Judgment:
ORDER
1. Petitioners in these two writ Petitions are officer employees of the State Bank of Hyderabad. They are working in Junior Management Grade Scale-I (for short JMGS-I) with effect from December 27, 1982. They had completed two years or more of service in rural branches which are identified as used by the Bank. They were aspirants of promotion to the next Higher case of Middle Management Grade Scale-II (for MMGS-II) for the years 1989 and 1990. They had completed all other eligibility criteria including one years, service as field officer. They complained against their exclusion from appointment in spite of their qualification, eligibility and entitlement, by including names of ineligibles who had not completed the obligatory period of one year's service as field officer and/or two years of service in the rural branches, according to he Circular No. PER/89-990/43 dt. July 28, 1989 (in W.P. No. 15466/89) and Circular No. PER/90-91/7 dated April 26, 1990 (in W.P. 8343/90) respectively. Petitioners submit that two years of service in the rural branches and one year's field service are obligatory eligibility criteria in accordance with the guidelines issued by the Government of India, which have been incorporated as part of the ad hoc promotion policy and the relevant employment notices issued pursuant thereto by the State Bank of Hyderabad. The respondent Ban however maintains that it had no course open except to grant relaxation in case of employees who were otherwise eligible but could not possess the requisite period of rural service or filed service on the relevant dates in 1989 and 1990 due to no fault of the Respondents contend that the two items of qualifications, though pre-requisites for promotion do not form part of the eligibility criteria In other words respondents submit that it was not possible to eliminate persons who were otherwise qualified and seniors but could not be posted in rural branches or in the field and therefore were denied opportunity of acquiring these otherwise essential qualifications. Respondent-bank submits that such of the seniors who were otherwise eligible had to be were promoted with the stipulation that their promotion would be effective only on completion of the obligatory period of rural service. Whether the respondent-back could have done so overlooking the petitioners who were duly qualified according to the regulations the promotion policy and the circulars is the crux of the controversy involved in these two writ petitions.
2. There is no controversy as to the status of the State Bank Hyderabad as a statutory Corporation covered by the State Bank of India (Subsidiary Banks) Act, 1957, hereinafter referred to as the Subsidiary Banks Act and the Regulations framed thereunder. It is admitted that the State Bank of Hyderabad (which was then called the Hyderabad Bank) before the enactment of the above Act was governed by the State Bank of Hyderabad Act, 1956. Before and after the enactment of the Subsidiary Banks Act, the State Bank of Hyderabad was and continues to be a statutory Corporation with all characteristics of a 'State', under Article 12 of the Constitution of India. Section 63 of the Subsidiary Banks Act confers power on the State Bank of India to frame Regulations in respect of Subsidiary Banks which include the State Bank of Hyderabad as well. Such Regulations may comprehend pay and service conditions of officers and other employees of such banks. Such Regulations are farmed form time to time by the State Bank of a India in consultation with the Board of Directors of each of the Subsidiary Banks. It is also not in dispute that the service conditions of employees are governed by the State Bank of Hyderabad Officers Service Regulations, 1979, hereinafter referred to as the 'Service Regulations' Clause 17 of the Regulations empowers the Board of Directors or the Executive Committee, to lay down promotion policy from time to time.
3. The State Bank of India issued Circular No. PER/12 of 1987 dt. February 12, 1987 to the effect that Government of India guidelines making rural service compulsory as one of the eligibility criteria for promotion form JMGS-I to MMGS-II, for a minimum period of two years would be followed. This was because of the statutory obligation cast on the State Bank of India and the Subsidiary Banks to follow the instructions and the guidelines issued by the Government of India scrupulously in respect of conditions of staff, officers and others employed by the respective Banks. Since the State Bank of Hyderabad had not framed regular promotion policy, it had issued ad hoc promotion policy which was being adopted by the Board of Directors or Executive Committee from year to year. It is beyond dispute that in each of the circulars issued after 1987, it was mentioning specifically that for promotion, compulsory rural service for a period of two years would be insisted upon.
4. In circular dt. February 12, 1987, the General Manager (Operations) of the Bank classified Metropolitan, Urban Semi-Urban and Rural branches for the purpose of posting and promotion. It was stated that -
'Please note that officers who do not complete the rural/Semi-urban services will be disqualified for promotions, eventhough they may fulfill other eligibility criteria as to service etc., for the purpose of promotion to Middle Management Grade Scale-II or Middle Management Grade Scale-III as the case may be, to made effective from the June 1, 1988.
It was also stated that -
'It is therefore for the officers concerned who did not have rural service of the requisite period, to approach the superior officers for opportunity to complete the rural service if they want to be seriously considered for promotion'.
In the ad hoc promotion policy issued for the year 1989-90, specific reference was made to 'the Government of India circulars including that of the rural service'. The complaint of the petitioners is that in spite of such prior intimation in the selections conducted in the year 1989-90 ineligible officers who stayed back in Metropolitan and Urban Branches were not disqualified; on the other hand, they were promoted with the condition that such promotions would be effective only after they completed two years of rural service.
5. Petitioners seek the issue of a writ of certiorari to quash the promotion orders dt. July 28, 1989 and circular April 28, 1990 leading to the written test for latter year as unconstitutional, illegal, arbitrary and mala fide. They also seek a declaration that they are entitled to promotion to MMGS-II with all consequential benefits as on August 1, 1989 and August 1, 1990.
6. The factual details relating to the petitioners, their eligibility and their qualifications are not in dispute. The only dispute seems to be that persons who are seniors to them but could not be or were not posted in sub-urban/rural branches due to reasons not attributable to them are not liable to be disqualified due to non-possession of rural service for the requisite period. The respondent bank contends that two years of rural service is obligatory, not for consideration for selection but only for effective promotion, and the same is ensured by the specific provision contained in the promotion order. Respondent therefore submits that there is no illegality or arbitrary in considering seniors for promotion and in ordering promotion subject to those promotions being effective only on their completing the requisite obligatory period of rural service. Petitioners submit that they are not aware of all of the officers who were considered for promotion without completing two years of rural service as on the relevant date without disqualifying them as was obligatory as per circular dt. February 12, 1987. They wherever have impleaded a few of the officers who fall into that category. In an additional affidavit in W.P. 15466/89. They have also stated that they filed a representation before the respondent bank of September 16, 1991 requesting the respondent to furnish the names of persons who did not complete two years of rural service or those not having operational experience of one year, so as to enable them to implead such persons as party respondents in the Writ Petitions. Respondent No. 7 in the first Writ Petitions - Associate of Bank Officers' Association, Hyderabad representing some such officers has got itself impleaded as additional 7th respondent, as per orders dt., February 1, 1991 in W.P. M.P. No. 1516/91. They claim to represent the officers who have been ordered to be promoted. In the light of the above facts, it seems to me right to assume that the parties who are likely to be affected are before me through their Association, in addition to respondents Nos. 5 and 6 who have been individually impleaded.
7. As I mentioned above, the short question which comes up for consideration is whether the stipulation contained in the Government of India instructions which were reproduced in Circular No. PER/12 of 1987 dt. February 12, 1987 and to which reference was made repeatedly in the ad hoc promotion policy and Circulars relating to selections conducted year after year from 1988 for promotion from from JMGS-I to MMGS-II, that only such of the candidates in the former who have completed two years of rural service and one year service in operation/field service, would be considered for promotion, is an obligatory eligibility criteria or is only for post-promotion qualification which has to be completed before orders of promotion could be effective.
8. Section 49 of the Subsidiary Banks Act, 1959 provides for continuance of existing of officers and employees of some of the subsidiary Banks. Section 50 deals with staff for subsidiary Banks and provides that the subsidiary bank may, subject to such limitations and conditions as may be prescribed, appoint such number of officers, advisers and employees as it considers necessary or desirable, for the efficient performance of its functions and on such terms and conditions as it may deem fit. Section 62 enables the Central Government to frame rules and Section 63 empowers the State Bank to make regulations. The latter provision is in the following terms :
'63. Power of the State Bank to make regulations : The State Bank may, with the approval of the Reserve Bank, (by notification in the Official Gazette) name in respect of a subsidiary bank, regulations, not inconsistent with this Act and the rules made thereunder, to provide for all matters for which provision necessary or expedient for the purpose of giving effect to the provisions of this Act'.
Sub-section (2), Clause (m) of Section 63 enables framing of regulations relating to -
'the conditions and limitations subject to which the subsidiary bank may appoint officers, advisers and other employees and fix their remuneration and other terms and conditions of service.'
Clause (n) empowers framing of regulations relating to the duties and conduct of officers, advisers and other employees of the subsidiary bank.
Sub-section (3) provides that 'all regulations under this section, except these first regulations, shall be made in consultation with the Board of Directors of the subsidiary bank concerned.
Sub-section (4) states that every regulation shall, as soon as may be after it is made, be forwarded to the Central Government and the Government is obliged to obtain the approval of the House of Parliament.
9. It is therefore clear that the conditions of service including rules relating to promotion have to be promulgated as relations by the State Bank of India. It was in exercise of that power that the State Bank of Hyderabad Officers' Service Regulations, 1979 were framed. Clause 17 of the above regulations is in the following terms :
'17 Promotions to all grades of officers in the Bank shall be made in accordance with the policy laid down by the Board or the Executive Committee from time to time having regard to the State Bank's guidelines'.
Promulgation of a promotion policy is therefore a statutory obligation. As long as regular promotion policy is not framed, ad hoc promotion policy adopted in exercise of the power under Clause 17 or the Regulation will do duty as statutory conditions of Service regarding promotion. The sources of power for issue of Circular No. PER/12 of 1987 dt. February 12, 1987 must necessarily be Clause 17 of the regulations. There are indications in the above circular that it was part of the promotions policy. It was specifically issued with reference to promotions to MMGS-II and III and the same specifically referred to the rural service and semi-urban service as compulsory requirements for promotions. It was stated therein.
'Pending finalisation of a regular promotion policy covering all grades/scales of officers in terms of Regulation 17 of the State Bank of Hyderabad (Officers) Service Regulations 1979, the Government of India have issued guidelines making rural/semi-urban service compulsory as one of the eligibility criteria for considering promotion from Junior Management Grade Scale-I to Middle Management Grade Scale-II and Middle Management Grade Scales-II to Middle Management Grade Scale-III as a part of the promotion policy to effective from the June 1, 1988. The details are as under :
Promotion from JMGS-I to MMGS-II : Minimum two years service in rural branch. As regards specialist officer, he should take the requisite rural branch experiences as and when he switches over to the main stream of banking.'
For implementation of the above term, the branches of the Bank were classified as Metropolitan, Urban, Semi-urban and Rural. It also contained the following recital :
'While the Bank has initiated suitable seats to expose the officers who have not completed the requisite rural/semi-urban service nevertheless, officers who have not completed services in the rural/semi-urban centers are advised to inform their respective controlling Authorities in case their transfer orders to rural/semi-urban centers as the case may be are not received by the March 31, 1987. Please note that officers who do not complete the rural/semi-urban service will be disqualified for promotions even though they may fulfill other eligibility criteria as to service etc., for the purpose of promotion to Middle Management Grade Scale-II or Middle Management Grade Scale-III as the case may be, to be made effective form the June 1, 1988.'
10. It is therefore evident that the Government of India stated guidelines as a substitute for regular promotion policy. It is beyond doubt that the respondent bank considered the guidelines issued by the Government of India as part of the promotion policy. If is not so, there was no meaning in the classification of the branches and the caution that all officers 'who have not completed the requisite period of service in the rural/semi-urban centers are advised to inform their respective controlling Authorities in case their transfer orders to rural/semi-urban centers as the case may be are not received by the March 31, 1987 to fulfill the eligibility criteria for promotion to MMGS-II, to be made effective form the June 1, 1988.'
11. In the employment notice - Circular PER/89-90/11 dt. May 10, 1989 - reference was made to the Government of India guidelines in which eligibility criteria including two years of rural service was stipulated for promotion form JMGS-I to MMGS-II. It was also stated that 'pending formulation of regular promotion Policy covering all grades/scales in terms of Regulation 17 of the State Bank of Hyderabad Officers' Service Regulations 1979 the Executive Committee at its meeting held on the April 15, 1989, approved the following ad hoc promotion policy for filling up vacancies identified for the year 1989 under channel viz., (a) Seniority Channel and (b) Merit Channel in the ratio of 50 : 50 of the total vacancies determined for promotion under each of the channels.'
12. Among the general conditions in clause (v) of the circular sub-clause (d) was to the effect that the 'Government of India guidelines in regard to rural posting will be meticulously implemented 'In the light of the circular issued viz. PER/12 of 1987 dt. February 12, 1987 and the employment notice relating to promotion form JMGS-I to MMGS-III for the year 1989 the relevant portions of which I have extracted above, there could have been no doubt among the eligibles that the promotion policy which the Executive Committee framed in exercise of its power under Regulation 17 of the Service Regulations definitely stipulated the eligibility criteria that such of the officers in Junior Management Grade Scale-I who had completed two years of service in rural branches alone would be qualified for promotion and these who did not have those qualification would be 'disqualified' for promotion.
13. Having stipulated this condition in exercise of the statutory power was it open for the respondent bank-Board of Directors or the Executive Committee to favour persons who has not acquired the necessary eligibility criteria Was it open for the bank to admit persons who were not eligible in terms of the promotion policy to appear for the test and other processes for selection leading to promotion to MMGS-II I have no doubt that if the circulars dt. February 12, 1987 and May 10, 1989 spelt out a promotion policy which was promulgated in exercise of the power under Clause 17 of the Staff Regulations, the respondent-bank was bound to Act only in accordance with the terms of the above promotion policy. It was bound to disqualify such of the officers who had not completed the rural services for a period of two years as on the relevant date viz. June 1, 1989.
14. The explanation of the respondent-bank is that though it had issued circular dt. February 12, 1987 to the effect that rural service for two year would be an eligibility criterion for promotion with effect from June 1, 1988 and the circular specifically mentioned that the bank had initiated steps to post officers to complete the requisite rural service, in some cases, it could not provide posting to such rural and semi-urban areas immediately due to administrative difficulties. It is stated that considerable number of officers otherwise suitable for being considered for promotion from JMGS-I to MMGS-II could not complete the stipulated 2 years of rural/semi-urban service, that this resulted in a number of officers not completing rural service by August 1, 1989 and it was because of this anxiety that some of the candidates who had not completed two years of rural service were also considered and their posting was deferred till the completion of that requirement.
15. The respondent bank seems to contend that the bank had the power to grant exemption from the promotion policy in deserving cases where candidates who were otherwise eligible were disabled form acquiring the requisite qualification due to no fault of theirs. It may perhaps be that in cases where a conditions or qualification was introduced suddenly in such circumstances where the eligibles had no opportunity to acquire these new qualifications, it may be necessary to consider that question.
16. There is considerable force in the sub-mission of the petitioners that it could not have been impossible for the respondent-bank to devise the posting of candidates who were otherwise eligible to rural/semi-urban branches, within the stipulated period from the date of issue of circular dt. February 12, 1987. It was more than two years thereafter that the ad hoc promotion policy for promotion to MMGS-II for 1989 was framed. Petitioners are right in their submissions that persons who obtained and continue to obtain the benefits of Metropolitan and Urban postings in defiance of the circulars are not entitled to nay exemptions has been pleaded by the respondent bank.
17. In all cases where exemption from rural service was granted, assuming there is such power, it shall be only for the purpose of rectifying an injustice done to nay individual or remedying the grievance of a group of persons which was occasioned by reason of administrative decisions taken in the exigencies of service. The power to grant relaxation or exemption shall not be exercise to confer benefits on the favorites contrary to the stipulations contained in principles and rules of general application. If rules are framed which are to be implemented uniformly in all similar cases, I do not find any reason why persons who continued to enjoy the benefit of Metropolitan/Urban posting shall have an edge over those who had completed the rural/semi-urban service requirement, the absence of which was mentioned as a disqualification in the circular dt. February 12, 1987.
18. In spite of the stipulations in that circular, if officers were continued in Metropolitan/Urban postings to their manifest advantage, the imperatives of the circular initiating a disqualification shall not be relaxed in favour of those very officers. The relaxation if any, granted was contrary to the terms of the circular which was incorporated as part of the ad hoc promotion policy for the relevant year.
19. The same reasoning applies with equal force to he promotions effected during the next year, which is the subject matter of challenge in W.P. 8483/90. In its letter SBD/001357 dt. May 11, 1990 the State Bank of India informed the Managing Director of the State Bank of Hyderabad that as a result of consultation with the Associate Banks Officers' Association a promotion policy has been finalized and the same may be adopted to ensure that promotions for the year 1990 are completed on or before August 1, 1990 positively. Clause 5 of the general guidelines for promotion was the following :
'The Government of India guidelines in regard to promotions to the above grades will be kept in view'.
Clause (b) of the promotion policy form JMGS-I to MMGS-II provided that -
'one year's operational experience as Field Officer/Dy. Manager/Manager of a Division/Branch Manager. The Associate Banks will have to ensure that all eligible officers are exposed to one year's operational experience before they are due for promotion.'
Among 'other guidelines' Clause 3 was to the effect that the Government guidelines like those relating to rural assignment etc., will be meticulously followed. In its memorandum dt. May 15, 1990 to the Executive Committee, the Chief General Manager recommended approval of the promotion policy for filling up the vacancies from JMGS-I to MMGS-II for the years 1990 onwards. Clause 5 of the general guidelines was also the same as in the guidelines proposed by the State Bank of India. Clause 4 of the 'other guidelines' was the same as was referred to earlier viz., that 'the Government guidelines those relations to rural assignment will be meticulously followed.' It is therefore obvious that no person was left in any doubt that he should complete the requisite period of rural service for two years and operational experience for one year as a part of the eligibility criteria for consideration for promotion. It was clear that the promotion policy proposed by the State Bank of India and which was adopted by the Executive Committee of the State Bank of Hyderabad, left no quarter for the concerned subsidiary Bank to withhold the requisite posting in rural/semi-urban branch so as to enable the eligible officers to acquire the requisite qualification. I find considerable force in the submission of counsel for the petitioners that favorites were retained in Metropolitan/Urban postings with assurance that the short-fall in rural service or operational experience would be condoned when occasion arises. Exemption of obligatory requirements for promotion in favour of those who ought to have been disqualified is clearly arbitrary and discriminatory.
20. In the light of the above discussion, I hold that the petitions are entitled for promotion in preference to those who had not completed the obligatory period of two years of operational experience as prescribed by the relevant promotion policy the absence of which was to be treated as disqualification of the candidates who were otherwise eligible. Since there is no dispute that the petitioners were otherwise eligible, qualified and suitable and could not be promoted due to the promotion of persons who were liable to be disqualified, their claims for promotion shall be considered against vacancies which had arisen and the filling up of which was deferred till such time as the ineligibles completed the obligatory service requirements . The respondent bank shall promote the petitioners forthwith. They shall be assigned appropriate ranks in MMGS-II. If that requires any revision of ranking or reversion of disqualified officers who were wrongly promoted, it shall be done after issue of notice to such persons as are likely to be affected.
21. The writ petitions are allowed as above. Petitioners are entitled to their costs including advocate's fee of Rs. 500/- in each of the petitions.