1. On 17th May, 1982, the first respondent - the Manager, Reserve Bank of India, Nagpur, passed an order withdrawing recognition granted to the petitioner - a registered Trade Union and an affiliated Association of the All India Reserve Bank Employee's Association. In this Rule, the said order is challenged as being unfair and in violation of principles of natural justice. The merit of the challenge has to be judged against the following backdrop of factual events.
2. The petitioner was recognized as an Association, firstly, in January 1957 and was representing Class III employees. In the year 1963, two different factions claimed majority of membership. Consequently, recognition granted to the petitioner was withheld. But by settlement dated 7th October, 1970, it was resorted and since then the petitioner has been representing the employees as their bargaining agent. By an award of the National Tribunal dated 4th December, 1981, the workload upon the Class III employees of Notes Examination and Verification Department was increased. There was an agitation against the said increase of workload. A deputation of the employees requested the management for not implementing the increased workload, but the request was turned down; as a result, the employees had resorted to strike and 'go slow'. On 21st April, 1982, the first respondent served a notice upon the Secretary of the petitioner indicating that it was proposed to withdraw the recognition and calling upon to show cause against the proposed action by 5th May, 1982. The Secretary of the petitioner addressed a letter requesting for grant of two months' time to give reply to the various points raised. It was also mentioned in the reply that the matter relating to the recognition of a registered Trade Union of Class III employees is sub-judice in a Court of law. The first respondent did not give any reply to the application for extension of time and on 17th May, 1982, addressed a letter to the petitioner communicating the decision to withdraw the recognition. The petitioner was asked to hand over possession of the room allotted to the Association along with the other property of the Bank in its possession.
3. The substance of the stand taken by the Bank is some what as follows : The grant of recognition was its voluntary act and had no statutory basis. De-recognition order was purely administrative in nature, such a decision having been taken as the petitioner had violated the terms of the Code of Discipline and had indulged in unlawful activities. The petitioner was not legally entitled to any show cause notice, but it was given ex abundanti cautela to avoid giving any room for debate on the question. Instead of showing cause and giving reply on merits, the petitioner un justifying claimed two months' time to reply and that too by raising a 'legal plea'. As the recognition carried with it the corresponding obligation to observe the Code of Discipline and 'as the association had admittedly not carried on its obligation under the Code of Discipline', the management was justified in withdrawing the recognition. In any event, in the absence of legal right to be recognized 'it is open to the Bank to withdraw the recognition for such reasons as it may consider fit and proper.'
4. Now, it is true, as a general principle that no association has a fundamental right to be recognized. In a given case where absence of recognition renders the right to form an association illusory different considerations are likely to arise. But, this controversy need not detain as in the present case we are concerned only with the case of de recognition. We find it difficult to hold that refusal to grant recognition and withdrawal of the recognition once granted can be placed on the same footing. Primary purpose of Trade Union is collective bargaining and only recognized unions can properly wield that authority and influence. Recognition once obtained by the Union becomes its soul and gives it a new vigor as an authorized bargaining agent of the members and indeed raises its status to a new height. Any Union can ill-afford to lose that status in case it wants to continue efficiently and effectively to serve the cause of the workers for which alone it is recognized. In any case, the recognition gives certain privileges and 'derecognition' amounts to their denial. Order of derecognition adds insult to the injury in case it is passed as a disciplinary measure and is for alleged commission of offence and/or acts of indiscipline. Such an order attaches stigma and is plainly punitive in nature.
5. Professor de Smith in his classic 'Judicial Review of Administrative Action' (Fourth Edition) at page 177 while dealing with the topic 'Scope of the Audi Alteram Partem Rule Today' says :
'Right in property, personal liberty, status, immunity from penalties or other fiscal impositions, interest in preserving one's livelihood and reputation, and reasonable expectations of preserving or even acquiring benefits (e.g. license, monetary awards), are among the interests to which procedural protection may be accorded. This is by no means an exhaustive list.'
Dealing further with the changing concept of applying the Rule even to privileges at page 188, it is observed :
'In the past Courts have refused to imply a procedural duty to hear before an administrative tribunal exercises discretionary licensing powers : such decisions were said to concern privileges, not rights. This conceptualist approach has been in large part abandoned in favour of a more sophisticated analysis towards the procedural duties of licensing authorities and a more realistic assessment of the economic effect upon the individual.'
We are proceeding on the assumption that the impugned order is in exercise of the administrative powers and not a quasi judicial powers. But, that will make no difference as far as the application of principles of natural justice is concerned. With proliferation of State activities, a very narrow margin exists between administrative power and quasi judicial power. Of course, depending upon the nature of the power, the person exercising, the circumstances and the manner under which it is exercised and the consequences ensuing therefrom, the principle 'no one shall be condemned unheard ' applies even to administrative order. This principle stands on its own strength and always applies to such orders excepting where its application is excluded expressly or by necessary implication. Duty to act fairly by any public body is implied in the exercise of its functions. It includes even procedural obligations. Applying these tests to the present matter, we are of the clear opinion that the impugned order adversely affects the status and/or privileges of the petitioner and is punitive in nature and, therefore, such an order could not be passed without following the principles of natural justice.
6. It appears that there has been some divergence of opinion about the rights of privately recognized unions, in the matter of their right of recognition as well as derecognition. We will deal with only those authorities which have direct bearing on the question before us. In M. A. David v. K.S.E. Board 1973 II L.L.J. 466, it is observed :
'Recognition of a trade Union is, by and large, a matter of agreement between the employer and the union except in Maharashtra and Madhya Pradesh where there has been legislation in this behalf. If recognition cannot be enforced by a Writ, recognition cannot be continued also as of right. ......... In the absence of any statutory rule or at least an agreement, the appellant-Union cannot insist that it should be heard before the recognition is withdrawn.'
Now, the application of principles of natural justice, as observed above, does not depend upon either statute or upon a positive term in the agreement requiring its compliance. This is not a case where the application of principles of natural justice has been excluded by agreement. It seems to us that this aspect of the matter was not raised before the learned Judge of Kerala High Court. We find it difficult to tow the aforesaid line of reasoning. In the case of the Tamil Nadu Electricity Board v. Tamil Nadu Electricity Board, Accounts and Executive Staff Union : (1980)IILLJ246Mad , Madras High Court considered the aforesaid decision and dissented therefrom. In the course of judgment, it is observed :
'On the other hand, if it is to be held that, unless there is a statutory provisions dealing with the recognition, it is not possible for a person like the respondent to approach the Court under Art, 226 of the Constitution, in the event of derecognition, either on the ground of violation of the principles of natural justice or on the ground of arbitrariness, we respectfully disagree with the view of the Kerala High Court.'
With great respect to the learned Judges of the Kerala High Court, we prefer the line adopted by the Madras High Court.
7. This takes us to the second point as to whether under the facts and circumstances of this case there has been, in fact, violation of the principles. Our answer is in the positive for the reasons that follow : Whether or not there has been violation of the Code of Discipline and whether its certain terms were binding on the Union, what sort of agitation was launched etc., are all questions of fact. There is nothing apparent of admitted in the matter as is wrongly presumed by the Bank. Before expiry of the time to give reply, though on the last day, the Union sought two months' time to give detailed reply. 'Incidentally' it was also mentioned that the matter relating to the recognition of a Trade Union of Class III employees is sub-judice. The Bank instead first considering the request for grant of time, as prayed for, or granting such shorter time as it thought reasonable under the circumstances, hurriedly proceeded to pass an order of derecognition in which for the first time the reasons for refusal to grant time are mentioned. It is pertinent to the notice the following lines in the order :
'It is not possible to give extension of time by 2 months to the Association and though it has been given adequate time, it has only taken a legal plea.'
The impugned order proceeds on the basis that Union has 'nothing to say by way of reply.' The two matters (i) about extension of time and (ii) about the case pending in the Court, have been unnecessarily mixed up on the assumption that prayer for time to give reply on merits was linked up by the Union with the Court's case. The use of the word 'incidentally' sufficiently clarifies that time was not sought by the reason of pendency of the writ petition in Court. The Bank is right when it comes to the conclusion that the writ petition has nothing to so with the same show cause notice. The Bank has further assumed that 'Association has admittedly not carried on its obligation under the Code of Discipline.' We see nothing on record to warrant the conclusion of admission. Indeed, ground No. 4 of the petition mentions - rightly or wrongly - 'that the petitioner has not accepted the Code of Discipline to which a reference has been made in the order as well as in the show cause notice and the respondent No. 1 could have withdrawn the recognition because of the alleged breaches of the Code of Discipline. It is for this reason that a reply and hearing was necessary.' It is true that no such ground is mentioned in the application for time. But, that does not mean that the petitioner had no intention of raising this point. Indeed, the only purpose of seeking time was to raise certain points. Therefore, the basic question is not of raising pleas on merits at that time or the correctness of the stand but of the propriety of claiming an opportunity to do so. Under the circumstances the proper course for the Bank was to first consider the application for extension of time. Nothing would have been lost in granting some reasonable time though it must be said that the management was not obliged to grant time sought for. By virtue of the mere fact that the application was filed on the last day an unreasonably longer time was prayed for, it cannot be said that the petitioner had no intention to raise any defence at all and the application lacked bona fides. Reasonableness is always implied in opportunity, for giving opportunity is not an empty formality. We are, therefore, of the opinion that no opportunity was granted to the petitioner to reply to the show cause notice.
8. It is contended on behalf of the Bank that there exists alternate remedy and hence on that ground alone the petitioner should be dismissed. Now, refusing to entertain a writ on the ground of existence of alternate remedy is not a rule of law but prudence. If the alternate remedy is not efficacious and/or there is clear violation of law, there is no necessity of driving the employees to a long drawn trial and subject them to unnecessary harassment - an inevitable part of such trials.
9. Two small points raised on behalf of the intervener-Union remain to be disposed of. It is firstly contended that the petitioner has not locus to invoke the writ jurisdiction. Our attention was invited in this connection to some of the decisions of this Court holding that the provisions of the Secondary School Code, being mere executive instructions are not enforceable and that too at the instance of a teacher in writ jurisdiction. We fail to see how the ratio of those decisions will have any application to the present case. It is next contended that in the absence of demonstration of actual prejudice, no interference with the impugned order should be made. For the reasons already indicated, it seems to us that the prejudice has been amply demonstrated in the present case.
10. We thus allow the petition and make the Rule absolute. The order dated 17th May, 1982 (Annexure E) is hereby quashed. There shall be, however, no order as to costs.
11. As we are quashing the order of derecognition of merits, it follows that the Bank has every right to pass suitable orders on merits after hearing the petitioner. The petitioner is directed to give its reply to the show cause notice within a period of two weeks from today, failing which the Bank is free to presume that the petitioner has nothing to say in the matter.