SBI's 10% Cap on MMGS-II Placement for Trainee Officers Upheld; Allahabad HC Division Bench Reverses Single Judge
A Division Bench of the Allahabad High Court has held that SBI's 2020 policy capping MMGS-II placements at 10% of batch strength does not alter any vested right of 2019-batch Trainee Officers, reversing an earlier single judge order that had struck down the cap as arbitrary.
A Division Bench of the Allahabad High Court, comprising Justice Saumitra Dayal Singh and Justice Swarupama Chaturvedi, on 21 August 2026 allowed a Special Appeal filed by State Bank of India and set aside a single judge order dated 14 November 2024 that had declared SBI's Training and Confirmation Policy dated 16 December 2020 arbitrary and void in its application to the 2019 batch of Probationary Officers and Trainee Officers. The single judge had directed SBI to place the original petitioners in Middle Management Grade Scale-II (MMGS-II) in accordance with the pre-existing policy of 2019, which allowed placement in MMGS-II to any officer scoring 75% or above in training assessments. The Division Bench, after examining the State Bank of India Officers' Service Rules, 1992, held that no vested right to placement in MMGS-II ever arose solely from achieving that threshold score, and that the 10% cap introduced by the 2020 policy was a lawful exercise of discretion expressly preserved under Rule 16 of the Rules.
The Dispute Before the High Court
The original petitioners were employees of SBI who had earlier served as Assistants. Under the State Bank of India Officers' Service Rules, 1992, and the Training and Confirmation Policy dated 23 April 2019 (the Old Policy), they were appointed as Trainee Officers of the 2019 batch through promotion, following success in an all-India examination. Their appointment letters, one of which is dated 7 June 2019 and addressed to petitioner Priyanshu Arya, confirmed their appointment as Trainee Officers with effect from 29 April 2019, and specified that “confirmation after training will be done in terms of extant policy for confirmation of Trainee Officers as Me../MMGS-II.”
At the time of appointment, the Old Policy governed training and confirmation. Under Clause 5G(i) of that policy, officers scoring a minimum 50% marks (45% for SC/ST/PwD) in overall assessment were to be confirmed in Junior Management Grade Scale-I (JMGS-I). Under Clause 5G(ii), officers scoring 75% or above (70% for SC/ST) were to be “considered for placement” in MMGS-II, subject additionally to passing Credit and Branch Manager certification.
While the 2019 batch was still undergoing training, SBI's Deputy General Manager (HR) placed a note before the Central Human Resources Committee (CHRC) on 2 December 2020, proposing revision of the Old Policy. The note cited feedback from earlier batches that large numbers of officers placed in MMGS-II lacked experience and maturity to handle middle management responsibilities, leading to stress and long-term negativity. For context, 807 of 816 Trainee Officers and 1,445 of 1,592 Probationary Officers of the 2017 batch had been placed in MMGS-II, as had 1,497 of 1,524 Trainee Officers of the 2018 batch.
The note proposed, and the CHRC accepted, capping MMGS-II placements at 10% of total batch strength, based on inter se merit among those who had achieved the minimum 75% threshold. This was given effect by E-circular No. 1129/2020-21 dated 16 December 2020, the Impugned Policy, issued by the Deputy Managing Director (HR) & Corporate Development Officer. The policy was made applicable to the 2019 batch onwards, since the training of 2018-batch Trainee Officers had already concluded in May 2020, before the circular was issued.
All original petitioners achieved more than 75% marks but were placed in JMGS-I rather than MMGS-II. They challenged the Impugned Policy before a single judge, who upheld their case and directed SBI to place them in MMGS-II with all notional benefits. SBI appealed.
The Legal Questions
The Division Bench identified five issues: whether the Impugned Policy was ultra vires the Rules; whether the rules of the game had been changed mid-way; whether the Old Policy had vested in the petitioners a right to MMGS-II placement solely on achieving 75% marks; whether there was hostile discrimination between 2018-batch and 2019-batch Trainee Officers; and whether the Impugned Policy operated retrospectively.
Senior Advocate Sri Shashi Nandan, for SBI, argued that the Old Policy created no statutory right. He pointed to Clause 5 of the appointment letter, which tied confirmation to the “extant policy” at the time of confirmation, not at the time of appointment. He relied heavily on the first proviso to Rule 16(1) of the Rules, which gives the Bank discretion to place officers in MMGS-II only upon a finding of merit and suitability for future leadership role — through a screening process prescribed by the CHRC. Since no vested right existed, the Bank was free to refine its exercise of that discretion. He distinguished the Supreme Court's decision in Tej Prakash Pathak and others v Rajasthan High Court and others, (2024) SCC OnLine 3184, on the ground that the selection of Trainee Officers had been completed and their right to confirmation in JMGS-I was entirely untouched; what had changed was only the criteria applied to grant an additional benefit. He also relied on Divisional Personnel Officer, Southern Railway v T.R. Chellapan, (1976) 3 SCC 190, to support the proposition that prescribing higher merit to restrict the pool eligible for MMGS-II was permissible.
Senior Advocate Sri Ashok Khare, for the petitioners, contended that the appointment letter's reference to “extant policy” incorporated the Old Policy as it stood on 7 June 2019, and the Bank could not replace that policy mid-stream. He pressed the principle that rules of the game cannot be changed during an ongoing selection or assessment exercise — a principle the Supreme Court applied in Tej Prakash Pathak to invalidate a new pass percentage introduced after interviews were complete. He argued the Impugned Policy was effectively retrospective, and that treating 2018-batch Trainee Officers more favourably than 2019-batch officers amounted to hostile discrimination.
How the Division Bench Reasoned
The bench began with the statutory framework. Appointment, probation, confirmation and promotion rights for SBI officers arise under the State Bank of India Officers' Service Rules, 1992, framed by the Central Board under Section 43(1) of the State Bank of India Act, 1955. The Old Policy and the Impugned Policy are both CHRC prescriptions made under those Rules; they are not themselves statutory instruments.
Rule 16(1) of the Rules provides that an officer “shall be confirmed” upon satisfactorily completing training. The first proviso adds that the Bank “may” confirm and give placement in MMGS-II, upon determining merit and suitability for future leadership role through a screening process prescribed by the CHRC. The bench held that this proviso unambiguously reserves discretion to the Bank. Confirmation in JMGS-I is mandatory upon achieving minimum qualifying marks; placement in MMGS-II is not.
The bench then examined the language of the Old Policy itself. Clause 5G(i) uses the phrase “shall be confirmed” for JMGS-I on 50% marks. Clause 5G(ii) uses “shall be considered” for MMGS-II on 75% marks. Drawing on the Supreme Court's analysis of the word “consider” in Divisional Personnel Officer, Southern Railway v T.R. Chellapan, (1976) 3 SCC 190, the bench held that the CHRC deliberately chose different language to produce different legal effects. Achieving 75% created only an eligibility to be considered; it did not create an automatic or absolute right to placement in MMGS-II.
Since the first proviso to Rule 16(1) expressly contemplates that MMGS-II placement is at the Bank's discretion subject to suitability for a future leadership role, and since the Old Policy itself used “shall be considered” rather than “shall be confirmed,” the bench concluded that no substantive right to MMGS-II placement had ever vested in the petitioners. The CHRC was therefore entitled to prescribe a further, more refined test — the 10% inter se merit cap — as the screening process through which that discretion is exercised, without infringing any right.
On the “rules of the game” argument, the bench distinguished Tej Prakash Pathak on its facts. In that case, the entire selection process had concluded before a new qualifying criterion was introduced for the interview stage, affecting candidates' entitlement to selection itself. Here, neither the selection as Trainee Officers nor the right to confirmation in JMGS-I was disturbed. The Impugned Policy only regulated the discretionary step of MMGS-II placement. The zone of consideration — officers scoring 75% or above — remained intact; only the upper limit of those who would be placed in MMGS-II was refined. The bench also distinguished the Madhya Pradesh High Court's decision in Minakshi Singh v State of M.P. & Ors., 2014 (1) MPLJ 373, on the ground that in that case an entirely new subject had been added to a departmental examination during probation, which is not what happened here.
On discrimination, the bench found a rational basis for treating 2018-batch and 2019-batch Trainee Officers differently. The 2018-batch Trainee Officers had completed their training and been assessed under the Old Policy before the Impugned Policy was issued on 16 December 2020. The 2019-batch Trainee Officers' final assessment cut-off was 17 March 2021, with confirmation due on 16 June 2021. Applying the Impugned Policy to the 2019 batch, whose assessment was still pending, was consistent and rational. Applying it only to the Probationary Officers of the 2018 batch but not the Trainee Officers of the same batch would itself have created arbitrariness within that batch, since the two streams underwent a common training. Applying the Impugned Policy from the 2019 batch onwards avoided that problem entirely.
The bench also noted that the Probationary Officers of the 2019 batch, who are direct recruits and a parallel stream to the Trainee Officers, had not challenged the Impugned Policy at all.
On retrospectivity, since the petitioners had no vested right to MMGS-II placement at any point before the Impugned Policy was issued, and since their assessment was still incomplete on 16 December 2020, the policy did not operate retrospectively. The bench drew support from State of Haryana v Subhash Chander Marwaha & Ors., (1974) 3 SCC 220, where the Supreme Court upheld a State Government's decision to make only seven appointments from a merit list even when vacancies existed. The bench observed that the present case was on even firmer ground for the Bank: no post has been left vacant; all officers have been confirmed in service in JMGS-I, and it is only the additional benefit of MMGS-II placement that has been rationalised.
Order
The Division Bench allowed Special Appeal No. 9 of 2025. The order of the learned single judge dated 14 November 2024 in Priyanshu Arya & Ors. v The State Bank of India & 5 Ors., 2024:AHC:189256, was set aside. The writ petition filed by the original petitioners stands dismissed. No order as to costs was made.