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£o,..m..,. ,;..1·9;..;;8

PARLIAMENT OF [NDlA

RAJYASABHA

COMMITTEE ON SUBORDINATE LEGISLATION

NINETY-SECOND REPORT

(Presented oo the 28th November, 1991)

I _..,.

RAJYA S.\BHA SECREfARIAT 1\'l!W DELHI

.Vo.-t:mber, I99IIAgraltayana, 1913 (Sa~a}

CONTENTS

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(i)

~. Tra: Ro-oaT .

U. R."S n B•nk of fndla. Acl, 1934-tnaking of Rul S(R tul t:c.::al ~h mes Uf\'1 r '"''" 1-l!i

COMPOSITION CJF THE COMMITTEE

I. Shrt J agesh Desat-Chairnum

2. Shrimat; Bijoya Chakravarty

:1. Shri Bhuvnesh Cha turvedi

·I Shri Gnj Singh

5, Ml<s SaroJ Khaparde

6 Shn B. V . Abdulla Koya

; • Shri :\!d. Salim

8. Slui Mentay Pndmanabham

9, Shri M. Palantyand;

10. Shr1 Pravat Kumar Samantaray

II ShnmntJ Pratibha Singh

l:!. Shn G. G. Swell

13. Shri Ashok Nath Vermn

14 Shri Kapil Verma

15. Shri S. Viduthalai Vin.Jmbt

Shh R C Soperna, Under Secn-tary

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REPORT

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INTRvDOCTION

l, the Chairman o! the Committee on Subordina~ Legislation, hav:ing been authorised by the Committee to present tbe Repon on it. behal!, do hereby present this Ninety-second P.epon of tlte C'Ommittee.

1.1 The Committee considetcd and adopted the Report at its meeting held on the lith November. 1991.

1 :t Thl' matter r~lating to the l'ru)king of RulesjRegulsttOns/ Schemes under the R~crv() Bank o! India Act, 1934 examined by the Committee o.longwith the comments of the Government received thereon nnd the observations and r(jCommendations, which in ttu. opiniou of the Comm1ttee. should be brought to the notice of the House. ore contained In the sueceeding paragraphs of the Report.

n RESERVE BANK OF INDIA ACT, 1934-MAKING OF

RULES/REGULATIONS/SCHEMES UNDER THE -

2 Pursuant to a t·eferc'nce made on the 16th June, 198-l to the Ministry o( Finance. requesting them to send copies of the Recruit­ment Rules for the posts obtaining in the Reserv.; Bank of India as alsn thp reasons Cor not making RulestRegulationsjSchemi"S etc. required to be made under the Reserve Bank of India Act. 1934. the

Ministry of Finance cBanking Division) t-ide their Office Memoran­dum dated the 1st F~ruary, 1985. informed as under:-

A statement indicating the Rules, RegulatiO!ls and Agree. ments framed under the Reserve Bank of India Act, 1934, together witb information regarding the dates on whieh thnse were lrud on the Table of both the House. is en­closed. !Vide Annexure-n

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As may be seen from the statement the date. on wh1ch lOme of the rules/ regulations or arnendrnents were placed on the Table oi !.he Lok SabhafRajya Sabha 1s being ascertain­ed. As some of the arnendrnents to the Regulations 3 re considerably old. efforts are being made to locate the relc-\'anl Iiles so as to indicate the dates on which the amend· ments were placed before both Houses of Par!Jarnent. In­formation about this would be sent to th!! Rajya Sabha

&.-cretariat \'Cr~· early :)eclion 58( l) of the Reserve Bank of India Act enables the

Bank to fr<Lffie regulations in respect of matters lor which proviMon " ne<:essary for the purpose of giving et!ect ! O

the prov~S.Oil» oi the Act, sub-sect ton l2) of Sect ion :\3 nnrr~•tes sornc of the purposes for which regulaHons can b., rnade by the Bank without prejudice tO the generality of suO-section (1). Reserve Bank of India ha, report<'d that mos'l oi them are in the nature of enabling provisions. and as such iL may not be possibll!' for tt to indi~atc specifi<- reasons for not framing rulcs1 regulations under the provisions of the Act. Accordin:;\ tn Reserv~ BMk of Indi3 since the provision is not n mnnJn· tory o11e but only :~n enabling provision there mny not he nny specific situation or ground yet {or lrwoki111\ the """ nbling provisron.< for tramin'g the rules and regulations. 'l'hts matter is, however. being iurthcr pursued willr the R~sr•t'VC Bank of India with a view to en.~nre tho\ wlwre­vr·r necessary rules. regulations and scheme, be framed

urr(ent\,· /Is rr•gards Recruitment Rules of Reserve J:hn

1: o( India. the

Bank has reported thai it has not formu\~ted recruitment nrle as such, but the bank follows a set procedure in the matter of recruitment. A copy of U1e Note dt·t~ilin!l the procedure followed by RBl for ~itment of staft i; en·

closed·· I Vtde Annexure-111 2 I The above comments or the Ministry were considered by the

Sccret.:uiat and therenfter certain further points were tcfcrred to them for comments/clarifications on Februarv 25. !985 . The points re{erred :u1<l the comments of the }.!.inistrv, thereon (VidP Mlnistr"'i

0 .M. dated the 3Qth April. 1985) are as under ·-

Point T'ef.rrrNJ· (a) The Ministry u'.de their O.M. have forwarded a note indi.

cntln!( thE' procedure followed in the RBI for recruitment

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<>f ~taff in classes I. lll and IV. Wba~ is the authority under which the said procedure for recruitmenl has been laid down; whether i~ is under Section 58(1 l or Section 58(2) (r) of lhe RBI Act, 1934?

(b) Whether there is a separate set of rules govemmg lhe conditions of service of the staff employees oi lhe RBI, If so. a copy each o! the same may be supplied for exa· mination by the Comm1ttee, indicating the authority under which these have been framed?

Section 58(1) of the Reserve Bank of India Act, 1934 empo­wer. the Central Board of the Bank to make with pre­vtous sanction of lbe Central Government, regulations consistent wtlh lhc Act, to provide for all matters ior which provision is necessary or convenient for the purpose of givtng effect to the provisions of the Act. Under sub­•<.-etlon (2) of Section 58. certain matter< have been pro­vided Hpeciflcally for wllich regulations may be framed None o! th<> clauses specified in sub-section (2) of Section 1\8 refers to matters relating to appOinlment etc. of staff: however. in l~<rms of clause (r) . Tegulations may be fra· mcd gencraUy, for tht> efficient conduct of the business n[ Lh~ Bank As such, both in terms o! sub-$ec lion (1) and sub-J>eCtlon (2) (r) of Se<;tiun. 58 of the Act, the Central Board has been empowered to frame regulahons. [or matters rch1ti•tg to terms and conditions of servi'" of lh<> staJT of the Bank

II\ add1lion lo the a!oresatd power under Section 7 (2) of the Act. subject to any directiens which the Cenu·al Govl!l'n­ment may (rom time to lime g.ve, the general £uperintcn· dence and din-ction of the affairs and busines' of the Bank has been entrusted to lhe Central Board. which is empowered to exercise all powers and do all acts and things whtch may be exercised or done by the Bank Under thi~ Section. the Central Board has b<!en thus em­powered to issue administrative instructions for maltt!ts relating to staff, including the terms and condition. of their ser.·icc and recruitment

The powers conferred on the Central Board under Section 58 (I) nnd {2) nre m the nature of enabling pr<·'i"ion and

except in the cru.es speciftc;dly referred to m clauses (f) to (q) of sub-s~-ction (2) it is not necessary !or the Bank to frame h"tatutory regulations. Tclarlng to all the matters cOncernil>g I he aff;urs and bustnCSS of the Bank. Even if it 1S considered that where,·er an enabling pcwer is con• tcrred on a statutory corporation, the cot-poration must !ramc statutOIJ' re!l"lations in pursuance oi s-.tch power•. it is the Bsnk's contention. that it i,; not r.ece~sarv to rrame rcgulauons relating to te:-nlS and conditio;s of service of staff nnd recruitment under sectic•u 5ll oi the 1\ct this reason be'o!(. that similar nowcr n ss been con.­ferre,\ on the Bank in terms of secdon '1(2) of tho Act whereunder. the Board has been ernpower~d t<> issue ad· rrunistraUve in>truction; from time to tin1e. Attd in pur· Sl~~nce thereof admtaistrati,··· instrUctions hav~ been iss,l· cd and Rc~erve B;u1k's Staff Rei!Ulations i"c<•rr"n:.tr. thcsc ln.strucl1ons iS'tted {rom tinlc to time 1n !ll!dltioll , ctr·

cttlar< :tre also being \'3sUed. \n a maLter taken up befor<' the Supreme Court bY some ol

the B.mlt'' Officers (V. '£. Khanzode & Others Vs Reserve Banl< of Jnd\a and Othct·s) u contention bad Men ad\'anc-cd on behalf of the petitioners tl1at the Reserve B~nl< of lnti\n (Stull) ttegulaUons. ]948 (which have nol been trnm· l!d under Section 58 of the .'\.<:t \ are stntulot')' r~t,:ulalions, sine~ the power to frw:ne such regulations c~n onl:l ue tr~ccd to Section 58 of the Act. Tne Bank h&d con\Pn•lcd before the Supreme Court that the power conferred undt-t' sub·sc<-tion (t) of Section :;8 was only an ennblin~ powt•r nnd 1\ was not necessary that Staff Re!!lllations must be framed und~:r th~t sub-;;ect\on or not at a\1. A reference was abo 'n"il·~d \o the pro\risions of Section 7\2\ o( tht> Act and the Supreme Court uphe1d the Bank's cantet\tion (the case ts reported in AIR. 1982 S.C pJl. 917 ,..ni in 1982.) LL.J . pg. 465] and held in para a< page 9'25 that, " .. .. it is rPaterial 10 note that Section 58 (I) is in the nature o£ an enab1ing pro,<\sion under which the Centro\ Board "may" make regulations in order to prcdde !or all matters for which it is necessary or convcntent to make pro\'lsion tor the ~)llrpose of g;,.;ng effect to the provhions of the Act. This pro,.;sion dOCS not justifY the :trgum~nt that staif regulations must be framed under it or not at ,.u. Th" ,ubstance of the matter is that the Centra\ Board bas the power to fr<Wle regulntions relating to the conditi.ons of ser.ice of the B3,nk's staff. Tf il haS that

pow,•r. it mny exercise It eiLhM 1n accordance with Secuon .~8(J) nr b~· uchng ~ppropriateh- JJl the exercise of Jt< gen~ral power of administrntion ::tnd •upcrintend~nce. •· After agreeing with p<•t!tloner·~ counsel Shri Narimar,'s c·ontcnt1on. Lha·L ns st..atcrl In Ha.lsbury's Laws of England, a SWLuwry corporation can do only such acts ;JS are autho­ri>cd by the statute creatln;: 11 and :hat tl1e powers of such a corporation cannot e~ tend beyond what the sta~ute pro­vides cxpr<?SS!y or by necessary implicatum, the Court

referred to lhe pro1'isions of Section 7 of the Act and obser. \'eo! 111 para 19 at page 92.5. ''Frum Ulat point of view, the prov•s!Uns of Section 7 2) of the Act are unportant. By t!lat s.>c:lon the genera s.lpcrmtendcncc and direction.> of the Rft'ilJrs .md busmc • of '"e Bank ar<· entrusted to tl::c Ccntr.t BCiard of Dirt'Ctn s, 1\'h,.·h is empowered to ewrcisc all vowers and d< all ~cts and things .which may bc exercised or dune hi th B • ..,k J\Lttters relating to Lhe serv1cc CUI\ tJOns o! t ~ staJT ore prc.eminently the matter$ which rclu!e to tn,. nffa1r.s of the B.1nk. It would therefore be wronu to den~ to the Centro! Board the power to issut.- ildmud¥,rnt1ve rhrer ions or drcubrs relating to the c·unuit •Ill• of ~~Jvice of tlw Bank's staff. To read Into th~ provision <•f Sect•on 5RC1), A proltibition against the i~<Su:.ncc· or such ndminislra! 1·e directions or circulars is p.•tcntly to t::norc tl'e ""<'!'" of wiloles<>mc powers con­f t!rred l!Jlnn 1 h(• C()ll t r:tl 13(>ard uf Directors by Section 7 (2) of lhto .\ct. Tnrlt·<•d, this sectlo't brint;s the impu~ned circHtar nnd SC'l110I'ity lisl ,vitl11n th<· nth~s tnentioued in llahhury, tlte) hiiVl' thQ nnthol'ity of th<:" statute."

It will bt' cll'nr fr·o:-n tho anrov<'. th~t tloc CPntral Board of the Bitnk ltas s< Oldent powe:r to iswc ·•dmil)istrative instruc­tion~ n•liJtiJ, to the t<rms und ''''nditions of staff :ncluding­rccruitrncnt ~nd it is not incumi.Je-•lt on the Board to frame

;t:.tutory J'CJIIlarions unrJ •r Sect•on 58 of the Act. fn rcgarrl to th" f<'Craltment of the slalf the B<•ar<f has issued admmistrath" instructions circulars from time :o tim~ and gurdclines h ve brcn t•numernte•J for the ti'Cruitmcnt of Class IV, Cl • Tll and Class I siaff of the Bank, :\.'< far •• recru!tmt>nr of Clan r staff I~ l'onccrned, :he Bank has constituted an independcn: bocll· namely Reserve Bank of fndra Scn·1ces Boar" ancl it 'ollt>ws its own criteria fCir recruumcnl For recruitm"llt of Clas> nr staff. a compendium hos beer: publ'shed which includes the guirlc­!Jnl-s llOTnlS rdating to such r£'Cmitment A<; for recrWt- ·-

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ment of Class JV staff also, various circulars have been • issued nnd there is thus a se~ policy relating to the recrull· mcnt for all cla>ses of statf ln ilie Bank. including S.C./ S T . and Ex-servicemen

In vtcw of the aforesaid, •n our opinion. the ttmns and condi· t1ons of recrUitment of staff o! me Bank would also !all wilhl.ll the powers conferred on the Central Board in terms of Scct•on 7 (2) of the Act and as such. i~ •s not necessary tu frame statutory regulations under Section 58 of the Act We hope. thiS :":ole sufficienuy clarifies thr reas<>ns ior not frnmmc sta tutory re~;ulatiuns undm- Section 53 of the- .\et

Poent reft•rr~"! :

(c) The set oi rules recc. vcd frorn the 11inistrv do not cover the ttsrccts of rule ~ru~king as contemplated under clnuses II') an<J (1') of sub->vcllon (2) of Section fill of the Act Plc~sc indicate -spee•fically whether re311h11cn> l'O\'E!rln~ those ••spccts have not been fromed so far o ~d H so. the re:lSons for the same. Whot are the cxistirt~ nrd<>r</ guldt·lines for regulating Ute aspect covered \mder the said clauses namely (i) clearing houses [or Schodult.!d Btlnks und (iil efficient conduct of the bu~ines.; of 1 he Bnnk, generally: ancl a copy e~~h of such r>rr1Cnl/!1uid<>· tines mo,· be "u])plied for con~idcration at th<s end

MiniStry's comments:

The matter i~ under cowespondcnce wtth Res<:rve Bnnk of Jndia and a separate Note will be sent shortly

2 2 The subjec~ matter as explained in the foregoing paragraphs was considered by the Commtltee at its meeting hl'ld on 5th .lul'.c 191!.'! Extracts from the fl'!"vant Minutes are as fo1luws .-

"l'hc Committle was not satisfied with the comm~'\ts fur­nished by the Mirustrv of FinanCe in connection w1th non­framml! of regulahQns regarding the recruitmem of S:atl of Reserve Sank of India under Section 58 of t h,. Act and following onlv a set procedure in the rnat'e• of rcc· ruitm.-nt of staff. The Committee also ?hserved that C\'Cn

the Reserve Bank of India !Staff) Regulat1ons 1948 (a

copv of which had been furnished by th<> Resen'e Bank or India) were not regulations in the proper sense of th(• tonn. In <n far no specific statutorv power either under Section 5S or Section 7 (2) of the Act had been invoked

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11> the preamble to til~: ~aid regulations. '£he Comnutl"e tlll'~'l:lcd the ::>ecr~tanat to make a reference to the ;1-tin­ISll'y m the hght ui discussion held in U1e meeting 'fhe \.:omm.llec also dccidl!d to ncar the Secretary, .Mmistry of r'anancc (Banlung DtviSJOn) and the representatives of Rcs~rve Bank o{ India after the comments trom tht:

:-.hoahtry were received. ·•

2.3 A rctcrcnce was accordingly made to the ~Hnistry on 19th

June IS~. m the lollowmg terms:-"'lll Tne I\lm!Strv in \herr comments dated 1·2-19115 stated

ahat the <le•i~ability oi tranling rwesJregulationsJschemc,; under sectaon 58(2) of the Reserve Bank of India Act. 1934 ,_.; bcLng pursued w1th the Reserve Bank of lndm. What 1s the outcome in tlus regard so far?

(2) T'ne Comnuttee v1ewed the state oi affairs whereunder lhc recrwtment o{ OfficersfSlaff is bemg regulated on:) by way of n set procedure as highly unsatisf•Nory. The Reserv" Bank o! India S'!l'vice Regulations, 194B which purporL to ~o,·ern the service conditions of emp:0yees or R.c~rv•· B::mk of India, also do not satisfy li>e requin·· men\ of regulations in. the proper sense o! tile term. since t.h~; regtliUtJons do not itlvolve statu\lll) po'''Pt< ~tlhcr under Secuon 7 (2) or Section ft8 of the Aet "

2..1 As lht• comm.,nts on the above point:; were not fo~t~1coming from tht• Mmblry, clespi1c reminders. the rcpreseutalives o{ the Ministry were a>ked to appenr before the Chmrman of the Com­m>ttee to cxplnln llw renson.' for d!'lay, 'l.'he representatives of the '\1uustry ac<:ordingly oppeared before the Chairmnn nn 1411\

t'.,bruory. 1986. 2.5 tn lhe meantime, the Minis\rv ndc t.heh' cmnmunica\1mt

rlatcd the 13th February. l!lS6. [urnlshed thcir commcn.; as fol·

lows:-"R~.>Servc ll3nk of b:>dia has stated that !hough the Staff Re· gulatlons go\'enl'ng the sef"'iCc condition,: o( the em· piO}eCS of ReM!f\'e Bank of India ha\'e not ~"" framed under Section 58 of thc Reser\'c Bank of lndh Act. the~ ha "" been framed in exercise of powers under Scc:ion 7 (21 of the Rc:;er\'e Bnnk of India Act. 1934 The~· have also brought to this Mirnstry'S notice that th" Suprem, Court of India i.n t.heir Judgement on the case relating to V T Khanzode-Vs-RBI reported in i\lR !932 SC 917, hn\'c ronfirmed that the R~>ocrn, B:mk of tndin IJas wiJ<>le-

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oome powt>r under Section 7 (2) of the Reserve Bank of lndla Act to lor d<1wn the service ct>nditions of their em­ployees ancl that Sccuon 58 of the said Act cann••t bn con­stru"CC as a pmhlbttion 1n exercise of their oowe·- under Sect:on 7(2) or thal Act fnr tne purpose ·

As far a.< the t<:. fUltmcnt pro<.-ed;~re and guideline-< r.re Cl II- r tcmed. th~ Reserve Bank of Ir.dia has ,-tated that th,•y s:rnilnrlv act<'d m exerctS<> of the !JOW.,rs conferred hy :Scch<>n 7t 21 of the Reserve Bank of India Aet

The Wlderstgnec1 " .ilia d11-ected to M>close the followan., short "'\otts 'Snefs :n th1s rcgaru -

ill !\ote < xar>m:ng t"e statutory :ramework on wh1ch me l Ull"S go ·ern1ng r~nntme.1t in Reserve Bank ,,r [ncHa •Ire tl~sed nnd desirability of making ,·hant!e tiu:rt•i, IAun.,xu re-111 J

t•il Nole m\ Res~rvt> B:mk of India (S;nt~) Hegulnt.ons '9~::! r Amwxure-IV I

liu) Note "" !r"nung of regul:\\ions for Clcann!( Flou•~s IAnncxur~V

2.6 Th~ rcprescnlal!vcs wh<> "ppeat·ed before the Chairman on 14th Fcbruury, l9a6 "XPrt'sscd for the delay in furnishinY till'

requlsitt· mforrnallon{t<>mm~nls

:!. 7 The diScussion \''<IS mainlv focussed on the issue rclatlnl{ 10

non-fuuning of st~llttory regulai'ion;;. especially those relatirw to the rc>cruilment and st·rvlce conditions of the Staff under Scdi(ln 58 uf the Rc,;crvc Bank uf India Act

2.8 Tbe r~prcsentali\'~s c:cpl~ined their po>Iuon in the liqht ol the traditional worktug and operati<mal difficulties in framinl! .<tntu­tor~· regulation In place of administrative orders. They w•·r,• of th~ view thnt admtmslntll\'e iru;lruchons and ~n'e rcgul;,tions were ll~lng framed under the oowers conferred by Section 7 nf fr~ .-\ct .

2 !I The Chairmnn made a reference :o the obser\'atirns made by th~ Committee at its mel'ting held on 5th Jun<'. !985 an•l direct­ed that the Mirustrv should analvsc and indicate L'<" aspects c>n which regulations eM be framed. under c:illferent pro,·ision; oi :he Act, pnd to fumlsh a d~tailed note in respec: thereof. explaining their difficultie:;, In precise terms. for non-framing of the re~r.tlntion!l In respect of various aspeds, especially recruitment nnd conditions of ~rv!ct• of employe!'>!

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2.10 ln comph<~nce witb tbe above directioJlJi, the ::Vlintstry vtde their 0 M. dated lhc 30th April, 1986 sent a note rece>ved from Reserve Bank of India explaining the stand of the Reserve Bank of India that their staff regulations should no! be converted into st<~tu­tory regulations under Section 58 of RBI Act, 1934. TAn.oexure VTJ

2.11 The Ministry also stated tbat the informationlno!PS on other points regarding C1canng fiousc Rules e;.c. has already been fur­ni~hed to lhe Rajya Sabha Secretariat vide their letter dated the l3tb February, 1966 'Annexure V1T]

2.12 The Comrruttee at ll< meeting held on l6th Janu~ry. L987, ~nsldered comments or the Minis<rv m detail and directed to sef.'k further clarifications rn the tight of the discussions.

2.13 A"cordingly, on lOth April. 1987, a reference w:. made tn the Ministry n! f'inance in the following terms

. and to -;late that the Committee on Sunordm~tt' L~g\s·

lation :R<1jya Sabha ol its meeting held on 16-1 Jl7 cons!. d~red the comment:- of the Ministrv ond dtrcctcd •he SecrctnrJat tn seek further cl~rifir•tion on •t' f()liowing "mocrvations:-

'11•~ Commlllec docs 'll)l ncren• !he !Jl'Opt·'ch nf csorlltll: tn i::tsuc of :•dmlnlc;trativP inst,·uction6 U?1dPr ~~ertion 7 (~) of !he ReservP B:mk nf Incho .'\rl fpr regulatin , th<· rt'­

crullment and service rendition< f1f emplnyPi"' "f the R~s~rve Bnnk in pr<'ference to l·,vmt'" rlown of st:l!utory rcgu],,tions as warranierl b" Se~lion 5~ (2) of the Act F\trther. this tant!lmounts to ci!·cwnve·1ti•:n n( 1he r~ quirPmcnt~ o[ layint.; lh~ re~~1b1io~-; o~ iht• T·1hlP nf ihc Hnuscs. thus denying \l1ro Trnll<~"' f T' '"~''ment th 011· portunih~ under tl,~ l;p.a,· tn modij,. ·r .. ~ntt1 ,..f sam" \\1thin ll1c pr~"c:--ihed period jt..; · ~ ~-, rf!sult '"' nPga. tiOT\ 0£ the de!=-it~d objPC::! Of p.;:rrl;~,n~~nt;1""Y ("fJf"trO) (lVCr

cxerc:Jsu n£ aulhl'rit...- of delr.'!~t~~t .... g:$):l1lon '

Accordinglv the lllm«try of Finance ~'<' r-:•nu<><tc.l their comments {or ron<l(!~r.alio~ bv Commit're ordinal(' Lel!i•l:l'i"n a• an e~r''' date •·

furr.ioh on ~uh-

~- J.l After persistent rerrunder,, the Minbtn· furnished thE'Ir comments clarification" 0!'1 I Oth :-:o,·ereber, 1!)8; wi-tch nre as under

" nnd to ·~\· that the matter t'l'L< Laken up \dth the Dep rt ment of LeJ;a! Affrurs '1=ni~trv o( t~~w :=tn1l .Ju.~'.ce (}r ad vic~. Thai :\llni"J n 1,~, ndvi::erl ~, rcnrr.du< <>ct h(·]o\\'

tO

'The present refel'CllC~ irom the Department of 'Economic Affairs has arisen out of the recommendation of the Committee on Subordinate Legislation of the Rajya Sabha in connection with the service cOnditions of the -:tali of the Rcser,·e Bank of fndia In V T. Khanzod~ V•. Rcs<:n·e Bank vj India. the Supreme Coun held that 'n long a• ~taff re.;ulatiuns are not framed under sec­bon ~(l) of ~he Reserve Bank of India A~t. 1934. 1\

IS open to tht' Central Board of Director• or the Reserve Bank to i,_.,ue admini>trative cucular• regulatmg tlw serv1re condiuon5 of the staff tn the cxerc'"'" of powl.'n; confcrre<l by Section 7(2! of the .-\ct I :\lTI 1 \9H2 !SC 017 ot 9'26). lt appears that thb legal pusition is not hetnt; que;;·ioned b~ the Comtntttec on Subordin~lr. J,e!!l~lal•on How~\·er, that Committee is of the opm­ion thut the Reserve Bank ,hould make regulation·• under Section 58 (I) <"f the said Act so that Parliament would cet an opportu;,tll,' to scrutinise S\lCh regul~tions hv vtrtue of the provisions contntned in Sectmn 58 (4 J nf the Acl. It m~y he n<:~tud 1 hat every reguht\lon rn"de under :->cclion 58 has to be latd be!ore each H<>US~ of

Parliament

lloth the Reserve Bank nnd the Depnrtntenl nl f.conomic Alfairs are of the opinion Lhal the present ,wstmn or isSlliD~ odministrative circubrs rc~ltlaiin~ 1h1• servil'<! ~ondi\iOllS of the ,1,;tl'f in e)(ercisc of the pow~rS con(l•r­red hv Section 7 (~) of th<> Act should bt· a\lnwed to Ill' continued, h:1vinl! regard to some of thn practical can­std~ration• outline<i tn the note o{ tlw l)epsri!Mnl llf

Economi<' AiTairs

The Rcser\'e Bank of 1ndia is of the oJ)inion that s<'clion 5~ prescribes r1~id requireme-nt$ and •hat makintt ~rn·1c~ re~latioru unlier tile said section would hamper 1hc effecti\'enes-~ of the Reserve B:mk tn dt>alin~ with the

changing situation "" the\' Mise

from a pure!. le,!!al J)Oinl of vtew. 11 appears tn~l the prac­tical considerations outlin<'cl b\' the Regen:e 'Bani: of lndia do not in an' way inhibit the powrr< piven unMr S~cl;nn ~,s : > makP re~ulat\on' concermng ser\'ict' c-on­chuon. The question \\.-hcthcr r-eguhn.ion:.. on o::Prvscc condlltons should be made under Sceti<>n 5!1 (1 \ nr not has t.o he viewed from a policv anl(le '

•

•

11

The advice of the Mirustry of Law was referred Lo the Re­serve Bank or India and their comments are as undcr: -

·our comments on the opinion of the Law 1\fulistry are as follows. Paragraphs 1 & 2 of the note prepared in the Department of Legal Affairs of the MiniMry of Law set out the background position correctly . As far as paragraph 3 is concerned. it may not be qulle accurate to >ay that I he reservations expressed by the Reserve Bank arc purely !rom the practical point of view. A very fundammtal and basic question involving a con­flict of jurisdiction in dealing with the framing of staff re~:ulat1ons was raised and deah wtth in the note I Annexure-III) prepared b'• the Reserve Bank for con. >!deration of the Government Para 2 of the note deal$ with the leg:.! question As pointed out there. ns the Law stands at present. the resolution of dispute, arising from the mai<ing or amendment of I he slafl' regLt· l~tll)n' from ume to time musl nece~;r,arily, In t'lc "chcme nf thlni!S Co11lcmplotcd und provided for in tho rndustrial Disputes Act. l!ll7 cxc lusiv<'ly by the proee.>s of ndjudication of Labour Tribunals/Courts constituted 1111cl~r that Acl That Ac~ provides for such adjudica­tion being binding on the parties without unytlliul( mora. 1'he legal question raised in the Reserve Bank's not~ is ·1S to the scopE> of pnrliamen!Ary scrutiny of the nwkm.<! nr amendin<t of staff reguJ;;tinns in 1 he contPxt n( the provision< of the Indus! rial Disputes Act. HH7 . It is the cou"dered view of the Reserve Bank thar wilhnut «ll amendment to the Industrial J)tsputes !\ct. it mav not he poss•bk for Parliament to ••xercise con­current Jut"tsriichon with the Courts acting under the lndu<trial Otspute$ Act.. 19-17 The Ministry of Law. 1f onL• m<>rel~· J!OCS by t'le no~e re~orded bv them do not appear to have con<idered this a . .;pect of the matter ft IS su~:::csted that " discussion with the Department of I::connmic AtTain. and the ).iinistry of La\\- may help to focus on the legal 1ssue in,·olved- Tt is ~-ubrnitted tha t loa,·ing rc~:ard to the fundamental nature of the leg-al t,;sues involved and m."'er considerations already ad­nrted to by the Reserve Bank, it would be appropriate to aUow the exJsling procedures to continue since more than 1!0 per cent of the employ<'e force of the Reserve !:lank JS governed by the Industrial Displlt<>S Act. 194i.'

12

•'Ra))'a Sabha Secr<'tanat 1S requested to kindlY plAce the abovll advice of the Ministry of Law and Justic~ 3n1 R~erve Bank of lndia before the comrolt<C1! on Subordinate Legislation for consideration. ln case nny further clari· ftcation is needed. the matter could be dts<:t>~sed with the officers of Resen·c Bank oi India • the concurrence of

J

the Commtltee •• 2 15 1'he Comuuttee consideTCd the rr.at~c= at 11> meeting held

on the 12th Jan. ary. 193!1. 1t "'as note satlsf,ed w:th the cxp\an:>· 1\0n gtvcn by the Ministry of Finance and decided to bear the (1l Secreta!")' Mtmstry of Finance and (ii) Sccrct·•l'Y illil\lstrr of 1-~w &: Justice to obtrun furtber ,·\arification in the n\attcr

'l.lS The Committee. thereafter .,,ted Bomba) and rhsc<~.s~cl \tiC mJttcr w1th the offtccrs o! Reserve Bnnl: of lncha on the 2~rd ::>c~lcmbr:r. 1089 A no'.c on the di;tt.ussions ts pl"oed at tAnnexurc-

Vltl\ :!.17. The He,er\'c Bank of b;dia ill thPlT \ettPr dated the t9'h

December, 1989, ~tated as under:-'ll m~~ l<1n<ll~ br recalled th~\ lhc PMllal'l'ICI\tary Cnmmttt~r

on Stthordlnate I,cgislatior. (Rtqya s~hh~) bad vi•'"'~ lhP Bani< on ~3rd September 198~ to discuss the molter rt~ t,:arding framin;l u( rcgula\i(lr.S relaHng to ,ervlcc c01Vll· t\(lns o£ the ,taft under Seetiol\ ~n o! thE' Re>CfVI' n~nl< of lndta ,\o't Dn•ing the meetin~. the Parl\anwnlary Cnrrmlttee lmd w:th Deputv (':o\'crnor l)r (' 1h11>\~rft· )311 t\ \\'3~ dr>trrd • '"' the cn'tr!.' n1ottcr ~hnt1\d I" rc· \'lcwed jn a comprc•IE'O,i':" nntc t.tkinr, 111\" ,,ccount the Commit•<>e'" ,·icws ~bo'.ll the nl'··d [or Parhamentary sct'\lttnY aP i CQntro\ "wr ,uch re«u\ation~ h \\'n> tndi· ca\ed thai • 11<' rc,·:e\\' nJ\e he orcpared n a month ~nd {o w3rded to the Government We :tdvisc that the nute is already tmi!er preoant\on and I< bemg 1\nallsed k!!CP· tng in \''CW the ViC'.\'S Of the conccr"Cd o~p"rtmentJ; ,n· clndlllg the Lcg~l Dcpartmen; We hope to (of\\Ord the note to the Govcmm~n\ c,hortly W c bo" C' cr regret •hat 1\ h<b not been possible tn finali••o the 113me within

a month. a~ tndicated "

2 18 Alter pen'l>tent toll"" -up. th•• Re<crve Bani< of lnd•3 wide thdr letter dated 3rcl ;\ugu,;t 19~0. ult•m~t<'h scm , com•·rercM•~• rc,·iew note ( 1\nr.c,;ur" 1Xl rc~at'din~ tmmllt~ o! rcgul:~nons re­latt!1f: l ' «,rv1ce conditiO~ of tlw ,t3!' t'nder :\•"·""" 5S of the

I

\

•

13

R. B.!. Act and deeply regretted for the delay in forwardina the note and requested for condoning the same.

2.19. The Ministry of Finance vide their 0 M. dated the Sth Jo'ebruary, 1991. also broadly agreed with the views of the Reserve Bank of India expressed in the latter's note dated lbe 3rd August, 1990.

2-20. In pursuance of the decl>;ion taken on the 12th January, 11189 the Committee heard the S"Cretary. '-fimstry of Fmance and the Secretary, Ministry of Law and Justice (Department or LesJl Affairs) on the 19th and 20th :March. 1991, respectively

2.21 The Fmancc Secretary in his C\'idence before the Commit­te·• submitted that •;o far the Government was of tre view that the lleservc Bank of India t\ct 1!134 gave the option to the Reseo ve Bonk of India to hav.. the staff regulalions under the general power of supcrintcndenct• under Section. 7(2) or under Saction 5~. This oplion w:~s left to the Reserve Bank of India in the interest of tiC">Ciblllty ()( operaltons However. i:n the light of the ob<crvatlorla made by th~ CommIttee. the s~crctary agreed to ask tho H.,;erve Bank of India to place the muller boforo' the Centr:;l Bo:.rd Dir­<!dOl'S so thnt lltc:v C'ould sc~ whctht•r t11ere was any uei!d few hav ... in~ u scconu look al the ()OSition Thereaftel', 1hc ( ;rovcmnoenl would Lake a tina] view in the ma Iter and communicate its decision by Jun!', 19n1

2 22 The Law Secretary .cohmitted that the Supreme Court had given oploon to th~ Rcscrv<' Bank of India to make regul~lir.ns with regard to '~rv1cC conditions eitbe1• under Se~tion 58 or t•nder Ser­tion 7 But. from " purely legal point of vJew, the pr11ct:cal con­siderations uutlined hv the R<!serve Bark of India did not. 111 nny way, inhibit the powers givt<n under Section ;;s to make regulation< concerning ~crvice , ·onditions Howc,·cr the question whether rt>­gulations on service condition' should be made under Se·tion 58 or not has to be ,.,~wed from a pnlicy angle.

2 2~ Th(' M in1st" of Fmance in their 0. ::II. dated the 3011> Seo­tember, 1991. co~urucatcd the Go,•crnmenfs stand as undet

.. .and to •ay that the matter wa• taken un with th,• Reserve Bank of lrdia. The Central Board of ncst·•·vr Bank nr India has considered the matter and ha,·e rcs<.h ed that sincC> lbe conditions of ,;en-icc of the workme:! ~tafT a11d

officers in Reserve "Bank of India are integrated. it is nei· ther necessary nor convement to make separ;,tc regula­tions for officers under Section 58 of the Reserve Bank of India Act, 1934

The matter has been considered bv the Go\·errunent . The reasoning given by the Re5erve Bank of India has been con~idered appropriate and there is no reason to diller with them. The Finance Minister agrees to this view.

It is requested !hal the views of the Go\'ernment may be placed before the Committee on Subordinate Legisla-tion . "

2.24 The Commtttee considered the matter at its meetin•~ held on the 25th October, 1991, and dedded to report the same to the !Iouse. The Committee's rccommcndationsfobservations are gi\'CTL in the succeeding paragraphs.

2.25 Tho Committee hns considered the matter il\ dc11th. It hM heard the Sccrctnr~·. Minis(ry of Finance, Secretary, Minish·~· of Lnw nod Justice (Dcpnrlmenl of Legal Affai)·$) at1cl the Dc}lnty Gov· <>rnor, Reserve Bru\k of lnd iu.

2 26 The Conuuitlcc b not at all convinced with the slMd o( the <\ovcrnment that 'SccUou 58 of the RBI Act, 19:14 prcsnllwcl ri~:ill ru<Jnlrcments and that making scn~ce regulations under the snid section would hamper the effectiveness o( the RBI in dculill!( with tho changing sil~ations "' they arise'. The Conllllitlee is of the con­Sidered view that making o£ the regulations w~tler Section 58 nl tho Act is thl! will o( the legislatu.rc and tall bl.' amencled fr<~Ol time to time nccording tu Uu~ challging situations.

2.27 The Committee reels, both £ron> the le~al point of view a< \\ell as £rom the practicnbilit)·flk:ribilit.; ast>ect, that there ;, no diOicuH)• in framing Stnff Jtegul.~tious under Section 58 of the .\ct. The Couuuiltce also feels t.bat lb., intention hchincl uon-(r~n,ing of regulations under Section 58 by the Goverrunent is tu e' ade the scrutmy b,· Parliament as the regulations to be made under Sedlou 58 would have to be laid before Parliament. The Committee ;, sur· prised to fmd that when Ll1e policy of the present Govcrmn~lll i• lu dispense with discretions and arbitrariness at the bureaurr~tk le\Cl to tho maxbnttm possihlc es.tent. the RBI 6nds it more con\Cnicnt to i<<ne admiuistrativc circulars couccrmng the service condition• of their officers and employees under Section T.

15

, 2.28 Tho Committ~, therefore, stroJ;Jgly feels and recommends

)

•

thftt Government may fr.unc the Service ~gulations in respect of their ollicer-; nnd employ~ under Section 58 of the RBJ Ad, 19:1-1 "''pcditiously, under intimation to the Committee.

2 29 Tho Committee also feels unhappy that the RBI took more than lfl months in forwarding their Review Note to the Committee. whi<h wa.~ a"ured to be sent in a month's time st the meednc- of tho Commiltec with the Officers of the Bank at Bombay on lhe Z3rd ScJ>Icmber. 1'189.

Nt:w Dr.uu; November 11. 1991.

JAGESH DESAI. ChairmCl••,

Comrn.ittee on S~tbordill<lte Legislation.

A.'<'<EXURE.l

( Yi<* pan 2ofU., Rtporl)

/ ,i11 nl RNk s[ Rrgufations. ,(r:t«t~nt$fntn-~t/~~,~dn II:~ RRI .·h t.! 9)4

s. No.

lnlc .: J'.uli~ul...rJ. ... r Rules , Rtp~lacson~. Attreement", SchCme\<:Sc. frarr:<d uorfcr rh~: ROI A:::t , 1914

2

Ruh·~ 11ntl Ri.:f(ll(ttllm;~

ScCilt .. •D of Rill Acl, 1934 unJe-r

wbu:h framed

)

~O<e•-vc 1l.1nk of I nd•a (NoiC !<sur) Rcgu- 58 lm il)ns, 19)5 (ntt tuncr,.;kd up to J It h M"Y· 19R3)

2 ltO!iCC\~ BQnk nr lndh~ (~OIC Refund) Rule,, 1975

j Reser\·~ U..ln).. nf ln•li:t (Nute Refund} (AmenJmcntlRuks. 1980.

.. Rc~n (" nank uf Jndi.•. l!ruplcl)'eC»' PrO\,. d.:nt I ·und R<:L:uLujt•ns, PH.5.

Pnw-jso l U Se~.:tion23

rro\i~o to

Section 2S

55

\Yb!tlt..:-r R.uh:s, Rtgulations Ag1«:· mCr!IS, Scheme~ CIC. pla«<J lll' I~ Tn.blc C\f p.,rJ ian~t 01nd dare on which pla«d

Brief inrormation

4

Ye:.·Lok Sni.lha Rajya Sabl"

Y<-'S·Lck Sabha Rajyn S:lf\ha

Oat~

5

12-S-1983 27-9-1983

16-8-1976 20-~· 1976

R.cnt:\rks

6

Thcoxa~;t dnu:ofplt•.cJugorlh< Rules on 1h~ Tullier. ur1 he llousts ore bolngas­C<"nalr'lcd.

The"' Rq:ulnJion• were framed in 19JS •nd be«ln>C cffecJiv< on 1•1 0<1ob<r, 1935. They "ere rr~mtd With rbc pre .. vit'IU'\ ,;.ncl ion uri be (j~l\emor Gcncml in Council In 19JS •n term~ c,fthc Sec­linn ~S "'fthc RUJ ''"''• 1~~4.

-""

• •

5 Rc~crvc Bank of Jmlio Employees' Pro vi- SS donr Fund (Addilionnl Subscrirn ions) Reaulotions. 19$0.

6 Rescno Sunk or Indio Gu:lrnncct Punll 58 Reaul~rl''"'·

1 Re><!IIC Bank of Indio G:neral Regu);o. tltH~J, 1949(ib amended uptc' 3rd Ser· t<mbor. 1979).

...

'<'-"lint' :O)I(.CJ ~•I •""-- ,\'-'1 r<Cluire~ lh;..t '"H :) Rc~:ul.~,j,,n It' hi. fon,an!cd h.' the Cet'llral Gu,onmcnt anc! l..,n Go­\ ornm<-nt ;, rtqu.rctl to l-'y the ~ r orM~ t~t'..h llou"-C of Po:.rliJ.rM-rH. This «;ub·loC'dttln "' \\3.S •nrt,)ouct'd in 1974 under RDI (Am<n~mcno) ,\ct. 1974. Prior to i111'-. tiKte "a~ no nccc.co\ity

t•f Pl~~ins "u..:h R.ulh;Rcf:ul:uionsb..­fnre P~rlilnxnt. Thrrtft.•rt,lhe R.ults/ ~C8'-II+'.fion' fr.:'lme<! ~Ubs""Qucna co the

1 nthlduc•!on t\(tht~ ~ub-~rjon unlyacc r~qtJil'<'d tv tx- nlutd hc"'rr 1 be Pari'='· mcnc Am<ndmco1s n\:tdc from 1974. IH..''fl.~\'('f. rrquirc ftt m laid bt(()f(' each tfuu~c. lnft.·rml1rianrca~rdioR: 1he~.me Hn \\hh,:h lhC)C 1\..we bOtn laid rs bcin1; 'A-"t.:Crllllncd n.nd wtll he cc)mmunie:ated r.t:.rl),

Sc.:ctil'~n :<814\ nf tltt" All r~qulrtott chat cv~ ry Ho:cul~ 1 ion 10 be forw::ocded to ch..: ( cn1nd Cuv(.rnmtnl and 1hr.t Go­"·crnmonl 1-. l"rqu,•·«f 1u ley the ~rnc bcf,lr,h-nch I rvu~<.: •'f Pl\(Jiament. Thi~ tmb·«:clitH\ 4 wM lnrru<luccd in J 974 undor RBI (An•endmcnr) Ace. J974. l'r 101' W thi<ll thero WI\S flO Jt¢0Csslay of f>Jncina "iuch J't.ulel\tR.cuuhulo.l'l oofw:e Parliament. 11\orcfr·rc. th,. Rulr.sf Rt~ulolti011~ rmmt:d 'IIU~~quent lt• the iOIUidUCIIMI t\f cu~ Sub-Stcliun only urc ro,auirol co ttc J'll:tc'"d b<foro the Purll.,fll.:nc. An\..::rHhll(nls made from JQ74., htho.t.\'tr, require I() be fold bd1:m; cac:h .Hou,... Jnrorma­

tiol' tC'¥Mdlnj:L cl•cdn.h .. fs on wh1ch 1be~,. have htcn lnJd Hi oc.ng&."'C:~rtruncd and \\·ill be communicated eatJy,

-...,

l

S Rc«:"c Jl.lnl; of lndi• lilllrloyca&' Gr••· ~8 \Uil)' and sup;.mnnu.-tion Fuod Rqula­uoo~. •915

•J R'*"" B.lnk of lnd•• Sd•tJu1<Cill3.U. SS Rcsu'•"ans. 19SI.

a

(B) AJtrettmmts I AgrtemW' bcl\\C-tn (,jQwrnmc:nt oCJndia

nnU R\!Str\'1) 8a1tlr.. of lodia r~gardinl: 21

IHI\03\lemont or l)ubtiC D.;bt.

l AjJ/ecmCilt!il bei'AOCJ\ vu.rwu~ State (hJ\'t'1. 21 J.IHl Rc~\lr\'C .Uank of h'1i.lia

4 s

Atn~'-u!ft\Cnts rrolk in l976 ~nd t97~ ha\~

beon l~lJ bt-iore P.-t.r· tiametl{ "n the (OII<lWlft& d:ttCS.

I \-l·l'~7tt 12-J-1nr. ~4·11-197>

1976- Lok S~bha ~jyaS~bm

1978-Parliamenl

.Main AgrumcnTS 1n 1935

AKrt.>t•me~ .. ,s bt!IWi'l"tl J ?69 tttr(/ J 9'4

Lok Sabna Rlljya Sabba

Agreements fn 1976 Lok Sabba Roil'• SlbM

Agrctm~niJ in ]1)81

t.ok Sll>hn IUjya S•bha

Agrr.rmr"ts in 19n l.Ok Sabha ~jya Sabha

9·5·1975 13·5-1975

I·IH976 l·ll·l97fo

1J·12·1''~' 22.·t2·1.9MI

Cl-t~-19tU 6-1~·1983

6

Jnform.;alic'n t(:prdm.a the dau::/s of taYiDI tho R.csulaHon' bduro bo1 h the Housa '' bc•nJ dw:crltlm:d and "ill be com· munu:.;atcd c.:\tly.

w._ pluccd t..rurc li•.c I h~n Gov<nlor 0-:nc:mlln Council. ,..... ""

Jnforn\lllion ragnrditl!.!- ugrcerncntJ uutcred iniO bot\i.'t.:tfl Vl\rlou•Statc Gov~rnmcnts l'rl~,, lO 1!>b9 is not re.1dily :wailabiO

•

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.-\ NNl~XURE-TL

(V•dc para :! of the Report)

PROCEDURE FOLLOWED IX THE RESERVE Bfu.'ffi: OF INDIA FOR RECRU1Tl1ENT OF STAFF 1:\ CLASSES 1, ill AND IV

Clou I

Darcel Reenutment from the open market to vtlrious cadres m l:la~s I is maue on Aii Indaa basis through competitive examina· llons and mten·iews held b,· the Resen·e Bank o! India Services Uot~rd . The Board is an ·independent body and functtcms somc­Whut on the lines of the Union Public Service Comm•lo's:onfSlate P~1blic Service Commissions. Direct Recruitment is mainly re,orted to 1\1 the base levels of the Officers cadre viz. (or the posts o( stall u!tlcer Grade 'A' and 'B' (Which is the next higher post to Grade '!\').

2. Pursuant to an agreement with the All India Reserve Bank o( Indio Employees As:sodation who also represent the interests of employees in Closs Ill cadre looking [orwm·d to promotions tD

the officer cndrcs in thu Bank, Direct Recruitment to the post of Stalf Oltlccr Gt·ade 'A' I~ at prc>ent restricted lo 17k per cent of the total vncancies arlsmg in a particular yea rs so as to provide promo­tiOnal opportunities to employees in Closs 111. Further. 50 per cent of this 17l per cent of the total vacancies is earmarked for staff candididales subjerl to their satisfying lhe eligibi.ity condi­tions and ~t'leclicm standard prescribed for outside candidates, though the normal age relaxations as applicable to st.aff candidates are extended in their cases. The remaining 82! per cent of the vacanCies ue filled in by staff candidate-s by promotion from Class III on the basis of a qualifying Departmental written e"amination prescribed for this purpose

3 The Promotion Scheme as outlined abo<"e was challenged in 1980 by some of the employees in Class Ill at Nagpur alleging thnt the Scheme· is discriminatory against employees at different centres because no uniform period oi service in Class ill has been pres· cribcd for eligibility and con.~equently comptlrati\·ely junior employees at some centres got chance to appear for the WTitten test

19

20

whereaJ< at other eentres employees witJ• Jon~er serviC<' m Claso 111 and quite s~ior, were not eligible to take the written l<'st. The Nagpur Bench of the Bombay High Coun struck down certain pro­\'lsions ur the Scheme of Departmental examinauon. As a result of this, the Ocpartmomtal ~<xamina\ions could not be conduct"•\ nftcr 1979 80. Thereupon. the Bank went in Appeal to 111,. Supreme Cour~. 111 connection with the appeal. the Bank In dnr course also liled nn dlidav1t dated :!.2nd February. 1983 anne,:ing thereto a Fcttll'meJ•t (Viz b~ exchange of letters between •'lc Bank and the All lnd1a Resen·e Bank F.mployces A .. <s<>z:ation) moorp:•r<t ng there· in a modified Scheme of promotion to the post of Sta t O~ice~ (.;rtltle 'il" Thl• new S· heme envisages that subject to appro,·~! ol the Supreme Comt tl•e pnnc>ples governing recruitmen. an1 promot!ort to the p<hts of Oftkers in Grade 'A" should he mojificd a• un<lt'r:

(1) 10 per tent of the vacancies arisin~ in the c~·ltt of St.•ll OOkers Grade 'A'. should be tilleJ excluswly bv d~rer•

rec-nutment. (h) 67. per cent of the total vat'ancics in the caolrt! of Staft

Officers Grade 'A'. should be t\lte.l 011 the bnsis of writtcn <jll~lif)'ln(( exammatio11 Ior staff candidat<'s in ;occurd~IlCC with thr ;cheme of Departmcnlat exominatinll nb.i~CI Ill the conditiOn that no employee nt any ctntre wlll be ,1\1-mitted to the lest unle$s h~ has pill m 3 year.>" minimum 'Nvwe m clerical cadre. The examin~Iion will be !'Uil· dut•tt•d l"· the Services' Board as hithertn.

(i!i) 22' (ll'l' c"n1 oj' the total vacancies will Ll' lliled t,y sH•If

r;mdldat~s on the basis of ru1 All Tndia mcl'il tes1 to he J>I'<'Scrtbcd in consultation with Reserve Ballk or India R<'rviccs Board for which a mimmum qualifyin1: sen·lc• In Ci<•s.' !IT was to be pres('ribed. {A quahfyin'{ scrvi~c ,.r 9 yeArs 111 Class 1 H was prescribed for this purpo~e l

P••nding the final decision of the Supreme Court in order tn fill <·:<Jstlng vacancies in the cadre of Staff Officers Grade 'A" th~ B~n'k also mov!XI an application in the Supreme Coun in February 1113·1 fnr interim order> for holding an ad-hoc written test for promotion to> thu post of Stall Oiiicer Grade "A' By an order datt•d ~nd ;\lay. 198-! the Hon"ble Supreme Court intero(lha directed a referendum ~mongst the employee; in Class III in the mancr of the said Senlr· m.-nt filed in the Supreme Court with the Bank's affida\oit dated 22nd rebru<try, 1983 Tbe referendum in question has sine.. bC(;n con· ductro and the result ol tbe poll communication to the Hon'ble Court. In this order the Court also directed that tht' vacancies in Staff Officer Grade A' be filled up in the following manner:

21

"Pul"ely as an interim measure. the total number of vacancies in a particular year in Stall Officers Grade ·A aiter de­dueling vacanCJcs allocable to direct recruits shall be filled up by promotion in following manner:

!'>0 pel' cent ot such vacancies shall l:e filled up on All India ba;ts after a compehU.:e examination and the n•main'ng 50 per cent on ccntrewtse ba•is."

Ac~or.!ingly, the ad-hoc exammation has be{,n held from l&th .\u~:ust. 1!18~ onward• .

~ At present Duect Recruitment to the post of Stalf Officer Grade ·a· i~ re<trictl'<.i to I 3rd of t'>e vacancies in Grade ·s• (i e 33! per cent) :.nd curr<mtl~· a proposal to restrict the inta>.e of Otfi­ct:rs from open markct to .1 ma.ximurn ai 30 per cent of the e3tim:~ted \'acancies in Grc•de B' is under consideration

5 B~-,;td~s direct rc<:ruttmcnt to the general cadre of Officers in Gracie.> A'~ 'B' referred to uoovc. there are certain special categories of posts 111 the B<>nk such as Research Officers, Hindi Officer,. Legal Olliccr<. Securit~ Ollic~r,, Engineers. el". f~r \vbich cadres direc1 tccruilmcnt is rcs'>rlc'fl l<t on ~ lirnit~rl ,~aJe through the Reser\'<' Ik111k of India Sct·vlces Bo>Jrd.

At prc>i<•nt lhcr·c n•·~ no posts in tilts cndre in the Banl<

l'lns.• Ill

The l.lnuk follows t system or centt·ewi~e recruitm~nt tn~ C'la$y If! posts (clerical J>OSIS) und n:cruitment to this cadre is attcndtd to by ench centre of the Bank (Lo~al recruitment centre) on decentntliscu \;~~is necruhment against \'acancies at a11y centre is made from among cligibl<- candidates belonging t'O that region i.e. those who hav~ obtained the prescribed edu~ational qualifications from the Univcrsitie< Boards of Exarr .nation in t'te region sen-ed h~ char centre. In other worcL.. in a. " centre, recruitment to Cla>'S IIJ srafl' is confined to the region which is attached to a particulu offic(.' of th<' Bank .

The Central Oflice of the Bank is,;ue from time to titll• \'.lrious instruchons to the ~hnagers of the Bank's Offi~es relating to recruit­ment vi1

I Finalllkltion o! mdent

2 Issue of adn•rttsement and advice to Employmenl Exchang­i.-9

22

3. :Eligibility criteria 4. Receipt and scrutiny of applications

5. Preparation for written test 6 Conductio g of "'ritten test and skill

7. Evaluation of an:;wcr p•pen;

8 Short-li:iling for interviews

!1 . Conducun~ or interviews

10. PreparatiOL' of Select list. and

11. Appointment

Succ•nctl.y, rt may be stated that in case the number of po;;ts Is more than 5. the posts a!'e advertised in the approved newspavcn> <'irculating m the recruitment zone of the concerned office. Applicn· Uons are <1bo invited !rom the Employment Exchange,; and other or­ganisations look•ng alter the welfare of Scheduled Caste Scheduled Trib<!, Physically Handicapp~·l and Ex-servicemen candidates. When the posts arc less than 5, posts at'e notified only to the Ernplo~ mont Exchange and other approl!ed organisations. '£he major recruitment in Clnss Ttl is for the post ol Clerks and Typists. which i> usuall~ ttnclertaken al\llually. Recnlitment to other posts 1'i •. Te l~phone Operator, Tran.,lator. Overseer etc. is undertaken as &nd when nt:~d arises. The prescribed age limit is tS to 24 years For ctertcal posts. Gt'adu.~ho•t is pr~scribcd as the minimum educnuc.na l 'l"allfit·atton whereas Cor non-clericol posts recruitment Is cpnl1necl to Under· l!l':tduntes- For tecluiical JW>ls. technical quallfica1ion/reqlll•i1e <>"· peri.,ncc in the Jicld ts prescribed as addi1ionol qualiiicar'nn t'<ll' the post of Clerk. Typist. Translator etc ;election is made on the! b~sis of written test and inteniew and for other posts seledion i~ made em the busis of interview The entire range uf re.rlollm"n~ activities arc regulated by a time-bound programme accordin~ to a pre-determined schedule laid down by Central Office. The written l.el:t and skill test are conducled on pre-determined dau•s •imultant-· ou,)y at all centre~ with common question papers. The whole ptO· cedure spans a period of about 22 weeks >taning in August amd completed by the end oi December each year 'fh., wai ll\6 !••· 1> required to be read~ by the beginning of January and \\'Ill be ope­rative lor vacancie; required to be filled up during that ('lllendnr

year only.

The intcrview6 are conducted during the pre-detcrmtnt>d period in mid-December, The Interview Board comprises 3 member~ (two senior officials of the Bank and one member irom outsido? who Is either an academician or educationist or psychologist) Whc11eve•

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Scheduled Caste/Scheduled Tribe candidates are to be interviewed a member representing SC;ST category is included

c:ass IV

Recruiunent to tlu; Class IV posts viz. Peon, Mazdoor Durwan . etc. is made by the Managers Officers-in-Charge Of the respective otlkcs on zonal basis. ,\gc limit prescribed for the <'lass IV post Is 18 to 25 yean; and <.-ducational qualification prescribed s Standard IV to XII. The ,.~c:.ncies arc notified to the Employment Exchanges t~nd other ngentie.< looking aftel" the welfare oi Scheduled Castes/ li"~.edulcd 1 ribes and p.sysrcally handicapped candidates and sclec­hon is made !rom among the candidates sponsored by !he local Em­ployment Exchang" and approved organisations looking after the .• •·

1 fare or physically handicapped candidates. As contemplated in Uovemment's letter Department of Persormel and A R.0.:\1. Nc. ~2012 111181-Est(SCT) dated 26th March, 1981. in order to get suffi­cient number of Scheduled Cas-te, Scheduled Tribe candrdate<; the Dank also advi~es the cor tenb oi oe~r adverti:;ements/notilication~ to the various Wcllarc Organisations of Scheduled CnstesfSchedulcd Tribes recognised by Government of India. However. it is made clear· to these ot·ganisations thut their function is limited to advising the Scheduled Caste Scheduled Tribe candidates about the proposed recruitment and that it will not bu for them lo recomm~nd or pros~ the nnme/s of any candida!~. The candidates have to apply to the Bank's office I hrouull the Ernploymcnt 8xchange or dir ect. <•S tho ~asc mny be Hccnrilm~n! from other sources viz. dil'ectly, ;, rnadc by our· offices after obtaining a non-availability certificate frnm the appropriate };mployment Exchange. Selection is made on the basis o! intel'views.

Al\'NEXURE-lU

l V•de para 2.5 of the Report)

NOTE EX .... )IIN!:-;G THE ST.\TUTORY FR&"\fEWORK OF WHICH , THE RULES GOVERKING RECRUlT:ME~T IN THE RESERVE BA:-IK o~· 1:-IOIA ARE BASED AND DESIRABILITY OF MAKI-;G

t\ CHA!\"GE THERE!:'\'

The qu~~llon of lr.uning regulations go,·erning the re:ruhment ot stalf and officers of ~be Reserve Bank. of India, more or less stands C•t the same (uohng 3$ the question relaUng to the framing o( ~t~­tutory regulations ~o,·eming the service conditions of the RBI'.; em· ploy~es. Havins: (:iven the maller considerable thought. tbe Resen·., Hnnk is of the Vlt!W that it \VOtlld not be desirable to ir~me stntn· tutY regul.nions governing the recruitment o_f mnployees.

2. An import~nt und significant distinction between staff reguLt­t ,ons ond ;my rules governing re<:ruitment procedures, is that where· as in th" case or staff regulations. they are intettded to be nnd are m 1 he form of directions or instructions tl•at have to be complied with IJy tl •c employees und. thcr~£ore. form part of the conditions of lh~ir s~rvic(' ln the case of recnutment, the criteria and procedures lu be follr>wod In ttte recruitment of staff and officers ore pla'ely u muller 11£ policy dt•cisions of I he Reserve Bank of India tn h~ imple­ment, rl by it sci! Once the necessary policy deCisions :u·e arrived ut. the only t[\ICtition is one of lmplement.ation . There·fore. since the maHer of recruitment mainly t,>ertains to formulation of policy, the Reserve Bank of India bas set down these policy decisions and the methods of implementing them Section 7(2) of the Reserve Bank ol India Act . 1934 empowers the Reserve Bank to do >O Hnving regard to this, making of statutory regulations would n!l! he the appropriate form In which such pclicy decisions and instructions for implementation should be <~t down.

:\ Further it must b" no~ed that if the polide• concerning rect·uitmcnt and the procedures connected therewith are set down in the rorrn of statutory regulations. it is quite likely to rai<>e ovoid­nble disputes even before the actual recruitment be~tins. It mu,;t also be mentioned that the fact that the recruitment policte> and pro«durcs connC<:lL'<i therewith are 1\0l Set OUt in the form Of .ta­tutory regulations. does not enable the Resen•e Bank to ac: arbltra·

24

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rily in such matters since any such action can be caUed in quest1on before the Court. Therefore, there is ample protection within the existing set-up to remedy any arbitrary action. In this connection it would be useful to take note of certain observations m1de by the Supreme Court in Khanzode's case reported in AIR 1982 SC 917.

Paragraph 22 of the said judgement reads as follows:-

"22. It may bear mentioning that any action taken by Cen­tral Bo3rd of Directors under S. 7(2) is subje~t to tl1e ctirections given by the Central Government nnrler 7 (I) just as any regulations framed by it under S :;s is sub· JCCI to I he pre\•Jous sanction of the Central Governm()'H In either case, I he Central Bond has to ab1de by the d~­dsion or directions of t!Je Central Government . There ran, therefore, be no apprehension that. by lakin~ act1on under S. 7 (2), tht• Central Board may l'ircurn\'cnt tbe condition on whi~h the power conferred by S . . "itl c.1n hr exercised by it The overall authority of the Central Government acts as a l'CStraining influence on anv 01chon taken by the Central Bo•rd, whether it acts under one ot· 1 he other provision of I he Act."

·l. Both In the• mnttcn of staff regulations, as well as 111 lh~ mattct tcl,.ting to t·ccruitmcnt, it is well kno11'n that frequent chanw•s Rt'c ncccssRry Tho Reserve Bnnk has been able to keep pace :111d rc•r­Jl<>nd lo ~uch chnnqcs by the C':crcise of its powers under Sccti<o:l 7 (2) of !he Reserve Bsmk of In diu Act

5. F'or the a!oresnid reasons. the Reserve 83nk of [ndta , o! thl! considered view that it 1s neither necess1ry nor desirabl~ t" frame statutory l·.,gulation, under Section 58 of the Reserve Bank of ln<i•a 1\ct wllh rcjprd 10 rts recruitment policies and pro~edu1·e.;.

ANNEXURE-IV

(Vide par:~ 2.5 of tha Report)

RESERVE BANK OF L~DIA (STAFF) REGULATIONS. 19~8. The regulation making power is contained in Seetion :18 of the

Res~rw Bank of India Act. 193-l. sub-section 2\ of Seetion ilS enumerates the matters for which regulations may he m:-.de The conditions of •ervice of employees of ;he Bank is not <>DC of the matter enumerated therein. Henrt'. it would not be pcrmiss'ul,. to make staff Regulations pursuant to the pro,isions ot snb-scc:ion (2) of Section sr. No doubt, the matters ermmcrated uncer sub· sc<:tlon (~) arc no> exhattslive and the Central Bo3rd can, unciC!r sub-section (I). make regulations for all matter< for which pro\'l· sion i< ne.c~ssary or ront;enieott for the pctrpose of givin~ E-Ifert to the provision-' of the Act. But with respect to matters not cnnme1·:>· ted under sub-section l~) of Section 58 of the RBI ,\ct. Regul .. l.on< can be made onl)' by invoking s~lb-secti•m (1) of Section 5~ .mr\ thot sub-section can he invoked if the Central Board is o( the view that it would be necessary or convenient to make t·egulaiions tor the purpose or 1!iving err eel to I he provisions of the Act. The b'lSiC quc~11on wl•ich ari~es ifi whether the Central Board of the Bank ean, at this distance o( time. and that too when important p<ltl of the Staff Regulation~ relating to tbe conditions of service of the workmen staff has ~\ready been transformed into, and has becomr part of the :..wards and settlements mad<! irom time to time. t••ltc lh~ view that it would now be necessary or convenient to frame st••II regulations under sub-<eclion (1) of Section !i8 tor giving e!Tccl

t<> tl)c provision< of the Act

2. I L mtghl b" useful. in this context. to no \lee the background in which the staff regulations came to be adopted :-s !Jlying do\\·n

~tandard terms or contract. :1 . Soon after the sctlin;: up or the Reser<.:c B3nk the ftrst Rcs~n·e

Bank of India I Staff) Regubtions came into existence in 19:\5 . TI1e orescnt s• •ff rc!(UI~tions were made in 19·18 aiter the tran5fer of owncr.rhip of the Re<lrr\"l' Bank to tl,e Central Government

The staff re;:ulalions ha,·e been fromed by the Central Board as contract of service o.nd every empioyee is required to sll(D a dcclnrn­tlnn tn be bnund hv th<' ll.<'gul:~tions The Central Board did not

26

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consider it necessary or convenient to frame statutory regul11tions for laying down the conditions of service ot the employees. 011 the contrary, records indicate that tile view held in the Bank as far ba~!< ts 19~1 was that the framing of statutory regulations for every pur­

pose would have Impeded the work of t.he Bank (vide the note dated !'J-2-1~~1 rei:orded by Sir C D. Dcshmulili-eopy enclosed -;de Appendix I). Thus, 1t appear, that a conscious decision was taken t<> make t11e staff regulations non-statutory as it was con~id~red not con,·cnient to make them statutory. The question is whether ~ne could sa,· reasonabh· thdt there hltS been a change in the situ.~tio n during these ye3r< in view of whicn the Cem.ral Board could form a view !haL It would now be necessary or ronvcnient to repbce the exnting non-statutor)· regulations h) statutor~- regulations. A-, a' n•ady pointed out, the terms and conditions of SCT\ice of the work­men staff who conslltutc the major labour force in the BalM L•avc become part of the awards and settlements made llnder the l•·dU<· trial Disputes Act In view of \"e well-se"led position, those tnrm; and conrlltions cannot be varl~d except b~- oth~r awards and • • tlc­ments. Accordmgly. it would be unneoessary to frame stAlutnry ltJI(llio!ion• ju~t for Incorporating (hose terms and conditions.

•J. ·ro frarnc >lst!lttory re!lulations for non-workmen st~f~ 1\'•··uld also lead to ~ lot of inconv<"nience. Thus. lhc changed :li(utlti• 11 I <·nythlllg. has made it impmcUcable for ihe Centr~l Board to ilh'o>ko the provisions of sub •cction 11) nf Section 58 rif the Reserve J·>•, k of lndln Act.

S. The qUt':<hon whether the Staff Reguldttons were framed uurlo·l' Section 58 of the RBI Ac·t came up for consideration before the Supreme Court in V T. Khanzode Vs RBI-.-'UR 1982 SC ~17 'rhe Supreme Court held that the Staff Regulations were not frnmed in ptn-suance of Sectit>n 5.1 of th" Act. The following extract; from the judgcmrnt o! the Supreme Coun enunciates the legal pc<ition with regard to St~fT RegJlatit>ns:

•·From that point of new. the urovisions of S 7 (2) of the Act :.rc important. B" that section. the gcn~ral super:n­tendence and direction of the affair> and busine>< of the Bank nrc entrusted to :he Centra, Board of Oire<-tof' which J~ empowt>red to cx<'rcise all powers and do ~n acts and things which may be exercised or done by the Bnnk. Matters relating to the sen•ice condition< of LlJc staff arc pre-eminently matters which relate to t'te nfl'airs oi the Flank It w~uld therefore be wrong to deny ;,J the Cen­tral Board the power to issue administrative dir~tiun< or

circulars regulating the conditions of service of the Bank' I

stat!. To road into the provision of S. 53(1) a prohibit.Ion against the issuance of such administrative directions or ci rculors i> patently to ignore the scope of wholesome powers conferred upon the Central Board of Directors by S 'i (2) oi the Act" (para 19 at page 925).

6 l\o purposl' '.\'ill be served :utd no advantage will accrue by replacil1g the c"t~t!ng staff re~:ulations by ststuto'y re~ulation~ frumed pursuant tu Section 58(1) of the RBI Act.

APPE~DIX-1

FILE STAFF I { l) 48 VOL I

PAGE 13

( Rer;u la\Jon-Pre~mblc) t:X'l'RAC'f FROM P.4RA 4 OF THE D.O. REPLY

Dated 5 2. U

(D.O. NO . G .

71/-11 dated 5-2-1911 of Shri DeshmUkh to SJtri 'I'revor't

!ctrcr dated 30-1-1941

The conclusion that 1 he Slafl Regulatioilh are f\Ot Rcgulut.ions framed on the authority in Section 58. but are merely standardised lerrns ur "ontL·nct with the employees is one in which th" Governor tonCUfb. That section could not have intended that every gen.,ral order Js,ucd b~ the Bank shn11 be in the •form of statutory ref!ula­Llons under the General provisions of sub-section (ll fm· such a requirement would have impcdei the working of the Bcm~< to nn intolerable degree Clat"e (J) nf sub-scct>on (2) provides for the regulation of Stall funds nncl Superannuation funds ~nd although dause (r) is m general terms. It must be constmed in accordance with the usual principles governing the 1nterpretation of 'tatutc;. as provided for the r"gulation o! matters in pari materi.t with th" mnllers to be regulated by the pre<'eding clauses. A search may d:><!lose >Ome re<'ord "f this view a!'ld in any case it is probably not necessary to take legal advict> on the point which the Go,·crnr,r thmks Is sufllcl(mtly clear.

Youn sinct."re1v. Sd' -

(C. D DESHM'L'KHI

'\ :VN E.. XU U I-;_\'

( V rdc par 2 - of the Report)

F 1\t\:\fh\c; tW HE<;L'L.\T!O:'I'S FOR CLEARING HOUSES U.\'DER SECT/0:-< 38(:?) (p) or· THE RBI ACT, 1934.

c;nvcrnment n( lntli,, (B,nking Di\·ision) has advised that the ParlJ~rneruary Cnmmftt~e "n Subordin:lie Legislation wanted to know ll'n<•thcr rules and rp :•rl:llions for Cl~aring Houses lu.ve l.cen frnnll'<l rnl<f<~r Scctoun 58 (2) (pl of Rl'·crve Bank of Jndia Ac!. 193~. Tirc query in dc!,\il i ns under·

(I) Wh, ther regul .. : on< und~r S<'nion 58 C2) (p) have not bet:n ( r>tmcd so far

toil IC fo. t~c reJ.•n•1• for the same.

(iir) Whnt :1rc the• r~isling urdcrs'guide!ine$ for r~~;ulatlng r lw .r~pccts cr•1·r·red under the said CJau<es (i) Ucadng Houses for Sdrrclul<'d hnnks etc.

l 'rhc· (' n r·r~ "I IHC'PJH R:i:! Cle:u·;llg Houses in nw ennntt·y. out 1>/' wh'do 1:1 :or·p hrin1. n"""""'" Is Rr•servc Bnnk of Imiiu. Wh1ch H'Cnlllll,; fm· nhou1 li:i [lLT C!•rl[t,f 1•>1~1 ,.,lume ~nd amnun l IJf elocqup~ rl•~arcc.l in all lhe dr· 11'itr1• hu tses These tle:u·irl,, houses tn tlw ton lire ~oun 1 rv nrr in<it>ncnd<'~! bo•fres fu nctioninu on !he line~ <lf • 0

Clubs ,,,. A,sncin loons lind ha1·e the!r own rules ~nd re~ulations Thcst• rulr•, a 1'1 r~Qula!inn, me adonwo an• l omended from time ' lome dc,~ndinq upon 'lie nt'ed at a p.1r! icular time b}· the member bmoks volurnarifl• fn Hoe GenerJ( Bodv rn•etings of lh•' clcarin~ hou" s Tl'csc ~uJ•·s h~1·,. ~o f•r not be~n placed .on st·;t"t"ry bas'• ,;Ill'!! h1· and l:;rgC' 1'/e·,rinr: Houses ha1•e hecn functionin:~ 'lllOothlv loll on ~'•c o·,·et.nt u • ,\]'" tmcer !h~ c"isUng prn1·isions o( !he HOT Act lhc<l! ru;,, c.1n be framed •lnlv for scheduled comm<•rcial hank.< '•' hcn•os rhe mt•nrbcr sh11 n( cl~;,r:n~ ~ou:;e e"tend< to n<>n· •rhcduled ~ommcrc•M bnnks C•'JOp~rath·c banks and po5tol .av'ng;: L·,,nks O•mng tlo, ~'3St f<' .- "ear>. <orne disturbances in lhe tunc­honing or the dC'.a•rn" hou<~ :rt ~ number of centre:; have bcc:1 nbst·n·c.t whiclo h • at•r~cte:! pul>li, crl"cis

111 and concern of the

(;""crnrncnr n( Indm Ccns•:qut'nth a Working Group wa; anpoin. fed h1· Indian R:tnks' ,\SS")t•Hrnu at the ins!Jnce nf Reser.-e B:~nk <>f lnrfoa In I'Xaomnc \'nr·ou rule'S anri ~~lations ::o\'Crnin;! lhc ~•·nrlut•J nf clParin hous~:E "' thr· o::ot•ntry :md evoh·e uniform rule<

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30

and regulations for adoption by clearing houses. The Working Croup had recommended model rules and regulations which have been accepted by the Bank. The WorkirJg Group ha< also recom­mended that the uniform rules and regulations of cleartn~ houses be pl~ced on statutory basis in terms oi Section 58 (2) (p) or the RDI Act. Accepting this ''i"w point would lrnnly ame,.,dmcnt c: Section !i8 (2) (p) of the RBI Act, 1934. to include the fr.1mlng of rules for clearing houses having membersh);:> of non-scheduled banks. cooperath't' banks and postal sa\·ings banks since tho cxistmg pro,·is:on covers mak ng r~cs for c!e3ring hou>es of scheduled banks only Howevt>r, putting these mles on statutory basis will render them Inflexible inn~much as •mendment to these rules would be B

time consuming process . Also Bank has introduced mecl·an'sed ·!caring Ill its various offices and is in the process of introduting CIIICR cheque processinjl. Since with the introduction o[ latest technology some Jlxibility will be required in managing clt'flring houses, it is Celt that time has not yet become ripe to bnr.g these rule~ under the Statute. It "~11 be only after MICR technology iF introduc~d nnd the rlearin~ syslem stabili-zes tllot the matter of JlUtl.iu!,' these rules on statutory basis can be consideretl. Besides. RBI hos in prh,cipl" taken a decision that the '\"atlonnl Cle:~rinl( CeU created hy it tor t.ht> purpose ot introduction of J.';TlCR technology in clearing houses and the nutional clearing jn the country may be converted in due ~ourse into a ' Statutory Corporation. Th~ <[Ll'"S·

lion of puttinp, clearing house rules and reg1.1lations on Statutory hosis could be con~id<'rl!d bv that Corporation when it is estuhli~hed. Doing so would be ad,·ant~gcous since the would he C•)rporotion would have experienced various problems of running the m~ch 'nis­ed clearing houses. Pcndin~J such an arrangement. it has been thought Msirable to adopt these clearing house rules. bv \'nriOll'

' cleoring loouscs in the country, on voluntary basis. For this pm­pnsc. a meeting of banks managing clearing houSe$ is bein;: con­vened "l Mndra~ on 18th Jan11ary . 1986 and it i~ expected that these rules would be adopted by '~rious clearin~ houses by Fehruan•. 1986.

2, Thus while RBI ls not n\'erse to the rules and regulauons of clearing houses being placed on Statutory basis it would for the time bctn.: prefer to ha,·e these model rules adopted ,·niurctaril} b~· clearing houses When the ::'11ational Clearing Corpornt 1on 's ~rcated u a S•awtory Corpora ion. which would ns a p~r~ of its

opemtion t~ke up supCT\'ision over all clearing house' in the coun­try. the qurslion oi framill)1 statutory regulations go,·ernin~ the rl~aring houses could also be considered as a part of the Statute.

ANNEXURE-VI n ·1dP p1r<1 ~10 ,,r the Report)

!\OTE EXPLAJNG\G THE STA?\J) OF THE RESERVE BANK OF IXDIA THAT THEIR STAFF REGUL'\TIO~S SHOULD NOT BE CO:'\\FRTF.D 11-iTO STATUTORY REG'(JLATJOXS UNDER SEC-

TION ;,a OF THr. RESER\'E B.-\.~ OF IXDL-\ ACT, 1934

The Com m• ttee on Suhorciin:.te l.ee•slation of the Rajya Sabha r~i<cd the qurstaon or thP. Reserve Bank makint: •t~tutory regul:~. liOnS under ~cchnn 58 oo the Resen·e Bank of India Act. 1934 gov. crmng the •~n·icr conditions of lis staff and office~> on the grottnd that once the re~ulations ar.• framed under Secticm 5ll o( lhl' Act ibJcl. Pnrlaomcnt wall be able to ,orutini;e the re·!ulntiore3 and any :·mendmonts thereto from lim<' In time Earlier, a note was pre. pnr·cd cxa111ining the question and wos furnished to the Government. This note wa• pAssed ''n to the Comn:ittce. On Hth Februnry. 1986, llw Cholrman of th~o CommitteE!! had a discnss>On with senioa· officlu l ~ or the Rcsen•<' Bank and Joint Secret:>r;• in t11P Minlstry ~r Fillilnc~ (Bnnkirw Dn·iSJon). The Chairman observer! lhnt t ho rrHl i-.uo wns not wf1 eth~r the Reserve Bank has power under sub­. ''Ctinn (2) of Sectlon 7 of the Re~crve Bank of Tndin Act to issue ndm inish·ativc instructions t•u the su hjcct of s<"rvice regulations of t• stan'. He •:xplained tha t tbe Reserve B~Hk may have statutory

powers both IIJ1dL'r 'cction 'oil nnn under Section 7 In the matters of un'scnhtnu ntl~s of conduct dascipline etc of 't~ st:lff :md officer, l>ul in lh~ statutnr,\' srhem\! of things onh- rPgulalion< framed under Soct'nn o8 arc requi red to be laid before each House nf Parliament. r'1us n!Tordin_q opportunity lo Parliament to scrutinise th~ regula­Linn$ Jn the coun:c n{ the infOI'Il1o) ni<cussions. it was brought tO •he notirc- of the Chairrro~n that t'>ere arc other consideraticn~ that mu,· h~vc• to 1:c tak~n no!P of before we can t.1k<.' a view on the qu!'!tion The Chairman then des1red that a further note mav be

• prc;mred on the<(.' points This rote is prepared in the 3hO\'e -con. text

., Without atl<'mplln:: a det.siled analy~;s of the rele\•ant pro· \'isions or thl' Industrial Disput~ Act. 1947 (which is applicahle tr, the Re.,erve llank). it "'"Y br st:Jted that if the employees othl"r than Officc!'ll ar._, not agreeable to the pro))OSal to frame re!:t!latlons '" to make am~ndrnent.• t'rereto whaie\·er be thr f'lrm .n which

31

32

t.hc rr.gulatlnn!" are made W~H:thcr statutory or olhf'rwb~. t'll',Y mav r;;;.1.sc out itH.lU~tri~l dbpuv•. l•1 that l'vent n has to gfl t\not -~h t

1.u

process of conciliation. whu.:h is usually unproductive of ·l r'"hlt! n1cnt. 311d 1 hen lu tt,e GO\'t~rnment to dt::dde wl~etht>r l ~\~ tHspl'tt' should ~ rPicrrcd (or odJ•nlication to a labom court or andus~nal tnbunal in accordance with the relevant pr 'VIs'ans o[ the hl<ius· rial Oi~putcs ,\rt This is the po<tllon not only in the Re>en·c Bank but in all 1n$UIUII<tll• to whido the Industrial Disputes Ac· applir

It is for the same r~:t.,ou th<ll no !'tatutur\· regul:l\tons h::~Y"' Let! • madt> un<lt'r the formal regulat·on making powrr bv the na1Jcn~'tsc1 l•tnks etC. In tc•Sptocl of the sen•occ conditions o! their subr.dn\:<tc ~laff Ol,{"(• 1h1! m..ltlPr' goes for adn.ahcalion and !.he ,:,., .. is'cn or award nf lhc llihunnl is hnndc-d down. the decision or .1\'.olr··l he· comes lln:.l anrl hinding •m the oarlic> und~r 1he Jndu'trial Dispute Al'l Thus. tlwna is nu s~<,pe }pft for Parllamen~:-JrV ~rutinv of llw dctl5lun or nwm·d of the i1vlustrial courts or trllmn~ls Wht."l C•ne con>OdNs thnl nearly 80 per cent of the wock-force tn th~ Re· ~.rrvc Hnnk con"isls t)f suhordu1ate st;;~ff. the adv:mta~· ~n allowing u,., !'xi,liiiU •ct 11p lCI continue both in respecl of the .u1J<1trlina'e ;tall und lh~ oniccr-<IRff i$ apnnrent. It is submitted •nut it ma~· bt.' nt .. itlu·r nt•N!ss:1rv nor t•onvrnient to disnlncc the pre!\~n~ tnrthn1 nf pr<~~ct•ihinl~ I he. ~c-rvi('c· rulc•s governing til-t,• cmp1ovces or the·

Rc~m \I 13nnlt.

a. J\noth~' poim thot mt·rlts eon,idct·ali•lll i;; thul ll·e R··<e·o ,,~ Bank o! lndla ~l~tnds on an cnt!rel\· rl'frt>r~nt and 11niq11~ !onti t.: \''h4.!n crunp"J't!d to othcL· sta lutorv corporat:on~ und .\llthl'!tilius. Till~ has twcn :.Oirm,~ct on ntnre lhnn one o::c3Sion h:v· t11e S•nn·tm\'.' Ccl'lrt n{ Jndin Th~ un~(lllene'-'-; rl,.riv~~ frmn tl:~ nature:" nf thl! \':'lrtcd crut·J~ll funchon~ tha'~ h~ve hrcn cnlru~ted til 1l .:\n\ t11 .....

ruptlu•l Jn the funct·onin" o( rhf" Res-erve s~nk i'lti:=tn~ Nl. oi 118 rl'lntinns with its ('mployt'"f"S :s th!-reforc a mrtlt"r of :_:~;"P t Clli\C, 1 n 1<1 tht.• Ccntrnl and SteiP Gov<'rnments t'le b1nkin~: intt ''" ,. d •u nn euncernt~d with scc:unn~ moneta~· st.abihtv nr the ('lliH h\ H Lh.s &Spt•ct j~ kept in uPr'P'""Cti\"f!. it;.., :-.'Uhrnittc-0 ·~at tiH"r" < rrt '" b~ •1ld for dl'-id[ng n'>t to d1an£!e the existin~ <d-w> !• I. mav ue<:<l lo be consi<l~ccd how [;,r the s·>mew'lal n'!id rcout nt <'I S<'O'IIun !ill wo•oh! h:unpcr th<' ,.ff~li,·cn~ nf t'lc Re • '~ B1nk in de11inq with the rhan~in~ si1unuons ~-~~ .. ~·w ... · ari ... t> A.: • S 1 •

~m~ Court had o:ca~~o!\ to ""bse.l"\·e. the ['IO'''er!> co'1frr ... ed ••n "1

c H" <•rvc Bank for rc~:ul:lting the :en· -:-e ('ondit on' of •Is v'•lf undN S••rtinn 7(2) of the A~t arc 'wholesome".

·1 Rcscf\'C' Rank h~s made !':everal regula11on:-: nndeor Sect ion 5 ( r the RBI :\c\ on \·3riOUS ma!ters and theT~fore i\ h•> no r•ser-

'

'

33

vation Ill ptincirlc to making statutory regui2tiuns w ,cnt·v~·· tli<'rf' is nt~d to do so. As f~r as st•r.·•ce condihon5 .. r'-' con~c.•rn­l'<l, ,., . ..,! M r:uly as 19:15, 1here wa;:. chn;~e and t"" R•·s<·rv~ B.u1'< u,;,·iclt'<l to Jllocr~d undrr Secuon 7121 of the Ac• ra1her th:m h'' way o( H·g,ll:.tif•n!" under Sed ion 58_ So r~r as 1hc subor1.n.t'L' !il~1r _., c conrl·rn.cd, th~ rules and condttwns of .s('r\·:cc ilpp1•clbl~ to them are the admtmstrauv~ tnstructtons issued undr-r St<etJOn 7121 of the Acl as mod:fied by the award~. de<:iswn< and ~·:nle-ments under the Jndustnal Disputes Act. It :s considered nr.1 vcn· prBrucable and inrlced !I mgy be counter-product:ve t > lliL•mpt to pn·pan• a !:t'-.'t of regulat.on.s out of the various tu!es.

decls:uns onl~rs and award,- some of them admirustratlw· •n~t""''· t on~. nth\.·r~ dcc.·isiuns .anrt awards of courts and yet o!lte-r:J. result or hi alt•ral s~ttl~mcnts into a meaningful ccher~nr and cxh~U>· L.\'1! se: of rc~ulauons. It is sllbmitted that "·nile the Reserv~ B.~tlk hilS alwavs been ready t(" make regulations on \~armus m<ll· lcrs nnd"r Sccllou 53 and have. in fact, made se\'l'ral sach rcgu. lr\.or1s in :he c~se of the sen·ke conditions nr its staff tt h~, the ahn\'t' ~:t"rl·~~~s n·se-rv:ttions.

AN:<EXURE--Vll

(Vide para ~ 11 oi the Rcporll

F :\0. I -!fPrl IR

covu::;)!ENT OF 1:\DI.\ ~U):1STR'i OF F·:;.\:\CE

Department of Econ)m\c Affan-s

(Bankln~ Di\'t<ion)

OFFICE JIIEMORA>iDU!IT

Sw.a;cr: Reserve Bank of India Act. l\134-R le;;/Rcgu\ationsiSchcml!i> made under the exami!1ation by th~ <.:umm•ttl!e on :iuh·

ordinate Lei!islation of Rajy:o Sahha

The ttndersigncd ts direclcd to rekt to l\~jyc Sabh~ Sect<:\CI '"' 0. M No . 5 (at) tl'A·C<>tn. l, no.~lcd the 19\h Jun~. 1935 on the sub "c\ ~ilcd abOl't: an<:! to sa)' as unde.r 111 serinrim ill reply to 1ht' puiHl>

\1\entioncd in para l therein:-

(ll Reserve Bank oi lnt\13 has stoted \h(ol though \ho :h dl Reg\tlation> gO''"t'oi!\g the >en·ice cml•litinns ul 1l1e •·m· ployecs of Heser\'e Bank o( India lor_vc· nnt j.,,., r ..... ,~LI under Seclton 58 oi the Res<:rv•· Bank of !nd·~ .\tt t

1

1~y have been framed i" ~xe!·ci$C oi powu·s und;,r Se..tton 7 (2) oi the RDl Act. t9:H. The~ have al>o broul.\hl Ill thh l\linlslr,,.s nottce that the SuJ•rcme Cou1 l of Indb 111 •h lr Judgement on tile ca!>e .da~in::: tO\' 1' Khnuzocle-\'s-UI3l reported in AlR 1982 SC 911 lla\'C confirmed th •t tho RI\1 has •·W"lolesome'' oower und~~ SeC\ on 7 (~) ol the RBI Act to lay doWn the scr\'ICe condttiOtiS of their ,., rlo~ ces and that Section 58 oi :he said .\ct cannot b.! construed liS a prohibition on exercise of their pow~rs under S£ ·non

> (2) of that Act ior the purpoSt!

(:!.) As far a; the recru:trnenl procedure and glltddmcs ort' concerned. ~he RBI hCls >tatL-d that the~ ha,·~: $ilr .a•ly ~cted tn eJ<erci!'e o[ the powers con:,·rrcd bv Sc Lio 1 > (2)

of the RBI Act

I

I

35

11. The underoigned 1s also directed to enclo£e the following short

Notes/Briefs in this regard -

(i) Now examining tht~ statutory framework on which the rule.> gowrning recruitment in Reserve Bank of Indil are based and desirability of making a change therein. (Annexure-lll)

(ii) :\ote on Re..,rvc Bank of India (Staff) Regulations. 19~3. (Annexur~-lV)

(iii) Note on framing Regulations for Clearing House.> under s.,clion 56 (2) (p) of the RBl Act. !934. (AnnCXI,lTe·V)

Sd;· (S P. BllAT!A)

Onder Secretary to tile Got:emm<al of India

,\NKF.Xl1JU:-\'IU

(VI<ic para t.l6 tof the Report)

SEPTE).!BER 2.'1 Hl39

(12.:10 1-'.~ \

The Committee met at 12.30 P M. on $:llurtla\·, the 23rd S~pt•·m· her. 1989. tn the Conftrcnce Room il. Head Office, Rc,erve Bm\( oi 11\lh•. Bnmbay and held dh<·ussions witil the reprc,.cnlaliH or t'" Hcscr\'e Bank or lndtn on the rule·; re•!ul:>UOfi> schCIDI' ntad•· \lnclcr the Hc,N\'t! Bank of Jml•·• Act. J!l!H u• :h<' Hnht 01 ll••• il:ad< lL••m:.l

;-.; ut~ on the s\lb)Ctl

Chowdhary Hom Sewak-Chairm·•" Shri Shankalf.LO r>;apv.un;•o n~shrnllkh ~hn M. S Gurupadu'w amy

Shn Thomas Kuthiravattom

Shr1 Subr;lm:-tnian Sw~uny

Shri C. P. Tnpalht Shn Kapil VemtJ

SF.CIIl''f A RISI

Shrl H. I'. Mahaj:tn, fl•l'" !!' SPcrciM•f

Shri s. K St!tl Gupla. l_ludeT s.~. f'C(Itfll

ShTi S K Gan!(uii C<"""' llee Ol);,.q·

Ur C RangaraJan. 0••"'' !I Goremof

Shri P R, :\ayak. Deputy (;onrnor

Shri U K Surma. fTt>liUit'C [)!n•cwr

Shri S N Bagai. Exertuir? Dtrt!C10T

!'hn S S 'farapnre E.,·~cuure D;reqor

3()

37

Shri R Srin•vnson Legal Ad··• .,.,.

Shri K. S ShL rc,, ,]c'ld riulilr/ L<?!JU/ Atlt•isrr

SIH'J J', Y. l'nuhv~ S•<r~tury (S~•rc•tury's DrpartmP"t)

Shri ,\ ( 'handnun•1ulisw.1r 111, Joi.,t Secr,•rary ( Scl'Tctary's

DC"par• nwllfi Vr N C Kh , lckar Jn 11 (",,;,., ;{nuag•r

Snri S V Pr •bhu. Del 1111 Mu11agcr

Sh11 Y. ;\! Par.~nJap~ Jom• Cllwj Olf;rPr

Shri :'\ IJ p~, rncswarnn Ju "' Cl>iej Or; •'r Shr1 S \'cnkate,;\1 '"'' /) re t<>r

,\I lhc otll"· thto l'h,JJml"n of t"" C'orr.mi•tee e~quir~ I ns to ,;•hy the Governor, R~n··· B .. nl; nr India was not pre;~n· Ill the mec·ting n, c Rang.oi'O.Jal' Deputy Governor. iPformed (llnt the (;o,·ern•>r 11',15 <>II t rrf I he cou n tn· <md cot• fa nco( !t•cr" fMC? he pri.'Sen • In tha mertmg

Thcrt•nftcr, rlu~ Dcput\' r,.,,.,,mor, wc•kumcd 1h~ L'hait·rr.~" ::\ll•m. Ul"L> ilfld tho• Ollirt·r~ rll tlu• l'<>rnmi1lt>e •n •.;llbord~t.:ote t.eg,,:,u, .. u of,,,. n.l,f,\'' s """ ''"" lllllndu 'I'd tlw' lllecrs ID rile C'ornmiltel• ami gJvt• hrkf .ll'COunt nf "'' ·ocli•·!ttc 1r lhe fbnk

Tlw C'hniJ'IIIan •f u,.. l••nHlllllce :,fso ·veltomed the J'~Prt>senta· tives of lht> Dun/; IJI'l'S~lll 111 lht• lll<'e1in~ .rn<f inLroduceJ th. Mt·m­J:.crs Mid offic~rs of tfot• l'<>tnmiil<'t' o\ bl'fpf ~CC<>tlnl uf lh!• rJisc·u -:iou is llfVt•IJ 'H~Iow

Tht· CornrnifJt I· z-oi~t·d hv., JS:HJrs:

(i) ::"Jon-fr;mting of ~l:l(Uiorv rc r11Ja1 ing In tht• rt•tJIIilllH•nt

1h~ ~tarf unc],_~r· Section =if; r•( Act I!J3~

ul~tions. cspe~blh· those anti servii.:e ...:ondi 1 inns uf

1 he Resen·c ll.ank n1 lnrha

(H) :\'on lr m 'Jg of C1t\uJn' Hou.-;e rUH.>s undtr S c::nn 58(~) ~,f 1he 1\<·•

R<'!!~rdJII~ tht· first IS.~U<' ~he power • fr:t'Tie Regul.,tion:; hru. I <'<'II e<•nf<'rrecJ on the Bunk hy SC"(·ti~n 58 (I) :md 12) .. r the ,\ct NC)nc of the clauses ~pcclfied In sub->;e<.uon 121 of Section :'ll of the Act rc·fer to matl~r& rcl,•tmg to appuu•tm•-nt et<: of statf; howe1·er. iu terms of clnuS(• (r) r"g_ulallons l'<'Uid be framed gcn<·ratl~·. fo! the t·fficlent l'Qnduct of the bllSIOl'SS or the Bank :\< ~uch. both in ll'rrns of sub·<cctton (I) :md <llb·<<!t:linn 12) of S€ctton 58 nf the ,'\ct thc> Ct•ntral Bnard hns i <'C'I crnpow<•red t 1 frame> rctrnbtion- for mttttf\r~ relat(n~ '"terms 1nd t.;on ht!()ns of otcrvicc of th~ gt:-tlf of the BJnk

ln addition to the aforesaid power' under sub-section (2) o. Section 7 o( the Act. ~ub]cct 10 :mr directions which the Ccnu·a\ Government may from time to time give. the ~eneral <upcrmtcnd­cncc and dm:ction o1 t .e .<!Ta•"• of the busi11es; of the B nl. h • bee!' entrusted to the C••ntrJ Board. which IS c:npo·.ver, J 10 e:~nr, e ~11d do :>!1 :•cis and thll\~• wluch ma)· be exerctsed 01 done by !'"' B4nk By this Se.uon. the Centrnl Board h.;s bee:t em!'owered to tssue ~dministratl\'01 lnstruct.ons for mailers rclaiing tO s:aff, indu~ing the :e:m:. and cond:uons or the· r s<rvk.., omd recrultmc:lt. Thercf,,re the pow•••-s conferred on the Cemr-.1 Board under Seoton •S(ll an l (2) are 111 the nature- of enabling provisions .md except in tl"' case;; spee•Jlcully referred to In r!ause ( () to tg) oi sub-section r~) u"rc· of 1t w~LS not stat\ttorUy nec.:ess;1ry for the BaC\k t~ frame st~tutcry rcgulattons rclnung to aU the matter> conccrnmg Lhe .1frairs and busl-

ne>~ of the Bank

In the c;~sc reporte-d 10 A.l.R. 19f.'- S .C pa;:e 91~ (V T. Kh n· zodc und Ors v s Rfl( & Ors) .. the Supreme Court ha• uplwkt the Bank • cont.,ntion that tite pow~n. conferred under sub-sechon ll) (>lhl (!\J nf Section 58 were only enabling powers and it wa> not uccessary that S\<1ff Regulatiom must be framt:d umlcr tlt-.t sub­~eclion 01 not at ,d) The Centnl Board bas thus sufficil'nt powe1 111 lssU<! admmi•Lrutlve instru.;;Lio•tS relnthg to the 'erms and condl· lloM of stall tncluding r~nutnwnt and it wus not obllgntory on thl' Uoarc.l to frame statutory regulutlmts under St·cti(,n .1ll of •he Act

Ap:•rl from th~ abo\" " very fundamentalnnd b<t,iC q wstlon l.n· volvlng o conlhct of JUr!>diclion in dealir.g w:th the tramin;; ur l::it;<f! HcJ;ula\lons IS lnvoh·d. 'ince as the law stands at prese!'ll ~he rc­,otution ol disputes ansmg !'rom the making or nmendrnent of the Stnfl Hcgula!ions Irorn t•mc to time must ne~e;sarily. in •he schcm~ ol things cont~mplotcd and p~ov1ded f<,r ;n th<: lndustrL.I n:.putcs Act. 19-17, be cxclu•h·cly by the proce-ss of adjudication <•f Labour tnbun.•ls courts constituted under that Act. The !n:lu;trinl Dis­pute• Act provide., for such adJudicaUon be!ng bindir.;\ on the ptrties without an~ thmg more in the context of the prov!,;ions o! 1hc !D .'\ct, there is no >Cope le! t {o~ p,rUamentary scrutiny oi th'! making

or amending of Stall Re!(Uia!:ons.

!'early 80 per cent o£ the Re;c:ve Bank's st<li'l coasists of work· men staff gowrned b\' the provisions of the ID Act and if ,uch em· p!oyeu (other than officers) arc not a~'Tee3ble to the pr poS<~l to frame regulations or :o make amendments theretc whatever be the form In wh1ch tht! regulanons :tre mad~ whether statutcry or oth~wise-they may raise an industrial dispute. In that event. tt

39

l>a~ to go through !he process r>f conciliation, which is usually un-, productive of a settlement, and then 10 the Government to dec1de

whether the dispute should be 1 cferreJ for adjudication to a labour court or indu>trinl tribunal .n accordance with the rele\·ant prov.~tcns t•f the I.D. Act This IS tile positlon not oniy in the Reserw Ba::tk but in oil institutions to which the Industrial D•sputes A"t applies. It is for the same reason that no statutory regu.ations ha\·e b~n made under the formal regulahon makong power b~· the nationaH~~ banks. etc. m rc.peet of the ~en~e c .. mdit.~ns of :hcir '"bordinatc stall. One" !he mallt•r goe,; f<>r adjudication and the decision or award of the tribunnl IS hande,) down. the decision or award become.; linal and hindin~: on the p~rties under the ID Act. Thus, there IS no s-"ope l~rt !or the Parliamcnlar~ scrutiny of the deci~on or aw<lrd of the lndu;lria! ,'Ourt or trib\uuls \\'hen one considers ;;hat nearly CO p.r cent of the work-force 1n the Rcs~rve Bank consists of subordi­nate :-;taff lbe advant~ge in .JlJowing tite e.'\!st.mg s~t up ( 1J continue both in re•tJCCt o! t.lu: sLibordmntc sta'f and th" office•· '~afT Js "PP«r­t,nt. lt i~, therefore, neitl1er n•cessary "or convenic·nt to di~pluce tl1c present mcth" I o! prescribing the 'en·i~c rules governing the employees of tiw Re.cn·e Bank.

Another point that merits consid<!r3tion ls U1al the Rt<sen•t• Aunk or lndiu st<,nds on ~n t!lltircl~· different and unique Iootin,t wl\en comp,Hcd tn olhcr stal\1\ory corporolio•ts and authoritles This h~> l.'t:<ln ,mrmed on mort! than onu occasion by the Supreme Court o,· Tncli,, This Ulll(j\leness derives u·om t'lc n:tture o( the \'lried crucial fm>cllons that have been enlru,lcd to it. Any d1sruption in tbe i\mctlonin~ o! the Hl!oervc Bank arisin~ out of its rriations wllh its employee' is. therefore ~ mall~• of great concern to the C!!r.tral and State Gov~rnmenls, the banldng industry and to nll con­cerned with >ecuring munctory stability of tl:c country. If this asp<'ct 1~ kept In perspective, 1t is submit~ed that !hecc is more to be said for deciding not to change the existing set-up !t also may need to be consid11recl how lar the somewhat TJgid requ~rements e;f >t!Ction 58 would hompcr the t'fTecth·cness of the Re£en·c Ban'< tn dt!aling with the rhangmg ~•tuations as they ari;;e. As the Suprj!mc Court had occaS!on to ob...<ervc. the powers conferred on the Rt>Serve Bank !or rcgulntmg tht' service conditions of its staff under Section i(2} of the Act arc • wholesome ..

Rcscr\'c Bank has made >c,•cral rc;;ulations under Secticn ~& ' r the RBI Act on various m;~lten; nnd t'>erefDre It has no rcsen•atlon . In principle to making statutory regulations whenever there Is need to do so. A~ far as ,en•ice condition; are conecmed. even as early as 103& th~rc was a choice and the Reserve Bank decided to proce.;d under Section 7 (2) of the Act rather than by way of regulatton>

r

J: fr tl

OtJ

40

under Hcl'\1011 sa. So iar ,IS 1 nc suhurllinalt! stalf ,uo cnncerlleJ. the 1 hies und cond111on• uf '"'''ICC •• pp\lcablc to thern arc tnc nc!m nlstn· \1\'<' ulstru<·llon' >SSu,•d undel Scttwn ': t2) nl the .\rL •S roo<hli<'·• hy tlu: nwnrds. deCISIOIIS and settlement' under II'< ln n»tr I D' • J ut•·> J\tl II IS t•onsukrctl >0' \'cr: prac11cao It•. nr unlccd 1t ma\

be Cll~llll T·l!Od.!Cll\'C to at\cmpl I<> prepare a set o£ r uJ)unns I ul 1'10 \'anous rules, dtCtsions C'tdt>r; and some of t"em o~J ll'"tr ,. live nls•rucll(llls other dc<.:IS•<>ns and award> o~ c<.>urb and \C' oH>t'f rl.'sultt: o{ b:la1e1 a1 ''<:lll<'l""~enl• mto a meaningful, coherent nnd cxh u< 11\C •ct of rcgulatoor ll ·< ,ul,:"'ltllcd ·hat wh1lc l .c R <f\'~ Cst k ~- · al 1\ av )Jcc, rc>d:, to mal><" r~~;.tlal :ort on '"" s mall ul 1<•1 "e~hon ~:1 anti ""''~ HI bel n~!H' _,,,·cr"l ~u,·.o re ul u·m 1r the ' .sc of the scrvicl.' r.ond•l•""' •f 1l· s• ... IT a hJ> ·~ ~• 'c s rl ''

lC!\CfV~tttrmS

The <jllCS\1011 o( rram<ng rcf(Ul.ltinns gov~·un\! tllC .,. I'll rrro•l ot stuff und olllters of \lor Rc>~rve Banko! lnclb. 'll"r'· <11" l~ss •l ,d, vii th<· • orr.l' loon\ in~; os the qu~ lion r"bt.;tu; to tile frsn\11\o d "tul.t 1o~t'V rt>~lllo!lnlls govcr oott;; the ·;<'r'-'icc t"ndiunm ,.[ tlto <1!-11 ,.,, • t•lco::rns. J[.ll'l"!l g1 ., u the mc~llr-• nlll<i•\PtalM thout.hl or,,. Hr~en·o H11 1tl: is n( tllf.' view \l1L1I it wuulrl no \ he deslrabl,• to fr;nn~ ,• o\\li"~'Y ~t•gulutinns ~<)\'t!f mng 1he lf'l.'l·uitrnent nf t-mplo\'t:C:O:

An •rnpnt·tont and sii.!t1ifk on\ d ist incllor1 he',wten stall r••guluuon~ ;,ml no1y r11lcs g<J\'Prnin~ , ccnHI!11el11 pruccdul·es » that •:he:•o:;~ 111 \ "" < :o>t uf st uiT rcgu l.o titn1S tlt<;v are in\ end<•d to loc an• I ror.: 1 n tlor· inrm of direclwns " ' ll•>lfll<'tliH>S tht<l nave t.> to t•unm\ll'd Wllh lov t\11• <'lnplo~ec~ ,...,,1. t nt•refor~. [on l1 port of the c•mtlilioiiS ,f l

0

wi1 :cr,:,,., on th<• •·.1<C o( r~rnutment. th~ crHcr>a s ,; pruecclll•es '" lo• fu\IOW~J \11 \\It' Tt'('r\ll\ll'lellt o( >1.<Jtf an<J 0!1\CCf> ,1rf' plli'Pl\ ~ rna\lt'l

ol pnhc)' dt·dsi<ot>> of tht· Rcs('rn· Bank ul Indl•• tu lol.' till \nr.en\e I h; it:sclr On< •· the n.:,·:essnry po\ic~ ried<ions Jl'l' arrl\'Cl •'· tllr .- \y q.1cst:o11 '' rne <' m pkmen1:otion. Tlwre!urc sin<e th.- nlnH~r C( fPCrui\11<'11\ mainh p~rt:.ins 10 fo,-muJaliOn u! poliC) 1' e fl~ l f\'C Bank of india has set down thc<e policy dcci>iOI1 anct ~he trl.'tlltltl< o! tmplt•'Jlentmll them Scctiun ~121 oi tl'r Re<•<\c Bank o! Inti ,\ t 1934 cmvo"·crs the Hes,n·e Bunk '" do "' llP\'11"' re~ rd tO \hts. muktng $\al~tory re;:-. .l~tion> would nnt bl' nppro1 r1al • 1 wlt1Ch such policy tled<;oni' :tnJ Instruct on< ior , 11! lcmcr tal' n

'""' Jd be ><'~ down Further, 1\ must he noted tha\ ,[ the polk.~- concc1 mng ccrull·

mcnt ancl the prot·edures cmtnt~\l'd th<rewitn ere <Ct tlnwn n the IMlll of stalUtnr~ regu\~IJOOS. 1\ I" quite Jikt!}~ \0 PIS•' d\Otla )11! dl • I•IIIL'S cvcll bdorc IIW actual recruitlnc\1\ bcgnlS 1t must 11\st> be mcnlltoli"U that the [act th;tl tlte recr ultmen: policlL'S ar.d proce•.luNS

t

41

""""'<'l••d •hu" "'"h art• not ""' QUI;,, t' •e fotrn of ''"'U!on· regula. •.ons docs not enablt· the Re$en·e S3nk t.:> act a l•itr rd.1 n c.

i1 ltJ Slllt'e D,l' SUCIJ ACIJon l' ~~ C..lled in CjUc tum before lftc C'r un Tlterefcm, there is ~mplc protection WJth;n the c" :ttn" sc:. up to rernt•d.l any rbltrnr.• ~t•on In 11-.is co:Jnecuon it Would be 1 t.l to lilk(' note of ccrwm o!Jscrntion.~ mad., b.' the Sg,l'l'm" ( ourt in Kbnzodc's "<lse ••po ten m AIR 198'-l SC 917. Pangrnph .!2 of t ~ said Jnd~;cmenr r"" Is s toll!!""·

l2 It ma, bear <'llloon ng lha: an~ oc:iun t k<?n by Central B' lrd ' Vu~uon; unrf,•r ::>ec:"·'ll 7 (2) is >Ub•t"! tq the d!tt'C't, 'J gn,.., by the Ccnr ral <:o:·emrnent un I r Sc~. hQ~ 7r J J JIJst as ny regr,Jation framed by it "" I• r Sc< ­

Iron 5(j 1< ~UbJect tu •),<' prev•nus s~~<'lion O( tbe C~nfl l t:o1cr merr ln r·J'!"'" ca.e '''" l'"nlt3l B•J3rc/ "~s I• nbidc hy rh,, <I<'CJ>~nn ur <fll'Ccfl"ns "f tl•c Ce:ur· l1 G<J\cr,.. 11!1!11' "i l•er,• 'on lh,cr,•fnrP. lP "" "P!Jrelren.<inn tiln1 1,1 t.1J.nng Mr,.,, ••n<kr Sc•ctinu 7(:?1 lile c""''"' flo11d nw,• t"lt't'UIIl\'t'tll j!J,. ''"'"''ti"ll '''' IV}Ji"h the !JfliV<'r "'"'f~·rr trl L,l' Sc.-, t'"" iiH r·:rn b<· "WrcJ.sed 1,~. 1t '1'111 <>l·er·; IJ •' litho. nt, ol "'" Cem,·aJ <~nverrmwnt tl<'ts as n restrr, ning in­ll:rt·n ·, •m unv Olctirm to ke?n h.v the CenlraJ F'u11d. Wh•·· lher 11 ~~r·r,, llli"r nne Ill' 1/), ~>·her )>r"l'is•on, r>f 111,. ll c t."

Boll, Ill rh. ,,, ((,.,. "·' ''"'l I g•IIJIJor,s .,, \I'd) '-·' ' " "' li):Jif(•l.

•·f<HJI:g lc• '"'"l'll)>r,, . .,,, 11 •• ""Jt k•Ju\111 lh<~t !•·~quen• r•lran~~.5 :.r·e r:ce,••1'<11 ,. ·r•,.. [1 .... ,.,,,., Honk h;,, J,c, .. , able to keeo P<lt" <md re<·

•·' ,,.. 1 tn Sl:q ·I,"'""~ 1,, :J,, e:o;en·,,.~ o! ;,, Jl<lWer., Unt', r Sect 011 7UJ ot '111. R •rh H:tnk fl( lnd1a Art

rot} d('t~J \' 1!\V h ' l•.llufflJ v n :ulaho, ~

\,., IVJ!Jo r. "~rd In It , neq•,er nc.cs;~:T l'OJ· d ,Jr~z:? :o fr rn~ 'lifer Set! • 11 ~ nf I he llesen<' Ba,~ of hd~,

•s To (rtU•m, r• • ;;c IJen•s and prr-eedur,.,

J\. {,,r n k1 •• I tun ~I(Ul,JtJcon~ In r~!at:on 'n l'!<!art ·Jous, i• COU('erncd, the n,scrl'c Bank has no ObJ~··on ,,, dn '0 "" ,, sl'C"o I 5!1(21(/!) 0{ 'hf] Rl'sen,. IJ;,nk of fnd•;, ,\,• oc,.,..ilt<rl 'II "'''!I of tc ul . tons r th- '<itiJ re>l>e<:• '" S<:heclu)C(I b3'lk, ~­~··nth '''Ill llru\1~/on las ""'''I rnr/e•ltn •·ryll/p •h.., Hc·senn !hn~ • 'lnk,. regulnr.vr for ,oiJ bunk, '\·hethc·r '"' :·dul.,,f nr

to'hcr" I 1: T!1~ R" •nc B. or k ~ •s ~"l>o~t~kd ,, C.>mml!t~> f, r ""'" In•., IJ,, r, JIJ,•r n·f ,.,~mmmr:tHun~: i!Jlptopn;,te rcl;ulaticu.< tn /,,

lila le IJ"H II•JJ g<ll•c·rn l1c ('J"<lllnl;' Hous"s The re;r••r: nf tho Comm,rto,, IS cxncrtc,·l .... he subrnitlerj \\'ithin lhtce ln<lfllilf

The Commtttee d1d not accrpt t.he e;;planatoon glVcn by tbe rep· rescnlatives of tbc Bank in the matter and rather took exception to the stand taken by them that there was no scop" for Parli~mcn· tary ~crutony in the matter of making or amending oi Stnfi Rcgu­lltllons. The Cammttlec IS of the considered view thnt the pro\'i-s ons in Section • or the Act were only transitory in ch:•racter and ~he lcgts!aturc h~s ordained that regular RulesfRe~lations should be fr~med under Secllon 58 thereof Keedless to state th~t when tht• lluies arc slntutonly frnmed they arc notnied, laod on the Table or th llou•c or l>.tr!ia:nem and are ),;nown to the world nt large In oddilton to the1r coming under tbe scrutiny o( Parliam~nt. The de:a aons of the Supreme Court onlv """Pre<s the lcgnl \'icw ond so lol'g ~s the Hul€s Reg~.llati<•ns ..;nder Section 5& arc not m.1dc, \he it\~~cu.:Uons issued under- Sectlon "; of rbe Act an~ legolly bondmg It. ho•.';·~ver, does not mean lhnt 1he RBI should not ubtrle by the rhrecttons ~iyen in the Act for framin~ of Rules{ Regulations foa· the r<'<'ruitmen'. conditions of ~rvi~ of lhe offi· cers ~nd ~tatf. The Committee. in particular, djd nnt fmd any t>l~u•ihlc rea<on fnr which thl' RegulntioDS have no' bee•l mad" f'lr the ollkt•rs for tlll'lr recruitment an:;! ~ondiUuns of servit·e are nol cu,·ored unrll'r lhc Awards and the Industrial Di;;putes Atl, 1947. A vic.>w wa' ulso expressed that t1 bal~nce could be st,·ur,k "wn with rCI(ard to the re~rnitmcnt a~ conditions n{ Servi"c ne':L'la· tions for the other staff ••is-!1.-L>is the provoslons of the Industrial Di~putc~ Ad, l!H7 . ultimately, the Bank repre,<>ntative-; agr~crl tn hnve n thortn•gh look into the matter and p••omi<ed to ;>nrl n nnle ln 1h.: CommlHee in abo·ot a n1<•nih's time

Thcrr•nHer. tne Chairman n{ th:! Comm•ltec thanker! th~ rep­re•eoolalin>s or the RBI !or m3ktng adequate slav arrnnqemen for th!' Members and Officers of the CnnHnittee.

The dtscussl<m then concluded at 1 15 P.:>.t

I

A~NEXliRE-IX

IVtde para :! •8 ol he Report)

'l'HE PARL!AME!'."TARY COMMITTEE OX SUBORDl::-IATE LE­GISLATION (RAJ\'A SABHAt ~luTING WITH THE RESERVE BANK ON 23RD SEPTEMBER. !989-WHETHER STAFF REGU· LATIONS SHOULD BE FRAMED ffi\"DER SECTION 58 OF THE

RESERVE BA:'\K OF I~DIA ACT.

The P~rh~mcntary Committee on St.bordmate U,gislation l Rajya Sabha) has been enqturin~ why the Staff Regulations should not now be fmmcd under ScC:ion 58 of the Reserve Bank of India Act with a view to gwmg nn opport1111Hy to the Parliament to scnttinise those regulntions and the nmendmenls lo be made thereto. There were s~vcral meeting< belwc~n the officials of th~ Bank ~nd the Committe~ (rom lime to time on the question of framing the StniT Rel(ulnti(1n< under Sc t:ot1 58 nf the Act. The Resen·e Bnnk has pointed cui nmnerous dnlkulties and ~or.sid<'rable nmount of inconvonienrc which wo11!d be caused if the tcnns and conditioM or scrv•n· or the Re.s•;1·vc Bank's officer>; and sto!'f ~1·c "lOw

to be cmbodit!d in the Corm nf Re!{ulation> to hr mRde undet· S~· lton 58

Du1·ing its m~~lint: wl1h th•' R~servc Bank on 23rd Sertember, 1989, I h~ J>~rliamentarv Committee desired that the entire m~tter rebtlng to 1 he frarnmg' of Staff l<egulations should be re' •cwed tak­ittg into account th~ Committee's vlews obout the need fer Parlia­mcntory s•·rutinv of Stnff Resulati,-.n< Accor.iingiY, •hr n•rzlie· wns con~i•lercd ~frc<!t an<l the ouc·tion whe.ht•r the Staff Rcgul2tioM could be framed under Scdion 58 of the Resen-c B~nk o: Jndia Act Is cxamint'rl hclow

The Re5crvc Bank of india Acl (Act :\o. 2 nf 193~1 is " prc-<.:onstitutlot\ Act nnd Section 58 of that Act ronf""red on the Central Board of thl' Bank powt:>r to make re~ulatlon• While Suh-seclion (I) \'CSit'd In th~ C'~ntrnl Board gcreral powers to make regula­tions, Sub-section 12) ·herE-of ecm;r:ncra•ed variou~ subjects for which regulation• rould he framed The items memioned in Sub-se-~t<an (~I clo not lnducl .. spc:-ificall..- the s·•bje.:t of framing Staff Regul~thr.• laying down the terms ~nd ronditions of the officers and s~a1• or Ll-or Reserve 8ank In conlr.1sl, S·tlr•ection 12) (n) o, Set·ti~n 50 of t!·~

43

44

Stat .. Bank nr Tndw ;\ t (yo:.t-l• 11\ t ,uhun t'I\~ClJ1ll'n' l \! i\<:1 ~0 :l;l of J~;i,>) ~pe I oil~ cm,"·\I'Cred the c, T'tral Bllarol •>! til• ::;t~lc Bank to nuke r,•gui.J wns wiH~ 1 c=sp<."Cl to dune.. and londuci o{ offiCL'flS. oUa r ~mp1o~cc~, advtsct"S an·i a~cnts. of tbt 5 t:tl' Ban~. (The p,,rllarnenturv Commi,lt:c 1 ' the cnurse of dist·U:-.:>io:! wanted to know w ' the n, crl Bmk could not fraiiC $tall Re;;ula'nlni uudey Se<:ll n 51l \\ben the S.ale BaP-'< ,:,mid frame suc•1 ~tatutory rcJ;Uiatnm.~ un1.1er Sc~t1<m 50 ,f the S•nl<' Bank of India :\ell There: I'S, nn doubt lha• under ::;ub-se<:\lon (II of !Serum 58 of th•! Rcs<'n'.: U:>nk of India ,\,·t, th• p• \\ cr< \'t'stc<l m the Cl"ntrnl Buard are w1de ,•ntl tht• Bo;.nd hn:; a 1lhonl\ lo make reg.u~aoons to pruv t-! for all matlcn for wh>d; pnw>.IOI1 Is 11e=c<suy or convenient f r the pur­po~c or gwmg ellen teo the pr<>\'t~ion< of that :\~' ,\, ,, known. lhl.' Hc~rn·e Bank of Inrh.J t·$.me into .·xis'-encc ov an t!r·:u tnu n\ uf llC$Cr\'t' BJnk or lndi.l Act tAc;t i';o :! , f !~:Hl :1nd s:tartc~i furu:uo1•· 111\: m w:l'• Aflcr th•· H<''U"CC B~nk s'.ar•ecl [>111 ·tiomng th·· Central JJ\)~\rd had to l'On::.idl•r tlv• qne:-.tlOJ\ ·~ fromine <i:IPt'roprhtf• tr.£'r\'lt'P

otondJl:Ol\'S rdatln~ lo tht: (lflicer:- und st;:,n ot ~""" l~t·;:i('l'\. n-.u1k

' l'ht• lirst titatl Hcgulattn h laving down the l'~rrns oomd C'(ltHHI !U:'l'l

n1 st.'r\'kl' <1£ t1w otliccrs ar• l thH ~t.itf! of thL' Reser\'£' Uank, werr pUl':)lll.llll 111 power:-: ,,f U)Gnfl ~<.~ment .mrl ·~elWt~tl supC'rmH·udPn.t..c Vf!S\l.,d by !:)ccLiun 7 ot thl' H.cstl'VC' thnk ur lndw :\d. I 1"11010d In

Novcn1bcr. UJ:~5 '"'ltir:h cwn.: tt> bt· rensed from UU\L· 11 tt n<..: d~ pet\J1ng on lhc U<~t!dS i.lt'ld c:<lgo?l'lcics of ~tdtnln15trallt1r and w cope wHo lhc changlng situutkm.s Tl!er~APCt the Slaff HcgttlaOU\S <:mhod\'UH~ Lkt-t:h:d tcl"m::. !uvl condi11ons of service lnl~

1

urlitW cun .. rlu,·t, dbt·,plirP aHU otlwr n'la1lcrs. Wt'Tr! £r;.inlcd m. l~J·Hi abo und(•r the s;:1m.~ pi.)\\'Cr!<o anc 10t under Section 5R n! the Ae1 \\~hilc the HCS('r\' Bani> 1•f !>1dia 1Staff1 Rcnuhlinn,., ls-!8 :;n f>·ame I bv tlw c,,ntral Board ll'(l dn\\'n in d.._tni) tne 1t!r!"l~~ il)ltl roruiitir I e. r·f $\'r·

\.1('4' includm" c•ptt·luct .md disciph11c vf P1e (tmr~r~ .uht ~~{,ITo! th~ lh::scrt.:c Uank Hc~ul hot\ fi tl'L't'f"Qf ii&~lpit•rl .a \e L'"l1<HW t1! \'ertln·~ 111 the (;overnor t.he po\\Cr to 1 tc pre: f'"e :-e~u1atl(ln::o .1nd 1

1 o to

1s~uc st.~ch ndmt'b trn•ive to~tru .. ·io'~ .L .... m ' be :. ce at' to l!i\'e ciTctt I<• ollie\ ta'T\' o I lh<' (l'lrPO'C.• of lhC pro\i<'nn.. (•f th•• rcgu\~· hntts ~nd otlwn\ t~c tu ·ccur(' cff~·th P ontru o£ tl) .,... 'r'1 ;l\)u\ c tel·hruquc was cmpluvcO c-o 'h::t.t •he- (~· • •rr. oultl J~lll" t~d mlnistrntJ\'e m$trU<.~ioru. 3.-;; n .tn- b·· '"~t~cCS$:tn· to tlccl \\'1'"' the ~atu ~'Laons emerging frnm. time t, time Th11u. 1 Ulcrc b no m:ner1dl l'<'llhlv av.nwl:-lp the ob\lo , rc , "l "'" the Central Bn rd n£ 11•~ lt..:~er~·c B.utk cilo~t· to framf' ·he n{P1-~t<tltaOt\: s•nf'f Rrt•datltlOS coupled with the te lm\qu<> men'lof'rd ea<lwr wa< •t-n> ·u<h a mea-

t

45

sure'"'"" fnunu arlrnllli>tratlveh· cxlremelv convenient for dealing wtth the matters conccrrung officers ~d staff employed by the Rcscn·.., Bank. At till.· cost of repetition it may be stated that those rcgulati<ms wetr• iramed before the Constitution v:~;;; emct<'d. There Cltn be no duubt aiJout the fact that in the judgem~nt of the t:cntr:rl &•arc) of the Re,ervc Bank the framing of non-statulor)• rcgulallo:>ns and confett1ng on the Governor power io issve ad­ffiiRistratlvc instn.ctions as may be nc:cssary to have effective <'On­trol or lht• staff was considered ~minenUy convenient as those ro>gu­lattons could deal with the staff relations effecth·elv in the ~hang­tug situation Further-more. the Central Board mus'i have belie,·cd that such non•stntutory regulations together with th~ power In issue adminislratl\·e in>Jtn.ctions pt'O\'idcd the reqwred fle'\Jbi­h(J in d~alin!: with tlw matters tclatinl( :o sl<Jff manal(ement.

Stnre the JtcsL--r\'(_) l3~utk sfnrlC'd runctioningJ a period (•f 5;; )•t•ar~ has cl~p:;ed :u\ l both qu~ntilitth·c and qualitative change3 have tak­en plncc- WJLh rc,pect tu matlcr~ relating to the terms and conditiou, or St•rviw. crmrluct <tnd chsctpllne oi officer.; and staff of •hr! Resen ~ tlank Ovet· th~ ycnrs. several Administration Clrc11lars h~\...- b~en issued sovcrninl( the relulionship between lhe Bank Jnd Its em­!Jloyecs. Likew••u, ~ctllcmenls and awnrds have brought oboul con­"dcrublc c·h:m•~en in the• nahJt'o and complexion of the rela1ionship between lhe fl:mk and Hs staff particularly lhc workmen sl>~fl' licsultnmly lht• ~:r~nt or st~ff relation canuc.l he r01mrl mereh· in lhc pJ·uvisinns of Reserve Bank of lndia (Staff) Regulnlions. Jq48 I:Jut in scvcr:1l Admmistration Circulars issued from tirn~ to ,,rn,, ~ctllemcnts rc~ched betwP.en the Bank and its emplovee<. Awards made durin~ lhe course of indu~trial adjudication. etc In spite of the trancnclous changes brought about in tbe slaff relation and r.ot. withstunding the enormous difficu11ias and considerable amount of inconve'!liencc which would ent3il if the staff matters are to l:c embodied now in the form of regulations io be framed under,Scc­tion 5& of th~ Reserve Bank of India Act. the question was consi­dered afn•sh with utmost dcferc·nce to the \'iews e=")lrc'"<'-1 bv the Pnrliamcntary Committee. The matter was also referred to ''"' Bank\ Legal Department for their opinion whether the Staff R<'­gulat!ons could now be framed under Section 58.

The Legal Department which has consir!ered lhe matter from all ib :>ngles has expres:o·<'d the views as follows-Sub-section (21 of :SCction 58 crmrneratL'S various items for which provisions coulti be made ~· frnming rl!sulntions under that section. Among'" lbr»e Items. making of provisirms for dutiEs. conduct and other terms and COndltinM n( servire i~ not specifical!v provided. Accorriingly, the <)u!'StiO"' ha$ tn be r•nn~•dcrc';i whPther 'th~ gell6'~1 pnwers <"Onferrcd

on tho Centro\ Board unrler Sub-se .. li<'ll (1) could hr. I!Wokr,i for maktng Staff Re!(lllations dealing with the terms and conditions of service of the officc!'1' and staff, their conduct. disc.pline and nll other connected matters. ~o doubt, the power conferred tm thE: Central Board by Sub-section (I) of Section 58 is wide 1n its <w~cp but the powcr,; conferred on the Central-Board can be cxcrci•ed '"bJCCI to the condition prE'ce:lent Utat the Central Board should bc <1£ the <~pinion that the making of provisions by framin~ any regula­tions thereund•·r is necessary or convenient for the purpose or gwing effect to thl' provisions of the Act. (lncidentally, in sevt'ral of the p<><t-Constitution enactments. the expression usee\ b une=sarv or t.t·ptd,enr and not co<t,·enicn< ) lt is well s~ttled that statutory au· thority cropo\\-.-red to make Subordinate Legislation must act stricti)! wlthll' the limits of the powers grunted to it bv the legislature. ln this co<\te~t. the decision oi tile Suprem~ c.;un rrported in AlR 1972. Sup~me Court page 2427 may be seen In para~rnph ti of lha t ]udgement It Is laid down" ....... authority vested with power nr n>OI<tng ::;ubordinnte Lef!is)ation has lo act within the limit~ II( il!i p11w~r and cannot trans~ri'-Ss the same The initial different~ bclWCP.Il Uw Subordmn l~ Legislation and the statutory lnw lies m lhl' lud th;~t a subo•·clin:11e law making hodv is hound by ln• tNm' of ils dc•lrgatcci tlr d~rived :tulhority and the Court of Law os n genet•:~ I rule, will nol (live <? ffect \o the rules, thus macle, un less snlis­n~d of the conditions po·eccdcnl to the validity of the rules have been sati,fierl 'rht' question to be- considered. th~re­rorr IS whotber the Cen\Tal Board o! th~ Re~crvr· Bank lOult.l nnw form an opm•on thal making of Stall R~guln­tinhs ha• b~come necessary or con\·enient for the nurpose of aiving effct'l to the pro\'is>ons of the Reserve Bank of India i\ct. It i> lrue lhnt the mallcr of forming such an opinion i., left to lhe subjecli\•e 'ahofachon nf lh~ C<ml ral Board. But tlw Central 'Board. wn\1., f.,rnliOJl ~\lCh nr npininn, has to l>Onnfide 3l'ld honestlY b~JlP.\'C that II hn.s h~comc nC"£"es~rv m· convC'nient to nnkc provistnn., rcltttinrl1o ~tali matters bv framin~ regulaliOIIS under Seclion f>!l an·l that too Cor the purpose of eivin~ effect to the nrm•isions of the A!'l In ~hort, in order to invoke :he authnri\\' vested ·;n the Ct>~t1r:tl Board tmder Section 58. It woulrl he neoe"saTY !or lhc Crntral Bo3rd to form an opm1on (a) thot the makinl! of pro\·ision' bv \\'3\' oi ;tatu· tor,• rc~ulation~ is neO:C$"5.atY or t:on\'enient. and (b\ that the\~ :tre nt•c!'iS:IT\' nr convenient for tbe purp<>S" n£ l!i\'in:: C'ff<'ol In thl' pro­, .. .'!;on f'i. the ,.\ct ;:tnt\ not ior anu odapr OtarpOs"' Thuot- w'dle \~e p<>wer or th" C<'nlrat B');lrd to make Staff R<·onhtiuns uruer Sub­<~<'lion 1 I) of ~~ctlon 5~ is not in doubt that the conditions pr~ clenl fi.e. the re((Uilllions are necessary or convenient for thr ourpos• of givin~ effect to the provi<inns or the Act) lair! down therein have

47 to bc $ntJsfk'd for exercising such power cannot be disputed. It Jollows, therefore that if lhe C'cntral Board honestly belie\ e> that ll ts now wholly unnec('ssary or totaliy inconvenient to frarn~ re­gulataons fot· providing for sta!I matters for the purpON' or giviny effect to the provtsions of the Act, it will not be permissible fnr tl~t• 13onrd to exercise the powers ,·ested tn it under that suh-sectmn. It appears that tn view of the developments taken place s:nce t~e Heserve Bank ~taned functioning in 1935 and in view of the ~"''C· rnl Administration Circulars isoued for regulating the conduct. db­cipline. term,. and conditions o! service as also in the li~ll of cqm. plcxities arising nut of settlements. awards etc.. it would not be possible for l.bc Central Board to form a bonafide opinin:1 th:ot 11 would be nC!Cessaf\· or com·enient now to frame statutory stalf He­gulations for the purpose of gi\·ing effe~t to the provisions of the Act. lf that is the situation. •t wcmld not be in order for WI' Cen· tr~l Board to mvokc the general power.> conferrt:d•• under Sub. section (2) lr) cannot al!io be pre;.,cd into sen·ice for framinl! Stall .Hegulatlons und~r Section 58.

'l'he above general view applies to regulations for both cfficer and workmen employees. The tUiliculties that would arise if statutory re­gulations nrc framed tor workmen employees have been appreciated by t he Parliamentary Committee on Subordinate Legislation. The !raming o! statutory regululions only Cor officer staff is also not practica l>lc in the Reserve Bnnk, a>; unlike in the nationaliscr.l bank,; nnd the State Sank of Indio. in th(;! Resel've Bank the workmen em­f loyecs on promotion lo officer's grade arc appointed ~o officiote ~gainst short-term and long-term vacanc4;~ and are reverted rc1 their substantive grade fl'cquenlly ond it wou ld be di fficult and complica­ted to apply two seJs of rul~s to such workmen employees pl'omoted to olllciotc In the officer~ grade. Further. e,·en in the case of officer starr, the Reserve 'Bank hold. discussions with Officers' A~<oclations periodicollv ;md reviews their terms & conditions of servi~e broad­ly in view. the Government's policy and the practice in the Banking Industry. If statutory regulatiOil!; are framed. it would require frequent change.• . Under the exbling regulations. the changes are given t>/Iect to by means of Administration Circulars issued under .Kt>gulntlons 6.

'l'he Committee has suggested framing of statutory regulations for recruitment. The existing Staff Regulations do not contain detailed

••on It by sub-section (1) of Section 58. For the same reason, the general and Incidental power conferred-

provisions regariling recntilrnent. However. there is a set pult"Y rc· Jnling to the recruitment for all classes of staff in the Bani:. Furtllcr. the Bank has ~'Onstituted an independent body t>iz. the Reserve Bank of !nella Servite3 Bo~nl for t-ecruitrnenl o{ the oltict-rs. If we fr~mt> ~ta:utor~ rcQulatinos for recruitment, it is likely to unneces­sarily it\\'olvc the Re<cn·c fl3nk in mnr" litigalit\n all ewer the coun­try. Io view of the hi::h legal cr>sts, it would he :t burden <n the !lank's rcsourcl!ol to defend t·ases filed oy candidatr.s who are not ~·clt>Cled. The constnutional. rights under Articles g and lu arc surr • cient to tnke c:u-e that the Reserve Bsnk does not net :.rbilr.orily In '''h·<:tton uf r-andiciatt•s

In tlw ll~ht uf the ahnve, one ~annot honestly and JUStitiably re· comm<'r\d w 1hr· t'entrnl Boa1 d uf the Reserve Dank the n·,nl;lng 11f Shill' Re~ulations or Regul:!tians for recruitment under Section 58 ot tht· Heservc 13nnk of India Act. at thi.< stage

•

f '

•

l

M!Nt.'I'ES OF THE :'-1EETING Of' THE CO;\UDTIEE ON SUBORDl~ATE LEGISLATlOJ\

u

SEC0!'-'1> MEETING

The Comm1ttcc mel at li.OO A.M. on Wednesday, the 5th Jun'!, 1!:35, in Comnlilte<: Room 'A" Ground "Floor. Parliament P.ouse An-

nexe, New Delhi.

t Shri M KalyanasundaNrn-iu the ChaiT

2. ShTI La\ K. Advoni a. 8hri S. W. Ohnbe ~. Shrimati Krishna t<aul ~. Shrima\i U~ha Malhotra 6. Shri Dhuleshwar Mcena 7 Shrl Mahendra Mohan Mishra 8 Shri Sushi\ Chand Mohunta 9. Shrl Tbangabtlalu

S!!CRET ,\'RIAT

Shrimali K. K. Chopra, Additional Secretary Shrl R. N Rhardwaj, Set~ie»r LegislatiVe Committee Officer

2. ln the J.bsence of the Chai.rman. Shri M. JCa\yanasundaram

was voted to their Chair .

• .. 3.

4 . MEMORA.'IlOUM NO- 3/85 Rc~en•c bonk uj Jmdo Ad. 193-t--Rulcs/Regulalion~/Schcnt<' nuul~

under lhP-

The Committee con~idercd tbe abo\'C Memorandum. The Com· miltec was not sati•ficd with the comments furnished by the ~tini>· If'' of Finance in conneotion with non-framing of regu\atictn~ rc• yarding the recruitment of Staff of Reserve &nk of 1ndia unrler Scc;1on 58 uf the Aet ;ond following only a set procedure in the

-• Relate to :natters not incl~1ded in the Report.

51

-52

maller nf recruilmt'n\ nf ~lalf The CNnmtltee al<<' obsen·e<l that "''en the Rm;erve B;tnk ol lndt. (Staff) Regulations 1948 were not regulations in the proper sense of the term since specific power either under Section 53 or Section i (:!) of the Act seems to have been invoked in the preamble. {Taming 1he same. After some dis· cus.,ion thu Committee decided to ha,·e {urther clarificationsle\ucidl•· t•ons [ron' the MinislrY. 'l'he Commi\tee directed the Secretarial to make reference to the l\.titustrv in the light of discuss•on held in the meeting. 'fhe Committee also decided to hear the secretary "'lin­istry of Finance (Banking Did>ion) and the representati•:es of the R . S. I . aner the c<>mments from the Ministry were received .

• * •

5. • 6. The Committee then adjourned at 12.10 P.M.

---

N!NTii MEETING

'\'he Committee n1ct at II OU ,\.M qn friday. the \6th .January, \fl(\7 in Committee Room '.'1.' PorUa1neni House Annexe. n,•w Delhi.

Mt].UJJ;H~ Pll£SE:NT

I. Prof. N. M. Kamblc-Chntrm<Ht

'.!. Shri Tiralh Ranl A.JDla :!. Shri Vithalrao Madhavrao J adhav

4 Shrimali l<aila•hpati 5. Slvi M~tkh\lar Singh Ma1ik

6. Sbrl :Mahendra )ioban Wsbra

7. Shri P. Babul Reddy

11. Shri Sukomal Sen !l . Shri Kcsh<lvprasad Shukla

10 Shri 'fh;mgabaalu

Srnt. !(. K. Chopra, Addi~iO!tal Secretary :)hri R. N. Bhardwa). Chid Lr.!J Com. OjJi~a Shrl R. B. Sharma. Senior Leg. Com. Ojftcer --- - ----

••• Relate to matters nol included in the R.eporl.

•

L

l

53

7'1'1L1 1\t.~'-'' e Ba,.l~ v) Jndlu A 'l, l':JM-RulesJReg,d;' o • , tade

u rld~r l he-

TiJc ..:o:nna llec vJlStd~:rer.f tnt."' :\a~tn\.1! dr,dwu 111 ~omc dctat-'S 'Jiu: Curr 'llH I Chd no" a'-= d.'!- t ti.c p:oprltly of rc~ortmg to thl1 tssue (,;,i .. dnlnu .. tratJ\'c ~nstn .. _t.Lns r ._ regulo..H.r~.o tne recru.'L""~·cn~ Cj:nd ,crvlrl! Cund1Uuns of '-'· p oyc<.•., of ht R.:s;:.""n·e Ba.!l. in preil·r­encc to I~ \log do\ 11 of ~t:h Of) egub.t v.1s 0:1 Lhfl ~ub,'"~"- The <.:ommlltee ob..;cr\ocd 1at tl.to') t.J;u..ll"!''o~:n:, tN ca·c~venL :: cf the !'(>qu!rcme•.ts uf ,uy.ng tne r~'1U ,J • n!'s the Table of tht.! lto~C3. lhtb d"''Yillg the lku es ''• Par.i llD<·n· .he o;:>;:-ont.m t:. u 1d~r the :nw to modi!\ c annu I t <IL'11c ,,,,fti.. tl.e pr.-"~rl<·&l per>uJ. Tt'lls alSo Ic~u lt.•\.J n :a "'"dt ..>1 ( i ,... Cl: ~t~\.'tJ obJect of f·u1 L;lmen­t~trv coul.rol O\'Cr c\.cr~at"t l>! tt.&lhc r .y c:T dd~,ga!ed te~is. .• tion

Aftttr su 1c U.s-·u . .::;.l .. n t te o2onJmt~l.~=c dt~t-~ .. :eo that o reference 1.;.- mndc lu the ~fln,Sft~ Z'C~t(IO(, f'11rther L ... J.t'iJku.ion:: ;1, llt' ight ro(

Lhc di.scu~"'·)wn:-; ncltl tn lhc mt:tt.l1g 'fl1e Cummit!cc nbo tlt,;"C'idctl to lthtr the ::>ecrctdry of th~ ~.limstry of r·n r.,~ :a s;ro;; I~r~hcr clartfi· cation~ in tho rna; le1

:1. ·-1.

5 'rl>~ Comuutt(•r lhan aci,curned 8t 1~ loP .'II.

VIJ

SEVENTH :\fEETlNG

,

The Committ~e met at 3 110 P !II on Thur.>rlay the l~tu Janu­a.ry. 1989 In Conunitlee Room 'A 1-'arl!ament House Anne>:e. New J.JeJlll .

MtMr.ER.S PP.£.~);:,,.

I. Chowdhar,• R.1m Se·.,·ak-ChamoaH 2. Shrt La! K Advani 3. Shri Tridib Chaudhuri 4. Shri Durga Pra.,ad Jamuda 5, Shri Thomas Kuthira\'8ttom 6. Shrimatt Shanh Pahadia 7 Shri Chandr:ka Prasad Tn!Jathi 8 Shn Kapil Verma \I Shrl l<n Dutt Yad•v

••• Relate to outliers not tnducled in th<> R~por:.

54

SECRETARJ~T

K. Chopra, tldditiona! Secretary

• • • • !';o 8/83

Res<!'rt'(' Bank of Indm Act, 1934-Ru!esfRcgu'~tiO>tsiSchem~ mad~ ''n..r~r : hP.

The t:ommtllce con<tdt'red the aoo,·e l-icmorandum 'I'I>e Cnm­matee was nol •. tt ed ,_,, h tJ..c exnlanatton gi,·tm by the Mani•try of Fi'l:lncc <>n t"1e po:nt< '"3ls<cd .-\Iter ·orne diS<:ussaon, 11c Clm­mattct> dcctdctl In h "' ~,., S.. · ~tar~ oi •he :.lt:ustry uf F•nancc ~nd IIISO the s,.~rcllrv t•f Mm!Strv of uw & J::<ticc ... :urhcr rrurltitntion

4 • • ... • • • r, • • " •

';' Tht- CommL .. t~ th::n adu1urned .,.t :~ -~:n P ~I tJ mr.C'' arr.un "' 31lU I' 1.1 nr i.'rirfa,· tilt' l1'l1 J ,,.,,,.~. 1'JP.9.

II

II\ I' t'r>ll'm11tc.., ""'' a l 11.00 A, 1\1 nn Friel"."· tc.c 25tl. Octob~r. 1'1!11 in Collllllili"(' noom 'A' Gl'Ollntl Floo•'. Parlimnrn Hou~e Annex,, Na•w ()~!hi

~hr ' • -'s 1 D~ 11 C'JHtJrPdln

Shrt 13h111'r-esh l'lt.t!urvt'<ii s,"., ~ld Salin• -;•.. \T~n::., Pacl-n.a:abha•n <ihrl Prw 1 K• r- a San""''"") :-;hnm.tl Prut hh• Smgh Xhr G (; SIYe'l Shr• A•hok Nath \'erma Sht 1 ~ Vkluth rtrl1'1J1

!-.tor· H S r• R Siu1 A

S:rRI:T\R: H

'I h .n /)• ·cc•fl• ( ...: ... rnA. { 1·d..er St:cr~'IJ.""'J K ':; nr.h r.m·rtJY rftee Oflil'("f

r~"'' ,. t, m • 'C'" "' t ''l.'"'!udcd l'l \he Rerynrt

1

"' • 5S

2. MEMORANDUM :No 3/~l

Tlci!Crt:e Bonk of lttdra ..tcr, 1934-RulesfRegu4Jr,On8/Sche1114 nuute under th.._

The Cornrnntl!e considered the above Memorandum. lt was not, r •kltlg both the legnl and the pr.lchcabilit.'· P<>infl; of View, satis­hed WJth lhe rcaaoning of rhe Rescn·e Bank of India and the Gov. ernrnen: and was of t11,. consid<'red t~<'W that il was essential that the Staff Hegulnhn~~s under Sectron 58 of the Ac; should be U.l­rned \\~lhout any further deL;y as that was the P<>licy laid down by r;,., 1 t'gJsiltrrm• 'rJ1~ C •rnmntt~ thPn de~ded to report rnnuer :o lh·· Hnus<•

. ~ • •

•