M RAMU Vs. GOVERNMENT OF INDIA

JUDGEMENT

(1.) W. P. No. 504 of 1989 is filed by an employee of the Indian, Overseas Bank Ltd. , Madras and W. P. No. 505 of 1969 by an employee of the State Bank of india, Madras, for the issue of writs of mandamus to strike down the provisions of section 36-AD of the Banking Laws (Amendment) Act 1968, as unconstitutional and illegal.

(2.) THE Government of India introduced in Parliament Banking Laws Amendment bill on 23-2-1967. The Bill mentioned several objects for its introduction, viz. , (1)to snap or at least to make ineffective the link between a few industrial houses and the banks, (2) to change the exclusive orientation of the Banks towards industry and business and to reorient credit facilities to several priority sectors such as agriculture, small scale industries, rural finance, cooperation and exports, (3) to arrest monopolistic trends of the investment of funds of the Banks and misdirection of bank's resources, and (4) to ensure that the credit decisions of the management of Banking companies conform with the plans for economic development. The Bill was passed by the Parliament and received the assent of the president of India on 2-1-1969 and was brought into force throughout India from 1-2-1969. The petitioners submit that the provisions of Clauses (a) to (c) to Subsection (1) of Section 36-AD are violative of the fundamental rights of the petitioners and as such void. The impugned Sub-section may be set down below:

(3.) SUB-CLAUSE (c) of Sub-section (1) of Section 30-AD prohibits a person from acting in any manner calculated to undermine the confidence of the depositors in the banking company. The validity of this sub-clause was challenged on the ground that the right of freedom of speech in criticising the affairs of the banking company would be adversely affected. The sub-clause cannot be understood in the manner sought to be construed by the learned counsel for the petitioners. What is prohibited is any adverse act calculated to undermine the confidence of the depositors of the Banking company without reasonable excuse. The Legislature cannot be denied its right to protect the interests of the bank without prejudice to the right of freedom of speech. "freedom of speech" would not include acting in a manner calculated to undermine the confidence of the depositors of the Banking company without any reasonable excuse. That the act of speeches that are made is punishable only when it is made without reasonable cause is made specific in sub-section (2) of Section 36-AD which provides that whoever contravenes any provision in Sub-section (1) without any reasonable excuse shall be punishable. This provision amply safeguards the right of freedom of speech of the petitioners regarding the affairs of the bank.