Davis Kuriape v. State Bank Of India — 1993 DIGILAW 546 (KER)

JUDGMENT G.H. Guttal, J. 1. O. P. No. 7205/1990, 9734/1988 and 8332/1990 are by officers of the erstwhile Bank of Cochin (B. O. C, for short) which was amalgamated with the State Bank of India (the S. B. I. for brevity) pursuant to a scheme under S.45 of the Backing Regulation Act, O. P. Nos. 7129/1989 and 10469/1989 are by the officers of the State Bank of India appointed before such amalgamation. The petitioners in both the sets of the petitions impugn the order DBOD No. Rec. 651/NB, 46-(A) (SP1)-89 dated 28th July, 1989 passed by the Reserve Bank of India the respondent No. 2 herein, where under, for the purpose of seniority, two years of service of the officers of the Bank of Cochin was held equal to one year's service of the officers of the S. B. I. The officers of the B. O. C. are aggrieved because they wanted equation of service as 1:1 counting the entire length of service in officer grade in the Bank. The officers of the S. B. I, are aggrieved because by considering the two years' service of the Officers of the B. O. C. equal to one year of service in the S. B. I., their prospects of promotion have been adversely affected. 2. The facts giving rise to these petitions are set out in paragraphs. 3. In 1985 the B. O. C. had 108 branches and 12 extension counters. Ninety six of these branches were located in Kerala. It had 320 officers in its employment. On 27-4-1985 the Union of India imposed a moratorium on the B. O. C. A scheme under S.45 of the Banking Regulation Act (hereinafter referred to as the Act) was eventually framed by the R. B. I. and was sanctioned by the Central Government. The scheme came into force on 26-8-1985. 4. Clause (10) of the scheme in so far as is relevant for this case lays down that (i) employees of the B. O. C. shall continue in service of the S. B. I. (ii) they shall be deemed to have been appointed by the S. B. I. at the same remuneration and on the same terms and conditions of service (iii) as were applicable to them immediately before the 27th April, 1985. When analysed clause (12) of the scheme has three elements; (i) the S. B. I. shall pay to the officers of the B. O. C.; (ii) the same remuneration and the terms and conditions of service; (iii) as are applicable to the officers of the S, B. I. of the corresponding rank and status subject to the condition that. (iv) the qualifications and experience of the officers of the B. O. C. is the same as or equivalent to those of the officers of the S. B. I. 5. In pursuance of the scheme the S.B.I, proceeded to absorb and equate the employees of the B. O. C. with the corresponding rank of officers of the S. B. I. Following discussions with the Association of the officers, the executive committee of the Board of Directors of the S. B. I. resolved that no weightage shall be given to the length of past service of the officers of the B. O. C. for the purpose of promotion and seniority. The result was 'that the officers of the B. O. C. took their place on 26-8-1985 in the cadres determined by the S. B. I. as "corresponding cadres", as if they were appointed in such cadres on 26-8-1985. The benefit of the service in the B. O. C. was thus lost. This decision was published as a circular letter No. PER: 44 dated 22-5-1987 where under the absorption of the officers of the B. O. C. was regularised with effect from 1-9-1985. 6. The officers of the B. O. C. constituted a forum known as Bank of Cochin (State Bank of India) Officers' Forum and represented their grievance R.B.I. against aforesaid circular to the Reserve Bank of India (R.B.I. for short). They by its order dated 28-7-1989 (Ext. P4) made, in exercise of its power under clause (12) of the scheme conceded a part of the demand of the officers of the B. O. C. The circular of the S. B. I. was modified so that "the officers of the Ex-BOCL should be extended by S. B. I. seniority of their past service in the transferor bank in the ratio of 2:1 i. e. experience of every two years in the transferor bank upto the date of amalgamation be treated as equivalent to one year's experience in the transferee bank." 7. Since under clause (12) of the Scheme qualifications and experience of the officers of the B. O. C. determine the terms and conditions of service, upon absorption in the S. B. I. it is necessary to set out the qualification and experience of the officers of the B. O. C. taken into account by the respondents. The petitioner Nos. 1 and 2 in O. P. No. 7205 of 1990 joined the B. O. C. as clerk on 1-6-1973 and 6-5-1974. They were promoted as Junior Officers on 1-11-1976 and 1-11-1977 respectively. The petitioners in O. P. 9734 of 1998 were appointed as clerks on 1-11-1976 and promoted as officers on 1-1-1980. The petitioner in O. P. No. 8332 of 1990 was appointed as a Clerk in the B. O. C. on 1-12-1971 and was promoted as Grade III Officer on 1-1-1978. These officers of the B. O. C. were promoted from the post of clerk to the Officers Grade within three years of their service. Cherian K. Simon the petitioner in O. P, No. 7129 of 1989 was appointed directly by the State Bank of India as Junior Management Grade Scale I on 3-11-1980. The five petitioners in O. P. No. 10469 of 1989 were clerks or cashiers appointed on 15-9-1969, 10-6-1972, 19-2-1974, 7-2-1974 and 6-1-1967 respectively. They were promoted in the Junior Managerial Grade Scale I, on 1-12-1984, 1-12-1984, 1-6-1985, 1-6-1985 and 15-7-1982 respectively. The point which is relevant is that in the State Bank of India those who joined as Cashier or Clerks - Typists took atleast 10 years to be promoted to the Junior Managerial Scale I. 8. A comparison of the qualifications and experience in service before promotion to the officers grade in the B. O. C. and S. B. I. may be noted. The S. B. I. has two channels of promotion to the officers grade, (i) Direct recruitment as officers: (a) There is a direct recruitment of trainee managers from amongst the clerks who hold these qualifications: (a) a degree from a University: (b) experience as clerk for 4-5 years: (C) Part 1 certificate of the Association of Indian Institute of Bankers. The candidates have to qualify at a written test held at National level Selection is followed by two years' training. The candidates have to qualify at a written test held at National level Selection is followed by two years' training. Thus the graduates appointed as trainee managers have to spend about 6 years before they are posted in the lowest grade of managers. (b) Non graduate clerks too are eligible for direct appointment by passing the test at the national level. But they must hold both Part I and Part II certificates of the Indian Institute of Banks. (ii) By promotion: The second channel of appointment to the managerial cadre in the S. B. I. is by appointment of clerks with 10-12 years of service after a written test and interview held by the bank itself. The qualifications and experience for appointment in the managerial cadre of the B. O. C. are somewhat different. A clerk with 2-3 years of service who holds only the Part I of the C. A. I. I. B. was eligible for promotion to the Junior Officers' cadre. 9. Besides the qualification and experience set out above there are three other features which differentiate the process of selection of the officers in the two Banks. In the B. O. C. there was no written test for appointment of clerks as officers. Secondly in the B. O. C. the selection was not by an independent Board but by internal evaluation by the Bank itself. The third point is not related to the process of selection. It relates to post retirement benefit. The officers of the B. O. C. were not entitled to pension. The officers of the S.B.I, are. The fourth distinction is in the scales of pay of the lowest managerial posts. The pay scales of the Junior Officers and officers in Grade III of the B. O. C. were Rs. 585-1540 and Rs. 700-1750 respectively. They have been absorbed as Junior Management Grade Scale I of the S. B. I. (Rs. 1175-2675). 10. The fourth distinction is in the scales of pay of the lowest managerial posts. The pay scales of the Junior Officers and officers in Grade III of the B. O. C. were Rs. 585-1540 and Rs. 700-1750 respectively. They have been absorbed as Junior Management Grade Scale I of the S. B. I. (Rs. 1175-2675). 10. When the R.B.I. and S.B.I, set out to fulfil Clause.12 of the Scheme which is a reproduction of Clause (i) of sub-s.(5) of S.45, it had to consider (i) examination of the qualifications and experience of the officers of the B. O. C. proposed to be absorbed in the S. B. I. (ii) After a comparative evaluation of such qualifications and experience it determines the rank and status to be assigned to the officers of the B. O. C. in the S.B.I. In State Bank of Travancore v. General Secretary of the State Bank of Travancore (1978 Lab. and I. C. 1343) a Division Bench of this Court considered a case where three years' service in the transferor bank was equated with one year's service in the transferee bank. The principles that emerge from this judgment are; (i) The word experience does not mean mere length of service. (ii) Experience takes in its sweep the quality in service, efficiency of the organisation the richness and variety of experience, range and magnitude of the business transacted. 11. The rights of the employees of the transferor bank were enunciated by the Supreme Court in Canara Bank, Bangalore v. M. S. Jasra and Others 1992 (2) SCC 484 ) in these words: - "The only right of such an employee whose service is so continued is, therefore, to claim parity with the employees of the transferee bank itself of corresponding rank or status subject to equivalent qualifications and experience and no more." (emphasis supplied) 12. The equation of two year's service in the B. O. C. with one year's in the S. B. I. is alleged to be arbitrary and discriminatory. Clause (i) of sub-s.5 of S.45 which has been incorporated in the scheme as clause (12) is important for this case. The equation of two year's service in the B. O. C. with one year's in the S. B. I. is alleged to be arbitrary and discriminatory. Clause (i) of sub-s.5 of S.45 which has been incorporated in the scheme as clause (12) is important for this case. The scheme provides for continuance of service of all the employees of the transferor company in the transferee company "at the same remuneration and on the same terms and conditions of service." By clause (i) of the proviso to clause (i) of sub-s.(5) of S.45 of the Act and clause (12) of the scheme the S. B. I. is enjoined to grant to the employees of the B. O. C. the same terms and conditions of service as are at the time of such grant applicable to the employees of the "corresponding rank and status" of the transferee back. This, however, is subject to "the qualifications and experience" of the transferor bank being the same as or equivalent to those of such other employees of the transferee bank. Paragraph 7 of the order of the R. B. I. dated 28-7-1989 (Ext. P4) records that the qualification and experience of the employees of the B. O. C. was taken into account. The standard of efficiency, volume of business, the fact that the experience of the officers of the B. O. C. consists of 3 years service as clerks, as against the clerks in the S. B. I. who spent atleast 10 years in the clerical cadre, the magnitude of the business of the B. O. C. and S.B.I, the method of selection by written test, the national character of the test in which the officers of the S. B. I. are selected, all went into the decision making process of the R.B.I 13. Although the circular of the S. B. I. deprives the petitioner of any weightage in the matter of seniority, the order of the R.B.I, restores a part of it. I am satisfied that the fact that the difference in the qualification and experience of the officers of the two banks were weighed evaluated and given effect to. This is what the R. B. I. is expected to do. I am satisfied that the fact that the difference in the qualification and experience of the officers of the two banks were weighed evaluated and given effect to. This is what the R. B. I. is expected to do. They concluded on the basis of the evaluation of quality and experience, that it would not be fair and just to give weightage only to the length of service in the B. O. C. This conclusion is entirely in accordance with the scheme and the statutory provisions. It would have been irrational and arbitrary to ignore the marked difference in the qualifications and experience and give weightage to every year's service. The decision is consistent with the principles set out in Para.10 above. If, as claimed by the petitioners the length of service were the only criterion, there was no need to lay down the elaborate tests such as quality of service, efficiency of the organisation, the range and volume of ] business and quality of experience for the purpose of equation of the officers of the transferor bank with the officers of the transferee bank. 14. It was then urged, on the basis of the judgment in State Bank of Travancore v. Elias Elias and Others ( AIR 1971 SC 143 ) that the officers of B. O. C. were entitled to the protection not only on their remuneration but also on their status as officers. The assumption that the petitioners or other officers who have been absorbed, have been lowered in status is factually incorrect. As the circular of the S. B. I. dated 22-5-1987 (Ext. P2) shows, the junior, officers and officers in Grade HI of the B. O. C. whose pay scales were Rs. 585-1540 and Rs. 700-1750, were not equated with the clerks in the S. B. I. But they were equated with junior management Grade Scale 1 in the pay scale of Rs. 1175-2675. Therefore officers were equated with officers and there was no reduction in the status. In State Bank of Travancore v. Elias Elias and Others (A. I. R 1971 S. C. 143) a member of the clerical staff was fitted into the cadre of subordinate staff such as peons, sweepers etc. 1175-2675. Therefore officers were equated with officers and there was no reduction in the status. In State Bank of Travancore v. Elias Elias and Others (A. I. R 1971 S. C. 143) a member of the clerical staff was fitted into the cadre of subordinate staff such as peons, sweepers etc. It is in the context of this fitment that the Supreme Court held that such fitment is a gross denial of the guarantee of the terms and conditions of the employees of the transferor bank. In that case the rank and status were actually reduced. The judgment has no application to the facts of this case. 15. In my opinion the absorption of the officers of the B. O. C. with the J. M. G. S. I. cadre and the grant of seniority by counting two years in B. O. C. as equal to one year in the S. B. I. is fair equitable and entirely in accordance with the tests laid down in clause (12) of the scheme. It is neither arbitrary nor discriminatory. 16. Learned counsel then urged that clause (12) of the scheme uses the word "pay" or "grant". The word "grant" applies to the terms and conditions of service. According to him, the word "grant" implies, that every year's service of the officers of the B. O. C. must be taken into account for the purpose of fitment in the corresponding posts in the S. B. I. The argument ignores that the obligation to grant the same terms and conditions is subject to the qualification and experience which, as already stated, includes not merely the length of service but. the totality of the factors like quality of service, the magnitude of the business, mode of selection and other factors. Since the R. B. I. and S. B. I. are required to determine the terms and conditions on the basis of qualifications and experience, it stands to reason that the number of years of service "granted" to the petitioners has to be consistent with the qualifications and experience. Consequently therefore the entire length of service cannot be granted to the officers of the B. O. C. 17. Consequently therefore the entire length of service cannot be granted to the officers of the B. O. C. 17. Another argument advanced was that the R. B. I. has no power under clause (12) of the scheme or under S.45 of the Act to equate the 2 years service in the B. O. C. with one year's service in the S. B. I. According to learned counsel, the proviso to clause (12) of the scheme limits the authority of the R.B.I, to resolve "any doubt or difference" as to whether the qualifications or experience of the employees of the B. O. C. are the same as or equivalent to the qualifications and experience of the S. B. I. of the corresponding ranker status. According to counsel the equation of 2 years service in the B. O. C. with one years service in the S. B. I. does not fall within the authority to resolve "any doubt or difference". This question has been answered by this Court in State Bank of Travancore v. The General Secretary Association of the State Bank of Travancore, Trichur and Others (1978 Lab. and I. C. 1343) where it was held that the R. B. I. was within its authority in equating the 3 years service of employees in the transferor bank with one year's service in transferee bank. Therefore there is no doubt that the R. B. I. which is required to consider the qualifications and experience of the officers of the B. O. C., was within its authority in holding that 2 years service in the B. O. C. should be considered as equal to one year's service in the S. B. I. 18. The submission that the equation of 2 years' service of the officers' of the B. O. C. with one year's in the S. B. I. causes a break in service and is therefore inconsistent with the obligation to "grant" to the employees of the B. O. C. continuity of service is unfounded. The judgment of the Punjab and Haryana High Court in Ranbir Singh and Others v. Union of India and Others (1978 SLJ 441) relied upon by counsel is inapplicable to the facts of this case. That was a case of bus conductors. Under the Pepsu Road Transport Corporation Reorganisation Order, the employees of the corporation absorbed in the Haryana Roadways were entitled to continuity of service. That was a case of bus conductors. Under the Pepsu Road Transport Corporation Reorganisation Order, the employees of the corporation absorbed in the Haryana Roadways were entitled to continuity of service. The Haryana Roadways which absorbed them treated them as new entrants to the service. In this case, the officers of the B. O. C. have not been treated as new entrants. Their service as officers of the B. O. C, has been continued, the only difference being that the full weightage for the entire length of service has not been given. The length of service at the time of absorption has been reduced. But the continuity of service has not been broken. The judgment of the Supreme Court in K. I. Shephard v. Union of India ( AIR 1988 SC 686 ) arose out a petition by employees of the transferor bank who were excluded from the employment in the transferee bank. Therefore the judgment has no application to the facts of this case. 19. The contention of the officers of the B. O. C. and of the S. B. I. is that they were not heard by the R. B. I. before the original circular letter PER 44 dated 22-5-1987 (Ext. P2) by the S.B.I., was modified by the R. B. I's order dated 28-7-1989 (Ext. P4). The letter PER 44 dated 22-5-1987 (Ext. P2) was the result of the discussions held with the Association of which officers of both the banks were members. Thus the interests of both the banks were represented and considered. The result of these discussions was prejudicial to the officers of the B. O. C. This prejudicial effect was remedied by the R. B. I. by the order dated 28-7-1989 (Ext. P4). The equation and absorption is fair. I see no breach of the principles of natural justice. As already stated, the facts of the case of K. I. Shephard v. Union of India ( AIR 1988 SC 686 ) were different. 20. The circular letter PER 44 dated 22-5-1987 (Ext. P2) was pursuant to the statutory scheme. But it is urged that it embodies a contract of employment and that the contract is contrary to S.45 of the Banking Regulation Act. It is therefore urged that the "contract" offends the law i and therefore void. The circular letter in question is not a contract. P2) was pursuant to the statutory scheme. But it is urged that it embodies a contract of employment and that the contract is contrary to S.45 of the Banking Regulation Act. It is therefore urged that the "contract" offends the law i and therefore void. The circular letter in question is not a contract. It is an administrative order made in exercise of statutory authority. The circular letter is an expression of the decision taken by the S. B. I. after discussion with the Association of Officers of which officers of both the banks are members. The resultant equation and absorption is just fair and entirely according to S.45 of the Banking Regulation Act and the scheme. There is no merit in this submission. 21. For the reasons stated in the foregoing paragraphs all these petitions are dismissed.