Punjab National Bank And Others v. Manjeet Singh And Another

S.B Sinha, J.— Leave granted.

2. The appellant herein is a nationalised bank. Some scheduled banks initiated a scheme commonly known as daily deposit scheme. There were, however, various nomenclatures given therefor, as for example, mini deposit scheme, pygmy deposit scheme, etc. The said schemes were introduced for mobilising small savings from public. For the said purpose, services of deposit collectors were taken to canvass opening of accounts, to collect deposits from the account-holders at their residence/business premises, and to deposit collections in the banks on a daily basis.

3. New Bank of India, which has since merged with the appellant, had such a scheme. The respondents herein were deposit collectors in pygmy deposit scheme floated by the said Bank. Under the agreement, they were entitled to commission at the rate of 3.5% of the collections made by them. Those pygmy deposit collectors working in New Bank of India since 1979 had been allowed to continue with Appellant 1 upon their amalgamation in 1993. The system of paying commission at the rate of 3.5% of the amount collected by them continued.

4. An industrial dispute was raised by such deposit collectors of various banks pursuant whereto the Government of India by a notification on 3-10-1980 referred the following dispute for adjudication before the Industrial Tribunal, Hyderabad:

“Whether the demand of the commission agents or as the case may be deposit collectors employed in the banks listed in the annexure that they are entitled to the pay scale and other service conditions admissible to regular clerical employees of these banks is justified? If not, to what relief are the workers concerned entitled to and from which date?”

5. The appellant Bank along with some other nationalised banks was also party to the said reference. The association of the bankers viz. Indian Banks Association was also impleaded in the said reference. By an award made on 22-12-1988, the Tribunal opined that the deposit collectors were workmen and as such the reference was maintainable.

6. In its award it was directed:

(i) Eligible deposit collectors i.e those who are less than 45 years of age as on 3-10-1980, if otherwise eligible, would be considered for regular absorption after taking qualifying examination.

(ii) Those, other than (i) above, shall be given benefits as conferred by the award i.e

(a) Full back wages of Rs 750 linked to minimum deposit of Rs 7500 p.m

(b) Incentive remuneration @ 2% for deposit collected above Rs 7500 p.m

(c) Conveyance allowance of Rs 50 p.m for deposit collected less than Rs 10,000 and Rs 100 p.m for deposit collected over Rs 10,000 p.m

(d) Gratuity equal to 15 days' commission for each year of service rendered.

7. A writ petition filed by the Indian Banks Association before the High Court of Andhra Pradesh questioning the correctness of the said award was dismissed. A special leave petition was preferred by the said Association before this Court. The appeal was also dismissed. The judgment of this Court is since reported in Indian Banks Assn. v. Workmen of Syndicate Bank (2001) 3 SCC 36. This Court noticed that before the High Court it was conceded that the relief of being absorbed as regular staff of the Bank in clerical cadre was not available to be granted whereupon the High Court had set aside the directions of the Tribunal to absorb the deposit collectors as regular staff. Other directions, however, came to be upheld. Appeals were also filed by the workmen before this Court.

8. The contention of the respondents was noticed in the following terms:

“Mr Sharma submitted that gratuity need not be only under the Payment of Gratuity Act. He submitted that the Tribunal had not said that it was awarding gratuity under the Gratuity Act. He submitted that the Tribunal has powers, dehors the Gratuity Act, to direct payment of gratuity. He submitted that the Tribunal always has power and jurisdiction to modify conditions of service and, in this case, it has been found by the Tribunal that there were no fixed pay scales, no bonus, no gratuity, no dearness allowance and, therefore, the Tribunal had given the direction, as set out hereinabove, as and by way of a package. He submitted that earlier, commission was being paid at the rate of 3.5 per cent by most of the banks. He pointed out that now, over and above the sum of Rs 7500, the commission had been reduced to 2 per cent. He submitted that to that extent deposit collectors were losing out, but as this was part of the package as given by the Tribunal it was being accepted by the deposit collectors. He submitted that the directions given by the Tribunal were fair and just and absolutely right. He submitted that the order of the High Court was correct and this Court should not interfere.”

9. This Court also noticed the submissions made on behalf of the workmen that deposit collectors had been working for 20 to 25 years and that there was nothing wrong if they were either absorbed in the banks or given regular pay scales, allowances and other service conditions as applicable to other employees of the banks.

10. This Court dismissed the appeal preferred by the Indian Banks Association stating:

“We also see no substance in the contention that these schemes are unremunerative. The banks have introduced these schemes because they want to encourage the common man to make small and regular deposits. As a result of such schemes, the number of depositors has become much larger. We have no doubt that such schemes are continued because the banks find them remunerative. The banks have large collections through such schemes.”

11. Notices were issued to the mini deposit collectors for recovery of the amounts paid to them from the date of the judgment of the High Court i.e 1-4-2001 stating:

“The bank shall start paying you the remuneration in respect of your assignment as ‘mini deposit collector’ as per the said terms of the above award as modified by the Andhra Pradesh High Court with effect from 1-4-2001 pending calculation of arrears/recoveries in respect of the prior period i.e from 28-3-1997 to 31-3-2001. The payment/intimation of the arrears/recoveries after adjustment of the amount already paid in respect of the period prior to 1-4-2001 i.e from 28-3-1997 to 31-3-2001 will be made/given to you shortly.”

12. Legality of the said notices came to be questioned by the workmen in a writ petition filed before the Punjab and Haryana High Court inter alia on the premise that no unilateral decision could have been taken by the appellant without giving them an opportunity of being heard. Attention of the High Court was also drawn to an interdepartmental correspondence dated 26-5-2001 issued by Syndicate Bank which is to the following effect:

“Attention of the branches is invited to our Circular Nos. DZO/P&D/Cir.34.F.739/2001 dated 19-4-2001 and Circular No. DZO/P&D/Cir.39/2001 dated 8-5-2001 wherein we have communicated the guidelines received from H.O with regard to payment of remuneration to the pygmy agents in the light of the Supreme Court judgment.

Now we have been informed by the Head Office that they have been in touch with the IBA regarding further course of action contemplated by them. On hearing from them, the necessary guidelines will be informed. Till such time, the procedure followed hitherto for payment of commission will continue.

Branches are advised to act accordingly and inform the agents.”

The High Court allowed the said writ petition on the premise that principles of natural justice were required to be complied with before issuing the said notice.

13. Mr Dhruv Mehta, learned counsel appearing on behalf of the appellant would submit that the award being binding on all the workmen in terms of Section 18(3)(d) of the Industrial Disputes Act, direction by the High Court to comply with the principles of natural justice was wholly unwarranted. It was further submitted that in a case of recovery of the amount in terms of an award, the writ court could not have exercised its discretionary jurisdiction.

14. Mr Gopal Mahajan, learned counsel appearing on behalf of the respondents, on the other hand, would submit that the writ petitioners being not parties to the said award, the award was not binding upon them. Had an opportunity been given to them, they could have shown that the appellant cannot take a different stand vis-à-vis other nationalised banks.

15. The Industrial Disputes Act, 1947 was enacted inter alia for settlement of industrial disputes and for certain other purposes. Maintenance of industrial peace by way of settlement of disputes is one of the objects of the said legislation. Section 18 of the Industrial Disputes Act specifies the persons on whom settlements and awards are binding. Sub-section (3) of Section 18 thereof provides as under:

“18. (3) A settlement arrived at in the course of conciliation proceedings under this Act or an arbitration award in a case where a notification has been issued under sub-section (3-A) of Section 10-A or an award of a Labour Court, Tribunal or National Tribunal which has become enforceable shall be binding on—

(a) all parties to the industrial dispute;

(b) all other parties summoned to appear in the proceedings as parties to the dispute, unless the Board, arbitrator, Labour Court, Tribunal or National Tribunal, as the case may be, records the opinion that they were so summoned without proper cause;

(c) where a party referred to in clause (a) or clause (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates;

(d) where a party referred to in clause (a) or clause (b) is composed of workmen, all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part.”

16. From a perusal of clause (d) of sub-section (3) of Section 18 of the Industrial Disputes Act, it is, thus, evident that all workmen who are employed in the establishment or who subsequently become employed in that establishment would also be bound by an award made by an Industrial Tribunal. The management as also the workmen were parties to the said award. Hence, the respondents cannot be heard to say that the award was not binding on them only because they were not parties.

17††. In an industrial dispute referred by the Central Government which has an all-India implication, individual workmen cannot be made party to a reference. All of them are not expected to be heard. The unions representing them were impleaded as parties. They were heard. Not only were the said unions heard before the High Court, as noticed hereinbefore from a part of the judgment of the High Court, they had preferred appeals before this Court. Their contentions had been noticed by this Court. As the award was made in the presence of the unions, in our opinion, the contention of the respondents that the award was not binding on them cannot be accepted. The principles of natural justice were also not required to be complied with as the same would have been an empty formality. The court will not insist on compliance with the principles of natural justice in view of the binding nature of the award. Their application would be limited to a situation where the factual position or legal implication arising thereunder is disputed and not where it is not in dispute or cannot be disputed. If only one conclusion is possible, a writ would not issue only because there was a violation of the principles of natural justice.

18. In M.C Mehta v. Union of India (1999) 6 SCC 237 the law is stated in the following terms:

“More recently Lord Bingham has deprecated the ‘useless formality’ theory in R. v. Chief Constable of the Thames Valley Police Forces, ex p Cotton 1990 IRLR 344 by giving six reasons. (See also his article ‘Should Public Law Remedies be Discretionary?’, 1991 PL, p. 64.) A detailed and emphatic criticism of the ‘useless formality theory’ has been made much earlier in ‘Natural Justice, Substance or Shadow’ by Prof. D.H Clark of Canada (see 1975 PL, pp. 27-63) contending that Malloch (1971) 1 WLR 1578, (1971) 2 All ER 1278 (HL) and Glynn (1971) 1 WLR 487, (1971) 2 All ER 89 (Ch D) were wrongly decided. Foulkes (Administrative Law, 8th Edn., 1996, p. 323), Craig (Administrative Law, 3rd Edn., p. 596) and others say that the court cannot prejudge what is to be decided by the decision-making authority. de Smith (5th Edn., 1994, paras 10.031 to 10.036) says courts have not yet committed themselves to any one view though discretion is always with the court. Wade (Administrative Law, 5th Edn., 1994, pp. 526-30) says that while futile writs may not be issued, a distinction has to be made according to the nature of the decision. Thus, in relation to cases other than those relating to admitted or indisputable facts, there is a considerable divergence of opinion whether the applicant can be compelled to prove that the outcome will be in his favour or he has to prove a case of substance or if he can prove a ‘real likelihood’ of success or if he is entitled to relief even if there is some remote chance of success. We may, however, point out that even in cases where the facts are not all admitted or beyond dispute, there is a considerable unanimity that the courts can, in exercise of their ‘discretion’, refuse certiorari, prohibition, mandamus or injunction even though natural justice is not followed. We may also state that there is yet another line of cases as in State Bank of Patiala v. S.K Sharma (1996) 3 SCC 364, Rajendra Singh v. State of M.P (1996) 5 SCC 460 that even in relation to statutory provisions requiring notice, a distinction is to be made between cases where the provision is intended for individual benefit and where a provision is intended to protect public interest. In the former case, it can be waived while in the case of the latter, it cannot be waived.”

(emphasis in original)

19. In Viveka Nand Sethi v. Chairman, J&K Bank Ltd. (2005) 5 SCC 337 the law is stated in the following terms:

“22. The principle of natural justice, it is trite, is no unruly horse. When facts are admitted, an enquiry would be an empty formality. Even the principle of estoppel will apply. [See Gurjeewan Garewal (Dr.) v. Dr. Sumitra Dash (2004) 5 SCC 263.] The principles of natural justice are required to be complied with having regard to the fact situation obtaining therein. It cannot be put in a straitjacket formula. It cannot be applied in a vacuum without reference to the relevant facts and circumstances of the case. (See State of Punjab v. Jagir Singh (2004) 8 SCC 129 and Karnataka SRTC v. S.G Kotturappa (2005) 3 SCC 409.)”

(See also P.D Agrawal v. State Bank of India (2006) 8 SCC 776, JT (2006) 5 SC 235.)

20. The appellant Bank had no other option but to implement the award. If it did not, its action could be held to be penal. Reliance placed by the respondents on the letter of Syndicate Bank dated 26-5-2001 is also misplaced. The said circular letter does not state that the principles of natural justice were required to be complied with. As on the date of issuance of the circular letter they had not received the necessary guidelines, a temporary measure was proposed to be taken therefor.

21. For the reasons aforementioned, the impugned judgment cannot be sustained which is set aside accordingly.

22. However, keeping in view the peculiar facts and circumstances of this case, we direct that the recoveries may not be made from the respondents so as to avoid undue hardship to them. This order is being passed in exercise of our jurisdiction under Article 142 of the Constitution of India.

23. Orders to the aforementioned effect have been passed in many cases e.g Shyam Babu Verma v. Union of India (1994) 2 SCC 521, (1994) 27 ATC 121 and Sahib Ram v. State of Haryana 1995 Supp (1) SCC 18.

24†††. However, this part of the order shall not be treated as a precedent. The appeal is allowed with the aforementioned directions and observations. No costs.