CIVIL APPELLATE JURISDICTION : Civil appeal No. 1054 of
From the Judgement and Order dated 20.9.1991 of the Delhi High Court in C.W.P. No 2199 of 1991.
K.N. Bhat, S.R. Bhat, Mrs. L.M. Bhat and Alok Agarwal for the Appellants.
S.C. Gupta H.N. Salve, Inder Jeet Sharma, S.P. Sharma and H.S. Parihar for the Respondents.
The Judgment of the Court was delivered by
VERMA, J. Respondent No. 1,M.S.Jasra, joined the service of the Reserve Bank of India in 1957, was promoted as a Staff Officer in 1970 and then as a Banking Officer in 1977. M.S. Jasra applied in response to an advertisement issued by the Lakshmi Commercial Bank and was selected in 1983 for the post of Assistant General Manager which he joined in March, 1983.
The Central Government, after considering the application made by the Reserve Bank under sub-section (1) of Section 45 of the Banking Regulation Act, 1949 made an order of moratorium under sub-section (2) thereof in respect of Lakshmi commercial Bank of April 27, 1985. Thereafter, the Reserve Bank prepared a scheme for amalgamation of the Lakshmi Commercial bank with the Canara Bank on August 23, 1985 under sub-section (4) of Section 45 which was approved by the Central Government on August 24, 1985. As a consequence thereof, the services of the employees of Lakshmi Commercial Bank were continued on amalgamation in the Canara Bank and respondent No. 1, M.S. Jasra was fitted in the post of Divisional Manager in the Canara Bank.
M.S. Jasra, respondent No. 1 was aggrieved by his continuance in the Canara Bank as Divisional Manager since he claimed to be fitted against a higher post by virtue of the office of Assistant General Manager held by him in the Lakshmi commercial Bank; and he also asserted that he was entitled to continue in the service of Canara Bank till he attained the age of 60 years which was the age of superannuation for him in the Lakshmi Commercial Bank instead of 58 years, the age of superannuation in the Canara Bank. These representations made by M. S. Jasra were rejected by the Canara Bank as well as by the Reserve Bank. Respondent No. 1, M. S. Jasra then filed Writ Petition No. 2199 of 1991 in the Delhi High Court for grant of the relief that he was entitled to continue in service in the Canara Bank till he attained the age of 60 years instead of 58 years. By the impugned Judgment dated 20th September, 1991 the High Court has allowed the Writ Petition Quashing the Reserve Bank’s letter dated 18th May, 1991 wherein it was stated that the age of superannuation of respondent No. 1, M.S. Jasra was 58 years and not 60 years as claimed by him, and declared that the respondent No. 1 is entitled to continue in service of Canara Bank till he attains the age of 60 years. Hence, this petition for grant of special leave to appeal against the High Court’s Judgment has been filed. The only question for decision herein is that of the age of superannuation.
Leave is granted.
The contention of Shri K.N. Bhat, learned counsel for the appellant, Canara Bank, is that the relevant provisions contained in Section 45 of the Banking Regulation Act, 1949 read with the materials portions of the scheme for amalgamation framed by the Reserve Bank show that the employees of the Lakshmi commercial Bank who are continued in the service of the Canara Bank, on amalgamation of the Lakshmi Commercial Bank with the Canara Bank are entitled, on their integration in the service of the Canara Bank, to the same remuneration and the same terms and conditions of service which are applicable to the other employees of corresponding rank or status in the Canara Bank and not to any higher or larger benefits irrespective of the fact whether the remuneration and terms and conditions of service of the concerned employee were better or worse prior to amalgamation in the Lakshmi commercial Bank. Shri Harish N. Salve, learned counsel for the respondent Reserve Bank of India has supported the contention of Shri Bhat. On the other hand, Shri S.C. Gupta, learned counsel for respondent No. 1, M.S. Jasra has attempted to support the High Court’s conclusion including the reasons therefor.
It would be appropriate at this stage to quote the portion of Section 45 of the Banking regulation Act, 1949 and Scheme for Amalgamation framed by the Reserve Bank under Section 45(4) of the Act:-
"45. Power of Reserve Bank of apply to Central
Government for suspension of business by a banking
company and to prepare scheme of reconstitution or
amalgamation:- (1) Notwithstanding anything
contained in the foregoing provisions of this Part
or in any other law or any agreement or other
instrument, for the time being in force, where it
appears to the Reserve Bank that there is good
reason so to do, the Reserve Bank may apply to the
Central Government for an order or moratorium in
respect of a banking company.
(2) The Central Government, after considering
the application made by th Reserve Bank under sub-
section (1), may make an order of moratorium
staying the commencement or continuance of all
actions and proceedings against the company for a
fixed period of time on such terms and conditions
as it thinks fit and proper and may from time to
time extend the period so however that the total
period of moratorium shall not exceed six months.
(4) During the period of moratorium, if the
Reserve Bank is satisfied that -
(a) in the public interest; or
(b) in the interest of the depositors; or
(c) in order to secure the proper management
of the banking company; or
(d) in the interests of the banking system
of the country as a whole, - it is
necessary so to do, the Reserve Bank may
prepare a scheme -
(i) for the reconstruction of the banking
company, or
(ii) for the amalgamation of the banking
company with any other banking institution
(in this section referred to as "the
transferee bank"
(5) The scheme aforesaid may contain
provisions for all or any of the
following matters, namely:-
(i) the continuance of the services of all
the employees of the banking company
(excepting such of them as not being
workmen within the meaning of the
Industrial Disputes Act, 1947 are
specifically mentioned in the Scheme) in
the banking company itself on its
reconstruction or, as the case may be, in
the transferee bank at the same
remuneration and on the same terms and
conditions of service, which they were
getting or as the case may be, by which
they were being governed, immediately
before the date of the order of moratorium:
Provided that the scheme the shall contain a
provision that-
(i) the banking company shall pay or grant
not later than the expiry of the period of
three years from the date on which the
scheme is sanctioned by the Central
Government, to the said employees the same
remuneration and the same terms and
condition of service as are, at the time of
such payment or grant, applicable to
employees of corresponding rank or status
of a comparable banking company to be
determined for this purpose by the Reserve
Bank (whose determination in this respect
shall be final);
(ii) the transferee bank shall pay or grant
not later than the expiry of the aforesaid
period of three years, to the said
employees the same remuneration and the
same terms and conditions of service as
are, at the time of such payment or grant,
applicable to the other employees of
corresponding rank or status of the
transferee bank subject to the
qualifications and experience of the said
employees being the same as or equivalent
to those of such other employees of the
transferee bank:
Provided further that if in any case under clause
(ii) of the first proviso any doubt or difference
arises as to whether the qualification and
experience of any of the said employees are the
same as or equivalent to the qualifications and
experience of the other employees of corresponding
rank or status of the transferee bank the doubt of
difference shall be referred,before the expiry of a
period of three years from the date of payment or
grant mentioned in that clause to the Reserve Bank
whose decision thereon shall be final;
(8) On and from the date of the coming into
operation of the scheme or any provision thereof,
the scheme, or such proviso shall be binding on the
banking company or, as the case may be, on the
transferee bank and any other banking company
concerned in the amalgamation and also on all the
member, depositors and other creditors and
employees of each of those companies or the
transferee bank and on any other person having any
right or liability in relation to any of those
companies or the transferee bank including the
trustee or other persons managing, or connected in
any other manner with, any provident fund or other
fund maintained by any companies or the transferee
bank.
(14) The provisions of this section and of any
scheme made under it shall have effect
notwithstanding anything to the contrary contained
in any other provisions of this Act or in any other
law or any agreement, award or other instrument for
the time being in force.
(15) In this section , "banking institution"
means any banking company and includes the State
Bank of India or a subsidiary bank or a
corresponding new bank.
Explanation - References in this section to the
terms and conditions of service as applicable to an
employee shall not be construed as extending to the
rank and status of such employee.
The relevant clauses of the Amalgamation Scheme are : -
"(10) All the employees of the transferor bank
other than those specified in the schedule referred
to in the succeeding paragraph shall continue in
service and be deemed to have been appointed by the
transferee bank at the same remuneration and on the
same terms and conditions of service as were
applicable to such employees immediately before the
close of business on 27th April, 1985.
Provided that the employees of the transferor
bank who have, by notice in writing given to the
transferor or the transferee bank at any time
before the expiry of one month next following the
date on which this scheme has been sanctioned by
the Central Government, intimated their intention
of not becoming employees of the transferee bank,
shall be entitled to the payment of such
compensation, if any, under the provisions of the
Industrial Disputes Act, 1947 and such pension,
gratuity provident fund and other retirement
benefits as may be ordinarily admissible under the
rules of authorisation of the transferor bank
immediately before the close of the business on
27th April, 1985.
Provided further that the transferee bank
shall in respect of the employees of the transferor
bank who are deemed to have been appointed a s
employees of the transferee bank be deemed also to
have been taken over the liability for the payment
of retrenchment compensation in the event of their
being retrenched while in the service of the
transferee bank on the basis that their service
continues and has not been interrupted by their
transfer to the transferee bank.
(12) The transferee bank shall on the expiry
of period not longer than three years from the date
on which this scheme is sanctioned, pay or grant to
the employees of the transferor bank the same
remuneration and the same terms and conditions of
service as are applicable to the employees of
corresponding rank or status of the transferee bank
subject to the qualifications and experience on the
said employees of the transferor bank being the
same as or equivalent to those of such other
employees of the transferee bank.
Provided that if any doubt or difference
arises as to whether the qualifications or
experience of any of the said employees are the
same as or equivalent to the qualification and
experience of the other employees of corresponding
rank or status of the transferee bank or as to the
procedure of principles to be adopted for the
fixation of the pay of the employees in the scales
of pay of the employees in the scales of pay of the
transferee bank, the doubt or difference shall be
referred to the Reserve Bank of India whose
decision thereon shall be final".
The High Court has taken the view that clause (i) of sub-section (5) of Section 45 read with clause 10 of the amalgamation scheme confers a vested right on the transferred employees of the Lakshmi Commercial Bank in respect of their terms and conditions of service which could not be adversely affected as a result of the amalgamation with the Canara Bank and Proviso (ii) in Section 45(5)(i) and clause 12 of the Scheme could not take away or dilute the vested right so conferred by Section 45(5)(i). The material portion of the High Court’s Judgment is as under :-
"The mandate of Section 45(5)(i) is that the scheme
which is formulated may contain provisions with
regard to employees of the banking companies and
such a scheme should protect the remuneration and
other terms and conditions of an employee, The
second proviso to Section 45(5)(i) of the Act as
well as clause 12 of the scheme have to be read
harmoniously with Section 45(5)(i) and clause 10 of
the scheme. The second proviso was not meant to
take away or dilute the rights which are conferred
by clause (i). Keeping this in view clause 10 of
the scheme was formulated which specifically
provides that the terms and conditions of the
employees like the petitioner shall be those as
were applicable to them immediately before the
close of business on 27th April, 1985.
Clause 12 of the scheme or the second proviso
to Section 45(5)(i) cannot be so read as to take
away the vested rights of the transferred employees
which rights were that their remuneration as well
as the terms and conditions of service were not to
be adversely affected.
the present case, on the other hand, there is a
statutory assurance contained in Section 45(5)(i).
The assurance contained in this provision coupled
with clause 10 of the scheme gives a right to an
employee like the petitioner to continue to remain
in service till the age of 60 years.".
The question is whether the construction so made by the High Court of the relevant provisions in Section 45 of the Act and clauses 10 and 12 of the amalgamation scheme is correct.
The further question is whether on that basis, the claim of respondent No. 1 as former employee of the Lakshmi Commercial Bank to retire at the age of 60 years instead of 58 years is a vested right, as held by the High Court, which cannot be taken away on amalgamation of the Lakshmi Commercial Bank with the Canara bank in this manner.
The Banking Regulation Act, 1949 is an Act to consolidate and amend the law relating to banking. Part III of the Act contains Sections 36B to Section 45 under the heading ’suspension of business and winding up of banking companies’. Section 45 in Part III provides for the power of Reserve Bank to apply to the Central Government for suspension of business of a banking company and to prepare scheme of reconstitution or amalgamation. Sub-section (1) enables the Reserve Bank to apply to the Central Government for an order of moratorium in respect of a banking company if there is good reason so to do. Sub-section (2) empowers the Central Government, on such an application of the Reserve Bank to make an order o moratorium staying the commencement or continuance of all actions and proceedings against the banking company for a fixed period of time on such terms and conditions as it thinks fit and proper and permits extension of the period of moratorium so as not to exceed six months.
Sub-section (4) then provides for preparation of a scheme by the Reserve Bank for the reconstruction of the banking company for its amalgamation with any other banking institution if the Reserve Bank is satisfied that it is necessary so to do in the public interest; or the interest of the depositors; or to secure the proper management of he banking company; or in the interests of the banking system of the country as a whole.
Sub-section (5) then specifies the provisions which may be made in such a scheme. It is clause (i) and the provisos thereunder of sub-section (5) with which we are concerned. The opening words in sub-section (5) are: "The scheme aforesaid may contain provisions for all or any of the following matters..." It is clear that the scheme so framed under sub-section (4) may contain provisions for all or any of the matter specified in sub-section (5) so that it enables all or any of the specified matter to be provided in the scheme prepared under sub-section (4) and the matters specified in the several clauses in sub-section (5) do not automatically get incorporated in such scheme unless the scheme specifically includes any such matter. It means that the matter specified in clause (i) of sub-section (5) is not an invariable term to be read in such a scheme framed under sub-section (4) for amalgamation of the banking company unless it is incorporated specifically in the scheme so prepared. Thus, such a scheme may or may not contain provision for the continuance of the services of all the employees of the banking company in the transferee bank as is specified in clause (i). However, if the scheme does provide for this matter, then the continuance of the services of the employees of the banking company in the transferee bank as provided in clause (i) is subject to the requirements of the proviso thereunder. In other words, it is not necessary that every scheme of amalgamation framed under sub-section (4) must provide for continuance of services of all the employees of the banking company in the transferee bank; but where such a provision is made, it must contain a provision as required by the provisos in clause (i). This is clear from the use of the word ’may’ in the opening word of sub-section (5) and the word ’shall’ in the proviso. In effect it means that where the scheme provides for continuance of the services of all the employees of the banking company in the transferee bank at the same remuneration and on the same terms and conditions of service which they were getting or, as the case may be, by which they were being governed immediately before the date of the order of moratorium, then the scheme must contain a provision that the transferee bank shall pay or grant not later than the expiry of the period of three years from the date on which the scheme is sanctioned by the Central Government to the said employees the same remuneration and the same terms and conditions of service as are applicable to the other employees of corresponding rank or status of the transferee bank subject to the qualifications and experience of the said employees being the same as or equivalent to those of such other employees of the transferee bank.
Clause (i) read with the proviso in sub-section (5) results in enabling the making of a provision in the scheme of amalgamation for the continuance of services of the employees of the banking company in the transferee bank on the same terms and conditions by which they were governed before the date of the order of moratorium but when such a provision is made, the scheme has also to provide that the transferee bank shall grant not later than the period of three years the same terms and conditions of service of the employees who are continued, the terms and conditions of service in the transferee bank in the corresponding rank or status, subject to the requisite qualifications and experience. The right of the employees of the banking company in the transferee bank on continuance of the service by virtue of such a provision in the scheme as provided in clause (i) of sub-section (5) is merely that which is contained in the proviso thereunder, that is, that the transferee bank would treat them at per with its own employees of corresponding rank or status subject to the qualifications and experience irrespective of the earlier terms and conditions of service. In other words, if the scheme provides for continuance of the services of the employees in the transferee bank, then beyond a period of three years from the date on which the scheme is sanctioned by the Central Government, the transferee bank cannot discriminate between such employees and its other employees of corresponding rank or status. The only right of such an employee whose services is so continued is, therefore, to claim parity with the employees of the transferee bank itself of corresponding rank or status subject to equivalent qualifications and experience and no more. The right of such an employee is provided in the proviso to clause (i) and not in the earlier enacting part of clause (i) of subsection (5) as claimed by respondent No. 1 and upheld by the High Court.
Clauses 10 and 12 of the scheme as quoted above merely incorporate the matter specified in clause (i) and the proviso thereunder with which we are concerned and so read and understood, there is no ambiguity or conflict in those clauses of the scheme either inter se or with clause (i) and the proviso thereunder in sub-section (5) of Section 45.
Shri S. C. Gupta, learned counsel for respondent No. 1 placing strong reliance on State Bank of Travancore v. Elias & Ors., [1971] 2 S.C.R. 28, attempted to support the view taken by the High Court. In our opinion, the decision which led to the addition of the Explanation in Section 45 by Act. No.1 of 1984 to the effect that in this Section the ’terms and conditions of service’ shall not be construed as extending to the rank and status of such employees, is of no assistance in the present case. With respect, if that decision is read to construe clause (i) with its proviso in sub-section (5) of Section 45 as suggested on behalf of respondent No. 1, then we are unable to subscribe to that view since the proper construction of these provisions according to us, is as indicated above.
It follows, that respondent No. 1 could not, therefore, claim to be governed by the age of superannuation of 60 years in the Lakshmi commercial Bank. When his services were continued on amalgamation of the Lakshmi commercial Bank with the Canara Bank he became an employee of the Canara Bank and was, therefore, entitled only to the right given by proviso (ii) to clause (i) of sub-section (5) of section 45 which entitled him to the same terms and conditions of service as employees of the corresponding rank or status of the Canara Bank. Age of superannuation of the employees in Canara Bank being 58 years only, respondent No.1 could not claim to retire at 60 years. The High Court misconstrued clause (i) and proviso (ii) thereunder of subsection (5) of section 45 of the Act and clauses 10 and 12 of the amalgamation scheme to take the contrary view. The impugned Judgment of the High Court has, therefore to be set aside resulting in dismissal of the Writ Petition of respondent No. 1 filed in the High Court. Consequently the Appeal is allowed. No costs. G.N Appeal allowed.