Case Note & Summary
The appeal arose from a writ petition filed by the Federation of Bank of India Staff Unions and another against the Union of India and the Bank of India. The appellants challenged a communication dated 10.10.2009 by which the Central Government rejected a panel of three workmen for nomination as a workman director on the ground that each had less than three years of residual service before superannuation, and also challenged the validity of Clause 3(2)(iii)(b) of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970. The High Court dismissed the writ petition. On appeal, the Supreme Court noted that the relief regarding the communication and panel had become infructuous as the recommended employees had retired. The sole surviving issue was the constitutional validity of Clause 3(2)(iii)(b). The appellants argued that the disqualification applied only to workmen and not to officer-employees, violating Article 14. The Court examined Section 9(3)(e) and (f) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 and Clause 3(2)(iii) of the Scheme. It held that the classification between workmen and officers is reasonable and based on intelligible differentia, as the two categories are distinct. The disqualification ensures that a workman director serves a full term without interruption due to superannuation, which serves the object of stability in the Board. The Court found no violation of Article 14 and dismissed the appeal, upholding the validity of the clause.
Headnote
A) Constitutional Law - Article 14 - Reasonable Classification - Clause 3(2)(iii)(b) of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970 - The challenge was that the disqualification for workman directors (residual service less than three years) was discriminatory as no similar disqualification existed for officer-employee directors - The Supreme Court held that the classification between workmen and officers is based on intelligible differentia and has a rational nexus with the object of ensuring continuity and stability in the Board of Directors - The legislature is competent to prescribe different qualifications and disqualifications for different categories of directors - The clause was held to be legal and valid (Paras 28-31).
Issue of Consideration
Whether Clause 3(2)(iii)(b) of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970, which disqualifies a workman from being nominated as a director if he is likely to attain the age of superannuation during his term of office, is ultra vires Article 14 of the Constitution of India on the ground that no similar disqualification applies to officer-employee directors.
Final Decision
The Supreme Court dismissed the appeal, holding that Clause 3(2)(iii)(b) of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970 is legal and valid, and does not violate Article 14 of the Constitution of India. The Court found that the classification between workmen and officers is reasonable and the disqualification serves a legitimate purpose.
Law Points
- Article 14 of the Constitution of India
- Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act
- 1970/1980
- Clause 3(2)(iii) of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme
- 1970
- Classification of employees
- Reasonable classification
- Disqualification for nomination as director
Case Details
Civil Appeal No.5570 of 2014
Sidharth Bhatnagar for appellants; Pranab Kumar Mullick & Bhakti Pasrija for respondents
Federation of Bank of India Staff Unions & Anr.
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Nature of Litigation
Civil appeal against the judgment of the High Court of Bombay at Goa dismissing a writ petition challenging the rejection of a panel of workmen for nomination as director and the validity of a disqualification clause in the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970.
Remedy Sought
The appellants sought quashing of the communication dated 10.10.2009 rejecting the panel, a mandamus to consider the panel, and a declaration that Clause 3(2)(iii) of the Scheme is ultra vires the Constitution.
Filing Reason
The Central Government rejected the panel of three workmen for nomination as workman director on the ground that each had less than three years of residual service before superannuation, which the appellants claimed was discriminatory and violative of Article 14.
Previous Decisions
The High Court of Bombay at Goa dismissed the writ petition, holding that Clause 3(2)(iii) of the Scheme is legal and valid.
Issues
Whether Clause 3(2)(iii)(b) of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970 is ultra vires Article 14 of the Constitution of India for providing a disqualification for workman directors that does not apply to officer-employee directors.
Submissions/Arguments
Appellants argued that there is no rational basis for providing different disqualifications for workmen and officers, and that Clause 3(2)(iii)(b) creates discrimination without reasonable basis, violating Article 14.
Respondents argued that the classification between workmen and officers is reasonable and based on intelligible differentia, and the disqualification ensures continuity and stability in the Board of Directors.
Ratio Decidendi
The classification between workmen and officers under Section 9(3)(e) and (f) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 is based on intelligible differentia and has a rational nexus with the object of ensuring continuity and stability in the Board of Directors. The legislature is competent to prescribe different qualifications and disqualifications for different categories of directors. Clause 3(2)(iii)(b) of the Scheme, which disqualifies a workman from being nominated as a director if he is likely to attain the age of superannuation during his term, is a reasonable restriction and does not violate Article 14.
Judgment Excerpts
We find no merit in this submission for more than one reason.
It would be clear from a perusal of clauses (e) and (f) of Section 9(3) of the Act that both the categories of employees are different...
The legislature is competent to prescribe different qualifications and disqualifications for different categories of directors.
Procedural History
The appellants filed a writ petition (Writ Petition (c) No.618 of 2010) in the High Court of Bombay at Goa challenging the communication dated 10.10.2009 and the validity of Clause 3(2)(iii) of the Scheme. The High Court dismissed the writ petition on 08.04.2011. The appellants then filed a special leave petition in the Supreme Court, which was converted into Civil Appeal No.5570 of 2014.
Acts & Sections
- Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980: Section 9, Section 9(3)(e), Section 9(3)(f)
- Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970: Clause 3(2)(i), Clause 3(2)(ii), Clause 3(2)(iii), Clause 3(2)(iii)(b)
- Constitution of India: Article 14
- Trade Unions Act, 1926:
- Industrial Disputes Act, 1947: Section 2(s)
