IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE FOURTH DAY OF OCTOBER TWO THOUSAND AND TEN PRESENT HON'BLE SRI JUSTICE R.SUBHASH REDDY WRIT PETITION No.3921 of 2005 Between: Pingali Saritha Reddy, W/o.P.Rajender Reddy, Aged 40 years, Occ: employee, R/o.H.No.8-2- 686/DB/19, Road No.12, Banjara Hills, Hyderabad-500 034 … Petitioner And Secretary, Government of India, Ministry of Finance, Dept. of Banking, North Block, New Delhi- 110 011, and five others … Respondents Order: This writ petition is filed with a prayer as under: “For the reasons stated in the accompanying affidavit, it is prayed that this Hon’ble Court may be pleased to issue a writ, order or direction, more particularly one in the nature of writ of certiorari or any other appropriate writ by calling for the records pertaining to the order No.C.A.O:HR:Dt.16.8.2004 from the fifth respondent in terminating the services of petitioner and the rejection letter DT.21.9.2004 of the sixth respondent and quash the same as substantively procedurally ultra vires, arbitrary, unconstitutional, illegal and void ab initio, while consequently direct the respondents 1 to 4 to pass appropriate orders to reinstate the petitioner in service with full back wages and continuity of service and to pass such further or other orders as this Hon’ble Court deems fit and proper under the circumstances of the case. 2. The petitioner herein was appointed as Manager in Development Credit Bank Ltd., a scheduled bank. In the affidavit filed in support of the writ petition, it is stated that the petitioner, earlier, had experience in banking sector and worked for about 14 years in Andhra Bank; thereafter she pursued L.LB. from Osmania University and had also done her M.S. in United States of America and after working for some time in Florida, USA, she was selected as Assistant Manager in State Bank of Mauritius at Hyderabad and worked as such for about 2 ½ years. In the selections made in the third respondent-Development Credit Bank Ltd., she was duly selected and appointed as Manager and letter of appointment dated 02-04-2002 was given to her with the following conditions: 1. You shall be on Probation at the first instance for a period of six months from the day you report to duty. 2. Subject to satisfactory performance during the probation period, you will be confirmed in the services of the Bank. 3. During the period of your service in the Bank, you shall be bound by the rules and regulations of the Bank which are in force at present or which may be brought into force from time to time. 4. Your services are liable to be terminated by three month’s notice in writing or three month’s emoluments in lieu of such notice from either side. 5. You shall devote full time and energy for the prosperity of the Bank. You shall not, while in the services of the Bank, concern yourself directly or indirectly with any other work or outside duties for gain without the express written permission from the Management. 6. You are liable to be transferred from one department to another or to any of the branches of the Bank. In case of such transfer, you will abide by the working of the department or branch concerned without demanding any compensation or extra remuneration. On transfer, whether to a department or branch, you shall be governed by the conditions of service and rules and regulations that may be prevailing at the place you may be transferred to. 7. No information relating to the affairs of this Bank that you may acquire as a result of your employment with us shall be disclosed either by word of mouth or in writing to any outside unless authorized to do so by the Competent Authority or by law. You will be required to execute a Security Bond and also a Secrecy Bond as per the rules of the Bank at the time of joining the services. 8. Your services are liable to be terminated without notice or payment in lieu of such notice as and when the Bank comes to know of any previous conviction by the Court of law. 9. Your appointment will be subject to your producing your proof of age, graduation, professional qualifications certificate and being found medically fit and on producing a clean discharge certificate from your present employer.” 3. When the petitioner was working as Manager, she was terminated from service invoking power under clause 4 of the letter of appointment, by the impugned order. On receipt of the impugned termination order, the petitioner filed a detailed representation to the General Manager of the bank requesting to reconsider and review the order of termination. In the said representation, it is stated that though the order of termination is passed invoking clause IV of the letter of appointment, but, in reality, the said order is passed with reference to a fraud of Rs.29.00 lakhs committed in Secunderabad branch of the bank, for which she is not responsible. It is further stated in the representation that at that point of time she was working at Madhapur branch and the fraud alleged to have been committed was at Secunderabad branch and though she was not connected in any way to the said fraud, she was terminated from service without conducting any enquiry and without issuing any notice. 4. The impugned order of termination is questioned mainly on the ground that in spite of completion of period of probation by the petitioner, respondent-bank has terminated her services without conducting any enquiry and without issuing any notice. It is the case of the petitioner that as per the service rules of the respondent- bank; her services cannot be terminated without conducting any enquiry. 5. Counter-affidavit is filed on behalf of respondents 3 to 6. In the affidavit sworn by one Sri G.H.Pillai, Assistant General Manager (Personnel & HRD), Development Credit Bank Ltd., it is stated that Development Credit Bank Ltd., is a company registered under the Indian Companies Act, which carries on banking business with necessary approvals of the Central Government and the Reserve Bank of India. It is stated that it is not a State within the meaning of Article 12 of the Constitution of India and as the same is also not discharging any sovereign functions, as such, the writ petition filed against the bank is not maintainable. The counter-affidavit further states that though the writ petition is filed seeking quashing of the orders of respondents 5 and 6, no relief is sought against the Central Government and the Reserve Bank of India, which are shown as respondents 1 and 2 and they are merely made parties only for the purpose of filing the writ petition. It is averred that service conditions of employees of the bank are guided by specific rules and bipartite settlements; as such, there is no control over the service conditions of the bank, by respondents 1 and 2. It is further averred that as per the ruling of the Apex Court in the case of Federal Bank Ltd., v. Sega Thomas, writ petition against a scheduled bank is not maintainable. About challenge of the order dated 16-08-2004 in the writ petition, it is stated that the petitioner was appointed as Manager vide order dated 02-04-2004 subject to certain conditions. Condition No.4 of the conditions is relied upon, which reads as under: “Your services are liable to be terminated by three month’s notice in writing or three month’s emoluments in lieu of such notice from either side.” 6. Further, in the counter-affidavit, it is stated that the petitioner, at the time of her appointment, having accepted the terms and conditions thereof, cannot question the order terminating her from service, when the same is passed in terms of the conditions laid down in the letter of appointment. 7. Heard Smt.D.Pramada, learned counsel for the petitioner and Sri G.Vidyasagar, learned counsel appearing for respondents 3 to 6. 8. It is submitted by learned counsel for the petitioner that as much as the petitioner was appointed by following due selection procedure and in view of confirmation of her service after completing the period of probation and when she is on the permanent rolls of the bank, it is not pen to the respondent-employer to terminate her services by merely giving three months’ notice without conducting any enquiry. Learned counsel would submit that there are separate set of rules governing the service conditions, namely Discipline and Appeal Rules and unless an enquiry is conducted, it is not open to the respondent- employer to terminate her services. In support of her submissions, learned counsel relies on a judgment of the Hon’ble Supreme Court in Delhi Transport Corpon. V. D.T.C. Mazdoor Congress[1], wherein the Supreme Court considered the power of the employer to terminate the services of a permanent employee without any enquiry. On the objection, as regards maintainability of the writ petition raised by the respondents, it is submitted by the learned counsel for the petitioner that the power of this Court under Article 226 of the Constitution of India for granting various kinds of writs is not confined to statutory authorities and instrumentalities of the State, but the said power can be exercised for issuance of writs to any other person or authority performing public duty. The learned counsel would further submit that as the respondent-bank is involved in the business of banking and is a licencee under the Banking Regulations Act and is discharging public duties, as such, it cannot be said that the writ petition is not maintainable. 9. On the other hand, it is submitted by Sri G.Vidyasagar, learned counsel appearing for the respondent-bank, that as regards maintainability of a writ petition against a scheduled bank, the Hon’ble Supreme Court has considered the said issue in Federal Bank Ltd. V. Sagar Thomas and others[2]. In the said judgment, the Supreme Court held that against a company incorporated under the Companies Act, 1956 (not being a “govt. company” under Sec.617) no writ petition is maintainable. It is further held that mere regulatory provisions, to ensure that business or commercial activity carried on by private bodies remains within a discipline, do not confer any status upon the company nor put any obligation upon it which may be enforced through issue of a writ under Article 226 of the Constitution of India. Relying on the said judgment, it is submitted that the said judgment squarely applies to the present case as much as the petitioner is an employee of Development Credit Bank, which is a scheduled bank and is a company registered under the Indian Companies Act, having no pervasive control by the Government or the Reserve Bank of India. The learned counsel also relied on the judgment of the Hon’ble Supreme Court in Zee Telefilms Ltd., and another v. Union of India and others[3], wherein the Hon’ble Supreme Court, while considering the status of Board of Control for Cricket in India, held that in absence of any pervasive control by the Government on the BCCI, which is a Society registered under the Societies Registration Act, as such, it cannot be construed as a State, within the meaning of Article 12 of the Constitution of India. 10. As much as respondents have disputed maintainability of the writ petition, I deal with such objection at first instance. In this writ petition, it is not in dispute that the petitioner is an employee of Development Credit Bank Ltd., which is a company registered under the Companies Act, 1956 and it is also not in dispute that it is a scheduled bank. But, it is the case of the petitioner that the said bank is an authority under Article 12 of the Constitution of India as it is a scheduled bank registered under the II Schedule of the Reserve Bank of India Act, 1934 and is bound by the guidelines and directions issued by respondents 1 and 2 herein from time to time. It is also the case of the petitioner that the said bank is discharging the functions of banking, which are essentially Government functions of public character bound by laws of the bank and the policies of the Government; in that view of the matter there is a pervasive control by the Government and the Reserve Bank of India on the bank, as such, the writ petition is maintainable. 11. But, it is to be noticed that the question as regards maintainability of a writ petition has come up for consideration, in the case of Federal Bank Ltd., (2 supra), which is also a company registered under the Companies Act and a scheduled bank like that of Development Credit Bank. The respondent therein was working as Branch Manager in the said bank. By initiating disciplinary proceedings, on the ground that he has exceeded his authority in grant of loans and advances to different parties, an enquiry officer was appointed to enquire into the charges framed against him. He was found guilty of the charges and accordingly punishment of dismissal from service was imposed against him. He challenged the said order before the High Court in a writ petition in which an objection was raised with regard to maintainability as much as Federal Bank is a private bank and not a State or its instrumentality within the meaning of Article 12 of the Constitution of India. Learned single Judge found that the bank was performing public duty; as such it falls within the meaning of “other authority” within the meaning of Article 12 of the Constitution of India. The said order of the learned single Judge was confirmed by a Division Bench and ultimately the matter carried to the Supreme Court by the bank. The Supreme Court, while reversing the judgment of the High Court, clearly held that a private bank carrying on banking business as a scheduled bank cannot be termed as an institution or a bank carrying on any statutory or public duty. In the said judgment, it was further held that merely regulatory provisions to ensure that commercial activity carried on by private bodies to work with a discipline, neither confer any status upon the company nor put any obligation upon it which may be enforced through issuance of a writ under Article 226 of the Constitution of India. Paragraphs 27 and 33 of the aforesaid judgment, which are relevant for the purpose of the disposal of the present writ petition, are extracted, which read as hereunder: “Such private companies would normally not be amenable to the writ jurisdiction under Article 226 of the Constitution. But in certain circumstances a writ may issue to such private bodies or persons as there may be statutes which need to be complied with by all concerned including the private companies. For example, there are certain legislations like the Industrial Disputes Act, the Minimum Wages Act the Factories Act or for maintaining proper environment say Air (Prevention and Control of Pollution) Act, 1981 or Water (Prevention and Control of Pollution) Act, 1974 etc. or statutes of the like nature which fasten certain duties and responsibilities statutorily upon such private bodies which they are bound to comply with. If they violate such a statutory provision a writ would certainly be issued for compliance of those provisions. For instance, if a private employer dispense with the service of its employee in violation of the provisions contained under the Industrial Disputes Act, in innumerable cases the High Court interfered and have issued the writ to the private bodies and the companies in that regard. But the difficulty in issuing a writ may arise where there may not be any non-compliance or violation of any statutory provision by the private body. In that event a writ may not be issued at all. Other remedies, as may be available, may have to be resorted to.” “For the discussion held above, in our view, a private company carrying on banking business as a scheduled bank cannot be termed as an institution or company carrying on any statutory or public duty. A private body or a person may be amenable to writ jurisdiction only where it may become necessary to compel such body or association to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it. We don't find such conditions are fulfilled in respect of a private company carrying on a commercial activity of banking. Merely regulatory provisions to ensure such activity carried on by private bodies work within a discipline, do not confer any such status upon the company nor puts any such obligation upon it which may be enforced through issue of a writ under Article 226 of the Constitution. Present is a case of disciplinary action being taken against its employee by the appellant Bank. Respondent's service with the bank stands terminated. The action of the Bank was challenged by the respondent by filing a writ petition under Article 226 of the Constitution of India. The respondent is not trying to enforce any statutory duty on the part of the Bank. That being the position, the appeal deserves to be allowed.” 12. Although learned counsel for the petitioner seeks to rely on the earlier Constitution Bench judgment in Ajay Hasia v. Khalid Mujib[4], but, it is not identical to that of the case on hand. The judgment of the Hon’ble Supreme Court, in the case of Federal Bank Ltd., (2 supra), can be applied to the present case on all fours having regard to the similarity between the two cases. In that view of the matter, the present writ petition is to be rejected on the ground of maintainability itself, without going into the validity of the impugned order.13. 13. For the aforesaid reasons and following the judgment of the Hon’ble Supreme Court in the case of Federal Bank Ltd., (2 supra), Development Credit Bank, third respondent herein, cannot be held to be “other authority” within the meaning of Article 12 of the Constitution of India, so as to maintain the present writ petition. 14. The writ petition is not maintainable and is accordingly dismissed, however, in the circumstances without any order as to costs. However, it is made clear that as the writ petition is rejected without examining the validity of the impugned order, it would be open to the petitioner to avail any other remedy open under law. ___________________ (R. SUBHASH REDDY, J) October 4, 2010 MRR [1] AIR 1991 SC 101 [2] (2003) 10 SCC 733 [3] (2005) 4 SCC 649 [4] AIR 1981 SC 487