IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

WRIT PETITION (CIVIL) NO.                             OF 2015

(UNDER ARTICLE 32 OF THE CONSTITUTION OF INDIA)

IN THE MATTER OF:

K.D. Khera                                                                        …Petitioner

Versus

Union of India & Ors.                                                 …Respondents

I.A. No.           OF 2015

(Application for Ad-Interim Ex-Parte Stay)

P A P E R  B O O K

(FOR INDEX, PLEASE SEE INSIDE)

I N D E X

RECORD OF PROCEEDINGS

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SYNOPSIS

This writ petition is being filed before this Hon’ble Court under Article 32 of the Constitution of India in public interest challenging the advertisement dated 26.02.2015 issued by Department of Financial Services, Government of India inviting applications for the post of Managing Director and Chief Executive Officer (MD & CEO) in A-category five large Public Sector Banks (PSB)  viz. Bank of Baroda, Bank of India, Canara Bank, IDBI Bank Ltd. and Punjab National Bank holding major Public investment and each bank having business above 3 Lac crore.

 It is most pertinent to point out that these Five PSB have an annual turn over of more than Rs.3 Lac Crore and  hold huge deposits of the Common Man and  as such these PSB are back bone of Indian Economy and any arbitrary and unreasonable  decision relating to appointment to top most positions in these PSB will jeopardise the Indian Economy.

 For the first time,  the eligibility criteria for Top Most Posts of MD & CEO for these five large Public Sector Banks (PSB), holding huge investments of general public, is purposely designed in such a manner that all existing Executive Directors of PSB (who were  the only persons eligible under old policy) will automatically become in-eligible solely on account of cut off age of 55 years with three years Board experience, which is purposely and malfidely reduced in the case of appointment of MD & CMD only for these five large PSB, which will make only Private sector applicants eligible solely on the account of this cut off age.

 The eligibility criteria debar by one stroke all the Executive Directors of PSB. The petitioner submits that the end result of this discriminatory policy, of privatisation from the top will cause a huge detriment to the interests of PSBs and the Indian Banking Sector.

 Foremost, it is submitted that the Government of India’s advertisement dated 26.02.2015 to call for applications for the post of MD & CEOs in the public sector banks is against the constitutional and statutory framework. The aforesaid advertisement is a move to promote outsiders in the banks by discriminating against the well-experienced, in-house staff of these banks, who are more capable to take up these appointments. It is submitted that the senior personnel and employees at the public sector banks have worked for decades in the public sector banks and form the backbone of the Indian banking industry. However, they are now being completely overlooked for these posts through the aforesaid advertisement.

It is submitted that as per the advertisement for the appointment of MD & CEOs of Punjab National Bank, Bank of India, Bank of Baroda, Canara Bank and IDBI Bank Ltd., these positions have been thrown open to anyone with at least 15 years of experience in mainstream banking, of which at least three years should be served at the board level. The advertisement further stipulates that the candidates should be in the age group of 45-55 years as on the date of advertisement. It is submitted that the aforesaid eligibility criteria is discriminatory and violative of Articles 14 and 19 of the Constitution of India as the aforesaid criteria will debar almost all the candidates from within the public sector banks.

It is submitted that the eligibility criteria prescribed in the aforesaid advertisement dated 26.02.2015 reads as under:

“4. Eligibility Criteria:

a. Person of ability, integrity and standing with knowledge and experience in Banking

b. Proven management, leadership and innovative skills to build and inspire team

c. Experience in institutional development in banking sector

d. Should have at least 15 years of experience in mainstream banking of which at least 3 years should be served at the Board level.

e. Should be in the age group of 45 to 55 years on the date of advertisement

f. Application received shall be screened and shortlisted on the basis of experience and eligibility conditions. The candidates will be called for preliminary interaction for the purpose of determining the eligibility. The decision of the Screening Agency shall be final. Candidates duly recommended by the Screening Agency will only be called for the interview.”

 It is submitted that Clause 4(d) of the Eligibility Criteria is highly discriminatory as most of the personnel / employees of the public sector banks are promoted as Executive Director (hereinafter referred to as “ED) only when they reach the age of 53 years or 54 years and rarely any of them is promoted early before attaining the said age. Although many of the employees of the public sector banks would have at least 15 years of experience in mainstream banking, none of them would possess the experience of serving at the Board level for at least 3 years. Therefore, most of the top level employees of the public sector banks, though possessing more than 15 years of experience in mainstream banking, would lack the other essential criterion of the experience of serving at the Board level for at least 3 years due to the policy of the public sector banks and Government of India in not promoting them to Board level positions at an early age.

Hence all existing Executive Directors (ED), appointed by government pursuant to their good performance and clean track record, won’t be able to apply for these posts on account of cut of age of 55 years  with 3 years experience at the board level.

The Government is very well aware that, as per its own promotion policy, almost all ED of PSB are appointed post rigorous selection process after the age of  53 to 54 Years (at least after 23 years of service, as per promotion rules of PSB) and as such in no case they can fulfil the twin criteria of cut of age  of  55 years & 3 Years Board Level Experience on the date of Advertisement.

 It is further submitted that General Managers of the public sector banks are not eligible to apply as they don’t possess three year board level experience. Thus, the advertisement and especially the criterion of possession of experience of serving at the Board level for at least 3 years is highly discriminatory against the employees of the public sector banks, who have worked in banking sector with public sector banks and waited all these years for appropriate position in the banks in accordance with the policy of the public sector banks as well as Government of India. 

 The fact that none of the current Executive Directors are eligible to apply for the posts advertised is clear from the time taken to reach the post of General Manager and Executive Director through the process of promotion which is clearly established from Guidelines issued by Government of India dated 14.03.2012, as per which the minimum years in service required to reach the post of Executive Director is between 23 to 25 years, subject to the person securing all his promotions in due time. This also never happens in public sector banks due to delays caused in promotions. The effect of such guidelines as well as guidelines prior to 14.03.2012 has been that none of the current EDs satisfy the twin criteria of three years board experience and being below  55 years of age.

 This policy vide advertisement dated 26.02.2015 is designed in such a manner that only applicants from the private sector are elligible in case of only these five large PSB, on account of cut of age criteria prescribed in the advertisement.

 Such a discriminatory policy would lower the moral of ED who have spent their life in service of the PSB and nation, as they will have to report to a person who is substantially  inexperienced (15 years of service).Such a policy shall also have far reaching consequences as in case of Private Banks generally persons having very good relations with the promoters are appointed at Board level that to at a young age. Appointment of persons from private banks to the position of MD and CEO of these five PSB holding huge investments and deposits of Common Man can cause serious issues about utilization of funds for benefit of certain set of private persons and industries.

It is submitted that in public sector banks, the board design approach is structural. The Bank Nationalisation Acts of 1970 and 1980 lay down in granular detail the manner in which board positions are to be filled. There are eight broad categories of directors. These are

a.           Whole-time Directors (the Chairman and Executive Directors);

b.           Central Government Official Directors;

c.           Directors with expertise in Bank Regulation and Supervision (in common parlance known as RBI directors);

d.           Workmen Employee Directors;

e.           Officer employee directors;

f.            Chartered Accountant Directors;

g.           Central Government Nominee Directors; and

h.           Elected Shareholder Directors.

Except a to c, all others directors are collectively referred to as non-official directors and detailed guidelines have been issued by the Government for their eligibility, mandating that "persons with special academic training or practical experience in the fields of agriculture, rural economy, banking, cooperation, economics, business management, human resources, finance law, marketing, industry and IT will ordinarily be considered."

 Similarly, the SBI Act of 1955 refers to seven categories of directors for SBI as there is no separate category for chartered accountants, while IDBI Bank (constituted under the Companies Act) has five different categories of directors.

 Pithily put, the Chairman (who is invariably also the CEO) and the Executive Directors constitute the top management of each public sector bank, and are its whole-time directors on the board. In terms of the existing process, for their appointment a Selection Committee has been constituted by the Government, chaired by the RBI Governor, and including (amongst others) the RBI Deputy Governor for Banking and the Secretary for Financial Services in the Finance Ministry. In practice, the Governor does not attend the selection process. The Selection Committee comprises a sub-committee chaired by the Secretary for Financial Services, and other members include the RBI Deputy Governor for Banking. The short listing of candidates is undertaken by the Department of Financial Services. The shortlisted candidates are called for interview, but the interviews are generally short, sometimes lasting less than five minutes for a candidate. Selected candidates need to be appointed through approval of the Appointments Committee of the Cabinet (ACC) of the Government after consultation with RBI.

 It is submitted that the rule of law inhibits arbitrary action and also makes it liable to be invalidated. Every action of the State or its instrumentalities should not only be fair, legitimate and above board but should be without any affection or aversion. It should neither be suggestive of discrimination nor even give an impression of bias, favouritism and nepotism. Procedural fairness is an implied mandatory requirement to protect against arbitrary action where statute confers wide power coupled with wide discretion on an authority. If the procedure adopted by an authority offends the fundamental fairness or established ethos or shocks the conscience, the order stands vitiated. The decision-making process remains bad. It is submitted that the Union of India is violating the aforesaid principle of rule of law by prescribing the aforesaid eligibility criteria. However, vide the advertisement dated 26.02.2015 the entire class of Executive Directors of the public sector banks has been discriminated against as they have been rendered ineligible to the posts advertised. The same amounts to hostile discrimination.

This Hon’ble Court has in State of Madhya Pradesh v. Nandalal Jaiswal (reported in AIR 1987 Supreme Court 251) at page 280 observed as under:  

"What we said in that case in regard to legislation relating to economic matters must apply equally in regard to executive action in the field of economic activities, though executive decision may not be placed on as high a pedestal as legislative judgment insofar as judicial deference is concerned.  We must not forget that in complex economic matters every decision is necessarily empiric and it is based on experimentation or what one may call "trial and error method" and therefore, its validity cannot be vested on any rigid "a priori" consideration or on the application of a straight jacket formula. The courts must while judging the constitutional validity of an executive decision relating to economic matters grant a certain measure of freedom "play" in the "joints" to the executive….. The court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical.  The court can interfere only if the policy decision is patently arbitrary, discriminatory or malafide.”  

 The petitioner states that the policy vide advertisement dt 26.02.2015 is patently arbitrary, discriminatory or malafide. It is also unfair and unjust in the way it will affect the ED and GM of the PSB.

Further, the impugned advertisement is contrary to the guidelines laid down by the Government of India for appointment of Executive Directors and Chairmen & Managing Directors of Public Sector Banks. Vide notification No. 18(67) EO/08(ACC), the guidelines provide as under:

a.      The pool for selection of EDs may be confined to GMs of Nationalized Banks. CGMs( Chief General Manager) of Associate Banks of SBI who have risen from the Associate Banks Service will also be included in the pool.

b.      Applications will be invited from those General Managers of Nationalized Banks, and CGMs of Associate Banks of SBI who have risen from the Associate Banks Service, and who have completed two years service as GM and have three years of residual service.

c.      The cut-off date for determining the eligibility will be reckoned as on 1st April of the financial year in which the vacancies arise.

d.      The Sub-Committee of the Appointments Board will comprise of Dy. Governor, Reserve Bank of India (RBI), 3 external experts in the management and banking field and Secretary, Department of Financial Services. The Sub-Committee will interact with the eligible candidates. The panel of experts associated with the Sub-Committee will be approved by ACC from the panel suggested by Department of Financial Services.

e.      The Sub-Committee after interaction with eligible candidates will prepare a merit list after taking into account the Annual Performance Reports (APRs) of last seven years for which 70 marks would be awarded (10 marks for outstanding, 08 marks for very good, and 06 marks for good). If there are adverse remarks, 2 marks are to be deducted for each such APR. The remaining 30 marks will be assigned on the basis of performance during the interaction. Further, in Banks where there are only 3 Grades instead of the usual four, the grading will be converted to the next highest level. For example, if a Bank does not have “outstanding” in its grading system, the grading of “v good” will be read as “outstanding”.

f.       Further, a minimum benchmark of 50 (out of the total of 70 marks) in the last 7 APRs would be required for eligibility for consideration. The grade ‘Average’ would not be upgraded.

g.      Where the candidates score equal marks, seniority will be determined with reference to age, the older person being ranked senior.

h.      The role of the Sub-committee will be to interact with the eligible candidates and to empanel them after interaction based on their domain knowledge, banking skills and APRs. If an officer has been imposed more than three minor penalties or more than one major penalty and two minor penalties or two major penalties in his /her career, he/she will not be considered eligible for pool of selection of EDs/CMDs.

i.        The Sub-Committee of the Appointment Board will draw up a merit list as per the number of anticipated vacancies with a reserve list upto 25% of the anticipated vacancies and recommend the same to the Appointment Board.

j.        The Panel prepared for the year will be valid for one year i.e. upto 31st March of the financial year for which it has been prepared.

It is submitted that the Government of India ought to have followed the criteria laid down in the aforesaid guidelines and not issued the advertisement dated 26.02.2015, which is contrary to the aforesaid procedure for appointment of Executive Directors and Chairmen & Managing Directors of Public Sector Banks.

 In a catena of decisions the Supreme Court has laid down that the norms or rules as existing on the date when the process of selection begins should control such selection and any alteration  to such norms would not affect the continuing process unless such alteration is specifically given retrospective effect. The Government vide advertisement dated 26.02.2015 has changed the long standing selection and promotion criteria in the case of the 5 PSB without specifically mentioning any retrospective change in the existing policy. It is submitted that amendment in promotion policy can be given effect only in future promotions. The selection criteria which have been prescribed in advance cannot be changed afterwards in a retrospective manner.

Another crucial aspect of the advertisement is that the same does not provide the terms & conditions for appointment, including the salary package and the same has been kept flexible. The relevant portion of the advertisement dated 26.02.2015 reads as under:  

“The salary package payable to the appointees will be flexible. The other terms and conditions of appointment will be those as may be specified by the Government at the time of appointment.”

 It is submitted that in absence of any fixed remuneration in the advertisement, the advertisement is liable to be quashed as the same is against the basic tenets of public employment as well as service law jurisprudence in India.

 PSB are an important driver of change in bringing equality at the door step of all Indians. A key component of aim to achieve equality of credit in India has been the so called lending to “priority sector lending”. All Indian banks are required to meet a 40 per cent target on priority sector lending. The law states that all domestic commercial banks, public or private, have to lend 40 per cent of their adjusted net bank credit (ANBC) or credit equivalent amount of their off balance sheet exposure— whichever is higher—to the priority sectors, and exposure of foreign banks (with more than 20 branches) is only 32 per cent.

 As compared to private banks public sector banks (PSB) have clearly defined rules as they have to compulsorily lend in the subcategories- agriculture, micro and small enterprises, education, housing, export credit and others. The most important amongst them is that 40 per cent of all priority sector lending must be made to agriculture. Thus the share of PSB in achieving this equality of opportunity in lending is paramount and most vital.

 When PSB have a long  history of striving for promoting equality and removing discrimination in public lending, it is shocking to see such a discriminatory policy of appointment being pursued by the Government for the top most posts of these five PSB vide advertisement dt 26.02.2015. This is a cause for great public concern and hence trhe petitioner had to take the initiative to bring this ex-facie arbitrary and discriminatory policy to the notice of this Hon’ble Court.

 This Hon’ble Court in a catena of decisions has laid down that the policies of State and instrumentalities of State have to be non-arbitrary and reasonable and have to be answerable to these twin tests under Article 14 of the Constitution of India unlike Private entities. Unfortunately the policy that the Government of India wants to pursue as evidenced by the advertisement dt 26.02.2015 is violative of Article 14 and patently discriminatory and capable of huge Public loss and upheaval in the Indian banking Sector.

  It is submitted that the discriminatory policy of appointment that is envisaged as per the advertisement dated 26.02.2015 will have grave repercussions to the health of Indian credit policy and Indian banking system. This is a violation of not only the private right of a few Executive Directors of the PSB but the fundamental rights of the citizens of the entire nation. This is more so for the reason that unlike Private sector banks, public sector banks have partnered the Indian government’s fiscal policy of removal of inequality and discrimination. This was also the main reason for nationalisation of the PSB earlier.

 If at all there is any need for reforms in PSB even then there is no rational connection or basis with the discrimination that has been meted out to the specific class of persons namely the Executive directors currently working in the PSB. On the other hand having a discriminatory policy which only favours persons to be appointed from Private sector banks is fraught with grave consequences such as putting the entire corpus of funds that the PSB have at their disposal up for grabs by private interests. This is a possibility as such an abuse cannot be ruled out at the hands of persons from a private sector background driven solely by profit motive.

 As compared to private persons promotion of General Managers in PSB has been on the basis of selection by a committee formed by the Government consisting of RBI, Nominee of the Government & CMD of the respective Bank after mandatory clearance from CVC.

It is important here to bring to the notice of this Court that besides these five banks, in the past, for appointment in case of other Public Sector Banks for post of CMD for all the prior years, Executive Directors (ED) till age of 58 years i.e. two years before retirement, were eligible for appointment. This change in policy is a watershed in the banking history of India post Nationalisation of Indian banks, and may lead to disastrous consequences.

 It has also come to the knowledge of the petitioner that contrary to advice and view of Appointment Committee of Cabinet, the cut of age was unjustly, irrationally & unilaterally reduced from 58 years to 55 years, with a sole objective to make all existing Executives Directors of PSB ineligible.

 Hence, the Petitioner is filing this Writ Petition in Public Interest seeking immediate intervention of this Hon’ble Court in this regard.

IN THE SUPREME COURT OF INDIA------

(CIVIL ORIGINAL JURISDICTION)

WRIT PETITION (CIVIL) NO.                               OF 2015

(UNDER ARTICLE 32 OF THE CONSTITUTION OF INDIA)

IN THE MATTER OF:

K. D. KHERA

88, 1^st Floor, Bhera Enclave,

Paschim Vihar, Opp. National Market,

New Delhi-110087                                                        …Petitioner

7.      Bank of Baroda

Through its Managing Director & CEO  

Head Office at:

Suraj Plaza 1, Sayaji Ganj

Baroda, Gujarat- 390005                           Respondent No. 7

WRIT PETITION UNDER ARTICLE 32 OF THE CONSTITUTION OF INDIA

To

The Chief Justice of India and His Companion

Justices of the Hon’ble Supreme Court of

India New Delhi

 The Humble Petition of the Petitioner above named;

MOST RESPECTFULLY SHOWETH:

1.           That the petitioner is a graduate in Commerce and Fellow of the Institute of Cost Accountants of India. He retired from Punjab National Bank after serving for more than thirty eight years. During this period he worked in different branches and administrative offices of the bank, thus gaining in-depth knowledge of different aspects of banking. He had been Director on the Board of Punjab National Bank for three terms at different intervals. He has been the Trustee of Punjab National Provident Fund & Pension Funds for several years.

2.           He is vitally interested in the cause of Indian Banks and their employees. Banks being a backbone of any economic system, their officials have to take crucial financial and executive decisions that have direct bearing on the financial health of the banks. It is his firm belief that working in branches and administrative offices as well as on the Board of the banks had well equipped him with the confidence required for taking financial and often crucial decisions at micro and macro levels.

3.           The petitioner has remained fully involved in the trade union’s activities of banks and served as General Secretary of All India Punjab National Bank Officers' Association for three decades. He has also held the post of President of the All India Banks Officers' Confederation having more than 2,50,000 officers in Public Sector Banks, Private Sectors Banks, Co-operative Sector Banks & Regional Rural Banks. By virtue not only of posts, he held, but also because of his acumen in negotiations, he had been a key participant and signatory in almost all the salary revision settlements and other service related settlements with the Indian Banks' Association as well as Punjab National Bank.

4. The Petitioner was convener of the Sub-committee of the All India Bank Officers' Confederation for suggesting improvements in conduct and discipline/appeal regulations. These Recommendations of the committee were forwarded to the Indian Banks' Association for consideration and discussion. He has also authored certain hand books on disciplinary matters as General Secretary of All India Punjab National Bank Officers' Association. He organized a number of seminars on disciplinary matters for giving training to officers on various aspects of Disciplinary proceedings. In such seminars eminent lawyers, Trade Union leaders of the Banking Industry, Chairman & MD and top officials of PNB participated. Even one of the seminars was inaugurated by the Hon'ble Central Vigilance Commissioner. He is also a shareholder of Punjab National Bank.

5.    This writ petition is being filed by the Petitioner before this Hon’ble Court under Article 32 of the Constitution of India in public interest challenging the advertisement dated 26.02.2015 published by Department of Financial Services, Government of India inviting applications for the post of Managing Director and Chief Executive Officer (MD & CEO) in five Public Sector Banks viz. Bank of Baroda, Bank of India, Canara Bank, IDBI Bank Ltd. and Punjab National Bank. True Copy of advertisement dated 26.02.2015 issued by Department of Financial Services, Government of India is annexed herewith as ANNEXURE P-1 (pg.                 )

6.       That it is submitted that the Government of India’s advertisement dated 26.02.2015 to call for applications for the post of MD & CEOs in the public sector banks is against the constitutional and statutory framework. The aforesaid                               advertisement is a move to promote outsiders in the banks by discriminating against the well-experienced, in-house staff of these banks, who are more capable to take up these appointments. It is submitted that the senior personnel and employees at the public sector banks have worked for decades in the public sector banks and form the backbone of the Indian banking industry. However, they are now being overlooked for these posts through the aforesaid advertisement.

7.           That in public sector banks, the board design approach is structural. The Bank Nationalisation Acts of 1970 and 1980 lay down in granular detail the manner in which board positions are to be filled. There are eight broad categories of directors. These are

a.           Whole-time Directors (the Chairman and Executive Directors);

b.           Central Government Official Directors;

c.            Directors with expertise in Bank Regulation and Supervision (in common parlance known as RBI directors);

d.           Workmen Employee Directors;

e.           Officer employee directors;

f.             Chartered Accountant Directors;

g.           Central Government Nominee Directors; and

h.           Elected Shareholder Directors.

Except a to c above, others are collectively referred to as non-official directors and detailed guidelines have been issued by the Government for their eligibility, mandating that "persons with special academic training or practical experience in the fields of agriculture, rural economy, banking, cooperation, economics, business management, human resources, finance law, marketing, industry and IT will ordinarily be considered." 

8.           That similarly, the SBI Act of 1955 refers to seven director categories for SBI as there is no separate category for chartered accountants, while IDBI Bank (constituted under the Companies Act) has five different director categories.

9.           That pithily put, the Chairman (who is invariably also the CEO) and the Executive Directors constitute the top management of each public sector bank, and are its whole-time directors on the board. In terms of the existing process for their appointment, a Selection Committee has been constituted by the Government, chaired by the RBI Governor, and including (among others) the RBI Deputy Governor for Banking and the Secretary for Financial Services in the Finance Ministry. In practice, the Governor does not attend the selection process, the Selection Committee comprises a sub-committee chaired by the Secretary for Financial Services, and other members include the RBI Deputy Governor for Banking. The short listing of candidates is undertaken by the Department of Financial Services,. The shortlisted candidates are called for interview, but the interviews are generally short, sometimes lasting less than five minutes for a candidate. Selected candidates need to be appointed through approval of the Appointments Committee of the Cabinet (ACC) of the Government after consulting RBI

10.       That if the policy of the Government vide advertisement dated 26.02.2015 is allowed to carry on for the next batch of vacancies in PSB even then none of the Executive Directors appointed with the PSB shall be eligible for applying for the top most vacancy in these banks.

11.       That it is submitted that the performance of the Indian public sector banks is better than the private sector banks. The aforesaid position entails despite the fact that a CMD of a public sector bank is paid a fraction of its private sector counterparts.

12.       That it is submitted that the high non-performing assets of the public sector banks can be attributed more to the participation in government sponsored schemes and stalled projects rather than due to lack of competence and due diligence of the bank officials. 

13.       That it is submitted that as per the advertisement for the appointment of MD & CEOs of Punjab National Bank, Bank of India, Bank of Baroda, Canara Bank and IDBI Bank Ltd., these positions have been thrown open to anyone with at least 15 years of experience in mainstream banking, of which at least three years should be served at the board level. The advertisement further stipulates that the candidates should be in the age group of 45-55 years as on the date of advertisement. It is submitted that the aforesaid eligibility criteria is discriminatory and violative of Articles 14 and 19 of the Constitution of India as the aforesaid criteria will debar almost all the candidates from within the public sector banks.

14.       That it is submitted that the eligibility criteria prescribed in the aforesaid advertisement dated 26.02.2015 reads as under:

“4. Eligibility Criteria:

a. Person of ability, integrity and standing with knowledge and experience in Banking

b. Proven management, leadership and innovative skills to build and inspire team

c. Experience in institutional development in banking sector

d. Should have at least 15 years of experience in mainstream banking of which at least 3 years should be served at the Board level.

e. Should be in the age group of 45 to 55 years on the date of advertisement

f. Application received shall be screened and shortlisted on the basis of experience and eligibility conditions. The candidates will be called for preliminary interaction for the purpose of determining the eligibility. The decision of the Screening Agency shall be final. Candidates duly recommended by the Screening Agency will only be called for the interview.”

15.       That it is submitted that Clause 4(d)(e)  of the Eligibility Criteria is highly discriminatory as most of the personnel / employees of the public sector banks are promoted as Executive Director (hereinafter referred to as “ED) only when they reach the age of 53 years or 54 years and rarely any of them is promoted early before attaining the said age. Although many of the employees of the public sector banks would have at least 15 years of experience in mainstream banking, very few of them would possess the experience of serving at the Board level for at least 3 years. Therefore, most of the top level employees of the public sector banks, though possess more than 15 years of experience in mainstream banking, however, they would lack the other essential criterion of the experience of serving at the Board level for at least 3 years due to the policy of the public sector banks and Government of India in not promoting them to Board level positions at appropriate age.

16.       That it is further submitted that General Managers of the public sector banks are not eligible to apply as they don’t possess three year board level experience. Thus, the advertisement and especially the criterion of possession of experience of serving at the Board level for at least 3 years is highly discriminatory against the employees of the public sector banks, who have worked in banking sector with public sector banks and waited all these years for appropriate position in the banks in accordance with the policy of the public sector banks as well as Government of India. 

17.       That the fact that none of the current Executive Directors are eligible to apply for the posts advertised is clear from the time taken to reach the post of General Manager and Executive Director through the process of promotion is clearly established from letter issued by Government of India dated 14.03.2012, as per which the minimum years in service required to reach the post of Executive Director is between 23 to 25 years, subject to the person securing all his promotions in due time. This also never happens in public sector banks due to delays caused in promotions. True Copy of letter No. F.No.4/11/1/2011-IR dated 14.03.2012 issued by the Government of India is annexed herewith as ANNEXURE P-2. (pg.  

18.       That it is submitted that the rule of law inhibits arbitrary action and also makes it liable to be invalidated. Every action of the State or its instrumentalities should not only be fair, legitimate and above board but should be without any affection or aversion. It should neither be suggestive of discrimination nor even give an impression of bias, favouritism and nepotism. Procedural fairness is an implied mandatory requirement to protect against arbitrary action where statute confers wide power coupled with wide discretion on an authority. If the procedure adopted by an authority offends the fundamental fairness or established ethos or shocks the conscience, the order stands vitiated. The decision-making process remains bad. It is submitted that the Union of India is violating the aforesaid principle of rule of law by prescribing the aforesaid eligibility criteria. However, vide the advertisement dated 26.02.2015 the entire class of Executive Directors of the public sector banks has been discriminated against as they have been rendered ineligible to the posts advertised. The same amounts to hostile discrimination.

19.       That the impugned advertisement is contrary to the guidelines laid down by the Government of India for appointment of Executive Directors and Chairmen & Managing Directors of Public Sector Banks. Vide notification No. 18(67) EO/08(ACC), the guidelines provide as under:

a.           The pool for selection of EDs may be confined to GMs of Nationalized Banks. CGMs of Associate Banks of SBI who have risen from the Associate Banks Service will also be included in the pool.

b.           Applications will be invited from those General Managers of Nationalized Banks, and Chief general Manager(CGM) of Associate Banks of SBI who have risen from the Associate Banks Service, and who have completed two years service as GM and have three years of residual service.

c.            The cut-off date for determining the eligibility will be reckoned as on 1st April of the financial year in which the vacancies arise.

d.           The Sub-Committee of the Appointments Board will comprise of Dy. Governor, Reserve Bank of India (RBI), 3 external experts in the management and banking field and Secretary, Department of Financial Services. The Sub-Committee will interact with the eligible candidates. The panel of experts to the associated with the Sub-Committee will be approved by ACC from the panel suggested by Department of Financial Services.

e.           The Sub-Committee after interaction with eligible candidates will prepare a merit list after taking into account the Annual Performance Reports (APRs) of last seven years for which 70 marks would be awarded (10 marks for outstanding, 08 marks for very good, and 06 marks for good). If there are adverse remarks, 2 marks are to be deducted for each such APR. The remaining 30 marks will be assigned on the basis of performance during the interaction. Further, in Banks where there are only 3 Grades instead of the usual four, the grading will be converted to the next highest level. For example, if a Bank does not have “outstanding” in its grading system, the grading of “v good” will be read as “outstanding”.

f.             Further, a minimum benchmark of 50 (out of the total of 70 marks) in the last 7 APRs would be required for eligibility for consideration. The grade ‘Average’ would not be upgraded.

g.           Where the candidates score equal marks, seniority will be determined with reference to age, the older person being ranked senior.

h.           The role of the Sub-committee will be to interact with the eligible candidates and to empanel them after interaction based on their domain knowledge, banking skills and APRs. If an officer has been imposed more than three minor penalties or more than one major penalty and two minor penalties or two major penalties in his /her career, he/she will not be considered eligible for pool of selection of EDs/CMDs.

i.              The Sub-Committee of the Appointment Board will draw up a merit list as per the number of anticipated vacancies with a reserve list upto 25% of the anticipated vacancies and recommend the same to the Appointment Board.

j.              The Panel prepared for the year will be valid for one year i.e. upto 31st March of the financial year for which it has been prepared.

Copy of notification no. 18(67) EO/08(ACC) dated 13.04.2011 issued by Government of India is annexed herewith as ANNEXURE P-3. (pg.

20.       That it is submitted that the Government of India ought to have followed the laid down in the aforesaid guideline and not issue the advertisement dated 26.02.2015, which is contrary to the aforesaid procedure for appointment of Executive Directors and Chairmen & Managing Directors of Public Sector Banks.

21.       That another crucial aspect of the advertisement is that the same does not provide the terms & conditions for appointment, including the salary package and the same has been kept flexible. The relevant portion of the advertisement dated 26.02.2015 reads as under:   

“The salary package payable to the appointees will be flexible. The other terms and conditions of appointment will be those as may be specified by the Government at the time of appointment.”

It is submitted that in absence of any fixed remuneration in the advertisement, the advertisement is liable to be quashed as the same is against the basic tenets of public employment as well as service law jurisprudence in India.

22.       That it is submitted that several representations have been made to the Hon’ble Prime Minister and Hon’ble Finance Minister against the impugned advertisement dated 26.02.2015 by various stakeholders of public sector banking. On 03.03.2015 All India Bank Officers’ Confederation sent its representation to the Hon’ble Finance Minister urging him to reconsider the appointments to be made under the advertisement dated 26.02.2015. A copy of the aforesaid representation was also sent to the petitioner herein. Copy of representation dated 03.03.2015 sent by All India Bank Officers’ Confederation to the Hon’ble Finance Minister is annexed herewith as ANNEXURE P-4. (pg.

23.       That on 12.03.2015 All India Bank Officers’ Confederation sent its representation to the Hon’ble Prime Minister urging him to reconsider the appointments to be made under the advertisement dated 26.02.2015. A copy of the aforesaid representation was also sent to the petitioner herein. Copy of representation dated 12.03.2015 sent by All India Bank Officers’ Confederation to the Hon’ble Prime Minister is annexed herewith as ANNEXURE P-5. (pg.

24.       That as a proof of the effect of this discriminatory policy on the ground level, the petitioner is annexing a list of all the incumbent Executive Directors who are working in the public Sector banks. Such is the level discrimination that almost all of the Executive Directors are ineligible to apply as per the advertisement dated 26.02.2015. Copy of list of the Executive Directors employed with all the public Sector banks as on 26.02.2015 is annexed as ANNEXURE P-6. (pg.

25.       That it is submitted that the statistics suggest that some private sector banks are having more non-performing assets (“NPAs”) than several public sector banks. Besides, public sector banks are making profits of around 40000 crores per annum after providing for over 80000 crores for provisioning due to write off and policies of the Government and are paying a staggering Rs. 10,000 crores to exchequer by way of dividend, income tax and other indirect taxes and providing direct employment to 10 lakh employees.

26.       That it is submitted that the government’s  total capital invested in the public sector banks is not more than Rs. 25,000 crores and the returns on capital invested is far higher. It is submitted that if the recruitment to the aforesaid posts is held under the advertisement dated 26.02.2015, then all the public sector banks will be headed by private sector candidates at the cost of Executive Directors currently employed with the public sector banks. The EDs form the backbone of Indian banking sector. They have vast experience in running banks as compared to their peers in private sector banks.  

27.       That it is submitted that the eligibility criteria prescribed in the advertisement dated 26.02.2015 is highly discriminatory against the employees of the public sector banks, who are at the position of General Managers and above. It is discriminatory as these employees have worked day and night at a fraction of remuneration vis-à-vis their counterparts in private sector banks to make the public sector banking successful and functional in India. They have left no stone unturned in ensuring that the Prime Minister’s Jan Dhan Yojna becomes a roaring success. They visited slums in Mumbai, non-motorable villages in Bihar and North East to enrol over 12.5 crore Indians into banking mainstream – a record breaking feat which could only be accomplished by dedicated staff of public sector banks. The Hon’ble Prime Minister has many a time credited the bankers for making his dream of financial inclusion possible. 

28.       It is submitted that the Indian banking system is plagued with NPAs from the private sector companies. Hence, the competence and capability of private sector bankers cannot be put at a higher pedestal than those of the public sector bankers.

29.       That it is submitted that the Economic Survey of 2015 has rightly pointed out that the balance sheet of public sector banks has deteriorated due to stalled projects in infrastructure sector and not due to any systemic risk. The survey clearly states that the public sector banks, which are exposed to governmental accountability and oversight, lending in a situation of NPAs, is not easy to manage because of a generic problem of caution, afflicting bureaucratic decision-making. Despite the significant variation in public sector banks, the survey states that it is also striking that on these measures, the best public sector banks perform well above private sector banks on average, recognising of course that public sector banks may be burdened with greater social obligations that place them at a competitive disadvantage relative to the private banks.

30.       This Petition in being filed by the Petitioner on, inter alia, following grounds:

GROUNDS

A.          Because the Government of India’s advertisement dated 26.02.2015 to call for applications for the post of MD & CEOs in the public sector banks is against the constitutional and statutory framework. The aforesaid advertisement is a move to promote outsiders in the banks by discriminating against the well-experienced, in-house staff of these banks, who are more capable to take up these appointments. It is submitted that the senior personnel and employees at the public sector banks have worked for decades in the public sector banks and form the backbone of the Indian banking industry. However, they are now being overlooked for these posts through the aforesaid advertisement.

B.          Because as per the advertisement for the appointment of MD & CEOs of Punjab National Bank, Bank of India, Bank of Baroda, Canara Bank and IDBI Bank Ltd., these positions have been thrown open to anyone with at least 15 years of experience in mainstream banking, of which at least three years should be served at the board level. The advertisement further stipulates that the candidates should be in the age group of 45-55 years as on the date of advertisement. It is submitted that the aforesaid eligibility criteria is discriminatory and violative of Articles 14 and 19 of the Constitution of India as the aforesaid criteria will debar almost all the candidates from within the public sector banks.

C.          Because the eligibility criteria prescribed in the aforesaid advertisement dated 26.02.2015 reads as under:

“4. Eligibility Criteria:

a. Person of ability, integrity and standing with knowledge and experience in Banking

b. Proven management, leadership and innovative skills to build and inspire team

c. Experience in institutional development in banking sector

d. Should have at least 15 years of experience in mainstream banking of which at least 3 years should be served at the Board level.

e. Should be in the age group of 45 to 55 years on the date of advertisement

f. Application received shall be screened and shortlisted on the basis of experience and eligibility conditions. The candidates will be called for preliminary interaction for the purpose of determining the eligibility. The decision of the Screening Agency shall be final. Candidates duly recommended by the Screening Agency will only be called for the interview.”

D.          Because Clause 4(d) of the Eligibility Criteria is highly discriminatory as most of the personnel / employees of the public sector banks are promoted as Executive Director (hereinafter referred to as “ED) only when they reach the age of 53 years or 54 years and rarely any of them is promoted early before attaining the said age. Although many of the employees of the public sector banks would have at least 15 years of experience in mainstream banking, very few of them would possess the experience of serving at the Board level for at least 3 years. Therefore, most of the top level employees of the public sector banks, though possess more than 15 years of experience in mainstream banking, however, they would lack the other essential criterion of the experience of serving at the Board level for at least 3 years due to the policy of the public sector banks and Government of India in not promoting them to Board level positions at appropriate age.

E.          Because it is submitted that General Managers of the public sector banks are not eligible to apply as they don’t possess three year board level experience. Thus, the advertisement and especially the criterion of possession of experience of serving at the Board level for at least 3 years is highly discriminatory against the employees of the public sector banks, who have worked in banking sector with public sector banks and waited all these years for appropriate position in the banks in accordance with the policy of the public sector banks as well as Government of India. 

F.           Because the fact that none of the current Executive Directors are eligible to apply for the posts advertised is clear from the time taken to reach the post of General Manager and Executive Director through the process of promotion is clearly established from Guidelines issued by Government of India dated 14.03.2012, as per which the minimum years in service required to reach the post of Executive Director is between 23 to 25 years, subject to the person securing all his promotions in due time. This also never happens in public sector banks due to delays caused in promotions.

G.          Because the impugned advertisement is contrary to the guidelines laid down by the Government of India for appointment of Executive Directors and Chairmen & Managing Directors of Public Sector Banks. Vide notification No. 18(67) EO/08(ACC), the guidelines provide as under:

a.           The pool for selection of EDs may be confined to GMs of Nationalized Banks. CGMs of Associate Banks of SBI who have risen from the Associate Banks Service will also be included in the pool.

b.           Applications will be invited from those General Managers of Nationalized Banks, and CGMs of Associate Banks of SBI who have risen from the Associate Banks Service, and who have completed two years service as GM and have three years of residual service.

c.            The cut-off date for determining the eligibility will be reckoned as on 1st April of the financial year in which the vacancies arise.

d.           The Sub-Committee of the Appointments Board will comprise of Dy. Governor, Reserve Bank of India (RBI), 3 external experts in the management and banking field and Secretary, Department of Financial Services. The Sub-Committee will interact with the eligible candidates. The panel of experts to the associated with the Sub-Committee will be approved by ACC from the panel suggested by Department of Financial Services.

e.           The Sub-Committee after interaction with eligible candidates will prepare a merit list after taking into account the Annual Performance Reports (APRs) of last seven years for which 70 marks would be awarded (10 marks for outstanding, 08 marks for very good, and 06 marks for good). If there are adverse remarks, 2 marks are to be deducted for each such APR. The remaining 30 marks will be assigned on the basis of performance during the interaction. Further, in Banks where there are only 3 Grades instead of the usual four, the grading will be converted to the next highest level. For example, if a Bank does not have “outstanding” in its grading system, the grading of “v good” will be read as “outstanding”.

f.             Further, a minimum benchmark of 50 (out of the total of 70 marks) in the last 7 APRs would be required for eligibility for consideration. The grade ‘Average’ would not be upgraded.

g.           Where the candidates score equal marks, seniority will be determined with reference to age, the older person being ranked senior.

h.           The role of the Sub-committee will be to interact with the eligible candidates and to empanel them after interaction based on their domain knowledge, banking skills and APRs. If an officer has been imposed more than three minor penalties or more than one major penalty and two minor penalties or two major penalties in his /her career, he/she will not be considered eligible for pool of selection of EDs/CMDs.

i.              The Sub-Committee of the Appointment Board will draw up a merit list as per the number of anticipated vacancies with a reserve list upto 25% of the anticipated vacancies and recommend the same to the Appointment Board.

j.              The Panel prepared for the year will be valid for one year i.e. upto 31st March of the financial year for which it has been prepared.

H.          Because it is submitted that the Government of India ought to have followed the laid down in the aforesaid guideline and not issue the advertisement dated 26.02.2015, which is contrary to the aforesaid procedure for appointment of Executive Directors and Chairmen & Managing Directors of Public Sector Banks.

I.             Because the rule of law inhibits arbitrary action and also makes it liable to be invalidated. Every action of the State or its instrumentalities should not only be fair, legitimate and above board but should be without any affection or aversion. It should neither be suggestive of discrimination nor even give an impression of bias, favouritism and nepotism. Procedural fairness is an implied mandatory requirement to protect against arbitrary action where statute confers wide power coupled with wide discretion on an authority. If the procedure adopted by an authority offends the fundamental fairness or established ethos or shocks the conscience, the order stands vitiated. The decision-making process remains bad. It is submitted that the Union of India is violating the aforesaid principle of rule of law by prescribing the aforesaid eligibility criteria.

J.           Because as a proof of the effect of this discriminatory policy on the ground level, the petitioner has annexed a list of all the incumbent Executive Directors who are working in the public Sector banks. Such is the level discrimination that almost all of the Executive Directors are ineligible to apply as per the advertisement dated 26.02.2015.

K.          Because the eligibility criteria prescribed in the advertisement dated 26.02.2015 is highly discriminatory against the employees of the public sector banks, who are at the position of General Managers and above. It is discriminatory as these employees have worked day and night at a fraction of remuneration vis-à-vis their counterparts in private sector banks to make the public sector banking successful and functional in India. They have left no stone unturned in ensuring that the Prime Minister’s Jan Dhan Yojna becomes a roaring success. They visited slums in Mumbai, non-motorable villages in Bihar and North East to enrol over 12.5 crore Indians into banking mainstream – a record breaking feat which could only be accomplished by dedicated staff of public sector banks. The Hon’ble Prime Minister has many a time credited the bankers for making his dream of financial inclusion possible. 

L.           Because another crucial aspect of the advertisement is that the same does not provide the terms & conditions for appointment, including the salary package and the same has been kept flexible. The relevant portion of the advertisement dated 26.02.2015 reads as under:  

“The salary package payable to the appointees will be flexible. The other terms and conditions of appointment will be those as may be specified by the Government at the time of appointment.”

It is submitted that in absence of any fixed remuneration in the advertisement, the advertisement is liable to be quashed as the same is against the basic tenets of public employment as well as service law jurisprudence in India.

M.         Because since Government of India is the majority stake holder in the all public sector nationalized banks hence it has been controlling the policy of promotions of General Managers, Executive Directors and CMDs of these banks on a reasonable and rational basis.

N.          Because it is an established practice for the last forty years in the Indian banking History that the Government of India which is the majority stake holder in the all public sector nationalized banks has been promoting persons to the posts of executive directors and CMD from within Banking Industry itself itself.

O.          Because a deviation from the aforesaid established practice will be detrimental to the very need for nationalization of banks which was undertaken by the Government of India earlier to ameliorate the conditions of the masses by making banking accessible to the poor.

P.          Because  the advertisement dated 26.02.2015  allowing any person with experience in the field of banking  to be eligible for applying for the incumbent posts is an unguided and vague condition and goes against well established prior policy of the government to appoint persons in PSU banks from within the persons employed with these banks.

Q.          Because the advertisement dated 26.02.2015 allowing any person with experience in the field of banking to be eligible is detrimental to the overall morale of the persons already serving in various posts and designations within the banks and who were desirous of serving the organisation in a larger capacity. It is detrimental to the confidence of the entire work force as the top management for the first time may comprise of persons with no knowledge of the functioning of the PSU nationalized banks.

R.          Because the opening up of the top positions in the nationalized banks to private persons from, outside these banks poses a great risk to the interests of the economy as a whole as there is great risk of dubious practices creeping in to subserve purely private interests of few vested private individuals and corporations. It also poses a great risk as valuable Government information which may be privileged and secretive in nature and protected by laws may be prone to misuse and gross abuse in the hands of private individuals

S.          Because the appointment of private persons from, outside these PSU nationalized banks to the top posts may be a severe detriment to the nation’s interests as the entire endeavour of the Government to bring back to India the unaccounted black money lying deposited in foreign banks may suffer a severe setback at the hands of such vested private interests.

T.           That there is every chance that such private sector employee may have conflict of interest as during their lifetime they have served only to private banks.

U.          That there is serious risk that such persons only getting selected on important posts of PSB can give undue benefit to particular  set of people on account of gaining profits. It cannot be forgotten that these Five PSB has annual turnover more than Rs.3 Lac Crore and it hold huge deposits of Common Man as such these PSB are back bone of Indian Economy and any wrong decision about crucial post selection will jeopardise the Indian Economy.

29.    That the petitioner has not filed any petition before this Hon’ble Court/High Courts or any other Court praying for similar reliefs.

PRAYER

In view of the facts and circumstances stated hereinabove, it is most respectfully prayed that this Hon’ble Court may graciously be pleased to:-

               i)             Issue a writ, order or direction in the nature of writ of mandamus or any other writ, order or direction an appropriate writ, order or direction quashing and setting aside the advertisemen9t dated 26.02.2015 issued by Department of Financial Services, Government of India; and     ii)            pass such other order or orders as deem fit in the facts and  circumstances of the case.

And for this act of kindness, petitioner as in duty bound shall ever be grateful.

DRAWN BY:                                   

SNDEEP S LADDA

ADVOCATE FOR PETITIONER

DRAWN ON: 31.03.2015

FILED ON: 0   .04.2015