1 IN IN IN THE THE THE HIGH COURT OF JUDICATURE AT BOMBAY HIGH COURT OF JUDICATURE AT BOMBAY HIGH COURT OF JUDICATURE AT BOMBAY O.O.C.J. O.O.C.J. O.O.C.J. WRIT PETITION NO. 323 OF 2003 Co-operative Bank Employee’s Union, 81/83, Shalini Palace, Bhavani Shankar Road, Dadar (West), Mumbai 400 028. ... Petitioner Vs. 1. The Bharat Co-operative Bank (Mumbai) Ltd. Shivgiri, 1st Floor, Plot No. 11, Samant Estate, Goregaon (East), Mumbai 400 063. 2. The Chief Executive Officer, The Bharat Co-operative Bank (Mumbai) Ltd. Shivgiri, 1st Floor, Samant Estate, Goregaon (East), Mumbai 400 063. 3. Learned Member, Industrial Court, Maharashtra New Administrative Building, Bandra (East), Mumbai 400 051. ...Respondents Mr. C.U. Singh with Mr. M.D. Nagle for Petitioner. Mr. V.C. Pawaskar for Respondent Nos. 1 and 2. CORAM : F.I. REBELLO,J. DATED : SEPTEMBER 13, 2004 ORAL JUDGMENT : 1. The issue which arises in the present petition is, which is the "Appropriate Government" in 2 respect of the Respondent No. 1 Bank, a Multi State Cooperative Bank carrying on business in more than one state. 2. A few facts now may be set out : . The Petitioner Union had filed a complaint being Complaint (ULC) No. 769 of 2002 before the Industrial Court, Maharashtra, under Item 5 of Schedule II and Items, 3, 5, 9 and 10 of Schedule IV of the M.R.T.U. & P.U.L.P. Act, 1971. The Respondent No. 1 raised an objection that M.R.T.U. & P.U.L.P. Act is not applicable as the Appropriate Government in respect of the Bank is the Central Government. It was contended that as the Respondent No. 1 is a bank engaged in the business of banking and is Banking Company as defined under Clause (c) of Section 5 of the Banking Companies Act, 1949 which is now known as Banking Regulation Act, 1949. Considering the definition of appropriate Government, the appropriate Government would be the Central Government. . The Respondent No.1 was initially registered under the provisions of the Maharashtra State 3 Co-operative Societies Act, 1960. The bank was subsequently registered under the provisions of the Multi State Cooperative Societies Act 1984 and is thus a multi State Cooperative Bank. It is carrying on business in more than one state. On these pleadings and facts the objection raised by Respondent No. 1 Bank that the appropriate Government is the Central Government found favour with the learned Industrial Court. The learned Industrial Court on holding that as the appropriate Government is the Central Government, accordingly held that the complaint could not be entertained and returned back the plaint to the Petitioner for seeking appropriate relief before appropriate forum. 3. At the hearing of this petition on behalf of the Petitioner, their learned counsel contends that the order of the learned Industrial Court suffers from an error of law apparent on the face of the record. Considering the provisions of the Industrial Disputes Act read with the definition of "banking" in the Bank Regulation Act, it is pointed out that the appropriate Government is the State Government and not the Central Government. 4 4. To decide the issue, let us consider the provisions of the various Acts relevant for discussion to find out who is the appropriate Government for a multi State Cooperative Bank carrying on business in more than one State. Section 5 of Banking Regulation Act, 1949, sets out the various definitions under the Act. Under Section 5(c) the expression ‘banking company’ means any company which transacts the business of banking. Section 5(b) defines banking to mean the accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order of otherwise. Company under Section 5(d) means any company as defined in Section 3 of the Companies Act, 1956 and includes a foreign company within the meaning of Section 591 of that Act. Part V came to be introduced in the Banking Regulation Act by Act 23 of 1965 with effect from 1.3.1966. By Act 61 of 1981, in Section 5, the definition of Cooperative Bank was included under (CCL) to mean a State Corporate Bank, a Central Cooperative Bank and a primary Cooperative Bank. We will refer to Section 2 and 3 and Section 56 of the Banking Regulation Act in the course of discussion. 5 . The Industrial Dispute Act 1947 thereinafter referred to as the Central Act, came into force with effect from 1.4.1947. The definition of appropriate Government in Section 2(a) came to be amended by Act 54 of 1949 whereby in respect of air transport service or a banking company or an insurance company the Central Government was made the appropriate Government. Banking company as inserted by Act 54 of 1949 and substituted by Act 38 of 1959 meant amongst others a banking company as defined in Section 5 of the Banking Companies Act, 1949, having branches or other establishments in more than one state. . We then have the Bombay Industrial Relations Act, 1946 which thereinafter shall be referred to as the State Act of which Section 2(3) reads as under : "In the areas in which the Bombay Industrial Disputes Act, 1938 was in force immediately before the commencement of this Act, this Act shall apply to the industries to which the said Act applied. 6 . Provided that this Act shall cease to apply with effect from the date on which the Bombay Industrial Relations (Amendment) Act, 1949, comes into force, to the Imperial Bank of India and any banking company as defined in Section 5 of the Banking Companies Act, 1949, having branches or other establishments in more than one State." . There is yet another legislation known as Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practice Act, 1971 (hereinafter referred to as MRTU & PULP Act). Section 2(3) of the said Act reads as under : "Except as otherwise hereinafter provided, this Act shall apply to the industries to which the Bombay Industrial Relations Act, 1946, Bom.XI of 1947, for the time being applies, and also to any industry as defined in clause (j) of section 2 of the Industrial Disputes Act, 1947, XIV of 1947, and the State Government in relation to any industrial dispute concerning such industry is the 7 appropriate Government under that Act." . The Banking Regulation Act came to be amended with effect from 1.3.1966 by Act 23 of 1965. By that amendment, several amendments, including Part V were introduced in the Act. The definition of Banking company was not amended but by an amendment to Section 5, section 5(cci) was introduced to define a cooperative Bank by Act 61 of 1981. By virtue of part V, provisions of the Banking Regulation Act, 1949 were made applicable to Cooperative Societies, carrying on ‘Banking’ subject to the modification set out therein from the date of the amendment. It may be pointed out that Section 2 of the Banking Regulation Act provides that the provisions of the Banking Regulation Act are in addition to and not save as hereinafter expressly provided, in derogation of the Companies Act and any other law for the time being in force. What this would mean will be that if there be a law in force for cooperative banks, that law will apply in addition to the provisions of the Banking Regulation Act to the extent possible. Section 56 of the Banking Regulation Act, is contained in Part V of the Act, which was introduced by Act 23 of 1965 with effect from 8 1.3.1966. It is provided that the provisions of the Banking Regulation Act for the time being in force are made applicable to the cooperative societies. Section 3 introduced by the same amendment excluded certain cooperative Banks and cooperative societies except in the manner and to the extent provided in Part V. It may also be noted that for the purpose of the Act, it may also be mentioned that by virtue of Section 56(a)(i) reference to a Banking company" or the company or such company through out the Act shall be construed as reference to a cooperative bank. 5. On a reading of the above provisions, on behalf of the Petitioner their learned counsel submits that the reference to Banking Company as made applicable to Cooperative Banks with effect from 1.3.1966 by Part V of the Banking Regulation Act will not apply to the definition of Banking Company under the provisions of the Industrial Disputes Act, 1947. It is firstly submitted that the definition of Banking company as contained in the Section 5(c) of the Banking Regulation Act, 1949, has not been amended by Act 23 of 1966 or by any other amendment. It is only by virtue of Section 56, that the provisions of the Banking Regulation 9 Act have been made applicable to cooperative Banks, which have been defined by the Act 61 of 1981, by introducing definition of Cooperative Bank in Section 5(cci). Section 3 of the Banking Regulation Act makes it clear that nothing in the Act applies amongst to Cooperative Institutions, except in the manner and to the extent provided in Part V. Section 56 makes it clear that the provision of that Act shall apply to cooperative societies as they apply to Banking Companies. It is then alternatively contended that at the highest considering the doctrine of referential incorporation, any amendment of the definition of Banking Company in the Industrial Disputes Act would be in respect of the Banking company as it stood when the definition of Banking Company was inserted by the Central Act 54 of 1949 and substituted by Act 36 of 1956. Banking Company as included in the definition of appropriate Government in Section 2(a), can only refer to the Banking Company as defined in Section 2(bb) of the Industrial Disputes Act and consequently to the definition of Banking Company as it stood in the Banking Regulation Act at the time of insertion of the definition of Banking Company by Act 54 of 1949 and substituted by Act 36 of 1956. Learned counsel 10 for that purpose seeks to place reliance on the judgments in the case of M/s. Bolani Ores Ltd. Vs. State of Orissa and another, (1974) 2 Supreme Court Cases 777, in the case of Mahindra and Mahindra Ltd. Vs. Union of India and another, (1979) 2 Supreme Court Cases 529, and in the case of M/s. Onkarlal Nandlal Vs. State of Rajasthan and another, (1985) 4 Supreme Court Cases 404, for the purpose of pointing out the effect of referential incorporation in a statute. Learned counsel has also placed reliance in the case of State Bank of Travancore Vs. Mohammed Mohammed Khan (1981) 4 Supreme Court Cases 82 and more specifically to Paragraph 13 of the said judgment to contend that the appropriate Government as defined in Section 2(a) of the Industrial Disputes Act will not apply to a Cooperative Society carrying on business of banking. . On the other hand on behalf of the Respondent No. 1, their learned counsel contends that the award does not suffer from any error of law apparent on the face of the record. It is submitted that a similar issue had arisen for consideration under the provisions of the State 11 Act. A learned Single Judge of this court in the case of Cooperative Bank Employees Union and Saraswat Cooperative Bank Ltd. and others, 1983 (47) FLR 348 held that in view of the provisions of the Banking Regulation Act, the provisions of the State Act would not apply to a cooperative society, carrying on the business of banking in more than one State. It is further pointed out that the issue of who constitutes a ‘Banking Company’ under the provisions of the Banking Regulation Act, 1949 has been answered by a Division Bench of this Court in Shamrao Vithal Cooperative Bank Ltd. and others Vs. M/s. Star Glass Works and others, 2003 (2) Mh.L.J. 1. The view taken in the said judgement has been approved by a Full Bench of this court in Shri. Narendra Kantilal Shah Vs. Joint Registrar, Cooperative Societies and others in Writ Petition No. 6075/2002 decided on 12th December, 2003. Reliance is also placed on the judgement of the Division Bench of Gujarat High Court in the case of P.K. Shah Vs. Gujarat Industrial Cooperative Bank Ltd. 2001 I LLJ 783. It is pointed out that once the provisions of the Banking Regulation Act, 1949 have been made applicable to the Banking company, then for the purpose of Central Act also the same meaning will have to be assigned and if so 12 assigned, the appropriate Government would be the Central Government and consequently the order of the Industrial Court cannot be faulted with. 6. Considering the above, we may now consider the arguments, more so considering the reliance placed on behalf of the Respondents on the judgments of this court by their learned counsel. We may first address ourselves to the issue as to what was in issue and what was held in the case of Saraswat Coop. Bank Ltd. (Supra). The issue was whether pursuant to introduction of the proviso to Section 2(3) byMah. 22 of 1965, whether the provisions of the B.I.R. Act would apply to a Banking company as defined in Section 5 of the Banking Companies Act, now the Banking Regulation Act having branches or other establishments in more than one State. Under the State Act as amended, if there was banking company as defined in Section 5 of the Banking Companies Act, 1949 having branches or departments in more than one state, the State Act would not apply. It was this issue which was in issue before the learned Single Judge. The issue now advanced before this court that the definition of Banking Company and also of appropriate Government has tobe considered on the date of referential incorporation 13 by the Act 54 of 1949 in the Industrial Disputes Act and not from the subsequent amendment to the Banking Regulation Act, 1949 by the Act 23 of 1965 was not in issue. It is no doubt true that the learned Single Judge on the consideration of the provisions of Section 5 of the Banking Regulation Act came to the conclusion that the provisions of the Bombay Industrial Relations Act would not apply considering that the Bank therein had branches in more than one state. The issue of the provisions of the Industrial Disputes Act, namely appropriate Government and Banking Company were not in issue and also was not in issue referential incorporation of the definition of Banking Company as defined in the Banking Regulation Act in the definition of Banking Company under the Industrial Disputes Act. From this it will be clear that a coordinate Bench of this court was considering an entirely different issue considering the proviso to Section 2(3) of the B.I.R. Act. It is also settled that what has to be considered is the ratio of the judgement. If the ratio of Saraswat Cooperative Bank is considered the issue now raised was not in issue. Hence, it is open to consider the argument now advanced and answer it. 14 . In the case of Shamrao Vithal Cooperative Bank Ltd. (supra), the issue before the learned Division Bench was whether the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 would apply to a cooperative Bank carrying on the business of Banking. The issue before the leaned Division bench was whether considering the definition of Banking Company under the Banking Regulation Act, 1949 the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 would also apply to Cooperative Banks. The learned Division Bench held considering the amendment by Act 23 of 1965 from 1.3.1966 to Part V that it will also apply to Cooperative Banks. This judgement for the issue that is sought to be advanced here and secondly as it was dealing with a mechanism of recovery under a different Act would be of no assistance to us for the following reasons : . Firstly the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is an Act subsequent to Part V being introduced to the Banking Regulation Act, with effect from 1.3.1966. Secondly this judgement came for consideration before the Full Bench of this Court in Shri. 15 Narendra Kantilal Shah (supra) which also took a view that Cooperative Banks which are doing business of Banking and advancing loan of more than Rs. 10 lacs. would also be governed by the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. In an S.L.P. filed before the Apex Court against the said Judgment, the operation of the said judgment and order has been stayed. At any rate, as pointed out earlier, what we are considering are amendments in the Industrial Disputes Act in the definition of appropriate government made in the year 1949 and Banking Company by Act 54 of 1949 and 38 of 1959 and the effect of an amendment made in the Banking Regulation Act by Act 23 of 1965 from 1.3.1966. One aspect of the Judgement of the Division Bench however is important. A finding has been recorded by the learned Division Bench that the amendment is by referential incorporation. It may also be mentioned that the learned Judges consisting the Full Bench have also considered the Judgement of the learned Single Judge in Saraswat Cooperative Bank Ltd. (supra). . The next judgment relied upon is of the learned Division Bench of Gujarat High Court in the case of 16 P.K. Shah (supra). There also the issue was in respect of the Multi State Cooperative Bank having banking business apart from the State of Gujarat in the Union territory of Dadra and Nagar Haveli. The learned Division Bench held that the appropriate Government would be the Central Government. However, we may again note that the issue canvassed before this court was neither an issue nor answered by the learned Division Bench of Gujarat High Court. It may therefore, be said that the judgment in Saraswat (supra) or for that matter in Shamrao Vithal (supra) can be said to conclude the issue or the view taken in Shri. Narendra Kantilal Shah (supra) shall also be taken by the Court. It is open for consideration. It is in that context that we must now consider the arguments advanced. 7. What is the effect of referential incorporation has been the subject matter of several judgements before the Apex Court. In Bolani Ors Ltd. (supra) referring to incorporation of the definition, the learned court observed as under : ".... to incorporate the definition under the Act as it then existed and not as it may exist from time to time. " 17 The Court further observed : "Where two Acts are complimentary or interconnected, legislation by reference may be an easier method because a definition given in the one act may be made to do as the definition in the other act both of which being enacted by the same legislature. " The Apex Court then referred to with approval, the judgement of Lord Esher, M.R. in re Wood’s Estate regarding incorporation and quoted the following passage : "If a subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that, as has often been held, is to write those sections into the new Act just as if they had been actually written in it with the pen, or printed in it, and, the moment you have those clauses in the later Act, you have no occasion to refer to the 18 former Act at all." . The matter once came up for consideration in Mahindra and Mahindra (supra) where the Apex Court noted the distinction between a mere reference to or citation of one Statute in another and incorporation which in effect means bodily lifting the provisions of one enactment and make it part of another. Reliance was placed in the judgment of Bolani & Ors. (supra) which read as under : "But where a provision of one statute is incorporated in another the repeal or amendment of the former does not affect the latter. The effect of incorporation is as if the provision incorporated were written out in the incorporating statute and were a part of it. Legislation by incorporation is a common legislative device employed by the legislature where the legislature for convenience of drafting incorporates provisions from an existing statute by reference to that statute instead of setting out for itself at length the provisions which it desires to adopt. Once the incorporation is 19 made, the provision incorporated becomes an integral part of the statute in which it is transposed and thereafter there is no need to refer to the statute from which the incorporation is made and any subsequent amendment made in it has no effect on the incorporation statute." . In Onkarlal Nandlal (supra) adverting to Shamrao Vithal Parulekar Vs. District Magistrate, Thana, AIR 1952 SC 324, the Apex Court noted the following passage : "The rule is that when a subsequent Act amends an earlier one in such a way as to incorporate itself, or a part of itself, into the earlier, then the earlier Act must thereafter be read and construed (except where that would lead to a repugnancy, inconsistency or absurdity) as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that thereafter there is no need to refer to the amending Act at all. This is the rule in England. See Craies on Statute 20 Law, 5th Edition, Page 207, it is the law in America; See Craford on Statutory Construction, Page 110, and it is the law which the Privy Council applied to India in Keshoram Poddar v. Nund Lal Mallick." . It will thus be clear that as in the instant case, the definition of banking company as contained in the Banking Regulation Act, 1949 has been incorporated in the provisions of the Industrial Disputes Act, 1947 by Act 54 of 1949 and substituted by Act 38 of 1959 and appropriate Government by Act 54 of 1949. Applying the test of incorporation, the definitions as they stood at the time the aforementioned Amendment Act came into force will be the applicable definitions. That was much prior in point of time to 1.3.1966 when by Act 23 of 1965, the provisions of the Banking Regulation Act was amended. . For the appropriate Government to be the Central Government, the following requirements must be met. The banking company must be a public company which transacts the business of banking. Banking has been defined to mean accepting for the purpose of lending or investment, of deposits of money from 21 the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise. The company has to be a company as defined in section 3 of the Companies Act, 1956 (1 of 1956); In the instant case, even though respondent No. 1 may be carrying on banking business, yet it is not a company as defined under Section 5(d) of the Banking Regulation Act, 1949. Therefore, the definition of Banking company would not include a cooperative Bank which is regulated under the provisions of the Maharashtra State Cooperative Societies Act or for that matter a Bank registered under the provisions of the Multi State Cooperative Societies Act. 7. Yet another important aspect of the matter and which may be referred to is that, Section 5 of the Banking Regulation Act has been amended by the amendment Act 23 of 1965. The definition of Cooperative Bank has been introduced by Section 5(cci) to mean a State Cooperative Bank or Central Cooperative Bank and a Primary cooperative Bank. By virtue of Section 3 of the Banking Regulation Act again introduced by