Full Judgment Text
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4820 OF 2016
(Arising out of SLP (C) No.14209 of 2014)
UCO BANK APPELLANT
VERSUS
SAUMYENDRA ROY CHOUDHURY & ORS. RESPONDENTS
J U D G M E N T
R.F.NARIMAN,J.
1. Leave granted.
2. The matter arises out of a decision by the nomination
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committee set up under an RBI Circular dated 24 May, 2013, in
which it has decided, having regard to the fact that the
respondent no.1 before us is over aged, i.e. above 65 years,
and the fact that he has already served for a period of two
terms as Director of the Appellant Bank is disqualified
therefore from standing for any further election as Director
of the said Bank.
3. The said decision was challenged before the High Court in
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Civil Suit No. 212 of 2013. By an interim order dated 29
November, 2013, the learned trial Judge allowed the interim
prayer of the respondent no.1 before us, namely, Prayer (e),
by which an interim mandatory injunction was ordered to deem
the said Director as having been elected as a shareholder
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director notwithstanding the impugned order dated 24 May,
2013. This was for the reason that prima facie the learned
Single Judge held that the Government of India Guidelines
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dated 10 December, 2007, which alone contained the twin
disqualifications of being above age as well as having stood
for election as a Director twice, could not apply to persons
who are elected Directors as opposed to non-official
Directors, who are only the Directors nominated under a
Statutory Scheme under Section 9(3) of the Banking Companies
(Acquisition and Transfer of Undertaking) Act, 1970. It was
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further held that the RBI Guidelines dated 1 November, 2007,
issued pursuant to the Statutory Power contained in Section 9
(3AA) of the said Act, alone governed the facts of these
cases, and that no other criteria de hors the criteria in
these guidelines could possibly be taken into account.
4. The appeal from the aforesaid judgment met with the same
fate, as the Division Bench, by the impugned Judgment and
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Order dated 15 May, 2014, reiterated the findings of the
learned Single Judge and granted the same relief based on the
same view taken of the respective guidelines issued by the
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Government of India and by the Reserve Bank of India.
5. Considering that the Suit is yet to be decided, and that
we are only confronted with an interim order passed by the
High Court, we do not propose to go into the merits of the
contentions raised by learned counsel on either side. Suffice
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it to say that, prima facie, the RBI Guidelines dated 1
November, 2007 framed under Section 9 (3AA) of the said Act
would apply to the facts of the case. What is important under
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the Section itself is to determine the fit and proper status
of a person who wishes to be elected as a Director in the
appellant-Bank based on track record, integrity and such other
criteria as the RBI notifies from time to time in this regard.
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The RBI, in the Guidelines dated 1 November, 2007 has
expressly stated that in determining the fit and proper status
of an existing elected Director/proposed candidate, the
nomination committee should determine his educational
qualification, his experience and field of expertise, track
record and integrity. What is important to note is that the
aforesaid list, as stated by the said Guidelines, is only
illustrative and not exhaustive. Further, what is important
is that the committee should see whether non adherence to any
of the aforesaid criteria would hamper the existence of the
elected Director/proposed candidate from discharging his
duties as Director on the Board of the bank.
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6. We have been shown a letter dated 3 September, 2013,
written by the Under Secretary, Ministry of Finance,
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Department of Financial Services, to the appellant-bank. This
letter is set out by us hereinbelow:
“ As you are aware, the election of shareholder
director in Public Sector Banks is administered by
RBI guidelines no. DBOD No. BC NO.
471/29.39.001/2007-08 dated 01.11.2007 as per which
the Nomination Committee of the Bank's Board is to
undertake a process of due diligence to determine the
`fit and proper' status of persons to be elected
under Section 9(3)(i) of the Banking Companies Act,
1970/80. These guidelines are broad, illustrative
and largely indicative.
2. Therefore, I am directed to state that in order
to ensure that the candidates elected as
shareholder director discharge their duties as
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director on the Board with greatest transparency and
in public interest, it is desirable that Government
guidelines dated 01.06.2011 regarding appointment of
part-time non-official director also be kept in mind
while carrying out determination of `fit and proper'
status of the candidates. You are requested to advice
the board of your bank accordingly.
3. This issues with approval of S(FS).”
7. We are prima facie of the view that this letter applies
to cases like the present. This being the case, we are of the
view that the present case should be remanded to the
nomination committee so that the committee takes a fresh
decision as to whether the respondent No.1 is fit and proper
for election as a Director of the appellant-bank. This is for
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the reason that in the impugned order dated 24 May, 2013
before the High Court, the said committee took into account
only the fact that the respondent No.1 was over age and the
fact that he had already been Director in the appellant-bank
for more than two terms. We, therefore, remit the matter to
the nomination committee to decide this case after a
consideration of all the criteria laid down in the RBI
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Circular dated 1 November, 2007 and the Guidelines dated 10
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December, 2007 issued by the Ministry of Finance, Government
of India. Needless to add, all these criteria will be taken
into account without giving any one or more criteria undue
weightage, the idea being that ultimately the nomination
committee has to decide, in accordance with Section 9 (3AA) of
the Act, whether the respondent No.1 is a fit and proper
person to be elected as a Director of the appellant-bank.
8. We, therefore, set aside the order of the learned Single
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Judge and Division Bench of the High Court of Calcutta and
remit the matter to the committee as aforesaid. The committee
will decide in accordance with what is stated in our judgment
within a period of four weeks from receiving our order. We
request a Single Judge of the High Court to take up Civil Suit
No. 212/2013 for hearing within a period of eight weeks from
today. We expect that the learned Single Judge will decide
the said suit finally within six months from today.
10. With the above observations, the aforesaid civil appeal
is disposed of.
.....................J.
[KURIAN JOSEPH]
....................J.
[ROHINTON FALI NARIMAN
NEW DELHI;
MAY 05, 2016
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