Holding

The classification of officers into two categories with retirement ages of 60 and 58 years is a valid classification under Articles 14 and 16, so Rule 3 is not unconstitutional.

Summary

The petitioners, officers of the Central Bank of India appointed after the 1969 nationalisation, challenged their forced retirement at age 58 under Rule 3 of the Bank's Rules for Age of Retirement, arguing that having two different retirement ages (60 for pre‑July 19, 1969 officers and 58 for post‑July 19, 1969 officers) violated Articles 14 and 16 of the Constitution. The Bank relied on Regulation 19 of its 1979 Service Regulations, which incorporated the Government’s guidelines and the powers conferred by Section 19(2) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, to classify officers based on the date of recruitment. The Supreme Court held that the classification was based on a rational distinction – the preservation of pre‑nationalisation service conditions for transferred officers and the need to align new entrants with prevailing public‑sector retirement ages – and therefore satisfied the test of valid classification under Articles 14 and 16. Consequently, Rule 3 was not unconstitutional and the retirement order stood. The writ petitions were dismissed.

Issues considered

Whether the differential retirement ages for officers recruited before and after 19 July 1969 constitute an unreasonable classification violative of Articles 14 and 16 of the Constitution.
Whether Rule 3 of the Rules for Age of Retirement, effected through Regulation 19, is void as unconstitutional.
Whether the order of retirement of the petitioner under Rule 3 is illegal.

Legislation cited

Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970s. 12(2), s. 19(2)
Constitution of Indias. 14, s. 16, s. 32

Subjects

Articles 14Articles 16age of retirementnationalisation of banksclassificationservice conditionsBanking Companies Actpublic sector employmentdiscriminationconstitutional lawservice regulations

Judgment

B.S. YADAV & ANR. A
v.
CHIEF MANAGER, CENTRAL BANK OF INDIA & ORS.

MAY 5, 1987

[E.S. VENKATARAMIAH AND K.N. SINGH, JJ.] B

Labour and service law

Central Bank of India (Officers) Service Regulations, 1979, Regu-
lation 19 & Annexure I-Rules for Age of Retirement, rr. 1, 2, &
3-0fficers recruited before July 19, 1969 to superannuate at 60 years, c
- those inducted on or after that date at 58 years-Validity of-Whether
violative of Articles 14 and 16 of the Constitution.

Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1970: s. 12(2)-Service conditions of officers and employees tl!ans-
ferred from existing Banking Companies oefore nationalisation to D
corresponding new banks-Validity of.

~-·
Constitution of India: Articles 14, 16 and 32-Nationalisation of
banks-Service condition that employees prior to nationalisation date
superannuate at 60 years and others at 58 years-Such classification
whether valid and reasonable. E

Before nationalisation of banking companies, the members of the
stall' of the Central Bank of India i,td. were entitled to remain in the
.-- \,~ service of the bank till 60 years by virtue of the circular dated March
f 11, 1969. Section 12(2) of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1970 upon nationalisation provided that F
--( any employee of the Bank whose services were transferred to the cor·
responding new bank could hold his office in that bank on the same
terms and conditions and with the same rights to pension, gratuity, etc.
until they were duly altered by the corresponding new bank. Clause (d)
of s. 19(2) of the Act specifically conferred powers on the Board of
Directors of the corresponding new bank to make regulations with G
regard to the conditions or limitations subject to which the correspond-
ing new bank might appoint officers or other employees and tlx their
t
remuneration and other terms and conditions of service.

Regulation 19 of the Central Bank of India (Otllcers') Service
Regulations, 1979, empowered the Board of Directors to determine the H
165
166 SL'PREME COURT PEPORTS [ 1987) 3 S.C. R.

A age of retirement of officer employees of the Bank. Rule 1 of the Rules
for Age of Retirtment contained in Annexure 1 to the Regulations re-
quires an otlicer employee of the Bank recruited/promoted prior to the
19th July, 1969 (the date on which banking business was nationalised)
to ·retire on completion of the 60 years of age; rule 2 requires an officer
employee of the Bank recruited prior to 19th July, 1969 but promoted
B
as an ofticer on or aller 19th July, 1969 to retire on completion of 60
years of age, while rule 3 requires an otllcer employee of the Bank
recruited on or aller 19th July, 1969 to retire on completion of 58 years
of age.

C
The Isl petitioner WliS appointed on 13th August, 1972 as Chief
Cashier in the Bank. The letter of appointment contained a clause
which stated that he will be governed by the terms and conditions of
-
service as applicable to the other ollicer stalf of the Bank. He was
served with a notice dated 25th February, 1980 stating that he would be
treated as finally retired from the Bank's service aller the close ot'
D business on February 29, 1980 on completion of 58 years of age.

Id the writ petitions assailing the order of retirement it was con-
tended for the petitioner, that there could not be two dilferent ages of
retirement in the case of otlicers of the Bank, and that since rule 3 of the
Rules for Age of Retirement required the ollicers, who were recruited
subsequent to July 19, 1969 to retire on completion of 58 years of age
E while others falling under rules I and 2 could continue till 60 years of
age, rule 3 was liable to be struck down as being violative of Arts. 14
and 16 ot'the Constitution.

For the respondents, it was contended that the employees whose
services were transferred to the Bank under sub-s. (2) of s. 12 of the Act
F were entitled to continue in service tiU 60 years of age by virtue of the
conditions of service prev2iling in the Central Bank of India Ltd. prior
to the nationalisation of bank, that the officers and employees other
than the award staff recruited after the nationalisation of the banks
were required to retire on completion of 58 years of age, which was the
age of superannuation generally prevailing in the service of all Public
G Sectior Corporations, Central Government and many of the State
Governments, and that since the employees recruited prior to July 19,
1969 belonged to a different class altogether, it could not be said that
there had been violation of Arts. 14 and 16 of the Constitution.

Dismissing the writ petitions, the Court,
H
B.S. Y ADA V v. CENTRAL BANK 167
•
HELD: 1. The classification of the employees into two cate- A
gories, i.e. those falling under rules 1 and 2 of the Rules for Age of
Petirement and those falling under rllle 3 thereof satisfies the test of a
valid classification laid down under Arts. 14 and 16 of the Constitution.
Rule 3 of the Rules for Age or Retirement, therefore, cannot be declared
as unconstitutional. [179BC)
B
2. The difference between the age of retirement of ollicer emp-
loyees falling under rules 1 and 2 of the Rules for Age of Retirement,
and the age of retirement of the ollicer employees falling under rule .1
theyeof arose on account of the decision taken by the Government of
India and the Bank not to alter to their prejudice the right whkh the
employees of the Bank who had been recruited prior to July 19, 1969 C
had acquired under the circular issued by the Central Bank of India
Ltd. on March 11, 1969 before nationalisation of the banks. Since there
was no alteration of the condition relating to the age of superannuation,
the said ollicers continued to enjoy the benefit of the condition of service
relating to retirement. But as regards employees who were recruited
after July 19, 1969, the Bank fixed the age of superannuation at S!I D
years having regard to the prevailing age of superannuation of the
members belonging to the various services in public sector corporations,
Central Government and many of the State Governments. [l 76AD)

3. At the time of nationalisation the corresponding new banks did

- not have their own employees to run the vast business taken over under
the Act. There was necessity to secure the services of the employees of
the former banking companies without causing much dissatisfaction to
them. The terms and conditions of the service Qf the employees of the
banks which were taken over under the Act had, therefore, been pro-
E

tected by the Act. Insofar as the employees recruited after nationalisa-
tion were concerned the Government applied the rules generally applic- F
able to all its employees in other spheres of Government service. The
Bank's attitude cannot be said to be unreasonable particularly when the
age of retirement of the new entrants is quite consistent with the condi-
tions prevailing in almost all the sectors of public employment. There
cannot, therefore, be said to be any hostile discrimination against the
petitioner. [177G; 178F; B; 179AB;) G

Life Insurance Corporation of India & Anr. etc. v. S.S. Sri-
. vasiava & Others, (Civil Appeal Nos. 1076-1077of1987), applied.

Dr. Nikhil Bhushan Chandra v. Union of India & Ors., (1983
LAB I.C. NOC 109 Cal.), approved. H
16S SLPREME COURT REPORTS [1987] 3 S.C.R.

A 4. Though the order of appointment• in the case of the first J,···~· .
petitioner stated that he would be governed by the terms and conditions
which were applicable to other officers of the Bank, it did not prevent
the Bank l'rom making a regulation which was applicable exclusively to
the officers recruited after July 19, 1%9. In the case of ollicers falling
under rules l and 2 of the Jlules for Age of Retirement no extra benent
B was conferred on them. They were only permitted to carry the benefit of
the rules for Age of Jletirement which was prevailing in the former ~ ...
banking company, which was taken over by the Government on
nationalisation. [177EGJ -.

CIVIL EXTRAORDINARY ORIGINAL JURISDICTION:
c Writ Petition.Nos. 601-602 of 1980.
(Under Article 32 of the Constitution of India).

M.K. Ramamurthy, J. Ramamurthy, Mrs. Chandan Ramamur-
thy and M.A. Krishnammthy for the Petitioners.
D
K. Parasaran, Attorney General D.N. Mishra, Ms. Meera
Mathur, O.C. Mathur, C.V. Subba Rao, R.P. Srivastava, Hemant
Sharma and P. Parmeswaran for the Respondents.

The Judgment of the Court was delivered by
E
VENKATARAMIAH, J, The petitioners in these Writ Petitions
filed under Article 32 of the Constitution of India have prayed for a
declaration that rule 3, of the Rules for Age of Retirement contained in
1\nnexure I to the Central Bank of India (Officers') Service Regula-
tions, 1979 (hereinafter referred to as 'the Regulations') framed under
F regulation 19( 1) of the Regulations is unconstitutional and void, and to
direct the Central Bank of India (hereinafter referred to as 'the Bank')
to fix the age of retirement of all the officers of the Bank uniformly at
60 years. They have further prayed for the quashing of the Order dated
25.2.1980 issued by the Chief Manager of the Bank at its Regional
Office, New Delhi retiring Petitioner No. 1, B.S. Yadav from service
G as being illegal and unconstitutional and for a declaration that
Petitioner No. l, B.S. Yadav continues or shall be deemed to be in the
service of the Bank till he attains the age of 60 years with consequen-
-""
tial benefits. The petitions are filed by B.S. Yadav, who was working
as an officer of the Bank and the All India Central Bank Employees'
Federation.
H
B.S. YADAV v. CENTRAL BANK [VENKATARAMIAH. l.] 169

'°}'- The Bank came to be established under the Banking Companies A
(Acquisition and Transfer of Undertakings) Act, 1970 (hereinafter
referred to as 'the Act') under which the banking business of 14 bank-
ing companies was nationalised. At the commencement the process of
nationalisation of these banks was not smooth-sailing. On the Govern-
ment of India taking a decision to nationalise the banking business of
14 banking companies the Banking Companies (Acquisition and B
"' r- Transfer of Undertakings) Ordinance 8 of 1969 was promulgated by
..,,, the President on July 19, 1969. The Ordinance provided for the
acquisition and transfer of the undertakings of certain banking com-
panies which were 14 in number in order to serve better the needs of
development of the economy in conformity with the national policy
and objectives and for matters connected therewith or incidental c
thereto. Under the Ordinance 14 'corresponding new banks' were
established. The Bank which is involved in these cases is the corres-
ponding new bank of the Central Bank of India Ltd. which was one of
the banking companies whose undertaking was taken over under the
Ordinance. The corresponding new banks were authorised to carry on
and transact the business of banking as defined in clause (b) of section D
>y· 5 of the Banking Regulation Act, 1949 and also to engage in one or
more forms of business specified in sub-section (I) of section 6 of the
Act. The Chairmart of the banking company whose business was taken
over holding office immediately before the commencement of the
Ordinance was appointed as the custodian of the corresponding new
bank. The general superintendence, direction and management of the E
affairs and business of the corresponding new bank was vested in the
custodian who was to be the Chief Executive Officer of that bank. The
above Ordinance was replaced by the Banking Companies (Acquisi-
tion and Transfer of Undertakings) Act 22 of 1969. The constitutional
validity of both the Ordinance and the Banking Companies (Acquisi-
tion and Transfer of Undertakings) Act 22 of 1969 was questioned F
before this Court in Rustom Cavasjee Cooper v. Union of India, [ 1970)
3 S.C.R. 530. By the decision rendered in the said case this Court
declared the Ordinance and the Banking Companies (Acquisition and
Transfer of Undertakings) Act 22 of 1969 as invalid and the action
taken or deemed to have been taken in exercise of the powers under
• } them as unauthorised. The above judgment of the Court was pro- G
nounced on February 10, 1970. The effect of the judgment was that the
undertakings of the 14 banking companies, whose business had been
acq~tired by the Central Government under the authority of the above
said Ordinance and the Act, reverted to the banking companies. With
a view to resuming control over the business of those banking com-
panies, the President again promulgated on February 14, 1970 the H
170 sl PREME COURT REPORTS [ 1987] 3 S.C.R.

A Banking Companies (Acquisition and Transfer of Undertakings) Ordi-
nance, 1970. The provisions of the earlier Act which were struck down
-t_,
by this Court had been duly modified by promulgating the said Ordi-
nance. The said Ordinance provided for the acquisition and transfer of
the banking business of the said banking companies with effect from
July 19, 1969, i.e., the date on which those undertakings were initially
B acquired by the Central Government. This Ordinance was replaced by
the Act within a short period which was deemed to have come into ---< "
force from July 19, 1969. By section 3 of the Act 14 corresponding new
banks which were mentioned in the First Schedule to the Act came to ~
be established. The paid-up capital of the every new bank constituted
under section 3 of the Act was, .until any provision was made in that
c behalf in any scheme made under section 9 of the Act, to be equal to
the paid-up capital of the existing bank in relation to which it was the
-
corresponding new bank. The existing banks were the banking com-
parries mentioned in the Second Schedule to the Act whose banking
business had been earlier taken over on July 19, 1969. The entire
capital of each corresponding new bank was vested in and allotted to
0 the Central Government. Every corresponding new bank was treated
as a body corporate with perpetual succession and a common seal with
power, subject to the provisions of the Act, to acquire, hold and dis-
y
pose of property, and to contract and to sue and be sued in its own
name. Under the Act the Bank became the corresponding new bank in
respect of the Central Bank of India Ltd. Among other provisions, the
E Act provided for the appointment of officers and employees of the cor-
responding new hank. Section 12 of the Act reads thus:

"12. Removal of Chairman from office-(!) Every person
holding office, immediately before the commencement of
this Act, as Chairman of an existing bank shall. if he
F becomes Custodian of the corresponding new bank, be
deemed, on such commencement, to have vacated office as
such Chairman. ''

(2) Save as otherwise provided in sub-section ( 1),
every officer or other employee of an existing bank shall
G beoome, on the commencement of this Act an officer or
other employee, as the case may be, of the corresponding
new bank and shall hold his office or service in that bank on
the same terms and conditions and with the same rights to
pension, gratuity and other matters as would have been
admissible to him if the undertaking of the existing bank
H had not been transferred to and vested in the correspond-
B.S. YADAV v. CENTRAL BANK [VENKATARAMJAH, J.] 171

ing new bank and continue to do so unless and until his A
employment in the corresponding new bank is terminated
or until his remuneration, terms and conditions are duly
altered by the corresponding new bank.

(3) For the persons who immediately before the com-
mencement of this Act were the trustees for any pension, B
provident, gratuity or other like fund constituted for the
officers or other employees of an existing bank, there shall
be substituted as trustees such persons as the Central
Government may, by general or special order, specify.

(4) Notwithstanding anything contained in the C
Industrial Disputes Act, 1947, or in any other law for the
time being in force, the transfer of the services of any
officer or other employee from an existing bank to a cor-
responding new bank shall not entitle such officer or other
employee to any compensation under this Act or any other
law for the time being in force and no such claim shall be D
entertained by any court, tribunal or other authority."

Sub-section (2) of section 12, in particular, provided for the
transfer of the services of all officers and other employees of an exist-
ing bank from the existing bank to the corresponding new bank on the
same terms and conditions and with the same rights to pension, E
gratuity etc. and it stated'that any officer or employee of the existing
bank whose services were so transferred was to continue to be in the
r employment of the corresponding new bank until his employment in
the corresponding bank was terminated or until his remuneration,
terms or conditions were duly altered by the corresponding new bank.
Section 19 of the Act conferred power on the Board of Directors of a F
corresponding new bank to frame regulations after consultation with
the. Reserve Bank of India and with t\e previous sanction of the
Central Government for all matters for which provision was expedient
for the purpose of giving effect to the provisions of the Act. Clause (dj
of section 19(2) of the Act specifically conferred powers on the Board
of Directors to make regulations with regard to the conditions or limi- G
tations subject to which the corresponding new bank might appoint
advisers, officers or other employees and fix their remuneration and
other terms and conditions of service. After the Bank came to be
established there were two classes of officers and employees working
in it, namely, officers and employees who had become officers and
employees of the Bank under sub-section (2) of section 12 of the Act H
172 SUPREME COURT REPORTS [1987] 3 S.C.R.

A and the officers and employees of the Bank appointed after July 19, ~-1
1969.

The age of retirement of the officers and employees of the vari-
ous banks established in India has been the subject-matter of several
awards and settlements for several years. On the 20th March, 1953
B the Sastry Award which was passed on the industrial disputes between
certain banking companies and their workmen directed thus:

"We direct that after the workman has reached the age of
55 years he may be retired after giving him two months'

c
notice in writing in case his efficiency is found by the emp-
loyer to have been impaired; subject to this rule and also
subject to any rule under an existing pension fund the
-
workman should not be compelled to retire before he is 58
years old."

The National Industrial Tribunal (Bank Disputes) Award known
D as Desai Award, on industrial disputes between certain banking com-
panies and corporations and their workmen too!Llhe view as underc

"A workman should not be compelled to retire before he is
58 years old. Banks however, will be at liberty, wherever
they consider fit, to make rules providing for a higher age
E of retirement."

The First Bipartite Settlement on industrial disputes between
certain banking companies and their workmen entered into on
-~
. --
October 19, 1966 provided thus:

F "In supersession of paragraph 15.13 of the Desai Award,
after a workman has reached the age of 57 years, he may be
retired after gi'jing him two months' notice in writing in
case his efficiency is found by the employer to have been
impaired."

G By a circular dated March 11, 1969, the erstwhile Central Bank
of India Ltd. directed that as far as possible no member of the staff
should be allowed extension in service beyond the retirement age of 60
years. The said circular which is marked as 'Annexure-R2'. and
enclosed to the counter-affidavit filed by Shri A.S. Jain, Assistant
General Manager of the Bank at its Regional Office, New Delhi reads
H thus:
8.S. YADAV v. CENTRAL BANK (VENKATARAMIAH, J.) 173

BID/STAFF/69/17 11th March, 1969 A
(To All Offices in India)
Re: Age of Retirement.

It has now been decided that as far as possible no mem-
ber of the staff should be allowed extension in service beyond B
the retirement age of sixty. Branches are therefore advised to
refrain from recommending the case of any member of the
staff for extension in service beyond the retirement age.

- Staff members who retire at the age of sixty may, how-
ever, be allowed to avail of, from the date of retirement,
ordinary leave, if any, due to them, and treated as retired
C

from service from the date of expiry of such leave.

P .C. Mevawalla
General Manager"
D
It is thus seen that on the eve of the nationalisation of the bank-
ing companies the members of the staff of the Central Bank of India
Ltd. were entitled to remain in the service of the bank till 60 years and
that until the terms and conditions of service were altered under sub-
section (2) of section 12 of the Act, every officer or employee belong-
ing to the Central Bank of India Ltd. who.se services were transferred E
under section 12(2) of the Act to the Bank was entitled to the benefit
of the said rule relating to the age of retirement. He could, therefore,
continue in service till he attained the age of sixty years in the Bank
subject to any alteration that might be made by the Bank.

Upon nationalisation of the 14 banks it became necessary to F
rationalise the terms and conditions of service of the employees of the
banks, particularly in view of the varying terms and conditions of
service that existed in different banks prior to nationalisation which
were continued by virtue of sub-section (2) of section 12 of the Act.
The Government of India, therefore, appointed on July 19, 1973 a
committee consisting of five members with Shri V.R. Pillai as the G
Chairman (which was popularly known .as the Pillai Committee) to
enquire into and to make recommendations with regard to standardi-
sation of scales of pay, allowances and perquisites of the transferred
officers (other than award staff) in the 14 nationalised banks. One of
the points referred to the Pillai Committee was the question relating to
the age of superannuation of and the nature and quantum of terminal H
174 SUPREME COURT REPORTS [1987] 3 S.C.R.

A benefits for the officer -cadres. The Pillai Committee submitted its _,{-1.
report in May, 1974. Paragraph 8.18 and 8.22 of the Pillai Committee
Report relating to the age of superannuation read thus;

"8.18. According to existing practices, the age of superan-
B nuation (or retirement) in eleven of the nationalised banks
is 60 years, with a provision that after an officer has at-
tained the age of 57 years he can be retired after giving
him two months' notice in writing, if his efficiency is found
to have been impaired. In another bank, though the age of
superannuation is 60, the proviso about earlier retirement
applies only when the officer has attained the age of 58
c years. In two other banks the age of superannuation itself is
58 years.

8.22. In the circumstances, we recommend that the age of
superannuation of officers in the banks should be 60 years,
D with a provision for review at the age of 58 years to adjudge
the fitness of the officer for continuance in service. In order
to remove uncertainties, the above review may be initiated y
on the officer attaining the age of 57 years and,completed
well before he reaches 58 years."

E
Thereafter in September, 1976 the Government of Indio
appointed a study group, called the Study Group of Bankers, to make
suggestions for the implementation of Pillai Committee Report. After
examining the Report of the Pillai Committee and taking into con-
sideration all other aspects the Study Group of Bankers made its re-
F commendations on all questions including the age of superannuation
of officers who-had become the employees of the banks under section
12(2) of the Act. On receipt of the recommendations of the Study
Group of Bankers the Government of India issued guidelines to the
nationalised banks to frame appropriate regulations with regard to the
terms and conditions of the service of the officers working in them.
G Accordingly the Bank prepared its regulations after consultation with
the Reserve Bank of India and submitted them for the approval of the
Government of India. The Government of India gave its approval to
the regulations with some modifications. On receipt of the approval of
the Central Government on 23rd May, 1979 the Bank brought into
force the Regulations with effect from 1st July, 1979. Regulation 19 of
H the Regulations provided as under: ~
B.S. YADAV v. CENTRAL BANK [VENKATARAMIAH, J.) 175

"19. Age of Retirement-
A
(I) The age of retirement of an officer employee shall be as
determined by the Board in accordance with the Guidelines
issued by the Government from time to time;
Provided that the Bank may, at its discretion on review by B
.. y the Special Committee as provided hereinafter in sub-
regulation (2) retire an officer employee on or at any time
after the completion of 55 years of age or on or at any time
after the completion of 30 years of total service as an officer
employee or otherwise, whichever is earlier; ...... , ..... "

- In accordance with the guidelines issued by the Central Govern- C
ment, the Board determined the Rules for Age of Retirement as
y follows:

"The age of retirement of an officer in the Bank on or
after the appointed date shall be determined as under:
D
1. An officer employee of the Bank recruited/promoted
y prior to 19th July, 1969 shall retire on completion of the 60
years of age.
2. An officer employee of the Bank recruited prior to 19th
July, 1969 but promoted as an officer on or after 19th July,
1969 shall retire on completion of 60 years of age. E

--· 3. An officer employee of the Bank recruited whether as
an Award Staff or as an officer employee on or after 19th
July, 1969 shall retire on completion of 58 years of age."

Rules 1 and 2 of the Rules for Age of Retirement relate to an F
officer employee who had been recruited or promoted as an officer
prior to July 19, 1969, i.e., prior to the date on which the banking
business of the former banking companies was nationalised and to an
employee recruited prior to nationalisation but promoted as an officer
thereafter. Rule 3 of the Rules for Age of Retirement relates to an
officer employee of the Bank recruited whether as an award staff or an G
officer employee on or after July 19, 1969. The officer employees who
had been recruited or promoted prior to July 19, 1969 or recruited
prior to July 19, 1969 but promoted as officers, after July 19, 1969 were
allowed to retire under the Rules for Age of1Retirement on completion
of 60 years of age. All other officer employees recruited whether as an
award staff or an officer employee on or after July 19, 1969 were H
176 SUPREME COURT REPORTS [1987] 3 S.C.R.

required to retire on completion of 58 years of age. The difference
A
between the age of retirement of officer employees falling under rules
1 and 2 of the Rules for Age of Retirement and the age of retirement
of the officer employees falling under rule 3 thereof arose on account
of the decision taken by the Government of India and the Bank not to
alter to their prejudice the right which the employees of the Bank who
B had been recruited prior to July 19, 1969 had acquired under the circu-
lar issued by the Central Bank of India Ltd. on March 11, 1969 before
nationalisation of the banks. Section 12(2) of the Act, as already
stated, provided that any employee of the Bank whose services were
transferred to the corresponding new bank could hold his office in that
bank on the same terms and conditions and with the same rights to
pension, gratuity, etc. until they were duly altered by the correspond-
c ing new bank. Since there was no alteration of the condition relating to
the age of superannuation, the said officers continued to enjoy the
benefit of the condition of service relating to retirement which was in
existence prior to nationalisation of banks. But as regards employees
who were recruited after July 19, 1969 the Bank fixed the age of
D superannuation at 58 years having regard to the prevailing age of
superannuation of the members belonging to the various services in
public sector corporations, Central Government and many of the State
Governments.

The 1st petitioner was appointed on 13th August, 1972 as an

·-
E officer in the post of Chief Cashier in the Bank. The letter of appoint-
ment issued in his case contained a clause which read as follows:

"You will be governed by the terms and conditions of
service as applicable to the other officer staffof the Bank."

F On the Regulations coming into force in 1979 the !st Petitioner
was served with a notice dated 25.2.1980 issued by the Chief Manager
of the Bank stating that he would be treated as finally retired from the
Bank's service after the close of business on February 29, 1980 on
completion of 58 years of age. The above writ petitions were filed in
April, 1980 questioning the order of retirement issued in the case of
G the !st petitioner and praying inter alia for a declaration, as mentioned
above, that all officers including the 1st petitioner should be permitted
to continue in service till the completion of 60 years of age as in the
case of officers falling under rules I and 2 of the Rules for Age of
Retirement. The principal grounds urged in support of the writ peti-
tions were that there could not be two different ages of retirement in
H the case of officers of the Bank and that since rule 3 of the Rules for

___________ ,,,_-.. -.~ ( --
B.S. YADAV v. CENTRAL BANK [VENKATARAMIAH, J.) 177

Age of R~tirement required the officers, who were recruited subse- A
quent to July 19, 1969, to retire on completion of 58 years of age while
others falling under rules 1 and 2 of the said Rules could continue till
60 years of age, rule 3 was liable to be struck down as being violative of
Articles 14 and 16 of the Constitution. The petitions were opposed by
the Bank and the Union of India. It was pleaded by them that since the
employees whose services were transferred to the Bank under sub- B
section (2) of section 12 of the Act were entitled to continue in service
till 60 years of age by virtue of the conditions of service prevailing in
.,..- the Central Bank of India Ltd. prior to nationalisation of banks, the
Bank and the Government found that it would be unj11st and unfair to
reduce the age of superannuation from 60 years in the case of such
employees and, therefore, did not alter the said condition of service. C
In the absence of any alteration they were entitled to continue to be in
service till they attained 60 years of age even after nationalisation by
virtue of sub-section (2) of section 12 of the Act. The officers and
employees other than the award staff recruited after the nationalisa-
tion of the banks were required to retire on completion of 58 years of
age which was the age of superannuation generally prevailing in the D
services of all public sector corporations, Central Government and
'y many of the State Governments. It was urged that since the employees
recruited prior to July 19, !969 belonged to a different class altogether,
it could not be said that there had been violation of Articles 14 and 16 of
the Constitution, and the difference in the ages of retirement of the
two classes of officers was due to historical reasons. E

t
It is no doubt true that the order of appointment in the case of the
1st petitioner stated that he would be governed by the terms and condi-
tions which were applicable to other officers of the Bank. That condition,
however, did not prevent the Bank from making a regulation which
was applicable exclusively to the officers recruited after July 19, 1969. F
In the case of officers falling under rules 1 and 2 of the Rules for Age
of Retirement no extra benefit was conferred on them. They were only
permitted to carry the benefit of the Rules for Age of Retirement
which was prevailing in the former banking company which was taken
over by the Government on nationalisation. We are of the view that
there was good reason to make a distinction between the employees G
who had entered service prior to nationalisation and those who joined
thereafter. At the time of nationalisation the corresponding new banks
did not have their own employees to run the vast business taken over
under the Act. There was, therefore, necessity to secure the services of
the employ.ees of the former banking companies without causing much
d1ssatJsfact10n to them. There was also need for standardising the con- H
178 SUPREME COURT REPORTS (1987] 3 S.C.R.

A ditions of service of all such employees belonging to the 14 banks. The
Government of India took the advice of the Pillai Committee and the
Study Group of Bankers and after due deliberation evolved a uniform
pattern of conditions for the transferred employees keeping in view
the conditions of service of the employees prevailing in the majority of
the banking companies which were nationalised. Insofar as the emp-
B loyees recruited after nationalisation were concerned the Government
applied the mies generally applicable to all its employees in other
spheres of Government service.

We have given detailed reasons in our judgment in the Life
Insurance Corporation of India & Anr. etc. v. S.S. Srivastava &
c Others, (Civil Appeal Nos. 1076-1077 of 1987) decided on 5.5.1987
justifying the existence of a mle fixing different ages of retirement to
different classes of employees of the Life Insurance Corporation of
India in the circumstances existing there. The circumstances prevailing
in this case are almost the same ..Those reasons are equally applicable
to the present case too. In Govindarajulu v. The Management of the
D Union Bank of India & Others, (Writ Petition No. 5486 of 1980)
decided on 21.11.1986 the High Court of Madras has rejected the
contentions similar to those which are raised before us. In that case a
regulation framed by the Union Bank of India which was similar to the
one in this case was upheld. That decision has been approved by us in

1
the Life Insurance Copo ration of India & Anr. etc. v. S.S. Srivastava &
E Others, (supra). In Dr. Nikhil Bhushan Chandra v. Union of India &
Ors., (1983 LAB J.C. NOC 109 Calcutta) similar regulations framed
by the United Commercial Bank which was also nationalised under the ·
Act came up for consideration before the High Court of Calcutta. The .
High Court rejected the theory of discrimination put forward on the
basis that fixing 60 years as age of retirement for those who were
F recruited prior to July 19, 1969 and 58 years of age who joined after
that date lacked an intelligible differentia. The Calcutta High Court
pointed out that the terms and conditions of the service of the emp-
loyees of the banks which were taken over under the Act had been
protected by the Act and it was not possible to hold that there had
been any hostile discrimination against the petitioner in that case. We
G are of the view that the decisions of the Madras High Court and the
Calcutta High Court, referred to above, lay down the correct principle.
It is true that if the nationalised banks wanted to reduce the age of
retirement of the transferred employees they could have done so. But
they have tned to standardise their conditions of service and to bring
about some uniformity without giving room for much discontent or
H dissatisfaction. The question involved in this matter is not one of mere
,
B.S. YADAV v. CENTRAL BANK [VENKATARAMIAH, J.] 179

competence. It involves justice and fairness too. Having regard to all A
aspects of the matter, the nationalised banks have tried to be fair and
just insofar as the question of the age of retirement is concerned. We
cannot say in the circumstances that the Bank's attitude is unreason-
able, particularly when the age of rettrement of the new entrants is
quite consistent with the conditions prevailing in almost all the sectors
B
of public employment.

We are of the view that the classification of the employees into
two categories i.e., those falling under rules 1 and 2 of the Rules for
Age of Retirement and those falling under rule 3 thereof satisfies the
tests of a valid clas~ficition laid down under Articles 14 and 16 of the
Constitution. We do not, therefore, find any ground to declare rule 3 c
of the Rules for Age of Retirement, which is impugned in this case, as
unconstitutional.

The Writ Petitions are, therefore, dismissed. There shall, how-
ever, be no order as to costs.
D
P.S.S. Petitions dismissed.