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2025 Supreme(Online)(Tel) 13594
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
NAGESH BHEEMAPAKA, J
Sri Setty Ravi Teja – Appellant
Versus
M/s Pearl Law Associates – Respondent
WRIT PETITION No. 8538 OF 2018
For the Appellants/Petitioners: Sri Prabhakar Sripada, Sri Setty Ravi Teja
For the Respondents: Sri B.S. Prasad
Acquisition of associate banks by the State Bank of India subjected employees to unjust discrimination regarding service conditions; unilateral changes to employment terms without Central Board approval deemed void.
Headnote:(A) State Bank of India Act, 1955 - Sections 2, 17, 19, 35 - Discrimination in service conditions following acquisition of Associate Banks by State Bank of India - Employees from Associate Banks subjected to hostile discrimination, deprived of salary benefits and bank contributions - Unilateral offer of employment by Chief General Manager (HR) without approval from Central Board declared void. (Paras 2-6, 10, 12-14)
(B) Service Jurisprudence - Employees cannot be dismissed or forced into new terms without proper consideration and application of prior agreements or past practices; legitimate expectation upheld. (Paras 28-34)
(C) Judicial Review - Courts do not interfere with policy decisions made under statutory provisions unless proved arbitrary or illegal. (Paras 12, 24)
Facts of the case:
The case involves employees of five Associate Banks acquired by State Bank of India, alleging discrimination in new employment terms post-acquisition without Central Board approval. The Chief General Manager issued unilateral option letters leading to grievances.
Findings of Court:
The Court found that the unilateral offer of employment without terms sanctioned by the Central Board violated statutory provisions, resulting in discrimination against former Associate Bank employees. No claims under the principles of legitimate expectation were upheld given the conditions of integration.
Issues: The primary issues addressed were the legality of unilateral changes imposed on employees post-merger, the application of service conditions, and the viability of claims regarding salary increments and allowances.
Ratio Decidendi: The Court ruled that employees cannot be subjected to arbitrary changes in conditions of service and that mergers carry expectations of continuity in service benefits founded on prior agreements. It emphasized the duty of statutory bodies to follow due process.
Result: Writ Petition dismissed. No costs.
| Table of Content |
|---|
| 1. acquisition of associate banks by sbi. (Para 1 , 2) |
| 2. claims of discrimination in benefits post-acquisition. (Para 3 , 4) |
| 3. petitioners' locus and eligibility under different conditions. (Para 5 , 6) |
| 4. estoppel due to earlier option choices regarding pension. (Para 7 , 8 , 9) |
| 5. legal precedents on mergers and employee rights. (Para 10 , 11 , 12) |
| 6. judicial limitations on reviewing institutional policy decisions. (Para 13 , 14) |
| 7. sbi's merger consistent with historical precedents. (Para 15 , 16) |
| 8. historical policy implications and employee integration. (Para 17 , 18 , 19) |
| 9. the relationship between governmental acts and employee status. (Para 20 , 21 , 22) |
| 10. doctrine of legitimate expectations in administrative law. (Para 23 , 24 , 25) |
| 11. establishment of employee rights and expectations through legislation. (Para 26 , 27 , 28 , 29) |
| 12. nature of policy changes affecting employee benefits. (Para 30 , 31 , 32 , 33 , 34) |
| 13. retaining benefits in the context of merger options. (Para 35 , 36 , 37 , 38) |
| 14. insufficient evidence of raised grievances by certain petitioners. (Para 39) |
| 15. conclusion and dismissal of the writ petition. (Para 40 , 41 , 42) |
ORDER:
Heard Sri Prabhakar Sripada, learned Senior Counsel representing Sri Setty Ravi Teja, learned counsel for petitioners as well as Sri B.S. Prasad, learned Senior Counsel on behalf of M/s Pearl Law Associates for the respondents.
2. The case of petitioners is that Respondent No.4 – State Bank of India acquired five Associate Banks viz: (1) State Bank of Bikaner and Jaipur, (2) State Bank of Hyderabad, (3) State Bank of Mysore, (4) State Bank of Patiala, and (5) State Bank of Travancore as per said Gazette Notifications dated 22.02.2017 which were to come into force from 01.04.2017. It was mentioned in Clause 7 of the said Notification that Employees of the Transferor Banks (Associate Banks) shall become, from the effective date, an officer of, as the case may be, of Transferee Bank (State Bank of India) and shall hold his / her office of service therein on such terms and conditions as may be approved by the Central Board of the Transferee Bank (State Bank of India) and shall continue to work in accordance there with. However, no terms and conditions of service were approved by the Central Board, even though the effective date of the operation of Gazette Notification was 01.04.2017. Two days prior thereto, i.e. on 29.03.2017, Respondent No. 2 - Chief General Manager (HR), State Bank of India, Corporate Centre, Mumbai issued Option Letters to all the employees and officers of the Associate Banks asking them to either accept the terms and conditions contained in the Option Letters by exercising option “A” or “B” or discontinue their services by exercising option “C”. In other words, employees were told either to accept Options A or B or resign immediately by exercising option C.
It is stated that this so-called option letter is unknown to service jurisprudence. A permanent employee or officer cannot be forced to resign if he or she does not like the new terms and conditions imposed by the Management. Moreover, the so-called offer of Employment Letter dated 29.03.2017 does not refer to any terms and conditions of service approved by the Central Board of the Transferee Bank i.e. State Bank of India. Therefore, it can be seen that Respondent No. 2 has no authority to unilaterally issue offer of employment letter which are not sanctioned or approved by the Central Board of the Transferee Bank. Respondent No.2 by himself cannot frame service conditions, as service conditions have to be approved only by the Central Board of the Transferee Bank. As per Section 43 of the State Bank of India Act , 1955 (for short, ‘the Act’), it is only the SBI which may appoint officers or other employees. The bank acts through the Central Board as defined under Section 2 (b). As per Section 17 , the management of SBI vests with the “Central Board” and not the “Chief General Manager (HR)” i.e.
