1. The above first appeal was filed by Narshibhai Fakirbhai Patel, whose suit for declaration, that the orders regarding the termination of his services with the Reserve Bank, dated June 13, 1958 and August 5, 1958 were illegal, ultra vires and inoperative and contrary to natural justice; that he continued in the service of the respondent-defendant, Reserve Bank of India, as a coin note examiner, and had a right to all the benefits and emoluments of the said post, was dismissed on March 3, 1970, by the learned Judge in the City Civil Court, Bombay, on the ground that, his suit was not maintainable, that he was not a Central Government servant, that he was not holding a civil post under the Union of India; and, therefore, he was not protected under Art. 311 of the Constitution of India, and his services were legally and properly terminated under the Reserve Bank of India (Staff) Regulations, 1948.
2. Regulation No. 25(2) read as under :
'(2) The Bank may determine the service of any employee after the expiry of the period of his probation on giving him -
(a) three month's notice or pay in lieu thereof if he is an employee in Class I, and
(b) one month's notice or pay in lieu thereof if he is an employee in any other class.
The power to determine the service of an employee shall be exercised by the Governor with the prior approval of the Central Board in the case of an officer and by the Manager with the prior approval of the Governor in the case of other employees.'
The learned Judge further overruled the contention on behalf of the plaintiff that the said Regulation 25(2) contravened Art. 14 of the Constitution of India, as that ground was not pressed before him.
3. The finding of the learned Judge, that Art. 311 cannot be invoked by an employee of the Reserve of India, is supported by a decision of the Supreme Court, in Dr. S. L. Agarwal v. The General Manager, Hindustan Steel Ltd. : (1970)IILLJ499SC , in which it was laid down that a statutory corporation was not a department of the Government, and its servants and employees were not holders of civil posts under the State. In view of the said decision, Mr. Baadkar, the learned counsel appearing on behalf of the appellant found it impossible to argue that the plaintiff was protected by the provisions of Art. 311 of the Constitution of India.
4. His principal contention, in support of the appeal, was that the Reserve Bank of India (Staff) Regulations, 1948 were made by the Central Board of Directors of the Reserve Bank of India, in exercise of its powers, under S. 58 of the Reserve Bank of India Act, 1934, and they require the previous sanction of the Central Government, which was not admittedly obtained, in the present case; and hence he argued that the regulations were invalid; and the Reserve Bank could not justify the termination of the services of the plaintiff, under the invalid Regulation 25(2).
5. He further submitted that as the regulations require the previous sanction of the Central Government, Art. 16 of the Constitution of India also comes into operation, with regard to the power of sanction to make a regulation by the Central Government, and hence even though the plaintiff was not holding a civil post under the Central Government, for invoking Art. 311 of the Constitution, he was protected under Art. 16 of the Constitution, which guaranteed equality of opportunity to all citizens in the matter of appointment or employment to any office under the State.
6. These arguments ignore the relevant provisions of the Reserve Bank of India Act, under which the Reserve Bank of India is incorporated, and the reference to which is necessary for understanding the scope and nature of S. 58 of the Act. The Reserve Bank of India, is incorporated under S. 3 of the Reserve Bank of India Act, 1934, which runs as follows :
'3. (1) A bank to be called the Reserve Bank of India shall be constituted for the purposes of taking over the management of the currency from the '(Central Government)' and of carrying on the business of banking in accordance with the provisions of this Act.
(2) The Bank shall be a body corporate by the name of the Reserve Bank of India, having perpetual succession and a common seal, and shall by the said name sue and be sued.'
7. Section 7 of the Act says :
'7. (1) The Central Government may from time to time give such directions to the Bank as it may, after conciliation with the Governor of the Bank, consider necessary in the public interest.
(2) Subject to any such directions, the general superintendence and direction of the affairs and business of the Bank shall be entrusted to a Central Board of Directors which may exercise all powers and do all acts and things which may be exercised or done by the Bank.
(3) Save as otherwise provided in regulations made by the Central Board, the Governor and in his absence the Deputy Governor nominated by him in this behalf, shall also have powers of general superintendence and direction of the affairs and the business of the Bank, and may exercise all powers and do all acts and things which may be exercised or done by the Bank.'
8. The functions of the Reserve Bank as the Central Bank of the country, or as the bank of the bankers, and as the Governments' banker are laid down in Chapter III, such as its powers to transact the Government business, right to issue bank notes, from its issue Department, to regulate legal tender, etc. Under S. 17, the Reserve Bank is authorised to transact the various kinds of business specified in that section, mostly concerning the Union of India, the State Government, local authorities, banks and other corporations and persons, relating to the finance and banking in the country. Section 19 prohibits the Bank from entering into certain kinds of business, which ordinary bankers would do, such as making loans or advances, to private parties, drawing or accepting bills payable otherwise than on demand and allowing interest on deposits or current accounts, purchasing the shares of any banking company or of any other company, etc.
9. It is in the context of these powers relating to the finance and banking in the country and its functions as the Central Bank of the country, that under Chapter IV general provisions are made, including provisions to make regulations with the previous sanction of the Central Government, consistent with the Act 'to provide for all matters for which provision is necessary or convenient for the purpose of giving effect to the provision of this Act.'
10. It is only such regulations, which are necessary or convenient for the purpose of giving effect to the essential functions of the Reserve Bank under the provisions of the Act, which would fall within the ambit of S. 58 of the Act. In my opinion the provisions of the section must refer to the special provisions in the Act for regulating its basic functions as the Central Bank or the Bank of bankers or Governments' banker.
11. Even clause (2) of S. 58 which specifies certain matters, with respect to regulations, which may be made, without prejudice to the generality of the foregoing provisions of clause (1) of S. 58, refers only to the constitution and management of staff and superannuation funds for the officers and servants of the Bank in clause (i) and generally, for the efficient conduct of the business of the Bank in clause (r), and not to the manner in which, the services of the employee can be terminated, which are only incidental to the main functions of the Bank, as the Central Bank or Government's bank of the country. All such matters, such as appointment and termination of services of the staff would naturally fall within the scope of S. 7 of the Act relating to the day to day management or the organisation of the staff and services for running the Bank.
12. It is true that to some extent, the provisions contained in S. 7 and S. 58 are apparently overlapping. They are really not so. The Legislature could not have an intention to confer by one section, namely, S. 7(2). the power to make regulations, without the sanction of the Central Government, although it may be subjected to directions, if any, under S. 7(1), and in another section, namely, S. 58 confer powers to make regulations only with the previous sanction of the Central Government. The Legislature must be attributed an intention in making the distinction between regulations.
13. In my opinion, the intention will be clear when we see the scheme of the whole Act and the essential nature of the Reserve Bank as an incorporated body to function as the Central Bank of the country, subject to the powers of the Government of India and control of the Parliament. The Reserve Bank regulates the economy of the country, through issue of currency, finance, banking, etc. As such it is with regard to the said essential functions alone, that S. 58 comes into operation. With regard to the ordinary discipline and management functions of regulating conditions of service and the staff, it must be held that the Central Board, subject to the directions, if any, of the Central Government, is competent to exercise powers and to make regulations in respect of all such things just like any other incorporated body or an employer.
14. It is well settled that Corporation is as fully capable of binding itself by any contract as is an individual, except as to those contracts which from the nature of objects of the Corporation, or from the express or implied terms of its Constitution it is prohibited from making. (see Halsbury's Laws of England, Fourth Edition, para 1366, page 798).
15. In the present case, it cannot be disputed that although the plaintiff had joined services earlier, after the regulations were framed, he had made a declaration as required by the regulations in prescribed form. A true copy of the declaration is at Ext. 'B' annexed to the written statement and runs as follows :
C/o Reserve Bank of India,
Issue Department, Bombay.
I, Narshibhai Fakirbhai Patel hereby declare that I have read and understood the Reserve Bank of India (Staff) Regulations, 1948, and in terms of the provisions thereof, I elect to :
(i) *** Sd/- N. F. Patel.
(ii) serve under these Regulations in lieu of my existing of service and further declare that I hereby subscribe and agree to be bound by the said Regulations.
Sd/- N. F. Patel.
Nature of appointment : Note-coin Examiner'.
16. The said form was prescribed under Regulation No. 106 of the Reserve Bank (Staff) Regulations 1948. Having made such a declaration it must be held that the plaintiff could not object the termination of his services under Regulations No. 25(2).
17. In the circumstances, he could not invoke Art. 16 of the Constitution of India, because he was not denied any opportunity to serve with the Reserve Bank of India, but his services were terminated only in accordance with the regulation, by which he was bound after he joined the services of the Reserve Bank of India. He was bound by the Staff Regulations, as long as he was in service and they are force; and, it is not open to him, to contend that when the regulations are enforced against them, although he was not bound by the regulations, they were not enforceable against him. No such self-contradictory claim can be supported by the provisions of Art. 16 of the Constitution.
18. Before parting with the case, I must point out that Mr. Sawant, the learned counsel appearing for the Reserve Bank of India drawn my attention to the unreported judgment dated August 6, 1969 of Vimadalal, J., in Miscellaneous Petition No. 206 of 1967, where the learned Judge took the view that the Reserve Bank of India (Staff) Regulations, 1948 were contractual regulations and not statutory regulations, in respect of which this Court could interfere under Art. 226, and the petition under Art. 226 was dismissed. That question does not arise in the present case, as the present appeal arises out of a suit and not out of a writ petition under Art. 226.
19. Mr. Sawant has also refereed me to a decision of a learned single Judge of the Allahabad High Court on a different of opinion of two learned Judges of that Court, with regard to the question as to whether the Reserve Bank of India (Staff) Regulations, 1948 were made in exercise of the powers under S. 58 of the Act, in the context of the question as to whether the regulations fell within Art. 131A of the Constitution of India.
20. In view of my aforesaid conclusion, that the Reserve Bank of India (Staff) Regulations, 1948 were framed by the Central Board of Directors, under S. 7(2) of the Act : and the plaintiff had made a declaration, by which he bound himself by those regulations, it is not necessary to discuss those cases further, as I have come to the conclusion that having himself bound by the regulations, the plaintiff could not have a cause of action, when his services were terminated under and in accordance with them. It is not his case that any of the regulations are violated.
21. For the above reasons, I confirm the decree passed by the learned Judge of the City Civil Court and dismiss the above appeal.
22. The suit was filed in the year 1960 and at that time perhaps the lawyers had no sufficient experience, as they have today, after the famous decisions of the Supreme Court and of the various High Courts, and particularly, the above decisions referred to by Mr. Sawant. In the circumstances, there shall be no order as to costs of this appeal.