  for  being  considered  for promotion. Then  Administration Circular  No. 20  was issued introducing scheme of Written Examination for the first time for giving  departmental promotions.  The learned  judges of the High  Court were  of the view that perhaps this was done to introduce  element of objectivity in the test. Candidates who passed  the said qualifying examination were included in the ‘fit’  list and  became eligible  being  considered  for promotion to  the next  higher  post.  The  High  Court  was concerned, as  mentioned hereinbefore,  with  the  said  new scheme which is introduced by Circular dated 13th May, 1972.      Analysing the  said scheme,  the High  Court was of the view that  under the new scheme candidates from a particular centre numbering  twice the  anticipated vacancies  in  that centre alone were eligible to appear in the departmental 892 examination and  consequently to  qualify for promotion. The grievance of  the petitioners before the High Court was that under the  new scheme,  chance to  appear in the examination depended not on relative merits but merely on the fortuitous circumstances, namely,  the number of vacancies occurring in a particular  centre in  a  panel  year.  According  to  the petitioners, this had no nexus with the prupose of promotion viz.  to  secure  efficient  cadre  of  Staff  Officers  and therefore the  scheme, according to the petitioners, was bad in law.  The High  Court found  considerable force  in  this submission.      In the  impugned judgment  under appeal  the High Court relied on  Ramchandra Shankar  Deodhar &  Ors. v.  State  of Maharashtra &  Ors., [1974]  2 S.C.R.  216. According to the High  Court  the  promotion  on  the  basis  of  Centre-wise seniority was  opposed to  the said  decision of this Court. There, the  petitioners were  Tahsildars  in  the  erstwhile State of  Hyderabad. After  the  new  State  of  Bombay  was constituted with  territories drawn  from  various  existing States including  Hyderabad under  the States Reorganisation Act, 1956,  equation of  posts and determination of inter se seniority was  done by  the Allocated  Government  Servants’ (Absorption, Seniority,  Pay and  Allowances)  Rules,  1957. Under these rules of 1957, the Government of Bombay declared that the  posts of  Mamlatdar in  the former State of Bombay should be  deemed to be equivalent to the posts of Tahsildar from the  former State  of Hyderabad and the posts of Deputy Collector in  the former State of Bombay should be deemed to be equivalent  to the  posts of  Deputy Collector  allocated from the  former State  of Hyderabad. The recruitment to the posts of  Deputy Collector was provided for by Rules of 30th July, 1959  (called 1959 Rules) according to which vacancies

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 21  

to the  posts of  Deputy Collector  were to  be filled  from three sources  50% by  nomination on the basis of the result of  competitive   examination;  25%  by  directly  recruited Mamlatdars who  have put  in at  least seven  years’ service including the  period spent  on probation  and the remaining 25% by  Mamlatdars promoted  from the  lower  ranks  in  the revene departments.  The reservation  of 25%  in  favour  of directly recruited Mamlatdars was made by the second proviso of rule  (1) of the Rules. On 7th April, 1961 the Government laid down  the principles for regulating the preparation and revision of  select list  of Mamlatdars/Tahsildars fit to be appointed. It was held by this Court by a bench of five 893 learned judges  that the  second proviso  to rule (1) of the 1959 Rules  was void as being violative of Article 16 of the Constitution. This  Court was of the view that the procedure for promotion  to the cadre of Deputy Collectors followed by the State  Government was also invalid on the ground that it denied  equality   of  opportunity   of  promotion  and  was therefore hit  by Article  16 of  the Constitution and hence the Government resolution dated 7th April, 1961 was quashed.      What was  done in  the aforesaid  case was  to have  an integrated  service   of  Mamlatdars   for  the  purpose  of promotions to  Deputy Collectors’ grade which was admittedly a State-wise  grade and  that promotion  was on the basis of merit-cum-seniority. It  was found that select list based on merit and  seniority Division-wise  for promotion  to higher grade, viz.  that of  the Deputy  Collector and  these lists were liable  to be  varied from  time to  time on periodical assessment of  merits of  the incumbents  in that  list, and this Court  was of  the view that it might lead to injustice in that  if promotions  were made from these lists Division- wise there was a possibility of a less meritorious candidate with lesser seniority being promoted in preference to a more meritorious candidate elsewhere. In the instant appeal it is necessary to  consider the  question of  promotions from the Centre-wise cadre  to an  All India  Cadre and  not a  State cadre. If,  therefore, any  analogy or  parallel has  to  be sought, then  it must  be from  the All  India cadre  of the Government of  India service. It may be noted that in an All India Service  considerations other  than merit on seniority have to  be taken  into account.  In the appellant Bank, the procedure is to give a qualifying test just to ascertain the fitness for  upgradation. In  effect upgradation  is  really done on  the basis of seniority alone subject to fitness. In Deodhar’s case,  the emphasis was rather on merit rating and the discrimination  was implicit  against  more  meritorious candidates with  higher seniority.  But in  the instant case the appellant  Bank is an undertaking which comes within the Industrial Disputes  Act, 1947  and the  Class III employees are fully covered by the definition of the term "workman" in section 2(s)  of the  said Act  and one  of  the  principles normally applicable  in fixing their terms and conditions of service is  the Industry cum region principle. It was stated by this  Court in Hindustan Antibiotics v. Workmen, [1967] 1 S.C.R. 652 that those principles should also be 894 applied to  State-run industries.  The question  whether the recruitment to  the lowest  cadre of  officers viz.  Class A officers should  be essentially  from Class III employees by promotion directly  came up  for consideration by this Court in All-India  Reserve Bank Employees’ Association v. Reserve Bank of India, [1966] 1 S.C.R. 25 and this Court held that a workman can  raise a dispute on such a point. It was in that context that  a dispute  was in fact raised and a settlement

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 21  

under section 18(1) of the Industrial Disputes Act, 1947 was entered into with the recognised union namely All India Bank Employees  Association   on   7th   May,   1972,   and   the Administration Circular  AC-9 and  AC-8 dated 13th May, 1972 issued.      The High  Court in  the impugned  judgment proceeded on the basis  that in  fact the  Class  III  employees  of  the Reserve Bank  of India belonged to an All India Cadre freely transferable from  one place to another. This aspect will be dealt with later on.      The division  bench of  the Bombay  High Court  in  the decision under  appeal found  that the  ratio  of  the  said decision  in   Deodhar’s  case  applied  to  the  facts  and circumstances of the instant case because the cadre of clerk (Grade II)  was all  India cadre  and not  a local cadre and secondly  the   post  of  Staff  Officer  (Group  A)  was  a transferable one  even  in  practice  was  a  common  point. Examination was also held on All-India basis. Therefore, the High Court was of the view that even if it was held that the petitioner’s post  was not of All India cadre, it would make no difference  for applicability  of the principle laid down by this Court in Deodhar’s case (supra).      Promotion was  included in  the ambit  of  equality  of employment  or   appointment  under   article  16   of   the Constitution, according to the Bombay High Court. The Bombay High Court  noted that  there were very junior officers like respondents 4  and 5  before the  Bombay High  Court who had been posted  then at  Bhopal office.  The petitioners before the Bombay High Court were otherwise qualified and confirmed employees having  15 years  service to  their credit and yet they did  not get  the chance  to appear  in examination  as employees and some respondents got their chances even though they were  appointees of  1980 and  were not even confirmed. The 895 respondents 4  and 5 before the Bombay High Court were given the benefit  not on  the basis of comparative merit but only on the  basis,  according  to  the  Bombay  High  Court,  of fortuitous event  that there  had been  vacancies in  Bhopal office. Therefore,  the basis  on which  the scheme provided was promotion  according  to  the  vacancies  in  the  zonal offices. This  circumstance of  anticipated vacancies in the zonal offices  has no  nexus, according  to the  Bombay High Court, to  the merit-cum-seniority  aspect. The  Bombay High Court also  could not sustain the contention urged on behalf of the  appellant before  us that the scheme was contractual and  therefore  was  binding  on  the  petitioners.  It  was submitted that  the petitioners before the Bombay High Court and the  three respondents before us were not members of the union and  were  not  parties  to  the  agreement  mentioned before. Moreover,  according to the High Court, by agreement one could  not give  up one’s right. It was contended before the High  Court that  the validity  of the  scheme had  been upheld by  the decision of this Court in the case of Reserve Bank of India v. N.C. Paliwal & Ors., (supra) where one part of the  scheme came  up for  scrutiny, but  according to the High Court  as this  point was  not the  subject  matter  of scrutiny, the said decision did not affect the position.      The main  grounds on which the High court of Bombay set aside the  impugned portion  of the  circular which has been set out  hereinbefore was  the position that the presumption that the  staff from  which the  promotion was  made  namely Class III  employees, clerical  and non-clerical belonged to an All-India  cadre and  that  promotion  on  the  basis  of centre-wise seniority  was opposed  to the  decision of this

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 21  

Court in the case of R.S. Deodhar (supra).      The three  petitioners in  the court  below namely Shri C.N. Sahasranaman,  Shri R.  Raman and Shri S.D. Peshkar who were the  three staff  members  in  the  employment  of  the appellant Reserve  Bank of  India are  respondents  to  this appeal. Intervention  has been permitted by the Court during the course  of the proceedings by the All India Reserve Bank Employees’ Association, the recognised union who represented the majority  of the workmen, and the All India Reserve Bank Workers Organisation  who represented  the minority  of  the workers both of whom have been made party-respondents. The 896 other  interveners  are  All-India  Reserve  Bank  Employees Federation at  Hyderabad and  All-India Reserve  Bank  Staff Association. The  majority recognised  union as  well as the last mentioned  union are  supporting the stand taken by the appellant bank.      In order to appreciate the controversy in this case, it was highlighted  before us  that since  the inception of the bank, separate  department-wise and group-wise seniority for promotion to  the cadre  of officers  and non-officers  were maintained by the bank.      In 1972,  following with  recognised union,  a combined seniority list  was maintained as a result of the settlement and the two circulars A.C. Nos. 8 and 9 both dated 13th May, 1972. These are two annexures being Annexures ’A’ and ’B’ to the special  leave petition  to this  Court which are in the Paper Book  of this  appeal. Annexure  ’A’  deals  with  the scheme for  combined seniority list and switchover from non- clerical to  clerical cadre.  It is not necessary to set out in extenso the detailed scheme. In this scheme all employees in  Class   III  non-clerical  cadre  substantively  in  the categories that  have been listed as groups I, III, IV and V in the  annexure who were graduates or had passed both parts of Institute  of Bankers  Examination would  be eligible  to exercise an  option in accordance with sub-clause (a) or (b) of clause 2 to be transferred, automatically and without any screening, to posts in the clercial cadre and also to vacant and other  posts than  purely stop gap or short term nature, subject to  sub-clause (b) mentioned in the scheme. Combined seniority scheme  introduced by the Reserve Bank to equalise opportunity of confirmation and promotion of class under the optee scheme  came up  for consideration  by this  Court  in Reserve Bank of India v. N.C. Paliwal & Ors., (supra). There the Court  noted that at every centre of the Reserve Bank of India, there  were five  departments, the General Department and four  Specialised  Departments.  There  was  a  separate seniority list  for the employees in each Department at each centre and  confirmation and promotion of employees was only in the  vacancies arising  within their  Department at  each centre. There  were two grades of clerks in each Department, namely, Grade  I and Grade II. The pay scales of Grade I and Grade II clerks in all the 897 departments were  the same  and their  conditions of service were also  identical. There  was  automatic  promotion  from Grade II  to Grade  I. It  is not  necessary to  set out  in details the  consequences. But it may be mentioned that this optee  scheme  gave  rise  to  dissatisfaction  amongst  the employees in  the General  Department and they claimed equal opportunities for  having combined seniority but justified a separate seniority  list on  the ground  that work  in  each Department   was    of   a    special   nature   and   their interchangeability was undesirable and hard to achieve. As a result of  the recommendations  of  the  National  Tribunal,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 21  

however, the  Reserve Bank  introduced the optee scheme 1965 as a  first step  towards equalisation of opportunity. Under the scheme,  the  option  to  go  over  to  the  specialised Department was  confined to  confirmed Grade  II clerks  and officiating Grade  I class  in the general department. If he exercised option,  he was eligible to be selected. If he was selected, he  would be entitled to be absorbed only as Grade II clerk  in one  of the  specialised departments  with  the result that  if he was an officiating Grade I in the General Department at  the time  of the  exercise of  the option, he would lose  the benefit  of officiation  in Grade  I in  the general department  as also  the monetary benefit of Rs. 15. His seniority  in the  cadre  of  Grade  II  clerks  in  the specialised department  in which  he was  absorbed would  be determined on  the basis of his length of service calculated from the  date of  his recruitment if he was a graduate when he joined  service, or from the date of his graduation if he became a graduate whilst in service.      The petitioners  in that  case and some others were, at the time  of introduction  of the  Optee  Scheme,  confirmed Grade II  clerks in  the general department and some of them were officiating  in  the  general  department  as  Grade  I clerks. They exercised the option under the Optee Scheme and were absorbed  substantively as confirmed Grade II clerks in one or the other of the specialised departments. The clerks, other than  the petitioners were, in due course, in order of seniority, promoted  as officiating  Grade I clerks in their respective specialised  departments. But  before the turn of the  petitioners  for  promotion  came,  a  new  Scheme  was introduced on  13th May,  1972 as  a  result  of  continuous agitation  by   the  employees   for  full  equalisation  of opportunities  between   the  general   department  and  the specialised departments. The 898 scheme was  known as  the Combined  Seniority Scheme, and it superseded the  Optee Scheme.  It consisted  of two parts as mentioned  hereinbefore.   One   part   provided   for   the integration of  the clerical staff of the General Department with the clerical staff of the Specialised Departments, this is annexure  ’A’ of  the present  Paper Book  and the  other which is  annexure ’B’  in the  present Paper  Book for  the integration of  the non-clerical  staff  with  the  clerical staff in all the Departments. The Combinted Seniority Scheme gave  an   option  to   the  non-clerical  employees  to  be transferred to  posts in  the clerical  cadre,  but  in  the interest of efficiency, prescribed a qualification that only those employees  in non-clerical  cadre would be transferred who were  either graduates  or  had  passed  both  parts  of Institute of  Bankers’ Examination.  For  determining  their seniority  vis-a-vis   those  in  the  clerical  cadre,  the Combinted Seniority  Scheme adopted  the rule  that  1/3  of their total  non-clerical service  until 7th  May, 1972 (the date on  which agreement was reached at between the Bank and its employees on the terms of the Combined Seniority Scheme) or the  date of  acquiring the qualification should be taken into account.      Allowing the  appeal from  the High Court and upholding the validity  of the  Combined Seniority  Scheme, this Court held that  assuming that  the Reserve  Bank was  State under article 12  of the  Constitution and  therefore, subject  to articles  14  and  16  of  the  Constitution,  by  the  mere introduction of  the Optee  Scheme, no  promise or assurance could be  spelt out  on the part of the Bank not to take any steps towards  integration of other employees not covered by the Optee  Scheme. The  Reserve  Bank,  could  not,  on  any

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 21  

principle of  law or  by any process of implication, be held bound  to   hold  its   hands  in   the  matter  of  further integration, until  the petitioners  were  promoted  in  the Specialised Departments. The only object of the Optee Scheme was to  equalise the  promotional opportunities  of Grade II clerks in  the General  Department with  those of  Grade  II clerks in the Specialised Departments by giving an option to the former  to be  absorbed in  the latter.  The object  was carried out  as soon  as the  petitioners and other Grade II clerks in  the General  Departent opted to be transferred to the Specialised  Departments.  Then  they  became  Grade  II clerks  in  the  specialised  departments  having  the  same promotional opportunities as the original Grade II clerks in the 899 specialised departments. There was no assurance given by the Bank that  the promotional  opportunities available to Grade II clerks  in  the  Specialised  Departments  would  not  be diminished. This  Court in the said decision was of the view that the  Combined  Seniority  Scheme  did  not  affect  the promotional opportunities  of all  Grade II  clerks  in  the Specialised Departments,  irrespective of  whether they were original  or   transferee  Grade   II  clerks.  It  did  not discriminate between transferee Grade II clerks and original Grade II  clerks. There  was no breach of the principle that the promotional  opportunities of transferee Grade II clerks should be  equal to  those of  original Grade II clerks. The fact that  some of  the  Grade  II  clerks,  junior  to  the petitioners, had  become  Grade  I  clerks  in  the  general departments, and  so could  be equated  only  with  Grade  I clerks  in   the  specialised   departments  was   a  wholly fortuitous result, according to this Court. This Court noted that it  might cause  heart-burning amongst  the petitioners that they  were still  continuing to  be Grade II clerks but whenever services  were integrated,  some hardship was bound to result  as a  necessary consequence  of integration. This Court further  held that Reserve Bank did not undertake that it would  not  take  any  steps  for  bringing  about  total integration  of   the  clerical   services  until   all  the transferee Grade  II clerks  were  promoted.  The  Bank  was entitled to  introduce the  Combined Seniority Scheme at any time it  thought fit  and its validity could not be assailed on the  ground that it was introduced at a time when some of the transferee Grade II clerks still remained to be promoted and so  was discriminatory  against them. The fact that some transferee Grade II clerks had already obtained promotion as Grade I  clerks in  the Specialised  Departments by the time the Cabinet Seniority Scheme was introduced, was all part of the exigencies  of service  and in law no grievance could be made against it.      The integration  of different  cadres  into  one  cadre could not  be said  to involve any violation of the equality clause, according  to this  Court. Therefore, the first part of the  scheme for combination stands affirmed by this Court in N.C. Paliwal’s case (supra).      It may  be mentioned  that it  is the  case of the Bank that the  settlement and the circulars namely Circulars Nos. 8 and  9 referred to hereinbefore both dated 13th July, 1973 were the 900 culmination of  a long process of negotiation and assessment by the  bank. Reference  was made to the observations in the Award of the National Tribunal presided over by Justice K.T. Desai. Indeed,  this court  referred to the said decision of Justice K.T.  Desai at  page 382  and quoted  from the  said

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 21  

report. Justice  Desai had  observed that  it was  desirable when it  was possible,  without detriment  to the  Bank  and without affecting  the efficiency,  to group  employees in a particular category  serving in different departments at one Centre together  for the  purpose of  being  considered  for promotion that  a common  seniority list  of such  employees should be  maintained. The  same would  result in opening up equal avenues  of promotion  for a large number of employees and there  would be  lesser sense of frustration and greater peace of mind among the employees. These observations of the National Tribunal  were also  approved by  this Court in All India Bank  Employees Association  v. Reserve Bank of India, [1966] 1 S.C.R. 25 at 57.      In Reserve  Bank of  India  v.  N.C.  Paliwal  &  Ors., (supra), at  page 385  of the report, it was observed, inter alia, as follows :           "The  Association   continued   to   agitate   for           acceptance of  its demand  and  ultimately,  as  a           result of  negotiations, an  agreement  dated  7th           May, 1972  was arrived at between the Reserve Bank           and the  Association by  which the  demand of  the           Association was  substantially  conceded  and  the           principle  of   a  combined   seniority  list  was           accepted by  the Reserve Bank. The petitioners and           some other employees were, however, not members of           the Association  and they  refused to  accept  the           terms of this agreement and hence the Reserve Bank           issued a Circular dated 13th May, 1972 introducing           a Scheme  for combined seniority list and switched           over from  non-clerical  to  clerical  cadre  with           effect  from   7th  May,  1972.  This  Scheme  was           substantially in  the same  terms as the agreement           dated 7th  May, 1972  and we  shall hereafter, for           the sake  of convenience,  refer to this Scheme as           the Combined Seniority Scheme. 901      It may be mentioned as was placed before us that before a combined  list at the centre was introduced, the provision was based  on department-wise  seniority at  each centre and the working  of the  Reserve Bank  department-wise had  been explained in  the Paliwal’s  case by this Court at pages 380 and 381 of the report. It may be mentioned that the Circular AC-9 dated  13th May,  1972 which  was issued  as  mentioned before following the statutory settlement dated the 7th May, 1972 under  section 18(1)  of the  Industrial Disputes  Act, 1947 was  upheld in  Paliwal’s case  at page  380-382.  This Circular was  not challenged  before the  Bombay High Court. The resulting  position is that the centre-wise seniority is the established  position and whatever promotions have to be effected  must   be  based  on  the  centre-wise  seniority, according to  the appellant.  The other part of the Circular i.e. Circular  AC-8 dated  13th May,  1972  only  laid  down certain procedural  aspects of  promotion from  clerical  to non-clerical  (Officer  cadre)  and  even  if  any  part  of Circular AC-8  was set  aside, it  would  not  substantially affect the  stand of  the appellant Bank that the promotions are and would be made on the basis of combined seniority. It is the  case of  the Bank  that the principle of centre-wise seniority was  evolved  after  considerable  discussion  and debate with  all the  concerned  interests,  viz.  who  were represented by  the recognised  union,  i.e,  the  All-India Reserve Bank Employees’ Association and all the view points, according to  the Bank,  were  considered  by  the  National Tribunal and  this Court  had, as mentioned hereinbefore, in the two  decisions on  two different  occasions, upheld  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 21  

validity of  the combined seniority scheme; namely All India Reserve Bank  Employees’  Association  v.  Reserve  Bank  of India, at page 57 and Reserve Bank of India v. N.C. Paliwal, (supra) at pages 380-382.      Indeed in  the last  mentioned case  at page  394,  the validity  of   the  combined   seniority   list   has   been subsequently upheld by this Court.      The controversy  in this  appeal lies  within a  narrow area but  it has  been urged  against  a  vast  compass  and necessarily would  require examination of some aspects which are strictly not germane to the present issue.      It has  to be  borne in  mind  as  has  been  mentioned herein- 902 before that  A.C. 9  dated 13th  May, 1972  has received the acceptance and  approval of  this case in Paliwal’s case and A.C. 9 and A.C. 8 form an integral part of the promotion and regulation of the employment of the staff.      It was  further emphasised  from the  point of  view of justice and  fairness that for a large majority of employees of the  Bank, the  maintenance of  centre-wise seniority was essential. If  Class III clerical and non-clerical staff are treated as an All-India cadre, both the employees as well as the Bank  would find  themselves  in  a  difficult  position because the  employees will  render themselves  to be freely transferable from  one area  to another and particularly for those employees  who are  being transferred  outside Bombay, Calcutta  and   Delhi,  may  find  it  extremely  difficult, according to  the Bank, to get housing accommodation (as the Bank  woud   not  be   in  a   position  to   offer  housing accommodation to all its employees). In such a situation, it was submitted,  it would  become a problem of discipline for enforcement of  transfer made  if the same is refused by the employees. It  was, therefore,  in those  circumstances that taking a  pragmatic view the Bank had so far not insisted on establishing an  All-India cadre  as far  as the non-officer staff was concerned. To add to the problem of accommodation, there would  be the  problem of  children’s education at the new centres.  The integration  of various centre-wise grades into  one  All-India  grade  would  also  pose  considerable administrative problems.      In V.T.  Khanzode v. Reserve Bank of India, (supra), it was noted  that the  private interest of employees of public undertakings should  not override  public  interest  and  an effort had  to be  made to harmonize the two considerations. No scheme  governing service  matters could be foolproof and some section  or the  other of  employees was  bound to feel aggrieved on  the score  of its expectations being falsified or remaining  to be fulfilled. Arbitrariness, irrationality, perversity and  mala fide will, of course, render any scheme unconstitutional but  the  fact  that  the  scheme  does  no satisfy the  expectations of  every employee was no evidence of these.  It was  further observed  that the contentions of variations of  the service  rules had  to be  judged in  the light of  the historical data governing the constitution and Management of  the Services under Reserve Bank of India from time to time. Without an 903 awareness of  the history  leading to  the events  which the petitioners have  challenged as  unconstitutional, it  would not be  possible either  to apprciate  the  position  or  to provide an  answer to  it. These  observations were  made in connection with  the evaluation of integrated seniority list for the officers Grade B and above.      In Kamal  Kanti Dutt  & Ors.  v. Union of India & Ors.,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 21  

[1980] 3  S.C.R. 811, at pages 841-842 this Court emphasised that in matters like formulation of seniority list where, in respect of  the rules  of promotion,  more than one view was possible and that a choice had to be necessarily conditioned by several  considerations ensuring  justice to  as many  as possible and  injustice to  as few,  it was not safe to test the constitutionality  of service rule on the touch stone of fortunes of individuals.      This  Court   had  also  observed  that  the  right  of promotion  should  not  be  confused  with  mere  chance  of promotion. Though  the right  to be considered for promotion was a  condition of  service, mere chances of promotion were not. See Mohd. shujat Ali v. Union of India, [1975] 1 S.C.R. 449. See  also in  this connection  the observations in R.S. Deodhar v.  State of  Maharashtra, (supra)  at  p.  230  and Reserve Bank  of India v. C.T. Dighe, [1982] 1 S.C.R. 107 at 121-122.      It  is   apparent,  therefore,   that  the  chances  of promotion in  some areas occur more often in smaller centres than in  other bigger  centres like  Bombay, Calcutta, Delhi but that  is fortutious  and would  not  really  affect  the question,  and   violate  articles   14  and   16   of   the Constitution. The  justice of  the case  should be judged in conjunction with  other factors, the convenience, the future of the family etc.      The High Court proceeded, inter alia, on the basis that the fact that Class III employees of the Bank belonged to an All-India  cadre  freely  transferable  from  one  place  to another.      Regulation 31  of the  Reserve Bank  of  India  (Staff) Regulations, 1948  which is  in Chapter  IV namely; Conduct, Disciplince and Appeals, is as follows :           "Unless in any case it be otherwise distinctly 904           provided, the  whole time  of an employee shall be           at the  disposal of  the Bank,  and he shall serve           the Bank  in its  business in such capacity and at           such  place  as  he  may  from  time  to  time  be           directed."      Regulation 31  as indicated is subject to the condition that  ’unless   in  any  case  it  be  otherwise  distinctly provided’. In  the instant  case,  it  has  been  distinctly provided in  the appointment  letters as  to where the Class III employees  of the  Bank are  liable to  serve.  See  for instance, the  specimen copy  at page  107 of the Paper Book which clearly, inter alia, provides as follows :           "He/She is liable to be posted either as Coin-Note           Examiner Gr.II  or as  Clerk Gr.II  in any  of the           department of the Bank at Bombay (Fort) or Byculla           Offices."      All appointment  letters issued  to all  staff  members appointed in Class III and below ever since the inception of the Bank  contained, according  to the  Bank,  identical  or similar provision  specifying the  offices in  which of  the Bank these  employees are  required  to  work.  It  appears, therefore, there  was  definite  provision  contrary  to  as contemplated by  Regulation 31 of the Reserve Bank of India, (Staff) Regulation 1948 and therefore the general provisions of  Regulation   31  would  not  have  any  application.  In contrast, the appointment letters issued to the officers had always invoked  general provisions  of Regulation  31 giving full power to the management of the Bank to post or transfer the officers  in any  office situated  in  India.  For  this purpose, specimen  appointment letter to an officer in Grade A may be referred to. See in this connection pages 98 to 108

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 21  

of the paper book wherein it is stated in (xi) as follows:           "Posting and liability for transfer:           You are  liable to be posted in any of the offices           of the  Bank and to work in any of its departments           or  the   departments/offices  of   its  associate           institutions as the Bank may decide. You will also           be liable  for transfer  to any  place in India as           the Bank  may decide  from time  to  time  without           payment of  any allowance  other  than  travelling           allowance." 905      It was  further submitted  and it appears that there is good deal of substance in this that if an All-India cadre is enforced in  respect of Class III employees, it would result in injustice  to all  the employees  in that  class  at  the smaller centres  for a  considerably  long  period  of  time leading to  industrial unrest.  The result  of applying  the principles of an All-India cadre for this class of employees would be that the senior-most in that whole cadre All-India- wise would  alone have  to be  considered for  promotion. In such a case, for a considerable long time, only employees of the older  offices, namely, Bombay, Nagpur, Madras, Calcutta and Delhi  will have  to be  considered, they  being by  far senior-most  among   the  All-India  employees  and  such  a consideration and empanelling would continue for a very long time as the principal basis of the settlement was not one of promotion  on  merit  but  rather  an  upgradation  on  mere seniority, the  only qualification  being an  examination to determine  fitness.  Once  fitness  was  determined  by  the examination, the  ranking in  that examination  did not come into play  thereafter and  the  successful  candidates  were again listed  according  to  centre-wise  seniority  in  the matter of  upgradation and promoted as and when vacancies at that centre  occur. It was submitted that the recruitment of Class III employees at the lowest grade was made centre-wise by the  Managers of  the offices  concerned and not from one source  at   the  centre   as  such   recruitment  would  be administratively not feasible, to be undertaken.      It has  to be borne in mind in deciding the controversy in this  case that  in the  course of  this litigation on or about 20th  October, 1982,  this Court by an order suggested the appellant  Bank that  it might  frame a  new scheme  for promotion, removing  as far  as possible any imbalances that might be  existing in  the prevailing  scheme. The appellant Bank, thereafter,  made certain  suggestions which  were not acceptable to  all the  unions and  more particularly to the recognised union.  In the  circumstances, the Bank could not proceed with the suggested scheme.      Thereafter, the  officers of  the appellant  Bank  held discussions with the representatives of the recognised union viz., the All-India Reserve Bank Employees’ Association, and further modified  the scheme  agreed to under the settlement dated 7th May, 1972. 906      As a result of the discussion with the employees of the Bank, certain  decisions were taken regarding the principles governing recruitment and promotion for staff officers Grade A. There  are in  the affidavit  affirmed on  22nd February, 1983 by  Shri Pradeep  Madhav Joshi, the Joint Chief Officer in the  Personnel Policy  Department of  the Reserve Bank of India along with the letter dated 21st February, 1983.      It was  stated therein  that the  principles  governing recruitment and  promotion for Staff Officer Grade A evolved in 1972  be, subject to the approval of this Court, modified on the  following terms;  "(i) 10% of the vacancies of Staff

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 21  

Officers Grade  A. will  be filled  in exclusively by direct recruitment. However,  such of  the members of the staff who comply  with   the  eligibility  requirements  as  might  be prescribed from time to time for direct recruitment, subject to relaxation  in respect of age requirement as the Bank may decide, will be eligible to compete in the selection test. (ii) Of the remaining 90% of the vacancies, 75% thereof will be filled  in on  the basis  of a  written examination  i.e. qualifying  test   in  accordance   with  the   scheme   for promotions: Staff Officers Grade A annexed to Administrative Circular  No.8   dated  13th   many,  1972  subject  to  the conditions  that   no  employee  will  be  admitted  to  the qualifying test at any centre unless he has put in a minimum qualifying period  of service  of three  years  in  clerical grade as on a notified dated. (iii) The  residuary portion,  i.e. 35%  of the  90% of  the vacancies or  in other  words 22-1/2% of the total vacancies to the  post of Staff Officers Grade A would be filled in on the basis of an All-India Merit Test to be prescribed by the Bank in  consulation with the Reserve Bank of India Services Board ordinarly,  and employee who had put in a minimum of 9 years’ service  in Class  II would  be eligible  to take the test. If,  however, sufficient  number of  employees with  9 years’ service  were not available at any point of time, the Bank might  suitably reduce  the  conditions  of  qualifying service so  that candidate  to the extent of at least thrice the  number   of  vacancies  are  available  for  the  test. Notwithstanding  such   reduction  in   qualifying   service necessitated in  the circumstances indicated, in the case of non-clerical  staff   who  are  non-graduates,  they  would, however, be eligible for taking the 907 test only  on completion  of  9  years  service.  Successful candidates would be empanelled in the central panel in order of their comparative merits and they would be considered for posting in  order of their position in the central panel as, when and  where, the  vacancies to  posts of  Staff  Officer Grade A in any of the offices of the Bank might arise."      The  appellant   Bank  addressed   a  letter   to   the Association incorporating  the  aforesaid  decision  of  the appellant Bank  on the  modification of principles governing recruitment and  promotion for Staff Officer Grade A and the Association has, by its letter confirmed the same.      It was  submitted  on  behalf  of  the  Bank  that  the modified scheme envisages appointment of a candidate for the post  of   Staff  Officer  Grade  A  through  holding  three different test,  viz. (i)  qualifying test  on the  basis of centre-wise seniority  and estimation  of vacancies of Staff Officers Grade  A for  each centre,  (ii) merit test for all employees with  a minimum  length of  service of  9 years on all-India  basis.   Successful  candidates   who   will   be empanelled  in   the  central   panel  in   order  of  their comparative merits  would be considered for posting in order of their  position in  the central panel, as, when and where the vacancies  to the  post of Staff Officers Grade A in any of the  offices of the Bank might arise; and (iii) Selection test for  direct recruitment of candidates for Staff Officer Grade A  for inducting fresh blood for Staff Officer Grade A which is  the base  level of  officer  and  first  level  of supervisory cadre.  It was  submitted on  behalf of the Bank that the  modified scheme  achieved just  balance keeping in view the  interest of  the employees as a class i.e. both of senior and  experienced employees  and junior  and qualified employees on  the one  hand and the interests of the Bank on the other.  It was  further stated  that earlier, 82-1/2% of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 21  

the vacancies  were allotted to be filled on the centre-wise basis. Under the modified Scheme, the percentage was brought down to  67-1/2. It  was necessary to make gradual change as the total  change  in  the  existing  procedure  would  have created industrial  unrest  and  would  have  led  to  other imbalances in operation.      Further it  was  submitted  that  the  modified  scheme provided  that   no  employee   would  be  admitted  to  the qualifying test at any centre unless he has put in a minimum qualifying 908 period of  service of  three years in clerical cadre as on a notified date.  It was  submitted on behalf of the Bank that one of  the factors  that influenced  the High  Court in the judgment under  appeal was  that raw  junior employees  from Bhopal Office  were eligible  to appear  for the  qualifying test, as  apparent from  the decision  under appeal.  It was submitted that  with the  modification, no  employee who had put in less than three years of service would be admitted to the qualifying  test and  the grievance  that even temporary and junior  employees would  become eligible would no longer survive.      The correctness  or otherwise  of the  decision of  the Bombay High Court in the light of the modified scheme has to be judged from various angles.      On  behalf   of  the  opposing  respondent,  Shri  C.N. Sahasranaman made  his  submissions  orally  in  person.  He submitted that  at pages 296 to 299, 306, 307 and 310 of the Paper Book,  the appellant  had admitted  that the  impugned scheme of  promotions  had  led  to  serious  imbalances  in opportunities for  appearing at  the examinations. With this admission, it  was urged  by respondents appearing in person that the  question of  law raised by them in their affidavit have been  concluded by  themselves and therefore they could not have  any grievances  whatsoever  against  the  impugned judgment of  the Bombay  High Court.  It was  submitted that matters relating to the imbalances contained by the impugned Circular No.8  had already been considered at length by this Court and  this Court  had directed on 20th October, 1982 to formulate a  new  policy  removing  the  imbalances  in  the impugned policy.      It was  submitted  by  the  opposing  respondents  that equality right of Class III employees which was an All-India Institution would  be affected  even in  the modified scheme suggested by  the Bank.  It  was  urged  that  it  would  be destructive of  the All-India stature of the Reserve Bank of India.      The main  grievance of  the respondents  was that there was violation of the constitutional right and it will hamper development of an All-India Institution and All-India cadre.      Regarding reference to the case of N.C. Paliwal, it was submitted on behalf of the opposing respondents that this 909 Court had  not struck  down the  impugned  circular  on  the ground that  it  did  not  ensure  equality  of  chances  of promotion but  on the  ground that the scheme did not ensure equality of  opportunity to be considered for promotion. The equality of  chances of  promotion and  the equality  to  be considered for  promotion, according to the respondents, are two different questions and the grievance of the respondents was that  there was  denial of equality to be considered for promotion.      Whether there  has been  denial of equality of the view of promotion  or any  constitutional right  infringed or not cannot be  judged, where  interest of large number of people

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 21  

are concerned,  in the  abstract. Vast  majority, indeed the overwhelming majority  of the  workmen are  in favour of the scheme as  evolved by  the Bank  as modified  as it would be apparent from  the submissions  urged on behalf of All-India Reserve Bank  Employees’  Association  impleaded  as  party- respondent in  this appeal as well as All India Reserve Bank Employees’ Federation, Hyderabad. It has to be borne in mind that in  service jurisprudence  there cannot  be any service rule which  would satisfy  each and  every employee  and its constitutionality has to be judged by considering whether it is fair,  reasonable and does justice to the majority of the employees and fortunes of some individuals is not the touch- stone. See in this connection the observations of this Court in Kamal  Kanti Dutt  & Ors.  v. Union  of India  and  Ors., (supra).      Furthermore it  appears to  us that  Circular No.9 is a counterpart of  Circular No.8.  Circular No.  8 having  been held valid,  Circular No.  9 must  also follow  to be  good. Circular No.  8 cannot  stand in vacuum and in isolation. It is a  step to the fulfilment of the object to be achieved by Circular No.  9. Viewed  in that  point of  view  and  as  a feasibility and  having regard  to the factors and in regard to the  history of  Reserve Bank  employees, we  are of  the opinion that  the scheme  as modified  by the  Bank  and  as accepted by vast majority of their employees is a proper and just scheme  and does not suffer from the vice of article 14 or article 16 or any other constitutional guarantees.      It is  well to bear in mind the fact that settlement of disputes by direct negotiations or settlement through 910 collective bargaining  is always  to be  preferred for it is best  suited   for  industrial   peace  which   the  aim  of legislation for  settlement  of  labour  disputes.  See  the observations in  New Standard  Engineering Co.  Ltd. v. N.L. Abhyankar and  Ors., A.I.R.  1978 S.C. 982 at 984 = [1978] 2 S.C.R. 798.  This view  has again  been reiterated  by  this Court in  Tata Engineering  & Locomotive  v. Their  Workmen, A.I.R. 1981  S.C. 2163  = [1982]  1 S.C.R. 929. The order of this Court  dated 2nd  May, 1984  and the referendum and the result thereof have been set out hereinbefore.      We may,  however, note  that about the proper manner of holding this  referendum, certain  doubts were  expressed at the  time   of  hearing   of  this  appeal.  The  Referendum undoubtedly indicates  that majority of the employees are in favour of  acceptance of the modified settlement. In matters of service  conditions, it  is difficult  to evolve as ideal set of norms governing various conditions of services and in grey area  where service  rules operated,  if more  than one view is  possible  without  sacrificing  either  reasons  or common-sense, the  ultimate choice  has  necessarily  to  be conditioned by several considerations ensuring justice to as many as  possible and  injustice to  as  few.  See  in  this connection the  observations in K.K. Dutta v. Union of India (supra) at  page 841. These principles, however significant, do not  authorise the  majority of  the employees to trample upon  the   constitutional  guarantees   or  rights  of  the individual or  minority employees. Majority cannot thwart or barter away the constitutional rights of the minorities. The constitutional guarantees  are to  protect this very danger. But in judging the content of the constitutional rights, the entire perspective  of the  equality of opportunity here and denial of equal right in public employment have to be viewed in a  fair, reasonable  and just perspective. Viewed in that light,  it  is  true,  there  may  be  individual  instances exemplifying injustice by postponing or delaying the chances

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 21  

of promotions  of the  contesting respondents  yet that does not deny  them their  constitutional  right  in  its  proper measure, and  the considerations  that have weighed with the making of  the modified scheme and in the light of the other considerations mentioned  hereinbefore, we must observe that with whatever  care and objectivity or foresight any rule is framed, some  hardship, inconvenience  or injustice might to result but the 911 paramount  consideration   is  the   reconciliation  of  the conflicting claims  of two important constituents of service one which  brings fresh  clerical employees  and  the  other mature experience.  There has  been a  happy merger of these two considerations  in  the  scheme  proposed  and  in  that merger,  no  violation  of  the  guaranteed  rights  of  the opposing respondents have occurred.      It has  further to  be borne in mind that the promotion scheme having  been evolved  after careful consideration and having been  in operation  ever since  the inception  of the Bank with  modification from time to time as a result of the negotiations under the Industrial Disputes Act should not be modified drastically.  In such  matters  one  should  hasten slowly.      In the premises we affirm the scheme as modified by the second modification  referred to  hereinbefore in the letter dated 21st  February, 1983 and as explained in the affidavit of Pradeep  Madhav Joshi  filed on  22nd February,- 1983. We further direct  that the  adhoc promotions  made  under  the directions of  this Court  in terms  of the Order dated 22nd May, 1984  be regularised.  The  opposing  respondents  have appeared in person and have made submissions. They have made valuable contributions. The constitutionality of a scheme or if there is a violation of a right can only be decided if it is questioned.      In that  view of  the matter  the opposing  respondents should be  amply compensated.  We award  cost  of  Rs.  5000 jointly to them or if they are appearing singly then singly. Amounts already  paid by the Bank should be adjusted against the amount  to be  paid. If  more amounts than Rs. 5000 have already been paid then nothing need be refunded or paid. The decision of  the Bombay  High Court is set aside. The appeal is  allowed   and  the   order  of  the  Bombay  High  Court substituted by the order mentioned hereinbefore.      Civil Misc.  Petition No.  14834 of  1985 - application for intervention  and Civil Misc. Petition No. 14822 of 1985 application for  impleading are  allowed and are disposed of along with the above order. S.R.                                         Appeal allowed. 912