ALL INDIA BANK EMPLOYEES ASSOCIATION THE STATE BANK OF INDIA STAFF UNION PETITIONERS ATTORNEY GENERAL FOR INDIA THE PUNJAB NATIONAL BANK EMPLOYEES ASSOCIATION ALL INDIA STATE BANK STAFF FEDERATION Vs. NATIONAL INDUSTRIAL TRIBUNAL:NATIONAL INDUSTRIAL TRIBUNAL BANK DISPUTES :NATIONAL INDUSTRIAL TRIBUNAL BANK DISPUTES

JUDGEMENT

(1.) Civil Appeal No. 154 of 1961 has been filed on special leave obtained from this Court against an order of K. T. Desai, J., functioning as the National Industrial Tribunal (Banks Disputes) Bombay dated October 31, 1960. The point arising for decision in the appeal is as regards the constitutional validity of S. 34A of the Banking Companies Act, 1949 which was enacted on August 26, 1960 as an amendment to the patent Act (Act X of 1949), The appellant before this Court is the All India Bank Employees Association which is a trade union organization of Bank Employees of several banks operating in India. The Punjab National Bank Employees' Union, which is a trade union with similar objects has been permitted to intervene in this appeal in support of the appellant union. The three other Writ Petitions are by other Bank Employees' Unions whose description would be apparent from the cause title and all these cases have been heard together because in the writ petitions also the point raised is identical, viz., the validity of S. 34A of the Banking Companies Act, which will be referred to hereafter as the impugned provision.

(2.) Section 34A whose validity is the matter in dispute in these proceedings runs in the following terms:-

(3.) Before commencing the examination of the points in controversy and the grounds on which the legality of the above provision is impugned, it would be helpful for a better appreciation of the problem if we set out, in very brief outline, the history of the steps which led to the enactment in dispute. There was a long standing practice in England of Banking Companies, as distinguished from companies carrying on other commercial etc. activities, not to disclose, in their balance sheets and Profit and Loss accounts, bad and doubtful debts and the provision made therefor, as well as the secret reserves created and held under various items-a practice which received judicial recognition by Buckley, L. J. in Newton v. Birmmgham Small Arms Co. Ltd., (1906) 2 Ch 378. This practice was followed by several banks in India and questions arose from time to time as to how far the practice was consistent with the statutory provisions as to disclosure contained in the several Companies Acts enacted from time to time. We shall, however, add that the desirability and even the legality of this practice has not gone without challenge, though there has been a considerable body of opinion which has held this to be salutary and necessary for the preservation and progress of a credit institution like a bank. We are not now concerned with the desirability or ethics of the practice which is a matter for the consideration of the legislature but as to the steps by which accord was established between the practice and the law