Supreme Court of India
INDIAN BANKversusK. USHA AND ANR. ETC. ETC.
- Citation
- 1998 INSC 42
- Decided
- 28 January 1998
- Bench
- S B MAJMUDAR
Holding
A settlement under Section 2(p) of the Industrial Disputes Act creates a contractual liability that is transmitted to the successor bank under Section 2 of the Banking Regulation Act and enforceable by specific performance under Section 19(d) of the Specific Relief Act, and the Scheme of Amalgamation does not contain a contrary provision to defeat that liability.
Summary
The Bank of Thanjavur was amalgamated with Indian Bank under a Scheme of Amalgamation framed pursuant to Section 45 of the Banking Regulation Act, 1949. The heirs of employees who died while in service of the transferor bank claimed compassionate appointments based on a 1982 settlement entered into under Section 2(p) of the Industrial Disputes Act. The question before the Supreme Court was whether that settlement, a contractual liability of the transferor bank, bound the successor bank despite the Scheme’s silence on compassionate appointments. The Court held that Section 2 of the Banking Regulation Act, read with Section 19(d) of the Specific Relief Act, transmits the contractual obligation to the transferee bank, and that the Scheme does not contain a contrary provision to override it. Consequently, the High Court’s mandamus directing Indian Bank to appoint the claimants was justified. The appeals were dismissed, leaving the High Court orders intact.
Issues considered
- The extent to which a Scheme of Amalgamation under the Banking Regulation Act transfers contractual liabilities of the transferor bank to the transferee bank.
- Whether a settlement under Section 2(p) of the Industrial Disputes Act, entered into by the transferor bank, is binding on the successor bank.
- Interpretation of Section 45(9) and 45(14) of the Banking Regulation Act in relation to compassionate appointments.
- The applicability of Section 19(d) of the Specific Relief Act in enforcing specific performance against a successor company.
- Whether the High Court could issue mandamus for compassionate appointments when vacancies were allegedly absent.
Legislation cited
- Banking Regulation Act, 1949s. 18(1), s. 18(3), s. 2, s. 45(14), s. 45(9)
- Industrial Disputes Act, 1947s. 18(1), s. 18(3), s. 2(p)
- Specific Relief Act, 1963s. 19(1)(d)
Subjects
amalgamationcompassionate appointmentsuccessor liabilityindustrial dispute settlementspecific performancebanking regulation actscheme of amalgamationtransfer of liabilitiesheirs of deceased employees
Judgment
A INDIAN BANK
v.
K. USHA AND ANR. ETC. ETC.
JANUARY 28 , 1998
B [S.B. MAJMUDAR AND M. JAGANNADHA RAO, JJ.]
Banking Regulation Act, 1949 :
Ss.2, 18(1) 18(3), 45(9) and (45(14)-Ama/gamation of Thanjavur
C Bank with Indian Bank-Claim for appointment on compassionate ground
by dependents of employees who died while in service with transferor bank-
Scheme of Amalgamation indicating no provision on this topic-Claim based
on a Settlement entered into in 1982 between the Union of employees of
transferor bank and its management under s.2{p) ofIndustrial Disputes Act-
D Settlement not arrived at in conciliation proceedings-Held the Settlement
u/s 2(p) rlw s. 18(1) of l.D.Act would get transmitted to transferee bank on
combined operation of s.19(J)(d) of Specific Relief Act and s.2 of the Ac/-
Transferee bank liable to appoint claimants in service-Industrial Disputes
Act, I 947-S.s.2(p), 18(1) and 18(3)- !Spec/fie ReliefAct, I 963-S.19(/)(d)-
Service Law-Appointment on compassionate ground
E
The Bank ofThanjavur Limited was amalgamated with the Indian Bank
with effect from 20th February 1990 in accordance with the Scheme of
Amalgamation framed under Section 45 of the Banking Regulation Act,
1949. Clause 2 of the scheme provided for transfer of the property rights
and assets of the Bank of Thanjavur (transferor bank) to the Indian Bank
F . (transferee bank) and prescribed that all the corresponding liablilities, duties
and obligations of the transferor bank would become liabilities, duties and
obligations of the transferee bank. Clause 10 of the Scheme provided that
all the employees of the transferor bank would continue in service and be
deemed to have been appointed by the transferee bank at the same
G remuneration and the terms and conditions of service as were applicable to
such employees immediately before the close of business on 19th August
1989.
The respondents, the heirs and legal representatives of the employees
who died while in service of the Bank ofThanjavur, claimed appointments
H on compassionate ground on the basis of an agreement of the year 1982
358
INDIAN BANK v. USHA 359
entered into between the Union of the employees of the transferor bank with A
its Manageme11t under Section 2(p) of the Industrial Disputes Act, 1947,
-·· - f.. albeit the Settlement was not arrived at during the conciliation proceedings.
The appellant bank refused to entertain the claims. The writ petitions filed
.....,,...-'. by the respondents were allowed by the Single Judge of the High Court
holding that they were entitled to get the benefit of the Settlement which was
binding not only on the transferor bank but also on its successor in interest
B
~-
namely the appellant bank. Since the appellant bank rejected the claim of the
., respondents Single Judge issued writ of Mandamus directing the appellants
bank to appoint the respondents on compassi.onate ground. The writ appeals
of the bank were dismissed by the Division Bench of the High Court.
Aggrieved, the Indian Bank filed the present appeals. c
It was contended for the appellant bank that the High Court erred in
issuing mandamus to the appellant to appoint the respondents in service. It
was submitted that the Scheme of Amalgamation limited the liability of the
transferor bank oQly to the extent provided in Clause IO which pertained to
the then existing employees of the transferor bank and did not cover the D
~-
liability under the 1982 Settlement to provide compassionate appointment to
the heirs of deceased employees of the transferor bank, and thus, in view of
sub-sections (9) and (14) of S.45 of the Banking Regulation Act, the Scheme
by incorporating Clause 10 had made a contrary provision on the topic of
granting compassionate appointment; that in any case the 1982 settlement
E
arrived at between the management of the transferor bank and the Union of
its employees would only bind the parties to the settlement as per Section
18(1) of the Industrial Disputes Act and could not be enforced against the
transferee bank; and that even if the respondents were found to be eligible
to get employment, the High Court could not ha~e issued the directions to
appoint them in the absence of vacancies available. F
~
_.
For the respondents it was contended that on a conjoint reading of
Section 2 of Banking Regulation Act, 1949 and Section 19(1 )( d) of the
Specific Relief Act, the 1982 Settlement would be binding on the appellant
bank; that even if two views were possible on the construction of relevant
provisions of the Scheme and the Act, a construction which fructifies the G
benevolent scheme underlying the settlement should be accepted; and that
since the appellant. bank had rejected the claim of the respondent for
appointment on compassionate ground and had requested the High Court to
decide the question on merits, on the peculiar facts of the case especially
when it was not the contention of the appellant bank before the High Court H
) .
360 SUPREME COURT REPORTS [1998] l S.C.R.
A that there were no vacancies available with the bank to absorb the respondents
even if they were eligible to be so absorbed, the High Court was right in ,..(,__ •
issuing the mandamus.
Dismissing the appeals, this 2ourt
B HELD : I.I. The High Court was perfectly justified in granting reliefs
to the respondents. It cannot be said that no liability could be imposed on the
appellant bank so far as the claim of the respondents for compassionate
appointments was concerned. [375-G-H; 379-E-F]
C 2.1. While construing any scheme in connection with the question of
providing compassionate appointment to the heirs of deceased employee who
was the bread-winner and whose exit had left his heirs in the lurch and in
precarious and vulnerable economic position a construction which fructifies
such a welfare measure has to be preferred as compared to another
construction which stultifies such a benevolent welfare measure. [374-CI
D
Workman ofMessrs Binny Ltd. v. Management of Binny Ltd. and another,
[1985) 4 sec 325, relied on.
Canara Bank, Bangalore v. MS. Jasra and others, [1992) 2 SCC 484,
distinguished
E
2.2. · Before sub-section (14) of Section 45 of Banking Regulation Act,
1949 can be pressed in service it must be shown that there is an express
provision on a given topic of liability in the scheme or in the Section and
such express provision should be irreconcilable with and be in express
F conflict or be repugnant to any contrary express provision found in any other
instrument having the force of the law or in any part of the Act or any other
law or award. [373-D-E]
2.3. The claim of the respondents flows from a Settlement under s.
2(p) oflndustrial Disputes Act, 1947 entered into in 1982 by the transferor
G company with its erstwhile employees through their Union and the liability
arising under the said Settlement which is sought to be enforced against the
appellant-bank obviously is not a monetary liability or a crystallised liability
under Section 45(9) of the Banking Regulation Act, 1949 but it is purely
a contractual liability having a binding legal force under Section 18(1) of the
H l.D. Act. The terms 'liabilities, duties and obligations' as employed in the
INDIAN BANK v. USHA 361
second part of Clause 2 of the Scheme of Amalgamation will get colour from A
~ 'f.. the scheme of Section 45(9) and have to be read down as referring to
.financial liabilities, obligations and duties pertaining to assets and properties
transmitted to and vested in the transferee bank to the extent provided in the
scheme. They will not take in their sweep any contractual obligations dehors
such transmitted assets and properties of the transferor bank.
1370-G-H; 371-A-CI
B
~,
2.4. The words 'liabilities, duties and obligations of transferor bank'
would also necessarily have a nexus or connection with the assets and rights
which are contemplated to be transferred to the transferee bank. The second
part of Clause 2 of the Scheme of Amalgamation cannot be read independently
of the first part and in isolation. The second part of Clause 2, therefore, c
cannot be held to be representing a contrary intention or provision of not
undertaking the obligation of the transferor bank 'in connection with its
contractual liability under the 1982 Settlement with the Union of its
employees in connection with the topic of providing compassionate
appointments to the heirs of its deceased employees. 1371-E-G] D
~
2.5. In the facts of the present case, neither clause 2 nor clause 10
of the Scheme of Amalgamation represents any provision regarding
compassionate appointments to be given to the heirs of the erstwhile deceased
employees of the transferor bank. In fact the entire Scheme is silent on this
topic. A provision which is silent on a topic cannot be said to have laid down E
any intention contrary to the one as reflected by any other express provision
contained in any other instrument or agreement. Hence, there is no occasion
for the said Clauses of the Scheme to project any contrary express provision
to override or to supersede the provisions contained in the 1982 Settlement
which was binding on the transferee bank and which would remain operative
to the extent benefit thereunder is available to the concerned claimants like F
..;
~
the respondents. Therefore, sub-section (14) ofs.45 of the Act cannot be said
to be applicable. 1375-E-F]
3.1. Under sub-section (1) of s.18 of the l.D. Act the 1982 Settlement
was binding on the parties to the settlement, namely, ex-workmen of the
transferor bank on the one hand and the management of the transferor bank G
on the other. Till the time of amalgamation, therefore, the settlement was an
>- operative contractual obligation on the transferor bank which !tad legal
binding force qua it. However, sub-section (3) of s.18 of the I.D. Act being
out of picture by itself, the said settlement under Section 2(p) of the l.D. Act
which was binding under Section 18(1) on the transferor bank could not have H
362 SUPREME COURT REPORTS [1998] I S.C.R.
A been pressed in service against the transferee bank which is the successor
bank and which was obviously not a party to the said Settlement. But, it is
Section 2 of the Act which becomes operative in such a situation. Once
Sectfon 2 applied it brought in its wake Section 19 of the Specific Relief Act,
1963 which provides for the relief against the parties and persons claiming
B under them and obviously is a law in force.
3.2. Consequently, the appellant transferee bank, which has emerged
as on amalgamated company as a result of the amalgamation with the earlier
company, would be liable to meet the contractual obligations flowing from the
settlement binding on the transferor company and these contractual
obligations.which could have been specifically enforced against the transferor
C company during the currency of the Settlement under Section 2(p) read with
Section 18(1) of the I.D. Act would get transmitted and foisted on the shoulders
of the appellant transferee company on the combined operation of Section
19(1)(d) of the Specific Relief Act and Section 2 of the Act.
[377-G-H; 378-A[
D 4.1. If the scheme for granting compassionate appointments as per the
rules and regulations of the employer concerned expressly provides that >---
such appointments can be granted to the heirs of its deceased employees
dying in harness only if vacancies exist for absorbing them, then the
compassionate appointments could be granted only against such vacancies
E and the Court cannot direct, by mandamus, to create vacancies for that
purpose if there are none. [378-8-D]
4.2. In the instant case, in fact, the respondents are already employed.
The appellant had already rejected the claim of the respondents only on the
plea that they had no legal right to claim compassionate appointments being
outsiders and heirs of ex-employees of the transferor bank. It was not the
F case of the appellant while rejecting their claims that there were no vacancies
where they could be fitted even though they were eligible for such
appointments. Further, the appellant itself requested the High Court to
decide the question of eligibility of the respondents on merits and it joined
issue on this aspect before the High Court. Once the High Court found that
G the claim of the respondents was wrongly rejected by the appellant bank and
especially when the appellant bank had not put forward the defence of non-
availability of vacancies, no fault could be found with the High Court when
it issued mandamus to the appellant to grant appointments to the concerned
respondents. [378-D-H; 379-D-E)
Hindustan Aeronautics Ltd. v. V. A. Radhika Thirumalai (Smt.), [1996)
H 6 sec 394, held inapplicable.
INDIAN BANK v. USHA [S.B. MAJMUDAR. J.] 363
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3619 of A
~."" 1993 Etc. Etc.
From the Judgment and Order dated 16.3.93 of the Madras High
Court in W.A. No. 733 of 1992.
N. B. Shetye, Ambrish Kumar for the Appellant in C.A. No. 3619/93. B
Ambrish Kumar for the Appellant.
Ms. Indira Jaisingh and Sudarsh Menon for the Respondents.
The Judgment of the Court was delivered by c
S.B. MAJMUDAR, J. Leave granted in Special Leave Petitions.
By consent of learned advocates appearing for contesting parties this
group of nine appeals was heard finally and is being disposed of by this
common judgment. D
The common appellant, Indian Bank, in this group of appeals has
brought in challenge the judgment and orders of Division Benches of Madras
High Court allowing writ petitions of the respondents concerned who are the
heirs and legal representatives of deceased employees of Bank of Thanjavur
limited which was amalgamated with the appellant-bank with effect from 20th E
February 1990 in accordance with the Scheme of Amalgamation framed under
Section 45 of the Banking Regulation Act, 1949 (hereinafter referred to as 'the
Act'). The respondents concerned had sought compassionate appointments
from the appellant-bank on the ground that they were the heirs and legal
representatives of the deceased employees of Thanjavur Bank ( hereinafter
referred to as 'the transferor bank') whose assets and liabilities were taken F
over by the appellant-bank, hereinafter referred to as 'the transferee bank' for
the sake of convenience. The claim of the respondents for such appointments
was based on an agreement entered into between the recognised Union of the
employees of the transferor bank in the year 1982 with the Management of
the transferor bank under Section 2(p) of the Industrial Disputes Act, 1947 G
(hereinafter referred to as 'the 1.D. Act') The said settlement was not arrived
at during conciliation proceedings, hence it remained binding only on the
parties to the said settlement, namely, the Union of employees of trai;isferor
bank on the one hand and the Management of the transferor bank on the
other. As per the said settlement a scheme of compassionate appointment to
be given to the eligible heirs of deceased employees of transferor bank who H
364 SUPREME COURT REPORTS [ 1998] l S.C.R.
A died in harness was evolved. The respondents' contention was that the said
settlement remained binding to the transferee bank as the successor bank
which had taken over assets and liabilities of the transferor bank pursuant to
the order of amalgamation. The appellant transferee bank refused to entertain
the said claims. That resulted in diverse writ petitions by the respondents
before the High Court. The High Court took the view that the respondents
B were entitled to get the benefit of the said settlement which was binding not
only on the transferor bank which was a party to the settlement but also on
its successor-in -interest, namely, the appellant-bank and as the appellant-
bank had rejected the request of the respondents by the impugned judgments,
writs of mandamus were issued to the appellant-bank to grant appointments
C on compassionate ground to the concerned respondent-writ petitioners.
Having obtained special leave to appeal under Article 136 of the Constitution
of India these appeals have been moved by the appellant-bank challenging
the aforesaid decisions rendered by the High Court.
It may be stated that earlier seven Special Leave Petitions arising out
D of a Common judgment of the Division Bench of the High Court in writ
appeals confirming decisions of the learned Single Judge were taken up for
consideration by this Court and while granting leave the prayer for stay was
refused. We are informed that as there was no stay of the impugned orders
of the High Court pending these appeals the respondents concemed have
E already been appointed to the respective posts which they are holding and
are working as employees of the appellant-bank. However it was brought to
our notice by learned senior counsel for the appellant that the said
appointments were given by the appellant subject to the result of these
appeals and they will, therefore, have to abide by the present decision of
ours.
F
In support of these appeals learned senior counsel, Shri N. B. Shetye,
who appeared in Civil Appeal No. 3619 of 1993 which was taken up as a lead
case and Shri Ambrish Kumar, learned counsel for the appellant-bank in the
rest of the appeals raised for our consideration the following contentions:
G 1. The Scheme of Amalgamation limits the liability of the transferor
bank only to the extent provided in Clause 10 of the Scheme of
Amalgamation which pertains to the then existing employees of
the transferor bank who were taken over by the transferee bank
and the said scheme did not cover the transferor bank's liability
H under the settlement to provide compassionate appointments to
II-
,
INDIAN BANK v. USHA [S.B. MAJMUDAR, J.] 365
the heirs of its deceased employees who might have died in A
'.
., "' harness and consequently the High Court was in error in issuing
mandamus to the appellant to absorb all these respondents in
service of the bank.
2. In any case the settlement of 1982 arrived at between the
management of the transferor bank and the Union of its employees B
"}- could only bind the parties to the settlement as per Section 18( I)
of the I.D. Act and could not be enforced against the successor-
bank, namely the appellant-bank.
3. In any view of the matter the High court could not have issued
mandamus to the appellant- bank to appoint the concerned c
respondents even if they were found to be eligible to get such
employment under the Scheme and on the basis ofsettlement of
.' I 982, without first ascertaining whether there were vacancies on
which such persons could be accommodated and it should have
been left to the appellant - bank in any case to consider this
D
---<. aspect of the matter and even on that ground the final orders
passed by the High Court in favour ofthe respondents cannot
be sustained.
_ Learned Senior counsel for the respondents, Ms. Indira Jaisingh, on the
other hand, while refuting these submissions contended that on a .correct E
interpretation of Section 45 of the Act and the scheme found thereunder it
has to be held that none of the provisions thereof gave any contrary indication
in connection with the employment to be offered on compassionate grounds
to the heirs of the deceased employees of transferor bank and consequently
the relevant clauses of the Scheme on which the appellant-bank relies would
not cut across the scope and ambit of the settlement entered into by the F
predecessor-bank, namely, the. transferor bank with its own employees through
their union. She further submitted that on a conjoint reading of Section 2 of
the Act and Section 19(1) (d) of the Specific Relief Act such settlement would
be binding on the successor-bank namely, the appellantcbank even apart from
the non-applicability of Section 18(3) of the l.D. Act in this connection. ltwas G
also vehemently contended by learned senior counsel for the respondents
that even if two views are possible on the· construction of relevant provisions
of the Scheme and Section 45 of the Act, a construction which fructifies the
benevolent scheme underlying the settlement being a welfare measure deserves
to be accepted and the contrary construction which stultifies such a benevolent
and a labour welfare provision should not be accepted. She lastly submitted H
'
366 SUPREME COURT REPORTS [1998] 1 S.C.R.
A that so far as the third contention of the learned senior counsel for the ..
appellant-bank is concerned it was the appellant-bank itself which requested
the High Court to decide the question on merits by placing appropriate
material before it and as it had already rejected the claims of the respondents
there was no question of the High Court calling upon the appellant to re-
consider the matter on the peculiar facts of this case and especially when it
B was not the contention of the appellant bank before the High Court at any
time either before the learned Single Judge or in writ appeals or even in other
writ petitions that there were no vacancies available with the bank to absorb
the respondents if they were otherwise eligible to be so absorbed and hence
even the third contention does not deserve to be accepted.
c
We shall deal with the aforesaid three contentions seriatim.
Contention No. I
At the outset we must look at the relevant provisions of the Act under
D which the scheme of Amalgamation saw the light of the day. The aforesaid
Scheme was promulgated under the provisions of the Act which was enacted
in 1949 as Act 10 of 1949 by the Central legislature with a view to consolidate
and amend the law relating to banking. The Act sought to regulate the
business of banking companies and gave wide powers to the Reserve bank
E of India to control and monitor the same. Various regulatory provisions were
made in connection with the working of commercial banks covered by the
sweep of the Act. During the working of the Act after its enactment in 1949
it was found that the working of some of the banking companies was not upto
the mark and the situation might arise during its commercial existence where
it would be found to have reached the point of bankruptcy. In order to deal
F with such sick commercial banks covered by the Act the legislature by Act
37 of 1960 inserted Section 45 with its relevant sub-sections empowering the
Reserve Bank to apply to the Central Government for an order of moratorium
in respect of such banking companies. During the period of moratorium of
such a banking company the Reserve Bank was authorised, on being satisfied
G about the existence of various conditions contemplated by Clauses (a)) to (d)
of Sub-section (4) of Section 45, to prepare a scheme for the reconstruction
of the banking company, or for the amalgamation of the banking company
with any other banking institution. As the transfer9r bank in the present case
had reached nadir of its financial commitments and functioning, a moratorium
for it was ordered by the Central Government at the behest of the Reserve
H Bank as per Section 45 Sub-section(!) of the Act and it was during the period
~-
INDIAN BANK v_ USHA [S.B. MAJMUDAR, J.] 367
of moratorium of the transferor bank that a Scheme of Amalgamation of the A
" transferor bank with the appellant transferee bank was promulgated by the
Reserve Bank. The said scheme was sanctioned by the Central Government
as per sub-section 7 of Section 45 with effect from 20th February 1990.
Naturally the question arose as to what was to happen to the erstwhile
employees of the transferor bank, whose assets and liabilities were being
B
~ taken over as provided in the scheme, by the transferee bank. The provision
regarding the same was incorporated in Clause I 0 of the Scheme while Clause
2 of the scheme dealt with transfer of assets and liabilities of the transferor
bank to the transferee bank as indicated therein.
It is in the light of the aforesaid statutory set up and the resultant c
amalgamation scheme and its provisions regarding the matter~ in issue that
the first contention of the learned senior counsel for the appellant will have
to be examined. When we tum to the relevant clauses of the Scheme of
Amalgamation we find three clauses of the Scheme which have an impact on
the decision of the present controversy. The said clauses read as under:
..(_ D
"CLAUSE - 2: As from the date which the Central Government may
specify for this purpose under sub-section (7) of Section 45 of the
said Act, (hereinafter referred to as the prescribed date ) all rights,
powers, claims, demands, interests, authorities, privileges, benefits,
assets and immovables including premises subject to all incidents of E
tenure and to the rents and other sums of money and covenant
reserved by or contained in the leases or agreement under which they
are held, all office furniture, loose equipment, plant apparatus and
appliance, books papers stocks of stationery, other stocks and stores,
all investments in sto~ks, shares and securities, all bills receivable in
F
-« hand and in transit, all cash in hand and on current or deposit account
.. (including money at all or short notice) with banks bullion, all book
debts, mortgage debts and other debts with the benefit of securities,
or any guarantee therefor, all other if any, property rights and assets
benefit of all guarantees in connection; with the business of the
transferor bank shall, subject to the other provisions of this scheme, G
.._ stand transferred to, and become the properties and assets of the
transferee bank and as from the prescribed data all the liabilities,
duties and obligations of the transferor bank shall be and shall become
the liabilities, duties and obligations of the transferee bank to the
extent and in the matter provided hereinafter. H
368 SUPREME COURT REPORTS [1998] l S.C.R.
A CLAUSE - 10: All the employees of the transferor bank shall continue
in service and be deemed to have been appointed by the transferee ~- ...
bank at the same remuneration and on the same terms and conditions
of service as were applicable to such employees immediately before
the close of business on 19th August, 1989 provided that the
employees of the transferor bank who have, by notice in writing given
B to the transferor or the transferee bank at any time before the expiry
~
of 1 month next following the date on which this scheme has been
sanctioned by the Central Government intimated their intention of not
becoming employees of the transferee bank, shall be entitled to the
payment of such compensation, if any, under the provisions of the
c Industrial Disputes Act, 1947 and such pension, gratuity provident
fund and other retirement benefits as may be ordinarily admissible
under the rules of authorisations of the transferor bank immediately
before the close of business on I 9th August, 1989. Provided further
that the transferee bank shall in respect of the employees of the
transferor bank who are deemed to have been appointed as employees
D of the transferee bank be deemed also to have taken over the liability ~-
-")::
for them of retrenchment compensation in the event of their being
retrenched while in the service of the transferee bank on the basis that
their service has been continued and has not been interrupted by their
transfer to the transferee_ bank.
E CLAUSE - 16: If any doubt arises in interpreting any of the provisions
of this Scheme, the matter shall be referred to the Reserve Bank of
India and its opinion shall be conclusive and- binding on both the
transferee and transferor banks and also on all. the members, depositors
and other creditors and employees of each of these banks and on any
F other person having any rights or liability in relation to any of these
banks." ~-
-·-
We shall first see the scope and ambit of Clause 2. The first part of the said
clause provides for the transfer of all assets and properties of the transferor
bank to the transferee bank as it provides transfer of all rights, powers, claims,
G demands, interests, authorities, privileges, benefits, assets and immovables
including premises and also including all furniture and other stock investments
etc. This part of the clause refers to the asset side of the Picture. Along with
-4 -,..-
the transfer of these assets and the rights of the transferor bank in favour
of the transferee bank the latter part of the clause lays down, after observing
H that these properties and assets will become the properties and assets of the
~
I
INDIAN BANK v. USHA [S.B. MAJMUDAR, J.] 369
transferee bank as and from the prescribed date that all the liabilities, duties A
and obligations of the transferor bank shall be and shall become the liabilities,
duties and obligations of the transferee bank to the extent and in the manner
provided !hereinafter meaning thereby in the subsequent clauses of the scheme.
Relying on the second part of c!ause 2 learned senior counsel for the appellant
submitted that second part of Clause 2 is independent of the first part and, B
therefore, when it deals with the transmission of liabilities, duties and
obligations of the transferor bank to the transferee bank the said transmission
shall be limited only to the extent to which the subsequent clauses of the
Scheme would provide for such transmission and nothing more. It was,
therefore, submitted that whatever may be the liability or contractual obligation
of the transferor bank, under the 2(p) Settlement of 1982 with the Union of C
its employees, such liability or obligation did not get transmitted to the
transferee-bank as the latter part of the Scheme did not provide for any such
obligation or liability being incurred by the transferee bank. It can, therefore,
be said that to that extent no such liability or obligation was undertake.n by
the transferee bank. In this connection strong reliance was placed on Clause
I 0 of the Scheme which only concerned the then existing employees of the D
transferor bank on the appointed date whose services were taken over by the
transferee bank. Therefore, in connection with the ex-employees of the transferor
bank only limited provision was made in Clause. IO and no provision was
made regarding deceased employees and their heirs and how the heirs of such
deceased employees of the transferor bank were to be dealt with. In this E
connection it was also .submitted, placing reliance on Sections 45(9) and
45(14) of the Act, that the Scheme by incorporating clause IO of the Scheme
of Amalgamation had made a contrary provision on this topic of granting
compassionate appointments to the heirs of the deceased employees of the
transferor bank who might have died in harness and hence this contrary
provision in the Scheme superseded the iiability flowing from the said F
Settlement entered into by the transferor bank in 1982 with the Union of its
erstwhile employees.
It must at once be stated that on first blush the contention of learned
senior counsel for the appellant appears attractive but on a closer scrutiny G
it falls through as we will presently show. Clause 2 of the Scheme has to be
read in the light of Section 45(9) which reads as under:-
"45(9). On and from the date of the coming into operation of, or as
the case may be, the daie specified in this behalf in , the scheme shall
be substituted; the properties and assets of the banking company H
·~
\
370 SUPREME COURT REPORTS [1998) I S.C.R.
A shall, by virtue of and to the extent provided in the scheme, stand
transferred to and vest in, and the liabilities of the banking company .~· -
shall, by virtue of and to the extent provided in the scheme, stand
transferred to and become the liabilities of, the transferee bank."
The said sub-section obviously deals with a provision to be incqrporated in
B the Scheme regarding properties and assets of the banking company which
are to be transferred under the Scheme to the transferee bank. The said clause
enables the Scheme to provide the extent to which such properties and assets
of the transferor company will get transferred to the transferee bank and
would vest in it. And then follows the second part of sub-section (9) of
Section 45 which deals with liabilities of the banking company and makes an
c identical provision that such liabilities of the transferor bank also by virtue
of and to the extent provided in the Scheme would stand transferred to and
become the liabilities of the transferee bank. Thus, the said sub-section (9)
of Section 45 of the Act enables the Scheme-making authority to provide in
that Scheme the extent to which the properties and assets of the banking
D company can be transferred and corresponding liabilities attached to such
properties and assets of transferor company also can get vested in the
transferee company. It is obvious that when assets of the transferor company
't-··
..
<
are being transferred and are to vest in the transferee company under the
Scheme, it could not be a one-way traffic. Hence, the corresponding liabilities
of the banking company attaching to such assets would also have to travel
E as a result of the said transmission of the properties and assets of the
transferor company to the transferee company to th~ extent provided in the
Scheme. In the context in which the word 'liabilities' is employed by the
Legislature in Section 45 sub-section (9) of the Act it has to be held that
'liabilities' as contemplated therein are the monetary liabilities of the transferee
F company in connection with the properties of the transferor company which
stand transferred and have vested in the transferee company as a result of ~
;.
the Scheme of Amalgamation. For deciding the scope and ambit of such
financial liabilities what is expressly provided in the Scheme in that connection
has to be kept in view and only such Iiabilities would get attached to the
transferee company. Now it is obvious that the claim of the respondents flows
G from 2(p) Settlement under l.D. Act entered into by the transferor company
with its erstwhile employees through their Union and the liability arising
~ .-
under the Settlement which is sought to be enforced against the appellant-
bank. Obviously is not a monetary liability or a crystallised liability. But it is
purely a contractual liability having a binding legal force under Section 18(1)
'
\
H of the 1.0. Act. Such liability is not within the sweep of sub-section (9) of
!
JNDIAN BANK v. USHA [S.B. MAJMUDAR, J.] 371
Section 45, which as we have seen earlier, will have limited connotation of A
~.X, being financial liability of the transferor bank which would travel and get
transmitted to the transferee bank along with the properties and assets of the
transferor bank which, as indicated in the Scheme, would vest in the transferee
bank. Section 45(9), therefore, cannot render any assistance to the appellant-
bank. On a parity of reasoning, therefore, the terms 'liabilities, duties and B
obligations' as employed in the second part of Clause 2 of the Scheme will
get colour from the Scheme of Section 45(9) and have to be read down as
referring to financial liabilities obligations and duties pertaining to assets and
properties transmitted to and vested in the transferee-bank to the extent
provided in the Scheme. They will not take in their sweep any contractual
obligations dehors such transmitted assets and properties of the transferor- C
bank. This is made clear when we tum to the first part of Clause 2 which has
provided for the transmission of assets and rights of the transferor company
to the transferee company under the Scheme. Therein a detailed provision is
made even about transfer of office furniture, loose equipment, plant apparatus
and appliances, books, papers, stocks of stationery, other stocks and stores
etc. After catalogueing these assets for transmission to the transferee company D
the Second part which is complementary to the first part also deals with the
transmission of liabilities, duties and obligations of the transferor bank.
Therefore, the words 'liabilities, duties and obligations of transferor bank'
would also necessarily have a nexus or connection with the assets and rights
which are contemplated to be transferred to the transferee-bank. The second E
part of Clause 2 cannot be read independently of the first part and in isolation.
If learned counsel for the appellant were right in their contention then second
part of the Clause 2 would have been enacted separately as an independent
clause. The second part of Clause 2, therefore, cannot be held to be
representing a contrary intention or provision of not undertaking the obligation
of the transferor-bank in connection with its contractual liability under 2(p) F
settlement with the Union of its employees in connection with the topic of
providing compassionate appoi11'r'ents to the heirs of its deceased employees.
That takes us to the consideration of sub-section (14) of Section 45 on
which strong reliance was placed by learned senior counsel for the appellant. G
The said sub-section 14 reads as under:-
"45(14). The provisions of this section and of any scheme made under
it shall have effect notwithstanding anything to the contrary contained
in any other provisions of this Act or in any other law or any
agreement, award or other instrument for the time being in force." H
~
\
372 SUPREME COURT REPORTS (1998] 1 S.C.R.
A A mere look at the said provision shows that before it can apply there must
be a provision on a given topic either in any of the other clauses of Section
45 or any scheme framed thereunder and such a provision must be contrary
to any other provision on the same topic as found in any other part of the
Act or in any other law or award or instrument for the time being in force.
B Thus on the same topic there must be two contradictory provisions, one, on
the one hand in the Scheme or any-part of Section 45 and second, on the
other hand on the same topic expressing an entirely different and contrary
intention in any other part of the Act or in any law or any other award or
instrument fC>r the time being in force. The topic for consideration around
which the controversy revolves in the present cases is the question of
C providing compassionate appointments to the eligible heirs of deceased
employees of transferor-bank who died in harness and who claimed such
appointments under the Settlement of 1982 from the transferee-bank. On this
topic or question there must be an express provision in the Scheme or Section
45 of the Act and such express provision should be contrary to and different
from the provision made on the same question and topic by any other part
D of the Act or in any other law, agreement, award or instrument for the time
being in force. So far as this aspect is concerned learned counse~ for the
appellant pitched their faith only on the second part of Clause 2 and Clause
10 for submitting that there is such a contrary provision in the Scheme which
would govern the present controversy. We have already seen that second
E part of Clause 2 does not reflect such a contrary provision.
So far as Clause 10 is concerned it was submitted that it is a complete
code in itself which deals with the topic of the Service conditions of the
erstwhile employees of the transferor bank and as Clause I 0 has not provided
anything regarding deceased employees of the transferor bank and about the
F rights and claims of their eligible heirs who could claim appointments on
compassionate ground as their bread-winners had died in harness it can be ~
said that by necessary implication Clause I 0 had excluded such a liability on "-·
the part of the transferee bank in discharging the obligations flowing from the
2(p) settlement entered into by the transferor bank with its erstwhile Employees'
G Union and consequently Section 45 sub-section (14) of the Act can get
attracted on the facts of the present case. It is not possible to agree with this
contention. The reason is obvious. Clause 10 on its own wordings deals only
with the existing ex-employees of the transferor bank who might be available Jr
for being continued in service of the transferee bank on the date of
amalgamation. This clause has nothing to do with the deceased ex-employees
H of the transferor bank. Learned counsel for the appellant also agreed to this
INDIAN BANK v. USHA [S.B. MAJMUDAR, J.] 373
factual position as emerging from the express terms of Clause 10. But it was A
submitted that by necessary implication it would mean that deceased ex-
-A employees of the transferor bank were not under contemplation nor their heirs
were to be considered by the transferee bank for enabling such heirs of the
deceased ex-employees of the transferor bank to have any claim against the
transferee bank. We fail to appreciate how this contention can support the
appellant's case under Section 45 sub-section (14) of the Act. Once it is held B
~- and must be held, on the express language of clause IO which never even
whispered about the deceased ex-employees of the transferor bank, that the
topic regarding giving compassionate appointments to the heirs and legal
representatives of the ex-employees of the transferor bank who might have
died in harness during the time the fransferor bank was operating is not c
covered by Clause 10. In other words on this topic no provision is made in
clause 10 of the Scheme either expressly or by necessary implication. Once
that conclusion is reached sub-section ( 14) of Section 45 of the Act gets out
of picture. As observed earlier before sub-section (14) of section 45 can be
pressed in service it must be shown· that there is an express provision on a
given topic of liability in the scheme or in the Section and such express D
-,,, -~' provision should be irreconcilable with and be in express conflict or be
repugnant to any contrary express provision found in any other instrument
having the force of the law or in any part of the Act or any other law or award.
In the present case we are concerned with the agreement under Section 2(p)
of the l.D. Act entered into in 1982 by the transferor bank with the Union of E
its employees and it is that agreement which provided for giving compassionate
appointments to the heirs of the employees dying in harness. The aforesaid
provision contained in the 2(p) Settlement is not in conflict with any other
contrary express provision in the Scheme especially Clause 10 thereof. In fact
the entire Scheme especially Clause 10 thereof. In fact the entire Scheme is
silent on this topic. It is obvious that a provision which is silent on a topic F
-~. cannot be said to have laid down any intention contrary to the one as
.... ' reflected by any other express provision contained in any other instrument
or agreement. Repugnancy or conflict as contemplated by Sub-section (14) of
Section 45 can arise only when on the same topic there are two contradictory
express provisions. One in the Scheme and another in the agreement. Then
G
only the provision in the Scheme would override such contrary express,
provision in the agreement. As none of the clauses in the Scheme of
,.. ~ Amalgamation could be pointed out by the learned counsel for the appellant.
for culling out such express conflict on the topic of compassionate
appointments to be granted to the heirs of the deceased ex-employees of the
transferor-bank reliance placed by the learned counsel for the appellant on H
374 SUPREME COURT REPORTS [1998) 1 S.C.R.
A Section 45 sub-section (14) of the Act also cannot be of any assistance to
them.
In this connection we must' also have to keep in view the settled legal
position that while construing any Scheme in connection with the question
of providing compassionate appointments to the heirs of deceased employee
B who was the bread-winner and whose exit had left his heirs in the lurch and
in precarious and vulnerable economic position a construction which fructifies ·-<"'
such a welfare measure has to be preferred as compared to another construction
which stultifies such a benevolent welfare measure. In this connection learned
senior counsel for the respondents was right when she relied upon a decision
C of this court in the case of workmen of Messrs. Binny Ltd. v. Management
of Binny Ltd. and another, [1985) 4 SCC 325. In that case a Bench of three
learned judges of this Court speaking through Khalid, J., had to consider the
provisions of a Scheme of Amalgamation of companies concerned under the
orders of the High Court. While interpreting the scheme of amalgamation
which had an impact on the question of welfare of employees, the following
D observations were made in para 9 of the Report :
" ... It is a trite law that in matters of welfare legislation, especially
involving labour, the terms of contracts and the provisions of law
should be liberally construed in favour of the weak .... "
E Keeping in view the aforesaid settled rule of construction when we consider
the scope and ambit of clauses 2 and 10 of !he Scheme we do not find any
thing provided therein which would of necessity contraindicate the foisting
of liability and obligation on the transferee-bank in connection with the
contractual obligation undertaken by its predecessor-in-interest, namely, the
transferor-bank under the 2(p) Settlement of 1982 in connection with the
F question of providing compassionate appointment to the heirs of deceased
bread-winner who might have died in harness.
Learned senior Counsel for the appellant in support of his first contention
invited our attention to a three Judge Bench decision of this Court in the case
G of Canara Bank, Bangalore v. M.S Jasra and others, (1992] 2 sec 484 for
submitting that the schemes framed under the Act as per Section 45 of the
Act must be given their full effect and they are comprehensive in nature. It
must be kept in view that in the said decision this Court was not concerned
with th~ examination of the question whether the successor bank, namely, the
transferee- bank under the Scheme of Amalgamation had undertaken the
H liabilities of transferor-bank or not. The question in that case was that when
INDIAN BANK v. USHA [S.B. MAJMUDAR, J.] 375
the liabilities of the transferor bank in connection with the service conditions A
of its existing employees were taken over by the transferee- bank, would such
taking over entitle the erstwhile employees of the transferor - bank to claim
better rights from the transferee-bank than what they had already got by way
of existing service conditions at the time of amalgamation. In that case
Lakshmi Commercial Bank was amalgamated with Canara Bank. The erstwhile B
employees of the transferor bank claimed age of superannuation to be 60
years instead of 58 years which was the age of superannuation in the
transferee-bank, namely, the Canara Bank. Rejecting such a claim it was held
by this Court that as laid down by sub-section (5) of section 45 the Scheme
was to contain provisions in connection with the service conditions of the
employees of the transferor-bank as laid down therein and such a scheme so C
framed under sub-section (4), therefore, may contain provisions for all or any
of the matters specified in sub-section (5) so that it enables all or any of the
specified matters to be provided in the scheme prepared under sub-section
(4) and the matters specified in the several clauses in sub-section (5) do not
automatically get incorporated in such scheme unless the scheme specifically
includes any such matter. We fail- to appreciate how the said decision can be D
of any assistance to the learned senior counsel for the appellant on the facts
of the present case. If the scheme deals with a topic and if it is comprehensive
enough then it would rule out any contrary provision found elsewhere and
express provision of the scheme only has to be given effect to. In the facts
of the present case, as seen earlier, neither clause 2 nor clause I 0 of the E
Scheme represents any provision regarding compassionate appointments to
be given to the heirs of the erstwhile deceased employees of the transferor-
bank. Hence, there is no occasion for the said clauses of the Scheme to
project any contrary express provision to override or to supersede the
provisions contained in 2(p) Settlement which was binding on the transferor-
bank and which if binding on the transferee-bank would remain operative to F
the extent benefit thereunder is available to the concerned claimants like the
respondents herein. In the light of the relevant clauses of the Amalgamation
Scheme, therefore, it is not possible to agree with the contention of the
learned senior counsel for the appellant that no liability could be imposed on
the appellant-bank so far as the claim of the respondents for compassionate G
appointments was concerned. The first contention, therefore, stands rejected.
Contention No. 2
That takes us to the consideration of the second contention. It is true
that the settlement under Section 2(p) of the I.D. Act was entered into not H
376 SUPREME COURT REPORTS [1998] l S.C.R.
A by the appellant-bank but by the transferor-bank with the union of its erstwhile
employees. They were outsiders so far as the transferee-bank is concerned.
Such 2(p) Settlement which was not arrived at during conciliation could not
be binding on the successor or transferee management as Section 18 sub-
section (3) of the I. D. Act would not get attracted to such a settlement. There
B cannot be any dispute on this aspect. Further it cannot also be §ainsaid that
under Section 18 sub-section (I) of the I. D. Act such settlement was binding
at least on the parties to the settlement, namely, ex-workmen of the transferor-
bank on the one hand and the management of the transferor-bank on the
other. That consequence squarely flows from Section 18 sub-section (l) of the
I. D. Act which reads as under:
c "18. Persons on whom settlement and awards are binding-( l) A
settlement arrived at by agreement between the employer and workman
otherwise than in the course of conciliation proceeding shall be binding
on the parties to the agreement."
D Till the time of amalgamation, therefore, the said settlement remained operative
and binding on the transferor-bank being a party thereto. That was the
situation on 19th June 1990, a day prior to the date on which the Scheme of
Amalgamation saw the light of the day, that is, w.e.f. 20th June 1990. Thus
it was an operative contractual obligation of the transferor-bank flowing from
the settlement which had legal binding force qua it. Question is whether the
E binding effect of such a settlement could be visited on the transferee or
successor bank, namely, the appellant. Section 18 sub-section (3) of the I. D.
Act being out of picture by itself the said settlement under Section 2(p) of
the l.D. Act which was binding under Section 18( I) on the transferor-bank
could not have been pressed in service against the transferee-bank which is
p the successor bank and which was obviously not a party to the said settlement.
However, it is Section 2 of the Act which becomes operative in such a
situation. Section 2 reads as under:-
"2. Application of other laws not barred.-The provisions of this Act
shall be in addition to and not, save as hereinafter expressly provided,
G in derogation of the Companies Act, 1956 and any other law for the
time being in force."
As clearly laid down therein the provisions of the Act will not be in derogation
of the Companies Act , 1956 or any other law for the time being in force save
and except as expressly provided to the contrary in latter part of the Act. The
H latter part of the Act obviously brings in its sweep section 45 and its various
INDIAN BANK v. USHA [S.B. MAJMUDAR, J.] 377
sub sections. Therefore, if any of the provisions of Section 45 or its sub- A
sections had said anything expressly contrary in connection with the binding
effect, on the transferee-bank, of erstwhile settlements entered into between
the transferor-bank on the one hand and its the then existing employees
through their Union on the other hand, the provisions of any other law for
the time being in force which foisted such an obligation on the transferee B
bank would not remain operative and clicking. However, as seen earlier, no
y- provision in the Act and especially in any of the clauses of Section 45 or even
in any of the clauses of the Scheme of Amalgamation in the present case
could be effectively pressed in service by the learned senior counsel for the
appellant to cull out any express provision contra-indicating the foisting of
liability under the settlement arrived at under Section 2(p) of the I. D. Act by C
the transferor-bank with its erstwhile employees on the topic of compassionate
appointment. Hence, Section 2 of the Act had its full operation. Once Section
2 applied it brought in its wake section 19 of the specific Relief Act, 1963
which obviously is a law in force. Section 19 provides for the relief against
parties and persons claiming under them by subsequent title and lays down.
'Except as otherwise provided by this Chapter, specific performance of a D
contract may be enforced against - (a) .... (b) ....... (c) ........ (d) when a company
has entered into a contract and subsequently becomes amalgamated with
another company, the new company which arises out of the amalgamation. It,
therefore, becomes clear that apart from Section 18 Sub-Section (3) of the I.
D. Act the liability of the transferee-bank to meet the contractual obligation E
of the transferor bank under the Settlement binding under Section 18( 1) of the
I. D. Act would remain squarely attracted by virtue of Section 19(d) of the
Specific Relief Act read with Section 2 of the Act. This is the view taken by
the High Court in the impugned judgments which remains well sustained on
the conjoint operation of the 2(p) Settlement of 1982, Section 2 of the Act and
Section 19(d) of the Specific Relief Act. The said legal effect flowing from the . F
aforesaid statutory provisions is not contra-indicated by any express provisions
in any part of the Act or in any part of Section 45 or for that matter in any
of the clauses of the Scheme of Arnalgamation. Consequently the appellant
transferee-company which has emerged as an amalgamated company as a
result of the amalgamation with the earlier company would be liable to meet G
the contractual obligations flowing from the settlement binding on the transferor
- company and these contractual obligations which could have been
specifically enforced against the transferor- company during the currency of
the settlement under Section 2(p) read with section 18 (1) of the I. D. Act
would get transmitted and foisted on the shoulders of the appellant transferee-
company on the combined operation of Section 19(1 )(d) of the Specific Relief H
""'-----------------------·-~··· 4·-··· ..
378 SUPREME COURT REPORTS [1998] 1 s.c.R.X
A Act and Section 2 of the Act. The second contention, therefore has to be
answered in the negati\·e, in favour of the respondents and against the
appellant.
Contention iVo. 3
B Now remains the consideration of the third contention. LearJled counsel
for the appellant were right when they contended that if the scheme for
granting compassionate appointments as per the rules and regulations of the
employer concerned expressly provides that such appointments can be granted
to the heirs of its deceased employees dying in harness only if vacancies exist
C for absorbing them, then the compassionate appointments could be granted
only against such vacancies and the Court cannot direct, by n1andan1us, to
create vacancies for that purpose if there are none. In this connection they
rightly invited our attention to a decision of this Court in the case of Hindust_an
Aeronautics Ltd. v. A. Radhika Thirumalai (Smt.), (1996] 6 SCC 394. However,
the said decision cannot be of any avail to the appellant on the facts of the
D present cas'es. The first reason is that it was not the contention of the
appellant before the High Court, either before the learned single Judge or in
appeal or in the writ petitions, the decisions wherein are challenged by direct
Special Leave Petitions before us, that there are no vacancies with the
appellant-bank wherein the respondents co~ld be fitted in. In fact respondents
E are a~eady employed in these vacancies. Consequently the ratio of the
aforesaid decision cannot be applicable to the peculiar facts of these cases.
The appellant had already rejected the claim of the respondents only on the
plea that they had no legal right to claim compassionate appointments being
outsiders and heirs of ex-employees of the transferor-bank who could not
claim any such appointments from the transferee-bank. It was not the case
F of t~e appellant while rejecting their claims that there were no vacancies
where they could be fitted even though they were eligi~le for such
appointments. On these facts, therefore, the High Court was perfectly justified
in iSsuing mandamus to the appellant-bank once the main defence of the
appellant was found to be unsustainable and which view of the High Court
G is approved by us as discussed while considering the aforesaid first two
contentions. The second reason why the aforesaid decision cannot be of any
.• _avail to the appellant is that the appellant itself requested the High Court to
decide the question of eligibility of the respondents on merits and it joined
issue on this aspect before the High Court. In this connection our attention •
was invited by learned counsel for the appellant to para I 7 of the impugned
H judgment of the Division Bench which reads as under:
I
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