Case: New Bank of India Employees Union &amp; Another Vs. Union of India &amp; Others

well as the Union Government considered the total volume of business of both the banks, the rate of promotion in both the banks, the number of employees in both the banks, as well as the impact if the entire length of service of the employees of the transferor bank is taken into account or one time reduced level is taken into account and finally evolved the scheme of placement and modalities for promotion. Having considered the necessary averments made in the affidavits filed by the Union Government as well as by the Reserve Bank of India we are of the considered opinion that in framing the Placement Scheme and determining the ratio of 2:1 in Clauses 4(a)(iii) & 4(b)(ii) the appropriate authorities have taken relevant and germane materials into consideration and the said provision cannot be termed as arbitrary and irrational.30. So far as the fourth question is concerned we do not find any substance of Mr. Raos argument that the Placement Scheme is retrospective in nature. As we have discussed earlier, on deciding to amalgamate the two banks in exercise of power under Section 9 of the Acquisition Act the Union Government framed the scheme of amalgamation and notified the same on 4th September, 1993. But in that scheme excepting making the employees of the transferor bank as employees of the transferee bank, the other questions like their inter-se seniority and fitments in the cadre of the transferee bank had not been decided. On the other hand Clause 5(4) of the Amalgamation Scheme left the matter open for being evolved at a later stage and the complete fusion between the employees of the two banks came only on the subsequent scheme being framed, which scheme was evolved after due deliberations on the relevant materials. The scheme therefore, necessarily have to be given effect with effect from the date of amalgamation and the same cannot be held to be retrospective in nature as contended by Mr. Rao. 31. The only other question which remains for consideration is whether the conclusion of the High Court that the scheme making process under Section 9 of the Acquisition Act is not legislative is correct in law. In view of our conclusions on the four questions formulated, this question is not of much relevance but since the High Court has recorded a conclusion and the learned Additional Solicitor General and Shri Salve advanced the argument we think it appropriate to answer this question also. The High Court relied upon the decision in Sapherds case (supra) and came to hold that the provisions of Section 45 of the Banking Regulation Act being in pari materia with Section 9 of the Banking Companies Acquisition and Transfer of Undertakings Act, 1980, and the scheme framed under Section 45 of the Banking Regulation Act having been held by this Court to be not legislative, the scheme framed under the Acquisition Act as in the present case, must also be held to be not legislative one. It is undisputed that in Sephards case (supra) the amalgamation was of a private bank with a nationalised bank and the provisions of the Banking Regulation Act, 1949 applied. This Court in Sephards case (supra) on examining Section 45(11) of the Banking Regulation Act 1949 came to hold that merely because a scheme framed is required to be laid before both the Houses of Parliament after the same has been sanctioned by the Central Government the Scheme cannot be held to be legislative in nature. But in our considered opinion the High Court has failed to notice the fundamental distinction between the provisions of Section 45 of the Bank in Regulation Act and Section 9 of the Acquisition Act. Under Section 9 of the Acquisition Act under which Act the impugned scheme has been framed, every scheme framed by the Central Government has to be laid before each Houses of Parliament for a total period of 30 days and the Parliament has the power to agree to the Scheme and making any modification or in giving to a decision that the scheme should not be made and it is only thereafter the Scheme has the effect either in the modified form or does not agree. The essential distinction between the two provisions therefore, is that whereas under the Banking Regulation Act the Scheme framed has merely to placed before the Parliament and nothing further but under the Acquisition Act the scheme becomes effective only after the same is placed before both the Houses of Parliament and after the Parliament makes such modification and agrees to the scheme. In this view of the matter the decision of this Court in Sephards case (supra) has no application to a scheme framed under the provisions of the Acquisition Act and in our considered opinion, a scheme framed under Section 9 of the Banking Companies Acquisition and Transfer of Undertakings Act, 1980, is a legislative one. The High Court was in error in holding the scheme not to be a legislative one. 32. Mr. Sharma, the learned senior counsel appearing for the appellant, the Punjab National Bank Employees Federation urged that the ratio of 2:1 fixed under the Placement Scheme infact works out gross injustice. The interest of the employees of the Punjab National bank should not be jeopardised by bringing the employees of the New Bank of India and no credit should be given to the employees of the New Bank of India for their past services rendered. We do not find any force in the aforesaid contention and, as discussed earlier, the ratio of 2:1 was fixed in the Placement Scheme in consultation with the Reserve Bank of India and after a comparative study of the business of the two banks, the rate of promotion, the higher productivity and larger measure of responsibility and higher average business per branch of the Punjab National Bank as compared to the New Bank of India and all other germane considerations. The submission of Mr. Sharma, therefore, is rejected.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]18. According to Mr. Rao the aforesaid provision makes it clear that the employees of the transferor bank would continue to be the employees of the transferee bank on the same terms and conditions which they were enjoying under their erstwhile employer, namely, the transferor bank, until and unless the terms and conditions are duly altered by the transferee bank. In that view of the matter the Union Government had no power to frame Clauses 4(a)(iii) & 4(b)(ii) of the Placement Scheme and thereby jeopardise the chances of promotion of the employees of the transferor bank in the transferee bank to their detriment and altering their conditions of service. According to Mr. Rao promotion and seniority are two different concept and Clause 5(4) of the Amalgamation Scheme had merely authorised the Central Government to make another Scheme, a subsidiary one after consultation with the Reserve Bank of India for determining the placement of the employees of the transferor bank and for- determining their inter-se seniority vis-a-vis the employees of the transferee bank. Promotion by no stretch of imagination can be included within the purview of Clause 5(4) of the Amalgamation Scheme. In this view of the matter the impugned clause of the Placement Scheme, namely, Clause 4(a)(iii) & 4(b)(ii) computing the ratio of 2:1 for the purpose of determining the minimum length of service for promotion from subordinate cadre to clerical cadre and also from clerical cadre to officer cadre is wholly without jurisdiction and an arbitrary exercise of power by the Central Government. Mr. Rao contends that the right of promotion of the employees of the transferor bank remains fully protected under Clause 5(2) of the Amalgamation Scheme and it can only be duly altered by the transferee bank and that right cannot be taken away by the Central Government in framing a scheme in the garb of determination of inter se seniority. In this connection Mr. Rao has also advanced an argument that in the minimum, before introducing the scheme and altering the service conditions, the employees should have been given atleast an opportunity of hearing. Mr. Rao placed reliance on the decisions of this Court in the case of K.I. Shephard and Ors. Etc. Etc. v. Union of India and Ors. (1988)ILLJ162SC which was approved and followed in the case of H.L. Terhan v. Union of India [1988] Suppl. 3 SCR 923. In the Shephards case (supra) when some private banks were amalgamated with Punjab National Bank, Canara Bank and State Bank of India in terms of separate schemes drawn under Section 45 of the Banking Regulation Act, 1949, some of the employees of the amalgamated banks were excluded from employment in the transferee banks and such exclusion was made without giving the employees an opportunity of being heard. When the matter had been challenged before the Kerala High Court, the learned Single Judge of the High Court had proposed a post amalgamation hearing but that had been vacated by the Division Bench of the High Court. In that context this Court had held that even a post decisional bearing will not meet the ends of justice and there is no justification to throw out the employees from their employment without giving them an opportunity of representation and giving an opportunity of representation is a condition precedent to the action taken. We fail to understand how this decision is of any assistance to the appellants. In that particular case on account of certain charges against the employees of the private banks they were not given employment in the transferee bank and, therefore, this Court had observed that before excluding them from consideration they had a right to be heard. In the present case none of the employees of the transfer or bank had been excluded from absorption in the transferee bank, on the other hand an option was asked for and thereafter by operation of the Amalgamation Scheme, the employees of the transferor bank have become the employees of the transferee bank and, therefore, question of giving them opportunity of hearing does not arise. In Trehans case (supra) the question for consideration was whether there can be deprivation or curtailment of any existing right or benefit enjoyed by government servant without complying with the rules of natural justice by giving the servant concerned an opportunity of being heard. In that particular case the Caltex Oil Refinery (India) Ltd., a government company (for short Corn"), which was acquired by the Government of India under the provisions of the Caltex (Acquisition of Shares of Caltex Refining (India) Ltd.) Act. 17 of 1977, the Board of Directors of Coril had issued a circular indicating the perquisite admissible to the Management staff should be rationalised in the manner stated in the circular. That circular was challenged by the employees of Corils on the ground that it curtails the existing rights and advantages and such circular should not have been therefore, issued without affording an opportunity of hearing. The High Court had quashed that circular accepting the contention of the employees and on appeal this Court confirmed the decision of the High Court and following the earlier view expressed in Shephards case (supra) held that there can be no deprivation or curtailment of any existing right, advantage or benefit enjoyed by government servant without complying with the rules of natural justice by giving the government servant concerned an opportunity of being heard. We fail to understand how this decision also is applicable to the present case where Section 9 of the Acquisition Act authorises Central Government to make a Scheme of Amalgamation of two banks and in exercise of that power the Central Government after consulting the Reserve Bank of India framed the Amalgamation Scheme and retained to itself the power to frame another scheme for placement and seniority of the employees of the transferor bank vis-avis the employees of the transferee bank and in accordance with that power framed the Placement Scheme. In our considered opinion, neither the Placement Scheme in any way alters the conditions of service of the employees of the transferor bank nor does it require any opportunity of hearing to be given to the employees of the transferor bank before framing of the Placement scheme. Mr. Rao also placed reliance on the decision of this Court in the case of Canara Bank v. MS. Jasra and Ors. (1992)ILLJ777SC . In the aforesaid case the question for consideration was, when some private banks are amalgamated with the Nationalised bank under the provisions of Banking Regulation Act 1949 can the employees of the private banks claim to be governed by an age of superannuation of the transferor bank or they would be governed by the terms and conditions of service applicable to the employees of corresponding ranks or status of the transferee bank. This court answered the question by holding that the employees would be governed by the terms and conditions of service of employees of the corresponding rank of the transferee bank and therefore, their claim to continue in service upto 60 years is unsustainable. Analysing the provisions of the Banking Regulation Act 1949 and referring to proviso (ii) to Clause (i) of Sub-section (5) of Section 45 of the said Act this Court held that the employees of the transferor bank would be entitled to the terms and conditions of service with the employees of the corresponding rank and status of the transferee bank were availing of and therefore the High Court was in error in allowing the claim of the employees of the transferor bank. In our considered opinion this decision is of the assistance to the point which arises for consideration in the present case. Firstly, the provisions of Banking Regulation Act 1949 has no application in the case in hand. Secondly, the point in controversy in the case in hand is different than the point in controversy in that case. Thirdly, Section 9 of the Acquisition Act confers power on the Central Bank to frame the Scheme of Amalgamation and in exercise of that power to Amalgamation Scheme had been framed which came into force on 4th September 1993 and under Clause 5(4) thereof Central Government had retained power to frame the Scheme for placement and inter-se seniority between the employees of the transferor bank with the transferee bank and in accordance with that power the impugned scheme of placement had been framed. The question for consideration therefore, is whether the Central Government had the power to frame the impugned Placement Scheme? As has been noticed earlier the expression placement in Clause 5(4) of the Amalgamation Scheme must be construed to mean re-deployment of the employees fitment of those employees in a grade or rank or cadre in the transferee bank and inter-se seniority of those employees vis-a-vis the employees of the transferee bank in the cadre or grade. If this meaning is given to the expression Placement in Section 5(4) of the Amalgamation Scheme and then the impugned provision of Clause 4(a)(iii) and 4(b)(ii) are considered it is difficult for us to accept the contention of Mr. Rao that it alters the conditions of service of the employees of the transferor bank and beyond the power of the Central Govt.the Central Government decided to amalgamate two banks it has to make a scheme after consulting the Reserve Bank of India under Section 9 of the Acquisition Act. In the case in hand Amalgamation became necessary as the transferor bank was incurring heavy loss and without the amalgamation it would have been totally wound up. When a scheme is framed amalgamating two banks, it is not possible for the Central Government to take the details of the service condition in account and that is why it provided that the employees of the transferor bank would become the employees of the transferee bank on the same terms and conditions, with the same rights to pension, gratuity and other matters which would have been admissible to them if they would have continued as the employees of the transferor bank. But so far as the question of their placement and inter-se seniority vis-a-vis the employees of the transferee bank, the Scheme itself stipulated that in consultation with the Reserve Bank of India the Central Government after taking relevant factors into consideration may frame the Scheme. It is in exercise of this power the placement scheme has been framed and under the Placement Scheme what has been intended is that for determination of the inter-se seniority and in the matter of promotion from subordinate cadre to the clerical cadre and from the clerical cadre to the officers cadre while the computation of years of service rendered is taken into account, the computation shall be made in the ratio of 2:1 i.e. two years of service, in the transferor bank would be considered equivalent to one year of service in the transferee bank. This computation is only one time computation and whether such decision has been taken after taking the relevant factors into account will be considered by us when the question of arbitrariness etc. is considered. But on examining the provisions of the Acquisition Act as well as the provisions of Clause 5(4) of the Amalgamation Scheme framed in exercise of power under Section 9 of the Acquisition Act and the impugned clauses of the Placement Scheme we have no hesitation to come to the conclusion that the Central Govt. did retain the power to frame the Placement Scheme in question which is essential for determination of the placement of the employees of the transferor bank and the inter-se seniority vis-a-vis the employees of the transferee bank and for framing such scheme it was not necessary to afford an opportunity of hearing to the employees of the transferor bank, as in our view there has been no change on conditions of their service. In this view of the matter we answer the first question by holding that the Central Government has the power to frame the subsequent scheme which has been termed by us in this judgment as the Placement Scheme for the placement of the employees of the transferor bank in the transferee bank and for the determination of their inter-se seniority with the employees of the transferee bank.19. Coming down to the second question the legal position is fairly settled that no scheme of amalgamation can be fool proof and a Court would be entitled to interfere only when it comes to the conclusion that either the scheme is arbitrary or irrational or has been framed on some extraneous consideration.Rao, learned Counsel appearing for the appellants on the other hand, urged that the subsequent scheme framed for placement of the employees must be held to be arbitrary as there is no rational for wiping of the past service of the employees of the transferor bank. Relying upon the decision of this Court in the case of K. Madhavan and Am. Etc. v. Union of India and Ors. [1988]1SCR421 the learned Counsel urged that the entire period of service rendered by the employees of the transferor bank can be taken into account for the purpose of their seniority after amalgamation. In the aforesaid case petitioner Madhavan was a permanent officer in the grade of Deputy Commandant. On 14.6.76 it has been found to be equivalent to the grade of S.P. in the CBI. When Madhavans services were taken over by the CBI the question arose whether his past service shall be taken into account for determining his seniority in the CBI and in that contest this Court has observed that his entire period of service should be taken into account.In our considered opinion this decision is of no assistance to the appellant in the present case where a particular scheme was required to be framed after amalgamation of the services of the transferor bank with the transferee bank and in that scheme certain provisions have been made as to how the employees of the transferor bank would be fitted in the transferee bank.26.Mr. Rao, learned Counsel also placed reliance on another decision of this Court in the case of Tej Narain Tiwary v. State of Bihar and Ors. [1993] 2 Suppl. S C C 623 in support of his contention that in a case of amalgamation the entire past service of the employee should be taken into account.In that case the appellant Narain Tiwary had been appointed by the Bihar School Examination Board as Special Officer in August 1969. The said post was abolished with effect from April 1, 1971. He filed a suit and obtained injunction against the abolition of post and termination of his services. In the course of litigation a compromise had been arrived at between the Board and the appellant wherein he was appointed as a Sectional Head Officer and his pay as a Special Officer was also protected. The Board, therefore, passed an order on March 20, 1972 appointing the appellant as a Sectional Head Officer in the general cadre. In the seniority list of Sectional Officers prepared by the Board the appellant had been shown above respondent No. 5 and he had been granted promotion to the post of Asstt. Secretary. The respondent No. 5 therefore, filed a Writ Petition challenging the seniority list. The High Court came to the conclusion that the post of Sectional Officer occupied by the appellant not being a cadre post the services rendered by the appellant as Special officer cannot be taken into account for his seniority in the cadre of Sectional Officer. This Court in appeal reversed the judgment of the High Court and held that the compromise entered into between the parties and the order of March 20, 1972 is capable of being interpreted as an order of amalgamation of the ex cadre post of Special Officer with the cadre of Sectional officer and consequently the appellant would get his seniority from the date of his appointment as a Special Officer. In coming to this conclusion the Court also relied upon the results and orders of the Board itself. We fail to understand how this case can be of any assistance to the appellants in the present case.27. In view of the legal position as discussed above, and on examining the provisions of the Placement Scheme more particularly Clauses 4(a)(iii) & 4(b)(ii) and on consideration of the opinion rendered by the Reserve Bank of India we have no hesitation to come to the conclusion that the said Scheme is neither arbitrary nor irrational and on the other had a just scheme evolved by the Union Government after due consultation with the Reserve Bank of India and Court cannot interfere with such a Scheme.28. Coming to the third question the answer would obviously depend upon the relevant materials considered both by the Reserve Bank of India as well as by the Union Government before framing of the Placement Scheme. At the outset it may be noted that most important function of the Reserve Bank of India is to regulate the Banking system generally it is usually described as a Bankers Bank. The Reserve Bank of India has been given certain advisory and regulatory functions. It advices government and other banks on financial and banking matter. The provisions of the Reserve Bank of India Act shows that a bank has been created as a Central Bank with powers of supervision, advice and inspection over banks particularly those desiring that they be included in the Second Schedule or those scheduled already. The Reserve Bank safeguards the economy and financial stability of the country. We have set out the functions of the Reserve Bank of India because the Placement Scheme which is being impugned in the present case by the employees of the transferor bank had been framed in due consultation with the Reserve Bank of India and the said Reserve Bank has filed affidavits indicating the broad consideration on which the ratio 2:1 has been fixed.The appellants, however, strongly relied upon the fact that both the banks being nationalised banks and the recruitment to both the banks being through the same Selection Board, there is no justification for treating the services of the employees of the transferor bank on 2:1 basis after amalgamation for the purpose of promotion. In our considered opinion the contention of the appellant is wholly unsustainable. As has been stated earlier, the financial loss sustained by the transferor bank had brought the bank to a virtual collapse. It is at that point of time the Reserve Bank on consideration having taken a sympathetic view of the matter and instead of advising winding up of the bank and its liquidation advised for its merger with a stronger bank and the Government of India ultimately accepted the advise of the Reserve Bank. On its amalgamation necessary provisions were required to be made for the placement of the employees of the transferor bank with the employees of the transferee bank. At that stage the bank as well as the Union Government considered the total volume of business of both the banks, the rate of promotion in both the banks, the number of employees in both the banks, as well as the impact if the entire length of service of the employees of the transferor bank is taken into account or one time reduced level is taken into account and finally evolved the scheme of placement and modalities for promotion. Having considered the necessary averments made in the affidavits filed by the Union Government as well as by the Reserve Bank of India we are of the considered opinion that in framing the Placement Scheme and determining the ratio of 2:1 in Clauses 4(a)(iii) & 4(b)(ii) the appropriate authorities have taken relevant and germane materials into consideration and the said provision cannot be termed as arbitrary and irrational.30. So far as the fourth question is concerned we do not find any substance of Mr. Raos argument that the Placement Scheme is retrospective in nature. As we have discussed earlier, on deciding to amalgamate the two banks in exercise of power under Section 9 of the Acquisition Act the Union Government framed the scheme of amalgamation and notified the same on 4th September, 1993. But in that scheme excepting making the employees of the transferor bank as employees of the transferee bank, the other questions like their inter-se seniority and fitments in the cadre of the transferee bank had not been decided. On the other hand Clause 5(4) of the Amalgamation Scheme left the matter open for being evolved at a later stage and the complete fusion between the employees of the two banks came only on the subsequent scheme being framed, which scheme was evolved after due deliberations on the relevant materials. The scheme therefore, necessarily have to be given effect with effect from the date of amalgamation and the same cannot be held to be retrospective in nature as contended by Mr.view of our conclusions on the four questions formulated, this question is not of much relevance but since the High Court has recorded a conclusion and the learned Additional Solicitor General and Shri Salve advanced the argument we think it appropriate to answer this question also. The High Court relied upon the decision in Sapherds case (supra) and came to hold that the provisions of Section 45 of the Banking Regulation Act being in pari materia with Section 9 of the Banking Companies Acquisition and Transfer of Undertakings Act, 1980, and the scheme framed under Section 45 of the Banking Regulation Act having been held by this Court to be not legislative, the scheme framed under the Acquisition Act as in the present case, must also be held to be not legislative one. It is undisputed that in Sephards case (supra) the amalgamation was of a private bank with a nationalised bank and the provisions of the Banking Regulation Act, 1949 applied. This Court in Sephards case (supra) on examining Section 45(11) of the Banking Regulation Act 1949 came to hold that merely because a scheme framed is required to be laid before both the Houses of Parliament after the same has been sanctioned by the Central Government the Scheme cannot be held to be legislative in nature. But in our considered opinion the High Court has failed to notice the fundamental distinction between the provisions of Section 45 of the Bank in Regulation Act and Section 9 of the Acquisition Act. Under Section 9 of the Acquisition Act under which Act the impugned scheme has been framed, every scheme framed by the Central Government has to be laid before each Houses of Parliament for a total period of 30 days and the Parliament has the power to agree to the Scheme and making any modification or in giving to a decision that the scheme should not be made and it is only thereafter the Scheme has the effect either in the modified form or does not agree. The essential distinction between the two provisions therefore, is that whereas under the Banking Regulation Act the Scheme framed has merely to placed before the Parliament and nothing further but under the Acquisition Act the scheme becomes effective only after the same is placed before both the Houses of Parliament and after the Parliament makes such modification and agrees to the scheme. In this view of the matter the decision of this Court in Sephards case (supra) has no application to a scheme framed under the provisions of the Acquisition Act and in our considered opinion, a scheme framed under Section 9 of the Banking Companies Acquisition and Transfer of Undertakings Act, 1980, is a legislative one. The High Court was in error in holding the scheme not to be a legislativedo not find any force in the aforesaid contention and, as discussed earlier, the ratio of 2:1 was fixed in the Placement Scheme in consultation with the Reserve Bank of India and after a comparative study of the business of the two banks, the rate of promotion, the higher productivity and larger measure of responsibility and higher average business per branch of the Punjab National Bank as compared to the New Bank of India and all other germane considerations. The submission of Mr. Sharma, therefore, is rejected.