Punjab National Bank, Limited v Their Workmen
Supreme Court of India

6 December 1960
C.A. No. 450 of 1959,
The Judgment was delivered by: GAJENDRAGADKAR, J.
1.  This appeal by special leave arises out of an industrial dispute between the appellant, the Punjab National Bank, Ltd., and the respondents, its workmen. On 17 June, 1958 the Central Government referred his dispute for adjudication to the Central Industrial Tribunal, Delhi, constituted under S.7A of the Industrial Disputes Act XIV of 1947; this reference was made under S. 10(1)(d) of the said Act. The question referred for adjudication is thus stated in the order of reference :
"Whether the Punjab National Bank, Ltd., Delhi, is justified in imposing a condition that the persons appointed as officers grade II either by direct recruitment or by promotion shall be governed by the rules of the bank as applicable to officers in respect of scales of pay and other conditions of service and not by those of the award of the All-India Industrial Tribunal (Bank Disputes), as modified by S. 3 of the Industrial Disputes (Banking Companies) Decision Act, 1955 (41 of 1955), and if not, to what relief are such persons entitled."
2. The industrial tribunal heard both the parties, considered the evidence led by them in support of their respective contentions and has made an award in favour of the respondents. In dealing with the reference the tribunal framed two issues. The first issue was whether the appellant was justified in issuing circular No. 249 dated 18 April, 1957 (Ex. M. 4) and thereby imposing the conditions contained therein on its employees, and whether such a circular was opposed to law as contended by the respondents. The second issue was whether in view of the subsequent circular No. 336 (Ex M.1) issued by the appellant on 26 May, 1958 the respondents can have no grievance at all in the matter. Both these issues have been answered by the tribunal substantially in favour of the respondents. The tribunal has held that though the appellant may be at liberty to impose and conditions it liked on new entrants in its service, it could not impose any conditions in its pre-existing staff which were inconsistent with the Bank award which was then in operation; that is why the tribunal has set aside the promotions made by the appellant from the existing employees to grade II under the relevant circulars and directed the appellant to make promotions to the cadre of officer grade II from among its employees according to the procedure prescribed by the said Bank award.
3.  It is against this award that the appellant has come to this Court by special leave.The appellant which is an important banking company carries on its banking operations through its 350 odd branches situated all over the country. It employs more than 7, 000 workmen in its several offices. In the present appeal we are concerned with its supervisory staff whose strength approximately is 824. As we will presently point out, the present industrial dispute is the culmination of longstanding difference between the appellant and its supervisory staff, and the story of these difference goes back to the constitution of the Sen Tribunal appointed in June 1949. This tribunal was called upon to deal, inter alia, with the problem of the supervisory staff employed by Indian banks.
4. After an exhaustive enquiry it made its award, but on an appeal to this Court the said award was set aside in 1951. Thereafter Act 11 of 1951 was passed as a temporary measures for freezing certain provisions of the said award in order to prevent the spread of the prevailing unrest amongst the bank employees in question. The said dispute was then referred by the Central Government to the Sastri Tribunal in January, 1952. This tribunal held an elaborate enquiry and made its award which was published on 20 April, 1953. Appeals were preferred by the banks and their employees against the said award before the Labour Appellate Tribunal, and on 28 April, 1954 the Appellate Tribunal substantially confirmed the recommendations and directions of the Sastri Tribunal with certain modifications. In these arbitration proceedings 121 banks were concerned; amongst them was the present appellant. After the decision of the Labour Appellate Tribunal was pronounced the Central Government made certain modifications in the said decision, and that led to the appointment of a Commission of Enquiry on the five points referred to it. On 25 July 1955 the Commission submitted its report, and in the terms of the said report the parliament passed Act 41 of 1955 which was in operation for five years thereafter. It is common ground that at the relevant time the decision of the Labour Appellate Tribunal as modified by the later Act governed the relations between the appellant and the respondents.
5. According to the respondents the appellant consistently followed a policy of refusing to implement the said decision and with that object it began to issue circulars with a view to persuade the respondents to give up their claims under the said decision. The respondents, however, were determined to enforce their rights under the said decision, and that led to arbitration proceedings between the parties. The Central Government referred to Mr. Rameshwar Dayal for his adjudication a dispute relating to 17 supervisors, accountants and head cashiers named in the reference. The main point of controversy between the parties was whether the employees designated as aforesaid were workmen under the Act or not. Whereas the respondents thought they were workmen, the appellant denied it. On 4 April, 1957 the said tribunal decided this point in favour of the respondents, and it held that the appellant was not justified in reissuing a dispute in that behalf. It is in the background of this previous history of long-standing dispute that the subsequent events which led to the present reference have to be considered.
6. The Sastri award which dealt exhaustively with all the items of dispute between the parties made several recommendations, two of which may be specifically mentioned at this stage. In Para. 164 the award provided that in regard to categories of employees specified in the said paragraph it was necessary that special allowances should be paid. These categories were serially specified as categories 1 to 9 and in respect of each of them the special allowance fixed was prescribed by the award. It is well-known that the Sastri award had classified the banks into four classes, and the directions in regard to the payment of special allowance was made by reference to the areas where the said banks were operating. The class of employees designated as supervisors, superintendents, sub-accountants, departmental incharges, and employees in charge of treasury pay office constituted category 9, and a special allowance of Rs. 50 per month was payable by "A" class banks in regard to them.Paragraph 529 of the award dealt with the problem of promotions.
7. The award stated that it was not possible to lay down any hard and fast rule in connexion with promotions. It rejected the suggestion of the employees' unions that they should be consulted in connexion with promotions, because it was satisfied that such suggestions were not supportable on principle. It was agreed that promotion could not be treated as a matter which could be made automatic and a great deal of discretion by its very nature must rest with the management in that connexion. Even so, in the said paragraph the award made certain general recommendations which may be borne in mind by the management in dealing with cases of promotion. The award also deal with the problem of dearness allowance in different places, readjustment of salaries, office hours, overtime wages, procedure to be followed in taking disciplinary action and transfers in several paragraphs. The respondents' case is that the provisions contained in these several paragraphs of the award which were confirmed by the appellate decision were binding between the parties at the relevant time and it was not open to the appellant to impose any new condition into the contract of service which was inconsistent with any of the provision of the said decision. That in substance is the basis of the grievance made by the respondents in the present proceedings.
8. Let us now briefly indicate the nature and effect of the circulars issued by the appellant seeking to introduce new conditions of service governing the employment of the respondents. The first circular in the series is circular No. 201 issued on 8 August, 1956 (Ex. W. 5.) By this circular the appellant framed certain rules for promotion of clerks to the cadre of supervisors. It appears that the rules framed by the appellant in that behalf were not exhaustive, and so the said rules were revised and new elaborate provisions were made for promoting clerks to the cadre of supervisors. These rules prescribe the allotment of marks under different clauses and are intended to held the management in assessing the quality of the work done by the employee with a view to decide whether he should be promoted to the cadre of supervisor or not. This circular does not appear to be inconsistent with any provision of the award or decision, and no serious exception can be taken on it.
9. The followed circular No. 249 (Ex. M. 4) dated 18 April 1957. By this circular the appellant announced that its board of directors has sanctioned the creation of two grades for the officer staff, officer grade II, with its pay scale beginning with Rs. 175 in the grade Rs. 175-15-325-E.B.-20-425 and officer grade I beginning with Rs. 225 in the grade Rs. 225-20-425-E.B.-25-550. The circular then proceeded to add that all existing confirmed supervisors shall be placed in grade II and all confirmed officers of the rank of accountants and assistant managers in grade I. According to the circular, salaries of persons who were drawing less than the starting salary of the new grade should be raised to the minimum of the new grade from 1 April, 1957 when the said grade had come into existence. The circular further promised that adjustment allowance then being drawn by the officer shall be wiped off to the extent of increase in his employments on account of the revision of grades. It appears that the tribunal was inclined to hold that this provision about adjustment allowance contravened the award, but it has been fairly conceded before us that the said view is erroneous; so that by itself this circular also cannot be said to contravene the award or the decision.
10. But there are two other confidential letters which were issued by the appellant along with the said circular and which lend strong support to the respondents' case that the circular was issued as a part of a scheme whereby the appellant wanted to deprived the respondents of their legitimate rights under the award. The first confidential letter issued on 30 May, 1957 (Ex. M. 18), and addressed to the different branch managers, starts by saying that according to industrial decisions the status of an employee has to be determined not by his designation but by reference to the nature of the work that he does. This has reference to industrial decisions under S.2(s) of the Act. Then the circular says that the appellant was anxious to avoid such disputes, and it adds :
"accordingly it has been decided to address the supervisors and accountants working at your branch with a letter, copy of which is attached. You are requested to issue the aforesaid letter under you signatures to the supervisors and accountants working under you, and send their replies to us in a confidential cover along with a complete list of duties performed by them as per specimen attached."
11. The other letter (Ex. M. 18A) purports to enquire from the different employees whether they considered themselves as officers or workmen; in other words, the enquiry addressed to the employees was on the question as to whether they claimed the status of a workman under S.2(s) of the Act or not. In case the employee agreed that he was an officer, then the appellant agreed to place him in the two scales mentioned by circular no. 249; and the letter significantly adds that if the employee is thus promoted to either of the two officer grades
"the bank rules shall apply to your regarding the various benefits and conditions of service."
The last sentence in the letter is also significant. It says :
" Should you, however, consider that in view of the nature of most of your duties you should be considered as workman covered under the Sastri award, you should please let us know so that we may ascertain your duties and decide your status"
12. In other words, this letter clearly and unambiguously shows that it is only if an employee agreed to be treated as an officer that he stood any chance of promotion to either of the two grades. If he claimed the status of a workman, then the bank reserved to itself he liberty to decide that matter for itself. Since these two letters were sent to the different branch managers before giving effect to the two grades announced by circular No. 249, it is obvious that the said circular and the two letters formed part of the same transaction, and the statement in the said circular that all existing confirmed supervisors shall be placed in grade II became an empty promise; only such supervisors were confirmed as agreed to treat themselves as officers, and those who claimed the status of workman were not confirmed.It appeared that after the employees were sounded by sending the two confidential letters the appellant decided to take the next step; and so it issued circular No. 292 (Ex. W. 2) on 13 December, 1957.
13. This circular refers to the earlier circular No. 201 of 8 August, 1956, and says that the appellant had decided to fill up future vacancies of officers grade II in Bihar, Orissa, Assam, Madhya Pradesh, Rajasthan and places in Bombay State outside Bombay City, and so it wanted to call for applications from clerical staff having 10 marks or more in the priority list according to educational qualifications, length of service, better start and special increments. The circular closed with the positive statement that on appointment to such posts the employees will be governed by the bank rules as applicable to officer staff in respect of service conditions, scales of pay, transfers, etc., and not those of the bank award. Thus the result of this circular is clear that employees promoted to the class of officers in grade II would be deprived of the benefits of the Bank award and would be governed by the bank scales; in other words, what the earlier circular indirectly attempted to do with the assistance of the two confidential letters was directly sought to be done by this circular. No doubt the circular ostensibly was limited to the appointments mentioned in the branches specified in it, but the object of the circular cannot be concealed by the specification of such branches. The appellant had decided to recruit to grade II only such employees as would forgo their status as workmen and would be willing to take bank scales and nothing more.
14. The circular naturally led to dissatisfaction amongst the employees who began to make loud protest against this open contravention of the Bank award. As a result of the protests thus made by the employees the present reference was made on 17 June, 1958. A few days before this reference was made the appellant thought it fit to modify its impugned circular, and with that object it issued another circular No. 336 (Ex. M. 1) on 26 May, 1958. This circular says that some employees may not have applied for promotion due to the impugned clause in the earlier circular of 13 December, 1957 (No. 292), and it called upon them to apply for consideration of their cases on merits. The circular added that should any one of them be selected for promotion, he would be given an option either to elect for the award scales of pay and allowances or to be governed by the bank rules applicable to officers.
15. That in brief is the nature of the circulars which have given rise to the present dispute.The first question which has been urged before us by Mr. Veda Vyas on behalf of the appellant is that the reference itself is invalid. His argument is that, as the words used in the reference stand, they indicate that it is only persons who have been promoted subject to the impugned condition whose cases are referred to adjudication; and he points out that none of such persons has raised any dispute, and therefore no industrial dispute could have been referred for adjudication at all. This argument proceeds on the assumption that the first part of the reference refers to persons appointed subject to the impugned condition; but, in our opinion, this assumption is clearly not justified.
16. The question referred has no reference to the persons appointed subject to the impugned conditions, but it refers to the question as to whether the impugned condition itself is valid or not; in other words, the reference can be paraphrased thus : Is the condition that the person appointed to officer grade II by promotion would be governed by the rules of the bank valid and justified ? This is the only way in which the reference can be read; that being so, we do not think that there is any substance in the challenge to the validity of the reference.
17. The next argument is that the award made by the tribunal is outside its jurisdiction, because relief granted by the award covers persons other than those who have been promoted to grade II. This contention is also based on the same misconstruction of the terms of reference. It assumes that the reference is confined to persons who have been promoted, and so it seeks to limit the scope of the reference as to relief to the same class of persons. If, on the other hand, the reference is in regard to the validity of the conditions sought to be imposed by the impugned circular, then the nature and extent of the relief would also be similarly extended.
18. Mr. Veda Vyas has then relied on the fact that the tribunal itself has held in favour of the appellant that fresh appointments of new recruits can be made by the appellant subject to any terms it deems reasonable to impose; and he argues that in introducing the impugned condition the appellant really wanted to benefit its employees by making them eligible for promotion to grade II. He has also contended that the tribunal was in error in attributing to the appellant a well-planned scheme by which the appellant intended to deprive the respondents of the arrears of special allowance to which they were entitled under the award. How can any scheme, however cleverly designed, deprive the respondents of their arrears which may have accrued in their favour under the award, asks Mr. Veda Vyas.
19. Prima facie this point appears to be attractive; but when we scrutinize the two confidential letters carefully, it becomes plain that the whole object of the enquiry instituted by the said letters was to obtain an admission from the employees about their status before the promised promotion came their way; in other words, if the employees answered the query as the appellant expected them to do and said they were officers having regard to the nature of their duties, then the said admission would itself put the said employees outside the protection of the award, and in that sense they would not be entitled to make any claim for the arrears of any special allowance. That at any rate must have been the object with which the confidential letter was issued. In this connexion it would be material to recall that the Dayal award was pronounced on 4 April, 1957, and circular No. 249, innocent in appearance, was issued on 18 April, 1957 coupled with the two confidential letters.
20. We are satisfied that the tribunal was right in taking the view that the object of issuing the circulars and two letters was to persuade or tempt the employees to make an admission that they were not workmen under the Act, and thus disqualify them from making any claim for special allowance guaranteed to them under the award. If that be the true position, then the argument that the circular was intended to benefit the employees and put them on a par with new recruits cannot claim even prima facie the merit of plausibility. The next contention raised is that whatever may be the infirmity in the circulars, Nos. 249 and 292, that has now become a matter of history because of a fresh circular No. 336 issued on 26 May, 1958. This circular called upon the employees who were unwilling to forgo the award to apply for promotion, and it solemnly promised them that in case they were selected they would be given an option either to remain under the award or to choose the bank's scale. Indeed Mr. Veda Vyas suggested that in view of the last circular no industrial dispute could be said to subsist between the parties at the date of the reference.
21. In our opinion, this contention is not will-founded. It is obvious that this last circular was issued because it was apprehended by the appellant that the protests made by the employees were likely to succeed and that an industrial dispute was likely to be raised. It is with a view to prepare its defense for meeting the employees' case before the tribunal that this circular was issued by the appellant; and so, if any prejudice has been caused to the respondents by the earlier circulars, it cannot be said that they have been rectified or cured merely by the issue of this latter circular.Besides, there can be no doubt that after the original circular was issued on 18 April, 1957 many promotions have been made and they have been made in most cases only in regard to persons who agreed to give up their claims under the award. In this process prejudice must have been caused to a large number of employees who stood by the award and did not accept the tempting offer of promotion for a price, the price being in their opinion too heavy to be paid. To illustrate the nature of prejudice which must have been caused to a large number of employees some oral evidence was led on behalf of the respondents. Kashyap, Goyal, Gupta and others have given evidence on oath that they were not promoted and their juniors were promoted, solely for the reason that they stood by the award whereas their juniors submitted to the condition imposed by the appellant. This oral evidence shows that officers in charge of branches expressly told the employees that the appellant had decided to promote only those who would take the bank scales and give up the benefits under the award. He evidence has not been challenged by any statement on oath on behalf of the appellant, and it has been believed by the tribunal. Therefore the conclusion of the tribunal that prejudice was caused to a large number of employees by the impugned circulars of 18 April, 1957 and 13 December, 1957 cannot be successfully challenged.
22. There is one more point which must be considered in this connexion. Mr. Veda Vyas argues that whatever may be said against circular No. 292 there is no reason why the earlier circular No. 249 should be brought into the controversy. He has urged a similar argument in regard to the earliest circular No. 201 issued on 8 August, 1956. In regard to circular No. 249 it is impossible to accept the argument that it is either innocent or is not connected with the scheme evolved by the appellant for the purpose of depriving the respondents of their legitimate rights under the award. We have already observed that by itself the circular reads like an innocent circular, but the two confidential letters issued along with it clearly bring out the object underlying the said circular.
23. In fact what was contained in the confidential accompaniments of the said circular ultimately became a part of the subsequent circular. Therefore it is not possible to dissociate the said circular from the main impugned circular No. 292. Three circulars, Nos. 249, 292 and 336, form part of the same scheme and transaction, and they are held together by the invisible thread of the two confidential letters. Therefore, in our opinion, the tribunal was right in holding that the last circular did not mitigate the impropriety or remove the illegality of the two earlier circulars and that the said two circulars contravened the respondents' right under the award.The position in regard to circular No. 201 issued on 5 August 1956 is, however, different. It is no doubt possible to contend that this circular was the beginning of the scheme; but, on the other hand, prior to the issue of this circular promotion rested entirely in the discretion of the management, and if by this circular the management revised its earlier rules and made elaborate provisions for the allotment of marks, it would be difficult to hold that this circular by itself contravened any of the rights vesting in the respondents by virtue of the award, or that it was really a part of the same transaction evidenced by subsequent circulars. At the hearing before us a statement has been filed on behalf of the appellant which shows the promotions that have taken place during the relevant period.
24. Sixty-eight promotions were made to the cadre of supervisors between 8 August, 1956 and 18 April, 1957. It is admitted that though the circular of 18 April, 1957 had affirmed that all confirmed supervisors would be placed in officer grade II, in actual fact only 451 out of 542 affirmed supervisors were originally placed in the said cadre, obviously because the remaining supervisors did not accept the appellant's scale and conditions. Therefore up to 13 December, 1957 promotions to grade II numbered 128, and promotions to supervisors' cadre numbered 7. Similarly, from 13 December, 1957 to 4 October, 1958 the two respective promotions are 210 and 5. It has been fairly conceded before us by the learned Attorney-General on behalf of the respondents that he cannot seriously question the propriety of the 68 promotions to the grade of supervisors that took place between 8 August, 1956 and 18 April, 1957. In regard to the remaining categories of promotions they are clearly open to challenge, because, while these promotions were made, obviously cases of other persons who were eligible at that time were not considered because they did not agree to take the bank rates and scales.
25. We would, therefore, confirm the finding of the tribunal that circular No. 249 read with the two confidential letters and circular No. 292 have contravened the rights of the respondents under the award, and as such are invalid. We would also confirm the finding of the tribunal and its conclusion that the promotions made from 18 April, 1957, by virtue of the said circulars, and bad and must be set aside. There are, however, two directions issued by the award of the tribunal which must be reversed; and they are in regard to circular No. 201 issued on 8 August, 1956 and the direction issued by the tribunal to the appellant to promote such of the respondents as are eligible to the cadre of officer grade II.
26. It is conceded that the said cadre is not a matter of right conferred on the respondents by the award, and all that the respondents can claim is to have their wages structure, allowances and promotions in the ordinary way as prescribed by the award. If, however, the appellant wants to continue the said cadre, it must take care to see the promotion to the said cadre does not depend on any conditions prejudicial to or inconsistent with the employees' rights under the award. Subject to the said modifications, the award of the tribunal is confirmed and the appeal is dismissed. There will be no order as to costs.
Appeal Dismissed.