1 wp.no.618/10 IN THE HIGH COURT OF BOMBAY AT GOA WRIT PETITION NO. 618/2010 1. Federation of Bank of India Staff Unions, Registration No.9385, Registered Office :- C/o Bank of India Bldg, Mahatma Gandhi Road, Fort, Mumbai – 403 023, Through its Deputy General Secretary, Shri Antonio Maximiano Pereira. 2. Shri Antonio Maximiano Pereira, Deputy General Secretary, Federation Of Bank of India Staff Unions, Presently working at Bank of India, Vasco-da-Gama Branch, Goa. ……. Petitioners. V/s. 1. Union of India, through Secretary, Department of Financial Services, Ministry of Finance, Government of India, Jeevan Deep Building, 3rd Floor, Parliament Street, New Delhi-1. 2. Bank of India, Through the General Manager (HR), Industrial Relations Division, Human Resources Department, Head Office, Star House, Plot C-5, “G” Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051. ……… Respondents. 2 wp.no.618/10 Mr. S. S. Kantak, and Mr. A. Kamat, Advocates for the Petitioners. Mr. M. Amonkar, Central Govt. Standing Counsel for Respondent No.1. Mr. A. N. S. Nadkarni, Senior Advocate with Mr. H. D. Naik, Advocate for Respondent No.2. CORAM : S.C. DHARMADHIKARI & F.M. REIS, JJ. Date of reserving Judgment : 22nd March, 2011. Date of pronouncing Judgment : 8th April, 2011. J U D G M E N T : (Per S.C. DHARMADHIKARI, J. ) Rule. Respondents No.1 and 2 waive service. Since a short point is involved, the writ petition is taken up for final hearing by consent of parties. 2. By this petition under Article 226 of the Constitution of India, the Petitioners impugn certain communications, by which Nominations forwarded by them for Appointment to the post of Workmen Director, of Respondent No.2 Bank, have not been accepted. 3 wp.no.618/10 3. The facts, in brief, are that petitioner No.1 is a registered association of various staff unions of the Bank of India, registered under the Trade Union Act, 1926 and Petitioner No.2 is the Deputy General Secretary of Petitioner No.1. He is an employee of the second Respondent Bank. The first Respondent is the Union of India, sued through the Department of Finance which is the controlling and governing authority for the Nationalised Banks. Respondent No.2 is a Nationalised Bank, in which, the member of the Petitioners are employed. 4. It is the case of the Petitioners that the Bank is managed by a Board of Directors. The Board of Directors is to be constituted under Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (hereinafter, referred to as the “Act”). Further, this provision empowers the Central Government to make a scheme for carrying out the provisions of the Act. The scheme, inter alia, provides for constitution of the Board of Directors and all such matters in connection therewith or incidental thereto as the Central Government may consider it necessary or expedient. Section 9(3) of 4 wp.no.618/10 the Act states that every Board of Directors, constituted under any scheme made under sub-section 9 (1) shall include one Director from among, such of the employees of the corresponding new bank, who are workmen under Section 2 (s) of the Industrial Disputes Act, 1947 and such a Director shall be nominated by the Central Government in such manner as may be specified in the scheme made under Section 9. 5. It is the case of the Petitioners that accordingly, a scheme was framed which is entitled “Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980”. It is the case of the Petitioners that various terms are defined in the scheme and in Chapters thereof, constitution of the Board is set out. Thereunder, Clause 2(i) deals with the nomination of workman Director on the Board of Directors of Banks like the second respondent, which are nationalised under the Act. As far as workman director is concerned, he shall be nominated by the Central Government from out of a panel of three such employees furnished to it by the representative Union, within a date to be specified by the Central Government, which date shall not be more than six weeks from the date of communication made by the Central Government, requiring the representative Union to furnish the 5 wp.no.618/10 panel of names. The term of office, as far as workman director is concerned, is specified in clause 9(2) (a) of the said scheme. He shall hold the office for such term not exceeding three years as the Central Government may specify at the time of his nomination and thereafter until his successor has been nominated and shall be eligible for renomination. 6. The case of the Petitioners further is that they received a letter from the management of the second Respondent Bank dated 28th May, 2009, calling upon them to furnish a panel of three names of Office Bearers in order of preference for appointment of workman Director. A copy of the said letter is annexed as Annexure “B”. 7. In response to this letter, by a communication dated 8th June, 2009, addressed to Respondent No.2 Bank, the Petitioners forwarded names of three employees, they are, Mr. Dinesh Jha ‘Lallan’, Mr. Ram Gopal Sharma, and Mr. Pranab Kumar Roychowdhary. 8. However, the Petitioners were surprised to receive a copy of letter dated 10th October, 2009 written by the Under Secretary to the 6 wp.no.618/10 Government of India, Ministry of Finance, addressed to the General Manager of Respondent No.2 Bank wherein it was stated that all three workmen employees recommended by the Petitioners are disqualified for being nominated as a Director as they have less than three years of residual service before they attain the age of superannuation. Such being the case, the Central Government conveyed its inability to nominate any of them as the Director on the Board of Directors of the second Respondent Bank and the Petitioners were requested to forward a fresh panel. 9. The Petitioners submitted a representation dated 21st October, 2009 to the Additional Secretary to reconsider the decision. However, the second Respondent Bank requested the Petitioners to submit a fresh panel by a letter dated 18th January, 2010. The Petitioners forwarded a representation to the Finance Minister of India, but the Bank once again requested them to submit a fresh panel. Correspondence continued and ultimately, the Petitioners being dissatisfied with the letter dated 10th October, 2009 (Annexure “C”) and the further communications of the Bank and finding that there is no response to their representation, filed this writ petition under Article 7 wp.no.618/10 226 of the Constitution of India seeking to quash and set aside the same. 10. Mr. Kantak, learned Counsel appearing on behalf of the Petitioners submits that the first Respondent could not have treated the three employees whose names were forwarded for being appointed as a Workman Director, to be disqualified. His submission is that clause 3(2)(iii)(b) providing that the workman director should be of such age that there is no likelihood of his attaining the age of superannuation during his term of office as a director, cannot be construed to be a mandatory clause, but it is directory. He submits that the Bank has always treated this as directory, because persons having less than two years service left for retirement, were consistently appointed to the post of Workman Director. Mr. Kantak submits that from 1980, a large number of workmen/officer employees were appointed on the Board of Directors of different Banks, including three in Bank of India, and they did not have three years of service left before retirement. Mr. Kantak submits that the respondents have misinterpreted the scheme completely. Inviting our attention to clause 3(2)(i) and clause 9 and particularly, clause 9(2), it is submitted by him that what the 8 wp.no.618/10 scheme envisages is the maximum period of 3 years of a Director. There is no question of any disqualification. Assuming that any such disqualification is being read into clause 3(2)(iii), the same is contrary to Clause 9(2)(a) of the Scheme, read with its proviso, and there is clear inconsistency in these two clauses. He submits that any inconsistency and repugnancy must be avoided and the Court should harmoniously construe the scheme and hold that no mandate flows from the subject-clause. In other words, this Court should not place such a construction on Clause 3(2)(iii) of the Scheme, which would be contrary to other clauses and particularly Clause 9(2)(a). The principle of statutory interpretation is to avoid any collision between two provisions of the same statute or regulation. If this principle is applied, then, the only construction that can be placed on the provision in question is that it is are directory in nature. 11. Mr. Kantak submits that the interpretation placed by the Respondents creates a hostile discrimination between two categories of Directors on the Board of Directors of the second Respondent Bank. In other words, the Director from the category of officer employees of the second Respondent Bank will have the benefit of nominating and 9 wp.no.618/10 continuing for three years in terms of the clauses of the scheme; whereas Workman Director will stand disqualified for being considered at the threshold if he does not have three years of service left before retirement. This discrimination between Directors on the Board of Directors should be avoided and that is how the clause providing for disqualification should be construed and particularly not creating any impediment in appointing any Workman as a Director of the second Respondent Bank, irrespective of his age and tenure of service. How many years of service of such employees is left, is not a relevant consideration at all. The composition of the Board should be broad-based and representative in character. Once such is the intent of the statute, then, this Court should not accept the stand of the respondents, but proceed to allow the petition and quash the impugned communication. 12. In support of his submissions, Shri Kantak has relied upon the decisions of the Hon'ble Supreme Court reported in the case of National and Grindlays Bank Ltd., vs. Municipal Corporation for Greater Bombay, reported in AIR 1969 SC 1048; in the case of All India Bank Officers' Confederation etc., v. Union of India and 10 wp.no.618/10 others, reported in AIR 1989 SC 2045; and in the case of Sultana Begum vs. Prem Chand Jain, reported in (1997) 1 SCC 373. 13. In support of his contention that the Union of India is always treating the clause in question as directory and has made appointments on this understanding, he relies upon a decision of the Hon’ble Supreme Court in the case of Indian Metals and Ferro Alloys Ltd., Cuttack vs. Collector of Central Excise, Bhubaneshwar, reported in 1991 (1) SCC 125. 14. On the other hand, Shri Amonkar, learned Standing Counsel appearing on behalf of the first Respondent invited our attention to the affidavit-in-reply and submitted that the petition should be dismissed on the ground of delay and laches, as it is filed after a lapse of more than one and half years from the communication dated 10th October, 2009. He further submits that various clauses of the scheme deal with the directors to be nominated. In the instant case, from the panel submitted by the Petitioners it was found that all three persons did not have the requisite period of service before their retirement. It is submitted that the reason for the same is to keep 11 wp.no.618/10 continuity and not to cause disruption in the term of the Board of Directors by mid-term vacancy. If there is retirement from the Board midstream, the Central Government may have to fill up the vacancy either by renomination of the concerned Director or by calling for a fresh panel from the representative Union for appointing a Workman Director. That would mean that the workmen will have no representation on the Board till such time the vacancy is filled up and that would not be in the interest of the workmen and the Unions. Therefore, it was thought fit that such workmen should be nominated by the Unions who have more than 3 years of service left before their superannuation. Such being the intent and purpose sought to be achieved, it cannot be held by any stretch of imagination that the provision is directory. It is mandatory in nature. If such a construction is not placed, then, it would mean that the representation from the workman employee category on the Board will change frequently. It would require short term changes and appointments being made. In these circumstances, all contentions of the learned Advocate for the Petitioners will have to be rejected and the petition be dismissed. 15. He submits that there is no discrimination between two set 12 wp.no.618/10 of directors. There may be stray cases of deviation from the provision, but that does not mean that the clause is not binding on the parties. It is submitted that the scheme has been formulated by the Government in consultation with the Reserve Bank of India. In terms of Clause 3(2)(iii), a workman of a nationalised Bank shall be disqualified for being nominated as a director unless he is and has been serving for a continuous period of not less than five years in the nationalised Bank and he is of such age that there is no likelihood of his attaining the age of superannuation during his term of office as a director. It is submitted that the comparison made is also not well founded. There cannot be any discrimination, much less hostile discrimination, as contented. In these circumstances, the scheme cannot be faulted and the instances cited do not support the case of the Petitioners at all. If there is no discrimination, then, the petition should be dismissed. 16. With the assistance of the learned Counsel appearing for the parties, we have perused the petition and the annexures thereto and even the affidavits filed on record. We have also perused the statutory provisions and the scheme, so also the decisions brought to our notice. 13 wp.no.618/10 17. For properly appreciating the rival contentions, we may refer to the provisions relevant for the instant case. The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 was enacted on 31st March, 1970 for the acquisition and transfer of the undertakings of certain banking companies, having regard to their size, resources, coverage and organisation in order to control the heights of the economy and to meet progressively, and serve better the needs of development of the economy in conformity with national policy and objectives and for matters connected therewith or incidental thereto. Chapter I of the Act is entitled “Preliminary” and there are various definitions set out in this part. In Chapter II, the transfer of the undertakings of existing banks and share capital of the corresponding new Banks has been provided for. Chapter III deals with payment of compensation and then comes Chapter IV which provides for management of corresponding new banks. After making provision for their Head Office and management, what has been done is to insert Section 8 which states that every corresponding new bank shall, in the discharge of its functions, be guided by such directions in regard to matters of policy involving public interest as the Central Government 14 wp.no.618/10 may, after consultation with the Governor of the RBI, give. Then comes Section 9, which reads as under : “9. Power of Central Government to make scheme.—(1) The Central Government may, after consultation with the Reserve Bank, make a scheme for carrying out the provisions of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, the said scheme may provide for all or any of the following matters, namely:— (a) the capital structure of the corresponding new bank 1[* * *]; (b) the constitution of the Board of Directors, by whatever name called, of the corresponding new bank and all such matters in connection therewith or incidental thereto as the Central Government may consider to be necessary or expedient; (c) the reconstitution of any corresponding new bank into two or more corporations, the amalgamation of any corresponding new bank with any other corresponding new bank or with another banking institution, the transfer of the whole or any part of the undertaking of a 2[corresponding new bank to any other corresponding new bank or banking institution] or the transfer of the whole or any part of the undertaking of any other banking institution to a corresponding new bank; 3[(ca) the manner in which the excess number of directors shall retire under second proviso to clause (i) of sub-section (3);] (d) such incidental, consequential and supplemental matters as may be necessary to carry out the provisions of this Act. 4[(3) Every Board of Directors of a corresponding new bank, constituted under any scheme made under sub- section (1), shall include— (a) 5[not more than four whole-time directors] to be appointed by the Central Government after consultation with the Reserve Bank; (b) one director who is an official of the Central 15 wp.no.618/10 Government to be nominated by the Central Government: Provided that no such director shall be a director of any other corresponding new bank. Explanation.—For the purposes of this clause, the expression “corresponding new bank” shall include a corresponding new bank within the meaning of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980); 1[(c) one director, possessing necessary expertise and experience in matters relating to regulation or supervision of commercial banks, to be nominated by the Central Government on the recommendation of the Reserve Bank;] (d) 7[* * *] (e) one director, from among such of the employees of the corresponding new bank who are workmen under clause (s) of Section 2 of the Industrial Disputes Act, 1947 (14 of 1947), to be nominated by the Central Government in such manner as may be specified in a scheme made under this section; (f) one director, from among the employees of the corresponding new bank who are not workmen under clause (s) of Section 2 of the Industrial Disputes Act, 1947 (14 of 1947), to be nominated by the Central Government after consultation with the Reserve Bank; (g) one director who has been a Chartered Accountant for not less than fifteen years to be nominated by the Central Government after consultation with the Reserve Bank; (h) subject to the provisions of clause (i), not more than six directors to be nominated by the Central Government; 3(i) where the capital issued under clause (c) of sub-section (2-B) of Section 3 is— (I) not more than sixteen per cent. of the total paid-up capital, one director; (II) more than sixteen per cent. but not more than thirty-two per cent. of the total paid-up capital, two directors; (III) more than thirty-two per cent. of the total paid-up capital, three directors, to be elected by the shareholders, other than the Central Government, from amongst themselves: 16 wp.no.618/10 Provided that on the assumption of charge after election of any such director under this clause, equal number of directors nominated under clause (h) shall retire in such manner as may be specified in the scheme: Provided further that in case the number of directors elected, on or before the commencement of the Banking Companies (Acquisition and Transfer of Undertakings) and Financial Institutions Laws (Amendment) Act, 2006, in a corresponding new bank exceed the number of directors specified in sub-clause (I) or sub-clause (II) or sub-clause (III), as the case may be, such excess number of directors elected before such commencement shall retire in such manner as may be specified in the scheme and such directors shall not be entitled to claim any compensation for the premature retirement of their term of office.] (3-A) The directors to be nominated under clause (h) or to be elected under clause (i) of sub-section (3) shall— (A) have special knowledge or practical experience in respect of one or more of the following matters, namely:— (i) agricultural and rural economy, (ii) banking, (iii) cooperation, (iv) economics, (v) finance, (vi) law, (vii) small-scale industry, (viii) any other matter the special knowledge of, and practical experience in, which would, in the opinion of the Reserve Bank, be useful to the corresponding new bank; (B) represent the interests of depositors; or (C) represent the interests of farmers, workers and artisans. 1[(3-AA) Without prejudice to the provisions of sub- section (3-A) and notwithstanding anything to the contrary contained in this Act or in any other law for the time being in force, no person shall be eligible to be elected as director under clause (i) of sub-section (3) unless he is a person having fit and proper status based upon track record, integrity and such other criteria as the Reserve Bank may notify from time to time in this regard.] 1[(3-AB) The Reserve Bank may also specify in the notification issued under sub-section (3-AA), the authority to determine the fit and proper status, the manner of such determination, the procedure to be followed for such determination and such other matters as may be considered necessary or incidental thereto.] 17 wp.no.618/10 (3-B) Where the Reserve Bank is of the opinion that any director of a corresponding new bank elected under clause (i) of sub-section (3) does not fulfil the requirements of 10[sub-sections (3-A) and (3-AA)], it may, after giving to such director and the bank a reasonable opportunity of being heard, by order, remove such director and on such removal, the Board of Directors shall coopt any other person fulfilling the requirements of 1[sub- sections (3-A) and (3-AA)] as a director in place of the person so removed till a director is duly elected by the shareholders of the corresponding new bank in the next annual general meeting and the person so coopted shall be deemed to have been duly elected by the shareholders of the corresponding new bank as a director.] (4) The Central Government may, after consultation with the Reserve Bank, make a scheme to amend or vary any scheme made under sub-section (1). 2[(5) On and from the date of coming into operation of a scheme made under this section with respect to any of the matters referred to in clause (c) of sub-section (2) or any matters incidental, consequential and supplemental thereto,— (a) the scheme shall be binding on the corresponding new bank or corporations or banking institutions, and also on the members, if any, the depositors, and other creditors and employees of each of them and on any other persons having any right or liability in relation to any of them including the trustees or other persons, managing or in any other manner connected with, any provident fund or other fund maintained by any of them; (b) the properties and assets of the corresponding new bank, or as the case may be, of the banking institution shall, by virtue of and to the extent provided in the scheme, stand transferred to, and vested in, and the liabilities of the corresponding new bank, or, as the case may be, of the banking institution shall, by virtue of, and to the extent provided in the scheme, stand transferred to, and become the liabilities of, the corporation or corporations brought into existence by reconstitution of the banking institution or the corresponding new bank, as the case may be. 3[Explanation I].—In this section, ‘banking institution’ means a banking company and includes the State Bank of India or a subsidiary bank.] 4[Explanation II.—For the purposes of this section, the expression “corresponding new bank” shall include a corresponding new bank within the meaning of the 18 wp.no.618/10 Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980).] 5[(6)] Every scheme made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament while it is in session for a total period of thirty days [which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid], both Houses agree in