GOPALJI KHANNAversusALLAHABAD BANK AND OTHERS

A                             GOPAUi KHANNA
                                        v.
                     ALLAHABAD BANK AND OTHERS

                              FEBRUARY 27, 1996
                                                                                   -
B               [S.C. AGRAWAL AND G.T. NANAVATI, JJ.]

          Se1vice Law :

         Allahabad Bank Officer Employees' (Discipline and Appeal) Regula-
C tioiis, 1976: Regulation 18.
          Penalty on employee-Imposition of-Review-Enhancement of penal-
    ty-Passed by Executive Director acting as Chairman and Managing Direc-
    to1~Held : order not null and void on ground that Executive Director not
    specified as reviewing auth01ity-Also not invalid on ground that power could
D   not be delegated especially when employee also understood order as one
    issued by person discharging the functions of Chabman and Managing Direc-
    tor.

         Administration Law :

E        Delegation of Power-Cliainnan and Managing Director of Bank-Em-
    powered to exercise power of review-Enhancement of-Penalty imposed on
    employee by Executive Director holding chaige of Chainnan and Managing
    Directo1~Held: did not amount to exercise of delegated power.


          Words and Phrases :
F
         "Statute Law''-Meaning of in the context of Allahabad Bank Officer
    Employees' (Discipline and Appeal) Regulations, 1976.

        The appellant was an employee of the respondent-Bank. A
  departmental enquiry was instituted against him for certain acts of mis·
G conduct. The disciplinary authorities, by way of penalty, reduced him to a
  lower stage in the time scale of his pay. As the penalty imposed upon him
  was found to be inadequate by the Executive Director who was then holding
  charge of the post of Chairman and Managing Director,:, he passed an
  order setting aside the said penalty, issued a show-cause notice and
H ultimately enhanced the penalty by fixing his pay in the minimum of the
                                       1068

                                                              .......,,.
               GOPAUi KHANNAv. ALLAHABAD BANK                        1069

lower grade. The appellant challanged that order by filing a writ petition A
in the High Court, which was dismissed. Hence this Appeal.

       On behalf of the appellant, it was contended that the order of
enhancement of penalty was passed by the Executive Director and as the
Executive Director was not specified in the Allahabad Bank Officer
Employees' (Discipline and Appeal) Regulations, 1976 as the reviewing B
authority, the order passed by him should be regarded as null and void;
that since under Regulation 18 Chairman and Managing Director was
specified as reviewing authority, the power could not be validly delegated
to any subordinate authority; and that, therefore, the Executive Director,
although holding charge of the offices of Chairman and Managing Direc- C
tor also, could not have validly exercised that power.

      Dismissing the appeal, this Court

      HELD : 1.1. In the show-cause notice and the order enhancing the
penalty it is stated that they were being passed by the Executive Director D
in terms of Regulation 18 of the Allahabad Bank Officer Employees'
(Discipline and Appeal) Regulations, 1976. That would mean that while
passing the afore-said orders, he was discharging the functions of Chair-
man and Managing Director. He was only holding charge of the office of
the Chairman and Managing Director and, therefore, he could not have
signed the afore-said orders as Chairman and Managing Director. Since E
he was then holding substantively the post of Executive Director he rightly
described himself, while signing the afore-said orders, as Executive Direc-
tor. The appellant also understood the show cause notice as one issued by
a person discharging the functions of Chairman and Managing Director
as can be seen from his representation made pursuant thereto. [1072-C-E] F

      1.2. Though the Regulations have been framed in exercise of the
powers conferred by Section 19 of the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1970, by the Board of Directors, they
cannot be equated with a statute. What the Board of Directors have done
by making those Regulations is to regulate the power of taking disciplinary G
action against the employees of the bank. Moreover, this is not a case
where the power of chairman or the Managing Director came to be
exercised by a subordinate official as a result of delegation of that power.
The Executive Director while exercising the power of review was really
discharging the functions of Chairman and Managing Directo• as he was H
 A
     1070                   SUPREME COURT REPORTS                 [1996] 2 S.C.R.

     then placed incharge of those offices and was therefore entitled to perform
                                                                                     1
     all the duties and functions of those offices. He did not exercise that power
     on the basis that it was delegated to him. [1072-G-H; 1()73-A-B]

           1.3. As the Executive Director was entrusted with the charge of
     Chairman and Managing Director he became entitled to exercise all the
 B   executive powers, perform duties and discharge functions attached to
     those offices and, therefore, the order of penalty passed by him was legal
     and valid. [1076-C-D]

           Krishna Kumar v. Divisional Assistant Engineer, [1979] 4 SCC 289,
 C   Marathwada University v. Seshrao Ba/want Rao Chavan, [1989] 3 SCC 132;
     Ramakant Shripad Sinai Adval Palkar v. Union of India, [1991] Suppl. 2
     SCC 733; State of Haryana v. S.M. Shanna, [1993] Suppl. 3 SCC 252; Ajaib
     Singh v. State of Punjab, [1965] 2 SCR 845; Hari Chand Aggarwal v. The
     Batala Engineering Co. Ltd., AIR (1969) SC 483 and State of Madhya
     Pradesh v. Shri Sheo Narayan Yadav, held inapplicable.
 D
           Barnard v. National Dock Labour Board, [1953] 1 All England Report
     1113, referred to.

              CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3895 of
 E    1996.

           From the Judgment and Order dated 5.4.89 of the Allahabad High
      Court in C. Misc. W.P. No. 4048 of 1988.

              Anil Kumar Gupta for the Appellant.
 F            S.K. Mehta for the Respondents.

              The Judgment of the Court was delivered by

              NANAVATI, J. Leave granted.
 G            The short question that arises for consideration in this appeal is
        whether the power of review available to the Chairman and Managing
        Diredor of the Allahabad Bank under Regulation 18 of the Allahabad
        Bank Officer Employees' (Discipline and Appeal) Regulations, 1976 could
     i, Jlave been exercised by the Executive Director who, in absence of the
.. H chairman and Managing Direc(or, was. entrusted with c~rrent charge of the
         GOPAUI KHANNAv. ALLAHABAD BANK [NANAVATI, J.)                1071

  duties of offices of the Chairman and Managing Director.                   A
        The appellant is an employee of the Allahabad Bank. A departmen-
  tal enquiry was instituted against him for certain acts of misconduct. By an
  order dated June 30, 1987, the disciplinary authority, by way of penalty,
  reduced him to a lower stage in the time scale of his pay. As the penalty B
  imposed upon the appellant was found to be inadequate by the Executive
  Director who was then holding charge of the posts of Chairman and
  Managing Director, he passed an order dated 30th December, 1987 setting
  aside the s_aid order of penalty and proposing to impose major penalty of
  reduction from MMG Scale II to JMG Grade Scale I and to fix his pay in
  the JMG Scale I at the minimum of that scale. By that order the appellant C
• was called upon to submit his representation as to why the proposed
  enhanced penalty should not be imposed upon him. After considering the
  representation made by the appellant the Executive Director by order
  dated 5.2.1988 imposed penalty of reduction from MMG Scale II to JMG
  Scale I and fixed the pay of the appellant at the minimum of that scale.
  The appellant challenged that order by filing a writ petition in the Al- D
  lahabad High Court. It was dismissed as the High Court did not find any
  substance in any of the contentions raised before it.

          Two contentions have been raised before us. Firstly, it was contended
  that the order enh:mcing the penalty was passed by Shri Wadhwa in his E
  capacity as the Executive Director and as the Executive Director is not
  specified in the Regulations as the reviewing authority, the order passed
  by him should be regarded as null and void. Secondly, and in the alterna-
  tive, it was contended that under the Regulations, only the Chairman and
  Managing Director are specified as reviewing authorities and, therefore, F
  Shri Wadhwa who was the Executive Director and was merely holding
  current charge of duties of the posts of Chairman and Managing Director
  could not have reviewed the order of penalty passed by the disciplinary
  authority.

        Before we consider these contentions it may be stated that till G
  23.6.1987 Shri R. Srinivasan was the Chairman and Managing Director of
  the Allahabad Bank. As he was appointed Chairman and Managing Direc-
  tor of Bank of India by Notification dated 23.6.1987, he was directed to
  hand over current charge of duties of the post which he was holding to the
• Executive Director Shri R.L. Wadhwa. Pursuant to the said Notification H
    1072                  SUPREME COURT REPORTS                 [1996] 2 S.C.R.
                                                                                   J
A Shri Srinivasan handed over and Shri Wadhwa took over the charge of the
 "posts of Chairman and Managing Director on 24.6.1987. The resultant
  position was that ther:eafier Shri Wadhwa continued to hold substantively,
  the post of Executive Director and at the same time was also holding
  charge of the offices of the Chairman and Managing Director. Sub-
B sequenty, on 29th April, 1988 Shri Wadhwa was appointed as Managing
  Director. and also as Chairman of the Bank.

          In support of his first contention the learned counsel drew our
  _attention to the order-cum-show cause notice dated 30.12.1987 and the
   impugned order dated 5.2.1988. Both are signed by Shri Wadhwa as
C Executive Director,_ However, we find that, in both these orders it is stated
  ;that they were bemg passed by him in terms of Regulation 18. That would
   mean that while passing thvse orders, Shri Wadhwa was discharging the
  functions of Chairman and Managing Director. Shri Wadhwa was only
   holding charge of the offices of the Chairman and Managing Director and,
   th·erefore, he could not have signed those orders as Chairman and Manag-
D ing Director. Since he was then holding substantively the post of Executive
  Director he rightly described himself, while signing those orders, as Execu-
  tive Director. The appellant also understood the show .cause notice as one
  issued by a person discharging the functions of Chairman and Managing
  Director as can be seen from his representation made pursuant thereto. lit
E it he has referred to Shri Wadhwa as Executive Director and reviewing
  authority. Therefore, the first contention raised by the learned counsel has
  to be rejected.

          With respect to the second contention, it was submitted by the
F learned counsel that the power of review is conferred by Regulation 18.
    Only the Chairman and Managing Director are specified as reviewing
    authorities. This statutory power, therefore, can be exercised by Chairman
    and Managing Director only as they are the named authorities under the
    statutory provision and cannot be validly delegated to any subordinate
    authority. Shri Wadhwa, therefore, could not have validly exercised that
G power. There is no substance in this submission. It is really misconceived.
    Though the Regulations have been framed in exercise of the powers
    conferred by Section 19 of the Banking Companies (Acquisition and
    Transfer of Undertakings) Act, 1970, by the Board of Directors, they
    cannot be equated with a statute. What the B,oard of Directors have done
H . by making th()se Regulations is to regulate the power of taking disciplinary   •
•          GOPAUi KHANNAv. ALLAHABAD BANK [NANAVATI, J.)

    action against the employees of the bank. Moreover, this is not a case A
    where the power of Chairman or the Managing Director came to be
                                                                            1073




    exercised by a subordinate official as a result of delegation of that power.
    Shri Wadhwa while exercising the power of review was really discharging
    the functions of Chairman and Managing Director as he was then placed
    incharge of those offices and was therefore entitled to perform all the B
    duties and functions of those offices. He did not· exercise that power on
    the basis that it was delegated to him. Therefore, the decisions in Barnard\
    v. National Dock Labour Board, [1953} 1 All England Report 1113, Krishna
    Kumar v. Divisional Assistant Electrical Engineer, [1979) 4 SCC 289 and
    Maratltawada University v. Seshrao Ba/want Rao Chavan, (1989) 3 SCC 132,
    relied upon by the learned counsel in support of his contention that C
    statutory power can be exercised by the named authority only and cannot
    be further delegated, require no further consideration. So also, Ramakant
    Sluipad Sinai Adva/palkar v. Union of India, [1991) Suppl. (2) SCC 733 and
    State of Haryana v. S.M. Shamia, [1993] Suppl. 3 SCC 252 cited by the
    learned counsel have no relevance. The question which arose for con- D
    sideration in those cases was whether an officer who substantively holds a
    lower post and is asked to discharge the duties of a higher post can be
    considered as promoted to that higher post. This Court held that entrust-
    ment of current duties charge of a higher post does not amount to promo-
    tion and in such cases the person continues to hold his substantive lower
    post and only discharges the· duties of higher post essentially as a stop-gap E
    arrangement.

          It was next submitted that when a person is entrusted with charge of
    current duties of a higher post, he can exercise only those powers and
    perfor.m those fm;1ctions which are available to the person holding the         p
    higher post under executive orders and not those which are conferred by
    statutory provisions. In support of this submission the learned counsel
    relied upon the decision of this Court in Ajaib Singh v. State of Punjab,
    [1965] 2 SCR 845. In that case what had happened was that the Additional
    District Magistrate, Amritsar was invested with powers of a District
    Magistrate under Section 10(2) of the Code of Criminal Procedure, 1898          G
    and was also put in charge of the office of the District Magistrate Amritsar,
    who was transferred. No order appointing him as a District Magistrate
    under Section 10(1) was passed. While in charge of the office of the District
    Magistrate, he passed an order of detention under the Defence cf India
    Act and Rules, 1962. That order was challenged on the ground that as the        H
    ·1074                 SUPREME COURT REPORTS                 [1996] 2 S.C.R.

A Additional District Magistrate was not appointed as District Magistrate
  under Section 10(1) he did not have the power to pass a detention order
  and, therefore, the order passed by him was without any authority of law
  and liable to be set aside. This Court after considering the relevant
  provisions of.the Defence of India Act and the Rules, drastic nature of the
B power and the, consequences following from it, observed that the power of
  detention cpuld only be exercised by the State Government or an officer
  or authority .to. whom it was delegated and that the said power could be
  delegated to an officer or authority who was not lower in rank than the
  District Magistrate. It was then held that even though the Additional
  District Magistrate was exercising the powers of the District Magistrate on
C there being a vacancy in the office of the District Magistrate, he was still
  not the District Magistrate as he was not appointed as such under Section
  10(1) of the Code and therefore, he had no power to pass the order of
  detention. Even though invested :with the powers of a District Magistrate
  he did not become an officer of the rank of a District Magistrate. In this
D case we are not concerned with such a provision and therefore are not
  required to consider whether Executive Director of the bank when
  entrusted with the charge of duties of the offices of Chairman and Manag-
  ing Director became an officer of the rank of Chairman and Managing
  Director. Moreover the power of the employer to take disciplinary action
  against his employee including the power to review. an order of penalty,
E has to. be distinguished from the statutory power to detain a person.
  Therefore, on the basis of this decision it cannot be held that the Executive
  Director who was merely entrusted with the charge of duties of the offices
  of Chairman and Managing Director could not have exercised the power
  of reviewing the order of penalty passed by the disciplinary authority.
F
        In Hmi Chand Agganval v. The Batala Engineeling Co. Ltd., AIR
  (1969) SC 483 also a question had arisen whether the Additional District
  Magistrate who was entrusted with all the powers of the District Magistrate
  under Section 10(2) of the Code of Criminal Procedure could have exer-
  cised the power delegated by the Central Government to the District
G Magistrate to requisition the property under Section.29 of the Defence of
  India Act, 1962. This Court held as under :

                "The powers of requisitioning are of a very drastic nature and
             involve the fundamental rights in respect of property guaranteed
H            under Article 19(1)(t) of the Constitution. The Central Govern-
       GOPAL.JI KHANNAv. ALLAHABAD BANK [NANAVATI, J.]                     1075

         ment while making the delegation of its power under Section 29            A
         of the Act must ordinarily be presumed to be fully conscious of
         this aspect of the ·matter and it is for that reason that an officer or
         authority of the high status of a District Magistrate in the district
         was empowered to exercise that power.

         The scheme of Section 10 of the Code leaves no room for doubt B
         that the District Magistrate and the Additional District Magistrate
         are two and distinct authorities and even though the latter may be
         empowered under sub-section (2) to exercise all or any of the
         powers of a District Magistrate but by no stretch of reasoning can
         an Additional District Magistrate be called the District Magistrate C
         which are the words employed in sub-section (1) of Section 10."

      This decision, therefore, does not support the contention raised on
behalf of the appellant.

      In State of Madhya ..Pradesh v. Shri Slteo Narayan Yadav, this Court D
was required .to interpret Rule 3(b) framed under the Madhya Pradesh
Local Authorities School Teachers (Aqsorption in Government Service)
Act, 1963 which read as follows :

             "3(b) For absorption on the post of Head Master/Principal of
         a High/Higher Secondary School, the person concerned should               E
         possess the post-graduate degree and should have worked on the
         post for a minimum period of 7 years in the same institution and
         should have 10 years' teaching experience in any recognised in·
         stitution of Madhya Pradesh."
                                                                                   F
      It was contended by the respondent that working on the post for a
 minimum period of 7 years would for the purpose of computation of 7 years
include service even as incharge Head Master/Principal or officiating
service in the post. On the other hand it was contended by the State that
the teacher claiming to be absorbed as Head Master/Principal should have
worked as a confirmed Head Master/Principal in a substative post for the           G
full period of 7 years. This Court held that the period during which the
teacher had worked as incharge Head Master/Principal ought to have been
taken into account by the State Government for computing the period of
7 years. It is difficult to appreciate how this decision can lend any support
to the contention raised on behalf of the appellant. On the contrary this          H
         1076                  SUPREME COURT REPORTS                   (1996) 2 S.C.R.

    A Court has observed therein that the confirmed holder of a substative post
        would be discharging the functions attached to the post and when some
        one is placed in that very post in an officiating capacitY or directed to hold
        charge of the post, he would be ·required to perform the duties ·and
      . discharge . ·the functions of the post rendering identical service. In para-
    B graph 10 of the judgment it is further observed as under:
                      "It may be that the confirmed holder of the post may be away
                   and not in a position to discharge the duties and some one may
                  ·be appointed in an officiating capacity or may be directed to hold
                   charge but nonetheless such holder of the post·will have to perform
    C              duties and ·discharge functions attached to the post."

               After considering the above decisions and Regulations 2(n) and 18,
         we ,are of the opinion that as the executive Director Shri Wadhwa was
         entrusted with the charge of the offices of Chairman and Managing Direc-
         tor he became entitled to exercise all the executive powers, perform duties
    ;D   and discharge functions attached to those offices and, therefore,the order
         of penalty passed by him was legal and valid.

                This appeal; therefore, fails and is dismissed. No order as to costs.

         v.s.s.                                                    Appeal dismissed.




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