K. SAMANTARAYversusNATIONAL INSURANCE CO. LTD.

                          K. SAMANTARA Y                                  A
                                   v.
                 NATIONAL INSURANCE CO. LTD.

                        SEPTEMBER 12, 2003

         [DORAISWAMY RAJU AND ARIJIT PASAYAT, JJ.]                        B
     Service Law :

      Seniority-Promotion-Policy for Officers-Seniority-cum-merit and
merit-cum seniority-Difference between-Officer found unsuitable for
promotion-Representation rejected-Writ petition filed on the ground       c
that policy overlooked principle of seniority-cum-merit and laid undue
stress on merit dismissed-Correctness of-Held : In seniority-cum-merit
greater emphasis is laid on seniority while in merit-cum-seniority merit is
the determinative fa..:tor-But as one goes higher in the ladder ofpromotional
posts seniority loses importance and merit gets primacy-The promotion D
policy laid stress not only on seniority but also on merit as well as other
relevant aspects-Thus decision of High Court upheld.

      The appellant was working as an Administrative Officer in the
respondent-company. The respondent promulgated a "Promotion Policy E
for Officers". The appellant was not found suitable for promotion and
his representation to the chairman of the Management Committee was
rejected. The writ petition filed by the appellant was dismissed by the
High Court. Hence this appeal.

     On behalf of the appellant, it was contended that the principle of F
seniority-cum-merit was given a go-by and undue stress was placed on
merit.

     On behalf of the respondent, it was contended that on a reading
of the whole policy it was clear that seniority-cum-merit was not the G
only criterion for granting promotion.

     Dismissing the appeal, the Court

     HELD : I. In all services, whether public or private there is
invariably a hierarchy of posts comprising of higher posts and lower H
                                 669
    670                  SUPREME COURT REPORTS (2003] SUPP. 3 S.C.R.

A posts. Promotion, as understood under the Service Law Jurisprudence,
    is advancement in rank, grade or both and no employee has a right to be
    promoted, but has a right to be considered for promotion. [673-C, DJ

          Sant Ram Sharma v. State ofRajasthan & Ors., AIR (1967) SC 1910
B and Syndicate Bank Scheduled Castes and Scheduled Tribes Employees
    Association (Regd) v. Union of India & Ors., [1990) Supp. SCC 350,
    referred to.

         2. The principles of seniority-cum-merit and merit-cum-seniority
    are conceptually different. For the former, greater emphasis is laid on
C   seniority, though it is not the determinative factor, while in the latter
    merit is the determinative factor. [673-H, 674-A)

          State of Mysore v. Syed Mahamood, AIR (1968) SC 1113, referred
    to.

D         3. The "Promotion Policy for Officers" shows the service structure
    like a pyramid. The higher one goes in the ladder of promotional posts
    remarkably the seniority loses importance, and merit gets primacy.
                                                                     [675-G)

         4. While laying down the promotion policy or rule, it is always
E   open to the employer to specify the area and parameter of weightage
    to be given in respect of merit and seniority separately so long as the
    policy is not a colourable exercise of power. [676-8)

          B. V Sivaiah v. K. Addanki Babu, [1998) 6 SCC 720, held inapplicable.
F
         5.1. In the case at hand, prior to the formulation of policy, certain
    guidelines existed and the objectives of the policy were to rationalize
    and codify the existing guidelines relating to promotions within the
    Officers cadre. There is no statutory rule operating. It is for the
    employer to stipulate the criteria for promotion, the same pertaining
G   really to the area of policy making. It was, therefore, permissible for
    the respondent to have its own criteria for adjudging claims on the
    principle of seniority-cum-merit giving primacy to merit as well,
    depending upon the class, category and nature of posts in the
    hierarchy of administration and the requirements of efficiency for such
H   posts. (676-D, E]
     K.SAMANTARAYv. NATIONAL INSURANCE CO. LTD. [PASAYAT,J.]          671

     5.2. A reading of the whole policy reveals that stress was not on A
seniority alone and weightage was sought to be imposed on merit and
other relevant aspects also. (676-F]

    .CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7280 of
2003.
                                                                            B
    From the Judgment and Order dated 4.7.2002 of the Orissa High
Court in O.J. C. No. 6532 of 1992.

    Yasobant Das, Arvind Kumar Tiwari and Sudarsh Menon for the
Appellant.                                                      C
    Mukul Rohtagi, Additional Solicitor General and Remeshwar Prasad
Goyal for the Respondent.

     The Jud;?;ment of the Court was delivered by
                                                                            D
     ARIJIT PASAYAT, J. : Leave granted.

      Whether promotion has been rightly denied and what is the conceptual
difference between the principles of merit-cum-seniority vis-a-vis seniority-
cum-merit has been the subject matter of controversy in large number of E
cases. It is not unusual that a person entering into a particular service has
an expectation that he will go higher in the hierarchy and denial thereof
results invariably in litigation. The case at hand is no exception.

      At the threshold of the litigious history, appellant was working as an F
Administrative Officer of the National Insurance Company Limited
(hereinafter referred to as 'the employer'). A· promotional policy was
formulated on 14.2.1990 and is called "Promotion Policy for Officers". It
was indicated in clause 3. I that provisions of this policy are applicable to
promotion of Officers up to and including the cadre of General Manager.
Appellant was not found suitable for promotion of the relevant periods i.e. G
1991-92 and 1992-93. As he was not granted promotion, he filed a
representation to the Chairman of the Managing Committee of the employer-
company indicating that many of his juniors in the cadre of Administrative
Officer/Branch Manager had been given promotion which was denied to
him. When the representation was rejected for the period 1991-92, and H
    672                   SUPREME COURT REPORTS [2003) SUPP. 3 S.C.R.
A same was the fate for 1992-93, the appellant filed writ petition before the
  Orissa High Court. The basic stand in the writ petition was that the
  appellant had been wrongly denied promotion. During course of hearing
  of the writ petition, it was contended that the stipulations in clause in para
  7.1 of the policy are in variance with those in para 1.2. It was highlighted
B that promotion was to be granted on the basis of seniority-cum-merit. As
  42 marks out of 100 were earmarked for seniority, the principle of
  seniority-cum-merit was given a go-by and undue stress was placed on
  merit. Strong reliance was placed in the judgment of learned Judge of
  Rajasthan High Court in Umesh Chand Pandya v. The New India
  Assurance Co. and Ors. and Upendra Kumar Pradhan v. The New India
C Assurance Co. and Ors. delivered on 29.5.1997 consisting identical
  provision in the policy of the New India Assurance Company. The
  employer resisted the claim on the ground that on a reading of the
  promotional policy and object underlying the same, it is clear that there
  has been no infraction. It was submitted that basis for promotion was not
D seniority alone but seniority-cum-merit and other relevant aspects, which
  are clearly linked and connected with the process of selection for promotion.
  The High Court by the impugned judgment held that the appellant was not
  entitled to any relief and there was no illegality in the decision-making
  process of the employer in denying promotion.
E
           Learned counsel for the appellant submitted that para 1.2 makes it
    clear that the basis for promotion is seniority-cum-merit alone and by
    allotting 42 marks out of 100, such policy has been overlooked by attaching
    undue importance to so-called merit. A decision of this Court in B. V.
F   Sivaiah and Ors. v. K. Addanki Babu and Ors., [1998) 6 sec 720 was
    referred to in order to substantiate the plea.

       In response, Mr. Mukul Rohtagi, learned Additional solicitor General
  submitted that on a reading of the whole policy it is clear that seniority-
  cum-merit is not the only criteria for granting promotion. Para 7.2 itself
G makes it clear that as one goes higher in the hierarchy of posts seniority
  has lesser importance, and merit has overriding importance. A reference
  was made to Syndicate Bank Scheduled Castes and Scheduled Tribes
  Employees Association (Regd), through its General Secretary, K.S. Badlia
  and Ors. v. Union of India, through its Additional Secretary, Ministry of
H Finance (Deptt. of Economic Affairs), Banking Division and Ors., [1990)
     K. SAMANT ARAY v. NATIONAL INSURANCE CO. LTD. [PASAYAT, J.]         673

Supp. SCC 350 to contend that were seniority-cum-merit and all other A
relevant aspects have been duly taken note of, there is no scope for making
a grievance. It pointed out that in the writ petition there was no challenge
to the policy or its efficacy and, only during argument probably sustenance
was drawn from the Rajasthan High Court's judgment and plea regarding
the legality of para 7 .2 was raised. It is also highlighted that the policy is B
in operation of more than a decade, and even without imp leading a single
officer who has been promoted on the basis of para 7.2, the writ petition
was misconceived.

      Jn all services, whether public or private there is invariably a
hierarchy of posts comprising of higher posts and lower posts. Promotion, C
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 Rajasthan and Ors., AIR (1967) SC 1910 are
significant :                                                             D
         "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 filled by the person who has served longest in E
         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 inefficient that disciplinary action has F
         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 G
         in having posts filled by the most able 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, H
    674                   SUPREME COURT REPORTS [2003] SUPP. 3 S.C.R.

A though it is not the determinative factor, .while in. the latter merit is the
  determinative factor. In The State of Mysore and Anr. v. Syed Mohamood
  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
B of Seniority-cum-merit, that the rule required promotion to be made by
  selection on the basis 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
C 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. But these are not the only modes for deciding whether promotion
  is to be granted or not.

         Before we analyse the legal position further, it would be appropriate
D   to extract some of the relevant paragraphs of the promotion policy.

             "I.I The main objective is to rationalise and codify the existing
             guidelines relating to promotions within the Officers cadre (Class-
             !) and to formulate a well defined promotion policy with built in
             motivation, providing therein reasonable opportunities to officers
E            to move up in hierarchy, keeping in view the legitimate aspirations
             of the Officers to shoulder higher responsibilities.

             1.2. This is aimed to be achieved by providing for promotion of
             officers through a process of selection on the basis of their
F            seniority-cum-merit. While seniority is a known fact depending
             upon the number of years of service put in, merit, would inter-
             alia comprise of job knowledge, past performance, suitability and
             growth potential. These are to be assessed on the basis of
             performance appraisal system. Suitability and growth potential
             can be assessed from recommendations and remarks of Officers
G            in the appraisals and interviews, were applicable.

              7. CRITERIA FOR PROMOTION AND WE!GHTAGE :

             7.1 Selection for promotion shall be based on seniority, insurance
H            qualifications and merit-cum-seniority potential, as brought out in
     K. SAMANTARAYv. NATIONAL INSURANCE CO. LTD. [PASAYAT, J.)         675
          performance appraisals. In addition, for promotion to the cadre of A
          Manager there shall be interview before selection. In assessment,
          maximum weightage in terms of numerical marks for various
          criteria shall be worked out as under :

                           A.A.0.   A.O.      A.M.     Dy.MANAGER
                                                                             B
                           TO       TO        TO       TO

                           A.O.     A.M.      DY.M.    MANAGER

  (a) Seniority            60       42        30       20
                                                                             c
  (b) Insurance
  Qualification            10       8

  (c) C.R. FORM

  (i) Traits in C.R.       10       15        20        15                   D
  (ii) Performance         10       15        25       25

  (iii) Growth potential   10       20        25       25

  (d) Interview                                         15                   E

  Total                    100      100       100       100


          NOTE : Marks for Insurance Qualification shall come into effect F
          for promotion exercise for 1992 and onwards. Till then Total
          marks for A.A.O. to A.O. and A.O. to A.M. shall be 90 to 92
          respectively."

      As the figurative data extracted from the policy goes to show the G
service structure is like a pyramid. The higher one goes in the ladder of
promotional posts remarkably the seniority loses importance, and merit
gets primacy.

     In Syndicate Bank case (supra) observations in para 14 throw
considerable light on the controversy. The third mode (apart from seniority- H
    676                   SUPREME COURT REPORTS [2003] SUPP. 3 S.C.R.

A cum-merit and merit-cum-seniority modes) has been recognized. It has
    been described as a "hybrid mode of promotion". In other words, there
    is a third category of cases where seniority is duly respected and merit is
    appropriately recognized.

B         While laying down the promotion policy or rule, it is always open
    to the employer to specify area and parameter of weightage to be given
    in respect of merit and seniority separately so long as policy is not
    colourable exercise of power, nor has the effect of violating ofany statutory
    scope of interference and other relatable matters. The decision in B. V.
    Sivaiah case (supra) is clearly distinguishable on facts and in law. That was
C   a case where statutory rules governed the field. This Court, inter alia, held
    that fixing terms which are at variance with the statutory rules is
    impermissible. In the case at hand, prior to the formulation of policy in
    February, 1990, there were no codified prescriptions. It was the stand of
    the respondent-employer that prior to the formulation of the policy, certain
D   guidelines existed and the objectives of the policy were to rationalize and
    codify the existing guidelines relating to promotions within officers cadre.
    There is no statutory rule operating. It is for the employer to stipulate the
    criteria for promotion, the same pertaining really to the area of policy
    making. It was, therefore, permissible for the respondent to have their own
E   criteria for adjudging claims on the principle of seniority-cum-merit giving
    primacy to merit as well, depending upon the class, category and nature
    of posts in the hierarchy of administration and the requirements of
    efficiency for such posts.

          Reading of the whole policy reveals that stress was not on seniority
F alone and weightage was sought to be imposed on merit and other relevant
    aspects also. In view of this conclusion it is not necessary to go into the
    question offence-sitting stand adopted by the appellant and non-impletion
    of affected persons. There is no scope for interference in this appeal, which
    is accordingly dismissed. Costs made easy.
G
    V.S.S.                                                   Appeal dismissed.