ANDHRA BANKversusANDHRA BANK OFFICERS & ANR.

                            [2008] 7 S.C.R. 1125


                            ·ANDHRA BANK
                                   v.
                  ANDHRA BANK OFFICERS & ANR.
                    (Civil Appeal No. 3405 of 2008)
                               MAY 8, 2008
                                                                          B
       [S;B. SINHA AND LOKESHWAR SINGH PANTA, JJ.}

            Banking Companies (Acquisition and Transfer of
      Undertakings) Act, 1980 - ss. 8 and 19 ·- Regulations tnade
      under the Act in consultation with Reserve Bank of India 7          c
      Under the regulations scheme for reimbursement of the. _
      amount spent on, to and frojourn~y between res(denae and
      Office treating the same as official journey - Central
      Government's guideline that suchjourney not to be treated as
      official - Guideline challenged - Single Judge as well as
                                                                           0
      Division Bench of High Court holding th.at the guideline was ·
      violative of s. 8 as the same was issued by Central Government_
      without prior consultation with Reserve Bank - On appeal, held:
      Guidelines were not in violation of s. 8 - s. 8 applies to matters ·
      of policy - Regulations laying down terms and· conditions of E
      service of employees of Bank would not necessqri/y invo·lve
    . any policy decision - The guidelines were issued in exercise
      of power u(Jder the Regulations ;_ Reg&Jations having beerl
      made after following due process, fresh consultative process
      not required for the guidelines. issued thereunder - Andhra
)
      Bank (Officers) Service Regulations, 1982 - Rsgulation 26.           F
          Board of Directors of the appellant~Bank, made
     Andhra Bank (Officers) Service Regulations, 1982 u/s ·19
     of Banking Companies (Acquisitibn and transfer of
     Undertakings) Act, 1980, in consultation with Reserve G
     Bank of India and prior sanction of Central Board of the
     Bank. Under Regulation 26 thereof, a scheme was made
     regarding reimbursement for to ~nd fro journey between
     residence.and office, treating the same as official.. Central
                                    1125                                  H
    1126      SUPREME COURT REPORTS              [2008] 7 S.C.R


A Government issued guideline to the effect that such
  journey not to be treated as official journey. Respondents
  filed writ petition challenging the same. Single Judge of
  High Court held that although the Bank was entitled to
  change its policy decision, yet the guidelines being
B contrary to s. 8 is not sustainable as the same was issued
  without consultation with Reserve Bank of India. Division             •
                                                                        I
  Bench of High court confirmed the order of Single Judge.
  Hence the present appeal.
           Allowing the appeal, the Court
c
         HELD: 1.1 The scheme in regard to reimbursement
    of the expenses incurred for going to office from the
    residence or coming back from the office to the residence
    was treated to be official. The Central Government could,
D thus, issue a guideline in relation thereto. When the Central
    Government, in exercise of its power under Regulation          ""
    26 of Andhra Bank (Officers) Service Regulations, issues
    a direction, the requirements of sub-regulation (2) thereof
    regulating formulation of the rule only is that it should be
E in accordance with the guidelines. The words used in the
  · provision are should be' and not 'must be'. The ultimate
    decision, therefore, is in the Bank although guidelines
    issued by the Government must be given due weight.
    Such guidelines may be issued from time to time as the
    Regulations itself have been framed in consultation with
F the Reserve Bank of India. The latter must be held to have
    given its approval for such exercise of the power by the
    Ban~ as also issuance of guidelines by the Government.
    Whenever such guidelines are issued or rules are made,
    fresh consultative process need not be undergone. [Para
G 14] [1136-G,H; 1137-A-C]
       1.2 . The word 'consultation' has different
  connotations in different contexts. Where one authority
  is required to consult the another, such consultation must
H be meaningful. It must mean conscious and effective
        ANDHRA BANK v. ANDHRA BANK OFFICERS & ANR.             1127

  "'
         consultation but the same would apply where the A
         consultation is necessary. As fort.he purpose of issuance
         of guidelines; no consultation was necessary to be made
         with the Reserve Bank of India by the Central Government.
       . [Paras 14 and 15] [1137-D,F-G]
              1.3 Section 8 of Banking Companies (Acquisition and B
       Transfer of Undertakings) Act, 1980 provides for issuance.
                                    '
       of directions by the Central Government with regard to
       matter's of policy involving public interest which are
       bound to be followed by the 'New Banks' in the discharge
       of its functions. The functions of the Bank are regulated      c
       not only by'the said Act but also by Banking Regulation
       Act, 1949 and Reserve Sank of India Act, 1934. A regulation
       framed for the purpose of laying down the terms and
       conditions of service of the employees of the bank do not
       necessarily involve any policy decision invo.lving public D
       interest. Each word used in ~ection 8 must be given effect
       to. It is separate and distinct from the regulation making
       power. [Para 13] [1134-C-E]
            Andhra Bank v. B. Satyanarayana and Ors. 2004 (2) SCC
                                                                      E
       657 -- relied on.
            Union of India and Ors. v. Mohd.Ramzan Khan 1991 (1)
       SCC 588; Municipal• Corporation of Greater Bombay v. ·New
       Standard Engineering Co. Ltd. 1991 {1) SCC 611; Indian
  )'   Administrative Service (S. C. S.) Association, U. P and Ors. F
       1993 Supp.(1) sec 730; Gauhati High Court and Anr. v.
       Kuladhar Phukan and Anr 2002 (4) SCC 524- distinguished.
            CIVIL APPELLATE JURISDICTION : Civil Appeal No.
       3405 of 2008.
                                                                      G
            From the Judgment & Order dated 17.42006 of the High
,).    Court of Judicature, Andhra Pra~esh at Hyderabad in W:A. No.
       133412000.                                              '

             V.R. Reddy, Sunil Kurarka, P.P. Singh and Abhay Yadav
       for the Appellant                                           H
    1128       SUPREME COURT REPORTS                 [2008] 7 S.C.R
                                                                        •
A        Jaideep Gupta, D. Bharat Kumar, Anand, Azim H. Laskar,
    M. lndrani and Abhijit Sengupta for the Respondent No.1.
           Kuldeep S. Parihar and H.S. Parihar for RBI.
           The Judgment of the Court was delivered by
B          S.B. SINHA, J. 1. Leave granted.
         2. Interpretation of Regulation 26 of the Andhra Bank
  (Officers) Service Regulations, 1982 framed under Section 19
  of the Banking Companies (Acquisition and Transfer of
c Undertakings) Act, 1980 (for short, 'the Act') is the question
  ir.volved herein. Parliament enacted the Act to provide for the
  acquisition and transfer of the undertakings of certain banking
  companies, having regard to their size, resources, coverage
  and organization in order to further control the heights of the
D economy, to meet progressively, and serve better, the needs of
  the development of the economy and to promote welfare of the
  people, in conformity with the policy of the State towards
  securing the principles laid down in clauses (b) and (c) of Article
  39 of the Constitution and for matters connected therewith or
E incidental thereto. Section 3 of the Act provides for the transfer
  of undertakings of the existing banks. Appellant bank is a 'New
  Bank' within the meaning of the provisions of the said Act.
  Undertaking of the existing bank in terms of the said Act vested
  in the 'New Bank'. Section 8 of the Act provides that every
  corresponding 'New Bank' shall in the di;,charge of its
F functions be guided by such directions in regard to the
  matters of policy involving public interest as the Central
  Government may, after consultation with the Governor of the
  Reserve Bank, issue. Section 19 of the Act empowers the
  Board of Directors to make regulations, sub-section (1) whereof
G is in the following terms :
           "19. Power to make regulations.-(1) The Board of
           Directors of a corresponding new bank may, after
           consultation with the Reserve Bank and with the previous
           sanction of the Central Government, by notification in the
H
 ANDHRA BANK v. ANDHRA BANK OFFICERS & ANR.                 1129
                 [S.S. SINHA, J.]

     Official Gazette, make regulations, not inconsistent with      A
     the provisions of this Act or any scheme made thereunder
     to provide for all matters for which provision is expedient
     for the purpose of giving effect to the provisions of this
     Act."
      3. Indisputably, the Board of Directors, in consultation      8
with the Reserve Bank of India and with prior sanction of the
Central Board, made regulations, Regulation 26 whereof reads
as under:

      "26. Bank's car for personal purposes :                       c
     1)     No officer, other than the Officers authorized by the
            Board, in accordance with the guidelines of the
            Government, shall be allowed the use of the Bank's
            car for personal purposes.
                                                                    D
    . 2)    The use of the Bank's car for personal purposes
            should be sub1ect to the rules formulated by the Bank
            in accordance with the guidelines of the Government
            from time to time."
        4. The Board of Directors framed a scheme as regards        E
reimbursement of the amount expended by the officers for
undertaking their journey by car from their respective residences
to the bank and back. A circular letter was issued on 20.4.1983
to the said effect, clause (3) whereof reads as under :
      3.    Reimbursement towards Driver's salary for the           F
            officers for whom the (sic) provides a car.
     i)     At places, Bombay Delhi
            and Calcutta :                  Upto Rs.650/- p.m.
     (ii)   At all other state Capitals                             G
            And Area-I (above 12
            Lakhs population :              Upto Rs.450/- p.m.
     (iii) At other places :                Upto Rs.400/- p.m.
            This scheme comes into force with effect from           H
      1130       SUPREME COURT REPORTS                   [2008] 7 S.C.R.


A                 22.2.1983.

             II. · MAINTENANCE OF VEHICLES OWNED BY
                     .
                   OFFICERS
            Reimbursement of maintenance expenditure for cars and
B           scooters to Chief Officers Managers including in
          . Administrative/Controlling Officers, Technical Officers and
            Credited Officers owned by them will be as .under :

                  Mopeds            Rs.75/- per month

c                 Scooters          Rs.150/- per month.

                  Cars               Rs.325/- per month.

             Competent authority to sanction. conveyance aUowance to
             officers is AGM, Dy-in-charge of BS & BD at Central Office.
D            (Prior sanction from Central Officers necessary)."
                                                                             ...,.
            5. In its meeting dc>~ed 20.2.1985, a schem.e was
     . formulated by the Barik which was circulated to all c;:oncerned in
       terms of its letter dated 7.3.1985, the relevant part whereof reads
       as under:
E
             "1. Travel ·from residence to office and back is to be
             considered as .travel for office work (as fa.r as
             reimbursement of conveyance expenses is concerned)."

       . The C~ntral Government, however, by reason of a circular
F letter dated 25;4.1990 addressed to the Chief Executive of all
 . public sectors banks; inter alia, stated :
             "The to and from journeys between office and residenQe
             should 11ot be treated as official journeys and no
             reimbursement for such journeys be made. The claim duly
.G           countersigned by an officer at least one step higher than
             the officer claiming the reimbursement forthe·entire month
                                                                                 .....
             should be submitted only once. Hpwever, the officers in
             Scale 'IV and above may not. get their vouchers
             countersigned."
H
             ANDHRA BANK v. ANDHRABANK OFFICERS & ANR.                     1131
                            [SB. SINHA, J.]

               ·The said letter was circulated by the Indian bank                  A
            Association.
                   6. A writ petition was filed by the respondents herein before
             the Andhra Pradesh High Court questioning the validity nf the
             said purported guidelines issued by the Central Government.
 ...< .·   · During the pendency of the said writ petition, the Board cif          B
             Directors issued a circular letter dated 22.2.1991, the relevant
             portion whereof reads as under :
                  "Keeping in view the prevalent situation, we are informed
                  by the Indian Banks' Association vide its letter No.PD/ c
                  CIR/76/E(x)/2208 dated 25.1.1991 that in its discussions
                 ·held with the Officers' Organisations on the above i'ssue,,
                  the Officers' Organisations had indicated their inclination .
                  to accept some red.uctior\ .in the consumption of petrol·
                  and subsequently, some of the senior leaders of the
                                                                                 D.
                  Officers' Organisations met the Chairman cif the Indian
                  Banks' Association and conyeyed to.the IBAwr,iting to the .
                  banks to bring about a cut in petrol limits, it being fhe need
                  of the hour. Accordingly, it has been de_cided to bring about
                  a cut in the petrol limits of the officers owning vehicles and
                                                                                 E •.
                  covered under the Scheme 'B' and bring about uniformity
                  in all the Public Sector Banks.
                  In view of the above, the ·revised limits for reimbursement
                  of conveyance expenses to Officers under Scheme 'B'
                  (for the officers owning vehicles) as against the e_xisting      F;
  }' .
                  limits shall be as under with effecHrom 1.3.1991 ... " ·
                 7. A learned Single Judge of the said Court, although
            opining that the appellant bank was entitled to change its
            policy decision,. held that as prior to issuance of the
            guidelines, the Central Government, had not consulted the G
            Reserve Bank. of India, the same was violative of Section 8 of
-'i         the Act stating:
                  "The guidelines do not purport to be under the provisions .
                  of the Act. It is sou.ght to be argued that power to issue H.
      1132       SUPREME COURT REPORTS                · [2008] 7 S.C.R.
                                                                            •

A        ·such guidelines is to be found in Section 8 of tre Act.
           Section 8 only says thatthe Bank in question in discharge
           of its functions shall be guided by s;uch directions ln regard
           to matters of Policy involving public interest Central
           Government may after consultation with the Governor of
B          Reserve Bank of India may give. As stated already the
           impugned circular nowh(l}re shows that any consultation
           took place between respondent No1. and the Governor of
           Reserv"e' Bank of India. It· iS, thus clear that Respondent
           No.1 cannot Jegitimately contend that the impugned
c          guidelines have been validly issued under Section S of
           the Act.' There does not appear any other provision which
         . justifies Respondent No.1 to issue any such guidelines to
           the Banks.
             As pointed- out already, Respondent No.3-Bank had
0 .          formulated the scheme under its powers conferred by the
             Regulations.The sair! scheme was implemented already.
             Under the said scheme, the journeys from residence to
             office and yice- versa were to be treated as 'on official
             duty'. This was a specific term in the scheme . Respondent
E            No.1 had absolutely no power to tinker with the provisions
             of the scheme."
           8. A Division Bench ofthe High Court ·affirmed the said
      view of the learned Single Judge, stating :
F            "Section 8  of the Act lays down that the Bank in the
             discharge of functions shall be guided by such directions
             in regard to matters of policy involving public interest as
             the Central Government may after consultation with the
             Ga.verno.r of Reserve Bal")k of India.
·G           A perusal of the impugned guidelines makes it cle~r that
             there was no prior consultation with the Governor of the
             Rese~ Bank of India. The said consultation was only
             with th'e Indian Banks' Association. Had such a
             consultation been there, the bank is. bound by t~e
H
            ANDHRA BANK v. ANDHRA BANK OFFICERS & ANR.                 1133
                           [S.R SINHA, J.]

                 directions. From this it is beyond doubt that the power A
                .for issuing the impugned guidelines cannot be traced to
                .Section 8 of the Act."
                  9. Wit.h a view to ascertain as to whether, in fact, any
             consultative process had been undergone with the Reserve          B
    ;.   · · Bank bf India t;>y the Central Government, the former was
             impleaded as a party to this appal.
                At our request, learned Solicitor General for India also
           assisted us.                                            ·
                 10. The only 'question which arises for our consideration C
           is as to whether in the facts and circumstances of the case,
           it was necessary to consult the Reserve Bank of India by
           the Central Government before issuing the impugned
           guidelines.                   ·
                                                                               D
                 · 11. Submission of the learned Solicitor General,· as also
           Mr. ·v.R. Reddy, learned Senior Advocate.. appearing for the
           appellant, are :                                               ·
                (1) · Whereas Section 8 of the Act applies when the
                      Central Go'vernment is required'to issue a policy E
                      decision; regulation having been framed after
                      consulting, the Reserve Bank of India in the prior
                      sa'r:iction of the Central Government, it was not
                      necessary to consult the Reserve Bank bf India
)                     again.                                             F
                (2)   Guidelines having been issued ·by the Central
                      Government in terms of Regulation 26 and not in
                      terms of Regulation 8, no consultation with the
                      Reserve Bank of India was necessary.
                                                                               G
                12. Mr. Jaideep Gupta, learned senior counsel appearing
           on behalf of the respondent, on the other hand, would submit
                (i)   Consultation. with the Reserve Bank of India was
                      imperative iri nature;
                                                                               H
    1134       SUPREME COURT REPORTS                    [2008] 7 S.C.R.


A          (ii) · In view of the fact that although bank can change its
                  pQlicy from time to time, if it does so 1n terms of the
                  Guidelines issued by the Central Government, the
                  same must subserve the legal requirements as
                  envisaged under Section 8 of the Act;
B          (iii) As admittedly, the Central· Government had not
                 consulted the Reserve Bank of India, the impugned
                 judgments are unassailable .
       . 13. Section 8 of the Act provides for issuance of directions
c  by the Central Gover'nment with regard to matters of policy
 . involving public interest which are bound to be followed by the
   'New Banks' in the discharge of i'ts functions. The functions of
   the bank ·are regulated .not only by the said Act but also by
   Banking Regulation }\ct, 1949 and Reserve Bank of India Act,
D 1934.
          A regulation framed for the rurpose of laying down the
    terms and conditio'ns of service of the employees of the bank
    do not necessarily involve any policy'decision involving public
    interest. Each word u~ed in Section 8 must be given effect to. It
E is separate and distinct from th.e regulation making power.
    Section 9 and Section 19 are made for different purposes.
    Whereas Section 8 postulates issuance of directions by the
    Central Government .which must undergo the consultative
 · process with Hie Governor of the Reserve Bank, in terms of
F S~ction 19, it is for the Board of Directors to consultthe Reserve
    Bank. Only thereafter the ·Regulations can be brought in force
    with the previous sanction of the Central· Government· Such·
    Regulatio.ns must b~ consisterit with the provisions of the Act or
    the scheme made thereunder. It must provide for all matters for
G · which provisions have been made for the purpose of giving
    effect to the the said Act wherefor Section' 12(2) of the Act has
    also a significant role to play.
         The services of the employees of the existing bank wer'
    contemplated to be taken over by reason of the provisions ot
H
       ANDHRA BANK v. ANDHRA BANK OFFICERS & ANR..               1135
                     . [S.S. SINHA, J)

      . the Act. They were to be governed by the same terms and A·
        conditions and continue to have the same rights as regards
        pension, gratuity and other matters subject, however, to any
        alteration made by the corresponding new bank with regard to
        his remunerations and other terrns and conditions of service.
        Such.alternations are required to be made only in terms of the   s
   > regulations made under Section 19 and not otherwise. Use of
        the Bank's cars for personal purpose is only one of the
        regulations. The guidelines contemplated under sub-regulation
        (2) of Regulation 26 would be those issued by the Central
        Government but they are not subject to any further regulation.   c
        For issuarice of the said guidelines; the procedures laiCfdown ·
.·. · f~:ir making Regulations were not required to be undergorre. "fhe
        guidelines issued by the Government, however, would be subject
        to Rules formulated bythe Bank. If there is no guideline, .the
        same by itself would not stand in the way of the bank to make
                                                                         0
   >- a. scheme but if there is a guideline, ·the Rules must be
        formulated in accordance therewith. Guidelines may be issued
        bythe Government from time to tim~. The expression from 'time
        to time' is.significant. It must be given its. due meaning. It
        does. ~ot and cannot mean that whenever the guidelines are
        issued, the Central Governm.entrnust consult the Reserve bank · E
     . of India.                                           ·

          · The question,. albeit in a bit differentcontext, came up for
       consideration before a Three Judge Bench in AndhraBank v. · ·
      .B. Satyanarayana & Ors. [(2004) 2 SGC 657] which we may F
       notice.                                             ·

          ·Regulation 17 of the Regulations which was the subject
      matter of consideration therein reads as :

           "17. Promotions.-(1) Promotions to all grades of officers G
           in the Bank shall be made in accordance with the policy
           la.id down by the Board, from time to time_, having regard
           to the guidelines
                          t  of- the Government,
                                       .          if any.
           (2) For the avoidance of doubts, it is. clarified that this
           Regulation shall a.lso apply to promotions of any category    H
    1136       SUPREME COURT REPORTS                    [2008] 7 S.C.R.


A          of employees to the Junior Management Grade."

          It was noticed that the Government had also issued
    guidelines of the said Regulation. This Court held that once the
    power vests in an authority by reason of the provisions of a
    statute, such power can be exercised from time to time. Changes
8   are required to be made keeping in view the requirements of
    managements as also exigencies of the situation obtaining at
    the relevant time. It is true, as has been contended by Mr. Gupta,
    that one of the contentions raised .therein was that the Regulation
    was arbitrary and ultra :vires as it did not contain sufficient
C   guidelines. But this Court therein also took into consideration
    the effect and purport of Section 19 of the Act in the following
    terms:
           "12. The Regulations in terms of sub-section (2) of Section
           12 read with Section 19 of the Act were required to be
           framed by the Board of Directors. For amending the              ....,
           Regulations each time they were not only required to
           consult the Reserve Bank of India and obtain previous
           permission of the Central Government but also the
           amended Regulations were required to be laid before
E          both the Houses of Parliament in terms of Section 19 of
           the Act. With a view to avoid the rigours of such procedural
           requirements, we see no reason as to why the said power
           cannot be delegated to the Board of Directors keeping in
           view the fact that a policy decision was required to be laid
F          down for effecting promotions to different grades of officers
           and employees at different points of time."
           14. The term 'rules' used in sub-regulation (2) of Regulation
    19 appeared to have been loosely used. It did not envisage any
G   statutory rules. The power to frame rules is vested with the Bank.
    The power of the bank is required to be exercised by the Board
    of Directors. The scheme in regard to reimbursement of the
    expenses incurred for going to office from the residence or
    coming back from the office to the residence was treated to be
H   official. The Central Government could, thus, issue a guideline
                ANDHRA BANK v. ANDHRA BANK OFFICERS & ANR.                1137
      ..(                      [S.B. SINHA, J.]

                in relation thereto. When the Central Government, in exercise A
                of its power under Regulation 26 of the Regulations, issues a
                direction, the requirements of sub-regulation (2) thereof
                regulating formulation of the rule dnly is thatit should be in
                accordance with the guidelines. The words used in the provision
          ;.    are 'should .be' arid not 'must be'. The ultimate decision, B
                therefore, is in the bank although guidelines issued by the
                Government must be given due weight. Such guidelines may
                be issued from time to time as the Regulations itself have been
                framed in consultation with the Reserve Bank of India. The
                latter must be held to have given its approval for such           c
                exercise of the power by the bank as also issuance of
                guidelines by the Government. Whenever such guidelines are
                issued or rules are made, fresh consultative process need not
                be undergone.

          >-         Furthermore, the word 'consultation' has different D
                 connotations in different contexts. Relianc8 has been placed
               · by Mr. Gupta on some decisions of this Court in Municipal
                Corporation of Greater Bombay v. New Standard Engineering
                Co. Ltd. [(1991) 1 SCC 611 ]; Indian Administrative Service
                (S.C.S.) Association, UP & Ors. [1993 Supp.(1) SCC 730];          E
                and Gauhati High Court & Anr. v. Kuladhar Phukan & Anr.
                [(2002) 4 SCC 524]. In view of our findings aforementioned, the
                said decisions have no application in this case.

                      15. There cannot be any doubt whatsoever where one
                authority is required to consult the another, such consultation F
                must be meaningful. It must mean conscious and effective
                consultation but the same would apply where the consultation is
                necessary. As for the purpose of issuance of guidelines, no
                consultation was necessary to be made with the Reserve Bank ·
                of India by the Central Government, in our opinion, the impugned G
      j
                judgment cannot be sustained.

                     16. Reliance has also been placed on Union of India &
                Ors. v. Mohd. Ramzan Khan [(1991) 1 SCC 588], wherein it
                was held that the guiaelines issued by the Central Government
                                                                                  H
-··
  '
      1138      SUPREME COURT REPORTS                  [2008] 7 S.C.R.


· A   were not relateable to any Regulation or Section 8 of the Act.
      The said decision has no application in the instant case, as it
      was noticed that the guidelines issued by the Central Government
      were not in terms of any Regulation. In this case, the guidelines
      have been issued in terms of sub-regulation (2-) of Regulation
 B    26. It is, therefore, referable to a statutory power.

             17. For the reasons aforementioned, the impugned
      judgment cannot be sustained. It is set aside accordingly. Appeal
      is allowed with costs. Counsel's fee assessed at Rs.25,000/-
      (Rupees twenty five thousand only).
·c
      K.K.T.                                         Appeal allowed.