1992 (3) TMI 367 - SC - Indian Laws

Transferred employee's superannuation age ruling changed by Supreme Court, High Court decision overturned

The Supreme Court allowed the appeal, ruling that the transferred employee could not claim a superannuation age of 60 years from the acquiring bank but ... Continuance of service on amalgamation - terms and conditions of service - proviso requiring parity with transferee bank employees - vested right in pre-amalgamation terms - explanation excluding rank and status from 'terms and conditions'Continuance of service on amalgamation - terms and conditions of service - proviso requiring parity with transferee bank employees - Construction of Section 45(5)(i) of the Banking Regulation Act and of Clauses 10 and 12 of the amalgamation scheme. - HELD THAT: - The Court held that Sub section (5) of Section 45 is permissive in that a scheme prepared under Sub section (4) may, but need not, incorporate the matters listed in Sub section (5). Where a scheme does provide for continuance of services of employees of the transferor bank in the transferee bank on the same remuneration and terms and conditions as before moratorium, the proviso to Clause (i) operates to require that, within three years, the transferee bank shall grant to those employees the same remuneration and terms and conditions as are applicable to employees of corresponding rank or status of the transferee bank, subject to equivalent qualifications and experience. Thus the employee's right arising from inclusion of Clause (i) in a scheme is limited to the parity guaranteed by the proviso and does not extend beyond it. Clauses 10 and 12 of the Scheme merely implement Clause (i) and its proviso and are not inconsistent with Sub section (5)(i). The opening 'may' in Sub section (5) and the mandatory 'shall' in the proviso establish that the substantive right is the post amalgamation parity, not retention of all prior superior terms. [Paras 12, 13, 14]Section 45(5)(i) must be read so that where a scheme continues employees it only guarantees eventual parity with transferee bank employees of corresponding rank/status subject to qualifications and experience; Clauses 10 and 12 of the Scheme incorporate and do not contradict that proviso.Vested right in pre-amalgamation terms - explanation excluding rank and status from 'terms and conditions' - Whether respondent No.1 acquired a vested right to the higher age of superannuation (60 years) under his pre amalgamation terms so as to prevent application of transferee bank's lower retirement age (58 years). - HELD THAT: - Applying the statutory construction above, the Court concluded that respondent No.1, on being continued in service after amalgamation, became an employee of the transferee bank and his rights were limited to parity with employees of corresponding rank/status of the transferee bank subject to qualifications and experience. The Explanation that 'terms and conditions of service' do not extend to rank and status reinforces that pre amalgamation superior terms do not give a perpetuable vested right to retain higher benefits contrary to the proviso. Consequently the High Court's view that Clause (i) and Clause 10 conferred an indefeasible right to the prior retirement age was a misconstruction. [Paras 13, 15, 16]Respondent No.1 was not entitled to retain the 60 years superannuation; he was bound by the transferee bank's retirement age of 58 years and the High Court's decree to the contrary was set aside.Final Conclusion: The appeal is allowed; the High Court's judgment declaring respondent No.1 entitled to retire at 60 years is set aside and the writ petition is dismissed. Issues Involved:1. Age of superannuation for the transferred employee.2. Interpretation of Section 45 of the Banking Regulation Act, 1949.3. Validity of the High Court's interpretation of the amalgamation scheme.Detailed Analysis:1. Age of Superannuation for the Transferred Employee:The primary issue in this case is the age of superannuation for respondent No. 1, a former employee of Lakshmi Commercial Bank, who claimed entitlement to continue in service until the age of 60 years, as opposed to 58 years, which is the age of superannuation in Canara Bank. The High Court had ruled in favor of respondent No. 1, quashing the Reserve Bank's letter and declaring that he is entitled to continue in service until the age of 60 years. This judgment was challenged by the appellant, Canara Bank.2. Interpretation of Section 45 of the Banking Regulation Act, 1949:The relevant legal provisions are contained in Section 45 of the Banking Regulation Act, 1949, which deals with the power of the Reserve Bank to apply to the Central Government for suspension of business by a banking company and to prepare a scheme of reconstitution or amalgamation. Specifically, Sub-section (5) of Section 45, along with its provisos, is crucial. The scheme may contain provisions for the continuance of the services of all employees of the banking company in the transferee bank at the same remuneration and on the same terms and conditions of service which they were getting immediately before the date of the order of moratorium. However, the proviso mandates that within three years, the transferee bank must align the terms and conditions of service to those applicable to its own employees of corresponding rank or status, subject to equivalent qualifications and experience.The Supreme Court clarified that the scheme does not automatically incorporate the provisions of Sub-section (5) unless specifically included. The right of the employees is to claim parity with the employees of the transferee bank of corresponding rank or status after three years from the date of the scheme's sanction.3. Validity of the High Court's Interpretation of the Amalgamation Scheme:The High Court had interpreted Clause (i) of Sub-section (5) of Section 45 and Clause 10 of the amalgamation scheme as conferring a vested right on the transferred employees, which could not be adversely affected by the amalgamation. The Supreme Court disagreed with this interpretation, stating that the High Court misconstrued the provisions. The Court emphasized that the right of the employees is provided in the proviso to Clause (i), which mandates parity with the transferee bank's employees after three years, rather than an unalterable continuation of the previous terms and conditions.The Supreme Court concluded that respondent No. 1, upon amalgamation, became an employee of Canara Bank and was subject to its terms and conditions, including the age of superannuation, which is 58 years. The High Court's judgment was set aside, and the writ petition filed by respondent No. 1 was dismissed.Conclusion:The appeal was allowed, and the Supreme Court held that respondent No. 1 could not claim the age of superannuation of 60 years as applicable in Lakshmi Commercial Bank. Instead, he was bound by the age of superannuation of 58 years as applicable in Canara Bank. The High Court's judgment was set aside, and no costs were awarded.