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CASE NO.: Appeal (civil)  1877 of 1999

PETITIONER: Andhra Bank

RESPONDENT: B. Satyanarayana & Ors.

DATE OF JUDGMENT: 12/02/2004

BENCH: CJI, S.B. Sinha & S.H. Kapadia.

JUDGMENT: JUDGMENT

S.B. SINHA , J :

                This appeal is directed against the judgment and order  dated 31.3.1998 passed by a Division Bench of the Andhra  Pradesh High Court in Writ Appeal No.1152 of 1988 whereby  and whereunder an appeal preferred by the appellant herein  against a judgment and order dated 13.6.1988 passed by a  learned Single Judge in Writ Petition No.6076 of 1984 was  dismissed.   

       In view of the point involved in this appeal, it may  not be necessary to dwell  at length the fact of the matter.   Suffice it to point out that  Respondent Nos. 3 to 12 herein  at all relevant times were holding the posts of  Regional  Manager.  They along with the Respondent Nos.1 and 2 herein  were considered for promotion to the post of  Assistant  General Manager upon following the procedures laid down in a  circular letter dated 11.2.1984 issued in terms of  Regulation 17(1) of the Andhra Bank (Officers’) Service  Regulations, 1982, (hereinafter referred to as ’the  Regulations’, for the sake of brevity).  Upon consideration  of the cases of the private parties herein, the respondent  Nos. 3 to 13 were promoted; whereafter the writ petition was  filed by the respondent Nos. 1 and 2 herein questioning the  validity of the said circular.  A learned Single Judge of  the High Court in the said writ petition held that  Regulation 17(1) of the Regulation is arbitrary as no  guideline was provided thereby.  Aggrieved by and  dissatisfied with the said judgment, the appellant herein  preferred an appeal before the Division Bench of the High  Court.  The Division Bench despite holding that Regulation  17 of the Regulations may not be ultra vires the  Constitution of India but the promotion policy formulated   by the appellant should have been issued in compliance of  the procedure laid down in Section 19 of the Banking  Companies (Acquisition and Transfer of Undertakings) Act,  1980 (hereinafter referred to as ’the Act’, for the sake of  brevity)  holding :

"...It is a settled principle of law  when power is delegated to a subordinate  law making body subject to certain  conditions, the conditions must be  complied with.  Otherwise the  subordinate legislation would be ultra

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vires, the power granted to it, which  itself is subject to a condition."

       Mr. V.R. Reddy, learned Senior Counsel appearing on  behalf  of the appellant would submit that the Division   Bench of the High Court went wrong in holding that in making  the guidelines, the conditions precedent for making the  regulation as contained in Section 19 of the Act were  required to be complied with.  The learned counsel would  submit that it is not in dispute that the Board of Directors  of the appellant-Bank before framing the regulations had  consulted the Reserve Bank of India and also obtained prior  approval of the Central Government in terms of Section 19 of  the Act.   The policy decision as regard promotion of the  officers having been framed in terms of Regulation 17 and in  conformity with the guidelines issued by the Union of India,  Mr. Reddy would submit, it was not necessary to consult the  Reserve Bank of India or obtain prior permission of the  Central Government.

       It is not in dispute that the appellant-Bank was a  ’corresponding new bank’ within the meaning of the  provisions of the Act.  Section 8 of the Act obligates every  corresponding   new bank to be guided by such directions as  regard the matters of policy involving public interest  as  the Central Government may, after consultation with the  Governor of the Reserve Bank, give.

       Sub-section (2) of Section 12 of the Act reads as  under:

"(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."  

       The Board of Directors of the corresponding new bank is  empowered to make a regulation after consultation with the  Reserve Bank of India and previous sanction of the Central  Government.  Such regulation, inter alia, may relate to the  duties and conduct of officers and other employees of the  corresponding new bank.

       It is not in dispute that pursuant to or in furtherance  of sub-section (2)  of Section 12 read with Section 19 of  the Act, in consultation with the Reserve Bank of India and  upon obtaining prior permission therefor, the Board of

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Directors of the appellant-Bank framed  the Regulations  known as ’Andhra Bank (Officers’) Service Regulations 1982’.   Regulation 17 of the said Regulations reads thus :

               "17. Promotions :

1.      Promotions to all Grades of  officers in the Bank shall be made  in accordance with the policy laid  down by the Board, from time to  time, having regard to the  guidelines of the Government, if  any.

2.      For the avoidance of doubts, it is  clarified that this regulation  shall also apply to promotions of  any category of employees to the  Junior Management Grade."

It appears that the Central Government had also issued  guidelines purported to be in terms of  Regulation 17 of the  Regulations.

It was not the contention of the Respondent Nos.1 and 2  before the High Court or before us that the Board of  Directors by reason of  the regulation making power could  not have been delegated with the power to lay down a policy  for grant of promotion to the officers working in the bank.   From a bare perusal of Regulation 17, it would be evident  that sufficient safeguards have been provided for therein  inasmuch as while laying down such policy, the Board must  have regard to the guidelines issued by the Central  Government.  It is further not in doubt or dispute that such  guidelines had been provided by the Government in terms of  the aforementioned regulation.

       A valid regulation once framed would be a part of the  statute.   

It is a well-settled principle of service jurisprudence  that the employer is entitled to lay down policy decision  laying down the criteria for grant of promotion to its  officers.  The eligibility norms for such promotions must be  defined  by the bank on a realistic basis wherefor a system  to  choose the  best available talent to man the critical  positions is to be devised.   Once a power vests in an  authority by reason of the provisions of a statute, it is  trite that such power can be exercised from time to time.   Changes are required to be made keeping in view the  requirement of the management as also the exigency of the  situation obtaining at the relevant time.  Furthermore, it  is one thing to say that by reason of Section 19, the  Parliament has conferred essential legislative functions  upon the Board of Directors to make regulation but it is  another thing to say that the regulation is arbitrary and  ultra vires as it did not contain sufficient guidelines.   The High Court did not come to the conclusion that essential  legislative competence of the Parliament has been delegated  to the Board of Directors in terms of Section 17 of the Act  or otherwise.

       The regulations in terms of  sub-section (2) of Section  12 read with Section 19 of the Act were required to be

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framed by the Board of Directors.  For amending the  regulations each time they were not only required to consult  the Reserve Bank of India and obtain previous permission of  the Central Government but also the amended regulations were  required to be laid before both the Houses of the Parliament  in terms of Section 19 of the Act.   With a view to avoid  the rigors of such procedural requirements, we see no reason  as to why the said power cannot be delegated to the Board of  Directors keeping in view of the fact that the policy  decision required to be laid down for effecting promotions  to different grades of officers and employees at different  points of time.   

       Regulation 17 of the Regulation, in our opinion, does  not confer any unguided, uncanalised and arbitrary power as  the same was issued in conformity with the guidelines issued  by the Central Government.  The requirement to lay down the  regulation before both Houses of Parliament also provides  for sufficient safeguard.  For making a regulation, the  requirements of Section 19 of the Act were required to be  complied with but the procedure laid down therefor are  wholly irrelevant for the purpose of formulating the policy  decision in terms of Regulation 17 aforementioned.  The High  Court in its impugned judgment failed to notice the said  distinction and, thus, based its decision wholly on a wrong  premise.

       A machinery provision, it is trite, must be construed  in such a manner so as to make it workable having regard to  the doctrine ’ut res magis valeat quam pereat’.

       In People’s Union for Civil Liberties & Anr. Vs. Union  of India & ors. [JT 2004 (1) SC 152], this Court while  rejecting a similar contention as regard Section 18 of the  Atomic Energy Act, 1962 held:

"The question as to whether a statute  is ultra vires Constitution of India  having conferred unguided, uncanalised  or wide power cannot be determined in  vacuum.  It has to be considered having  regard to the text and context of the  State as also the character thereof.  It  deals with a sensitive subject.

       Section 18 has been enacted for the  purposes specified therein.  It is well- settled that guidelines for enacting the  said provision must be found out from  the subject matter covering the field.   For the said purpose even the preamble  of the Act may be looked into.  

       The notification of discovery of  uranium or thorium, control over mining  operations, the disposal of uranium,  power to obtain information are within  the scope and ambit of the said Act.   Section 13 provides for informations as  regard,  contracts.  Section 14  postulates control over production and  use of atomic energy.  Restrictions as  regard  disclosure of information as  contained in Section 18 are not vague or  wide in nature.  It specifies the areas

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where such disclosures are prohibited.   The powers of the Central Government to  make an order in terms thereof are,  thus, limited.

       It is not a case where as in  Hamdard Dawakhana and Another Vs. Union  of India and others [AIR 1960 SC 554] or  Krishna Mohan (P) Ltd. Vs. Municipal  Corporation of Delhi [(2003) 7 SCC 151]  the Central Government has been  conferred with a wide uncanalised and  unguided power.  It is also not a case  where the words employed in the  provision provide for   no criteria nor  can it be said that no  standard has  been laid down by the Parliament  therefor. It is furthermore not a case  where principles on which the power of  the Central Government are to be  exercised have not been disclosed.  By  reason of the Act, essential legislative  functions have also not been delegated.  

       We do not think that having regard  to the purport and object of the said  Act, the provisions of Section 18 have  bestowed unguided and uncanalised powers  on the Central Government.  Sections 18  and 3 of the Atomic Energy Act had to be  enacted by the Parliament as in wrong  hands the information can pose a danger  not only to the security of the State  but to the public at large."            

       The High Court, therefore, committed a manifest error  in passing the impugned judgment.

       For the reasons aforementioned, the impugned judgment  of the High Court cannot be sustained.  It is set aside  accordingly.  The Appeal is allowed.  Since in view of the  fact that nobody appeared for the respondents, there shall  be no order as to costs.