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Judgment
Ismail, J.—These five writ petitions challenge the selection and appointment of Respondents 2 to 4, who are common to all these writ petitions, as Assistant General Managers in the first Respondent-Bank. Affidavits counter-affidavits, reply affidavits, rejoinder affidavits and third party affidavits have been filed before this Court and Mr. A. Ramachandran, who appears for the Petitioners, sought to cover a very wide ground. However, in view of the very narrow compass within which we propose to dispose of these writ petitions, it is not necessary to go into all the contentions so vehemently put forward by Mr. A. Ramachandran in support of the case of the Petitioners in these writ petitions. We shall briefly refer to the facts in order to understand the point raised by the learned Counsel for the Petitioners. The Petitioners and Respondents 2 to 4 are officers of Grade I in the first Respondent-Bank, namely, the Indian Bank. It was stated that originally Grade I consisted of only two categories of officers, namely, Superintendents and Regional Managers, but subsequently taking into account, the stagnation in Grade II, the other officers, like Branch Managers, Inspectors of Branches and others, who were in Grade II were promoted and taken over to Grade I. It is not in dispute that an appointment as Assistant General Manager in the Bank has to be made from among the officers of Grade I. As far as the present controversy is concerned, the undisputed facts are that on 30th April, 1978, a committee consisting, among others, the Managing Director and the General Manager of the Bank, the latter of whom was stated to have taken the place of Secretary, which was prevalent before nationalisation of the Bank, examined the list of Grade I officers for the purpose of selecting three persons to be appointed as Assistant General Managers and unanimously recommended the names of Respondents 2 to 4 in these writ petitions, and that subsequently the Board of Directors on 14th June, 1978 met and selected those three officers and appointed them as Assistant General Managers in the existing grade of Rs. 1,500--75--1,950--50--2,000. It is the selection and appointment of these three persons that are challenged in the present writ petitions.
As we have pointed out already, several contentions were put forward in support of the writ petitions. But as the Petitioners are bound to succeed with reference to one contention, namely, that the selection and appointment of Respondents 2 to 4 were not in accordance with Rule 39 of the rules governing the service of officers in the Indian Bank, it is not necessary to go into the other controversies. Rule 39 of the Rules reads as follows:
Promotions from one grade to another will depend upon the number of permanent vacancies available and the Board will sanction the promotions on the recommendation of the Secretary. In formulating his recommendation, the Secretary shall give due weight to seniority, merit, passing of Institute of Bankers'' Examination and other relevant factors.
Before proceeding further, we shall make a reference to the relevant provisions of Central Act V of 1970, namely, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, in order to appreciate the status of the aforesaid Rule 39. Section 3(1) of this Act proceeded to state:
On the commencement of this Act, there shall be constituted such corresponding new banks as are specified in the First Schedule.
The First Schedule to the said Act, among others, refers to the Indian Bank Ltd., which has become Indian Bank on nationalisation. Section 7(2) of the Act stated that the general superintendence, direction and management of the affairs and business of a corresponding new bank shall vest in a Board of Directors which shall be entitled to exercise all such powers and do all such acts and things as the corresponding new bank is authorised to exercise and do.
Section 12(2) of the Act, which is important, reads as follows:
Save as otherwise provided in Sub-section (1), every officer or other employee of an existing bank shall become, on the commencement of this Act, an officer or other employee, as the case may be, of the corresponding new bank and shall hold his office or service in that bank on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him if the undertaking of the existing bank had not been transferred to and vested in the corresponding new bank and continues to do so unless and until his employment in the corresponding new bank is terminated or until his remuneration, terms or conditions are duly altered by the corresponding new bank.
Section 19 deals with power to make regulations and Clause (d) of Sub-section (2) of that section enables the Board of Directors to make regulations relating to the conditions or limitation subject to which the corresponding new bank may appoint advisers, officers, or other employees and fix their remuneration and other terms and conditions of service. Section 19(3) states:
Until any regulation is made under Sub-section (1), the articles of association of the existing bank and every regulation, rule, bye-law or order made by the existing bank shall, if in force at the commencement of this Act, be deemed to be the regulations made under Sub-section (1) and shall have effect accordingly and any reference therein to any authority of the existing bank shall be deemed to be a reference to the corresponding authority of the corresponding new bank and until any such corresponding authority is constituted under this Act, shall be deemed to refer to the Custodian.
Thus, by the fiction created u/s 19(3) of the Act, the rule, namely, Rule 39 which we have extracted above will be deemed to be a regulation made by the Board of Directors under Sub-section (1) of Section 19 and will continue to govern the conditions of service of the employees and there is no dispute before us that on the relevant date, it was Rule 39 which was in force and was applicable to the selection and appointment in question. As a matter of fact, the counter-affidavit filed on behalf of the first Respondent-Bank repeatedly asserts that Rule 39 has been observed and complied with in selecting and appointing Respondents 2 to 4 herein. In paragraph 4 of the counter-affidavit originally filed on behalf of the first Respondent, it was stated that the criteria which the Committee followed were the criteria envisaged under Regulation 39 referred to by the Petitioners in their affidavits. In the rejoinder filed on behalf of the first Respondent herein, this position was made clear in paragraph 11 thereof. It is admitted that in terms of Section 19(3) of the Act, Secretary referred to in Rule 39 is the General Manager of the Bank. Consequently if Rule 39 is read as required to be read by Section 19(3) of the Act, the Board will have to make the appointment on the recommendation of the General Manager.
What had happened in the present case is that a Committee of five persons including the Managing Director and General Manager met on 30th April, 1978 and considered the list of 83 Grade I officers and out of the said list selected Respondents 2 to 4 for appointment as Assistant General Managers. Since much turns upon the proceedings of the Committee, we are extracting the entire minutes of the Committee, dated 30th April, 1978 below:
Minutes of the meeting held at 10.00 A.M. on 30th April, 1978 at the residence of the Managing Director:
Present:
Shri M.V. Subba Rao, Managing Director.
Shri K. Venkatarama Ayyar, General Manager.
Shri R. Lakshmanan, Deputy General Manager (also in charge of Vigilance Department)
Shri M. Vallinayagam, Deputy General Manager.
Shri V.S. Ramachary, Deputy General Manager.
The meeting was convened to identify suitable officers for being considered for promotion as Assistant General Managers for filling up the existing 3 vacancies.
Shri K. Narayanan, Deputy General Manager, was not invited to the meeting, as he is related to one or more of the candidates in the eligible list. Shri S.V.N. Sambandhan, Joint General Manager, was away from Madras on 30th April, 1978, but the subject-matter of the executives deliberations was discussed with him before and after this date and he was also of the same view.
For the purpose of identifying suitable candidates, the entire list of Grade I officers, whether the officers in the grade are designated as Superintendents, Regional Managers, Development Managers, Inspectors of Branches or Branch Managers, was gone through one by one.
At the outset, the Managing Director emphasized the need for all those present to express their opinion freely and frankly without any reservations and at the same time in objective manner with a view to ensure that the right type of people are promoted as Assistant General Managers.
The Managing Director thereafter outlined the following points, which in his view, were the essential qualifications for appointment as Assistant General Managers in the Bank:
(1) Seniority alone cannot be a criterion for promotion to executive posts--senior management positions;
(2) A record of integrity and dependability;
(3) Good educational background with capacity to express oneself fluently both orally and in writing;
(4) Branch experience in different capacities as well as experience at Head Office, a mix of both of which would enable an Assistant General Manager to take a balanced view of the administrative problems that come out for decision at the executive level;
(5) Proven capacity to take initiative and decision making-executive ability;
(6) Experience of working atleast in one or other of the metropolitan centers, viz., Bombay, Calcutta and New Delhi. Having worked in Madras alone may not be of equal advantage as working in other 3 metropolitan centres, because of the difference in business connections in these centres; and
(7) Capacity for sustained hard-work and ability to stand stress and strains.
The Managing Director called upon the executives present to express their opinion about the qualities required in an executive as enumerated by him. While all of them were in full agreement with the qualifications required, they, however, expressed doubts as to whether it would be possible to spot the necessary number of candidates with all the qualifications enumerated. After some discussions, it was agreed that under the peculiar background of our own institution, it may be unavoidable to make good with as many of the desirable qualifications as can be brought in candidates.
In going through the list of Grade I officers, every member present was given an opportunity to express his opinion about each candidates in the light of their respective experience of dealing with them. The following final list of candidates came up for discussion:
(1) Shri P.V. Subramaniam, Superintendent, Central Office.
(2) Shri S.V.N. Sambandhan, Regional Manager, Bangalore.
(3) Shri E. Ramakrishnan, Manager, George Town Branch.
(4) Shri T.P. Karunandam, Development Manager, Ahmedabad.
(5) Shri R. Venkataramani., Principal, Staff Training College.
There was, however, no unanimity about the suitability of the first two candidates. Shri P.V. Subramaniam, though considered competent, had one serious episode of failure of mental health and one subsequent episode of nervous breakdown. Shri S.V.N. Sambandhan, it was felt by some, was inclined to take things easy and does not exert himself in full measure as expected of a Regional Manager. The Committee was unanimous about the suitability of candidates (3), (4) and (5) for promotion as Assistant General Managers.
(Signed) MANAGING DIRECTOR
Signed....
Signed....
Signed....
Signed....
Even though the resolution of the Board of Directors, dated 14th June, 1978 does not refer to the minutes of the Committee and merely states that Respondents 2 to 4 herein are promoted as Assistant General Managers, it is repeatedly pointed out in the counter-affidavit filed on behalf of the first Respondent-Bank that the deliberations and recommendations of the Committee were considered and that they constituted the basis of the action of the Board of Directors, dated 14th June, 1978.
The question therefore that arises for consideration is whether the action of the Board of Directors in acting on the deliberations and recommendations of the Committee was in compliance with Rule 39 of the rules referred to already or not. We are clearly of the opinion that the action of the Board of Directors in promoting Respondents 2 to 4 herein, on the basis of the deliberations and recommendations of the Committee which met on 30th April, 1978 was not in compliance with the requirement of Rule 39.
We have already extracted Rule 39 and also pointed out that what the said Rule 39 requires is that the Board should make the appointment of the recommendation of the Secretary, who is now the General Manager. The said rule does not contemplate recommendation of anybody else being the basis of the appointment to be made by the Board. In the present case, it is clear that the person, who made the recommendation was not the General Manager, but a committee consisting of five persons whose names find a place in the minutes of the meeting held on 30th April, 1978. The very opening paragraph of the minutes of the said meeting, namely:
The meeting was convened to identify suitable officers for being considered for promotion as Assistant General Managers for filling up the existing three vacancies.
and the last sentence of the minutes, namely, The Committee was unanimous about the suitability of the candidates 3, 4 and 5 (Respondents 2 to 4 herein) for promotion as Assistant General Managers make it abundantly clear that the recommendation was not that of the Secretary, now the General Manager, but that of the Committee which was convened to consider and which considered the list of Grade I officers for promotion as Assistant General Managers and made the recommendation. Consequently the position is that in the place of the Secretary or the General Manager as contemplated by Rule 39, a Committee sat and selected Respondents 2 to 4 herein and recommended their promotions as Assistant General Managers to the Board of Directors.
Mr. M.R. Narayanaswami, learned Counsel for the first Respondent, contended before us that even though the Board should make the appointment on the recommendation of the Secretary, there is absolutely nothing in the rules nor is there any principle preventing the Secretary from taking the assistance of some other persons and that is exactly what has happened in the particular case. We are unable to accept this argument on the facts of this case. It is not as if the Secretary took the assistance of the Managing Director, the Deputy General Manager (in charge of Vigilance Department) and other two Deputy General Managers in making his recommendations, but those persons were closely and inextricably associated with the General Manager as a member of the Committee and so it is the Committee which made the selection and recommendation and not the General Manager. It is now well settled that when a particular action has to be taken by a person on the recommendation of X it is the recommendation of X alone that should be the foundation of the action of the person and certainly not the recommendation of X + Y because once the rule designates the recommending authority and vests the recommending power in a particular officer designated for the purpose, that officer alone will be competent to make the recommendation and nobody else. We have sufficiently indicated already that Rule 39 by means of a fiction created by Section 19(3) of the Act has statutory force, as if it is a regulation made by the Board of Directors, u/s 19(1) of the Act, and consequently any violation of that rule will certainly entitle the persons like the Petitioners to come before this Court and complain of such violation under Article 226 of the Constitution of India.
There is yet another infirmity with regard to the recommendation made by the Committee. Paragraph 2 of the minutes of the Committee, dated 30th April, 1978 states:
Shri K. Narayanan, Deputy General Manager, was not invited to the meeting, as he is related to one or more of the candidates in the eligible list. Shri S.V.N. Sambandhan, Joint General Janager, was away from Madras on 30th April, 1978, but the subject-matter of the executives deliberations was discussed with him before and after this date and he was also of the same view.
It is admitted that Shri S.V.N. Sambandhan had signed the minutes of the meeting held on 30th April, 1978, even though he did not participate in the meeting. It passes one''s comprehension as to how Shri S.V.N. Sambandhan could have signed the minutes of the meeting without attending the meeting at all. Apart from this the statement contained in paragraph 2 extracted above, namely, but the subject-matter of the executives deliberations was discussed with him before and after this date, (that is, before and after 30th April, 1978) may lead to very serious consequences. Any discussion with Shri S.V.N. Sambandhan before the date of the meeting would not have had any effect on the members who participated in the meeting, because the actual selection could not have been discussed previously and all that could have been possibly discussed was about the fact of selection or the necessity for making a selection. The very purpose of convening a committee for making a selection is that the view of one member will have its impact on other members and possibly may change the views of other members also and therefore, any discussion which might have been had with a particular person before or after the meeting will have no consequence whatever. On the other hand, Mr. A. Ramachandran, learned Counsel for the Petitioners, took advantage of this statement contained in paragraph 2 of the minutes and contended that if the matter was discussed before 30th April, 1978 with Shri S.V.N. Sambandhan and he took the same view, it would follow that the selection of Respondents 2 to 4 herein had already been made even before 30th April, 1978 and, if the statement that the matter was discussed with him subsequent to 30th April, 1978 and Shri S.V.N. Sambandhan shared the same view was to be taken to be true, the decision must have been arrived at only later and not on 30th April, 1978. It is unnecessary for us to go into the correctness or otherwise of this submission, since we are satisfied that the signing of the minutes by Shri S.V.N. Sambandhan was itself irregular, apart from the irregularity involved in the Committee making recommendations instead of the General Manager.
With regard to these two positions, namely, that it is not the General Manager, who made the recommendation, but a Committee which included the General Manager which made the recommendation and that Shri S.V.N. Sambandhan who did not participate in the meeting held on 30th April, 1978 had signed the minutes, Mr. M.R. Narayanaswami learned Counsel for the first Respondent, contended that Courts ought not to import too much of legalism into the internal conduct of bodies like the first Respondent-Bank and that therefore we will have to construe the position liberally. We are afraid that we are not in a position to appreciate or accept this argument. So long as the rules are in force and they govern the selection and appointment in question, it is the duty of all the persons who have anything to do with the rules to follow them and we cannot relax the necessity to comply with the rule on the ground that it involves what the learned Counsel for the first Respondent calls too much of legalism. Once we arrive at the conclusion that Rule 39 has not been complied with, it follows that the selection and appointment of Respondents 2 to 4 in these writ petitions as Assistant General Managers have not been done in accordance with law and, therefore, they have to be set aside. There was no dispute that in making the recommendation, all the five Petitioners herein were entitled to be considered because they were also officers of Grade I.
Consequently instead of granting the prayers contained in the writ petitions, namely, issue of a writ in the nature of declaration declaring that the promotions of Respondents 2 to 4 overlooking the Petitioners as illegal and that the Petitioners are entitled to be considered along with other Superintendents/Regional Managers for promotion as Assistant General Managers in preference to Respondents 2 to 4, a declaration will issue that the selection and appointment of Respondents 2 to 4 herein as Assistant General Managers was not in accordance with the requirement of Rule 39. The result of that will be that the first Respondent-Bank will have to make a fresh selection for appointment as Assistant General Managers in accordance with law. The writ petitions are allowed to the extent indicated above. There will be no order as to costs.
After we have dictated the above judgment, Mr. M.R. Narayanaswami, learned Counsel for the first Respondent-Bank made an oral application purporting to be under Article 134-A of the Constitution of India for grant of a certificate under Article 133(1) of the Constitution of India for preferring an appeal to the Supreme Court against our judgment. As we have indicated already, the only submission made on behalf of the first Respondent-Bank was that we ought not to import too much of legalism into the construction of Rule 39 and never was there any controversy that in the place of the recommendation of the General Manager as contemplated by Rule 39, read with Section 19(3) of the Act it was the recommendation of the Committee that was taken into account by the Board of Directors in selecting and appointing Respondents 2 to 4 herein. Consequently that the appointment of Respondents 2 to 4 herein was in contravention of Rule 39 is indisputably established. Under these circumstances, we do not consider that any substantial question of law of general importance which, in our opinion, needs to be decided by the Supreme Court is involved in the present case. Hence we reject the request of the learned Counsel for the first Respondent-Bank.