Judgment:
ORDER
Ashok Bhan, J.
1. Aggrieved by the impugned judgment of the Single Judge dismissing the writ petition thereby upholding the notification Annexure-A amalgamating Vysya Co-operative Bank Limited, (hereinafter referred to as 'the transferor Bank') with the Industrial Co-operative Bank Limited, Bangalore (hereinafter referred to as 'the transferee Bank') and Annexure-E, dated 31-7-1985, declining absorption of the appellant by the transferee bank on the plea of not being desirable, has filed this appeal.
2. Transferor bank was under moratorium pursuant to an order made by the Government of India on 12th June, 1981 in terms of Section 45 read with Section 56(zb) of the Banking Regulation Act, 1949 being in certain financial problems and attendant question arising thereto. Registrar of Co-operative Societies formulated a scheme as provided under Section 14B of the Karnataka Co-operative Societies Act (hereinafter referred to as 'the Act') proposing to amalgamate the transferor and transferee bank in public interest. A draft scheme was framed inviting objections thereto. After considering the objections if any, a scheme Annexure-A was finalized with the approval of the Reserve Bank of India in terms of Section 14A of the Act. Clauses 10 and 11 of the scheme, which are required to be interpreted in this appeal are reproduced below:
'10. Subject to paragraph 11, all the employees of the transferor bank shall continue in service and be deemed to have been appointed by the transferee bank at the same remuneration and on the same terms and conditions of service as were applicable to such employees:
Provided that the employees of the transferor bank who have, by notice in writing given to the transferor bank or the transferee bank at any time before the expiry of one month next following the date on which this scheme has been sanctioned by the Registrar of Co-operative Societies, intimated their intention of not becoming employees of the transferee bank, shall be entitled to the payment of such compensation, if any, under the provisions of the Industrial Disputes Act, 1947 and such pension, gratuity, provident fund and other retirement benefits as may be ordinarily admissible under the rules or authorization of the transferor bankimmediately before the said date or the date of moratorium whichever applicable:
Provided further that the transferee bank shall in respect of the employees of the transferor bank who are deemed to have been appointed as employees of the transferee bank be deemed also to have taken over liability for the payment of retrenchment compensation in the event of their being retrenched while in the service of the transferee bank on the basis that their service has been continuous and has not been interrupted by their transfer to the transferee bank.
11. The transferee bank shall be entitled not to take in its employment such of the employees of the transferor bank as are, in its opinion not found desirable and/or found surplus, and the services or date or any other subsequent date as may be decided upon by the Registrar of Co- operative Societies, Karnataka, on the transferee bank making payment to such employees of compensation, if any, to which they are entitled under any law relating to industrial disputes in force in the State and such pension, gratuity, provident fund and other retirement benefits ordinarily admissible to them under the rules of the transferor bank immediately before the said date.
The transferee bank shall appoint a screening committee for this purpose in which two representatives of the transferor bank and two representatives of the Registrar of Co-operative Societies shall be associated. The screening committee may also determine the seniority of the staff of the transferor bank taken over by the transferee bank'.
3. Appellant was employed as a junior assistant in the transferor bank from 2nd of September, 1976. The majority of the shares of which were held by the Government of Karnataka. Shares in that bank were amalgamated with the transferee bank with effect from 30th November, 1981. In terms of Clause 10 and subject to Clause 11 of the scheme of amalgamation, the appellant was allowed to continue in the employment of the transferee bank on the remuneration and same conditions of service. His services were terminated with effect from 31st July, 1985 under the impugned order Annexure-E stating therein that he was not a desirable employee to be absorbed in the employment of the transferee bank. Aggrieved by Clause 11 of the scheme of amalgamation providing that the transferee bank could refuse to take an employee 'found undesirable' and the order terminating his services being 'not a desirable employee to be absorbed', the writ petition was filed inter alia contending (1) that the scheme amalgamating the transferor bank with the transferee bank is bad insofar as it provides for terminating of services in the matter provided under Clause 11 and therefore the consequential action taken by the respondent is also bad and (2) even otherwise the respondent should have followed the principles of natural justice before terminating the services of the appellant and not having done so, the impugned action is invalid in law.
4. Clause 10 provided that subject to the provisions of Clause 11, employees who were in transferor bank would continue in service and deemed to have been continued in the transferee bank on the same remuneration and same conditions. It is also stated therein that the transferee bank would be deemed to have taken over liability for the payment of retrenchment compensation in the event of their being retrenched while in the service of the transferee bank on the basis that their services would be continued and had not been interrupted by their transfer to the transferee bank. Under Clause 11 a screening committee consisting of two representatives of the transferor bank and one representative of the transferee bank and two representatives of the Registrar of Co-operative Societies was constituted to examine the absorption of the employees of the transferor bank in the transferee bank. Transferee bank can refuse to absorb an employee of the transferor bank if in its opinion the said employee was not found desirable/or was found surplus. The service of such employee were to stand terminated from that date or any subsequent date as may be decided by the Registrar of Co-operative Societies. Transferee bank was required to make payment to such employee of compensation, if any, provided under the Industrial Disputes Act, pension, provident fund, gratuity.
5. screening committee after looking into the records of the appellant and other relevant circumstances came to the conclusion that he was not a desirable employee to be absorbed in the employment of the transferee bank. The Board of Directors of the transferee bank in its meeting held on 16-10-1982 after due consideration of the recommendations made by the screening committee, accepted the same. Thereafter the Registrar of Co- operative Societies, Karnataka decided the date of termination to be 31st July, 1985.
6. The first contention raised before us by the Counsel for the appellant (this contention was not raised before the learned Single Judge) is that the order Annexure-E is not an order of termination simplicitor/non-absorption, but having found undesirable to be absorbed in the employment of the transferee bank he was terminated thus jeopardising his successfully getting another employment. According to him the words 'not desirable employee to be absorbed in the employment of the transferee bank' casts stigma and in that sense should be held to be an order of dismissal and not mere order of discharge. Reliance was placed on a judgment of the Supreme Court in Jagdish Mitter v Union of India, in which it was held that where the services of Government employees were dispensed with after recording that he was not found to be desirable to be retained in Government Service to be stigmatic which amounts to be an order of dismissal and not mere discharge from service. The submission made is without any substance. Appellant continued in the services of the transferee bank without any interruption subject to Clauses 10 and 11 of the scheme of amalgamation. He continued in the establishment of the transferee bank subject to those conditions. The action to be taken was by the screening committee after examining therecords regarding desirability to absorb the said employee in the employment of transferee bank. The relationship of master and servant did not come into existence. On amalgamation if the transferee bank refuses to take an employee of the transferor bank in its service by passing an order that he is undesirable, would not amount to termination of an employee. It is refusal to take an undesirable person in service. If the employee and employer relationship is subsisting then, an order of termination on the ground of 'undesirable' is liable for attack on the ground that it casts a stigma. But where no such relationship exists and the transferee bank refuses to take an employee of the transferor bank on the ground of undesirability, then it cannot be attacked on the ground that it is stigmatic. Appellant had not yet become the employee of the transferee bank. It is not a case of termination of service by an employer but, refusal to take/absorb a person in its employment. The fact that the transferor bank was in strained circumstances and there was a moratorium is not in dispute. Powers under Section 14B could therefore be invoked. While invoking those powers certain provisions were made in regard to the continuation of the employment on the establishment of the transferor bank with the transferee bank. When one bank is merged with another bank the new bank becomes the new employer. An employee could be permitted to continue in the services of the transferee bank only if the transferee bank is satisfied about the employee's suitability. An employee could not be continued in the services against the wishes of the new employer. Such of the employees who were not acceptable to the transferee bank could not be forced on it. All the same a fair and reasonable procedure had to be established for Screening to determine the desirability or otherwise of the employees for absorption in the transferee bank. For this the screening committee was constituted which was empowered to decide the questions relating to employment and other connected matters with it. Screening committee was to decide regarding the desirability of the absorption of the employee in the transferee bank. The recommendations were then to be referred to the Registrar for the purpose of fixing the date from which the services of the employees was to be terminated. The procedure adopted cannot be stated to be arbitrary as fair amount of representation was given to the representatives of the concerned parties.
7. It was then contended that the scheme amalgamating the transferor bank with the transferee bank is bad insofar as it provides for termination of services in the manner provided under paragraph 11 and therefore consequential action taken by the respondent is also bad. Scheme of amalgamation was prepared in exercise of the powers conferred by Section 14-B of the Act. Article 31-A(c) of the Constitution of India provides that notwithstanding anything contained in Article 13, no law providing for the amalgamation or two or more Corporations either in the public interest or in order to secure the proper management of any of the Corporations, established deemed to be void on the ground that it is inconsistent with or takes away or abridges any of the rights conferred by Articles 14 and 19. In case the taw has been made by the legislature of a State the provisions of Article 31-A were to apply only if such law had been reserved for consideration of the President of Indiaand obtained his assent. Karnataka Co-operative Societies Act was placed before the President of India for his consideration and it received the President's assent on 11th August, 1959. The scheme of amalgamation was prepared under Section 14-B of the Act which had received the assent of the President of India and therefore the scheme for amalgamation would attract Article 31-A of the Constitution and such scheme cannot be challenged on the ground of being violative of Article 14 or 19 of the Constitution. The challenge to the scheme providing for discontinuance/non-absorption of an employee in the services of the transferee bank in the manner provided under paragraph 11 cannot be challenged on the ground of violative of Articles 14 and 19 of the Constitution. We have already observed that the procedure provided was not arbitrary as adequate safeguards by way of providing representation to all concerned parties on the screening committee had been given.
8. Reliance placed by the Counsel for the appellant on a decision in K.I. Shephard v Union of India, to contend that the order terminating the services of the appellant without affording an opportunity of hearing being violative of principles of natural justice, is not sustainable in law, is misplaced. In the said case the amalgamation scheme under Section 45 of the Banking Regulation Act provided that some employees should be excluded from employment. It was held that the employees who were excluded should have been given a right to hear and where such hearing is not given the Court can intercede to get such benefit and the employees could not be penalised in such manner. It was also held that requirement of specific mention of the names in the draft scheme who were excluded from the employment had not been complied with and hence the final scheme published was bad. As the interest of the affected employees were excluded from employment which was in contravention of principles of natural justice, the order was struck down. In the present case the appellant was allowed to continue in employment by the transferee bank subject to paragraphs 10, 11 and 12. Appellant received a copy of the order by which he was allowed to continue in service subject to paragraphs 10, 11 and 12 and appellant accepted the employment subject to those conditions. He was allowed to continue in services in terms of the clauses thereto and the screening committee having examined the matter finding that the appellant was not desirable to continue in service recommended to the Registrar of Co-operative Societies accordingly. The scheme with which the Supreme Court was concerned in Shephard's case, supra, was altogether different. There the scheme itself excluded certain categories of employees and therefore it was stated that while taking an administrative action when the rights of certain parties are affected, hearing should have been given. screening committee examined the case as contemplated in the case of confirmation on probation, the decision was taken on the basis of the service record during the period of the employees past employment. In the case before the Supreme Court there was no enquiry by the authority much less by a screening committee as interpreted in the present case. The provisions of paragraphs 10 and 11 were made applicable in the present case in which enough safeguards were provided under the scheme. Neither the scheme nor the order can be held to be invalid being violative of principles of natural justice.
9. For the reasons stated above, we find no merit in the appeal and the same is dismissed with no order as to costs.