New
Bank of India Employees Union & Anr Vs. Union of India & Ors [1996] INSC 386 (13 March 1996)
G.B.
Pattanaik (J) G.B. Pattanaik (J) Ramaswamy, K.
CITATION:
JT 1996 (3) 203 1996 SCALE (2)734
ACT:
HEAD NOTE:
Leave
granted.
These
four appeals by way of Special Leave deal with one and the same scheme of
amalgamation of the New Bank of India (hereinafter called as the "Transferor Bank") with the Punjab
National Bank (hereinafter called the "Transferee Bank"). The
employees of the Transferor Bank filed Writ Petitions, one by the officers and
another by the workmen challenging clause 4 (a)(iii) and clause 4 (b)(ii) of
the Scheme dated 8th December, 1993 called the New Bank of India (Determination
of Placement of Employee (officers and workmen) of the New Bank of India in
Punjab National Bank) scheme, 1993 (hereinafter called the "Placement
Scheme").
The
aforesaid scheme had been framed by the Government of India in exercise of the
powers conferred by Section 9 of the Banking Companies (Acquisition and
Transfer of Undertaking Act 1980) (hereinafter referred to as "the
Acquisition Act"). The employees of the Transferee Bank also filed Writ
Petitions in the High Court of Punjab & Haryana challenging the Placement
scheme on the ground that the seniority of the employees of the Transferee Bank
has been altered to their disadvantage on account of the principle of seniority
indicated in the Placement Scheme and the said Scheme is arbitrary and violative
of Article 14 of the Constitution of India. The Division Bench of the Punjab
& Haryana High Court dismissed all the Writ Petitions and upheld the
provisions of the Placement Scheme and hence these appeals by the Workmen and
Officers of the Transferor Bank as well as by the employees of the Transferee
Bank.
Under
the provisions of the Acquisition Act of 1980, 14 Banks in the country were
nationalized including the Transferee Bank. The New Bank of India Limited was a
Private Bank which was taken over by the Central Govt, under the provisions of the Acquisition Act of 1980 on
15.4.1980. The said New Bank of India incurred financial loss to such an extent and its financial position
was so unsatisfactory that its capital and deposits completely stood eroded and
the Bank declared a loss of Rs.11.52 crores in the year 1991-92.
The
Reserve Bank of India which is the monitoring authority
and advisor to the Government of India, on consideration of the financial
position of the New Bank of India
suggested that it would subserve public interest if the said New Bank of India is merged with another stronger
Nationalized Bank.
The
Government of India finally decided to exercise the powers under Section 9 of
the Acquisition Act and in consultation with the Reserve Bank of India decided
to amalgamate the Transferor Bank with the Transferee Bank and for the
aforesaid purpose brought into existence a Scheme dated 4th September, 1993
called the New Bank of India (Amalgamation and Transfer of undertaking) Scheme
1993 (hereinafter called "The Amalgamation Scheme"). Under the
aforesaid Amalgamation Scheme, the undertakings of the Transferor Bank stood
transferred to and vested in the Transferee Bank and the effect of such vesting
was that all assets, rights, powers, authorities and privileges and all
property movable and immovable, cash balance, capital, reserve funds,
investments and all other rights and interests in, or arising out of such
property as were immediately before the commencement of the Scheme in the
ownership, possession, power or control of the transferor bank in relation to
the undertakings, whether within or outside India, and all books of accounts,
registers, records and all other, documents of whatever nature relating thereto
and shall also be deemed to include all borrowings, liabilities and obligations
of whatever kind then subsisting of the transferor bank in relation to the
undertakings deemed to have been transferred to an vested in the transferee
bank. Clause 4 of the aforesaid Amalgamation Scheme is extracted hereinbelow in
extenso:-
"4.
General effect of vesting:-
(1)
The undertakings of the transferor bank shall be deemed to include all assets,
rights, powers authorities and privileges and all property, movable and
immovable, cash balances, capital, reserve funds, investments and all other
rights and interests in, or arising out of; such property as were immediately
before the commencement of this Scheme in the ownership, possession, power or
control of the transferor bank in relation to the undertakings, whether within
or outside India, and all books of accounts, registers, records and all other
documents of whatever nature relating thereto and shall also be deemed to
include all borrowings, liabilities and obligations of whatever kind then
subsisting of the transferor bank in relation to the undertakings.
(2)
Where any property is held by the transferor bank under any lease the
transferee bank shall on and from the date of commencement of this scheme be
deemed to have become the lessee in respect of such property as if the lease in
relation to such property had been granted to the transferee bank and thereupon
all the rights under such lease shall be deemed to have been transferred to,
and vested in, the transferee bank;
Provided
that on the expiry of the term of any lease referred to in this sub-clause such
lease shall, if so desired by the transferee bank, be renewed on the same terms
and conditions on which the lease was held by the transferor bank immediately
before the date of commencement of this Scheme." Under clauses 5 of the
said Amalgamation Scheme the Board of Directors of the Transferor Bank stood
dissolve and the officers and employees of the Transferor Bank became the
officer and employee of the Transferee Bank on the same terms and conditions
with the same rights to pension, gratuity and other matters as would have been
admissible to those employees if the undertakings of the transferor bank and
not been transferred to and vested in the transferee bank subject to those
facilities being available at the time of the transfer to the similarly placed
employee of the transferee bank.
Clauses
5(4) of the aforesaid Amalgamation Scheme authorizes the Central Bank to make
another scheme in consultation with the Reserve Bank of India for determining the placement of
the employees of the transferee bank. The aforesaid clause 5(4) of the Aamalgamation
Scheme is extracted in extenso:- "5(4) The Central Government shall, as
soon as possible after the commencement of this Scheme, make a Scheme in
consultation with Reserve Bank of India for determining the placement of the
employees of the transferor bank including the determination of their inter-se
seniority vis-a-vis the employees of the transferee bank. While making the
Scheme the Central Government shall take account of relevant factors such as
experience of the employee of the transferor bank." In exercise of the
aforesaid power conferred upon the Central Government under Clause 5(4) of the
Amalgamation Scheme read with Section 9 of the Acquisition Act the Central
Government did frame the Placement Scheme on 8th December, 1993 the legality of
which had been challenged both by the employees of the Transferor bank as well
as the employees of the Transferee Bank.
Clause
1(2) of the Placement Scheme stipulates that the Scheme shall be deemed to have
come into force with effect from 4th September, 1993.
Clause
4 of the aforesaid Placement Scheme deals with the seniority of officers and
employees of the Transferor Bank vis-a-vis employees of the Transferee Bank.
Clause
4(a)(iii) of the Placement Scheme deals with the procedure for computation of
years of service rendered in the transferor bank for the purpose of determining
the minimum length of service for promotion from subordinate cadre to clerical
cadre in the transferee bank and clause 4(b)(ii) provides the guidelines for
the determination of seniority on fitment or for promotion to the next grade or
scale of an officer of the transferor bank in the transferee bank. Since both
these provisions have been challenged by the employees and officers of the
transferor bank as well as the employees of the transferee bank it would be
worthwhile to extract the aforesaid provisions in extenso:- "4(A)(iii) The
procedure for computation of years of service rendered in the transferor bank
for the purpose of determining the minimum length of service for promotion from
subordinate cadre to clerical cadre as also from the clerical cadre to officer
cadre and also for the purpose of posting in the posts carrying special
allowance, shall be computed in the ratio 2:2, that is, two years of service in
transferor bank as equivalent to one year of service in the transferee bank.
For this purpose, total service in the respective cadre of the workmen
employees, that is clerical or sub- staff in which the official is placed at
the time of transfer, shall be reckoned but fractions of a month shall be
ignored, for example, if a workmen employee has rendered two years and nine
months service in the clerical/sub-staff cadre, as the case may be, in the
transferor bank at the time of amalgamation with transferee bank, it shall be
reckoned as equal to one year and four months service in the clerical or
sub-staff cadre, as the case may be, in the transferee bank.
4(b)(ii)
For the purpose of seniority on fitment or for promotion to the next grade or
scale, the service rendered by an officer in the transferor bank shall be
computed, after amalgamation, in the ratio of 2:1, that is, two years of
service in the transferor bank as equivalent to one year servive in the
transferee bank. For this purpose, total service in the scale in which an
officer is transferred shall be reckoned but fractions of a month shall be
ignored. For example if an officer has rendered two years nine months service
in Scale-II in the transferor bank at the time of amalgamation with the
transferee bank, it shall be reckoned as equal to one vear and four months
service in Scale-II in the transferee bank." The Division Bench of the
High Court came to the conclusion that ;
(i)
The scheme making process under Section 9 of the Acquisition Act is not
legislative in nature and, therefore, the Placement Scheme is not law.
(ii)
The power under Section 9 of the Acquisition Act is wide enough to amalgamate
the New Bank (The Transferor Bank) with any another banking institution
including the one taken over under the Acquisition Act of 1970.
(iii)
Once the Central Government has the power to amalgamate the Transferor Bank
with the Transferee Bank it has to provide for the initial placement of the
employees and the scheme framed for the purpose cannot be said to be without
jurisdiction.
(iv)
The Placement Scheme does not interrupt services of the employees of the
transferor bank nor does it alter their terms and conditions of employees to
their prejudice;
(v)
The Placement Scheme providing for the services of the employees of the
transferor bank in the respective cadre at the time of merger in the transferee
bank to be counted in the ratio of 2:1 cannot be said to be discriminatory when
the profitivity in terms of business of the two banks, the volume of business
handled by the employees of the two banks, the promotion effected in scales 3
to 7 by the New Bank of India just before its merger with the Punjab National
Bank, the rate of promotion of the employees in the two banks when compared are
taken into account. The High Court also came to the conclusion that on account
of acute financial position of the transferor bank when it was open to the
Central Government to close down the bank, the Government in consultation with
the Reserve Bank of India decided not to take the extreme step of closing the
bank and, on the other hand, decided to merge to same with the stronger Punjab
National Bank, the scheme of amalgamation and placement has to be examined from
the point of view of wider public interest and unless it is positively established
that any clause thereof is arbitrary or irrational the Court should not
interfere with the same.
Mr.
P.P. Rao, the learned senior advocate appearing for the workmen of the
transferor bank contended that clause 5(4) of the Amalgamation Scheme authorizes
the Central Government to make a further scheme for determining the placement
of the employees of the transferor bank as well as for determination of their
inter se seniority vis-a-vis the employees of the transferee bank whereas
clause 4(a)(iii) of the Placement Scheme provides the procedure for computation
of years of service rendered in the transferor bank for the purpose of
determining the minimum length of service for promotion from subordinate cadre
to the clerical cadre as also from clerical cadre to the officer cadre which is
beyond the competence of the central Government. In other words Mr. Rao
contended that the promotion of an employee from one cadre to the other is
condition of service of an employee which under clause 5(2) of the Amalgamation
Scheme could have been duly altered only by the transferee bank and the Central
Government exceeded its jurisdiction in the garb of determining the placement
of the employees of the transferor bank as well as their inter se seniority in
altering the condition of service. Mr. Rao further urged that even if clause
5(4) of the Amalgamation Scheme would be held to authorise the Central
Government to frame a scheme as provided in clause 4(a)(iii) of the Placement
Scheme but the same is vitiated since no relevant materials have been
considered by the Central Government and there is no justification for fixing
the ratio of 2:1 i.e. 2 years of service in the transferor bank is equivalent
to one year of service in the transferee bank particularly when both the banks
are nationalized banks and the recruitment of service in both the banks is
through & process of selection by the Recruitment Board. According to Mr. Rao,
the aforesaid computation in the ratio of 2:1 in clause 4(a)(iii) of the
Placement Scheme is irrational and arbitrary and therefore, should be struck
down. Mr. Rao lastly urged that in any view of the matter the retrospective
operation of the scheme which came into force on 8th December, 1993 and was
given retrospective effect with effect from and was given retrospective effect
with effect from 4th September, 1993 is on the face of it bad in law as by an
executive order the conditions of service of an employee could not have been
altered retrospectively.
Mr. Arora,
the learned counsel appearing for the officers of the transferor bank apart
from reiterating the stand taken by Mr. Rao submitted that the factors which
were given to be the relevant factors for the decision by the Government to
reduce the seniority of the officers of the transferor bank as indicated in
paragraph 6 of their counter affidavit filed before the High Court by no
stretch of imagination can be considered to be germane factors and, therefore,
the decision contained in clause 4(b)(ii) of the Placement Scheme must be
struck down as irrational and arbitrary. He further contended that the merger
of a small bank with a stronger bank cannot be held to be a ground for reducing
the years of service of an employee of a transferor bank and such reduction of
service is wholly arbitrary. Mr. Arora, learned counsel also contended that
there has been no iota of material in the counter affidavit filed before the
High Court that the rate of promotion was much faster in the transferor bank as
compared to the transferee bank. And further the finding of the High Court that
the officers of the transferee bank will be junior to the officers of the New
Bank of India if the entire credit is given to the services rendered in the
transferor bank is a finding based on no evidence. Learned Additional Solicitor
General replying to the contentions raised by the learned counsel for the
appellants submitted that the framing of the Amalgamation Scheme framed by the
Central Government in exercise of powers under Section 9 of the Acquisition Act
had not brought in a total fusion and was in a transitory stage and clause 5(4)
of the said Amalgamation Scheme authorized the Central Government to make a
scheme of placement in consultation with the Reserve Bank of India.
The
expression "Placement" in clause 5(4) of the Amalgamation Scheme
conceives of fitment of an employee in a cadre or grade; position he occupies
in the grade which in other words, would be his seniority, and redeployment of
his service in the grade. The Placement Scheme framed by the government more
particularly clause 4(a)(iii) as well as 4(b)(ii) achieves the aforesaid
objective and is squarely within the powers conferred upon the Central
Government under clause 5(4) of the Amalgamation Scheme. So far as the
considerations which weighed with the Central Government to take the ratio of
2:1, learned Additional Solicitor General placed before us the relevant
paragraphs of the counter affidavit of the Reserve Bank of India as well as the
Union Government and also produced before us a chart indicating the impact of
the ratio being 2:1 as well as the impact of it the entire service of an
employee under transferor bank is taken into account and contended that if the
latter course would have been taken then for years to come no employee of the
Punjab National Bank, namely, the transferee bank would have got any
opportunity of getting promotion to the higher cadre. He also further contended
that when the Reserve Bank of India which monitors all these Nationalized Banks
was consulted and the said Reserve Bank of India decided to have the ratio of
2:1 after considering several germane factors it cannot be said to be arbitrary
or irrational as contended by the learned counsel appearing for the appellants.
Mr. Reddy learned Additional Solicitor General also contended that the
provisions of clause 4(a)(iii) & 4(b)(ii) is merely one time exercise and
the said provision has been made after due consultation with the Reserve Bank
of India and after taking into consideration several important factors, like,
respective manpower of the two banks, respective tenure of promotion in two
banks, respective business of two banks and the fact that there has been a
large scale promotion in the transferor bank just before the amalgamation.
According to Mr. Reddy no scheme governing service matters can be foolproof and
some section or other of the employee is bound to feel aggrieved on the score
of its expectations being falsified or remaining to be fulfilled as been held
by this Court in the case of V.I. Khanzode & Ors. vs. Reserve Bank of India
& Ors. (1982(2) SCC 7). Therefore, unless the persons aggrieved establish
arbitrariness, irrationality, perversity or malafide the scheme cannot be held
to be unconstitutional.
Mr.
Reddy cited before us several decisions of this Court indicating the parameters
for interference by the Court when validity of similar scheme is assailed and
submitted that the impugned scheme more particularly clauses 4(a)(iii) &
4(b)(ii) of the Placement Scheme infact strikes a just balance between the
conflicting claims of the employees of the transferor bank and the employees of
the transferee bank and the said provision can neither be held to be arbitrary
and irrational and therefore the Court should not interfere with the same.
Mr.
Reddy lastly submitted that the conclusion of the High Court that the scheme
making process is not legislative in nature is wholly erroneous.
Mr.
Salve, the learned senior counsel, appearing for the Reserve Bank of India contended that when the New Bank of
India was sustaining loss and would have
been otherwise wound up, the Reserve Bank of India advised the Union Government to merge the same with a
stronger bank so that the employees will not suffer. While advising
amalgamation the Reserve Bank of India also considered the relevant factors for
determination of the inter se seniority of the employees and after due
deliberations came to the conclusion of accepting the ratio of 2:1 at the stage
of placement of promotion which advice was ultimately accepted by the Central
Government. According to Mr. Salve all materials having been duly considered
advice having been given to the Union Government which advice was ultimately
accepted, the contentions of arbitrariness and irrationality raised by the
counsel appearing for the appellants is nothin but an imaginary grievance and
not established through any positive datta and, therefore, the Court should
refrain from interfering with the Amalgamation Scheme as well as the Placement
Scheme more particularly the ratio of 2:1.
Mr.
Sharma, the learned counsel appearing for the employees of the transferee bank,
on the other hand contended, that the Scheme works out harshly against the
employees of the transferee bank and the benefits conferred upon the employees
of the transferor bank under the scheme should not be given to them.
In
view of the rival submissions the following questions really arise for our consideration
:-
1. Is
the Placement Scheme framed by the Central Government which provides for the
ratio of 2:1 for the purpose of promotion of the employees of the Transferor
Bank is beyond the power of the Central Government as conferred under Clause
5(4) of the Amalgamation Scheme read with Section 9 of the Acquisition Act?
2.
What are the powers of the Court to examine such schemes and on what grounds
the Court can interfere with such a Scheme?
3.
Whether framing the Placement Scheme and determining the ratio of 2:1 in
Clauses 4(a)(iii) and 4(b)(ii), relevant and germane materials had been taken
into account or the provisions can be held to be arbitrary and irrational?
4. Can
the Placement Scheme by any stretch of imagination can be said to be
retrospective in nature?
5. Was
the High Court correct in coming to the conclusion that the scheme making
process under Section 9 of the Acquisition Act is not legislative in nature? So
far as the first question is concerned Mr. Rao appearing for the appellants
elaborated his submission by contending that no doubt Section 9 of the
Acquisition Act confers power on the Central Govt. to make a scheme for
Amalgamation of one bank with the other after consultation with the Reserve
Bank of India and in exercise of that power the Central Government did frame
the Scheme of Amalgamation which was published on 4th September, 1993. Under
the said Amalgamation Scheme the undertaking of the New Bank of India stood
vested in Punjab National Bank on the commencement of the Scheme itself and the
effect of such vesting has been indicated in clause 4 of the Amalgamation
Scheme. Under Clause 5(2) of the said Scheme the officer and employees of the
transferor bank became officer and employees of the transferee bank and they
shall hold their office or service in the transferee bank on the same terms and
conditions and with the same rights, pension, gratuity and other matters as
would have been admissible to him if the undertakings of the transferor bank
had not been transferred to and vested in the transferee bank until the terms
and conditions are duly altered by the transferee bank.
According
to Mr. Rao the aforesaid provision makes it clear that the employees of the
transferor bank would continue to be the employees of the transferee bank on
the same terms and conditions with they were enjoying under their erstwhile
employer, namely, the transferor bank, until and unless the terms and conditions
are duly altered by the transferee bank. In that view of the matter the Union
Government had no power to frame clauses 4(a)(iii) & 4(b)(ii) of the
Placement Scheme and thereby jeopardize the chances of promotion of the
employees of the transferor bank i the transferee bank to their detriment and
altering their conditions of service. According to Mr. Rao promotion and
seniority are two different concept and clause 5(4) of the Amalgamation Scheme
had merely authorized the Central Government to make another Scheme, a
subsidiary one after consultation with the Reserve Bank of India for
determining the placement of the employees of the transferor bank and for
determining their inter-se seniority vis-a-vis the employees of the transferee
bank. Promotion by no stretch of imagination can be included within the purview
of clause 5(4) of the Amalgamation Scheme. In this view of the matter the
impugned clause of the Placement Scheme, namely, clause 4(a)(iii) &
4(b)(ii) computing the ratio of 2:1 for the purpose of determining the minimum
length of service for promotion from subordinate cadre to clerical cadre and
also from clerical cadre to officer cadre is wholly without jurisdiction and an
arbitrary exercise of power by the Central Government. Mr. Rao contends that
the right of promotion of the employees of the transferor bank remains fully
protected under clause 5(2) of the Amalgamation Scheme and it can only be duly
altered by the transferee bank and that right cannot be taken away by the
Central Government in framing a scheme in the garb of determination of inter se
seniority. In this connection Mr. Rao has also advanced an argument that in the
minimum, before introducing the scheme and altering the service conditions, the
employees should have been given atleast an opportunity of hearing. Mr. Rao
placed reliance on the decisions of this Court in the case of K.I. Shephard
& Ors. etc. etc. vs. Union of India & Ors. (1988 (1) SCR
188) which was approved and followed in the case of H.L. Trehan vs. Union of
India (1983(Suppl.)(3) SCR 923). In the Shephard's case (supra) when some
private banks were amalgamated with Punjab National Bank, Canara Bank and State
Bank of India in terms of separate schemes drawn under Section 45 of the
Banking Regulation Act, 1949, some of the employees of the amalgamated banks
were excluded from employment in the transferee banks and such exclusion was
made without giving the employees an opportunity of being heard. When the
matter had been challenged before the Kerals High Court, the learned Single
Judge of the High Court had proposed a post amalgamation hearing but that had
been vacated by the Division Bench of the High Court. In that context this
Court had held that even a post decisional hearing will not meet the ends of
justice and there is no justification to throw out the employees from their
employment without giving them an opportunity of representation and giving an
opportunity of representation is a condition precedent to the action taken. We
fail to understand how this decision is of any assistance to the appellants. In
that particular case on account of certain charges against the employees of the
private banks they were not given employment in the transferee bank and,
therefore, this Court had observed that before excluding them from
consideration they had a right to be heard. In the present case none of the
employees of the transferor bank and been excluded from absorption in the
transferee bank, on the other hand an option was asked for and thereafter by
operation of the Amalgamation Scheme, the employees of the transferor bank have
become the employees of the transferee bank and, therefore, question of giving
them opportunity of hearing does not arise. In Trehan's case (supra) the
question for consideration was whether there can be deprivation or curtailment
of any existing right or benefit enjoyed by government servant without
complying with the rules of natural justice by giving the servant concerned an
opportunity of being heard. In that particular case the Caltex Oil Refinery (India) Ltd., a government company (for
short `Coril'), which was acquired by the Government of India under the
provision of the Caltex (Acquisition of Shares of Caltex Refining (India) Ltd.) Act 17 of 1977, the Board of
Directors of Coril had issued a circular indicating the perquisites admissible
to the Management staff should be rationalized in the manner stated in the
circular. That circular was challenged by the employees of Corils on the ground
that it curtails the existing rights and advantages and such circular should
not have been therefore, issued without affording an opportunity of hearing.
The High Court had quashed that circular accepting the contention of the
employees and on appeal this Court confirmed the decision of the High Court and
following the earlier view expressed in Shephard's case (supra) held that there
can be no deprivation or curtailment of any existing right, advantage or
benefit enjoyed by government servant without complying with the rules of
natural justice by giving the government servant concerned an opportunity of
being heard. We fail to understand how this decision also is applicable to the
present case where Section 9 of the Acquisition Act authorises Central
Government to make a Scheme of Amalgamation of two banks and in exercise of
that power the central Government after consulting the Reserve Bank of India
framed the Amalgamation Scheme and retained to itself the power to frame
another scheme for placement and seniority of the employees of the transferor
bank vis-a-vis the employees of the transferee bank and in accordance with that
power framed the Placement Scheme. In our considered opinion, neither the
Placement Scheme in any way alters the conditions of service of the employees
of the transferor bank nor does it require any opportunity of hearing to be
given to the employees of the transferor bank before framing of the Placement
Scheme. Mr. Rao also placed reliance on the decision of this Court in the case
of Canara Bank vs. M.S. Jasra & Ors. (1992) 2 SCC 484). In the aforoesaid
case the question for consideration was, when some private banks are
amalgamated with the nationalized bank under the provisions of Banking
Regulation Act 1949 can the employees of the private banks claim to be governed
by an age of superannuation of the transferor bank or they would be governed by
the terms and conditions of service applicable to the employees of
corresponding ranks or status of the transferee bank. This court answered the
question by holding that the employees would be governed by the terms and
conditions of service of employees of the corresponding rank of the transferee
bank and therefore, their claim to continue in service upto 60 years is
unsustainable.
Analysing
the provisions of the Banking Regulation Act 1949 and referring to proviso (ii)
to clause (i) of Sub Section (5) of Section 45 of the said Act this Court held
that the employees of the transferor bank would be entitled to the terms and
conditions of service which the employees of the corresponding rank and status
of the transferee bank were availing of and therefore the High Court was in
error in allowing the claim of the employees of the transferor bank.
In our
considered opinion this decision is of no assistance to the point which arises
for consideration in the present case. Firstly, the provisions of Banking
Regulation Act 1949 has no application in the case in hand. Secondly, the point
in controversy in the case in hand is different than the point in controversy
in that case. Thirdly, Section 9 of the Acquisition Act confers power on the
Central Bank to frame the Scheme of Amalgamation and in exercise of that power
the Amalgamation Scheme had been framed which came into force on 4th September,
1993 and under clause 5(4) thereof Central Government had retained power to
frame the Scheme for placement and inter-se seniority between the employees of
the transferor bank with the transferee bank and in accordance with that power
the impugned scheme of placement had been framed. The question for
consideration therefore, is whether the Central Government had the power to
frame the impugned Placement Scheme? As has been noticed earlier the expression
Placement in clause 5(4) of the Amalgamation Scheme must be construed to mean
re-deployment of the employees; fitment of those employees in a grade or rank
or cadre in the transferee bank and inter se seniority of those employees vis-a-vis
the employees of the transferee bank in the cadre or grade. If this meaning is
given to the expression `Placement' in Section 5(4) of the Amalgamation Scheme
and then the impugned provision of clause 4(a)(iii) and 4(b)(ii) are considered
it is difficult for us to accept the contention of Mr. Rao that it alters the
conditions of service of the employees of the transferor bank and beyond the
power of the Central Govt. It would be appropriate for us at this stage at the
cost of repetition to extract clause 5(4) of the Amalgamation Scheme as well as
Clauses 4(a)(iii) & 4(b)(ii) of the Placement Scheme.
"5(4)
The Central Government shall, as soon as possible after the commencement of
this Scheme, make a Scheme in consultation with Reserve Bank of India for
determining the placement of the employees of the transferor bank including the
determination of their inter se seniority vis a vis the employees of the
transferee bank. While making the Scheme the Central Government shall take
account of relevant factors such as experience of the employee of the
transferor bank." "4(a)(iii) The procedure for computation of years
of service rendered in the transferor bank for the purpose of determining the
minimum length of service for promotion from subordinate cadre to clerical
cadre as also from the clerical cadre to officer cadre and also for the purpose
of posting in the posts carrying special allowance, shall be computed in the
ratio 2:1 that is, two years of service in transferor bank as equivalent to one
year of service in the transferee bank. For this purpose, total service in the
respective cadre of the workmen employees, that is, clerical or sub-staff in which
the official is placed at the time of transfer, shall be reckoned but fractions
of a month shall be ignored, for example, if a workmen employee has rendered
two years and nine months service in the clerical/sub-staff cadre, as the case
may be, in the transferor bank at the time of amalgamation with transferee
bank, it shall be reckoned as equal to one year and four months service in the
clerical or sub-staff cadre, as the case may be, in the transferee bank."
"4(b)(ii) For the purpose of seniority on fitment or for promotion to the
next grade or scale, the service rendered by an officer in the transferor bank
shall be computed, after amalgamation, in the ratio of 2:1, that is, two years
of device in the transferor bank as equivalent to one year service in the
transferee bank. For this purpose, total service in the scale in which an
officer is transferred shall be reckoned but fractions of a month shall be
ignored. For example, if an officer has rendered two years nine months service
in Scale II in the transferor bank at the time of amalgamation with the
transferee bank, it shall be reckoned as equal to one year and four months
service in Scale II in the transferee bank." When the Central Government
decided to amalgamate two banks it has to make a scheme after consulting the
Reserve Bank of India under Section 9 of the Acquisition
Act. In the case in hand Amalgamation became necessary as the transferor bank
was incurring heavy loss and without the amalgamation it would have been
totally wound up. When a scheme is framed amalgamating two banks, it is not
possible for the Central Government to take the details of the service
condition in account and that is why it provided that the employees of the
transferor bank would become the employees of the transferee bank on the same
terms and conditions, with the same rights to pension, gratuity and other
matters which would have been admissible to them if they would have continued
as the employees of the transferor bank. But so far as the question of their
placement and inter-se seniority vis-a-vis the employees of the transferee
bank, the Scheme itself stipulated that in consultation with the Reserve Bank
of India the Central Government after taking
relevant factors in consideration may frame the Scheme. It is in exercise of
this power the placement scheme has been framed and under the Placement Scheme
what has been intended is that for determination of the inter so seniority and
in the matter of promotion from subordinate cadre to the clerical cadre and
from the clerical cadre to the officers cadre while the computation of years of
service rendered is taken into account, the computation shall be made in the
ratio of 2:1 i.e. two years of service in the transferor bank would be
considered equivalent to one year of service in the transferee bank. This
computation is only one time computation and whether such decision has been
taken after taking the relevant factors into account will be considered by us
when the question determination of the placement of the employees of the transferor
bank and the inter-se seniority vis-a-vis the employees of the transferee bank
and for framing such scheme it was not necessary to afford an opportunity of
hearing to the employees of the transferor bank, as in our view there has been
no change on conditions of their service. In this view of the matter we answer
the first question by holding that the Central Government had the power to
frame the subsequent scheme which has been termed by us in this judgment as the
Placement Scheme for the placement of the employees of the transferor bank in
the transferee bank and for the determination of their inter se seniority with
the employees of the transferee bank.
Coming
down to the second question the legal positions fairly settled that no scheme
of amalgamation can be fool proof and a Court would be entitled to interfere
only when it comes to the conclusion that either the scheme is arbitrary or
irrational or has been framed on some extraneous consideration. Learned
Additional Solicitor General, Mr. Reddy appearing for the respondents in this
context contended that the only enquiry which the Court can make is whether the
provisions of this scheme is arbitrary and irrational so that it results no
inequality of opportunities amongst employees belonging to the same class.
In
support of this contention he placed strong reliance on the decision of this
Court in the case of Reserve Bank of India vs. N.C. Paliwal (1976) 4 SCC 838).
In that case the Reserve Bank had 5 different departments which were broadly
divided into two groups called the General Department and the Specialized
Department and each department was treated as a separate wing for the purpose
of determining seniority and promotion of the employees within the group. The
employees of the Specialized departments were having greater opportunities for
confirmation and promotion as compared to the employees of the General
Department. On account of this disparity the employees of the General
Department claimed for equalization of their chance of their confirmation and
promotional opportunity by having a combined seniority list of all employees
irrespective of the departments to which they belong. Ultimately the Reserve
Bank of India introduced a Scheme called Optee
Scheme. In May 1972 the Reserve Bank issued another scheme called Combined
Seniority Scheme which provided for integration of clerical staff of the
general departments with the clerical staff of the specialized departments and
it also made provision for determination of inter so seniority. the validity of
the said Scheme had been challenged on the ground that the Scheme is violative
of the Constitutional principle of equality and must be held to be
discriminatory. This Court negativing the aforesaid contentions held that the
integration of different cadres into one cadre cannot be said to involve any
violation of equality clause. Examining the question of rule of seniority
adopted by the Combined Seniority Scheme the Court further observed :-
"Now there can be no doubt that it is open to the State to lay down any
rule which it thinks appropriate for determining seniority in service and it is
not competent to the court to strike down such rule on the ground that in its
opinion another rule would have been better of more appropriate. The only
better or more appropriate. The only enquiry which the court can make is
whether the rule laid down by the State is arbitrary an irrational so that it
results in inequality of opportunity amongst employees belonging to the same
class. Now , here employees from non-clerical cadres were being absorbed in the
clerical cadre and, therefore, a rule for determining their seniority vis-a-vis
those already in the clerical cadre had to be devised. Obviously, if the non-
clerical service rendered by the employees from non clerical cadres were wholly
ignored, it would have been most unjust to them. Equally, it would have been
cadre, if the entire non clerical service of those coming from non clerical
cadres were taken into account, for non clerical service cannot be equated with
clerical service and the two cannot be treated on the same footing. The Reserve
Bank, therefore, decided that tone third of the non clerical service rendered
by employees coming from non clerical cadres should be taken into account for
the purpose of determining seniority. This rule attempted to strike a just
balance between the conflicting claims of non clerical and clerical staff and
it cannot be condemned as arbitrary of discriminatory" Learned Additional
Solicitor General also relied upon another decision of this Court in the case
of Tamil Nadu Education Department Ministerial and General Subordinate Services
Association & Ors. vs. State of Tamil Nadu & Ors (1980) 3 Supreme Court Cases 97). In the aforesaid case
the District Board Schools were taken over by the Government of Tamil Nadu and
after such taking over the issue of merger of the staff confronted the
government. At the time of taking over Government decided to keep the absorbed
personnel as a separate service in the education department. This dicotomy
between the staff of District Schools and the Government Schools gave rise to
heart burning and the Government therefore, considered afresh the question of
integration of two services, the Government schools' servants were being called
the `A' wing staff and the staff of the former District Board Schools were
being referred to as `B' Wing staff. Finally after examining the matter of
integration in great detail and taking into account the number of personnel in
different categories of both the wings and promotional opportunities for them,
the government adopted a formula to integrate the two wings and to equalise
their service conditions to the extent possible by issuing the circular which
was challenged by the employees of the `A' wing on the ground that it is
capricious and arbitrary. The government decision in question fixed the ratio
between two wings in the matter of promotion and fixed the principle of
computation of service in determining the seniority. This Court on examining
the ratio fixed by the government order held "The ratio of 5:3 and 3:2
respectively were prescribed for the ministerial staff and teaching staff,
taking realistic note of the total numbers in the two equivalent groups viz.
quondam District Board servants and relative government school staff. This is
not an irrational criterion when coalescence of two streams springing from two
sources occurs." The Court further observed :- "Counsel for the
respondents explain that when equated groups from different sources are brought
together quota- rota expedients are practical devices familiar in the field.
Bearing
in mind the strength of the District Board staff to be included, the ratio is
rational. Maybe, a better formula could be evolved, but the court cannot
substitute its wisdom for government's, save to see that unreasonable
perversity, mala fide manipulation, indefensible arbitrariness and like
infirmities do not defile the equation for integration. We decline to demolish
the order on this ground. Curial therapeutics can heal only the pathology of
unconstitutionality, not every injury." The Court also examined the
principle of fixation of seniority and held :- "The more serious charge is
that length of service for fixing seniority has inflicted manifest injustice on
the `A' wing i.e. regular government staff, being born in arbitrariness and fed
on mala fide. It is fair to state the generalities and then proceed to
particularities. Here we must relies that all the schools having been taken
over by the State directly the personnel had to be woven into the basic fabric.
Some relevant formula had to the furnished for this purpose so that the homogenisation
did not unfairly injure one group or the other. In 1970 government chose not to
integrate but to keep apart. Later, this policy was given up. We cannot, as
court, quarrel if administrative policy is revised. The wisdom of yesterday may
obsolesce into the folly of today, even as the science of old may sour into the
superstition now, and vice versa. Nor can we predicate mala fide or ulterior motive
merely because Assembly interpellation have ignited rethinking or, as hinted by
counsel, that the Education Minister's sensitivity is due to his having been
once District Board teacher. Democratic processes -- both these are part of
such process -- are not anathema to judges and we cannot knock down the order
because government have responded to the Question Hour or re-examined the
decision at the instance of a sensitive minister." At this stage it would
also be appropriate to notice yet another decision of this Court in the caseV.
T. Khanzodoe and others vs. Reserve Bank of India and Anr. (1982 2 Supreme Court Cases 7) in which case the Court was
examining again the principle evolved by the Reserve Bank of India for a
combined seniority for different groups of employees with retrospective effect.
The Court observed :- "Combined seniority has been recommended by two
special committees, whose reports reflect the expertise and objectivity which
was brought to bear on their sensitive task. It is clear that inter-group
mobility and common seniority are a safe and sound solution to the conflicting
demands of officers belonging to Group I on one hand and those of Groups II and
III on the other. Private interest of employees of public undertakings cannot
override public interest and an effort has to be made to harmonize the two
considerations. No scheme governing service matters can be foolproof and some
section or the other of employees is bound to feel aggrieved on the score of
its expectations being falsified or remaining to be fulfilled. Arbitrariness,
irrationality, perversity and mala fide will of course render any scheme
unconstitutional but the fact that the scheme does not satisfy the expectations
of every employee is not evidence of these." In S.C Sachdev & Anr. vs.
Union of India (1981) 1 SCR 971) a particular provision of the Recruitment
Rules of 1969 was being challenged as an arbitrary. The said provision provided
that UDCs drawn from Audit offices must put in 10 years of service for
acquiring eligible for promotion where other UDCs are eligible for promotion in
putting in 5 years of service. Rejecting the contention of the appellant this
Court held :- "Considering the history leading to the formation of the new
organisation, SBCO-ICO, the distinction made between the two classes of UDCs,
in the context of the length of their service for the purposes of promotion is
not arbitrary or unreasonable. The staff of the Audit Offices which was engaged
in the Savings Banks' work might well have faced retrenchment. Instead of
subjecting them to that hardship, they were given the option of joining the new
organisation.
Experience-wise
also, there would appear to be fair justification for requiring them to put in
longer service in the new organisation before they are eligible for promotion
to the higher grade. The challenge has therefore to be repelled." The
facts of this case are somewhat akin to the facts of the present case. Mr. Rao,
learned counsel appearing for the appellants on the other hand, urged that the subsequent
scheme framed for placement of the employees must be held to be arbitrary as
there is no rational for wiping of the past service of the employees of the
transferor bank. Relying upon the decision of this Court in the case of K.Madhavan
and Anr. etc. vs. Union of India & Ors. (1988 (1) SCR
421) the learned counsel urged that the entire period of service rendered by
the employees of the transferor bank can be taken into account for the purpose
of their seniority after amalgamation. In the aforesaid case petitioner Madhavan
was a permanent officer in the grade of Deputy Commandant. On 14.6.76 it has
been found to be equivalent to the grade of S.P. in the CBI. When Madhavan's
services were taken over by the CBI the question arose whether his past service
shall be taken into account for determining his seniority in the CBI and in
that context this Court has observed that his entire period of service should
be taken into account. In our considered opinion this decision is of no
assistance to the appellant in the present case where a particular scheme has
required to be framed after amalgamation of the services of the transferor bank
with the transferee bank and in that scheme certain provisions haven been made
as to how the employees of the transferor bank would be fitted in the
transferee bank.
Mr. Rao,
learned counsel also placed reliance on another decision of this Court in the
case of Tei Narain Tiwarv vs. State of Bihar & Ors. (1993 (2) (suppl.)
Supreme Court Cases 623) in support of his contention that in a case of
amalgamation the entire past service of the employee should be taken into
account. In that case the appellant Narain Tiwary has been appointed by the
Bihar School Examination Board as Special Officer in August 1969. The said post
was abolished with effect from April 1, 1971.
He filed a suit and obtained injunction against the abolition of post and
termination of his services. In the course of litigation a compromise had been
arrived at between the Board and the appellant wherein he was appointed as a
Sectional Head Officer and his pay as a Special Officer was also protected. The
Board, therefore, passed an order on March 20, 1972 appointing the appellant as a
Sectional Head Officer in the general cadre. In the seniority list of Sectional
officers prepared by the Board the appellant had been shown above respondent
no. 5 and he had been granted promotion to the post of Asstt. Secretary. The
respondent no. 5 therefore, filed a Writ Petition challenging the seniority
list. The High Court came to the conclusion that the post of Sectional Officer
occupied by the appellant not being a cadre post the services rendered by the
appellant as Special officer cannot be taken into account for his seniority in
the cadre of Sectional Officer. This Court in appeal reversed the judgment of
the High Court and held that the compromise entered into between the parties
and the order of March 20, 1972 is capable of being interpreted as an order of
amalgamation of the ex cadre post of Special Officer with the cadre of Sectional
officer and consequently the appellant would get his seniority from the date of
his appointment as a Special Officer. In coming to this conclusion the Court
also relied upon the results and orders of the Board itself. We fail to
understand how this case can be of any assistance to the appellants in the
present case.
In
view of the legal position as discussed above, and on examining the provisions
of the Placement Scheme more particularly Clauses 4(a)(iii) & 4(b)(ii) and
on consideration of the opinion rendered by the Reserve Bank of India we have
no hesitation to come to the conclusion that the said Scheme is neither
arbitrary nor irrational and on the other hand a just scheme evolved by the
Union Government after due consultation with the Reserve Bank of India and
Court cannot interfere with such a Scheme.
Coming
to the third upon the relevant materials considered both by the Reserve Bank of
India as well as by the Union Government
before framing of the Placement Scheme.
At the
outset it may be noted that most important function of the Reserve Bank of India is to regulate the Banking system
generally. It is usually described as a Bankers Bank.
The
Reserve Bank of India has been given certain advisory and
regulatory functions. It advices government and other banks on financial and
banking matters. The provisions of the Reserve Bank of India Act shows that a
bank has been created as a Central Bank with powers of supervision, advice and
inspection over banks particularly those desiring that they be included in the
Second Schedule or those Scheduled already. The Reserve Bank safeguards the
economy and financial stability of the country. We have set out the functions
of the Reserve Bank of India because the Placement Scheme which is being
impugned in the present case by the employees of the transferor bank had been
framed in due consultation with the Reserve Bank of India and the said Reserve
Bank has filed affidavits indicating the broad consideration on which the ratio
2:1 has been fixed. The Union of India in its affidavit filed in this Court,
sworn to by the Under Secretary in the Ministry of Finance, Banking Division
stated thus:- "Central Government after taking into consideration the
complete date and entire material on record of the case and in consultation
with Reserve Bank of India decided that the Service rendered in erstwhile New
Bank of India by employees/Officers in grade/scale in which they were placed at
the time of amalgamation had to be computed in the ratio of 2:1 and that to
only for the purpose of computing eligibility for consideration for promotion
to next grade/scale and/or for the purpose of posting on a post carrying
special allowance. For all other purpose, the service rendered by the employees
of erstwhile New Bank of India has to be treated at par with the
service rendered by the employees of New Bank of India in PNB. It is relevant to mention that New Bank of India was small in size both in regard to
its branches and also in terms of its deposits and business Act. A comparison
of the erstwhile New Bank of India and the Punjab National Bank in terms of
productivity, volume of business, staff strength, time taken for promotion etc.
as indicated below would reveal that the employees of Punjab National Bank were
having higher productivity per employee and higher level of responsibilities,
house keeping and higher average business per branch. As compared to this, the
promotional avenues available to them were less. On account of the merger, if
the number of years of services were equated between the employees of erstwhile
New Bank of India and Punjab National Bank, it would
happen that the employees with longer years of service of Punjab National Bank
would become junior to the employees with lesser period of service in the
corresponding grades." The Reserve Bank of India in its affidavit in this Court have stated thus:- "New
Bank of India Limited was nationalized and constituted as New Bank of India in 1980 under the provisions of the
Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980. It was
a bank comparatively small in size with 591 branches and deposits of Rs.2362.33
crores as at the end of March, 1993.
6. The
Reserve Bank of India as the Central Bank of the country,
has been monitoring on a continual basis the performance of the various public
sector banks. It was brought to the notice of the Government by Reserve Bank of
India that the financial position of New Bank of India as revealed by the
Annual Financial Review conducted by Reserve Bank of India as on 31st March,
1992 was extremely unsatisfactory. The losses of the bank including loan losses
were estimated at Rs.306.90 crore which exceeded the provisions, reserves and
paid up capital of the bank amounting to Rs. 242.78 crore. The deposits of New
Bank of India had thus been eroded to the extent
of Rs.64.12 crore.
The
said evaluation of Reserve Bank of India did not take into account the depreciation in Government and other
securities estimated at Rs.25.52 crore which had not been provided for. The
bank had declared a loss of Rs.41.52 crore in its published accounts for the
year 1991-92.
7. The
Reserve Bank of India brought to the notice of the
Government various deficiencies in the working of the bank.
Some
of these are set out below :-
i) The
calibre and quality of officials in the senior management cadre was inadequate.
ii)
The supervision and control exercised by the Head Office over the controlling
offices and the branches was unsatisfactory. The internal working of the
branches was also far from satisfactory.
iii)
Funds management had been a weak area. The bank had been lending much beyond
what its scarce resources would permit, relying heavily on market borrowings.
With the constraints on resources the bank would find it difficult to service
even its existing borrowers.
iv)
The bank had not been able to bring about any improvement in credit management
despite repeated advice.
The
appraisal of credit proposals showed several deficiencies. Discretionary powers
had not been exercised properly by the functionaries at various levels
including the top executives. Adhoc/spot sanctions/excess drawals had been
allowed frequently. The post disbursement supervision of advances was also
unsatisfactory.
v) The
bank was saddled with substantial load of sticky advances amounting to Rs.
438.66 crore as on 31/3/1992 which formed 39.2% of the total
advances.
vi)
The bank did not comply with the minimum capital requirement under the
provisions of the Reserve Bank of India Act. It was prima facie a fit case for
de-scheduling the bank;
vii)
The bank was not in a position to pay the depositors in full as and when their
claims accrue and its methods of operation were far from satisfactory. Under
the policy followed with reference to private sector banks, this would be a fit
case for compulsory merger, as it did not satisfy even the requirements under
Section 22 of the Banking Regulation Act, 1949 for carrying on banking business
although the said provisions do not apply to nationalized banks.
8. The
Reserve Bank of India was of the view that the
possibility of New Bank of India earning
reasonable profits in the near future and making up the gap in provisions and
emerging as a strong and viable unit was remote. It was doubtful whether the
bank would be in a position to recover or regularize and bring down the high
level of sub-standard advances to any significant extent. If the bank was to
remain as a separate unit, financial assistance of substantial magnitude would
have to be given to it. But the extremely weak senior management structure of
the bank as well as the deficiencies in its lower sections did not infuse
confidence that even with such assistance, the management would be able to
remove the weaknesses in its working and make it a viable unit in the near
future." The appellants, however, strongly relied upon the fact that both
the banks being nationalized banks and the recruitment to both the banks being
through the same Selection Board, there is no justification for treating the
services of the employees of the transferor bank on 2:1 basis after
amalgamation for the purpose of promotion. In our considered opinion the
contention of the appellant is wholly unsustainable. As has been stated
earlier, the financial loss sustained by the transferor bank had brought the
bank to a virtual collapse. It is at that point of time the Reserve Bank on
consideration having taken a sympathetic view of the matter and instead of
advising winding up of the bank and its liquidation advised for its merger with
a stronger bank and the Government of India ultimately accepted the advise of
the Reserve Bank. On its amalgamation necessary provisions were required to be
made for the placement of the employees of the transferor bank with the
employees of the transferee bank. At that stage the bank as well as the Union
Government considered the total volume of business of both the banks, the rate
of promotion in both the banks, the total number of employees in both the
banks, as well as the impact if the entire length of service of the employees
of the transferor bank is taken into account or one time reduced level is taken
into account and finally evolved the schemen of placement and modalities for
promotion. Having considered the necessary averments made in the affidavits
filed by the Union Government as well as by the Reserve Bank of India we are of
the considered opinion that in framing the Placement Scheme and determining the
ratio of 2:1 in clauses 4(a)(iii) & 4(b)(ii) the appropriate authorities
have taken relevant and germane materials into consideration and the said
provision cannot be termed as arbitrary and irrational.
So far
as the fourth question is concerned we do not find any substance of Mr. Rao's
argument that the Placement Scheme is retrospective in nature. As we have
discussed earlier, on deciding to amalgamate the two banks in exercise of power
under Section 9 of the Acquisition Act the Union Government framed the scheme
of amalgamation and notified the same on 4th September, 1993. But in that scheme excepting
making the employees of the transferor bank as employees of the transferee
bank, the other questions like their inter se seniority and fitments in the
cadre of the transferee bank had not been decided. On the other hand clause
5(4) of the Amalgamation Scheme left the matter open for being evolved at a
later stage and the complete fusion between the employees of the two banks came
only on the subsequent scheme being framed, which scheme was evolved after due
deliberations on the relevant materials. The scheme therefore, necessarily have
to be given effect with effect from the date of amalgamation and the same
cannot be held to be retrospective in nature as contended by Mr. Rao.
The
only other question which remains for consideration is whether the conclusion
of the High Court that the scheme making process under Section 9 of the
Acquisition Act is not legislative is correct in law. In view of our
conclusions on the four questions formulated, this question is not of much
relevance but since the High Court has recorded a conclusion and the learned Additional
Solicitor General and Shri Salve advanced the argument we think it appropriate
to answer this question also. The High Court relied upon the decision in Sapherd's
case (supra) and came to hold that the provisions of Section 45 of the Banking
Regulation Act being in parimateria with Section 9 of the Banking Companies
Acquisition and Transfer of Undertakings Act, 1980, and the scheme framed under
Section 45 of the Banking Regulation Act having been held by this Court to be
not legislative, the scheme framed under the Acquisition Act as in the present
case, must also be held to be not legislative one. It is undisputed that in Sephard's
case (supra) the amalgamation was of a private bank with a nationalized bank
and the provisions of the Banking Regulation Act, 1949 applied. This Court in Sephard's
case (supra) on examining Section 45(11) of the Banking Regulation Act 1949
came to hold that merely because a scheme framed is required to be laid before
both the Houses of Parliament after the same has been sanctioned by the Central
Government the Scheme cannot be held to be legislative in nature. But in our
considered opinion the High Court has failed to notice the fundamental
distinction between the provisions of Section 45 of the Banking Regulation Act
and Section 9 of the Acquisition Act. Under Section 9 of the Acquisition Act
under which Act the impugned scheme has been framed, every scheme framed by the
Central Government has to be laid before each Houses of Parliament for a total
period of 30 days and the Parliament has the power to agree to the Scheme and
making any modification or in giving to a decision that the scheme should not
be made and it is only thereafter the scheme has the effect either in the
modified form or does not agree.
The
essential distinction between the two provisions therefore, is that whereas
under the Banking Regulation Act the Scheme framed has merely to placed before
the Parliament and nothing further but under the Acquisition Act the scheme
becomes effective only after the same is placed before both the Houses of
Parliament and after the Parliament makes such modification and agrees to the
scheme. In this view of the matter the decision of this Court in Sephard's case
(supra) has no application to a scheme framed under the provisions of the
Acquisition Act and in our considered opinion, a scheme framed under Section 9
of the Banking Companies Acquisition and Transfer of Undertakings Act, 1980, is
a legislative one. The High Court was in error in holding the scheme not to be
a legislative one.
Mr.
Sharma, the learned senior counsel appearing for the appellant, the Punjab
National Bank Employees Federation urged that the ratio of 2:1 fixed under the
Placement Scheme infact works out gross injustice. The interest of the
employees of the Punjab National Bank should not be jeopardized by bringing the
employees of the New Bank of India and no
credit should be given to the employees of the New Bank of India for their past services rendered.
We do not find any force in the aforesaid contention and, as discussed earlier,
the ratio of 2:1 was fixed in the Placement Scheme in consultation with the
Reserve Bank of India and after a comparative study of the business of the two
banks, the rate of promotion, the higher productivity and larger measure of
responsibility and higher average business per branch of the Punjab National
Bank as compared to the New Bank of India and all other germane considerations.
The submission of Mr. Sharma, therefore, is rejected.
In the
premise, as aforesaid. all the appeals are dismissed but in the circumstances,
there will be no order as to costs,.
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