STAIB BANK OF INDIA & ORS. ETC. v. S. VIJAYA KUMAR & ORS. ETC.

The Judgment of the Court was delivered by 11 F KASLIW AL, J. Special leave granted.

All the above cases are disposed of by one single order as identical questions of law are involved in all these cases. In order to appreciate the controversy, facts in brief are stated of all these cases. G SLP No. 4176 of 1988:

The respondent Vijaya Kumar was appointed as a Probationary )_ ~ Officer (Gr. I Officer) by an Order of the Executive Committee of the Central Board of the State Bank of India on 7. 12.71. The respondent H was chargesheeted in respect of gross irregularities and corrupt

p. 401 Copy page pinpoint

practices and was ultimately dismissed from service by an order dated ~ 22.12.88 passed by the Chief General Manager of the Bank. Shri Vi jay A Kumar filed a writ petition No. 194/83 before the ,'\nd_hra Pradesh High Court challenging his order of dismissal. A Division Bench of the High Court heard the writ petition alongwith writ appeal No. 141/86 and allowed the writ petition but dismissed the writ appeal by order dated 26.11.87. The State Bank aggrieved against the aforesaid B / order of the High Court passed in writ petition No. 194/83 has filed ~ this special leave petition. The High Court has allowed the writ peti- 1 lion only on one ground that the appointing authority ofVijaya Kumar was Executive Committee of the Bank and as such Chief General Manager being an authority lower than the appointing aut'10rity was not competent to pass an order of dismissal. c SLP No. 15235 of 1988: ' ).._ In this case the respondent T. Dayakar Rao was appointed as a Clerk in the State Bank of India in the month of October, 1962. In the month of July, 1971 he was selected as a Trainee Officer and was given D job training at various branches of the Bank for two years. While he was working as a Bank Manager he was chargesheeted for irregulari- ties committed by him during the period 1.9.79 to 15.6.80. Disciplinary proceedings were initiated on 29.7.82. On 6.3.84 the Chief General -y Manager in the capacity of disciplinary authority passed an order of dismissal. T. Dayakar Rao filed a writ petition No. 1204/84 in the High E Court. The Division Bench of the High Court by an order dated 13th August, 1988 allowed the writ petition following the decision of Divi- sion Bench given in writ appeal No. 141/86 dated 26. 'l.87. The Bank r aggrieved against the aforesaid order has filed the Special Leave Pc,;- tion under Article 136 of the Constitution. F -1- SLP No. 2069 of 1990:

In this case Shri A.K. Soundararajan appellant was appointed as Technical Officer by an order dated 14.6.68 of the Executive Commi- ttee of the Central Board of the Bank. It was mentioned in the Order that Shri Soundararajan would be governed by the State Bank of India G (Officers & Assistants) Service Rules. Post of Technical Officer was considered equivalent to Staff Officer Grade III under the Rules. He was suspended and given a chargesheet on 23.4.82 and was dismissed by an order dated 31.3.83 passed by the Chief General Manager. Shri Soundararajan filed a writ petition No. 7108/85 in the High Court challenging his order of dismissal. Learned Single Judge of the High H

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A Court by .order dated 31.10.88 allowed the writ petition by following :the decision given.by .the Division Bench in writ petition No. 1204/84 -f •in the case of T. Dayakar Rao. The State Bank ·aggrieved against the order of ,the learned Single Judge filed an appeal before the Division :Bench. The Div.ision Bench in this .case took into consideration an .amendment made in Regulation 55 by a resolution dated 25.8.88 made ·B applicable with retrospective effect. The Division Bench by Order ~ .dated 30th November, 1989 allowed the appeal filed by the Bank. Shri .A.K. Soundararajan aggrieved against the Order of the High Court 't' has filed this Special Leave Petition

It would be.necessary to narrate the facts of SLP (C) No. 5139/88 C (State -Bank of India v. Hanumantha Rao) disposed of by an order of this Court dated 30th January, 1990.

Hanumantha Rao was promoted as Grade I Officer on 1.4.1973 by the Executive Committee of the Central Board of State Bank of India. In 1979 he was ·posted as the 'Manager of a branch of the Bank .D ;in Warangal District. In respect of certain alleged acts of misfeas- .ance/malfeasance .he was suspended on 17.8.81. On 4.5.82 a memo -of ..charges was served on Hanumantha Rao by the Chief General Manager of the Bank. The Chief General Manager of the State Bank of India, local ·head office Hyderabad dismissed Hanumantha Rao by an order dated 7.1.84. Hanumantha Rao filed a writ petition No . .E 5509 /84 in the High Court. Learned Single Judge allowed the writ ;petition declaring the order of dismissal as incompetent and invalid. "rhe Bank aggrieved against .the order of the Learned Single Judge ·filed a Letters •Patent Appeal No. 141/86 before the Division Bench. The Division Bench .heard and disposed of the writ appeal No. 141/86 and-writ petition No. 194/83 by _a common order. The Division Bench ·F agreed with the conclusion of the learned Single Judge that the order of dismissal .passed by the Chief General Manager is incompetent and invalid being violative of the guarantee contained in the proviso to Regulation 55(2)(a) of the State Bank of India General Regulations, 1955.

G While dealing with the cross objections filed by Shri Hanumantha Rao the Bench took notice of the fact that the writ petitioner had died -on 24.11.87 and as such gave the following direction:

"On account of the death of the writ-petitioner it is unnecessary for us to go into the merits of the contentions urged by way of cross-objections. There is no question of I ' I

S.BJ. v. S. VUAYA KUMAR (KASLIWAL, J.] 403

any enquiry or further enquiry hereafter. We may mention A in this connection that the learned counsel for the peti- tioner (respondent in this Writ· Appeal) offered to file a petition to bring on record the legal representatives of the deceased writ-petitioner as respondents in this Writ Appeal since, according to him, they would be entitled in any event to claim the monetary benefits flowing from the orders of B / this Court. Now that we have agreed with the learned • single Judge that the order of dismissal was incompetent and invalid, we direct that the writ petitioner shall be. treated to be under suspension pending enquiry till 24.11.1987 and all the monetary benefits that he is entited to on that basis, including the arrears of suspension allo- wance, shall be paid over to his legal representatives. Mr. c Prasad will·fiJe the legal representatives petition within two weeks from today. Post this Writ Appeal for orders after two weeks.

The Writ Appeal, accordingly, fails and is dismissed, D but, in the circumstances, without costs."

The Bank aggrieved against the aforesaid order filed the SLP No. 5139/88 before this Court. Taking note of the facts and circum- stances of the case of Hanumantha Rao having died on 24.11.87 leav- ing behind 14 children, this. Court on 30th January, 1990 did not con- E sider if fit to interfere with impugned order of the Division Bench. It was further made clear that even though this Court was not interfer- ing with the impugned order, the questions raised on behalf of the Bank were left open. The Bank was directed to treat Hanumantha Rao in service and p'ay the dues, arrears of salary and other terminal benefits in accordance with law to his legal representatives. With these observations, the SLP was dismissed.

The question which calls for consideration in all these cases is whether the order of dismissal could be passed by the Chief General Manager who was lower in rank to the Executive Committee who was the appointing authority in these cases. G

In order to appreciate this controversy, it would be proper to give reference of the relevant provisions of the State Bank of India Act, 1955 (hereinafter referred to as the Act), State Bank of India General Regulations, 1955 (hereinafter referred to as the Regulations) and the State Bank of India (Supervising Staff) Service Rules, 1975 H

404. SUPREME COURT REPORTS [1990] 3 S.C.R.

(hereinafter referred to as the Rules).

Section 43 of the Act empowers the State Bank to appoint such number of officers, Advisors and Employees as it considers necessary or desirable for the efficient performance of its functions and to determine the terms and conditions of their appointments and service. B Section 49 of the Act confers power on the Central Government, '-.,, m consultation with the Reserve Bank to make rules to provide for all matters in which provision is necessary or expedient for the purpose of giving effect to the provisions of the Act.

Section 50(1) of the Act confers powers on the Central Board of Directors of the Bank to make regulations. c Sub-section (3) of the Section 50 of the Act empowered the Reserve Bank to make the first regulations with the previous sanction of the Central Goverrunent. D In exercise of the powers conferred by sub-section (3) of Section 50 of the Act, the Reserve Bank of India with the previous sanction of the Central Government made the State Bank of India General Regu- lations, 1955. These regulations have been amended from time to time by the Central Board of Directors by making regulations under sub- section ( 1) of Section 50 of the Act. £<- Regulation 55(2)(a) deals with the initial appointments and promotions to various categories of employees in the bank. Initially the appointments of Officers used to be made only by the Executive Committee as provided in Regulation 55(2)(a). As the bank grew larger in branches, the bank thought fit to vest the power of appoint- F ment and promotion to various functionaries of the bank and also gave ~ power to delegate their power of appointment also. Regulation 55(2)(a) was thus substituted by a resolution dated 18th August, 1971 of the Central Board. After this resolution for Officers Grade I & II, the appointing authorities were specified as the Secretary and Trea- surer or the Managing Director respectively depending upon whether the appointment/promotion is for service in the Circle or the Central Office. The State Bank of India Officers & Assistants Rules which govern the service conditions of Grade I Officer whether they were _}--- Probationary Officers or Trainee Officers and Staff Officers followed the scheme of "appointing authority" laid down in the Regulations. Regulation 55(2)(a) was again amended by a resolution of the Central H

S.B.I. v. S. VUAYA KUMAR [KASLIWAL, J.J 405

Board on 11th July, 1972. By this amendment there was only a terminological regrouping of the earlier regulation rather than any A qualitative change. The State Bank Laws (Amendment) Act, 1973 introduced various amendments and one of the amendments was relat- ing to change of designation of Secretary and Treasurer as CP.ief General Manager. Hence the Central Board vide its resolution dated 29.3,74 for the words "Secretary & Treasurer" substituted "Chief B General Manager." The service conditions of all Officers came to be brought under a single set of service rules viz. the State Bank of India (Supervising Staff) Service Rules which came into force on 1.7.75. It would be important to mention that Regulatioq 55(2)(a) at all relevant period for our purpose recognized the right of the officers or employees of the Bank under the following clause "such officers ()r employees shall not be dismissed from service of the State Bank by an c authority lower than the appointing authority." Clause (f) of Rule 3 of the State Bank of India (Supervising Staff) Service ]lules which is relevant for our purposes reads as u!lder:

(f) "Appointing Authority" means- u (i) in the case of Officers Grade II and Grade I aqd ()f other employees to wh()m the salary scales applicable to Officers Grade II arn:I Grade I generally apply with or with- out modification, the Chief General Manager concerned or the Managing Director according as the employee is serv- E ing in the Circle or in or under Central Office;

r (ii) in the case of Staff Officers of various grades and of other employees to whom the salary scales. applicable to Staff Officers generally apply with ()r without modification, the Managing Director; F

(iii) in the case of Senior Staff Appoiqtments and of employees to whom the salary, sq!les applicable to Senior Staff Appointments generally apply with or without modifi- cation, the Executive Committee; G Sub-Rule (1) of Rule 50 relevant for PIJI purposes is also repro- duced below:

50(1)(i) The Disciplinary Authority may itself, or shall when so directed by its superior authority, institute discipli- nary proceedings against an employee. H

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(ii) The Disciplinary Authority or any Authority higher A than it may impose any of the penalties in rule 49 on an -f employee.

It may be furher noted that an amendment in Regulation 55 was approved by Cenral Board at its meeting dated August 25, 1988 which .B reads as under:

55(1) Save as provided in sub-regulation (2) and as may be \' directed the Cenral Board, a Local Board may exercise all the powers of the State Bank in respect of the Staff serving in the areas in its jurisdiction. c 2(a) The appointing and/or promoting authority for vari- ous categories/grades of officers and employees shall be such as the Executive Commitee may by general or special ~ order designate from time to time.

D (b) No officer or employee of the Bank shall be dismissed, discharged, removed or retired from the service of the Bank or reduced to a lower grade or post or to a lower stage in a time scale by an authority lower than the appoint- ing authority. Explanation (For the purpose of clause (b) the term 'appointing authority' shall mean and include the E authority who has been designated as such in respect of such class or grade of officers or employees to which the officer or employee concerned, as the case may be belongs at the time when such Order is passed or any proceeding leading to such Order or termination is initiated.)

F (c) Nothing in this sub-regulation shall affect the powers of a disciplinary authority appointed or notified under any award, settlement under the Industrial Disputes Act, 1947, governing, affecting or regulating the service conditions of workmen of the Bank, and for the purpose of clause (b) above, the appointing authority shall be deemed to have G been substituted by such disciplinary authority.

(d) The salary and other emoluments to be granted to offi- cers and other employees shall be as laid down in the Rules of Service approved by the Central Board and, where no such rules have been laid down, as fixed by the Executive H Committee.

S.B.I. v. S. VIJAYA KUMAR [KASLIWAL, J.J 407

(e) The power to grant pensions to officers and other emp- A loyees leaving the service of the State Bank, other than pensions provided for under the Rules of pension funds respectively applicable to them, shall be reserved to the

, / Central Board.

(f) The grant of gratuties or other financial assistanqo, .either ·temporary or permanent, to widows, children or other dependents of deceased officers or other employees shall be .made by the Executive Committee of the Cenral B

.Board except where grant of any such gratuity or financial assistance is authorised by any general direction given by the Cenral Board. Explanation (The term 'Officers' in this regulation shall include any employee to whom the rules of C service generally applicable to officers, apply with or with- out modification.) (Sub-regulation (2) substituted with effect from 1.10. 79)."

The Executive Committee of the Bank passed the following re- D ·solution on August 30, 1988:

In exercise of the powers conferred by sub-section ( 1) of Section 43 of the State Bank of India Act, 1955 (23 of 1955) and amended sub-regulation (2)(a) of Regulation 55 of the State Bank of India General Regulations, 1955, the Executive Committee of the Central E Board of.the State Bank of India hereby makes the following order:

The initial appointments and/or promotions to various categories of officers and other employees in the Bank set out-in Column I here

• .under shall be made by the authority specified in Column II . F . Columl Column II Employees working at branches i) Employees other a) Subordinate the concerned than officers Staff Branch Manager and Deputy Gene- ral Manager. G ii) Clerical the concerned Staff Regional Manager and Dy. General Manager.

b) Employees working at LHOs/ H

408 SUPREME COURT REPORTS [1990] 3 S.C.R.

A Regional Offices and their establishments

The concerned Office Manager/ Admn. Officer at Staff Colleges or Institutes Manager Dy. Chief B Manager or, where there is no post of above descriptions . the head of concerned dept/office.

ii) Officers in The Chief General Manager for Junior Management appointments/promotions in the c Grade Scale I Circle and the Chief General and Middle Manager (Personnel & HRD) in Management Central Office for Central Grade Scale II Office establishment.

D iii) Officers in The Deputy Managing Director Middle Management Grade Scale III

iv) Officers in The Managing Director Senior Management E Grade Scale IV, V

v) Officers in Top Recommending Authority: Executive Grade Scale VI, VII The Directors Promotion Committee and special consisting of the Chairman, the scales Managing Director and the Director nominated by the Central Government in terms of clause (e), sub-section ( 1) of Section 19 and the Director nominated by the Reserve Bank of India in terms of clause (f) of sub-section (1) of Section 19 of the Act.

Promoting/Appointing Authority:

The Executive Committee of the H Central Board.

S.B.I. v. S. VIJAYA KUMAR [KASLIWAL, J.] 409

All authorisations in respect of appointing authority and/or A '\- promoting authority made by the Executive Committee from time to time after 1.10. 79 shall be deemed to have been done under the amended regulation 55. Appointments authorised by the Chief General Manager (Personnel & HRD) in respect of JMGS I after 1.10.79 are also confirmed hereby. B

- All the employees of the bank in the cases before us where appointed by the Executive Committee. Order of dismissal in their cases has been passed by the Chief General Manager. It is an admitted position that on the date of passing the order of dismissal the Chief General Manager was the appointing authority. According to the Bank though the employees were appointed by the Executive Committee, but at the time when inquiry was held and the order of dismissal c passed, the Chief General Manager had become the appointing ,._ authority. On the other hand the contention on behalf of the employees is that the Executive Committee being the appointing authority, no authority lower than the Executive Committee can pass the order of dismissal in their cases. According to their contention the D Chief General Manager, being a lower authority than the Executive Committee, he had no competence to pass the order of dismissal. Learned counsel for the employees in this regard referred to Article 311 of the Constitution of India and placed reliance on a plethora of cases decided on the basis of guarantee enshrined under Article 311 of the Constitution. E

The guarantee clause under Article 311(1) of the Constitution of - .-r India which is relevant for our purpose reads as under:

"No person who is a member of a Civil Service of the Union or an All India Service or a Civil Service of a State F or holds a Civil post under the Union or a State shall be dismissed or removed by an authority subordinate to that by which he was appointed."

Now so far as the right which has been conferred on the emp- loyees of the State Bank contained in Regulation 55(2)(a) is that such G officers or employees shall not be dismissed from service of the State Bank by an authority lower than the appointing authority. Thus a comparison of the provisions contained in Article 311(1) of the Constitution and the right guaranteed to the employees of the State Bank under Regulation 55(2)(a) shows that there is a material dif- ference between the language used in the two provisions. Under Arti- H

410 SUPREME COURT REPORTS [1990) 3 S.C.R.

A cle 311(1) the words used are "by which he was appionted." In Regula- tiqn 55(2)(a) there are no such words "by which he was appionted" and in its place the only right guaranteed is that the employee shall not be· dismissed by an authority lower than the appointing authority. Thus the right guaranteed in case of the officers or employees of the State Bank is that the order of dismissal cannot be passed by an authority B lower than the appointing authority. A perusal of the relevant Regula-

- tions and Rules mentioned. above clearly go to show that the Chief General Manager had become the appointing authority of the emp- loyees in question under Regulation 55(2)(a) with effect from 1.7.74. Admittedly the orders of dismissal have been passed long after these amendments when the Chief General Manager had already become their appointing authority under the Regulations and the Rules. Tue c right that an officer or employee of the State Bank of India cannot be dismissed from service by an authority lower than the appointing authority is a creation of statutory rules and regulations. So far as the right or protection guaranteed under Article 311 of the Constitution is concerned, it applies to members of the Civil Service of the Union or D an All India service or a Civil Service of a State or who holds a Civil Post under the Union or a State. Admittedly the employees of the State Bank do not fall under any one of these categories and they cannot seek any protection under Article 311(1) of the Constitution. The employees of the State Bank can only claim such rights which have been conferred under Regulation 55(2)(a) of the General Regulations. E The only right conferred under the said provision is that the officers or employees of the State Bank cannot be dismissed by an authority lower than the appointing authority. With the risk of repetition it may be stated that on the date when the order of dismissal has been passed, Chief General Manager had already become the appointing authority and as such the order of dismissal has not been passed by an authority F lower than the appointing authority.

Apart from the view taken by us as mentioned above the Regula- tion 55 has been amended by a resolution of the Central Board dated August 25, 1988 with retrospective effect. It has now been made clear in the explanation that for the purpose of clause (b) the term appoint- G ing authority shall mean and include the authority who has been designated as such in respect of such class or grade of officers or employees to which the officer or employee concerned, as the case may be belongs at the time when such order is passed or any proceed- ' ., ,,.,A-.-.~-- ings leading to such order or termination is initiated. This provision now concludes the controversy if any and clearly provides that the H a'ppointing authority shall mean and include the authority who has

S.B.I. v. S. VIJAYA KUMAR [KASLIWAL, J.) 411

been designated as such at the time when such order is passed. It was A -,.. contended on behalf of the Learned counsel for the employees that the Bank had no power to amend the Regulations with retrospective effect. We see no force in this contention. Section 50(2)(a) of the Act clearly provides that all regulations made under this section shall have effect from such earlier or later date as may be specified in the regula• tion. Thus the regulations can be made to give effect from earlier-dates B ---'< also as may be specified in the regulations. We find no force in the contention of learned counsel for the employees that they had vested 'i right in this regard and the same could not have been taken away by making regulations with retrospective effect. There cannot be any vested right in such a matter. As already mentioned above it was a right conferred under Regulation 55(2)(a) and the same can be amended with retrospective effect also in case the authority competent c to make regulations has been given a right to make regulations with )...- retrospective effect. It has been held in State of Jammu & Kashmir v. Triloki Nath Khosa & Ors., S.C.R. 1974 Vol. 1 771 that it is well settled that a Government servant acquires a 'status' on appointment to his office and as a result his rights and obligations are liable to be determined under statutory or constitutional authority which for its exercise requires no reciprocal consent. In Bishun Narain Misra v. The State of Uttar Pradesh and Others, AIR 1965 Vol. 52 SC 1567 it was held that new rule reducing the age of retirement from 5~ years to 53 years could not be said to be retrospective. The proviso to the new rule ---y and the second notification were only methods to tide over the difficult situation which would arise in the public service if the new rule was applied at once and also to meet ·any financial objection arising out of the enforcement of the new rule. The new rule therefore, could not be struGk down on the ground that it was retrospective in operation. In Roshan Lal Tandon v. Union of India & Anr., and Kunj Behari v. Union of India & Ors., AIR 1967 SC Vol. 54 1889 it was held that the legal position of Government servant is more one of status than of contract. The hallmark of status is the attachment to a· legal relation- ship of rights and duties imposed by the public law and not by mere agreement by the parties. Emolument of the Government servant and his terms of service are governed by statute or statutory rules which may be unilaterally altered by he Government without the consent of the employee. It was further held in the above case that the petitioner had no vested contractual right in regard to the terms of his service and that the same can be altered unilaterally. We may further add that the prohibition if any to alter the terms and conditions can be found only under the Constitution of India and in- case power of the rule or law making authority is not circumscribed or limited by any constitutional H

412 SUPREME COURT REPORTS [1990] 3 S.C.R.

A mandate then it has power to amend such terms and conditions of service unilaterally without the consent of the employee. In the cases ~ in hand before us the right whatsoever conferred on the employees of the State Bank was on the basis of Regulation 55(2)(a) and the Central Board of the Bank was authorised to amend such regulations from any B date under Section 50(2)(a) of the Act. ~-- In the result the appeals filed by the State Bank of India in the case of Vijaya Kumar and T. Dayakar Rao are allowed, the impugned orders passed by the High Court are set aside and the cases are remanded to the High Court for deciding the writ petitions on other points in accordance with law. Now so far as the appeal filed by Sh. C A.K. Soundararajan is concerned, the point decided by us shall remain concluded but the appellant would be free to raise other points before this Court which are left undetermined: This case may now be listed for further hearing and final disposal at an early date.

In the facts and circumstances of the case, the parties shall bear 0 their own costs.

Y. Lal C.A. No. 3392 & 3393 of 1990 allowed. C.A. No. 3394 of 1990 ordered to be listed for final hearing.