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CASE NO.: Appeal (civil)  1542 of 2007

PETITIONER: BHARAT CO-OPERATIVE BANK (MUMBAI) LTD.

RESPONDENT: CO-OPERATIVE BANK EMPLOYEES UNION

DATE OF JUDGMENT: 22/03/2007

BENCH: CJI K.G. BALAKRISHNAN, LOKESHWAR SINGH PANTA & D.K. JAIN

JUDGMENT: J U D G M E N T [Arising out of S.L.P. (Civil) No.8377 of 2005)

D.K. JAIN, J.:

       Leave granted. 2.      In relation to a Multi-State Co-operative Bank  carrying on business in more than one State, which  government \026 Central or State, is the "appropriate  government" for the purposes of the Industrial Disputes  Act, 1946 (for short "the ID Act"), is the short question for  consideration in this appeal? 3.      The Appellant-Bank (hereinafter referred to as "the  Bank") was originally registered under the Maharashtra  State Co-operative Societies Act, 1960.  As the Bank had a  number of branches outside Maharashtra, subsequently, it  got registered under the Multi-State Co-operative Societies  Act, 1984.  It is in the banking business and is governed by  the provisions of the Banking Regulation Act, 1949 (for  short "the BR Act"). The respondent is a trade union and  represents workmen employed in the Bank. 4.      Mainly aggrieved by transfer of eleven employees from  one place to another, alleging it as an act of victimisation,  the respondent filed a complaint against the Bank under  Section 28 of the Maharashtra Recognition of Trade Unions  and Prevention of Unfair Labour Practices Act, 1971 (for  short "the MRTU & PULP Act"), along with an application  for interim relief, before the Industrial Court at Mumbai.   While resisting the complaint, the Bank raised certain  preliminary issues of jurisdiction and maintainability of the  complaint under the MRTU & PULP Act.  The plea of the  Bank was that as it was engaged in the business of banking  and is a Banking Company as defined in Clause (c) of  Section 5 of the BR Act, the appropriate government would  be the Central Government and therefore, the provisions of  the MRTU & PULP Act, a State Act, were not applicable.   The Industrial Court upheld the objection and ordered that  the complaint may be returned to the respondent for  seeking relief before an appropriate forum. 5.      The respondent questioned the validity of the said  order by preferring a writ petition in the High Court.   Allowing the writ petition, the learned single Judge came to  the conclusion that for the "appropriate Government" to be  the Central Government it was necessary that the Bank  must be a Company incorporated under the Companies  Act, 1956, which requirement was missing in the present  case. He observed, that even though the respondent may be

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carrying on banking business, yet it is not a Company as  defined under Section 5(d) of the BR Act. Inter-alia, holding  that the definition of Banking Company would not include  a Co-operative Bank, which would be regulated under the  provisions of the Maharashtra State Co-operative Societies  Act, the learned Judge set aside the order of the Industrial  Court and remanded the matter back to that Court for  decision on merits.  6.      Being aggrieved, the Bank filed a Letters Patent  Appeal before the Division Bench. Inter-alia, observing that  Section 2(bb) of the ID Act is an instance of legislation by  incorporation and not legislation by reference and,  therefore, the amendments made in the BR Act after 1949  cannot be read into the ID Act, Division Bench came to the  conclusion that the appropriate Government in the present  case would be the State Government.  In other words, the  Division Bench held that for the purpose of deciding which  is the "appropriate government" the expression "Banking  Company" will have to be read, as it existed in BR Act of  1949 and that the subsequent amendments made vide  Banking Regulation Act, 1965 had to be ignored.  Being  aggrieved, the Bank is before us by special leave. 7.      We have heard Mr. Jamshed Cama, learned senior  counsel appearing on behalf of the Bank and Mr. Chander  Uday Singh, learned senior counsel on behalf of the  respondent.   8.      On behalf of the appellant it was contended that  Section 2(bb) of the ID Act creates its own corporate entity,  i.e., multi-State Banking Company and reference to the BR  Act is for the limited purpose of identifying one kind of  banking institution it brings in.  Thus, there is no question  of such multi-State Banking Company referred to in the BR  Act of being bodily lifted in the ID Act by legislative  incorporation of the BR Act, 1949 and, therefore, when the  expression "Banking Company" was expanded in 1965 to  include co-operative banks, such co-operative banks also  became banking companies under the BR Act and if any of  these newly included banking companies operate in more  than one State, then they also become multi-State Banking  Companies for the purpose of Section 2(bb) of the ID Act.  It  is asserted that introduction of definition "Banking  Company" in the first part of Section 2(bb) of ID Act is a  case of referential legislation and not legislation by  incorporation.  Laying emphasis on the Industrial Disputes  (Banking and Insurance Companies) Act, 1949 (for short  "the IDBIC Act") it was submitted by the learned counsel  that the IDBIC Act mandates that in respect of multi-State  Banking and Insurance Companies the appropriate  Government for all industrial disputes would only be the  Central Government and, therefore, the expression  "Banking Company" in Section 2(bb) of the ID Act must be  read in conjunction with the object and purpose of IDBIC  Act so as to bring ID Act into syne with the IDBIC Act.  The  submission is that being aware of the malice in the  industrial field relating to multi-State Banks and Insurance  Companies, IDBIC Act was enacted to bring all multi-State  Banking and Insurance Companies under the control of the  Central Government as appropriate Government, to obviate  the difficulties being faced by the banks and insurance  companies, having branches outside one State, inter-alia in  the form of lack of uniformity of service conditions and  industrial peace.   9.      Per contra, learned counsel for the respondent  submitted that the doctrine of statutory incorporation  squarely applies in the present case, as the definition of

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"Banking Company" in the ID Act had been bodily lifted  from the BR Act.  Moreover, the definitions in Sections 2(a),  2(bb) and 2(kk) of the ID Act are exhaustive.  Subsequent  amendments from time to time in Section 2(bb) to include  certain specified institutions clearly show the legislative  intent not to give an expansive interpretation to the original  words.  It is contended that the fact that the Parliament  expressly amended Section 2(bb) to include State Bank of  India, notwithstanding amendments to the BR Act on 22nd  October, 1956 to apply that Act to the State Bank of India  and corresponding new banks is a strong indicator of the  legislative intent that amendments to the BR Act were not  intended to apply automatically to Section 2(bb) of the ID  Act. 10.     In order to appreciate the contentions raised, it would  be necessary to refer to some salient statutory provisions,  which form the background of the issue involved. 11.     The I.D. Act came into force with effect from 1st April,  1947.   The term "appropriate Government" was defined in  Section 2(a).  However, sub-clause (i) of clause (a) came to  be amended in the year 1949 by the amendment Act 54 of  1949, whereby in relation to any industrial dispute  concerning a "Banking Company" or Insurance Company,  the Central Government was declared to be the  "appropriate Government". Simultaneously, Section 2(bb)  was inserted by the same Act, defining the "Banking  Company".  Needless to add that it is only those banking  companies which fall within the ambit of the definition in  the said provision that the Central Government would be  the appropriate government.  With respect to other banking  companies, the State Government, in which the bank is  situated, would be the appropriate government in terms of  sub-clause (ii) of clause (a) of Section 2 of the ID Act.   Section 2(bb) which is at the centre of controversy reads as  under: "2(bb). "Banking Company" means a banking  company as defined in Section 5 of the Banking  Companies Act, 1949 (10 of 1949) having  branches or other establishments in more than  one State and includes (the Export-Import Bank  of India) (the Industrial Reconstruction Bank of  India), (the Industrial Development Bank of  India), (the Small Industries Development Bank  of India established under section 3 of the Small  Industries Development Bank of India Act,  1989), the Reserve Bank of India, the State Bank  of India (a corresponding new bank constituted  under Section 3 of the Banking Companies  (Acquisition and Transfer of Undertakings Act,  1970 (5 of 1970) (a corresponding new bank  constituted under Section 3 of the Banking  Companies (Acquisition and Transfer of  Undertakings) Act, 1980 (40 of 1980), and any  subsidiary bank), as defined in the State Bank of  India (Subsidiary Banks) Act, 1959 (38 of 1959)."

From a bare reading of the Section it is clear that in order  to fall within the meaning of this definition, a "Banking  Company" has to satisfy two requirements, viz: (i) it should  be a "Banking Company" as defined in Section 5 of the  Banking Companies Act, 1949 and (ii) it should have  branches or other establishments in more than one State.   It may also be noted that some banks, by name, have  specifically been included in the definition.  Section 5 of the  BR Act gives interpretation to various expressions used in

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the said Act. As per clause (c) of Section 5 the expression  "Banking Company" means any "Company" which transacts  the business of banking in India.  According to Section 5(b)  "banking" means the accepting, for the purpose of lending  or investment, of deposits of money from the public,  repayable on demand or otherwise and withdrawable by  cheque, draft, order or otherwise. The expression  "Company" has been interpreted in clause (d) of Section 5  to mean any Company as defined under Section 3 of the  Companies Act, 1956 and includes foreign company within  the meaning of Section 591 of that Act.   Indubitably, the  appellant-Bank is not a Company within the meaning of the  said clause.  However, by the Act 23 of 1965 several  amendments were carried out in the BR Act with effect from  1st March, 1966, widening the scope of the said Act. By that  amendment Part-V, containing only one Section 56,  providing for application of BR Act to Co-operative Banks,  like the appellant-Bank, was inserted.  Section 3 was  substituted to declare that the provisions of the BR Act  shall apply to a Co-operative Society only in the manner  and to the extent specified in Part-V thereof.  12.     The main question raised for determination is whether  the afore-noted amendments to the BR Act, particularly  insertion of Section 56 in the new format w.e.f. 1st March,  1966, after the insertion of the definition of "Banking  Company" in the ID Act by Act 54 of 1949 will apply  mutatis mutandis to the matters governed by the ID Act? 13.     As there is no indication in the ID Act as to the  applicability or otherwise of the subsequent amendments in  the BR Act, the question posed has to be answered in the  light of the two concepts of statutory interpretation,  namely, incorporation by reference and mere reference or  citation of one statute into another. Thus, answer to a  rather intricate question hinges on the test whether at the  time of insertion of the definition of the term "Banking  Company" in the form of sub-section (bb) of Section 2 of the  ID Act by the 1949 Act it was a mere reference to the  Banking Companies Act, 1949 (later re-christened as the  Banking Regulation Act) or the intendment of the  legislature was to incorporate the said definition as it is in  the ID Act?  14.     Before adverting to the said core issue, we may briefly  notice the distinction between the two afore-mentioned  concepts of statutory interpretation, viz., a mere reference  or citation of one statute in another and incorporation by  reference. Legislation by incorporation is a common  legislative device where the legislature, for the sake of  convenience of drafting incorporates provisions from an  existing statute by reference to that statute instead of  verbatim reproducing the provisions, which it desires to  adopt in another stature.  Once incorporation is made, the  provision incorporated becomes an integral part of the  statute in which it is transposed and thereafter there is no  need to refer to the statute from which the incorporation is  made and any subsequent amendment made in it has no  effect on the incorporating statute. On the contrary, in the  case of a mere reference or citation, a modification, repeal  or re-enactment of the statute, that is referred will also  have effect on the stature in which it is referred.  The effect  of "incorporation by reference" was aptly stated by Lord  Esher, M.R.  In re: Wood’s Estate, Ex parte Her  Majesty’s Commissioners of Works and Buildings  in  the following words at page 615: "If a subsequent Act brings into itself by  reference some of the clauses of a former Act, the

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legal effect of that, as has often been held, is to  write those sections into the new Act just as if  they had been actually written in it with the pen,  or printed in it, and, the moment you have those  clauses in the later Act, you have no occasion to  refer to the former Act at all."

15.     The Privy Council in Secretary of State for India in  Council vs. Hindustan Co-operative Insurance Society  Ltd. , while amplifying the doctrine of incorporation,  observed as follows: "Their Lordships regard the local Act as  doing nothing more than incorporating certain  provisions from an existing Act, and for  convenience of draft doing so by reference to that  Act, instead of setting out for itself at length the  provisions which it was desired to adopt\005  The  independent existence of the two Acts is  therefore recognized; despite the death of the  parent Act, its offspring survives in the  incorporating Act.  Though no such saving  clause appears in the General Clauses Act, their  Lordships think that the principle involved is as  applicable in India as it is in this country."

16.     The doctrine of legislation by incorporation and its  effect has been dealt with by this Court in a catena of  decisions. In Ram Sarup vs. Munshi & Ors.  a  Constitution Bench held that repeal of Punjab Alienation of  Land Act, 1900 had no effect on the continued operation of  the Punjab Pre-emption Act, 1913 and that the expression  "agricultural land" in the later Act had to be read as if the  definition of the Alienation of Land Act had been bodily  transposed into it.  After referring to what Brett, L.J. said  on the effect of incorporation in Clarke vs. Bradlaugh ,  namely, "where a statute is incorporated, by reference, into  a second statute the repeal of the first statute by a third  does not affect the second", it was observed as follows:- "Where the provisions of an Act are  incorporated by reference in a later Act the  repeal of the earlier Act has, in general, no effect  upon the construction or effect of the Act in  which its provisions have been incorporated. *       *       * In the circumstances, therefore, the repeal  of the Punjab Alienation of Land Act of 1900 has  no effect on the continued operation of the Pre- emption Act and the expression ’agricultural  land’ in the later Act has to be read as if the  definition in the Alienation of Land Act had been  bodily transposed into it."

17.     The same principle was applied in Bolani Ores Ltd.  vs. State of Orissa . In that case this Court was  considering the question regarding the interpretation of  Section 2(c) of the Bihar and Orissa Motor Vehicles  Taxation Act, 1930 (for short "the Taxation Act").  This  Section when enacted adopted the definition of "motor  vehicle" contained in Section 2(18) of the Motor Vehicles  Act, 1939.  Subsequently, Section 2(18) was amended by  Act 100 of 1956 but no corresponding amendment was  made in the definition contained in Section 2(c) of the  Taxation Act. The argument advanced was that the  definition in Section 2(c) of the Taxation Act was not a  definition by incorporation but only a definition by

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reference and the meaning of "motor vehicle" in Section 2(c)  must, therefore, be taken to be the same as defined from  time to time in Section 2(18) of the Motor Vehicles Act,  1939.  The argument was rejected by this Court and it was  held that this was a case of incorporation and not reference  and the definition in Section 2(18) of the Motor Vehicles  Act, 1939, as then existing, was incorporated in Section 2(c)  of the Taxation Act and neither repeal of the Motor Vehicles  Act, 1939 nor any amendment in it would affect the  definition of "motor vehicle" in Section 2(c) of the Taxation  Act.   18.     The decision of this Court in Mahindra & Mahindra  Ltd. Vs. Union of India & Anr.  also proceeded on the  same principle.  There the question was in regard to the  effect of subsequent amendment in Section 100 of the Code  of Civil Procedure, 1908 on Section 55 of the Monopolies  and Restrictive Trade Practices Act, 1969 (for short "The  MRTP Act").  Section 55 of the MRTP Act provides for an  appeal to this Court against the orders of the Monopolies  and Restrictive Trade Practices Commission on "one or  more of the grounds specified in Section 100 of the Code of  Civil Procedure, 1908".  Section 100 of the Code of Civil  Procedure was substituted by a new Section in 1976, which  narrowed the grounds of appeal under that Section.  In  construing Section 55 of the MRTP Act this Court held that  Section 100 of the Code as it existed in 1969 was  incorporated in Section 55 and the substitution of new  Section in the code, abridging the grounds of appeal, had  no affect on the appeal under Section 55 of the MRTP Act. 19.     The principle laid down in these decisions was  reiterated in U.P. Avas Evam Vikas Parishad vs. Jainul  Islam & Anr.  and lately in P.C. Agarwala vs. Payment  of Wages Inspector, M.P. & Ors.  It is, therefore, clear  from the afore-noted decisions that if there is a mere  reference to a provision of one statute in another without  incorporation, then, unless a different intention clearly  appears, the reference would be construed as a reference to  the provision as may be in force from time to time in the  former statute. But if a provision of one statute is  incorporated in another, any subsequent amendment in the  former statute or even its total repeal would not affect the  provision as incorporated in the latter statute.   20.     However, the distinction between incorporation by  reference and adoption of provisions by mere reference or  citation is not too easy to highlight.  The distinction is one  of difference in degree and is often blurred.  The fact that  no clear-cut guidelines or distinguishing features have been  spelt out to ascertain whether it belongs to one or the other  category makes the task of identification difficult.  The  semantics associated with interpretation play their role to a  limited extent.  Ultimately, it is a matter of probe into  legislative intention and/or taking an insight into the  working of the enactment if one or the other view is  adopted.  Therefore, the kind of language used in the  provision, the scheme and purpose of the Act assume  significance in finding answer to the question. (See:  Collector of Customs vs. Sampathu Chetty & Anr. ). The  doctrinaire approach to ascertain whether the legislation is  by incorporation or reference is, on ultimate analysis,  directed towards that end.  (See: Maharashtra State Road  Transport Corporation vs. State of Maharashtra &  Ors. )  Thus, the question for determination is to which  category the present case belongs. 21.     The plain language of Section 2(bb) of the ID Act  makes the intention of the legislature very clear and we

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have no hesitation in holding that reference to Section 5 of  the Banking Companies Act, 1949 in the said provision is  an instance of legislation by incorporation and not  legislation by reference.  22.     Section 2(bb) of the ID Act as initially introduced by  Act 54 of 1949 used the word "means\005.. and includes" and  was confined to a "Banking Company" as defined in Section  5 of the Banking Companies Act, 1949, having branches or  other establishments in more than one province and  includes Imperial Bank of India.  Similarly, Section 2(kk),  which was also introduced by Act 54 of 1949, defines  Insurance Company as "an Insurance Company defined in  Section 2 of the Insurance Act, 1938 (IV of 1938), having  branches or other establishments in more than one  province". It is trite to say that when in the definition  clause given in any statute the word "means" is used, what  follows is intended to speak exhaustively.  When the phrase  "means" is used in the definition, to borrow the words of  Lord Esher M.R. in Gough vs. Gough , it is a "hard and  fast" definition and no meaning other than that which is  put in the definition can be assigned to the same. (Also see:  P. Kasilingam and Ors. vs. P.S.G. College of Technology  and others ).  On the other hand, when the word  "includes" is used in the definition, the legislature does not  intend to restrict the definition; makes the definition  enumerative but not exhaustive.  That is to say, the term  defined will retain its ordinary meaning but its scope would  be extended to bring within it matters, which in its ordinary  meaning may or may not comprise.  Therefore, the use of  the word "means" followed by the word "includes" in  Section 2(bb) of the ID Act is clearly indicative of the  legislative intent to make the definition exhaustive and  would cover only those banking companies which fall  within the purview of the definition and no other. 23.     Moreover, Section 2(bb) has subsequently been  amended from time to time by various amendments to  include certain specified banks and institutions, which  would otherwise not fall within the exhaustive definition of  the "Banking Company" in Section 2(bb) read with Section  5(c), 5(b) and 5(d) of the BR Act.  It is plain that if the  Parliament had intended an expansive interpretation of the  original words, then there would have been no reason  whatsoever to keep amending the definition from time to  time.  In our view, therefore, the language of Section 2(bb)  clearly demonstrates the legislative intent not to bring  within its ambit all the banks transacting the business of  banking in India. 24.     We are, therefore, of the opinion that introduction of  the Banking Companies Act, 1949 in clause (bb) of Section  2 of the ID Act is a case of incorporation by reference; it has  become its integral part and therefore, subsequent  amendments in the BR Act would not have any effect on  the expression "Banking Company" as defined in the said  Section.  25.     At this juncture, we may also consider an alternative  submission made on behalf of the Bank that even if it is  assumed that the provisions of Section 5 of the BR Act were  introduced into Section 2(bb) of the ID Act by way of  legislative incorporation, two of the exceptions, namely,  exceptions (c) and (d), carved out by this Court in State of  Madhya Pradesh vs. M.V. Narasimhan  and reiterated in  P.C. Agarwala’s case (supra), would apply in the instant  case.  The exceptions so enumerated are: (a)     Where the subsequent Act and the  previous Act are supplemental to each

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other; (b)     Where the two Acts are in pari materia; (c)     Where the amendment in the previous Act,  if not imported into the subsequent Act  also, would render the subsequent Act  wholly unworkable and ineffectual; and (d)     Where the amendment of the previous Act,  either expressly or by necessary  intendment, applies the said provisions to  the subsequent Act. 26.     In our view, there is no substance in the contention.   The ID Act is a complete and self contained Code in itself  and its working is not dependant on the BR Act.  It could  not also be said that the amendments in the BR Act either  expressly or by necessary intendment applied to the ID Act.   We, therefore, reject the contention advanced by learned  counsel for the appellant on this aspect as well.  27.     Further, as noticed above, the definition of the  "Banking Company" in clause (bb) of Section 2 of the ID Act  being exhaustive, it is only with respect to the "Banking  Company" falling within the ambit of the said definition in  the ID Act, that the Central Government would be the  appropriate government, which admittedly is not the case  here. 28.     In the light of the analysis we have made of the  provision contained in Section 2(bb) of the ID Act, we deem  it unnecessary to dilate on the impact of the IDBIC Act on  the ID Act. 29.     For all these reasons, we have no hesitation in  upholding the view taken by the High Court that for the  purpose of deciding as to which is the "appropriate  government", within the meaning of Section 2(a) of the ID  Act, the definition of the "Banking Company" will have to be  read as it existed on the date of insertion of Section 2(bb)  and so read, the "appropriate government" in relation to a  multi-state co-operative bank, carrying on business in more  than one state, would be the State Government. 30.     In the result, the appeal fails and is dismissed  accordingly.  The appellant shall pay the costs of the  respondent throughout.