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Bhagwandas Tiwari And Others v. Dewas Shajapur Kshetriya Gramin Bank And Others
Factual and Procedural Background
Ten officers of Dewas Shajapur Kshetriya Gramin Bank (the “Bank”), all in Junior Management Grade I, filed Writ Petition No. 799 of 2000 before the Madhya Pradesh High Court (Indore Bench). They challenged a promotion process initiated by the Bank’s circular dated 26-11-1999 that invited applications for promotion to Middle Management Grade II. Although the circular stated that promotion would be on the basis of “seniority-cum-merit” and that a candidate must obtain a minimum of 45 marks out of 100, the Bank allegedly required candidates to secure 45 out of the 60 marks allotted to (a) work performance and (c) interview, thereby, according to the petitioners, shifting the criterion to “merit-cum-seniority.”
The learned Single Judge dismissed the writ petition, relying principally on this Court’s decision in B.V. Sivaiah v. K. Addanki Babu. A Division Bench affirmed. The aggrieved officers (appellants) sought redress in the Supreme Court of India, which granted leave and delivered the present judgment.
Legal Issues Presented
- Whether the Bank’s imposition of a requirement that candidates secure 45 out of the 60 marks earmarked for performance assessment and interview is compatible with the statutory criterion of promotion on the basis of “seniority-cum-merit.”
- Whether the High Court erred in reading such a requirement into the promotion circular when the circular itself was silent on that point.
Arguments of the Parties
Appellants’ Arguments
- The circular mandated only a minimum of 45 out of 100 total marks; prescribing 45 out of 60 for performance and interview unlawfully elevated merit over seniority and thus converted the criterion to “merit-cum-seniority.”
- No clause in the circular or in the Bank’s reports (115th and 117th) authorised the additional condition; inserting it amounts to impermissible addition of a term.
Respondents’ Arguments
- The Bank never departed from “seniority-cum-merit.” Because the 40 marks for length of service are automatic, meaningful competition exists only within the 60 marks for merit; therefore, requiring 45/60 simply ensures a minimum threshold of merit without displacing seniority.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| B.V. Sivaiah v. K. Addanki Babu (1998) 6 SCC 720 | Explains distinction between “seniority-cum-merit” and “merit-cum-seniority”; permits prescribing minimum marks if consistent with seniority focus. | High Court relied on it, but Supreme Court held the Bank’s 45/60 requirement was not contemplated by the circular and thus mis-applied the precedent. |
| C.N. Jagathigowda v. Chairman, Cauvery Gramina Bank (1996) 9 SCC 677 | Illustrates application of seniority-cum-merit in regional rural banks. | Cited by High Court; Supreme Court found it not decisive because present circular lacked the disputed condition. |
| Union of India v. Mohan Lal Capoor (1973) 2 SCC 836 | Defines “merit-cum-seniority” as emphasising merit first, seniority only when merit is equal. | Quoted to contrast with seniority-cum-merit and to highlight conceptual difference. |
| State of Mysore v. Syed Mahmood (1968) 3 SCR 363 | Holds that in seniority-cum-merit, seniority prevails subject to fitness to discharge higher duties. | Used to reaffirm that merit cannot eclipse seniority unless senior is unfit. |
| State of Kerala v. N.M. Thomas (1976) 2 SCC 310 | Explains that under seniority-cum-merit, senior gets priority once minimum merit is met. | Quoted to elucidate governing principle behind the statutory rule. |
| Sant Ram Sharma v. State of Rajasthan (1968) 1 SCR 111 | Discusses need to balance merit and seniority in a promotion policy. | Invoked to show broader context of promotion jurisprudence. |
| K. Samantaray v. National Insurance Co. Ltd. (2004) 9 SCC 286 | Summarises conceptual distinction between the two promotion criteria. | Cited in support of the analytical framework. |
| State of U.P. v. Jalal Uddin (2005) 1 SCC 169 | Restates that in seniority-cum-merit, seniority has primacy though not sole control. | Used to reinforce the Court’s interpretation of the applicable standard. |
Court's Reasoning and Analysis
The Supreme Court held that the High Court overlooked a decisive textual omission: the circular nowhere stipulated that a candidate must score 45 of the 60 “merit” marks. Reading such a threshold into the document amounted to adding a substantive condition, contrary to settled principles that courts cannot supplement regulatory language.
The Court differentiated “seniority-cum-merit” from “merit-cum-seniority.” Under the former, seniority predominates once a minimum level of merit is met; under the latter, merit is the determinative factor. By requiring 75% of the merit-related marks (45/60), the Bank effectively shifted the criterion toward merit-cum-seniority, undermining statutory intent embodied in Clause 7 of the Second Schedule to the 1988 Rules.
The Court emphasised that while an authority may prescribe a minimum standard for merit, that standard must be expressly provided. Absent clear language, an implied 45/60 benchmark could not be sustained. Reliance by the High Court on Sivaiah was misplaced because that case upheld expressly prescribed minima; here no such prescription existed.
Consequently, the promotions of Respondents 2, 3 and 4, who were seniors and had higher overall marks, remained undisputed, but the process concerning the other private respondents required correction.
Holding and Implications
PARTLY ALLOWED – The appeal succeeds except in relation to Respondents 2, 3 and 4. The Bank must issue fresh promotion orders consistent with the Court’s ruling; no costs were awarded.
Implications: The decision reaffirms that, under a “seniority-cum-merit” regime, any minimum merit threshold must be expressly articulated. Reading additional conditions into promotion policies is impermissible. While the ruling directly affects only the parties’ promotion exercise, it underscores limits on administrative discretion in framing or interpreting promotion criteria, without setting a new doctrinal precedent.
Dr. Arijit Pasayat, J.— Leave granted.
2. The 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 Petition No. 799 of 2000 decided on 25-6-2001 was upheld.
3. 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 Dewas Shajapur Kshetriya Gramin Bank (hereinafter referred to as “the Bank”). Challenge in the writ petition was to the order of promotion issued by Respondent 1 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 working as officers in Junior Management Grade I. On 26-11-1999, the Bank issued a promotion policy 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 Grade 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 to the Regional Rural Banks (Appointment and Promotion of Officers and Other Employees) Rules, 1988 (in short “the Rules”). The said Rules came into operation with effect from 28-9-1988 and it was framed by the Central Government. Respondent 1 Bank has been established under the provisions of the 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 of the bank. Clause (b)(a) of sub-section (2) of Section 29 was inserted by the Regional Rural Banks (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 the regional rural bank shall be appointed in exercise of the 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 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
(a) Source of recruitment Hundred per cent 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 temporarily officers of the sponsor banks and other banks or organisations on deputation. (b) Qualifications and eligibility (i) A graduate of recognised university or any equivalent qualifications recognised as such by the Government of India, preference being given to Agriculture or Commerce or Economics graduates. (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 suitable candidates of requisite experience are not available. Note.—The post of Area Managers and Senior Managers will be equivalent in rank and will be interchangeable. (c) Mode of selection Interview and assessment of performance for the preceding three years' period as officer for promotion.”
4. Standard prescribed as per the circular is as follows:
“(7) Standard.—Standard of selection in promotion procedure shall be as under:
(a) Performance of work (Work performance for the last 3 years) - Maximum 30 marks (b) Period of service (2 marks per year for the completed period of service subject to maximum 40 marks) - Maximum 40 marks (c) Interview - Maximum 30 marks Total maximum marks - 100 marks
In order to be selected for promotion, obtaining minimum 45 marks shall be compulsory.”
5. Grievance of the writ petitioners was that the principle of promotion on the basis of seniority-cum-merit was given a go-by and Respondent 1 Bank adopted the policy of merit-cum-seniority by fixing criteria that only those employees who have secured 45 marks out of 60 in respect of criteria (a) and (c) i.e performance of work and interview shall be selected for promotion.
6. 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 shifted from seniority-cum-merit to merit-cum-seniority.
7. Learned Single Judge did not accept this contention and dismissed the writ petition. It was held that in view of what has been stated by this Court in B.V Sivaiah v. K. Addanki Babu (1998) 6 SCC 720, the stand adopted by the Bank was in order. Reference was made to paras 16, 18 and 37 of B.V Sivaiah case (1998) 6 SCC 720 to hold that criterion of seniority-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 SCC 677.
8. The Division Bench upheld the judgment of the learned Single Judge by 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.
9. Stand of the appellants before the High Court was reiterated at the time of hearing of this appeal.
10. 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.
11. 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 Regulation 5(2) of the Indian Administrative Service/Indian Police Service (Appointment by Promotion) Regulations, 1955 which prescribed that “selection 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 (1973) 2 SCC 836 has said:
“[F]or inclusion in the list, merit and suitability in all respects should be the governing consideration and that seniority should play only 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 tilt the scale.”
12. Similarly, Beg, J. (as the learned Chief Justice then was) has said:
“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 comparative applied to all eligible candidates and not minimal like pass marks at an examination. The Selection Committee has an unrestricted choice of the best available talent, from amongst eligible candidates, determined by reference to reasonable criteria applied in assessing the facts revealed by service records of all eligible candidates so that merit and not mere seniority is the governing factor.”
13. 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 v. Syed Mahmood (1968) 3 SCR 363, AIR 1968 SC 1113, while considering 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, this Court has observed that the rule required promotion to be made by selection on the basis of “seniority subject to the fitness of the candidate to discharge the duties of the post from among persons eligible for promotion” (AIR p. 1114, para 2). 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 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.
14. In State of Kerala v. N.M Thomas (1976) 2 SCC 310, A.N Ray, C.J has thus explained the criterion of “seniority-cum-merit”:
“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 administration, the senior though the less meritorious shall have priority.”
15. The above position was highlighted in Sivaiah case (1998) 6 SCC 720. At para 18 of the said judgment it was noted as follows:
“18. We thus arrive at the conclusion that the criterion of ‘seniority-cum-merit’ in the matter of promotion postulates that given the minimum necessary merit requisite for efficiency of administration, the senior, even though less meritorious, shall have priority and a comparative assessment of merit is not required to be made. For assessing the minimum necessary merit, the competent authority can lay down the minimum standard that is required and also prescribe the mode of assessment of merit of the employee who is eligible for consideration for promotion. Such assessment can be made by assigning marks on the basis of appraisal of performance on the basis of service record and interview and prescribing the minimum marks which would entitle a person to be promoted on the basis of seniority-cum-merit.”
16. The impugned judgment of the learned Single Judge and the Division Bench 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 45 marks as a compulsory measure. If really the intention was to apply the said minimum marks to the said criteria it would have been specifically provided that way. It is noted by the High Court that in the circular or in the 115th or 117th Report of Respondent 1 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 the respondents is accepted, it would mean addition of a condition which is not specifically provided for. That is impermissible.
17. 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 Rajasthan (1968) 1 SCR 111, AIR 1967 SC 1910 are significant: (AIR p. 1916, para 9)
“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 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 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 men? In other words, the question is how to find a correct balance between seniority and merit in a proper promotion policy.”
18. The principles of seniority-cum-merit and merit-cum-seniority are conceptually different. For the former, greater emphasis is laid on seniority, though it is not the determinative factor, while in the latter merit is the determinative factor. In State of Mysore v. Syed Mahmood (1968) 3 SCR 363, 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 basis of “seniority subject to the fitness of the candidate to discharge the duties of the post from among persons eligible for promotion” (AIR p. 1114, para 2). 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 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.
19. These aspects were highlighted in K. Samantaray v. National Insurance Co. Ltd. (2004) 9 SCC 286, AIR 2003 SC 4422 and in State of U.P v. Jalal Uddin (2005) 1 SCC 169.
20. 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, means that an employee is to secure 75% of marks. Such a high percentage cannot be a measure for prescribing minimum marks to assess merit. It obviously would be a case of shifting the focus to merit-cum-seniority principle. In para 37 of Sivaiah case (1998) 6 SCC 720 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 case (2005) 1 SCC 169 it was noted that in seniority-cum-merit greater emphasis is on seniority though it is not the determinative factor. In the case of merit-cum-seniority, merit becomes a determinative factor. In fact, the position noted by this Court in paras 19, 20, 24 and 25 of Sivaiah case (1998) 6 SCC 720 dealt with almost identical fact situation, apart from para 16 of the judgment.
21. The 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.
22. The appeal is bound to succeed to the extent indicated. Respondent 1 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.
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