Bank Vs. B. Satyanarayana & Ors  Insc 95 (12 February 2004)
S.B. Sinha & S.H. Kapadia. S.B. Sinha , J :
appeal is directed against the judgment and order dated 31.3.1998 passed by a
Division Bench of the Andhra Pradesh High Court in Writ Appeal No.1152 of 1988
whereby and whereunder an appeal preferred by the appellant herein against a
judgment and order dated 13.6.1988 passed by a learned Single Judge in Writ
Petition No.6076 of 1984 was dismissed.
view of the point involved in this appeal, it may not be necessary to dwell at
length the fact of the matter.
it to point out that Respondent Nos. 3 to 12 herein at all relevant times were
holding the posts of Regional Manager. They along with the Respondent Nos.1 and
2 herein were considered for promotion to the post of Assistant General Manager
upon following the procedures laid down in a circular letter dated 11.2.1984
issued in terms of Regulation 17(1) of the Andhra Bank (Officers') Service
Regulations, 1982, (hereinafter referred to as 'the Regulations', for the sake
of brevity). Upon consideration of the cases of the private parties herein, the
respondent Nos. 3 to 13 were promoted; whereafter the writ petition was filed
by the respondent Nos. 1 and 2 herein questioning the validity of the said
circular. A learned Single Judge of the High Court in the said writ petition
held that Regulation 17(1) of the Regulation is arbitrary as no guideline was
provided thereby. Aggrieved by and dissatisfied with the said judgment, the appellant
herein preferred an appeal before the Division Bench of the High Court. The
Division Bench despite holding that Regulation 17 of the Regulations may not be
ultra vires the Constitution of India but the promotion policy formulated by
the appellant should have been issued in compliance of the procedure laid down
in Section 19 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1980 (hereinafter referred to as 'the Act', for the sake of
brevity) holding :
is a settled principle of law when power is delegated to a subordinate law
making body subject to certain conditions, the conditions must be complied
with. Otherwise the subordinate legislation would be ultra vires, the power
granted to it, which itself is subject to a condition." Mr. V.R. Reddy,
learned Senior Counsel appearing on behalf of the appellant would submit that
the Division Bench of the High Court went wrong in holding that in making the
guidelines, the conditions precedent for making the regulation as contained in
Section 19 of the Act were required to be complied with. The learned counsel
would submit that it is not in dispute that the Board of Directors of the
appellant-Bank before framing the regulations had consulted the Reserve Bank of
India and also obtained prior approval of
the Central Government in terms of Section 19 of the Act. The policy decision
as regard promotion of the officers having been framed in terms of Regulation
17 and in conformity with the guidelines issued by the Union of India, Mr. Reddy
would submit, it was not necessary to consult the Reserve Bank of India or obtain prior permission of the
not in dispute that the appellant-Bank was a 'corresponding new bank' within
the meaning of the provisions of the Act. Section 8 of the Act obligates every
corresponding new bank to be guided by such directions as regard the matters of
policy involving public interest as the Central Government may, after
consultation with the Governor of the Reserve Bank, give.
(2) of Section 12 of the Act reads as under:
Save as otherwise provided in sub-section (1), every officer or other employee
of an existing bank shall become, on the commencement of this Act, an officer
or other employee, as the case may be, of the corresponding new bank and shall
hold his office or service in that bank on the same terms and conditions and
with the same rights to pension, gratuity and other matters as would have been
admissible to him if the undertaking of the existing bank had not been
transferred to and vested in the corresponding new bank and continue to do so
unless and until his employment in the corresponding new bank is terminated or
until his remuneration, terms or conditions are duly altered by the
corresponding new bank." The Board of Directors of the corresponding new
bank is empowered to make a regulation after consultation with the Reserve Bank
of India and previous sanction of the
Central Government. Such regulation, inter alia, may relate to the duties and
conduct of officers and other employees of the corresponding new bank.
not in dispute that pursuant to or in furtherance of sub-section (2) of Section
12 read with Section 19 of the Act, in consultation with the Reserve Bank of
India and upon obtaining prior permission therefor, the Board of Directors of
the appellant-Bank framed the Regulations known as 'Andhra Bank (Officers')
Service Regulations 1982'.
17 of the said Regulations reads thus :
Promotions to all Grades of officers in the Bank shall be made in accordance
with the policy laid down by the Board, from time to time, having regard to the
guidelines of the Government, if any.
the avoidance of doubts, it is clarified that this regulation shall also apply
to promotions of any category of employees to the Junior Management
Grade." It appears that the Central Government had also issued guidelines
purported to be in terms of Regulation 17 of the Regulations.
not the contention of the Respondent Nos.1 and 2 before the High Court or
before us that the Board of Directors by reason of the regulation making power
could not have been delegated with the power to lay down a policy for grant of
promotion to the officers working in the bank.
bare perusal of Regulation 17, it would be evident that sufficient safeguards
have been provided for therein inasmuch as while laying down such policy, the
Board must have regard to the guidelines issued by the Central Government. It
is further not in doubt or dispute that such guidelines had been provided by
the Government in terms of the aforementioned regulation.
valid regulation once framed would be a part of the statute.
a well-settled principle of service jurisprudence that the employer is entitled
to lay down policy decision laying down the criteria for grant of promotion to
its officers. The eligibility norms for such promotions must be defined by the
bank on a realistic basis wherefor a system to choose the best available talent
to man the critical positions is to be devised. Once a power vests in an
authority by reason of the provisions of a statute, it is trite that such power
can be exercised from time to time.
are required to be made keeping in view the requirement of the management as
also the exigency of the situation obtaining at the relevant time. Furthermore,
it is one thing to say that by reason of Section 19, the Parliament has
conferred essential legislative functions upon the Board of Directors to make
regulation but it is another thing to say that the regulation is arbitrary and
ultra vires as it did not contain sufficient guidelines.
High Court did not come to the conclusion that essential legislative competence
of the Parliament has been delegated to the Board of Directors in terms of Section
17 of the Act or otherwise.
regulations in terms of sub-section (2) of Section 12 read with Section 19 of
the Act were required to be framed by the Board of Directors. For amending the
regulations each time they were not only required to consult the Reserve Bank
of India and obtain previous permission of the Central Government but also the
amended regulations were required to be laid before both the Houses of the
Parliament in terms of Section 19 of the Act. With a view to avoid the rigors
of such procedural requirements, we see no reason as to why the said power
cannot be delegated to the Board of Directors keeping in view of the fact that
the policy decision required to be laid down for effecting promotions to
different grades of officers and employees at different points of time.
17 of the Regulation, in our opinion, does not confer any unguided, uncanalised
and arbitrary power as the same was issued in conformity with the guidelines
issued by the Central Government. The requirement to lay down the regulation
before both Houses of Parliament also provides for sufficient safeguard. For
making a regulation, the requirements of Section 19 of the Act were required to
be complied with but the procedure laid down therefor are wholly irrelevant for
the purpose of formulating the policy decision in terms of Regulation 17
aforementioned. The High Court in its impugned judgment failed to notice the
said distinction and, thus, based its decision wholly on a wrong premise.
machinery provision, it is trite, must be construed in such a manner so as to
make it workable having regard to the doctrine 'ut res magis valeat quam pereat'.
of India & ors. [JT 2004 (1) SC 152],
this Court while rejecting a similar contention as regard Section 18 of the Atomic
Energy Act, 1962 held:
question as to whether a statute is ultra vires Constitution of India having
conferred unguided, uncanalised or wide power cannot be determined in vacuum.
It has to be considered having regard to the text and context of the State as
also the character thereof. It deals with a sensitive subject.
18 has been enacted for the purposes specified therein. It is well- settled
that guidelines for enacting the said provision must be found out from the
subject matter covering the field.
the said purpose even the preamble of the Act may be looked into.
of discovery of uranium or thorium, control over mining operations, the
disposal of uranium, power to obtain information are within the scope and ambit
of the said Act.
13 provides for informations as regard, contracts. Section 14 postulates
control over production and use of atomic energy. Restrictions as regard
disclosure of information as contained in Section 18 are not vague or wide in
nature. It specifies the areas where such disclosures are prohibited.
powers of the Central Government to make an order in terms thereof are, thus,
not a case where as in of India and
others [AIR 1960 SC 554] or Corporation of Delhi [(2003) 7 SCC 151] the Central
Government has been conferred with a wide uncanalised and unguided power. It is
also not a case where the words employed in the provision provide for no
criteria nor can it be said that no standard has been laid down by the
Parliament therefor. It is furthermore not a case where principles on which the
power of the Central Government are to be exercised have not been disclosed. By
reason of the Act, essential legislative functions have also not been
not think that having regard to the purport and object of the said Act, the
provisions of Section 18 have bestowed unguided and uncanalised powers on the
Central Government. Sections 18 and 3 of the Atomic Energy Act had to be
enacted by the Parliament as in wrong hands the information can pose a danger
not only to the security of the State but to the public at large." The
High Court, therefore, committed a manifest error in passing the impugned
the reasons aforementioned, the impugned judgment of the High Court cannot be
sustained. It is set aside accordingly. The Appeal is allowed. Since in view of
the fact that nobody appeared for the respondents, there shall be no order as