2008 (5) TMI 612 - SC - Companies Law

Supreme Court: Central Govt guidelines under Reg. 26 don't need RBI consultation. Travel not reimbursed.

The Supreme Court held that guidelines issued by the Central Government under Regulation 26 do not need consultation with the Reserve Bank of India. The ... Whether in the facts and circumstances of the case, it was necessary to consult the Reserve Bank of India by the Central Government before issuing the impugned guidelines? Held that:- There cannot be any doubt whatsoever where one authority is required to consult the another, such consultation must be meaningful. It must mean conscious and effective consultation but the same would apply where the consultation is necessary. As for the purpose of issuance of guidelines, no consultation was necessary to be made with the Reserve Bank of India by the Central Government, in our opinion, the impugned judgment cannot be sustained. Appeal allowed. Issues Involved:1. Interpretation of Regulation 26 of the Andhra Bank (Officers) Service Regulations, 1982.2. Validity of guidelines issued by the Central Government without consulting the Reserve Bank of India.3. Whether travel from residence to office and back should be considered as official travel for reimbursement purposes.Issue-Wise Detailed Analysis:1. Interpretation of Regulation 26 of the Andhra Bank (Officers) Service Regulations, 1982:The core issue in this case revolves around the interpretation of Regulation 26, which pertains to the use of the bank's car for personal purposes. Regulation 26 states:- 'No officer, other than the Officers authorized by the Board, in accordance with the guidelines of the Government, shall be allowed the use of the Bank's car for personal purposes.'- 'The use of the Bank's car for personal purposes should be subject to the rules formulated by the Bank in accordance with the guidelines of the Government from time to time.'The judgment emphasizes that the guidelines issued under Regulation 26 by the Central Government do not require prior consultation with the Reserve Bank of India. The guidelines are meant to ensure that the rules formulated by the bank are in accordance with governmental policies, but they are not statutory rules and do not necessitate a consultative process with the Reserve Bank each time they are issued.2. Validity of Guidelines Issued by the Central Government Without Consulting the Reserve Bank of India:The High Court had initially invalidated the guidelines issued by the Central Government on the grounds that there was no prior consultation with the Reserve Bank of India, as required under Section 8 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980. The Supreme Court, however, clarified that:- Section 8 pertains to policy decisions involving public interest, which require consultation with the Reserve Bank of India.- Regulation 26, on the other hand, deals with the terms and conditions of service for bank employees, which do not necessarily involve public interest policy decisions.- Therefore, the guidelines issued under Regulation 26 do not fall under the purview of Section 8 and do not require consultation with the Reserve Bank.3. Whether Travel from Residence to Office and Back Should Be Considered as Official Travel for Reimbursement Purposes:The original scheme formulated by the bank allowed for reimbursement of conveyance expenses for travel from residence to office and back, treating it as official travel. However, the Central Government issued guidelines stating that such travel should not be considered official and should not be reimbursed. The High Court had ruled this invalid due to the lack of consultation with the Reserve Bank. The Supreme Court, however, held that:- The Central Government can issue guidelines under Regulation 26 without consulting the Reserve Bank.- The guidelines are binding on the bank, and the bank must formulate its rules in accordance with these guidelines.- The travel from residence to office and back cannot be treated as official travel for reimbursement purposes as per the new guidelines issued by the Central Government.Conclusion:The Supreme Court set aside the High Court's judgment, holding that the guidelines issued by the Central Government under Regulation 26 do not require prior consultation with the Reserve Bank of India. The bank must comply with these guidelines, and travel from residence to office and back should not be considered official travel for reimbursement purposes. The appeal was allowed with costs assessed at Rs. 25,000.