1996 (2) TMI 391 - SC - Companies Law

Whether the appellant is liable to take over the services of the appellant? Held that - Section 45 of the Act envisages the power of the Reserve Bank to apply to the Central Government for suspension of the business of a banking company and prepare a scheme for reconstitution or amalgamation. Admittedly, the Traders Bank was amalgamated With the appellant bank by exercise of the power under sub-section (1) read with sub-section (2) of section 45 of the Act. The sanction in that behalf has been accorded by the Central Government in the scheme under sub-section (7). As seen, clause (10) of the scheme envisages that employees existing as on November 20, 1987, in the transferor bank, viz., the Traders Bank, so taken over, shall become employees of the appellant bank. Admittedly, the respondent was not in service as on that date. Even no suit or proceedings was pending against the Traders Bank as on the date. As far as service conditions are concerned, in view of the specific provision in the scheme contained in paras 3 and 10 of the notification arrears of salary is a liability to be discharged by the transferor-bank and not of the appellant bank. Under these circumstances, the suits are clearly not maintainable.

Issues:
1. Termination of service and resignation of the respondent by the Traders Bank.
2. Amalgamation of Traders Bank with the appellant bank under the Banking Companies Regulation Act, 1949.
3. Suit filed by the respondent against the appellant bank for arrears of pay and declaration of the acceptance of resignation as illegal.
4. Interpretation of the scheme of amalgamation regarding the continuation of employees' services.
5. Comparison with relevant legal precedents regarding the liability of the transferee bank in amalgamation cases.

Detailed Analysis:
1. The respondent's service termination was sought by the Traders Bank, which accepted his resignation. The appellant bank later amalgamated with the Traders Bank. The Central Government approved the amalgamation under the Banking Companies Regulation Act, 1949. The scheme of amalgamation stated that all employees of the transferor bank would continue in service with the transferee bank under the same terms and conditions.

2. The respondent filed suits against the appellant bank for arrears of pay and challenging the acceptance of his resignation by the Traders Bank. The appellant raised a preliminary objection on the maintainability of the suits based on the scheme of amalgamation. The trial court rejected the objection, and the Delhi High Court dismissed the revision.

3. The main issue was whether the appellant bank was liable to take over the services of the respondent based on the scheme of amalgamation. The court referred to Section 45 of the Act, which empowers the Reserve Bank to apply for the suspension of a banking company's business and prepare a scheme for reconstitution or amalgamation. The court analyzed the provisions of the scheme and relevant legal precedents to determine the maintainability of the suits.

4. The court cited the Canara Bank case to explain that the scheme of amalgamation may or may not provide for the continuation of employees' services in the transferee bank. If such a provision exists, it must comply with specific requirements. The court also referred to the U.P. State Electricity Board case and the Rashtriya Mill Mazdoor Sangh case to draw parallels in interpreting liabilities in amalgamation scenarios.

5. The respondent argued that his employment was a liability to be taken over by the appellant bank under the scheme of amalgamation. However, the court held that the liability for arrears of salary was to be discharged by the transferor bank, not the appellant bank. Therefore, the court found the suits filed by the respondent were not maintainable, and the appeal was allowed, leading to the dismissal of the suits without costs.

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