Back
High Court Of Delhi
M.GOPALAKRISHNAIAH - Appellant
Versus
UNION OF INDIA - Respondent
Civil Writ 3157 of 1993
Decided On : 05/10/1994
2. Administrative Law — Natural justice — "legitimate expectation" concept recognized.
Petitioner was Executive Director of Bank of Maharashtra when he received an order of termination dated 9 July, 1993 issued by Central Government under clause 8 sub-clause (1-A) of Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970, made under section 9 of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The order was to take effect from date of service of order on petitioner and granted petitioner three months salary and allowances in lieu of notice. Petitioner challenged this order as being in violation of natural justice principles and procedure provided under sub-clause 4 of clause 8; petitioner further contended that sub-clause (1A) was unconstitutional and, thereforee, void. Respondents contended inter alias that services of petitioner had been terminated, because petitioner was felt to be unsuitable after adverse remarks made about him in the B. K. Rao Report, when he was General Manager (Personnel and Central Accounts Deptt. and Funds) of Andhra Bank. That Report was commissioned by Reserve Bank of India to investigate role of and supervision exercised by top management of Andhra Bank and Andhra Bank Financial Services in securities transactions (This investigation was done after the three Janakiraman Reports on the irregularities in funds management by Commercial Banks and financial institutions, especially in connection with Government securities, P.S.U. bonds etc. in 1991 and 1992). Petitioner had been General Manager at Andhra Bank immediately prior to his current appointment at Bank of Maharashtra.
Allowing the writ petition the court
Held:
Basic principles of natural justice have been violated to the prejudice of the petitioner. The petitioner had a legitimate expectation that before his tenure could be cut down he would be given opportunity to explain his conduct and whether he is in any way connected with any irregularity in the security transactions. It is not that there is anything against him when he functioned as the Executive Director of the Bank of Maharashtra or his performance there was not up to the mark. It is difficult to comprehend as to how the respondents could act on the reports of Janakiraman and Dr. Rao when those were not appointed by the Central Government and no opportunity had been given to the petitioner to explain his conduct if there was anything adverse against him. Loss of confidence, undesirability and unsuitability arose because of the adverse report given by Dr. Rao and not otherwise. It is a removal of the petitioner and not mere termination simplicities as canvassed. For one thing, clause 8(1A) would be vocative of section 23 of the Contract Act being against public policy as held by the Supreme Court in Central Inland Water Transport Corporation Ltd. and Anr. v. Brojo Nath Ganguly and Anr. (AIR 1986 S.C. 1571). Similar clause has also been held to be unconstitutional in a number of cases. Bank of Maharashtra is not a company under the Companies Act. From the return itself, petitioner will appear to be like any other employee of the Bank of Maharashtra. Clause 8(1A) would, thereforee, be hit by Articles 14 and 16 of the Constitution which guarantee equality before law and equality of opportunity in the matters of public employment.
( 1 ) WE are reminded of the memorable words of lord Atkin in his dissenting judgment in mcht in l. liversidge v. Anderson and another , 1941 (vol. 3) All England Reports 338 (HL) : " In England amidst the clash of arms the laws are not silent. They may be changed, but they speak the same language in war as in peace. " However, when a huge security seam involving thousands of crores of rupees surfaced, it would appear law became different for the petitioner who faced the ignominy of his services having been terminated in violation of law of the land.
( 2 ) THE petitioner, who was at the relevant time Executive Director (whole-time Working Director) of the Bank of Maharashtra and Was also looking after the day to-day affairs of the bank until the appointment of regular Chairman and Managing Director or under further orders of the Central Government, was visited with order of termination dated 9 July 1993 issued by the Central Government in the exercise of powers conferred by sub-clause (I A) of clause 8 of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970 (for short the scheme ) made under section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 ( the Banking Act for short ). The services of the petitioner were terminated with effect from the date of service of the notice on him and he was to be paid a sum equivalent to the amount of his salary and admissible allowances for a period of three months in lieu of the period of notice. This notice of termination of services of the petitioner was served upon him on 12 July 1993. The petitioner is now challenging this notice and also challenging the validity of sublause (I A) of clause 8 of the scheme.
( 3 ) THE Banking Act provided for the acquisition and transfer of the undertakings of certain banking companies, and "corresponding new bank", under clause (d) of section 2 of the Banking Act, means the Bank of Maharashtra and other banks mentioned in the first schedule to that Act. Section ) of the Banking Act under which the scheme was framed, in relevant part, is as under :- "9. (1) The Central Government may, after consultation with the Reserve Bank, make a scheme for carrying out the provisions of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, the said scheme may provide for all or any of the following matters, namely :- (a) the capital structure of the corresponding new bank, so however that the paid-up capital of any such bank shall not be in excess of rupees fifteen crores; (b) the constitution of the Board of directors, by whatever name called, of the corresponding new bank and all such matters in connection therewith or incidental thereto as the Central Government may consider to be necessary or expedient; (c) the reconstitution of any corresponding new bank into two or more corporations, the amalgamation of any corresponding new bank with any other corresponding new bank or with another banking institution, the transfer of the whole or any part of the undertaking of a corresponding new bank to any other banking institution or the transfer of the whole or any part of the undertaking of any other banking institution to ilcorresponding new bank; (d) such incidental, consequential and supplemental matters as may be necessary to carry out the provisions of this Act. (3) Every Board of Directors of a corresponding new bank, constituted under any scheme made under sub-section (1), shall include - (a) representatives of the employees, and of depositors, of such bank, and (b) such other persons as may represent the interests of each of the following categories, namely, farmers, workers and artisans, to be elected or nominated in such manner as may be specified in the scheme. (4 ). . . . . . . . . (5 ). . . . . . . . . " Under clause (e) of clause 2 of the Scheme, "nationalised bank" means a cor- responding new bank constituted under sub-section (1) of section 3 o
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
