Case: B.S. Yadav &amp; Anr Vs. Chief Manager, Central Bank Of India &amp; Ors

2. The Bank came to be established underthe Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (hereinafter referred to as the Act) under which the banking business of 14 banking companies was nationalised. At the commencement the process of nationalisation of these banks was not smooth sailing. On the Government of India taking a decision to nationalise the banking business of 14 banking companies the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance 8 of 1969 was promulgated by the President on July 19, 1969. The Ordinance provided for the acquisition and transfer of the undertakings of certain banking companies which were 14 in number in order to serve better the needs of development of the economy in conformity with the national policy and objectives and for matters connected therewith or incidental thereto. Under the Ordinance 14 corresponding new banks were established. The Bank which is involved in these cases is the corresponding new bank of the Central Bank of India Ltd. which was one of banking companies whose undertaking was taken over under the Ordinance. The corresponding new banks were authorised to carry on and transact the business of banking as defined in clause (b) of Section 5 ofthe Banking Regulation Act, 1949 and also to engage in one or more forms of business specified in(1) of Section 6 of the Act. The Chairman of the banking company whose business was taken over holding office immediately before the commencement of the Ordinance was appointed as the custodian of the corresponding new bank. The general superintendence, direction and management of the affairs and business of the corresponding new bank was vested in the custodian who was to be the Chief Executive Officer of that bank. The above Ordinance was replaced by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 22 of 1969. The constitutional validity of both the Ordinance and the Banking Companies (Acquisition and transfer of Undertakings) Act 22 of 1969 was questioned before this Court in Rustom Cavasjee Cooper v. Union of India ((1970) 3 SCR 530 : (1970) 1 SCC 248 : AIR 1970 SC 564 : (1970) 40 Com Cas 325). By the decision rendered in the said case this Court declared the Ordinance and the Banking Companies (Acquisition and Transfer of Undertakings) Act 22 of 1969 as invalid and the action taken or deemed to have been taken in exercise of the powers under them was unauthorised. The above judgment of the court was pronounced on February 10, 1970. The effect of the judgment was that the undertakings of the 14 banking companies, whose business had been acquired by the Central Government under the authority of the abovesaid Ordinance and the Act, reverted to the banking companies. With a view to resuming control over the business of those banking companies, the President again promulgated on February 14, 1970 the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1970. The provisions of the earlier Act which were struck down by this Court had been duly modified by promulgating the said Ordinance. The said Ordinance provided for the acquisition and transfer of the banking business of the said banking companies with effect from July 19, 1969, i.e., the date on which those undertakings were initially acquired by the Central Government. This Ordinance was replaced by the Act within a short period which was deemed to have come into force from July 19, 1969. By Section 3 of the Act 14 corresponding new banks which were mentioned in the First Schedule to the Act came to be established. Thecapital of every new bank constituted under Section 3 of the Act was, until any provision was made in that behalf in any scheme made under Section 9 of the Act, to be equal to thecapital of the existing bank in relation to which it was the corresponding new bank. The existing banks were the banking companies mentioned in the Second Schedule to the Act whose banking business had been earlier taken over on July 19, 1969. The entire capital of each corresponding new bank was vested in and allotted to the Central Government. Every corresponding new bank was treated as a body corporate with perpetual succession and a common seal with power, subject to the provisions of the Act, to acquire, hold and dispose of property, and to contract and to sue and be sued in its own name. Under the Act the Bank became the corresponding new bank in respect of the Central Bank of India Ltd. Among other provisions, the Act provided for the appointment of officers and employees of the corresponding new bank.

Reasoning:
14. On the Regulations coming into force in 1979 petitioner 1 was served with a notice dated February 25, 1980 issued by the chief Manager of the Bank stating that he would be treated as finally retired from the Banks service after the close of business on February 29, 1980 on completion of 58 years of age. The above writ petitions were filed in April 1980 questioning the order of retirement issued in the case of petitioner 1 and praying inter alia for a declaration, as mentioned above, that all officers including petitioner 1 should be permitted to continue in service till the completion of 60 years of age as in the case of officers falling under Rules 1 and 2 of the Rules for Age of Retirement. The principal grounds urged in support of the writ petitions were that there could not be two different ages of retirement in the case of officers of the Bank and that since Rule 3 of the Rules for Age of Retirement required the officers, who were recruited subsequent to July 19, 1969, to retire on completion of 58 years of age while others falling under Rules 1 and 2 of the said rules could continue till 60 years of age, Rule 3 was liable to be struck down as being violative of Articles 14 and 16 of the Constitution. The petitions were opposed by the Bank and the Union of India. It was pleaded by them that since the employees whose services were transferred to the Bank under sub-section (2) of Section 12 of the Act were entitled to continue in service till 60 years of age by virtue of the conditions of service prevailing in the Central Bank of India Ltd. prior to nationalisation of banks, the Bank and the government found that it would be unjust and unfair to reduce the age of superannuation from 60 years in the case of such employees and, therefore, did not alter the said condition of service. In the absence of any alteration they were entitled to continue to be in service till they attained 60 years of age even after nationalisation by virtue of sub-section (2) of Section 12 of the Act. The officers and employees other than (sic including) the award staff recruited after the nationalisation of the banks were required to retire on completion of 58 years of age which was the age of superannuation genially prevailing in the services of all public sector corporations, Central Government and many of the State Governments. It was urged that since the employees recruited prior to July 19, 1969 belonged to a different class altogether, it could not be said that there had been violation of Articles 14 and 16 of the Constitution, and the difference in the ages of retirement of the two classes of officers was due to historicalIt is no doubt true that the order of appointment in the case of petitioner 1 stated that he would be governed by the terms and conditions which were applicable to other officers of the Bank. That condition, however, did not prevent the Bank from making a regulation which was applicable exclusively to the officers recruited after July 19, 1969. In case of officers falling under Rules 1 and 2 of the Rules for Age of Retirement no extra benefit was conferred on them. They were only permitted to carry the benefit of the Rules for Age of Retirement which was prevailing in the former banking company which was taken over by the government on nationalisation. We are of the view that there was good reason to make a distinction between the employees who had entered service prior to nationalisation and those who joined thereafter. At the time of nationalisation the corresponding new banks did not have their own employees to run the vast business taken over under the Act. There was, therefore, necessity to secure the services of the employees of the former banking companies without causing much dissatisfaction to them. There was also need for standardising the conditions of service of all such employees belonging to the 14 banks. The Government of India took the advice of the Pillai Committee and the Study Group of Bankers and after due deliberation evolved a uniform pattern of conditions for the transferred employees keeping in view the conditions of service of the employees prevailing in the majority of the banking companies which were nationalised. Insofar as the employees recruited after nationalisation were concerned the government applied the rules generally applicable to all its employees in other spheres of GovernmentWe have given detailed reasons in our judgment in LIC v. S. S. Srivastava decided on May 5, 1987 justifying the existence of a rule fixing different ages of retirement to different classes of employees of the Life Insurance Corporation of India in the circumstances existing there. The circumstances prevailing in this case are almost the same. Those reasons are equally applicable to the present case too. In Goivindarajulu v. Management of the Union Bank of India (Writ Petition No. 5486 of 1980, decided on November 21, 1986, in the High Court of Madras) decided on November 21, 1986 the High Court or Madras has rejected the contentions similar to those which are raised before us. In that case a regulation framed by the Union Bank of India which was similar to the one in this case was upheld. That decision has been approved by us in LIC v. S. S. Srivastava. In Dr. Nikhil Bhushan Chandra v. Union of India (1983 Lab NOC 109 (Cal)) similar regulations framed by the United Commercial Bank which was also nationalised under the Act came up for consideration before the High Court of Calcutta. The High Court rejected the theory of discrimination put forward on the basis that fixing 60 years as age of retirement for those who were recruited prior to July 19, 1969 and 58 years of age who joined after that date lacked an intelligible differential. The Calcutta High Court points out that the terms and conditions of the service of the employees of the banks which were taken over under the Act had been protected by the Act and it was not possible to hold that there had been any hostile discrimination against the petitioner in that case. We are of the view that the decisions of the Madras High Court and the Calcutta High Court referred to above, lay down the correct principle. It is true that if the nationalised banks wanted to reduce the age of retirement of the transferred employees they could have done so. But they have tried to standardise their conditions of service and to bring about some uniformity without giving room for much discontent or dissatisfaction. The question involved in this matter is not one of mere competence. It involves justice and fairness too. Having regard to all aspects of the matter, the nationalised banks have tried to be fair and just insofar as the question of age of retirement is concerned. We cannot say in the circumstances that the Banks attitude is unreasonable, particularly when the age of retirement of the new entrants is quite consistent with the conditions prevailing in almost all the sectors of publicWe are of the view that the classification of the employees into two categories, i.e., those falling under Rules 1 and 2 of the Rules for Age of Retirement and those falling under rule 3 thereof satisfies the tests of a valid classification laid down under Articles 14 and 16 of the Constitution. We do not, therefore, find any ground to declare Rule 3 of the Rules for Age of Retirement, which is impugned in this case, as unconstitutional