RESERVE BANK OF INDIA Vs. FRANCIS

JUDGEMENT

(1.) The suspension of banking business by the Bank of Cochin, pursuant to a moratorium, ordered by the Central Government, and, its consequent amalgamation with the State Bank of India, under a scheme prepared by the Reserve Bank of India, have given rise to these writ proceedings and the present appeals.

(2.) On an application made by the Reserve Bank of India under S.5 of the Banking Regulation Act (for short, the Act), the Central Government made an order of moratorium in respect of the Bank of Cochin in April 1985 and the banking business stood suspended. Thereafter, when the Reserve Bank was satisfied that in public interest and in the interest of depositors, it was necessary to prepare a scheme for the amalgamation of this banking company, the Bank of Cochin, with some other banking institution, a draft scheme was prepared proposing to amalgamate Bank of Cochin with the State Bank of India. The draft scheme with certain modifications suggested by the Reserve Bank was sanctioned by the Central Government under S.45(7) of the Act, by notification dated 23rd August, 1985. The schedule attached to the scheme and forming part of the scheme included the name of twenty one officers of the Cochin Bank (the transferor Bank) who ceased to be the employees of that Bank and who were entitled only to pension, gratuity, Provident Fund and such other benefits ordinarily admissible to them before the close of the business on 27th April, 1985. They were thus denied employment in the transferee bank, the State Bank of India.

(3.) Aggrieved by this humiliating inclusion in the offending schedule, the employees filed writ petitions in this Court challenging the validity of the Schedule attached to this scheme contending mainly that it was unfair, unjust, arbitrary and discriminatory and opposed to the principles of natural justice.