K.I. Shephard and Ors. vs. Union of India (UOI) and Ors.

Facts

Three banks- Hindustan Commercial Bank, The Bank of Cochin Ltd. and Lakshmi Commercial Bank were amalgamated with Punjab National Bank, Canara Bank and State Bank of India respectively under Section 45 of the Banking Regulation Act, 1949 (Act). Some of the employees of the amalgamated bank were excluded from employment in transferee banks. They went before the Kerala High Court for relief under Article 226 of the Constitution. A learned single Judge gave them partial relief but on an appeal to the Division Bench by the transferee bank, the writ petitions were dismissed. This appeal is against the decision of the Division Bench by the excluded employees claiming their non-representation in the decision.

Key Takeaways for Students

Legal Issue

Whether authorities acted fairly by not allowing representation of excluded employees?

Holding

The decision to exclude employees from service under the transferee banks without their representation deprives them of their livelihood and brings adverse civil consequences. The rules of natural justice apply to administrative action and in the instant cases, the decision to exclude a section of the employees without complying with the requirement of natural justice was bad.

The court directed that each of the three transferee banks should take over the excluded employees on the same terms and conditions of employment under the respective banking companies prior to amalgamation. The employees including those who did not file a petition would be entitled to the benefit of continuity of service for all purposes including salary and perks throughout the period.

Final Decision Petition Allowed

Ratio

All parties to a dispute should be allowed to be heard and present their case.