Supreme Court Dismisses Appeal by Legal Representative of Deceased Bank Employee; Upholds Bank of Patiala Staff Rule on Compulsory Retirement. Regulation Order of 1954 remained valid under Article 357(2) of Constitution of India, and Rule 27 did not infringe Articles 311 or 14.

Suit for declaration that compulsory retirement order was invalid and Rule 27 of Bank of Patiala (Staff) Rules, 1954 was unconstitutional and void.

Ram Prasad sought declaration that his compulsory retirement order dated June 11, 1958 was invalid and that Rule 27 of the Staff Rules was wholly unconstitutional, null and void.

The Board of Directors of Bank of Patiala passed an order compulsorily retiring Ram Prasad under Rule 27 of the Staff Rules; he challenged this order as illegal, mala fide, and violative of Articles 311 and 14.

Trial court (Subordinate Judge, Patiala) granted a decree substantially allowing the claim; Punjab High Court allowed the State's appeal and set aside the trial court judgment.

Whether Bank of Patiala Regulation and Management Order, 1954 lapsed on termination of President's Rule on March 7, 1954, especially since it was gazetted on March 14, 1954. Whether the delegation to the Board of Directors to frame Staff Rules under Clause 4(1)(iii) survived the end of President's Rule. Whether the Staff Rules framed by the Board could supersede the Patiala State Regulations applicable to Bank staff. Whether Rule 27 of Bank of Patiala (Staff) Rules, 1954 violated Articles 311 and 14 of the Constitution. Whether the Board of Directors was properly constituted when it promulgated the Staff Rules.

Appellant contended that prior to the Regulation Order, Patiala State Regulations governed Bank staff; the delegation to the Board lapsed on March 7, 1954, so the Board had no authority to approve Staff Rules on March 25, 1954 and enforce them from April 1, 1954. Appellant argued that the Regulation Order was legislative in nature and its operation could not extend beyond one year under Article 357(2). Appellant submitted that the Staff Rules sought to supersede Regulation IX of Patiala State Regulations, which could not be done by rules made by the Board since the Ruler exercised legislative powers. Appellant challenged Rule 27 as unconstitutional under Article 311 and argued Staff Rules were violative of Article 14. Appellant alleged that the Board which promulgated the Staff Rules was not properly constituted because all directors were not present at the meeting. Respondent State contended that the order of compulsory retirement was passed under rules which were legal and constitutionally valid and governed the employees of the Bank.

The Bank of Patiala Regulation and Management Order, 1954, though gazetted after the proclamation ceased, came into operation on the date it was made and was saved by Article 357(2) as a thing done or omitted to be done before expiration of one year after proclamation ceased. Patiala State Regulations were applied to Bank staff by executive act and could be changed by a similar executive act. Rule 27 of Staff Rules did not offend Article 311 because compulsory retirement simpliciter is not dismissal or removal, and did not violate Article 14. A majority of members of a corporation or company is entitled to exercise its powers, so the Board was properly constituted.

An employee shall retire at fifty five years of age provided that (i) the Bank may, at its discretion and without giving any reasons, retire any employee from the Bank’s service after he has completed the age of fifty years or the service of twenty five years whichever happens first and no claim to special compensation on this account will be entertained; Although the Regulation Order was made on February 27, 1954 and was not published in the Gazette until March 14, 1954, the order itself provided for its commencement on the date on which it was made and it therefore came into operation on February 27, 1954. The Patiala State Regulations were applied to the employees of the State Bank of Patiala as a result of an 'extension' made by the Maharaja pursuant to the executive powers vested in him. The act of extension being an executive act it could be changed by a similar executive act. The High Court had rightly held that under the law governing corporations, a majority of the members in the Corporation is entitled to exercise the powers of the Corporation and that the rule regarding corporations is equally applicable to a company.

Ram Prasad filed a suit in the Court of Subordinate Judge, Patiala, seeking declaration that the compulsory retirement order was invalid and Rule 27 unconstitutional. The trial court granted a decree substantially allowing his claim. The State of Punjab appealed to the Punjab High Court, which allowed the appeal and set aside the trial court judgment. During pendency of the High Court appeal, Ram Prasad died and his widow was brought on record as legal representative. The legal representative then appealed to the Supreme Court on a certificate granted by the High Court.

• Constitution of India, 1950: Article 14, Article 311, Article 356, Article 357(2)
• Bank of Patiala Regulation and Management Order, 1954: Clause 4(1)(iii)
• Bank of Patiala (Staff) Rules, 1954: Rule 27
• Patiala State Regulations: Regulation IX
• Patiala Services Regulations, 1947: