DATTATRAYA DINKAR Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) THIS order will also govern the disposal of Misc. Petition No. 326 of 1967.

(2.) THESE are two applications tinder Articles 226 and 227 of the Constitution by persons employed as Head Cashiers in the various Branches in the State of madhya Pradesh of the State Bank of India challenging the validity of Rule 18 (1)of the State Bank of India (Sub-Account ants and Head Cashiers) Service Rules (hereinafter referred to as the Service Rules) and of certain clauses of an agreement which each of the petitioners was required to execute in terms of Rule 18 (1) for indemnifying the State Bank of India against any loss or damages caused by his own acts or omissions or by the acts or omissions on the part of the cash Department Staff employed under him. The petitioners pray that Rule 18 (1)and the impugned clauses of the agreement be declared invalid and inoperative and the respondents be restrained from enforcing them. The third petitioner tribhangamarari Pal in Misc. Petition No. 453 of 1967 also prays that a notice issued to him by the State Bank of India on 14th July 1967 asking him to make good a cash shortage of Rupees 2000/- be quashed.

(3.) IN order to appreciate the circumstances in which these petitions have been filed and the arguments advanced on behalf of the parties, it is first necessary to refer to the relevant provisions of the State Bank of India Act, 1955, and of the service Rules and to the material clauses of the agreement executed by each of the petitioners in terms of Rule 18 (1 ). The preamble to the State Bank of India act, 1955 (hereinafter referred to as the Act) sets out its objects which are: the extension of banking facilities on a large scale, more particularly in the rural and semi-urban areas, and diverse other public purposes and transfer to the State bank of India the undertaking of the Imperial Bank of India. Section 3 (1)establishes the State Bank of India. It says that "a Bank to be called the State bank of India shall be constituted to carry on the business of banking and other business in accordance with the provisions of this Act and for the purpose of taking over the undertaking of the Imperial Bank". Section 3 (2) makes the State Bank of india a body corporate with perpetual succession and a common seal. Section 7 deals with transfer of service of existing officers and employees of the imperial Bank to the State Bank. The first sub-section of this section is in the following terms: "every officer or other employee of the Imperial Bank (excepting the managing director, the deputy managing director and other directors) in the employment of the Imperial Bank immediately before the appointed day, shall, on and from the appointed day, become an officer or other employee, as the case may be, of the State Bank, and shall hold his office or service therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension, gratuity and other matters as he would have held the same on the appointed day if the undertaking of the Imperial bank had not vested in the State Bank, and shall continue to do so unless and until his employment in the State Bank is terminated or until his remuneration, terms or conditions are duly altered by the State bank". By Section 17 (1) the general superintendence and direction of the affairs of the state Bank is entrusted to the Central Board which may exercise all powers and do all such acts and things as may be exercised or done by the State Bank and are not by the Act expressly directed or required to be done by the State Bank in general meeting. Section 18 inter alia prescribes that in the discharge of its functions the State Bank shall be guided by such directions in matters of policy involving public interest as the Central Government may, in consultation with the governor of the Reserve Bank and the Chairman of the State Bank, give to it The composition of the Central Board has been given in Section 19, Section 43 gives to the State Bank the power to appoint officers and other employees. It runs thus: "the State Bank may appoint such number of officers, advisers and employees as it considers necessary or desirable for the efficient performance of its functions, and determine the terms and conditions of their appointment and service. " section 49 gives to the Central Government the power to make rules. It is as follows: "49. Power of Central Government to make rules. (1) The Central Government, in consultation with the Reserve bank, may, by notification in the Official Gazette, make rules to carry out the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for (a) the procedure for the payment of compensation under this Act; (b) the determination of persons to whom the said compensation shall be payable in all cases, including cases where shares in the Imperial Bank have been held by more than one person, or where they have been transferred before the appointed day but the transfer has not been registered or where the shareholder is dead. " Section 50 is concerned with the power of the Central Board to make regulations. It is in the following terms: "50. Power of Central Board to make regulations. (1) The Central Board may, after consultation with the Reserve bank and with the previous sanction of the Central government make regulations, not inconsistent with this Act and the rules made thereunder, to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for - (a) ** ** ** to ** ** ** (u) ** ** ** (3) Notwithstanding anything contained in this section, the first regulations shall be made by the reserve Bank with the previous sanction of the Central government, and thereupon shall be deemed to be the regulations made by the Central Board under this section and shall have force accordingly until they are amended or repealed. "