1 WRIT PETITION NO.5394 OF 2001 lgc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.5394 OF 2001 Bank of Maharashtra Officers’ Association ] A Trade Union registered under the ] Trade Unions Act, ] Jiva Devashi Niwas, Ranade Road, ] Dadar, Mumbai. ]... Petitioner versus 1 Union of India ] T K Kaushik ] Tax Ayakar Bhavan, Bombay-20 ] ] 2 Reserve Bank of India ] Central Office, ] Shahid Bhagat Singh Marg ] Mumbai - 411 005 ] ] 3 Bank of Maharashtra ] Central Office, ] 1501, Shivajinagar, ] Pune – 411 005 ] ] 4 Shri M P Kale, Designated Officer, ] General Manager, ] Recovery & Rehabilitation Department] Bank of Maharashtra, Central Office ] 1501, Shivaji Nagar, Pune 411 005 ] ] 5 Bank of Maharashtra Officers’ ] Organization, ] 5 Kasturi, 371-B, Shaniwar Peth ] Pune – 411 030 ] ] 6 Shri Padmakar N Deshpande ] General Secretary of Bank of ] Maharashtra Officers, Organization ] and presently posted at Bank of ] Maharashtra, Staff Training Centre, ] Pune as MMGS-III ]... Respondents. 2 WRIT PETITION NO.5394 OF 2001 Mr. J P Cama, Senior Counsel, a/w Smt. Neha Mehta i/by Mr. K P Anilkumar for the Petitioner. Mr. Y S Bhate with Mr. D A Dubey with Mr. N R Prajapati i/by Mr. Pankaj Kapoor for the Respondent No.1-UOI None for Respondent No.2. Mr. Girish Kulkarni i/by M G Kulkarni for Respondent Nos. 3 and 4. None for Respondent No.5. Mr. Jaydeep Mitra i/by Mr. G S Godbole for Respondent No.6. CORAM : P B MAJMUDAR & R M SAVANT, JJ. Judgment Reserved from : 02nd July 2010 Judgment Delivered on : 10th August 2010 JUDGMENT : [PER R M SAVANT, J] 1 The issue involved in the instant Petition is as regards the nomination of a Officer Director on the Board of Directors of the Respondent No.3-Bank. The Petitioner, which is a Trade Union representating employees of the officers cadre in the Respondent No.3-Bank, has inter alia prayed for the following reliefs :- A) This Hon’ble Court may be pleased to declare that the Scheme promulgated by the Government of India vide Notification dt. 17.10.2000 in respect of the verification of membership of officers for appointment of non workman employee Director is ultra vires the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and Nationalised Banks (Management and Miscellaneous) scheme, 1970 and 1980 hence null and void. B) This Hon’ble Court may be pleased to grant a Writ of Mandamus or a Writ in the name of Mandamus or another appropriate Writ, direction or Order under Art.226 of the Constitution of India and direct the First Respondent Union of India to frame a fresh Scheme in consultation with the Second Respondent Reserve Bank of India in accordance with law” 2 In view of the fact that pursuant to the scheme mentioned in the prayer clauses i.e. the scheme dated 17.10.2000, one Padmakar N Deshpande, the General Secretary of Respondent No.5-Organization, was nominated as a Director from the 3 WRIT PETITION NO.5394 OF 2001 non-workers category. Prayer clauses (A-1) and (A-2) were added in the prayer clause by way of amending the Petition. Since the tenure of the said Deshpande is already over and since two further nominations thereafter have taken place, the said prayers have become infructuous and have, therefore, not been reproduced in the instant Judgment. Therefore what survives for our consideration is only prayer clauses (A) and (B) as above. Factual Matrix :- 3 The Petitioner as mentioned herein above is a trade union registered under the Trade Union Act, 1926 and claimed to represent the majority of the employees belonging to the officers cadre at the time when the above Petition was filed. The Petitioner claims to be one of the oldest Unions representing the officers of the Respondent No.3 and as such is seriously concerned with not only the policy relating to the operational banking and the effectiveness thereof but also about an extremely uncertain prospect of the continuity, security and welfare of a large number of officers in the present scenario of competitive banking and the Government policies. The Petitioner claims to have long and adequate experience to represent the officers of the Respondent No.3-Bank at all levels including the Board of Directors. The Petitioner therefore legitimately claims the appointment of its own nominee on the Board of Directors of the Respondent No.3-Bank. 4 So far as the statutory provisions are concerned, in the instant Petition it is mainly the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (for brevities sake referred to as “the said Act”). Under the said Act, the Central Government is empowered to make a scheme for carrying out the provisions of the 4 WRIT PETITION NO.5394 OF 2001 said Act in consultation with the Reserve Bank of India. Subsection (2) of section 9 of the said Act stipulates the matters which may be provided for in the Scheme. Subsection (3) of section 9 of the said Act, with which we are concerned, specifically stipulates that the Board of Directors of a Bank shall necessarily include one Director from among the employees who are not “workmen” under clause (s) of Section 2 of the Industrial Dispute Act, 1947 to be nominated by the Central Government after consultation with the Reserve Bank of India. In pursuance of the said power conferred by the said Act, the Central Government had framed a scheme called the Nationalised Banks (Management and Miscellaneous Provisions) Schemes in the year 1970 and thereafter in the year 1980. The said schemes provided for an appointment of one Director from among the employees of Nationalised Banks falling under the category of “workmen” under the I.D. Act to be appointed by the Central Government from out of a panel of three such employees furnished to it by the representative Union. In so far as non-workman employee Director is concerned, the said schemes simply empowered the Central Government to appoint one Director from among the employees of the nationalised banks who are not workmen under the I.D. Act in consultation with the Reserve Bank of India, thereby leaving a discretion to the Central Government about the choice of the employee concerned. It appears that in terms of the said schemes, the Central Government used to select an officer of a bank from the panel of names sent by the banks confined to office bearers of the Association of Officers. The said system continued till August 1982. On 23/8/1982 the Central Government issued a circular stating that there was no justification for restricting the choice to the office bearers of the Association and declared that the Government would appoint any officer of proven ability and character to the Board of Directors of a Nationalised Bank irrespective of his affiliation with any association. 5 WRIT PETITION NO.5394 OF 2001 The said circular was challenged by the All India Bank Officers’ Confederation before the Apex Court as being ultra vires the said Act and the schemes as being against the democratic principle. The Apex Court, considered the circular on the touchstone of the provisions of the Act and the schemes, was pleased to hold that the circular dated 23/8/1982 was ultra vires the Act and the schemes and hence null and void. The said judgment of the Apex Court is reported in AIR 1989 SC 2045 in the matter of All India Bank Officers’ Confederation v/s. Union of India. We would make a detailed reference to the said judgment at an appropriate time. It appears that though the directions were issued by the Apex Court in the said judgment to amend the schemes which were already in force, no such steps were taken by the Central Government. It appears that vacancy for the non-workers Director in the Respondent No.3-Bank was not filled up since the year 1987. In view of the fact that no immediate steps were taken by the Central Government and no scheme was framed laying any procedure either for verification of membership of Officers’ Association or for election of a representative from the Officers’ Association for the purpose of appointment of Officer Director and since the Petitioner-Union felt that it was one of the most affected Unions in that respect, the Petitioner filed Writ Petition No.4048 of 1999 in this Court on the ground that the Respondent No.3-Bank was procrastinating the process of verification of membership and supporting, helping and aiding the Respondent No.5- Union in its endeavour to send its nominee on the Board of Directors. The said Writ Petition No.4048/99 was allowed by this Court and the Central Government was directed to frame a proper scheme for verification of membership of the Officers’ Association in the Respondent No.3-Bank. It would be apposite to reproduce Para 9 from the said Judgment which, in our view, is relevant for the purpose of adjudication of the issue raised in the instant Petition. 6 WRIT PETITION NO.5394 OF 2001 “9. It is an admitted position that the Central Government has not framed any scheme for the purpose of ascertaining the majority status of the officers association and the Central Government has left it to the individual bank to frame appropriate scheme for purpose of appointing officer director on the board of directors of the bank. In our opinion, in view of the decision of the Supreme Court in All India Bank Officers Confederation’s Case (supra), it is obligatory on the Central Government to frame appropriate scheme in respect of the banks for the purposes of ascertaining the majority status as also for providing machinery to resolve the disputes in respect of process for verification of membership of the officers union and this power cannot be delegated to individual Banks as sought to be done by the Central Government. As held by the Supreme Court the object of the Act is to give the board a truly representative character so as to reflect the genuine interest of the various persons manning or dealing with the bank as an individual and a commercial enterprise. In order to ensure that such election or nomination would lend to the board of directors its truly representative character, it is necessary for the Central Government to frame a proper scheme for verification of the majority status of the union and elect a pannel of officers to the board of directors. In the instant case the learned counsel appearing for the bank has fairly conceded that the statistic/information supplied to the Indian Bank Association was not for purpose of ascertaining majority status of the union and this was not verified either at regional or central office level and was routinely complied and submitted. In the circumstances we direct the Central Government to frame scheme for ascertaining the majority status of the union and submit the same before this court within three months from today.” 5 After the said judgment of this Court, the Central Government framed a scheme in consultation with the Reserve Bank of India known as the Nationalised Banks (Management and Miscellaneous Provisions)(Second Amendment) Scheme, 2000 and notified the same vide its Notification dated 17/10/2000 (hereinafter referred to as “the Scheme of 2000”). A perusal of the said Scheme discloses that the said scheme provides for a procedure for verification of membership of Officers’ Association and for obtaining a panel of names for appointment of non-workman 7 WRIT PETITION NO.5394 OF 2001 employee Director on the Board of Director of the nationalised banks. The Third Schedule of the said scheme gives the procedure for verification of membership. It appears that prior to the said Writ Petition being filed, there appeared to be a tussle for ascendancy between the Petitioner Union and the Respondent No.5-Union as regards who had the support of majority of the officers of the Respondent No.3-Bank. It was the claim of the Petitioner that the Petitioner had the majority support, however, the Management of the Respondent No.3-Bank was indirectly supporting the Respondent No.5-Union and conducting itself contrary to the provisions of the scheme. It was the case of the Petitioner-Union that since the Respondent No.5-Union did not have the requisite representation in the officers cadre and therefore to avoid a nominee of the Petitioner-Union being on the Board of Directors, the issue of verification of the membership was procrastinated by the Respondent No.3- Management. It was, therefore, the case of the Petitioner that on account of the alleged high handedness of the Management of the Respondent No.3 and also on account of flagrant violation of the letter and spirit of the Banking Companies Act and also the directions of the Apex Court in the judgment (Supra) that the Petitioner had to resort to filing the said Writ Petition No.4048/99. The aforesaid facts in our view are not germane for deciding the controversy in issue but have been stated only to complete the narration of facts. 6 It appears that after the scheme came into force, the Respondent No.3- Management had appointed a designated officer as contemplated under the said scheme. The said designated officer vide letter dated 1/8/2001 declared 31/7/2001 as the date on which the membership position of the Officers’ Associations would be verified under the said scheme. It is the case of the Petitioner that the scheme does 8 WRIT PETITION NO.5394 OF 2001 not envisage any specific date of reckoning and more over the scheme envisages a procedure for verification of the membership in respect of banks who have at present an Officer Employee Director on their Boards and the tenure of such an employee Director has expired. The said scheme does not provide for a situation where no Director has been appointed at all and the position is vacant. It was therefore the case of the Petitioner that the Respondent No.3-Bank ought to have approached the Central Government for proper clarification for fixation of the date of reckoning with reference to which the membership of the Associations would be verified. It was further the case of the Petitioner that the date 31/07/2001 fixed as the date of reckoning has been fixed by the designated officer for helping the Respondent No.5- Union. It was the case of the Petitioner that 31.07.2001 should be the date of reckoning with reference to which the verification of membership could be done. The Petitioner had accordingly addressed a letter dated 12/09/2001 to the Chairman and Managing Director of the Respondent No.3 requesting him to intervene in the matter. Since the Petitioner was of the view that the designated officer under the scheme was bent upon completing the process with callous disregard to the provisions of the said Act with calculated ulterior motive of taking the Petitioner Union by surprise and preventing it from achieving its objective of having its own office bearer as non- workman employees Director and though the Petitioner submitted its list of members on 31/7/2001, without prejudice to its right to challenge the same. The Petitioner- Union has filed the instant Petition challenging the said scheme of 2000. 7 The principal ground of challenge to the said scheme is that the said scheme is not in accordance with the Banking Companies (Acquisition & Transfer of Undertakings ) Act, 1970 and is contrary to what has been held by the Apex Court in 9 WRIT PETITION NO.5394 OF 2001 the matter of All India Bank Officers Confederation v/s. Union of India, AIR 1989 SC 2045. 8 Since the Central Government has framed a scheme and the scheme is ascribable to Section 9 of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970. The said Section 9 prior to its amendment read as under (relevant excerpt) :- “Sec.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)....................... (b)....................... (c)........................ (d)........................ (3) Every Board of Directors of a corresponding new bank, constituted under any scheme made under sub-section (1), shall include--- (a) representatives of the employees, and of depositors, of such bank; and (b) such other persons as may represent the interests of each of the following categories, namely, farmers, workers, and artisans, to be elected or nominated in such manner as may be specified in the scheme.” (emphasis supplied) It is required to be noted that in so far as Section 9 is concerned, the said provision has undergone a change inasmuch as by an amendment in the year 1995, the word “election” has been deleted from the said provision and therefore what remains is 10 WRIT PETITION NO.5394 OF 2001 only the nomination and hence the Officer Director can only be appointed by nomination. We have referred to the said change as we are of the view that in the context of the challenge raised in the instant Petition to the said scheme, the said change has some relevance and consequences in so far as the Petitioner-Union is concerned. 9 In the above Petition an affidavit has been filed on behalf of the Respondent No.1-Union of India by one Ramesh Chand, working as Under Secretary in the Ministry of Finance, Department of Economic Affairs (Banking Division). On behalf of the Respondent No.3 an affidavit is filed by one Ashok V Dugade, the General Manager of Respondent No.3 and, on behalf of the Respondent Nos.5 and 6 an affidavit is filed by one Padmakar Deshpande, the Respondent No.6 and the General Secretary of the Respondent No.5. In so far the affidavit of the Respondent No.1-Union of India is concerned, the said affidavit justifies the provisions of the scheme and sets out the background in which the said scheme which has been challenged in the above Petition came to be drafted. The said affidavit further goes on to state that the said scheme inter alia contains checks and balances inasmuch as an appeal has been provided under clause 6 of the said scheme in case of any grievance in respect of verification carried out by the designated officer. In so far as affidavits of Respondent Nos. 3 and 5 are concerned, the said affidavits inter alia deal with the case as regards verification on the basis of “check off” system. It has been mentioned in the said affidavits that the Petitioner 11 WRIT PETITION NO.5394 OF 2001 Union itself was propagating the said check off system since long but having realised that it did not have majority of the officers that it has now questioned the said check off system. In so far as cut off date of 31st July 2001 is concerned, the said affidavits justify the said cut off date fixed by the designated officer for ascertaining the membership of the respective Unions. It is further stated in the said affidavits of the Respondent Nos.3 and 5 that the Petitioner on some pretext or the other does not want the verification to go on as it is apprehensive of the result of such verification on the basis of which the Officer Director is to be nominated on the Board of Directors of the Respondent No.3. The said Respondents have ultimately stated in the said affidavits that the scheme which is questioned in the above Petition is not ultra vires the provisions of the said Act or is not contrary to the judgment of the Apex Court in the case of All India Bank Officers’ Confederation v/s. Union of India reported AIR 1989 SC 2045 10 SUBMISSIONS ON BEHALF OF THE PETITIONER :- (i) It is submitted on behalf of the Petitioner that the scheme of 2000 is not in accordance with the provisions of the Act of 1970. It is contended on behalf of the Petitioner relying upon Section 9 of the said Act that the principle enshrined in Section 9 is that a representative of the Officers is to be nominated on the Board of Directors. The object of the legislature therefore was that the Board should have a truly representative character so as to reflect the genuine interests of the various persons manning or dealing with the bank as an industry and a commercial enterprise. It is the contention of the learned senior counsel for the Petitioner that an Officer Director chosen in the manner as envisaged in the scheme does not result in 12 WRIT PETITION NO.5394 OF 2001 really a true representative of the Officers Director being chosen for being nominated on the Board of Directors. (ii) It is next contended that the scheme of 2000 is also contrary to what has been decided by the Apex Court in the case of All India Bank Officers’ confederation v/s. Union of India (Supra). Relying upon paras 6 and 8 of the said Judgement, the learned senior counsel for the Petitioner submitted that apart from the fact that the scheme is contrary to the intent of the legislature, as can be seen from Section 9, and the said scheme in so far as it contemplates the nomination of the Officer Director by the process envisaged in the scheme is against what has been propounded by the Apex Court in the judgment (supra). It is contended that the Apex Court has held that in the case of employees, election is indeed the most logical, the most appropriate, the most democratic and certainly the most advantageous form of representation. The learned senior counsel for the Petitioner contended that the nomination from a union which has majority does not result in the true representative of the Officers Director being nominated as a Director on the Board of Directors. (iii) In so far as process of verification is concerned, it is the submission of the learned senior counsel that there is unbridled and unregulated power conferred on the designated officer in the matter of verification of the membership of the union. As a consequence, this results in the entire process being left to the whims of the designated officer of the individual banks which results according to the learned senior counsel into an improper representation of the officers. 13 WRIT PETITION NO.5394 OF 2001 (iv) In so far as the verification of membership is concerned, by clause (2) of the said scheme it is contemplated that the same is to be ascertained on the basis of a list of members submitted by the representative union which members have paid subscription for at list three months during the period of 1st six months of the preceding year from the date on which the term of the existing Officers Director expires or position has fallen vacant due to some other reason. However, by clause (3) what is contemplated is a requirement which according to the learned senior counsel is contrary to the requirement of clause (2). It is contended that clause (3) stipulates that verification officer shall examine the lists and ascertain the number of members who had paid three months’ subscription within the period of six months preceding the date of reckoning. This according to the learned senior counsel for the Petitioner is incongruous to the provisions contained in clause (2) and, therefore, the entire verification process results into improper system of verification which ultimately has adverse effect on the process of verification as to which union has a majority. It is also contended that clauses (2) and (3) of the Scheme 2000 have the effect of affecting the right of an officer to be a member of a particular union by changing his allegiance. (v) It is contended that though the appeal is provided against any grievance regarding verification, since the said appeal is to be decided within a period of 15 days, the said remedy is not an effective remedy as it is likely that in view of the limitation prescribed the whole process will be speeded up and thereby