IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated 12..3..2008 Coram: The Hon'ble Mr. Justice K.CHANDRU W.P. No. 49012 of 2006 and M.P. No. 1 of 2006 K.C. Kumar :: Petitioner vs. 1. Bharat Overseas Bank Ltd. By its Chairman 196 Anna Salai Chennai – 2 2. Assistant General Manager (Personnel) Bharat Overseas Bank Ltd. Head Office 192 Anna Salai Chennai – 2 3. Indian Overseas Bank Rep. by its General Manager (Personnel) Administration Department 763 Anna Salai Chennai – 2 R3 impleaded as per order dated 21.4.2007 by KLJ in MP.No.1/07 in WP.49012 :: Respondents Petition filed under Article 226 of the Constitution of India seeking for issuance of writ of Mandamus directing the respondents to pay the petitioner the gratuity and Provident Fund amount with 12% interest from 12.4.2006 till the payment award cost. For Petitioner : Mr. D. Hari Paranthaman For Respondents : Mr. S. Ravindaran for M/s T.S. Gopalan & Co. O R D E R Heard the arguments of Mr. D. Hari Paranthaman, learned counsel appearing for the petitioner and S. Ravindran, learned https://hcservices.ecourts.gov.in/hcservices/ counsel appearing for M/s. T.S. Gopalan & Co., for the respondents and have perused the records. 2. The petitioner was working as the Chief Manager in the Nungambakkam Branch of the first respondent from 01.8.2004 to 11.4.2006. He submitted his resignation letter dated 07.4.2006 to the first respondent through his branch. The reason for resignation was stated to be compelling domestic and personal problems. Since the petitioner wanted to leave the service immediately, he also requested to waive the three months' notice period and to grant relief immediately. If the respondents are not willing to waive the notice period, he had requested that three months' salary in lieu of notice can be adjusted from the terminal benefits payable to him. Since there was no response till 11.4.2006, he handed over the charge to the Senior Manager of Nungambakkam Branch and intimated the said fact to the second respondent vide letter dated 12.4.2006. 3. The petitioner received a telegram dated 18.4.2006 from the second respondent stating that his resignation letter was being processed and he was instructed to report for duty lest he may be construed as a deserter. The petitioner sent a reply dated 21.4.2006 stating that he did not desert the branch and in fact, he had handed over the charge to the Senior Manager of the Branch and he was not in possession of any charge or keys of the branch. He also sent a reminder dated 08.7.2006 seeking for settlement of his terminal benefits followed by a letter dated 09.9.2006. When the respondents were not considering those representations, he filed the present writ petition seeking for direction to the respondents to pay him the Gratuity and Provident Fund with 12% interest with effect from 12.4.2006. 4. During the pendency of the writ petition, the share holding of the first respondent Bank was acquired by the Indian Overseas Bank [for short, 'I.O.B.'] by a transfer scheme of 2007 which was published in the Government Gazette dated 12.3.2007. In the light of the acquisition of the first respondent Bank by the Indian Overseas Bank, the petitioner filed M.P. No. 1 of 2007 to implead the Indian Overseas Bank as a party third respondent and accordingly, this Court ordered the impleadment of the I.O.B. as the third respondent vide order dated 21.4.2007. 5. The first respondent filed a counter affidavit stating that the first respondent Bank is a only a Company registered under the Companies' Act 1956 and, therefore, no writ petition will lie against the said Bank. It was also stated that the service conditions of the petitioner, who was working as a Scale IV Officer are covered by the Bharat Overseas Bank Limited Officers' Service https://hcservices.ecourts.gov.in/hcservices/ Rules and the resignation will have to be made only in terms of the Service Rules and, therefore, the petitioner's resignation was not accepted. On the contrary, the petitioner was given a charge sheet on 27.6.2006 and since the notice given by the petitioner was not sufficient, the respondents are entitled to continue the disciplinary action and that the writ petition itself was not maintainable against the first respondent. Subsequently, an additional counter affidavit was filed stating that the Chairman of the first respondent Bank demitted his office on 06.4.2006 and the Senior General Manager, who was the disciplinary authority, had decided to initiate disciplinary action against the petitioner and, therefore, his resignation letter dated 07.4.2006 was not considered. 6. In the meanwhile, a supplementary affidavit dated 19.01.2007 was also filed by the respondents enclosing the notification of the Government of India dated 08.9.2006 published in the Government Gazette and it was stated that the merger of the two Banks, viz., respondents 1 and 3, will take place on 31.3.2007. It was also stated that the first respondent Bank was not a subsidiary of the IOB. 7. Thereafter, on a specific direction of this Court, the third respondent I.O.B. filed a counter affidavit dated 10.11.2007 wherein it was stated that by Notification dated 12.3.2007, the Central Government gave a sanction for the merger of the two Banks and also notified the Scheme of Merger. Pursuant to the sanction of merger, the first respondent Bank gave an offer of employment to all the existing employees including the petitioner and forwarded the offer made by the third respondent to the petitioner informing that in the event of the petitioner accepting the offer of employment, pending disciplinary action will be continued in accordance with the Rules of the first respondent. But it was also indicated that it is the petitioner, who does not accept the offer and, therefore, he will cease to be on their employment and his services are being retained only for completion of the disciplinary action. Since the petitioner refused to accept the offer, he ceased to be the employee of the first respondent but nevertheless, his services will be continued for the purpose of completing the disciplinary action. 8. The following passage is found in paragraph 3 of the counter affidavit. ".... Therefore, the petitioner is bound to face the disciplinary action, notwithstanding his employment having come to an end with the first respondent. At the same time, Clause – 14 of the https://hcservices.ecourts.gov.in/hcservices/ Scheme envisages that "On and from the Effective Date, proceedings of whatever nature by the first respondent Bank shall be continued by the third respondent Bank as effectively as if the same had been filed by the transferee Bank." In other words, as from the effective date, on behalf of the first respondent (Transferor Bank), the third respondent Bank (transferee Bank) is entitled to continue disciplinary action and bring it to its culmination. Therefore, the stand of the third respondent Bank is that by virtue of the Clause – 14 of the Scheme, it is entitled to continue the disciplinary action initiated by the first respondent by the issue of charge sheet dated 27.6.2006 and therefore the bank is not in a position to accede to the request of the petitioner for release of PF and Gratuity." 9. Though the learned counsel for the petitioner relied upon the judgment of the Division Bench of this Court in A.K.Ansari and another v. Bharat Overseas Bank Ltd. and another [1999 (3) LLN 310] to support the proposition that the writ petition was held to be maintainable by this Court. In the light of the subsequent developments, the question about the maintainability of the writ petition need not be gone into. Since the liabilities of the first respondent Bank now stood vested with the third respondent, which is a nationalised Bank, the issue of maintainability does not arise. Since under the Scheme of Merger dated 12.3.2007, all the liabilities and pending Court actions vest with the transferee Bank (I.O.B.), if any liability is fastened due to the non-payment by the first respondent, automatically, the obligation only vests with the third respondent. 10. Though the learned counsel for the third respondent relied upon the judgment of the Supreme Court reported in AIR 1988 SC 215 [Shri Bhagwan Dass Chopra v. United Bank of India and others], that case does not help the case of the respondents. In paragraph 7 of the said judgment, the Supreme Court observed as follows: Para 7: "In view of the terms of the agreement of merger and in particular Clause 22 thereof United Bank of India was rightly impleaded as a party to the proceedings before the Tribunal in the place of the Narang Bank of India Ltd. By reason of impleading of United Bank of India as a party there was no change in the character of the proceedings pending before the Tribunal. United Bank of India only stepped into the shoes of the Narang Bank of India Ltd. and all proceedings that had gone on till the date on which https://hcservices.ecourts.gov.in/hcservices/ United Bank of India was so impleaded were binding on the United Bank of India. The proceedings before the Tribunal could thereafter be continued against the United Bank of India. United Bank of India could thereafter take part in the further proceedings before the Tribunal in the same capacity in which the Narang Bank of India Ltd. was appearing in the case. It was bound by all proceedings which had taken place till then. It could not go back on the proceedings. Generally speaking an assignee cannot set up a case inconsistent with the one put forward by his assignor and it is only in exceptional cases an assignee could be permitted to raise any new plea and that too only for avoiding multiplicity of the proceedings. In the instant case there was no such exceptional circumstance which entitled United Bank of India to take up a plea different from the pleas which had already been taken up by the Narang Bank of India Ltd. and there was also no need to permit it to reopen the proceedings which had gone on till then." 11. But in the aforesaid case, the Supreme Court though allowed the impleaded Bank to conduct the case, further refused to reopen the past proceedings. But in the present case, we are not concerned with any such situation since the Merger Scheme notified by the Central Government put all the liabilities on the transferee Bank. 12. Mr. D. Hari Paranthaman, learned counsel appearing for the petitioner, submitted that once a resignation is given to the competent authority, viz., Chairman, even though there is a discretion of the part of the Chairman to accept it or not, it is stated that the discretion has to be exercised judicially and cannot be denied on arbitrary or capricious fashion. For this proposition, the learned counsel relied upon the judgment of this Court reported in 2003 (1) LLN 372 [K.S.P. Dora v. Chairman and Managing Director, Bharat Overseas Bank Ltd.]. 13. In construing the rules relating to regulations in the first respondent Bank, this Court observed in paragraphs 12 and 13 as follows: Para 12: "The only reason for not accepting the resignation is on the footing that the resignation seeking for immediate acceptance by refunding three months' salary was not contemplated in the rules. Even though such offer to refund three months' salary was https://hcservices.ecourts.gov.in/hcservices/ not contemplated, the rules had given discretion to accept any resignation with immediate effect even though prior notice had not been given. It is obvious from various correspondence that the Chairman never considered the question of acceptance of resignation with immediate effect as contemplated in the proviso to the rule relating to resignation. Even assuming that the offer to return three months' salary was not contemplated, nothing prevented the Chairman from considering the question as to whether the resignation should not accepted with immediate effect or not. Since there is no appearance and no counter-affidavit has been filed, nothing is forthcoming as to why the resignation was not accepted. As already indicated at the time of giving the resignation, no disciplinary proceedings had been initiated nor even contemplated. Para 13: Keeping in view these aspects, I see no reason as to why the resignation should not have been accepted with immediate effect. The petitioner was on leave on April 29 and 30, 1993, and the resignation letter was dated April 29, 1993. In such view of the matter, it must be taken that if the petitioner had resigned and his service had come to an end with immediate effect from April 30, 1993, and the relationship of employer and employee should be deemed to have been severed from May 1, 1993. Once this conclusion is arrived at, the subsequent proceedings and framing charges against the petitioner must be taken to be illegal." [Emphasis added] 14. Therefore, it is necessary to extract the Service Rules relating to resignation which is as follows: Resignation 13.(i): "An Officer in the permanent establishment shall not resign from the service of the Bank without first giving a notice in writing of his intention to do so. The period of such notice required shall be three months and the notice shall be addressed to the Chairman. Provided that the Chairman may at his discretion permit an Officer to resign without such notice or reduce the period of such notice. https://hcservices.ecourts.gov.in/hcservices/ (ii) Notwithstanding anything to the contrary contained in clause (i), (a) an Officer against whom disciplinary Proceedings are pending shall not resign from his service in the Bank without the prior approval in writing of the Chairman; and (b) any notice of resignation given by such an Officer before or during the disciplinary proceedings shall not take effect unless it is accepted by the Chairman. (iii) For the purposes of this rule, disciplinary proceedings shall be treated as pending against an Officer until final orders are passed on them if: (a) he has been placed under suspension; or (b) any notice has been issued to him to show cause why disciplinary proceedings should not be initiated against him; or (c) any charge sheet has been issued against him. Explanation: A show cause notice or order of suspension or charge sheet signed by the Chairman and put on a course of transmission prior to or during the period of notice will be sufficient compliance with the requirements of clause (iii)." [Emphasis added] https://hcservices.ecourts.gov.in/hcservices/ 15. A bare reading of the rule clearly shows that the Chairman has power at his discretion to waive the notice period or reduce the notice period. Further, it is also seen that a person against whom disciplinary proceedings are pending cannot resign from service in the Bank without the prior approval in writing of the Chairman. The notice of resignation will not take effect unless it is accepted by the Chairman. It is also stated that for the purpose of that rule, disciplinary proceedings should be treated as pending against an Officer until final orders are passed on them. In the explanation, it is stated that a show cause notice or suspension or charge sheet signed by the Chairman and put on a course of transmission prior to or during the period of notice, will be sufficient compliance of the requirement. As per the explanation, though the power to frame a charge may vest with any other authority, but to refuse to allow a person to resign, then the charges will have to be framed by the Chairman himself. 16. In the present case, the Rules relating to delegation of powers for initiating disciplinary action was also notified and in respect of the officers relating to Scale IV, it is the General Manager, who is the disciplinary authority and the appellate authority is the Chairman. Subsequently, the disciplinary authority is a Senior General Manager and the appellate authority continues to be the same. But these rules are for normal circumstances. As stated above, when it comes to refusal to accept the resignation, then a disciplinary action is deemed pending only when the Chairman frames the charge sheet or show cause notice as the case may be. 17. When the petitioner sent his resignation letter on 07.4.2006, there was no Chairman and he demitted his office on 06.4.2006. It was only on 27.6.2006, a charge sheet was framed by the Senior General Manager and at no point of time, the resignation letter of the petitioner was placed before the Chairman. Even if the Chairman had demitted his office, the activity of the Bank had to be continued by a three Member Directors Committee until a new Chairman was to be appointed. 18. It was also urged by the petitioner that when one Vijayakumar, AGM resigned after the Chairman demitted his office, his resignation was accepted by the Directors' Committee only. 19. Therefore, till date, the petitioner's letter of resignation was not dealt with by the Chairman as required under the Rules. Even though a new Chairman had assumed office during November 2006, no action was taken in terms of his resignation letter. Subsequent to the merger, since the petitioner had not opted to go to the service of the IOB and in the absence of any https://hcservices.ecourts.gov.in/hcservices/ binding rules or a tripartite agreement among the parties, the third respondent IOB cannot continue any action in the matter of disciplinary proceedings. A disciplinary action can be said to be pending only when a charge sheet is issued by the competent authority. In the present case, on the date when he submitted his resignation letter, there was no disciplinary proceedings pending against him and since his resignation was not refused by any authority, which is a Chairman in this case and in the absence of the Chairman, it is the Directors' Committee. Therefore, there was no valid refusal of the resignation offered by the petitioner. 20. It must be stated that the petitioner's notice period must be deemed to be completed and in the present case, the petitioner even requested a waiver of the notice period failing which he offered to adjust the wages in lieu of notice against the terminal benefits. Since no order was passed on the resignation letter submitted by the petitioner within the due period and since the petitioner had not volunteered to join the third respondent after the merger and in the absence of any rule which enables the respondents to continue the disciplinary action even after the merger in respect of the ex-employees of the first respondent, it must be deemed that such a disciplinary proceedings shall lapse and cannot be continued without there being any legal basis for the same. 21. It has been held by the Supreme Court in 1999 (3) SCC 666 [Bhagirathi Jena v. Board of Directors, O.S.F.C.] that once an employee ceases to be an employee of the establishment and the severance of master and servant relationship, the disciplinary action cannot be continued in the absence of any rules authorising the same. Paragraphs 6 and 7 of the said judgment may be usefully extracted below: Para 6: "It will be noticed from the abovesaid regulations that no specific provision was made for deducting any amount from the provident fund consequent to any misconduct determined in the departmental enquiry nor was any provision made for continuance of the departmental enquiry after superannuation. Para 7: In view of the absence of such a provision in the abovesaid regulations, it must be held that the Corporation had no legal authority to make any reduction in the retiral benefits of the appellant. There is also no provision for conducting a disciplinary enquiry after retirement of the appellant and nor any provision stating that in case misconduct is established, a deduction could be made from retiral benefits. Once the appellant had retired from service on 30-6-1995, there was no https://hcservices.ecourts.gov.in/hcservices/ authority vested in the Corporation for continuing the departmental enquiry even for the purpose of imposing any reduction in the retiral benefits payable to the appellant. In the absence of such an authority, it must be held that the enquiry had lapsed and the appellant was entitled to full retiral benefits on retirement." 22. Though it arose in the context of retirement, the same principle will apply even in case of resignation as found in K.S.P. Dora's case (cited supra) made by this Court. Similar is the question in the present case and since the third respondent is not empowered to take any disciplinary action and the first respondent having ceased to exist and also in the light of the observation made by this Court in K.S.P. Dora's case (cited supra), the writ petition is bound to succeed. 23. Accordingly, the writ petition will stand allowed and the third respondent is directed to settle the petitioner's Gratuity and Provident Fund within a period of four weeks from the date of receipt of a copy of this order. Though the petitioner had requested 12% interest on the delayed payment in the absence of any rules, the respondents are directed to pay only 6% interest on the delayed payment. There will be no order as to cost. Consequently, connected Miscellaneous Petition is closed. gri Sd/- Asst. Registrar. /true copy/ Sub Asst. Registrar. To 1. The Chairman, Bharat Overseas Bank Ltd. 196 Anna Salai Chennai – 2 https://hcservices.ecourts.gov.in/hcservices/ 2. The Assistant General Manager (Personnel) Bharat Overseas Bank Ltd. Head Office 192 Anna Salai Chennai – 2 3. The General Manager (Personnel) Indian Overseas Bank Administration Department 763 Anna Salai Chennai – 2 1 cc to Mr.D.Hariparanthaman, Advocate, SR.13656 1 cc to M/s.T.S.Gopalan & Co., SR.13813 sr (co) dv/24.3. W.P. No. 49012 of 2006 https://hcservices.ecourts.gov.in/hcservices/