Reserve Bank of India vs C.S. Rajappan Nair and Others

Govindan Nair, C.J.—This is an appeal by Respondents 1 and 2 in O.P. 29 of 1975 which was allowed by a learned Judge of this Court by the judgment under appeal. The Respondents to this appeal are the Petitioner in the said original petition as well as Respondents 3 to 8 in the O.P. By the judgment under appeal Exts. P-4 and P-6 in the original which were impugned have been set aside.

The controversy between the Petitioner in the original petition the first Respondent herein and Respondents 3 to 8 in the original petition who are Respondents 2 to 7 in this appeal resulted from the integration of the Trivandrum and Cochin offices of the 1st Appellant, the Reserve Bank of India. By such integration the 1st Respondent has been placed below Respondents 2 to 7 and Exts. R-8 and R-9 produced along with the counter affidavit of the 1st Appellant the Reserve Bank of India have been relied on in support of the ranking the 1st Respondent below Respondents 2 to 7. The contention that was raised by the 1st Respondent before the learned Judge was that Ext. R-5 produced by the 1st Appellant should have been applied and Exts. R-8 and R-9 should not have been relied on. The learned Judge by the judgment under appeal has directed a reconsideration of the question. The Appellants, the Reserve Bank of India and the Deputy Chief Officer, Reserve Bank of India, Department of Banking Operations and Development contend that the integration effected and the ranks assigned are valid and require no reconsideration. We shall state the necessary facts.

The first Respondent started his career as an employee in the Reserve Bank of India in Madras as a clerk Grade II. He was later promoted while working there as an officiating clerk Grade I. Thereafter he was transferred to the Cochin Office of the Bank which commenced functioning in 1970. When he was transferred to the Cochin Branch he was transferred as a clerk Grade II the substantive post that he was holding at that time and he therefore started functioning in the Cochin office as a clerk Grade II. Later on he was promoted as a clerk Grade I in the Cochin office and he was also confirmed as a clerk Grade I in that office. Respondents 2 to 7 held similar posts in the Trivandrum office of the Bank. It is sufficient to state that all of them started as clerks Grade II after the date on which the Petitioner started functioning as clerk Grade II in the Madras office of the Bank. It is also seen that Respondents 2 to 7 were first promoted as clerks Grade I only after the first Respondent was promoted as clerk Grade 1 in the Madras office. But Respondents 2 to 7 got opportunities of officiating in the staff officers Grade II before the first Respondent was appointed as a staff officer Grade II. The second Respondent was functioning as an officiating staff officer Grade II on 1st July 1974. Respondents 3 to 7 had functioned as officiating staff officers Grade II before 1st July 1974 but were actually not functioning as staff officer Grade II on 1st July 1974. The first Respondent was promoted as an officiating staff officer Grade II in August 1974. According to the Appellants the principle that was applied for the integration of the staff at Trivandrum and Cochin was the same as that was applied for the integration of the offices at Bombay and Byculla and Kanpur and Lucknow which is evidenced by Ext. R-5. The only difference according to the Appellants was that the offices just now mentioned were integrated with reference to the date, 7th May 1972 while the offices at Trivandrum and Cochin were integrated only with effect from 1st July 1974. The relevant part of Ext. R-5 in regard to the integration principle as far as the staff officers Grade II are concerned, is admittedly seen in paragraph 9(III)(a) of Ext. R-5. We shall extract the relevant part of Ext. R-5.

9(III)(a). Seniority of employees promoted as staff officers grade II after 7th May 1972. -- Employees promoted as staff officers grade II after 7th May 1972 will rank for purposes of promotion to and confirmation in that grade below those officiating as staff officers grade II on 7th May 1972.

....

Certain controversies arose regarding the principle to be applied in the matter of integration of staff officers Grade II and Ext. R-3 indicates that the matter was further clarified by stating that not only employees who were officiating as staff officers Grade II on 7th May 1972 but even those who had officiated prior to that date will have to be considered as staff officers Grade II for the purpose of integration. Ext. R-8 is dated 1st August 1972 soon after Ext. R-5 which was earlier in that year but after 7th May 1972. The same principle as embodied in Ext. R-8 has been applied for the purpose of integration of the Trivandrum and Cochin officers is clear from a telegram sent by the Chief Manager of the Bank on the 29th June 1974 to the Cochin office of the Reserve Bank. This telegram clearly states that (1) it has been agreed that the combined seniority list of both offices should be introduced effective from 1st July 1974 and (2) that the appointments to posts of staff officers Grade II on and after 1st July 1974 should be made on the basis of the combined panel of staff officers Grade II of Cochin and Trivandrum and that those so appointed will rank for purposes of promotion to and confirmation in that Grade below those officiating as staff officers Grade II on the said date or who had officiated prior to that date.

It is on this basis that the Petitioner who admittedly was holding only the post of clerk Grade I on 1st July 1974 and who had never officiated as staff officer Grade II before that date was integrated with other first grade clerks from the Trivandrum office whereas Respondents 2 to 7 who had officiated as staff officers Grade II before 1st July 1974 (one of them was functioning as a staff officer Grade II on that date) were integrated in the grade of staff officers Grade II with other staff officers. The Petitioners complained against this and received Ext. P-6 reply which is a brief one and which merely stated: "that as he was promoted as staff officer Grade II only after the 1st July 1974 he will rank for the purpose of promotion to and confirmation in the cadre of staff officers Grade II below those who had officiated prior to that date". Ext. P-6 is dated the 8th November 1974. The Petitioner made a further representation on the 20th November 1974 and this was disposed of by Ext. P-5 dated 12th December 1974. In this communication it is more clearly stated that the principle that had been applied is what has been stated in Exts. R-8 and R-9 namely, that those who had officiated before 1st July 1974 as staff officers Grade II stood on a different footing in the matter of integration from clerks Grade I who had not officiated as staff officers Grade II before that date. The first Respondent was informed that he cannot be grouped with Respondents 2 to 7 and that his position will be among clerks Grade I. The original petition was filed to quash Exts. P-5 and P-6 and the learned Judge has set aside Exts. P-5 and P-6 and by the judgment under appeal it was directed that fresh principles may be laid down by the bank or fresh regulations may be framed for the purpose of settling the principles to be applied for the integration of the two offices of the 1st Appellant at Trivandrum and Cochin.

The judgment also considered the case of the first Respondent that he was senior to Respondents 2 to 7 in the cadre of clerks Grade I and it appears to us that the learned Judge was inclined to take the view that the first Respondent was senior. But the question has been left open and no final conclusion has been reached. The view has also been taken that what are called the Reserve Bank of India (Staff) Regulations, 1948 are statutory regulations framed under the Reserve Bank of India Act, 1934 u/s 58 of that Act and what has been done in the matter of integration of the staff of Cochin and Trivandrum offices was against regulation 28 of the above Regulations. This was perhaps the reason why the suggestion has been made in the judgment that the question of framing fresh regulations may be considered by the first Appellant.

The real question arising for decision in this case is only whether the principles adopted by the bank for the purpose of integration of the Trivandrum and Cochin branches adopted by the bank were illegal or wrong to such an extent as to justify interference in proceedings under Article 226 of the Constitution. It was not suggested that the Reserve Bank of India (Staff) Regulations, 1948 contain any provisions regarding such integration of different units. But counsel for the first Respondent did contend that Ext. R-5 has to be traced to its source, the power u/s 58 of the Reserve Bank of India Act to make regulation and that we should take it that the provision in paragraph 9(III)(a) of Ext. R-5 is a regulation made u/s 58 and that that has been altered by the Bank unilaterally by Exts. R-8 and R-9. It was submitted that such alteration which counsel for the first Respondent urged was a unilateral alteration was unjustified and illegal. The alteration evidenced by Ext. R-9 according to counsel was done by a telegram and this procedure it was contended was certainly not a proper or valid one by which a statutory rule making power or regulation making power could be exercised by the bank. It was therefore submitted that Exts. R-8 and R-9 should be ignored and that the integration should have been in accordance with the principles embodied in Ext. R-5. Counsel submitted that the integration should therefore have been made effective from the 7th May 1972 with reference to the posts held by the employees at Trivandrum and Cochin offices on that date. At any rate it was submitted that the principle to be applied is only what is stated in paragraph 9(111) of Ext. R-5 which, as we have seen, only mentioned about the staff officers functioning as officiating staff officers Grade II on the 7th May 1972.

It appears to us to be difficult to assign the status of statutory rules to Ext. R-5. The basis of Ext. R-5 is clearly a settlement. This is seen from the facts stated in a judgment of the Delhi High Court in J.C. Sachdev and Ors. v. Reserve Bank of India, New Delhi and Anr. 1973 (2) L.L.J. 204. We may extract the following passage from the head-note in that decision.

The first scheme was known as First Optee Scheme of 1965. But the various schemes formulated benefited only some categories of employees. The agitation for a common seniority list went up and after prolonged negotiations the bank and the association concluded an agreement dated 7th May 1972 which provided for the preparation of a common seniority list for all employees of the bank. The non-clerical employees of the bank were also given the option to be transferred to the clerical side subject to their being a graduate or possessing a certificate of having passed I.I.B. Examination.

Some of the employees of the bank did not accept the terms of the agreement and filed writ petition 690 of 1972 challenging the office circular dated 12th May 1972 and the Petitioners in writ petition challenged the validity of the Optee Scheme of 1965 and office circulars mainly on the ground that the schemes are violative of Articles Hand 16 of the Constitution.

The matters referred to in the passage extracted above are those detailed in Ext. R-5. There is little doubt that Ext. R-5 is the outcome of a settlement arrived at with the employees of the bank. It is impossible to give the status of a statutory regulation to Ext. R-5 by reason of this fact alone. The rule making power has to be exercised by the authority on whom the rule making power has been conferred by the legislature. If that rule making power authority takes the advice of, or if that rule making authority is guided by the view of Ors. whether it be that of employees of the bank, or of outsiders, in the matter of laying down principles for integration or for any other purpose, the principles so laid down cannot be treated as statutory regulations framed u/s 58. Further Section 58 specifically requires the previous sanction of the Central Government before regulations are made under that section. It is not the case of the 1st Respondent that the previous sanction of the Central Government was taken before the settlement was reached or the scheme evidenced by Ext. R-5 was settled. We are therefore unable to accept the contention that Ext. R-5 can be taken to embody regulations framed u/s 58 and that its terms are therefore unalterable without any similar process of regulation making being followed by the bank. If Ext. R-5 is merely an administrative direction by the bank then it follows that the bank has full authority to alter the terms of Eat. R-5 by other administrative directions. But we do not think that in substance or in essence the terms of Ext. R-5 meant for the integration of the various units of the Reserve Bank of India functioning in the various parts of India have been altered by subsequent conduct or by virtue of the subsequent communications which have been produced as exhibits in this case. We find, as mentioned already, that Ext. R-8 was issued in August 1972 soon after the scheme was settled, stating that for the purpose of integration those who had functioned as staff officers Grade II before 7th May 1972 should be given seniority over those who were appointed as staff officers Grade II after that date. We may refer to paragraph 10 of Ext. R-5 at this stage.

Office-wise combined seniority list. -- The combined seniority list will be drawn up office-wise. For this purpose, (i) the offices at Bombay and Byculla together will be deemed to be one office and (ii) those at Kanpur and Lucknow together will be deemed to be one office. The offices at Cochin and Trivandium which are now separate will together be treated as one office on the opening of an office of the issue department at Trivandrum/Cochin or earlier, if so decided by the Bank. Until then, they will be treated as separate offices. The offices at Jammu and Srinagar will also be treated as one office if so decided by the Bank.

This shows that the integration effected by Ext. R-5 was of the officers at Bombay and Byculla at Kanpur and Lucknow. It is also patent that the offices at Cochin and Trivandrum were separate at that time and that those offices were to be treated as separate offices till a date is fixed by the Bank for integrating those offices. That date was to be "on the opening of an office of the issue department at Trivandrum/Cochin, or earlier, if so decided by the Bank." We must again emphasise what is further stated in that paragraph that "until then, they will be treated as separate officers". It is therefore evident that no integration was intended to take effect with effect from the 7th May 1972 with reference to Trivandrum and Cochin offices. It is also clear from Ext. R-9 that the date fixed for such integration was the 1st July 1974. This date was fixed with the concurrence of the bank employees associations. In the light of the above, it is evident that for the purpose of integration the position and status of the employees as on 1st July 1974 will normally have to be taken into account for the purpose of integration unless other criteria have been laid down. What appears to have been done was to take into consideration the position and status of the employees on 1st July 1974. On that date the first Respondent was a first grade clerk in the Cochin office. He has no case that before that date he had ever functioned as an officiating staff officer Grade II. All the Respondents concerned, 2 to 7, had functioned as staff officers Grade II before that date. One of them, as was pointed out, was actually functioning as staff officer Grade II on 1st July 1974. In these circumstances the fact that Respondents 2 to 7 were treated separately does not justify interference by this Court in proceedings under Article 226 of the Constitution. We are also not satisfied that any deviation had been made from the principle that was applied for the purpose of integration of the offices at Bombay and Byculla and Lucknow and Kanpur, in the integration of the Trivandrum and Cochin Branch offices.

The learned Judge dealt with the matter regarding the question in a slightly different manner. This particular aspect has been dealt with in paragraph 7 of the judgment which we shall extract.

The short question therefore is whether persons who are juniors, judged by the standards by which normally seniority would be judged if the two offices were to be treated as combined even on 7th May 1972 were entitled to seek preference in the matter of ranking in the post of staff officer grade II merely because of officiation as such on or before 1st July 1974. The only case of Respondents Nos. 4 to 8 is that they had either officiated as staff officers grade II prior to 1st July 1974 or were officiating on 1st July 1974 when the two offices were combined. There is no scope for such preference in the absence of a specific rule which gives a preferential claim to juniors by reason of such officiation. The case of the Respondents rests on Clause 9(iii)(a) of Ext. R-5. That confers a preferential claim to staff officers grade II officiating on or those who had officiated prior to 7th May, 1972, the date of the settlement. That would be sufficient to meet the situation with regard to the integration of these in different groups on 7th May 1972, the date on which there was group-wise integration in all the offices. Even in regard to the integration of offices on 7th May 1972 this would operate since there was combined seniority to be reckoned in regard to staff of such offices as on 7th May 1972. But in the case of Trivandrum and Cochin offices the integration was postponed to be a subsequent date. By analogy it is said the date 7th May 1972 in Clause 9(iii)(a) must be read in the case of integration of Trivandrum and Cochin offices as the subsequent date of integration. This is not so expressed in Ext. R-5 and it is not possible to read this as implied, when Clause 9(iii)(a) specifically refers to the right of those officiating on 7th May 1972 it is not possible to apply the principle to a subsequent event and hold that the same rule must be extended to integration of the Trivandrum and Cochin offices to be effected on some future date. That will be plainly going beyond the terms of Ext. R-5 and I see no warrant for such a view. It is not one of the matters for which provision was made in the settlement resulting in the scheme. Therefore the stand taken by the Reserve Bank in Exts. P-5 and P-6 is not justified on the terms of Ext. P-1 scheme. The grievance of the Petitioner is hence well founded in that in issuing Exts. P-5 and P-6 to him the Deputy Chief Officer has acted beyond the terms of Ext. R-5. For that reasons Exts. P-5 and P-6 have to be quashed.

The paragraph opens with the assumption that by virtue of Ext. R-5 the position as on the 7th May 1972 has to be taken for effecting integration even of the offices at Trivandrum and Cochin. With great respect we cannot agree with this assumption particularly in view of the specific provision in paragraph 10 of Ext. R-5 which we have already referred to and in view of what is clearly stated in Ext. R-9 telegram and the agreement that has been referred to in Ext. R-9. The further observations in the judgment that Ext. R-5 cannot be applied for effecting integration of the Trivandrum and Cochin offices also, we think with great respect, are not justified. Ext. R-5 has to be understood as laying down certain general principles in the matter of integration of the various offices and the various classes of employees all over India. Those general principles have also been applied in the matter of integration of the Trivandrum and Cochin branches but in view of what is stated in paragraph 10 of Ext. R-5 and in view of the agreed date of the integration of Trivandrum and Cochin offices, namely 1st July 1974, the integration of these two offices had to be effected with reference to the status of the employees as on that date. That is what has been done. The course followed and the principle applied by the Reserve Bank of India can be impugned before the High Court under Article 226 of the Constitution only if they are violative of Article 16 of the Constitution. We see no violation of Article 16 because the classification of a group of employees who had officiated in a particular capacity as a different class and treating them differently from Ors. who had not the opportunity to function as such is certainly an intelligible differentiation which can stand the test of equality provided by Article 16. It is not for us to say that a different principle could have been applied or not, or state that it would have been more just or fair to have applied a different principle. The only question is whether the classification is justifiable for the purpose of Article 16 of the Constitution. We think the classification cannot be said to be unjustified for the purpose of Article 16.

There was an attempt made to suggest that the promotions at the Trivandrum office were accelerated to defeat those at the Cochin office. We find no justification for this suggestion. The date with reference to which the integration was to be made was a date fixed after consultation with the employees union. The union would not have agreed to the date 1st July 1974 and the application of the principles of Exts. R-5 and R-8 if there was any such unfair practice as suggested. Further there is also no iota of evidence in support of the suggestion.

The writ application by the 1st Respondent has therefore no leg to stand.

We are not concerned in this case with the question of inter se seniority of the 1st Respondent and Respondents 2 to 7 in the cadre of Clerks Grade I. We express no opinion on this matter.

In the result we set aside the judgment under appeal and dismiss the original petition. We direct the parties to bear their respective costs.