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Judgment
Admittedly, the petitioner was declared as insolvent on 5.11.1990 and therefore, his service was terminated by order dated 15.7.1991 by the
respondent-bank, invoking Section 10(1)(b)(i) of the Banking Regulation Act (hereinafter referred to as the ""Act""). Thereafter, by order dated
3.8.1992, the order of insolvency was set aside by this Court, on the basis of which the petitioner, by his representation dated 14.8.1992,
requested the respondent bank to reinstate him in service. However, the request was rejected by the respondent bank by their proceedings dated
11.9.1992. Hence, the petitioner seeks a writ of certiorarified mandamus to call for the records in Ref.No.ZO/IR dated 11.9.1992 on the file of
the second respondent, to quash the same and to direct the respondent to reinstate him into service with all benefits of which he is entitled under
the terms of his employment.
The learned counsel for the petitioner, referring to the case of one S.Subbaraya Davey, who was terminated from service with effect from
27.9.1982, as he was declared insolvent an order dated 27.9.1982, was reinstated by the proceedings of the second respondent dated
10.8.1983, taking note of an order of this Court dated 5.4.1983, wherein the order of insolvency dated 27.9.1982 was set aside, contends that
the petitioner is also similarly placed and therefore, he is also entitled to be reinstated in service by the respondent bank.
2.2. In this regard, the learned counsel for the petitioner relies upon the decisions in Sengara Singh v. State of Punjab, AIR 1984 SC 1499 and
Iron and Metal Traders Pvt. Ltd., Bombay Vs. M.S. Haskiel and Another etc., wherein the Apex Court held that persons similarly placed should
be given the benefit of reinstatement.
2.3. That apart, the learned counsel for the petitioner contends that once the order of insolvency dated 5.11.1990 was set aside by an order dated
3.8.1992, it cannot be said that the petitioner was adjudicated as insolvent and therefore, the petitioner is entitled for reinstatement in service.
3.1. Per contra, learned counsel for the respondent bank, placing reliance on the ratio laid down in Digambar v. Central Bank of India 1992 (II)
MLJ 87 contends that the termination of service of the petitioner on account of the loss of confidence because of his act of insolvency and due to
suspension of payment is valid in law and no exception could be taken from such decision in view of Section 10(1)(b)(i) of the Act.
3.2. The learned counsel for the respondent bank distinguished the case of S. Subbaraya Davey on the ground that S. Subbaraya Davey was
declared insolvent by an ex parte order dated 27.9.1982 and therefore, he filed an application to set aside the same as he was not heard before he
was declared as insolvent. Before the disposal of the application to set aside the ex parte order dated 27.9.1982, it appears that he had settled the
dues payable to the creditors, as a result of which, the application to set aside the ex parte order dated 27.9.1982 was allowed and ultimately, the
insolvency petition itself was dismissed.
3.3. In any event, the learned counsel for the respondent contends that the petitioner has, admittedly, suspended the payment payable to the
creditor and therefore, there is a bar for the bank to continue the employment of the petitioner any further, in view of Section 10(1)(b)(i) of the
Act.
I have given careful consideration to the submissions of both sides.
5.1. In Black''s Law Dictionary, ""adjudication"" is defined as follows:
Adjudication:- The legal process of resolving a dispute. The formal giving or pronouncing a judgment or decree in a court proceeding: also the
judgment or decision given. The entry of a decree by a court in respect to the parties in a case. It implies a hearing by a court, after notice, of legal
evidence on the factual issue(s) involved.
5.2. As held in Deep Chand and Others Vs. Land Acquisition Officer and Others, , the decree means a formal expression of an adjudication which
the court conclusively and finally determines the right of either parties.
5.3. Under the facts and circumstances of the case referred to by either side, admittedly, there is no adjudication in the case of S. Subbaraya
Davey. On the other hand, it cannot be disputed that there was a proper adjudication in the case of the petitioner before passing the order of
insolvency dated 5.11.1990.
Therefore, the case of S. Subbaraya Davey cannot be compared to that of the petitioner. Once the petitioner was declared as insolvent after an
adjudication, the respondent bank is empowered to take appropriate decision in the mailer of continuing the petitioner in service, u/s 10(1)(b)(i) of
the Act, which reads as follows:
Prohibition of employment of Managing Agents and restrictions on certain forms of employment (1) No banking company -
(a) ...
(b) shall employ or continue the employment of any person -
(i) who is, or at any time has been, adjudicated insolvent, or has suspended payment or has compounded with his creditors, or who, is or has
been, convicted by a criminal court of an offence Involving moral turpitude; or
6.2. A reading of Section 10(1)(b)(i) of the Act makes it clear that there is a statutory bar either to employ or to continue the employment of any
person who is adjudicated as insolvent or who has suspended the payment with his creditors. In other words, once an employee is declared as
insolvent for non payment of the dues payable to the creditors, it amounts to suspension of payment automatically. The legislature has imposed
such statutory bar in the matter of employing or continuing to employ any person who has suffered the above statutory infirmity. The termination of
service of such employee who had been declared as insolvent or suspended the payment to its creditors is, therefore, indispensable, on account of
loss of confidence in the employee due to his own act of insolvency or suspension of payment to the creditors as held in Digambar v. Central Bank
of India 1992 (II) MLJ 87.
6.3. Under such circumstances, the plea of discrimination among the similarly placed persons based on Article 14 of the Constitution of India
cannot be either entertained or appreciated, as it is wholly misconceived. It is well settled in law that benefit of Article 14 of the Constitution of
India could be extended only in the matter of discrimination in lawful claims but not in illegality.
It is not in dispute that the order of insolvency dated 5.11.1990 was subsequently set aside by this Court, by order dated 3.8.1992. Once it is
clear that mere suspension of payment to the creditors is suffice to attract Section 10(1)(b)(i) of the Act. under which no person could be
continued in employment, if he had been either declared as insolvent or suspended the payment to the creditors, the order dated 3.8.1992, setting
aside the order of insolvency of the petitioner, shall not remove the stigma caused on him, on account of his act of insolvency and suspension of
payment to the creditors, suffered u/s 10(1)(b)(i) of the Act. Therefore, the reliance on the decision in Senaara Singh v. State of Punjab, AIR 1984
SC 1499 and Iron and Metal Traders Pvt. Ltd., Bombay Vs. M.S. Haskiel and Another etc., is not applicable to the facts and circumstances of
this case, in view of the express statutory bar in continuing the employment of the petitioner in service of the respondent bank as per section 10(1)
(b)(i) of the Act.
Finding no merits, the writ petition is dismissed. No costs.