CASE NO.: Appeal (civil) 4390 of 1996 PETITIONER: BANK OF BARODA RESPONDENT: RAJENDER PAL SONI DATE OF JUDGMENT: 19/02/1996 BENCH: K. RAMASWAMY & G.B. PATTANAIK JUDGMENT:
JUDGMENT
1996 (2) SCR 837
The following Order of the Court was delivered :
Leave granted.
We have heard learned counsel on both sides.
It is not necessary to preface the antecedent enquiry conducted against the
respondent for misconduct by the Traders Bank which was amalgamated with
the appellant-Bank, Suffice it to state that on June 25, 1986 the
respondent’s service was sought to be terminated by issuance of an order on
offering three months’ pay in lieu of the requisite notice. Instead, the
respondent on even date had tendered his resignation (Ex.P-5) to Traders
Bank; transferor-Bank of the appellant had accepted the resignation on July
2, 1986. Consequently, the respondent had returned the cheque of salary
offered to him in lieu of notice on the even date. Under Section 45 of the
Banking Companies Regulation Act, 1949 (for short, the ‘Act’), the scheme
of amalgamation of transferor bank with the appellant bank, with effect
from November 20, 1987 (Ex.P-8) was initiated. The Central Government had
accepted the amalgamation under sub-section (7) of Section 45 of the Act
with effect from the appointed date viz. May 13, 1988. A scheme in that
behalf was approved by Central Government. Clause 10 of the scheme provides
as under ;
“All the employees of the transferor bank shall continue in service and be
deemed to have been appointed by the transferee bank at the same
remuneration and on the same terms and conditions of service as were
applicable to such employees immediately before the close of business on
20th November, 1987.”
Para 2 of the notification dated May 12, 1988 issued under Section 45(1)
read with sub-section (2) of Section 45 of the Act envisages, among other
things undertaking of the liabilities with respect to the pending suits,
appeal or other legal proceedings of whatever nature by or against the
transferor bank arising as on the prescribed date were allowed to continue
on the appellant-Bank thus :
“If on the prescribed date any suit, appeal or other legal proceedings of
whatever nature by or against the transferor bank is pending, the same
shall not abate, or be discontinued or be in any way prejudicially
affected, but shall subject to the other provisions of this scheme, be
prosecuted and enforced by or against the transferee bank.”
Admittedly, the respondent had filed the Civil suit No. 123 of 1989 which
is now re-numbered as Suit No. 61 of 1993 to recover a sum of Rs. 69,680 as
the arrears of his pay etc. and also filed Civil Suit No. 122 of 1989 which
is now re-numbered as Suit No. 63 of 1993, on June 3, 1989 for declaration
that the acceptance of resignation by the Traders Bank, viz., the
transferor Bank was illegal. Relying upon the notification, the appellant
raised preliminary objection after filing written statement to the
maintainability of the suit which was rejected by the trial Court. In
revision No. 595/94 by order dated March 21, 1995, the Delhi High Court
dismissed the revision summarily,
Even in this appeal the only question is : whether the appellant is liable
to takeover the services of the appellant ? If that finding is recorded in
favour of the respondent, necessarily the suit of the respondent would
stand maintainable. Section 45 of the Act envisages the power of the
Reserve Bank to apply to the Central Government for suspension of the
business of a Banking Company and prepare a scheme for re-constitution or
amalgamation. Admittedly, the Traders Bank was amalgamated with the
appellant- Bank by exercise of the power under sub-section (1) read with
sub-section (2) of Section 45 of the Act. The section in that behalf has
been accorded by the Central Government in the scheme under sub-section
(7). As seen, clause (10) of the scheme envisages that employees existing
as on November 20, 1987 in the transferor bank, viz., the Traders Bank so
taken over, shall become employees of the appellant-Bank, Admittedly, the
respondent was not in service as on that date. Even no suit or proceedings
was pending against the Traders Bank as on the date. Under those
circumstances, the question arises : whether the suit is maintainable ?
This Court in Chairman, Canara Bank, Bangalore v. M.S. Jasra & Ors., AIR
(1992) SC 1100 on paragraph 9, has considered the effect of sub-sections
(4) & (5) of Section 45 of the Act and of the scheme framed thereunder
which reads and held as under :
“9. Sub-section (5) then specifies the provisions which may be made in such
scheme. It is Cl.(l) and the provisos thereunder of sub-sec. (5) with which
we are concerned. The opening words in sub-sec. (5) are : ‘The scheme
aforesaid may contain provisions for all or
any of the following matters …..’ It is clear that the scheme so
framed under sub-section (4) may contain provisions for all or any the
matters specified in sub- sec. (5) so that it enables all or any or the
specified matters to be provided in the scheme prepared under sub-sec. (4)
and the matters specified in the several clauses in sub-sec. (5) do not
automatically get incorporated in such scheme unless the scheme
specifically includes any such matter. It means that the matter specified
in Cl.(i) of sub-sec. (5) is not an invariable term to be read in such a
scheme framed under sub-sec. (4) for amalgamation of the banking company
unless it is incorporated specifically in the scheme so prepared. Thus,
such a scheme may or may not contain provisions for the continuance of the
services of all employees of the banking company in the transferee bank as
is specified in Cl. (i). However, if the scheme does provide for this
matter, then the continuance of the services of the employees of the
banking company in the transferee bank as provided in Cl. (i) is subject to
the requirement of the proviso thereunder. In other words, it is not
necessary that every scheme of amalgamation framed under sub-sec. (4) must
provide for continuance of services of all the employees of the banking
company in the transferee bank, but where such a provision is made, it must
contain a provision as required by the provisos in Cl. (i). This is clear
from the use of the word ‘may’ in the opening words of sub-sec, (5) and the
word ‘shall’ in the proviso. In effect it means that where the scheme
provides for continuance of the services of all the employees of the
banking company in the transferee bank at the same remuneration and on the
same terms and conditions of service which they were getting or, as the
case may be, by which they were being governed immediately before the date
of the order of moratorium, then the scheme must contain a provision that
the transferee bank shall pay or grant not later then the expiry of the
period of three years from the date on which the scheme is sanctioned by
the Central Government same remuneration and the same terms and conditions
of service as are applicable to other employees of corresponding rank or
status of the transferee bank subject to the qualifications and experience
of the said employees being the same as or equivalent to those of such
other employees of the transferee bank,”
In U.P. Electricity Board, Lucknow through its Chairman and Anr. v. Radhey
Mohan Venna, [1994] Supp. 2 SCC 356, similar question had arisen under the
Electricity Act, It was held that the Board and amalgamated Company are
entitled under that Act to enter into an agreement. Employees existing as
on that date and against whom disciplinary proceedings were pending on that
date could not be deemed to be employees of the Board. In the absence of
any such agreement, it was held that by operation of Section 6(l)(ii) of
the Electricity Act, the Board was not bound to take such an employee into
the service.
In Rashtriya Mill Mazdoor Sangh v. National Textiles Corporation, South
Maharashtra Ltd. and Ors., [1996] 1 SCC 313 similar question had arisen for
consideration. This Court held that the liability to pay gratuity which
became payable to a former employee prior to the taking over of the textile
Company was of the textile company and not of the Custodian.
It is contended by the learned counsel for the respondent that under the
Scheme, the assets and liabilities are to be taken over by the appellant-
Bank and, therefore, the employment of the appellant is one of the
liabilities. Judicial review being one of the basic features of the
Constitution, he cannot be prevented to avail of the judicial review
against the appellant-Bank. We find no force in the contention. As far as
service conditions are concerned, in view of the specific provision in the
Scheme contained in paras 3 and 10 of the notification arrears of salary is
a liability to be discharged by the transferor-Bank and not of the
appellant-Bank. Under these circumstances, the suits are clearly not
maintainable.
The appeal is accordingly allowed, the suit stand dismissed. No costs. G.N.