Andhra HC (Pre-Telangana)
Syndicate Bank And Anr. vs P. Bhaskar And Ors. on 29 January, 1994
Equivalent citations: (1995)ILLJ782AP
JUDGMENT Sivaraman Nair, J.
1. This appeal arises from the judgment of our learned brother P.L.N. Sarma, J. allowing Writ Petition No. 16059/86 declaring circular No. 360/78/BC/IRD/20dt. Dec 12, 1978 as null and void and directing the 1st respondent to implement the pre-existing service conditions of the petitioners so as to refix the basic salary in the category of Junior Officers, reckoning special allowance/notional special allowance of the Special Assistants/clerks in fixing their basic pay in the category of junior officers with all consequential monetary benefits.
2. The controversy which is involved in this writ petition is in a very short compass. It involves the interpretation of Section 19(3) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, (hereinafter referred to as 'the Act'). The basic facts, which are necessary for understanding the controversy, are not in very serious dispute. The learned single Judge found that the conditions of service which are applicable to the eight petitioners prior to the takeover of the Bank under the Act were saved by Section 19(3) of the Act, since no Regulation had been framed as was enabled by Sub-section (1) of Section 19, till 1980. The learned Judge found that in view of the specific provisions contained in Section 19, the pre-existing service conditions could not be altered by the respondents in the Writ Petition by issue of executive/admimstrative orders like the circular order which the custodian had issued on May 18, 1971, and December 12, 1978. The custodian, who was the respondent in the Writ Petition has filed this writ appeal.
3. On a perusal of the facts as disclosed by the pleadings and the elaborate arguments addressed by counsel for the appellants, we are left with the impression that this is one of the many appeals which ought not to have been filed at all and particularly by an instrumentality of the State. We will now refer to the necessary facts. We will refer to the parties as they appeared in the writ petition.
4. The 8 petitioners entered service as clerks under the respondent-Syndicate Bank on the dates shown against each of them- Petitioner No. 1 on November 5, 1965, petitioner No. 2 on February 28, 1967, petitioner No. 3 on October 6, 1966, petitioner No. 4 on May 12, 1966, petitioner No. 5 on July 27, 1963, petitioner No. 6 on October 29, 1962, petitioner No. 7 on November 8, 1965 and petitioner No. 8 on May 1, 1969. Petitioners 2 and 7 were working as Special Assistants, at the time when they were promoted as Junior Officers on December 22, 1972 and January 15, 1973 respectively. The other petitioners were promoted as junior officers on January 1, 1973 (1st petitioner), December 26, 1972 (3rd petitioner), March 18, 1972 (4th petitioner), January 1, 1973 (5th petitioner), January 1, 1973 (6th petitioner) and August 16, 1975 (8th petitioner). In the counter affidavit it was stated that the 5th petitioner was promoted on January 22, 1973, but that difference is not very material to the facts of this case. All the petitioners were represented by the 9th petitioner-Syndicate Bank Officers Association.
5. According to the pre-existing service conditions, clerks/special assistants appointed as junior officers were entitled to have their salary fixed on promotion as Junior Officers, taking into consideration their actual emoluments inclusive of special allowance as Special Assistants, or such allowance which they would have drawn had they been appointed as Special Assistants . According to the petitioners, that provision in the conditions of service was a bye-law or an order made by the existing bank and which was in force at the commencement of the Act and had to be deemed to be a regulation made under Sub-section (1) of Section 19 of the Act. A further consequence of that submission was that the bye-law or order in force at the commencement of the Act, could be altered only in exercise of the power under Section 19(1) by the new bank, in consultation with the Reserve Bank of India and by publishing the same by notification in the official gazette with the previous sanction of the Central Government.
6. On May 18, 1971, the respondent bank was alleged to have altered the conditions of service by providing that with effect from June 1, 1971, the basic pay in the junior officers grade may be fixed at a point in the grade so that the total emoluments inclusive of basic pay, dearness allowance at the rates in force, place allowance and house rent allowance as determined for III Area are higher than the total emoluments drawn as special Assistant inclusive of basic pay, special allowance, dearness allowance at the rate in force but excluding City compensatory allowance, house rent allowance and any other compensatory allowance. The consequence of the above administrative order was that in the case of the petitioners who were promoted after June 1, 1971 was to alter the service condition relating to fixation of salary on promotion as junior officers to their detriment, since the special allowance which they would have drawn had they been appointed as Special Assistants were not reckoned for the purpose of pay fixation on promotion. Petitioners submitted that the above administrative order had the effect of altering the service conditions which were in force at the commencement of the Act. 13 employees who were promoted after the issue of the administrative order on May 18, 1971 had submitted individual representations and their cases were also high-lighted by the 9th respondent by its representation dated August 3, 1978. That representation was acknowledged on August 10, 1978 and discussions were held on the basis thereof by the respondent with representatives of the 9th petitioner on December 6 and 7, 1978. By circular dt. December 12, 1978, as a result of the discussions, the respondent altered the rule relating to fixation of basic pay of Clerks/Special Assistants, who were promoted as junior Officers. It is advantageous to refer to the relevant portion of the circular which is as follows:
"(1) Fitment of Promotee Officers: Though it had not been possible to arrive at an understanding on this matter, it has been decided by the management to fit all the promotee officers promoted in 1978 and hereafter as follows:
(a) The basic pay of a clerk promoted to the cadre of Junior Officer may be fixed at the starting stage of the pay scale of junior officers, in case it is not higher.
(b) However, if the basic pay of a clerk is already higher than the starting stage of the pay scale of junior officer, then it shall be fixed at the nearest higher stage in the pay scale of junior officer.
(c) The basic pay and special allowance of a special assistant together shall be taken into account when fixing his pay in the pay scale of junior officers on promotion so that in no case the new basic pay is less than the total of basic pay and special allowance of the special assistant
(d) In all cases there shall not be a reduction in the total emoluments of a non-subordinate workmen staff upon promotion to the cadre of junior officer."
The above order made a distinction between clerks who were promoted to the cadre of Junior Officers and special Assistants who were so promoted. In the case of clerks only the basic pay of the clerk promoted as junior officer was to be taken into consideration and his salary had to be fixed at the starting stage of the basic pay of Junior Officer in case it was not higher. As far as the Special Assistants were concerned, fixation of salary was to be made taking into account not only the basic pay but special allowance as well. The result was that the special allowance or notional special allowance which a clerk would have drawn, had he been posted as special Assistant prior to his promotion as a junior officer was denied to clerks who were promoted as Junior Officers. The second disadvantage, which was inherent in the above circular, was that the benefits of re-fixation was confined only to those promoted in 1978 and later, petitioners having been promoted in 1972, 1973 and 1975, were denied the benefit of refixation of salary in accordance with the circular dt. December 12, 1978. The case of the petitioners was that the Administrative order dt. May 18, 1971 and the circular order dt. December 12, 1978, which the custodian and Board of Directors had issued, violated Section 19 of Act 5 of 1970, in that the preexisting service conditions were "deemed regulations" and such regulations could have been altered only by framing new regulations or altering existing regulations as provided in Section 19(1) of the Act. Yet another submission of the petitioners was that the implementation of the administrative order dt. May 18, 1971 and the Circular order dt. December 12, 1978 created classification of employees belonging to the same cadre viz., clerks/special Assistants, depending entirely on an arbitrarily chosen date depriving those who were promoted between May 18, 1971 and December 12, 1978 for hostile discrimination. This, they contended, was discriminatory and violative of Article 14 of the Constitution of India. Even among those who were promoted from the clerical cadre as junior officers subsequent to the promotion of petitioners 2 and 7, they pointed out that one Sri Venkateswarlu, who was junior to these petitioners and who was promoted later than them on April 9, 1973, was granted higher emoluments than his seniors. That was also said to be discriminatory and violative of the constituitonal guarantees contained in Article 14 of the Constitution of India.
7. In the counter affidavit filed on behalf of the respondent, the basic facts relating to the appointment of the petitioners as clerks, the officiation of petitioners 2 and 7 as Special Assistants and the promotion of all of them as Junior Officers on the respective dates excepting in the case of the 5th petitioner were admitted. The respondent contended that the pre-existing service conditions did not amount to 'a regulation, rule, bye-law or order' which alone was saved by Section 19(3) of the Act as "deemed regulations". It was also submitted that it was competent for the respondent custodian to issue administrative/circular orders regulating conditions of service which were not covered by pre-existing regulations, rules, bye-laws or orders. A further contention was that the bilateral settlements binding the nationalised banks and its employees had also provided for conditions similar to those covered by the impugned administrative/circular orders. It was contended that such settlements had provided that no promotee to junior Officers' cadre would draw lesser total emoluments than he was drawing in the category of clerks/special Assistants and therefore there was no scope for any grievance for the petitioners. Reference was also made to the fact that subsequent to the filing of the Writ petition, the fitment in scales of salary was revised in the case of petitioners 2, 4, 5, 6 and 8 and that petitioners 1, 2, 3, 5, 6 and 7 were not drawing lesser salary than Sri Venkateswarlu as on July 1, 1979 when the new scales of pay were implemented for officers of the Bank and as a matter of fact petitioners 1, 4 and 6 were drawing more basic pay as on July 1, 1979 than Sri Venkateswarlu.
8. On an examination of the pleadings and arguments on either side, the learned single Judge found that the pre-existing service conditions were orders within the comprehension of Section 19(3), and by virtue thereof, they were deemed regulations which could not be altered except by amending those regulations or by framing fresh regulations under Section 19(1) of the Act. It was on that premise that he held that the two orders issued by the custodian on May 18, 1971 and the circular issued by the 1st respondent on December 12, 1978 being purely administrative in nature, could not override the deemed regulations and therefore the same were ineffective and void. Admittedly, the service regulations were framed by the 1st respondent bank only on June 30, 1979 and they came into force on July 1, 1979. The court repelled the contention that there was delay and laches on the part of the petitioners for the reason that the order dt. December 12, 1978 was admittedly the product of discussions based on the representation dt. August 3, 1978 which the 9th petitioner-Association had filed on behalf of the 8 petitioners and five others and that the 9th petitioner had filed W.P. No. 6989/79 which was dismissed by order dt. August 26, 1986 by Raghuvir, J observing that the individuals who were aggrieved by the refusal to consider their claims should seek remedy on their own, In the mean time, on September 1, 1980 the Bank had issued proceedings under the statutory regulations giving benefit of inclusion of the special allowance/notional allowance for Special Assistants/clerks while fixing the basic pay in the category of Junior Officers on promotion. Writ Petition No. 16059/86 was filed on October 27, 1986.
9. Counsel for the respondent (appellant herein) urged before us that the learned single Judge went wrong in understanding the scope and purport of Section 19( 1) and (3) of Act 5 of 1970 and that he erred in holding that the pre-existing conditions of service relating to fitment on promotion by including special allowance paid at that time was an order within the meaning of Section 19(3) of the Act. He sought to make a distinction between an administrative order passed by a private banking Company and a 'regulation, rule, bye-law or order' governed by Section 19(3) of the Act. Yet another submission was that even in the regulations which were framed under Section 19(1), no provision was made to take into account the special allowance which the concerned employee was drawing for the purpose of fitment into the scale of pay applicable to junior officers. Yet another submission was that the administrative practice relating to fitment was not a binding precedent which the nationalised bank had to take into account under Section 19(3) of the Act and that as a matter of fact the special allowance/fitment allowance was not being paid from 1971 onwards till 1979 and that therefore the learned Single Judge should not have granted any relief since the claim had become stale.
10. We heard elaborate arguments on the various points which are referred to above. We feel that it is expedient first, to refer to the ground relating to laches, before we enter into other aspects of the case.
11. Petitioners were promoted on various dates from December 22, 1972 to August 16, 1975. In me affidavit accompanying the writ petition, there was a positive averment that till the issue of the administrative order dt. May 18, 1971, clerks/special Assistants promoted as junior Officers were given the benefit of inclusion of special/notional special allowance for the purpose of fixation of salary and fitment into the pay scales applicable to junior officers. Petitioners had also pleaded that when the bank altered the procedure in May, 1971, representations were made by the individual officers and that the bank did not consider such representations at all. It was thereafter that the 9th petitioner-Association took up the cause of the 13 aggrieved officers in its letter dated August 3, 1978 which the respondent acknowledged on August 10, 1978. On the basis of the above, discussions were held on 6th and 7th of December, 1978 resulting in the order dt. December 12, 1978, prospectively granting the benefit of inclusion of special allowance in the case of Special Assistants only and refusing to do so in the case of clerks promoted as junior officers. Even then, the respondent Bank did not reply to the representation dt. August 3, 1978 till July 26, 1979. It was over a month thereafter that the 9th petitioner- Association representing the aggrieved officers, filed W.P. No. 6989/79, which was dismissed by order dt. August 26, 1986 observing that the individuals who were aggrieved, had to seek remedy on their own. Immediately thereafter, within two months, Writ Petition No. 16059/86 was filed on October 27, 1986. The Writ Petitioners who were prompted in 1972 till 1975 could not have come to this court within 90 days from May 18, 1971 when the first administrative order was issued, because they were not directly affected till they were actually promoted; nor could they have rushed to this court immediately after their promotions, because their cause was taken up by the Association and such efforts led to circular dt. December 12, 1978, partially conceding their demand but refusing relief in the case of the petitioners. In view of the above facts, we have no hesitation in holding that the Learned Single Judge was right in not throwing out the Writ Petition on the ground of laches.
12. The other contentions of the respondent can be considered together. It is necessary that we refer to Sections 7, 12 and 19 of Act 5 of 1970.
13. Section 7(2) which is relevant to appreciate submissions of the respondent reads as follows;
"7(2): The general superintendence, direction and management of the affairs and business of a corresponding new bank shall vest in a Board of Directors which shall be entitled to exercise all such powers and do all such acts and things as the corresponding new bank is authorised to exercise and do."
14. Counsel for the petitioners rely on Section 12(2) of the Act, which is in the following terms:
"12(2): Save as otherwise provided in Sub-section (1), every officer or other employee of an existing bank shall become, on the commencement of this Act, an officer or other employee as the case may be, of the corresponding new bank and shall hold his office or service in that bank on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him if the undertaking of the existing bank had not been transferred to and vested in the corresponding new bank and continue to do so unless and until his employment in the corresponding new bank is terminated or until his remuneration, terms or conditions are duly altered by the corresponding new bank."
15. Section 19(1)(2)(d) and (3) on which the learned Single Judge placed reliance are as follows;
"19(1): Power to make regulations:
The Board of Directors of a corresponding new bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government (by notification in official gazette) make regulations, not inconsistent with the provisions of this Act or any scheme made thereunder, to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, the regulations may provide for all or any of the following matters, namely:-
(a) to (c)........
(d) the conditions or limitations subject to which the corresponding new bank may appoint advisers, officers or other employees and fix their remuneration and other terms and conditions of service :
(3) Until any regulation is made under Sub-section (1), the articles of association of the existing bank and every regulation, rule, bye-law or order made by the existing bank shall, if in force at the commencement of this Act, be deemed to be the regulations made under Sub-section (1) and shall have effect accordingly and any reference therein to any authority of the existing bank shall be deemed to be a reference to the corresponding authority of the corresponding new bank and until any such corresponding authority is constituted under this Act, shall be deemed to refer to the Custodian."
16. Counsel for the appellant Bank (respondent) is right in his submission that by virtue of Section 7(2) of the Act, the Board of Directors of the new Bank has power of general superintendence, direction and management of the affairs and business of the Bank and it may exercise all such powers and do all acts and things to achieve those purposes. But that is not an unlimited charter of power, The new bank being a creature of the statute, had to abide by other provisions of the Act which created it. Sections 12(2) and 19(3) of the Act are such statutory provisions which limited or regulated the power of the Bank. We are not in a position to accept the submission that the powers of general superintendence and management is unlimited and may override other provisions of the Act.
17. What Section 12(2) provides is in the nature of a transitory provision which enables transformation of employees of the banking company into employees of the new Bank on the same terms and conditions and with the same rights to pension gratuity and 'other matters' which would have been admissible to him, had not there been transfer of the undertaking under the Act. We find considerable force in the submission of counsel for the petitioners that terms and conditions of service include the provisions regulating fitment on promotion, and those terms and conditions were to continue till 'remuneration terms or conditions are duly altered by the corresponding new bank.'
18. Before we advert to the submissions regarding the competence of the new bank to prescribe or alter or amend service conditions of transferred staff, it is necessary to refer to the scope and ambit of Section 19 of the Act Sub-section (1) enables the framing of regulations by the Board of Directors, subject to consultation with the Reserve Bank of India and the previous sanction of the Central Government to provide for all matters for giving effect to the provisions of the Act, The sub-section particularises the specific matters for which regulations may be made, without prejudice to the generality of such power under Section 19(1). Clause (d) of Sub-section (2) is relevant for our purpose. That enables framing of what may compendiously be called 'service regulations'. Sub-section (3) provides for the interregnum between the date of commencement of the Act and the framing of regulations. That is achieved by deeming the instruments prescribed by the Banking Company as regulations. What are preserved by Section 19(3) are --(1) articles of association of the existing bank, or (2) every regulation, or (3) rule or (4) bye-law, or (5) order, made by the existing bank. Any one of them, if in force at the commencement of the Act, were deemed to be regulations made under Section 19(1). The argument whiten was emphatically urged before us was that, administrative orders issued by the existing bank and which were in force at the commencement of Act 5 of 1970 are not taken in by the terms-- "articles of association of the existing bank, or regulation or rule or bye-law or order made by the existing bank". The submission is that the Syndicate Bank Officers (Conditions of Service) Rules, 1966 adopted by the Board of Directors at the meeting held on April 30, 1966, did not contain a provision for fitment of salary on promotion and any order passed or guidelines adopted in relation to fitment would not be an instrument which would be deemed to be a regulation under Section 19(3). It was grudgingly conceded that the Syndicate Bank Employees (Conditions of Service) Rules, 1966, may, perhaps, qualify under Section 19(3), but not administrative orders of executive instructions issued by the management of the bank in exercise of its managerial discretion regarding service contracts or agreements or settlements entered into in exercise of its supervisory powers of day-to-day administration of the affairs of the bank.
19. we are astounded by the proposition which is advanced before us. We are of the opinion that the four-fold classification of instruments in Section 19(3) of the Act is exhaustive of all prescriptions which the banking company would have issued and which had force as conditions of service binding the management and the employees alike at the commencement of the Act. Obviously, the bank could not have framed regulations, rules, bye-laws or orders of a statutory character, nor could the articles of association of the existing bank be statutory in the strict sense, the articles of association of a private banking company is only the contract of its incorporation. Regulations, rules, bye-laws or orders, are instruments which are of general application and have binding force in respect of those who are governed by the same. They draw their vigour not from their statutory character, but from the power of the employer under the general law of master and servant to prescribe conditions of service. Though not statutory in their origin, the prescriptions nevertheless bind the Master and servant alike.
20. An argument that an order or rule or a bye-law to be deemed to be a regulation under Section 19(3) shall partake of the character of a statutory regulation is obviously absurd, since such a provision will be unnecessary as it is axiomatic that a regulation, rule, bye-law order having statutory force will continue to apply, unless effectively superseded by similar instruments without the assistance of a deeming provision. A statutory fiction is created only in cases where, in reality, and but for the fiction, a different state of affairs would have prevailed. To say that the fiction will operate only in cases where there was a statutory instrument--be it regulation, rule, bye-law or order--in existence is to assert the absurd. Even without a fiction, those instruments will be statutory. The fiction will therefore be an obviously absurd surplusage. It is the basic principle of interpretation of Statutes that the legislature knows what it does and does so with specific reference to the facts which it is aware of. The assumption which we have, therefore, to make is that in enacting Section 19(3), the legislature knew that there were instruments of a non-statutory character made by the existing bank which it wanted to save and deem to be statutory regulations till regulations are framed in exercise of the power under Section 19(1). The legislature also wanted to be exhaustive of all such instruments which the Bank had prescribed, viz., Articles of Association of the existing bank which was the contract of its incorporation as also other instruments which were variously described as Regulations or Rules or Bye-laws or Orders made by the existing bank. We are of the opinion that the learned single Judge was right in assuming that the list of instruments mentioned in Section 19(3) was meant to be exhaustive; and nothig was left out of its purview. The Legislature did not make a distinction between statutory instruments on the one hand and executive or administrative prescriptions on the other. That was why it covered the entire gamut of binding prescriptions or guidlines made by the master in exercise of his power under the general law and which had force and effect on me date of commencement of the Act, by detailed enumeration of the various types of instruments.
21. Counsel for the appellant (respondent bank) submitted that the mere fact that the power to make regulations was conferred by Section 19(1) of the Act did not divest the Banking Company of power of general superintendence and management vested in the Board of Directors by Section 7(2) of the Act. He submitted further that even in the absence of and without promulgating regulations, the Board of Directors can issue administrative directions, He submitted further that the instructions issued by a banking company prior to the commencement of the Act being in the nature of administrative directions, it was competent for the Board of Directors to alter or amend them by administrative circulars. Reliance for this purpose was placed in V.T. Khanzode v. Reserve Bank of India, (1982-I-LLJ-465) (SC). Specific reference was made to the following observations in paragraph 18 of the Judgment occurring in page p.474 to the effect that "The substance of the matter is that the Central Board has the power to frame regulations relating to the conditions of service of the Bank's staff. If it has that power, it may exercise it either in accordance with Section 58(1) or by acting appropriately in the exercise of its general power of administration and superintendence."
Reference was also made to paragraph 25 at page p.477 to the following effect:
"Since the Staff Regulations of 1948 are in the nature of administrative directions, it was competent to the Central Board to alter or amend them by an administrative circular. No lack of statutory powers is involved in that process. Under Section 7(2), the Central Board has the power to provide for service conditions of the Bank's staff by administrative circulars, so long as they do not impinge upon any Regulations made under Section 58 of the Act."
We are of the opinion that reliance on the above decision in support of the proposition which counsel for the respondent-bank advances is absolutely misplaced for the reason that the Supreme Court had no occasion to consider a provision similar to Section 19(3) read with Section 12(2) of the Act to the effect that pre-existing regulations, rules, bye-laws or orders would be deemed to be regulations or that the staff of the banking company which was taken over, would be treated as staff of the new bank on the same terms and conditions of service. The other aspect is that the Supreme Court in the above decision held that the power of the Central Board under Section 7(2) to provide for service conditions of the Bank Staff by administrative circulars could be available only "so long as they do not impinge upon any Regulations made under Section 58 of the Act" In the present case the Administrative Circulars admittedly impinge upon the deemed regulations under Section 19(3) of the Act. The observations contained therein have the effect of invalidating administrative orders/circulars, which impinge upon the deemed regulations.
22. Yet another reason why we shall not accept the submission of counsel for the respondent is the decision of a Constitution Bench of the Supreme Court of five Judges in Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi (1975-I-LLJ-399), wherein the court held that "regulations containing the terms and conditions of appointment are imperative", and (para 23) (P.408):
"The noticeable feature is that these statutory bodies have no free hand in framing the conditions and terms of service of their employees. These statutory bodies are bound to apply the terms and conditions as laid down in the regulations. The statutory bodies are not free to make such terms as they think fit and proper. Regulations prescribe the terms of appointment, conditions of service and procedure for dismissing employees. These regulations in the statutes are described as "statute" fetters on freedom of contract. The Oil and Natural Gas Commission Act in Section 12 specifically enacts that the terms and conditions of the employees may be such as may be provided by regulations. There is a legal compulsion on the Commission to comply with the regulations. Any breach of such compliance would be a breach of the regulations which are statutory provisions. In other statutes under consideration, viz. The Life Insurance Corporation Act and the Industrial Finance Corporation Act though there is no specific provision comparable to Section 12 of the 1959 Act the terms and conditions of employment and conditions of service are provided for by regulations. These regulations are not only binding on the authorities but also on the public."
It is clear from the above statements contained in paragraphs 22 and 23 of the judgment that it is imperative on the Corporations to frame regulations containing conditions of appointment of its staff. The observations contained in V.T. Khanzode case (supra) which indicate that it is only optional for the employer, cannot be considered as laying down the correct law.
23. The decisions rendered by various High Courts in the country with specific reference to Sections 19(3) and 12(2) of the Act, have concurred in the view that orders issued by the banking company prior to the commencement of the Act in relation to service conditions, had to be deemed as regulations under Section 19(3) of the Acts and violation thereof justifies invocation of jurisdiction of Courts.
24. In Lachman Dass Aggarwal v. Punjab National Bank (1977) 2 Serv LR 565, a Division Bench of the Punjab and Haryana High court held that the departmental circular No. 20 dt. October 25, 1952 is relatable ,to statutory power available under Sections 19(1), 19(2)(d) and 19(3) and; should thereby deemed to be regulations which have such force and vigour as regulations framed under Section 19(1) read with Section 19(2)(d) of the Act. The court held that the Circular has the same force as regulation made under Sections 19(1) and 19(2) of the Act.
25. A Division Bench of this court in Miss P. S. Geeta v. The Central Bank of India, Bombay (1978) 2 Serv LR 856: held that the circular issued by the Central Bank of May 6, 1968 relating to recruitment to the posts of clerks and subordinate staff, was within the comprehension of the deeming provision of Section 19(3) of the Act and violation of the terms of that order which was deemed regulation justified interference by the court.
26. In Indian Bank v. Evalappan (1979-II-Lan.LJ 450), a Division Bench of the Madras High Court also took the same view, holding that violation of Rule 30 of the Service Rules of the preexisting bank which was a part of the deemed regulations under Section 19(3) justified the court in upsetting the disciplinary proceedings against the concerned employee.
27. The Karnataka High Court in P. V. Nayak v. Syndicate Bank, (1979-II-LLJ-176)-took the same view and held that Syndicate Bank Officers (Conditions of Service) Rules (1966) was deemed regulation and violation thereof was justiciable.
28. A Division Bench of the Delhi High Court in Krishna Dev Puri v. Union of India, (1984-I-LLJ-197) also held that Staff Circular No. 20 of the Punjab National Bank dt. October 28, 1952 was deemed regulation and non-complaince with those regulations was actionable.
The court held that in view of Section 19(3) the said Circular of 1952 had therefore to be regarded as a regulation framed under Section 19(1).
29. We have no hesitation in holding that the order issued by the pre-existing banking company prior to its take over under Act 5 of 1970, related to service conditions of the petitioners, that they were relatable to the power to frame regulations under Sections 19(1) and 19(2)(d) of the Act and are deemed regulations under Section 19(3) thereof.
30. Counsel for the respondent-bank referred us to a decision of our learned brother Ramaswamy, J, (as he then was) in Canara Bank Officers Congress, Bangalore v. The Canara Bank Head Office through its Chairman (1988 6 Serv LR 497). The controversy which arose for consideration was as to whether fitment of salaries in accordance with the formula envisaged in Memo. No. 18/81 dt. January 10, 1981 to the Junior Management Grade Scale-I Officers and Circular No. 137/80 dt. April 18, 1980 to those officers who were promoted on or after July 1, 1979 were contradictory and therefore discriminatory. No question relating to service conditions framed by Administrative Orders/circulars by the bank before the commencement of Act 5 of 1970 arose for consideration in that decision. The court held that the provision which enabled officers in the same category but with longer service to draw additional remuneration in view of the increments sanctioned to them did not violate the principle of equal pay for equal work. The answer of the court was understandable in the negative. We hold that the above decision has no application to the facts of this case.
31. We therefore affirm that the learned single Judge was right in holding that the pre-existing service conditions which bound the employer--respondent Bank and the employees--the petitioners and others--alike was atleast an 'order' which was in force at the commencement of the Act and which was saved by Section 19(3) of the Act and was therefore 'deemed regulation' relating to fitment in the pay scale applicable to junior officers on promotion from the category of clerks/special Assistants. That "deemed regulation" can be altered, amended or replaced by the Board of Directors exercising power vested under Section 19(1) of the Act after consultation with the Reserve Bank of India and by notification in the official gazette with the previous sanction of the Central Government." It is not the case of the respondent Bank that it did so, in issuing the administrative order dt. May 18, 1971 or the circular order dt. December 12, 1978. That exercise was undertaken only when the regulations were framed in 1979 and the new scales of salary were implemented with effect from July 1, 1979.
32. We affirm the finding of the learned single Judge that in so far as the impugned circular/orders were not issued in exercise of the power to make regulations, under Section 19(1) of the Act, the same were null and void. It is elementary that if a statutory enactment prescribes the manner in which power may be exercised, that mode and none other, shall be resorted to and defiance of that rule shall necessarily result in invalidation of the offending instrument. The argument that the custodian has the necessary supervisory and managerial power to prescribe conditions of service or provide for fitment in the absence of a statutory regulation under Section 19(1) of the Act, does not appeal to us, for the reasons which we have mentioned above. We are of the opinion that deemed regulations under Section 19(3) are as potent as regulations framed under Section 19(1) of the Act and till regulations are so framed, the deemed regulations shall have full force and effect. In so far as it is not disputed that for the period from 1971 to 1979, the pre-existing service conditions which were 'deemed regulations' in relation to fitment of clerks/special Assistants promoted as Junior Officers were violated and the petitioners were affected thereby, the consequential relief which the learned single Judge has granted was definitely appropriate. We do not find much substance in the submission that the relief which the petitioners seek were granted by the circular order dt. December 12, 1978. It was so granted only in respect of Special Assistants by reason of condition No. (c) of the order dt. December 12, 1978.
In the case of clerks promoted as junior officers to which category the petitioners belonged, what all was taken into account for fitment was basic pay exclusive of special allowance or notional special allowance as Special Assistants. True it is that they were given the benefit of actual emoluments not lower than the basic pay which they were drawing as on July 1, 1979 as also on the date of promotion. But that was not what the pre-existing service conditions assured them.
33. Nor are we impressed by the submission that with effect from August 1, 1980, all the benefits which the petitioners seek have been fully granted. That had only prospective effect. Petitioners had lost monetary benefits which they would have had from the dates on which they were promoted by inclusion of special allowance/notional special allowance as Special Assistants which they were drawing or would have drawn on the dates of promotion. It is not as if the benefits which the petitioners seek are so inconsequential as to refuse to grant relief on the principle of 'de minimis'. For a considerable period of time of 5 to 8 years they were given lesser emoluments than they were entitled to under pre-existing service conditions. We therefore hold that the learned single Judge was right in granting the consequential monetary relief to the petitioners as a result of declaring the Circular order dt. December 12, 1978 as invalid. We also hold that the invidious discrimination between clerks on the one hand and special Assistants on the other who were governed by the same pre-existing conditions of service in relation to fitment effected by circular order dt. December 12, 1978 was discriminatory,
34. We also hold that the petitioners continued as employees/officers of the respondent bank by virtue of the provisions of Section 12(2) of the Act "on the same terms and conditions and with the same rights to pension, gratuity and other matters which would have been admissible to him if the undertaking of the existing bank was not transferred to and vested in the corresponding new bank". We hold that the right to fitment as per the pre-existing conditions prescribed by the banking company did continue. We are of the opinion that reading Section 12(2) with Section 19(3) of the Act, there can hardly be any doubt about the continuance of service conditions including right of appropriate fitment on promotion.
35. One significant fact which emerges is that the Bank was aware of the injustice resulting from denial of appropriate fitment to those promoted from the category of clerks/Special Assitants during the period from 1971 to 1979. In its Circular dt. December 12, 1978, it granted relief to the Special Assistants by including their special allowance for the purpose of fitment in the scale of pay of junior officers, but refused to take into consideration Special/Notional Special allowance which the clerks would have drawn in accordance with the pre-existing service donditions. In respect of special Assistants, the relief was ganted prospectively. In the case of clerks, me only assurance was that if they were drawing basic pay in the pre-promotion post higher than the minimum in the scale of junior officers, their pay scale would be stepped up to the next higher stage in the category of junior officers. That was also only prospective, with the result that petitioners who were promoted as junior officers were to lose the benefit for the period of promotions from 1972 upto 1978. That was rectified only pursuant to orders issued by the respondent in 1980 pursuant to the statutoy regualtions which came into force with effect, from July 1, 1979 pursuant to the notification issued on June 30, 1979. It is therefore obvious that the respondent-bank itself had realised that injustice was done to clerks who were promoted as junior officers during the period from 1971 to 1979. Obviously, petitioners were treated differently and in a discriminatory manner, since those clerks who were promoted between 1970-71 and those promoted after 1980 got the benefit of inclusion of special allowance for the purpose of fitment of salary in the scale applicable to junior officers, whereas only those who were promoted during the interregnum were denied monetary benefit from the date of their promotions upto 1979. We feel that there is considerable force in the submission of the petitioners, based on the decision of the Supreme Court in Prabhakar Rao v. State of A.P. wherein the age of retirement was reduced from 58 to 55 years, by order dt. February 28, 1983 and the same was subsequently restored to 58 years, as the date of superannuation with effect from August 23, 1984 resulting in denial of higher age of retirement for persons who attained the age of 55 years between those two dates and the same was found by the Supreme Court to be arbitrary and discirminatory. We are of the opinion that the same principle shall apply to the facts of the present case also.
36. We are astounded by the persistence with which the bank, which is an instumentality of the State fought the relief which the petitioners have been seeking, to treat them on the same footing as those who were promoted upto May, 1971 and from 1979 from the category of clerks in the matter of fixation/fitment of salary in the pay scale applicable to junior officers. The specific pica of the petitioners was that the loss in emoluments amounted to about Rs. 50/- per month for each and Rs. 600/- per year including all the incidentals. The difference in the salary which the petitioners claim would he somewhere about Rs. 750/- each. Such relief was granted to the Special Assistants prospectively by order dt. December 12, 1978. It was granted to all again prospectively, in the refixation which became effective from July 1, 1979. It was further extended with effect from September 1, 1980. The total amount involved would have been far less than what the respondent hank had expended in fighting this litigation tooth and nail. It is necessary that nationalised institutions like the respondent-bank realises that they arc dealing with peoples money and have some circumspection in conducting litigations at the peoples costs. We have mentioned that the Bank itself had realised the entitlement of such persons to those benefits, by issue of orders under the statutory regulations. It was only appropriate that the Bank considered the reliefs which the petitioners sought without driving them to court. Atleast when the court granted relief to 8 out of 13 affected officers, the Bank should have desisted from pursuing the matter further because, obviously what the petitioners got was only what the Bank, by its belated realisation and consequntial orders, had granted to others similarly placed. The persistence of the Bank in refusing to grant deserving relief shall naturally result in our disapprobation. The only manner in which we can articulate such disapprobation is by award of costs.
37. We therefore dismiss the appeal in affirmance of judgment of the learned single Judge. The respondent-bank who is the appellant herein will pay costs to the petitioners in the writ petition (who arc respondents herein) along with advocates fee which we fix in a sum of Rs. 2000/-.