LEGAL ISSUE: Whether setting a minimum benchmark for interview and performance appraisal in promotions based on seniority-cum-merit is permissible.
CASE TYPE: Service Law, specifically concerning promotions in Regional Rural Banks.
Case Name: Shriram Tomar and another Etc. Versus Praveen Kumar Jaggi and others
Judgment Date: April 9, 2019
Date of the Judgment: April 9, 2019
Citation: (2019) INSC 313
Judges: L. Nageswara Rao, J., M.R. Shah, J.
Can a bank set minimum qualifying marks for interviews and performance appraisals when promoting employees based on seniority-cum-merit? The Supreme Court of India addressed this question in a case concerning promotions in a Regional Rural Bank. The core issue revolved around whether a bank could fix a benchmark for interview and performance appraisal scores, in addition to a written test, for promotions to Junior Management Scale II. The Supreme Court, in this judgment, clarified that setting such benchmarks is permissible, provided that promotions are ultimately based on seniority among those who meet the minimum criteria. The judgment was delivered by a two-judge bench comprising Justice L. Nageswara Rao and Justice M.R. Shah, with Justice M.R. Shah authoring the opinion.
Case Background
The case originated from a dispute regarding promotions to the post of Junior Management Scale II in the Mahakoshal Kshetriya Bank. The bank, following the Regional Rural Banks (Appointment and Promotion of Officers and other Employees) Rules, 1998, conducted a promotion process. These rules stipulated that promotions to Scale II would be based on seniority-cum-merit, with selection criteria including a written test, interview, and assessment of performance appraisal reports.
The rules allocated 60 marks for the written test, 20 marks for the interview, and 20 marks for performance appraisal reports. The written test was divided into two parts, A and B, each carrying 30 marks. Candidates had to secure a minimum of 40% marks in each part of the written test to qualify for the interview. However, the rules did not specify any minimum qualifying marks for the interview or performance appraisal reports.
For the promotion of Scale I officers to 16 available posts of Scale II, the Bank called 64 candidates for the written test conducted on April 16, 2004. 32 candidates qualified in the written test. The appellants, along with other eligible candidates, appeared in the interview on September 18 and 19, 2004. The bank published the results on October 9, 2004, promoting several officers, including the appellants, who were senior in the list. However, some junior officers were also promoted, leading to the dispute.
The dispute arose when the bank, through administrative instructions, set a benchmark of minimum 12 marks each for the interview and performance appraisal reports. Some senior officers who scored above 40% in the written test but did not meet the 12-mark benchmark in the interview and performance appraisal were not promoted. This led to the filing of writ petitions challenging the promotion order. The writ petitioners contended that promotions should be strictly based on seniority for those who qualified in the written test, and the bank’s benchmark was illegal.
Timeline:
| Date | Event |
|---|---|
| 1998 | Regional Rural Banks (Appointment and Promotion of Officers and other Employees) Rules, 1998 were formulated. |
| 29.07.1998 | The Rules were notified in the gazette. |
| 30.03.2004 | Respondent-bank issued a memo to submit ‘performance appraisal reports’ of preceding five years’ of Scale I officers. |
| 12.04.2004 | The bank issued guidelines in consonance with the Rules. |
| 16.04.2004 | Written test conducted for promotion from Scale I to Scale II. |
| 18/19.09.2004 | Interviews conducted for the candidates who qualified in the written test. |
| 09.10.2004 | Bank published the results of successful officers/candidates promoted to Scale II posts. |
Course of Proceedings
The learned Single Judge of the High Court did not accept the bank’s decision to fix a minimum of 12 marks in the interview and performance appraisals. The Single Judge stated that the rules did not provide for such a procedure and that it violated the principle of seniority-cum-merit. The Single Judge directed the preparation of a fresh select list by prescribing the minimum necessary cut-off marks out of 100.
The Division Bench of the High Court dismissed the appeals against the Single Judge’s order. However, the Division Bench modified the order by directing the bank to conduct a fresh exercise for promotion instead of preparing a fresh select list. The Division Bench also directed the bank to prescribe minimum necessary cut-off merit marks out of 100 to make the rule of seniority-cum-merit applicable. The original appellants before the Division Bench, who were promoted in the list dated 09.10.2004, then preferred the present appeals before the Supreme Court.
Legal Framework
The case is governed by the Regional Rural Banks (Appointment and Promotion of Officers and other Employees) Rules, 1998, formulated under Section 29 of the Regional Rural Banks Act, 1976. The Third Schedule of these Rules provides for the appointment of officers in different categories. Specifically, for Scale II officers, the rules state that:
- The source of appointment shall be 100% by promotion.
- The criterion for promotion shall be on the basis of seniority-cum-merit.
- The mode of selection includes a written test, interview, and assessment of performance appraisal reports.
The rules allocate marks as follows:
- Written Test: 60 marks (divided into Part A and Part B, each with 30 marks)
- Interview: 20 marks
- Performance Appraisal Reports: 20 marks
The rules specify that candidates must secure a minimum of 40% marks in each part of the written test (Part A and Part B) to qualify for the interview. However, the rules do not prescribe any minimum qualifying marks for the interview or performance appraisal reports.
Arguments
Appellants’ Arguments:
- The appellants argued that the Division Bench erred in quashing the entire selection list and ordering a fresh promotion exercise. They contended that the learned Single Judge had not found the entire selection process to be vitiated, and therefore, the Division Bench should not have set aside the entire list.
- They submitted that both the Single Judge and the Division Bench were wrong in holding that prescribing minimum marks for the interview and performance appraisal reports violated the principle of seniority-cum-merit.
- Relying on the Supreme Court’s decision in Chairman, Rushikulya Gramya Bank v. Bisawamber Patro [(2013) 4 SCC 376], the appellants argued that setting a benchmark based on aggregate performance in the written test, interview, and performance appraisal report is permissible.
- They also cited Rajendra Kumar Srivastava v. Samyut Kshetriya Gramin Bank [(2010) 1 SCC 335], where the Supreme Court held that prescribing minimum qualifying marks to ascertain the minimum merit required for higher posts does not violate the concept of promotion by seniority-cum-merit.
- The appellants contended that out of the 16 candidates promoted, 13 were senior to the original writ petitioners. The objection was only regarding three junior officers who were promoted. Therefore, at most, the High Court should have set aside the promotion of those three junior officers.
- The appellants fairly conceded that after candidates meet the benchmark in the interview and performance appraisal reports, promotions should be made based on seniority-cum-merit.
Original Writ Petitioners’ Arguments:
- The original writ petitioners supported the Single Judge’s order, arguing that prescribing a benchmark of 12 marks each in the interview and performance appraisal reports violated the principle of seniority-cum-merit.
- They submitted that the only eligibility criterion in the advertisement was obtaining a minimum of 40% marks in the written test, and no minimum marks were prescribed for the interview and performance appraisal reports.
- They relied on the Supreme Court’s decisions in B.V. Sivaiah v. K. Addanki Babu [(1998) 6 SCC 720] and Sarva U.P. Gramin Bank v. Manoj Kumar Chak [(2013) 6 SCC 287], and prayed for the dismissal of the appeals.
Submissions Table
| Main Submission | Sub-Submission (Appellants) | Sub-Submission (Original Writ Petitioners) |
|---|---|---|
| Validity of Setting Minimum Marks |
✓ Setting a benchmark based on aggregate performance is permissible. ✓ Minimum qualifying marks are necessary to ascertain merit. |
✓ Prescribing minimum marks for interview and performance appraisal violates seniority-cum-merit. ✓ Only minimum 40% in written test was required. |
| Quashing of Entire Selection List | ✓ Division Bench erred in quashing the entire list as the Single Judge did not find the entire selection process vitiated. | |
| Extent of Relief | ✓ At most, the High Court should have set aside the promotion of only the three junior officers. | |
| Reliance on Precedents | ✓ Relied on Chairman, Rushikulya Gramya Bank v. Bisawamber Patro and Rajendra Kumar Srivastava v. Samyut Kshetriya Gramin Bank. | ✓ Relied on B.V. Sivaiah v. K. Addanki Babu and Sarva U.P. Gramin Bank v. Manoj Kumar Chak. |
Issues Framed by the Supreme Court
- Whether fixing a benchmark of minimum 12 marks each in the interview and performance appraisal reports is permissible under the principle of seniority-cum-merit.
- Whether the Division Bench was justified in setting aside the entire select list and ordering a fresh exercise for promotion.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether fixing a benchmark of minimum 12 marks each in the interview and performance appraisal reports is permissible under the principle of seniority-cum-merit. | Yes, permissible. | The Court held that setting a minimum benchmark for interview and performance appraisal is permissible as long as promotions are based on seniority for those who meet the minimum criteria, relying on Chairman, Rushikulya Gramya Bank v. Bisawamber Patro and Rajendra Kumar Srivastava v. Samyut Kshetriya Gramin Bank. |
| Whether the Division Bench was justified in setting aside the entire select list and ordering a fresh exercise for promotion. | No, not justified. | The Court found that the Division Bench was not justified in setting aside the entire select list and ordering fresh promotions, especially when the Single Judge had not found any irregularities in the entire selection process. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How it was Considered | Legal Point |
|---|---|---|---|
| Chairman, Rushikulya Gramya Bank v. Bisawamber Patro [(2013) 4 SCC 376] | Supreme Court of India | Followed | Prescription of benchmark merit criterion based on aggregate performance is permissible. |
| Rajendra Kumar Srivastava v. Samyut Kshetriya Gramin Bank [(2010) 1 SCC 335] | Supreme Court of India | Followed | Prescribing minimum qualifying marks to ascertain minimum merit is not violative of seniority-cum-merit. |
| B.V. Sivaiah v. K. Addanki Babu [(1998) 6 SCC 720] | Supreme Court of India | Distinguished | The court distinguished this case, stating that the facts and circumstances were different. |
| Sarva U.P. Gramin Bank v. Manoj Kumar Chak [(2013) 6 SCC 287] | Supreme Court of India | Distinguished | The court distinguished this case, stating that the facts and circumstances were different. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | How it was treated by the Court? |
|---|---|
| Appellants’ submission that the Division Bench erred in quashing the entire selection list. | Accepted. The Court held that the Division Bench was not justified in setting aside the entire selection list. |
| Appellants’ submission that prescribing minimum marks for the interview and performance appraisal reports did not violate the principle of seniority-cum-merit. | Accepted. The Court held that setting a benchmark is permissible. |
| Appellants’ reliance on Chairman, Rushikulya Gramya Bank v. Bisawamber Patro and Rajendra Kumar Srivastava v. Samyut Kshetriya Gramin Bank. | Accepted. The Court relied on these cases to support its decision. |
| Original Writ Petitioners’ submission that prescribing a benchmark of 12 marks each in the interview and performance appraisal reports violated the principle of seniority-cum-merit. | Rejected. The Court held that setting a benchmark is permissible. |
| Original Writ Petitioners’ reliance on B.V. Sivaiah v. K. Addanki Babu and Sarva U.P. Gramin Bank v. Manoj Kumar Chak. | Rejected. The Court distinguished these cases, stating that the facts and circumstances were different. |
How each authority was viewed by the Court?
- The Supreme Court followed Chairman, Rushikulya Gramya Bank v. Bisawamber Patro [(2013) 4 SCC 376], stating that the prescription of a benchmark merit criterion based on aggregate performance in written test, interview, and performance appraisal reports is permissible.
- The Supreme Court followed Rajendra Kumar Srivastava v. Samyut Kshetriya Gramin Bank [(2010) 1 SCC 335], stating 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 seniority-cum-merit.
- The Supreme Court distinguished B.V. Sivaiah v. K. Addanki Babu [(1998) 6 SCC 720] and Sarva U.P. Gramin Bank v. Manoj Kumar Chak [(2013) 6 SCC 287], stating that the facts and circumstances were different.
The Court held that both the learned Single Judge and the Division Bench erred in holding that fixing qualifying marks in the interview and performance appraisal reports would violate the principle of seniority-cum-merit. The Court clarified that after ensuring candidates possess the minimum necessary merit (40% in written test and 12 marks each in interview and performance appraisal reports), promotions should be made based on seniority, irrespective of anyone having obtained more marks.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the need to balance the principles of seniority and merit in promotions. The Court recognized that while seniority is a crucial factor, a minimum level of merit must also be ensured to maintain the efficiency of the higher posts. The Court emphasized that setting a benchmark for interview and performance appraisal does not violate the principle of seniority-cum-merit, provided that promotions are ultimately based on seniority among those who meet the minimum criteria. The Court relied on its previous judgments in Chairman, Rushikulya Gramya Bank v. Bisawamber Patro and Rajendra Kumar Srivastava v. Samyut Kshetriya Gramin Bank, which upheld the validity of such benchmarks.
| Sentiment | Percentage |
|---|---|
| Upholding the benchmark for interview and performance appraisal | 40% |
| Ensuring promotions are based on seniority after meeting minimum criteria | 30% |
| Reversal of High Court orders | 20% |
| Reliance on precedents for upholding benchmark | 10% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Logical Reasoning
Key Takeaways
- Banks and other organizations can set minimum qualifying marks for interviews and performance appraisals in promotions based on seniority-cum-merit.
- The setting of such benchmarks does not violate the principle of seniority-cum-merit, provided that promotions are based on seniority among those who meet the minimum criteria.
- The Supreme Court emphasized the need to balance seniority and merit in promotions, ensuring that candidates possess a minimum level of merit for higher posts.
Directions
The Supreme Court directed the respondent-authority to prepare a fresh select list for promotion to the post of Junior Management Scale II. The list should consider candidates who crossed the benchmark of having obtained minimum 40% qualifying marks in the written test and having obtained minimum 12 marks each out of 20 marks each for interview and performance appraisal reports, respectively. Those candidates should be promoted in the order of seniority, irrespective of anyone among them having obtained more marks.
Development of Law
The ratio decidendi of this case is that in promotions based on seniority-cum-merit, it is permissible to set a minimum benchmark for interview and performance appraisal scores, provided that promotions are ultimately based on seniority among those who meet the minimum criteria. This judgment reinforces the principle that while seniority is important, a minimum level of merit must also be ensured for higher posts. This judgment reaffirms the position of law as laid down in Chairman, Rushikulya Gramya Bank v. Bisawamber Patro and Rajendra Kumar Srivastava v. Samyut Kshetriya Gramin Bank.
Conclusion
The Supreme Court allowed the appeals, setting aside the judgments of the High Court. The Court clarified that fixing a benchmark for interview and performance appraisal is permissible in promotions based on seniority-cum-merit. The Court directed the respondent-authority to prepare a fresh select list based on the guidelines provided, ensuring that promotions are based on seniority among those who meet the minimum criteria. This judgment provides clarity on the balance between seniority and merit in promotion policies.
Category
Parent Category: Service Law
Child Categories: Promotions, Seniority-cum-Merit, Regional Rural Banks, Benchmarks, Interviews, Performance Appraisals, Regional Rural Banks Act, 1976, Section 29, Regional Rural Banks Act, 1976
FAQ
Q: Can a bank set minimum marks for interviews and performance appraisals in promotions?
A: Yes, the Supreme Court has clarified that it is permissible for banks to set minimum qualifying marks for interviews and performance appraisals, provided that promotions are ultimately based on seniority among those who meet the minimum criteria.
Q: What is the meaning of seniority-cum-merit in promotions?
A: Seniority-cum-merit means that while seniority is a crucial factor, a minimum level of merit must also be ensured. Promotions are based on seniority among those who meet the minimum merit criteria.
Q: What was the main issue in the Shriram Tomar vs. Praveen Kumar Jaggi case?
A: The main issue was whether a bank could fix a benchmark for interview and performance appraisal scores in addition to a written test for promotions to Junior Management Scale II, which were based on seniority-cum-merit.
Q: What did the Supreme Court decide in this case?
A: The Supreme Court held that setting a minimum benchmark for interview and performance appraisal is permissible, provided that promotions are based on seniority among those who meet the minimum criteria.
Q: What should organizations do to ensure fair promotions?
A: Organizations should set clear and transparent criteria for promotions, which may include minimum qualifying marks for written tests, interviews, and performance appraisals. However, they should also ensure that promotions are based on seniority among those who meet the minimum criteria.