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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 2970-2975 OF 2013 [Arising out of SLP (C) NOS.9181-9186 OF 2011]

Rani Laxmibai Kshetriya Gramin Bank & Ors.    ...Appellants  

VERSUS

Manoj Kumar Chak                                           ...Respondent

WITH

CIVIL APPEAL NOS. 2989-2992 OF 2013 [Arising out of SLP (C) NOS.9306-9309 OF 2011]

Vidur Gramin Bank & Ors.                                 ...Appellants  

VERSUS

Paramjeet Singh & Ors.                                     

...Respondents

WITH

CIVIL APPEAL NOS. 2976-2988 OF 2013 [Arising out of SLP (C) NOS.9432-9444 OF 2011]

Rani Laxmibai Kshetriya Gramin Bank (now Sarva U.P. Gramin Bank & Ors.)               ...Appellants  

VERSUS

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Siraj Ahmed Khan & Ors.                               ...Respondents

WITH

CIVIL APPEAL NOS. 2993-3010 OF 2013 [Arising out of SLP (C) NOS.9284-9301 OF 2011]

Sarva UP Gramin Bank & Ors.                          ...Appellants  

VERSUS

Sanjeev Kumar & Ors.                                   ...Respondents

       J U D G M E N T

SURINDER SINGH NIJJAR,J.

1. Leave granted in all the Special Leave Petitions.

2. These appeals are directed against the common judgment  

and final order dated 8th December, 2010 passed by the  

High Court of Judicature at Allahabad in Writ Petition Nos.  

58206 of 2005 and in connected Writ Petition Nos. 58214,  

59016,  59018,  59035 and  59758 of  2005,  whereby  the  

High Court has allowed all the Writ Petitions and set aside  

the Circular           No. 17 of 2009 dated 30th November,  

2009 and Circular dated 12th July, 2010 in so far as they  

make  a  provision  to  exclude  the  employees  from  

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consideration for promotion, who are otherwise eligible to  

be considered for promotion and are within  the zone of  

consideration, on the basis that they have either obtained  

the ‘D’ rating in the annual performance report or have  

been  penalized  for  any  misconduct  in  the  preceding  5  

years.  

Background:-

3. Before we take up for consideration, the issues involved, it  

would  be  appropriate  to  briefly  notice  the  background  

leading to the present litigation.  

4. There  are  currently  about  82  Regional  Rural  Banks  

(for  short  “RRBs”)  sponsored  by  various  nationalized  

banks, set up under the Regional Rural Banks Act, 1976  

(for short “the RRB Act, 1976”).  There are about 67,000  

employees of the Bank, spread all over India mostly in the  

interiors.  

5. To  ensure  uniformity  amongst  all  the  RRBs,  Section  29  

read with Section 17 of the RRB Act, 1976 empowers the  

Central Government to lay down the terms and conditions  

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of service of employees of all the banks. Section 17 of the  

RRB  Act,  1976  empowers  the  RRBs  to  appoint  such  

number of officers and other employees as it may consider  

necessary  or  desirable  in  such  manner  as  may  be  

prescribed  for  the  efficient  performance  of  its  functions  

and  to  determine  the  terms  and  conditions  of  their  

appointment and service.  Section 24 of the Act lays down  

that in the discharge of its functions, RRBs shall be guided  

by such directions in regard to matters of policy involving  

public  interest  and  the  Central  Government  may,  after  

consultation  with  the  National  Bank  for  Agriculture  and  

Rural Development (for short “NABARD”), may prescribe.  

Under Section 29 of this Act, the Central Government has  

been empowered to make rules after consultation with the  

NABARD  and  the  Sponsor  Banks  for  carrying  of  the  

provisions of the RRB Act, 1976.  By Clause (ba) of sub-

section  (2)  of  Section  29,  which  was  inserted  by  the  

Regional Rural Banks (Amendment Act), 1988, the Central  

Government was empowered to make rules relating to the  

manner in which the officers and other employees of the  

RRBs shall be appointed.   

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6. Till the year 1988, there were no statutory rules governing  

the promotion of employees of RRBs and the same were  

governed  by  various  Circulars  issued  by  the  Central  

Government  and  NABARD.     On  1st December,  1987,  

NABARD  issued  guidelines  to  all  RRBs  vide  letter  No.  

IDD.RRB.NO.        C-78/316(GEN)/87-88,  explaining  the  

concept  of  promotion  by  “Seniority-cum-Merit”  as  

envisaging promotion by seniority with due considerations  

to  minimum  merit/fitness  prescribed.   Further,  it  was  

stipulated that “this rule envisages promotion by seniority  

with  due  considerations  to  minimum  merit/fitness  

prescribed.  Fitness implies that there is nothing against  

an officer;  no disciplinary  action is  pending against  him  

and none is contemplated.  The officer has neither been  

reprimanded  nor  any  adverse  remarks  have  been  

conveyed to him in the reasonable recent past”.  Although  

the aforesaid Circular was issued in relation to promotion  

of  Managers  to  the  post  of  Area/Sr.  Manager,  it  was  

observed that  the similar  procedure may be followed in  

case of the promotion of Sr. Clerk and internal promotion  

to Field Supervisor and Manager Posts.    

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7. The  Central  Government  vide  a  Notification  

dated 28th September, 1988 framed statutory rules, known  

as Regional Rural  Banks (Appointment and Promotion of  

Officers and other Employees) Rules, 1988 (for short “the  

RRB Rules, 1988).  These rules were made in exercise of  

the  powers  conferred  on  the  Central  Government  by  

Section 29 read with Section 17 of the RRB Act, 1976 after  

consultation  with  the  NABARD  and  the  Sponsor  Banks  

specified in the First Schedule of the Rules.   

8. Second  Schedule  of  the  aforesaid  Rules  laid  down  the  

criteria  for  appointment  to  different  categories  of  posts  

whether by direct recruitment or by promotion in all the  

RRBs.   The criterion for  promotion on all  the posts  was  

specified as seniority-cum-merit.  With regard to the post  

of Area / Senior Manager, Clause 7 of Schedule 2 provided  

that the appointment on the aforesaid post shall be made  

100%  by  promotion  from  amongst  confirmed  officers  

working in the Bank.  Promotion will  be on the basis of  

seniority-cum-merit.  If suitable officers are not available  

internally,  these  posts  are  to  be  filled  by  deputation  in  

another banks or organization on deputation.   

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9. Clause  7(c)  pertains  to  the  mode  of  selection,  which  

provided  for  “interview  and  assessment  of  performance  

reports  for  the  preceding  3  years  period  as  officer  for  

promotion”.  It is relevant to note here that in these rules,  

the provisions pertaining to merit/fitness contained in the  

NABARD  Circular  dated  1st December,  1987  were  not  

incorporated.   Even  though,  the  1988  Rules  have  been  

promulgated in consultation with NABARD and the Sponsor  

Banks.

10. In spite of the promulgation of the RRB Rules, 1988, the  

RRBs  continued  to  make  promotions  by  taking  into  

consideration the criteria laid down in the 1987 Circular in  

addition  to  the  provisions  contained  in  the  RRB  Rules,  

1988.  This led to the actions of the RRBs being challenged  

by way of Writ Petitions in Andhra Pradesh High Court and  

Madhya Pradesh High Court.  Both the Andhra Pradesh as  

well  as  the  Madhya  Pradesh  High  Court  held  that  if  

seniority-cum-merit criterion is adopted for the purposes  

of seniority, then the first senior most eligible employee  

has  to  be tested to  find  out  whether  he  possesses  the  

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minimum required merit for holding the higher post and  

only if he is not found suitable or fit, his immediate junior  

may  be  tested  for  the  purpose  of  promotion.  These  

decisions  of  the  High  Courts  were  challenged  by  the  

various  RRBs  as  well  as  the  promoted  officers  whose  

promotion has been set aside by this Court.   

11. The controversy was laid at rest by this Court in the  

judgment delivered in the case of  B.V. Sivaiah & Ors. Vs.  

K.  Addanki  Babu  &  Ors.  1   This  Court  distinguished  the  

principle  of  “Merit-cum-Seniority”  and  the  principle  of  

“Seniority-cum-Merit”.  It has been held that the principle of  

“Merit-cum-Seniority”  lays  greater  emphasis  on  merit  and  

seniority plays a less significant role.  Seniority is to be given  

weight  only  when  merit  and  seniority  are  approximately  

equal.   As between two officers of “seniority-cum-merit”, the  

criterion  of  seniority-cum-merit  lays  greater  emphasis  on  

seniority.  However, this Court added a caveat that an officer  

can not  claim promotion as  a  matter  of  right  by  virtue of  

seniority alone and if  he is  found unfit  in the discharge of  

duties of the higher post, he may be passed over and the  

1 (1998) 6 SCC 720

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officer  junior  to  him  may  be  promoted.   The  aforesaid  

judgment of this Court was delivered                 on 17 th July,  

1998.   

12. Thereafter on 29th July, 1998, in exercise of the powers  

conferred by Section 29 read with  Section 17 of  RRB Act,  

1976,  in supersession of  the RRB Rules,  1988, the Central  

Government,  after consultation with the National Bank and  

Sponsor Bank specified in the Second Schedule, promulgated  

the  Regional  Rural  Banks  (Appointment  and  Promotion  of  

Officers  and  other  Employees)  Rules,  1998.   The  relevant  

provision for appointment by promotion as a Scale II officer is  

as under:-

“2.

(a) Name of Post                 Scale II Officer

(b) Classification                 Group ‘A’

(C) Source of appointment           100 % by promotion

(d) Whether promotion to be        Promotion shall be made      made on seniority basis          on the basis of seniority      or seniority-cum-merit          -cum-merit      basis.

(e) Eligibility Officer  holding  post  for  eight years as an officer  on  regular  basis  in  the  Regional  Rural  Bank  

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shall  be  considered  for  promotion  to  Scale-II  post in that bank :

Provided that no officer  shall  be  considered  for  promotion unless he has  been  confirmed  in  feeder grade  post:

Provided further that the  Board  may,  with  the  prior  approval  of  National Bank relax the  qualifying  service  for  a  period  not  exceeding  two  years,  if  eligible  officers  are  not  available.

     Note:

(I) The officers eligible for promotion to the post of Area  Managers/Senior Managers/Officers Scale-II on or before  publication  of  this  notification,  shall  continue  to  be  considered for promotion to Scale-II officer Post.

(II)   The service of the incumbents, who are holding the  post  eligible  for  promotion  before  publication  of  this  notification, shall continue to be counted for the purpose  of promotion to the Scale II officer post.

(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  the  preceding  five years  as an officer  in  Scale I/Field Supervisor.

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(g) Composition of Committee The  committee  (for  considering  promotion)  shall  consist  of  the  following persons, namely,  

i)  The  chairman  of  the  concerned  Regional  Rural  Bank-Chairman

(ii)  A  director  nominated  the sponsor bank-Member.

(iii)  A  director  nominated  by  the  National  Bank  Member.

Note:  If  none of  the members of  the Committee belongs to  Scheduled Castes/Scheduled Tribes, the Board may nominate  a person belonging to Schedule Castes or Schedule Tribe as an  additional  member  and  such person shall  participate  in  the  process of selection by the concerned committee.

(h) Reckoning of the   The minimum eligibility in  minimum eligibility              terms  of the number of  

years  of  service  for  promotion shall be reckoned  as on the 1st April of the year  in  which  the  vacancy  is  expected  to  arise  or  has  actually arisen.

(i) Number of candidates            The number of  candidates to be  

                To be considered for            considered for promotion from  Promotion                        officer Scale I to officer Scale II  

shall be restricted to four times  

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the  number  of  vacancies  available for promotion.

(j)  Selection process for The Selection shall be on the       Promotion                         basis of performance in the  

written  test,  interview  and  perforlmance appraisal reports  for preceding five years as per  the  division  of  marks  given  below.

(A) Written Test 60 Marks

(B) Interview 20 Marks

(C) Performance 20 Marks                          Appraisal Reports

     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 to written  test shall be further divided as  under :

Part ”A”    30 Marks Part “B” 30 Marks

A list of only those candidates,  who secure a minimum of 40%  marks  in  each  part  shall  be  

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prepared and such candidates  shall be called for interview. “   

13. The Rules also provide that the written test shall be in  

two  parts  viz.  Part  A  and  Part  B,  each  consisting  of  30  

marks.   It  was provided that  the list  of  those candidates  

shall be prepared, who secure a minimum of 40% marks in  

each part and such candidates shall be called for interview.  

Thus  the  Rules  had  clearly  introduced  the  minimum  

necessary merit as laid down by this court in the case of  

B.V. Sivaiah (supra).  However, it appears that one of the  

Sponsor  Banks,  namely  Punjab  National  Bank  issued  

guidelines  dated  27th February,  1999  laying  down  the  

“procedure to be adopted in RRBs for promotion in different  

cadres – clarification thereof”, to all its Sponsored Regional  

Rural Banks.   

 Present Litigation:

14. Thereafter,  the  individual  officers  of  erstwhile  RRBs  

filed  13  Writ  Petitions  before  the  High Court  in  the  year  

2004-2005 on the ground that the Circular sought to debar  

totally  from  consideration  for  promotion,  officers  against  

whom disciplinary action was pending or contemplated as  

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well as those, who had been reprimanded or had obtained a  

‘D’  rating  in  their  annual  performance  reports  in  the  

preceding 5 years before the selection process commences.  

15. Whilst  the  aforesaid  matters  were  still  pending,  it  

appears that the Punjab National Bank and Bank of Baroda  

issued another clarification by the Circular No. 17 of 2009  

dated 30th November, 2009.  The aforesaid circular entitled  

“Appointment  and  Promotion  of  Officers  and  other  

Employees of RRBs” reiterated the provision contained in  

the  Notification  dated  29th July,  1998.   Pursuant  to  the  

aforesaid, Sarva U.P. Gramin Bank issued a Circular dated  

12th July,  2010 incorporating the clarification contained in  

the Circular dated 12th July, 2010, subsequently reiterated  

on 30th November, 2009.  The aforesaid Circulars were also  

challenged  in  Writ  Petition  Nos.   55913,  50638,  50629,  

51003 and 50633 of 2010.

16. All  the  aforesaid  writ  petitions  were  clubbed  and  

decided by the High Court of Judicature at Allahabad by a  

common  judgment  dated  8th December,  2010.    By  the  

aforesaid  judgment,  the  High Court  quashed  the  Circular  

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No.  17  of  2009  dated  30th November,  2009 and  Circular  

dated 12th July, 2010.  The appellant bank was directed to  

consider the claim of the respondents (Writ Petitioners) for  

promotion in accordance with the procedure and method of  

punishment  provided  by  the  competent  authority  for  

selections.   The High Court in its judgment concluded :-

“1. Where a person is eligible to be considered for  

promotion, his exclusion, on the ground that he has  

suffered  minor  or  major  penalties,  cannot  be  a  

ground  to  exclude  him  from  consideration.  The  

competent  authority,  as  held  in  K.V.  Janakiram  

(supra)  and  B.V.  Sivaiah  (supra),  can  lay  down  

minimum  standards  required  and  also  prescribe  

mode  of  assessment  of  merit  of  the  employees  

eligible  to  be  considered  for  promotion.  The  

assessment can be made by assigning marks on the  

basis  of  appraisal  of  performance  on  the  service  

record and interview. The competent authority may  

also prescribe minimum marks which would entitle a  

person to be promoted on the basis of seniority-cum-

merit. The employee, however, cannot be excluded  

and  denied  his  right  to  be  considered  by  the  

selection committee for promotion.

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2.  The  persons,  who  have  been  awarded  censure  

entry  or  other  minor  punishments,  thus  cannot  be  

excluded  from  the  zone  of  consideration  for  

promotion. The question of assessment on merit is to  

be made by the Selection Committee at the time of  

selection  and  not  before  that  by  eliminating  the  

person who is within the zone of consideration.

3.  We are further  of  the opinion that  the circulars  

issued  by  the  bank  cannot  override  the  statutory  

Rules nor can supplement it to the extent that the  

persons, who are otherwise eligible to be considered  

for promotion, will be rendered ineligible and will not  

be given a chance to be considered for promotion.”

17.  Aggrieved  by  the  aforesaid  observations  and  the  

decision of the High Court, the appellant bank has filed the  

present appeals.

SUBMISSIONS :

18. We  have  heard  very  lengthy  submissions  by  the  

learned counsel for the parties.  

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19. We may first briefly notice the submissions on behalf  

of the appellants. Mr. Dhruv Mehta, learned senior counsel  

appearing  for  the  appellants  submitted  that  the  Circular  

dated 30th November,  2009 and 12th July,  2010 were not  

ultra vires of the RRB Rules, 1998.  The two Circulars have  

only supplemented the RRB Rules,  1998,  where they are  

silent.  The Circulars do not have the effect of supplanting  

the  RRB  Rules,  1998.   He  elaborated  that  the  aforesaid  

Rules do not provide for and/or are silent with regard to the  

treatment  to  be  given  /meted  out  to  the  case  where  

“adverse remarks” have been recorded against an officer  

during  the  preceding  5  years,  i.e.,  period  under  

consideration for promotion.  He submitted that the Sponsor  

Banks have merely reiterated the earlier Circular issued by  

the  NABARD  on  1st December,  1987,  which  was  

subsequently clarified on 27th February, 1999.  The Circulars  

dated  30th April,  2009  and  12th July,  2010  have  merely  

reiterated the earlier position.  The appellant bank had only  

reiterated the aforesaid guidelines after the amalgamation  

of  the  small  RRBs  into  one  RRB  (appellant  bank)  vide  

Notification dated 30th November,  2007.   However,  these  

guidelines were being followed by erstwhile RRBs also prior  

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to  amalgamation.   Learned  senior  counsel  relied  on  the  

judgment in the case of  Sant     Ram Sharma   Vs.  State of  

Rajasthan & Ors.  2   to submit that it was permissible for the  

appellant bank to fill up the gaps and supplement the rules  

and issue instructions which were not inconsistent with the  

statutory rules.  Learned senior counsel further submitted  

that the aforesaid Circulars  have been issued in order to  

bring  about  uniformity  as  different  RRBs  were  following  

different  procedures  for  making  promotions  on  similar  

posts.   Since the Rules of  1998 are silent  with regard to  

non-consideration  of  officers,  who  have  adverse  remarks  

against them in the preceding 5 years, it was necessary to  

lay  down  uniform  guidelines.   He  emphasised  that  DPC  

under the RRB Rules, 1998 consists of :- (a) Chairman, RRB,  

(b) Director nominated by Sponsor Banks and (c) Director  

nominated  by  NABARD.   In  the  absence  of  uniform  

guidelines,  DPC consisting of individuals will  be conferred  

with power to decide whether an individual officer despite  

having been punished in the preceding 5 years should be  

recommended/selected for promotion or not.  According to  

Mr. Dhruv Mehta, introduction of such a process will lead to  

2 (1968) 1 SCR 111

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infusion  of  arbitrariness  in  the  process  of  promotion.   In  

such circumstances, the promotion of a particular officer, in  

spite of having been punished, will be based entirely on the  

perception of individual members of DPC.  This could lead to  

more  litigation  by  the  officers,  who  are  not  

selected/approved for promotion in spite of having a clean  

record.  He points out that without the aforesaid guidelines,  

an officer,  even though,  he has  been punished for  gross  

misconduct, would have to be promoted in case he obtains  

minimum 40% marks in the written test, because in other  

parameters,  namely interview and performance appraisal,  

the  RRB  Rules,  1998  do  not  prescribe  minimum  marks.  

Debarring  such  a  person  from  promotion  would  not  be  

arbitrary as the rationale behind such procedure is to weed  

out  the  unfit  at  the  initial  stage.   In  support  of  this  

submission,  the  learned  senior  counsel  relied  on  the  

observations made by this Court in the case of  Rajendra  

Kumar  Srivastava  &  Ors. Vs.  Samyut  Kshetriya  

Gramin Bank & Ors.  3    The instructions, according to him,  

merely prescribe minimum merit necessary for discharging  

the function of the higher post.  Therefore, the procedure  

3 (2010) 1 SCC 335

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prescribed in the Circulars would not violate the concept of  

promotion by seniority-cum-merit.  Learned senior counsel  

further submitted that same procedure will  be followed in  

cases,  where  an officer  has  been communicated adverse  

remarks  and graded as ‘D’  in  the 5 years  preceding the  

selection  process.   In  support  of  this  submission,  the  

learned counsel relied on certain observations made by this  

Court in Civil Appeal No. 6072 of 2012, Ram Ashish Dixit  

Vs. Chairman, Purvanchal Gramin Bank & Ors.

20. The next submission of Mr. Dhruv Mehta was that the  

employee only has a right to be considered for promotion  

and does not have an absolute right to be promoted only on  

the  basis  of  seniority.   Learned  senior  counsel  reiterated  

that  criteria  of  “fitness”,  i.e.,  a  candidate  should  not  be  

found to be “unfit to discharge the duties of higher post” is  

a condition implicit in the criteria of promotion on the basis  

of “seniority-cum-fitness” criteria.

21. Learned  senior  counsel  has  further  submitted  that  

different rules prescribed different criterias for adjusting the  

suitability of candidates for promotion viz. “seniority-cum-

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fitness”,  “seniority-cum-merit”  and  “merit-cum-seniority”.  

However, the “fitness” of a candidate to discharge duties of  

higher post, has to be considered necessary, relevant and  

an implicit condition of promotions in all the above criterias.  

He  draws  support  for  the  aforesaid  submission  from the  

judgment of this Court in the case of  State of Mysore &  

Anr. Vs.  Syed Mahmood & Ors.  4    and  Haryana State  

Warehousing  Corporation  &  Ors. Vs.  Jagat  Ram  &  

Anr.  5    

22. Mr.  Dhruv  Mehta  then  submitted  that  the  

employee/officers, who have not been promoted in view of  

the  guidelines  dated  30th November,  2009  and  12th July,  

2010,  had not  been debarred from consideration as they  

were, in fact, considered along with all  the other officers,  

who had completed the requisite period of service but have  

been weeded out/eliminated at the threshold, in view of the  

fact that they had been either punished or graded ‘D’ in the  

5  years  preceding the selection.   Learned senior  counsel  

further submitted that non-promotion of those officers, who  

have  either  been  punished  or  have  been  recipient  of  4 AIR 1968 SC 1113 5 (2011) 3 SCC 422

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adverse remarks such as Grade ‘D’, would not be violative  

of  Article  14  and  16  of  the  Constitution  of  India.   The  

candidates, who have been imposed penalty/punishment or  

whose performance is assessed as unsatisfactory during the  

period under consideration for promotion can not be placed  

at par with the candidates, who have not been imposed any  

punishment/penalty  or  whose  performance  has  been  

outstanding, very good or good during the said period.  The  

classification made on the basis of the service record is a  

reasonable classification and has a nexus with the object  

sought  to  be  achieved  namely  promotion  to  the  next  

grade/cadre.  In support of this, he relies on the judgment of  

this Court in the case of  Union of India & Ors. Vs.  K.V.  

Jankiraman & Ors.  6     

23. Mr. Dhruv Mehta has also brought to the attention of  

this  court  the  “subject  wise  bifurcation”  of  the  present  

special  leave  petitions,  which  appears  to  have  been  

premised  on  the  basis  of  different  levels  of  punishment  

imposed  on the  writ  appellants/respondents  herein  which  

6 (1991) 4 SCC 109

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rendered them ineligible from consideration for promotion.  

The bifurcation is as under :

(i) SLP (C) No. 9284-9301/2011: The concerned employees  

in this bunch were rendered ineligible for consideration  

for promotion due to imposition of punishment on them  

during the preceding five years.

(ii)SLP  (C)  No.  9181-86/2011:  The  assessment   of  the  

concerned  employees  in  this  bunch  was  rendered  

“unsatisfactory”,  i.e.,  they  were  rated  “D”  in  any  one  

year out of preceding five years.  

(iii) SLP (C) No.  9432-9444/2011: Some punishment was  

imposed on the employees herein during the preceding  

five  years  and  also,  their  performance  was  rated  as  

unsatisfactory, i.e., they were rated “D”.

(iv) SLP  (C)  9306-9309/2011:  Issues  raised  by  the  writ  

petitioners  herein  were  not  same/similar  to  the  lead  

matter therein.  

24. Lastly,  he  submits  that  this  Court  in  a  catena  of  

judgments  has  held  that  an  employee  can  be  validly  

debarred from consideration for promotion during the rigour  

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of punishment.   He has made a reference to the following  

judgments:-

State of T.N. Vs. Thiru K.S. Murugesan & Ors.  7  , L.  

Rajaiah Vs.  Inspector General of Registration &  

Stamps,  Hyderabad  &  Ors.  8   and  Collector  of  

Thanjavur  Distt.  &  Ors. Vs.  S.  Rajagopalan  &  

Ors.  9   

25. On  the  other  hand,  learned  senior  counsel  for  the  

respondent, Mr. Fakhruddin, submitted that the submissions  

made by the appellants about the usurpation of the power  

of selection of the management by the members of the DPC  

clearly indicates that the two Circulars have not been issued  

bonafide and are in fact intended to whittle down the role  

and powers of Independent Selection Committee prescribed  

in the statutory rules of 1998.  The function of selection has  

been  statutorily  conferred  on  the  DPC,  and  can  not  be  

permitted  to  be  usurped  by  the  Bank  Management.   He  

further submitted that by virtue of Section 29 and Section  

17  of  the  RRB  Act,  1976,  the  powers  to  determine  the  7 (1995) 3 SCC 273 8 (1996) 8 SCC 246 9 (1995) 3 SCC 273

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service conditions including promotions of the employees of  

the RRBs are vested in the Central Government.  Therefore,  

the two Circulars can not be permitted to prevail over the  

provision of  the  statutory  rules  of  1998.   Mr.  Fakhruddin  

emphasised that Government of India has promulgated the  

aforesaid  rules  in  consultation  with  NABARD  and  the  

Sponsor Bank.  Even then, no provision has been made in  

the  aforesaid  rules  to  debar  the  employees/officers  for  

being considered for promotion amongst them who fall in  

the zone of consideration, on the basis that they have been  

either penalized or given an unsatisfactory/’D’ rating annual  

performance  appraisal  report.   It  is  submitted  by  all  the  

learned counsel appearing for the respondent that the RRB  

Rules, 1998 are in consonance with the observations made  

by this Court in the case of B.V. Sivaiah (supra) and is a  

complete code, which does not need to be supplemented by  

any instructions.  It is further submitted that in the guise of  

laying down minimum marks as a benchmark to determine  

the  suitability/fitness/merit  for  promotion,  the  appellants  

have introduced the criteria  of  merit-cum-seniority  in  the  

place of  seniority-cum-merit.   Such change in the criteria  

could only be made by making the necessary amendment in  

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the  Rules  and  not  by  issuing  guidelines/Circulars  by  the  

Sponsor Banks or NABARD.   

26. Learned senior counsel further submitted that the two  

Circulars are wholly arbitrary since even the employees who  

had  been  only  given  the  lowest  penalty  of  censure  or  

reprimand can be eliminated at the threshold, from being  

considered for  promotion.   It  is  further  submitted by the  

learned counsel for the respondent that blanket debarment  

will have the effect of giving an unbridled/untrampled power  

in the hands of the superiors of an employee.  Such power  

can be abused and misused to give/deny “promotion to a  

particular  employee/officer  due  to  personal  reasons  and  

likes and dislikes of  a particular  officer”.   Learned senior  

counsel,  therefore,  submitted  that  the  High  Court  has  

correctly quashed the aforesaid two Circulars.  

CONSIDERATION/CONCLUSIONS :

27. We have given due consideration to the submissions  

made by the learned counsel for the parties.   It is by now  

settled  beyond  cavil  that  statutory  rules  can  be  

supplemented but can not be supplanted.  This is the ratio  

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of law laid down in the case of Sant Ram Sharma (supra).  

It  has  been  reiterated  by  this  Court  in  a  catena  of  

subsequent  judgments.   It  is,  however,  not  necessary  to  

burden  the  present  judgment  by  making  a  copious  

reference to the other decisions which merely reiterated the  

same ratio.  

28. We have noticed earlier that till 1988, there were no  

statutory rules governing the promotions of the employees  

of RRB.  The promotions in these banks were governed by  

various Circulars issued by the Government, NABARD and  

the  Sponsor  Banks.   One  such  Circular  is  

dated 1st December,  1987,  which provided that  the word  

“merit”,  provides  that  criteria  of  seniority-cum-merit  

envisages promotion by seniority with due consideration to  

minimum merit/fitness  prescribed.   However,  the  Circular  

further provided that fitness implies that there is nothing  

against an officer, no disciplinary action is pending against  

him and none is contemplated.  The officer has neither been  

reprimanded nor any adverse remarks have been conveyed  

to him in the reasonable recent past.  

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29. The aforesaid Circular is prior in time to the RRB Rules,  

1988.  The aforesaid rules clearly provided that promotion  

shall  be  made  by  following  the  criteria  of  seniority-cum-

merit.  Rule also provides that any officer/employee having  

8 years of service as an officer/employee shall be eligible to  

be considered for promotion.  The criteria for determining  

the minimum merit required of the candidate for promotion  

is to be ascertained on the basis of his performance in the  

written  test,  interview  and  his  assessment  in  the  

performance appraisal report.  There is no provision in the  

Rules that an employee/officer, who has been punished in  

the 5 years  preceding the selection process or  has been  

given  an  adverse  remark  or  graded  ‘D’  shall  not  be  

considered  for  promotion  at  all.  The  Circular  dated  1st  

December,  1987  was,  therefore,  clearly  contrary  to  the  

1988 statutory  rules,  and,  therefore,  ceased to  have any  

legal effect from the date of the enforcement of the rules.

30. It is a matter of record that the RRB Rules, 1988 were  

superseded by the RRB Rules,  1998.  The aforesaid rules  

incorporated the principle of minimum merit as enunciated  

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by this Court in B.V. Sivaiah (supra).  In Paragraph 18 of  

the aforesaid judgment, this Court observed as follows:-

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

31. Following the aforesaid observations, the RRB Rules,  

1998 have introduced a detailed procedure for determining  

the  minimum  merit  for  promotion  to  the  next  higher  

post/grade.   The  RRB  Rules,  1998  clearly  provided  that  

officers holding post in 8 years as an officer on regular basis  

in the RRB shall  be considered for promotion to the next  

higher post.  The aforesaid rule does not provide that any  

employee/officer,  who  has  suffered  a  punishment  or  has  

received an adverse appraisal/Grade ‘D’ in the performance  

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appraisal,  shall  not  be  eligible.   However,  the  Circulars  

dated 30th November, 2009 and 12th July, 2010 enables the  

appellant  banks  to  eliminate  such  employees,  which  is  

clearly contrary to the provisions contained in the statutory  

service rules.  The procedure prescribed under the aforesaid  

two  Circulars  clearly  has  the  effect  of  supplanting  the  

provision of eligibility, which is not permissible.   

32. Such an additional provision can not be justified on the  

basis that it would form part of the minimum merit required  

to be considered for promotion. In our opinion, the reliance  

placed in support of this proposition on the judgment in the  

case  of  Rajendra  Kumar Srivastava (supra) is  wholly  

misplaced.   In  the  aforesaid  judgment,  this  Court  has  

observed as follows:-

“11. It  is  also  well  settled  that  the  principle  of  seniority-cum-merit, for promotion, is different from  the  principle  of  “seniority”  and  the  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  

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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 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”

33. These observations clearly apply at the time when the  

eligible persons are being considered for promotion by the  

DPC. Eligibility under the rules is on the basis of minimum  

length of service – eight years, unless relaxed by two years  

confirmation in the lower/feeder post. It is not possible to  

accept  the  submission  of  Mr.  Dhruv  Mehta  that  bare  

minimum merit can be determined even before the list of  

candidates  is  placed  before  the  DPC for  consideration  of  

their  merit.   Rule  (2e)  clearly  provides  firstly  for  the  

determination  of  the  eligibility,  as  noticed  above.  The  

criteria  for  promotion  (seniority-cum-merit)  is  provided  in  

Rule 2(d). Rule 2(f) provides for “mode of selection”. It is  

clearly provided that “the selection of the candidates shall  

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be made by  the  committee…………”.  The  second  part  of  

Rule 2(f) provides the criteria for determination of the bare  

minimum  merit.  In  fact,  for  this  very  reason,  the  rules  

themselves provide that in order to succeed in the written  

test, a candidate has to secure a minimum 40% marks in  

each part of the written test consisting of 30 marks each. It  

is  only  when  all  the  candidates  within  the  zone  of  

consideration have participated in the selection procedure  

and their performance is assessed on the basis of written  

test,  interview,  and  past  performance  i.e.  performance  

appraisal that the minimum merit would become relevant.  

When  the  bare  minimum  merit  of  the  candidates  is  

determined, the promotion shall be made on the basis of  

seniority irrespective of the better performance of the junior  

candidates  in  the  written  test/interview/performance  

appraisal.

34. Similarly, the reliance placed by Mr. Dhruv Mehta on  

the  judgment  of  this  Court  in  K.V.  Jankiraman’s  case  

(supra) is  also  misplaced.  In  this  judgment,  this  Court  

considered the circumstances under which the banks could  

resort  to the “sealed cover procedure”,  when considering  

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the  claims  of  the  eligible  candidates  for  promotion.  The  

court  also  examined  the  impact  of  departmental  

punishment for assessment of the suitability of an employee  

for promotion. The relevant ratio of this Court is as under :  

“29.  According  to  us,  the  Tribunal  has  erred  in  holding  that  when an officer  is  found guilty  in  the  discharge of his duties, an imposition of penalty is all  that  is  necessary  to  improve  his  conduct  and  to  enforce  discipline  and  ensure  purity  in  the  administration. In the first instance, the penalty short  of  dismissal  will  vary  from  reduction  in  rank  to  censure.  We  are  sure  that  the  Tribunal  has  not  intended that the promotion should be given to the  officer from the original date even when the penalty  imparted is of reduction in rank. On principle, for the  same  reasons,  the  officer  cannot  be  rewarded  by  promotion as a matter of course even if the penalty  is  other  than  that  of  the  reduction  in  rank.  An  employee has no right to promotion. He has only a  right to be considered for promotion. The promotion  to a post and more so, to a selection post, depends  upon  several  circumstances.  To  qualify  for  promotion, the least that is expected of an employee  is  to  have  an  unblemished  record.  That  is  the  minimum expected to ensure a clean and efficient  administration and to protect the public interests. An  employee  found  guilty  of  a  misconduct  cannot  be  placed on par with the other employees and his case  has to be treated differently. There is, therefore, no  discrimination when in the matter of promotion, he is  treated differently. The least that is expected of any  administration  is  that  it  does  not  reward  an  employee with promotion retrospectively from a date  when for his conduct before that date he is penalised  in praesenti.  When an employee is held guilty and  penalised and is, therefore, not promoted at least till  the date on which he is penalised, he cannot be said  to have been subjected to a further penalty on that  account. A denial of promotion in such circumstances  is not a penalty but a necessary consequence of his  conduct. In fact, while considering an employee for  promotion  his  whole  record  has  to  be  taken  into  

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consideration  and  if  a  promotion  committee  takes  the  penalties  imposed  upon  the  employee  into  consideration  and  denies  him the  promotion,  such  denial  is  not  illegal  and unjustified.  If,  further,  the  promoting authority can take into consideration the  penalty or penalties awarded to an employee in the  past while considering his promotion and deny him  promotion on that ground, it will be irrational to hold  that  it  cannot  take  the  penalty  into  consideration  when it  is  imposed at a later date because of  the  pendency  of  the  proceedings,  although  it  is  for  conduct prior to the date the authority considers the  promotion. For these reasons, we are of the view that  the  Tribunal  is  not  right  in  striking  down  the  said  portion of the second sub-paragraph after clause (iii)  of  paragraph  3  of  the  said  Memorandum.  We,  therefore, set aside the said findings of the Tribunal.”

These  observations  make  it  abundantly  clear  that  

promotion can be justifiably denied to eligible candidate at  

the time of his/her performance appraisal by the DPC. The  

fact  that  the  officer/employee  has  been  departmentally  

punished would form part of the service record and can be  

taken into account by the DPC. In such circumstances, the  

employee cannot possibly claim to have been subjected to a  

further penalty on the basis of the misconduct which led to  

his  punishment.  This,  however,  would  not  permit  the  

management to debar an employee from being considered  

for promotion at the stage of considering whether such an  

employee is “eligible” to be considered in terms of Rule 2(e).  

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35. The  observations  in Rajendra  Kumar  Srivastava  

(supra) also  do  not  support  the  submissions  made  by  

Mr. Dhruv Mehta. In paragraph 13, it is observed as follows :

“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.”

These  observations  also  make  it  clear  that  whilst  

assessing the eligibility of the candidates, determination of  

bare minimum merit is not envisaged. There is, in fact, a  

complete  segregation  of  Rule  2(e)  from  Rule  2(f).  

Determining the eligibility of candidate is in the nature of a  

ministerial  function.  The  management  merely  has  to  see  

that the candidate possesses the minimum length of service  

and  that  he/she  is  confirmed  in  the  feeder  cadre.  The  

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determination of bare minimum merit is on the basis of the  

performance in the written test/interview and performance  

appraisal. This is the function of the Selection Committee  

i.e. Departmental Promotion Committee.    

36. There  is  no  doubt  that  punishment  and  adverse  

service record are relevant to determine the minimum merit  

by the DPC. But to debar a candidate, to be considered for  

promotion,  on  the  basis  of  punishment  or  unsatisfactory  

record  would  require  the  necessary  provision  in  the  

statutory service Rules.  There is  no such provision under  

the 1998 Rules.  

37. In B.V.Sivaiah (supra), this Court laid down the broad  

contours  defining  the  term “bare  minimum merit”  in  the  

following words :

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

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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.”

From  the  above,  it  becomes  clear  that  the  

determination of the bare minimum criteria is the function  

of the DPC and cannot be taken-over by the management at  

the time of determining the eligibility of a candidate under  

Rule 2(e).

38. The  reliance  placed  by  Mr.  Dhruv  Mehta  on  the  

judgment of  this  court  in the case of  Ram Ashish Dixit  

(supra)  is  also misconceived.  In the aforesaid case, the  

officer  had  been  considered  for  promotion  during  the  

pendency  of  the  departmental  proceedings  to  Middle  

Management Grade II.  However, the result was kept in a  

sealed  cover.   After  finalization  of  the  proceedings,  the  

appellants  requested  the  authority  to  open  the  sealed  

cover.   He  was,  however,  informed  that  he  can  not  be  

promoted  in  view of  the  bank Circular  dated  28th March,  

1998 as he had been punished.  Subsequently,  again his  

case  was  to  be  considered  for  promotion  in  September,  

1999.  However, he was denied consideration for promotion  

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in  view of  the conditions contained in Circular  dated 28th  

March, 1998.  It was submitted on behalf of the appellants  

that the punishment imposed upon the staff of the Bank can  

not be treated to be an ineligibility for promotion since the  

eligibility for promotion is prescribed under the RRB Rules,  

1988.  It was submitted on behalf of the bank (respondent  

therein) that since stoppage of increment for 3 years is a  

punishment  imposed  upon  the  appellants,  during  the  

period, he would be undergoing punishment, he could not  

have  been  considered  to  be  eligible  for  promotion.  

Therefore,  according  to  the  bank,  respondent  had  been  

rightly held to be ineligible under Circular dated 28th March,  

1998.  It was also claimed by the bank that the Circular is  

supplementary in nature and can not be said to be in any  

manner  inconsistent  and  ultra  vires of  the  rules.   In  

answering the rival submissions, this Court held as under:-

“The criteria for promotion from Junior Manager  Grade-I to Middle Management Grade-II is on the  basis  of  the  seniority-cum-merit.  Clearly  therefore,  the fact that the appellant has been  punished for a misconduct, the same would form  a part  of his  record of service which would be  taken  into  consideration  while  adjudging  his  suitability on the criteria of seniority-cum-merit.  If on such assessment of his record of service the  appellant is not promoted, it cannot be said to be  by way of punishment. It is a non-promotion on  

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account of the appellant not reaching a suitable  standard  to  be  promoted  on  the  basis  of  the  criteria.”  

39. We also do not  find any merit  in  the submission of  

Mr.  Dhruv  Mehta  that  the  Circular  No.17  of  2009  

dated  30th November,  2009  and  Circular  dated  12th July,  

2010 are to ensure that the individual members of the DPC  

do  not  recommend  for  promotion  an  individual  officer  

despite  having  been  punished  in  the  preceding  5  years.  

Such curtailment of the power of the DPC would have to be  

located in the statutory service rules. The 1998 Rules do not  

contain any such provision. The submission needs merely to  

be stated, to be rejected. We also do not find any merit in  

the  submission  of  Mr.  Mehta  that  without  the  aforesaid  

guidelines, an officer, even though, he has been punished  

for  gross  misconduct  would  have  to  be  permitted  to  be  

promoted  as  no  minimum  marks  are  prescribed  for  

interview  or  performance  appraisal.  In  our  opinion,  it  is  

fallacious to presume that under the 1998 Rules, once an  

officer gets the minimum marks in the written examination,  

he  would  be  entitled  to  be  promoted  on  the  basis  of  

seniority alone. There is no warrant for such a presumption.  

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The  misconduct  committed  by  eligible  employee/officer  

would be a matter for DPC to take into consideration at the  

time  of  performance  appraisal.  The  past  conduct  of  an  

employee  can  always  be  taken  into  consideration  in  

adjudging the suitability  of  the officer  for  performing the  

duties of the higher post.

40. There is another very good reason for not accepting  

the  submissions  made  by  Mr.  Dhruv  Mehta.  Different  

rules/regulations of the banks provide specific punishments  

such  as  “withholding  of  promotion,  reduction  in  rank,  

lowering  in  ranks/pay  scales”.  However,  there  is  another  

range of penalty such as censure, reprimand, withholding of  

increments  etc.  which  are  also  prescribed  under  various  

staff  regulations.  To debar such an employee from being  

considered  for  promotion  would  tantamount  to  also  

inflicting on such employee, the punishment of withholding  

of  promotion.  In  such  circumstances,  a  punishment  of  

censure/  reprimand  would,  in  fact,  read  as  

censure/reprimand + 5 years  debarment from promotion.  

Thus  the  circulars  issued  by  the  bank  debarring  such  

employees from being considered would be clearly contrary  

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to the statutory rules. The circulars clearly do not fall within  

the ratio in Sant Ram’s case (supra).

41.  In our opinion, the observations made by this Court in  

the  case  of  Ram Ashish  Dixit (supra) are  a  complete  

answer to the submissions made by the learned counsel for  

the appellants, Mr. Dhruv Mehta. Therefore the High Court,  

in  our  opinion,  has  rightly  quashed  the  aforesaid  two  

Circulars and directed that the respondent be considered for  

promotion in accordance with the applicable rules.  

42.    We, therefore find no merit in the civil appeals filed by  

the  appellant-bank,  and  are  accordingly  dismissed.  No  

costs.   

……..….…………………J.       [Surinder Singh  

Nijjar]

       ………………………….J.          [H.L. Gokhale] New Delhi; April 09, 2013.

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