Holding

The Promotion Policy, including clauses 5.1, 5.5, 6.2 and 7.1, is constitutionally valid and non‑discriminatory, and Regulation 7 is upheld as final.

Summary

The appellants, who had risen from clerks to assistant managers in the New Bank of India, were placed in the Junior Management Grade Scale I along with accountants after the bank was taken over by the Union of India under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980. They challenged Regulation 7 of the 1982 Officers' Service Regulations and clauses 5.1, 5.5, 6.2 and 7.1 of the bank's Promotion Policy as violative of Articles 14 and 16 of the Constitution, alleging that their prior seniority and assistant‑manager service were being wiped out. The Punjab & Haryana High Court Single Judge upheld Regulation 7 but struck down the contested clauses as ultra vires; the Division Bench reversed this, holding the policy non‑discriminatory and giving appropriate weightage to assistant‑manager service. On appeal, the Supreme Court held that Regulation 7 had become final and could not be reopened, and that the Promotion Policy, including the impugned clauses, was constitutionally valid and did not erase seniority. Consequently, the Court dismissed the appeal, confirming the High Court's decision.

Issues considered

Whether Regulation 7 of the New Bank of India (Officer's Service) Regulations, 1982 is valid and can be reopened on appeal.
Whether clauses 5.1, 5.5, 6.2 and 7.1 of the Promotion Policy are ultra vires of Regulation 18(5) and violate Articles 14 and 16 of the Constitution.
Whether the seniority of officers promoted to Assistant Manager before the takeover is wiped out, resulting in discriminatory treatment.

Legislation cited

Constitution of Indias. Article 14, s. Article 16

Subjects

service lawpromotionsenioritydiscriminationArticles 14 and 16bank takeoverregulationpromotion policyinter‑se seniority

Judgment

A SH. K.B. SHARMA AND ANR.
v.
UNION OF INDIA AND ANR.

JANUARY 28, 1998

B [S. SAGHIR AHMAD AND G.B. PATTANAIK, JJ.]

Service law :

New Bank of India (Officer's Service) Regulations, I 982-Regulation
C 7-Promotion-Appellants joined as clerks in Bank, later promoted as
Accountants and again promoted as Assistant Managers-Bank taken over
by Union of India-New Regulations and Promotion Policy framed-
Appel/ants placed in Junior Management cadre, scale-/ along with
Accountants-New Regulations and Promotion Policy challenged in writ
D petition before High Court-Single Judge upheld the challenged Regulation
but struck down Promotion Policy-Division Bench in LPA upheld Promotion
Policy as there was no arbitrariness or inequality-On appeal Held,
Promotion Policy not discriminatory and no inte1ference called for.

Promotion Policy-Clauses 5. I. 5. 5, 6. 2 and 7. I-Determination of
E inter-se seniority-Held, Seniority before take over or tenure of service as
Assistant Manager not wiped off-Due weightage given to services rendered.

The appellants had joined the New Bank of India as clerks and were
promoted as Accountants and further promoted and confirmed as Assistant
Managers in the same pay scale, with the special allowance. While they were
F working as such, the Bank was taken over by the Union of India under
Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980
and later on the New Bank of India (Officers Service) Regulation 1982 was
framed along with a Promotion Policy.

As per clause 5.1 of the Promotion Policy the appellants were placed
G in the Junior Management Grade Scale I along with Accountants and their
seniority was determined. They filed a writ petition challenging the validity
of Regulation 7 and Clauses 5.1, 5.5, 6.2 and 7.1 of the Promotion Policy
as being violative of Art, 14 and 16 of the Constitution. Single Judge upheld
Regulation 7 which provided for categorisation and fitment of exi.5ting officers,
H but struck down the impugned clauses of the Promotion Policy holding them
388
K.B. SHARMA v. U.0.1. 389
to be ultravires of Regulation 18(5) and also violative of Articles 14 and 16 A
--r- of the Constitution.

The Division Bench in L.P.A. held that the Single Judge committed an
error by holding that unequals had not been treated equally. It also held that
there was no arbitrariness or inequality in the Promotion Policy. Hence, this
appeal. B
y~

The appellants contended that the very categorisation as per Regulation
7 is invalid as it puts Accountants and Assistant Managers in one grade; the
High Court was in error when it upheld the clauses of the Promotion Policy
as prior to the take over, the appellants had been promoted and in any event
they cannot be held to be junior to Accountants and be placed in the same c
grade; and that the seniority of the employees is being determined on
continuous length of service; therefore unequals like Accountants and
Assistant Managers are being treated equals which per se is hostile
discrimination.
D
--< The respondents contended that the expression "promotion", used in
""" the orders, was not in fact a promotion from one cadre to the other;
Accountants and Assistant Managers were in one grade scale, and as such
unequals were not being treated equally; and that the Promotion Policy for
determination of inter-se-seniority gave appropriate weightage for the services
rendered as Assistant Manager/Manager and seniority is not determined on E
length of service.

Dismissing the appeal, this Court

HELD : 1. Validity of Regulation 7 of New Bank of India (Officer's
Service) Regulations, 1982 was upheld by Single Judge and appellants did F
...: not challenge the same by filing any appeal and as such the decision in that
• respect has reached finality and cannot be re-opened in an appeal against
jndgment of the Division Bench where the only question was the validity of
different clauses of the Promotion Policy. [393-D-E]
2.1. A plain reading of the provisions of the Promotion Policy clearly G

-.
demonstrates that neither the seniority of the appellants in the erstwhile
'.""'"" Bank before the take over of the same nor their services as Assistant
Manager assuming the same to be a promotion are being wiped off in any
manner so as to hold the provisions ofthe Promotion Policy discriminatory.
On the other hand the provisions for determination of inter-se seniority H
390 SUPREME COURT REPORTS [1998] l S.C.R.

A under the Promotion Policy provide for additional weightage for the service
rendered by an employee as Assistant Manager in the erstwhile Bank. 1 -
1396-D-E)

2.2. Prior to taking over of the Bank the Accountants and Assistant
Managers were in the same grade scale and the Assistant Managers were
B getting an additional allowance of Rs. 75 p.m. for the onerous nature of duty
they were performing and, therefore, the same is not a promotion Stricto · 'f'
Se11su. 13%-E-F)

2.3. The Promotion Polky has taken care of giving additional weightage
for the services rendered as Assistant Manager in addition to the length of
C service for determination of seniority in the cadre of Junior Management
Grade Scale-I; neither any part of the service thus rendered by an employ\!e
has been ignored nor the Policy can be attacked as discriminatory. 1396-F)

2.4. In the matter oflaying down the Policy and criteria for promotion,
the very Promotion Policy, more particularly Clause I I thereolf, provides for
D different weightage for various factors and as such in laying du,wn the Policy
all relevant factors have been taken into consideration. 1396-G-H)

3. There is no invalidity in the impugned judgment olf the Division
-
Bench requiring interference. The appellants who are stated to have been
E promoted to higher grades on the basis of the judgment of th'e single judge
may not be reverted from the promotional posts they a re occupying
notwithstanding their seniority in the cadre of Junior Management Grade
Scale-I being lowered down in implementation of the provisions of the
Promotion Policy. [397-A-C)

p CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4223 of
l~. ~
!"
From the Judgment and Order dated 23.3.90 of the Punjab and Haryana
High Court in L.P.A. No. 310 of 1988.

G S.S. Javelli, Dr. Meera Agarwal and Ramesh Chandra Mishra for the
Appellants.

V.R. Reddy, Additional Solicitor General, A.K. Sikri, N.N. Goswami, V.
K. Rao, Ms. Madhu Sikri, C.B. Babu and V. K. Verma for the Respondents.

H The Judgment of the Court was delivered by
K.B. SHARMA v. U.0.1. [G.B. PATTANAIK, J.) 391
G. B. PATT ANAIK, J. This appeal is directed 'against the judgment of A
- ::,...- the Division Bench of the Punjab & Haryana High Court dated March 23,
1990, in Letters Patent Appeal No. 310 of 1988. By the impugned judgment
the Division Bench has reversed the judgment of the learned Single Judge
and allowed the LPA. The appellants are the employees of the New Bank of
India who joined the Bank as clerk in the year 1972. They were promoted as
Accountants in the year 1977. In the year 1980 they were further promoted
B
)----
as Assistant Manager in the same scale of pay as that of Accountant but
special allowance of Rs. 75 p.m. had been granted. These appellants had
undergone some Probationary period and were confirmed as Assistant
Manager of the Bank. While they were so continuing the Bank was itself
taken over by the Union of India under the Banking Companies (Acquisition c
and Transfer of Undertakings) Act, 1980. After the taking over of the Bank
a set of Regulations were framed, called, The New Bank of India (Officers
Service Regulation) 1982, providing for service conditions of the employees
including the categorisation of the officers and their fitment in the new
1
grades. The Bank also formulated a set of policy for promotion, called the

- --.::: "Promotion Policy' which provided for the inter se seniority of these employees D
in different grades after their fitment and the mode and criteria for promotion.
The appellants who were working as Assistant Manager before !'!king over
of the Bank in the pay scale of Rs. 400-1110, which was also the scale of pay
meant for Accountants were placed in the Junior Management Grade Scale I
alongwith the Accountants. Their seniority in the Junior Management Grade E
Scale I was determined under Clause 5.1 of the. Promotion Policy. Being
aggrieved by their fitment into the Junior Management Grade Scale I as well
as determination of their seniority in the said grade in accordance with the
Promotion Policy they filed a Writ Petition challenging the validity of
Regulation 7 as well as Clauses 5.1, 5.5, 6.2 and 7.1 of the Promotion Policy
inter alia on the ground that the Regulation in question has undone the F
'... promotion of the appellants already achieved and as such is violative of
Articles 14 and 16 of the Constituti0n. It was also contended that different
clauses of the Promotion Policy indicating the mode for determination of inter
se seniority in the new cadre where the appellants have been filled in are also
violative of Articles 14 and 16 inasmuch as their promotion from the post of
G
Accountants to the post of Assistant Manager has not been given any
·,,_-
w~ightage and such Promotion Policy, more particularly Clause 5.1 thereof
contravenes Sub-Regulation 5 of Regulation 18.

The respondents on the other hand took the stand that prior to taking
over of the Bank the Accountants and Assistant Managers were drawing the H
-------------------------~··--
I
' _,,
\
392 SUPREME OOURT REPORTS [1998) I S.C.R.-~
A same scale of pay, but those who were being posted as Assistant Manager
were merely getting an allowance of Rs. 75 per month. The word "promotion'
is a misno.aer and, therefore, the appellants cannot claim any right on that
score. Further stand of the respondents was that once the bank wa~ taken
over, the employer had ample powen to determine the service conditions by
framing Rules and Regulations and in exercise of such power Regulations
B having been framed and the post having been categorized to different grades
and their fitment having been indicated there is no justification on the stand
of the appellants that they could not have been fitted in Junior Management
Grade Scale I alongwith the Accountants. So far as the Promotional Policy Is
concerned, it was the stand of the respondents that there has Ileen no
C discrimination and due weightage has been given for the period an employee
has served as an Assistant Manager even for determination of their seniority
in the cadre of Junior Management Grade Scale I and as such there has been
no discrimination nor violation of Articles 14 and 16 of the Constitution. The
learned Single Judge, however, on consideration of the different provisions
of the Regu,lation as well as the Clauses of Promotion Policy came to hold
D that Regulation 7 providing for categorisation and fitment of the existing
officers of the Bank on being taken over its legally valid and there is no
constitutional infirmity and as such the appellants were rightly put in the
Junior Management Grade Scale I. But so far as the Clauses of Promotion
Policy is concerned, the learned Single Judge came to hold that Clauses 5.1,
E 5.5, 6.2 and 7.1 are ultra vires of Regulation 18(5) and are otherwise
discriminatory and violative of Articles 14 and '16 or'the Constitution and
accordingly those Clauses of Promotion Policy were struck down. The
appellants did not challenge the judgment of the learned Single Judge and,
therefore, the finding of the learned Single judge that their fitment into Junior
Management Grade Scale I and that Regulation 7 is constitutionally valid has
F. become final. The Bank, however, assailed the judgment of the learned Single
Judge striking down the different Clauses of Promotion Policy, as stated
' earlier, by filing a LPA. The Division Be~ch considered the diffe~entprovisions
of the Promotion Policy and came to hold that the Single Judge committed
an error by holding that unequals have been treated as equals and the said
G conclusion cannot be sustained. The Division Bench further came to hold
that no unreasonableness or arbitrariness or inequality can be found in the
Promotional Policy providing the mode for determination of inter se seniority
' of the officers in any particular grade. It also took note of the fact that even
while fixing the seniority under the Promotion ,Policy, additional weightage
has been provided for discharging the functions of the Manager/Assistant
H Manager managing one man Bank. Further weightage has also been provided
K.B. SHARMA v. U.0.1. [G.B. PATTANAIK, J.] 393
at th'e time of consideration for promotion and therefore, the Clauses of the A
Promotional Policy cannot be held to be violative of Articles 14 and 16 of the
Constitution. With these conclusions the judgment of the learned Single
Judge having been set aside and the Clauses of Promotional Policy having
been held to be valid the appellants have preferred this appeal.

Mr. Javeli, learned senior counsel appearing for the appellants B
y strenuously urged that the very categorisation of the officers in the terms of ·
Regulation 7 by putting the Assistant Managers and the Accountants in one
grade is invalid and has been so held by the Andhra Pradesh High Court in
Sainathan 's case and the Special Leave Petition against the said judgment
has not been entertained by this Court and as such Regulation 7 must be held C
to be invalid. We are unable to accept this contention of Mr. Javeli, learned
senior counsel, inasmuch as in Sainathan 's case only the inter se seniority
·of the officers was under challenge and the determination made thereunder
by the High Court was not interfered with by this Court inasmuch as the
Special Leave Petition was dismissed in limini. Neither the High Court has
struck down Regulation 7 nor this Court had the occasion to go into that D
question while dismissing the Special Leave Petition in limini. That apart, as
has been stated earlier, in the case in hand the learned Single Judge upheld
the validity of Regulation 7 and the appellants did not challenge the same by
filing any appeal and as such the decision of the learned Single Judge in that
respect has reached finality and cannot be re-opened in an appeal against the E
judgment of the Division Bench where the only question was the validity of
different Clauses of the Promotional Policy. We have, therefore, no hesitation
in rejecting the submission of Mr. Javeli on this score.

Mr. Javeli, learned senior counsel further contended that the Division
Bench of the High Court was in error in holding that the Clauses of the F
Promotion Policy are not discriminatory and does not violate the provisions
of Regulation 18(5). According to the learned counsel the employees of the
erstwhile Bank prior to its taking over who had been promoted from the post
of Accountant to that of Assistant Manager/Manager in any event cannot
be held junior to the Accountants who after taking over have been placed
in one grade, namely, Junior Management Grade Scale I. The past services of G
the appellants as Assistant Manager which is the promotional post are being
completely wiped off by the Promotion Policy and, therefore, the Policy must
be held to be grossly discriminatory. According to Mr. Javeli, learned senior
counsel under the Policy in question, the seniority of the employees in Junior
Management Grade Scale I is being determined on the continuous length of H
394 SUPREME COURT REPORTS (1998] I s.cE-
A service thereby unequals like Accountants and Assistant Managers are being
treated as equals which per se is a hostile discrimination and as such the said
~lauses of the Promotion Policy must be struck down.

Mr. Reddy, learned Additional Solicitor General appearing for the
respondents, on the other hand contended that the expression 'promotion'
B though had been used in the orders while posting the appellants as Assistant
Manager but infact it was not a promotion from one cadre to the other, on
the other hand the Accountants and the Assistant Managers were in one
grade scale and, therefore, the argument that unequals have been treated as
equals is of no substance. Mr. Reddy, learned Additional Solicitor General
C further contended that in the Promotional Policy even for determination of
inter se seniority in the Junior Management Grade Scale I appropriate
weightage for services as Manager/Assistant Manager has been given, as is
. apparent from Clause 5.5 of the Policy and the seniority is not being determined
solely on the length of service in the grade. Mr. Reddy, learned Additional
Solicitor General also further pointed out that even for promotion from Junior
D Management Grade Scale I to Middle Management Grade II weightage for
various factors, like, seniority, educationaVprofessional qualification, Banking
knowledge, performance review and potential a:e given, as is apparent from
Clause II of the Promotion Policy and as such the apprehension of the
appellants that their services as an Assistant Manager prior to the taking over
E ofthe·Bank is being totally ignored is wholly unfounded and is devoid of any
substance. As such the Division Bench of the High Court rightly held the
Clauses of the Promotion Policy to be intra vires.

Having heard the learned counsel for the parties and having examined
the provisions of the Regulation as well as the Clauses of the Promotional
F Policy we do not find any infirmity with the conclusions arrived at by the
Division Bench of the High Court so as to be interfered with by this Court.
But since Mr. Javeli learned senior counsel appearing for the appellants has
vehemently urged that the provisions of the Promotional Policy are
constitutionally infirm and violate sub-r~gulation 5 of Regulation I 8 we are
examining the same in a greater detail. To appreciate the contentions raised .
G it would be appropriate to extract Regulation 18(2) and 18(5) and Clauses 5.1,
5.5, 6.2 and 7.1 of the Promotion Policy. r

"Regulation 18(2):-

"Seniority of an officer in a grade or scale shall be reckoned with
H reference to the date of his appointment in that grade or scale. Where
K.B. SHARMA v. U.0.1. [G.B. PATTANAIK, J.] 395
there are two or more officers of the same length of service in that A
grade or scale, their inter-se seniority shall be reckoned with reference
to their seniority in the immediately proceeding grade of scale or the
previous cadre to which they belonged in the Bank's service. Where
two or more officers have the same length of service in such preceding
grade or scale or such previous cadre, their seniority shall be determined
with reference to their seniority in the immediately preceding grade or B
scale or cadre, as the case may be.

'Regulation 18(5):-

Nothing in this Regulation shall affect the seniority among themselves
of the officers as existing immediately prior to the appointed date." C

"Promotion Policy:-Clause 5.1 - Seniority of an officer in a Grade or
,. Scale shall be reckoned with reference to the date of his appointment
+ in that Grade/Scale. Where there. are two or more officers of the same
length of service in that Grade or Scale, thdr inter-se seniority shall
be reckoned with reference to their seniority in the immediately D
preceding Grade or Scale, or the previous cadre to which they belong
in the Bank's services. Where two more officers have the same length
of service in such preceding Grade or Scale or such previous cadre
their seniority will be determined with reference to their seniority in
the immediate preceding grade or cadre, as the case may be," E
"Clause 5.5 :- In order to remove doubts, it is clarified that seniority
in Junior Management Grade Scale I of different categories of officers
· i.e. Managers Asstt. lncharge Extn. Counters and Accountants shall
be common, to be determined as per length of service in the Junior
Management Grade/Scale I. However, extra weightage for performing F
higher responsibilities of Managers/Asst!. Managers/lncharge Extn.
Counters shall be given as under:

(I) Assistant Managers/Incharge Extn. Counters = 1/2 additional
mark for each completed year of service or part thereof which is
not less than six months as Assistant Managers/Incharge Extn. G
Counters.

(2) Managers = I additional mark for each completed year of service
or part thereof which is not less than six months ·as Manager."

"Clause 6.2 :- Promotion from Junior Management Grade/Scale I to
Middle Management Grade/Scale II. H
396 SUPREME COURT REPORTS [1998] l S.C.R

A For promotion from Scale I to Scale II an officer should have
completed a minimum 7 years of service in the officers' cadre."

"Clause 7.1 :- In respect of officers categorised into new scales of
pay under New Bank of India (Officers) Service Regulations, 1982 as
on the appointed date, their length of service in the new scales will
B be reckoned as under for the purpose of eligibility for promotion from
one grade to another :

(i) Officers who are categorised in Jr.. Management Grade/Scale I as
on the appointed date -Minimum 7 years of service required in
terms of para 6.2 above will be reckoned from the date of initial
c appointment (inclusive of probation period, if any) in the Officers'
cadre."

A plain reading of the aforesaid provisions clearly demonstrates that
neither the seniority of the appellants in the erstwhile Bank before the taking
D over of the same nor their services as Assistant Manager, assuming the same
to be a promotion are being wiped off in any manner so as to hold the
provisions of the Promotion Policy to be discriminatory. On the other hand
the provisions for a determination of inter se seniority under the Promotion
Policy provide for additional weightage for the service rendered by an employee
as Assistant Manager in the erstwhile Bank. We also find sufficient force in
E the contention of Mr. Reddy, learned Additional Solicitor General that prior
to taking over the bank the Accountants and Asst!. Manager were in the
same grade scale and the Astt. Managers were getting an additional allowance
of Rs. 75 p.m. for the onerous nature of duty they were performing and,
therefore, the same is not a promotion stricto sensue. But even otherwise the
p Promotional Policy having taken care of giving additional weightage for the
services rendered by him as Assistant Manager in addition to the length of
service for Determination of Seniority in the cadre of Junior Management
Grade Scale I neither any part of the service thus rendered by an employee
has been ignored nor the Policy can be attacked as discriminatory. We are
therefore, in agreement with the Division Bench of the High Court, of the
G considered opinion that the provisions of the Promotional Policy sought to
be challenged in these proceedings are constitutionally valid and there is no
legal infirmity in the same. Even in the matter of laying down the Policy and
criteria for promotion the very Promotional Policy, more particularly Clause 11
thereof, provides for different weightage for various factors and as such in
H laying down the Policy all relevant factors have been taken into consideration.
K.B. SHARMA v. U.0.1. [G.B. PATTANAIK, J.] 397
In the aforesaid premises, we see no invalidity in the impugned judgment A
--t of the Division Bench of Punjab & Haryana High Court requiring our
interference.

While we decline to interfere with the impugned judgment of the High
Court we make it clear that the appellants who are stated to have been
promoted to higher grades on the basis of the judgment of the learned single B
y Judge may not be reverted from the promotional posts they are occupying
notwithstanding their seniority in the cadre of Junior Management Grade
Scale I may be lowered down in implementations of the Provisions of the
Promotional Policy. The appeal is accordingly dismissed with the aforesaid
observations. But in the circumstances, there will be no order as to costs. C
A.Q. I Appeal dismissed.

;