1. The petitioner herein was originally recruited by the first respondent-Bank as a clerk in the year 1955. He was promoted later in the year 1970 as an officer and posted to Virudhunagar. On 22.2.1975 the first respondent placed him under suspension in view of the fact that the petitioner was an accused in a Criminal Case in C.C. No. 30707 of 1975 on the file of the 14th Metropolitan Magistrate, Egmore, Madras. Subsequently the petitioner's services were terminated by the second respondent by an order dated 8.11.1975 in exercise of its powers under Rule 10 of the Rules governing the service conditions of officers in the first respondent-Bank. The said order of termination of services has been challenged in this writ petition by the petitioner on the following grounds:
(1) Rule 10, under which the petitioner's services had been terminated, is violative of Article 14 of the Constitution in that the said Rule enables the second respondent to terminate the services of its employees without complying with the requirements of the rule of natural justice.
(2) The impugned order terminating the petitioner's services passed by the second respondent is violativc of Article 311 of the Constitution.
(3) The Appellate power vested in the second respondent under Rule 34 of the Rules governing the services of Officers in the first respondent-Bank is unguided and the exercise of that power by the second respondent in this case is quite arbitrary and ex facie illegal as it does not set out the grounds on which the petitioner's appeal has been rejected.
2. In the counter-affidavit filed by the first respondent it has been submitted that Rule 10 of the Service Rules provides for termination simpliciter by giving three months notice or payment of three months' salary in lieu of notice, and in this case the petitioner's services have been terminated by the impugned order dated 8.11.1975 on payment of a sum of Rs. 4,315.20 being the three months' emoluments due to the petitioner in lieu of three months' notice and that, therefore, the impugned order of termination of services is strictly in accordance with the said Rule 10. It is also contended by the respondents in the counter-affidavit that the impugned order is not punitive in nature and that it is only an order terminating the services by the management in exercise of its contractual right contained in the Services Rules. As regards the contention that the impugned order is violative of Art, 311 of the Constitution, the respondents contend that Article 311 does not apply to the petitioner as he is not a civil servant and as such he cannot claim the benefit of that Article. As regards the contention that Rule 10 is violative of Article 14 of the Constitution, it has been pointed out by the respondents that since Rule 10 provides for mere termination of service on three months' notice or on payment of three months' salary in lieu of notice, there is no necessity to follow the principles of the natural justice, with regard to the contention of the petitioner that Rule 34 of the Service Rules is unguided and the order dated 17.1.1976 passed on appeal by the second respondent is quite arbitrary, the submission of the respondents is that Rule 34 of the Service Rules cannot be said to be uncanalised and that the power under Rule 34 has to be exercised by the second respondent strictly in accordance with the entire body of the Service Rules and, therefore, the order dated 17.1.1979 cannot be said to be arbitrary in this case.
3. Rule 10 of the Service Rules governing the Officers in the first respondent-Bank, under which the impugned order has been passed by the second respondent, is as follows:
The Bank shall have the option to terminate the service of an officer on the permanent establishment on giving him three months' notice in writing or in lieu thereof, paying him a sum equivalent to his substantive salary and allowances for three months.
Rule 34 of the said Rules provides for a right of appeal to the Board of Directors for an officer against whom an order of punishment has been passed by any authority other than the Board. It also provides for an application for reconsideration of the Board's own order awarding punishment, to the Board itself, exercising its powers conferred under Rule 10 terminating the services of the petitioner on giving three months' emoluments in lieu of three months' notice.
4. Admittedly, there was no prior notice given to the petitioner. There was also no enquiry of any sort before the petitioner's services were actually terminated by the impugned order. The learned Counsel for the petitioner submits that the impugned order terminating his services, though purporting to be one passed under Rule 10, it is virtually an order of punishment as it has actually resulted in the petitioner losing the benefits of continued service, and that before terminating the services of the petitioner, there should have been a due enquiry after giving an opportunity to the petitioner to say as to why the power under Rule 10 should not be invoked by the second respondent.
5. Though the petitioner was not given any prior notice and no enquiry was conducted before the impugned order was passed by the second respondent, the order in this case cannot be said to be punitive. Rule 10 forms part of the service conditions which govern the petitioner's services under the second respondent. That rule specifically gives an option to the first respondent-Bank to terminate the services of an officer on giving three months' notice or three months' salary in lieu of notice, and it is in the exercise of that option the second respondent has terminated the services of the petitioner on paying three months' salary in lieu of three months' notice, is not disputed, the learned Counsel for the petitioner would say that whatever might be the scope and effect of Rule 10 before the Bank was nationalized, the position is entirely different after such nationalization. According to the learned Counsel for the petitioner, after the nationalisation of the Bank, the petitioner, should be taken to have become a civil servant entitled to the protection under Article 311 and that, even otherwise the services of the petitioner, who has acquired a statutory status as a result of the nationalisation, cannot be terminated except in pursuance of a disciplinary enquiry conducted after giving due notice and opportunity to the petitioner to defend his case. The question is whether the petitioner, as a result of the nationalisation of the respondent-Bank, can be said to have become a civil servant entitled to the protection of Article 311 of the Constitution. If the petitioner is held to he entitled to the protection of Article 311, then clearly the impugned order could not be sustained in law. However, on a due consideration of the matter, we are of view that the petitioner cannot claim to have become a civil servant as a result of the nationalisation of the Bank. It is true that as a result of the nationalisation the petitioner has acquired a statutory status. But that will not mean that the petitioner can claim himself to be a civil servant entitled to the protection of Article 311 of the Constitution.
6. What is the effect of nationalisation of the respondent-Bank has to be decided with reference to the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act 5 of 1970, hereinafter referred to as the Act. That Act provided for the acquisition and transfer of the undertakings of certain banking companies to a new Bank in order to control the economy and serve the needs of the development of economy in confirmity with the nationalisation policy and objectives. Section 4 of the Act vests all the existing banks in a corresponding new Bank and Section 5 mentions as to what is the effect of such vesting. Section 12(2) of the Act, which is material for our purpose, provides as to what is the position of the employees working in the existing Banks which have been directed to vest in the corresponding new Banks. That sub-section is as follows:
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 of service in that Bank on the same terms and conditions and with the same rights to pension, gratuity and other mutters 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.
As per the above provision, all officers or employees of the existing Bank will, on the date of the commencement of the Act, automatically become officers or employees of the corresponding new Bank and will hold office in that Bank on the same terms and condition and with the same rights to pension, gratuity and other matters as would have been admissible to them if the existing Banks had not been transferred or vested in the corresponding new Bank, and such terms and conditions would continue to govern their services till the terms and conditions are duly altered by the corresponding new Bank. As a result of the above provision, the rules governing the services of officers in the first respondent-Bank, which are framed by it on 11.1.1963, have become statutory and they continue to govern the services of officers and employees of the first respondent-Bank until the said Rules are modified by the corresponding new Bank. The first respondent-Bank is the corresponding new Bank, and it is the admitted case of both parties that the rules governing the services of officers in the Indian Bank, Ltd., which have become statutory as a result of Section 12(2) of the Act, continue to govern the relationship of the petitioner and the other officers and the first respondent-Bank. The fact that the above service Rules have become statutory, does not automatically lead to the inference that officers like the petitioner serving under the first respondent could be called civil servants and their service called civil service entitled to the protection of Article 311. The effect of the said rules becoming statutory is that the services of the first respondent's employees cannot be terminated except strictly in accordance with the rules, and if any termination of service has taken place contrary to the said Service Rules, the Court can declare the termination as void Mild deem the petitioner to be in service notwithstanding the order of termination. Before the Rules become statutory, as a result of the nationalisation any order of termination of service by the Bank of its employees, even in violation of the Rules, will not enable the Court to grant a relief to concerned the employee or declaration that he continues to be in service, and the only remedy open to the employee is to sue the Bank for wrongful dismissal and claim damages for such wrongful dismissal, and there is no question of re-instatement of an employee in such a case. But the management cannot terminate the service of an employee contrary to the service regulations after the earlier rules had bee statutory effect under Section 12(2) and if there such a termination the Court can grant a relief of declaration that the services of the employee continue notwithstanding the illegal order of termination. Except that different, we do not see how the employees of the respondent-Bank can claim any rights which a civil servant can claim.
7. As a matter of fact, in Sukhdev Singh v. Bhagatram : (1975)ILLJ399SC , the Supreme Court had dealt with the rights of persons who have acquired a statutory rights. The Supreme Court has pointed out that employment under public corporations is a public employment, and, therefore, the employee could have the protection which appertains to a public employment, and that any public employment, where there is an employment to a permanent post, the employment can be terminated strictly in accordance with the rules governing the serving conditions of its employees. Therefore, the only thing that has to be considered in the case of an employee having a statutory status in to see whether the termination is strictly in accordance with the Service Rules which have become statutory after the passim; of Act 5 of 1970. When there are Service Rules governing the service conditions of the petitioner under the first respondent, which are statutory, it is not open to the petitioner to say that the power conferred on the management by Rule 10 should not be invoked or that Rule 19 has become invalid or inoperative after the nationalisation. Rule 19 does not envisage the issue of prior notice or the conduct of any enquiry before the services are terminated under that rule. That rule proceeds on the basis that the termination of services thereunder is not a penal action and that is why no other safeguards, such as a prior notice or a detailed enquiry, have been provided therein. We are not inclined to agree with the learned Counsel for the petitioner that whatever be the cope and content of Rule 10, the termination of the services of the petitioner without giving any opportunity to put forward his case against such termination, will clearly violate the principles of natural justice. Principles of natural justice have to be followed only if cases where the employee is sought to be penalised. Where the service Rules provide for termination of services in a particular manner and that manner has been adopted by the management, it docs not appear to be necessary to follow the principles of natural justice.
8. The next contention of the learned Counsel for the petitioner is that Rule 10 is a law in force and, therefore, it should satisfy the requirement of Article 13(1) of the Constitution, and if the Rule is found to be violative of Article 14, the same should be struck down. But we are unable to see how Rule 19 will come within the definition of 'law in force'. Rule 19 has not been given any such statutory status as urged by the learned Counsel for the petitioner. Rule 10 has merely been continued by Section 12(2) of the Act to govern the service conditions of the petitioner and others under the first respondent. It is not a provision made by the Parliament or by any Subordinate Legislative Authority. It is a rule made by a condition private employer originally to govern the service conditions of its employees which has been continued in force till such time as the corresponding new Bank modifies or alters the same. Therefore, Section 12(2) of the Act cannot be taken to make the rules governing the service of officers in the Indian Bank as 'Laws in force'. In the decision (1964) S.C. 599, referred to by the learned Counsel for the petitioner, the question arose as to whether Rules 148 and 149 (3) of the Railway Establishment Code is violative of Article 311(2) of the Constitution. The Supreme Court held that in so far as those rules have been taken as framed under Article 209, they have to satisfy the requirements of Article 311. We do not see how the principle laid down in that case can be invoked on the facts and circumstances of this case where we are not dealing with a civil servant who is entitled to protection under Article 311. As stated already, by no stretch of imagination the petitioner could be treated as a civil servant so as to enable him to get protection of Article 311.
9. We have already pointed out that though the impugned order of termination of the services results in certain serious consequences to the petitioner, it is not penal in character, for, the service conditions specifically provide for termination of services on giving three months' notice or on payment of three months' salary in lieu of notice and it is only that power which has been exercised by the second respondent in this case. Such an order, not being an order passed in the course of a disciplinary proceeding, no complaint of violation of the principles of natural justice could be made in Municipal Corporation, Greater Bombay v. P.S. Malavenkar and Ors. : (1978)IILLJ168SC , the Standing Orders the Bombay Municipal Corporation enabled the Corporation to terminate the services of the employees on one month's notice. In exercise of that power the services of an employee were terminated for unsatisfactory record of service. The question arose whether it is termination simpliciter or whether it is punitive in character. The Industrial Court, dealing with that question, set aside the order of termination on the ground that the impugned order of termination is of a punitive character passed without a domestic enquiry, and therefore, it could not be sustained. When the matter came before the Supreme Court, it took the view that it is responsible to regard the order of termination as punitive in character so as to invite the application of Clause (2) of Standing Order 21 read with Standing Order 23 which provided for an elaborate enquiry in cases of termination of an employment of misconduct as a result of disciplinary enquiry. The Supreme Court, in support of its view, referred to a serious of its decisions rendered earlier. In K. Palankhamy v. Canara Bunk Bangalore (1978) L.I.C. 303, one of us sitting singly have held that lid order terminating the services under Clause 3 of the Special Contract of service entered into between the employee and the Canara Bank, after giving three months' salary in lieu of notice for unsatisfactory work, is not a termination of service for misconduct and, therefore, the order is not vitiated for violation or principles of natural justice in that no enquiry was conducted before the actual termination of services. In that case it has been pointed out that where an order terminating the services of an employee has been passed in exercise of the contractual right by the employer, the motive which led to the exercise of such a power has to be carefully distinguished from the nature of the order. Even if the reason or occasion for exercise of the power has been set out in the order, that will not go to invalidate the actual exercise of the contractual rights. Therein the termination of services was stated to be for unsatisfactory work. Even then it was held not to be of a punitive character. In this ease the order of termination does no case any aspections of the petitioner and it is merely a termination simpliciter. St long as the second respondent has got the option to terminate the services of the petitioner on giving three months' notice or three months' salary in the lieu of notice, the exercise of the power cannot be questioned on the ground that the order of termination was not preceded by any enquiry.
10. In I.N. Subba Reddy v. Andhra University : 3SCR1013 , the Supreme Court had to deal with a case of termination of services of a Professor by the Andhra University. The University, was governed by the provisions of Andhra University Act, 1926. Clause 10(b) of the conditions of services governing the employees of the University enabled the University to terminate the services of its employees without assigning any reasons by giving six months notice or pay. In exercise of the power conferred by Clause 10(b) of the Conditions of Service, the University terminated the services of one of its professors and the orders was challenged on the ground that before terminating the services, there should have been an enquiry for misconduct. The Supreme Court pointed out that there are two methods of termination of services available to the University under the service conditions one is to terminate the services of the Professor by giving him six months' notice under Section 24 of Chapter V of the Administrative Manual, and the other after conducting an enquiry against the professor for misconduct under Clause (d) of Section 19 of the University Act. Once the University exercised the power to terminate the services of the Professor after giving three months' notice in accordance with Section 24 of Chapter V of the Administrative Manual and Clause 10(b) of the Conditions of Service, the said order cannot be questioned merely because there is another mode of termination of services after conducting an enquiry for misconduct. In view of the clear pronouncement of the Supreme Court in the above decision, we are not inclined to agree with the contention of the learned Counsel for the petitioner that the second respondent in this case should have conducted an enquiry before the services of the petitioner were terminated. In any view of the matter, we do not see any justification for holding that the order of termination passed in this case under Rule 10 of the Rules governing the service of officers in the first respondent-Bank is vitiated.
11. The writ petition, therefore, fails and it is dismissed. There will be no order as to costs.