New Bank of India Employees'' Union and Another vs Union of India

P.R. Gokulakrishnan, C.J.—This special civil application is filed to issue a writ of mandamus or any other appropriate writ, order or

direction directing the respondent not to discontinue or remove petitioner No. 2 from the post of workmen-director of the New Bank of India on

the board of directors until his successor is appointed by the respondent after following the due procedure laid down in clause 3(b) read with

clause 2(h) of Schedule to the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1980 (hereafter referred to as ""the

Scheme""), and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (hereafter referred to as ""the Act"").

Mr. Vyas, learned counsel appearing for the petitioner, questions the legality of discontinuing the workmen-director as and from September 1,

1987, even before a workmen-director is appointed in the board of directors of the bank. Learned counsel submits that the board of directors

cannot function even for a single minute without having a director representing the workmen as envisaged by section 9(3) of the Act. If it is said

that as per clause 9 o the Scheme, the workmen-director cannot hold office for more than 3 years and he can hold office only during the pleasure

of the Central Government, the said clause is ultra vires section 9(3) of the Act. It is the further submission of learned counsel, Mr. D. D. Vyas,

that the classification of the directors of the bank regarding the terms of office mentioned in clause 9 of the Scheme is discriminatory in character

and as such it offends article 14 of the Constitution. Finally, learned counsel contended that clause 9 of the scheme which states that the director

will hold office during the pleasure of the Central Government will lead to arbitrariness and also will result in circumventing section 9 of the Act by

not appointing or continuing the workmen-director on the board of directors.

We have carefully considered the abovesaid submission made by learned counsel appearing for the petitioners herein. Section 9 of the Act

empowers the Central Government to frame a scheme. Section 9(3) of the Act states ""Every board of directors of a corresponding new bank

constituted under any scheme made under sub-section (1) shall include:-

(a) representatives of the employees, and of depositors of such bank, and

(b) such other persons as may represent, in the interest of each of the following categories, mainly farmers, workers and artisans,

to be elected or nominated in such manner as may be specified in the scheme.

Clause 9 of the Scheme which came into being on September 1, 1987, reads as follows:

Term of office of other directors.-(1) A director appointed under sub- clauses (b), (c), (d), (e), (f), (g) or (h) of clause 3 shall hold office during

the pleasure of the Central Government.

(2) Subject to the provisions of sub-clause (1), such director shall hold office for such term, not exceeding three years, as the Central Government

may specify at the time of his appointment.

In this clause 9, the term of office of the workmen-director has also been specified. There is nothing in this clause 9 to suggest that the

representation of the workmen-director will not be on the board of directors. Simply because the duration of the office of such director is

mentioned, the same cannot be considered as running contrary to section 9 and, in our opinion, clause 9 has nowhere suggested that the board of

director will not be without the representation of a workmen-director.

Clause 3 of the Scheme deals with the constitution of the board. Clause 3(a) states that not more than two whole-time directors, of whom one

shall be the managing director, to be appointed by the Central Government after consultation with the Reserve Bank of India. Clause 3(b) deals

with appointment of workmen-director. The proviso to clause (b) reads ""provided that where the Central Government is of opinion that owing to

the delay which is likely to occur in the verification and certification of any union or federation as representative union, it is necessary in the interest

of the nationalised bank so to do, it may appoint any employee of the nationalised bank, who is a workman, to be a directors of that bank"". Clause

9 of the Scheme prescribes the terms of office of the directors and in that clause, except the director appointed as whole-time director as per

clause 3(a), other directors have to hold office during the pleasure of the Central Government and they will hold office for such term not exceeding

three years as the Central Government may specify at the time of their appointment. This, according to Mr. Vyas, is discriminatory in nature and,

as such, this clause prescribing the term of office offends article 14 of the Constitution. We are not able to appreciate this argument. The whole-

time directors stand on a different category both in services to the bank and in the manner of appointment of such directors. Hence, it cannot be

said that the directors other than the whole-time directors and the directors appointed under clause 3(a) are of the same category and, as such, the

service conditions should be equal to both these categories. We find no question of discrimination in this case since the classification is reasonable

and the term of office fixed for these categories have nexus to the object sought to be achieved. As we have seen already, the doctrine of pleasure

and the fixing of the term of office for workmen-directors do not run counter to section 9 of the Act and further, the proviso to clause 3(b) of the

Scheme which we have extracted above clearly envisages appointment of workmen-director without any delay. The apprehension of Mr. Vyas

that the appointment of a workmen-director will not be made immediately was allayed by Mr. shah, learned counsel for the respondent, by stating

that the appointment will be made at the earliest possible time since it is the duty of the Central Government both as per the Act and the Scheme to

appoint such directors.

The ""doctrine of pleasure"" advanced by Mr. Vyas suggesting that it runs counter to the provisions contained in section 9(3) of the Act cannot be

appreciated since there is nothing in clause 9 which would suggest that the board of directors will be without any representation of the workmen. It

cannot also be said that the absence of such workmen-director for a short period, i.e., between he date of expiry of the term of office of the

previous workmen-director and the date of appointment of his successor by the Central Government, will in any way amount to a conflict between

the provisions contained in section 9(3) of the Act and the provisions contained in clause 9 of the Scheme.

In view of the above discussion, we find no substance in any of the contentions raised by Mr. Vyas, learned counsel for the petitioners.

Accordingly, this petition is dismissed. Notice stands discharged.