Bombay High Court
Bank Of Maharashtra Officers' ... vs Union Of India on 10 August, 2010
Author: R M Savant
Bench: P B Majmudar, R M Savant
1 WRIT PETITION NO.5394 OF 2001
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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 ig ]
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.
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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 ::: Downloaded on - 09/06/2013 16:15:48 ::: 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 ::: Downloaded on - 09/06/2013 16:15:48 ::: 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.
::: Downloaded on - 09/06/2013 16:15:48 ::: 5 WRIT PETITION NO.5394 OF 2001The 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.
::: Downloaded on - 09/06/2013 16:15:48 ::: 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 ::: Downloaded on - 09/06/2013 16:15:48 ::: 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 ::: Downloaded on - 09/06/2013 16:15:48 ::: 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 ::: Downloaded on - 09/06/2013 16:15:48 ::: 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 ::: Downloaded on - 09/06/2013 16:15:48 ::: 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 ::: Downloaded on - 09/06/2013 16:15:48 ::: 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 31 st 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 ::: Downloaded on - 09/06/2013 16:15:48 ::: 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.
::: Downloaded on - 09/06/2013 16:15:48 ::: 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 there will be no true verification and hence the remedy would only be illusory ::: Downloaded on - 09/06/2013 16:15:48 ::: 14 WRIT PETITION NO.5394 OF 2001
(vi) It is further contended that the process of sample checking contemplated in clause (6) is also arbitrary and ultimately results in the whole process being contrary to the purport and intent of Section 9. It is contended that clause (6) contemplates that if the objection list consists of 500 or less names of members, the number of officers to be personally interrogated would be 15% subject to a minimum of 100. It is contended that in the process of interrogation, if certain members deny membership of the association, the officers who deny the membership of the said association would be removed from the list of the said association.
Meaning thereby that only officers who have accidentally fallen into the sample list would be removed from the list of the union leaving the rest of officers from the objection list untouched. It is contended that such a sample checking does not really result in a proper verification.
(vii) It is contended that though the Act has been amended in the year 1995 whereby the word "election" has been deleted. The same would have no effect inasmuch as it is the case of the Petitioner-Union that election is the best method to nominate an Officer Director on the Board of Directors as propounded by the Apex Court in the judgment in All India Bank Officers Confederation case (Supra). It is also contended that nomination would include election as only after the election the Officer can be nominated to the Board of Directors.
11 SUBMISSIONS ON BEHALF OF THE RESPONDENTS :-
(a) That the scheme has been propounded in the light of the judgment of the Division Bench of this Court in the writ petition filed by the Petitioner above ::: Downloaded on - 09/06/2013 16:15:48 ::: 15 WRIT PETITION NO.5394 OF 2001 named being Writ Petition No.4048 of 1999. It is contended that in the said judgment this court observed that 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. It is contended that it is in the context of the decision of the Division Bench of this Court that the challenge to the said scheme has to be considered.
(b) That in view of the deletion of the word "election" from Section 9 the entire scenario has changed and in view of the fact that nominations have taken place pursuant to the said amendment, the Petitioner-Union's grievance does not survive.
(c) That the scheme of 2000 is not against the law laid down by the Apex Court in the Judgment of All India Bank Officers confederation (Supra) as the facts before the Apex Court in the said case were not concerning the verification of the majority status of union operating in a bank but the said case was as regards appointment of a person from amongst three names which were submitted by the Bank to the Central Government.
(d) That the scheme in question has been operating smoothly across the country in all the banks and except the Petitioner Union, no other union has any grievance about it and so far as the Petitioner Union is concerned, the grievance is only as regards the Respondent No.3-Bank as otherwise the Petitioner has its ::: Downloaded on - 09/06/2013 16:15:48 ::: 16 WRIT PETITION NO.5394 OF 2001 members as a Director in some other banks pursuant to the process of nomination carried out in terms of the said scheme of 2000.
(e) That the Petitioner cannot question the check off system adopted by the bank for verification of membership as the Petitioner-Union itself was when in majority propagating the verification on the basis of the check off system and only after finding that it is not enjoying the majority amongst the officers the Petitioner is now crying hoarse about the said check off system.
(f) That the scheme has inherent checks and balances in so far as verification is concerned. Clauses (2) and (3) have been framed in such a manner so as to see that the Union enjoys a majority over a period of time and not temporarily prior to the date of reckoning. It cannot be said that the said clauses confer unguided and unbridled power on the authorities.
(g) That in so far as appeal provision is concerned, that remedy cannot be called illusory merely because the period of 15 days is prescribed. There is rational in prescribing the said period inasmuch the endeavour to see it that the dispute regarding verification is decided expeditiously. In cases where it cannot be decided within 15 days, the Appellate forum would be within its power to decide the same after 15 days.
(h) In so far as sample testing is concerned, if the verification officer finds that the objections are substantiated then it is not as if he is restricted to only the per centage which is fixed in the said clause (6) but would also be entitled to check each ::: Downloaded on - 09/06/2013 16:15:48 ::: 17 WRIT PETITION NO.5394 OF 2001 case independently and therefore there is no substance in the said grievance of the Petitioner-Union.
(i) It is contended by the Respondents that since it is known to the unions as to when the term of an Officer Director is come to an end, in the said context the period mentioned in the clauses (2) and (3) cannot be said to be unreasonable or arbitrary. In so far as periods which are to be taken into reckoning for verification of the majority since the same provisions apply to all the unions, the Petitioner cannot have any grievance about the same.ig
12 We have heard the learned counsel for the parties and have bestowed our anxious consideration to the rival contentions.
CONSIDERATION :
13 Since the scheme in so far as aspect of verification of the membership of the competing unions is under challenge, it would be necessary to advert to the background in which the scheme came to be framed. As mentioned earlier in this judgment, the Petitioner above named had filed Writ Petition No.4048 of 1999 in this Court seeking a writ of mandamus directing the Central Government to frame a scheme for appointing officer director to the Board of Directors of Bank of Maharashtra i.e. the Respondent No.3. The Petitioner Association was also seeking a writ of certiorari to quash the decision recommending a panel of officers of respondent No.4 [i.e. the Respondent No.5 herein] as officer-director on the Board of Directors and direct the bank to resort to the method of verification of majority union ::: Downloaded on - 09/06/2013 16:15:48 ::: 18 WRIT PETITION NO.5394 OF 2001 by check off system and verification of letters of authority or resort to secret ballot method. It is in this context that the Division Bench issued direction as contained in Para 9 of its judgment. As can be seen from the said Para 9, the Division Bench has observed that 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 is sought to be done by the Central Government. In the light of the object of the Act and especially Section 9 thereof, the Division Bench issued a direction that it is necessary for 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 that date. Accordingly the Central Government had submitted a scheme which has now culminated in the Scheme of 2000 which is under challenge in the above Petition. What can be deduced from the said judgment of the Division Bench is that the Petitioner Union in the said Writ Petition wanted verification process to be carried out on the basis of check off system and verification of letters of authority or resort to secret ballot method. The correspondence prior to filing of the said Petition also unequivocally points out that the Petitioner Union wanted verification of majority status to be done by check off system. It was never the case of the Petitioner Union at any time that in stead of ascertaining majority status, the nomination of the Officer Director should be by process of election as is now sought to be submitted by the learned senior counsel for the Petitioner. It was therefore in the context of the prayer of the Petitioner Union deserving that process of verification of majority status should be ascertained by providing machinery for the same in the scheme that was to be framed by the Central Government, that the Division Bench issued directions as ::: Downloaded on - 09/06/2013 16:15:49 ::: 19 WRIT PETITION NO.5394 OF 2001 contained in its judgment and order dated 10th April 2000 and which has been complied with by the Central Government by formulating the scheme of 2000.
14 Since the learned counsel for the Petitioner Union placed strong reliance upon the judgment in All India Bank Officers Confederation case (Supra) in support of its submission that in so far as officer director is concerned, the mode of election has received sanction of the Apex Court in the said case. The facts of the said case, the issue that was before the Apex Court, the observations of the Apex Court, and the conclusion can be gathered from Paras 1, 2, 6, 8 and 12 of the said Judgment which are reproduced herein under :-
"Para 1:- The first petitioner is a registered Central Trade Union claiming to represent about 85 per cent of the officers working in the various nationalised banks.
Petitioners 2 to 4 are principal office bearers of the first petitioner and are officers of different nationalised banks.
They are aggrieved by Circular dated 23.8.1982 (Annexure-
A) issued by the Joint Secretary to the Government of India, Ministry of Finance, Department of Economic Affairs, (Banking Division), New Delhi. They contend that the circular is contrary to the mandate of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (Act No. 5 of 1970) (hereinafter referred to as the 'Act') and the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1980 (hereinafter referred to as the 'Scheme'). They further contend that Clause 3 of the Scheme in terms of which the circular is purported to have been issued is ultra vires Section 9 of the Act unless the said clause is so read as to be in harmony with the Section, and when so read the said clause does not justify or support the impugned circular. The petitioners, therefore, seek a writ of mandamus to direct the Central Government to appoint a nominee of the majority association of each of the nationalised banks as a member of its Board of Directors.
The circular in question reads:
"As you are aware, in terms of sub-clause (c) of Clause 3 of ::: Downloaded on - 09/06/2013 16:15:49 ::: 20 WRIT PETITION NO.5394 OF 2001 Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980, one Director from among the employees of the nationalised banks who are not workmen, is to be appointed by the Central Government in consultation with the Reserve Bank of India on the Board of each of the Nationalised Banks. Unlike in the case of workmen, the Scheme does not lay down any procedure for selection of the non-workman Director. The intention clearly was that in the case of Officer-Director, Government should have ample scope and freedom in selecting any officer of the Bank to be the non- workman Director. However, hitherto panel of names sent by the banks for selection of the non-workman Director has been confined to office-bearers of the Association of Officers. Government has recently reviewed this matter in the light of the relevant provisions of the Scheme and come to a conclusion that there is no justification for restricting the choice to the office-bearers of the Associations."
Para 2:- The object of the circular is to clarify that the Central Government no longer regards itself bound by its earlier practice of appointing a person from out of the panel of three names submitted by the respective Association representing the majority of the non-workmen employees of each nationalised bank. The circular makes it clear that the Government wishes to appoint any officer of proven ability and character to the Board of Directors of a nationalised bank irrespective of his affiliation with any Association. The petitioners contend that the circular is undemocratic and contrary to the letter and spirit of the Act and the Scheme insofar as it cuts at the root of the representative form of selection for appointment to the Board of Directors as contemplated by the statute.
"Para 6:- The object of Section 9 of the Act, insofar as it is material, is to empower the Central Government to make a scheme for the constitution of the Board of Directors so as to include representatives of the employees and other specified categories. "Employees" include workmen and non-workmen. The categories specified, apart from the employees, are depositors, farmers, workers and artisans. The representatives of these classes of people are to be either elected or nominated in the manner specified by the Scheme. The legislature has left it to the Central Government to make a scheme providing for appointment to the Board from amongst the specified categories either by election or by nomination. The discretion as to the mode of appointment is, of course, left to the Central Government, but it is not an unrestrained or unrestricted discretion, but a discretion which must be reasonably exercised so as to ::: Downloaded on - 09/06/2013 16:15:49 ::: 21 WRIT PETITION NO.5394 OF 2001 give effect to the true intent of the legislature as to the composition of the Board of Directors. The object of the legislature is to give the Board 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.
Para 8 :- The Additional Solicitor General is right when he submits that it is generally within the discretion of the Central Government to choose the special mode of appointment. The Government may choose election or nomination as the appropriate mode of appointment in respect of various categories. But we do not agree with him when he submits that the Central Government has a discretion to avoid election even where election is appropriate and feasible in respect of a particular category of persons. The very object of leaving the choice to the Central Government as to the mode, which is election or nomination, is to enable it to reasonably exercise its discretion in such a way as to give the best form of representation to every category of persons mentioned in the Act. It may be possible to appoint a representative of the depositors by election instead of nomination. It would be perfectly within the discretion of the Central Government to choose that mode. On the other hand, the depositors being not an organised body of persons, although easily identifiable, selection of their representative by nomination may be easier, more feasible and perhaps more appropriate for the purpose of appointment to the Board. Farmers, workers other than employees, and artisans mentioned under subsection 3(b) of Section 9 are best represented by nomination, they being difficult of identification and their connection with the bank being more remote than in the case of employees or even depositors. For these classes of people, the discretion is entirely that of the Central Government to choose the mode of representation. In the case of employees, on the other hand, election is indeed the most logical, the most appropriate, the most democratic and certainly the most advantageous form of representation. They are well-identified, well-organised, well-motivated and interested associates and participants in the banking industry. They are as much a part of the bank as the management is. There can be no legitimate management culture foreign to their vital interests. There can be no valid management policy contrary to their genuine needs. The Act does not contemplate a management unmindful of the true and legitimate interest of the employees. In a nationalised bank, everyone is as much an employee as he is an employer. There is no antithesis between the management and the employees.::: Downloaded on - 09/06/2013 16:15:49 ::: 22 WRIT PETITION NO.5394 OF 2001
The distinction that traditionally existed prior to nationalisation is no longer applicable. The true management culture is indeed the culture that represents the various interests of all persons specified under Section 9 as well as the larger and wider interests of national economy as postulated in the preamble to the Act.
Para 12 :- While, in our view, it is open to the Central Government to amend the Scheme to improve on the machinery for the conduct of an appropriate election, it is incumbent upon it, until any such amendment is made, to work the present Scheme in such a way as to give the maximum scope for the concerned employees to exercise their choice in the selection of their representatives. That means, it would be perfectly in order for the Central Government to continue the: practice followed by it prior to the circular in question or to hold election of the representatives of the concerned employees, and, if necessary, to amend the Scheme suitably for that purpose.
As can be seen, the said case arose out of a circular dated 23/8/82 issued by the Central Government. By the said circular, the Central Government decided that the officer director need not be of the majority union and any officer who will protect the interest of the officers of the Bank can be appointed as officer director on the Board of Directors of the Bank. It appears that pursuant to the said circular a director, who was not an office bearer of the union, but only an officer, was appointed as officer director for three years on the Board of Directors. The constitutional validity of the said circular dated 23/8/82, therefore, came to be challenged by the confederation. It would have to be borne in mind that prior to the circular, the scheme of appointment of officer director as postulated in the scheme of 1970 and scheme of 1980 were being implemented. Inasmuch as the nominee of the majority union was nominated on the Board of Directors. It is when the said scheme of nomination was sought to be changed by the Central Government by the said Circular dated 23/8/82 that All India Bank Officers Confederation challenged the said circular. It is in the context of the ::: Downloaded on - 09/06/2013 16:15:49 ::: 23 WRIT PETITION NO.5394 OF 2001 said challenge that certain observations have been made by the Apex Court in the Judgment (supra). It is well settled that a judgment is only an authority for what it decides and not for what logically flows from it. Though the Apex Court has observed in the said judgment that the in so far as employees are concerned, election would be ideal mode of appointment. The said observation would have to be considered in the context of the challenge that was raised in the said case and not as a general proposition of law. As ultimately in the concluding part the Apex Court has left it to the wisdom of the Central Government as to which mode to adopt in respect of the nomination of the representative of the employees.
15 Now coming to the submission of the learned senior counsel for the Petitioner that since the nominee of only the majority union can be nominated to the Board of Directors as an officer director and, therefore, the scheme in effect does not carry out the purport and intent of the Act, as interpreted by the Apex Court, which is to give true representative character to the Board of Directors by nominating the officer director through an election without having any nexus with the majority a particular union may have. Firstly it is required to be noted that the word "election"
has been deleted from the said Act by virtue of amendment carried out in the year 1995 and, therefore, the officer director can only be nominated on the Board of Directors by the process envisaged in the said scheme. It is pertinent to note that the Petitioner-Union was virtually the sole union operating in the Respondent No.3-Bank and even after the Respondent No.5 came on the scene, the Petitioner Union still enjoyed the majority support of the officers of the Respondent No.3 Bank. The Petitioner Union therefore was, as can be seen from the record of the Petition, all along propagating that a proper system of identification of the majority amongst the ::: Downloaded on - 09/06/2013 16:15:49 ::: 24 WRIT PETITION NO.5394 OF 2001 unions should be brought in force so as to avoid any conflict between competing unions. In fact the Petitioner Union was propagating check off system for verification of the majority. However, in view of the fact that the Respondent No.5 Union started gaining ascendancy in the Respondent No.3 Bank and has now a majority, by virtue of which the nominee of the Respondent No.5 Union is on the Board of Directors at least since the last three occasions when such a nomination was made, it appears that the Petitioner started crying hoarse about the system envisaged in the said scheme for verification of the majority and has started propagating that the mode of election be adopted to nominate the officer director on the Board of Directors. It, therefore appears that in the changed scenario of the Petitioner Union loosing its majority status in the Respondent No.3 Bank that there was volte-face on the part of the Petitioner Union in the matter of the mode of appointment of the Officer Director. In so far as the said mode of appointment of the nominee of the majority association is concerned, it can be traced to the principle which is prevalent in the labour and industrial fields. It requires no debate that the nominee of the majority union only can be appointed to the Board of Directors, as in the labour and industrial fields also negotiations are always held with the recognized union or representative union as the case may be. The sine quo non for the union to send its nominee on the Board of Directors is its majority in a particular bank. The concept of the majority union being entitled to send its nominee on the Board of Directors is not as abhorrent as is sought to be made by the learned senior counsel for the Petitioner. May be the mode as propagated by the Petitioners Union for nominating a person on the Board of Directors can be one of the modes that can be adopted for sending a nominee.
However, since the legislature has chosen a mode as contemplated in the scheme of 2000, it is not for us in exercise of our writ jurisdiction under Article 226 of the ::: Downloaded on - 09/06/2013 16:15:49 ::: 25 WRIT PETITION NO.5394 OF 2001 Constitution of India, to pass judgment as to which mode is more suitable for sending a nominee of the officers on the Board of Directors. We are also informed that the Petitioner Union has a grievance only in respect of the Respondent No.3 Bank but in other banks where it has a majority it has no such grievance. We are, therefore, unable to accept the submission advanced on behalf of the Petitioner Union that the mode of election without having any nexus with the majority that a union may enjoy is the best course of action for nominating the officer director.
16 The observations of the Apex Court in the judgment in All India Bank Officers Confederation (supra) in para-8 have to be read in the context of the issue that was before the Apex Court and not as a general proposition laid down by the Apex Court. The Apex Court was dealing with the issue of the circular dated 23/8/82 by which circular the Central Government had departed from the practice of appointing a person from out of the panel three names submitted by the association representing the majority of the officers, to the mode of appointing any officer of proven ability and character to the Board of Directors of a nationalised bank irrespective of his affiliation with any Association. By the said circular therefore the Central Government departed from the practice of appointing the representative of the union which has a majority amongst the officers of the Banks by the process envisaged in the scheme. It is in the said context that the Apex Court has made the observations in para 8 of the said judgment.
17 Faced with the situation that the word "election" has been deleted from section 9 of the said Act. The learned senior counsel for the Petitioner Union contended that the nomination now envisaged in Section 9 can also be after election.
::: Downloaded on - 09/06/2013 16:15:49 ::: 26 WRIT PETITION NO.5394 OF 2001In this respect it is required to be noted that nomination and election stand apart from each other. A useful reference can be made to the Dictionary meaning of word "nomination" which is as follows :-
"As per P Ramnatha Aiyar's Advanced Law Lexicon `Nomination' means appointment for a specific purpose, selection of Arbitrator, in terms of arbitration clause' As per Oxford English Dictionary :-
`Nominate' means appoint to a job or position"
As can be seen from the said plain meaning of the word "nomination", the same cannot be equated with election and the entire process of nomination stands in contradiction with the process of election. In our view, therefore, in the light of the amendment to section 9 in so far as challenge to the said scheme on the ground that it does not envisage election, is concerned, in our view, it can be said that on account of the amendment to Section 9 the winds have gone out of the sail of the said challenge.
18 As regards the submission of the learned senior counsel for the Petitioner in respect of inherent contradiction between clause 2 and clause 3 of the scheme or congruity between the said two clauses, it would be relevant to reproduce the said two clauses of the Scheme .
"Clause (2) The Designated officer shall ask the officers' associations in the bank to produce before him, at the stipulated place and time, within ten days from the date of receipt of the first notice, a list of their members, in triplicate, in different branches or offices who have paid subscription for at least three months during the period of first six months of the ::: Downloaded on - 09/06/2013 16:15:49 ::: 27 WRIT PETITION NO.5394 OF 2001 preceding year from the date on which the term of the existing officer employee director expires or the position has fallen vacant due to some other reason. The date of reckoning shall be the first day of the month in which the term of the existing officer employee director expires or the position has fallen vacant due to some other reason. On receipt of the list, the Designated Officer shall appoint Verification Officers of the level of Deputy General Manager/ Assistant General Manager for every zone/region, who shall conduct physical verification, himself or by an officer nominated by him, of the membership strength of each officers' association on the basis of all or any of its following records :-
(i) Membership-cum-subscription register.
(ii) Counter foils of receipts.
(iii) Cash and Accounts Books
(iv) Bank Books
(v) Copy of its Constitution
(vi) Registration Certificate (if registered)
(vii) Affiliation certificate and payment receipts of the association
is affiliated to any All India or State Federation or Central Organization.
(viii) Copy of the latest annual return submitted to the Registrar of
Trade Unions
(ix) List of office bearers and
(x) Minute Book.
Clause (3) If an association fails to produce the list of its members and other records, a second and final notice shall be given by the Designated Officer (by Registered Post (Acknowledgement Due) asking it to produce them at the stipulated place and time within ten days from the date of the receipt of the second and final notice. If it again fails to produce them on the second occasion also, no further attempt shall be made to verify its membership. However, in respect of the associations which have submitted the lists and records, the Verification Officer shall examine them and ascertain the number of members who had paid three months subscription within the period of six months preceding the date of reckoning. This examination shall be 100 per cent and shall be done in the ::: Downloaded on - 09/06/2013 16:15:49 ::: 28 WRIT PETITION NO.5394 OF 2001 presence of the office bearers or representatives of other associations in the bank. While doing the verification of membership, the verification officer shall give due consideration to any representatives which the association officials might make to him."
19 It is required to be borne in mind that the scheme has been framed pursuant to the judgment of the Division Bench of this Court (supra) in the Writ Petition filed by the Petitioner wherein the Petitioner Union was praying that a scheme should be formulated to provide for a mechanism to verify which union has a majority amongst the officers. The Underlying principle therefore of clauses (2) and (3) is to verify as to which union has a majority amongst the officers of the Respondent No.3-Bank. It is also required to be noted that since the nominee of the majority union is to be nominated on the Board of Directors of the Respondent No.3- Bank, conscious effort has been made in the said scheme to see that the said majority is not a fickle majority but a majority which is stable and is existing at least for some length of time. If in the said context the said clauses (2) and (3) are considered, in our view, there can be no inconsistency or incongruity as is sought to be contended by the learned senior counsel for the Petitioner.
20 Now coming to the said two clauses, in so far as clause (2) is concerned, it postulates that the Designated Officer has to call for a list of the officers who had paid subscription for at least three months during the period of first six months of the preceding year from the date of reckoning. However, in terms of clause (3), the Verification Officer shall examine them and ascertain the number of members who had paid three months subscription within the period of six months preceding the date of reckoning. Therefore the intent of the said clauses is that an officer should have paid the subscription during the first six months at the time of calling the list by ::: Downloaded on - 09/06/2013 16:15:49 ::: 29 WRIT PETITION NO.5394 OF 2001 the Designated Officer and would be continuing to pay in the last six months of the year when the verification takes place. The principle appears to be that the majority of the union is at least standing for some length of time. The said two clauses, since they govern the submission of the list of members by a union and thereafter verification, are therefore geared towards verifying the majority. As indicated above, the underlying principle appears to be that the union in question which is to be declared as majority union has a majority over some length of time and is not a fickle majority.
21In so far as clause (2) is concerned, we are not impressed by the submission of the learned counsel for the Petitioner that the said clause since it contemplates any three months of the first six months period has the effect of leaving it to the discretion of the authorities and therefore, is arbitrary as the authorities may choose any three months period out of the six months period, in the event they desire to favour a particular union and therefore the declaration of majority on the basis of the said clause would only be illusory. It is required to be noted that the said clause has been framed in the manner it is considering the fact that the different unions adopt different methods for collection of subscription. In the instant case itself, the Petitioner union collects the subscription bi-monthly whereas the Respondent No.5 collects it monthly and therefore to cover all such eventualities probably the said clause (2) has been framed in the manner as it appears in the said scheme. In any event the said clause is applicable to all unions and since there is a safe guard provided by virtue of clause (3) which provides that the Verification Officer would examine the list and ascertain the number of members who have paid at least three months subscription within six months preceding the date of reckoning, we do not ::: Downloaded on - 09/06/2013 16:15:49 ::: 30 WRIT PETITION NO.5394 OF 2001 find any merit in the said submission of the learned senior counsel for the Petitioner and the submission, it seems, has been advanced only on account of the fact that the Petitioner Union no longer enjoys the majority support of the officers of the Respondent No.3-Bank.
22 In so far as submission of the learned senior counsel for the Petitioner that sampling method of verification in respect of a complaint received as regards membership does not make the said process as contemplated under clause (6) effective as in a given case beyond the percentage prescribed, if there are complaints, the same are not likely to be checked, in our view the said submission is an extreme submission and cannot be countenanced. It is not as if there is any prohibition on the verification officer to go beyond the percentage mentioned in the said clause (6), if he comes to the conclusion that the complaint made by a particular union in respect of the list submitted by the other union has some substance on the verification of a few instances mentioned in the complaint. Reading of such prohibition, in our view, would be against the principle of ascertaining the majority of a union amongst the officers of the Respondent No.3-Bank. As, in our view, every endeavour would have to be made considering the purport and intent of Section 9 of the said Act that only the nominee of the union which commands the majority is to be nominated and, therefore, the verification officer in the event he finds that there is substance in the complaint in respect of the list submitted by .a particular union would proceed to verify all cases in respect of which there is a complaint.
The contention of the learned senior counsel for the Petitioner that clauses (2) and (3) as framed have the effect of taking away the right of an officer to ::: Downloaded on - 09/06/2013 16:15:49 ::: 31 WRIT PETITION NO.5394 OF 2001 be a member of a particular union, in view of the fact that the said clauses contemplate that a person can be said to be a member of a particular union only if he satisfies the requirements of the said two clauses, the contention does not commend to us, as mentioned herein above, the scheme in terms of clause 2 contemplates a "date of reckoning" based on the date when the incumbent officer director is to demit office since the date when the incumbent is to retire, can be said to be known, a person who is desirous of changing allegiance from one union to another can do so taking into consideration the said fact. In our view, therefore the said clauses do not act as a restriction or fetter on any person wanting to change his allegiance. It is once again required to be restated that the underlying principle behind clauses 2 and 3 appears to be that a union should have majority for some length of time and it is towards that end, that the said clauses (2) and (3) have been framed.
23 As regards the submission of the learned senior counsel for the Petitioner in respect of the appeal provision is concerned, viz. that the said remedy is not an effective remedy as the period prescribed therein for disposing of the appeal namely 15 days is unreasonable. We are of the view that considering the fact that the nomination is to the Board of Directors and the date of reckoning, as contemplated in the scheme, is fixed in terms of the date on which the existing incumbent is to vacate the said office, there is some urgency in deciding the appeal expeditiously. It is in the said circumstances that the period of 15 days is probably fixed. That, in our view, would not mean that the authority does not have any discretion in that behalf and if some more time is required in a given case, then the authority can always dispose it of beyond the period of 15 days but within a reasonable time so as not to affect the process of verification of the majority union. The contention of the learned senior ::: Downloaded on - 09/06/2013 16:15:49 ::: 32 WRIT PETITION NO.5394 OF 2001 counsel for the Petitioner therefore that the said remedy is illusory and the period mentioned therein is unreasonable, cannot be accepted. In our view the scheme provides for adequate safeguards and ingrained in the scheme are proper checks and balances, and therefore it cannot be said that there is unguided and unbridled power vested in the authorities under the scheme.
In so far as the scheme of 2000 is concerned, it is significant to note that except the Petitioner above named, no other Union or Association of officers seems to have a grievance about the same. The Petitioner Union also seems to have a grievance only in respect of the Respondent No.3-Bank, but not in respect of others where it is enjoying majority. The Scheme therefore can be said to have worked smoothly. We therefore do not find any merit in the challenge to the said scheme. In our view, the challenge of the Petitioner is actuated by the fact that the Petitioner Union no longer enjoys the majority in the Respondent No.3-Bank. Since we do not subscribe to the view of the Petitioner as regards interpretation of the Apex Court Judgment in All India Bank Officers' Confederation case (supra) and in the light of what we have stated herein above, we do not find any merit in the above Petition, which is accordingly dismissed. Rule discharged.
[R.M.SAVANT, J] [P.B.MAJMUDAR, J]
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