1987 (9) TMI 414 - SC - Indian Laws

Summary

Issues Involved:
1. Vires of Section 45 of the Banking Regulation Act.
2. Requirement of draft scheme to include names of excluded employees.
3. Right to be heard for excluded employees.
4. Nature of scheme-making process under Section 45.
5. Application of natural justice in administrative actions.
6. Compliance with statutory time frame and natural justice.

Summary:

1. Vires of Section 45 of the Banking Regulation Act:
Though employees of the other two banks had not challenged the vires of section 45 of the Act, on behalf of Lakshmi such a challenge has been made. Since the grounds of attack on this score did not impress us at all, we do not propose to refer to that aspect of the submissions involving interpretation of Article 31-A, Article 16, and Article 21.

2. Requirement of draft scheme to include names of excluded employees:
Counsel on behalf of the excluded employees contended that the draft schemes did not include any names of employees intended to be excluded; no opportunity of being heard was afforded to them before exclusion was ordered under the schemes. The Court held that the legislative intention is that the scheme would incorporate the names of such employees as are intended to be excluded in accordance with the scheme at the draft stage.

3. Right to be heard for excluded employees:
The excluded employees were not given an opportunity of being heard with reference to the allegations now leveled against them. The Court concluded that the action of excluding these employees without complying with requirements of natural justice was bad.

4. Nature of scheme-making process under Section 45:
The scheme-making process under section 45 is not legislative. The Court held that the process being administrative or executive, rules of natural justice were applicable.

5. Application of natural justice in administrative actions:
The Court emphasized that rules of natural justice apply to administrative actions. The decision to exclude a section of the employees without complying with requirements of natural justice was bad. The Court stated that even when a State agency acts administratively, rules of natural justice would apply.

6. Compliance with statutory time frame and natural justice:
The Court rejected the contention that the statutory time frame for moratorium excluded the application of natural justice. It held that the time limited by statute provides scope for an opportunity to be extended to the intended excluded employees before the scheme is finalized.

Conclusion:
The writ petitions and the appeals must succeed. The Court set aside the impugned judgments of the Single Judge and Division Bench of the Kerala High Court and directed that each of the three transferee banks should take over the excluded employees on the same terms and conditions of employment under the respective banking companies prior to moratorium. The employees would be entitled to the benefit of continuity of service for all purposes including salary and perks throughout the period. The Court left it open to the transferee banks to take such action as they consider proper against these employees in accordance with law. The Court did not impose costs against the employers.