UNITED COMMERCIAL BANK Vs. V J VYAS

JUDGEMENT

(1.) Vibhakar Jyesh Taram Vyas the respondent No. 1 joined services under the then United Commercial Bank in or about May, 1948. He was promoted as an officer in the said Bank in or about July, 1963. In January, 1973 he was transferred to the Silehar Branch of the United Commercial Banki The said respondent had been provided with accommodation in the staff quarters at No. 1, Alipore Avenue, Calcutta. He was asked to vacate the said quarters repeatedly on his transfer. He did not do so. In the premises, by a letter dated 6th of March, 1974 the said respondent's services were terminated by the bank with immediate effect and he was offered along with the termination letter a cheque for Rupees 1,064/- by way of his emoluments in lieu of a month's notice. In the meantime the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 came into force on or about 31st of March, 1970. The said Act was to provide for the acquisition and transfer of the undertakings of certain banking companies and the United Commercial Bank was one of such banking companies. The said Act provided that all the sections of the Act except S. 21 should be deemed to have been come into force on the 19th of July, 1969, On the coming into operation of the said Act, S. 3 provides, that there shall be constituted such corresponding new banks as were specified in the first schedule. For the United Commercial Bank Ltd. the corresponding new bank was United Commercial Bank. In the premises the United Commercial Bank Ltd. became what is known in popular parlance a nationalised bank. Section 4 of the said Act stipulated that on the commencement of the Act the undertaking of every existing bank shall be transferred to and shall vest in the corresponding new bank. It is not necessary to refer in detail to the other provisions of the Act. S. 5 deals with the general effect of the vesting, S. 6 deals with the payment of compensation, Ss. 7, 8 and 9 provide for the management of the corresponding new banks, S. 10 deals with the closure of accounts and disposal of profits and there were other incidental provisions. Sub-s. (2) of S. 12 is relevant for the present purpose and is to the following effect:

(2.) Being aggrieved by the letter of termination dated 6th of March, 1974 aforesaid the respondent No. 1 made an application under Art. 226 of the Constitution and obtained a rule nisi. The said rule came up for hearing before Amiya Kumar Mookerji, J. and by a judgment delivered and order passed the learned Judge has quashed the order of termination and has made the rule nisi absolute. This appeal arises out of the aforesaid decision of the learned trial Judge.

(3.) In his judgment the learned trial Judge has held that in the absence of any contract the respondent No. 1's services could not be terminated by one month's notice in lieu of salary without complying with the principles of natural justice. The learned Judge has further held that the principles of natural justice had not been complied with in the instant case. On behalf of the appellants it was co.ntended before us that the learned trial Judge was in error in holding that the services of the respondent No. 1 could not be terminated by giving one month's notice in lieu or salary without complying with the principles of natural justice. It was urged on behalf of the appellant No. 1 that the terms and conditions of the respondent No. 1's employment with the United Commercial Bank were contained in Annexure A to the petition under Art. 226 of the Constitution. But neither Annexure A nor any document indicated that there was any term in the contract of employment of the respondent No. 1 which provided that the services of the respondent No. 1 could be terminated by one month's notice or by tendering one month's salary in lieu of such notice. It appears that in this case there was no term of contract or employment providing for the contingencies or the manner of termination of employment of the respondent No. 1. In these circumstances the question is was the respondent No. 1 entitled to make any grievance under Article 226 of the Constitution of the termination of his service without compliance with the principles of natural justice. On behalf of the appellant it was contended that there was no regulation statutory or otherwise which enjoined that rules of natural justice should be followed in case of termination of employment by the bank of its employee. Therefore, it was urged that even if the termination was wrongful the respondent was at best entitled to complain about breach of contract and claim damages in respect thereof and was not entitled to maintain any application under Art. 226 of the Constitution. In aid of this submission reliance was placed on the decision in the case of Indian Airlines v. Sukhdeo Rai, 1971 AIR(SC) 1828where the Supreme Court held that the Air Corporation Act, 1953 did not cast any obligation upon the Indian Airlines Corporation to appoint employees under any particular type of contract or to terminate them on specific grounds. Therefore, the Supreme Court observed that the corporation employee even though dismissed in contravention of the regulation made under the Act could not get such dismissal declared as null and void. In this case we are not concerned with the questions whether regulations made by a statutory corporation have statutory effect or whether violation of such regulations can be remedied by an appropriate order under Art. 226 of the Constitution, We have noticed that Cl. (d) of sub-s. (2) of S. 19 authorises the making of regulation dealing with the terms and conditions of service of the employees. Such regulation had not been made at the relevant time. Therefore, we are not concerned with the question as to what would have been the effect if there was any breach of such regulation We have also noticed Cl. (2) of S. 12 of the Act It provides that the employee of an existing bank shall become employee of the corresponding new bank on the same terms and conditions and on the same rights and would continue to enjoy those terms and conditions until the employment of the employee is terminated under the new bank. The effect of Cl. (2) of S. 12 of the Act is that until termination or until modification of the terms and conditions by proper regulation by the nationalised bank an employee of the erstwhile bank would continue to enjoy his rights and privileges of employment on the same terms. It did not specifically provide for the method of termination. From one point of view, therefore, it could be said that if the erstwhile bank had the right to terminate the services of its employee then the nationalised bank has also the same right. The only consequence would be that an employee might institute proceeding for wrongful termination if the termination is wrongful. We have noticed the purpose of the Act. It is a social legislation intended to take over the business and management of commercial banks. The employees of such banks come within the purview of public employment. In the case of Sirsi Municipality V/s. C. K. F. Tellis, 1973 AIR(SC) 855the Supreme Court observed that employment under statutory bodies differed from ordinary private employment. The Supreme Court at page 887 of the report observed that the cases of dismissal of a servant fell under three broad heads, The first head related to relationship of master and servant governed purely by contract of employment. Any breach of contract in such a case was enforced by suit for wrongful dismissal and damages. Just as a contract of employment was not capable of specific performance similarly, breach of contract of employment was not capable of finding a declaratory judgment of subsistence of employment. The second type of cases of master and servant arose under the industrial law. The third category of cases of master and servant was with regard to servant in the employment of the State or other bodies or local authorities or bodies created under the statutes. It was observed that in the case of a servant of the State or of a local authority or the statutory bodies courts had declared in appropriate cases the dismissals to be invalid if the dismissals were contrary to the of natural justice or if the dismissals were in violation of the provisions of the statutes. The rationale for the aforesaid view is that courts prever the use of arbitrary power by statutory bodies, and one way to make them prevent using arbitrary power is to make them conform to the principles of natural justice in appropriate cases. It was, further, observed in that case that the courts kept the State and the Public authorities within the limit of their statutory power. In the case of Malloch V/s. Aberdeen Corporation, 1971 1 WLR 1578, Lord Wilberforce observed as follows: