- (1.) THE appellants are employees of the first respondent Bank, having been appointed between 1979 and 1982. By notification dated 28. 9. 1988, the Central Government in exercise of powers conferred under section 17 read with section 29 of the Provincial Rural Banks Act, 1976 framed the "regional Rural Banks (Appointment and Promotion of Officers and other Employees) Rules, 1988 ('rules' for short ). Rule 5 of the Rules provided that all vacancies should be filled up by deputation, promotion or direct recruitment, in accordance with provisions contained in the second Schedule to the Rules. Entry 7 in the Second Schedule related to recruitment to the posts of Area Manager or Senior Manager (in Scale II ). It provided that all the posts of Area Managers and Senior Managers should be filled by promotion from among the confirmed officers (in scale I) working in the bank on the basis of seniority-cum-merit. It prescribed the educational qualification (graduate) and minimum period of service in the feeder cadre (eight years as an officer in the concerned regional rural bank ). It also prescribed the mode of selection by promotion as "interview and assessment of performance reports for the preceding three years period as officers". Sub-Rule (4) of Rule 10 provided that the Staff Selection Committee shall follow the procedure determined by the Board for selecting candidates for appointment or promotion, in accordance with the guidelines issued by the Central government from time to time.
(2.) AT the 131st meeting of the Board of Directors of the first respondent bank held on 29. 11. 1996, the following procedure for promotion of officers from scale I to scale II was approved : "after considering the guidelines contained in the Government of india's letter dated 23rd September, 1988 and the Letter no. 823 dated 7th October, 1996 of the National Bank, the Board passed a resolution that 60 points be earmarked on the basis of work done during the previous three years in the Selection procedure for promotion on the Scale II posts and 40 points be given for interview and in this manner the promotion procedure should be completed. Also, an information in this behalf be given to the National Bank. " In pursuance of the above, the eligible candidates (officers Scale I), including appellants were considered and interviewed on 16. 12. 1996 and 17. 12. 1996 and a select list was published on 20. 12. 1996 promoting 64 officers (respondents 4 to 67) from scale I to scale II with effect from 20. 12. 1996. Appellants 1 to 7 were not selected. Many who were selected, were their juniors. The appellants allege that their service and conduct were good and there were no adverse entries against them and therefore, they ought to have been promoted from Officer scale I to scale II. They therefore filed a writ petition before the Allahabad High Court (WP no. 3151/1997), for quashing the entire promotion process of the first respondent bank from scale I to scale II culminating in the order dated 20. 12. 1996 and for a direction to the first respondent bank to undertake the promotion process afresh. The appellants also sought quashing of the resolution of the Board of Directors dated 29. 11. 1996 prescribing the promotion procedure. The respondent bank resisted the said petition by filing a counter defending the promotions. During arguments, the High Court secured the original records from the bank to ascertain the procedure followed by the bank in the selection. The High Court also directed that the relevant documents be brought on record. Accordingly, the relevant documents were filed by the Bank with an additional affidavit, wherein the Bank described the selection procedure followed by it, as follows : "that when the proposal for promotion came before the Board, the department of personnel under the direction of the Chairman prepared complete summary giving the past history and the proposals for selection procedure. A thick booklet was prepared and in chapter V of the same the details for the procedure for selection were given. This book was part of the agenda put before the Board of Directors in its meeting of 23. 9. 1996 in which the process was approved with certain modification. A copy of the proceedings of the board meeting is Annexure A to this affidavit. That the whole matter has to be again presented before the Board in its meeting dt. 29. 11. 96, as in the meantime a letter was received from NABARD giving certain directions. The Board in this meeting adopted the process given in chapter V with certain modifications in the process as desired in the letter of the NABARD dated 7. 10. 1996 is Annexure B to this affidavit and a copy of the NABARD letter dated 7. 10. 1996 is Annexure C to this affidavit. That the Chapter V of the Booklet which has been approved by the board with modifications is also being filed as Annexure D to this affidavit. That in the end of chapter V it is provided that the qualifying marks will be 78% and those who will secure 78% or above would be eligible for promotion. That the selection Committee put these marks obtained on the seniority list and according to seniority those who were found eligible they have been promoted. This was done in accordance with the principle of seniority cum merit. As such there is nothing wrong in following this procedure. That none of those petitioners could secure 78% marks and hence they were not selected. " The High Court, after considering the material made available and respective contentions, passed the impugned order dated 4. 7. 2001, whereby it upheld the process of selection. It held that the two stage process adopted by the bank - the first preparing a list of candidates who secured the minimum of 78 marks (aggregate) in the performance appraisal and interview, and the second promoting the candidates who secured the minimum marks, strictly on the basis of seniority - satisfied the seniority-cum-merit criteria for promotion. The said decision is challenged in this appeal by special leave.
(3.) IT is contended by the appellants that the concept of promotion by seniority-cum-merit, did not contemplate prescribing of minimum qualifying marks for assessment of performance/interview, before applying the principle of seniority for promotion. It is contended that restricting the promotion to only those who secured the minimum qualifying marks, was violative of the seniority-cum-merit principle. It is further contended that even if any qualifying marks could be prescribed for assessing the minimum necessary merit required to meet the efficiency of administration, the fixation of an extremely high mark of 78 out of 100 as qualifying marks, had the effect of converting the criteria of promotion from seniority-cum-merit to merit-cum-seniority. The appellants placed strong reliance on the decisions of this Court in B. V. Sivaiah v. K. Addanki Babu [1998 (6) SCC 720] and Bhagwandas Tiwari v. Dewas Shajapur Kshetriya Gramin Bank [2006 (12) SCC 574] in support of their contentions. On the contentions urged, the following two questions arise for our consideration : (i) Whether minimum qualifying marks could be prescribed for assessment of past performance and interview, where the promotions are to be made on the principle of seniority-cum-merit? (ii) Whether the first respondent bank was justified in fixing a high percentage (78%) as the minimum qualifying marks (minimum merit) for promotion? re : Question (i) ;