The government has the authority to issue executive instructions supplementing the statutory Scheme, and such instructions can fill up gaps and supplement the rules, as long as they are not inconsistent with the existing rules.

VIBHU BAKHRU, J.

1. The petitioner – an Association of Employees (Officers) of respondent no.2 bank (hereafter “PNB”) – has filed the present petition impugning the communication dated 12.10.2015 (hereafter “the impugned communication”) issued by respondent no.1. The impugned communication is issued in the context of nomination of officer employees and workmen employees to be appointed as directors on the board of public sector banks. By the impugned communication, respondent no.1 has clarified that the names of only those officers / employees who have three years of residual service as on the date of vacancy on the board of directors, should be forwarded. The petitioner claims that the said additional requirement of the nominees having at least three years of residual service is contrary to the Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970 (hereafter “the Scheme”), which is framed under Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (hereafter “the Act”). The petitioner submits that the aforesaid added qualification (of three years residual service), for being nominated to be considered for appointment as directors on the board of public sector banks, was introduced for the first time by the impugned communication. It is contended that the same seriously affects the right of the employees (non-workmen) of the nationalized banks. The learned counsel appearing for the petitioner contended that most of the nominees are usually elected representatives and such representatives may not have residual service of three years; therefore, insisting on such qualification would effectively curtail the pool of persons from which such nominees could be chosen. He also contended that whereas the Scheme provided for such added qualification (three years of residual service) in the case of workmen employees, no such condition was stipulated in the case of officer employees. He submits that the Scheme must, therefore, specifically exclude imposition of any such condition.

2. The principal questions that fall for consideration of this Court are: (i) whether the condition that the officers nominated for being appointed as directors should have at least three years of residual service, falls foul of the Act or the Scheme; and (ii) whether such condition is arbitrary and unreasonable and offends Article 14 and 19(1)(c) of the Constitution of India.

3. At the outset, it would be relevant to refer to Section 9 of the Act. Sub-section (1) of Section 9 of the Act expressly provides that the Central Government may, after consultation with the Reserve Bank, make a scheme for carrying out the provisions of the Act. Sub-section (3) of Section 9 of the Act contains provisions regarding constitution of the board of directors and is set out below:

“3. Every Board of Directors of a corresponding new bank constituted under any scheme made under sub-section (1), shall include-

(a) not more than four whole-time directors to be appointed by the Central Government after consultation with the Reserve Bank;

(b) one director who is an official of the Central Government to be nominated by the Central Government:

Provided that no such Director shall be a Director of any other corresponding new bank.

Explanation,- For the purposes of this clause, the expression "corresponding new bank" shall include a corresponding new bank within the meaning of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980;

(c) one director, possessing necessary expertise and experience in matters relating to regulation or supervision of commercial banks, to be nominated by the Central Government on the recommendation of the Reserve Bank;

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(e) one director, from among such of the employees of the corresponding new bank who are workmen under clauses of section 2 of the Industrial Disputes Act, 1947, to be nominated by the Central Government in such manner as may be specified in a scheme made u