# STATE BANK OF TRAVANCOJU v. ELIAS. ELIAS & ORS

- **Citation:** [1971] 2 S.C.R. 28
- **Court:** Supreme Court of India
- **Decided:** 1970-09-04
- **Bench:** J. C. Shah, V. Bhargava
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-bank-of-travancoju-v-elias-elias-ors-5324
- **Pages:** 7

## Headnote

Banking Regulation Act (10 of 1949), s. 45(5)(1)-Clause (ii) of
the .first proviso-Scope of-Second proviso--Finality of decision oj
Reserve Bank-Extends to what matters.
The respondent was doing the duties of a civil agent in a Bank. His
duties were those of clerk and the salary paid to him was that of a
clerk.
Pursuant to a scheme of amalgamation prepared by the Reserve
Bank under s. 45(4)(d)(ii) of the Banking Regulation Act, 1949, the
Bank was amalgamated with the State Bank of Travancore. The respondent was admitted as an employee of the State Bank and was allotted
the duties of a 'civil agent'.
But the State Bank directed that 'civil.
agents should be treated as 'subordinate staff consisting of peons, watchmen and sweepers, whose scale of remuneration was very ml,Jth lower
than that of the clerical staff. He sub111itted representations to the authorities which were rejected.
The Reselrve Bank of ·India, to which the
matter was referred under s. 45 ( 5) of the Act, held that the State Bank
was justified in placing the respondent in the subordinate cadre whicb
was a residual cadre in the State Bank.
On the question : ( 1 ) Whether the decision of the Reserve Bank was
final and binding under the second proviso to s. 45(5)(i); and (2)
Whether the terms and conditions of the respondent's 5ervice were not
affected by the classification of his post in the subordinate cadre,
B
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HELD : ( !) The decision of the Reserve Bank whether the qual111cations and experience of any of the employees of a transferor bank are
the same as or equivalent to the quallflcatlo111 and ex~ence of emplayeea
of cormpondin1 rank or status ot a transferee ban
11 declared final by
the second proviso to 1. 45(5) (I) of the Act. But nallty 11 not attached
p
to any other m'tte'r.
In the preunt cue, however, the Reurve Bank.
purportod to determine that the rank and 1tatu1 of civil 11ent1 worklna
In the orlalnnl Bank cormponded with the rank and 1tatu1 of the 1u~
ordinate cadre under the State Bank.
That wa1 a matter which could
not be referred to the Rescrv~ Bank and. lt1 decl1ion thereon w11 not
final. [32 C-D; 33 A·Dl
(2) Under cl. (ii) of the proviso to s. '15(5)(1),
a tran1feree
bank must grant the same remuneration and same terms alld condltloru
of service as are applicable to employees of corresponding rank or status
of the transferee bank subject to the qualifications and experience of the
employee being the same as or equivalent to those of such other employees of the transferee bank.
That is, a person performing certain
duties in a t'ransferor bank when admitted into the service of the transfere~ bank must be fitted in a cadre which is equivalent in status. and
rank with the status and rank of the employees in the transferor bank.
In grading him into the cadre of equivalent status and. rank, experience
and qualifications may be taken into account, but, the rank and stat"'
enjoyed by him in the transferor bank cannot be ignored.
[33 F.JI;
34 A-DJ
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STATE BANK v. ELIAS (Shah, J.)
29
In the present case, it was c6nccded that the respondent satisfied the
conditions as. to rank, status and qualifications of a clerk in the State Bank
and it. was only contendt".d_ that he did not hav·e the, requisite experience
On the ground of lack of experience the respondent could not be deprived
of his rank and status in !he transferee Bank.
Also. the decision of th;.:
Reserve Bank that the sllbordinate cadre was a residual cadre is not supported by any evidence. _ Therefore, it \Vas not· open to the State Bank
to fit the respondent, who was performing the duties of a clerk in the
original b~nk, into a subdrdinate cadre manned by employees performing duties, which are not clerical, \;ut of peons and the like. [33 D-F;
34 Dl
.
C1v1L AP.PELLA TE ~uRJsDICT10N .: Civil Appea: No. 1720 of
1968.
.
:
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Appeal by special leave from .the judgment and order dated
November 2, 1967 of the Kerala High Court in Writ Appeal No.
64 of 1966.
·
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M. C. Chagla,

## Text

28
STATE BANK OF TRAVANCOJU;
v.
ELIAS. ELIAS & ORS.
September 4, 1970
[J. C. SHAH AND V. BHARGAVA, JJ.]
Banking Regulation Act (10 of 1949), s. 45(5)(1)-Clause (ii) of
the .first proviso-Scope of-Second proviso--Finality of decision oj
Reserve Bank-Extends to what matters.
The respondent was doing the duties of a civil agent in a Bank. His
duties were those of clerk and the salary paid to him was that of a
clerk.
Pursuant to a scheme of amalgamation prepared by the Reserve
Bank under s. 45(4)(d)(ii) of the Banking Regulation Act, 1949, the
Bank was amalgamated with the State Bank of Travancore. The respondent was admitted as an employee of the State Bank and was allotted
the duties of a 'civil agent'.
But the State Bank directed that 'civil.
agents should be treated as 'subordinate staff consisting of peons, watchmen and sweepers, whose scale of remuneration was very ml,Jth lower
than that of the clerical staff. He sub111itted representations to the authorities which were rejected.
The Reselrve Bank of ·India, to which the
matter was referred under s. 45 ( 5) of the Act, held that the State Bank
was justified in placing the respondent in the subordinate cadre whicb
was a residual cadre in the State Bank.
On the question : ( 1 ) Whether the decision of the Reserve Bank was
final and binding under the second proviso to s. 45(5)(i); and (2)
Whether the terms and conditions of the respondent's 5ervice were not
affected by the classification of his post in the subordinate cadre,
B
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HELD : ( !) The decision of the Reserve Bank whether the qual111cations and experience of any of the employees of a transferor bank are
the same as or equivalent to the quallflcatlo111 and ex~ence of emplayeea
of cormpondin1 rank or status ot a transferee ban
11 declared final by
the second proviso to 1. 45(5) (I) of the Act. But nallty 11 not attached
p
to any other m'tte'r.
In the preunt cue, however, the Reurve Bank.
purportod to determine that the rank and 1tatu1 of civil 11ent1 worklna
In the orlalnnl Bank cormponded with the rank and 1tatu1 of the 1u~
ordinate cadre under the State Bank.
That wa1 a matter which could
not be referred to the Rescrv~ Bank and. lt1 decl1ion thereon w11 not
final. [32 C-D; 33 A·Dl
(2) Under cl. (ii) of the proviso to s. '15(5)(1),
a tran1feree
bank must grant the same remuneration and same terms alld condltloru
of service as are applicable to employees of corresponding rank or status
of the transferee bank subject to the qualifications and experience of the
employee being the same as or equivalent to those of such other employees of the transferee bank.
That is, a person performing certain
duties in a t'ransferor bank when admitted into the service of the transfere~ bank must be fitted in a cadre which is equivalent in status. and
rank with the status and rank of the employees in the transferor bank.
In grading him into the cadre of equivalent status and. rank, experience
and qualifications may be taken into account, but, the rank and stat"'
enjoyed by him in the transferor bank cannot be ignored.
[33 F.JI;
34 A-DJ
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STATE BANK v. ELIAS (Shah, J.)
29
In the present case, it was c6nccded that the respondent satisfied the
conditions as. to rank, status and qualifications of a clerk in the State Bank
and it. was only contendt".d_ that he did not hav·e the, requisite experience
On the ground of lack of experience the respondent could not be deprived
of his rank and status in !he transferee Bank.
Also. the decision of th;.:
Reserve Bank that the sllbordinate cadre was a residual cadre is not supported by any evidence. _ Therefore, it \Vas not· open to the State Bank
to fit the respondent, who was performing the duties of a clerk in the
original b~nk, into a subdrdinate cadre manned by employees performing duties, which are not clerical, \;ut of peons and the like. [33 D-F;
34 Dl
.
C1v1L AP.PELLA TE ~uRJsDICT10N .: Civil Appea: No. 1720 of
1968.
.
:
~I
.
Appeal by special leave from .the judgment and order dated
November 2, 1967 of the Kerala High Court in Writ Appeal No.
64 of 1966.
·
'-.._
M. C. Chagla, P. C. Bhartari iind J. B. D'adachanji, for the
appellant.
K. Jayaram, for respondent No._ 1.
/
Nire11 De, Attorney General and I. N. Shroff •. for respondent
No. 2.
J".he Judgment of the Court was ~elivered by
Shah, J,
K. E. Elias-first respondent herein-was an em-
.ployee of the Orienr Central Bank Ltd. He was posted to db duty
as a "Civil Agem...
The Orient Centro! Bank Ltd. was amalgamated with the Kottayam Bank Ltd.
The amalgamated bank
was named the Kottayam Orient Bank Ltd.-hcreinafter called
'the K. 0. Bank.'
The services of Elias were transferred to the
K. 0, Bank.
Elias continued. to perform the duties of a "Civil
Agent'' of thnt Bunk, and certain specific duties relating to court
cases wer~ ussigned to him by the K.O. Bank.
The K. 0. Bnnk
issued n circular stlnctiofling tho salary and nliowanccs payable to
ull its subordinnte stnf! uncfer three heads-Assistnnts1 Clerks und
Peons.
The
suluty and allowances
pnid to
the Clerks
were
Rs. 46-2:50·3·BO-EB'·4· I 00 plus dearness
allowance Rs. 20/ •.
No separate scule was fixed for "Civil Agents .. und it is common
r;round thnt Elh1s was given the salary· und nllownnces p(tynble to
Clerks.
Pursuant to a scheme .. of nmalgamation prepared by the Rese\:ve Bank under s. 45(4)(dl(ii) of-the Banking Regulation.Act 10
of 1949, the K. 0. Bank .was amalga11)ated with the State Bank of
Travancore-hereinafter called ·the ~state Bank"".
Under that
scheme. Elias was admitted as an employee of the State Bank and
he was allotted the duties of a "Civil Agent'". To fix the remuneration and the teni1s and conditions of the employees under the State
SUPREME COURT REPORTS.
(1971 J 2 SLR.
Bank, the Board of Directors constituted a Committee to assess
the qualifications of all its employees.
Pursuant to a. report recei\ed from the Committee, the State Bank directed that the "Civil
A~ents·· be treated as "subordinate staff" and that their remuneration be refixed. The "subordinate staff" consisted of peons, watch·
men, 'weepers and employees with similar duties. Their scale of
remuneration was Rs. 28-2-86-1-96-EB-l-101.
The scale of remuneration of the clerical staff was Rs. 112-307.
Elias submitted a representation to the Deputy General Manager that in absorbing him in the sabordinate staff he was denied
the statutory guarantee of remuneration and te'rms and conditions
of service. This representation was rejected by the Deputy General
Manager by letter dated October 19, 1963, and Elias was informed that ."having regard to his educational qualifications and experience it had been decided by the State Bank to place him in:
the subordinate cadre." Elias made a representation to the General Manager which was rejected on December l J, 1963 and he
was informed that the Bank was unable to grant his request for
absorption into :he "clerical cadre".
Elias then moved a petition in the High Court of Kerala for
a writ of certiorari or other apprOJJTiate writ quashing the orders
dated October 19, 1963 and December 11, 1963, fixing his rank
in the cadre of subordinate staff.
A Single Judge of the High
Court dismissed the petition. He observed that since there was no
post of "a Civil Agent" in the State Bank, that Bank was competent to place Elias in the subordinate cadre.
The learned Judge
also observed that, having regard to the educational qualifications
and experience Elias
was properly placed
in the "subordinate
cadre", and no ground was made out to quash the fixation of the
rank and status based on an assessment of his qualifications and
experience.
Elias appealed to a Division Bench of the High Court. During the pendency of the appeal, the State Bank applied for taking
on record the decision dated September 15, 1967, of the Reserve
Bank of India, holding that the State Bank was justified in not
giving Elias the status of a clerk, and in placing him in the residual classification of "subordinate staff". This document was admitted on the record. The Court in allowing the appeal observed
that on a consideration of the relevant· circumstances. Elias was
entitled to the rank and status of a clerk under the State Bank, and
the ordtr of the Reserve Bank being in violation of the statutory
provisions contained in the Banking Regulation Act, 1949, the
orders dated October 19, 1963 and December l·l, 1963 were liable
to be set aside.
This appeal has been
filed with special !eave
granted by this Court.
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STATE BANK v. ELIAS (Shah, !,)
31
Two contentions were urged by the State Bank in support of
the appeal:
(1) that the decision of the Reserve Bank dated September 15, 1967, was final by virtue of s. 45(5)(i) read
with proviso (ii) of the Banking Regulation Act X of
1949 and could not be ignored by the Court; and
(2) that the State Bank having assured to Elias the
remuneration which he was drawing, a mere classification of his post In the subordinate cadre did not affect
the terms and conditions of his service under the State
Bank.
Section 45 of the Banking Regulation Act, 1949, by sub-s. (4}
authorises the Reserve Bank in certain eventualities to prepare a
scheme for reconstruction of a banking company or for. amalgamation of the banking company with any other banking institution.
By sub-s. (5), insofar as it is relevant, it is provided :
''The scheme aforesaid may contain provisions for
all or any of the following matters, namely:-
(i) the continuance of the services of all the employees of the banking company (except such of them
as not being workmen within the meaning of the Industrial Disputes Act, 194 7, are specifically mentioned in
the scheme) in the banking company itself on its reconstruction, or, as the case may be, in the transferee bank
at the same remuneration and on the same terms and
conditions of service, which they were getting or, as the
case may be, by which they were being governed, immediately before the date of the order of moratorium :
Provided that the scheme shall contain a provision
that-
( i)
(ii) the transferee bank shall pay or grant not later
than the expiry of the aforesaid period of three years,
to the said employees the same remuneration and the
same terms ar.d conditions of service as are applicable
to the other employees of corresponding rank or status
of the transferee bank subject to the qualifications and
experience of the said employees being the same as or
equivalent to tho'e of such other employees of the transferee bank :
-
Provided further
that if in any case under clause
Iii) of the first proviso any doubt or difference arises as
32
SUPREME COURT REPORTS
[1971]2 S.C.R.
to whether the qualifications and experierlce of any of
A
the said employees are the same as or equivalent to the
•1ualifications and experience of the other employees of
corresponding rank or status of the transferee bank, the
doubt or difference sha!i be referred to the Reserve Bank
whose decision thereon shall be final:"
In exerci>e of the authority under sub-ss. (4) & (5) of s. 45 of the
Banking Regulation Act, 1949, the Reserve Bank prepared a
scheme under which employees tmder the K. 0. Bank were transferred to the employment of the State Bank. The terms of cl. (ii)
of the first proviso to sub-s. (5) of s. 45 were expressly included in
the scheme.
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The decision of the· Reserve Bank that the qualifications and
·experience of any of the employees of the transferor bank are the
sa.me as or equivalent to the qualifications and experience of the
:ither employees of corresponding rank or status of the transferee
bank, is declared by the Act to be final. But finality is not attached to any other matter decided by the Reserve Bank. The ReD
serve Eank by its decision purported to determine that the rank
and sta.:us of the Civil Agent> working in the K. 0. Bank corresponded wiih the rank and status of the subordinate cadre under
the State Bank.
The Reserve Bank of India observed th;tt "the
Civil Agent has nothing to do with the office work in the Bank
just as in the case of clerks .and other employees and his work is
Fessentially different from the work of the ordinary staff in the
bank". The Bank then proceeded to observe that :
"In fitting an employee of the transferor bank into
the transferee bank, the rank and status of the employee
as also the nature of the duties performed by the employee in the transferor bank rave to be ascertained.
F
The mere fact that the employee in transferor bank bore
a particular designation either ;ts a clerk or otherwise
does not conclude the issue and that does not necessariUy
follow that he should, in the transferee bank, be placed
in a post having the same designation ......... .
On examining the position the Reserve Bank of India
G
is of opinion that the duties which the employee was
discharging in the transferor bank do not relate to the
duties which a clerk has to do in the office."
In the view of the Bank the duties performed by the Civil Agent
were "essentially different from those of a clerk and called for a
much lower degree of qualifications, skill and competence- than
If.
those which a clerk normally brings to bear on his work", and
since the subordinate cadre of the State Bank in which Elias was
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STATE BANK V. ELIAS (Shah, /.)
33
fitted' was "in effect a residual classification" there was no change
and the Bank was justified in placing him in that classification. It
was also observed that there was "no change in the work" allotted
to Elias, nor was he expected to do the work oil' a c~aprasi or a
peon and that his emoluments were better than those m the trans·
feror bank.
The fact that prior to the fitment in the transferes:
bank, in terms of the provisions of paragraph-15 of the Scheme,
Elias was addressed as a civil clerk diq not confer on him the
status of a clerk iiil the transferee bank. These observations relate
to matters which could not be referred to the Reserve Bank and
the decision of the Reserve Bank thereon is not made final under
the second proviso to sub-s. (S)(i) of s. 45 of the Act. Only the
question whether the qualifications and experience of any of the
empolyees of the transferor bank are the same as or equivalent to
the qualifications and experience of the other employees of corresponding rank or status under cl. (ii) of the first proviso is intended
to be referred to the Reserve Bank.
In that view the first argument advanced on behalf of the appellant must be rejected.
It is said that Elias "had studied only upto 5th Form".
But
that is not decisive of the corresponding rank or status in which
"he could be fitted" in the State Bank.
Elias was employed in
the K. 0. Bank as a Civil Agent.
The duties of a Civil Agent
were not menial. In the K. 0. Bank no separate scale was prescribed for the post of a Civil Agent.
The salary paid io Elias
was that of a Clerk and his duties were those of a clerk. In the
State Bank, Elias was also performing the duties of a Civil Agent
and there was no separate classifi.cation of the office of a Civil
Agent. The subordinate cadre consisted of peons. watchmen and
sweepers and of employees performing similar duties, and a Civil
Agent performing duties which could not appropriately be ph1ced
in that classification. The decision of the Reserve Bank that the
~ubordinate cadre was a residual cadre. is. in our judgment. not
supported by any evidence.
It was conceded before the High
Court that Elias satisfied "three conditions as to the rank. status
and qualifications"
of a clerk in the State Bank.
It was only
the said employees being the same as or equivalent to those of
the first proviso to.,s. 45(5)(i) the transferee bank must grant the
same remuneration and the same terms and conditions of service
as are applicable to employees of corresponding rank or status of
the transferee bank subject to the qualifications and experience of
the said employees being the same as or equivalent to those of
such other employees of the transferee bank. The g•tarantee under
cl. (i) of s. 45(5) of the Act does not cover merely the remuneration : it covers the terms and conditions of service as well.
it
would be a gross denial of the guarantee if the employee is not given
the rank and status which he had in the transferor bank. It is. in
our judgment. not open to the transferee bank to "fit" an emplo-
34
SUPREME COURT REPORTS
[1971] 2 S.C.R.
yee of the transferor bank performing the duties of a clerk into a
subordinate cadre manned by employees performing duties which
are not clerical, but of peons, watchmen, sweepers and the like.
The Banking
Regulation Act, 1949, guarantees
the same
terms and conditions of service, and the transferee bank is entitled
to "fit" the employees of the transferor bank into the corresponding rank or status. In doing so it has to take into account the
qualifications and experience of the employees of the transferor
bank.
But in "fitting" an employee into the transferee bank, the
rank and status enjoyed by an employee in the transferor bank
cannot be ignored.
A person performing certain duties in
the
transferor bank when admitted into the service of the transferee
bank may be so "fitted" in a cadre which is equivalent in status and
rank with the status and rank of the employees in the transferee
bank, but in grading him into the· cadre of equivalent status and
rank, experience and qualifications must be taken into account.
On the ground of lack of experience and qualifications a person
cannot be deprived of his rank and status in the transferee bank.
Clause (ii) to the first proviso of s. 45(5)(i) does not, in our judgment, authorise the transferee bank to "fit" an employee in the
transferee bank into a post with rank and status lower than the
rank and status enjoyed by the employee in the transferor bank.
To accept the contention raise(! on behalf of the State Bank is in
effect to defeat the guarantee relating to the terms and conditions
of service under cl. (i) of s. 45(5) and the first proviso thereto.
In our judgment the High Court was right in holding that the
orders passed by the State Bank "fitting" Elias into a subordinate
cadre infringed the guarantee under s. 45(5 )(i) of the Banking
Regulation Act, 1949.
The appeal fails and is dismissed with costs in favour of Elias.
V.P.S.
Appeal dismissed.
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