Sudhir Kumar Jain vs Union Of India & Anr.
2015 Latest Caselaw 416 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         W.P.(C) No. 456/2015
%                                                    16th January , 2015

SUDHIR KUMAR JAIN                                          ......Petitioner
                          Through:       Mr. Harish Malhotra, Sr. Adv. with
                                         Mr. Sakesh Kumar, Adv.


                          VERSUS

UNION OF INDIA & ANR.                                     ...... Respondents
                   Through:              Mr. Narendra Kalra and Mr. Sumit
                                         Rajput, Advs.

CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?     Yes


VALMIKI J. MEHTA, J (ORAL)

1.            By this writ petition filed under Article 226 of the Constitution

of India the petitioner, who was the Chairman and Managing Director of the

Syndicate Bank, impugns the order dated 22.9.2014 by which the services of

the petitioner have been terminated with immediate effect in exercise of

powers under sub-clause (1A) of Clause 8 of the Nationalised Banks

(Management        and   Miscellaneous     Provisions)   Scheme     1970/1980

(hereinafter referred to as 'the 1970 Scheme'). This impugned order reads

as under:-

W.P.(C) 456/2015                                                              Page 1 of 7
                        F.No.1/10/2012/VIG (Part-1)
                           Government of India
                            Ministry of Finance
                      Department of Financial Services

                                 New Delhi, Dated the 22nd, September, 2014
                                      Bhadrapada 31, 1936 (Saka)


                                  ORDER

In exercise of the powers conferred by sub-clause (1A) of Clause 8 of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme 1970/1980, the Central Government hereby terminates the term of office of Shri Sudhir Kumar Jain as CMD, Syndicate Bank with immediate effect and with the direction the grant of three months' salary and allowances in lieu of the notice may be considered only if he is exonerated."

2. The relevant Clause 8 of the 1970 Scheme reads as under:-

"Clause-8. Term of office and remuneration of a whole-time Director including Managing Director-

(1) A whole-time Director including the Managing Director shall devote his whole-time to the affairs of the Nationalised Bank and shall hold office for such terms not exceeding five year as the Central Government may, after consultation with the Reserve Bank, specify and shall be eligible for re-appointment.

(1-A) Notwithstanding anything contained in sub-clause (1), the Central Government shall have the right to terminate the term of office of a whole-time Director, including the Managing Director, at any time before the expiry of the term specified under that sub-clause by giving to him a notice of not less than three months, in writing or three months salary and allowances in lieu of notice; and the whole-time Director, including the Managing Director, shall also have the right to relinquish his

office at any time before the expiry of the term specified under that sub clause by giving to the Central Government notice or not less than three months in writing.

(1-B) Any reference to a whole-time Director, including the Managing Director, in sub-clause (1-A) shall be construed as including a reference to the person holding office as such at the commencement of the Nationalised Banks (Management and Miscellaneous Provisions) (Second Amendment) Scheme, 1976.

(2) A whole-time Director, including the Managing Director shall receive from the Nationalised Bank such salary, allowance, fees & perquisites and be governed by such terms and conditions as the Central Government may determine, after consultation with the Reserve Bank.

(3) If a whole-time Director including the Managing Director is by infirmity or otherwise rendered incapable of carrying out his duties or is absent on leave or otherwise in circumstances not involving the vacation of his office, the Central Government may, after consultation with Reserve Bank, appoint another person to act in his place during his absence.

(4) The Central Government may, if it is satisfied that it is expedient in the interest of the nationalized bank so to do, remove a whole-time Director, including the Managing Director, from office:

Provided that no such removal shall be made except after-

(a) consultation with the Board, and

(b) giving a reasonable opportunity to the whole-time Director including the Managing Director of showing cause against the proposed action."

3. A reading of Clause 8 of the 1970 Scheme with its sub-clauses

shows that there are two methods of termination of the employment of a

Director including the Managing Director. One method is under sub-clause

(1A) of Clause 8 of the 1970 Scheme and the second one is under sub-clause

3 of Clause 8 of the 1970 Scheme. Sub-clause (1A) of Clause 8 of the 1970

Scheme provides an exit route both to the employer and employee by means

of a three months' notice. Sub-clause 3 of Clause 8 of the 1970 Scheme is

for removal in the interest of the Nationalized Bank (viz Syndicate Bank in

this case) and in which case there is a requirement to follow the principles of

natural justice.

4. In my opinion, sub-clause (1A) of Clause 8 of the 1970 Scheme

is a balanced clause because it gives an exit route both to the employer as

well as the employee for bringing to an end to the contract of services of the

petitioner as a Chairman or a Managing Director of the Syndicate Bank.

The impugned order specifically refers to exercise of powers under sub-

clause (1A) of Clause 8 of the 1970 Scheme, and therefore I cannot agree

with the arguments urged on behalf of the petitioner that the termination of

the petitioner in this case should be taken as having been effected in exercise

of powers under sub-clause 3 of Clause 8 of the 1970 Scheme. If I accept

this argument urged on behalf of the petitioner, I would be doing violence to

the language of the impugned termination order dated 22.9.2014 which

specifically invokes only sub-clause (1A) of Clause 8 of the 1970 Scheme

and not sub-clause 3 of Clause 8 of the 1970 Scheme.

5. Once sub-clause (1A) of Clause 8 of the 1970 Scheme is

applicable, the argument urged on behalf of the petitioner by his senior

counsel is that this sub-clause (1A) of Clause 8 of the 1970 Scheme must be

completely complied with and since this sub-clause requires three months'

pay to be given with the termination order, and since the impugned order

thus does not give three months' pay, the impugned order thus falls foul of

the language of sub-clause (1A) of Clause 8 of the 1970 Scheme, and

therefore has to be set aside.

6. I do not agree with the argument urged on behalf of the

petitioner that the termination order issued under the sub-clause (1A) of

Clause 8 of the 1970 Scheme will fall merely because the three months' pay

is not given to the petitioner in terms of the impugned order dated 22.9.2014.

An order which is illegal on the ground that the requirement thereof being

not complied with being the three months' notice pay, in my opinion will

only have the effect that the petitioner pursuant to the impugned order will

be entitled to be given the three months' notice pay and not that the

termination itself is illegal. I say so because way back the Supreme Court in

the case of S.S. Shetty Vs. Bharat Nidhi Ltd., AIR 1958 SC 12 has held that

where there is an illegal termination of a contractual employment, the

maximum entitlement of a contractual employee wrongly terminated is the

notice pay as specified in the contract and not that the termination is illegal.

In the present case, the notice pay which is specified by virtue of sub-clause

(1A) of Clause 8 of the 1970 Scheme is a three months' notice pay and

therefore, the entitlement of the petitioner alleging illegal termination will

only be the three months' notice pay, inasmuch as, the appointment of the

petitioner was for a period of five years or till further orders in terms of the

appointment order dated 8.7.2013. This appointment order of the petitioner

dated 8.7.2013 reads as under:-

F.No.4/4/2012-BO-I Government of India Ministry of Finance Department of Financial Services New Delhi, dated 8th July, 2013 Ashadha 17, 1935 (Saka)

NOTIFICATION

In exercise of the powers conferred by clause (a) of sub- section (3) of Section 9 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 read with sub-clause (1) of clause 3 and sub-clause (1) of Clause 8 of The Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980, the Central Government, hereby appoints Sh. Sudhir Kumar Jain (DoB: 21.07.1960), Executive Director, Bank of Baroda as Chairman and Managing Director, Syndicate Bank, for a period of five years from the date of taking over charge or until further orders,

whichever is earlier." (underlining added)

7. Since the language of the aforesaid order dated 8.7.2013, makes

it clear that the appointment is for a period of five years or till further orders,

the appointment is for a term, and the term being a specific term, clearly

therefore the ratio of the judgment of the Supreme Court in the case of S.S.

Shetty (supra) will squarely apply, and consequently, the maximum

entitlement of the petitioner will be to claim three months' notice pay and

not seek quashing of the impugned order dated 22.9.2014 whereby services

of the petitioner as a Chairman and Managing Director have been

terminated.

8. Dismissed.

JANUARY 16, 2015                                VALMIKI J. MEHTA, J.
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