2007 Supreme(SC) 402

SUPREME COURT OF INDIA
K.G. BALAKRISHNAN, CJI., LOKESHWAR SINGH PANTA AND D.K. JAIN, JJ.
BHARAT COOP. BANK (MUMBAI) LTD. - Appellant;
Versus
COOP. BANK EMPLOYEES UNION - Respondent.
Civil Appeal No. 1542 of 2007
Decided on March 22,2007
Advocates appeared
Jamshed Cama, Senior Advocate (P.C. Pavaskar, Ms Nandini Gore, Ms Pragya Baghel and Manik Karanjawala, Advocates, with him) for the Appellant;
Chander Uday Singh, Senior Advocate (Nitin S. Tambwekar, B.S. Sai for K. Rajeev, Advocates, with him) for the Respondent.

A multi-state cooperative bank is governed by the State Government as the 'appropriate Government' under the Industrial Disputes Act, because the definition of 'banking company' was incorporated by reference as it existed in 1949, making subsequent amendments to the Banking Regulation Act inapplicable to that definition.

Headnote:(A) Industrial Disputes Act, 1947 - Sections 2(a) and 2(bb); Banking Regulation Act, 1949 - Section 5 - Definition of "appropriate Government" - Determination of whether the Central Government or State Government is the appropriate authority for a multi-state cooperative bank - Whether the definition of "banking company" in the Industrial Disputes Act is one of reference or incorporation. (Paras 2, 12, 13)

(B) Statutory Interpretation - Legislation by incorporation versus mere reference - Legislation by incorporation occurs when the legislature incorporates provisions from an existing statute by reference instead of verbatim reproduction; once incorporated, the provision becomes an integral part of the incorporating statute, and subsequent amendments to the parent statute have no effect on the incorporating statute - In contrast, mere reference or citation means subsequent modifications, repeals, or re-enactments of the referred statute will have an effect on the referring statute. (Paras 15, 20)

(C) Interpretation of Definition Clauses - Use of the word "means" in a definition is intended to be exhaustive and "hard-and-fast," assigning no meaning other than that specified - Use of the word "includes" indicates an enumerative, non-exhaustive definition, extending the scope to include items that may or may not otherwise be comprised - Use of "means... and includes" in Section 2(bb) of the Industrial Disputes Act indicates an intent to make the definition exhaustive. (Paras 23, 24)

Facts of the case:
A multi-state cooperative bank, carrying on business in more than one State and governed by the Banking Regulation Act, faced a complaint by a trade union regarding the transfer of employees. The bank contended that since it is a banking company, the Central Government is the "appropriate Government" under the Industrial Disputes Act, and consequently, a State-level labour act was inapplicable. The Industrial Court upheld this, but the High Court set it aside, holding that the bank was not a "company" under the Companies Act, 1956. The Division Bench of the High Court subsequently held that the appropriate Government was the State Government, reasoning that the definition in the Industrial Disputes Act should be read as it existed in 1949, ignoring subsequent amendments to the Banking Regulation Act.

Findings of Court:
The Court found that the reference to Section 5 of the Banking Regulation Act in Section 2(bb) of the Industrial Disputes Act is an instance of legislation by incorporation. Consequently, subsequent amendments to the Banking Regulation Act (specifically the 1965 amendment extending its application to cooperative banks) do not apply to the definition within the Industrial Disputes Act. Since the multi-state cooperative bank does not fit the definition of a "banking company" as it existed at the time of incorporation in 1949, the Central Government cannot be deemed the appropriate Government.

Issues: Whether the reference to the Banking Regulation Act in Section 2(bb) of the Industrial Disputes Act constitutes legislation by incorporation or mere reference, and based on that, whether the Central Government or the State Government is the "appropriate Government" for a multi-state cooperative bank.

Ratio Decidendi: TheCourt held that the definition of "banking company" in Section 2(bb) of the Industrial Disputes Act was incorporated by reference from the Banking Regulation Act as it existed in 1949. Under the doctrine of incorporation, the definition remains frozen at the time of incorporation, and subsequent amendments to the parent Act do not modify it. As cooperative banks were not included in the 1949 definition of "banking company," such banks do not fall under the ambit of the Central Government's jurisdiction as the "appropriate Government" under Section 2(a) of the Industrial Disputes Act. (Paras 22, 25, 30)

Result: Appeal dismissed.