Once Penalty Period Ends, Employee Must Be Reconsidered for Promotion: Punjab & Haryana High Court

In a significant judgment, the Punjab and Haryana High Court held that an employee who has completed the period of a minor penalty cannot be permanently denied consideration for promotion. The Division Bench of Justice Sanjeev Prakash Sharma and Justice Meenakshi I. Mehta, in LPA-1284-2024 (State Bank of India v. Suteekshan Mird), modified the Single Judge’s order and directed the State Bank of India (SBI) to reassess the respondent’s promotion eligibility after his punishment period ended.

The Court ruled that an employee cannot be promoted during the subsistence of a penalty, but once the penalty period is over, he must be given a fresh opportunity for promotion based on his record at that time. The employer cannot indefinitely deny career progression on the pretext of past punishment. The Court further clarified that retrospective promotion from the date of penalty completion is not automatic, but the Promotion Committee must reassess the employee's eligibility without considering the expired penalty.

"SBI's Reversion of Employee’s Promotion Without Fresh Consideration Was Arbitrary"

The case arose when Suteekshan Mird, a bank officer, was initially promoted to Chief Manager (SMGS-IV) on August 14, 2017. However, his promotion was later revoked on August 2, 2018, on the grounds that he was serving a minor penalty of stoppage of two increments for 30 months, which expired on December 16, 2017. The Bank argued that his promotion was void ab initio since he was under punishment at the time of promotion.

The Single Judge ruled in favor of Mird, granting him retrospective promotion from December 17, 2017, the date when the punishment ended. However, the Division Bench modified this ruling, holding that while an employee’s promotion during the penalty period is invalid, once the penalty is over, he must be reconsidered based on his updated service record. The Bank’s failure to reassess his promotion eligibility after December 17, 2017, was arbitrary and unjustified. The Court directed SBI to conduct a fresh evaluation for Mird’s promotion, ignoring the expired penalty.

"Sexual Harassment Inquiry and Promotion: Mere Allegations Cannot Be Used Indefinitely"
The case also involved allegations of sexual harassment, which led to Mird’s punishment in 2015 while he was employed with State Bank of Patiala before its merger with SBI. Following an internal inquiry, a penalty of withholding two increments for 30 months was imposed.

SBI argued that his past misconduct justified his exclusion from promotion in subsequent years. The High Court rejected this argument, stating that the punishment period ended on December 16, 2017. If the employer wished to consider the allegations for future promotions, it should have done so under clear service regulations. The Bank cannot indefinitely rely on past disciplinary action to deny promotions without fresh assessment.

The Court reaffirmed that an expired penalty cannot have a perpetual impact on career progression, emphasizing that promotion must be assessed based on the service record at the relevant time, not indefinite past penalties.

"Employer Must Follow Clear Promotion Policies – 2018-19 Policy Cannot Be Applied Retrospectively"

SBI sought to justify Mird’s exclusion by citing its Promotion Policy of 2018-19, which set April 1 of the promotion year as the eligibility cut-off date. SBI contended that since Mird was still under penalty on April 1, 2017, he could not be considered for the 2017-18 promotions.

The High Court rejected this argument, holding that the 2018-19 Promotion Policy does not apply retrospectively to the 2017-18 promotions. The Bank cannot retrospectively impose a future policy to justify past actions. The respondent's eligibility must be assessed based on the policies in effect at that time.

The Court ruled that Mird was eligible for reconsideration after December 17, 2017, under the rules applicable in 2017-18.

"Courts Cannot Direct Automatic Promotion – Only Reassessment Can Be Ordered"
While the Single Judge had granted Mird retrospective promotion from December 17, 2017, the Division Bench modified the ruling, holding that courts cannot grant direct promotion. Promotion is a matter of selection and evaluation. However, where an employer acts arbitrarily by failing to reconsider an employee post-penalty, the Court can intervene and order fresh assessment.

Thus, instead of granting automatic promotion, the Court ordered SBI to reassess Mird’s promotion eligibility from December 17, 2017, ignoring the penalty. If found eligible, the promotion would be granted with notional pay fixation but without arrears.

"Employer Directed to Reassess Promotion Within Three Months"
The Court modified the Single Judge’s order and directed SBI to reassess Mird’s promotion eligibility as of December 17, 2017, ignoring the expired penalty. Promotion, if granted, would be with notional pay fixation but no arrears. The entire process must be completed within three months.

This ruling ensures that employers cannot misuse past penalties to indefinitely block promotions, upholding the principle of fairness and career progression in public sector employment. By balancing disciplinary considerations with employment rights, the Punjab & Haryana High Court has set an important precedent for cases involving promotions and disciplinary penalties in government and public sector banks.
 

Date of Decision: 21 January 2025