2007 (3) TMI 726 - SC - Companies Law

Section 2(bb) of ID Act fixes 'appropriate government' definition; multi-state cooperative bank falls under State Government

SC held that the ID Act's reference to the Banking Companies Act was incorporation by statute, making the definition in Section 2(bb) exhaustive; ... Determination of the 'appropriate government' for a Multi-State Co-operative Bank under the Industrial Disputes Act, 1946 - government Central or State - Jurisdiction and maintainability of the complaint under the MRTU & PULP Act - term 'appropriate Government' - doctrine of statutory incorporation - Application of the doctrine of statutory incorporation vs. mere reference in legislative interpretation. Whether the 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 mutatismutandis to the matters governed by the ID Act? HELD THAT:- The plain language of Section 2(bb) of the ID Act makes the intention of the legislature very clear and we 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. Section 2(bb) of the ID Act as initially introduced by Act 54 of 1949 used the word 'means .. 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. 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. 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. 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. 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. Further, as noticed, 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. 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 multistate co-operative bank, carrying on business in more than one state, would be the State Government. In the result, the appeal fails and is dismissed accordingly. Issues Involved:1. Determination of the 'appropriate government' for a Multi-State Co-operative Bank under the Industrial Disputes Act, 1946.2. Applicability of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 to a Multi-State Co-operative Bank.3. Interpretation of the term 'Banking Company' in the context of the Industrial Disputes Act, 1946 and its relation to the Banking Regulation Act, 1949.4. Application of the doctrine of statutory incorporation vs. mere reference in legislative interpretation.Detailed Analysis:1. Determination of the 'appropriate government' for a Multi-State Co-operative Bank under the Industrial Disputes Act, 1946:The core issue was whether the Central or State Government is the 'appropriate government' for a Multi-State Co-operative Bank under the Industrial Disputes Act, 1946 (ID Act). The Supreme Court concluded that for the purposes of the ID Act, the definition of 'Banking Company' must be read as it existed at the time of the insertion of Section 2(bb) into the ID Act. Consequently, the 'appropriate government' for a Multi-State Co-operative Bank, which is not a 'Banking Company' as per the original definition, would be the State Government.2. Applicability of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 to a Multi-State Co-operative Bank:The respondent, a trade union, filed a complaint under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (MRTU & PULP Act) alleging victimization due to the transfer of employees. The Bank argued that it was governed by the Central Government, making the State Act inapplicable. The Industrial Court initially upheld this objection, but the High Court later ruled that the State Government was the appropriate authority, thus making the MRTU & PULP Act applicable.3. Interpretation of the term 'Banking Company' in the context of the Industrial Disputes Act, 1946 and its relation to the Banking Regulation Act, 1949:The term 'Banking Company' in Section 2(bb) of the ID Act was pivotal. The Bank contended that the definition should include Co-operative Banks following amendments to the Banking Regulation Act (BR Act) in 1965. However, the Supreme Court held that the definition in the ID Act was an instance of legislation by incorporation, meaning subsequent amendments to the BR Act did not alter the definition in the ID Act. Therefore, the term 'Banking Company' did not encompass Co-operative Banks.4. Application of the doctrine of statutory incorporation vs. mere reference in legislative interpretation:The Court examined whether the reference to the BR Act in the ID Act was a case of incorporation by reference or mere citation. It concluded that Section 2(bb) of the ID Act incorporated the definition of 'Banking Company' from the BR Act as it existed in 1949. This incorporation meant that subsequent amendments to the BR Act did not affect the definition in the ID Act. The Court emphasized that legislative intent was to make the definition exhaustive, evidenced by periodic amendments to include specific banks and institutions.Conclusion:The Supreme Court upheld the High Court's view that the State Government is the 'appropriate government' for a Multi-State Co-operative Bank under the ID Act. The appeal was dismissed, and the Bank was ordered to pay the costs of the respondent throughout. The judgment clarified that the definition of 'Banking Company' in the ID Act is fixed as per the 1949 BR Act and does not automatically incorporate later amendments.