Palamau Kshetriya Gramin Bank Adhikari Sangh vs Palamau Kshetriya Gramin Bank and Another

D.G.R. Patnaik, J.—The petitioner being an Association of Officers of Palamau Kshetriya Gramin Bank, have filed this writ application,

praying for quashing of part of the notification dated 1.12.2001 (Annexure-8), whereby the reimbursement of medical expenditure has been fixed

for the employees of the Palamau Kshetriya Gramin Bank unequal to the employees of the Sponsor Bank namely, the State Bank of India.

Claiming parity with the employees of the Sponsor Bank in respect of medical reimbursement, the petitioner has claimed that the impugned portion

of Annexure-8, is illegal, arbitrary and contrary to the directions contained in the Award dated 30.4.1990 passed by the National Industrial

Tribunal (NIT).

Respondents by filing counter-affidavit have denied and disputed the petitioner''s claim and have counter asserted that the impugned notification

is only by way of a communication of the decision taken by the Sponsor Bank namely, the State Bank of India, which in turn, is based upon a

notification issued by the Central Government in exercise of its powers under the provisions of Section 17(1) of the Regional Rural Banks'' Act,

1976.

In the light of the stand taken by the respondent Bank and for better appreciation of the dispute, the backgrounds facts of the petitioner''s case

has necessarily to be noted.

The Rural Banks including the Palamau Kshetriya Gramin Bank (referred to as Kshetriya Bank) (Respondent No. 1), were created by the Central

Government notification under the provisions of Section 2 of the Regional Rural Bank Act, 1976 The State Bank of India became the Sponsor

Bank of respondent No. 1.

Resentment was expressed by the employees of the Rural Banks on account of disparity in their service conditions as compared to the service

conditions applied to the employees of the Sponsor Bank Such grievance raised on the claim of equal pay for equal work, was referred to the

Supreme Court. The Apex Court referred the matter to the National Industrial Tribunal (NIT).

The NIT declared its Award on 30.4.1990, holding that the employees of the Regional Rural Banks would be entitled to claim parity with the

officers and other employees of Sponsor Banks in the matter of pay scales, allowances and other benefits. The Tribunal directed that the Award

should be given effect to from 1.9.1987. However, with regard to equation of posts and consequent fixation of the new scales of pay, allowances

and other benefits for officers and employees of the Regional Rural Banks, at par with the officers and other employees of comparable level in

corresponding posts in Sponsor Banks and their fitment into new scales of pay as are applicable to the officers of the Sponsor Bank, the Tribunal

held that it is a matter which has to be decided by the Central Government in consultation with such authorities as it may consider necessary.

Since, from the date when Award was made effective with effect from 1.9.1987, the employees of the Nationalized Commercial Banks, were

getting their pay scales on the basis of the 5th bipartite settlement and by implementation of the NIT Award, the employees of the Regional Rural

Banks were also given the benefit of the 5th bipartite settlement on the basis of which, pay structure of the Nationalized Commercial Banks had

been determined.

In consonance with the directions contained in the NIT Award of 1990, the National Bank for Agricultural and Rural Development (NABARD)

issued a direction On 19.2.1991 to all the Rural Banks; declaring therein that allowances and other benefits which are provided in the Bipartite

settlement in the Service Regulations of the concerned Sponsor Banks, be extended to the employees and officers of the Regional Rural Banks

respectively. It was also announced in the direction of the NABARD that Government of India has decided to implement the NIT Award and has

also accepted the recommendations of the Equation Committee regarding equation of posts in the Rural Banks with those of the Sponsor Banks.

By a notification dated 11.7.1991 (Annexure-3) a similar direction was issued by the Ministry of Finance, Department of Economic Affairs

(Banking Division) of the Central Government, addressed to the Chairman of the Regional Rural Banks for implementation of the Award. In the

aforesaid Central Government directives, emphasis was placed vide Clause-14, declaring therein that ""allowances, special allowances and other

benefits which are provided in the Bipartite settlement and service Regulation of concerned Sponsor Banks be extended to the employees/officers

of Regional Rural Banks respectively"". The allowances and other benefits made effective both retrospectively and prospectively as detailed in

Clause-15 of the directives, include the benefits of reimbursement of medical expenses, hospitalization and other benefits as per hospitalization

scheme.

In compliance of the above direction issued by the Central Government, through the Ministry of Finance, the Respondent Kshetriya Bank issued a

direction for implementation of the Central Government directives declaring that the officers of Kshetriya Bank would get 100% medical

reimbursement of hospitalization charges and their wards will get 75%.

Consequent upon the notification, members of the petitioner Association began to receive the medical benefits at par with the employees of the

Sponsor Bank.

While the matter thus came to be finally settled, the Kshetriya Bank (Respondent No. 1) by a subsequent notification, proceeded to revise the

medical facilities of its officers and employees.

Being aggrieved, the employees of the Kshetriya Bank preferred a writ application vide CWJC No. 2893 of 1991 (R) before this Court. The writ

application was disposed of on the basis of the assurance given by the respondents that they are contemplating to extend some more facilities to

the employees of the Kshetriya Bank and the matter is under consideration by the Central Government.

The petitioner alleges that contrary to the assurance given before the High Court, the Respondent Bank arbitrarily stopped extending medical

facilities to the employees of the Kshetriya Bank and had also threatened to recover the amounts given to them by way of medical reimbursement.

Such action was taken by the Respondent Bank on the presumption that the writ petition filed by the employees of the Kshetriya Bank was

dismissed by the High Court.

Being aggrieved, the employees of the Kshetriya Bank filed another writ application vide CWJC No. 864 of 1999 (R), challenging the

notification issued by the respondent Bank, whereby the medical facility was withdrawn. The impugned notification was quashed by the High Court

and a direction was issued to the respondent Bank to follow the guidelines issued by the Sponsor Bank and also take into consideration the earlier

notification issued by the respondent No. 1, as also the NIT Award and to provide the same medical facilities as being given to the employees of

the Sponsor Bank.

Later, when the pay structure of the employees of the Nationalized Commercial Banks was further revised in 1992 and 1997 by means of 6th

and 7th bipartite settlement, there was no corresponding revision of the pay structure of the employees of the Regional Rural Banks.

As a consequence, the dispute regarding disparity in the pay structure of the employees of the Regional Rural Banks vis-�-vis the Nationalized

Commercial banks, once again reared its head, which culminated in the filing of the litigation referred to as South Malabar Gramin Bank v. Co-

ordination Committee of South Malabar Gramin Bank Employees Union and South Malabar Gramin Bank Officer''s Federation and Ors. 2001 (4)

Supreme.

The impugned challenge in South Malabar Gramin Bank case (Supra) was regarding the validity of Section 17 of the Regional Rural Banks Act,

1976, on the ground that the provisions of Section 17 of the Act is ultra-vires of Articles 14 and 16 of the Constitution.

While deciding the issue, the Supreme Court had declared that the provisions of Section 17(1) of the Regional Rural Banks Act, was not ultra-

vires to the Constitution and that the revision of pay structure of the employees of the Regional Rural Banks could be made only after the Central

Government exercises its powers under the provisions of the Act and determines the same. The Supreme Court had however laid down a guideline

that while exercising the pay structure of the employees of the Regional Rural Banks, the Central Government would be duty bound to maintain

parity with the pay structure of the employees of the Nationalized Commercial Banks in the same sense and spirit as the Tribunal decided and was

given effect to by the Union Government in the year 1987.

For implementation of the directions of the Supreme Court in South Malabar Gramin Bank case (Supra), Government of India, Ministry of

Finance, Department of Economic Affairs (Banking Division) issued a notification on 11.4.2001 (which is referred to by the respondents as

Annexure-A to the counter-affidavit), declaring the pay scales as determined for the employees of the Regional Rural Banks.

Raising a strong protest against the notification (Annexure-A). the All India Regional Rural Banks'' Officers Federation challenged the same

before the Supreme Court in the case of A.I. Regional Rural Bank Officers Federation and Others Vs. Government of India and Others, . The

controversy raised in respect of the notification, was concerning the limitation imposed in the current payment of increase in the salary and in the

payment of arrears. The Supreme Court after analyzing Clause-II and III of the notification, had declared it unacceptable and quashed the same. It

appears that in the aforesaid case, no dispute was raised in respect of the other clauses, including Clause-V of the notification. Clause-V of the

notification reads as follows:

As far as other allowances are concerned, individual Sponsor Banks shall negotiate the same with the respective RRBs. The revised allowance

shall be paid with effect from 1.4.2000. The ceiling in the payment shall, however, be as per the formula stated in Clause-iii above.

Pursuant to the directives contained in Clause-V of the Central Government Notification, the Sponsor Bank of Respondent No. 1 namely, the

State Bank of India, constituted a Committee comprising of three Chairman of RRBs, two Assistant General Manager (RRBs) of the State Bank

of India to examine the issue for extension of other allowances. Adopting the recommendation contained in the specially constituted Committee, the

State Bank (sic) over the country, specifying the amount of allowances payable to the officers and employees of the sponsored Regional Rural

Banks.

The revised decision on the basis of the recommendation of the Committee in respect of allowances payable, have been mentioned in

Annexure-I and II to the Circular (Annexure-B) and have been made payable from 1.4.2000. While Annexure-I to the Circular relates to the

allowances payable to the Clerical and Subordinate Staff, Annexure-II relates to the allowances payable to the officers of the Regional Rural

Banks. The allowances which have been specifically incorporated in Annexure-I and II includes reimbursement of medical expenses (other than

hospitalization scheme) of Rs. 1,000/- in respect of Clerical and Subordinate staff up to 5 years of service and Rs. 1,200/- in respect of the

Clerical and Subordinate staff above 5 years of service. For officers, though an amount of Rs. 2,225/- per annum has been fixed towards medical

aid, but the hospitalization charges have not been revised and the existing allowances prior to the date of issuance of Circular, was to be paid, till

further instructions.

Thus, Annexure-II to the Circular continues to provide existing allowances in respect of the hospitalization charges and does not make any

revision therein. Yet, contrary to the stipulations contained in Annexure-II, the Respondent Kshetriya Bank, by the impugned notification

(Annexure-8), has altered the amount of medical reimbursement for the officers fixing the same at the rate of 90% for self and 60% for the

dependants. Against this, the petitioner is aggrieved on the ground that earlier, reimbursement of medical expense in case of hospitalization was

100% for self and 75% for the dependants of the employees / officers which has now been reduced by the impugned notification.

Respondent No. 1 Kshetriya Bank has filed its counter-affidavit. The stand taken by the Kshetriya Bank (Respondent No. 1) is that the

impugned order (Annexure-8) in respect of fixation of medical aid for the employees of the Gramin Banks, has not been done by the Respondent

Bank. Rather, such decision was taken by the Sponsor Bank in pursuance of the order of the Central Government under the second proviso to

Section 17(1) of the Regional Rural Banks Act, 1976.

Referring to Annexure-A which is the order of the Central Government dated 11.04.2001, learned Counsel for the respondent Bank submits that

the aforesaid order was passed pursuant to the order of the Supreme Court passed in Civil Appeal No. 2218 of 1999 in the case of South

Malabar Gramin Bank (Supra).

Explaining further, learned Counsel submits that the impugned notification issued by the Respondent Bank is only by way of a Circular conveying

information to all the concerned officers about the decision of the Central Government taken vide Annexure-A and if the petitioners'' are at all

aggrieved, they ought to have challenged the aforesaid decision of the Central Government.(sic) allowed, it will have the effect of quashing the

order of the Central Government which was passed in exercise of its powers u/s 17(1) of Regional Rural Bank Act 1976. In absence of the

Central Government as also the Sponsor Bank being impleaded as necessary parties, the prayer of the petitioners for quashing the impugned

notification cannot be allowed.

It is further sought to be explained that in compliance (sic) the Supreme Court as laid down in the case of South Malabar Gramin Bank

(Supra), in which the petitioner had intervened as member of the Regional Rural Bank Employees Association, the basic pay, Dearness allowance,

house rent allowance and all other allowances except medical aid (which is not treated as allowance) have been granted to the officers of the

Gramin Bank, including the Palamau Kshetriya Bank, on exactly the same lines and at par with the employees of the Nationalized Commercial

Banks and of the Sponsor Bank. Furthermore, the same medical allowance of Rs. 2,225/- per annum as given to the officers of all Nationalized

Commercial Banks and other Gramin Banks, is being paid to the employees of the Kshetriya Bank and in this respect, there is no disparity

whatsoever amongst the employees of the Nationalized Commercial Banks and the employees of the Respondent Kshetriya Bank.

Having heard learned Counsel for the parties, it has to be seen as to whether, by the impugned notification (Annexure-8), the respondent Bank

has curtailed any benefit relating to medical aid to the members of the petitioner Association, which was earlier extended to them; and if so,

whether it was within the competence of the respondent Kshetriya Bank to issue the impugned notification?

Admittedly, earlier, pursuant to the Central Government Notification dated 11.7.1991 (Annexure-3), the respondent Kshetriya Bank had

issued Circular for proper implementation of the Central Government directives, declaring that the officers of the Kshetriya Banks would 100%

medical facilities and their ward would get 75% medical facilities towards hospitalization charges and this defection was implemented.

By the impugned notification, medical facilities have been curtailed.

As observed above, the decision taken by the Sponsor Bank indicated through its Circular (Annexure-B), does not make any alteration in the

extent of reimbursement of allowances towards hospitalization for the officers and other staff of the Regional Rural Banks. Rather, it declares that

the existing allowances must be treated to be the same which was earlier declared by the Kshetriya Gramine Bank in pursuance to the Central

Government Notification dated 11.7.1991 (Annexure-3) whereby officers of the Kshetriya Banks were allowed 100% medical facilities and their

wards were allowed 75% medical facilities.

The stand taken by the respondents that the decision, as conveyed by the impugned notification, is in fact a decision taken by the Sponsor

Bank in (sic) notification (Annexure-3), is apparently incorrect. As observed above, the Circular issued by the Sponsor Bank (Annexure-B) does

not make any alteration or change in the extent of medical facilities including reimbursement of hospitalization charges. Yet, the respondent Bank

has unilaterally proceeded to alter the medical facilities which were earlier extended to the members of the petitioner Association. Such power is

certainly not vested with the respondent Bank. The decision to curtail the facilities, is in violation of the directions contained in the NIT Award and

arbitrarily tends to deprive the benefits which were earlier extended to the members of the petitioner Association.

In the light of the above discussions, I find merit in this writ application and the same is accordingly allowed. The impugned portion of the

notification (Annexure-8) is hereby quashed. The members of the petitioner Association shall continue to receive the same medical facilities as was

fixed and allowed to them in pursuance to the earlier Central Government Notification dated 11.7.1991 (Annexure-3).