Sarva U.P. Gramin Bank & Ors. v. Manoj Kumar Chak

Judgment

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2970-2975 of 2013. From the Judgment and order dated 08.12.2010 in WP No. 58206/2005, WP No. 58214/2005, WP No. 59016/2005, WP No. 59018/2005, WP No. 59035/2005 & WP No. 59758/ 2005 of the High Court of Judicature at Allahabad. WITH A Civil Appeal Nos. 2989-2992 of 2013. Civil Appeal Nos. 2976-2988 of 2013. Civil Appeal Nos. 2993-3010 of 2013. Dhruv Mehta, Yashraj Singh, Rajesh Kumar, Sriram Krishna, Anupama Dhurve, Prashant Narang, Sarv Mitter, (for B Mitter & Mitter Co.) for the Appellants. Fakhruddin, Gopal Krishna, M.K. Chaudhary, Raj Kishore, (For S.K. Verma, K.T. Anantharaman, Vasudevan Raghavan, Neeraj Shekhar, Avdesh Kumar Singh, Ashutosh Thakur, Priya c Ranjan Roi for the Respondent. The Judgment of the Court was delivered by SURINDER SINGH NIJJAR, J.

1Leave granted in all the Special Leave Petitions,

2These 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 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:-

3Before we take up for consideration, the issues involved, it would be appropriate to briefly notice the background leading to the present litigation.

4There are currently about 82 Regional Rural Banks (for short "RRBs") sponsored by various nationalized banks, set up under the R~gional 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.

5To 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 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.

6Till 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 A 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 B 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.

7The Central Government vide a Notification dated 28th C 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 D the RRB Act, 1976 after consultation with the NABARD and the Sponsor Banks specified in the First Schedule of the Rules.

8Second 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 E criterion for promotion on all the posts was specified as seniority-cum-merit. With regard to the post of Area I 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 F 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.

9Clause 7(c) pertains to the mode of selection, which G provided for "interview and assessment of performance reports for t11e 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.

10In 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 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 8. 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 h.as 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-cummerit 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 officer junior to him may be promoted. The aforesaid judgment of this Court was delivered on 17th July, 1998. 1. (1998) 6 SCC720.

12Thereafter 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:- (a) Name of Post (b) Classification (C) Source of appointment (d) Whether promotion to be made on seniority basis or seniority-cum-merit - basis. ( e) Eligibility Scale II Officer Group 'A' 100 % by promotion Promotion shall be made on the basis of seniority cummerit Officer holding post for eight years as an officer on regular basis in the Regional Rural Bank 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 o Reports for the preceding five years as an officer in Scale I/ Field Supervisor. (g)

Compo$ition 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 A process of selection by the concerned committee. (h} Reckoning of the minimum eligibility (i} Number of candidates To be considered for Promotion 0) Selection process for Promotion (A} Written Test (B} Interview (C} Performance Appraisal Reports The minimum eligibility in 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.

The number of candidates to be considered for promotion from officer Scale I to officer Scale lshall be restricted to four times the number of vacancies available for promotion. The Selection shall be on the basis of performance in the written test, interview and perforlmance appraisal reports for preceding five years as per the division of marks given below. 60 Marks 20 Marks 20 Marks TOTAL MARKS 100 MARKS (A} Written.test (60 marks} The candidates shall be required to appear for written test comprising of two parts viz. part (A} covering Banking Law and Practice of Banking and Part (B) covering Credit Policy Credit Management including priority Sector, Economics andManagement. 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 prepared and such candidates shall be called for interview. "

13The 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 promoiion in different cadres - clarification thereof', to all its Sponsored Regional Rural Banks. Present Litigation: 10

14Thereafter, 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 A consideration for promotion, officers against whom disciplinary action was pending or contemplated as 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.

15Whilst 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 of2010.

16All 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 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 8. 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 corisidered by the selection committee for promotion. 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 C 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."

17Aggrieved by the aforesaid observations and the decision of the High Court, the appellant bank has filed the present appeals. SUBMISSIONS :

18We have heard very lengthy submissions by the learned counsel for the parties.

19We may first briefly notice the submissions on behalf G of the appellants. Mr. Dhruv Mehta, learned senior counsel appearing for the appellants submitted that the Circular dated 30th November, 2009 and 12th July, 201 O were not ultra vires of the RRB Rules, 1998. The two Circulars have only A 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 I meted out to the case where "adverse remarks" have been B recorded against an officer during the preceding 5 years, i.e., period under consideration for promotion. H~ 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 . C 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 0 being followed by erstwhile RRBs also prior 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 E 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 nonconsideration of officers, who have adverse remarks against F 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 G 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 H 2. (1968) 1 SCR 111. of such a process will lead to infusion of arbitrariness in the A 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 c 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 0 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 prescribed in the Circulars would not violate the concept of promotion by seniority-cum-merit.

Learned senior counsel E 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. ~O. The next submission of Mr. Dhruv Mehta was that the employee only has a right to be considered for promotion and G 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 3. c2001> 1 sec 335. A the criteria of promotion on the basis of "seniority-cum-fitness" criteria.

21Learned senior counsel has further submitted that different rules prescribed different criterias for adjusting the 8 suitability of candidates for promotion viz. "seniority-cumfitness", "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 C 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

22Mr. Dhruv Mehta then submitted that the employee/ D 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 E threshold, in view of the fact that they had been either punished or graded 'D' in the 5 year$ preceding the selection. Learned senior counsel further submitted that non-promotion of those officers, who have either been punished or have been recipient of adverse remarks such as Grade 'D', would not be violative F 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/ G penalty or whose performance has been outstanding, very good or good during the said period. The classification made on the basis ofthe service record is a reasonable classification and has a nexus with the object sought to be achieved namely 4. AIR 1968 SC 1113. H s. c2011) 3 sec 422 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

23Mr. 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 rendered them ineligible from consideration for promotion. The bifurcation is as under : SLP (C) No. 9284-9301/2011: The concerned employees in this bunch were rendered ineligible for C 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 0 "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.

24Lastly, 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 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, (1991) 4 sec 109. 7. (1995) 3 sec 273. Hyderabad & Ors. 8 and Collector of Thanjavur Distt. & Ors. Vs. S. Rajagopalan & Ors. 9

25On 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 service conditions including promotions of the employees of the RRBs are vested in the o 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 cpmplete 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 (1996) s sec 246. 9. (1995)

3 sec 273. made by making the necessary amendment in the Rules and not by issuing guidelines/Circulars by the Sponsor Banks or NABARD.

26Learned 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 C give/deny "pr9motion 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 :

27We 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 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.

28We 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 G 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 A neither been reprimanded nor any adverse remarks have been conveyed to him in the reasonable recent past.

29The 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- B 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, C 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 D 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.

30It is a matter of record that the RRB Rules, 1988 were E superseded by the RRB Rules, 1998. The aforesaid rules incorporated the principle of minimum merit as enunciated 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 o~ 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."

31Following 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 con·sidered 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 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 o the aforesaid two Circulars clearly has the effect of supplanting the provision of eligibility, which is not permissible.

32Such 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-cummerit, 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 Js not automatic with reference to seniority alone. Merit will also play a significant role.

The standard method of seniority-cummerit 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 necessary merit and .[2013] 2 S.C.R. 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"

33These 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 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 orc;ler 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 tha 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.

34Similarly, 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 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 c 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 ttJat 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 circumstance~. To qu.alify 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 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 pe,.-ialty 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 ofhis/het performance appraisal by the DPC.

The fact that the officer/employee has been departmentally punisheCI would form part of the service record and can be taken into account by the DPC. In such circumstances, the employee cannot G 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 whet,!1er such an employee is "eligible" to be H considered in terms of Rule 2(e).

35The 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 C · 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 senioritycum-merit." These observations also make it clear that whilst assessing the eligibility of the ~ndidates, 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 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.

36There i~ no doubt that punishment and adverse service record are relevant to determine the minimum merit by the A 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.

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

38The 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 in view A 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 B increment for 3 years is a punishment imposed upon the appet1ants, 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 C 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 0 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 E of his record of service the appellant is not promoted, it cannot be said to be by way of punishment. It is a nonpromotion on account of the appellant not reaching a suitable standard to be promoted on the basis of the criteria."

39We 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 G 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 H 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. 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.

40There is another very good reason for not accepting the submissions ma de 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 to the statutory rules. The circulars clearly do not fall within the ratio in Sant Ram's case (supra}.

41In 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.

42We, therefore find no merit in the civil appeals filed by the appellant-bank, and are accordingly dismissed. No costs. R.P. Appeals dismissed.