Supreme Court Upholds Employer's Reservation Policy for Scheduled Caste and Scheduled Tribe Employees in Promotions. Carry-Forward Rule Allowing Lapse After Three Years and 50% Ceiling on Reserved Promotions Per Year Held Valid Under Article 16 of Constitution of India.

Writ petitions and civil appeals challenging the reservation policy of the State Bank of India for promotions of Scheduled Caste and Scheduled Tribe employees from Award Cadre to Junior Management Grade Cadre

Employees sought retrospective relaxation of service norms from 1978 onwards, filling of lapsed reserved vacancies, and removal of the 50% ceiling; State Bank of India appealed against the Andhra Pradesh High Court's reduction of service norms to five years for SC/ST and six years for general candidates

The State Bank's reservation policy and circulars resulted in low promotion of SC/ST employees due to high service norms and lapsing of reserved vacancies, prompting employees to challenge the policy

Andhra Pradesh High Court upheld the 50% ceiling on reserved vacancies but reduced SC/ST service norms to five years and general candidate norms to six years; State Bank of India appealed to the Supreme Court under a certificate of fitness

Whether the carry-forward rule allowing reserved vacancies to lapse after three years is valid under Article 16 Whether the provision that not more than 50% of vacancies in any given year should be reserved for SC/ST employees violates Article 16 Whether lapsed reserved vacancies should be filled retrospectively based on subsequent relaxation of service norms Whether the State Bank of India's reservation scheme as a whole is valid under Article 16

Employees contended that unfilled reserved vacancies from 1978 to 1983 should not be allowed to lapse and should be filled retrospectively on the basis of subsequent relaxation granted by the circular of 28 July 1983 Employees argued that the direction in the circular of 28 July 1983 that not more than 50% of vacancies in any given year should be reserved for SC/ST candidates was violative of Article 16 State Bank of India relied on the Supreme Court decision in Akhil Bharatiya Soshit Karamachari Sangh v. Union of India, which upheld similar carry-forward and 50% ceiling provisions Later, SC/ST employees sought directions to keep the ratio of eligible candidates at 3:1 depending on vacancies because the reduced service norms had brought too many SC/ST employees within the zone of consideration

The carry-forward rule for reserved vacancies for three years, after which they lapse, is constitutionally valid under Article 16. Reservation in promotions must not exceed 50% in any given year to balance efficiency and representation. The State Bank of India's scheme of reservation with service norm relaxation and separate interviews for SC/ST employees is not violative of Article 16. Subsequent relaxation of service norms cannot retrospectively revive vacancies that have already lapsed.

The circular urged that the backlog should be cleared expeditiously. This Court also upheld the instructions issued by the Railway Board in that case to the effect that in any given year not more than 50% of the promotional posts should be made available to the reserved category of Scheduled Caste and Scheduled Tribe candidates; holding that the carry-forward rule should not result in any given year in the selection or appointment of Scheduled Caste and Scheduled Tribe candidates in excess of 50% (p.242). In the light of this judgment the scheme formulated by the State Bank of India under the two circulars of 3rd of April, 1978 and 28th of July, 1983, thus cannot be faulted. We find it difficult to accept this contention.

Prior to 1974, there was no reservation in internal promotions in the State Bank of India. In 1974, a concession was introduced for SC/ST employees in promotions. In January 1978, the Government of India extended reservation policy to nationalized banks. On 3 April 1978, the State Bank of India issued a circular implementing reservation in promotions effective 1 March 1978. A subsequent circular dated 28 July 1983 was issued to clear backlogs and introduced further relaxations with a 50% ceiling. In February 1984, a special test exclusively for SC/ST employees was announced, leading to a boycott. Employees of the Hyderabad Circle filed three writ petitions in the Andhra Pradesh High Court. The Andhra Pradesh High Court upheld the 50% ceiling but reduced SC/ST service norms to five years and general candidate norms to six years. The State Bank of India appealed to the Supreme Court under a certificate of fitness. During pendency, the Supreme Court by interim order dated 22 November 1985 directed that no SC/ST reserved posts should lapse. The Supreme Court delivered final judgment on 24 April 1996.

• Constitution of India: Article 16