ANDHRA BANK versus B. SATYANARAYANA AND ORS.

Citation: [2004] 2 S.C.R. 304 · Decided: 12-02-2004 · Supreme Court of India · Bench: V.N. KHARE · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
ANDHRA BANK 
V, 
B. SATY ANARA Y ANA AND ORS. 
FEBRUARY 12, 2004 
B 
(V.N. KHARE, CJ., S.B. SINHA AND S.H .• KAPADIA, JJ.] 
Service law: 
Banking Companies (Acquisition and Transfer of Undertakings) Act, 
C 1980; Ss.12(2) and 19/Andhra Bank (Officers) Service Regulations, 1982; 
Regulation 17(/): 
Promotion to the Post of Assis/ant General Manager in terms of procedure 
laid down in a Circular as per Regulation 17(/)-Circular-Challenge to--
Single Judge of the High Court held the Regulation as arbitrary as without 
D guidelines-On appeal, Division Bench of the High Court held the Regulation 
1101 ultra vi res· the Constitution of India, however, observed that the procedure 
laid down in Section 19 of the Act should have been followed while formulating 
the promotion policy-On appeal, held: Parliament has conferred essential 
legislative functions upon the Board of Directors/Bank to make regulations-
E While formulating a promotional policy 'a corresponding new Bank' must 
follow directions of the Cenlral Government in consultation wilh the Reserve 
Bank of Jndia-Amendments, if proposed in the Regulations, has to be placed 
before both the Houses of Parliament-Hence lhe Regulation does not co1ifer 
any unguided, uncanalised and arbitrary power on the Bank while laying 
down the promotion policy-However, procedure laid down therefore is 
F irrelevant for the purpose of formulating the promotion policy decision. 
G 
Words and Phrases: 
'corresponding new Bank'-Meaning of in the context of Banking 
Companies (Acquisition and Transfer of Undertakings) Act, 1980. 
legal Maxims: 
Maxim 'ut res magis valeat quam pereat '-Applicability of-Discussed. 
Respondents were holding the posts of Regional manager and they 
H 
3M 
ANDHRA BANK v. B. SATY ANARA Y ANA 
305 
were considered for promotion to the post of Assistant General Manager A 
by the appellant-Bank as per procedure laid down in the Circular issued 
in terms of Regulation 17(1) of the Andhra Pradesh (Officers) Service 
Regulations. Respondent Nos. 3 to 13 were promoted. Respondent Nos. 1 
and 2; the aggrieved Officers, challenged the validity of the Circular. Single 
Judge of the High Court held Regulation 17 as arbitrary as no guidelines B 
were provided. The Bank preferred an appeal, which was allowed by the 
Division Bench of the High Court holding that the Regulation was not ultra 
vires the Constitution of India; however, it noticed that the Bank did not 
comply with the provisions of Section 19 of the Banking Companies 
(Acquisition and Transfer of Undertakings) Act, while formulating the 
promotion policy. Hence the present appeal. 
C 
It was contended for the appellant that the promotion policy was 
formulated in terms of Regulation 17 of the Regulations and in conformity 
with the guidelines issued by the Government of India; and that it was 
not necessary to consult the Reserve Bank of India or obtain prior 
permission of the Central Government. 
D 
Allowing the appeal, the Court 
HELD: 1.1. The appellant-Bank was a 'corresponding new bank' 
within the meaning of the provisions of the Banking Companies 
. (Acquisition and Transfer of Undertakings) Act. It has to be guided by E 
such directions as regard the matters of policy involving public interest 
as the Central Government may give after consultation with the Governor 
of Reserve Bank. 1308-El 
1.2. The Board of Directors of the corresponding new bank is 
empowered to make a regulation after consultation with the Reserve Bank F 
of India and after obtaining previous sanction of the Central Government, 
pursuant to or in furtherance of sub-section (2) of Section 12 read with 
Section 19 of the Banking Companies (Acquisition and Transfer of 
Undertakings) Act. 130:; 3, Cl 
1.3. In terms of Regulation 17 of the Regulations, sufficient 
safeguards have been provided for therein in as much as while laying down 
the policy, the Board must have regard to the guidelines issued by the 
Central Government. It is further not in doubt or dispute that such 
guidelines had been provided by the Government in terms of the 
G 
regulation. 1309-F, GI 
H 
306 
SUPREME COURT REPORTS 
[2004] 2 S.C.R. 
A 
J.4. It is a well-settled principle of service jurisprudence that the 
employer is entitled to lay down policy decision laying down the criteria 
for grant of promotion to its officers. The eligibility norms for such 
promotions must be defined by the Bank on a realistic basis wherefor a 
system to choose the best available

Excerpt shown. Read the full judgment & AI analysis in Lexace.