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TMI Blog2008 (5) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... banks. Appellant bank is a 'New Bank' within the meaning of the provisions of the said Act. Undertaking of the existing bank in terms of the said Act vested in the 'New Bank'. Section 8 of the Act provides that every corresponding 'New Bank' shall in the discharge of its functions be guided by such directions in regard to the matters of policy involving public interest as the Central Government may, after consultation with the Governor of the Reserve Bank, issue. Section 19 of the Act empowers the Board of Directors to make regulations, sub-section (1) whereof is in the following terms : "19. Power to make regulations.--(1) The Board of Directors of a corresponding new bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, by notification in the Official Gazette, make regulations, not inconsistent with the provisions of this Act or any scheme made thereunder to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act." 3. Indisputably, the Board of Directors, in consultation with the Reserve Bank of India and with prior sanction of the Central Board, made regulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire month should be submitted only once. However, the officers in Scale IV and above may not get their vouchers countersigned." The said letter was circulated by the Indian bank Association. 6. A writ petition was filed by the respondents herein before the Andhra Pradesh High Court questioning the validity of the said purported guidelines issued by the Central Government. During the pendency of the said writ petition, the Board of Directors issued a circular letter dated 22.2.1991, the relevant portion whereof reads as under : "Keeping in view the prevalent situation, we are informed by the Indian Banks' Association vide its letter No.PD/CIR/76/E(x)/2208 dated 25.1.1991 that in its discussions held with the Officers' Organisations on the above issue, the Officers' Organisations had indicated their inclination to accept some reduction in the consumption of petrol and subsequently, some of the senior leaders of the Officers' Organisations met the Chairman of the Indian Banks' Association and conveyed to the IBA writing to the banks to bring about a cut in petrol limits, it being the need of the hour. Accordingly, it has been decided to bring about a cut in the petrol limits of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India. The said consultation was only with the Indian Banks' Association. Had such a consultation been there, the bank is bound by the directions. From this it is beyond doubt that the power for issuing the impugned guidelines cannot be traced to Section 8 of the Act." 9. With a view to ascertain as to whether, in fact, any consultative process had been undergone with the Reserve Bank of India by the Central Government, the former was impleaded as a party to this appal. At our request, learned Solicitor General for India also assisted us. 10. The only question which arises for our consideration is as to whether in the facts and circumstances of the case, it was necessary to consult the Reserve Bank of India by the Central Government before issuing the impugned guidelines. 11. Submission of the learned Solicitor General, as also Mr. V.R. Reddy, learned Senior Advocate, appearing for the appellant, are : (1) Whereas Section 8 of the Act applies when the Central Government is required to issue a policy decision; regulation having been framed after consulting the Reserve Bank of India in the prior sanction of the Central Government, it was not necessary to consult the Reserve Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gratuity and other matters subject, however, to any alternation made by the corresponding new bank with regard to his remunerations and other terms and conditions of service. Such alternations are required to be made only in terms of the regulations made under Section 19 and not otherwise. Use of the Bank's cars for personal purpose is only one of the regulations. The guidelines contemplated under sub-regulation (2) of Regulation 26 would be those issued by the Central Government but they are not subject to any further regulation. For issuance of the said guidelines, the procedures laid down for making Regulations were not required to be undergone. The guidelines issued by the Government, however, would be subject to Rules formulated by the Bank. If there is no guideline, the same by itself would not stand in the way of the bank to make a scheme but if there is a guideline, the Rules must be formulated in accordance therewith. Guidelines may be issued by the Government from time to time. The expression from 'time to time' is significant. It must be given its due meaning. It does not and cannot mean that whenever the guidelines are issued, the Central Government must consult the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Board of Directors. The scheme in regard to reimbursement of the expenses incurred for going to office from the residence or coming back from the office to the residence was treated to be official. The Central Government could, thus, issue a guideline in relation thereto. When the Central Government, in exercise of its power under Regulation 6 of the Regulations, issues a direction, the requirements of subregulation (2) thereof regulating formulation of the rule only is that it should be in accordance with the guidelines. The words used in the provision are 'should be' and not 'must be'. The ultimate decision, therefore, is in the bank although guidelines issued by the Government must be given due weight. Such guidelines may be issued from time to time as the Regulations itself have been framed in consultation with the Reserve Bank of India. The latter must be held to have given its approval for such exercise of the power by the bank as also issuance of guidelines by the Government. Whenever such guidelines are issued or rules are made, fresh consultative process need not be undergone. Furthermore, the word 'consultation' has different connotations in different contexts. 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