1992 (3) TMI 367 - SC - Indian Laws

Summary

Issues Involved:
1. Age of superannuation for the transferred employee.
2. Interpretation of Section 45 of the Banking Regulation Act, 1949.
3. Validity of the High Court's interpretation of the amalgamation scheme.

Detailed Analysis:

1. Age of Superannuation for the Transferred Employee:
The primary issue in this case is the age of superannuation for respondent No. 1, a former employee of Lakshmi Commercial Bank, who claimed entitlement to continue in service until the age of 60 years, as opposed to 58 years, which is the age of superannuation in Canara Bank. The High Court had ruled in favor of respondent No. 1, quashing the Reserve Bank's letter and declaring that he is entitled to continue in service until the age of 60 years. This judgment was challenged by the appellant, Canara Bank.

2. Interpretation of Section 45 of the Banking Regulation Act, 1949:
The relevant legal provisions are contained in Section 45 of the Banking Regulation Act, 1949, which deals with the power of the Reserve Bank to apply to the Central Government for suspension of business by a banking company and to prepare a scheme of reconstitution or amalgamation. Specifically, Sub-section (5) of Section 45, along with its provisos, is crucial. The scheme may contain provisions for the continuance of the services of all employees of the banking company in the transferee bank at the same remuneration and on the same terms and conditions of service which they were getting immediately before the date of the order of moratorium. However, the proviso mandates that within three years, the transferee bank must align the terms and conditions of service to those applicable to its own employees of corresponding rank or status, subject to equivalent qualifications and experience.

The Supreme Court clarified that the scheme does not automatically incorporate the provisions of Sub-section (5) unless specifically included. The right of the employees is to claim parity with the employees of the transferee bank of corresponding rank or status after three years from the date of the scheme's sanction.

3. Validity of the High Court's Interpretation of the Amalgamation Scheme:
The High Court had interpreted Clause (i) of Sub-section (5) of Section 45 and Clause 10 of the amalgamation scheme as conferring a vested right on the transferred employees, which could not be adversely affected by the amalgamation. The Supreme Court disagreed with this interpretation, stating that the High Court misconstrued the provisions. The Court emphasized that the right of the employees is provided in the proviso to Clause (i), which mandates parity with the transferee bank's employees after three years, rather than an unalterable continuation of the previous terms and conditions.

The Supreme Court concluded that respondent No. 1, upon amalgamation, became an employee of Canara Bank and was subject to its terms and conditions, including the age of superannuation, which is 58 years. The High Court's judgment was set aside, and the writ petition filed by respondent No. 1 was dismissed.

Conclusion:
The appeal was allowed, and the Supreme Court held that respondent No. 1 could not claim the age of superannuation of 60 years as applicable in Lakshmi Commercial Bank. Instead, he was bound by the age of superannuation of 58 years as applicable in Canara Bank. The High Court's judgment was set aside, and no costs were awarded.