G.P. Singh, C.J.
1. Petitioner No. 1 in this petition under Article 226 of the Constitution is an association of officer-employees of Bank of India and petitioners 2 to 4 are officer-employees of the said Bank. The petitioners challenge the validity of Bank of India Officer Employees' (Conduct) Regulations, 1978, and Bank of India Officer-Employees' (Discipline and Appeal) Regulations, 1976.
2. The Bank of India Limited was a company with limited liability constituted and incorporated under the Companies Act, 1882. By the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the existing Banks, including the Bank of India Ltd., specified in column 1 of the First Schedule were nationalised. Section 3 of the Act constituted corresponding new Banks as specified in column 2 of the First Schedule. By Section 4 of the Act, the undertaking of every existing Bank stood transferred to and vested in the corresponding new Bank, As a result, the undertaking of the Bank of India Ltd., got transferred to and vested in the Bank of India, the corresponding new Bank. By virtue of Section 12(2), an officer or employee of an existing Bank became an officer and employee of the corresponding new Bank. The officers and other employees of the Bank of India Ltd., therefore, became the officers and employees of Bank of India. Section 12(2) which brought about this statutory transfer of employees reads as follows:
12(2). Save as otherwise provided in Sub-section (1), every officer or other employee of an existing Bank shall become, on the commencement of this Act, an officer or other employee, as the case may be, of the corresponding new Bank and shall hold his office or service in that Bank on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him if the undertaking of the existing Bank had not been transferred to and vested in the corresponding new Bank and continue to do so unless and until his employment in the corresponding new Bank is terminated or until his remuneration, terms or conditions are duly altered by the corresponding new Bank.
It will be seen that under Section 12(2), an officer or other employee of the Bank of India Ltd., became an officer or other employee of Bank of India 'on the same terms and conditions' on which he was employed by the Bank of India Ltd., and this position continued until his remuneration, terms and conditions were duly altered by the new Bank. Section 19(1) of the Act confers power on the Board of Directors of a new Bank to make regulations to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act. Certain specific matters on which regulations can be made are enumerated in Section 19(2). It is, however, clear that the generality of the power to make regulations conferred by Section 19(1) is not controlled or limited by enumeration of specific matters on which regulation can be made in Section 19(2) : See Emperor v. Sibnath Banerji A.I.R. 1945 P.C. 156, pp 159, 160; Afzal Ullah v. State of Utter Pradesh : 4SCR991 268; R. & H. Districts Electric Supply Co. v. State of U.P. : (1966)IILLJ330SC . But the power under Section 19 to make regulations can be exercised only 'after consultation with the Reserve Bank and with the previous sanction of the Central Government'. These requirements are obviously mandatory : See Banwarilal v. State of Bihar : (1961)IILLJ140SC , Amalgamated Coalfield v. Janapada Sabha : AIR1964SC1013 , ; Section 19(1) and the relevant clauses of Section 19(2) read as follows:
19(1) The Board of Directors of a corresponding new Bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, make regulations, not inconsistent with the provisions of this Act or any scheme made thereunder, to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act.
19(2). In particular, and without prejudice to the generality of the foregoing power, the regulations, may provide for all or any of the following matters, namely:
* * * *(d) the conditions or limitations subject to which the corresponding new Bank may appoint advisers, officers or other employees and fix their remuneration and other terms and conditions of service;
(e) the duties and conduct of advisers, officers or other employees of the corresponding new Bank;
* * * *(m) generally for the efficient conduct of the affairs of the corresponding new Bank.
3. The terms and conditions of service of an officer or other employee employed by the Bank of India Ltd., were governed by the agreement under which he was employed. There were no statutory regulations laying down the terms and conditions of service. The impugned regulations made by Bank of India under Section 19 supersede the contractual terms and conditions on the matters dealt with in them. The petitioners' challenge to these regulations can be classified under four heads : (i) Section 19 does not empower the making of regulations for changing the terms and conditions of an officer for employee who became an officer or employee of the new Bank under Section 12(2) ; (ii) the regulations were not made by the Board of Directors of the Bank, as they were thrust by the Central Government on the Bank and there was no consultation with the Reserve Bank and previous sanction of the Central Government as is required under Section 19(1) ; (iii) the regulations offend the petitioner's fundamental rights under Article 19(1) of the Constitution ; and (iv) the regulations are otherwise unreasonable.
4. The contention that Section 19 does not confer any power to make regulations to alter the terms and conditions of service of an officer or other employee whose service is continued by Section 12(2) under the new Bank is devoid of any merit. Section 12(2) expressly provides that the terms and conditions under which an officer or other employee was employed by the existing Bank would continue only until the terms and conditions are duly altered by the corresponding new Bank. Section 12(2), therefore, implies a power in the corresponding new Bank to alter the terms and conditions of an officer or other employee whose service is continued by that provision under the new Bank. The general power under Section 19(1) to make regulation for the purpose of giving effect to the provisions of this Act will, in our opinion, include a power to make regulations to lay down terms and conditions of all officers and employees whose services are continued under Section 12(2). Regulations laying down the terms and conditions of these officers and employees carry out the provisions of Section 12(2) which implies a power in the Bank to alter their terms and conditions of service. Moreover, Clause (e) and (m) of Section 19(2) can also support the regulations even if Clause (d) is interpreted to be limited to employees to be recruited in future and not to cover employees whose services are continued under Section 12(2). The subject of 'efficient conduct of the affairs' of the Bank referred to in Clause (m) on which regulations can be made covers a very wide area and the impugned regulations dealing with the conduct and discipline of the employees clearly fall within this subject. In our opinion, there was no lack of competence in Bank of India to make the impugned regulations under Section 19.
5. The second contention that the regulations were thrust by the Central Government on Bank of India and they were not really made by the new Bank and that there was no consultation with the Reserve Bank and no previous sanction of the Central Government, is without any foundation. The factual position is stated in the return of the respondents thus. In September 1973, the drafts of the Conduct Regulations and Discipline and Appeal Regulations were received by Bank of India from the Government of India, Ministry of Finance, Department of Banking, for its consideration and comments. The Bank thereupon considered the respective drafts at various management levels and forwarded its comments to the Government of India. Based on the comments received from the new Banks, including Bank of India, as also the comments from the Reserve Bank of India, model regulations were circulated by the Government of India to all new Banks in or about October, 1975. The respective model regulations were considered by all the new Banks at the highest level under the auspicious of the Indian Banks Association and the suggestions and recomendations in respect of the respective regulations were forwarded through the Chairman, Indian Banks Association, to the Government of India, Department of Banking--The Department of Banking, after considerig the suggesions made by the Indian Banks Association, clarified the points. The finalised models of the respective regulations were considered and adopted tentatively by the Board of Directors of Bank of India on 2nd July, 1976. It was decided to bring into force both sets of regulations after consultation with the Reserve Bank of India and after obtaining the previous sanction of the Government of India. The Reserve Bank of India, by its letter dated 4th August, 1976, informed Bank of India that it had communicated its views to the Government of India. It also annexed certain typographical errors/omissions noticed by it. The Government of India by it sletter dated 20th August, 1976 conveyed its sanction subject to certain changes communicated by it. The Board of Directors of Bank of India in its meeting held on 8th November 1976 passed a resolution formally adopting the two sets of regulations in accordance with the sanction of the Government of India.
6. At the time of hearing, the relevant correspondence was brought to our notice by the learned Counsel appearing for Bank of India and we are satisfied that the above steps, as stated in the return, were fully taken and the regulations were made in accordance with the procedure enacted in Section 19. It is wrong to say that the Board of Directors of the new Banks, including Bank of India, had no say in the matter and the regulations were thrust on the Bank. Before model regulations were finalised, the new Banks were consulted. Indeed, the model regulations were finally drafted after considering the comments of the new Banks the object of making model regulations was to have uniformity in all the nationalised banks. After the model regulations were finalised, they were considered by the Board of Directors and tentative decision was taken to adopt them in consultation with the Reserve Bank and after obtaining the previous sanction of the Government of India. The Reserve Bank, it appears, only pointed out certain typographical errors or omissions. The Government of India gave its approval subject to certain modifications. The Board of Directors finally in its meeting held on 8th November, 1976 adopted the regulations in conformity with the sanction of the Government of India. It is thus clear that the impugned regulations were made by the Board of Directors after consultation with the Reserve Bank and after obtaining the previous sanction of the Government of India as required by Section 19(1). Simply because to have uniformity all over India in the new banks, model regulations were prepared and circulated by the Government of India for adoption, it cannot be said that the regulations were not made in conformity with Section 19(1). In this connection, it cannot be lost sight of that the Government of India has power under Section 8 to issue directions to the new banks in regard to matters of policy involving public interest, after consultation with the Governor of the Reserve Bank. But apart from Section 8, the Government of India could, under Section 19, itself suggest model regulations for being adopted by the nationalised banks to bring about uniformity. In our opinion, the procedure adopted was in conformity with the requirement of Section 19(1).
7. Learned Counsel for the petitioner in his arguments relating to Conduct Regulations, challenged a number of regulations. The main attack was, however, directed to Regulations 7 and 17, which read as follows:
7. Contribution to Newspapers, Radio, etc.
(1) No officer-employee shall except with the previous sanction of the competent authority, own wholly or in part or conduct or participate in the editing or management of any newspaper or any other periodical publication.
(2) No officer-employee shall except with the previous sanction of the competent authority or except in the bona fide discharge of his duties participate in radio broadcast or contribute any article or write any letter either in his own name or anonymously or in the name of any other person, to any newspaper or periodical or make public, or publish or cause to be published or pass on to others any document paper or information which may come into his possession in his official capacity.
(3) No officer-employee shall except with the previous sanction of the competent authority publish or cause to be published any book or any similar printed matter of which he is the author or not or deliver talk or lecture in public meetings or otherwise:
Provided that no such sanction, is, however, required if such broadcast, contribution or publication is of a purely literary, artistic, scientific, professional, cultural, educational, religious or social character.17. Subscriptions : No officer-employee shall, except with the previous sanction of the competent authority, ask for or accept contributions to or otherwise associate himself with the raising of any funds or other collections in cash or in pursuance of any objective whatsoever.
8. The new banks, including Bank of India, constituted under Section 3 of the Act are statutory Corporations, The entire capital of each such bank stands vested in, and allotted to, the Central Government. Each such bank is a body corporate with perpetual succession and a common seal with power, subject to the provisions of the Act, to acquire, hold and dispose of property, and to contract and to sue and be sued in its name. In Sukhdev Singh v. Bhagatram : (1975)ILLJ399SC , it was held that statutory Corporations are authorities within Article 12 of the Constitution and are, therefore, included in the definition of State as contained in that Article. It was also held that rules and regulations made by such Corporations under statutory powers laying down conditions of service of their employees have the force of law. In view of the ruling in Sukhdev Singh's case, it must be held that the new banks, like Bank of India, fall within the definition of State under Article 12 and the regulations made by them under Section 19 of the Act have the force of law. If the regulations are inconsistent with the fundamental rights guaranteed under Article 19 of the Constitution, they would be void to the extent of the inconsistency as provided in Article 13.
9. Learned Counsel for the petitioners submitted that Regulation 7 of the Conduct Regulations was a serious inroad on the fundamental right to freedom of speech and expression of an officer-employee as guaranteed to him under Clause (1)(a) of Article 19 of the Constitution and that its provisions were not saved by Clause (2) of the said Article. It was also submitted that Regulation 17, which prohibited, except with the previous sanction of the competent authority, asking for or accepting contributions to or otherwise associating with the raising of any funds or collections in pursuance of any objective whatsoever, seriously prejudiced the rights of the officer-employees to have any collective activity. It was argued that it affected their rights to form associations or unions guaranteed to them under Article 19(1)(c), for the reason that without raising subscriptions it was not possible to form associations or unions and to run them properly.
10. Before deciding the objections raised by the learned Counsel for the petitioners, it would be useful to understand the line of approach which a Court has to adopt in deciding the validity of service regulations. In P. Balakotaiah v. Union of India : 1SCR1052 , the appellants' services were terminated under Rule of the Railway Services (Safeguarding of National Security) Rules, 1949, on the ground that they were engaged in subversive activities. One of the points raised by the appellants was that the order of termination of their services was on the ground that they were Communists and trade unionists, and that the order contravened the freedom to form association guaranteed under Article 19(1)(c). In rejecting this argument, the Supreme Court observed : 'The orders do not prevent them from continuing to be Communists or trade unionists. Their rights in that behalf remain after the impugned orders precisely what they were before. The real complaint of the appellants was that their services have been terminated ; but that involves, apart from Article 311, no infringement of any of their constitutional rights. The appellants have no doubt a fundamental right to form associations under Article 19(1)(c), but they have no fundamental rights to be continued in employment by the State, and when their services are terminated by the State they cannot complain of the infringement of any of their constitutional rights, when no question of violation of Article 311 arises.' The line of approach adopted in Balakotaiahs' case is that the service rules or regulations do not fetter freedom of speech or expression or right to form associations of an employee; but if he exercises those rights such exercise may bring about the determination of his services with the State, and as he has no fundamental rights to remain in the service of the State, the rules and regulations cannot be held to be invalid as depriving any of his fundamental rights. This line of approach is consistent with that adopted by Holmes, J., in the American case of Mculiffe v. New Beford  155 Mass 216 noted in U.S. 91 Law Ed. 330. In that case a policeman was removed for violating the Police Regulations which provided that 'no member of the department shall be allowed to solicit money or any aid, on any pretence, for any political purpose whatever.' In rejecting the challenge to the regulation that it violated the right to express political opinion, Justice Holmes, delivering the opinion of the Court, held : 'There is nothing in the Constitution or the statute to prevent the city from attaching obedience to this rule as a condition to the office of policeman, and making it part of the good conduct required. The petitioner may have a constitutional right to talk politics, but he has no constitutional right to be a policeman. There are few employments for hire in which the servant does not agree to suspend his constitutional right of free speech, as well as of idleness, by the implied terms of his contract. The servant cannot explain, as he takes the employment on the terms which are offered to him. On the same principle, the city may impose any reasonable condition upon holding offices within its control.' Similarly, in Ex parte Curtis, 27 Law Ed. 232. 106 U.S. 371, the challenge was to a law which provided that all executive officers or employees of the United States not appointed by the President, with the advice and consent of the Senate, are prohibited from requesting, giving to or receiving from any other officer or employee of the Government, any money or property or other thing of value, for political purposes. In upholding the validity of the law, the Supreme Court observed that the evident purpose of Congress in this class of enactments was to promote efficiency and integrity in the discharge of official duties, and to maintain proper discipline in the public service. And in United Public Service v. Mitchell  91 Law Ed. 754 : 330 U.S. 75, the Supreme Court negatived a challenge to the Hatch Act which forbids officers and employees in the Excecutive Branch of the Federal Government from taking any active part in political management and political campaigns. The Court accepted that political neutrality for classified public servants is a sound element for efficiency and that an actively partisan governmental personnel threatens good administration. The Court further observed that the Congress and the President are responsible for an efficient public service and if in their judgment, efficiency may be best obtained by prohibiting active participation by classified employees in politics as party officers or workers, the Court can have no constitutional objection.
11. It is, however, recognised by the Supreme Court of United States that 'even though a person has no right to a valuable governmental benefit and even though the Government may deny him the benefit for any number of reasons, therefore some reasons upon which the Government may not rely. It may not deny a benefit to a person on a basis that infringes his constitutionally protected interests especially, his interest in freedom of speech. For if the Government could deny a benefit to a person because of his constitutionally protected speech or associations, his exercise of those freedoms would in effect be penalised and inhibited. This would allow the Government to produce a result which it could not command directly. Perry v. Sindarmann (1972) 408 U.S. 593, 597 : 33 L. Ed. 2d' 570, p, 576. A Government servant does not on this principle surrender his freedom under the first amendment. The State, however, is entitled to impose reasonable restrictions for securing efficiency and discipline. In Pickaring v. Board of Education  391 U.S. 563, p. 568 : 20 L. Ed. 2d 811, p. 817, which was a case of a teacher, the Supreme Court observed:
The theory that public employment which may be denied altogether may be subjected to any conditions, regardless of how unreasonable, has been uniformly rejected. At the same time it cannot be gainsaid that the State has interests as an employer in regulating the speech of its employees that differ significantly from those it possesses in connection with regulation of the speech of the citizenry in general. The problem in any case is to arrive at a balance between the interests of the teacher, as a citizen, in commenting upon matters of public concern and the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees.
12. The line of approach adopted by our Supreme Court in Balakotaiah's case was not approved in later decisions. In Kameshwar Prasad v. State of Bihar 1962 I L.L.J. 294 : : (1962)ILLJ294SC , the question related to the validity of Rule 4A of the Bihar Government Servants' Conduct Rules, 1956. The rule provided that no Government servant shall participate in any demonstration or resort to any form of strike in connection with any matter pertaining to his conditions of dervice. The rule inhibiting any demonstration was held to be invalid as violating the fundamental rights under Clauses (a) and (b) of Article 19(1). After referring to Article 33 of the Constitution which permits Parliament to determine by law to what extent any of the fundamental rights be restricted or abrogated in their application to the members of the Armed Forces or the forces charged with maintenance of public order so as to ensure the proper discharge of their duties and maintenance of discipline among them, the Supreme Court held that other clauses of servants of Government in common with other persons and other citizens of the country cannot be excluded from the protection of the rights guaranteed by Part III by reason merely of their being Government servants. The Court rejected the approach in Balakotaiah's case on the ground that validity of the relevant rules was not challenged in that case. Regarding the decisions of the American Court, namely, Ex Parte Curtis, Mcauliffe v. New Beford and United Public Workers v. Mitchell (supra) relied upon by the respondents in that case, the Court observed that the freedom of speech under the first amendment to the Constitution of the United States though apparently without any restrictions had always been understood subject to the police power the scope of which had not been defined with precision or uniformly ; and the resultant flexibility that could be validly imposed rendered the American decisions inapplicable to and without much use for resolving the questions arising under Article 19(1) (a) or (b) of our Constitution wherein the grounds on which the limitation might be placed on the guaranteed right were set out with definiteness and precision. The Court further observed that if one had to consider the propriety of the impugned rule forbidding demonstration by Government servants, the propriety of the rule, as one intended to ensure proper discipline in a Government servant, could not be doubted; and that it would not be even open to argument that the rule was both reasonable and calculated to ensure discipline in the services and in that sense conducive to ensure efficiency in the service. The Court, however, held the rule to be invalid on the ground that it had no direct nexus with the maintenance of public order. The vice of the rule, the Court observed, was that it prohibited every type of demonstration-be the same however innocent and however incapble of causing a breach of public tranquillity and did not confine itself to those forms of demonstrations which might lead to that result. Kameshwar Prasad's case was followed by the Supreme Court in O.K. Ghosh v. E.Y. Joseph : (1962)IILLJ615SC . In that case, the Supreme Court struck down Rule 4A of the Central Civil Services (Conduct) Rules, 1955, which prohibited any form of demonstration. The Court also invalidated Rule 4B of these rules, which lays down that no Government servant shall join or continue to be a member of any Service-Association of Government servants which was not recognised by the Government. After referring to the rules relating to recognition of a service association, the Court concluded that the right to form association was conditioned by the recognition of the said association by the Government and the recognition could be refused or withdrawn on the grounds which were wholly unconnected with public order. On this reasoning, Rule 4B was held to be violative of the fundamental right under Article 19(1)(c), viz., right to form associations and was not held to be saved by Clause (4), which permits restrictions to be imposed in the interests of public order. In paragraph 10 of the judgment, the Court noticed that Government servant can be subjected to rules which are intended to maintain discipline amongst their ranks and to lead to an efficient discharge of their duties and that discipline amongst Government employees and their efficiency may in a sense be said to be related to public order. The Court, however, observed that to come within the scope of Clause (4) of Article 19, the rule must be in the interests of public order and must amount to a reasonable restriction. Explaining further, the Court observed that a restriction can be said to be in the interests of public order only if the connection between the restriction and the public order is proximate and direct. If the connection between the restriction and public order was indirect or far-fetched or unreal, it coud not fall within the purview of restriction in the interests of public order.
13. The cases of Kameshwar Prasad and O.K. Ghosh, clearly negative the suggestion that a citizen by his being employed by the State surrenders the fundamental rights of freedom of speech and expression, freedom to assemble peaceably and without arms and freedom to form associations or unions, guaranteed to him under Article 19(1) of the Constitution. These cases also lay down that a service rule which lays down restrctions on the exercise of any of these rights has to be justified on the touchstone of Clauses (2), (3) and (4) of Article 19 and that it cannot be held to be valid simply for the reason that it is intended to maintain discipline and efficiency in the employees. The flexibility that is open in this matter to the American Courts is not available to the Indian Courts and the principles applied in the American cases are not of help in judging the validity of the restrictions imposed on the freedom of speech, assembly and association under Clauses (2), (3) and (4) of Article 19. It is in the light of these principles that we have to examine the validity of the impugned regulations insofar as they are challenged as violating the fundamental rights of freedom under Article 19.
14. Coming first to Regulation 7, it could be seen that Clause (1) of this regulation prohibits an officer-employee without previous sanction of the competent authority to own wholly or in part or conduct or participate in the editing or management of any newspaper or any other periodical publication. The clause does not provide as to in what circumstances, the competent authority will grant its sanction. The right to own and publish a newspaper is included in the right of freedom of speech and expression under Article 19(1)(a) which covers the freedom of press. In Express Newspaper Ltd. v. Union of India : (1961)ILLJ339SC , the Supreme Court laid down that freedom of speech comprehends the freedom of press and that freedom of press amongst other involves freedom of employment or non-employment of the necessary means of exercising this right and freedom for restriction in respect of employment in the editorial force. The complete ban in owning, either wholly or partly, conducting or participating in the editing or management of a newspaper or any other periodical without previous sanction of the competent authority, when the grounds on which sanction can be refused are not specified, cannot be held to be protected by Clause (2) of Article 19. In the case of O.K. Ghosh (supra, p. 815), the Supreme Court considered a rule which prohibited a service association from starting or publishing any periodical, magazine or bulletin without the previous approval of the Government, and observed that it was not easy to see any rational, direct or proximate connection between the observance of those conditions and public order. Regulation 7(1), in our opinion, must, therefore, be held to be invalid.
15. As regards Clauses (2) and (3) of Regulation 7, Clause (2) provides that no officer-employee shall except with the previous sanction of the competent authority or except in the bona fide discharge of his duties participate in radio broadcast or contribute any article or write any letter either in his own name or anonymously or in the name of any other person to any newspaper or periodical or make public, or publish or cause to be published or pass on to others any document paper or information which may come into his possession in his official capacity. In so far as the regulation prohibits making public or publish or cause to be published or pass on to others any document paper or information which may come into possession of the officer-employee in his official capacity, the regulation is clearly valid. In Rameshwar Prasad's case (supra, p. 1172), the Supreme Court, after referring to Section 54(2) of the Income-tax Act, 1922, and Section 128(1) of the Representation of the People Act, 1951, observed: 'It cannot be contended that provisions on these or similar lines in these or other enactments restrict the freedom of the officers, etc., merely because they are prohibited from communicating information which comes to them in the course of the performance of duties of their office to others. The information having been obtained by them in the course of their duties by virtue of their official position, rules or provisions of the law prescribing the circumstances in which alone such information might be given out or used do not infringe the right of the freedom of speech as is guaranteed by the Constitution,' Clause (3) of Regulation provides that no officer-employee, except with the previous sanction of the competent authority, shall publish or cause to be published any book or any similar printed matter of which he is the author or not or deliver talk or lecture in public meetings or otherwise. A proviso which apparently is a proviso to both Clauses (2) and (3), modifies to some extent the rigour of Clauses (2), (3). This proviso says that no sanction is required if such broadcast or contribution or publications of a purely literary, artistic, scientific, professional, cultural, educational, religious or social character. It cannot be denied that Clauses (2) and (3) of Regulation 7, leaving aside that part of Clause (2) which relates to prohibition of publication of any document paper or information which comes into possession of the officer-employee in this official capacity, are restrictive of the freedom of speech and expression guaranteed under Article 19(1)(a). Although no sanction is necessary in cases where the broadcast, contribution or publication is of purely literary, artistic, scientific, professional, cultural, educational, religious or social character, yet there is no guideline for grant or refusal of sanction in other cases. For example, the regulation does not provide as to when permission for contribution or publication of an article on a political question would be granted or refused. We have already seen that the conditions for a restriction on the freedom of speech to be valid are that it should be reasonable and that it should have a direct nexus with the public order. Even if a restriction on freedom of speech is conducive to efficiency and discipline, yet if it bears no direct nexus with the public order or other matters referred to in Clause (2) of Article 19, it cannot be held to be valid. As Clauses (2) and (3) of Regulation 7 do not lay down the conditions on which sanction would be granted or refused, it cannot be held that refusal of sanction would be relatable to the matters referred to in Clause (2) of Article 19. Clauses (2) and (3) of Regulation 7, excepting that part of Clause (2) which relates to restriction on publication of any document paper or information coming into possession of the officer-employee in his official capacity, must be held to be invalid.
16. Learned Counsel for the respondents relied upon the case of P.N. Ramaswamy v. Coimbatore Municipality : (1969)IILLJ435Mad . In this case it was held that taking active part in politics, subscribing in aid of, or assisting in any way, any political movement in India, must be viewed as an objectional conduct on the part of a Government servant, harmful to good discipline and efficiency of service and should not be confused with the several freedoms mentioned in Article 19. Taking active part in politics may comprise of various acts which are not included in the freedoms guaranteed under Articles 19; for example, right to contest an election is not a fundamental right. However, in so far as political activities may be covered by the fundamental rights of freedom of speech, assembly and association guaranteed under Articles 19(1) (a), (b) and (c), restrictions on such activities can be saved only if they are within the scope of Clauses (2), (3) and (4) of Article 19. As earlier pointed out by us, the cases of Kameshwar Prasad and O.K. Ghosh, are direct authorities for the proposition that fundamental rights of an employee of freedom of speech, assembly and association cannot be restricted on the mere ground of efficiency and discipline. To be valid, the restriction imposed must be reasonable and must have a proximate connection with public order or with other matters referred to in Clauses (2), (3) and (4) of Article 19. If Rangaswamy's case intended to decide anything contrary to this, it cannot be accepted as an authority. Further though it may be reasonable to ban in general political speeches and activities by Government servants, different considerations may prevail in respect of employees in commercial undertakings of the Government when in private undertakings of similar nature there can be no such general restrictions,
17. We now take up the challenge to Regulation 17 which provides that no officer-employee shall, except with the previous sanction of the competent authority, ask for or accept contribution to or otherwise associate himself with the raising of any funds or other collections in cash or in kind in pursuance of any objective whatsoever. The regulation restricts the right to ask for subscriptions and to raise funds. A right to raise subscriptions or funds is not a fundamental right. The petitioners have no property in subscriptions or funds to be received and, therefore, the right to receive subscriptions or to raise funds cannot be called a right to acquire or hold or dispose of property. Learned Counsel for the petitioners submitted that the officer-employees have a fundamental right 1o form associations or unions under Article 19(1)(c) and this right cannot be exercised unless they are allowed to raise subscriptions for purposes of forming associations or unions and, therefore, the right to raise subscriptions must be taken to be a fundamental right under Article 19(1)(c). We are unable to accept this submission. It is true that even though a right is not specifically named in Article 19(1), it may still be a fundamental right covered by some clause of that Article, if it is an integral part of a named fundamental right or partakes of the same basic nature and character as that fundamental right. But every activity which facilitates the exercise of a named fundamental right is not necessarily comprehended in that fundamental right nor can it be regarded as such merely because it may not be possible otherwise to effectively exercise that fundamental right. The test to be applied in such cases is whether the right claimed by the petitioners is an integral part of a named fundamental right or partakes of the same basic nature and character as the named fundamental right so that the exercise of such right is in reality and substance nothing but an instance of the exercise of the named fundamental right : See Menaka Gandhi v. Union of India. A.I R. 1971 S.C. 597, pp. 640, 641. Applying these principles, it was held in Menaka Gandhi's case that the right to go abroad cannot be regarded as a right included in the freedom of speech and expression. On the same reasoning, the right to raise subscriptions or collect funds cannot be taken to be a part of the fundamental right to form associations or unions. Subscriptions may be raised for various purposes and raising of subscriptions may not necessarily and always be for forming associations or unions or for carrying on the activities of an association or union. It is, therefore, not correct in say that whenever there is a restriction on the right to raise funds or subscriptions there is a restriction on the right to form associations or unions. Regulation 17 thus does not encroach upon any fundamental right of the officer-employees. In a case, however, where premission is sought to raise funds or subscriptions for forming associations or unions and the permission is refused without any jurisdiction, it may be possible to urge that the order refusing permission violates the petitioners' fundamental right under Article 19(1)(c). The regulation though constitutionally valid, the action taken under it may offend a fundamental right and the action may be void if it directly and inevitably abridges or takes away the freedom to form associations or unions. This principle is also accepted in Menaka Gandhi's case (supra, p. 644). In the case before us, the petitioners have not yet applied for permission to raise subscriptions or funds for forming association. There is, therefore, no challenge to any order refusing permission to raise subscription. It was also submitted that Regulation 17 was even otherwise wholly unreasonable and, therefore, invalid. We assume for purposes of this case that like all statutory power, the power to make regulations laying down terms and conditions of service of employees under Section 19 of the Act must be reasonably exercised. Even so we are not satisfied that Regulation 17 suffers from the vice of unreasonableness. The object of the prohibition for raising subscriptions or funds without sanction is to prevent misuse of official position by officers of the Bank who, in the course of the business of the Bank, come frequently in contact with businessmen and other members of the public. Even subordinate employees have also to be protected from unreasonable demand of subscriptions or funds by the officers. The object of Regulation 17 is thus to ensure discipline and efficiency and the regulation cannot be held to be unreasonable.
18. Now, we take up those regulations of the Conduct Regulations which were also challenged, although not with that seriousness as Regulations 7 and 17. Learned Counsel for the petitioners first referred to the execptions contained in Clause (3) of Regulation 1 which says that the Regulations shall not apply to (i) the Chairman of the Bank ; (ii) the Managing Director of the Bank ; (iii) any whole time Director, if any ; (iv) those who are in casual employment or paid from the contingencies ; and (v) award staff. Learned Counsel submitted that the exclusion of these five categories was not justified and that there was no reasonable classification in making all officer-employees subject to the provisions of the regulations and in excluding the above five categories. In our opinion, there is no substance in this argument. The Chairman of the Bank, Managing Director and the whole time Director stand as a separate category. It will be seen from chapter IV of the Act that the general superintendence, direction management of the affairs and business of a new Bank vest in a Board of Directors. The Central Government is authorised under Section 9 to make a scheme in consultation with the Reserve Bank for carrying out the provisions of the Act ; and in particular, for the constitution of the Board of Directors, and all such matters in connection therewith or incidental thereto as the Central Government may consider it necessary or expedient. The Conduct Regulations impugned in this petition were made under Section 19. The power to make regulations is vested in the Board of Directors. It seems logical that the Board of Directors cannot make regulations for themselves. The terms and conditions under which the Chairman, Managing Director and any other Director may be employed would be provided for in the scheme made by the Central Government under Section 9 of the Act. Similarly, those employees who are in casual employment or paid from the contingencies stand as a separate category. The employment of such officers being casual, efficiency and discipline in them can be easily maintained without applying to them any detailed Conduct Regulations. As regards 'award staff', the expression is defined by Regulation 2(b) to mean 'the persons covered by 'award' as defined in the Industrial Disputes (Banking Companies) Decision Act, 1955.' The award staff stands as a category of its own. The exclusion of the five categories under Regulation 1(3) rests upon a reasonable classification. The petitioners, therefore, cannot make any grievance on that ground.
19. Learned Counsel for the petitioners then referred to Regulation 3(1) which provides that every officer-employee shall at all times take all possible steps to ensure and protect the interests of the Bank and discharge his duties with utmost integrity, honesty, devotion and diligence and do nothing which is unbecoming of a Bank officer. Learned counsel submitted that the prohibition to do nothing which is unbecoming of a Bank officer is too vague and, therefore, unreasonable. We do not agree. The prohibition to do nothing unbecoming of a Bank officer is a prohibition regarding an undesirable conduct which has some nexus with the employment as a Bank officer and the reputation of the Bank. It is common to find similar statutory rules prohibiting Government servants to do anything unbecoming of a Government servant. It is on these lines that Regulation 3(1) is made. The words 'which is unbecoming of a Bank officer', in our opinion, are not vague and cannot be held to be unreasonable.
20. Learned Counsel next referred to Clause (1) and (2) of Regulation 5. Clause (1) provides that no officer-employee shall use his position or influence directly or indirectly to secure employment for any person related, whether by blood or marriage to the employee or to the employee's wife or husband, whether such person is dependent on the employee or not. Clause (2) provides that no officer-employee shall, except with the prior permission of the competent authority, permit his son, daughter or any other member of his family to accept employment in any private undertaking with which he has official dealings or any other undertaking having to his knowledge official dealings with the bank. The provisions of Clauses (1) and (2) of Regulation 5 have clearly a bearing on the efficiency and discipline of an officer-employee. They seek to prevent clash of private interest with duty of an officer-employee. There is a proviso to Clause (2) of Regulation 5 which says that where the acceptance of the employment cannot await prior permission of the competent authority or is otherwise considered urgent the matter shall be reported to the competent authority ; and the employment may be accepted provisionally subject to the permission of the competent authority. The proviso tones the rigour of the requirement of prior permission under Clause (2) of Regulation 5. In our opinion, read as a whole, the provisions of Clauses (1) and (2) of Regulation 5 are reasonable.
21. Learned Counsel then referred to Clause (1) of Regulation 6 which requires that no officer shall, except with the previous sanction of the bank, engage directly or indirectly in any trade or business or undertake any other employment. In our opinion, there is nothing unreasonable in Regulation 6(1). The officer-employees of the Bank are not part-time employees and, therefore, from the very nature of their employment they cannot be allowed to engage themselves freely in any trade or business or undertake any employment. The proviso to Regulation 6(1) permits an officer-employee, without any prior sanction, to engage in honorary work of a social or charitable nature or occasional work of a literary, artistic, scientific, professional, cultural, educational, religious or social character, provided that his official duties do not thereby suffer. The officer, however, cannot undertake or has to discontinue any such work if so directed by the competent authority. The idea behind Regulation 6(1) is that the officer should not engage in any such work which may affect his efficiency as officer-employee. In our opinion, there is nothing unreasonable in Regulation 6(1).
22. Learned Counsel thereafter referred to Regulation 14. Regulation 14(1) provides that save as otherwise provided in these regulations, no officer-employee shall accept or permit any member of his family or any person acting on his behalf to accept any gift. Clause (2) of Regulation 14 provides that on occasions such as marriages, anniversaries, funerals or religious functions when the making of gifts is in conformity with the prevailing religious or social practice, an officer-employee may accept gifts from his near relatives but he shall make a report to the competent authority if the value of the gift exceeds Rs. 500. Clause (3) of the said regulation provides that on such occasions as specified in Clause (2) an officer-employee may also accept gifts from his personal friends having no official dealings with him but he shall make a report to the competent authority if the value of such gifts exceeds Rs. 200. Clause (4) provides that in any other case, the officer-employee shall not accept any gifts without the sanction of the competent authority if the value of such gifts exceeds Rs. 75. The prohibition on acceptance of gifts contained in Clause (1) of Regulation 14 is toned down by Clauses (2) and (3). The requirement of sanction of the competent authority in cases not covered by Clauses (2) and (3) before accepting any gifts exceeding Rs. 75 is to ensure that the officer-employee does not receive any gift from any person or institution having or likely to have official dealings with the Bank. The object appears to us to ensure efficiency and discipline and we do not find that the regulation in any way invalid.
23. Learned Counsel for the petitioners then directed his challenge to Clause (1) of Regulation 15, which provides that no officer-employee shall, in his individual capacity borrow or permit any member of his family to borrow or otherwise place himself or a member of his family under a pecuniary obligation to a broker or a moneylender or a subrodinate employee of the Bank of any person, association of persons, firm, company or institution, whether incorporated or not, having dealings with the Bank. There is nothing in this regulation which may be offending or unreasonable. The regulation seeks to prevent conflict of interest against duty.
24. Learned counsel next directed his challenge to Sub-clause (a) of Clause (1) of Regulation 20. This regulation requires that every officer-employee, on his first appointment, and every officer-employee of the Bank, on promotion to a post of an officer-employee in the Bank, shall submit a return of his assets and liabilities giving full particulars regarding the immovable property inherited by him or owned or acquired by him or held by him on lease or mortgage, either in his name or in the name of any member of his family or in the name of any other person. Learned Counsel submitted that there was no reason why an officer-employee should be required to submit a return of the immovable property owned by a member of his family. There is, however, no basis for this submission. The regulation does not require an officer-employee to submit a return of the immovable property belonging to any member of his family. It only requires an officer-employee to submit a return of his property. If such property stands in the name of his family, then the return must include it. The language of the regulation, therefore, does not support the objection raised by the learned Counsel for the petitioners.
25. Learned Counsel then referred to Regulation 21 which directs that no officer-employee shall, except with the previous sanction of the Bank, have recourse to any Court or to the press for the indication of any official act which has been the subject-matter of adverse criticism or an attack of a defamatory character. There is a proviso which says that nothing in this regulation shall be deemed to prohibit an employee from vindicating his private character or any act done by him in his private capacity and where any action for vindicating his private character or any act done by him in private capacity is taken, the officer-employee shall submit a report to his immediate superior regarding such action. The requirement of previous sanction for seeking recourse to any Court or to the press for the vindication of any official act appears to us to be reasonable. After all, the Bank is interested in the official acts of its employees. The Bank would be in a position to know whether the adverse criticism of an official act or an official employee has any jurisdiction or not. The Bank's reputation as an employer may also be involved in it. In the circumstances, it cannot be said that Regulation 21 is in any way unreasonable. As already seen, the proviso permits the vindication of private character or any act done in private capacity.
26. We then come to the Discipline and Appeal Regulations. Regulation 4 of these regulations provides that penalties mentioned therein may be imposed on an officer-employee for acts of misconduct or for any other good and sufficient reasons. The regulation specifies four minor penalties, viz. (1) censure ; (ii) withholding of increments of pay with or without cumulative effect ; (iii) withholding of promotion ; and (iv) recovery from pay or such other amount as may be due to him of the whole or part of any pecuniary loss caused to the Bank by negligence or breach of orders. The regulation also specifies four major penalties, viz., (i) reduction to a lower grade or post, or to a lower stage in a time scale ; (ii) compulsory retirement ; (iii) removal from service which shall not be a disqualification for future employment ; and (iv) dismissal which shall ordinarily be a disqualification for future employment. The first submission of the learned Counsel for the petitioners in the context of Regulation 4 is that the words 'any other good and sufficient reasons' are too vague and, therefore, the regulation is wholly unreasonable. The second submission is that the regulation does not provide as to in what cases minor penalties and in what cases major penalties can be imposed on the officer-employee. This according to the learned Counsel is unreasonable. We are unable to accept these submissions. Misconduct is not defined in these regulations, but Regulation 24 of the Conduct Regulations provides that a breach of any of the provisions of those regulations shall be deemed to constitute a misconduct. Apart from breach of the conduct Regulations, there could be other, conduct of an officer which may justify imposition of a penalty. Such a case would be covered by the words 'any other good and sufficient reasons' occurring in Regulation 4. It is true that the regulations do not provide as to in what cases minor penalty and in what cases major penalty would be imposed ; but it is obvious that these penalties would be imposed in accordance with the gravity of the misconduct proved against the officer-employee. In this context, it is to be taken note of that there is a provision for appeal against the order imposing penalties. The order of the disciplinary authority imposing any penalty would be subject to review by the appellate authority. There is, therefore, sufficient check to ensure that penalty is imposed on proper foundation and is commensurate with the misconduct proved against the officer.
27. Learned counsel for the petitioners then drew our attention to Explanation to Clause (21) of Regulation 6 which deals with procedure for imposing minor penalties. The procedure is a detailed one and gives full opportunity of meeting the charge to the delinquent officer. The regulation is wholly consistent with the principles of natural justice. The Explanation to Clause (21) says that if, in the opinion of the Inquiring Authority, the proceedings of the inquiry establish any article of charges different from the original article of charges, it may record its findings on such article of charge. Learned Counsel argues that this would deny the delinquent officer an opportunity to meet the charge. There is no substance in this argument. There is a proviso to the Explanation which says that the findings on such article of charge shall not be recorded unless the officer-employee has either admitted the facts on which such article of charge is based or has had a reasonable opportunity of defending himself against such article of charge. The proviso completely meets the argument of the learned counsel.
28. Learned Counsel thereafter referred to Regulation 12. Regulation 12 (1)(a) provides that an officer-employee may be placed under suspension by the competent authority where a disciplinary proceeding against him is contemplated or is pending. The argument is that suspension when a disciplinary proceeding is only contemplated is unreasonable. We do not agree. Sometimes, it is necessary to suspend an officer beforehand so that he may not influence the evidence to be collected against him in a preliminary enquiry before institution of the regular disciplinary proceeding. By suspending the officer, he is deprived of using the official position to influence the evidence. Further, the act of misconduct may be so serious as to warrant an immediate action of suspension to avoid any further harm to the Bank by the acts of the delinquent officer. Suspension in contemplation of disciplinary proceeding is not, therefore, unreasonable.
29. Learned Counsel then referred to Explanation (4) to Regulation 12 (1)(2). This Explanation provides that where a penalty of dismissal, removal or compulsory retirement from service imposed upon an officer-employee under suspension is set aside or declared or rendered void in consequence or by a decision of a Court of law and the disciplinary authority, on consideration of the circumstances of the case, decides to hold further inquiry against him on the allegations on which the penalty of dismissal, removal or compulsory retirement was originally imposed, the officer-employee shall be deemed to have been placed under suspension by the competent authority from the date of the original order of dismissal, removal or compulsory retirement and shall continue to remain under suspension until further orders. The argument of the learned Counsel is that the retrospective suspension in such cases is not justified. In our opinion, Explanation 4 would be used mainly in those cases where the officer's dismissal or removal or compulsory retirement is set aside or declared or rendered void on some technical grounds. If an officer is absolved by a decision of a Court of law on merits, there would be no question of re-starting any disciplinary proceeding on the same charges. If, however, the officer succeeds on a technical ground and the penalty is set aside, there is nothing unreasonable in again proceeding with the inquiry and in continuing suspension of the officer. The retrospective suspension in such cases cannot be said to be unreasonable.
30. Learned Counsel next referred to Regulation 13 which provides that no leave shall be granted to an officer-employee under suspension. This regulation cannot also be said to be unreasonable. It will prevent the officer from prolonging the disciplinary proceeding against him and there would be no delay in such cases. There is a tendency, very often seen, to prolong a disciplinary proceeding by asking for leave. It is to meet that eventuality that we have Regulation 13 which cannot be said, to be unreasonable.
31. Lastly, learned Counsel referred to Regulation 19 which directs that the Bank shall consult the Central Vigilance Commission when necessary, in respect of all disciplinary cases having a vigilance angle. Learned Counsel submitted that this is also unreasonable. We fail to appreciate as to how any consultation with the Central Vigilance Commission which is an independent body, will be prejudicial to the interests of the officer-employees. The provision for consultation with the Central Vigilance Commission, in our opinion, cannot be said to be unreasonable.
32. As a result of the aforesaid discussion, the petition is partly allowed. We declare Regulation 7, except the portion prohibiting making public, publishing or causing to be published or passing on to other any document or information coming into possession in official capacity, to be invalid. There will be no order as to costs of this petition. The amount of security deposit be refunded to the petitioners.