Full Judgment Text
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CASE NO.:
Appeal (civil) 1542 of 2007
PETITIONER:
BHARAT CO-OPERATIVE BANK (MUMBAI) LTD.
RESPONDENT:
CO-OPERATIVE BANK EMPLOYEES UNION
DATE OF JUDGMENT: 22/03/2007
BENCH:
CJI K.G. BALAKRISHNAN, LOKESHWAR SINGH PANTA & D.K. JAIN
JUDGMENT:
J U D G M E N T
[Arising out of S.L.P. (Civil) No.8377 of 2005)
D.K. JAIN, J.:
Leave granted.
2. In relation to a Multi-State Co-operative Bank
carrying on business in more than one State, which
government \026 Central or State, is the "appropriate
government" for the purposes of the Industrial Disputes
Act, 1946 (for short "the ID Act"), is the short question for
consideration in this appeal?
3. The Appellant-Bank (hereinafter referred to as "the
Bank") was originally registered under the Maharashtra
State Co-operative Societies Act, 1960. As the Bank had a
number of branches outside Maharashtra, subsequently, it
got registered under the Multi-State Co-operative Societies
Act, 1984. It is in the banking business and is governed by
the provisions of the Banking Regulation Act, 1949 (for
short "the BR Act"). The respondent is a trade union and
represents workmen employed in the Bank.
4. Mainly aggrieved by transfer of eleven employees from
one place to another, alleging it as an act of victimisation,
the respondent filed a complaint against the Bank under
Section 28 of the Maharashtra Recognition of Trade Unions
and Prevention of Unfair Labour Practices Act, 1971 (for
short "the MRTU & PULP Act"), along with an application
for interim relief, before the Industrial Court at Mumbai.
While resisting the complaint, the Bank raised certain
preliminary issues of jurisdiction and maintainability of the
complaint under the MRTU & PULP Act. The plea of the
Bank was that as it was engaged in the business of banking
and is a Banking Company as defined in Clause (c) of
Section 5 of the BR Act, the appropriate government would
be the Central Government and therefore, the provisions of
the MRTU & PULP Act, a State Act, were not applicable.
The Industrial Court upheld the objection and ordered that
the complaint may be returned to the respondent for
seeking relief before an appropriate forum.
5. The respondent questioned the validity of the said
order by preferring a writ petition in the High Court.
Allowing the writ petition, the learned single Judge came to
the conclusion that for the "appropriate Government" to be
the Central Government it was necessary that the Bank
must be a Company incorporated under the Companies
Act, 1956, which requirement was missing in the present
case. He observed, that even though the respondent may be
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carrying on banking business, yet it is not a Company as
defined under Section 5(d) of the BR Act. Inter-alia, holding
that the definition of Banking Company would not include
a Co-operative Bank, which would be regulated under the
provisions of the Maharashtra State Co-operative Societies
Act, the learned Judge set aside the order of the Industrial
Court and remanded the matter back to that Court for
decision on merits.
6. Being aggrieved, the Bank filed a Letters Patent
Appeal before the Division Bench. Inter-alia, observing that
Section 2(bb) of the ID Act is an instance of legislation by
incorporation and not legislation by reference and,
therefore, the amendments made in the BR Act after 1949
cannot be read into the ID Act, Division Bench came to the
conclusion that the appropriate Government in the present
case would be the State Government. In other words, the
Division Bench held that for the purpose of deciding which
is the "appropriate government" the expression "Banking
Company" will have to be read, as it existed in BR Act of
1949 and that the subsequent amendments made vide
Banking Regulation Act, 1965 had to be ignored. Being
aggrieved, the Bank is before us by special leave.
7. We have heard Mr. Jamshed Cama, learned senior
counsel appearing on behalf of the Bank and Mr. Chander
Uday Singh, learned senior counsel on behalf of the
respondent.
8. On behalf of the appellant it was contended that
Section 2(bb) of the ID Act creates its own corporate entity,
i.e., multi-State Banking Company and reference to the BR
Act is for the limited purpose of identifying one kind of
banking institution it brings in. Thus, there is no question
of such multi-State Banking Company referred to in the BR
Act of being bodily lifted in the ID Act by legislative
incorporation of the BR Act, 1949 and, therefore, when the
expression "Banking Company" was expanded in 1965 to
include co-operative banks, such co-operative banks also
became banking companies under the BR Act and if any of
these newly included banking companies operate in more
than one State, then they also become multi-State Banking
Companies for the purpose of Section 2(bb) of the ID Act. It
is asserted that introduction of definition "Banking
Company" in the first part of Section 2(bb) of ID Act is a
case of referential legislation and not legislation by
incorporation. Laying emphasis on the Industrial Disputes
(Banking and Insurance Companies) Act, 1949 (for short
"the IDBIC Act") it was submitted by the learned counsel
that the IDBIC Act mandates that in respect of multi-State
Banking and Insurance Companies the appropriate
Government for all industrial disputes would only be the
Central Government and, therefore, the expression
"Banking Company" in Section 2(bb) of the ID Act must be
read in conjunction with the object and purpose of IDBIC
Act so as to bring ID Act into syne with the IDBIC Act. The
submission is that being aware of the malice in the
industrial field relating to multi-State Banks and Insurance
Companies, IDBIC Act was enacted to bring all multi-State
Banking and Insurance Companies under the control of the
Central Government as appropriate Government, to obviate
the difficulties being faced by the banks and insurance
companies, having branches outside one State, inter-alia in
the form of lack of uniformity of service conditions and
industrial peace.
9. Per contra, learned counsel for the respondent
submitted that the doctrine of statutory incorporation
squarely applies in the present case, as the definition of
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"Banking Company" in the ID Act had been bodily lifted
from the BR Act. Moreover, the definitions in Sections 2(a),
2(bb) and 2(kk) of the ID Act are exhaustive. Subsequent
amendments from time to time in Section 2(bb) to include
certain specified institutions clearly show the legislative
intent not to give an expansive interpretation to the original
words. It is contended that the fact that the Parliament
expressly amended Section 2(bb) to include State Bank of
India, notwithstanding amendments to the BR Act on 22nd
October, 1956 to apply that Act to the State Bank of India
and corresponding new banks is a strong indicator of the
legislative intent that amendments to the BR Act were not
intended to apply automatically to Section 2(bb) of the ID
Act.
10. In order to appreciate the contentions raised, it would
be necessary to refer to some salient statutory provisions,
which form the background of the issue involved.
11. The I.D. Act came into force with effect from 1st April,
1947. The term "appropriate Government" was defined in
Section 2(a). However, sub-clause (i) of clause (a) came to
be amended in the year 1949 by the amendment Act 54 of
1949, whereby in relation to any industrial dispute
concerning a "Banking Company" or Insurance Company,
the Central Government was declared to be the
"appropriate Government". Simultaneously, Section 2(bb)
was inserted by the same Act, defining the "Banking
Company". Needless to add that it is only those banking
companies which fall within the ambit of the definition in
the said provision that the Central Government would be
the appropriate government. With respect to other banking
companies, the State Government, in which the bank is
situated, would be the appropriate government in terms of
sub-clause (ii) of clause (a) of Section 2 of the ID Act.
Section 2(bb) which is at the centre of controversy reads as
under:
"2(bb). "Banking Company" means a banking
company as defined in Section 5 of the Banking
Companies Act, 1949 (10 of 1949) having
branches or other establishments in more than
one State and includes (the Export-Import Bank
of India) (the Industrial Reconstruction Bank of
India), (the Industrial Development Bank of
India), (the Small Industries Development Bank
of India established under section 3 of the Small
Industries Development Bank of India Act,
1989), the Reserve Bank of India, the State Bank
of India (a corresponding new bank constituted
under Section 3 of the Banking Companies
(Acquisition and Transfer of Undertakings Act,
1970 (5 of 1970) (a corresponding new bank
constituted under Section 3 of the Banking
Companies (Acquisition and Transfer of
Undertakings) Act, 1980 (40 of 1980), and any
subsidiary bank), as defined in the State Bank of
India (Subsidiary Banks) Act, 1959 (38 of 1959)."
From a bare reading of the Section it is clear that in order
to fall within the meaning of this definition, a "Banking
Company" has to satisfy two requirements, viz: (i) it should
be a "Banking Company" as defined in Section 5 of the
Banking Companies Act, 1949 and (ii) it should have
branches or other establishments in more than one State.
It may also be noted that some banks, by name, have
specifically been included in the definition. Section 5 of the
BR Act gives interpretation to various expressions used in
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the said Act. As per clause (c) of Section 5 the expression
"Banking Company" means any "Company" which transacts
the business of banking in India. According to Section 5(b)
"banking" means the accepting, for the purpose of lending
or investment, of deposits of money from the public,
repayable on demand or otherwise and withdrawable by
cheque, draft, order or otherwise. The expression
"Company" has been interpreted in clause (d) of Section 5
to mean any Company as defined under Section 3 of the
Companies Act, 1956 and includes foreign company within
the meaning of Section 591 of that Act. Indubitably, the
appellant-Bank is not a Company within the meaning of the
said clause. However, by the Act 23 of 1965 several
amendments were carried out in the BR Act with effect from
1st March, 1966, widening the scope of the said Act. By that
amendment Part-V, containing only one Section 56,
providing for application of BR Act to Co-operative Banks,
like the appellant-Bank, was inserted. Section 3 was
substituted to declare that the provisions of the BR Act
shall apply to a Co-operative Society only in the manner
and to the extent specified in Part-V thereof.
12. The main question raised for determination is whether
the afore-noted amendments to the BR Act, particularly
insertion of Section 56 in the new format w.e.f. 1st March,
1966, after the insertion of the definition of "Banking
Company" in the ID Act by Act 54 of 1949 will apply
mutatis mutandis to the matters governed by the ID Act?
13. As there is no indication in the ID Act as to the
applicability or otherwise of the subsequent amendments in
the BR Act, the question posed has to be answered in the
light of the two concepts of statutory interpretation,
namely, incorporation by reference and mere reference or
citation of one statute into another. Thus, answer to a
rather intricate question hinges on the test whether at the
time of insertion of the definition of the term "Banking
Company" in the form of sub-section (bb) of Section 2 of the
ID Act by the 1949 Act it was a mere reference to the
Banking Companies Act, 1949 (later re-christened as the
Banking Regulation Act) or the intendment of the
legislature was to incorporate the said definition as it is in
the ID Act?
14. Before adverting to the said core issue, we may briefly
notice the distinction between the two afore-mentioned
concepts of statutory interpretation, viz., a mere reference
or citation of one statute in another and incorporation by
reference. Legislation by incorporation is a common
legislative device where the legislature, for the sake of
convenience of drafting incorporates provisions from an
existing statute by reference to that statute instead of
verbatim reproducing the provisions, which it desires to
adopt in another stature. Once incorporation is made, the
provision incorporated becomes an integral part of the
statute in which it is transposed and thereafter there is no
need to refer to the statute from which the incorporation is
made and any subsequent amendment made in it has no
effect on the incorporating statute. On the contrary, in the
case of a mere reference or citation, a modification, repeal
or re-enactment of the statute, that is referred will also
have effect on the stature in which it is referred. The effect
of "incorporation by reference" was aptly stated by Lord
Esher, M.R. In re: Wood’s Estate, Ex parte Her
Majesty’s Commissioners of Works and Buildings in
the following words at page 615:
"If a subsequent Act brings into itself by
reference some of the clauses of a former Act, the
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legal effect of that, as has often been held, is to
write those sections into the new Act just as if
they had been actually written in it with the pen,
or printed in it, and, the moment you have those
clauses in the later Act, you have no occasion to
refer to the former Act at all."
15. The Privy Council in Secretary of State for India in
Council vs. Hindustan Co-operative Insurance Society
Ltd. , while amplifying the doctrine of incorporation,
observed as follows:
"Their Lordships regard the local Act as
doing nothing more than incorporating certain
provisions from an existing Act, and for
convenience of draft doing so by reference to that
Act, instead of setting out for itself at length the
provisions which it was desired to adopt\005 The
independent existence of the two Acts is
therefore recognized; despite the death of the
parent Act, its offspring survives in the
incorporating Act. Though no such saving
clause appears in the General Clauses Act, their
Lordships think that the principle involved is as
applicable in India as it is in this country."
16. The doctrine of legislation by incorporation and its
effect has been dealt with by this Court in a catena of
decisions. In Ram Sarup vs. Munshi & Ors. a
Constitution Bench held that repeal of Punjab Alienation of
Land Act, 1900 had no effect on the continued operation of
the Punjab Pre-emption Act, 1913 and that the expression
"agricultural land" in the later Act had to be read as if the
definition of the Alienation of Land Act had been bodily
transposed into it. After referring to what Brett, L.J. said
on the effect of incorporation in Clarke vs. Bradlaugh ,
namely, "where a statute is incorporated, by reference, into
a second statute the repeal of the first statute by a third
does not affect the second", it was observed as follows:-
"Where the provisions of an Act are
incorporated by reference in a later Act the
repeal of the earlier Act has, in general, no effect
upon the construction or effect of the Act in
which its provisions have been incorporated.
*
In the circumstances, therefore, the repeal
of the Punjab Alienation of Land Act of 1900 has
no effect on the continued operation of the Pre-
emption Act and the expression ’agricultural
land’ in the later Act has to be read as if the
definition in the Alienation of Land Act had been
bodily transposed into it."
17. The same principle was applied in Bolani Ores Ltd.
vs. State of Orissa . In that case this Court was
considering the question regarding the interpretation of
Section 2(c) of the Bihar and Orissa Motor Vehicles
Taxation Act, 1930 (for short "the Taxation Act"). This
Section when enacted adopted the definition of "motor
vehicle" contained in Section 2(18) of the Motor Vehicles
Act, 1939. Subsequently, Section 2(18) was amended by
Act 100 of 1956 but no corresponding amendment was
made in the definition contained in Section 2(c) of the
Taxation Act. The argument advanced was that the
definition in Section 2(c) of the Taxation Act was not a
definition by incorporation but only a definition by
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reference and the meaning of "motor vehicle" in Section 2(c)
must, therefore, be taken to be the same as defined from
time to time in Section 2(18) of the Motor Vehicles Act,
1939. The argument was rejected by this Court and it was
held that this was a case of incorporation and not reference
and the definition in Section 2(18) of the Motor Vehicles
Act, 1939, as then existing, was incorporated in Section 2(c)
of the Taxation Act and neither repeal of the Motor Vehicles
Act, 1939 nor any amendment in it would affect the
definition of "motor vehicle" in Section 2(c) of the Taxation
Act.
18. The decision of this Court in Mahindra & Mahindra
Ltd. Vs. Union of India & Anr. also proceeded on the
same principle. There the question was in regard to the
effect of subsequent amendment in Section 100 of the Code
of Civil Procedure, 1908 on Section 55 of the Monopolies
and Restrictive Trade Practices Act, 1969 (for short "The
MRTP Act"). Section 55 of the MRTP Act provides for an
appeal to this Court against the orders of the Monopolies
and Restrictive Trade Practices Commission on "one or
more of the grounds specified in Section 100 of the Code of
Civil Procedure, 1908". Section 100 of the Code of Civil
Procedure was substituted by a new Section in 1976, which
narrowed the grounds of appeal under that Section. In
construing Section 55 of the MRTP Act this Court held that
Section 100 of the Code as it existed in 1969 was
incorporated in Section 55 and the substitution of new
Section in the code, abridging the grounds of appeal, had
no affect on the appeal under Section 55 of the MRTP Act.
19. The principle laid down in these decisions was
reiterated in U.P. Avas Evam Vikas Parishad vs. Jainul
Islam & Anr. and lately in P.C. Agarwala vs. Payment
of Wages Inspector, M.P. & Ors. It is, therefore, clear
from the afore-noted decisions that if there is a mere
reference to a provision of one statute in another without
incorporation, then, unless a different intention clearly
appears, the reference would be construed as a reference to
the provision as may be in force from time to time in the
former statute. But if a provision of one statute is
incorporated in another, any subsequent amendment in the
former statute or even its total repeal would not affect the
provision as incorporated in the latter statute.
20. However, the distinction between incorporation by
reference and adoption of provisions by mere reference or
citation is not too easy to highlight. The distinction is one
of difference in degree and is often blurred. The fact that
no clear-cut guidelines or distinguishing features have been
spelt out to ascertain whether it belongs to one or the other
category makes the task of identification difficult. The
semantics associated with interpretation play their role to a
limited extent. Ultimately, it is a matter of probe into
legislative intention and/or taking an insight into the
working of the enactment if one or the other view is
adopted. Therefore, the kind of language used in the
provision, the scheme and purpose of the Act assume
significance in finding answer to the question. (See:
Collector of Customs vs. Sampathu Chetty & Anr. ). The
doctrinaire approach to ascertain whether the legislation is
by incorporation or reference is, on ultimate analysis,
directed towards that end. (See: Maharashtra State Road
Transport Corporation vs. State of Maharashtra &
Ors. ) Thus, the question for determination is to which
category the present case belongs.
21. The plain language of Section 2(bb) of the ID Act
makes the intention of the legislature very clear and we
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have no hesitation in holding that reference to Section 5 of
the Banking Companies Act, 1949 in the said provision is
an instance of legislation by incorporation and not
legislation by reference.
22. Section 2(bb) of the ID Act as initially introduced by
Act 54 of 1949 used the word "means\005.. and includes" and
was confined to a "Banking Company" as defined in Section
5 of the Banking Companies Act, 1949, having branches or
other establishments in more than one province and
includes Imperial Bank of India. Similarly, Section 2(kk),
which was also introduced by Act 54 of 1949, defines
Insurance Company as "an Insurance Company defined in
Section 2 of the Insurance Act, 1938 (IV of 1938), having
branches or other establishments in more than one
province". It is trite to say that when in the definition
clause given in any statute the word "means" is used, what
follows is intended to speak exhaustively. When the phrase
"means" is used in the definition, to borrow the words of
Lord Esher M.R. in Gough vs. Gough , it is a "hard and
fast" definition and no meaning other than that which is
put in the definition can be assigned to the same. (Also see:
P. Kasilingam and Ors. vs. P.S.G. College of Technology
and others ). On the other hand, when the word
"includes" is used in the definition, the legislature does not
intend to restrict the definition; makes the definition
enumerative but not exhaustive. That is to say, the term
defined will retain its ordinary meaning but its scope would
be extended to bring within it matters, which in its ordinary
meaning may or may not comprise. Therefore, the use of
the word "means" followed by the word "includes" in
Section 2(bb) of the ID Act is clearly indicative of the
legislative intent to make the definition exhaustive and
would cover only those banking companies which fall
within the purview of the definition and no other.
23. Moreover, Section 2(bb) has subsequently been
amended from time to time by various amendments to
include certain specified banks and institutions, which
would otherwise not fall within the exhaustive definition of
the "Banking Company" in Section 2(bb) read with Section
5(c), 5(b) and 5(d) of the BR Act. It is plain that if the
Parliament had intended an expansive interpretation of the
original words, then there would have been no reason
whatsoever to keep amending the definition from time to
time. In our view, therefore, the language of Section 2(bb)
clearly demonstrates the legislative intent not to bring
within its ambit all the banks transacting the business of
banking in India.
24. We are, therefore, of the opinion that introduction of
the Banking Companies Act, 1949 in clause (bb) of Section
2 of the ID Act is a case of incorporation by reference; it has
become its integral part and therefore, subsequent
amendments in the BR Act would not have any effect on
the expression "Banking Company" as defined in the said
Section.
25. At this juncture, we may also consider an alternative
submission made on behalf of the Bank that even if it is
assumed that the provisions of Section 5 of the BR Act were
introduced into Section 2(bb) of the ID Act by way of
legislative incorporation, two of the exceptions, namely,
exceptions (c) and (d), carved out by this Court in State of
Madhya Pradesh vs. M.V. Narasimhan and reiterated in
P.C. Agarwala’s case (supra), would apply in the instant
case. The exceptions so enumerated are:
(a) Where the subsequent Act and the
previous Act are supplemental to each
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other;
(b) Where the two Acts are in pari materia;
(c) Where the amendment in the previous Act,
if not imported into the subsequent Act
also, would render the subsequent Act
wholly unworkable and ineffectual; and
(d) Where the amendment of the previous Act,
either expressly or by necessary
intendment, applies the said provisions to
the subsequent Act.
26. In our view, there is no substance in the contention.
The ID Act is a complete and self contained Code in itself
and its working is not dependant on the BR Act. It could
not also be said that the amendments in the BR Act either
expressly or by necessary intendment applied to the ID Act.
We, therefore, reject the contention advanced by learned
counsel for the appellant on this aspect as well.
27. Further, as noticed above, the definition of the
"Banking Company" in clause (bb) of Section 2 of the ID Act
being exhaustive, it is only with respect to the "Banking
Company" falling within the ambit of the said definition in
the ID Act, that the Central Government would be the
appropriate government, which admittedly is not the case
here.
28. In the light of the analysis we have made of the
provision contained in Section 2(bb) of the ID Act, we deem
it unnecessary to dilate on the impact of the IDBIC Act on
the ID Act.
29. For all these reasons, we have no hesitation in
upholding the view taken by the High Court that for the
purpose of deciding as to which is the "appropriate
government", within the meaning of Section 2(a) of the ID
Act, the definition of the "Banking Company" will have to be
read as it existed on the date of insertion of Section 2(bb)
and so read, the "appropriate government" in relation to a
multi-state co-operative bank, carrying on business in more
than one state, would be the State Government.
30. In the result, the appeal fails and is dismissed
accordingly. The appellant shall pay the costs of the
respondent throughout.