judgement:
Civil Appeal No. 335 of 1987.
From the order dated l0.12.1986 of the Customs Excise and Gold Control Appellate Tribunal, New Delhi in Appeal No. C/l080/ 86 B 2(OrderNo. 1284/86 B 2).
S.K. Dholakia, R.C. Bhatia, P.C. Kapur and S.K. Beri for the Appellant.
G. Ramaswamy, Additional Solicitor General, B. Parthasarthy and Mrs. section Suri for the Respondents.
The judgement of the court was delivered by DUTT, J.
The only question that is involved in this appeal preferred under section 130E of the , is whether the appellant is entitled to the benefit of the Notification No. 281 Cus/76, granting part exemption from payment of Customs duty in respect of the rod bushes and camshaft bushes imported by the appellant.
Before we refer to the said Notification, we may notice the provisions of the Heading No. 84.06 and Heading No. 84.63 of the , which are as follows: Heading Sub heading No. and Rate of duty Central No. description of article (a)Standard Excise (b)Preferen Tariff tial areas Item 84.06 International combustion (a)100% 29 piston engines.
84.63 Transmission shafts, (a) 60% cranks, bearing housings, plan shaft bearings, gears and gearing (including friction gears and gear boxes and other variable speed gears), flywheels, pulleys and pulley blocks, clutches and shaft couplings.
223 The said Notification No. 281 Cus dated 2.8 1976, as amended A from time to time, reads as follows: "Notfn.
No. 281.Cus.
The articles specified in column(2) of the Table hereto annexed and falling under Heading No. 84.06 are exempt from so much of that portion of the duty of Customs leviable thereon which is specified in the First Schedule to the , as is in excess of the rate specified in the corresponding entry in column (3) of the said Table.
THE TABLE Description of article Rate of duty (2) (3) Stationary or industrial internal combus 40 percent.
tion piston engines and parts thereof ad valorem.
excluding those which are inter changeable for use with motor vehicle other than those specified against section No 2 International combustion piston engines 40 per cent.
for industrial and agricultural tractors ad valorem.
and power tillers and parts thereof excluding those which are inter changeable for use with other motor vehicles Marine engines and parts thereof excluding 40 per cent.
those which are inter changeable for use ad valorem.
with motor vehicles other than those specified against Sl.
No. 2.
International combustion piston engines 3 per cent.
designed for use in aeroplanes and parts ad valorem of such engines.
International combustion piston engines 40 per cent.
for locomotives and parts thereof excluding ad valorem.
those which are inter changeable for use with motor vehicles other than those specified against Sl.
No. 2.
" 224 The Assistant Collector and the Collector of Customs (Judicial) overruled the contention of the appellant that the appellant was entitled to the benefit of exemption under the Notification No. 281Cus/76.
The Customs, Excise and Gold (Control) Appellant Tribunal, hereinafter referred to as 'the Appellate Tribunal ', dismissed the appeal of the appellant and affirmed the orders of the Customs authorities.
According to the Appellate Tribunal, the bushings and the bearings are the same and as the bearings come under the Heading No. 84.63 and not under Heading No. 84.06, they are not entitled to the benefit of exemption under the said Notification.
Hence this appeal under section 130 E of the .
The Notification grants exemption in part from payment of the Customs duty in respect of articles specified in column (2) of the Table and falling under Heading No. 84.06.
Heading No. 84.06 refers to 'internal combustion piston engines ' Paragraph 2 of column (2) of the Table annexed to the Notification, which is relevant for our purpose, not only refers to internal combustion piston engines, but also to 'parts thereof '.
Heading No. 84.06 does not, however, contain or refer to the Parts of internal combustion piston engines It is submitted by the learned Additional Solicitor General that as Heading No. 84.06 does not refer to the parts of internal combustion piston engines, the appellant is not entitled to claim any exemption for the bushes, even if they are parts of such engines.
Secondly, it is contended by him that even assuming that Heading No. 84.06 also contemplates parts of the engine, such parts must be all the parts of the engine and not a few parts thereof In other words, his contention is that Heading No. 84.06 will apply when an internal combustion piston engine in imported in a knocked down condition.
Lastly, it is contended that bushes and bearings are the same and indentical articles as held by the Appellate Tribunal and, as bearings have been provided for under Heading No. 84.63, the question of any exemption under the Notification does not arise.
It is also submitted by the learned Additional Solicitor General that even assuming that the bushes and bearings are not identical articles but they are distinct and separate, yet there is no material for holding that the bushes, which have been imported by the appellant, are parts of the engines referred to in Heading No. 84.06.
The Notification provides that the articles specified in column (2) of the Table and falling under Heading No. 84.06 are exempt from payment of a certain portion of the customs duty.
Paragraph 2 of 225 column (2) of the Table not only mentions internal combustion piston engines, undoubtedly forming the only subject matter of Heading No. 84.06, but it also mentions the 'parts thereof ', that is to say, parts of such engines.
Heading No. 84 06 does not refer to 'parts ' of such engines.
Non mention of 'parts ' in Heading No. 84.06 has given rise to a controversy between the parties.
It may be that the Notification has been inartistically drafted.
It is, however, clear that the Notification not only intends to grant exemption to internal combustion piston engines, but also to 'parts thereof '.
When, therefore, the intention is clear and manifest, it will be unreasonable to take a narrow view of the Notification and not to extend its benefit to the parts of the engines referred to in Heading No. 84.06.
To accept the contention made on behalf of the respondents that as Heading No. 84 06 does not mention 'the parts ', the Notification is inapplicable to the parts, will be to amend the Notification, which the court will not do.
In our opinion, therefore, the Notification will apply to parts of the engines mentioned under Heading No. 84.06.
We are unable to accept the contention of the respondents that 'the parts ' referred to in paragraph 2 of column (2) of the Table must be all the parts of the engines or engine in question and not a few parts thereof.
Paragraph 2 of column (2) does not provide that it must be all the parts of the engine or engines.
It simply provides 'parts thereof '.
In the absence of any clear and unambiguous provision that exemption will be granted in respect of parts of the engines, which must be all the parts constituting the engine or engines, we are not inclined to restrict the scope of the Notification.
Accordingly, we hold that 'parts referred to in paragraph 2 of column (2) of the Table may be all the parts or any of some of the parts of the engine or engines in question.
A mention of internal combustion piston engines under Heading No. 84.06 not only contemplates the engine or engines, but also the parts thereof.
So, although the parts are not mentioned under Heading No. 84.06, by necessary implication and in the context of the Notification, it includes the parts of the engine.
We are, therefore, of the view that parts of the engine or engines, mentioned under Heading No. 84.06, will get the benefit of exemption under the Notification.
It has been held by the Appellate Tribunal and it is also the contention of the learned Additional Solicitor General that bushings and bearings are identical articles.
It seems that the appellate Tribunal was influenced by the fact that the functions of the bushings and bearings are the same.
It may be that two articles have the same functions but, nonetheless, they are distinct and separate.
As the functions of 226 bushings are the same as that of the bearings, sometimes bushings are also called bearings, as pointed out by the Appellate Tribunal.
But when these two articles are known in the market by two different names, it is difficult to uphold the contention that they are same and identical, even though they perform the same functions.
We, therefore, do not agree with the finding of the Appellate Tribunal and the R Customs authorities that bushings and bearings are same and identical.
In view of our finding that the Notification exempts also parts of the engines mentioned in paragraph 2 of column (2) of the Table, in order to avail of the benefit of the exemption granted by the Notification, it has to be proved that the parts in respect of which the exemption is claimed, are parts of the internal combustion piston engine, as mentioned under Heading No. 84.63.
Some of such parts may have been included under Heading No. 84.63.
In other words, as soon as it is proved that the parts are of the engines, mentioned in heading No. 84.06, such parts will get the benefit of exemption as provided by the Notification, irrespective of the fact that they or any or some of them have already been included under Heading No. 84.06 or under any other Heading.
Therefore, even if bushings are the same as bearings, still they would come within the purview of the Notification, provided they are parts of the engines mentioned under Heading No. 84.06.
The contention of the Customs authorities that the article, which is provided under another Heading other than Heading No. 84.06, will not get the exemption as provided in the Notification, is not readily understandable.
When the Notification grants exemption to the parts of the engines, as mentioned under Heading No. 84.06, we find no reason to exclude any of such parts simply because it is included under another Heading.
The intention of the Notification is clear enough to provide that the parts of the engines, mentioned under Heading No. 84.06, will get the exemption under the Notification and in the absence of any provision to the contrary, we are unable to hold that the parts of the engines, which are included under a Heading other than Heading No. 84.06, are excluded from the benefit of the Notification.
In the instant case, there is no material or evidence nor is there any finding of the Appellate Tribunal or the Customs authorities that the bushes, which have been imported by the appellant, are parts of internal combustion piston engines falling under Heading No. 84.06.
In the circumstances, it is necessary that the Customs authorities should embark upon the question and decide whether the bushes, imported by the appellant, are really parts of such engines.
227 For the reasons aforesaid, we set aside the order of the Appellate A Tribunal and of the Customs authorities and send the case back to the Collector of Customs with a direction to decide, after giving an opportunity to the appellant, whether the bushes imported by the appellant are parts of the internal combustion piston engines, as mentioned under Heading No. 84.06.
The appeal is allowed, but in view of the facts and circumstances of the case, there will be no order as to costs.
P.S.S. Appeal allowed.

summary/full:
Heading No. 84.06 of the prescribed 100% duty on internal combustion piston engines, while Heading No. 84.63 laid down 60% duty on transmission shafts, cranks, bearing housings, plan shaft bearing etc.
The Notification No. 281 Cus/76 dated 2nd August, 1976 as amended from time to time exempted the articles specified in column (2) of the table thereto and falling under Heading No. 84.06 from payment of duty in excess of 40% ad valorem.
Internal combustion piston engines and parts thereof were one such article.
The appellant sought part exemption from payment of customs duty in respect of rod bushes and camshaft bushes, imported by it, in terms of the Notification.
The Assistant Collector and the Collector of Customs (Judicial) found that he was not entitled to the benefit of exemption under the said Notification.
The Appellate Tribunal affirmed the orders of the Customs authorities being of the view that the bushes and bearings were the same and as the bearings come under the Heading No. 84.63 and not under Heading No. 84.06, they were not entitled to the benefit of exemption.
In this appeal under section 130E of the it was contended for the respondent that as Heading No. 84.06 does not refer to the parts of internal combustion piston engines, the appellant was not entitled to claim any exemption for the bushes, even if they were parts of such engines, that even assuming that Heading No. 84.06 also contemplates parts of the engine, such parts must be all the parts of the engine and not a few parts thereof, and that bushes and bearings were the same and identical articles as held by the Appellate Tribunal and, as bearings have been provided for under Heading No. 84.63, the question of any exemption under the Notification did not arise, that there is no material for holding that the bushes, which have been imported by the 221 appellant, were parts of the engines referred to in Heading No. 84.06.
Allowing the appeal, ^ HELD: 1.1 The Notification No. 281/Cus/76 dated August 2, 1976, as amended from time to time will apply to parts of the internal combustion piston engines mentioned under Heading No. 84.06.
[225G] 1.2 Paragraph 2 of column (2) does not provide that it must be all the parts of the engine or engines.
It simply provides 'parts thereof '.
Such parts may be all the parts or any or some of the parts of the engine or engines in question.
Although the parts are not mentioned under Heading No. 84.06, by necessary implicated and in the context of the Notification, it includes the parts of the engine.
[225D F] 2.
Bushes and bearings are not same and identical.
As the functions of bushes are the same as that of the bearings sometimes bushes are also called bearings.
These two articles are distinct and separate.
They are known in the market by two different names.
[226A B] 3.1 In order to avail of the benefit of the exemption granted by the Notification, it has to be proved that the parts in respect of which the exemption is claimed, are parts of the internal combustion piston engine mentioned in Heading No. 84.06.
As soon as that is proved such parts will get the benefit irrespective of the fact that they or any or some of them have already been included under Heading No. 84.063 or under any other heading.
[226C D] 3.2 The intention of the Notification is clear enough to provide that the parts of the engines, mentioned under Heading No. 84.06, will get the exemption under the Notification.
Therefore, even if bushes are same as bearings, still they would come within the purview of the Notification, provided they are parts of the engines mentioned under Heading No. 84.06.[226F] 3.3 In the instant case, there is no material or evidence nor is there any finding of the Appellate Tribunal or the Customs authorities that the bushes, which have been imported by the appellant are parts of internal combustion piston engines falling under Heading No. 84.06.
The case is, therefore, sent back to the Collector of Customs to decide, after giving an opportunity to the appellant, whether the bushes imported by the appellant are really parts of the internal combustion piston engines, as mentioned under Heading No. 84.06.
[226G; 227A B]


judgement:
tition No. 177 of 1987 etc.
(Under Article 32 of the Constitution of India).
Dr. L.M. Singhvi, K.K. Venugopal, M.K. Ramamurthi, V.M. 193 Tarkunde, R.K. Garg, Ravi P. Wadhwani, Vrinda Grover, Vandana Chak, Ranjeet Kumar, M.N. Krishnamani, V. Shekhar, B.S. Maan, M.A. Chinnaswami, V.J. Francis, Mathai M. Paikeday, N.M. Popli, M.A. Krishnamurthi, Mrs. Chandan Ramamurthi, Balbir Singh, Rajan Karanjawala, Mrs. Manik Karanjawala, Ravi P. Wadhwani, P.N. Mishra, Ashok Grover, Ezaz Manbool, and K.K. Mohan for the Petitioners.
G. Ramasvamy, Additional Solicitor General, Dr. Y.S. Chitale, M.M. Abdul Khader, Soli J. Sorbjee, K.N. Bhat, G.L. Sanghi, O.C. Mathur, Miss Srieen Sethna, Harish Salve, H.S. Parihar, Vipin Chandra, Vijay Kr.
Verma, Miss Madhu Moolchandani, Gopal Subramium, Halida Khatoon, Mrs. Sushma Suri and P. Parmeshwaran for the Respondents.
E.C. Aggarwala and D.D. Gupta for the Intervener.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
The writ petitions under Article 32 of the Constitution and appeals by special leave are against the judgment of the Division Bench of the Kerala High Court in writ appeals have a common set of facts as also law for consideration.
These matters have been heard together and are disposed of by this common judgment.
Hindustan Commercial Bank ( 'Hindustan ' for short).
The Bank of Cochin Ltd. (hereafter referred to as 'Cochin Bank ') and Lakshmi Commercial Bank ( 'Lakshmi ' for short) were private banks.
Action was initiated under section 45 of the Banking Regulation Act, 1949 ( 'Act ' for short) for amalgamation of these three banks with Punjab National Bank, Canara Bank and State Bank of India respectively in terms of separate schemes drawn under that provision of the Act.
Amalgamation has been made.
Pursuant to the schemes, 28 employees of Hindustan, 21 employees of Cochin Bank and 76 employees of Lakshmi were excluded from employment and their services were not taken over by the respective transferee banks.
Some of these excluded employees of the Cochin Bank went before the Kerala High Court for relief under Article 226 of the Constitution.
A learned Single Judge gave them partial relief but on an appeal to the Division Bench by the transferee bank concerned the writ petitions have been dismissed.
The civil appeals are against the decision of the Division Bench.
The writ petitions directly filed before this Court are by some of the excluded employees of Hindustan and Lakshmi respectively.
194 Though employees of the other two banks had not challenged the vires of section 45 of the Act, on behalf of Lakshmi such a challenge has been made.
Since the grounds of attack on this score did not Impress us at all, we do not propose to refer to that aspect of the submissions involving interpretation of Article 31 A, Article 16 and Article 21.
It has often been said by this Court that Courts should not enter into constitutional issues and attempt interpretation of its provisions unless it is really necessary for disposal of the dispute.
In our opinion, this group of cases can be disposed of without reference to question of vires of some part of section 45 of the Act being examined.
Counsel on behalf of the excluded employees have broadly contended that the draft schemes did not include any name of employees intended to be excluded; no opportunity of being heard was afforded to them before exclusion was ordered under the schemes and the authorities concerned have not acted fairly; they deny the allegation that any of them was responsible for ficticious, improper or non business like advances of loan to parties thereby bringing conditions near about bankruptcy for the appropriate banking companies; many other employees against whom there were definite charges already pending enquiry or even orders of dismissal had been proposed have been taken over and retained in service of the transferee banks while these excluded employees without justification have been called upon to face this unfortunate situation.
The transferee banks, the Reserve Bank of India (hereafter referred to as RBI for short) and the Union of India have appeared and filed affidavits in opposition.
The Union of India has contended that the scheme in respect of each of the banks that has got amalgamated had been approved by it as required under the Act and since finality was attached to such schemes challenge was not open against the schemes particularly in view of the provisions contained in Article 3 I A of the Constitution.
On behalf of the Reserve Bank of India, several contentions were raised by way of opposition and shortly stated these submissions are: (1) Law does not require that the draft scheme should contain the names of the employees to be excluded; (2) The incorporation of the names finalised on the basis of scrutiny of the records before the schemes were placed before the RBI was sufficient compliance of the requirements of the law; 195 (3) the provisions of the Act did not confer any right on the employees of being heard; (4) the scheme making process was legislative in character and therefore did not come within the ambit of natural justice.
Alternately the action not being judicial or quasi judicial and at the most being administrative or executive was also not open to challenge on allegations of violation of rules of natural justice; (5) moratorium under the statutory provisions could not be beyond six months and in view of the fact that the entire operation had to be finalised within a brief time frame, the requirement of an enquiry by notice to all the officers intended to be excluded could not have been intended to be implanted into the provisions of section 45; and (6) Provision of compensation has been made for those who were excluded from the respective scheme.
Each of the transferee banks generally adopted the stand taken by RBI.
Before we proceed to examine the tenability of the several contentions and counter contentions advanced at the hearing, it is appropriate that we refer to the relevant provisions of the Act.
The entire law applicable to the facts of these cases is to be found in Part Ill of the Act and in particular in section 45.
As far as relevant, that section provides: "Notwithstanding anything contained in the foregoing provisions of this Part or in any other law or any agreement or other instrument, for the time being in force.
where it appears to the Reserve Bank that there is good reason so to do, the Reserve Bank may apply to the Central Government for an order of moratorium in respect of a banking company.
(2) The Central Government, after considering the application made by the Reserve Bank under sub section (1), may make an order of moratorium staying the commencement or continuance of all actions and proceedings against the company for a fixed period of time on such terms and conditions as it thinks fit and proper and may 196 from time to time extend the period so however that the total period of moratorium shall not exceed six months; (3) . . . . . . . (4) During the period of moratorium, if the Reserve Bank is satisfied that (a) in the public interest; or (b) in the interests of the depositors; or (c) in order to secure the proper management of the banking company; or (d) in the interests of the banking system of the country as a whole, it is necessary so to do, the Reserve Bank may prepare a scheme (i) for the reconstruction of the banking company, or (ii) for the amalgamation of the banking company with any other banking institution (in this section referred to as "the transferee bank").
(5) The scheme aforesaid may contain provisions for all or any of the following matters, namely: (a). . . . . . . . . (b). . . . . . . . . (c). . . . . . . . . (d). . . . . . . . . (e). . . . . . . . . (f). . . . . . . . . (g). . . . . . . . . (h). . . . . . . . . 197 (i) the continuance of the services of all the employees of the banking company (excepting such of them as not being workmen within the meaning of the are specifically mentioned in the scheme) in the banking company itself on its reconstruction or, as the case may be, in the transferee bank at the same remuneration and on the same terms and conditions of service, which they were getting or, as the case may be, by which they were being governed, immediately before the date of the order of moratorium: Provided. . . . . . . . (j) notwithstanding anything contained in clause (i) where any of the employees of the banking company not being workmen within the meaning of the are specifically mentioned in the scheme under clause (i), or where any employees of the banking company have by notice in writing given to the banking company or, as the case may be, the transferee bank at any time before the expiry of one month next following the date on which the scheme is sanctioned by the Central Government, intimated their intention of not becoming employees of the banking company on its reconstruction or, as the case may be, of the transferee bank, the payment to such employees of compensation, if any, to which they are entitled under the , and such pension, gratuity, provident fund and other retirement benefits ordinarily admissible to them under the rules or authorisations of the banking company immediately before the date of the order of moratorium: (k). . . . . . . . . (I) . . . . . . . . (6) (a) A copy of the scheme prepared by the Reserve Bank shall be sent in draft to the banking company and also to the transferee bank and any other banking company concerned in the amalgamation, for suggestions and objections, if any, within such period as the Reserve Bank may specify for this purpose; (b) the Reserve Bank may make such modifications, 198 if any, in the draft scheme as it may consider necessary in the light of the suggestions and objections received from the banking company and also from the transferee bank, and any other banking company concerned in the amalgamation and from any members, depositors or other creditors of each of those companies and the transferee bank.
(7) The scheme shall thereafter be placed before the Central Government for its sanction and the Centraly Government may sanction the scheme without any modifications or with such modifications as it may consider necessary; and the scheme as sanctioned by the Central Government may specify in this behalf: Provided . . . . . . . . (7A) The sanction accorded by the Central Government under sub section (7), whether before or after the commencement of section 21 of the Banking Laws (Miscellaneous Provisions) Act, 1963, shall be conclusive evidence that all the requirements of this section relating to reconstruction, or, as the case may be, amalgamation have been com plied with and a copy of the sanctioned scheme certified in writing by an officer of the Central Government to be a true copy thereof, shall, in all legal proceedings (whether in appeal or otherwise and whether instituted before or after the commencement of the said section 21), be admitted as evidence to the same extent as the original scheme.
(8) on and from the date of the coming into operation of the scheme or any provision thereof, the scheme or such provision shall be binding on the banking company or, as the case may be, on the transferee bank and any other banking company concerned in the amalgamation and also on all the members, depositors and other creditors and employees of each of those companies and of the transferee bank, and on any other person having any right or liability in relation to any of those companies or the transferee bank. . . (9). . . . . . . . . (10) If any difficulty arises in giving effect to the provisions 199 of the scheme, the Central Government may by order do anything not inconsistent with such provisions which appear to it necessary or expedient for the purpose of removing the difficulty.
(11) Copies of the scheme or of any order made under sub section ( 10) shall be laid before both Houses of Parliament, as soon as may be, after the scheme has been sanctioned by the Central Government or, as the case may be, the order has been made.
(12). . . . . . . . (13). . . . . . . . (14). . . . . . . . (15). . . . . . . .
Allegations advanced on behalf of the excluded employees is that the draft scheme contemplated under sub section 6(a) did not specifically mention names of the excluded employees and at a later stage when the scheme was sent up by the RBI to the Central Government a schedule containing the names of the excluded employees was attached to each of the schemes.
Section 45 of the Act provides a legislative scheme and the different steps required to be taken under this section have been put one after the other.
A reading of this section indicates a sequence oriented pattern.
What would ordinarily be incorporated in the draft scheme is indicated in sub section (5).
After the requirements of sub section (5) are complied with and the scheme comes to a presentable shape, sub section (6)(a) requires a copy thereof as prepared by RBI to be sent to the banking company (transferer) as also to the transferer bank.
Clause (b) of sub section (6) authorises RBI to make modifications in the draft scheme as it may consider necessary in the light of suggestions and objections received from the banking company and the transferee bank.
On a simple construction of sub sections (5) and (6) and on the basis of the sequence pattern adopted in section 45 it would be legitimate to hold that the Act contemplates the employees to be excluded to be specifically named in the draft scheme.
Since it is a draft scheme prepared by RBI and the right to object or to make suggestions is extended to both the banking company as also the transferee bank, and in view of the fact that clause 200 (i) of sub section (5) specifies this item to be a matter which may be included in the scheme, it must follow that the legislative intention is that the scheme would incorporate the names of such employees as are intended to be excluded in accordance with the scheme.
Once it is incorporated in the scheme the banking company as also the transferee bank would be entitled to suggest/object to the inclusion of names of employees.
It may be that the names of some of the employees may have been wrongly included and the banking company the hither to employer would be in a position to suggest/object to the inclusion of the names or it may even be that names of some undesirable employees which should have been left out have been omitted and the banking company as the extant employer of such employees would be most competent to deal with such a situation to bring about rectifications by exercising the power to suggest/object to the draft scheme.
The contention advanced on behalf of RBI that since it is open to it under sub section (6)(b) of section 45 to make modifications of the draft scheme, even if the names were not included earlier, at the stage of finalising the scheme for placing it before the Central Government as required under sub section (7), the earlier non inclusion is not a contravention is not acceptable.
We are of the view that in case some employees of the banking company are intended to be excluded, their names have to be specifically mentioned in the scheme at the draft stage.
The requirement of specific mention is significant and the legislature must be taken to have intended compliance of the requirement at that stage.
Mr. Salve for the RBI adopted the stand that the provisions of section 45 did not specifically concede a right of objection or making of suggestions to employees and in sub section (6)(b) mention was made only of members, depositors or other creditors.
For the reasons we have indicated above, this aspect of the contention does not impress us.
It is the common case of RBI as also the transferee banks that the records of service of each of the employees had been scrutinised and the names for inclusion in the scheme were picked up on the basis of materials like irresponsible action in regard to sanction of loans and accommodations to customers which affected the financial stability of the banking company concerned.
Such an allegation made in the counter affidavit in this Court has been seriously disputed by the litigating excluded employees.
It is their positive case that there was no foundation in such allegation and dubious loans, if any, had been sanctioned under instructions of the superior in the banking company and, therefore, did not involve any delinquency on the part of such employees.
Since it is the case of the respondents that exclusion had 201 been ordered on the basis of an objective assessment and the very A foundation of the allegation upon which such assessment has been made is disputed, a situation arose where facts had to be ascertained, and it involved assessment.
That has admittedly not been done.
These employees were in employment under contract in the banking companies which were private banks.
They have been excluded from service under the transferee banks and the contracts have now been terminated as a result of inclusion of their names in the schemes.
It cannot be disputed nay has not been that exclusion has adversely affected this category of employees and has brought about prejudice and adverse civil consequences to them.
Two contentions have been raised with reference to this aspect of the matter: ,, (1) There has been infraction of natural justice and (2) The transferee banks which are 'State ' and RBI which has monitored the operation being admittedly 'State ' their action in excluding some of the employees of the banking company and taking over the services of others who are similarly situated is hit by Article 14 of the Constitution.
It may be pointed out that according to the excluded employees, many facing similar allegations and/or in worse situation have been taken over.
Whether there is infraction of Article 14 of the Constitution on the allegation advanced would depend upon facts relating to the excluded employees as also the allegedly derelict employees whose services have been taken over.
In the absence of an enquiry in which the excluded employees should have been given an opportunity of participation it has become difficult for us to probe into the matter further.
F Admittedly the excluded employees have neither been put to notice that their services were not being continued under the transferee banks nor had they been given an opportunity of being heard with reference to the allegations now levelled against them.
Learned counsel for RBI and the transferee banks have taken the stand that the scheme making process under section 45 is legislative in character and, therefore, outside the purview of the ambit of natural justice under the protective umbrella whereof the need to put the excluded employees to notice or enquiry arose.
It is well settled that natural justice will not be employed in the exercise of legislative power and Mr. Salve has rightly relied upon a recent decision of this Court being Union of India H 202 & Anr.
vs Cynamide India Ltd. & Anr., [ 1987] 2 SCC 720 in support of such a position.
But is the scheme making process legislative? Power has been conferred on the RBI in certain situations to take steps for applying to the Central Government for an order of moratorium and during the period of moratorium to propose either reconstruction or amalgamation of the banking company.
A scheme for the purposes contemplated has to be framed by RBI and placed before the Central Government for sanction.
Power has been vested in the Central Government in terms of what is ordinarily known as a Henery 8 clause for making orders for removal of difficulties.
Section 45(11) requires that copies of the schemes as also such orders made by the Central Government are to be placed before both Houses of Parliament.
We do not think this requirement makes the exercise in regard to schemes a legislative process.
It is not necessary to go to any other authority as the very decision relied upon by Mr. Salve in the case of Cynamide India Ltd. (supra) lays down the test.
In paragraph 7 of the judgment it has been indicated: "Any attempt to draw a distinct line between legislative and administrative functions, it has been said, is 'difficult in theory and impossible in practice '.
Though difficult, it is necessary that the line must sometimes be drawn as different legal rights and consequences may ensue.
The distinction between the two has usually been expressed as 'one between the general and the particular '. 'A legislative act is the creation and promulgation of a general rule of conduct without reference to particular cases; an administrative act is the making and issue of a specific direction or the application of a general rule to a particular case in accordance with the requirements of policy '. 'Legislation is the process of formulating a general rule of conduct without reference to particular cases and usually operating in future; administration is the process of performing particular acts, of issuing particular orders or of making decisions which apply general rules to particular cases '.
It has also been said: "Rule making is normally directed towards the formulation of requirements having a general application to all members of a broadly identifiable class" while, "an adjudication, on the other hand, applies to specific individuals or situations.
But this is only a broad distinction, not necessarily always true.
" Applying these tests it is difficult to accept Mr. Salve 's contention that 203 the framing of the scheme under section 45 involves a legislative process.
There are similar statutory provisions which require placing of material before the two Houses of Parliament yet not involving any legislative activity.
The fact that orders made by the Central Government for removing difficulties as contemplated under sub clause (10) are also to be placed before the two Houses of Parliament makes it abundantly clear that the placing of the scheme before the two Houses is not a relevant test for making the scheme framing process legislative.
We accordingly hold that there is no force in the contention of Mr. Salve that the process being legislative, rules of natural justice were not applicable.
The alternate contention on this score is that the scheme making process being an executive activity or alternately an administrative matter, rules of natural justice have no application.
This contention has again to be rejected.
Neither in "Privy Council, Natural Justice and Certiorari" has indicated: "Formerly the presumption had been that there WAS obligation to give a hearing unless the statute itself indicated such an obligation; now the presumption is that there is such an obligation unless the statute clearly excludes it, notwithstanding the vesting of a power, in subjective terms, in a minister responsible to Parliament." As has beer.
pointed out by Wells J. in Perre Brothers vs Citrus organisation Committee, "It is now well established and there is no need for me to canvass the innumerable authorities bearing on this point that duties, responsibilities and functions of an administrative authority may be purely ministerial, or they may embody some quasi or semi judicial characteristic.
At one time a good deal of ingenuity and with all respect it seems to me a great deal of energy was wasted in attempting to discern whether a particular function was administrative or quasi judicial.
In my view the House of Lords, and now the High Court, have, to a very large extent set all such controversies at rest.
In my opinion, the test now is not so much as to whether one can fairly call something "ministerial" or 204 "administrative", or "quasi judicial" but whether the duties of a non judicial authority must, having regard to the wording of the Act, be carried out in a spirit of judicial fairness.
" In Re (H) K (an infant), Lord Parker, CJ, found that the immigration officer was not acting in a judicial or quasi judicial capacity.
Yet, the learned Chief Justice held that he still had to act fairly.
In that case it meant giving K an opportunity of satisfying the officer as to his age, and for that purpose he had to let K know what his immediate impression was so that K could disabuse him of it.
Lord Parker observed: "I appreciate that in saying that, it may be said that one is going further than is permitted on the decided cases because heretofore at any rate the decisions of the courts do seem to have drawn a strict line in these matters according to whether there is or is not a duty to act judicially or quasi judicially".
The obligation to act fairly even in administrative decision making has since been widely followed.
Mulla in 'Fairness: The New Natural Justice ' has stated: "Natural justice co exists with, or reflected, a wider principle of fairness in decision making and that all judicial and administrative decision making and that all judicial and administrative decision makers had a duty to act fairly.
" In the case of State of Horsily vs Dr. (Miss) Binapani Dei & ors., [ ; this Court observed: "It is true that the order is administrative in character but even an administrative order which involves civil consequences as already stated, must be made consistently with the rules of natural justice after informing the first respondent of the case of the State, the evidence in support thereof and after giving an opportunity to the first respondent of being heard and meeting or explaining the evidence.
No such steps were admittedly taken; the High Court was, in our judgment, right in setting aside the order of the State." 205 ln A.K Kraipak & ors.
vs Union of India & ors.
, [ a Constitution Bench quoted with approval the observations of Lord Parker in Re: (H) K (an infant) (supra).
Hegde, J. speaking for the Court stated: "Very soon thereafter a third rule was envisaged and that is that quasi judicial enquiries must be held in good faith, without bias and not arbitrarily or unreasonablly.
But in the course of years many more subsidiary rules came to be added to the rules of natural justice.
Till very recently it was the opinion of the courts that unless the authority concerned was required by the law under which it functioned to act judicially there was no room for the application of the rules of natural justice.
The validity of that limitation is now questioned.
If the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative enquiries.
Often times it is not easy to draw the line that demarcates administrative enquiries from quasi judicial enquiries.
Enquiries which were considered administrative at one time are now being considered as quasi judicial in character.
Arriving at a just decision is the aim of both quasi judicial enquiries as well as administrative enquiries.
An unjust decision in an administrative enquiry may have more far reaching effect than a decision in a quasi judicial enquiry.
" These observations in A.K. Kopak 's (supra) case were followed by another Constitution Bench of this Court in Chandra Bhavan Boarding and Lodging, Bangalore vs The State of Mysore & Anr., l 19701 2 SCR 600.
In Swadeshi Cotton Mills vs Union of India, ; a three Judge Bench of this Court examined this aspect of natural justice.
Sarkaria, J. who spoke for the Court, stated: "During the last two decades, the concept of natural justice has made great strides in the realm of administrative law.
Before the epoch making decision of the House of Lords in Ridge vs Baldwin, it was generally thought that the rules of natural justice apply only to judicial or quasi judicial proceedings; and for the purpose, whenever a breach of the rule of natural justice was alleged, Courts in England used to ascertain whether the impugned action was taken by the statutory authority or tribunal in the exercise of its 206 administrative or quasi judicial power.
In India also, this was the position before the decision of this Court in Dr. Bina Pani Dei 's case (supra); wherein it was held that even an administrative order or decision in matters involving civil consequences, has to be made consistently with the rules of natural justice.
This supposed distinction between quasi judicial and administrative decisions, which was perceptibly mitigated in Bina Pani Dei 's case (supra) was further rubbed out to a vanishing point in A.K. Kraipak 's case (supra) . . . . . ".
On the basis of these authorities it must be held that even when a State agency acts administratively, rules of natural justice would apply.
As stated, natural justice generally requires that persons liable to be directly affected by proposed administrative acts, decisions or proceedings be given adequate notice of what is proposed so that they may be in a position (a) to make representations on their own behalf; (b) or to appear at a hearing or enquiry (if one is held); and (c) effectively to prepare their own case and to answer the case (if any) they have to meet.
Natural justice has various facets and acting fairly is one of them.
RBI which monitored the three amalgamations was required to act fairly in the facts of the case.
The situation necessitated a participatory enquiry in regard to the excluded employees.
Since the decision to exclude them from service under the transferee banks is grounded upon a set of facts the correctness whereof they deny, if an opportunity to know the allegations and to have their say had been afforded, they could have no grievance on this score.
The action deprives them of their livelihood and brings adverse civil consequences and could obviously not be taken on the ipse dixit of RBI officers without verification of facts.
It is quite possible that a manoeuvring officer of the banking company adversely disposed of towards a particular employee of such bank could make a report against such employee and have him excluded from further service under the transferee bank.
The possibility of exclusion on the basis of some mistake such as to identity cannot also be ruled out.
There is all the more apprehension of this type is the process has to be completed quickly and very often the records of a large number of employees have to be scrutinised.
We are of the view that rules of natural justice apply to administrative action and in the instant cases the decision to exclude a section of the employees without complying with requirements of natural justice was bad.
207 It has been contended on behalf of respondents that moratorium could be for a total period of six months and that was the time allowed for the entire operation to be conducted.
In view of the time frame, by necessary implication it must follow that application of natural justice compliance of which would involve a time consuming process was ruled out.
We do not think that there is any merit in this contention either.
As a fact, in respect of the three banks the total number of excluded employees is around 125.
It is the common case of parties that proceedings were pending against some of them.
It may be that in view of the time frame a detailed enquiry involving communication of allegations, show cause, opportunity to lead evidence in support of the allegations and in defence of the stand of the employees may not be possible.
Keeping the legislative scheme in view perhaps a simpler enquiry, for instance, communication of the allegation and even receiving an explanation and in cases where the allegation was serious or there was a total denial though there was firm basis for the allegation a single personal hearing could be afforded.
In this case we are not really concerned with the manner or extent of hearing as there has been no hearing at all.
It must, therefore, be held that the action of excluding these employees in the manner done cannot be supported.
Fair play is a part of the public policy and is a guarantee for justice to citizens.
In our system of Rule of Law every social agency conferred with power is required to act fairly so that social action would be just and there would be furtherance of the well being of citizens.
The rules of natural justice have developed with the growth of civilisation and the content thereof is often considered as a proper measure of the level of civilisation and Rule of Law prevailing in the community.
Man within the social frame has struggled for centuries to bring into the community the concept of fairness and it has taken scores of years for the rules of natural justice to conceptually enter into the field of social activities.
We do not think in the facts of the case there is any justification to hold that rules of natural justice have been ousted by necessary implication on account of the time frame.
On the other hand we are of the view that the time limited by statute provides scope for an opportunity to be extended to the intended excluded employees before the scheme is finalised so that a hearing commensurate to the situation is afforded before a section of the employees is thrown out of employment.
We may now point out that the learned Single Judge of the Kerala High Court had proposed a post amalgamation hearing to meet the situation but that has been vacated by the Division Bench.
For the 208 reasons we have indicated, there is no justification to think of a post decisional heading.
On the other hand the normal rule should apply.
It was also contended on behalf of the respondents that the excluded employees could now represent and their cases could be examined.
We do not think that would meet the ends of justice.
They have already been thrown out of employment and having been deprived of livelihood they must be facing serious difficulties.
There is no justification to throw them out of employment and then given them an opportunity of representation when the requirement is that they should have the opportunity referred to above as a condition precedent to action.
It is common experience that once a decision has been taken, there is a tendency to uphold it and a representation may not really yield any fruitful purpose. 'Amalgamation ' as such saved under Article 31A(1)(c) of the Constitution is not under challenge here.
Strong reliance, however, had been placed on the provisions of sub section (7A) of section 45 of the Act.
The relevant part of it is as requoted here for convenience: "The sanction accorded by the Central Government under sub section (7) . shall be conclusive evidence that all the requirements of this section relating to . . amalgamation have been complied with This provision is indeed one for purposes of evidence.
In Smt.
Somavanti & ors.
vs State of Punjab & Ors., [19631 2 SCR 774 this Court pointed out that there was no real difference between 'conclusive proof ' provided for in section 4 of the Evidence Act and 'conclusive evidence ' as appearing in sub section (7A).
This provision does not bar the raising of a dispute of the nature received here.
As we have already pointed out, amalgamation is not under challenge.
Parties are disputing as to what exactly are the requirements of the procedure laid down under the Act and the position that no opportunity was afforded to the excluded employees is not in dispute.
To a situation as here protection of the umbrella of conclusive evidence is not attached so as to bar the question from being examined.
There is, therefore, nothing in sub section (7A) to preclude examination of the question canvassed here The writ petitions and the appeals must succeed.
We set aside the impugned judgments of the Single Judge and Division Bench of the Kerala High Court and direct that each of the three transferee banks 209 should take over the excluded employees on the same terms and conditions of employment under the respective banking companies prior to moratorium.
The employee would be entitled to the benefit of continuity of service for all purposes including salary and perks throughout the period.
We leave it open to the transferee banks to take such action as they consider proper against these employees in accordance with law.
Some of the excluded employees have not come to Court.
There is no justification to penalise them for not having litigated.
They too shall be entitled to the same benefits as the petitioners.
Ordinarily the successful parties should have been entitled to costs but in view of the fact that they are going back to employment, we do not propose to make orders of costs against their employers.
We hope and trust that the transferee banks would look at the matter with an open mind and would keep themselves alive to the human problem involved in it.
N.P.V. Petitions & Appeals allowed.

dataset_name: IN-Abs

summary/full:
The Hindustan Commercial Bank, the Bank of Cochin Ltd. and Lakshmi Commercial Bank were amalgamated with Punjab National Bank, Canara Bank, State Bank of India respectively in terms of separate schemes drawn under the Banking Regulation Act, 1949, and pursuant thereto 125 employees of these banks were excluded from employment, and their services were not taken over by the respective transferee banks.
Some of these excluded employees filed writ petitions before the High Court which granted partial relief, but on appeal by the transferee Bank the Writ Petitions were dismissed by the Division Bench.
Against this, appeals by Special Leave were filed before this Court.
Some of the excluded employees filed writ petitions before this Court directly.
It was contended on behalf of the excluded employees that the draft schemes did not include any name of employees intended to be excluded; that no opportunity of being heard as afforded to them before exclusion was ordered, and the authorities concerned had not acted fairly; that none of them was responsible for ficticious, improper or 189 on business like advances of loan to parties thereby bringing conditions nearabout bankruptcy for the appropriate banking companies, that many other employees against whom there were definite charges already pending enquiry or even orders of dismissal had been proposed had been taken over and retained in service of the transferee banks while these excluded employees, without justification, had been called upon to face this unfortunate situation.
The transferee banks, the Reserve Bank of India and the Union of India filed affidavits in opposition.
It was contended on behalf of the Union of India that the scheme in respect of each of the amalgamated banks had been approved by it as required under the Act and since finality was attached to such schemes, the schemes could not be challenged, particularly in view of the provisions contained in Article 31 A of the Constitution.
It was contended on behalf of the Reserve Bank of India that law did not require that the draft scheme should contain the names of the employees to be excluded, that the incorporation of the names finalised on the basis of scrutiny of the records before the schemes were placed before the RBI was sufficient compliance of the requirements of the law; that the provisions of the Act did not confer any right on the employees of being heard; that the scheme making process was legislative in character and, therefore, did not come within the ambit of natural justice, and the action, not being judicial or quasijudicial and, at the most, being administrative or executive was also not open to challenge on allegations of violation of rules of natural justice; that moratorium under the statutory provisions could not be beyond six months and in view of the fact that the entire operation had to be finalised within a brief time frame, the requirement of an enquiry by notice to all the officers to be excluded could not have been intended to be implanted into the provisions of section 45 and that provision of compensation had been made for those who were excluded from the respective schemes.
Allowing the writ petitions and appeals, this Court, ^ HELD: 1.
Rules of natural justice apply to administrative action and the decision to exclude a section of the employees without complying with requirements of natural justice was bad.
[206H] 2.1 Fair play is part of public policy and a guarantee for justice to citizens.
In our system of Rule of Law, every social agency conferred with power is required to act fairly so that social action would be just, and there would be furtherance of the well being of citizens.
[207E] 190 2.2 The rules of natural justice have developed with the growth of A civilization and the content thereof is often considered as a proper measure of the level of civilization and Rule of Law prevailing in the community.
[207E F] 2.3 Natural justice generally requires that persons liable to be directly affected by proposed administrative acts, decisions or proceedings be given adequate notice of what is proposed so that they may be in a position (a) to make representation on their own behalf; (b) or to appear at a hearing or enquiry (if one is held); and (c) effectively to prepare their own case and to answer the case (if any) they had to meet.
Even when a State agency acts administratively, rules of natural justice would apply.[206C D] 3.1 Section 45 of the Banking Regulations Act provides a legislative scheme and the different steps required to be taken have been put one after the other.
On a simple construction of sub sections (5) and (6) and on the basis of the sequence pattern adopted in section 45, it is clear that the Act contemplates the employees to be excluded to be specifically named in the draft scheme.
Since it is a draft scheme prepared by RBI and right to object or to make suggestions is extended to both the banking company as also the transferee bank, and in view of the fact that clause (i) of sub section (5) specifies this item to be a matter which may be included in the scheme, it must follow that the legislative intention is that the scheme would incorporate the names of such employees as are intended to be excluded in accordance with the scheme.
Once it is incorporated in the scheme, the banking company as also the transferee bank would be entitled to suggest/object to the inclusion of names of employees.
[199E F; H; 200A B] 3.2 In case some employees of the banking company are intended to be excluded, their names have to be specifically mentioned in the scheme at the draft stage.
The requirement of specific mention is significant and the legislature must be taken to have intended compliance of the requirement at that stage.
The excluded employees in the instant case, were in employment under the contract in the banking companies which were private banks.
They have been excluded from service under the transferee banks and the contracts had been terminated as a result of inclusion of their names in the schemes.
This exclusion has adversely affected this category of employees and has brought about prejudice and adverse civil consequences to them.
[200D E] 4.1 Natural justice cannot be employed in the exercise of legisla 191 tive power.
Power has been conferred on the RBI in certain situations to A take steps for applying to the Central Government for an order of moratorium and during the period of moratorium to propose either reconstruction or amalgamation of the banking company.
A scheme for the purposes contemplated has to be framed by RBI and placed before the Central Government for sanction.
Power has been vested in the Central Government in terms of what is ordinarily known as a Henery 8 clause for making orders for removal of difficulties.
[201H; 202A B] 4.2 Section 45(11) requires that copies of the scheme as also such orders made by the Central Government are to be placed before both Houses of Parliament.
This requirement does not make the exercise in regard to schemes a legislative process.
Framing of the scheme under section 45 does not involve a legislative process, and as such, rules of natural justice are applicable to the instant case.
[202C] 4.3 The fact that orders made by the Central Government for removing difficulties as contemplated under sub clause (10) were also to be placed before the two Houses of Parliament makes it abundantly clear that the placing of the scheme before the two Houses is not a relevant test for making the scheme framing process legislative.
[203B] 5.1 RBI which monitored the three amalgamations was required to act fairly in the facts of the case.
The situation necessitated a participatory enquiry in regard to the excluded employees.
If an opportunity to know the allegations and to have their say had been afforded, they could have no grievance on this score.
The action deprives them of their livelihood and brings adverse civil consequences and could obviously not be taken on the ipse dixit of RBI owners without verification of facts.
In view of the time frame, a detailed enquiry may not be possible but keeping the legislative scheme in view, perhaps, a simpler enquiry could be afforded.
[206E F] 5.2 In the facts of the case, there is no justification to hold that rules of natural justice have been ousted by necessary implication on account of the time frame.
On the other hand, the time limited by statute provides scope for an opportunity to be extended to the intended excluded employees before the scheme is finalised so that a hearing commensurate to the situation is afforded before a section of the employees is thrown out of employment.
[207F G] 5.3 There is no justification to think of a post decisional hearing.
H 192 on the other hand, the normal rule should apply.
The excluded employees have already been thrown out of employment and having been deprived of livelihood they must be facing serious difficulties.
There is no justification to throw them out of employment and then given them an opportunity of representation when the requirement is that they should have the opportunity as a condition precedent to action.
It is common experience that once a decision has been taken, there is a tendency to uphold it and a representation may not really yield any fruitful purpose.
[208A C] 6.
Protection of the umbrella of conclusive evidence is not attached to a situation as in the instant case, so as to bar the question regarding the requirements of the procedure laid down under the Act and the opportunity afforded to the excluded employees from being examined.
There is, therefore, nothing in sub section (7A) of section 45 to preclude examination of the question.
[208G] [Each of the three transferee banks should take over the excluded employees on the same terms and conditions of employment under the respective banking companies prior to amalgamation.
The employees would be entitled to the benefit of continuity of service for all purposes including salary and perks throughout the period.
It is open to the transferee banks to take such action as they consider proper against these employees in accordance with law.
There is no justification to penalise some of the excluded employees who have not come to the Court.
They too shall be entitled to the same benefits as the petitioners.] [208H; 209A B] Union of India & Anr.
vs Cynamide India Ltd. & Anr., [1987] 2 SCC 720; Perre Brothers vs Citrus organisation Committee, ; Re (H) K (an infant), ; State of Orissa vs Dr. (Miss) Binapani Dei & Ors., ; ; A.K Kraipak & ors., vs Union of India & Ors., ; Chandra Bhavan Boarding and Lodging, Bangalore vs The State of Mysore & Anr., 11970] 2 SCR 600; Swadeshi Cotton Mills vs Union of India, ; and Smt.
Somavanti & Ors.
vs State of Punjab & Ors., , referred to.


judgement:
Civil Appeal No. 142 of 1956.
Appeal by special leave from the judgment and order dated September 13, 1954, of the Labour Appellate Tribunal of India (Calcutta Bench) in Appeal No. Cal 87 of 1953.
H. N. Sanyal, Additional Solicitor General of India, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellants.
P. K. Chatterjee, for the respondents.
November 5.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with special leave arises out of an application made by the appellant to the Industrial Tribunal, Bihar under section 33 of the (hereinafter referred to as " 'the Act"), seeking permission to discharge the respondents from its employ.
873 The respondents were in the employ of the appellant and were staying in a two storeyed house in the city of Patna which had been rented by the appellant for housing its workmen.
On November 20, 1952, an occurrence took place in the said house wherein the respondents were involved.
Written reports of the said occurrence were sent on November 21, 1952, to the appellant 's Chief Engineer and the respondents were placed under suspension the same day.
An industrial dispute was then pending between the parties i.e., the appellant and its workmen before the Industrial Tribunal, Bihar, and the appellant therefore made an application to the said Tribunal under section 33 of the Act for permission to dismiss the respondents on the ground of misconduct as per cl.
17(b)(viii) of the appellant 's Standing Orders.
On November 27, 1952, the respondents also made an application before the said Tribunal under section 33A of the Act inter alia on the ground that their suspension by the appellant as aforesaid was a breach of section 33 of the Act.
On December 6, 1952, the appellant made an application before the said Tribunal stating that on a reconsideration of the facts of the case of the respondents the original prayer for permission to dismiss the the respondents was not being pressed, and for the ends of justice it would be sufficient if the appellant was granted permission to discharge the respondents under cl.
14(a) of the Standing Orders instead of the original prayer for dismissal under cl.
17(b)(viii) thereof.
This application was resisted by the respondents.
The Industrial Tribunal, however, entertained the same and after hearing the parties duly made its award on May 14, 1953, dismissing the respondents ' application under section 33A of the Act and granting the appellant permission to discharge the respondents from its employ with effect from the date of the order on payment to the respondents of one month 's pay in lieu of notice within 15 days therefrom.
The respondents carried an appeal against the said order of the Industrial Tribunal granting the appellant 's application under section 33 of the Act before the Labour Appellate Tribunal of India, Calcutta.
A 874 preliminary objection was taken on behalf of the appellant before the Labour Appellate Tribunal that no substantial question of law was involved and as such the appeal was not maintainable.
The Labour Appellate Tribunal was of the opinion that the appellant had alleged misconduct against the respondents and could not be allowed to adopt the expedient of terminating their services by giving notice for the requisite period or payment of salary in lieu of notice and that the Industrial Tribunal, therefore, ought not to have entertained the application for amendment of the prayer of the original application in which the appellant wanted to dismiss the respondents for misconduct.
This according to the Labour Appellate Tribunal was a substantial question of law and it therefore entertained the appeal.
The Labour Appellate Tribunal thereafter considered whether the appel lant had made out a case under cl.
17(b)(viii) of the Standing Orders and came to the conclusion that the respondents had not been guilty of any misconduct within the meaning of that clause and that therefore the order made by the Industrial Tribunal granting permission to the appellant to terminate the services of the respondents was liable to be set aside.
In so far, however, as after obtaining the permission from the Industrial Tribunal the appellant had given notice of discharge to the respondents, the Labour Appellate Tribunal expressed its inability to give the respondents any substantial relief either in the shape of reinstatement or compensation.
The appellant has come up in appeal before us against this order of the Labour Appellate Tribunal.
Shri H. N. Sanyal, appearing for the appellant, has urged in the fore front the contention that no appeal from the order of the Industrial Tribunal lay to the Labour Appellate Tribunal under section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950.
He contended that the said order was not a "decision" within the meaning of that expression in section 7 and even assuming that it was so, the appeal neither involved any substantial question of law nor was it a decision in respect of any of the matters specified in sub section (1)(b) 875 of that section.
The answer of Shri P. K. Chatterjee on behalf of the respondents was that the action of the appellant in the matter of the termination of the services of the respondents was punitive in character, that the discharge of the respondents for which permission was sought by the appellant was a punitive discharge, that such discharge was by reason of the alleged misconduct of the respondents falling within cl.
17(b)(viii) of the Standing Orders and not within cl.
14(a) thereof and that the substantial question of law which arose in the appeal was whether the appellant could be allowed to adopt the expedient of terminating the services of the respondents, without going through the procedure of submitting a charge sheet to the respondents and holding a proper enquiry in the matter of those charges, by merely giving notice for the requisite period or payment of salary in lieu of notice and thus resorting to el.
14(a) of the Standing Orders instead of cl.
17(b)(viii) of the same.
The other answer made by Shri P. K. Chatterjee was that having regard to the definition of the term "retrenchment" to be found in section 2(oo) of the Act the discharge of the respondents by the appellant really amounted to retrenchment and retrenchment being one of the matters specified in sub section
(1)(b) of section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950, the respondents had a right of appeal to the Labour Appellate Tribunal.
It is necessary, therefore, to appreciate what was sought to be done by the appellant when it made the application before the Industrial Tribunal on December 6, 1952.
This application has been described by the Labour Appellate Tribunal as an application for amendment of the original application which had been filed by the appellant on November 21, 1952, for permission to dismiss the respondents from its employ as per el.
17(b)(viii) of the Standing Orders.
It must be noted, however, that what the appellant purported to do by its application of December 6, 1952, was, in effect, to substitute another application asking for permission to discharge the respondents from its 111 876 employ under el.
14(a) of the Standing Orders, thus abandoning the relief which it had prayed for in the original application.
The application dated December 6, 1952, was thus, in substance, a new application made by the appellant to the Industrial Tribunal, no doubt relying upon the facts and circumstances which were set out in the original application but asking for the permission of the Industrial Tribunal to discharge the respondents from its employ under cl.
14(a) of the Standing Orders instead of dismissing them from its employ under el.
17(b)(viii) thereof.
We do not see how it was not competent to the Industrial Tribunal to allow the appellant to do so.
If the appellant bad been actuated by any oblique motives and wanted to evade the consequences of its not having held a proper enquiry, after submitting a charge sheet to the respondents one could have understood the criticism made by the Labour Appellate Tribunal in regard to the same.
The Industrial Tribunal, however, expressly recorded the finding that the application for leave to discharge the respondents from its employ was bona fide and what the appellant did by making the application dated December 6, 1952, was actuated by an honest motive of exercising its right to discharge the respondents under el.
14(a) of the Standing Orders instead of visiting upon the respondents the penalty of dismissing them from its employ under el.
17(b)(viii) thereof.
The discharge of the respondents was a discharge simpliciter in exercise of the rights of the employer under el.
14(a) of the Standing Orders and was not a punitive discharge under el.
17(b)(viii) thereof and if it was merely a discharge simpliciter, then, no objection could be taken to the same and the appellant would be well within its rights to do so, provided, however, that it was not arbitrary or apricious but was bona fide.
The only question relevant to be considered by the Industrial Tribunal would be that in taking the step which it did the appellant was not guilty of any unfair labour practice or victimization.
If the Industrial Tribunal did not come to a conclusion adverse to the appellant on these counts, it would have no jurisdiction to refuse, 877 'the permission asked for by the appellant.
Once the Industrial Tribunal was of opinion that the application dated December 6, 1952, and the discharge of the respondents for which .
the permission of the Industrial Tribunal was sought were in the honest exercise of the appellant 's rights, no question of law, much less a substantial question of law could arise in the appeal filed by the respondents against the decision of the Industrial Tribunal and the Labour Appellate Tribunal was clearly in error when it entertained the appeal.
In view of the above finding, we do not propose to deal with the contention that the order passed by the Industrial Tribunal under section 33 of the Act is not a "decision" within the meaning of that term in section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950.
The argument that the discharge of the respondents though patently it was a discharge simpliciter was, in substance, retrenchment within the meaning of the definition contained in section 2(oo) of the Act is equally untenable, for the simple reason that the term "retrenchment" was for the first time defined in the manner in which it has been done by an Ordinance promulgated in October 1953 which was followed by Act 43 of 1953 which was published in the Gazette of India on December 23, 1953.
The Industrial Tribunal made its order granting the permission under section 33 of the Act on May 14, 1953, so that, this definition of the term "retrenchment" could not apply to the facts of the present case.
If, therefore, at the relevant period the discharge simpliciter could not be deemed to be retrenchment of the respondents by the appellant, the decision of the Industrial Tribunal could not be said to be one in respect of any of the matters specified in sub section
(1)(b) of section 7 of the Industrial Disputes (Appellate Tribunal) Act, 1950.
In that view also no appeal could lie from the decision of the Industrial Tribunal to the Labour Appellate Tribunal.
It must be observed that neither of these two points was taken by the respondents either in the proceedings before the Industrial Tribunal or the Labour 878 Appellate Tribunal nor was either of them mentioned in the statement of case filed by the respondents in this Court.
They were taken for the first time in the arguments advanced before us by Shri P. K. Chatterjee.
We have, however, dealt with the same because we thought that we should not deprive tile respondents of the benefit of any argument which could possibly be advanced in their favour.
We are, therefore, of opinion that no appeal lay from the decision of the Industrial Tribunal to the Labour Appellate Tribunal, that the Labour Appellate Tribunal had no jurisdiction to interfere with the order made by the Industrial Tribunal granting the appellant permission to discharge the respondents under section 33 of the Act and that the decision of the Labour Appellate Tribunal is liable to be set aside.
We accordingly allow the appeal, set aside the decision of the Labour Appellate Tribunal and restore the order made by the Industrial Tribunal, Bihar, on date May 14, 1953.
The appellant will be entitled to its costs of this appeal from the respondents.
Appeal allowed.

summary/full:
The appellant made an application before the Industrial Tri bunal under section 33 Of the , for permission to dismiss the respondents, its employees, on the ground of misconduct under cl.
17 (b) (viii) of the appellant 's Standing 872 Orders, but subsequently, on a reconsideration of the facts, made another application praying instead for permission to discharge the respondents under cl.
14(a) of the Standing Orders.
The Industrial Tribunal found that the second application was bona fide made by the appellant with the honest motive of exercising its right to discharge the respondents instead of visiting upon them the penalty of dismissing them, and granted the appellant permission on payment to the respondents of one month 's pay in lieu of notice.
The Labour Appellate Tribunal, on appeal, was of the opinion that having once alleged misconduct against the respondents the appellant could not be allowed to adopt the expedient of terminating their services by giving notice for the requisite period, by means of a fresh application, and after considering whether the appellant had made out a case under cl.
I7(b)(viii) of the Standing Orders, came to the conclusion that the respondents had not been guilty of any misconduct, and held that the Industrial Tribunal erred in granting the permission to discharge the respondents.
On appeal to the Supreme Court: Held, that in an application under section 33 of the Industrial: Disputes Act, 1947, the relevant consideration was whether the employer was guilty of any unfair labour practice or victimisation, and unless the Tribunal came to a conclusion adverse to the applicant it would have no jurisdiction to refuse the permission asked for to discharge the employee.
Accordingly, in view of the finding of the Industrial Tribunal that the application was bona fide, no question of law arose out of its order, and the Labour Appellate Tribunal erred in entertaining the appeal.