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As stated earlier, construing the Amalgamation Scheme the High Court has held that it did not bring about complete merger of the Staff of NBI in the existing service of PNB and such merger being a one time event and part of amalgamation process was intended to be complete only after the Central Government framed a Placement Scheme.

In our opinion, the High Court has neither construed the Amalgamation Scheme nor interpreted the word 'placement' used therein correctly. On commencement of the Amalgamation Scheme the undertakings of NBI stood completely transferred to and vested in PNB. Moreover, paragraph 5(2) thereof in clear terms provided that every officer and other employees of NBI shall become from that date an officer or employee of PNB. Not only that it further provided that they shall hold office or be in service on the same terms and conditions. Since they became officers and employees of PNB it was further provided that they will continue in the service on the same terms and conditions until they are duly altered by PNB. Thus from the date of commencement of the Scheme the officers and other employees of NBI not only became officers and employees of PNB but also became subject to supervision and control of PNB. It was, therefore, not correct to say that did not become part and parcel of the then existing service of PNB right from that date. If the officers and employees of NBI were to be treated as a separate lot and not to be disturbed till the placement scheme was made by the Central Government then it would not have made a provision with respect to the terms and conditions on which they were to become the employees of PNB. In Paragraph 5(2) the Central Government also made it clear that it was thereafter open to PNB to terminate services of such employees and also to alter their remuneration and other terms and conditions of service. If the merger was intended to be complete only after making of the placement scheme then the Central Government would not have made such a provision in the amalgamation scheme itself. If the PNB could thus exercise such wide powers of an employer before making of a placement scheme it is difficult to appreciate why it did not have the power to deploy or transfer the employees of NBI till the placement scheme was made. Therefore, it could not have been the intention of the Central Government, when it made the amalgamation scheme, that no deployment or transfer of the employees of the erstwhile NBI should be made.

Making of a separate placement scheme by the Central Government is not a statutory requirement. It appears that in order to see that no injustice was done to the employees of NBI, as a result of their absorption in the service of PNB, it reserved to itself the power to make another scheme with respect to them for determining their placement in the ad-ministrative set- up of PNB and to lay down the norms and guidelines for determination of their inter se seniority vis-a-vis the employees of PNB. Though the word 'placement' has a wider dictionary meaning it does not appear to have been used in Paragraph 5(4) of the amalgamation scheme to mean an act of placing or posting. After amalgamation of NBI with PNB it was not expected that PNB should maintain all the offices and branches of NBI and should carry on its business through those offices and branches with the same employees of NBI. NBI was not run efficiently and it was for that reason that it has made huge losses. These circumstances, also indicate that the Central Government did not intend that till a placement scheme was framed by it PNB should not deploy or transfer any employee of NBI to any other branch or office. Moreover, it is unthinkable that the Central Government by reserving to itself the power of making a placement scheme intended to determine the places where the employees of NBI were to be deployed or posted. Considering the complex nature of banking operations it is not likely that the Central Government, in any case, intended to lay down the principles for guidelines for postings or transfers of the employees of NBI. By reserving to itself the power under Paragraph 5(4) of the amalgamation scheme for making a placement scheme the Central Government appears to have intended to lay down the norms and guidelines for solving the problems that were likely to arise as a result of the merger. In this context, the word 'placement' appears to have been used in the sense of fitment into a position in the administrative set-up of PNB. In other words, what was contemplated was making of a scheme by the Central Government for the purpose of deciding at which level or in which position the employees of NBI were to be fitted in the administrative set-up of PNB. It was possibly for this reason that it was further provided in Paragraph 5(4) that while making the scheme the Central Government shall take into account relevant factors such as experience of the employee, etc. In New Bank of India Employees' Union v. Union of India, [1996] 8 SCC 407, this Court had an occasion to construe the placement scheme, though in a different context. It held that the expression 'Placement' in clause 5(4) of the Amalgamation Scheme meant re-deployment of the employees of NBI, that is, fitment of those employees in a grade or rank or cadre in PNB and determining inter se seniority of those employees vis-a-vis the employees of PNB in that cadre or grade. It also held that under the placement scheme what has been provided and what was in-tended is that for determination of inter se seniority and for the purpose of promotions the computation of years of service had to be done in the manner provided in that scheme. This decision thus supports the view that we are taking.

If it was the intention of the Central Government that PNB should not deploy or transfer any employee of NBI till the placement scheme was made, it would have made an elaborate provision in that behalf in the placement scheme. Instead we find that with respect to deployment/trans-fer only a general provision has been made in Paragraph 3 of the scheme. Moreover, the said provision appears to have been made out of abundant caution. Even in absence of such a provision employees of NBI after they became employees of PNB could have been transferred by PNB subject to the service regulations and the existing awards and settlements. No employee of NBI could have thereafter successfully contended that PNB had no power to transfer them. So, the provision with respect to the transfer of workmen-employees was made in the placement scheme so as to remove any doubt, if any, with respect to the power of PNB to redeploy or transfer them to any of the offices or branches of PNB. When the Central Government provided in the placement scheme that redeployment or transfer may be made considering the suitability of the officer/employee, administrative exigencies and manpower requirements of PNB it did not fix any fresh or different norm for that purpose. Therefore, the said provision appears to have been made more by way of protection against discrimination rather than by way of fixing the principles and norms for their transfers. The only restriction placed on the power of PNB with respect to redeployment or transfers of the officers and workmen-employees of NBI is that the postings/transfers of workmen- employees will have to be made within the same linguistic area. Thus, we do not find anything in Paragraph 3 of the placement scheme which would indicate that redeployment/transfers of the officers/workmen employees of NBI were not contemplated by the Central Government till the placement scheme was framed by it. The important provision made in the placement scheme is with respect to fixation of inter se seniority and determination of seniority for the purpose of promotions. We are, therefore, of the view that the High Court was wrong in declaring the transfer orders of employees of NBI as bad on the ground that till the placement scheme was framed by the Central Government PNB had no power or authority to redeploy or transfer them.

It was also contended that not a single branch of NBI was closed down as a result of amalgamation and, therefore, it was really unnecessary to transfer any workman employee of NBI. Only the employees of NBI were transferred and that would indicate that impugned transfers were made either to accommodate employees of PNB or for some other con-siderations. Thus the transfer orders were either arbitrary or discriminatory and so they were rightly declared as illegal and bad. In support of his contention that in cases where both the transferor and transferee are State or State instrumentalities, it is open to the court to review whether the terms and conditions of the transfer ensure "fairness in action" and non-ar- bitrariness, Dr. Dhawan relied upon the decision of this Court in Gurmail Singh v. State of Punjab, [1991] 1 SCC 189. Though "fairness in action" is now an established test to judge the validity of actions of State or State instrumentalities, we do not find, even after applying that test, that the impugned action of PNB was either arbitrary or discriminatory. In the affidavit of Malvinder Singh, Manager of PNB, filed during pendency of the special appeal before the High Court, the reasons for transferring the workmen employees of NBI have been stated. It is pointed out that at the time of merger, NBI had one head office, 16 Regional Offices, 2 Training Centres and 591 branches. After the amalgamation it had become wholly redundant to have more than one head office or regional office at the same place, that is, at the place where both PNB and NBI had their regional offices. Discontinuation of such offices had thus become necessary, The total number of employees working in such offices was approximately 2000 and it had become necessary to redeploy them elsewhere. Under these circumstances PNB had thought it fit to redeploy/transfer them and to frame the guidelines for that purpose. It is also pointed out that at the time of amalgamation PNB had given option to the employees of NBI either to continue in service under PNB or to leave it and in the letters of acceptance signed by all those employees it was clearly agreed that the basis of computation of their seniority and such other matters will be determined in terms of the scheme that was to be issued by the Central Government and in the matter of other terms and conditions they shall be governed by the policy and procedures as in vogue with respect to employees of PNB. Therein it is also pointed out that productivity of NBI employees was as low as 27 lacs per employee while the corresponding figure with respect to PNB was 42 lacs per employee. Therefore, in order to make provision for the surplus staff and in order to efficiently utilise the manpower impugned transfers were made. After pointing out these relevant facts and cir-cumstances it is stated that the object of these transfers was to avoid any retrenchment or adverse effect on their terms and conditions of service. He has denied that in effecting those transfers PNB had acted contrary to any award/settlement/agreement in force. Therefore, the circumstance that not a single branch of NBI was closed down cannot lead to an inference that there was no surplus as stated and their redeployment and transfers were unnecessary. It was rightly contended by Mr, Reddy, learned Addi-tional Solicitor General, relying upon the decision of this Court in Union of India v. D, Mohan, (1995] 3 SCC 115, that where service of an employee is transferable even though within a limited area, in special circumstances, he can be transferred outside that area. We are of the view that the respondents have failed to establish their case of discrimination. On the contrary, we find that PNB has acted in a fair manner. The guidelines framed by PNB clearly indicate that no wholesale transfers of NBI employees were to be made and the Zonal Managers were authorised to transfer only the surplus staff and that too within the same language area in their zones. Even while effecting such transfers they were required to follow the guidelines. Any transfer outside the language area zone was to be done with the approval of the Head Office.