B SRINIVASA RAO Vs. ANDHRA BANK CENTRAL OFFICE

JUDGEMENT

(1.) This writ petitio n is filed for a writ of certiorari to quash the proceedings contained in letter No.666/ED/Sctt/42 dated 2.12.1994 of the Executive Director, Andhra Bank (for short 'The Bank') and the letter dated 15.4.1995 of the Chairman and Managing Director of the Bank and for a consequential direction to the respondents to treat the petitioner to be continued in services of the Bank as its General Manager with all consequential benefits.

(2.) The facts that are necessary for the disposal of the writ petition are narrated hereunder:

(3.) The petitioner joined respondent No.1 - Bank as Assistant General Manager before it was nationalized. Respondent No.1 -Bank was nationalized in the year 1980 and at the relevant point of time the petitioner was working as the General Manager of the Bank. With a view to extend the Bank's activities to housing and merchant banking and financial services, like other nationalized banks such as Canara Bank, State Bank of India, Bank of India etc., the petitioner established two subsidiary companies; one for merchant banking, housing and financial services and the other for allied activities. This writ petition is concerned with one of the two subsidiary companies namely; Andhra Bank Financial Services Limited (for short 'ABFSL'). It was constituted on 25.2.1991. The Reserve Bank of India conveyed its No Objection vide its letter dated 6.12.1990 for setting up a wholly owned merchant banking subsidiary for undertaking equipment leasing, hire purchasing, merchant banking and activities incidental thereto. The said letter contains certain conditions which include a condition that the ABFSL shall not undertake activities other than those mentioned in part-II without RBI's prior approval. In the annexure to the said approval it was clearly mentioned that ABFSL shall not carry out any other business under Section 1(a) to (o) of the Banking Regulation Act 1949 without prior approval of the RBI. The Department of Economic Affairs (Banking Division), Ministry of Finance, Government of India also gave its approval for setting up of the financial subsidiary of the Bank through its letter dated 17.1.1991 wherein it was stipulated that the Bank shall ensure that the Subsidiary follows the guidelines given by the RBI and that it will not undertake any business other than that is permitted by the RBI without seeking prior approval of the RBI.