Holding

The circulars do not bring about any change in the conditions of service and therefore do not violate Section 9A of the Industrial Disputes Act, 1947.

Summary

The State Bank of India issued circulars in 1987 requiring any employee who wished to contest municipal council elections to give an undertaking to resign if elected. A clerk and the staff union challenged these circulars, alleging they altered the conditions of service and violated Section 9A of the Industrial Disputes Act, 1947. The Andhra Pradesh High Court set aside the circulars, holding they effected a change in conditions of service. On appeal, the Supreme Court held that the circulars did not constitute a change in conditions of service because participation in elections is not a customary concession covered by Schedule 4 of the Act, and the existing rule already required prior sanction. Consequently, the circulars were not violative of Section 9A. The appeal was allowed and the High Court’s order was set aside.

Issues considered

Whether the circulars issued by the State Bank of India constitute a change in the conditions of service of employees within the meaning of Section 9A of the Industrial Disputes Act, 1947.
Whether participation in municipal or local body elections is a 'customary concession or privilege' covered by Condition 8 of the Fourth Schedule of the Act.
Whether the circulars violate the procedural requirements of Section 9A regarding notice for changes in conditions of service.

Legislation cited

Industrial Disputes Act, 1947s. 9A

Subjects

Industrial Disputes ActSection 9Aconditions of servicemunicipal election participationpublic sector bankemployee rightscircularscustomary concession

Judgment

GENERAL MANAGER [OPERATIONS] A
STATE BANK OF INDIA
v.
STATE BANK OF INDIA STAFF UNION AND ANR.

MARCH 20, 1998
B
[SUJATA V. MANOHAR AND D.P. WADHWA, JJ.)

Labpur Law:

Industrial Disputes Act, 1947-Section 9A-Conditions of service- C
Change in-Participation in election of Municipal Council and local
bodies-Circulars requiring employees of Award staff of Bank to give an
undertaking to resign from bank if elected in the election--Similar policy
practised by bank prior to the Circulars-Whether the circulars violative of
section 9A-Held, No, since they do not bring about any change in the D
conditions of service.

Section 9A Schedule JV-Conditions of service-Participation in
election of Municipal Council or local body-Whether customary privilege
connected with conditions of service-Held, no.

Appellant Bank issued Circulars dated 28.1.87 and 7.3.87 to the effect E
that the employees intending to contest the elections of Municipal Council
or local body while seeking permission to contest the election would be
required to give an undertaking that in case he gets elected he would resign
from the bank. Even prior to these circulars rule of conduct of award staff
of the bank was that the employees could not accept the office of Municipal F
'( council or public body without prior sanction of the bank.

Respondent No. 2 sought permission from the Bank to contest election
to Municipal Council, he filed his nomination before receiving the permission.
Thereafter he was informed that he could be granted permission only if he
gave an undertaking that he would resign from the service of the bank if he G
gets elected. He filed writ petition before the High Court, challenging the
Circulars. High Court set aside the Circulars holding that the Circulars
amounted to change in the conditions of service of workmen and were
violative of section 9-A of the Industrial Disputes Act.
Allowing the appeal, this Court H
377
378 SUPREME COURT REPORTS [ 1998] 2 S.C.R.

A HELD: I.I. The Circulars dated 28.1.1987 and 7.3.1987 cannot be
said to violate Section 9-A of the Industrial l)isputes Act, 1947. The circulars
do not bring any change in the conditions of service of a workman. Under
Section 9-A, no employee, who proposes to effect any change in the conditions
of service applicable to any workman in respect of any matter specified in
the Fourth Schedule, shall effect such change without notice as prescribed
B in that section. Schedule Four sets out the conditions of Service for change
of which notice is required to be given under section 9-A. The conditions of
service prescribed in the fourth Schedule include, i.nter-alia, wages,
contribution to any provident fund or pension fund, compensatory and other
allowances, hours of work, leave etc. Condition 8 is "withdrawal of any
C customary concession or privilege or change in usage." These customary
concessions or privileges clearly relate to conditions of service or words
participating in an election to a Municipal Council or local body is not a
customary privilege connected with conditions of service or work.
[380-C-E]
D 1.2. The rules of conduct of the Award staff have always included a rule
to the effect that the employee of the bank may not accept office of Municipal ;.-,_
Council or other public body without prior sanction of the bank. The Circulars,
therefore, do not bring about any change in this policy. [378-H; 379-A]

CIVIL APPELLATE JURISDICTION : Civi) Appeal No. 7264 of
E 1996,

From the Judgment and Order dated 26.8.1991 of the Andhra Pradesh
High Court in W.P No. 3161 of 1987.

Harish Salve, A.V. Rangam, A. Ranandhan, Buddy A. Rangandhan and
Muhammad Ali for the Appellants.
F
The Judgment of the Court was delivered by

MRS. SlJJA TA V. MANOHAR, J. The appellants, representing the State
Bank of India have challenged a decision of the Andhra Pradesh High Court
setting aside a Circular issued by the State Bank of India dated 28.1.1987 as
G also a Circular in the same terms dated 7.3.1987, as violating Section 9-A of
the Industrial Disputes Act, 1947 read with the Fourth Schedule. The
respondents to the present appeal are the State Bank of India Staff Union,
Hyderabad Circle and the second respondent who is a person aggrieved by
the Circulars.

H The Rules of Conduct of the Award staff of the State Bank of India
G.M. [OPERATIONS) S 8.1. v. S.8.1. STAFF UNION [SU.IATA Y. MANOHAR, J J 379

which were in force at all material times, provide, inter alia, that ··an employee A
of the bank may not take active part in politics or in any political demonstration,
nor may an employee accept office on a Municipal Council or other public
body without the prior sanction of the bank". In respect of officers of the
appellant-Bank, prior to 28th of January, 1987, under the State Bank of India
Supervising Staff Service Rules, an officer who wanted to contest an election
to Parliament, State Assemblies, Municipal council etc. had to resign from the B
bank's service before doing so. In the case of the Award staff, however,
permission to contest such an election could be considered by the General
Manager on certain conditions and on the employee giving an undertaking
that he was not and he would not become a member of a political party, that
he was not being nominated by a political party and that he would not be C
required to be present in the Council/Body during office hours. He also would
not receive any remuneration and would not plead his membership of such
a body as a bar to his transfer. If he violated any condition of his undertaking,
it would be open to the bank to call upon him not to continue in his office
in the above mentioned public or civic body.
D
According to the appellants-bank, cases came to their notice where
employees who had been elected to public/civic office had not been performing
, their normal day's work, causing inconvenience to the bank and its customers.
' There were also some cases of emµloyees indulging in restrictive practices
or favouring certain political parties for obtaining benefits from the appellant- E
bank. The appellant-bank, therefore, issued a Circular on 28. I. I 987 to the
effect that the local head offices will, in future, while considering the request
of an Award employee to seek election to any public/civic body, first thoroughly
examine whether his contesting the election will interfere or would be likely
to interfere with his duties in the bank. The local Head Offices were also
directed to obtain an undertaking from the employee indicating that (I) his F
contesting election will not interfere with his duties in the bank and he will
not take any undue advantage of his position in the bank and (2) in case he
gets elected, he will immediately resign from the bank's service, failing which
he will be liable to be discharged or the bank would be free to treat his letter
seeking permission as a letter of resignation from the day he is declared G
elected. The Circular of7.3.1987 gives a capsule of previous instructions and
repeats the Circular of 28.1.1987.

The second respondent, who w<Is a Clerk in the appellant-bank,
Hyderabad Circle, on 18.2.1987 sought permission of the appellant-bank for
contesting elections to the Municipal Council of Repalle. Although he did not H
380 SUPREME COURT REPORTS [ 1998] 2 S.C.R.

A receive permission, he filed his nomination. He was thereafter informed by the
bank on 5.3.1987 that his application for permission to contest the election ...._
could not be granted unless he gave an undertaking that he would resign
from the bank's service on his getting elected. Thereupon the respondents
filed a writ petition before the Andhra Pradesh High Court challenging the
two Circulars of28.1.l987 and 7.3.1987. The High Court has held that these
B two Circulars amount to a change in the conditions of service of workmen and
are violative of Section 9-A of the Industrial Disputes Act, 194 7. }-

~
We fail to see how these circulars can be said to violate Section 9-A
of the Industrial Disputes Act, 1947. Under Section 9-A no employer, who
proposes to effect any change in the conditions of service applicable to any
c workman in respect of any matter specified in the Fourth Schedule, shall effect
such change without notice as prescribed in that Section. Schedule Four sets
out the conditions of service for change of which notice is required to be
given under Section 9-A. The conditions of service prescribed in the Fourth
Schedule include, inter alia, wages, contribution to any provident fund or
D pension fund, compensatory and other allowances, hours of work, leave etc.
Condition 8 is: "Withdrawal of any customary concession or privilege or }._

change in usage". These customary concessions or privileges clearly relate
to conditions of service or work. Participating in an election to a Municipal
Council or local body is not a customary privilege connected with conditions
of service of work. The Circulars of28.l. I987 and 7.3.1987, therefore, do not
E bring about any change in the conditior.s of service of a workman. The Rules
of Conduct of the Award staff have always included a Rule to the effect that
the employee of the i)ank may not accept office on Municipal Council or other
publiC body without prior sanction of the bank. The Circulars, therefore, do
not bring about any change in this Policy. The appellants have explained that
the appellant-bank is a public sector undertaking set up for carrying out a
F public purpose. As an employer, the appellant-bank is a public sector ~
unde11aking set up for carrying out a public purpose. As an employer, the
appellant-bank has to ensure that the employees carry out their functions
without being influenced in any manner and their behaviour does not give
rise to any talk of favouritism in granting loans, credit facilities or other
facilities of the bank. When a person contests elections to a municipal or
G
public body he naturally seeks support from political parties or various other
persons in his constituency. Without their support it is not possible for a ,..,_
person to get elected. In turn, the elected person will be under an obligation
to those persons who are responsible for his election. Such an elected person,
if he is an employee of a public sector bank which deals with sanction of
H loans, advances, overdrafts etc., may be in a position to use his influence with

.
G.M. [OPERATIONS] SB.I. v. S.B.I. STAFF UNION [SUJATA V. MANOHAR, J.] 381
officers regarding granting of these facilities. In order, therefore, that the A
functioning of the bank is free from political influences and favouritism, and
/ in order to ensure that the employees attend to their duties during office
hours, the Circulars have been issued.

The same Circulars were challenged before the Delhi High Court by an
employee of the appellant-bank at Saharanpur branch in Uttar Pradesh. The B
petitioner before the Oelhi High Court also desired to contest elections to the
local Municipal Council. The Delhi High Court upheld the decision of the
management that the petitioner's continuance as Municipal Counsellor does
affect his work in the bank and that there was no question of any violation
of Article 19(1)(a), (b) and (c) of the Constitution. This decision of the Delhi C
High Court was upheld by this Court by a Bench of three Judges by its short
speaking order dated 5.4.1991 dismissing the special leave petition from the
judgment of the Delhi High Court.

Before the Delhi High Court the provisions of the Industrial Disputes
Act, 1947 were not invoked in respect of these Circulars, as has been done D
in the present case. There is, however, no merit in the challenge to these
·."" Circulars under Section 9-A of th~ Industrial Disputes Act, 1947 for reasons
which we have set out above.

The appeal is, therefore, allowed and the impugned judgment and order
of the Andhra Pradesh High Court is set aside. There will, however, be no E
order ·as to costs.

K.T. Appeal allowed.

"