Full Judgment Text
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PETITIONER:
B.S. YADAV & ANR.
Vs.
RESPONDENT:
CHIEF MANAGER, CENTRAL BANK OF INDIA & ORS.
DATE OF JUDGMENT05/05/1987
BENCH:
VENKATARAMIAH, E.S. (J)
BENCH:
VENKATARAMIAH, E.S. (J)
SINGH, K.N. (J)
CITATION:
1987 AIR 1706 1987 SCR (3) 165
1987 SCC (3) 120 JT 1987 (2) 347
1987 SCALE (1)1154
ACT:
Labour and service law
Central Bank of India (Officers) Service Regulations,
1979, Regulation 19 & Annexure 1--Rules for Age of Retire-
ment, rr. 1, 2, & 3--Officers recruited before July 19, 1969
to superannuate at 60 years, those inducted on or after that
date at 58 years--Validity of--Whether violative of Articles
14 and 16 of the Constitution.
Banking Companies (Acquisition and Transfer of Undertak-
ings) Act, 1970: s. 12(2)--Service conditions of officers
and employees transferred from existing Banking Companies
before nationalisation to corresponding new banks--Validity
of.
Constitution of India: Articles 14, 16 and 32--National-
isation of banks--Service condition that employees prior to
nationalisation date superannuate at 60 years and others at
58 years--Such classification whether valid and reasonable.
HEADNOTE:
Before nationalisation of banking companies, the members
of the staff of the Central Bank of India Ltd. were entitled
to remain in the service of the bank till 60 years by virtue
of the circular dated March 11, 1969. Section 12(2) of the
Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1970 upon nationalisation provided that any employee of
the Bank whose services were transferred to the correspond-
ing new bank could hold his office in that bank on the same
terms and conditions and with the same rights to pension,
gratuity, etc. until they were duly altered by the corre-
sponding new bank. Clause (d) of s. 19(2) of the Act specif-
ically conferred powers on the Board of Directors of the
corresponding new bank to make regulations with regard to
the conditions or limitations subject to which the corre-
sponding new bank might appoint officers or other employees
and fix their remuneration and other terms and conditions of
service.
Regulation 19 of the Central Bank of India (Officers’)
Service Regulations, 1979, empowered the Board of Directors
to determine the
166
age of retirement of officer employees of the Bank. Rule 1
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of the Rules for Age of Retirement contained in Annexure I
to the Regulations requires an officer employee of the Bank
recruited/promoted prior to the 19th July, 1969 (the date on
which banking business was nationalised) to retire on com-
pletion of the 60 years of age; rule 2 requires an officer
employee of the Bank recruited prior to 19th July, 1969 but
promoted as an officer on or after 19th July, 1969 to retire
on completion of 60 years of age, while rule 3 requires an
officer employee of the Bank recruited on or alter 19th
July, 1969 to retire on completion of 58 years of age.
The 1st petitioner was appointed on 13th August, 1972 as
Chief Cashier in the Bank. The letter of appointment con-
tained a clause which stated that he will be governed by the
terms and conditions of service as applicable to the other
officer staff of the Bank. He was served with a notice dated
25th February, 1980 stating that he would be treated as
finally retired from the Bank’s service after the close of
business on February 29, 1980 on completion of 58 years of
age.
In the writ petitions assailing the order of retirement
it was contended for the petitioner, that there could not be
two different ages of retirement in the case of officers of
the Bank, and that since rule 3 of the Rules for Age of
Retirement required the officers, who were recruited subse-
quent to July 19, 1969 to retire on completion of 58 years
of age while others falling under rules 1 and 2 could con-
tinue till 60 years of age, rule 3 was liable to be struck
down as being violative of Arts. 14 and 16 of the Constitu-
tion.
For the respondents, it was contended that the employees
whose services were transferred to the Bank under sub-s. (2)
of s. 12 of the Act were entitled to continue in service
till 60 years of age by virtue of the conditions of service
prevailing in the Central Bank of India Ltd. prior to the
nationalisation of bank, that the officers and employees
other than the award staff recruited after the nationalisa-
tion of the banks were required to retire on completion of
58 years of age, which was the age of superannuation gener-
ally prevailing in the service of all Public Section Corpo-
rations, Central Government and many of the State Govern-
ments, and that since the employees recruited prior to July
19, 1969 belonged to a different class altogether, it could
not be said that there had been violation or’ Arts. 14 and
16 of the Constitution.
Dismissing the writ petitions, the Court,
167
HELD: 1. The classification of the employees into two
categories, i.e. those falling under rules 1 and 2 of the
Rules for Age of Retirement and those tailing under rule 3
thereof satisfies the test of a valid classification laid
down under Arts. 14 and 16 of the Constitution. Rule 3 of
the Rules for Age or Retirement, therefore, cannot be de-
clared as unconstitutional. [179BC]
2. The difference between the age of retirement of
officer employees tailing under rules 1 and 2 of the Rules
for Age of Retirement, and the age of retirement of the
officer employees tailing under rule 3 thereof arose on
account of the decision taken by the Government of India and
the Bank not to alter to their prejudice the right which the
employees of the Bank who had been recruited prior to July
19, 1969 had acquired under the circular issued by the
Central Bank of India Ltd. on March 11, 1969 before nation-
alisation of the banks. Since there was no alteration of the
condition relating to the age of superannuations. the said
officers continued to enjoy the benefit of the condition of
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service relating to retirement. But as regards employees who
were recruited after July 19, 1969, the Bank fixed the age
of superannuation at 58 years having regard to the prevail-
ing age of superannuation of the members belonging to the
various services in public sector corporations, Central
Government and many of the State Governments. [176AD]
3. At the time of nationalisation the corresponding new
banks did not have their own employees to run the vast
business taken over under the Act. There was necessity to
secure the services of the employees of the former banking
companies without causing much dissatisfaction to them. The
terms and conditions of the service of the employees of the
banks which were taken over under the Act had, therefore,
been protected by the Act. Insofar as the employees recruit-
ed after nationalisation were concerned the Government
applied the rules generally applicable to all its employees
in other spheres of Government service. The Bank’s attitude
cannot be said to be unreasonable particularly when the age
of retirement of the new entrants is quite consistent with
the conditions prevailing in almost all the sectors of
public employment. There cannot, therefore, be said to be
any hostile discrimination against the petitioner. [177G;
178F; B; 179AB;]
Life Insurance Corporation of India & Anr. etc. v. S.S.
Srivastava & Others, (Civil Appeal Nos. 1076-1077 of 1987),
applied.
Dr.Nikhil Bhushan Chandra v. Union of India & Ors.,
(1983 LABI.C. NOC 109 Cal.), approved.
168
4. Though the order of appointment in the case of the
first petitioner stated that he would be governed by the
terms and conditions which were applicable to other officers
of the Bank. it did not prevent the Bank from making a
regulation which was applicable exclusively to the officers
recruited after July 19, 1969. In the case of officers
tailing under rules 1 and 2 of the Rules for Age of Retire-
ment no extra benefit was conferred on them. They were only
permitted to carry the benefit of the rules for Age of
Retirement which was prevailing in the former banking compa-
ny, which was taken over by the Government on nationalisa-
tion. [177EG]
JUDGMENT:
CIVIL EXTRAORDINARY ORIGINAL JURISDICTION: Writ Petition
Nos. 60 1-602 of 1980.
(Under Article 32 of the Constitution of India).
M.K. Ramamurthy, J. Ramamurthy, Mrs. Chandan Ramamurthy
and M.A. Krishnamurthy for the Petitioners.
K. Parasaran, Attorney General D.N. Mishra, Ms. Meera
Mathur, O.C. Mathur, C.V. Subba Rao. R.P. Srivastava. Hemant
Sharma and P. Parmeswaran for the Respondents.
The Judgment of the Court was delivered by
VENKATARAMIAH..J. The petitioners in these Writ Peti-
tions filed under Article 32 of the Constitution of India
have prayed for a declaration that rule 3 of the Rules for
Age of Retirement contained in Annexure I to the Central
Bank of India (Officers’) Service Regulations, 1979 (herein-
after referred to as ’the Regulations’) framed under regula-
tion 19(1) of the Regulations is unconstitutional and void,
and to direct the Central Bank of India (hereinafter re-
ferred to as ’the Bank’) to fix the age of retirement of all
the officers of the Bank uniformly at 60 years. They have
further prayed for the quashing of the Order dated 25.2.
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1980 issued by the Chief Manager of the Bank at its Regional
Office, New Delhi retiring Petitioner No. 1, B.S. Yadav from
service as being illegal and unconstitutional and for a
declaration that Petitioner No. 1, B .S. Yadav continues or
shall be deemed to be i. the service of the Bank till he
attains the age of 60 years with consequential benefits. The
petitions are filed by B.S. Yadav, who was working as an
officer of the Bank and the All India Central Bank Employ-
ees’ Federation.
169
The Bank came to be established under the Banking Compa-
nies (Acquisition and Transfer of Undertakings) Act, 1970
(hereinafter referred to as ’the Act’) under which the
banking business of 14 banking companies was nationalised.
At the commencement the process of nationalisation of these
banks was not smooth-sailing. On the Government of India
taking a decision to nationalise the banking business of 14
banking companies the Banking Companies (Acquisition and
Transfer of Undertakings) Ordinance 8 of 1969 was promulgat-
ed by the President on July 19, 1969. The Ordinance provided
for the acquisition and transfer of the undertakings of
certain banking companies which were 14 in number in order
to serve better the needs of development of the economy in
conformity with the national policy and objectives and for
matters connected therewith or incidental thereto. Under the
Ordinance 14 ’corresponding new banks’ were established. The
Bank which is involved in these cases is the corresponding
new bank of the Central Bank of India Ltd. which was one of
the banking companies whose undertaking was taken over under
the Ordinance. The corresponding new banks were authorised
to carry on and transact the business of banking as defined
in clause (b) of section 5 of the Banking Regulation Act,
1949 and also to engage in one or more forms of business
specified in sub-section (1) of section 6 of the Act. The
Chairman of the banking company whose business was taken
over holding office immediately before the commencement of
the Ordinance was appointed as the custodian of the corre-
sponding new bank. The general superintendence, direction
and management of the affairs and business of the corre-
sponding new bank was vested in the custodian who was to be
the Chief Executive Officer of that bank. The above Ordi-
nance was replaced by the Banking Companies (Acquisition and
Transfer of Undertakings) Act 22 of 1969. The constitutional
validity of both the Ordinance and the Banking Companies
(Acquisition and Transfer of Undertakings) Act 22 of 1969
was questioned before this Court in Rustom Cavasjee Cooper
v. Union of India, [1970] 3 S.C.R. 530. By the decision
rendered in the said case this Court declared the Ordinance
and the Banking Companies (Acquisition and Transfer of
Undertakings) Act 22 of 1969 as invalid and the action taken
or deemed to have been taken in exercise of the powers under
them as unauthorised. The above judgment of the Court was
pronounced on February 10, 1970. The effect of the judgment
was that the undertakings of the 14 banking companies, whose
business had been acquired by the Central Government trader
the authority of the above said Ordinance and the Act,
reverted to the banking companies. With a view to resuming
control over the business of those banking companies, the
President again promulgated on February 14, 1970 the
170
Banking Companies (Acquisition and Transfer of Undertakings)
Ordinance, 1970. The provisions of the earlier Act which
were struck down by this Court had been duly modified by
promulgating the said Ordinance. The said Ordinance provided
for the acquisition and transfer of the banking business of
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the said banking companies with effect from July 19, 1969,
i.e., the date on which those undertakings were initially
acquired by the Central Government. This Ordinance was
replaced by the Act within a short period which was deemed
to have come into force from July 19, 1969. By section 3 of
the Act 14 corresponding new banks which were mentioned in
the First Schedule to the Act came to be established. The
paid-up capital of the every new bank constituted trader
section 3 of the Act was, until any provision was made in
that behalf in any scheme made under section 9 of the Act,
to be equal to the paid-up capital of the existing bank in
relation to which it was the corresponding new bank. The
existing banks were the banking companies mentioned in the
Second Schedule to the Act whose banking business had been
earlier taken over on July 19, 1969. The entire capital of
each corresponding new bank was vested in and allotted to
the Central Government. Every corresponding new bank was
treated as a body corporate with perpetual succession and a
common seal with power, subject to the provisions of the
Act, to acquire, hold and dispose of property, and to con-
tract and to sue and be sued in its own name. Under the Act
the Bank became the corresponding new bank in respect of the
Central Bank of India Ltd. Among other provisions, the Act
provided for the appointment of officers and employees of
the corresponding new bank. Section 12 of the Act reads
thus:
12. Removal of Chairman from
office--(1) Every person holding office,
immediately before the commencement of this
Act, as Chairman of an existing bank shall, if
he becomes Custodian of the corresponding new
bank, be deemed, on such commencement, to have
vacated office as such Chairman.
(2) Save as otherwise provided in
sub-section (1), every officer or other em-
ployee of an existing bank shall become, on
the commencement of this Act an officer or
other employee, as the case may be, of the
corresponding new bank and shall hold his
office or service in that bank on the same
terms and conditions and with the same rights
to pension, gratuity and other matters as
would have been admissible to him if the
undertaking of the existing bank had not been
transferred to and vested in the correspond-
171
ing new bank and continue to do so unless and
until his employment in the corresponding new
bank is terminated or until his remuneration,
terms and conditions are duly altered by the
corresponding new bank.
(3) For the persons who immediately
before the commencement of this Act were the
trustees for any pension, provident, gratuity
or other like fund constituted for the offi-
cers or other employees of an existing bank,
there shall be substituted as trustees such
persons as the Central Government may, by
general or special order, specify.
(4) Notwithstanding anything con-
tained in the Industrial Disputes Act, 1947,
or in any other law for the time being in
force, the transfer of the services of any
officer or other employee from an existing
bank to a corresponding new bank shall not
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entitle such officer or other employee to any
compensation under this Act or any other law
for the time being in force and no such claim
shall be entertained by any court, tribunal or
other authority."
Sub-section (2) of section 12, in particular, provided
for the transfer of the services of all officers and other
employees of an existing bank from the existing bank to the
corresponding new bank on the same terms and conditions and
with the same rights to pension, gratuity etc. and it stated
that any officer or employee of the existing bank whose
services were so transferred was to continue to be in the
employment of the corresponding new bank until his employ-
ment in the corresponding bank was terminated or until his
remuneration, terms or conditions were duly altered by the
corresponding new bank. Section 19 of the Act conferred
power on the Board of Directors of a corresponding new bank
to frame regulations after consultation with the Reserve
Bank of India and with the previous sanction of the Central
Government for all matters for which provision was expedient
for the purpose of giving effect to the provisions of the
Act. Clause (d) of section 19(2) of the Act specifically
conferred powers on the Board of Directors to make regula-
tions with regard to the conditions or limitations subject
to which the corresponding new bank might appoint advisers,
officers or other employees and fix their remuneration and
other terms and conditions of service. After the Bank came
to be established there were two classes of officers and
employees working in it, namely, officers and employees who
had become officers and employees of the Bank under sub-
section (2) of section 12 of the Act
172
and the officers and employees of the Bank appointed after
July 19, 1969.
The age of retirement of the officers and employees of
the various banks established in India has been the
subject-matter of several awards and settlements for several
years. On the 20th March, 1953 the Sastry Award which was
passed on the industrial disputes between certain banking
companies and their workmen directed thus:
"We direct that after the workman has reached
the age of 55 years he may be retired after
giving him two months’ notice in writing in
case his efficiency is found by the employer
to have been impaired; subject to this rule
and also subject to any rule under an existing
pension fund the workman should not be com-
pelled to retire before he is 58 years old."
The National Industrial Tribunal (Bank Disputes) Award
known as Desai Award, on industrial disputes between certain
banking companies and corporations and their workmen took
the view as under:
"A workman should not be compelled to retire
before he is 58 years old. Banks however, will
be at liberty, wherever they consider fit, to
make rules providing for a higher age of
retirement."
The First Bipartite Settlement on industrial disputes
between certain banking companies and their workmen entered
into on October 19, 1966 provided thus:
"In supersession of paragraph 15.13 of the
Desai Award, after a workman has reached the
age of 57 years, he may be retired after
giving him two months’ notice in writing in
case his efficiency is found by the employer
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to have been impaired."
By a circular dated March 11, 1969, the erstwhile Central
Bank of India Ltd. directed that as far as possible no
member of the staff should be allowed extension in service
beyond the retirement age of 60 years. The said circular
which is marked as ’Annexure--R2’. and enclosed to the
counter-affidavit filed by Shri A.S. Jain, Assistant General
Manager of the Bank at its Regional Office, New Delhi reads
thus:
173
BID/STAFF/69/17 11th March,
1969
(To All Offices in India)
Re: Age of Retirement.
It has now been decided that as far
as possible no member of the staff should be
allowed extension in service beyond the re-
tirement age of sixty. Branches are therefore
advised to refrain from recommending the case
of any member of the staff for extension in
service beyond] the retirement age.
Staff members who retire at the age
of sixty may, however, be allowed to avail of,
from the date of retirement, ordinary leave,
if any, due to them, and treated as retired
from service from the date of expiry of such
leave.
P.C. Mevawalla
General Manager"
It is thus seen that on the eve of the nationalisation
of the banking companies the members of the staff of the
Central Bank of India Ltd. were entitled to remain in the
service of the bank till 60 years and that until the terms
and conditions of service were altered under subsection (2)
of section 12 of the Act, every officer or employee belong-
ing to the Central Bank of India Ltd. whose services were
transferred under section 12(2) of the Act to the Bank was
entitled to the benefit of the said rule relating to the age
of retirement. He could, therefore, continue in service till
he attained the age of sixty years in the Bank subject to
any alteration that might be made by the Bank.
Upon nationalisation of the 14 banks it became necessary
to nationalise the terms and conditions of service of the
employees of the banks, particularly in view of the varying
terms and conditions of service that existed in different
banks prior to nationalisation which were continued by
virtue of sub-section (2) of section 12 of the Act. The
Government of India, therefore, appointed on July 19, 1973 a
committee consisting of five members with Shri V.R. Pillai
as the Chairman (which was popularly known as the Pillai
Committee) to enquire into and to make recommendations with
regard to standardisation of scales of pay, allowances and
perquisites of the transferred officers (other than award
staff) in the 14 nationalised banks. One of the points
referred to the Pillai Committee was the question relating
to the age of superannuation of and the nature and quantum
of terminal
174
benefits for the officer cadres. The Pillai Committee sub-
mitted its report in May, 1974. Paragraph 8.18 and 8.22 of
the Pillai Committee Report relating to the age of superan-
nuation read thus;
"8.18. According to existing practices, the
age of superannuation (or retirement) in
eleven of the nationalised banks is 60 years,
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with a provision that after an officer has
attained the age of 57 years he can be retired
after giving him two months’ notice in writ-
ing, if his efficiency is found to have been
impaired. In another bank, though the age of
superannuation is 60, the proviso about earli-
er retirement applies only when the officer
has attained the age of 58 years. In two other
banks the age of superannuation itself is 58
years.
8.22. In the circumstances, we recommend that
the age of superannuation of officers in the
banks should be 60 years, with a provision for
review at the age of 58 years to adjudge the
fitness of the officer for continuance in
service. In order to remove uncertainties, the
above review may be initiated on the officer
attaining the age of 57 years and completed
well before he reaches 58 years."
Thereafter in September, 1976 the Government of India
appointed a study group, called the Study Group of Bankers,
to make suggestions for the implementation of Pillai Commit-
tee Report. After examining the Report of the Pillai Commit-
tee and taking into consideration all other aspects the
Study Group of Bankers made its recommendations on all
questions including the age of superannuation of officers
who-had become the employees of the banks under section
12(2) of the Act. On receipt of the recommendations of the
Study Group of Bankers the Government of India issued guide-
lines to the nationalised banks to frame appropriate regula-
tions with regard to the terms and conditions of the service
of the officers working in them. Accordingly the Bank pre-
pared its regulations after consultation with the Reserve
Bank of India and submitted them for the approval of the
Government of India. The Government of India gave its ap-
proval to the regulations with some modifications. On re-
ceipt of the approval of the Central Government on 23rd May,
1979 the Bank brought into force the Regulations with effect
from 1st July, 1979. Regulation 19 of the Regulations pro-
vided as under:
175
"19. Age of Retirement--
(1) The age of retirement of an officer em-
ployee shall be as determined by the Board in
accordance with the Guidelines issued by the
Government from time to time;
Provided that the Bank may, at its discretion
on review by the Special Committee as provided
hereinafter in subregulation (2) retire an
officer employee on or at any time after the
completion of 55 years of age or on or at any
time after the completion of 30 years of total
service as an officer employee or otherwise,
whichever is earlier; ............ "
In accordance with the guidelines-issued by the Central
Government, the Board determined the Rules for Age of Re-
tirement as follows:
"The age of retirement of an officer in the
Bank on or after the appointed date shall be
determined as under:
1. An officer employee of the Bank
recruited/promoted prior to 19th July, 1969
shall retire on completion of the 60 years of
age.
2. An officer employee of the Bank recruited
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prior to 19th July, 1969 but promoted as an
officer on or after 19th July. 1969 shall
retire on completion of 60 years of age.
3. An officer employee of the Bank recruited
whether as an Award Staff or as an officer
employee on or after 19th July, 1969 shall
retire on completion of 58 years of age."
Rules 1 and 2 of the Rules for Age of Retirement relate
to an officer employee who had been recruited or promoted as
an officer prior to July 19, 1969, i.e., prior to the date
on which the banking business of the former banking compa-
nies was nationalised and to an employee recruited prior to
nationalisation but promoted as an officer thereafter. Rule
3 of the Rules for Age of Retirement relates to an officer
employee of the Bank recruited whether as an award staff or
an officer employee on or after July 19, 1969. The officer
employees who had been recruited or promoted prior to July
19, 1969 or recruited prior to July 19, 1969 but promoted as
officers, after July 19, 1969 were allowed to retire trader
the Rules for Age of Retirement on completion of 60 years of
age. All other officer employees recruited whether as an
award staff or an officer employee on or after July 19, 1969
were
176
required to retire on completion of 58 years of age. The
difference between the age of retirement of officer employ-
ees failing under rules 1 and 2 of the Rules for Age of
Retirement and the age of retirement of the officer employ-
ees falling under rule 3 thereof arose on account of the
decision taken by the Government of India and the Bank not
to alter to their prejudice the right which the employees of
the Bank who had been recruited prior to July 19, 1969 had
acquired under the circular issued by the Central Bank of
India Ltd. on March 11, 1969 before nationalisation of the
banks. Section 12(2) of the Act, as already stated, provided
that any employee of the Bank whose services were trans-
ferred to the corresponding new bank could hold his office
in that bank on the same terms and conditions and with the
same rights to pension, gratuity, etc. until they were duly
altered by the corresponding new bank. Since there was no
alteration of the condition relating to the age of superan-
nuation, the said officers continued to enjoy the benefit of
the condition of service relating to retirement which was in
existence prior to nationalisation of banks. But as regards
employees who were recruited after July 19, 1969 the Bank
fixed the age of superannuation at 58 years having regard to
the prevailing age of superannuation of the members belong-
ing to the various services in public sector corporations,
Central Government and many of the State Governments.
The 1st petitioner was appointed on 13th August 1972 as
an officer in the post of Chief Cashier in the Bank. The
letter of appointment issued in his case contained a clause
which read as follows:
"You will be governed by the terms and condi-
tions of service as applicable to the other
officer staff of the Bank."
On the Regulations coming into force in 1979 the 1st
Petitioner was served with a notice dated 25.2. 1980 issued
by the Chief Manager of the Bank stating that he would be
treated as finally retired from the Bank’s service after the
close of business on February 29, 1980 on completion of 58
years of age. The above writ petitions were filed in April,
1980 questioning the order of retirement issued in the case
of the 1st petitioner and praying inter alia for a declara-
tion, as mentioned above, that all officers including the
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1st petitioner should be permitted to continue in service
till the completion of 60 years of age as in the case of
officers failing trader rules 1 and 2 of the Rules for Age
of Retirement. The principal grounds urged in support of the
writ petitions were that there could not be two different
ages of retirement in the case of officers of the Bank and
that since rule 3 of the Rules for
177
Age of Retirement required the officers, who were recruited
subsequent to July 19, 1969, to retire on completion of 58
years of age while others falling under rules I and 2 of the
said Rules could continue till 60 years of age, rule 3 was
liable to be struck down as being violative of Articles 14
and 16 of the Constitution. The petitions were opposed by
the Bank and the Union of India. It was pleaded by them that
since the employees whose services were transferred to the
Bank under subsection (2) of section 12 of the Act were
entitled to continue in service till 60 years of age by
virtue of the conditions of service prevailing in the Cen-
tral Bank of India Ltd. prior to nationalisation of banks,
the Bank and the Government found that it would be unjust
and unfair to reduce the age of superannuation from 60 years
in the case of such employees and, therefore, did not alter
the said condition of service. In the absence of any altera-
tion they were entitled to continue to be in service till
they attained 60 years of age even after nationalisation by
virtue of sub-section (2) of section 12 of the Act. The
officers and employees other than the award staff recruited
after the nationalisation of the basks were required to
retire on completion of 58 years of age which was the age of
superannuation generally prevailing in the services of all
public sector corporations, Central Government and many of
the State Governments. It was urged that since the employees
recruited prior to July 19, 1969 belonged to a different
class altogether, it could not be said that there had been
violation of Articles 14 and 16 of the Constitution, and the
difference in the ages of retirement of the two classes of
officers was due to historica reasons.
It is no doubt true that the order of appointment in the
case of the 1st petitioner stated that he would be governed
by the terms and conditions which were applicable to other
officers of the Bank. That condition, however, did not
prevent the Bank from making a regulation which was applica-
ble exclusively to the officers recruited after July 19,
1969. In the case of officers falling under rules 1 and 2 of
the Rules for Age of Retirement no extra benefit was con-
ferred on them. They were only permitted to carry the bene-
fit of the Rules for Age of Retirement which was prevailing
in the former banking company which was taken over by the
Government on nationalisation. We are of the view that there
was good reason to make a distinction between the employees
who had entered service prior to nationalisation and those
who joined thereafter. At the time of nationalisation the
corresponding new banks did not have their own employees to
run the vast business taken over under the Act. There was,
therefore, necessity to secure the services of the employees
of the former banking companies without causing much dissat-
isfaction to them. There was also need for standardising the
con-
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ditions of service of all such employees belonging to the 14
banks. The Government of India took the advice of the Pillai
Committee and the Study Group of Bankers and after due
deliberation evolved a uniform pattern of conditions for the
transferred employees keeping in view the conditions of
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service of the employees prevailing in the majority of the
banking companies which were nationalised. Insofar as the
employees recruited after nationalisation were concerned the
Government applied the rules generally applicable to all its
employees in other spheres of Government service.
We have given detailed reasons in our judgment in the
Life Insurance Corporation of India & Anr. etc. v. S.S.
Srivastava & Others, (Civil Appeal Nos. 1076-1077 of 1987)
decided on 5.5.1987 justifying the existence of a rule
fixing different ages of retirement to different classes of
employees of the Life Insurance Corporation of India in the
circumstances existing there. The circumstances prevailing
in this case are almost the same. Those reasons are equally
applicable to the present case too. In Govindarajulu v. The
Management of the Union Bank of India & Others, (Writ Peti-
tion No. 5486 of 1980) decided on 21.11.1986 the High Court
of Madras has rejected the contentions similar to those
which are raised before us. In that case a regulation framed
by the Union Bank of India which was similar to the one in
this case was upheld. That decision has been approved by us
in the Life Insurance Corporation of India & Anr. etc. v.
S.S. Srivastava & Others, (supra). In Dr. Nikhil Bhushan
Chandra v. Union of India & Ors., (1983 LAB I.C. NOC 109
Calcutta) similar regulations framed by the United Commer-
cial Bank which was also nationalised under the Act came up
for consideration before the High Court of Calcutta. The
High Court rejected the theory of discrimination put forward
on the basis that fixing 60 years as age of retirement for
those who were recruited prior to July 19, 1969 and 58 years
of age who joined after that date lacked an intelligible
differentia. The Calcutta High Court pointed out that the
terms and conditions of the service of the employees of the
banks which were taken over under the Act had been protected
by the Act and it was not possible to hold that there had
been any hostile discrimination against the petitioner in
that case. We are of the view that the decisions of the
Madras High Court and the Calcutta High Court, referred to
above, lay down the correct principle. It is true that if
the nationalised banks wanted to reduce the age of retire-
ment of the transferred employees they could have done so
But they have tried to standardise their conditions of
service and to bring about some uniformity without giving
room for much discontent or dissatisfaction. The question
involved in this matter is not one of mere
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competence. It involves justice and fairness too. Having
regard to all aspects of the matter, the nationalised banks
have tried to be fair and just insofar as the question of
the age of retirement is concerned. We cannot say in the
circumstances that the Bank’s attitude is unreasonable,
particularly when the age of retirement of the new entrants
is quite consistent with the conditions prevailing in almost
all the sectors of public employment.
We are of the view that the classification of the em-
ployees into two categories i.e., those falling under rules
1 and 2 of the Rules for Age of Retirement and those falling
under rule 3 thereof satisfies the tests of a valid classi-
fication laid down under Articles 14 and 16 of the Constitu-
tion. We do not, therefore, find any ground to declare rule
3 of the Rules for Age of Retirement, which is impugned in
this case, as unconstitutional.
The Writ Petitions are, therefore, dismissed. There
shall, however, be no order as to costs.
P.S.S. Petitions
dismissed.
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