04 September 1970
Supreme Court


Case number: Appeal (civil) 1720 of 1968






DATE OF JUDGMENT: 04/09/1970


CITATION:  1971 AIR  143            1971 SCR  (2)  28  1970 SCC  (2) 761  CITATOR INFO :  D          1992 SC1100  (12)  RF         1992 SC1341  (12)

ACT: Banking Regulation Act (10 of 1949), s. 45(5)(1)-Clause (ii) of  the  first proviso-Scope of-Second  proviso-Finality  of decision of Reserve Bank-Extends to what matters.

HEADNOTE: The  respondent was doing the duties of a civil agent  in  a Bank.  His duties were those of clerk and the salary paid to him  was  that  of  a  clerk.   Pursuant  to  a  scheme   of amalgamation   prepared  by  the  Reserve  Bank   under   s. 45(4)(d)(ii)  of the Banking Regulation Act, 1949, the  Bank was  amalgamated  with the State Bank  of  Travancore.   The respondent was admitted as an employee of the State Bank and was  allotted the duties of a ’civil agent’.  But the  State Bank  directed  that  ’civil agents  should  be  treated  as ’subordinate   staff  consisting  of  peons,  watchmen   and sweepers,  whose scale of remuneration was very  much  lower than   that   of   the   clerical   staff.    He   submitted representations to the authorities which were rejected.  The Reserve  Bank  of India, to which the  matter  was  referred under  s.  45(5) of the Act, held that the  State  Bank  was justified in placing the respondent in the subordinate cadre which was a residual cadre in the State Bank. On  the question : (1) Whether the decision of  the  Reserve Bank  was final and binding under the second proviso  to  s. 45(5)(i);  and (2) Whether the terms and conditions  of  the respondent’s service were not affected by the classification of his post in the subordinate cadre, HELD  :  (1) The decision of the Reserve  Bank  whether  the qualifications  and experience of any of the employees of  a transferor  bank  are  the  same as  or  equivalent  to  the qualifications and experience of employees of  corresponding rank or status of a transferee bank is declared final by the second  proviso to s. 45(5)(i) of the Act.  But finality  is not  attached  to any other matter.  In  the  present  case, however,  the Reserve Bank purported to determine  that  the rank and status of civil agents working in the original Bank corresponded  with the rank and ’status of  the  subordinate



cadre  under the State Bank.  That was a matter which  could not  be  referred  to the Reserve  Bank  and,  its  decision thereon was not final. [32 C-D; 33 A-D] (2)Under  cl.  (ii)  of the proviso to  s.  45(5)  (i),  a transferee  bank must grant the same remuneration  and  same terms  and  conditions  of  service  as  are  applicable  to employees of corresponding rank or status of the  transferee bank  subject  to the qualifications and experience  of  the employee  being the same as or equivalent to those  of  such other  employees of the transferee bank.  That is, a  person performing certain duties in a transferor bank when admitted into the service of the transferee bank must be fitted in  a cadre which is equivalent in status and rank with the status and  rank  of  the employees in  the  transferor  bank.   In grading  him into the cadre of equivalent status  and  rank, experience  and  qualifications may be taken  into  account, but,  the rank and status enjoyed by him in  the  transferor bank cannot be ignored. [33 F-H; 34 A-D] 29 In  the  present case, it was conceded that  the  respondent satisfied   the   conditions   as  to   rank,   status   and qualifications of a clerk in the State Bank and it was  only contended  that he did not have the requisite experience  On the ground of lack of experience the respondent could not be deprived  of  his rank and status in  the  transferee  Bank. Also, the decision of the Reserve Bank that the  subordinate cadre was a residual cadre is not supported by any evidence. Therefore,  it  was not open to the State Bank  to  fit  the respondent, who was performing the duties of a clerk in  the original bank, into a subordinate cadre manned by  employees performing duties, which are not clerical, but of peons  and the like. [33 D-F; 34 D]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal No.  ’1720  of 1968. Appeal  by special leave from the judgment and  order  dated November 2, 1967 of the Kerala High Court in Writ Appeal No. 64 of 1966. M.C.  Chagla, P. C. Bhartari and J. B.   Dadachanji,  for the appellant. K. Jayaram, for respondent No. 1. Niren De, Attorney General and I. N. Shroff, for  respondent No. 2. The Judgment of the Court was delivered by Shah, J. K. E. Elias-first respondent herein-was an employee of the Orient Central Bank Ltd.  He was posted to do duty as a  "Civil  Agent".  The Orient Central Bank Ltd.  was  amal- gamated  with the Kottayam Bank Ltd.  The  amalgamated  bank was  named the Kottayam Orient Bank Ltd.-hereinafter  called ’the K. 0. Bank.’ The services of Elias were transferred  to the K. 0. Bank.  Elias continued to perform the duties of  a "Civil  Agent"  of that Bank, and  certain  specific  duties relating  to  court cases were assigned to him by  the  K.O. Bank.   The  K. 0. Bank issued a  circular  sanctioning  the salary  and allowances payable to all its subordinate  staff under three heads-Assistants, Clerks and Peons.  The  salary and    allowances    paid   to   the   clerks    were    Rs. 46-2-50-3-80-EB-4-100 plus dearness allowance Rs. 20/-.   No separate scale was fixed for "Civil Agents" and it is common ground  that  Elias  was given  the  salary  and  allowances payable to Clerks. Pursuant to a scheme of malgamation prepared by the  Reserve



Bank under s. 45(4)(d)(ii) of the Banking Regulation Act  10 of 1949, the K. 0. Bank was amalgamated with the State  Bank of  Travancore-hereinafter called the "State  Bank".   Under that scheme, Elias was admitted as an employee of the  State Bank and he was allotted the duties of a "Civil Agent".   To fix  the  remuneration and the terms and conditions  of  the employees under the State 30 Bank,  the  Board of Directors constituted  a  Committee  to assess the qualifications of all its employees.  Pursuant to a  report  received  from  the  Committee,  the  State  Bank directed that the "Civil Agents" be treated as  "subordinate staff"   and  that  their  remuneration  be  refixed.    The "subordinate  staff" consisted of peons, watchmen,  sweepers and   employees  with  similar  duties.   Their   scale   of remuneration  was Rs. 28-2-86-1-96-EB-1-101.  The  scale  of remuneration of the clerical staff was Rs.  11 2-307. Elias submitted a representation to the Deputy General Mana- ger  that in absorbing him in the subordinate staff  he  was denied the statutory guarantee of remuneration and terms and conditions of service.  This representation was rejected  by the Deputy General Manager by letter dated October 19, 1963, and   Elias  was  informed  that  "having  regard   to   his educational  qualifications  and  experience  it  had   been decided  by the State Bank to place him in  the  subordinate cadre."  Elias made a representation to the General  Manager which was rejected on December 11, 1963 and he was  informed that the Bank was unable to grant his request for absorption into the "clerical cadre". Elias then moved a petition in the High Court of Kerala  for a writ of certiorari or other appropriate writ quashing  the orders dated October 19, 1963 and December 11, 1963,  fixing his rank ,in the cadre of subordinate staff.  A Single Judge of the High Court dismissed the petition.  He observed  that since  there  was no post of "a Civil Agent"  in  the  State Bank,  that  Bank  was  competent  to  place  Elias  in  the subordinate  cadre.  The learned Judge also  observed  that, having   regard  to  the  educational   qualifications   and experience  Elias  was properly placed in  the  "subordinate cadre", and no ground was made out to quash the fixation  of the   rank  and  status  based  on  an  assessment  of   his qualifications and experience. Elias appealed to a Division Bench of the High Court.   Dur- ing  the pendency of the appeal, the State Bank applied  for taking  on record the decision dated September 15, 1967,  of the  Reserve Bank of India, holding that the State Bank  was justified in not giving Elias the status of a clerk, and  in placing  him in the residual classification of  "subordinate staff".   This  document was admitted on  the  record.   The Court   in   allowing  the  appeal  observed   that   on   a consideration  of  the  relevant  circumstances,  Elias  was entitled  to the rank and status of a clerk under the  State Bank,  and the order of the Reserve Bank being in  violation of  the  statutory  provisions  contained  in  the   Banking Regulation Act, 1949, the orders dated October 19, 1963  and December 11. 1963 were liable to be set aside.  This  appeal has been filed with special leave granted by this Court. 31 Two  contentions were urged by the State Bank in support  of the appeal:               (1)that  the decision of the  Reserve  Bank               dated September 15, 1967, was final by  virtue               of  s. 45(5)(i) read with proviso (ii) of  the               Banking Regulation Act X of 1949 and could not               be ignored by the Court; and



             (2)that  the State Bank having  assured  to               Elias the remuneration which he was drawing, a               mere   classification  of  his  post  in   the               subordinate cadre did not affect the terms and               conditions  of  his service  under  the  State               Bank. Section  45 of the Banking Regulation Act, 1949,  by  sub-s. (4) authorises the Reserve Bank in certain eventualities  to prepare a scheme for reconstruction of a banking company  or for  amalgamation  of  the banking company  with  any  other banking  institution.   By  sub-s. (5),  insofar  as  it  is relevant, it is provided :               "The  scheme aforesaid may contain  provisions               for  all  or  any  of  the  following-matters,               namely               (i)the  continuance of the services of  all               the  employees of the banking company  (except               such  of them as not being workmen within  the               meaning of the Industrial Disputes Act,  1947,               are  specifically mentioned in the scheme)  in               the  banking  company  itself  on  its  recon-               struction,  or,  as the case may  be,  in  the               transferee  bank at the same remuneration  and               on  the same terms and conditions of  service,               which  they were getting or, as the  case  may               be,  by  which they were being  governed,  im-               mediately  before  the date of  the  order  of               moratorium :               Provided  that  the  scheme  shall  contain  a               provision that--               (i).............................................               (ii)the  transferee bank shall pay or  grant               not  later  than the expiry of  the  aforesaid               period  of three years, to the said  employees               the  same remuneration and the same terms  and               conditions of service as are applicable to the               other  employees  of  corresponding  rank   or               status  of the transferee bank subject to  the               qualifications  and  experience  of  the  said               employees  being the same as or equivalent  to               those  of such other employees of  the  trans-               feree bank               Provided  further  that if in any  case  under               clause (ii)of the first proviso any doubt               or difference arises as               32               to  whether the qualifications and  experience               of  any of the said employe s are the same  as               or   equivalent  to  the  qualifications   and               experience   of   the   other   employees   of               corresponding rank or status of the transferee               bank,   the  doubt  or  difference  shall   be               referred  to the Reserve Bank  whose  decision               thereon shall be final;" In  exercise of the authority under sub-ss. (4) & (5) of  s. 45  of  the Banking Regulation Act, 1949, the  Reserve  Bank prepared a scheme under which employees under the K. 0. Bank were  transferred to the employment of the State Bank.   The terms of cl. (ii) ,of the first proviso to sub-s. (5) of  s. 45 were expressly included in ,the scheme. The decision of the Reserve Bank that the qualifications and ,experience  of any of the employees of the transferor  bank are  the  same as or equivalent to  the  qualifications  and experience  of the other employees of corresponding rank  or status of the transferee bank, is declared by the Act to  be



final.   But  finality is not attached to any  other  matter decided  by  the  Reserve Bank.  The Reserve  Elank  by  its decision purported to determine that the rank and status  of the Civil Agents working in the K. 0. Bank corresponded with the rank and status of the subordinate cadre under the State Bank.   The Reserve Bank of India observed that  "the  Civil Agent  has  nothing to do with the office work in  the  Bank just  as in the case of clerks and other employees  and  his work is essentially different from the work of the  ordinary staff in the bank".  The Bank then proceeded to observe that :               "In fitting an employee of the transferor bank               into the transferee bank, the rank and  status               of  the  employee as also the  nature  of  the               duties  performed  by  the  employee  in   the               transferor  bank have to be ascertained.   The               mere fact that the employee in transferor bank               bore  a  particular designation  either  as  a               clerk or otherwise does not conclude the issue               and that does not necessarilly follow that  he               should, in the transferee bank, be placed in a               post having the same designation..........  On               examining  the  position the Reserve  Bank  of               India is of opinion that the duties which  the               employee  was  discharging in  the  transferor               bank do not relate to the duties which a clerk               has to do in the office." In  the view of the Bank the duties performed by  the  Civil Agent were "essentially different from those of a clerk  and called for a much lower degree of qualifications, skill  and competence than those which a clerk normally brings to  bear on  his work", and since the subordinate cadre of the  State Bank in which Elias was 33 fitted  was "in effect a residual classification" there  was no change and the Bank was justified in placing him in  that classification.   It  was also observed that there  was  "no change  in the work" allotted to Elias, nor was he  expected to  do  the  work  of a chaprasi or  a  peon  and  that  his emoluments  were better than those in the  transferor  bank. The  fact that prior to the fitment in the transferee  bank, in  terms of the provisions of paragraph-15 of  the  Scheme, Elias  was addressed as a civil clerk did not confer on  him the  status  of  a  clerk in  the  transferee  bank.   These observations  relate to matters which could not be  referred to  the  Reserve Bank and the decision of the  Reserve  Bank thereon is not made final under the second proviso to sub-s. (5)(i)  of s. 45 of the Act.  Only the question whether  the qualifications and experience of any of the empolyees of the transferor  bank  are  the  same as  or  equivalent  to  the qualifications  and  experience of the  other  employees  of corresponding  rank  or status under cl. (ii) of  the  first proviso is intended to be referred to the Reserve Bank.   In that  view  the  first argument advanced on  behalf  of  the appellant must be rejected. It is said that Elias "had studied only upto 5th Form".  But that is not decisive of the corresponding rank or status  in which  "he  could be fitted" in the State Bank.   Elias  was employed in the K. 0. Bank as a Civil Agent.  The duties  of a  Civil  Agent  were  not menial.  In the  K.  0.  Bank  no separate scale was prescribed for the post of a Civil Agent. The salary paid to Elias was that of a Clerk and his  duties were  those  of a clerk.  In the and there was  no  separate classification  of the office of a Civil     Agent.      The subordinate cadre consisted of peons, watchmen and  sweepers



and  of  employees performing similar duties,  and  a  Civil Agent  performing  duties which could not  appropriately  be placed  in that classification. The decision of the  Reserve Bank that the       subordinate cadre was a residual  cadre, is,  in our judgment, not supported by any evidence. It  was conceded before the High Court that Elias satisfied "  three conditions as to the rank-, status and qualifications" of  a clerk in the State Bank. It was only    the  said  employees being the same as or equivalent to those of  the       first proviso  to  s. 45(5)(i) the transferee bank must grant  the same  remuneration  and  the same terms  and  conditions  of service as are applicable to employees of corresponding rank or   status  of  the  transferee  bank    subject   to   the qualifications and experience of   the    said     employees being the same as or equivalent to those of  such      other employees of the transferee bank. The guarantee under  cl. (i)  of  s.  45,(5) of the Act does  not  cover  merely  the remuneration : it covers the terms and conditions of service as well . I    would  be a gross denial of the guarantee  if the  employee is not given the rank and status which he  had in the transferor bank. It is, in  our judgment, not open to the transferee bank to "fit" an emplo- 34 yee of the transferor bank performing the duties of a  clerk into  a  subordinate cadre manned  by  employees  performing duties  which  are  not clerical, but  of  peons,  watchmen, sweepers and the like. The Banking Regulation Act, 1949, guarantees the same  terms and  conditions  of  service, and  the  transferee  bank  is entitled to "fit" the employees of the transferor bank  into the  corresponding- rank or status.  In doing so it ’has  to take into account tile qualifications and experience of  the employees  of  the  transferor bank.  But  in  "fitting"  an employee  into  the  transferee bank, the  rank  and  status enjoyed  by  an employee in the transferor  bank  cannot  be ignored.    A  person  performing  certain  duties  in   the transferor  bank  when.  admitted into the  service  of  the transferee  bank-  may be so "fitted" in a  cadre  which  is equivalent  in status and rank with the status and  rank  of the  employees  in the transferee bank, but in  grading  him into the cadre of equivalent status and rank, experience and qualifications must be taken into account. Oil the ground of lack  of  experience and qualifications a person  cannot  be deprived  of  his rank and status in  the  transferee  bank. Clause (ii) to the first proviso of s. 45(5)(i) does not, in our  judgment.  authorise the transferee bank  to  "fit"  an employee  in’ the transferee bank into a post with rank  and status  lower  than  the  rank and  status  enjoyed  by  the employee  in the transferor bank, To accept  the  contention raised  on behalf of the State Bank is ill effect to  defeat the  guarantee  relating  to the  terms  and  conditions  of service  under  cl. (i) of s. 45(5) and  the  first  proviso thereto. In  our judgment tile High Court was right in  holding  that the  orders passed by the State Bank "fitting" Elias into  a subordinate cadre infringed the guarantee under s.  45(5)(i) of the Banking Regulation Act, 1949. The  appeal fails and is dismissed with costs in  favour  of Elias. V.P.S.                        Appeal dismissed. 35