1982 (3) TMI 258 - SC - Indian Laws

Supreme Court upholds RBI's authority over staff regulations, dismisses writ petitions

The Supreme Court dismissed the writ petitions, ruling that the Reserve Bank of India (Staff) Regulations, 1948 are not statutory. It held that the ... - Issues Involved:1. Whether the Reserve Bank of India (Staff) Regulations, 1948 are statutory in character.2. Whether it is competent for the Reserve Bank of India to provide for conditions of service of its staff by administrative circulars.3. Whether the impugned circular and seniority list offend against the provisions of Articles 14 and 16 of the Constitution.Issue-Wise Detailed Analysis:1. Statutory Nature of the Reserve Bank of India (Staff) Regulations, 1948:The petitioners contended that the Staff Regulations of 1948 were framed under Section 58 of the Reserve Bank of India Act, 1934, and therefore, cannot be altered by administrative circulars. The Reserve Bank argued that these regulations are not statutory in character as they were not framed under Section 58 of the Act. The Court analyzed the nature of the Staff Regulations, noting that they do not purport to have been made with the previous sanction of the Central Government, as required under Section 58. The Court concluded that the Staff Regulations of 1948 were not framed under Section 58 and are, therefore, not statutory. This conclusion was supported by the absence of a preamble in the 1948 Regulations indicating that they were framed under Section 58, unlike other regulations such as the Employees' Provident Fund Regulations of 1935 and the General Regulations of 1949.2. Competency to Provide Conditions of Service by Administrative Circulars:The petitioners argued that conditions of service must be framed under Section 58 (1) of the Act and cannot be framed by administrative circulars. The Reserve Bank contended that it has the power under Section 7 (2) of the Act to issue administrative circulars regulating the service conditions of its staff. The Court held that the Central Board of Directors has the power to make regulations under Section 58 (1) of the Act, and this power can be exercised either in accordance with Section 58 (1) or by issuing administrative circulars under its general power of administration and superintendence. The Court emphasized that the Central Board has the authority to issue administrative directions or circulars regulating the conditions of service of the Bank's staff, which is supported by Section 7 (2) of the Act.3. Violation of Articles 14 and 16 of the Constitution:The petitioners claimed that the combined seniority scheme introduced by the impugned circular and the draft combined seniority list violated their rights under Articles 14 and 16 of the Constitution by treating unequals as equals and fixing seniority retrospectively from an arbitrary date. The Court examined the historical context and the need for the combined seniority scheme, noting that the grouping and regrouping of departments were necessary for administrative efficiency and to address promotional imbalances. The Court found that the combined seniority and inter-group mobility were recommended by two special committees and were necessary for the smooth functioning of the Bank. The Court held that the scheme did not violate the equality clause and that the retrospective effect given to the scheme from May 22, 1974, was a balanced solution to rectify imbalances and anomalies caused by the previous group-wise seniority system. The Court concluded that the impugned circular, office order, and combined seniority list were not violative of the petitioners' rights under Articles 14 and 16 of the Constitution.Conclusion:The Supreme Court dismissed the writ petitions, holding that the Reserve Bank of India (Staff) Regulations, 1948 are not statutory, the Reserve Bank has the power to issue administrative circulars regulating the service conditions of its staff, and the impugned circular and seniority list do not violate Articles 14 and 16 of the Constitution. The Court emphasized the necessity of combined seniority and inter-group mobility for the efficient functioning of the Bank and the rectification of historical imbalances in promotional opportunities.