Court rules that SBI’s 10% merit-based cap on placement in middle management grade II aligns with statutory service rules and does not infringe vested rights of probationary officers.
In a significant judgment dated August 21, 2026, the Allahabad High Court (Division Bench) has upheld the State Bank of India’s (SBI) revised Training and Confirmation Policy that introduced a cap on the number of Trainee Officers placed in the Middle Management Grade Scale II (MMGS-II) upon completion of their training. The judgment, delivered by Justices Saumitra Dayal Singh and Swarupama Chaturvedi, arose from a special appeal filed by SBI challenging an earlier single judge order that had struck down the 10% cap introduced by the Bank’s 2020 policy for the 2019 batch of Trainee Officers.
The case involved Trainee Officers of the 2019 batch who were appointed as Assistants and promoted to Trainee Officers based on their success in the all-India examination. Their appointment letters and initial confirmation process were governed by the SBI Officers’ Service Rules, 1992 (“the Rules”) and an earlier Training and Confirmation Policy dated April 23, 2019 (“the Old Policy”). Under the Old Policy, officers scoring 75% or above (70% for SC/ST candidates) in continuous assessment were eligible for placement in MMGS-II without any cap on numbers.
However, following feedback about the lack of rigor in assessments and concerns that a large number of officers placed in MMGS-II lacked sufficient experience and maturity for leadership roles, SBI proposed a revision. The Central Human Resources Committee (CHRC) introduced the “Impugned Policy” on December 16, 2020, which capped MMGS-II placements to the top 10% of each batch based on merit, while retaining the minimum marks criteria. This policy also added suitability and conduct as factors for placement, adding objectivity and competitiveness to the process.
The Trainee Officers of the 2018 batch had already been assessed and placed in MMGS-II under the Old Policy before the Impugned Policy was introduced. The 2019 batch officers challenged the new policy, arguing it was arbitrary, retrospective, discriminatory against their batch, and violated the “rules of the game” by changing selection criteria mid-way.
The Division Bench, however, reversed the single judge’s ruling and dismissed the writ petition. The Court held that:
1. Statutory Basis of Confirmation and Placement: The Rules provide that officers must be confirmed upon satisfactory completion of probation/training, which is unconditional for JMGS-I placement upon achieving 50% marks (45% for SC/ST/PwD). Placement in MMGS-II is discretionary, dependent on merit and suitability for leadership roles, as per Rule 16(1) proviso.
2. No Vested Right to MMGS-II Placement: The Old Policy only guarantees confirmation in JMGS-I upon meeting minimum marks, while placement in MMGS-II is contingent upon further discretionary assessment. Thus, officers do not have a vested right to automatic MMGS-II placement solely by scoring 75% marks.
3. Legitimacy of the 10% Cap: The Impugned Policy’s introduction of a 10% cap based on merit does not violate the Rules or the “rules of the game.” It introduces transparency and objectivity in exercising the Bank’s discretion, ensuring only the top-performing and suitable officers are placed in MMGS-II, addressing prior concerns of over-placement.
4. No Retrospective Application or Hostile Discrimination: The policy was applied prospectively to the 2019 batch whose assessments were pending at the time of the policy change, while the 2018 batch was assessed and confirmed under the Old Policy. The difference in treatment arises from the timing of assessments, not arbitrary or hostile discrimination.
5. Discretion Must Be Exercised with Objective Criteria: The CHRC’s screening process and merit cap align with the statutory discretion granted to the Bank to assess suitability for future leadership roles. The Court noted that “consideration” for placement involves active application of the mind and cannot be equated with an automatic “determination.”
6. Previous Supreme Court Precedents Distinguish This Case: The Court distinguished this case from others like Tej Prakash Pathak v. Rajasthan High Court (2024), where eligibility criteria were changed after selection was complete, underscoring that here, the selection and confirmation processes remain intact and only the discretionary placement criteria were rationally adjusted.
The Court concluded that the Impugned Policy is consistent with statutory Rules, does not infringe any vested rights, and rationalizes discretionary placement to MMGS-II. Accordingly, the appeal was allowed, and the writ petition dismissed with no order as to costs.
This judgment clarifies the scope of discretion employers like SBI have in revising service policies affecting cadre placements during ongoing training and confirms that introducing objective merit-based caps aligned with statutory provisions is legally permissible.
Bottom Line:
Policy changes affecting placements in higher grades of employment must align with statutory rules, and employers may exercise discretion based on merit and suitability criteria without infringing vested rights.
Statutory provision(s):
State Bank of India Officers' Service Rules, 1992 - Rule 15, Rule 16, Rule 17
State Bank of India v. Priyanshu Arya, (Allahabad)(DB) : Law Finder Doc Id # 2965666
