Judgment

DUTT, J.:- In these appeals by special leave and in the Special Leave Petition the dispute relates to the seniority of erstwhile Officers Grade-II and the Probationary/Trainee Officers in the Grade-I of the State Bank of India.

2. In the lower level, the State Bank of India had two categories of officers, namely, Officers Grade-I and Officers Grade-II; the function of the former was managerial and that of the latter supervisory. The conditions of service of these two categories of officers were, admittedly, governed by the State Bank of India (Supervising Staff) Service Rules, hereinafter referred to as the 1975 Rules.

3. The 1975 Rules were not framed under the rule-making power of the Government, as conferred by S. 49, State Bank of India Act, but under S. 43 of the Act, sub-s. (1) of which provides that the State Bank may appoint such number of officers, advisers and employees as it considers necessary or desirable for the efficient performance of its functions, and determine the terms and conditions of their appointment and service. Sub-sec. (2) of S. 43 provides that the officers, advisers and employees of the State Bank shall exercise such powers and perform such duties as may, by general or special order, be entrusted or delegated to them by the Central Board.

4. Although the Officers Grade-I were superior in rank to the Officers Grade-II. there was little difference in the pay scales of these two categories of officers. The duties, which were to be performed by Officers Grade-I and Officers Grade-II, were also similar in nature. Indeed, with the expansion of the banking activities, a large number of Officers Grade-II were required to perform managerial duties which normally were performed by Officers Grade-I. The Officers Federation of the State Bank of India comprising both Officers Grade- I and Grade-II had been demanding the abolition of the distinction between these two Grades. The Bank, however, had been successfully resisting the demand made by the Officers Federation from time to time. The Federation had, at one time started taking resort to agitational method in order to force the Bank to abolish the theoretical distinction between Officers Grade-I and Officers Grade-II.

5. In the mean time, another external factor had crept into the situation. The Government had appointed a Committee. known as Pillai Committee, for considering a question of standardisation of pay and allowances of the officers staff in the nationalised Banks. After the Pillai Committee had submitted its report, the Government declared its intention to apply the recommendations of the Pillai Committee to the State Bank of India as well. According to the recommendations of the Pillai Committee. there should not be any distinction between Officers Grade-I and Grade-II. The Committee recommended four Grades for officers and had provided for only one scale at the junior management level. Four Grades of Officers are as follows :-

1. Top Executive Grade.

2. Senior Management Grade.

3. Middle Management Grade.

4. Junior Management Grade.

After proposals and counter-proposals between the Executive Committee of the Central Board of the State Bank of India and the Officers Federation, the Committee agreed to do away with the distinction between Officers Grade-I and Grade-II, who would be placed in a new cadre, called Junior Management Grade, having a scale of pay being Scale-I - Rs. 700-40-900-50-1100-EB-1200-60-1800. It was further agreed that the Officers Grade-II would be junior to the existing Officers Grade-I and the seniority list would be prepared accordingly.

6. After the said agreement was reached between the Executive Committee of the Central Board of the State Bank of India and the Officers Federation, the Central Board, in exercise of the powers conferred by subs. (1) of S. 43, State Bank of India Act, passed an order, called State Bank of India Officers (Determination of Terms and Conditions of Service) Order, 1979, for short the Order, deter