Case Note & Summary
The petitioners, Federation of Bank of India Staff Unions and its Deputy General Secretary, filed a writ petition under Article 226 of the Constitution of India challenging communications from the Bank of India rejecting their nominations for the post of Workmen Director. The petitioner No.1 is a registered trade union under the Trade Union Act, 1926, and petitioner No.2 is an employee of the Bank. The Bank is a nationalised bank governed by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The Board of Directors of the Bank is constituted under Section 9 of the Act, which empowers the Central Government to make a scheme for the constitution of the Board. The petitioners had forwarded nominations for the post of Workmen Director, but the Bank rejected them on the ground that the Central Government's approval had not been obtained. The legal issue was whether the Bank was justified in rejecting the nominations without the Central Government's approval. The petitioners argued that the Bank had the authority to accept nominations and that the rejection was arbitrary. The respondents contended that under Section 9(3)(c) of the Act and the scheme framed thereunder, the appointment of a Workmen Director requires the prior approval of the Central Government, and since no such approval was granted, the Bank could not accept the nominations. The court analyzed the provisions of Section 9 of the Act and the scheme for the constitution of the Board of Directors. It held that the appointment of a Workmen Director is subject to the approval of the Central Government, and the Bank cannot unilaterally accept nominations. The court found that the Bank's action was in accordance with the statutory scheme and that the petitioners had no vested right to be appointed. The court dismissed the writ petition, holding that the rejection of nominations was justified.
Headnote
A) Banking Law - Appointment of Workmen Director - Section 9(3)(c) Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 - The appointment of a Workmen Director in a nationalised bank requires the prior approval of the Central Government. The Bank cannot accept nominations without such approval. The court held that the Bank's action in rejecting the nominations was justified as the Central Government had not granted approval. (Paras 2-10) B) Banking Law - Scheme for Constitution of Board of Directors - Section 9 Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 - The Central Government is empowered to make a scheme for the constitution of the Board of Directors, including the manner of appointment of Workmen Directors. The scheme requires the Bank to seek the Central Government's approval before appointing a Workmen Director. (Paras 4-8) C) Constitutional Law - Writ Jurisdiction - Article 226 Constitution of India - The High Court declined to interfere with the Bank's decision as the Petitioners had no vested right to be appointed as Workmen Director. The court held that the Bank's action was in accordance with the statutory scheme and the Central Government's approval was a condition precedent. (Paras 9-10)
Issue of Consideration
Whether the Bank of India was justified in rejecting the nominations forwarded by the Petitioner Union for the post of Workmen Director on the ground that the Central Government's approval had not been obtained.
Final Decision
The High Court dismissed the writ petition, holding that the Bank's rejection of nominations was justified as the Central Government's approval is mandatory for appointment of Workmen Director under Section 9(3)(c) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.
Law Points
- Mandatory approval of Central Government for appointment of Workmen Director
- Section 9(3)(c) Banking Companies (Acquisition and Transfer of Undertakings) Act
- 1970
- Scheme for constitution of Board of Directors
- No vested right to be appointed as Workmen Director
