Holding

The refusal to extend the appellant's service was vitiated because the Review Committee was improperly constituted and the final order was passed by a committee member, violating the prescribed procedure.

Summary

D.C. Agarwal, a Deputy General Manager of State Bank of India, was subjected to a departmental inquiry that reduced his rank by three grades, an order later set aside by the High Court and upheld by the Supreme Court. The Bank was directed to consider him for promotion, but as he approached the superannuation age of 58, a Review Committee examined his request for extension of service up to age 60 and found him unsuitable. Agarwal challenged the refusal, arguing that the Committee was improperly constituted and that the final order was passed by a member of the Committee, contrary to the Bank's rules which require a higher‑ranking competent authority to make the final decision. The Supreme Court held that the procedure and guidelines for extension of service had been violated, rendering the decision vitiated. Consequently, the Court quashed the orders of the High Court, the appellate authority and the Review Committee, and directed the Bank to constitute a fresh Committee as per the rules and to have the competent authority pass the final order. The Court also noted Agarwal's conduct in seeking an interview with the Governor as unbecoming but focused its decision on procedural irregularities. The appeal was allowed.

Issues considered

Whether the Review Committee constituted for considering the extension of service was in compliance with the Bank's rules and guidelines.
Whether a final order on extension of service can be validly passed by a member of the Review Committee.
Whether the procedural violations render the decision to refuse extension of service void.

Subjects

Service lawExtension of serviceReview CommitteeProcedural fairnessBankingState Bank of IndiaPromotionSuperannuationDepartmental inquiry

Judgment

f\

A D.C. AGARWAL
v. ..-.
STATE BANK OF INDIA AND ORS.

MARCH 11, 1994

B
[S. RATNAVEL PANDIAN AND KM. SAHA!, JJ.]

Service Law-State Bank of India-Deputy General Manager-E.xten-
sion of service-Consideration of by Review Committee-Held, matter of ex-
tension had to be considered by a committee co11sisting of Managing Director
c and certain Deputy Managing Directors mentioned by designation-Review
Committee is a recommending body only-Final order to be passed by com-
petent authority higher in rank than Deputy Managing Directo,......Order having
been passed by a member of Review Committee was in gross violation of
procedure and guidelines-It is also violative of fairplay.
D
The appellant was a Deputy General Manager in the respondent
Bank. A departmental inquiry was ordered against him, which resulted in
imposing the punishment of reduction by three grades. The order was set
aside by the High Court. The decision of the High Court was maintained
by this Court. Since the Court's order was not complied with, the appellant
E i.nitiated contempt proceedings whereas the respondents moved this Court
for review of its order. The respondents also filed a special leave petition
against issuance of notice in the contempt case. This Court, disposing of
the matters, in August 1993, directed the respondents to consider the
appellant for promotion. The appellant was due to superannuate at the
F age of 58 in September 1993. He could be considered for promotion only
if be was in service. A Review Committee, which considered the case of the
>-···
appellant for extension of bis service upto the age of 60 years, did not find
him suitable. The recommendation was accepted by the appropriate
authority and its order refusing to grant extension to the appellant was
maintained in the department appeal. The appellant challenged the order
G by filing a writ petition which was dismissed by the High Court.

In appeal to this Court, it was contended on behalf of the appellant
that the constitution of the Review Committee was not proper inasmuch
,JI " •

as the persons constituting the committee were not entitled to consider the
H issue regarding extension of service of the officers of the category to which
638
AGARWAL v. S.B.I. 639

the appellant belonged and; that the appellant authority had based its A
findings on assumptions and not on appraisal of record. It was stated that
the extension in the Bank services was granted at the age of 50, 55 and 68
years and the appellant having been granted extension after the age of 55
years in 1993 only should not have been refused extension when there was
no material to show that he bad deteriorated in his functioning.
B
Allowing the appeal, this Court

HELD 1.1. The decision taken by the respondents was vitiated by
violating the rules and the guidelines provided for extension of service.
(643 A]
c
1.2. The matter of extension bad to be considered by a committee
consisting of Managing Director and certain Duputy Managing Directors
who are mentioned by designation. Admittedly, none of them were mem-
• bers of the Review Committee. (642 E]

1.3. The Review Committee is a recommending body only. The final D
order had to be passed by the competent authority on recommendation of
the committee. Such officer is always higher in rank than the Deputy
Managing Director. The final order was not passed by the competant
authority. It having been passed by a person who was a member of the
Review Committee, was in gross violation of the procedure and the guide E
lines provided. It is also violative of fair play. Though the appellate
authority bad examined the record, but it did not apply its mind to this
aspect which was basis and fundamental. (642 H; 643 A]
•
1.4. Besides, the extension of service of the appellant had to he
decided objectively on material on record to find out if he was entitled to F
extension. [642 DJ

2. The respondents are directed to constitute a fresh Committee of
the personnel, mentioned in the rules itself, other than the members of the
earlier Committee. In case the appellant bad made any allegation against
any of those Deputy Directors, then the Committee shall comprise of G
Deputy Directors other than those mentioned in the rules. The recommen-
dation of the Committee shall be placed before the competent authority
who shall be different and higher in rank than the members constituting
the Committee. (643 B, CJ

3. Though the appellant was posted to work at a place where his H

j
640 SUPREME COURT REPORTS [1994) 2 S.C.R.

A juniors were working at higher post, he was bound to follow the orders and
obey them. Nor was there justification on his part to proceed on leave
without obtain permission. His conduct in attempting to seek interview
with the Governor by declaring that he was Chief General Manager of the
Bank was unbecoming of a senior officer. [642 CJ

B CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1609 of
1994.

From the Judgment and Order dated 5.10.93 of the Punjab &
Haryana High Court in C.W.P. No. 12062 of 1993.
c F.S. Nariman, Naresh Kaushik, Smt. Lalitha Kaushik and S. Divate
for the Appellant.

Gururaja Rao, A.V. Rangam and A. Ranganathan for the Respon·
dents.
D
The Judgment of the Court was delivered by

R.M. SAHA!, J. This appeal is directed again.~! the order passed by
the High Court of Punjab and Haryana dismissing the Writ Petition filed ,
by the appellant against refusal to grant him extension in service as it would
E not be in the interest of the Bank. The appellant who joined the service of
the Bank as a Probationary Officer in the year 1961 rose to the level of top
executive grade VI. On 27th August 1980 he was given charge as Deputy
General manager of the zone comprising of the bank branches of Haryana
State and Union Territory of Chandigarh. In 1981 an inquiry was ordered
F against him by the Bank's Vigilance Department, Central Office, Bombay,
which ultimately resulted in imposing the punishment of reduction by three
grades. This order was set aside by the High Court and the order was
maintained by this Court. The appellant got relief as the Disciplinary
Authority while diiiagreeing with the report of the Inquiry Officer com-
G rnitted certain procedural irregularities. Since the order was not complied
with, the appellant approached the High Court by way of contempt
proceedings and the respondents moved this Court for review of its order.
Against issuance of notice in contempt by the High Court, the respondents
approachd this Court. We disposed of both the review application and the
S.L.P. directed against issuance of contempt notice by the High Court by
H accepting the statement of the learned Additional Solicitor General that
1

AGARWAL v. S.B.I. (SAHAl,J.] 641

; no fresh proceedings shall be taken against the appellant. And the con- A
;~ tempt application filed by the appellant shall stand withdrawn. Further the
respondents shall consider the appellant for promotion in accordance with
rules by a properly constituted committee. This order was passed in August
1993 whereas the appellant was reaching the age of superannuation at 58
in September 1993. He could be considered for promotion only if he was B
in service. Therefore, the Review Committee considered the case of appel-
lant for extension of his service up to the age of 60. It did not find him
suitable. The recommendation was accepted by the appropriate authority.
The order was maintained in the departmental appeal filed by the appel-
. !ant. The appellate authority passed a detailed order dismissing the appeal
as the appellant's case for extension was considered by the committee in C
conformity with the procedure. The appellate authority further found that
the competent authority did not decide the appellant's claim for extension
only on 'average' or 'above-average' ratings earned by the appellant but it
had also considered the guidelines issued by the Bank.
D
Two submissions were advanced by the learned senior counsel Shri
Nariman to assail the orders passed by the respondents, one, that the
constitution of the Committee was not proper inasmuch as the Committee
was constituted of persons other than who were entiled to look into the
matters of extension of service of officers of the category to which the
appellant belonged. It was next urged that the appellate authority had E
based its finding more on assumptions than on correct appreciation and
appraisal of the record. The learned counsel urged that the extension in
the Bank services is granted at the age of 50, 55 and 58 years. He urged
that even though the appellant was granted extension after the age of 55
years in 1993 only yet he was refused extension when there was no material F
available to show that the appellant had deteriorated in his functioning nor
any entry or warning was given to him during this period. The learned
counsel urged that the character roll entry, prior to 1981, being all excellent
and good and the disciplinary proceedings having remained pending be-
tween 1981 to 1987 which ultimately resulted in their quashing and their G
being no entry available from 1987 to 1993 which couid have resulted in
concluding that the appellant could not function in the interest of the Bank
the orders were liable to be quashed. On the other hand the learned
) > counsel appearing for the Bank vehemently argued that the Bank took
precaution in appointing a committee of those members against whom the
appellant had not made any allegation in any court of law. The learned H
T
I

642 SUPREME COURT REPORTS [1994) 2 S.C.R.

A counsel further urged that in any case from the record it appeared that the
appellant did not take leave at times nor did he abide by the instructions
issued by the higher officers, therefore, the orders were well founded.

That there appears to be no love lost between the department and
B the appellant. It further cannot be disputed that the appellant was posted
to work at a place where his juniors were working at higher post. The
reaction of the appellant, who by temperan1ent appears lo be excitable as
he had appeared earlier in person, to orders passed by those who were
once his junior can very well be visualised. The appeallant who is a senior
officer and has crossed the age of 58 must realise that this is contrary to
c service culture. He was duty bound to follow the orders and obey them.
Nor there was any justification at his part to proceed on leave without
obtining permission. We may also observe that the conduct of the appellant
" in attempting to seek interview with the Governor by declaring that he was
Chief General Manager of the Bank, was unbecoming of a senior officer.
D At the same time the extension of service of an employee had to be decided
objectively on material on record to find out if the appellant was entitled
to extension when it is not disputed that very few officers have been refused
extension in the category of appellant from 58 to 60 years We may not be
understood as expressing an opinion on the matter. But what has per-
suaded us to agree with the learned counsel for appellant is that the matter
E of extension had to be considered by a committee consisting of Managing
Director and certain Deputy Managing Directors who are mentioned by
designation. Admittedly none of them were members of the committee.
The respondents, despite our instructions, could not place any material to
satisfy that the appellant had made any allegation against them. Be it as it
F may, the final authority which had to pass the order "under the rules was
not the committee but a different person higher in rank than the members
who constituted the committee. The Review Committee appears to be
recommending body only. The final order had to be passed by the com-
petent authority on recommendation of the committee. Such officer, it is
G stated, is always higher in rank than the Deputy Managing Director.
Unfortunatly in this case the final order has been passed by a person who
was a member of the Review Committee. This, in our opinion, was in gross
violation of the procedure and the guideline provided. It is also violative
of fairplay. The Review Committee was only a recommendatory body. The
final order was to be passed by the competent authority. And this does not "
H appear to have been done. We are conscious that the appellate authority
Ji

AGARWAL v. s:B.I. [SAIW,J.] 643

had examined the record. But the appellate authority did not apply its mind A
to this aspect which was basic and fundamental. We are, therefore, of the
opinion that the decision taken by the respondents was vitiated by violating
the rules and the guidelines provided for extension of service.

In the result, this appeal succeeds and is allowed. The orders passed
by the High Court, the Appellate Authority and the Review Committee are B
quashed. The respondents are directed to constitute a fresh committee of
the personnel mentioned in the rule itself. In case the appellant had made
any allegation ~gainst any of those Deputy Directors then the committee
shall comprise of Deputy Directors, other than those who are mentioned
in the rules. The earlier Deputy Managing Directors who were the mem- (
bers of the committee shall not be members of the new .committee. The
recommendation of the committee shall be placed before the competent
authority who shall be. different and higher in rank then the members who
shall constitute the committee. Such committee shall be constituted within
two weeks from today and the decision by the competent authority shall be
taken within two weeks thereafter:-· I

.- R.P.
There shall be no order as to costs.

Appeal allowed.