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                                                         REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2760 OF 2013  (ARISING OUT OF SLP (CIVIL) NO.16961 OF 2008)

Chairman, Rushikulya Gramya Bank … Appellant

Versus

Bisawamber Patro & Others …Respondents

WITH  

CIVIL APPEAL NO.2761 OF 2013  (ARISING OUT OF SLP (CIVIL) NO.17546 OF 2008)

WITH  

CIVIL APPEAL NO.2762  OF 2013  (ARISING OUT OF SLP (CIVIL) NO.17974 OF 2008)

WITH  

CIVIL APPEAL NO.2763 OF 2013  (ARISING OUT OF SLP (CIVIL) NO.17977 OF 2008)

WITH  

CIVIL APPEAL NO.2764 OF 2013  (ARISING OUT OF SLP (CIVIL) NO.18417 OF 2008)

WITH  

CIVIL APPEAL NO.2765 OF 2013

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(ARISING OUT OF SLP (CIVIL) NO.18898 OF 2008)

WITH  

CIVIL APPEAL NO.2766 OF 2013  (ARISING OUT OF SLP (CIVIL) NO.19292 OF 2008)

AND

CIVIL APPEAL NO.2767  OF 2013  (ARISING OUT OF SLP (CIVIL) NO.19301 OF 2008)

J U D G M E N T

Aftab Alam,J.

1.          Leave granted in all the special leave petitions.  

2.         All the appeals are at the instance of a Regional Rural Bank, namely,  

Rushikulya Gramya Bank, and the matter relates to promotion from one scale to  

another.   Out  of  the  eight  appeals,  six  relate  to  promotion  from  Junior  

Management Scale-I to Middle Management Scale-II and in the remaining two  

appeals (arising from SLP (Civil) No.17974 of 2008 and SLP(civil) No.18898  

of 2008),  the matter  relates  to promotion from Clerk to Junior Management  

Scale-I.  

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3.      The short question that arises in these appeals is whether it is open to  

the management of the Bank to lay down a benchmark, besides the criteria fixed  

by the rules for grant of promotion on seniority-cum-merit basis.  

4.     The appellant - bank issued a circular No.024/2004-05, dated June 23,  

2004  notifying  the  vacancies  inter  alia in  the  seventeen  posts  of  Middle  

Management  Scale-II  and  eight  posts  of  Junior  Management  Scale-I.   The  

circular  stated  that  the  process  of  promotion  shall  be  conducted  as  per  the  

promotion rules  of  the Government  of  India.   For  promotion to  the post  of  

Middle  Management  Scale-II,  the  zone  of  consideration  was  four  times  the  

number of vacancies and for promotion to the post of Junior Management Scale  

– I, all eligible candidates were permitted to take the exam.

5.        The rules governing promotion from Junior Management Scale-I to  

Middle Management Scale-II, in so far as relevant for the present, are as under:-  

*2 (a) to (c) xxxxxxxx

(d) Whether promotion to be made on seniority basis or merit:

         Promotion shall be made on the basis of seniority-cum-merit.  

(e) Eligibility:                      xxxxxxx  

                   (f) Mode of Selection:          The         Selection        of          the  candidates  shall  be  made  by  the  committee on the basis of written  test,  interview  and  assessment  of  Performance Appraisal Reports for  

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the  preceding  five  years  as  an  officer in Sealed/Field Supervisor.  

(g) Composition of  Committee: xxxxxxxxx

(h) Reckoning of the  minimum eligibility: xxxxxxxxx

(i) Number of candidates  to be considered for promotion: xxxxxxxxx

(j) Selection process for promotion: The  selection   shall    be   on   the  

basis of performance in the written  test,  interview  and  performance  Appraisal  Report  for  preceding  five  years  as  per  the  division  of  marks given below.  

(A) Written Test: 60 marks

(B) Interview: 20 marks

(C) Performance Appraisal Reports: 20 marks

TOTAL marks: 100 marks

(A) Written test (60 marks)

The candidates shall be required to appear for written test  comprising of two parts viz. Part (A) covering Banking Law  and practice of Banking and Part (B) covering Credit Policy,  Credit Management including Priority Sector, Economics and  Management.  

                   :60 marks allotted written test shall be further divided as under:

Part “A” 30 marks Part “B” 30 marks

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A  list  of  only  those  candidates  who secure  minimum 40% marks  in  each  part  shall  be  prepared  and  such  candidates shall be called for interview.  

(B) Interview (20 marks):

There shall be no minimum qualifying  marks for the interview.  

(C) Performance appraisal Reports (20) marks):

Performance Appraisal Reports for the preceding five years shall  be considered for the purpose of awarding marks for promotion.”  

       In case of promotion from Clerk to Junior Management Class-I scale  

the division of marks is as under:-

“(A) Written test : 70 marks

(B) Interview marks : 20 marks

(C) Performance Appraisal : 10 marks.  

      Reports

Total Marks : 100 marks.”

70 marks allotted to written test are further divided as under:   

“English : 35 marks

Bank Law Practice : 35 marks

Total Marks : 70”

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6.        A candidate in order to qualify must secure a minimum of 40 per cent  

marks each in English and banking law practice.

7.       The  appellant  –  bank,  in  addition  to  the  requirement  of  40%  

qualifying marks in the written test further fixed the qualifying mark of 60% for  

general  candidates  and  55%  marks  for  SC/ST  candidates  on  the  aggregate  

marks comprising written test, performance appraisal reports and interview.  

8.       The names of all candidates who got 60% or above in the aggregate  

were put in the list for promotion strictly as per their seniority. All candidates  

were promoted in order of seniority, irrespective of anyone among them having  

got marks in excess of 60% in the aggregate.  

9.      The respondents in each of the appeals who were unsuccessful in  

getting promotions,  challenged the select  list  of  the promoted candidates  by  

filing writ petitions before the Orissa High Court. The High Court heard W.P.

(civil)  No.14359/2003  (giving  rise  to  civil  appeal,  arising  from  SLP(Civil)  

No.19292/2008)) as the leading case. It allowed the Writ Petition holding that  

prescription of the benchmark of 60% marks in the aggregate was in violation  

of  the  promotion  policy  and  the  rules  governing  the  field.  It,  accordingly,  

allowed  the  Writ  Petition  and  directed  the  appellant-bank  to  make  fresh  

selection in accordance with the Rules. (The other writ petitions giving rise to  

the  other  appeals  were  disposed  of  following  the  judgment  passed  in  W.P.

(Civil) No.14359/2004).  

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10.         In taking the view that the prescription of the minimum qualifying  

marks in the aggregate was in contravention of promotion based on seniority-

cum-merit, the High Court relied upon the decisions of this Court in  State of   

Kerala  v.  N.M. Thomas1,  Bhagwandas Tiwari v.  Dewas Shajapur Kshetriya   

Gramin Bank2, , and B.V. Sivaiah v. K. Addanki Babu3.

11.       In a more recent decision in Rajendra Kumar Srivastava  and others   

v.  Samyut Kshetriya Gramin Bank and others4, this Court re-visited the issue of  

fixing a high percentage as the minimum qualifying marks for promotion on  

seniority-cum-merit basis.  It examined all the three decisions (besides others)  

relied  upon  by  the  High  Court,  namely,  Bhagwandas  Tiwari  (supra),  B.V.   

Sivaiah (supra) and N.M. Thomas (supra).   

12.       In Rajendra Kumar Srivastava, the Court framed the following two  

questions for consideration:

“8.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?

1 (1976) 2 SCC 310 2 (2006) 12 SCC 574 3 (1998) 6 SCC 720 4 (2010) 1 SCC 335

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(ii) Whether the first respondent Bank was justified in  fixing  a  high  percentage  (78%)  as  the  minimum  qualifying marks (minimum merit) for promotion?

13.        Answering both the questions in the affirmative, the Court on an  

analysis of the earlier decisions observed and held that:

“13. 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.

14. 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  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.  

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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 lesser  minimum  qualifying  marks  and  fix  a  comparatively  higher  minimum qualifying marks for higher posts.”

14.        The decision of the High Court, thus, appears to be clearly contrary  

to the view taken by this Court in Rajendra Kumar Srivastava.  

15.      The decision of the High Court is, accordingly, set aside.  The writ  

petitions filed by the respondents before the Orissa High Court are dismissed.  

The  select  list  prepared  by  the  appellant-bank  is  affirmed.  The  appeals  are  

allowed but with no order as to costs.  

 ................................................J. (Aftab Alam)

................................................J. (Ranjana Prakash Desai)

New Delhi, April 2, 2013.  

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