TMI Blog1982 (3) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid circular, office order and combined seniority list are violative of their fundamental rights under Articles 14 and 16 of the Constitution, and are also ultra vires the power, jurisdiction and competence of the Reserve Bank of India, being without the authority of law and in contravention of the provisions of the Reserve Bank of India Act, 1934. The facts leading upon the impugned decision dated January 7, 1978, the office order dated April 27, 1978, and the draft combined seniority list are as follows: The Reserve Bank of India (Respondent No. 1) was established under the Reserve Bank of India Act, 1934, hereinafter referred to as the Act . Under the Reserve Bank of India (Staff) Regulations, 1948 framed under section 58 of the Act, the terms and conditions of service of the staff (including officers) of the respondent Bank were revised and regulated. These Regulations were amended from time to time. Provisions regarding record of service, seniority and promotion are contained in Regulations 27 to 30 (Chapter III), which read thus: 27. Record of Service: A record of service shall be maintained by the Bank in respect of each employee at such place or places and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Grades A, B, C, D, E and F, the lowest being Grade A and the highest being Grade F. Each Group had its own seniority List, that is to say, there were four separate seniority lists, one for each group. The latest of such lists, prior to the impugned combined seniority list, is dated July 1, 1976. The Reserve Bank had constituted a Cadre Review Committee in 1970, comprising Shri Justice J.L. Nain, then a sitting Judge of the Bombay High Court, Shri V. Isvaran, I.C.S. (Retd.) and Prof. N.S. Ramaswamy, a Management Expert. The Committee submitted a report in October 1972, on the basis of which the Bank issued Administration Circular No. 15, dated May 22, 1974, specifying the decisions taken by it in the light of the recommendations made by the Committee. One such decision which the Bank took was to prepare a common seniority list for and to provide for inter group mobility at the lowest level officers in each group, namely, Grade A officers, including those who were promoted to Grade B on or after January 1, 1970. With regard to higher grades (including officers in Grade promoted prior to January 1, 1970), the Bank decided to retain the group-wise seniority as at present . The in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... experience and work in posts for which they possess no expertise. For example, for the Department of Banking Operations and Development (in Group II), the emphasis was laid on the commercial banking experience of officers whereas, for recruitment and selection in the Agricultural Credit Department (in Group III), the emphasis was on experience in co-operation and agricultural finance. That is why the Bank had laid the pre-condition that the selected officer should give a specific and irrevocable undertaking to serve in the Group for which he was selected. Another grievance of the petitioners is that although the Bank has stated in paragraph 9.2.1 of the impugned Circular that the seniority of officers will be combined on the basis of their total length of service, the seniority list has in fact, been prepared in a very arbitrary and iniquitous manner. In a large number of cases, it is alleged, the actual service rendered by the officers concerned has been arbitrarily reduced and adjusted in the length of service of other officers, and the latter have been nationally treated as officiating in higher grades from dates much prior to their actual promotions to those grades. In some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e money market; Group III of Departments dealing with the Cooperatives and agricultural Credit institutions; and Group IV of Research Departments. Each Department had a separate line of seniority and although the Bank had the right under the Staff Regulations to post any employee to any group, each group operated as an independent seniority unit and the employees were eligible for promotion within their group only. It was, however, noticed that the group system had resulted in glaring inequalities in promotional opportunities in the various Departments, because of the accelerated pace of expansion of Departments in some of the Groups wherein relatively junior employees were able to secure earlier promotions and confirmations. So far as the non-officers staff was concerned, the Bank took several steps from time to time to equalise their chances of promotion. Finally, in pursuance of an agreement with the All-India Reserve Bank Employees Association, which is a representative Association of Class III employees of the Bank, the Bank introduced a combined scheme for clerical staff in May 1972 under which, the separate seniority lists of clerical employees in Class III were merged into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersonnel, Central Office, Bombay. The petitioners did not implead to the petition any of the officers belonging to the other groups who are likely to be affected if the relief sought by the petitioners is granted. Later, by an order dated July 24, 1978, respondents 3 and 4 were allowed to join in the petition on their own application. Respondent 3, Shri M.P. Saxena, was then the Deputy Chief Officer, Department of Banking Operations and Development, New Delhi, while respondent 4, Shri S. Acharya, was Deputy Chief Officer, Agricultural Credit Department, Chandigarh. Respondent 3, whose counter-affidavit has been adopted by respondent 4, has raised a preliminary objection to the maintainability of the writ petition on the ground that hundreds of officers similarly situated who are all specifically identifiable and who would be prejudicially affected if the prayers in the writ petitions are granted, have not been impleaded as respondents. According to him, this is a case of a few privileged persons trying to retain their undue privileges at the cost of a scheme introduced to improve the operational efficiency of the Institution and for the common good of the officers as a class. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al tribunal like the Cadre Review Committee. The Staff Regulations of 1948 are in the nature of standardised contractual conditions of service. They were not framed under section 58 of the Act and 425 therefore, it is competent to the Bank to alter them by administrative circulars. On these pleadings, the three main questions which arise for our consideration are, firstly, whether the Reserve Bank of India (Staff) Regulations, 1948 are statutory in character; secondly, whether it is competent to the Bank to provide for conditions of service of its staff by administrative circulars; and, thirdly, whether the impugned circular and seniority list offend against the provisions of articles 14 and 16 of the Constitution. The contention of the petitioner is that the Regulations were framed under section 58 of the Reserve Bank of India Act, 1934; that they cannot be altered by administrative circulars; that conditions of service cannot be framed by administrative circulars but must be framed by Regulations made under section 58 of the Act; and that, the impugned circular and seniority list violate their right to equal treatment in the matter of their service conditions and career. The Rese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Calcutta High Court in Reserve Bank Employees Association v. Union of India(1) that section 58 (2) (j) refers to staff funds and superannuation funds and that it cannot comprise service conditions. But, the provisions of sub-section (2) of section 58 cannot be taken to be exhaustive of the power of the Central Board to make regulations. It is well-settled that where a specific power is conferred without prejudice to the generality of a power already conferred, the specific power is only illustrative and cannot restrict the width of the general power. (See Emperor v. Shibnath Barerjee;(2) Om Parkash v. Union of India(3). Therefore, the ambit of the general power conferred by sub-section (1) cannot be attenuated by limiting it to matters specified in subsection (2) of Section 58. Section 58 (1) of the Act confers power on the Central Board of Directors of the Bank to make regulations in order to provide for all matters for which provisions is necessary or convenient for the purpose of giving effect to the provisions of the Act. It seems to us clear that it is not only convenient but manifestly necessary to provide for the service conditions of the Bank s staff in order to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Halsbury s Laws of England, Fourth edition. In paragraph 1326 it is stated that: Corporations may be either statutory or nonstatutory and a fundamental distinction exists between the powers and liabilities of the two classes. Statutory corporations have such rights and can do such acts only as are authorised directly or indirectly by the statutes creating them; non-statutory corporations, speaking generally, can do everything that an ordinary individual can do unless restricted directly or indirectly by statute . Paragraph 1333 says that: The powers of a corporation created by statute are limited and circumscribed by the statutes which regulate it, and extend no further than is expressly stated therein, or is necessarily and properly required for carrying into effect the purposes of its incorporation, or may be fairly regarded as incidental to, or consequential upon, these things which the legislature has authorised. What the statute does not expressly or impliedly authorise is to be taken to be prohibited. There is no doubt that a statutory corporation can do only such acts as are authorised by the statute creating it and that, the powers of such a corporation cannot e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this behalf, reliance is also placed by Shri Nariman on a decision of a Constitution Bench of this Court in Sukhdev Singh v. Bhagatram,(1) Ray, C.J., who spoke for three members of the Bench, observes in his judgment that the powers of statutory bodies are derived, controlled and restricted by the statutes which create them and that any action of such bodies in excess of their power or in violation of the restrictions placed on their powers is ultra-vires. The concurring judgment of Mathew, J. also contains observations to the same effect (see pages 628, 630 and 659 of the Report). This enunciation of law is to the same effect as in Halsbury and our answer is the same. While issuing the administrative circular governing the staff s conditions of service, the Central Board of Directors has neither violated any statutory injunction nor indeed has it exercised a power which is not conferred upon it by the statute. The circular is strictly within the confines of section 7 (2). So long as staff regulations are not framed under section 58 (1), it is open to the Central Board to issue administrative circulars regulating the service conditions of the staff, in the exercise of pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to a subject matter on which a rule or regulation can be framed, until it is so framed. The only precaution to observe in the cases of statutory corporations is that they must act within the framework of their charter. Its express provisions and necessary implications must at all events be observed scrupulously. It may bear mentioning that any action taken by the Central Board of Directors under section 7(2) is subject to the directions given by the Central Government under section 7(1) just as any regulation framed by it under section 58 is subject to the previous sanction of the Central Government. In either case, the Central Board has to abide by the decision or directions of the Central Government. There can therefore, be no apprehension that, by taking action under section 7 (2), the Central Board may circumvent the condition on which the power conferred by section 58 can be exercised by it. The overall authority of the Central Government acts as a restraining influence on any action taken by the Central Board, whether it acts under one or the other provision of the Act. Having seen that the Central Board has the power to provide for service conditions of the staff by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absent in the Regulations of 1948. That renders it safe and reasonable to accept the statement contained in the counter affidavit filed on behalf of the Reserve Bank by Shri Shamrao Laxman Jathar Deputy Manager in the Department of Administration and Personnel to the effect that the Staff Regulations of 1948 are not statutory in character, not having been made under section 58 of the Act of 1934. The rejoinder affidavit dated July 16, 1979 filed on behalf of the petitioners by Shri Jamnadas Gupta reiterates the contention that the Regulations of 1948 were framed under section 58 (1) with the sanction of the Central Government. Support is sought to that contention from the correspondence annexed to the affidavit filed in support of the writ petition and the correspondence annexed to the rejoinder. Of particular importance is the statement contained in the Memorandum to the Central Board dated January 21, 1949, submitted by the then Governor of Reserve Bank, Shri C.D. Deshmukh, on the subject of Reserve Bank of India Regulations . That Memorandum contains a list of regulations which were made by the Central Board with the approval of the Central Government . The very first item i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y do not impinge upon any Regulations made under section 58 of the Act. It now remains to be considered whether the impugned Administration Circular, No. 8, dated January 7, 1978; Office Order No. 679, dated April 27 1978; and the draft Combined Seniority List of officers prepared pursuant thereto, are violative of the petitioners right to equality in the matter of their service conditions. The salient features of the impugned Administration Circular may be summarized thus: (a) A common seniority and inter-group mobility is introduced simultaneously in all Grades of officers attached to Group I (Section A) and Groups II and III. (b) The seniority of all officers is combined as on May 22, 1974, on the basis of their total length of service (including officiating service), in the grade to which they were then posted on a regular basis. In doing so, the existing inter se seniority of the officers in the respective groups is maintained and the subsequent supersessions for promotion or confirmation in the respective groups are suitably reflected. The date of confirmation is not taken into account for this purpose. (c) The Circular covers all officers in Group I (Section A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers concerned. Office Order No. 679, dated April 27, 1978 was issued in pursuance of the aforesaid Circular. The Bank announced by it that the tentative Combined Seniority List of officers in Grade B (appointed prior to January 1, 1970) and Grades C , D , E and F would be available for inspection upto May 12, 1978. Officers aggrieved by the tentative Seniority List were asked to submit their representations within fifteen days. The tentative Combined Seniority List shows the proposed position occupied seniority-wise by 644 officers belonging to Group I (Section A) and Groups II and III. These writ petitions were filed by the petitioners on June 10, 1978 in order to challenge the Administration Circular, the Office order and the Combined Seniority List referred to above. The 25 petitioners are all officers in Group I. The case of the petitioners is that the Administrative Circular and the draft Combined Seniority list are violative of their rights under articles 14 and 16 of the Constitution because; (a) The combined fixation of seniority has the effect of treating unequals as equals in so far as officers belonging to different groups are concerned, whose appointmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Agricultural Credit Department and Group III of the Staff attached to the other Departments on the General Side. The Staff attached to the Agricultural Credit Department was reconstituted into a new Group, namely, Group IV with effect from April 1, 1955. The Industrial Finance Department and the Department of Non-Banking Companies were added to Group II in September 1957 and March 1966, respectively. Group V was created for the staff of the Industrial Department Bank of India with effect from April 1, 1965. The composition of the five Groups was readjusted on that date to ensure greater administrative efficiency. This system of grouping had many drawbacks bearing on the promotional opportunities of Officers in the various Groups. To mention but a few, the drawbacks were: (i) Unequal size of one Group as compared to another, (ii) Uneven expansion in one Group as compared to another, and (iii) Earlier confirmations of Officers in one Group as compared to those in another. In 1955, Group I was the largest of all the three Groups on the basis of the total number of officers in Grades B and above in each of the three Groups. The subsequent expansion in staff strength has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Such comparisons arising from promotional imbalances in the various groups caused resentment among the affected officers. This state of affairs had long agitated the minds of the officers in Groups II and III and they brought this state of affairs to the management s notice by various representations beginning from 1968. The Management of the Bank took several steps from time to time to correct the promotional imbalances but these steps did not touch even the fringe of the problem, especially since, the ad-hoc schemes and proposals were mainly aimed at correcting imbalances that the lower level. Ultimately, in face of growing discontentment amongst officers belonging to Groups II and III, the Management decided to refer the question to the Cadre Review Committee (CRC) a which was appointed by the Bank in May 1970. The Committee was, among other things, required to examine and make recommendations for the changes desirable in the existing constitution of the cadres of officers; having due regard to the need to provide reasonable prospects of increments and promotion and to ensure such degree of interchangeability as administrative efficiency and exigencies of the Bank s servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Officers Association protested against it and demanded immediate and simultaneous introduction of combined seniority and interchangeability for the rest of the grades also. Following the persistent demand made by the majority of the officers, the Bank appointed a Committee comprising Shri C.L. Thareja, the then Chief Manager, as Chairman, Shri K. Madhava Das, Chief Officer, Agricultural Credit Department, Shri P.N. Khanna, Chief Officer, Department of Banking Operations and Development, and Shri T.D. Katara, Manager, Bombay Office, to work out the modalities of the implementation of the combined seniority scheme for grades C to F and to determine the operative date for combining the seniority. The Bank decided that pending the submission of the report by this Committee, all future promotions namely those effected from 1.1.1976, will be purely ad hoc and provisional. The Thareja Committee, like the Cadre Review Committee, unanimously recommended the introduction of combined seniority simultaneously for all grades of officers. However, on the question of the operative date, it was divided in its views. Whereas Shri Thareja and Shri Katara, both Group I officers, reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Cardre Review Committee and the Thareja Committee show that combined seniority has emerged as the most acceptable solution as a matter of administrative, historical and functional necessity. We see no justification for undoing what these committees have achieved after an objective and integral examination of the whole issue. We may mention that the conclusion to which these committees came were considered by the Bank when Shri M. Narasimhan, later India s Executive Director in the World Bank, was the Governor and it was after Dr. I.G. Patel, Formerly Secretary, Economic Affairs, Govt. of India and Deputy Administrator, United Nations Development Programme, took over as Governor in December 1977 that the final decision was taken by the Central Board to introduce inter-group mobility and combined seniority. In Reserve Bank of India v. N.C. Paliwal, a Combined Seniority Scheme was introduced by the Reserve Bank of India, consisting of two parts, one part provided for the integration of the clerical staff of the General Departments with the clerical staff of the Specialised Departments, while the other provided for the switch-over and integration of the non-clerical staff with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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