Holding

An employee has no right to promotion; promotion must adhere to the seniority‑cum‑merit principle, and the circular's unauthorised minimum‑marks condition is invalid.

Summary

The Dewas Shajapur Kshetriya Gramin Bank issued a promotion policy for Junior Management Grade I officers, stating that promotion to Middle Management II would be on a seniority‑cum‑merit basis, with a circular prescribing a minimum of 45 marks out of 100 for selection. Ten officers challenged the policy, alleging that the requirement of 45 marks in performance and interview effectively shifted the criterion to merit‑cum‑seniority, thereby violating the seniority‑cum‑merit principle enshrined in the Regional Rural Banks (Appointment and Promotion of Officers and other Employees) Rules, 1988. The High Court dismissed the writ petition, holding that the bank’s policy was consistent with the seniority‑cum‑merit rule. On appeal, the Supreme Court held that no employee has a right to promotion, only a right to be considered, and that the circular’s addition of a compulsory 45‑mark condition, not expressly provided in the Rules, was impermissible. Consequently, the appeal was dismissed, and the bank was directed to issue fresh promotion orders in conformity with the seniority‑cum‑merit principle.

Issues considered

Whether the bank's circular, by imposing a minimum of 45 marks out of 60 for performance and interview, alters the promotion criterion from seniority‑cum‑merit to merit‑cum‑seniority.
Whether such an addition of a condition not expressly provided in the Regional Rural Banks (Appointment and Promotion of Officers and other Employees) Rules, 1988 is permissible.
Whether an employee has a legal right to promotion or merely a right to be considered for promotion.

Legislation cited

Regional Rural Banks Act, 1976s. Section 29

Subjects

promotionseniority-cum-meritmerit-cum-seniorityservice lawRegional Rural Banksminimum marksdoctrine of reading downemployee rights

Judgment

A BHAGWANDAS TIWARI AND ORS.
v.
DEWAS SHAJAPUR KSHETRIYA GRAMIN BANK & ORS.

NOVEMBER 8, 2006

B [ARIJIT PASAYAT AND LOKESHWAR SINGH PANTA, JJ.]

Service Law:

Promotion-Banking Services-Junior Management Grade J-
C Promotion to be made on basis of 'seniority-cum-merit-Plea that principle
of 'seniority-cum-merit was given a go-by and employer bank adopted the
policy of 'merit-cum-seniority by fixing criteria that only those employees
who secured minimum 45 marks out of 60 in respect ofperformance of work
and interview shall be selected for promotion-Held: Plea not tenable since
D nowhere there was a stipulation of obtaining 45 marks as a compulsory
measure-No minimum marks was prescribed for assessing merit-Addition
of a condition, not specifically provided far, is impermissible-Doctrine of
reading down the provisions cannot be applied to facts af the case-
Doctrines-Doctrine of reading down-Regional Rural Banks (Appointment
and Promotion of Officers and other Employees) Rules, 1988 - Second
E Schedule - Clause 7.

Promotion-No employee has right to be promoted-But has a right to
be considered for promotion.

Promotion-Principle of 'merit-cum-seniority and 'seniority-cum-merit'-
F Difference between, discussed.

Respondent No.1-Bank issued promotion policy for officers working in
Junior Management Grade I for being considered to the next promotional post,
Middle Management II. In terms of the policy, promotion was to be made on
G the basis of seniority-cum-merit. Respondent Nos. 2 to 8 were granted
promotion. However some of their colleagues filed writ petition before High
Court contending that the principle of seniority-cum-merit was given a go-by
and Respondent No. I-bank adopted the policy of merit-cum-seniority by fixing
criteria that only those employees who have secured 45 marks out of 60 in

H 760
BHAGWANDAS TIWARI"· DEWAS SHAJAPUR KSHETRIY A GRAMIN BANK 761

respect of criterion A and C i.e. Performance of work and interview shall be A
selected for promotion. The writ petition was dismissed. Hence the present
appeal

Disposing of the appeal, the Court

HELD: 1. In all services, whether public or private there is invariably a B
hierarchy of posts comprising of higher posts and lower posts. Promotion, as
understood under the service law jurisprudence, is advancement in rank, grade
or both and no employee has right to be promoted, but has a right to be
considered for promotion. [767-E-F]

Sant Ram Sharma v. State of Rajasthan and Ors., AIR (1967) SC 1910, C
referred to.

2.1. The principle of "merit-cum-seniority" lays greater emphasis on
merit and ability and seniority plays a less significant role. Seniority is to be
given weight only when merit and ability are approximately equal On the other D
hand, as between the principles of seniority and merit, the criterion of
'seniority-cum-merit' lays greater emphasis on seniority. (765-E, F; 766-C]
2.2. The High Court missed one basic factor. The circular nowhere
refers to the minimum marks being relatable to criteria A and C and nowhere
there is a stipulation of obtaining minimum 45 marks as a compulsory
measure. If really the intention was to apply the said minimum marks to said E
criteria it would have been specifically provided that way. The doctrine of
reading down the provisions has really no application to the facts of the case.
Addition of a condition which is not specifically provided for is impermissible.
(767-C, DJ
2.3. There is no basis, in the instant case, for the stand that for assessing F
merit a minimum number of marks has been prescribed. There is no mention
that 45 marks out of 60 relate to the prescription of minimum marks for
assessing the merit. The contention that minimum marks were 45 out of 60,
means that an employee is to secure 75% of marks. Such a high percentage
can not be a measure of prescribing minimum marks to assess merit. It
obviously would be a case of shifting the focus to merit-cum-seniority. G
(768-F-H]

B. V. Sivaiah and Ors. v. K. Aridanki Babu and Ors., (1998) 6 SCC 720,
relied on.

Jagathigowda, C.N v. Chairman, Cauvery Gramina Bank, (1996) 9 sec H
762 SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R.

A 677; Union of India v. Mohan Lal Capoor and Ors. (1973) 2 SCC 836; State
of Mysore and Anr. v. Syed Mahmood and Ors., (1968) 3 SCR 363; State of
Kera/a andAnr. v. N.M Thomas and Ors., [1976] 2 SCC 310; State of Mysore
and Anr. v. Syed Mahamood and Ors., AlR (1968) SC 1113; K. Samantaray v.
National Insurance Co. Ltd., AIR (2003) SC 4422 and State of UP. v. Jalal
B Uddin and Ors., [2005) 1sec169, referred to.

CIVIL APPELLATE JURISDITION: Civil Appeal No. 4722 of2006.

From the final Judgment and Order dated 26.6.2004 of the High Court
of Madhya Pradesh, Indore Bench at Indore in LP.A. No. 294/200 l.

c U.U. Lalit, C.K. Sasi for the Appellants.

A.K. Chitale, Vikrant Singh Bais, Niraj Sharma, S.S. Ray and Rakhi Ray
for the Respondents.

The Judgment of the Court was ·delivered by
D
ARIJIT PASA YAT, J. Leave granted.

Appellants call in question legality of the judgment rendered ·by a
Division Bench of the Madhya Pradesh High Court, Indore Bench. By the
impugned judgment the view taken by the learned Single Judge in Writ
E Petition No. 799 of 2000 decided on 25.6.200 l was upheld.

Factual position is almost undisputed and essentially is as follows:

The aforesaid writ petition was filed by ten persons who at the relevant
point of time were employees of the Dewas Shajapur Kshetriya Gramin Bank
F (hereinafter referred.to as the 'Bank'). Challenge in the writ petition was to
the order of promotion issued by respondent No. I-Bank and to the promotion
granted to respondents 2 to 8. The writ petitioners and respondents 2 to 8 .
were at the relevant point of time were working as officers in Junior
Management Grade I. On 26.11.1999, the bank issued a promotion policy
G whereby applications were invited from the officers working in Junior
Management Grade I for being considered to the next promotional post
known as Middle Management II. In terms of the policy, the promotion was
to be made on the basis of seniority-cum-merit and the policy also provided
criteria for consideration of cases for promotion. The relevant clause is clause
7 of the second schedule of the Regional Rural Banks (Appointment and
H
BHAGWANDAS TIWARJ 1•. DEWASSHAJAPUR KSHETRIY AGRAMINBANK [PASAYAT,J.) 763

Promotion of Officers and others Employees) Rules, 1988 (in short the 'Rules'). A
The said Rule came into operation with effect from 28.9.1988 and it was framed
by the Central Government. Respondent No.I-Bank has been established
under the provisions of Regional Rural Banks Act, 1976 (in short the 'Act').
Under Section 29 of the Act the Central Government is empowered to make
rules after consultation with the National Bank for carrying out the provisions B
of the bank. Clause (b)(a) of sub-section (2) of Section 29 was inserted by
Regional Rural Bank's (Amendment) Act, 1987 (in short the 'Amendment
Act') empowering the Central Government to ·make Rules relating to the
manner in which the officers and employees of Regional Rural Bank shall be
appointed in exercise of power conferred under Section 29 read with Section
17 of the Act. As per Rule 5 of the Rules all vacancies are to be filled up on C
deputation, promotion or direct recruitment in accordance with the provisions
contained in the second schedule. Clause 7 of the schedule deals with the
promotion as Area Manager or Senior Managers. Clause 7 reads as follows:

"Area Managers or Senior Managers:
D
(a) Source of recruitment Hundred percent by promotion from
amongst confirmed officers working in
the bank. Promotions will be on the
basis of seniority-cum-merit. If suitable
officers are not available internally, these
posts could be filled by taking E
temporarily officers of the sponsor
banks and other banks or organizations
on deputation.

(b) Qualifications and eligibility (i) A Graduate of recognized University
or any equivalent qualifications
F
recognized as such by Government of
India, preference being given to
Agriculture or Commerce or Economics
graduates.
G
(ii) Eight years service as an officer in
the regional rural bank concerned.
Provided that the Board may, with the
prior approval of National Bank, relax
the period not exceeding two years, if
H
764 SUPREME COURT REPORTS (2006] SUPP. 8 S.C.R.

A suitable candidates of requisite
experience are not available.
Note: The post of Area Managers
and Senior Managers will be
equivalent in rank and will
B be inter changeable.
(c) Mode of selection Interview and assessment of
performance for the preceding three
years period as officer for promotion."
Standard prescribed as per Circular is as follows:
c "(7) Standard: Standard of selection in promotion procedure shall be
as under:-
(a) Performance of work -Maximum 30 Marks

(work performance for the
D last 3 years)

(b) Period of service -Maximum 40 Marks
(2 marks per year for the
completed period of service
E subject to maximum 40 marks)

(c) Interview -Maximum 30 Marks

Total maximum marks -100 Marks
F In order to be selected for promotion, obtaining minimum 45 marks shall be
compulsory."

Grievance of the writ petitioners was that the principle of promotion on
the basis of seniority-cum-merit was given a go-by and the respondent No. l-
bank adopted the policy of merit-cum-seniority by fixing criteria that only
G those employees who have secured 45 marks out of 60 in respect of criterion
A and C i.e. Performance of work and interview shall be selected for promotion.

According to the appellants there was no such requirement in the
Circular and only requirement was obtaining minimum 45 marks in ·order to be
selected for promotion. By prescribing minimum of 45 marks out of 60, basis
H
BHAGWANDASTIWAR!r.DEWASSHAJAPURKSHETRIYAGRAMINBANK[PASAYAT,J.) 765

shifted from seniority-cum-merit to merit-cum-seniority. A
Learned Single Judge did not accept this contention and dismissed the
writ petition. It was held that in view what has been stated by this Court in
B. V. Sivaiah and Ors. v. K. Addanki Babu and Ors., [1998] 6 SCC 720, the
stand adopted by the bank was in order. Reference was made to paragraphs
16, 18 and 37 of B. V. Sivaiah case (supra) to hold that criterion of seniority- B ·
cum-merit was really applied. While applying the said criterion, seniority alone
is not to be considered, and merit cannot be ignored. A reference was also
made to the decision in Jagathigowda, C.N. v. Chairman, Cauvery Gramina
Bank, [ 1996] 9 sec 677.

The Division Bench upheld the judgment of learned Single Judge by C
observing that the doctrine has been rightly applied in the present case.
Though there was no mention in the Circular that the employee has to secure
more than 45 marks out of 60, that appears to be the intention.

Stand of the appellants before the High Court was reiterated at the time D
of hearing of this appeal.

Learned counsel for the respondents on the other hand submitted that
there was no departure from the criterion of seniority-cum-merit. A candidate
was'required to obtain 45 marks out of 60 because there was no question of
obtaining marks so far as service is concerned, that was only a conclusion. E
The principle of "merit-cum-seniority" lays greater emphasis on merit
and ability and seniority plays a less significant role. Seniority is to be given
weight only when merit and ability are approximately equal. In the context of
Rule 5(2) of the Indian Administrative Service/Indian Police Service
(Appointment by Promotion) Regulations, 1955 which prescribed that "selection F
for inclusion in such list shall be based on merit and suitability in all respects
with due regard to seniority" Mathew J. in Union of India v. Mohan Lal
Capoor and Ors., [1973] 2 SCC 836, has said:-

"For inclusion in the list, merit and suitability in all respects
should be the governing consideration and that seniority should play G
a secondary role. It is only when merit and suitability are roughly
equal that seniority will be a determining factor, or if it is not fairly
possible to make an assessment inter se of the merit and suitability
of two eligible candidates and come to a firm conclusion, seniority
would till the scale". H
766 SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R.

A Similarly, Beg J. (as the learned Chief Justice then was) has said (SCC p.851,
para 22):

"22. Thus, we think that the correct view, in conformity with the plain
meaning of words used in the relevant rules, is that the entrance" or
.'
"inclusion" test, for a place on the select list, is competitive and
B comparative applied to all eligible candidates and not minimal like
pass marks in an examination. The Selection Committee has an
unrestricted choice of the best available talent, from amongst eligible
candidates, determined by reference a reasonable criteria applied in
assessing the facts revealed by service records of all eligible candidates
c so that merit and not here seniority is the governing factor."

On the other hand, as between the principles of seniority and merit, the
criterion of 'seniority-cum-merit' lays greater emphasis on seniority. In State
of Mysore and Anr. v. Syed Mahmood and Ors., [1968] 3 SCR 363, while
considering Rule (a)(b) of the Mysore State Civil Services General Recruitment
D Rules, 1957 which required promotion to be made by selection on the basis
of seniority-cum-merit, this Court has observed that the rule required promotion
to be made by selection on the basis of "seniority subject to the fitness of
candidate to discharge the duties of post from among persons eligible for '
promotion". It was pointed out that where promotion is based on_ seniority-
cum-merit, the officer cannot claim promotion as a matter of right by virtue
E of his seniority alone and if he is found unfit to discharge the duties of the
higher post, he may be passed over and an officer junior to him may be
promoted.

In State ofKera/a and Anr. v. N. M Thomas and Ors., [ 1976] 2 SCC 310,
F A.N. Ray, C.J. has thus explained the criterion of"seniority-cum-merit" (SCC
p.335, para 38):-

"With regard to promotion the normal principles are either merit-
cum-seniority or seniority-cum-merit. Seniority-cum-merit means that
given the minimum necessary merit requisite for efficiency of
G administration, the senior though the less meritorious shall have
priority."

The above position was highlighted in Sivaiah case (supra). At para 18
of the said judgment it was noted as follows:-

"We thus arrive at the conclusion that the criterion of"seniority-cum-
H
BHAGWANDASTIWARl1·.DEWASSHAJAPURKSHETRNAGRAMINBANK[PASAYAT,J.] 767

merit" in the matter of promotion postulates that given the minimum A
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 B
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."

The impugned judgment of the learned Single Judge and Division Bench
c
of the High Court missed one basic factor. The circular nowhere refers to the
minimum marks being relatable to criteria A and C and nowhere there is a
stipulation of obtaining minimum 35 marks as a compulsory measure. If really
the intention was to apply the said minimum marks to said criteria it would
have been specifically provided that way. It is not~d by the High Court that D
in the circular or in the I 15th or I 17th report of the respondent No. I-Bank
there was no mention about this aspect. The doctrine of reading down the
provisions has really no application to the facts of the case. If the stand of
respondents is accepted, it would mean addition of a condition which is not
specifically provided for. That is impermissible.
E
In all services, whether public or private there is invariably a hierarchy
of posts comprising of higher posts and lower posts. Promotion, as understood
under the service law jurisprudence, is advancement in rank, grade or both
and no employee has right to be promoted, but has a right to be considered
for promotion. The following observations in Sant Ram Sharma v. State of F
Rajasthan and Ors., AIR (1967) SC 1910 are significant:

"The question of a proper promotion policy depends on various
conflicting factors. It is obvious that the only method in which absolute
objectivity can be ensured is for all promotions to be made entirely
on grounds of seniority. That means that if a post falls vacant it is G
filled by the person who has served longest in the post immediately
below. But the trouble with the seniority system is that it is so
objective that it fails to take any account of personal merit. As a
system it is fair to every official except the best ones; an official has
nothing to win or lose provided he does not actually become so
H
768 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A inefficient that disciplinary action has to be taken against him. But,
though the system is fair to the officials concerned, it is a heavy

..
burden on the public and a great strain on the efficient handling of
public business. The problem, therefore, is how to ensure reasonable
prospect of advancement to all officials and at the same time to
protect the public interest in having posts filled by the most able
B man? In other words, the question is how to find a correct balance
between seniority and merit in a proper promotion-policy."

The principles of seniority-cum-merit and merit-cum-seniority are
conceptually different. For the former, greater emphasis is laid in seniority,
C though it is not the determinative factor, while in the latter merit is the
determinative factor. In The State ofMysore and Anr. v. Syed Mahamood and
Ors., AIR (1968) SC 1113, it was observed that in the background of Rule
4(3)(b) of the Mysore State Civil Services (General Recruitment) Rules, 1957
which required promotion to be made by selection on the basis of seniority-
cum-merit, that the rule required promotion to be made by selection on the
D bas.is of "seniority subject to fitness of the candidate to discharge the duties
of the post from among persons eligible for promotion". It was pointed out
that where the promotion is based on seniority-cum-merit the officer cannot
claim promotion as a matter of right by virtue of his seniority alone and if he
is found unfit to discharge the duties of the higher post, he may be passed
E over and an officer junior to him may be promoted. But these are not the only
modes for deciding whether promotion is to be granted or not.

These aspects were highlighted in K. Samantaray v. National Insurance
Co. Ltd, AIR (2003) SC 4422, and in State of UP. v. Jalal Uddin and Ors.,
r2005J l sec 169.
F
There is no basis, in the instant case, for the stand that for assessing
merit a minimum number of marks has been prescribed. The contention that
minimum marks were 45 out of 60, me:ins that an employee is to· secure 75%
of marks. S•:ch a high percentage can not b~ a measure of prescribing minimum
marks to assess merit. It obviously would be a case of shifting the focus to
G merit-cum-seniority. In para 37 of Sivaiah case (supra), this Court noted that
minimum marks prescribed for assessing merit do not depart from the seniority-
cum-merit principle. But the factual position is different here. There is no
mention that 45 marks out of 60 relate to the prescription of minimum marks
for assessing the merit. In Jalal Uddin 's case (supra) it was noted that in
seniority-cum-merit greater emphasis is on seniority though it is not the
H determinative factor. In the ci:.se of merit-cum-seniority, merit becomes a
BHAGWANDAS TIWARI 1•. DEWAS SHAJAPUR KSHETRIY A GRAMJN BANK [PASAYAT, J.J 769

determinative factor. In fact, the position noted by thi·s Court in paragraphs A
19, 20, 24 and 25 of Sivaiah case (supra) dealt with almost identical fact
situation, apart from paragraph 16 of the judgment.

Appellants have no grievance so far as respondents 2, 3 and 4 are
concerned as their date of joining is earlier and they have secured higher
marks. The appeal stands dismissed, so far as they are concerned. B
The appeal is bound to succeed to the extent indicated. The respondent
no. I shall issue fresh orders for promotion in line with the judgment after
working out the necessary details. There will be no order as to costs.

B.B.B. Appeal disposed of. C