# INDIAN BANK v. K. USHA AND ANR. ETC. ETC

- **Citation:** [1998] 1 S.C.R. 358
- **Court:** Supreme Court of India
- **Decided:** 1998-01-28
- **Bench:** S.B. Majmudar, M. Jagannadha Rao
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/indian-bank-v-k-usha-and-anr-etc-etc-16107
- **Pages:** 22

## Headnote

Banking Regulation Act, 1949 :
Ss.2, 18(1) 18(3), 45(9) and (45(14)-Ama/gamation of Thanjavur
C Bank with Indian Bank-Claim for appointment on compassionate ground
by dependents of employees who died while in service with transferor bankScheme of Amalgamation indicating no provision on this topic-Claim based
on a Settlement entered into in 1982 between the Union of employees of
transferor bank and its management under s.2{p) of Industrial Disputes ActD Settlement not arrived at in conciliation proceedings-Held the Settlement
u/s 2(p) rlw s. 18(1) of l.D.Act would get transmitted to transferee bank on
combined operation of s.19(J)(d) of Specific Relief Act and s.2 of the Ac/-
Transferee bank liable to appoint claimants in service-Industrial Disputes
Act, I 947-S.s.2(p), 18(1) and 18(3)-
!Spec/fie Relief Act, I 963-S.19(/)(d)-
Service Law-Appointment on compassionate ground
E
The Bank ofThanjavur Limited was amalgamated with the Indian Bank
with effect from 20th February 1990 in accordance with the Scheme of
Amalgamation framed under Section 45 of the Banking Regulation Act,
1949. Clause 2 of the scheme provided for transfer of the property rights
and assets of the Bank of Thanjavur (transferor bank) to the Indian Bank
F . (transferee bank) and prescribed that all the corresponding liablilities, duties
and obligations of the transferor bank would become liabilities, duties and
obligations of the transferee bank. Clause 10 of the Scheme provided that
all the employees of the transferor bank would continue in service and be
deemed to have been appointed by the transferee bank at the same
G remuneration and the terms and conditions of service as were applicable to
such employees immediately before the close of business on 19th August
1989.
The respondents, the heirs and legal representatives of the employees
who died while in service of the Bank ofThanjavur, claimed appointments
H on compassionate ground on the basis of an agreement of the year 1982
358
INDIAN BANK v. USHA
359
entered into between the Union of the employees of the transferor bank with A
-
f..
its Manageme11t under Section 2(p) of the Industrial Disputes Act, 1947,
-··
albeit the Settlement was not arrived at during the conciliation proceedings.
The appellant bank refused to entertain the claims. The writ petitions filed
'.
by the respondents were allowed by the Single Judge of the High Court
.....,,...-
holding that they were entitled to get the benefit of the Settlement which was B
~-
binding not only on the transferor bank but also on its successor in interest
namely the appellant bank. Since the appellant bank rejected the claim of the
.,
respondents Single Judge issued writ of Mandamus directing the appellants
bank to appoint the respondents on compassi.onate ground. The writ appeals
of the bank were dismissed by the Division Bench of the High Court.
Aggrieved, the Indian Bank filed the present appeals.
c
It was contended for the appellant bank that the High Court erred in
issuing mandamus to the appellant to appoint the respondents in service. It
was submitted that the Scheme of Amalgamation limited the liability of the
transferor bank oQly to the extent provided in Clause IO which pertained to
~-
the then existing employees of the transferor bank and did not cover the D
liability under the 1982 Settlement to provide compassionate appointment to
the heirs of deceased employees of the transferor bank, and thus, in view of
sub-sections (9) and (14) of S.45 of the Banking Regulation Act, the Scheme
by incorporating Clause 10 had made a contrary provision on the topic of
granting compassionate appointment; that in any case the 1982 settlement E
arrived at between the management of the transferor bank and the Union of
its employees would only bind the parties to the settlement as per Section
18(1) of the Industrial Disputes Act and could not be enforced against the
transferee bank; and that even if the respondents were found to be eligible
to get employment, the H

## Text

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A
INDIAN BANK
v.
K. USHA AND ANR. ETC. ETC.
JANUARY 28, 1998
B
[S.B. MAJMUDAR AND M. JAGANNADHA RAO, JJ.]
Banking Regulation Act, 1949 :
Ss.2, 18(1) 18(3), 45(9) and (45(14)-Ama/gamation of Thanjavur
C Bank with Indian Bank-Claim for appointment on compassionate ground
by dependents of employees who died while in service with transferor bankScheme of Amalgamation indicating no provision on this topic-Claim based
on a Settlement entered into in 1982 between the Union of employees of
transferor bank and its management under s.2{p) of Industrial Disputes ActD Settlement not arrived at in conciliation proceedings-Held the Settlement
u/s 2(p) rlw s. 18(1) of l.D.Act would get transmitted to transferee bank on
combined operation of s.19(J)(d) of Specific Relief Act and s.2 of the Ac/-
Transferee bank liable to appoint claimants in service-Industrial Disputes
Act, I 947-S.s.2(p), 18(1) and 18(3)-
!Spec/fie Relief Act, I 963-S.19(/)(d)-
Service Law-Appointment on compassionate ground
E
The Bank ofThanjavur Limited was amalgamated with the Indian Bank
with effect from 20th February 1990 in accordance with the Scheme of
Amalgamation framed under Section 45 of the Banking Regulation Act,
1949. Clause 2 of the scheme provided for transfer of the property rights
and assets of the Bank of Thanjavur (transferor bank) to the Indian Bank
F . (transferee bank) and prescribed that all the corresponding liablilities, duties
and obligations of the transferor bank would become liabilities, duties and
obligations of the transferee bank. Clause 10 of the Scheme provided that
all the employees of the transferor bank would continue in service and be
deemed to have been appointed by the transferee bank at the same
G remuneration and the terms and conditions of service as were applicable to
such employees immediately before the close of business on 19th August
1989.
The respondents, the heirs and legal representatives of the employees
who died while in service of the Bank ofThanjavur, claimed appointments
H on compassionate ground on the basis of an agreement of the year 1982
358
INDIAN BANK v. USHA
359
entered into between the Union of the employees of the transferor bank with A
-
f..
its Manageme11t under Section 2(p) of the Industrial Disputes Act, 1947,
-··
albeit the Settlement was not arrived at during the conciliation proceedings.
The appellant bank refused to entertain the claims. The writ petitions filed
'.
by the respondents were allowed by the Single Judge of the High Court
.....,,...-
holding that they were entitled to get the benefit of the Settlement which was B
~-
binding not only on the transferor bank but also on its successor in interest
namely the appellant bank. Since the appellant bank rejected the claim of the
.,
respondents Single Judge issued writ of Mandamus directing the appellants
bank to appoint the respondents on compassi.onate ground. The writ appeals
of the bank were dismissed by the Division Bench of the High Court.
Aggrieved, the Indian Bank filed the present appeals.
c
It was contended for the appellant bank that the High Court erred in
issuing mandamus to the appellant to appoint the respondents in service. It
was submitted that the Scheme of Amalgamation limited the liability of the
transferor bank oQly to the extent provided in Clause IO which pertained to
~-
the then existing employees of the transferor bank and did not cover the D
liability under the 1982 Settlement to provide compassionate appointment to
the heirs of deceased employees of the transferor bank, and thus, in view of
sub-sections (9) and (14) of S.45 of the Banking Regulation Act, the Scheme
by incorporating Clause 10 had made a contrary provision on the topic of
granting compassionate appointment; that in any case the 1982 settlement E
arrived at between the management of the transferor bank and the Union of
its employees would only bind the parties to the settlement as per Section
18(1) of the Industrial Disputes Act and could not be enforced against the
transferee bank; and that even if the respondents were found to be eligible
to get employment, the High Court could not ha~e issued the directions to
appoint them in the absence of vacancies available.
F
~
_.
For the respondents it was contended that on a conjoint reading of
Section 2 of Banking Regulation Act, 1949 and Section 19(1 )( d) of the
Specific Relief Act, the 1982 Settlement would be binding on the appellant
bank; that even if two views were possible on the construction of relevant G
provisions of the Scheme and the Act, a construction which fructifies the
benevolent scheme underlying the settlement should be accepted; and that
since the appellant. bank had rejected the claim of the respondent for
appointment on compassionate ground and had requested the High Court to
decide the question on merits, on the peculiar facts of the case especially
when it was not the contention of the appellant bank before the High Court H
) .
360
SUPREME COURT REPORTS
[ 1998] l S.C.R.
A that there were no vacancies available with the bank to absorb the respondents
even if they were eligible to be so absorbed, the High Court was right in
,..(,__ •
issuing the mandamus.
Dismissing the appeals, this 2ourt
B
HELD : I.I. The High Court was perfectly justified in granting reliefs
to the respondents. It cannot be said that no liability could be imposed on the
appellant bank so far as the claim of the respondents for compassionate
appointments was concerned. [375-G-H; 379-E-F]
C
2.1. While construing any scheme in connection with the question of
providing compassionate appointment to the heirs of deceased employee who
was the bread-winner and whose exit had left his heirs in the lurch and in
precarious and vulnerable economic position a construction which fructifies
such a welfare measure has to be preferred as compared to another
construction which stultifies such a benevolent welfare measure. [374-CI
D
E
Workman of Messrs Binny Ltd. v. Management of Binny Ltd. and another,
[1985) 4 sec 325, relied on.
Canara Bank, Bangalore v. MS. Jasra and others, [1992) 2 SCC 484,
distinguished
2.2. · Before sub-section (14) of Section 45 of Banking Regulation Act,
1949 can be pressed in service it must be shown that there is an express
provision on a given topic of liability in the scheme or in the Section and
such express provision should be irreconcilable with and be in express
F conflict or be repugnant to any contrary express provision found in any other
instrument having the force of the law or in any part of the Act or any other
law or award. [373-D-E]
2.3. The claim of the respondents flows from a Settlement under s.
2(p) oflndustrial Disputes Act, 1947 entered into in 1982 by the transferor
G company with its erstwhile employees through their Union and the liability
arising under the said Settlement which is sought to be enforced against the
appellant-bank obviously is not a monetary liability or a crystallised liability
under Section 45(9) of the Banking Regulation Act, 1949 but it is purely
a contractual liability having a binding legal force under Section 18(1) of the
H l.D. Act. The terms 'liabilities, duties and obligations' as employed in the
INDIAN BANK v. USHA
361
second part of Clause 2 of the Scheme of Amalgamation will get colour from A
~ 'f..
the scheme of Section 45(9) and have to be read down as referring to
.financial liabilities, obligations and duties pertaining to assets and properties
transmitted to and vested in the transferee bank to the extent provided in the
scheme. They will not take in their sweep any contractual obligations dehors
such transmitted assets and properties of the transferor bank.
B
~,
1370-G-H; 371-A-CI
2.4. The words 'liabilities, duties and obligations of transferor bank'
would also necessarily have a nexus or connection with the assets and rights
which are contemplated to be transferred to the transferee bank. The second
part of Clause 2 of the Scheme of Amalgamation cannot be read independently c
of the first part and in isolation. The second part of Clause 2, therefore,
cannot be held to be representing a contrary intention or provision of not
undertaking the obligation of the transferor bank 'in connection with its
contractual liability under the 1982 Settlement with the Union of its
employees in connection with the topic of providing compassionate
appointments to the heirs of its deceased employees. 1371-E-G]
~
D
2.5. In the facts of the present case, neither clause 2 nor clause 10
of the Scheme of Amalgamation represents any provision regarding
compassionate appointments to be given to the heirs of the erstwhile deceased
employees of the transferor bank. In fact the entire Scheme is silent on this
topic. A provision which is silent on a topic cannot be said to have laid down E
any intention contrary to the one as reflected by any other express provision
contained in any other instrument or agreement. Hence, there is no occasion
for the said Clauses of the Scheme to project any contrary express provision
to override or to supersede the provisions contained in the 1982 Settlement
which was binding on the transferee bank and which would remain operative F
to the extent benefit thereunder is available to the concerned claimants like
..;
the respondents. Therefore, sub-section (14) ofs.45 of the Act cannot be said
~
to be applicable. 1375-E-F]
3.1. Under sub-section (1) of s.18 of the l.D. Act the 1982 Settlement
was binding on the parties to the settlement, namely, ex-workmen of the G
transferor bank on the one hand and the management of the transferor bank
>-
on the other. Till the time of amalgamation, therefore, the settlement was an
operative contractual obligation on the transferor bank which !tad legal
binding force qua it. However, sub-section (3) of s.18 of the I.D. Act being
out of picture by itself, the said settlement under Section 2(p) of the l.D. Act
which was binding under Section 18(1) on the transferor bank could not have H
362
SUPREME COURT REPORTS
[1998] I S.C.R.
A been pressed in service against the transferee bank which is the successor
bank and which was obviously not a party to the said Settlement. But, it is
Section 2 of the Act which becomes operative in such a situation. Once
Sectfon 2 applied it brought in its wake Section 19 of the Specific Relief Act,
1963 which provides for the relief against the parties and persons claiming
B under them and obviously is a law in force.
3.2. Consequently, the appellant transferee bank, which has emerged
as on amalgamated company as a result of the amalgamation with the earlier
company, would be liable to meet the contractual obligations flowing from the
settlement binding on the transferor company and these contractual
obligations.which could have been specifically enforced against the transferor
C company during the currency of the Settlement under Section 2(p) read with
Section 18(1) of the I.D. Act would get transmitted and foisted on the shoulders
of the appellant transferee company on the combined operation of Section
19(1)(d) of the Specific Relief Act and Section 2 of the Act.
[377-G-H; 378-A[
D
4.1. If the scheme for granting compassionate appointments as per the
rules and regulations of the employer concerned expressly provides that
such appointments can be granted to the heirs of its deceased employees
dying in harness only if vacancies exist for absorbing them, then the
compassionate appointments could be granted only against such vacancies
E and the Court cannot direct, by mandamus, to create vacancies for that
purpose if there are none. [378-8-D]
F
4.2. In the instant case, in fact, the respondents are already employed.
The appellant had already rejected the claim of the respondents only on the
plea that they had no legal right to claim compassionate appointments being
outsiders and heirs of ex-employees of the transferor bank. It was not the
case of the appellant while rejecting their claims that there were no vacancies
where they could be fitted even though they were eligible for such
appointments. Further, the appellant itself requested the High Court to
decide the question of eligibility of the respondents on merits and it joined
issue on this aspect before the High Court. Once the High Court found that
G the claim of the respondents was wrongly rejected by the appellant bank and
especially when the appellant bank had not put forward the defence of nonavailability of vacancies, no fault could be found with the High Court when
it issued mandamus to the appellant to grant appointments to the concerned
respondents. [378-D-H; 379-D-E)
Hindustan Aeronautics Ltd. v. V. A. Radhika Thirumalai (Smt.), [1996)
H 6 sec 394, held inapplicable.
>---
INDIAN BANK v. USHA [S.B. MAJMUDAR. J.]
363
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3619 of A
~.""
1993 Etc. Etc.
From the Judgment and Order dated 16.3.93 of the Madras High
Court in W.A. No. 733 of 1992.
N. B. Shetye, Ambrish Kumar for the Appellant in C.A. No. 3619/93.
B
Ambrish Kumar for the Appellant.
Ms. Indira Jaisingh and Sudarsh Menon for the Respondents.
The Judgment of the Court was delivered by
S.B. MAJMUDAR, J. Leave granted in Special Leave Petitions.
By consent of learned advocates appearing for contesting parties this
group of nine appeals was heard finally and is being disposed of by this
common judgment.
c
D
The common appellant, Indian Bank, in this group of appeals has
brought in challenge the judgment and orders of Division Benches of Madras
High Court allowing writ petitions of the respondents concerned who are the
heirs and legal representatives of deceased employees of Bank of Thanjavur
limited which was amalgamated with the appellant-bank with effect from 20th E
February 1990 in accordance with the Scheme of Amalgamation framed under
Section 45 of the Banking Regulation Act, 1949 (hereinafter referred to as 'the
Act'). The respondents concerned had sought compassionate appointments
from the appellant-bank on the ground that they were the heirs and legal
representatives of the deceased employees of Thanjavur Bank ( hereinafter
referred to as 'the transferor bank') whose assets and liabilities were taken F
over by the appellant-bank, hereinafter referred to as 'the transferee bank' for
the sake of convenience. The claim of the respondents for such appointments
was based on an agreement entered into between the recognised Union of the
employees of the transferor bank in the year 1982 with the Management of
the transferor bank under Section 2(p) of the Industrial Disputes Act, 1947 G
(hereinafter referred to as 'the 1.D. Act') The said settlement was not arrived
at during conciliation proceedings, hence it remained binding only on the
parties to the said settlement, namely, the Union of employees of trai;isferor
bank on the one hand and the Management of the transferor bank on the
other. As per the said settlement a scheme of compassionate appointment to
be given to the eligible heirs of deceased employees of transferor bank who H
364
SUPREME COURT REPORTS
[ 1998] l S.C.R.
A died in harness was evolved. The respondents' contention was that the said
settlement remained binding to the transferee bank as the successor bank
which had taken over assets and liabilities of the transferor bank pursuant to
the order of amalgamation. The appellant transferee bank refused to entertain
the said claims. That resulted in diverse writ petitions by the respondents
before the High Court. The High Court took the view that the respondents
B were entitled to get the benefit of the said settlement which was binding not
only on the transferor bank which was a party to the settlement but also on
its successor-in -interest, namely, the appellant-bank and as the appellantbank had rejected the request of the respondents by the impugned judgments,
writs of mandamus were issued to the appellant-bank to grant appointments
C on compassionate ground to the concerned respondent-writ petitioners.
Having obtained special leave to appeal under Article 136 of the Constitution
of India these appeals have been moved by the appellant-bank challenging
the aforesaid decisions rendered by the High Court.
It may be stated that earlier seven Special Leave Petitions arising out
D of a Common judgment of the Division Bench of the High Court in writ
appeals confirming decisions of the learned Single Judge were taken up for
consideration by this Court and while granting leave the prayer for stay was
refused. We are informed that as there was no stay of the impugned orders
of the High Court pending these appeals the respondents concemed have
E already been appointed to the respective posts which they are holding and
are working as employees of the appellant-bank. However it was brought to
our notice by learned senior counsel for the appellant that the said
appointments were given by the appellant subject to the result of these
appeals and they will, therefore, have to abide by the present decision of
ours.
F
G
H
In support of these appeals learned senior counsel, Shri N. B. Shetye,
who appeared in Civil Appeal No. 3619 of 1993 which was taken up as a lead
case and Shri Ambrish Kumar, learned counsel for the appellant-bank in the
rest of the appeals raised for our consideration the following contentions:
1.
The Scheme of Amalgamation limits the liability of the transferor
bank only to the extent provided in Clause 10 of the Scheme of
Amalgamation which pertains to the then existing employees of
the transferor bank who were taken over by the transferee bank
and the said scheme did not cover the transferor bank's liability
under the settlement to provide compassionate appointments to
II-
,
'. ., "'
"}-
.
'
---<.
INDIAN BANK v. USHA [S.B. MAJMUDAR, J.]
365
the heirs of its deceased employees who might have died in A
harness and consequently the High Court was in error in issuing
mandamus to the appellant to absorb all these respondents in
service of the bank.
2.
In any case the settlement of 1982 arrived at between the
management of the transferor bank and the Union of its employees B
could only bind the parties to the settlement as per Section 18( I)
of the I.D. Act and could not be enforced against the successorbank, namely the appellant-bank.
3.
In any view of the matter the High court could not have issued
mandamus to the appellant- bank to appoint the concerned c
respondents even if they were found to be eligible to get such
employment under the Scheme and on the basis ofsettlement of
I 982, without first ascertaining whether there were vacancies on
which such persons could be accommodated and it should have
been left to the appellant - bank in any case to consider this D
aspect of the matter and even on that ground the final orders
passed by the High Court in favour ofthe respondents cannot
be sustained.
_ Learned Senior counsel for the respondents, Ms. Indira Jaisingh, on the
other hand, while refuting these submissions contended that on a . correct E
interpretation of Section 45 of the Act and the scheme found thereunder it
has to be held that none of the provisions thereof gave any contrary indication
in connection with the employment to be offered on compassionate grounds
to the heirs of the deceased employees of transferor bank and consequently
the relevant clauses of the Scheme on which the appellant-bank relies would
not cut across the scope and ambit of the settlement entered into by the F
predecessor-bank, namely, the. transferor bank with its own employees through
their union. She further submitted that on a conjoint reading of Section 2 of
the Act and Section 19(1) (d) of the Specific Relief Act such settlement would
be binding on the successor-bank namely, the appellantcbank even apart from
the non-applicability of Section 18(3) of the l.D. Act in this connection. ltwas G
also vehemently contended by learned senior counsel for the respondents
that even if two views are possible on the· construction of relevant provisions
of the Scheme and Section 45 of the Act, a construction which fructifies the
benevolent scheme underlying the settlement being a welfare measure deserves
to be accepted and the contrary construction which stultifies such a benevolent
and a labour welfare provision should not be accepted. She lastly submitted H
366
SUPREME COURT REPORTS
[1998] 1 S.C.R.
A that so far as the third contention of the learned senior counsel for the
appellant-bank is concerned it was the appellant-bank itself which requested
the High Court to decide the question on merits by placing appropriate
material before it and as it had already rejected the claims of the respondents
there was no question of the High Court calling upon the appellant to reconsider the matter on the peculiar facts of this case and especially when it
B was not the contention of the appellant bank before the High Court at any
time either before the learned Single Judge or in writ appeals or even in other
writ petitions that there were no vacancies available with the bank to absorb
the respondents if they were otherwise eligible to be so absorbed and hence
even the third contention does not deserve to be accepted.
c
We shall deal with the aforesaid three contentions seriatim.
Contention No. I
At the outset we must look at the relevant provisions of the Act under
D which the scheme of Amalgamation saw the light of the day. The aforesaid
Scheme was promulgated under the provisions of the Act which was enacted
in 1949 as Act 10 of 1949 by the Central legislature with a view to consolidate
and amend the law relating to banking. The Act sought to regulate the
business of banking companies and gave wide powers to the Reserve bank
E of India to control and monitor the same. Various regulatory provisions were
made in connection with the working of commercial banks covered by the
sweep of the Act. During the working of the Act after its enactment in 1949
it was found that the working of some of the banking companies was not upto
the mark and the situation might arise during its commercial existence where
it would be found to have reached the point of bankruptcy. In order to deal
F with such sick commercial banks covered by the Act the legislature by Act
3 7 of 1960 inserted Section 45 with its relevant sub-sections empowering the
Reserve Bank to apply to the Central Government for an order of moratorium
in respect of such banking companies. During the period of moratorium of
such a banking company the Reserve Bank was authorised, on being satisfied
G about the existence of various conditions contemplated by Clauses (a)) to (d)
of Sub-section ( 4) of Section 45, to prepare a scheme for the reconstruction
of the banking company, or for the amalgamation of the banking company
with any other banking institution. As the transfer9r bank in the present case
had reached nadir of its financial commitments and functioning, a moratorium
for it was ordered by the Central Government at the behest of the Reserve
H Bank as per Section 45 Sub-section(!) of the Act and it was during the period
'
..
~-
INDIAN BANK v_ USHA [S.B. MAJMUDAR, J.]
367
of moratorium of the transferor bank that a Scheme of Amalgamation of the A
"
transferor bank with the appellant transferee bank was promulgated by the
Reserve Bank. The said scheme was sanctioned by the Central Government
as per sub-section 7 of Section 45 with effect from 20th February 1990.
Naturally the question arose as to what was to happen to the erstwhile
employees of the transferor bank, whose assets and liabilities were being B
~
taken over as provided in the scheme, by the transferee bank. The provision
regarding the same was incorporated in Clause I 0 of the Scheme while Clause
2 of the scheme dealt with transfer of assets and liabilities of the transferor
bank to the transferee bank as indicated therein.
It is in the light of the aforesaid statutory set up and the resultant c
amalgamation scheme and its provisions regarding the matter~ in issue that
the first contention of the learned senior counsel for the appellant will have
to be examined. When we tum to the relevant clauses of the Scheme of
Amalgamation we find three clauses of the Scheme which have an impact on
the decision of the present controversy. The said clauses read as under:
D
..(_
"CLAUSE - 2: As from the date which the Central Government may
specify for this purpose under sub-section (7) of Section 45 of the
said Act, (hereinafter referred to as the prescribed date ) all rights,
powers, claims, demands, interests, authorities, privileges, benefits,
assets and immovables including premises subject to all incidents of E
tenure and to the rents and other sums of money and covenant
reserved by or contained in the leases or agreement under which they
are held, all office furniture, loose equipment, plant apparatus and
appliance, books papers stocks of stationery, other stocks and stores,
all investments in sto~ks, shares and securities, all bills receivable in F
-«
hand and in transit, all cash in hand and on current or deposit account
..
(including money at all or short notice) with banks bullion, all book
debts, mortgage debts and other debts with the benefit of securities,
or any guarantee therefor, all other if any, property rights and assets
benefit of all guarantees in connection; with the business of the
G
transferor bank shall, subject to the other provisions of this scheme,
.._
stand transferred to, and become the properties and assets of the
transferee bank and as from the prescribed data all the liabilities,
duties and obligations of the transferor bank shall be and shall become
the liabilities, duties and obligations of the transferee bank to the
extent and in the matter provided hereinafter.
H
368
SUPREME COURT REPORTS
[1998] l S.C.R.
A
CLAUSE - 10: 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 immediately before
the close of business on 19th August, 1989 provided that the
B
employees of the transferor bank who have, by notice in writing given
to the transferor or the transferee bank at any time before the expiry
~
of 1 month next following the date on which this scheme has been
sanctioned by the Central Government 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
c
Industrial Disputes Act, 1947 and such pension, gratuity provident
fund and other retirement benefits as may be ordinarily admissible
under the rules of authorisations of the transferor bank immediately
before the close of business on I 9th August, 1989. Provided further
that the transferee bank shall in respect of the employees of the
D
transferor bank who are deemed to have been appointed as employees
~-
of the transferee bank be deemed also to have taken over the liability
for them 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 continued and has not been interrupted by their
transfer to the transferee_ bank.
E
CLAUSE - 16: If any doubt arises in interpreting any of the provisions
of this Scheme, the matter shall be referred to the Reserve Bank of
India and its opinion shall be conclusive and- binding on both the
transferee and transferor banks and also on all. the members, depositors
and other creditors and employees of each of these banks and on any
F
other person having any rights or liability in relation to any of these
~-
banks."
-·-
We shall first see the scope and ambit of Clause 2. The first part of the said
clause provides for the transfer of all assets and properties of the transferor
G
bank to the transferee bank as it provides transfer of all rights, powers, claims,
demands, interests, authorities, privileges, benefits, assets and immovables
including premises and also including all furniture and other stock investments
etc. This part of the clause refers to the asset side of the Picture. Along with
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the transfer of these assets and the rights of the transferor bank in favour
of the transferee bank the latter part of the clause lays down, after observing
H that these properties and assets will become the properties and assets of the
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I
INDIAN BANK v. USHA [S.B. MAJMUDAR, J.]
369
transferee bank as and from the prescribed date that all the liabilities, duties A
and obligations of the transferor bank shall be and shall become the liabilities,
duties and obligations of the transferee bank to the extent and in the manner
provided !hereinafter meaning thereby in the subsequent clauses of the scheme.
Relying on the second part of c!ause 2 learned senior counsel for the appellant
submitted that second part of Clause 2 is independent of the first part and, B
therefore, when it deals with the transmission of liabilities, duties and
obligations of the transferor bank to the transferee bank the said transmission
shall be limited only to the extent to which the subsequent clauses of the
Scheme would provide for such transmission and nothing more. It was,
therefore, submitted that whatever may be the liability or contractual obligation
of the transferor bank, under the 2(p) Settlement of 1982 with the Union of C
its employees, such liability or obligation did not get transmitted to the
transferee-bank as the latter part of the Scheme did not provide for any such
obligation or liability being incurred by the transferee bank. It can, therefore,
be said that to that extent no such liability or obligation was undertake.n by
the transferee bank. In this connection strong reliance was placed on Clause
I 0 of the Scheme which only concerned the then existing employees of the D
transferor bank on the appointed date whose services were taken over by the
transferee bank. Therefore, in connection with the ex-employees of the transferor
bank only limited provision was made in Clause. IO and no provision was
made regarding deceased employees and their heirs and how the heirs of such
deceased employees of the transferor bank were to be dealt with. In this E
connection it was also .submitted, placing reliance on Sections 45(9) and
45(14) of the Act, that the Scheme by incorporating clause IO of the Scheme
of Amalgamation had made a contrary provision on this topic of granting
compassionate appointments to the heirs of the deceased employees of the
transferor bank who might have died in harness and hence this contrary
provision in the Scheme superseded the iiability flowing from the said F
Settlement entered into by the transferor bank in 1982 with the Union of its
erstwhile employees.
It must at once be stated that on first blush the contention of learned
senior counsel for the appellant appears attractive but on a closer scrutiny G
it falls through as we will presently show. Clause 2 of the Scheme has to be
read in the light of Section 45(9) which reads as under:-
"45(9). On and from the date of the coming into operation of, or as
the case may be, the daie specified in this behalf in , the scheme shall
be substituted; the properties and assets of the banking company H
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370
SUPREME COURT REPORTS
[1998) I S.C.R.
A
shall, by virtue of and to the extent provided in the scheme, stand
transferred to and vest in, and the liabilities of the banking company
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shall, by virtue of and to the extent provided in the scheme, stand
transferred to and become the liabilities of, the transferee bank."
The said sub-section obviously deals with a provision to be incqrporated in
B the Scheme regarding properties and assets of the banking company which
are to be transferred under the Scheme to the transferee bank. The said clause
enables the Scheme to provide the extent to which such properties and assets
of the transferor company will get transferred to the transferee bank and
would vest in it. And then follows the second part of sub-section (9) of
c Section 45 which deals with liabilities of the banking company and makes an
identical provision that such liabilities of the transferor bank also by virtue
of and to the extent provided in the Scheme would stand transferred to and
become the liabilities of the transferee bank. Thus, the said sub-section (9)
of Section 45 of the Act enables the Scheme-making authority to provide in
that Scheme the extent to which the properties and assets of the banking
D company can be transferred and corresponding liabilities attached to such
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properties and assets of transferor company also can get vested in the
< ..
transferee company. It is obvious that when assets of the transferor company
are being transferred and are to vest in the transferee company under the
Scheme, it could not be a one-way traffic. Hence, the corresponding liabilities
E of the banking company attaching to such assets would also have to travel
as a result of the said transmission of the properties and assets of the
transferor company to the transferee company to th~ extent provided in the
Scheme. In the context in which the word 'liabilities' is employed by the
Legislature in Section 45 sub-section (9) of the Act it has to be held that
'liabilities' as contemplated therein are the monetary liabilities of the transferee
F company in connection with the properties of the transferor company which
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stand transferred and have vested in the transferee company as a result of
the Scheme of Amalgamation. For deciding the scope and ambit of such
;.
financial liabilities what is expressly provided in the Scheme in that connection
has to be kept in view and only such I iabilities would get attached to the
G
transferee company. Now it is obvious that the claim of the respondents flows
from 2(p) Settlement under l.D. Act entered into by the transferor company
with its erstwhile employees through their Union and the liability arising
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under the Settlement which is sought to be enforced against the appellant-
'
bank. Obviously is not a monetary liability or a crystallised liability. But it is
\
purely a contractual liability having a binding legal force under Section 18(1)
H of the 1.0. Act. Such liability is not within the sweep of sub-section (9) of
!
JNDIAN BANK v. USHA [S.B. MAJMUDAR, J.]
371
Section 45, which as we have seen earlier, will have limited connotation of A
~.X,
being financial liability of the transferor bank which would travel and get
transmitted to the transferee bank along with the properties and assets of the
transferor bank which, as indicated in the Scheme, would vest in the transferee
bank. Section 45(9), therefore, cannot render any assistance to the appellantbank. On a parity of reasoning, therefore, the terms 'liabilities, duties and B
obligations' as employed in the second part of Clause 2 of the Scheme will
get colour from the Scheme of Section 45(9) and have to be read down as
referring to financial liabilities obligations and duties pertaining to assets and
properties transmitted to and vested in the transferee-bank to the extent
provided in the Scheme. They will not take in their sweep any contractual
obligations dehors such transmitted assets and properties of the transferorC
bank. This is made clear when we tum to the first part of Clause 2 which has
provided for the transmission of assets and rights of the transferor company
to the transferee company under the Scheme. Therein a detailed provision is
made even about transfer of office furniture, loose equipment, plant apparatus
and appliances, books, papers, stocks of stationery, other stocks and stores
etc. After catalogueing these assets for transmission to the transferee company D
the Second part which is complementary to the first part also deals with the
transmission of liabilities, duties and obligations of the transferor bank.
Therefore, the words 'liabilities, duties and obligations of transferor bank'
would also necessarily have a nexus or connection with the assets and rights
which are contemplated to be transferred to the transferee-bank. The second E
part of Clause 2 cannot be read independently of the first part and in isolation.
If learned counsel for the appellant were right in their contention then second
part of the Clause 2 would have been enacted separately as an independent
clause. The second part of Clause 2, therefore, cannot be held to be
representing a contrary intention or provision of not undertaking the obligation
of the transferor-bank in connection with its contractual liability under 2(p)
settlement with the Union of its employees in connection with the topic of
providing compassionate appoi11'r'ents to the heirs of its deceased employees.
F
That takes us to the consideration of sub-section (14) of Section 45 on
which strong reliance was placed by learned senior counsel for the appellant. G
The said sub-section 14 reads as under:-
"45(14). The provisions of this section and of any scheme made under
it shall have effect notwithstanding anything to the contrary contained
in any other provisions of this Act or in any other law or any
agreement, award or other instrument for the time being in force."
H
372
SUPREME COURT REPORTS
(1998] 1 S.C.R.
A A mere look at the said provision shows that before it can apply there must
be a provision on a given topic either in any of the other clauses of Section
45 or any scheme framed thereunder and such a provision must be contrary
to any other provision on the same topic as found in any other part of the
Act or in any other law or award or instrument for the time being in force.
B Thus on the same topic there must be two contradictory provisions, one, on
the one hand in the Scheme or any-part of Section 45 and second, on the
other hand on the same topic expressing an entirely different and contrary
intention in any other part of the Act or in any law or any other award or
instrument fC>r the time being in force. The topic for consideration around
which the controversy revolves in the present cases is the question of
C providing compassionate appointments to the eligible heirs of deceased
employees of transferor-bank who died in harness and who claimed such
appointments under the Settlement of 1982 from the transferee-bank. On this
topic or question there must be an express provision in the Scheme or Section
45 of the Act and such express provision should be contrary to and different
D
from the provision made on the same question and topic by any other part
of the Act or in any other law, agreement, award or instrument for the time
being in force. So far as this aspect is concerned learned counse~ for the
appellant pitched their faith only on the second part of Clause 2 and Clause
10 for submitting that there is such a contrary provision in the Scheme which
would govern the present controversy. We have already seen that second
E part of Clause 2 does not reflect such a contrary provision.
So far as Clause 10 is concerned it was submitted that it is a complete
code in itself which deals with the topic of the Service conditions of the
erstwhile employees of the transferor bank and as Clause I 0 has not provided
anything regarding deceased employees of the transferor bank and about the
F rights and claims of their eligible heirs who could claim appointments on
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compassionate ground as their bread-winners had died in harness it can be
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said that by necessary implication Clause I 0 had excluded such a liability on
"-·
the part of the transferee bank in discharging the obligations flowing from the
2(p) settlement entered into by the transferor bank with its erstwhile Employees'
G Union and consequently Section 45 sub-section (14) of the Act can get
attracted on the facts of the present case. It is not possible to agree with this
contention. The reason is obvious.