( 1. ) BY this petition under Article 226 of the Constitution of India, the petitioners seek to challenge the right to recover from them the loss incurred to the Bank in refunding the mutilated notes by the petitioners 2 to 4.

( 2. ) PETITIONER No. 1 is an association of officers employed by the State Bank of India. This association is espousing the cause of the cashiers in general and want to canvass that the cashier of the State Bank of India would incur no personal liability in exchanging the mutilated notes. The facts and the circumstances leading to the order for realising the loss from the cashiers would differ from case to case and there is no common cause of a general nature, which the petitioner No. 1 could ventilate, and the petitioner No. 1 would have no locus standi in the case. We would, however, proceed to consider the case of the three petitioners.

( 3. ) ALL the three petitioners are Head Cashiers and were posted at all material times at the Civil Lines Branch of the State Bank of India. It is undisputed that the petitioners, M. P. Gupta, R. C. Namdeo and H. S. Verma, exchanged a considerable amount of mutilated notes of the denomination of less than Rs. 100 between the period from 6-2-1976 to 10-8-1978. When these mutilated notes were remitted to Reserve Bank of India, they were refused payment causing loss to the State Bank of India. M. P. Gupta, R. C. Namdeo and H. S. Verma had exchanged notes of the value of Rs. 40,782, Rs. 2,150 and Rs. 241 respectively. The notes were imperfect defective and mutilated. When the remittance was sent to Reserve Bank of India, which contained these notes, the Reserve Bank, in presence of the officers of the State Bank, sorted out the imperfect notes from the notes that could be paid by the Reserve Bank. Thereafter, the above notes were sent to the Claims Department of the Reserve Bank of India. The State Bank was advised and was informed that if they so desired, they could send their representative to be present at the time of the scrutiny by the Claims Department. In course of time, these notes were scrutinized by the Claims Department of Reserve Bank of India, who found that out of the notes thus remitted, notes of the value of Rs. 28,091 exchanged by M. P. Gupta, notes of the value of Rs. 390 exchanged by R. C. Namdeo and notes of the value of Rs. 5 exchange by H. S. Verma could not be accepted by them. The State Bank of India is realising this amount from the aforesaid cashiers by deducting from their salary in convenient instalments. It is not in dispute that the above notes refused (sic) payment by the Reserve Bank of India were exchanged by the petitiones concerned as aforesaid. It was possible to know from the packets of the notes exchanged by each of the cashiers as to which of them had accepted those notes from the chit attached to such packets bearing the signatures of the cashiers concerned.

( 4. ) THE three petitioners contend that the Manager (Accounts) of the State Bank of India was delegated the authority by the Reserve Bank of India to exchange the mutilated bank notes. The Head Cashiers were orally authorised to exchange these mutilated notes by the State Bank of India. The defective notes exchanged by them had to be later scrutinised by the Manager (Accounts) at his convenience before they were sent for remittance to the Reserve Bank of India. The Manager (Accounts) never took any objection as to the acceptance and exchange of the above bank notes and, therefore, it would be deemed that the notes had been exchanged under the authority of the Manager (Accounts ). The decision of the Manager (Accounts) to exchange the notes was final under Rule 21 of the Reserve Bank of India (Note Refund) Rules, 1975. Secondly, it is contended that natural justice required that the petitioners were issued notice before rejecting the notes; and lastly, it is urged that the amount cannot be deducted from their salary without an enquiry being made by the bank in which th