Holding

Section 11(1) does not create an immutable tenure and Regulation 19(1) is a valid, non‑ultra vires exercise of the power under Section 63, thus the retirement on completion of 30 years of service is lawful.

Summary

The appellants, former employees of Bank of Indore Limited who were transferred to the State Bank of Indore under the State Bank of India (Subsidiary Banks) Act, 1959, were retired after completing 30 years of service, before reaching the statutory retirement age of 58 prescribed in Section 11(1) of the Act. They challenged the retirement on the grounds that Regulation 19(1) of the State Bank of Indore Officers Service Regulations, 1979, which allowed retirement on completion of 30 years of service, was an excessive delegation of legislative power, violated the protection of tenure under Section 11(1), and was discriminatory under Articles 14 and 16 of the Constitution. The Supreme Court held that Section 11(1) safeguards only the terms and conditions of service until altered by law and does not create an immutable tenure that bars retirement on the basis of years of service. It further held that Regulation 19(1) is a valid exercise of the power conferred by Section 63 of the Act, is not ultra vires, and can be applied to existing officers. Consequently, the appeals were dismissed.

Issues considered

Whether Section 11(1) of the State Bank of India (Subsidiary Banks) Act, 1959 guarantees a fixed tenure that prevents retirement before age 58.
Whether Regulation 19(1) of the State Bank of Indore Officers Service Regulations, 1979 is ultra vires the Act and constitutes excessive delegation of legislative power.
Whether the regulation discriminates between officers of subsidiary banks and nationalised banks in violation of Articles 14 and 16 of the Constitution.
Whether Regulation 19(1) can be applied to officers who were transferred to the subsidiary bank under the Act.

Legislation cited

Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970s. 12(2)
State Bank of India (Subsidiary Banks) Act, 1959s. 11(1), s. 63

Subjects

tenureretirement ageservice regulationsexcessive delegationdiscriminationArticles 14Articles 16State Bank of Indiasubsidiary banksSection 11Regulation 19public employment

Judgment

A YASHWANT SINGH KOTHARI ETC. ETC.
v.
STATE BANK OF INDORE AND ORS.

JANUARY 14, 1993

B [AM. AHMADI AND M.M. PUNCHHI, JJ.)

State Bank of India (Subsidiary Banks) Ac~ 1959/State Bank of Indore
(Officers) Service Regulations, 1979:
~
Sections 11(1) and 63/Regu/ation 19-Transfer of services of employees
c of existing banks--Age of retirement-Fixing retirement of officers after com-
pletion of 30 years service-Whether arbitrary-Whether an exercise of exces-
sive delegatiotr-Differentiation between nationalised banks and subsidiary
banks--Whether discriminatory-Whether regulation applicable to existing
-
employees.
D
Constitution of India, 1950:
•
Altic/es 14 and 16--Age of retireme111-Differentiation between officers
of subsidiary banks and nationalised banks-Whether discriminatory-
Regulatio11 19 of State Bank of Indore Officers Service Regulations, 1979
E providing for retirement on completion of 30 years service-Whether valid.
Words and Phrasej'-"Tenure"-Meaning of.

The appellants, employees of the first respondent-Bank, who were
initially in the employment of a Limited Bank, which ceased to exist with
F effect from 1.1.1960 and became a subsidiary bank in the wake of State
Bank 9f India (Subsidiary Bank) Act, 1959, were made to retire before
attaining tbe age of 58 years on different dates, but upon completing 30 >----
years of actual service, in exercise of powers under Regulation 19(1) of the
State Bank of Indore (Officers) Service Regulations, 1979. The Writ Peti·
lions filed by the appellants challenging their retirement on the basis of
G
the Regulations were dismissed by the High Court.

In the appeals before this Court on behalf of the appellants, It was
contended that their retirement age of 58 ~ was statutorily protected
under Section 11 (1) of the Act as a 'tenui:e' and since there existed DO
. ""'
H provision In the Act for retiring an olllcer on completion of 30 )'Ul'I of
208
YASHWANT SINGH v. STA1E BANK 209

service, the Regulation providing so, was an exercise of excessive delega- A
lion of legislative powers, and was violative of Article 14 of the Constitu-
lion, that the Regulations which were the progeny of Section 63(1) of the
Act, could in no event, be inconsistent with the Act and the Rules made
thereunder, that since the date of superannuation was fixed at 58 years for
e!"ployees/officers who could claim protection of Section 11, Regulation 19
B
providing another alternative for effecting retirement upon the completion
or 30 years of service, even though 58 years bad not been attained, subject
to its occuning first, was an onslaught on that statutory protection, that
.----{ on the plain language of Section 11 of the Act, the security of 'tenure'
protected in the first part of the provision was not liable to change as the
word 'tenure' was significantly missing in the later part whereunder c
change is postulated, and therefore, 'tenure' of service could in no event
· be site.red by any change, revision or alteration by the corresponding new
bank, that Regulation 19 could not apply in the case of the appellants as
existing officers, and that when retirement age at 58 was the consistent
~~ policy for public employment, its curtailment by the alternative of30 years
D
service, if happening earlier, was discriminatory and violative of Articles
14 and 16 of the Constitution.

Dismissing the appeals, this Court,

HELD: 1.1. What is protected under Section 11(1) of the State Bank E
or India (Subsidiary Banks) Act, 1959 is the right of the employee of the
corresponding new bank to hold office or service therein on the samt
tenure, at the same remuneration and upon the same terms and condi-
lions and with the same rights and privileges as to bonus, gratuity and
other matters, as he would have held the same on the appointed day, if the F
undertaking of the existing bank had not lieen transferred to and vested,
in the corresponding new bank. That state of affairs is .to last unless and
~--<.
: un.til the services of the employee in that bank are terminated (!r until his
removal, or <!ther tenns and conditions of service are revised or altered by
the corresponding new bank under, or in pursuance of any law, or In
accordance with any provision which, for the time being, governs his G
service. [215C-D)

...... 1.2. The legislature In enacting Section 11(1) of the Act cannot be
atirlbuted the fault of tautology to have used the word •tenure' as ex-
planatory of the expression 'terms and conditions or service' or Inclusive H
T

210 SUPREME COURT REPORTS [1993] 1 S.C.R.

A of it. Even if it is assumed that there was total protection of r1Xed tenure
offices or services, unalterable under the second part of the provision,
rlXBtion of age of superannuation cannot be said to rlX a tenure of office
or service. [21SG-H, 216A]

1.3. In the instant case, the appellants have nowhere ever set up a •···
'
B case that they hold tenure posts or their services were tenurial, or have
pleaded that they bad any fixity of tenure of a specified durntion laid down f.
in their contract of service. Rather, throughout they have c~~imed to have
joined service in the lower rungs of the banking service all~ to have risen ~
to the posts of officers by the time they were asked lo retire. Therefore,
c providing for the clilte of retirement is not to rlX a 'tenure' as retirement,
as ordinary incidence of service. [21SF]
:~

1.4. In service jurisprudence the word 'tenure' has acquired a legal
sense or connotation which may mean a r1Xed term during which an office ......_
is held. [21SE]
D
1.S. The pnrpose of the Act, as spelt out from the Preamble of the
Act, is· to provide for formation of snbsidiary banks for the State Bank of
~
India and for the Constitution, management and control of subsidiary
banks so formed and for matters connected therewith or incidental there-
E to. Section 63 empowers the State Bank of India to frame Regulations for )..__
,,--
the purpose of giving effect to the provisions or the Act. One such purpose
is to lay down conditions and limitations subject to which the subsidiary
banks may appoint officers, advisers and other employees and fix their
remuneration and other terms and conditions of service. Co-relating the
F enabling provisions under Section 63 and Regulation 19 framed there-
under, the terms and conditions so laid thereunder would definitely go to
alter .or revise the conditions of service of the existing officers as con· .>-
i-
templated in the second part of Section 11. The manner in which such
power is exercised is nowhere arbitrary because the State Bank of India is
hedged on the one side to seek approval of the Reserve Bank of India and
G the Act and the Rules made thereunder on the other, when making Regula·
lions in respect of the subsidiary banks. The policy of providing a retire-
ment rule such as one in Regulation 19, is reOective of a policy and it Is
uniform for all employees existing and joining in future, for all subsidiary
...
banks uniformly. Conditions or service under Section 11 were protected
H till revised or altered in accordance with law. It cannot, therefore, be held
YASHWANT SINGH v. STATE BANK 211

that Regulation 19 cannot apply In the case of appellants, as existing A
officers. (216C-F, BJ

1.6. It Is not correct to say that the Regulations are ultra vires the
Ad, being exercise of excessive delegation. The power to frame Regulations
Is vested not In the executive government but In a nationalised bank, the
State Bank of India, which bas to work out the policy of retirement B
unlfonnally to sub-serve the Interests of the subsidiary banks. The so-
called protection in Section 11 ls not absolute but conditional to change
by the same lntendment of the legislature. The provision lo the Regulation
In question for maintaining the age of retirement of 58 years as before but
In the same breath permitting retirement on the completion or 30 years or c
service, whichever occurs earlier, Is In keeping with the policy of reckoning
a stated number of years of office attaining the crest, whereafter Inevitably
Is the descent, justifying retirement. lo this context 30 years period or
active service i~ not a small period for gainful employment, or an arbitrary
_A.
exercise to withhold the right to bold an office beyond 30 years, having not
attained 58 years of age. (216G, 217CI D

K. Nagaraj and Ors. etc. etc. ''- Chief Secretary of Andhra Pradesh,
A.l.R. 1985 S.C. 551, relied on.

2. The bank nationalisation and creation of subJldlary banks or the E
nationalised banks have a history of their own. The employees of the two
are rationally differentiated OD the basis or policy. The employees or the
subsidiary banks cannot claim equation with the employees of the
nationalised.banks to be retiring at the age of 58 years, on the basis that
the employees of the nationalised banks are not retirable on completion or
30 years or service. (2188) F
-·~
B.S. Yadav &Anr. v. The Chief Manager, Central Bank of India & Ors.,
A.l.R. 1987 S.C. 1706, distinguished.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 127 of
1993.
G
,,'
_.. .. From the Judgment and Order dated 17.1.89 of the Madhya Pradesh
High Court in M.P. No. 1187 of 1985.

WITH H
212 SUPREME COURT REPORTS (1993] 1 S.C.R.

A Civil Appeal No. 128 of 1993.

WITH

Civil Appeal No. 129 of 1993.

B M.C. Bhandare,'S.K Jain and Ms. Pratibha Jain for the Appellants.

A.K. Sanghi, A.V. Rangam and A. Ranganadhan for the Respon-
dents.

The Judgment of the Court was delivered by
c PUNCHHI, J. Special leave granted in these three connected peti-
lions.

Each appellaiit in these appeals was an employee of the State bank
of Indore (a subsidiary bank of the State Bank of India), the first respon-
--'-
D dent in these appeals. They were initially in the employment of the Bank
of Indore Limited which ceased to exist with effect from 1.1.1960 and
became a subsidiary bank known as the State Bank of Indore, in the wake
of the State Banlc of India (Subsidiary Banks) Act, 1959 (hereafter referred
to as the 'Act"). The existing employees of the kind of the appellants
claimed to have certain service rights protected under section 11 of the
E aforesaid Act inclusive of the right to continue till the age of 58 years. They
were however made to retire before attaining the age of 58 years on
different dates, but upon completing 30 years of actual service. The sub-
sidiary bank claims to have exercised powers under Regulation 19(1) of the
State Bank of Indore (officers) Service Regulations, 1979 (hereafter
F referred to as the "Regulations'), in taking such steps.
;....._
The respective appellants moved the High Court of Madhya Pradesh
under Article 226 of the Constitution claiming inter alia that Regulation 19
could not be invoked in their cases and, if it all it could, then that was ultra
vires and in exercise of excessive delegation of legislative powers made over
G to the State Bank of India under section 63 of the Act. The High Court by
a common judgment dated 17-1-1989 dismissed the writ petitions of the •
appellants being Miscellaneous Petition No. 1187 of 1985, Miscellaneous ""--
Petition No. 3532 of 1988 and Miscellaneous Petition No. 3197 of 1986, '
respectively. While these were put to challenge, it was felt by this Court on
H 26.2.1992 that the State Bank of India, though originally not a respondent
YASHWANT SINGH v. STATE BANK [PUNCHH~ J.] 213

before the High Court, should be added as a party since the impugned A
Regulation 19 had been framed by the Central Board of Directors of the
State Bank of India under the powers conferred on it by Section 63 of the
Act. Notice accordingly was given to the State Bank of India and apparent-
ly its stance is supportive of the impugned Regulation.

When the Act came into force on 1.1.1960 and the subsidiary bank, B
the State Bank of Indore, came into existence, the age of guperannuation
of its employees was clearly 58 years. The Regulations came into force on
October 1, 1979, almost 19 years later. The field pre-existing was governed
by office circulars and departmental prac!ices besides section 11(1) of the
Act, which provided as follows: C
TRANSFER OF SERVICES OF EMPLOYEES OF EXIST-
ING BANKS:

"Save as otherwise provided in this Act, every employee of an
existing Bank in the employment of that bank immediately D
before the appointed day, shall, on and from that day, become
an employee of the corresponding new bank and shall hold his
office or service therein by the same tenure at the same
remuneration and upon the same terms and conditions and with
the same rights and privileges as to pension, gratuity and other
matters as he would have held the same on the appointed day, E
if the Undertaking of the existing bank had not been transferred
to and vested in the corresponding new bank and shall continue
to do so unless and until his employment in that bank is ter-
minated or until his remuneration or other tenns and conditions
of service are revised or altered by the corresponding new bank F
under, or in pursuance of any law, or in accordance with any
provision which, for the time being governs, his service."

(emphasis ours).

And then Regulation 19(1), in so far is relevant, provides as G
follows:
_;. __
"AGE OF RETIREMENT-19(1):

An officer shall retire from the service of the Bank of attaining
the age of fifty-eight years of upon the completion of thirty H
214 SUPREME COURT REPORTS [1993] 1 S.C.R..

A years service, whichever occurs first:

Provided further that the competent authority may, at its dis-
cretion, extend the period of service of an officer who has
attained the age of fifty-eight years or has completed thirty
years service as the case may be, should such extension be
B deemed desirable in the interest of the Bank.'

The thrust of the claim of the appellants was and is that their >-~
retirement age of 58 years was statutorily protected under section 11(1) as
a "tenure' and since there existed no provision in the Act for retiring an
C officer on completion of 30 years of services, the Regulation providing so,
is an exercise of excesi?ive delegation of legislative powers. To put it
differently, it is suggested that the measure is a violent transgression on the
security of tenure statutorily protected and was violative of Article 14 of
the Constitution. ~

D
The Regulations are the progeny of Section 63(1) of the Act which
empowers the State Bank of India to make Regulations in respect of
subsidiary banks with the approval of the Reserve Bank of India. Those
Regulations can in no event be inconsistent with the Act and the Rules
made thereunder, and may provide for all matters for which provision is
E necessary and expedient for the purpose of giving effect to the provision
of the .Act.· Clause (m) of sub-section (2) of Section 63 provides that in
particular and without prejudice to the generalities of the power under sub-
section (1), such Regulations may provide for the conditions and limita-
tions subject to which the subsidiary bank may appoint officers, advisers
F and other employees and fix their remuneration and other terms and
conditions of service. As is plain from the reading of Section 11(1) of the
Act, while protection of existing terms and conditions of service is guaran-
teed under Section 11, that protection lasts so long as those terms and
conditions are not revised or altered under, or in pursuance of any law, or
in accordance with any provision, which governed the service. Since the
G age of superannuation was fixed at 58 years for employees/officers who
could claim protection of section 11, Regulation 19 providing another
alternative for effecting retirement upon the completion of 30 years of
service, even though 58 years had not been attained, subject to its occurring
first, was said to be an onslaught on that statutory protection, if the
H Regulation was taken to apply to the service conditions of the existing
YASHWANT SINGH v. STATE BANK [PUNCHHI, J.] 215

officers. But in case it was meant to apply prospectively .and not to the A
existing officers, the appellants have no grievance. Secondly it was asserted
that on the plain language of Section 11 of the Act, the security of 'tenure'
protected in the first part of the provision was not liable to change as the
word 'tenure' was significantly missing in the later part whereunder change
is postulated. On that basis it was suggested that 'tenure' of service could B
in no event be altered by any change, revision or alteration by the cor-
responding new bank.

Now let us examine the second argument first. What is protected under
section 11(1) on the employee of the corresponding new bank is his right to
hold office or service therein on the same tenure at the same remuneration C
and upon the same terms and conditions and with the same rights and
privileges as to bonus, gratuity and other matters, as he would have held the
same on the appointed day, if the undertaking of the existing bank had not
been transferred to and vested in the corresponding new bank. That state of
affairs is to last unless and until the services of the employee in that bank are D
terminated or until his removal, or other terms and conditions of service are
revised or altered by the corresponding new bank under, or in pursuance of
any law, or in accordance with any provision which, for the time being,
governs his service. If holding of office or service by the same "tenure' is
unalterable as excludingly urged on behalf of the appellants by Mr. Murli
Bhandare, Sr. Advocate, then on testing we find no basis for the same. E
No-where have the appellants in their respective special leave petitions or
writ petitions annexed thereto ever asserted that they hold 'tenure' posts or
their services were tenurial. In service jurisprudence the word 'tenure' has
acquired a legal sense or connotation which may mean a fixed term during
which an office is held. The appellants have nowhere ever set up such a case F
before the High Court or to have pleaded that they had any fixity of tenure of
a specified duration, laid down in their contract of service. Rather the
appellants throughout have claimed to have joined service in the lower rungs
of the banking service and to have risen to the posts of officers by the time
they were asked to retire. There is thus no room for the argument that
providing for the date of retirement was to fix a 'tenure' as retirement as G
ordinary incidence of service. The legislature in enacting Section 11(1) of the
Act cannot be attributed the fault of tautology to have used the word 'tenure'
as explanatory of the expression 'terms and cooditions of service' or inclusive
of it; this far we may go with the appellants. Even if we go that long to say that
there was total protection of fixed tenure offices or services, unalterable H
216 SUPREME COURT REPORTS (1993] 1 S.C.R.

A under the second part of the provision, the appellants gain nothing, for they ··~
have not laid the necessary foundation for that claim ever. Therefore we are
of the view that there is no substance in the argument that fixation of age of
superannuation is to fix a tenure of office or service. The argument thus fails.

The other argument of the appellants that Regulation 19 cannot
B apply to the case of the appellants as existing officers is also of no merit
because, as is plain, conditions of service under section 11 were protected
till revised or altered in accordance with law. The purpose of the Act, as
spelled out from the preamble of the Act, is to provide for formation of
subsidiary banks for the State Bank of India and for the constitution,
c management and control of subsidiary banks so formed and for matters
connected therewith or incidental thereto. Section 63, as has been noticed
earlia, empowers the State Bank of India to frame Regulations for the
purpose of giving effect to the provisions of the Acl. One such purpose is
to lay down conditions and limitations subject to which the subsidiary banks
D may appoint officers, advisers and other employees and fix their remunera-
tion and other terms and conditions of service. Co-relating the enabling
provisions under section 63 and Regulation 19 framed thereunder, the
terms and conditions so laid thereunder would definitely go to alter or
revise the conditions of service of the existing officers as contemplated in
the second part of Section 11. The manner in which such power is exercised
E is nowhere arbitrary because the State Bank of India is hedged on the one
side to seek approval of the Reserve Bank of India and the Act and the
Rules made thereunder on the other, when making Regulations in respect
of the subsidiary banks. The policy of providing a retirement rule such as
one in Regulation 19, is reflective of a policy and it is uniform for all
employees existing and joining in future, for all subsidiary banks uniformly.
F
The third submission about the Regulations being ultra vires the Act,
being exercise of excessive delegation too is of no substance when viewed
in the scheme of things. As observed earlier, the power lo frame Regula-
tions is vested not in the executive government but in a nationalised bank,
G the State Bank of India, which has to work out the policy of retirement
uniformally to sub-serve the interests of the subsidiary banks. The so called
protection in Section 11 is not absolute but conditional to change by the
same intendment of the legislature.

H In K Nagaraj and others etc. etc. v. Chief Secretary of Andhra Pradesh,
J

YASHWANT SINGH v. STATE BANK [PUNCHHI, J.] 217

AIR 1985 SC 551 this Court repelled a challenge to the reduction of A
~~ retirement age from 58 to 55 on the basis of the policy of the Government,
which was found not to be irrational or violating recognised norms of
employment plan. It was also noticed that not to provide for an age of
retirement at all would be contrary to public interest because the State
cannot afford the luxury of allowing its employee to continue in service
after they have passed the point of peak and that rules of retirement do
B
not take away the right of a member to his livelihood, the only limit is to
-~ the right to hold office till the stated number of years. The provision in the
Regulation in hand for maintaining the age of retirement at 58 years as
before but in the same breath permitting retirement on the completion of
30 years of service, whichever occurs earlier, is in keeping with the policy c
of reckoning a stated number of years of office attaining the crest,
whereafter inevitably is the descent, justifying retirement. In this context 30
years period of active service is not a small period for gainful employment,
-~ or an arbitrary exercise to withhold the right to hold an office beyond thiry
years, having not attained 58 years of age.
D
Muc~.• reliance was placed by learned counsel for the parties on B.S.
Yadav & a1iother v. The Chief Manager, Central Bank of India & others, AIR
1987 SC 1706 in support of their respective contentions. It was contended
on behalf of the respondent bank that Section 12{2) of the Banking
-'""" Companies {Acquisition and Transfer of Undertakings) Act, 1970 was pari E
materia the same as section 11{1) of the present Act and Regulation 19.
framed under the former Act was akin to Regulation 19 of the present
Regulation providing for different ages of retirement of two categories of
employees. As is evident from the Report those two classes were those
falling under Rules 1 and 2 of 'Rules of Age of retirement' for whom the F
- --".
..
age of retirement was 60 years and those falling under Rule 3 for whom
the age of retirement was 58 years, depending on the date of recruitment
of promotion being prior to or after the appointed day i.e. 19th July, 1969.
This Court ruled that the classification so made was valid as it satisfied the
tests laid down under Articles 14 and 16 of the Constitution because this
Court could not say, in the circumstances, that the attitude of the G
nationalised bank was unreasonable, particularly when the age of retire-
_;.._ meni ·of 58 years of the post 19th July, 1969 entrants was consistent with
the conditions prevailing in almost all the sectors of public employment.
Bui on the other hand it was contended by the appellants that when
retirement age at 58 was the consistant policy for public employment, .as H
218 SUPREME COURT REPORTS (1993) 1 S.C.R.

A laid down in B.S. Yadav's case, its curtailment by the alternative of 30 years
service, if happening earlier, is discrimanatory and violative of Articles 14
and 16 of the Constitution. We are not impressed by this argument. The
bank nationalisation and creation of subsidiary banks of the nationalised
banks have a history of their own. The employees of the two are rationally
differentiated on the basis of policy. The employees of the subsidiary banks
B
cannot claim equation with the employees of the nationalised banks to be
retiring at the age of fifty eight years, on the basis that the employees of
the nationalised banks are not retirable on completion of 30 years of
semce.

c partiesNobyother point of substance remains to be discussed even though the
their written submissions submitted much after the close of the
case made an effort to expand the controversy.

For the fore-going reasons, we find no substance in these appeals ,.i.
which are dismissed without any order as to costs.

N.P.V. Appeals dismissed.