NATIONAL INDUSTRIAL TRIBUNAL (BANK DISPUTES)

AWARD
ON THE
INDUSTRIAL DISPUTES
BETWEEN

CERTAIN BANKING COMPANIES AND CORPORATIONS

AND

BY

AI

PRESIDING OFFICER

BE

THEIR WORKMEN

SHRI JUSTICE KANTI LAL T. DESAI

(CHIEF JUSTICE OF THE HIGH COURT OF GUJARAT)

JUNE, 1962

REPRINTED BY THE INDIAN BANKS' ASSOCIATION, BOMBAY

BY PERMISSION OF THE GOVERNMENT OF INDIA

Introductory
Genesis of the dispute
Parties to the dispute
Categorisation of banks and areas
for the purposes of this adjudication
(i)
Categorisation of banks
(ii)
Categorisation of areas
Scales of pay
(i)
General
(ii)
Principles of wage fixation ...
(iii) The 15th Indian Labour Conference
(iv) Index Number
(v) Base Year
(vi) Consumption Units ... . .
(vii) Co-efficient
(viii) Ratio between minimum and maximum
(ix) Span
(x) Increments
(xi) Efficiency Bar
(xii) Capacity of the Industry to pay
(xiii) The National Income
(xiv) Productivity of labour
(xv) Erosion
(xvi) Prevailing rates of wages in comparable
concerns
(xvii) New scales of pay ...
(xviii) Poddars, Money Testers, Collecting
Sircars and gollas
(xix) Part-time employees
(xx) Apprentices
(xxi) Probationers
(xxii) Cooks and domestic servants ...
(xxiii) Supervisory staff
(xxiv) Special allowances
(xxv) Method of Adjustment in the
scale of Pay

Paragraphs

Pages

1.1 to 1.25
2.1 to 2.15
3.1 to 3.7

210
1116
1620

4.1 to 4.129
4.130 to 4.190

20-56
56-82

5.1 to 5.34
5.35 to 5.47
5.48 to 5.63
5.64 to 5.69
5.70 to 5.75
5.76 to 5.80
5.81 to 5.96
5.97 to 5.102
5.103 to 5.116
5.117 to 5.123
5.124 to 5.136
5.137 to 5.170
5.171
5.172
5.173 to 5.175
5.176 to 5.178

82102
103 108
108114
114116
116119
119120
120126
126127
127 129
129131
131134
135149
149150
150
150151
151154

5.179 to 5.188
5.189 to 5.190

154157
158

AI

I
II
III
IV

Contents

BE

Chapter

(xxvi) Reliefs
(xxvii) Dearness allowance with particular
reference to the -question whether any
part of the existing dearness allowance
should be absorbed in the basic pay
VI (i)
House Rent Allowance
(ii)
Other Allowances
(iii) Travelling Allowance and Halting
Allowance
(iv) Joining time on transfer
(v) Leave Fare Concessions
VII Provident Fund, including the rate of
contribution and the rate of interest
VIII Pension and gratuity
(i)
Gratuity
(ii)
Pension
IX Leave Rules
(i)
Existing leave rules
(ii)
Privilege leave
(iii) Casual leave
(iv) Sick leave
(v) Quarantine, Extraordinary and Maternity leave
(vi) Special Casual Leave
(vii) Study leave
(viii) Leave preparatory to retirement
X Hours of work and overtime
(i)
Hours of work
(ii)
Overtime
XI Medical aid and expenses
XII Cash deposits, fidelity bonds and other securities
to be furnished by the staff
XIII Uniforms and liveries
XIV Need for maintenance of seniority lists
XV Age of retirement
XVI Categories of workmen to whom the award of
the Tribunal should be applicable ...
XVII Subsistence allowance during period of suspension
XVIII Procedure for termination of employment and
taking other disciplinary action

TABLE OF CONTENTS

5.191
5.192
5.193
5.194 to 5.195
5.196 to 5.219
5.220 to 5.328

158159
159
159
159160
160170
170200

5.329 to 5.361

200-209

5.362 to 5.370

209-212

5.371 to 5.394
6.1 to 6.27
6.28 to 6.64
6.65 to 6.84

212-225
226-231
231-240
240-249

6.85 to 6.86
6.87 to 6.94

249
249-251

7.1 to 7.43

251-264

8.1 to 8.42
8.43 to 8.63

264-276
276-281

9.1 to 9.9
9.10 to 9.13
9.14 to 9.16
9.17
9.18
9.19 to 9.26
9.27
9.28 to 9.33

282-290
290-291
291-292
292
292
292-294
295
295-296

10.1 to 10.20
10.21 to 10.46
11.1 to 11.20

296-301
301-311
311-318

12.1 to 12.14
13.1 to 13.16
14.1 to 14.12
15.1 to 15.13

318-322
322-324
324-328
328-331

16.1 to 16.11
17.1 to 17.15

331-334
334-336

18.1 to 18.28

336-347

"E"

"F"
G

347-356
356

21.1 to 21.29

356-369

22.1 to 22.21

369-379

23.1 to 23.44
24.1 to 24.2
25.1 to 25.3

379393
394
394395

APPENDICES
Government Order/Notification No. 705, dated 21st March, I960,
No. 1449, dated 4th June, 1960, No. 704, dated 21st March, 1960
and No. 706. dated 21st March, I960
396-400
List of appearances
400-402
Interim Award, dated 14th December, 1960 ..
403-409
Order of the National Tribunal (Bank Disputes) Bombay, dated 31st October, 1960
regarding Section 34A of the Banking companies Act, 1949
409-431
Order of the National Tribunal (Bank Disputes). Bombay, dated 18th -November,
1960 regarding bringing on record the Reserve Bank of India as a party to Reference
No. I of 1960
431-440
Order of the National Tribunal (Bank Disputes), Bombay, dated 16th January 1961
regarding the issue of summons for, procedure of documents
440-444
Order of the National Tribunal (Bank Disputes), Bombay, dated 20th January 1961
regarding the furnishing of the certificates by the Reserve Bank of India under Section
34A of the Banking Companies Act, 1949
444-449

NOTIFICATION
New DeIhi-2, the 13th June 1962
S.O. 2028. In pursuance of Section 17 of the Industrial Disputes
Act, 1947 (14 of 1947), the Central Government hereby publishes the following
award of the National Industrial Tribunal, Bombay in the industrial dispute
referred to the said Tribunal by the notifications of the Government of India, in
the Ministry of Labour and Employment, Nos. S. O. 705, 1449 dated
respectively the 21st March, 1960 and the 4th June, 1960.
BEFORE THE NATIONAL INDUSTRIAL TRIBUNAL (BANK DISPUTES)
AT BOMBAY.
REFERENCE NO. I OF 1960.

In the matter of disputes between the Banking Companies and

Corporations specified in Schedule I to the Order No. S.O. 705, dated the
21st March 1960 and in the Schedule to the Order No. S.O. 1449, dated the
4th June 1960 of the Government of India in the Ministry of Labour and
Employment,

BE

B
C
D

19.1 to 19.22
20.1

AI

MINISTRY OF LABOUR AND EMPLOYMENT

XIX Date of effect of the new award and option, if any,

to be given to the existing employees to retain their
present terms and conditions of service
XX Need for interim relief
XXI Difficulties and anomalies in the operation
of the existing award
XXII The need for the development of the banking industry
including banking facilities in rural areas, and
Special needs of the State Bank of India and
its subsidiaries, in respect of any of the foregoing items, having regard to their responsibility
for the conduct of Government business
XXIIIAny other question connected with or arising
out of, the foregoing matters
XXIV
Costs
XXV
Acknowledgements

and
Their workmen.
PRESENT:

The Honourable Shri Justice Kantilal T. Desai, Presiding Officer of the

National Industrial Tribunal (Bank Disputes), Bombay. (Now Chief Justice of
the High Court of Gujarat).
APPEARANCES:
As in Appendix B.
INDUSTRY : Banking.

[PLACE : Bombay.]
Dated, the 7th June, 1962.

the 21st March 1960 to all the 67 banking companies and corporations referred
to in the Order banking companies and corporations on the one hand and
their workmen on the other.

AWARD
CHAPTER I
INTRODUCTORY

BE

1.2. By an Order bearing No. S. O. 705, dated New Delhi, the 21st
March 1960, the Central Government being of the opinion that an industrial
dispute existed or was apprehended between the banking companies and
corporations specified in Schedule I to the said Order and their workmen in
respect of matters specified in Schedule II thereto, which were either matters
in, dispute or matters connected with or relevant to the dispute, and that the
dispute involved questions of national importance and also was of such a
nature that industrial establishments situated in more than one State were
likely to be interested in, or affected by such dispute, and being further of the
opinion that the dispute should be adjudicated by a National Tribunal, in
exercise of the powers conferred by sub-section (1A) of section 10 of the
Industrial Disputes Act. 1947, referred the said dispute to this National Tribunal
for adjudication. Schedule I to that order specifies the names of 67 Banks.
Schedule-ll refers to 22 matters in all. A copy of the said Order forms part of
Appendix A

1.6. It took some time to set up the secretariat of the Tribunal. On 19th
May 1960, a preliminary informal meeting was held at which representatives
of a number of banking companies and corporations and of some of the
important workmens organisations attended. At that meeting, the wishes of
those who attended in connection with the filing of the statements of claim
and the filing of the written statements to such statements of claim were
ascertained. As a result of the informal discussions which took place, notices
were issued bearing date 20th May, 1960 to all the 67 banking companies
and corporations referred to in the Order bearing No. S. O. 705 dated the
21st March 1960 and their workmen, requiring the workmen to file their
statements of claim on or before the 10th June 1960 and requiring the banking
companies and corporations to file their written statements in reply to such
statements of claim on or before the 11th July 1960 and fixing the date of the
hearing of the Reference as the 20th July 1960. By the said notices the
banks concerned were required to cause a copy of the notice to be served
upon the secretary or where there was no secretary upon the principal officer
of the Trade Union or Unions of their workmen and to exhibit a copy of it by
afixing it at or near the main entrance of all their establishments. The banks
were also requested to exhibit a translation of the said notice in the regional
language of the place where the notice was exhibited and to intimate to this
Tribunal about the aforesaid requirements having been carried out by making
and filing an affidavit to that effect. After the receipt of the Order bearing No.
S. O. 1449, dated the 4th June 1960, whereunder 17 more banks were included
in the Reference, notices dated 8th June 1960 were issued requiring the
workmen of the newly included banks to file their statements of claim on or
before the 25th June 1960 and requiring the banks concerned to file their
written statements on or before the 11th July 1960 and fixing the date of the
hearing of the Reference in their case also as the 20th July 1960. These
notices contained other directions similar to those contained in the notices
dated the 20th May 1960. The aforesaid notices have been duly served upon
the banks concerned and their workmen.

1.1. By a Notification bearing No. S. O. 704, dated New Delhi the 21st
March 1960 the Central Government in exercise of the powers conferred by
section 7B of the Industrial Disputes Act, 1947, constituted a National
Industrial Tribunal with headquarters at Bombay and appointed me as the
Presiding Officer of the Tribunal. A copy of the Notification forms part of
Appendix A.

AI

1.3 By another Order, bearing No. S. O. 706, dated New Delhi the 21st
March 1960, the Central Government in exercise of the powers conferred by
sub-section (3) of section 10 of the Industrial Disputes Act, 1947, prohibited
the continuance of the strike which was then in existence in the State Bank
of India. A copy of the said Order forms part of Appendix A.

1.4. By a further Order bearing No. S. O. 1449, dated New Delhi, the 4th
June 1960, the Central Government being of the opinion that the dispute
which had been referred by the earlier Order bearing No. S. O. 705, dated the
21st March 1960, was of such a nature that the establishments in the banking
companies and corporations specified in the Schedule to the said Order
dated the 4th June 1960, were likely to be interested in or affected by such
dispute in exercise of the powers conferred by sub-section (5) of section 10
of Ihe Industrial Disputes Act, 1947, included in the said reference the banking
Companies and corporations specified in the said Schedule. In the said
Schedule, the names of 17 banks have been set out. A copy of the said
Order forms part of Appendix A.
1.5. As a result of the aforesaid Orders, the dispute in respect of the 22
matters referred to in Schedule II to the Order bearing No. S. O. 705, dated

1.7 On 25th May 1960, the All India Bank Employees Association filed
an application, being Miscellaneous Application No. 2 of 1960, dated the
24th May I960 claiming 25% of wages with a minimum of Rs. 25 per month
by way of interim relief. By Miscellaneous Application No. 4 of 1960, dated
the 25th May 1960, the New Citizen Bank of India Supervisory Staff Union
claimed interim relief at the rate of 25% of the basic salary with a minimum of
Rs. 25 per month. The All India Bank Employees Federation, by their,
application being Miscellaneous Application No. 7 of I960, dated the 1st
June I960 applied for 25% of wages as and by way of interim relief for all
workmen. The State Bank of India Employees Association (Bengal Circle)

would be caused to the workmen if such allowances were not paid. The
question of the grant of travelling allowance and halting allowance was at one
stage linked up with the question of the representation of parties by legal
practitioners as some of the banks were desirous of being represented by
legal practitioners before the Tribunal. By section 36(4) of the Industrial
Disputes Act, 1947, it has been provided that in any proceeding before a
National Tribunal a party to a dispute may be represented by a legal practitioner
with the consent of the other parties to the proceedings and with the leave of
the National Tribunal.

1.10. The Supreme Court in the case of the Punjab National Bank Ltd.
vs. Industrial Tribunal, Delhi, and others, reported in 1957 Supreme Court
Reports Page 220 [1957 (I)LLJ 455] has held that it was a negation of Justice
and reason to direct the employer to pay in advance the travelling allowance
and halting allowance costs of the Union representatives irrespective of the
final result of the proceedings and that the practice followed by some of the
Tribunals in awarding the same was unwarranted by law and principles of
reason and justice. In that case the Supreme Court set aside the order of the
Industrial Tribunal, Delhi, granting travelling and halting allowance to the
representatives of the various Unions pending the proceedings before the
Tribunal. The Supreme Court in another case reported in 1960(I)LLJ page 567
between Rohtas Sugar Ltd. and others and Mazdoor Seva Sangh and others
set aside the order of the Labour Appellate Tribunal at Dhanbad, whereunder
the Labour Appellate Tribunal had confirmed the order of the Industrial Tribunal
which had awarded travelling allowance and halting allowance to workmen
and which had directed that the workmen attending the proceedings before
the Industrial Tribunal should be treated as, being on special leave with pay
for the period of such attendance. In view of the aforesaid decisions, it was
not possible for me to give any relief to the workmen in connection with the
grant of halting and travelling allowance or to issue any directions that the
workmen should be treated as being on special leave with pay for the period
during which they attended the proceedings before this Tribunal.

AI

BE

by Miscellaneous Application No. 5 of 1960, dated the 25th May 1960, applied
for interim relief for the workmen of the Bengal Circle of the State Bank of
India at the rate of Rs. 25 per month. The Surat Bank Employees Union by
Miscellaneous Application No. 8 of 1960, dated the 9th June 1960 and the
Vadodra Rajya Bank Nokar Sangh by Miscellaneous Application No. 9 of
1960, dated the 8th June 1960 also asked for interim relief at 25% of the
basic wages with a minimum of Rs. 25 per month for all the employees with
effect from 1st April 1959. The State Bank of India Staff Union, Andhra
Pradesh, by Miscellaneous Application No. 14 of 1960, dated the 14th June
1960 applied by way of interim relief, wages for the strike period and other
reliefs for the workmen of the State Bank of India, Andhra Pradesh. The
State Bank of Patiala (All Cadres) Employees Association by Miscellaneous
Application No. 28 of 1960. dated the 16th June 1960 claimed by way of
immediate relief 25% of wages with a minimum of Rs. 25. After 17 more
banks were included in the Reference by the Order dated the 4th June 1960,
the All India Bank Employees Association by Miscellaneous Application No.
24 of 1960, dated the 21st June 1960, applied for interim relief also on behalf
of the workmen of the newly included banks. The Pandyan Bank Employees
Union by Miscellaneous Application No. 301 of 1960, dated the 12th August
1960, adopted the application for interim relief filed by the All India Bank
Employees Association and asked for further relief. The All India State Bank
of India Staff Federation which did not for some time participatein the
proceedings before the Tribunal by Miscellaneous-Application No. 293 of
1960, dated the 19th September 1960, claimed by way of interim relief the
abolition of Class IV area, the payment of Rs. 25 per month to every worker,
the payment of wages for the period of strike and the making good the loss
due to the non-implementation of the award as enumerated.
1.8. On the 8th June I960, another application was filed by the All India
Bank Employees Association claiming travelling allowance and halting
allowance for halting at Bombay for 71 representatives of the Association.
This application was followed up by various other applications made by the
constituent units of the All India Bank Employees Association and by various
Associations and Federations numbering over 800 for the grant of travelling
allowance and halting allowance during the time the representatives of work
men attended the proceedings before this Tribunal at Bombay. Facilities
were also sought for the representatives of the unions to remain present
during the proceedings.

1.9. The question relating to the number of representatives of the various

Associations and Federations who should attend the proceedings before the
Tribunal considerably agitated the minds of the workmen appearing before
the Tribunal. It was urged on behalf of the workmen that the workmen were
entitled to be. paid travelling allowance and halting allowance during the time
they stayed in Bombay for the purpose of preparing the case of the workmen
and for presenting the same before the Tribunal and that considerable hardship

1.11. The aforesaid legal position was pointed out to the representatives
of the workmen.Negotiations took place between some of the parties in
connection with the grant of halting and travelling allowance. Some of the
banks being somewhat keen on having their case represented by legal
practitioners, the All India Bank Employees Association on 21st June, 1960
filed a note before this Tribunal in which it was stated as under :
In terms of clause 36(4) of Industrial Disputes Act, 1947 the
Association records its objection to the appearance of any lawyer
in the adjudication proceedings under the above reference.
1.12. The All India Bank Employees' Association, the State Bank of
India Employees Association (Bengal Circle), the Northern India Banks
Association and others filed applications for holding the sittings of the Tribunal
at different places throughout the country.

1.15 As stated in the order of reference dated 21st March, 1960 the
dispute before me involves question of national importance. Often complicated
and important questions of law have arisen for determination by me. The
constitutional validity of section 34A of the Banking Companies Act, 1949,
was questioned before me and the matter was ably argued by distinguished
lawyers. Questions relating to the jurisdiction of the Tribunal, its powers and
authority, the true scope and effect of the orders of reference and the very
right of the authority making the reference in connection with some of the
items mentioned in schedule II to the order of reference dated 21st March,
1960 were raised before me in the course of the hearing. Full justice would
not have been done to these matters if the legal practitioners who had
specialised in labour and constitutional matters had not appeared before me.
In deciding these questions I have received considerable assistance from
legal practitioners appearing before me. In connection with matters which
come up for adjudication before National Tribunals, it is desirable that the
Tribunals should have the discretion to permit any party to be represented by
a legal practitioner irrespective of the consent of the other parties to the
proceedings. Where the stakes are large and the matters are complex, it
should not be placed within the power of any party to withhold its consent to
any other party being represented by a legal practitioner until due compliance
with some of its demands, however reasonable they may be from its point of
view, and to use the power of according its consent as a lever for securing
compliance with any of its demands. At the same time a National Tribunal
with its headquarters at one place when dealing with matters
affecting.employees all over the country employed in establishments situated
in various parts of the country should be in a position to give the requisite
directions which would enable the representatives of the workmen to appear
before the Tribunal for presenting their case and remain present throughout
the hearing which may last for a fairly long period.

(a)

AI

BE

1.13. The question of the grant of halting allowance and travelling

allowance to workmen and the question of some of the parties being
represented by legal practitioners was considerably agitating the minds of
the parties and the hearing had to be adjourned in order to enable the parties
to arrive at some amicable settlement. By 18th July, I960 it seems that some
understanding was arrived at. On that day the All India Bank Employees
Association addressed a letter to the Bombay Exchange Banks Association,
a copy whereof was sent to this Tribunal, wherein it was stated that the
Association had exercised its right under the Industrial Disputes Act in
informing the Tribunal of its objection to the appearance of counsel, but on a
reconsideration it was prepared to waive the said objection to help create a
congenial atmosphere and expressed a hope that the Bombay Exchange
Banks Association would also reciprocate in other matters. A similar letter
was addressed to the Attorneys of the Indian Banks Association and a copy
thereof was sent to the Tribunal. Ultimately the objection to the appearance
of parties by legal practitioners was withdrawn and it appears that some
arrangement was arrived at in connection with the payment of halting allowance
and travelling allowance. An agreement in writing arrived at in this connection
between the All India Bank Employees Association and the Travancore Cochin
Bankers Association, bearing date the 18th July, 1960, was filed before this
Tribunal. Under the terms of that agreement, it is, Inter alia, provided that the
member banks of the Travancore Cochin Bankers Association viz. The Palai
Central Bank Ltd., the Travancore Forward Bank Ltd. and the South Indian
Bank Ltd. would pay halting and travelling allowance to not more than three
employees, one from each of the above banks, to assist the All India Bank
Employees Association in the preparation and presentation of its case, that
all these three employees would be treated as on duty leave while they
attend the proceedings of the Tribunal at Bombay i.e. they would continue to
draw their usual total monthly emoluments payable at their duty stations and
would be treated as on duty for the purpose of other benefits and that they
would be paid travelling and halting allowances as under :
One second class return fare to each employee; and

(b) Rs. 10 per day to each employee from the date of depature from
the ordinary duty station to the date of return to such duly station,

provided that when the hearing before the Tribunal was adjourned for long
periods the employees concerned would return to duty and the fare as above
would be payable on each round trip.
1.14 Ultimately with the consent of the parties and with the leave of this
Tribunal most of the banks and employees Associations and Federations
were in fact represented by legal practitioners, a number of whom had
specialised in labour laws.. A list of persons who appeared before the Tribunal
during the course of the hearing of the main Reference on behalf of the banks
and their workmen will be found in Appendix B.

1.16. The regular hearing of the applications for Interim Relief commenced
on 12th September, 1960. After arguments were advanced at considerable
length by the numerous parties appearing before the Tribunal, the hearing
was concluded on 14th November 1960. The award of this Tribunal in connection
with the aforesaid applications will be found in Appendix C.
1.17. Applications were made by various Unions and Associations and
Federations of workmen for production of certain documents by some of the
banks concerned in this reference. The earliest application was filed on 9th
June, 1960 by the All India Bank Employees Association. Before the
applications were actually heard, the Banking Companies Act, 1949, was
amended with effect from 26-8-1960 by adding therein a new section 34A.
That Section provides as under :
(1) Notwithstanding anything contained in section 11 of the Industrial
Disputes Act, 1947, or any other law for the time being in force, no
banking company shall, in any proceeding under the said Act or in

any reserves not shown as such in its published balance sheet, or

(b)

any particulars not shown therein in respect of provisions made for

bad and doubtful debts and other usual or necessary provisions.

(2)

If, in any such proceeding in relation to any banking company other

than the Reserve Bank of India, any question arises as to whether
any amount out of the reserves or provisions referred to in subsection
(1) should be taken into account by the authority before which
such proceeding is pending, the authority may, if it so thinks fit,
refer the question to the Reserve Bank and the Reserve Bank shall,
after taking into account principles of sound banking and all relevant
circumstances concerning the banking company, furnish to the
authority a certificate stating that the authority shall not take into
account any amount as such reserves and provisions of the banking
company or may take them into account only to the extent of the
amount specified by it in the certificate, and the certificate of the
Reserve Bank on such question shall be final and shall not be
called in question in any such proceeding.

(3)

For the purposes of this section, banking company shall have the
meaning assigned to it in the Industrial Disputes Act, 1947.

AI

BE

(a)

State Bank of Patiala (All Cadres) Employees Association challenged the

constitutional validity of the new section 34A, on the ground that it violated
the fundamental rights guaranteed by Article 14 of the Constitution. A
preliminary objection was taken on behalf of a large number of banks to this
Tribunal deciding the question whether section 34A is void as aforesaid on
the plea that this Tribunal had no jurisdiction to do so. After arguments were
advanced at considerable length, this Tribunal passed an order on 31st
October, 1960 holding that the provisions of the aforesaid section were validly
enacted and were not violative of any fundamental right as alleged. This Tribunal
further held that the banking companies were entitled in the present
proceedings pending before the Tribunal to make the claim referred to in
section 34A of the Banking Companies (Amendment) Act, 1960. A copy of
the order made by me in that connection would be found in Appendix D.
Special Civil Application No. 14 of 1961 was filed in the High Court of Judicature
at Bombay by the Slate Bank of India Staff Union, Andhra Pradesh,
Vijayawada and the State Bank of India Staff Union, (Madras Circle) under
Articles. 226 and 227 of the Constitution of India challenging the correctness
of the aforesaid order. The said application was rejected by the High Court on
16th January, 1961. The All India Bank Employees Association filed a petition
before the Supreme Court for special leave to appeal to the Supreme Court
from the decision of this Tribunal and after obtaining such leave filed Civil
Appeal No. 154 of 1961 in the Supreme Court against the decision of this
Tribunal in connection with section 34A of the Banking Companies Act, 1949.
The All India Bank Employees Association also filed a writ petition under
Article 32 of the Constitution in connection with the said decision. The State
Bank of India Staff Union, Andhra Pradesh, Vijayawada and the State Bank
of India Staff Union, (Madras Circle) also filed similar writ petition before the
Supreme Court. Applications for the stay of proceedings before this Tribunal
were made before the Supreme Court and the Supreme Court on 16th February
1961 passed an order that pending the disposal of the Appeal arising out of
the aforementioned petition for Special Leave to Appeal and the Writ Petitions,
the proceedings in Reference No. 1 of 1960 before this Tribunal should continue
but no award should be made. The appeal and the aforesaid applications
were heard by the Supreme Court on 17th, 18th, 19th, 24th and 25th April,
1961. The Supreme Court delivered its judgement in connection with the
aforesaid matters on 28th August, 1961 unholding the constitutional validity
of section 34A of the Banking Companies Act, 1949, and dismissed the
appeal and the petitions with costs.

any appeal or other proceeding arising therefrom or connected

therewith, be compelled by any authority before which such
proceeding is pending to produce, or give inspection of, any of its
books of account or other document or furnish or disclose any
statement or information, when the banking company claims that
such document statement or information is of a confidential nature
and that the production or inspection of such document or the
furnishing or disclosure of such statement or information would
involve disclosure of information relating to :

After the enactment of this new section, various banking companies and
corporations claimed that some of the documents sought to be produced
and the information disclosed thereby were of a confidential nature and that
the production or inspection of such documents and the furnishing or disclosure
of such information would involve disclosure of information relating to reserves
not shown as such by the banks concerned in their published balance sheets
or any particulars not shown therein in respect of provisions made for bad
and doubtful debts and other usual or necessary provisions. The All India
Bank Employees Association, the All India Bank Employees Federation,
the All India State Bank of India Staff Federation, the State Bank of India
Employees Association (Bengal Circle), the State Bank of India Employees
Association (Delhi Circle), the State Bank of India Staff Union, Andhra
Pradesh, Vijayawada, the State Bank of India Staff Union, Madras Circle, the
All India Bank of Baroda Employees Federation, the Vadodra Rajya Bank
Nokar Sangh, the Indian Overseas Bank Employees Union, Madras and the

1.18. On 14th September, I960, the State Bank of India Staff Union,
Andhra Pradesh, Vijayawada filed Miscellaneous Application No. 291 of 1960
for bringing on record the Reserve Bank of India as a party to the present
reference. The said application was dismissed after hearing the parties by
the order of this Tribunal, dated 18th November, 1960. A copy of the said
order will be found in Appendix E. The aforesaid Union filed before the High

Court of Judicature at Bombay Special Civil Application No. 118 of 1961

challenging the correctness of the aforesaid order under Articles 226 and 227
of the Constitution of India. The said application was summarily rejected by
the High Court on the 6th February, 1961.

BE

1.20. The All India Bank Employees Federation filed Miscellaneous

Application No. 2 of 1961, dated the 19th January, 1961 before this Tribunal
in connection with the furnishing of certificates by the Reserve Bank of India
under section 34A (2) of the Banking Companies Act, 1949 in respect of 62
Banks appearing before me. Similar applications were made by the All India
Bank of Baroda Employees Federation being Miscellaneous Application
No. 3 of 1961, dated 20th January, 1961 and by the Indian Overseas Bank
Employees Union, Madras being Miscellaneous Application No. 4 of 1961,
dated 20th January, 1961. The aforesaid applications were made without
prejudice to the rights and contentions of the applicants in connection with
the validity of the Banking Companies (Amendment) Act, 1960 whereby
section 34A was inserted in the Banking Companies Act, 1949.

1.19. On 21st November, I960 the main hearing of the reference

commenced. Whilst the hearing of the reference was going on from day to
day, the State Bank of India Staff Union, Andhra Pradesh, Vijayawada and
the State Bank of India Staff Union, (Madras Circle) filed a joint application,
dated 2nd January, 1961, for the issue of a summons to the Reserve Bank of
India, Bombay, directing it to produce through any of its employees the returns
submitted by the State Bank of India to the Reserve Bank of India under
sections 25 and 27 of the Banking Companies Act during the years 1955 to
1960. By an Order dated 16th January, 1961, this Tribunal dismissed the
said application. A copy of the aforesaid decision will be found in Appendix F.

1.22. After the hearing of the reference had proceeded for a considerably
long time, a joint application dated 22nd February 1961 was made by the
State Bank of India Staff Union, Andhra Pradesh, Vijayawada, and the State
Bank of India Staff Union, (Madras Circle) for the issue of a Commission for
recording the evidence of Honourable Shri G. L. Nanda, Minister for Labour
and Employment, Government of India. Shri S. A. Dange, a member of the
Lok Sabha and Shri S. R. Vasavada, General Secretary of the Indian National
Trade Union Congress, Ahmedabad. The said application was supported,
inter alia, by the All India Bank Employees Association. On 7th March
1961, this Tribunal issued a Commission to the District Judge, Delhi for
examination viva voce of the Honourable Shri G. L. Nanda, and Shri S. A.
Dange and directed that the Commission should return by 24th April, 1961.
The Tribunal also issued a Commission to the District Judge, Ahmedabad for
examination viva voce of Shri S. R. Vasavada in similar terms. In order that
the proceedings of the Tribunal may not be delayed, liberty was given to all
the parties to join in the Commission and directions were given that any party
seeking to examine any witness must give notice to all other parties about
that partys intention to do so four days before such witness was examined.
The Commissioner appointed by the District Judge, Delhi, examined Shri S.
A. Dange on Commission at Delhi. The Commissions were returned
unexpected in respect of the other witness. Consequent upon the issue of
the Commission the hearing of the reference had to be adjourned to 2nd May
1961. When the hearing was resumed on 2nd May, 1961, an application
was made by the State Bank of India Staff Union, Andhra Pradesh, Vijayawada
for extending the returnable date of the Commission. The said application
was opposed by a number of parties and the same was rejected and the
hearing of the reference was resumed. The hearing of the reference was
concluded on 4th October, 1961.

AI

1.21. As a question had arisen before this Tribunal as to whether any

amount out of the reserves or provisions referred to in sub-section (1) of
section 34A should be taken into account by this Tribunal in considering the
financial capacity of the aforesaid 62 banks to bear any increased burden
that may be imposed upon them by reason of the award that this Tribunal
might make this Tribunal on 20th January, 1961, referred that question to the
Reserve Bank of India. This Tribunal further directed that the Reserve Bank of
India should in exercise of powers conferred under sub-section (2) of section
34A of the Banking Companies Act, after taking into consideration the principles
of sound banking and all relevant circumstances concerning the aforesaid 62
banking companies, furnish to this Tribunal, a certificate in respect of each of
the aforesaid 62 banks as provided by section 34A(2) stating whether the
Tribunal should not take into account any amount as such reserves and
provisions of the banking company concerned or may take them into account
specifying the extent of the amount to which only the Tribunal may so take
them into account. A copy of the order in connection therewith will be found
in Appendix G. The aforesaid certificates were received on 24th March, 1961
and have been duly considered by me in making this award.

10

1.23. During the pendency of the proceedings before this Tribunal,

numerous applications and complaints were made before this Tribunal under
section 33 and section 33A of the Industrial Disputes Act, 1947. A
considerable number of them were disposed of by this Tribunal. By the
Notification of the Ministry of Labour and Employment No. S.O. 3165, dated
the 23rd December, 1960 in exercise of the powers conferred by sub-section
(2) of section 33B of the Industrial Disputes Act, 1947, the Central Government
authorised this Tribunal to transfer proceedings pending before this Tribunal
under section 33 or section 33A of the said Act to the Labour Court, Delhi or
the Labour Court, Dhanbad. By subsequent notification issued by the Ministry
of Labour and Employment No. S.O. 1722, dated 17th July, 1961, in exercise
of the powers conferred by sub-section (2) of section 33B of the Industrial
Disputes Act, 1947, this Tribunal was authorised to transfer proceedings
pending before this Tribunal under section 33 or section 33A of the said Act
to the Labour Court, Madras or the Labour Court, Ahmedabad constituted
under section 7 of the said Act. After I was appointed as Chief Justice of the

11

Gujarat High Court on 26th January, 1961 most of these applications under
section 33 or 33A of the Industrial Disputes Act, 1947 were transfered to
various Labour Courts in exercise of the powers conferred by the aforesaid
two Notifications.

CHAPTER II
GENESIS OF THE DISPUTE

1.24. The applications filed before this Tribunal for holding the sittings of
the Tribunal at various places in the country were ultimately not pressed.

AI

BE

1.25. The Tribunal sat in all for about 178 working days whereout 74
days were devoted to the hearing of various miscellaneous applications in
this reference and about 104 days were devoted to the main hearing of this
reference.

2.1 Before I deal with the matters which have been referred for adjudication
to this Tribunal, it is desirable to review briefly the background of the present
dispute. During the second world war there was a rise in the prices of
commodities which caused considerable hardship to persons having a fixed
income. Efforts were made by various organisations to improve the living
conditions of workmen. Banking being an all-India industry efforts were made
by the workmen employed in banks to unite together for the purpose of
improving their living conditions. In the year 1946, the All India Bank
Employees Association, which is a federation of various unions of workmen
working in various establishments of banks throughout the country, was formed
with a view to tackle the problems of labour in the banking industry on an allIndia basis. There were awards given by various Tribunals in connection with
the labour disputes that arose at diverse places in India between some of the
banks and their workmen. Banks having branches at numerous places in
India became subject to the provisions of different awards at different places.
The Government realised the necessity of dealing with the disputes in the
banking industry on an all-India basis. The Industrial Disputes (Banking and
Insurance Companies) Ordinance (No. VI of 1949) was promulgated on 30th
April, 1949, where under a banking company was defined to mean a banking
company as defined in section 5 of the Banking Companies Act, 1949, having
branches or other establishments in more than one Province, and as including
the Imperial Bank of India. By clause 4 of that Ordinance it was provided that
notwithstanding anything contained in any other law, it shall not be competent
for a Provincial Government or any officer or authority subordinate to such
Government to refer an industrial dispute concerning any banking or insurance
company, or any matter relating to such dispute, to any Tribunal or other
authority for adjudication, inquiry or settlement. The Central Government
acquired the power to refer any dispute pending before a Provincial Tribunal
to an Industrial Tribunal constituted under section 10 of the Industrial Disputes
Act for adjudication. The aforesaid Ordinance was thereafter replaced by the
Industrial Disputes (Banking and Insurance Companies) Act (LIV of 1949).
2.2 On 13th June 1949 in exercise of the powers conferred by section 7
of the Industrial Disputes Act, 1947 (XIV of 1947), the Central Government
constituted an Industrial Tribunal consisting of Mr. K. C. Sen, a retired judge
of the High Court of Judicature at Bombay, as Chairman and two other retired
High Court Judges as members for the adjudication of industrial disputes in
banking companies. On the same day, the Central Government in exercise
of the powers conferred by clause (c) of sub-section (1) of section 10 of the
Industrial Disputes Act, 1947, as it then stood, referred the disputes between
the numerous banking companies and their employees for adjudication by

12

13

the said Tribunal. After considerable labour and industry, the aforesaid Tribunal
gave its award on 31st July, 1950, which will hereafter be referred to as the
Sen Award.

2.6. A large number of the employees and some of the banks concerned
in the dispute felt aggreived by the provision contained in the Sastry Award
and preferred appeals therefrom before the Labour Appellate Tribunal. A special
bench of the Labour Appellate Tribunal consisting of Shri F. Jeejeebhoy, Shri
D. E. Reuben and Shri A. Dasgupta was formed for the purpose of deciding
those appeals. On 28th April 1954 the Labour Appellate Tribunal gave its
decision in the matter giving larger benefits to the employees of the banks
than those given under the Sastry Award. The said decision is hereinafter
referred to as the Labour Appellate Tribunal decision.

2.7. The Labour Appellate Tribunal decision gave rise to considerable

misgivings in the minds of some of the bankers. They apprehended that the
Labour Appellate Tribunal decision would adversely affect the banking industry
and that the burden imposed thereby was beyond the capacity of some of
the banks and would result in the closure thereof. After the Labour Appellate
Tribunal decision was published, it was represented to Government that the
impact of the decision on the banking business of the country would be very
adverse and that it was not unlikely that in many cases individual units of the
banking sector would be in serious jeopardy. In order to be in a position to
consider this representation on merits the Government desired to collect
relevant information on the subject. The Reserve Bank of India under instructions
from the Government of India carried out a rapid survey of the possible effects
of the Labour Appellate Tribunal decision on the working of some banks by
way of sample. As a result of the material gathered by the Central Government,
it came to the conclusion that it would be inexpedient on public grounds to
give effect to the whole of the decision of the Labour Appellate Tribunal. By
an order, dated the 24th August 1954, the Central Government modified the
Labour Appellate Tribunal decision in certain respects.

BE

2.3 Some of the banks which were parties to the said disputes being
dissatisfied with the award applied to the Supreme Court for special leave to
appeal against the said award as it had been specially exempted from the
jurisdiction of the Labour Appellate Tribunal constituted under the Industrial
Disputes (Appellate Tribunal) Act (XLVIII of 1950). The said leave was granted
by the Supreme Court. Pending the hearing of the appeal by the Supreme
Court, it stayed the operation of the award with regard to (1) its applicability
to certain persons who were stated to be officers and not workmen (2) the
directions contained therein regarding bonus and (3) the directions contained
therein regarding provident fund. On 9th April 1951, the Supreme Court
declared the Sen Award as being void and inoperative for technical reasons
relating to the constitution of the Tribunal. The Supreme Court did not deal
with any question relating to the merits of any matter dealt with in the award.
As a result of the decision of the Supreme Court disputes which existed in
the banking industry remained unresolved. Soon thereafter there were strikes
in some banks consequent on certain actions taken by some of the banks.
The Central Government felt obliged to pass the Industrial Disputes
(Amendment and Temporary Provisions) Act (XL of 1951), whereunder among
other things, the scales of pay and the rate of allowance according to which
certain workmen had been paid immediately before 1st April 1951, were
temporarily frozen pending any settlement or an award by a new Tribunal.

said award is hereinafter referred to as the Sastry Award.

AI

2.4. The Government of India by a notification dated the 17th July, 1951
constituted an Industrial Tribunal of three persons with Mr. H. V. Divatia a
retired judge of the High Court of Judicature at Bombay as Chairman. The
Chairman and the other two members of the Tribunal resigned soon after
their Appointment.

2.5. By a notification dated the 5th January, 1952, in exercise of the

powers conferred by section 7 of the Industrial Disputes Act, 1947 (XIV of
1947). the Central Government constituted an Industrial Tribunal consisting
of Shri S. Panchapagesa Sastry a retired judge of the High Court of Judicature
at Madras, as Chairman and Shri M. L. Tappan and Shri V. L. DSouza as
members. The said Tribunal is hereinafter referred to as the Sastry Tribunal.
On the same day, in exercise of the powers conferred by section 10 of the
Industrial Disputes Act, 1947, the Central Government referred to the Sastry
Tribunal for adjudication disputes relating to numerous banks including banks
situated in the then existing part B States and their workmen in connection
with 34 different items. The banks comprised in the reference were 129 in
number, of which 68 were Scheduled banks and 61 were non-scheduled
banks with branches or other establishments in more than one State. After
carefully considering all aspects of .the matter referred to it, the Sastry Tribunal
gave a very detailed and exhaustive award in the month of March, 1953. The

14

2.8. The interference of the Government with the Labour Appellate Tribunal
decision raised a wave of discontent amongst the bank employees. Ultimately
on 17th September 1954 the Government appointed a one-man Commission
consisting of Shri Justice G. S. Rajadhyaksha a judge of the Bombay High
Court.
(1) to enquire into and ascertain the effects on the emoluments which
the employees were in receipt of prior to August 1954,
(a)
(b)

of the Appellate Tribunal Decision without modification,

of the Appellate Tribunal Decision as modified by
Governments Order No. S.R.O. 2732, dated the 24th August
1954.

(2) to ascertain,
(a)

the additional burden on individual banks that would have been

caused by the Appellate Tribunal Decision over the expenses

15

(b)
(c)

under the frozen Sen Award,

the extent and amount of relief obtained by them as a result
of the modifications made by Government,
the additional expenditure now to be borne by banks under
the modified decision over the expenditure incurred under the
frozen Sen Award that would have been incurred under the
Sastry Award

2.9 Among the recommendations made in the Bank Award Commission

report there was a recommendation that the Government should, as soon as
may be expedient, appoint a Commission to study the problem of the banking
system in the Travancore-Cochin State comprehensively de novo. The
Commission suggested that wide powers should be conferred on the
Commission to be appointed so as to enable it to examine not only the
financial position of the banks covered by the Sastry Award and the terms
and conditions of service of their employees but also similar problems in
regard to all the banks in Travancore-Cochin.

(3) --------------------------

II (a) to ascertain whether the terms and conditions of service of

workmen of the banks (except the Travancore Bank) incorporated
in the Travancore-Cochin State to which the provisions of the
Industrial Disputes (Banking Companies) Decision Act, 1955,
apply should be modified and if so, in what respects, having regard,
Inter alia, to the effects which the terms and conditions of service
that may be recommended by the Commission are likely to have
on the general economy of the area.
(b) to examine the terms and conditions of service of workmen in the
Banks incorporated in the said State other than those refered to
in clause (a) above and to make such suggestions or observations
in respect of them as the Commission may deem appropriate,
having regard to all relevant considerations, including in particular
those mentioned in clause (a).

AI

BE

It was further provided that in considering the aforesaid matters, due regard
should also be paid to the desirability of avoiding widespread closures of
banking companies or their branches, to the necessity to promote development
of banking in the country generally and in rural areas in particular and to any
possibilities of effecting economies in the expenses of banking companies.
The Commission was also asked to consider and recommend what special
modifications, if any, were necessary in the Labour Appellate Tribunal decision
in order to encourage the spread of banking facilities in the Class IV areas of
Part B' States and Part C' States other than Delhi, Ajmer and Coorg. Shri
Justice Rajadhyaksha having died shortly after he had undertaken the burden
of the Commission, Government appointed Shri P. B. Gajendragadkar, then a
judge of the Bombay High Court, in place and stead of Shri Justice
Rajadhyaksha. The said Commission after considerable labour and gathering
considerable material made its reports on 25th July 1955 making certain
recommendations which were subsequently embodied by the Government in
the Industrial Disputes (Banking Companies) Decision Act (41 of 1955). The
said report of the Commission is hereinafter referred to as the Bank Award
Commission report. By section 3 of the Industrial Disputes (Banking
Companies) Decision Act, 1955, it was provided that the decision of the
Labour Appellate Tribunal, dated 28th April 1954, would have effect as if the
modifications recommended in Chapter XI of the Bank Award Commission
report had actually been made therein. By section 4 of the said Act, it was
provided that the award of the Sastry Tribunal as modified by the decision of
the Labour Appellate Tribunal, as further modified by the recommendations
of the Bank. Award Commission would remain in force until 31st March 1959.

2.10. On 19th January 1956, the Government of India appointed the

Travancore-Cochin Banking Enquiry Commission consisting of Shri K. Ramuni
Menon, I.C.S. (retired) as Chairman and Dr. P. J. Thomas and Prof. M. L.
Dantwala as members. The terms of reference of the Commission, Inter
alia, provided as follows :

(4) to recommend, having regard to the facts ascertained and to the

need for ensuring an equitable treatment to bank employees consistent with
the capacity to pay of the various classes of banking companies or individual
units,
(a) whether the Appellate Tribunal Decision, as modified, should
be continued,
(b) whether the Appellate Tribunal Decision should be restored
and if so whether fully in part,
(c) whether the Appellate Tribunal Decision should be enforced
with any other modifications considered necessary.

16

The Travancore-Cochin Banking Inquiry Commission made its report on

3rd August 1956.
2.11. In view of the report of the Travancore-Cochin Banking Inquiry
Commission, the Central Government enacted the Industrial Disputes (Banking
Companies) Decision Amendment Act (40 of 1957) making certain changes
in the provisions of the Industrial Disputes (Banking Companies) Decision
Act (41 of 1955) referred to earlier affecting Inter alia the South Indian Bank
Limited, Trichur and the Catholic Syrian Bank Limited, Trichur, the Palai
Central Bank Limited, Palai, and the Travancore Forward Bank Limited, which
where in Class C.
2.12. The Sastry Award modified as aforesaid by the Labour Appellate
Tribunal decision and as further modified by the aforesaid Acts is hereinafter
referred to as the Sastry Award as modified. Under the Sastry Award as
modified a provision had been made for payment of dearness allowance to
the clerical staff and subordinate staff according to certain formulae. By the

17

Industrial Disputes (Banking Companies) Decision Amendment Act, 1958

(38 of 1958) the Central Government acquired the power to make such
adjustments therein as it thought fit for any period subsequent to 31st
December 1957; In exercise of the powers conferred thereunder, the Central
Government by a notification dated the 13th February 1960 has amended the
provision relating to the calculation of dearness allowance.

3.1 By the two Orders of Reference, dated the 21st March 1960 and the
4th June 1960 disputes between 84 banks in all and their workmen have
been referred for adjudication to this Tribunal. After the constitution of this
Tribunal, material changes have taken place affecting certain banks and their
workmen.
I. Stoppage of Banking Business

(1) Safe Bank Ltd. This bank is listed as bank No. 50 in schedule I
to the Order of Reference, dated the 21st March 1960. On 22nd June 1961
the Safe Bank Ltd. intimated to this Tribunal that on 31st January 1961 the
Reserve Bank of India had sent a notice in writing to the bank informing the
bank that licence to carry on banking business could not be granted to it
under the proviso to section 22(2) of the Banking Companies Act, 1949, and
that as per orders of the Reserve Bank it had stopped banking business with
effect from 6th February 1961. As the aforesaid bank has ceased to be a
banking company within the meaning of section 2(bb) of the Industrial Disputes
Act, 1947, no award is made in connection with the dispute between the said
bank and its workmen.

BE

2.13. The statutory period for the operation of the Sastry Award as
modified expired on 31st March 1959. There has been considerable expansion
of banking as an industry in the country. The workmen employed in banks
are dissatisfied with the conditions of service under which they are working.
The 15th Session of the Indian Labour Conference, which was held on the
11th and 12th July 1957 laid down certain principles governing wage fixation.
The expectations of workmen were aroused thereby throughout the length
and breadth of the country. The expectations so aroused have remained
unfulfilled, resulting in consequent dissatisfaction and unrest. There has been
a considerable rise in the cost of living and the purchasing power of money
has declined. The workmen contend that the adjustment in the dearness
allowance which is being made under the formula in operation does not
sufficiently neutralise the effect of the increase in the cost of living.

CHAPTER III
PARTIES TO THE DISPUTE

AI

2.14. The definition of workman given in section 2(s) of the Industrial

Disputes Act, 1947, has been amended to cover persons employed in a
supervisory capacity drawing wages not exceeding Rs. 500 per mensem
provided they do not exercise either by the nature of the duties attached to
their office or by reason of the powers vested in them, functions mainly of a
managerial nature, with the result that a number of persons, who previously
were not workmen have now become workmen within the meaning of the
Industrial Disputes Act, 1947.
2.15. In the month of April 1959, the All India Bank Employees
Association served notices of termination of the Sastry Award as modified
and submitted a fresh Charter of Demands as adopted at the 10th Conference
held at Bangalore from 3rd to 7th February 1959 on behalf of the workmen
employed in banks. The All India Bank Employees Federation also submitted
its Charter of Demands on behalf of the employees employed in banks. Various
other Unions also submitted their Charter of Demands. The All India State
Bank of India Staff Federation submitted its Charter of Demands on behalf of
the workmen employed in the State Bank of India. On 1st February 1960 the
said Federation gave a notice of strike and a number of employees of the
State Bank of India struck work. On 19th March 1960 the bank employees in
various parts of the country struck work in support of their demands as well
as in support of the employees of the State Bank of India. On 21st March
1960 this Tribunal was constituted and the dispute mentioned in the Order of
Reference was referred to this Tribunal for adjudication and the continuance
of the strike in existence in the State Bank of India was prohibited.

18

(2) Thomcos Bank Ltd. This bank is shown as bank No. 60 in

schedule I to the Order of Reference, dated the 21st March 1960. Some of
the assets and liabilities of this bank have been transferred to the Bank of
Madura Ltd. under an agreement of transfer, dated 12th September 1960,
entered into between the Thomcos Bank Ltd. and the Bank of Madura Ltd.
Under the terms of the said agreement, it is provided that after the transfer of
the assets and liabilities therein mentioned the Thomcos Bank would not
carry on banking business except to the extent necessary for the realisation
of its residuary and other assets and to convert the same into cash. By
clause 13 of the said agreement it is provided that the Bank of Madura Ltd.
would absorb in its service all the then members of the staff of the Thomcos
.Bank Ltd. on the same emoluments then obtaining in the Thomcos Bank
Ltd. and that in case any of the members of the staff who were not willing to
join the services of the Bank of Madura Ltd., the Thomcos Bank would pay to
such persons compensation, if any, legally due to them on the termination of
their service. The Bank of Madura Ltd. is not a party to the proceedings
before me. The All India Bank Employees Association made an application,
dated 11th November 1960 being Miscellaneous Application No. 304 of 1960,
for impleading the Bank of Madura Ltd. as a party to the proceedings. The
said application was rejected by me.
3.2. In view of the fact that for all practical purposes, the Thomcos Bank
Limited has ceased to do banking business and to be a banking company

19

and the services of a large number of its employees have been taken over by
the Bank of Madura Limited, no award is made in connection with the dispute
between the Thomcos Bank Limited and its employees.
II.

Delhi (hereinafter referred to as a transferee bank) with effect from 25th

March I961.
(10) The Rayalaseema Bank Limited. This bank is listed as bank
No. 12 in the schedule to the Order of Reference, dated the 4th June 1960. It
was under moratorium from 14-5-1961 to 31-8-1961. This bank has been
amalgamated with the Indian Bank Limited, Madras (hereinafter referred to
as the transferee bank) with effect from 1st September 1961.

Banks under Liquidation

(3) Laxmi Bank Limited.This bank is listed as bank No. 33 in

schedule I to the order of reference dated the 21st March I960. This bank has
gone into liquidation under an order, dated 28-6-1960, passed by the High
Court of Bombay and no award is made in connection with dispute between
this bank and its workmen.

III. Amalgamation under Section 45 of the Banking Companies Act

1949

BE

(5) Jodhpur Commercial Bank Limited This bank is listed as bank

No. 30 in schedule I to the Order of Reference dated the 21st March 1960.
This bank was under moratorium for a period of three months with effect from
6th July 1961. On 16th October 1961 this bank has been amalgamated with
the Central Bank of India Limited, Bombay ( hereinafter referred to as a
transferee bank).

(4) Palai Central Bank Limited This bank is listed as bank No. 44
in scheduled I to the Order of Reference dated 21st March 1960. This bank
was ordered to be wound up by the High Court of Kerala on 5th December
1960. As this bank has gone into liquidation, no award is made in connection
with the dispute between this bank and its workmen.

3.3. The aforesaid six banks have been amalgamated with other banks.
Under the schemes of amalgamation, the workmen employed by the aforesaid
six banks, would continue in service and would be deemed to have been
appointed by the transferee banks, at the same remuneration and on the
same terms and conditions of service as were applicable to such employees
immediately prior to the date of the respective orders of moratorium. There is
a further provision to the effect that the transferee banks would pay or grant,
not later than the expiry of the period of 3 years from the dates on which the
schemes of amalgamation were respectively sanctioned by the Central
Government to such employees the same remuneration and the same terms
and conditions of service as were applicable to the employees of the respective
transferee banks of corresponding rank or status subject to certain
qualifications.

AI

(6) The New Citizen Bank of India Limited. This bank has been
listed as bank No. 42 in schedule I to the Order of Reference, dated the 21st
March 1960. This bank was under moratorium from 15th November I960 to
28th April 1961. This bank has been amalgamated with the Bank of Baroda
Limited (hereinafter referred to as a transferee bank) with effect from 29th
April 1961.
(7) The Travancore Forward Bank Limited. This bank is listed as
bank No. 61 in schedule I to the Order of Reference dated the 21st March
1960. Thus bank was under moratorium from 25-10-1960 to 24-3-1961. This
bank has been amalgamated with the State Bank of Travancore, Trivandrum,
(hereinafter referred to as a transferee bank) with effect from 15th May 1961.

(8) The Bank of Nagpur Limited. This bank is listed as bank No. 3
in the schedule to the Order of Reference dated the 4th June 1960. This bank
was under moratorium from 27th November 1960 to 26th March 1961. This
bank has been amalgamated with the Bank of Maharashtra Limited (hereinafter
referred to as a transferee bank) with effect from 27th March 1961.
(9) The Indo Commercial Bank Limited. This bank is listed as
bank No. 7 in the schedule to the Order of Reference, dated the 4th June
1960. This bank was under moratorium from 25-10-1960 to 24-3-1961. This
bank has been amalgamated with the Punjab National Bank Limited, New

20

3.4. In view of the aforesaid provisions, no award is made in connection

with the dispute between the aforesaid six banks which have been
amalgamated and the employees of such banks.
IV. Merger

(11) Lloyds Bank Limited. This bank is shown as bank No. 34 in

schedule I to the Order of Reference, dated the 21st March 1960. Since 1-11961. The business of this bank in India has been transferred to the National
and Grindlays Bank Limited and the services of all the employees employed
by this bank in India have been taken over by the National and Grindlays
Bank Limited.
3.5 No award is made in connection with the dispute between the Lloyds
Bank Limited and its employees. The remuneration and the terms and
conditions of service of the previous employees of the Lloyds Bank Limited
who have now been taken over by the National and Grindlays Bank Limited
will be governed by the award made in connection with the dispute between
the National and Grindlays Bank Limited and its workmen.
V.

Banks in Which settlements have been arrived at

(12) Salem Bank Limited. This bank is shown as bank No. 51 in

schedule I to the Order of Reference, dated the 21st March 1960. On 18th
January 1961 a consent award has been given in connection with the dispute
between this bank and its employees and the said award is published in the
Gazette of India, Part II, section 3 (ii), dated the 4th February 1961 at page

21

357.

as or equivalent to those of such other employees of the Canara Bank Limited.

A joint application was made by the Canara Bank Limited, the Trivandrum
Permanent Bank Limited and the All Kerala Bank Employees Union on behalf
of the workmen of the Trivandrum Permanent Bank Limited that an .award
should be made by this Tribunal in terms of the settlement arrived at in the
course of the conciliation proceeding on 6th May 1961 before the Conciliation
Officer (Central), Ernakulam, regarding the terms and conditions of service of
the workmen of the Trivandrum Permanent Bank Limited and their appointment
in the service of the Canara Bank Limited.

(13) Bank of Tokyo Limited. This bank is shown as bank No. 4 in

the schedule to the Order of Reference, dated the 4th June 1960. On 10th
January 1961 a consent award has been given in connection with the dispute
between this bank and its workmen and the said award is published in the
Gazette of India Part II, Section 3 (ii), dated the 28th January 1961 at page
320.

BE

(15) The Martandam Commercial Bank Limited. This bank is shown

as bank No. 8 in the schedule to the Order of Reference, dated the 4th June
1960. On 10th January 1961 a consent award has been given in connection
with the dispute between this bank and its workmen and the said award is
published in the Gazette of India, Part II, section 3 (ii), dated the 4th February
1961, at page 367.

3.6. I have made an award on 7th August 1961 in terms of the settlement
arrived at as aforesaid. One of the terms of the said settlement provided that
on behalf of the employees of the Trivandrum Permanent Bank Limited the
All Kerala Bank Employees Union should agree to withdraw the dispute or
disputes in respect of the employees of the Trivandrum Permanent Bank
Limited pending before this Tribunal. In pursuance of the said settlement, the
All Kerala Bank Employees Union, on behalf of the employees of the
Trivandrum Permanent Bank Limited withdrew the dispute pending before
this Tribunal. The said Award has been published in Gazette of India, Part II,
Section 3 (ii) dated 2nd September 1961, at pages 2165 2172.

(14) The Belgaum Bank Limited. This bank is shown as bank No. 5
in the schedule to the Order of Reference, dated the 4th June 1960. On 20th
January 1961 a consent award has been given in connection with the dispute
between this bank and its workmen and the said award is published in the
Gazette of India, Part II, Section 3 (ii), dated the 11th February 1961, at page
443.

3.7 This award will only apply to the banks referred to in the orders of
reference, dated the 21st March 1960 and the 4th June 1960, other than the
aforesaid 16 banks and to the workmen of the banks other than those of the
aforesaid 16 banks.

AI

(16) The Trivandrum Permanent Bank Limited. This bank is shown

as bank No. 16 in the schedule to the Order of Reference, dated the 4th June
1960. As a result of an agreement arrived at between the Trivandrum Permanent
Bank Limited and the Canara Bank Limited selective assets and liabilities of
the former bank have been taken over by the later bank. The All Kerala Bank
Employees Union representing the workmen of the Trivandrum Permanent
Bank Limited raised before the Conciliation Officer (Central), Ernakulam a
dispute regarding the absorption of the workmen of the said bank in the
Canara Bank Limited. A settlement was arrived at in the course of the
conciliation proceedings on 16th May 1961 where-under it was.agreed that
all the employees of the Trivandrum Permanent Bank Limited other than
those who were over 60 years of age on the date of the taking over of the
assets and liabilities of the Trivandrum Permanent Bank Limited by the Canara
Bank Limited should continue in service and be deemed to have been appointed
by the Canara Bank Limited at the same remuneration and on the same
conditions of service as were applicable to such employees immediately
before the date of taking over. Under the terms of the said settlement, it was
agreed that the Canara Bank Limited would on the expiry of a period not later
than 3 years from the date of the taking over, pay or grant to the employees
of the Trivandrum Permanent Bank Limited appointed in the Canara Bank
Limited the same remuneration and the same terms and conditions of service
as were applicable to the employees of the corresponding rank and status of
the Canara Bank Limited subject to the qualifications and experience of the
said employees of the Trivandrum Permanent Bank Limited being the same

22

23

these circumstances, the norm of working funds has been adopted for the
purpose of classification of banks. No doubt apart from working funds, there
are various other factors which affect the profit-making capacity of banks and
their capacity to pay wages, but in the absence of better norms of classification
which are capable of being applied with certainty and without considerable
difficulty, the norm based on the availability of working funds has come to be
accepted.

CHAPTER IV
Item No. 1 : CATEGORISATION OF BANKS AND AREAS FOR THE
PURPOSES OF THIS ADJUDICATION.

4.2. To the extent that wages are correlated to the needs of the workmen
the cost of articles of consumption and the pattern of consumption become
material factors. The same vary in different areas in different parts of the
country. The standard of living in different parts of the country is not the
same. There is disparity between the cost of living of a person in a city like
Bombay or Calcutta where living accommodation is scare and the standard
of life ishigh and of a person dwelling in semi-urban and rural areas. By and
large workmen are available at somewhat lesser rate of wages in semi-urban
and rural areas than in cities. Taking diverse factors into consideration, Tribunals
have fixed wages and other conditions of service for workmen according to
the areas in which they function.
4.3. By his award dated 8th April 1947, Mr. Justice Divatia classified the
30 banks before him into 2 groups : (1) big banks with working funds of about
Rs. 15 crores and above, and (2) small banks with working funds of less than
Rs. 15 crores. He took the view that standardization of wages was not generally
feasible in the business of banking, although the clerical staff did the same
kind of work.

AI

BE

4.1. The question of categorisation of banks and areas becomes material

in connection with the fixation of workmens scales of pay. The other conditions
of service of workmen may also be related to this classification. In the report
of the Committee of Fair Wages, it is recommended that fair wages should
be determined on an industry-cum region basis. The members of the
Committee took the view that it was not feasible then to fix wages on any
other basis. In the banking industry where banks have branches in more than
one region and where numerous banks have branches all over the country,
the Tribunals in the past have given up this approach in preference to an
approach based on classification of banks according to their working funds
and according to the areas in which they function. No doubt, classification
of banks in this manner violates the principle of standardisation of wages in
the industry taken as a whole. It equally violates the principle of equal pay for
equal work. Tribunal have been compelled to acknowledge the necessity of
not applying these principles in connection with banks having branches in
more States than one. The profit making capacity of a bank depends to a
considerable extent upon the resources of the bank. The bigger banks can
command greater facilities from the Reserve Bank of India. The smaller banks
have to maintain a position of greater liquidity and easier convertibility. They
have sometimes to pay high rate of interest on their borrowings and to offer
greater inducements to the depositors. The older banks are able to build up
adequate reserves which are equal to or exceed their paid-up capital. In the
new banks the reserves are generally low and below the paid-up capital, and
under the provisions of section 17 of the Banking Companies Act, 1949, they
have to transfer to the reserve fund out of the balance of profit of each year as
disclosed in the profit and loss account before any dividend is declared, a
sum equivalent to not less than 20 per cent of such profit so long as the
reserve fund together with the amount in the share premium account does
not equal the paid up capital of the banks. The working funds of a bank
consist of its paid-up capital, its reserves and its deposits. Large resources
conduce to the greater stability of the institution, and inspire confidence
among the depositors. Large deposits themselves to an extent indicate the
confidence of the depositors in the institution and in a sense indicate the
stability of the institution. The greater a bank enjoys the confidence of the
public, the lesser is the rate of interest it has to pay on the deposits made
with it, and the lesser is the rate of interest at which it can borrow money.
Generally speaking, bank with larger resources is better able to bear the
burden of higher wages than a bank with smaller resources. In view of all

(i) Categorisation of Banks

4.4. The Sen Tribunal, which was the first all-India Tribunal which dealt
with banking industry, classified banks according to the working funds. Its
classification according to the average of working funds based on the figures
of the 30th June and the 31st December of the year 1949 was as following :
Class
(A) Imperial Bank of India and all Exchange Banks included in the
reference and all other banks having average working funds of Rs.
25 crores and above.
(B) Banks having average working funds below Rs. 25 crores and not
below Rs. 7 crores.
(C) Banks having average working funds of less than of Rs. 7 crores.
4.5. The Sastry Tribunal classified banks into four classes :
Class
(A) Banks whose working funds amount to Rs. 25 crores and more
and the Exchange Banks.
(B) Banks whose working funds amount to Rs. 7 crores and more
but are below Rs. 25 crores.
(C) Banks whose working funds amount of Rs 1 crore and more but

24

25

are below Rs. 7 crores.

(D) Banks whose working funds are below Rs. 1 crore.
The Sastry Tribunal thus provided one class more than what was sought
to be provided by the Sen Tribunal. Observing that the case of small banks
required special consideration, the Sastry Tribunal in paragraph 55 of its
award has stated as follows: It is true that this manner of division is to
some extent arbitrary but care has been taken to avoid marginal or border
line cases.

BE

We would recommend that if in future it should so happen that the

working fund of a particular bank has been below the lower limit or
has been higher than the upper limit set for its class continuously
for a period of two years, it should then be deemed to have passed
into the next,lower or the next higher class, as the case may be,
provided that the directions made in this award are still being followed
by the bank at that date, and provided further that such change
will not adversely affect the existing employees.

4.6. While providing for this rule of classification based on working funds,
the Sen Tribunal provided for the transfer of a bank from one class to another
having regard to the rise or fall in its working funds below or above the limit
prescribed for each class. In paragraph 48 of its award, the Sen Tribunal has
observed as follows :

AI

The Sastry Tribunal in paragraph 64 of its award made a similar provision with
the qualification that the relevant date for calculating the working funds
would be 31st December of each year, and that the change over from one
group to another should not adversely affect the total emoluments of the
existing employees drawn by them on the date of the said change over. For
the purpose of this classification, the Sastry Tribunal defined Working funds
to mean, paid-up capital, reserves and the average of the deposits for the 52
weeks of each year for which weekly returns of deposits were submitted to
the Reserve Bank of India under the provisions of the Reserve Bank of India
Act. By paragraph 65 it further directed the banks to publish and exhibit a
statement showing such average of the weekly returns of deposits in the first
month of the next succeeding calendar year together with a certificate from
its auditors as regards the correctness of the statement or a certificate from
the Reserve Bank of India to that effect.
4.7. Shri M. L. Tannan, who was a member of the Sastry Tribunal and
who is the author of Banking Law and Practice and who was for some time
the General Manager of the Punjab National Bank Ltd., has appended his
Minute of Dissent to the Sastry Award in connection with classification of
banks into different groups for the purpose of adjudication. In paragraph 650
of the award he has observed as under :
Paying capacity of individual banks will, of course, vary, as it is

26

determined by a number of considerations, not always related to

the amount of their working funds. These considerations include,
among others, the type of business certain banks are particularly
interested in. Thus banks undertaking principally foreign exchange
business should ordinarily be in a position to show better results,
earn higher profits and pay larger dividends. Banks profits will also
depend upon the type of directorate they may have. Banks with
influential directors or those connected with large businesses will,
no doubt, make a better showing. The managerial abilities of those
in charge of banks would also influence their earnings. Further,
banks working in important industrial or urban areas are likely to
earn more. Even profits, as such may not always be the determining
factor in assessing capacity. In this context, we have to take into
account the fact that there are some banks which, although they
show substantial profits from year to year, are not in a position to
appropriate even the major portion of their net earnings towards
payment of dividends,-as a part of the profits has to be set apart for
building up statutory and other reserves including provision for bad
and doubtful debts as also for providing depreciation in the value of
their investments. To this extent the paying capacity of banks should
be qualified. Still another factor which will limit dividends is the
proportion of paid-up capital on the one hand to working funds on
the other. It would be clear that banks with proportionately larger
working funds are not always able to pay higher dividends.

4.8. In paragraph 655 of his Minute of Dissent he has further stated as

under:
My colleagues classify banks exclusively on the basis of their
working funds. I would add that banks capacity, as determined by
profits and dividends should be taken as an equally, if not a more
basic factor in determining classification of banks.

He also suggested that an element of elasticity was cabled for in the classifi
cation of banks. He suggested that a bank which has paid, on an average, a
dividend of not more than 4 per cent (free of income-tax) over a period of three
years should be automatically placed in the class next below that to which it
would otherwise belong on the basis of the award and that it would secure
the desired measure of relief needed by the banks concerned and that as
regards the future the banks which for any two consecutive years were not
able to declare a dividend of more than 4 per cent free of income tax should
be downgraded and would continue to pay emoluments to their workmen at
the lower rate as long as the average rate of dividend for two consecutive
years did not exceed 4 per cent.
4.9. The suggestion of Shri Tannan did not find favour with his colleagues.
The suggestion would have had some value if the banks were under a legal

27

obligation to declare dividends in proportion to their profits and were under a

legal obligation to make a .complete disclosure about their secret reserves
which would reveal the true profits in a given year in their balance sheets.
There is, however, no such law. If the upgradation or downgradation of banks
depended upon the declaration of certain percentage of dividends, there would
be considerable scope for manipulation of dividends by banks having regard
to the fact that banks are in a position to set apart large amounts by way of
secret reserves without disclosing the same in their published balance sheets
and are in a position to declare such dividends as they think proper.

cases of banks in these two classes that seriously contested their ability to
pay. In regard to banks in C class, the Commission decided to deal with the
cases of individual banks and to record its conclusions on the capacity to
pay individually in respect of each one of these banks.

4.12. The Bank Award Commission after considering the various

alternative suggestions made for classification of banks by taking into account
the ratio of reserves to paid up capital, or the age of the banks, the area of
their operations and the type of their predominant business and their turnover
or by reference to their average profits and dividend paying capacity and the
ratio of the working funds to the total load, and after observing that even on
the basis of working funds, it might perhaps be possible to classify banks
more satisfactorily by attempting to reduce the very large discrepancies that
were present between the top and the bottom of the class, ultimately decided
to keep, as far as possible, to the structure of classification which had been
adopted by the Labour Appellate Tribunal. The Commission decided to deal
with banks falling in A and B classes classwise and to consider the special

4.14. In dealing with the argument that one or two units in a class could
not bear the burden of the decision of the Labour Appellate Tribunal, the
Commission observed that if it had found that the strain on their resources
would be unreasonably high and the imposition of the burden of the Labour
Appellate Tribunal decision would expose them to a genuine and real risk, it
would unhesitatingly have recommended their exemption from the application
of the Labour Appellate Tribunal decision. In dealing with C Class banks, the
Bank Award Commission observed that when it came to C Class banks, the
difficulties of the class approach became glaring and it found that differences
in standard of management made for sharp variations in earning capacity,
that most of such banks were started by local enterprise and had a wide net
work of branches whose operating unit was very small, that the clientele also

AI

BE

4.10. In the course of his dissenting minute in paragraph 666 Shri Tannan
has further observed that he did not consider the growth of small banks a
desirable development, both in the interests of the banking industry as well
as from the point of view of national development, that small banks were
more exposed to financial jolts and would not be easily able to with stand
these. He also observed that small banks would not have the resources of
big banks and would not be able to give the various facilities which the latter
provided to their customers and that the ability of big banks for organized
mobilisation of rural resources was also definitely larger. He expressed himself
not to be in favour of very small banks and stated that he would like the
development of banking in this country to proceed more or less on the same
lines as in England where the number of banks was very small but the number
of banks office was very large, and that he would like to encourage strong
and healthy banks to open branch offices even in comparatively small towns.

4.11. The Labour Appellate Tribunal in giving its decision has observed
in paragraph 97 that as regards 'D' Class Banks, they were small banks with
limited resources, that for survival these banks would have to be given special
consideration and that it was doubtful whether they would be able to sustain
a wage structure higher than the minimum wage if immediately imposed. It
decided in their case to retain the scales of pay and dearness allowance
given by the Sastry Award, subject to the condition that they would apply for
a period of not more than 5 years from 1st April 1954, after which period the
scales of the C Class Banks would become applicable.

4.13. In paragraph 66 of its report, the Bank Award Commission has

observed as follows : It seems to me that in dealing with the dispute
between inter-State banks and their employees, a more rational and more
satisfactory basis is supplied by the class-wise approach to the problem. It
further observed that in classifying banks, care must be taken to adopt a fair
basis for classification and to bring together in one category banks which
may be regarded genuinely as homogeneous in all material particulars and
that in fixing the wage structure class-wise, care must likewise be taken to
fix the wage structure in such a manner that it would not be unduly below the
paying capacity of the bank at the top of the class, not unduly above the
paying capacity of the bank at the bottom of the class. The Commission
further observed that commercial banking was a very competitive business
and that it was stated before the Commission by most of the banks in A and
B Classes that if wage structures were fixed separately for each one of the
banks, it would inevitably lead to dissatisfaction and bickerings between
employees and banks and that it was in the interest of the banking business
as a whole that the question of giving a fair deal to bankmen should be
considered class-wise. In paragraph 67 the Commission has observed that
the argument that a class-wise approach to the solution of this problem
attempted to put in a strait-jacket different banks, was apt to overtook the
anomalies which seemed to follow from awards pronounced bank wise and
was presumably based upon the view that the classification adopted by the
Tribunals was not as rational or satisfactory as it might have been. The
Commission further stated that the class-wise approach in the dispute relating
to banking was analogous to the region-wise approach which was generally
adopted in dealing with disputes in regard to other industries in the country,
and that the essence of a class-wise approach was to consider the paying
capacity of the class as a whole.

28

29

consisted of middle-class savers, petty traders and small industrialists and

that the C Class banks were a mixed bag. After considering bank-wise the
case of banks falling within Class C the Commission in substance classified
them into two groups, one the group able to bear the burden of dearness
allowance awarded by the Labour Appellate Tribunal decision, hereinafter for
brevitys sake called C-l Class and the other group not so able to bear such
burden, hereinafter called C-2 Class which was only to pay the dearness
allowance as provided by the order of modification made by Government,
dated the 24th August, 1954.

economy of the area.

Out of the banks under reference before this Tribunal, the cases of the following
banks have been dealt with by the Travancore-Cochin Banking Inquiry
Commissin:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)

4.15. As regards banks in the D Class other than those in the then
Travancore-Cochin State, the Commission recommended that the position of
the D Class banks as at the end of March 1959 should be examined afresh in
order to arrive at a decision as to their promotion or otherwise to C Class.

Out of these banks,the Palai Central Bank Ltd. has gone into liquidation. The
Travancore forward Bank Ltd. has been amalgamated with the State Bank of
Travancore. Most of the employees of the Thomcos Bank Ltd. have been
taken over by the Bank of Madura.

4.16. As regards the banks situated in the then Travancore-Cochin State

they presented peculiar problems of their own. The Commission pointed out
that the economy of that part of the country was a predominantly small
economy, essentially agricultural, and was based on a vast educated lower
middle class which formed a majority of the population of that State, that the
banking units incorporated in the said area were very small in point of paid up
capital reserves and total resources and in respect of their profits as well that
the State was definitely over-banked and that the position of most of the
banks was illiquid. The Commission took the view that it would not be
equitable to fix for workmen of these banks salary scales lower than those for
D Class banks which represented the minimum wage and that those banks
were not entitled to claim that they should be allowed to pay their workmen
less than the minimum wage. The Commission recommended the complete
exemption from the operation of any award of banks incorporated in the
Travancore-Cochin State other than the Travancore Bank in respect of business
within the limits of Area IV for a certain period. It recommended the appointment
of a special Commission to study the problems of the banking system in the
Travancore-Cochin State.

Palai Central Bank Ltd.,

Travancore Forward Bank Ltd.,
Thomcos Bank Ltd.,
Catholic Syrian Bank Ltd.,
South Indian Bank Ltd.,
Ambat Bank Ltd.,
Chaldean Syrian Bank Ltd.,
Cochin Commercial Bank Ltd.,
Indian Insurance and Banking Corporation Ltd.

AI

BE

4.18. As regards the Catholic Syrian Bank Ltd., the Commission came
to the conclusion on that the Bank had the paying capacity to implement the
Labour Appellate Tribunal decision with retrospective effect from 1st April
1954.

4.17. The Government of India appointed the Travancore-Cochin Banking

Inquiry Commission on 19th January 1956 consisting of Shri K. Ramunni
Menon. I.C.S. (Retired) as Chairman and Dr. P. J. Thomas and Prof. M. L.
Dantwala as Members. The terms of reference, amongst others provided as
follows :
to ascertain whether the terms and condition of service of workmen
of the banks (except the Travancore Bank) incorporated in the
Travancore-Cochin State to which the provisions of the Industrial
Disputes (Banking Companies) Decision Act, 1955 apply should
be modified and if so, in what respects having regard, Inter alia, to
the effects which the terms and conditions of service that may be
recommended by the Commission are likely to have on the general

30

4.19. As regards the South Indian Bank Ltd., the Travancore-Cochin

Banking Inquiry Commission has found that even on a conservative estimate
the bank would not find any difficulty in implemeting the Labour Appellate
Tribunal decision with retrospective effect from 1st April 1954.
4.20. As regards the Ambat Bank Ltd., the Chaldean Syrian Bank Ltd.
and the Cochin Commercial Bank Ltd., the Travancore-Cochin Banking Inquiry
Commission has stated that these banks would find it difficult to bear the
additional burden of establishment expenses if the exemption in respect of
area IV was withdrawn and the award was brought into force in that area with
retrospective effect from the 1st April 1954. It stated that if, however, the
change was effected from the 1st January 1956, the extra burden would be
lower and all the banks, except the two banks working at a loss, would not
find much difficulty in bearing it. As regards the two banks working at a loss,
the Commission discussed the matter with their representatives and the
Commission was informed that both the banks were agreeable to bear the
additional burden from the 1st January 1956 as in one case the additional
burden was comparatively small while in the other case the bank did not
want any special treatment. As regards the Indian Insurance and Banking
Corpn. Ltd., it is mentioned in the report of the Commission that the bank
had voluntarily given effect to the award scales of pay etc. in the exempted
area with effect from the 1st July 1954. The Commission recommended that
in the case of the D class Award banks the exemption in respect of area IV

31

in the Travancore-Cochin State should be withdrawn and the banks should

implement the Government modified decision as formulated in the Industrial
Disputes (Banking Companies) Decision Act, 1955, at the offices in that
area with effect from the 1st January 1956. Following the recommendations
of this Commission, the Industrial Disputes (Banking Companies) Decision
Amendment Act, 1957, was passed. As a result of this enactment, the South
Indian Bank Ltd., Trichur and the Catholic Syrian Bank Ltd., Trichur occupied
the same position as C-l Class Banks and the provision giving exemption to
branches of banks in Travancore Cochin in Area IV was taken away.

employees of such higher class banks.

4.24 The All India Bank Employees Federation in its Charter of Demands
had stated that it opposed the classification of banks as a matter of principle.
It stated that if, however, it was felt that the same was not feasible, then
banks should be divided in two classes viz Class A consisting of banks with
working funds of Rs. 15 crores or more and Class B consisting of banks with
working funds of less than 15 crores.
4.25. The All India State Bank of India Staff Federation and the State
Bank of India Staff Union, Andhra Pradesh, Vijayawada and Madras circle.
Madras have submitted that the State Bank of India should stand in a separate
class by itself.

4.21. Out of the 68 banks which are effectively under reference on the
basis of classification provided under the Sastry Award as modified 23 banks
would be in Class A, 13 banks would be in Class B, 19 banks would be in
Class C, and 13 banks would be in Class D.

4.26. The All India Bank of Baroda Employees Federation has made a
demand similar to that of the All India Bank Employees Association.

The American Express Co. Inc.,

The Andhra Bank Ltd.,
The State Bank of Patiala,
The State Bank of Saurashtra,
The Sangli Bank Ltd.,
The Ganesh Bank of Kurundwad Ltd.,
The Miraj State Bank Ltd.,
The Nadar Mercantile Bank Ltd.,
The Pangal Nayak Bank Ltd., and
The Union Bank of Bijapur & Sholapur Ltd.

BE

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)

AI

Out of the 68 banks, 57 banks are scheduled banks and 11 banks are
non-scheduled banks.

4.23. The All India Bank Employees Association has claimed that the
banks should be classified into 3 categories .as under for the purpose of
basic pay scales only :
A Class Banks, (i) Banks whose working funds amount to Rs. 25
crores and more, (ii) all the Exchange Banks, and (iii) all the
subsidiaries of the State Bank of India B Class Banks. Banks
whose working funds are Rs. 7 crores and above but below Rs.
25 crores.
C Class Banks. Banks whose working funds are below Rs. 7
crores.

The Association has further claimed that should the working funds of a
particulars bank whether by amalgamation, merger or otherwise cross and
remain higher than the upper limit set for its class continuously for a period of
52 weeks, it should automatically pass into the next higher class. In that
event the employees should be entitled to all the benefit admissible to the

32

4.27. The Indian Overseas Bank Employees Union has asked for classi
-flcation of banks into three classes; (i) A Class with working funds of Rs. 25
crores and more, (ii) B Class with working funds between 7 1/2 crores and
more but below Rs. 25 crores and C Class with working funds below Rs. 7 1/
2 crores. It however, submits that the expression working fund should include
deposits, paid up capital, all reserves, unpaid dividends, bank borrowings,
margins on letter of credits, guarantees, bills purchased and (monies due to)
sundry creditors.

4.22. The following banks which were not before the Sastry Tribunal
have come up before a National Tribunal for the first time :

4.28. The Vadodra Rajya Bank Nokar Sangh has claimed that the
classification of banks into four categories was not justified and that the
principle of equal pay for equal work should be accepted in the case of the
banking industry since the nature of work of their employees was substantially
the same irrespective of the size of the banks and the places where they are
situated. In the alternative it has claimed the classification of banks at the
most into three classes.
4.29. The South Gujarat Bank of Baroda Employees Union has claimed
that the banks should be classified into three categories : A Class banks
with working funds of Rs. 25 crores and over B Class banks with working
funds of Rs. 15 crores and over but below Rs. 25 crores and C Class banks
with working funds below Rs. 15 crores.
4.30. The Central Bank of India Employees Associations, Patna and
Muzafferpur and the Bihar Provincial Central Bank of India Employees
Association have opposed the classification of banks as a matter of principle
but they have stated that if it was not feasible to do so, banks may be divided
in two classes and not more. They have stated that those banks whose
working funds amount to Rs. 15 crores or more should be placed in A Class
and those banks whose working funds amount to less than Rs. 15 crores
may be placed in B Class.
4.31. The Cochin Commercial Bank Employees Association, Cochin,

33

has asked for classification of banks according to resources into three groups
: (i) Group A Banks whose working funds amount to Rs. 20 crores and
more, (ii) Group B Banks whose working funds amount to Rs. 5 crores
and more but below Rs. 20 crores, and (iii) Group C Banks whose working
funds amount to Rs. 1 crore and more.

on business in areas in which normally no commercial bank would consider

transacting business on economic grounds, and therefore there was in fact a
case for lessening the burden of a Class B bank in the case of subsidiary
banks. The Subsidiary banks, however, have submitted that their present
classification in class B with the areawise pay structure and dearness
allowance should continue.

4.37. The Kerala Bankers Association has in its written Statement referred
to the classification made by the Travancore Cochin Banking Inquiry
Commission, namely of C Class banks with working funds amounting to
rupees one crore and more upto 7 crores and of D Class banks with
working funds less than Rs. 1 crore and has submitted that emoluments
should be suited to the working possibility of banks.

AI

BE

4.33. The Indian Banks Association in its reply has stated that the
classification of banks based on working funds should be so rearranged as
to make such classification consistent with their earning capacity so that the
present classification in four categories may remain unchanged. The Indian
Banks Association craved liberty to submit at the hearing the relevant figures
for fixing the limits of working funds for classification of banks. At the hearing
when it was called upon to make its submission in the matter, it claimed that
Class A should comprise banks with working funds of Rs. 40 crores and
above, that Class B should comprise banks with working funds of Rs.12
crores and above but less than Rs. 40 crores, that Class C-l should comprise
banks with working funds of Rs. 7 crores and above but less than Rs. 12
crores that Class C-2 should comprise banks with working funds of Rs. 2
crores and above but less than Rs. 7 crores and that Class D should comprise
banks with working funds below Rs. 2 crores. The Indian Banks Association
has resisted the demand that when the working funds of any bank crossed
and remained higher than the upper limits set for its class continuously for a
period of 52 weeks, it should automatically pass into the next higher class.
The Association submitted that the principles laid down in para 64 of the
Sastry Award and the period of two years provided therein for the changeover
from one class to another whether higher or lower should remain unaffected
having regard to the fact that two years was a fair period for a bank to adjust
itself to the new classification.

4.36. On behalf of the State Bank of Patiala, it is submitted that even

with the present pay structure it was uneconomic for the subsidiary banks to
open branches and operate in small areas where no avenues of making profit
were available, but this had to be done by reason of a statutory obligation and
in the larger national interests, and if the pay structure etc. of a class A
bank was imposed on the State Bank of Patiala, or any other Subsidiary
bank, the subsidiary banks would not be in a position to carry out their
obligations without being a burden on the public exchequer. It is submitted
that no case existed either on facts or in equity for including the State Bank
of Patiala in or treating it as Class A bank.

4.32. The Allahabad Bank Employees Union, Calcutta, the State Bank
of Patiala, (All Cadres) Employees Association and the Employees
Association of the Union Bank of Bijapur and Sholapur more or less took the
same stand as that of the All India Bank Employees Association.

4.34 The Bombay Exchange Banks Associaton in its written statement

has submitted that the Exchange Banks were not affected by the classification
standard demanded by the workmen. It pointed out that it would be unrealistic
to classify Banks into 3 categories only.

4.35. On behalf of the eight Subsidiaries of the State Bank of India it is

submitted that the demand of the workmen that the subsidiary banks should
be classified as A Class banks irrespective of working funds etc. was
unreasonable and unjustified and had no basis either in fact or in equity. It is
pleaded that the Subsidiary banks would fall within Class B banks under the
Sastry Award and that there was no reason why these banks should be
upgraded to Class A. It is further pleaded, that the subsidiary banks had
imposed on them by statute obligations and duties which involved carrying

34

4.38. The Northern India Banks Association in its written Statement has
submitted that in view of the financial position and paying capacity of different
classes of banks, it was necessary that besides A, B and C Class banks
there should also be D Class banks whose working funds were below Rs. 1
crore, as already provided in the Sastry Award. It has further submitted that
in view of the rapidly increasing urban population as a result of industrialization
through-which we are passing, and in view of the development of small scale
and medium sized industries as a part of our well considered national policy,
the need for small banks was bound to continue and hence there was a case
for D Class banks. The Association has further submitted that only when
the working fund of a bank, whether by amalgamation, merger or otherwise,
crossed and remained higher than the upper limit set for its class continuously
for a period of two years, as provided in the Sastry Award, it should pass into
a higher class and in that case the employees should have the benefit of a
higher minimum starting pay only along with dearness allowance and other
amenities applicable to the higher class bank.
4.39. The National Bank of Lahore Ltd. in its written Statement has
submitted that the classification of banks into different categories was on
appropriate method and was not objected to by the bank. The Bank had no
suggestion to offer with regard to the classification of "A" Class and "B
Class banks. So far as the classification of C Class banks was concerned,

35

4.45. The Miraj State Bank Ltd. by its Written Statement has submitted
that the bank was an extremely small one from the point of view of its paid-up
capital as well as from the point of view of its total working funds, that it is
situated, along with all its branches, at places none of which had a population
of more than 75,000, that three of its branches were situated in places having
populations ranging from 10,000 to 20,000 and that in view of this circumstance
and in view of the general financial position of the bank, the bank should be
exempted from the provisions of the award of this Tribunal. Without prejudice,
the bank has submitted that the bank could not even afford the scales of pay
and dearness allowance, as well as the terms and conditions of employment
prescribed by the Sastry Award, as modified by the report of the Bank
Award Commission and therefore deserved to be placed in a class of its own,
which may be called E class.

AI

BE

4.40. The Travancore-Cochin Bankers Association by its written

Statement has submitted that it was incorrect to classify banks according to
the deposits and working funds, that the capacity of a bank cannot be
measured by taking either the deposits or the working funds, that profits may
vary due to several reasons year after year and from bank to bank, that
previous Tribunals classified banks into four groups, i.e., A Class banks, B
Class banks, C Class banks and D Class banks and the Association
submitted that the present classification may be allowed to continue.

classification suggested by the All India Bank Employees Association did

not appear to be proper or reasonable, that it was suggested by the Association
that the banks whose working funds were below Rs. 7 1/2 crores should be
classified as C class, that the working funds of the bank as seen from its
last balance sheet were not even Rs. 2 crores and that it was necessary to
have at least one more category whose working funds were below Rs. 3
crores. The Bank referred to another aspect of the matter viz., whether banks
should be classified with reference to the working funds or whether they
should be classified with regard to average earning capacity and stated that
it would be more proper to divide the several classes of banks with reference
to the earning or paying capacity rather than on the basis of working funds.

the bank submitted that banks with the working funds of at least Rs. 15
crores should be classified as C Class banks because under the newly
introduced rules by the Reserve Bank of India, a major portion of the working
capital of the banks would not be utilised by the banks themselves for the
earning of profits, but would be so utilised by the Reserve Bank of India. The
bank submitted that this necessarily would lead to diminition in the earning
capacity of the banks in general and the C Class banks in particular. The
bank further submitted that the wages which were being paid and which
would have to be paid would remain unaffected by the reduction of the capacity
to earn profits and consequently Rs. 7 crores working capital for a C
Class bank would not enable it to meet the expenses imposed upon it by the
previous awards and those that might be imposed hereafter. The bank
submitted further that it was not merely the increase in the volume of work
that should entitle the workmen to a wage higher than that fixed by the award
but the continuity of working fund for a full year coupled with comparative
increase in the profit should if at all be a matter for consideration. It has
submitted that there should also be a provision that if for any reason the
working capital of a bank suffers a reduction, then there should be a reduction
in the wages of the employees also.

4.41. The .Bhratha Lakshmi Bank Ltd. by its Written Statement has
submitted that in respect of D class banks the limit of Rs. one crore should
be increased to Rs. 3 crores, as the limit of Rs. 1 crore suggested in 1952
was equal to and in any case not less than Rs. 2 crores today.

4.42. The Gadodia Bank Ltd., by its Written Statement submitted that
there should be 4 categories of banks, A, B, C, and D classified on the basis
of average working fund. The bank submitted that in the case of D Class
banks in view of their financial position and with a view to allow them opportunity
to grow and become stronger and stronger, it may be provided that those
banks who have attained the upper limit step in into C Class provided that the
working funds remain continuously at least for 2 years.
4.43. The Jaya Laxmi Bank Ltd. by its Written Statement has suggested
that D Class bank may be categorised with working funds of less than Rs.
3 crores and stated that if that was not done, small banks would be put to a
lot of inconvenience to implement the new proposed wage structure.
4.44. The Vijaya Bank Ltd. by its Written Statement has stated that the

36

4.46.As regards classification of banks, in the absence of better norms

of classification, it seems to me that even though the classification of banks
based on working funds is not an ideal method of classifying banks, it is,
under the present circumstances, the best workable method of classifying
banks having branches in more than one State which are before me. If,
however, any bank, by reason of special circumstances peculiar to the bank,
is unable to bear the burden of the class under which it falls under this award,
it may be granted some relief or some special provision may be made for it.
The existence of such exceptional banks cannot come in the way of the
establishment of a rule relating to classification of banks in accordance with
their working funds.
4.47. In support of the claim made at the hearing on behalf of the Indian
Banks Association for classification of banks so that Class A would comprise
banks with working funds of Rs. 40 crores and above, Class B would comprise
banks with working funds of Rs. 12 crores and above but .less than Rs. 40
crores, Class C-l would comprise banks with working funds of Rs. 7 crores
and above but less than Rs. 12 crores, Class C-2 would comprise banks
with working funds of Rs. 2 crores and above but less than Rs. 7 crores and
Class D would comprise banks with working funds below Rs. 2 crores, Shri
Phadke, the learned advocate for the Indian Banks Association, filed a

37

4.52. This demand has been resisted by the State Bank of India. It was
urged that the State Bank, which is the creature of a statute, has to carry on
banking business on sound business principles and has to enlarge itself in
the rural areas irrespective of the fact whether its branches in such areas
would fetch profit or not. Shri Sachin Chaudhary who appeared for the State
Bank of India pointed out that two somewhat contradictory obligations had
been imposed on the State Bank of India viz. it was under an obligation to run
the institution on sound banking principles and it was under an obligation to
extend banking facilities to rural areas even though it may result in a loss. It
was also pointed out that the State Bank of India was a bank in the public
sector working for the benefit of the public and that its profits were turned over
to the Government. He stated that it was incorrect to say that because the
Reserve Bank held a major portion of the shares of the State Bank of India,
the Reserve Bank became the owner of the State Bank of India.

AI

BE

4.48. In the banking industry, the paid-up capital and reserves constitute
a small part of the total working funds. Dividends have to be paid only on the
paid-up capital. It is neither proper nor just to classify banks on the basis
suggested by the Indian Banks Association. It would mean, a disturbance at
all levels, adversely affecting the emoluments of the employees. No cogent
or convincing reasons have been adduced and no evidence has been led
which would justify the suggested classification. I see no reason to accede
to the demand made on behalf of the Indian Banks Association in this
connection.

of the State Bank were held by the Reserve Bank of India and that when
carrying on ordinary business the Reserve Bank called itself the State Bank
of India and carried on commercial banking business. It was argued further
that the relationship between the State Bank of India and the Reserve Bank
of India was not exclusively or merely that of a company and its share holder
or that of a mere agent and its principal. The State Bank was in a class by
itself created by the statute, a position which could not be claimed in respect
of the biggest of the A Class banks. It was submitted that the State Bank of
India should be placed in a class higher than that of A Class banks.

statement showing the yield according to total working funds of scheduled

banks after paying interest on deposits etc.. and establishment expenses for
the period 1951 to 1959. It showed that the percentage ratio of profits after
paying establishment expenses to total working funds had gone down from
2.02 per cent for the year 1951 to 1.40 per cent for the year 1959. He contended
that over the next three years the yield on working funds could be expected
to go further down to 1.2 per cent, and submitted that for the restoration of
the 1951 level of yield larger working funds would be necessary. The above
contention of the Indian Banks Association was very strongly opposed on
behalf of the employees. It was pointed out that as a result of the classification
suggested by the Indian Banks Association, it would bring twelve more banks
in Class D which class the employees wanted to abolish that thereunder
eleven C Class banks would fall in C-2 Class, six B Class banks would fall in
C-l Class and four A class banks, namely, the Canara Bank Ltd., the Indian
Overseas Bank Ltd., the Devkaran Nanjee Banking Corporation Ltd. and the
Union Bank of India Ltd. would fall in B Class. It was urged that the net result
of such classification would be a disturbance at all levels, inflicting great
hardship on the workmen. It was further urged that no cogent reasons were
advanced for this pulling down process.

4.49. The limit placed by the Sastry Tribunal in connection with A class
banks, viz., banks whose working funds amount to 25 crores and more,
appears to me to be fair and reasonable and there is no reason to disturb the
same.
4.50 The next question that will require to be considered is whether the
State Bank of India should be regarded as a bank falling within this class or
should be excepted from this class and should have scales of pay and other
service conditions of its own.

4.51. It was contended that by its constitution, by its structure, by the

way it was managed and the purposes for which it was constituted the State
Bank of India differed from all other A Class banks, that though the State
Bank was at present classified with other A Class banks, it was unlike other
A Class banks, specially constituted under a separate enactment. It was
next contended that the State bank was the name under which the Reserve
Bank functioned for certain purposes. It was submitted that most of the shares

38

4.53. While disposing of the application made on behalf of the State

Bank of India Staff Union, Andhra Pradesh, Vijayawada (Miscellaneous
Application No 291 of 1960) for bringing on record the Reserve Bank of India
as a party to Reference No. 1 of 1960, in relation to the dispute between the
State Bank of India and its workmen, I have, by my judgement and order,
dated 18th November 1960, held that the Reserve Bank of India and the State
Bank of India were not the same and that they were distinct and separate
entities constituted under different enactments. The said order appears in
Appendix E to this award. The State Bank of India and the Reserve Bank of
India have distinct functions to perform.

4.54. Having considered all aspects of the matter, I am of the view that
though the State Bank of India has special and peculiar features of its own,
there is no case made out for treating this bank on a footing higher than the
one occupied by A Class banks. On the one hand, it has the advantage of
having very extensive working funds whilst on the other it has to bear the
burden of the Government policy relating to the expansion of banking and in
particular in rural areas. In fact the Integration and Development Fund has
been constituted to meet some of the losses incurred by the State Bank of
India in opening some of its branches in accordance with its expansion
programme. In my view, the interests of the workmen are sufficiently
safeguarded by putting the bank in Class A. Accordingly I reject the demand

39

for placing the State Bank of India in a separate class by itself.

instructions, the general superintendence and conduct of the affairs and

business of a subsidiary bank vests in a Board of Directors which, except in
the case of the first constitution of the Board, is to consist of the Chairman
for the time being of the State Bank, ex officio; an officer of the Reserve
Bank, to be nominated by that bank; not more than five directors to be
nominated by the State Bank of whom not more than three shall be officers of
that bank; two directors to be elected in the prescribed manner by the
shareholders, other than the State Bank subject to certain limitations and a
director to be nominated by the Central Government in consultation with the
State Bank.

BE

4.56. The demand of the employees has been resisted by the State
Bank Subsidiaries. It was submitted that the demand was unreasonable and
unjustified and had no basis either in fact or in equity. It was further submitted
that the subsidiary banks had imposed on them by statute obligations and
duties which involved carrying on business in areas in which normally no
commercial bank would consider transacting business on economic grounds
and that there was in fact a case for lessening the burden which they would
have to bear as B Class banks.
4.57.The subsidiaries of the State Bank of India are the following :
The State Bank of Bikaner,
The State Bank of Hyderabad,
The State Bank of Indore,
The State Bank of Jaipur,
The State Bank of Mysore,
The State Bank of Travancore,
The State Bank of Patiala, and
The State Bank of Saurashtra.

AI

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)

These Subsidiaries are now governed by the State Bank of India (Subsidiary
Banks) Act. 1959. Six of these banks were constituted under the said Act.
The State Bank of Hyderabad and the State Bank of Saurashtra have been
constituted under different enactments. By section 9 of the said Act it has
been provided that on the constitution of the aforesaid new banks, under the
said Act all shares in the capital of the corresponding banks, where such
corresponding banks have a share capital, shall stand transferred to and
shall vest in, the State Bank, free of all trusts, liabilities and encumbrances.
There is a provision that no increase or reduction in the issued capital of a
new bank shall be made in such a manner that the State Bank of India holds
at any time less than 55 per cent of the issued capital of that bank. By
section 24 the State Bank is empowered from time to time to give directions
and instructions to a subsidiary bank in regard to any of its affairs and
business, and such subsidiary bank would be bound to comply with the
directions and instructions so given. Subject to any such directions and

40

4.58. By section 36 it is provided that a subsidiary bank shall, if so

required by the State Bank, act as an agent of the State Bank at any place
in India for (a) paying, receiving, collecting and remitting money, bullion and
securities on behalf of any Government in India : and (b) undertaking and
transacting any other business which the Reserve Bank may, from time to
time, entrust to the State Bank. By Section 37 it is provided that a subsidiary
bank may carry on and transact the business of banking as defined in clause
(b) of sub-section (1) of section 5 of the Banking Companies Act, 1949 and
may engage in such one or more of the other forms of business, as are
specified in sub-section (1) of section 6 of that Act. By sub-section (2) of
section 37, it is provided that the Central Government may, after consultation
with the Reserve Bank and the State Bank by order in writing (a) authorise a
subsidiary bank to do such other forms of business as the Central Government
may consider necessary or expedient: (b) direct that any form of business as
was mentioned in the order shall be carried on, subject to such restrictions,
conditions and safeguards as may be specified therein; or (c) prohibit a
subsidiary bank from carrying on or transacting any form of business, which,
but for that clause, it was lawful for the subsidiary bank to engage in.

4.55. Another claim made on behalf of the workmen is that the

subsidiaries of the State Bank of India should also be placed in Class A even
though by reason of their working funds they are not liable to be placed in the
said class. It was submitted that there was common ownership, direction
and management of the Subsidiaries of the State Bank of India for a public
purpose and that this should be the guiding factor. It was further submitted
that the Government policy was to serve the rural and semi-rural areas through
the State Bank of India and its Subsidiaries and that the terms and conditions
of service of the employees of the State Bank of India and its subsidiaries
should be the same.

4.59. By section 40 it is provided that after making provision for bad and
doubtful debts, depreciation in assets, equalisation of dividends, contribution
to staff and superannuation funds and for all other matters for which provision
is necessary by or under the Act or which are usually provided for by banking
companies, a subsidiary bank may, out of its net profits, declare a dividend.
4.60. By section 48 it is provided that a subsidiary bank may accept any
subsidies offered by the State Bank to meet:
(a)

(b)

the cost of the whole or any part of any specific programme of

development undertaken by that subsidiary bank with the approval
of the State Bank; and
such losses or expenditure as may be approved by the State Bank,
with the consent of the Reserve Bank.

These provisions indicate that a Subsidiary bank is a separate entity

which exists separately from the State Bank of India. The Subsidiary banks
have separate functions to perform. Under the directions of the State Bank of

41

India, the subsidiary banks have opened between 1st October 1959 and 30th
June 1960, 36 branches to cater to the needs of the rural and semi-urban
areas in the former Part B States by providing banking and credit facilities to
those areas. Merely because the State Bank of India has a controlling voice
in the affairs of the Subsidiaries, I would not be justified in placing any
Subsidiary bank in a class above the one in which it would ordinarily be
placed, so as to impose upon such bank a larger burden than that which it
would otherwise have to bear. I cannot accede to the demand of the workmen
in this connection.

4.64. As regards the members of the subordinate staff, in Area 1, the

amounts of remuneration payable at the same index number during 1st, 15lh
and 25th year of service by a C-l Class bank are Rs. 80.87, Rs. 104.87 and
Rs. 114.87 respectively whilst those payable by a C-2 Class bank are Rs.
52.75, Rs. 76.75 and Rs. 86.75 respectively. In Area II the amounts of
remuneration payable under similar circumstances during the 1st, 15th and
25th year of service payable by a C-l Class banks are Rs. 75.75, Rs. 100.75
and Rs. 110.75 respectively whilst those payable by a C-2 Class bank are
Rs. 47, Rs. 72 and Rs. 82 respectively. In Area III, the amounts of remuneration
payable under similar circumstances during the 1st, 15th and 25th year of
service, by a C-l Class bank are Rs. 70.62, Rs. 96.62 and Rs. 106.62
respectively whilst those payable by a C-2 Class bank are Rs. 42.50, Rs.
68.50 and Rs. 78.50 respectively.

AI

BE

4.62. I shall now deal with banks falling in the present Class C, namely,
banks whose working funds amount to Rs. 1 crore and more but are below
Rs. 7 1/2 crores. As a result of the report of the Bank Award Commission
and the enactment of the Industrial Disputes (Banking Companies) Decision
Act (41 of 1955) and the Industrial Disputes (Banking Companies) Decision
(Amendment) Act (40 of 1957), this class, for certain purposes has been
sub-divided into two classes one, the class known as Class C-l and the
other the class known as Class C-2. Class C-l consists of (1) the Bank of
Punjab Ltd., (2) the Bank of Indore Ltd., (now the State Bank of Indore). State
Bank of Jaipur Ltd., (now the State Bank of Jaipur), (4) the Bank of Maharashtra
Ltd., (5) the Canara Banking Corporation Ltd., (6) the Canara Industrial and
Banking Syndicate Ltd., (7) the Hind Bank Ltd., (8) the Travancore Bank
Ltd.. (now the State Bank of Travancore); (9) the South Indian Bank Ltd., and
(10) the Catholic Syrian Bank Ltd., The aforesaid banks were considered to
be in a position to bear the burden of the dearness allowance as awarded by
the decision of the Labour Appellate Tribunal. This Class C-l would also
comprise banks which, since the date of the Sastry Award, have been
upgraded from Class D to Class C by reason of the increase in their working
funds so as to amount to Rs. 1 crore and more for the period provided by the
Sastry Award. Class C-2 comprises banks which, fell within Class C under
the Sastry Award other than the aforesaid banks falling within Class C-l. The
banks falling within Class C-2 were not considered to be in a position to bear
the burden of dearness allowance provided by the decision of the Labour
Appellate Tribunal. Out of the banks which appear before me, only the following
six banks fall within Class C-2, namely (1) the Bank of Rajasthan Ltd., (2) the
Hindustan Commercial Bank Ltd., (3) the National Bank of Lahore Ltd., (4)
the Punjab and Sind Bank Ltd., (5) the United Industrial Bank Ltd., and (6)
the Pandyan Bank Ltd.

4.61. As regards B Class banks, the basis of classification as adopted

by the Sastry Tribunal, namely, banks having working funds amounting to
Rs. 7 crores and more but below Rs. 25 crores, is fair and reasonable and
does not require to be altered.

considerable extent from that payable to workmen employed by banks falling

within Class C-2. At the all-India working class consumer price index number
123 in the Series 1949 = 100, the remuneration (i.e., basic pay and dearness
allowance) which is payable to a member of the clerical staff in Area I by a Cl Class bank during the 1st year of service is Rs. 136.85, the 15th year of
service is Rs. 241.90 and the 25th year of service is Rs. 375.25 whilst that
payable by a C-2 Class bank during the 1st year of service is Rs. 116.50. the
15th year of service is Rs. 214.93 and the 25th year of service is Rs. 331. In
Area II, the amounts of remuneration payable under similar circumstances to
members of the clerical staff in the 1st, 15th and 25th year of service payable
by a C-l Class bank, are Rs. 124.05, Rs. 209.75 and Rs. 333.90 respectively
whilst those payable by a C-2 Class bank are Rs. 103.70, Rs. 193.13 and
Rs. 299.40 respectively. In Area III, the amounts of remuneration payable
under similar circumstances to members of the clerical staff in the 1st, 15th
and 25th year of service by a C-l Class bank are Rs. 114.25, Rs. 190.85 and
Rs. 307.05 respectively whilst those payable by a C-2 Class bank are Rs.
93.90, Rs. 180.25 and Rs. 263.25 respectively.

4.63. Though all the banks comprised in Class C-l and Class C-2 fall
within Class C, the total remuneration (excluding house rent) payable to
workmen employed by banks falling within Class C-l varies to a very

42

4.65. There is thus a very wide divergence between the total amounts of
basic pay and dearness allowance payable to employees of banks falling
within C Class depending on whether a bank is placed in C-1 group or C-2
group. When we come however to Area IV, the remuneration payable by C-l
Class bank and by a C-2 Class bank to workmen in the clerical grade is the
same. So is the case with workers in the subordinate grade.
4.66. The position appears to be very much more anomalous when one
considers the case of a bank which was in D Class at the time of the Labour
Appellate Tribunals decision and subsequently was upgraded by reason of
its working funds touching or crossing the limit of Rs. 1 crore for the prescribed
period. It then gets upgraded into C Class and has then to pay remuneration
payable by a C-l Class bank.
Thus, a bank whose working funds at the time of the Labour Appellate

43

Tribunals decision were less than the working funds of a C-2 Class bank has
to pay more than a C-2 Class bank, even though after upgradation its working
funds may be less than those of a C-2 Class Bank. The reason for the creation
of this new C-2 Class was the inability of the banks falling within C-2 Class to
meet the burden of the dearness allowance imposed by the decision of the
Labour Appellate Tribunal. I will proceed to examine the case of the six
banks which at present fall within C-2 Class, to see whether there is any
necessity now to provide for their workmen a lower remuneration than the
remuneration payable by other banks falling within C Class.

4.70. The Hindustan Mercantile Bank Ltd. This bank was

established in the year 1944. As shown in the Statistical Tables its paid-up
capital was Rs. 50,00,000 in the years 1959 and 1960, its reserves in the
year 1959 were Rs. 2.30,000 and in the year 1960 were Rs. 2,50,000, and its
deposits in the year 1959 totalled Rs. 2,07,37,000 and in the year 1960
totalled Rs. 1,86,04,000. The head office of the bank is at Calcutta. It has
branches at Bombay, Delhi, Kanpur, Bikaner and Chandernagore. Its total
working funds were Rs. 2,78,13,000 in the year 1955, Rs. 2,29,68,000 in the
year 1956, Rs. 2,77,29,000 in the year 1957, Rs. 2,87,51,000 in the year
1958 and Rs. 2,62,12,000 in the year 1959 as shown in the banks Written
Statement. For the year 1960 its total working funds were Rs. 2,15,80,000
and in the year 1961 the same amounted to Rs. 2,10,22,000 according to a
statement furnished by the bank. In 1947, the bank had 17 branches but
closed one branch after another as according to the bank, it was found
uneconomical to continue the branches. In 1960 the bank had only 7 branches.
The gross earnings of the bank have declined from Rs. 13,44,000 in 1955 to
Rs. 11,05,000 in 1959, The bank has not paid any dividend since its inception.
It has submitted by its written statement that the bank was not in a position
to bear any extra financial burden but on the contrary needed some relief.
From 1948 to 1960 this bank has made profits as follows :

BE

4.67. The Bank of Rajasthan Ltd. This bank was established in the
year 1943 with its registered office at Udaipur. As shown in the Statistical
Tables, in the years 1959 and 1960,it had a paid-up capital of Rs. 9,24,000,
its reserves were Rs. 5,45,000 in the year 1959 which rose to Rs. 8,01,000 in
the year 1960, and its deposits were Rs. 4,90,61,000 in the year 1959 and
Rs. 5,32,92,000 in the year I960. Its total working funds as on 31st December
1961, as given by the bank, amounted to Rs. 6,07,99,000. This bank declared
dividends at the rates following : In the year 1950 at 4%, in the year 1951
at 4%, in the year 1952 at 3%, in the year 1953 at 3%, in the year 1954
at 3%, in the year 1955 at 3%, in the year 1956 at 4%, in the year 1957
at 6%, in the year 1958 at 6%, in the year 1959 at 8% taxable and in the year
1960 at 10% taxable. This bank had 31 branches including the head office,
but excluding the purely administrative offices in the year 1959. It had 35
branches including the head office but excluding the purely administrative
offices in the year 1960.

footing as other banks falling within Class C. In view of the present financial
position of the bank and the progress made by it in the past few years, it
should not experience any difficulty in meeting the increased burden imposed
upon it as a result of the abolition of C-2 Class.

AI

4.68. In its written statement, this bank has stated that on 31-12-1959
twenty three of its branches were in towns with a population of less than
30,000 and that it caters to the needs of small businessmen and rural
population. It has pleaded that it has no capacity to pay wages at scales
higher than those which it is at present paying and that it will not be able to
maintain its present rate of dividend if it is made to pay increased rates of
wages. It has stated that if it is asked to pay emoluments to its workmen on
the basis of the bank being regarded as a C-l Class bank, it would have to
incur an additional expenditure of Rs. 86,630 which would considerably reduce
its balance of profits. In the year ended 31st December 1960, it has shown
that it made a profit of Rs. 3,36,202/- and that if it had to pay C-l Class wages
for the year 1960 the profits would have been reduced to Rs. 2,49,572.
4.69. This bank has 23 branches in Area IV and 6 branches in Area III as
on 31st December 1960. In Area III the number of members of its clerical
staff was 64 and the number of members of its subordinate staff was 36. In
Area IV number of members of its clerical staff was 99 and that of sub ordinate
staff was 83. The basic wages and dearness allowance payable by C-l and
C-2 Class banks in Area IV are the same.
There is no reason why this bank should not be treated on the same

44

Year
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960

Profits
Rs.
61,000
1,14,000
32,000
61,000
1,49,000
81,000
31,000
71,000
4,000
3,000
1,38,000
65,000
68,000

as shown by a note filed by the Indian Banks Association. Allegations of

various malpractices have been made against this bank which have been
denied by the Bank. There is no evidence led in support of these allegations.
No evidence has been led on behalf of the bank to show any special
circumstances peculiar to this bank entitling it to any special treatment. This

45

bank is in the private sector. It has not declared any dividend since its inception
and has not shown such profits as are ordinarily made by banks situated in
similar circumstances. In the absence of any satisfactory evidence led to
explain the paucity of its profits, there is no reason why this bank should not
pay to its employees the same amount of wages which other banks in the
same class have to pay to their employees.

fair and reasonable but in case this Honble Tribunal finds it necessary
to change the scales of pay we propose the following scales of pay
applicable to clerical and subordinate staff in C Class banks.
SCALES OF WAGES
(Clerks)
Class C Banks
Area I

Rs. 705105614771968252E.B.9315.

Area II

Rs. 65510061427191 8247 E.B.9310.

Area III

Rs. 605 95613771868242E.B.9305.

Area IV

Rs. 555 90613271818237E.B.9300.

(Peons)
Class C Banks

Area I to

4.71. The National Bank of Lahore Limited The Northern India

Banks Association has filed a reply to the statement of claim made by the
All India Banks Employees Association, inter alia on behalf of the National
Bank of Lahore Ltd. The bank itself has filed a separate reply to the main
demands of the workmen. This bank is a bank in C-2 Class since April 1954.
This bank was incorporated in the year 1942. As shown in the Statistical
Tables, its paid-up capital for the years 1959 and 1960 was Rs. 15,00,000,
its reserves for the year 1959 were Rs. 4,15,000 and for the year 1960 were
Rs. 3,50,000 and its deposits for the year 1959 were Rs. 4,09,47,000 and for
the year 1960 were Rs. 4,20,26,000. Its total working funds as given by the
bank for the years 1960 and 1961 amounted to Rs. 4,14,02,000 and Rs.
4,11,03,000 respectively. Its net profits for the year 1954 amounted to Rs.
1,34,507 for the year 1957 amounted to Rs. 1,63367 for the year 1958
amounted to Rs. 3,37,242 for the year 1959 amounted to Rs. 4,56,974 and
for the year 1960 amounted to Rs. 6,81,319. In the year 1961, it took over the
assets and liabilities of the Prabhat Bank Ltd. under a scheme of arrangement
sanctioned by the Government, with the result that it has now two more
branches. The bank has in all 24 branches including the head offices but
excluding the purely administrative offices. 14 of its branches are in Area I, 6
of its branches are in Area II, 2 of its branches are in Area III and 2 of its
branches are in Area IV. This bank was functioning before partition, in the
area now known as West Pakistan. In its reply, it has pleaded that it could
not pay any dividends to the shareholders since after the partition and
that the same was due mainly to the wage bill which it had to meet and the
provision, it had to make for the losses which had already been suffered as a
result of partition. The bank has stated that it had to make a provision for
about Rs. 9,00,000 for the losses suffered in Pakistan. The bank has pleaded
that special consideration should be given to the bank and that no increase,
in wages should be ordered. This written statement was filed on 8th July
1960. The balance-sheet filed for the year 1960 shows that it had tide over
the difficulties arising as a result of the partition and has been able to declare
four per cent dividend out of the net profits made by it during the year. A sum
of Rs. 60,000 out of the net profits has been utilised for declaring this dividend.
During the year, it has utilised its profits for the purpose of transferring Rs.
3,25,000 to the statutory reserves. The bank now is making substantial profits.
The Northern India Banks Association on behalf of its member banks including
this bank, has made the following proposal :

Area IV. Rs. 322102.

AI

BE

4.72. The above scales are better than the scales prescribed by the
Labour Appellate Tribunal for clerical staff in C Class banks. They are much
better than the scales of pay prescribed by the Labour Appellate Tribunal for
the members of the subordinate staff employed by C Class banks except for
the first few years of service in Area I.

We consider the existing minimum and maximum of the scales as

46

4.73. Having considered all aspects of the matter, in my view, this bank
will be able to bear the burden of the increased establishment charges under
my award as a C Class bank.
4.74. The Punjab and Sind Bank Limited, Amritsar : This bank
was incorporated in the year 1908. As shown in the Statistical Tables the
paid-up capital of this bank in the year 1959 was Rs. 3,87,000 and in the year
1960 was Rs. 3,88,000, its reserves were Rs. 12,10,000 in the year 1959 and
Rs. 10,75,000 in the year 1960, and its deposits were Rs. 1,88,11,000 in the
year 1959 and Rs. 2,13,17,000 in the year 1960. Its working funds for the
year 1961 as shown by the bank amounted to Rs. 2,34,92,800. This bank
had, in the year 1960, 13 branches including the head office but excluding
purely administrative offices. It had three branches in Area I, six branches in
Area II and three branches in Area IV. During the year 1959, this bank made
a net profit of Rs. 26,919. During the year 1960, it made a net profit of Rs.
12,286. In the balance-sheet for the year 1960, it is stated that lower profit
was partly due to the increase in establishment expenses as a result of reorganisation to improve efficiency of work at branches and partly due to higher
liquidity which was maintained in the second half year due to uncertain
conditions. It is further stated in the balance sheet that the deposits had
increased by about Rs. 25 lacs and loans and advances as on 31st December
stood at a higher figure by about rupees sixteen lacs. This bank paid dividends
at the rate of five per cent during the years 1954 to 1957. It has declared no

47

Roy and their respective sons. The head office of the bank is housed in part
of the premises belonging to the Roy family. It is stated that Shri J. N. Roy
and Shri P. N. Roy at their own cost installed counters in the premises of the
bank at a cost exceeding about Rs. 30,000 and also installed a strong room
and a record room at an expense of about Rs. 40,000.

4.75. The United Industrial Bank Ltd. Its paid-up capital between
1950 to 1960 has all throughout been Rs. 27,66,000. Its reserves were Rs.
4,60,000 in the year 1950, they went down to Rs. 3,50,000 in the year 1951,
they went up again to Rs. 5,30,000 in the year 1954, they dwindled to Rs.
3,66,000 in the year 1955, rose to Rs. 4,85,000 in the year 1956, they went
down to Rs. 3,72,000 in the year 1959 and went up to Rs. 3,74,000 in the
year 1960. Its total deposits were Rs. 1,33,76,000 in the year 1950, Rs.
1,16,82,000 in the year 1951, Rs. 1,06, 94,000 in the year 1952, Rs. 1,18,90,000
in the year 1953, Rs. 1,17,16,000 in the year 1954, Rs. 1,04,07,000 in the
year l955, Rs. 1,18,28,000 in the year 1956, Rs. 1,46,26,000 in the year
1957, Rs. 135,18,000 in the year 1958, Rs. 1,42,95,000 in the year 1959 and
Rs. 1,31,20,000 in the year 1960. Its working funds for the year 1961 as
shown by the bank amounted to Rs. 1,90,22,080. In accordance with its
published balance sheets, in round figures, this bank made a loss of Rs.
14,000 in the year 1952, made a profit of Rs. 47,800 in the year 1953, made
a loss of Rs. 32,000, in the year 1954, made a loss of Rs. 22,000 in the year
1955, made a profit of Rs. 47,100 in the year 1956, made a profit of Rs. 7,000
in the year 1957, made a loss of Rs. 44,800 in the year 1958, made a loss of
Rs. 92,900 in the year 1959 and made a small profit of Rs. 1,878 in the year
1960. It is stated in the balance sheet of the bank for the year 1960 that no
provision was required to be made for taxation that year as tax aggregating to
Rs. 56,551 already deducted at source from the yield on the banks
investments was due to be refunded to the bank. This bank has 7 branches
in all including the head office. Five of its branches, including the head office,.are
within the municipal area of Calcutta. One branch is at Patna and another
branch is at Naraingunge in East Pakistan. It has filed a written statement
claiming that having regard to its own peculiar financial position, the losses it
has incurred or the small profits that have been made in some years, the
gradual decrease in the ratio of profits to working funds since 1954 and
particularly the inadequacy of the banks working funds during the recent
years, it may be treated as a small unit on a special footing. It has submitted
that the losses incurred by the bank in recent years were partly due to the
mounting wage bills of the workmen staff and partly due to other circumstances
over which the bank had no control. What those circumstances beyond the
banks control are has not been specified. The bank in the year 1959. employed
in all 129 workmen, 71 of whom belonged to the clerical staff and 58 of whom
belonged to the subordinate staff. A statement has been filed on behalf of the
bank showing that as on 31-12-1959 out of a total 37,500 shares of the bank
24,000 shares were held in the aggregate by Shri J. N. Roy and Shri P. N.

4.76. This bank operates principally within the municipal limits of Calcutta.
It is a bank in the private sector. For over 10 years the bank has continued its
existence without declaring any dividend. No evidence has been led by the
bank to show any special reasons why it is making losses or only small
profits whereas other banks are making considerable profits. No evidence
has been led of any special circumstances peculiar to the bank which would
require this bank to be treated on any special footing so that it should pay
lesser amounts by way of wages to its employees than other banks similarly
situated. In my view, it should pay wages appropriate to its class under this
award.

dividends for the years 1958, 1959 and 1960. This bank is a member of the
Northern India Banks Association and the offer made on its behalf is similar
to the offer made on behalf of the National Bank of Lahore Ltd. In my view,
this bank would be able to bear the burden of the scales of pay and the other
provisions contained in my award as a C Class bank under my award.

AI

BE

4.77. The Pandyan Bank Limited. This bank was established in the
year 1946. As shown in the Statistical Tables its paid-up capital for the years
1959 and 1960 was Rs. 15,00,000, its reserves for the year 1959 were Rs.
11,45,000 and for the year 1960 were Rs. 13,95,000 and its deposits for the
year 1959 were Rs. 5,51,77,000 and for the year 1960 Rs. 4,34,01,000. Its
working funds for the year 1961 as shown by the bank were Rs. 4,29,31,000.
It had 82 branches including the head office but excluding the purely
administrative offices during the year 1959 and 83 branches excluding the
purely administrative offices during the year I960. It is one of the well-managed
banks in the country. In the year 1958, it made a profit of Rs. 4,18,925, which
rose to Rs. 7,14,840 in the year 1959 and to Rs. 7,50,005 in the year 1960.
During the year 1958 it distributed free of tax, dividend at the rate of ten per
cent on the paid-up capital of the company. In the year 1959, it distributed a
gross dividend of 14.29 per cent on the paid-up capital of the company.
During the year 1960, it distributed a gross dividend of ten per cent on the
paid-up capital of the company.

48

4.78. This bank had entered into an agreement regarding wages with its
workmen before the Bank Award Commission.
4.79. This bank will be able to bear the burden of a C Class Bank under
my award.
4.80. Having considered the position of all banks which are at present in
C-2 Class, I do not see any necessity of having any separate provision made
for them. They will pay the remuneration payable by C Class banks under
this Award.
4.81. I will next consider the case of D Class banks. It is strongly urged
before me that there is no necessity for maintaining this class. The Labour
Appellate Tribunal had provided in connection with this class of banks that
the scales of pay and dearness allowance given under the Sastry Award

49

be devised in order to make them sound and viable units. The question
also arises in this context as to whether some powers of compulsion
are required for effecting a merger in appropriate cases. * * * On
all grounds it is desirable that we start afresh with a banking structure
which is sound and sufficiently broad-based to take on the increasing
responsibilities that will fall on it during the Third Five Year Plan period.
From this point of view clearly one could not contemplate with
equanimity an indefinite or prolonged extension of tutelage for
substandard banks in various stages of difficulty.
Reliance was also placed on another speech delivered by the Governor of
the Reserve Bank as President of the Indian Institute of Bankers, at the annual
general meeting on August 10, 1961, where he has observed as under :

It is worth recalling xx xx xx that in 1947 we inherited a banking

system that was in several respects weak and disorganised as a
result of haphazard and mushroom growth during the war. Between
1941 and 1945 the number of banks had gone up from 473 to 737.
Several of these institutions showed highly undesirable characteristics,
such as an inadequate capital structure, too large a branch expansion
relative to resources, unsound methods of operation and unduly
favourable terms of managerial appointments. * * * As a result of the
consolidation * * * the number of banking institutions which had stood
at 737 at the end of 1946 was reduced gradually to 363 institutions at
the end of 1959. A number of these, unfortunately are still problem
banks.
Another problem which demands attention is that of the problem'
banks referred to earlier. The question has to be re-examined as to
whether these institutions have a useful role to play in the
economy and if so what structural and other improvements have to

50

The view is often expressed that small banks are per se more worthy
of encouragement than branches of banks on the ground that the
management of small banks, because of their direct and intimate
touch with borrowers and local economic conditions, are in a better
position to serve the banking needs of the community. On this ground
it has been suggested that the large number of small banks in our
country should, if there is a prospect of their being reasonably wellrun, countinue and not be subjected to a process of amalgamation.

AI

BE

would govern them, subject to the condition that they would apply for a period
of not more than five years from 1st April 1954 after which period the scales
of pay and dearness allowance of C Class banks would become applicable
to them. The Bank Award Commission, however, recommended that as
regards the banks in D Class other than those in the then Travancore-Cochin
State, their position as at the end of March 1959 should be examined afresh
in order to arrive at a decision about their promotion or otherwise to C Class.
It has been contended before me that the abolition of Class D would quicken
the pace of amalgamation of small banks with others and that such
amalgamation was in the national interest. It was contended that the policy
of amalgamation was backed by the Reserve Bank of India and that the
amendment of the Banking Companies Act empowered the Reserve Bank to
take such steps for amalgamation. By the Banking Companies (Second
Amendment) Act, 1960 (37 of 1960), Parliament has amended section 45 of
the Banking Companies Act. By this amendment it has been provided that
where it appears to the Reserve Bank that there was good reason so to do, it
may apply to the Central Government for an order of moratorium in respect of
banking companies. It is further provided that during the period of moratorium
if the Reserve Bank was satisfied that in the general interest or in the interest
of the depositors or in order to secure proper management of the banking
company or in the interest of the banking system of the country as a whole it
was necessary so to do, the Reserve Bank may prepare a scheme for the
reconstruction of the banking company or for the amalgamation of the banking
company with any other banking institution. Reliance was also placed upon
the speech of the Governor of the Reserve Bank of India in his inaugural
address delivered at the Second Indian Conference on Research in National
Income, on 31st August 1960. In the course of his address Shri lyengar has
observed as follows :

It is not really necessary for the purpose of reaching a practical

decision on our immediate problem, to discuss the relative merits of
branch banking versus small unit banking. * * * Whatever the theoretical
justification may be in favour of a small unit bank as opposed to branch
banking, the test in our country is whether unit banks have in fact
done well or whether on the contrary, they have failed to live up to
their expectations. * * * I would rarely say, that, by and large, experience
has shown that small unit banks have not been particularly successful
in our country, although a few of them have done well and have, in
fact, qualified for a licence.

4.82. It was also urged that the Travancore-Cochin Banking Inquiry

Commission, which was concerned with very small and poor banks, had
strongly recommended such amalgamation and that the Bank Award
Commission had also looked upon this process with great favour. It was
submitted that the Five Year Plans viewed with favour general amalgamation
of industrial units. It was pointed out by the employees that under the Divatia
Award there were only two classes of banks, that under the Sen Award there
were three classes of banks and that only the Sastry Award created four
classes. On the other hand, it was argued on behalf of the banks that no
proper material had been placed before this Tribunal to show that the time
had come for the abolition of D Class. It was further urged that if the scales of
C Class banks were made applicable to D Class banks, the heavy burden on
D Class banks would go up and some of the D Class banks may be wiped

51

out.

4.87. This bank has 12 branches including the head office but excluding
the purely administrative offices. Its net profit for the year 1958 was Rs.
1,67,883/- and it distributed a six per cent dividend free of income tax, utilising
Rs. 25.370/- for the purpose. For the year 1959, it made a profit of Rs. 1,42,318/
- and distributed a dividend of 8 per cent taxable at source and utilised Rs.
36,971/- for the purpose. For the year 1960, it made a profit of Rs. 1,13,000
and distributed a five per cent dividend. Out of its 12 branches, 7 are in area
IV, 2 are in area III and 3 are in area II and all its branches, except the branch
at Coimbatore, are in Kerala State. It has stated that during the year 1959 it
employed 27 peons and 58 clerks in all.

4.83. Before deciding upon the question whether Class D should be

abolished or should be maintained it would be desirable to examine the cases
of banks which are at present having working funds of less than one crore of
rupees, for the purpose of considering whether their cases warrant the retention
of a separate class.
4.84. At the time when the references were made there were 18 banks
with working funds below rupees one crore. 13 out of these 18 banks were
before the Sastry Tribunal and were classified as D Class banks. Out of the
18 banks, the Thomcos Bank Limited and The Trivandrum Permanent Bank
Limited have transferred their assets to other banks. The Bank of Nagpur
Limited and The Rayalseema Bank Limited have been amalgamated with
other banks and the Reserve Bank has refused to continue the licence in
connection with The Safe Bank Limited.

4.89. This bank was established in the year 1943. It has in all 8 offices
including the Head Office but excluding the purely administrative offices. As
shown by the Statistical Tables, its paid-up capital in the years 1959 and
1960 was Rs. 10,00,000; its reserves for the year 1959 were Rs. 1,18,000
and for the year 1960 were Rs. 1,50,000 and its total deposits in the year
1959 were Rs. 92,77,000 and in the year 1960 were Rs. 89,54,000. It made
a net profit of Rs. 72,510 in the year 1959 and of Rs. 78,165 in the year 1960.
The bank has not declared any dividend during the years 1953 to 1960. The
working funds of the bank for the year 1959 exceed Rs. 1 crore. The working
funds of the bank as given by the bank for the year 1960 amount to Rs.
1,08,00,000 and for the year 1961 amount to Rs. 94,50,000. Out of 8 offices,
5 are in Area I and 3 are in Area II. In the year 1959 this bank employed 59
persons in the clerical cadre, 4 in the supervisory cadre and 29 in the
subordinate cadre.

AI

BE

1. Chaldean Syrian Bank Limited.

2. Gadodia Bank Limited.
3. Jaya Laxmi Bank Limited.
4. The Pangal Nayak Bank Limited.
5. Ambat Bank Limited.
6. The Bharatha Lakshmi Bank Limited.
7. The Indian Insurance and Banking Corporation Limited.
8. The Narang Bank of India Limited.
9. Punjab and Kashmir Bank Limited.
10. The Ganesh Bank of Kurundwad Limited.
11. The Miraj State Bank Limited.
12. The Nadai Mercantile Bank Limited.
13. The Union Bank of Bijapur and Sholapur Limited.
I propose to consider the case of each of the aforesaid 13 banks.

(2) The Gadodia Bank Limited

4.85. The question of D Class banks, therefore, is now confined to the

following 13 banks in all :

4.88. This bank has just emerged from D Class and it is but fair that it
should have a little time to adjust itself so as to fall in line with other C Class
banks under this award.

(1) The Chaldean Syrian Bank Limited, Trichur

4.86. This bank is a non-scheduled bank. It was established in the year

1918. The Statistical Tables show that its paid-up capital for the years 1959
and I960 was Rs. 4,46,000/-, its reserves for the year 1959 were Rs. 3,76,000/
- and for the year 1960, were Rs. 4,07,000/- and its deposits for the year
1959, were Rs. 86,55,000/- and for the year 1960 were Rs. 93,83,000/-.
According to the bank for the year 1960, its average deposits were Rs.
97,21,760/- and its working funds were Rs. 1,05,80,124/-. Its working funds
as given by the bank for the year 1961 were Rs. 1,01,74,479/-. For 2 successive
years the working funds of this bank have exceeded Rs. 1 crore and under
the provisions of the Saslry Award as modified this bank has ceased to be a
D Class bank and stands upgraded to Class C-l.

52

4.90. By reason of the increase in its working funds over rupees one
crore continuously for a period of two years as provided in the Sastry Award
this bank would fall in Class C-l according to the Sastry Award as modified.
4.91. In view of the fact that this bank has gone into C-l Class during the
pendency of the proceedings before this Tribunal, it is necessary that it should
have a little time to adjust itself so as to fall in line with other C Class banks
under this award.
(3) The Jaya Laxmi Bank Ltd-, Mangalore.
4.92. This non-scheduled bank was established in the year 1923. The
Statistical Tables show that its paid-up capital for the years 1959 and 1960
was Rs. 5,00,000, its reserves in the year 1959 were Rs. 2,12,000 and in the
year 1960 were Rs. 2,20,000 and its deposits for the year 1959 were Rs.
87,79,000 and for the year 1960 were Rs. 1,02,33,000. The working funds of
this bank as on 31st December 1960 and 31st December 1961 as given by

53

the bank, have been Rs. 1,06,68,753 and Rs. 1,10,45,957 respectively.
4.93. For two years in succession, this banks working funds have
exceeded rupees one crore. This bank has ceased to be a D Class bank and
is liable to be regarded as a C-l Class bank, under the Sastry Award as
modified. It made a profit of Rs. 55,000 in the year 1959 and of Rs. 41,000 in
the year 1960. It declared a dividend of 8 per cent subject to tax for the year
1959 and of 6 per cent subject to tax for the year 1960. This bank has 3
branches in Area II, 1 branch in Area III and 10 branches in Area IV.
4.94. The bank has filed a written statement. It has pleaded that the new
wage structure proposed to be considered would be beyond the capacity of
smaller banks and that the same may not be made applicable to this bank.

(4) The Pangal Nayak Bank Limited, Udipi.

4.99. This bank was established in the year 1929. As shown by the
Statistical Tables, its paid-up capital during the year 1959 and 1960 was Rs.
7,00,000, its reserves were, for the year 1959, Rs. 1,15,000 and for the year
1960, Rs. 1,22,000 and its deposits for the year 1959, were Rs. 86,82,000
and for the year 1960, were Rs. 86,88,000. Its working funds, as on 31st
December 1961, as given by the bank, amounted to Rs. 96,42,000. This
bank had 16 branches in the years 1959 and 1960 including the head office,
but excluding purely administrative offices. This bank has filed a statement
showing net profits, not losses etc., made by the bank during the years 1929
to 1959 and also showing the amount of dividends declared. It appears from
the statement that except during the years 1949, 1952 and 1954, when the
bank had made losses, it has made profits. This bank has not declared any
dividend since the year 1949. This bank opened two branch offices in the
year 1958, one at Hyderabad and the other at Kothapeta. For the year 1956,
it made a net profit of Rs. 47,781, for the year 1957, it made a net profit of Rs.
51 319, for the year 1958, it made a net profit of Rs. 19,871, for the year
1959, it made a net profit of Rs. 32,225 and for the year 1960 it made a net
profit of Rs. 38,689. This bank has one office in Madras and its other offices
are in the State of Andhra Pradesh. It has one office in Area I, four offices in
Area II, four offices in Area III and seven offices in Area IV. The bank has
submitted that ever since 1953, the service conditions of the employees
were governed by the negotiated mutual agreements from time to time upto
31st December 1959. The bank in its written Statement has stated that it
was only from 1st January 1959 that as a result of the agreements, it was
almost on a par with the Sastry Award scales of pay and allowances. During
the year 1959 the bank employed 52 persons belonging to subordinate staff
and 68 persons belonging to clerical staff. The bank has prayed that the
existing terms and conditions of service may be permitted to continue under
negotiated agreement or otherwise till such time as a Commission of enquiry
took stock of the position of small banks as provided by the Bank Award
Commission in respect of D Class banks.

AI

BE

4.96. This bank was founded in the year 1920. As shown in the Statistical
Tables in the year 1959 its paid-up capital was Rs. 4,99,000 and in the year
1960 the same was Rs. 5,00,000, its reserves in the year 1959 were Rs.
1,59,000 and in the year 1960 were Rs. 1,87,000 and its deposits in the year
1959 were Rs. 91,58,000 and in the year 1960 were Rs. 1,15,94,000. Its
working funds for the year 1961 as given by the bank, amounted to Rs.
1,27,74,806. It had 18 branches including the head office in the year 1959
and 20 branches including the head office in the year 1960. It has 3 branches
in Area II, 3 branches in Area III and 14 branches in Area IV. It distributed a
dividend of 5.80 per cent subject to tax for the year 1959 and of 8 per cent
subject to tax for the year 1960. This bank was not before the Sastry Tribunal.
Its working funds for 2 years have exceeded Rs. 1 crore. If the Sastry Award
as modified was applicable to this bank it would have ceased to be in D
Class and would have gone to C-l Class. It is but fair that it should have some
relief before it adjusts itself so as to bring itself in line with other banks in C
Class under this Award.

(6) The Bharatha Lakshmi Bank Limited.

4.95. This bank also has just emerged from D Class and it should have
a little time to adjust itself so as to be in line with other banks in C Class
under my award.

7,54,000. It has in all three offices out of which two are in Kerala State and
one in Madras State. All these offices are in Area IV. This bank has come up
before this Tribunal because it has one of its offices outside the State in
which its other offices are situated. It is a very small bank and it cannot bear
the burden of basic wages and dearness allowance for C Class banks. This
bank will be required to be placed in the Excepted List of banks if Class C is
to cover all banks with working funds below Rs. 7 crores.

4.97. That leaves only 9 banks which may fall in Class D.

(5) Ambat Bank Limited, Chittur.

4.98. This bank was established in the year 1930. It is a non-scheduled

bank. As shown by the Statistical Tables, its paid-up capital for the years
1959 and 1960 was Rs. 71,000, its reserves for the year 1959 were Rs.
75,000 and for the year 1960 were Rs. 77,000 and its deposits for the year
1959 were Rs. 5,61,000 and for the year 1960 were Rs. 6,33,000. It made a
net profit of Rs. 14,000 in the year 1957 which went down to Rs. 4,351 in the
year 1958. Its profits went up to Rs. 7,106 in the year 1959 and to Rs. 8,647
in the year 1960. It has not paid any dividends during these four years. Its
total working funds for the year 1961 according to the bank amounted to Rs.

54

4.100. This is a bank in the private sector and has been existing since
the year 1949 without distributing any dividend to its shareholders. No evidence
has been led on behalf of the bank showing any special circumstances peculiar
to the bank which had brought about such a result. It is, however, fair that this
bank should have some relief for some time if it is to be placed in Class C

55

before it could fall in line with other banks comprised in that Class.

net profit of Rs. 25,164 and that the Directors considered it advisable to write
off the pre-partition advances amounting to Rs. 2,98,988 as also Rs. 2,500
being reduction in capital effected by the company in respect of the banks
pre-partition investments in shares. It carried forward a loss of Rs. 1,59,261.

(7) The Indian Insurance and Banking Corporation Limited, Trichur.

(8) Narang Bank of India Limited, New Delhi.

4.105. If Class D is abolished this bank will have to be placed in the

Excepted List of banks.
(9) The Punjab and Kashmir Bank Limited

AI

4.103. This scheduled bank was incorporated in the year 1942. In the
year 1958, it had a paid-up capital of Rs. 18,88,000. The same was reduced
to Rs. 10,02,423 under an order of the Court, dated 2nd December 1958 on
the ground that a part of its share capital was not represented by any assets.
As shown by the Statistical Tables, its paid-up capital for the years 1959 and
1960 has been Rs. 10,02,000, it has no reserves and its deposits for the year
1959 were Rs. 20,96,000 whilst the same for the year 1960 were Rs.
20,94,000. It has filed a statement showing that for the year 1955, it suffered
a loss of Rs. 11,801, for the year 1956, it suffered a loss of Rs. 8,763, for the
year 1957, it suffered a loss of Rs. 5,078 and for the year 1958, it suffered a
loss of Rs. 5,57,779. From the Directors Report for the year ended 31st
December 1958, it appears that the banking transactions had resulted in a
profit of Rs. 21,411 but the Directors had considered it advisable to write off
bad debts amounting to Rs. 5,60,029. It is stated that a further sum of Rs.
19,160 was also written off and thereby the profit of Rs. 21,411 had been
converted into a loss of Rs. 5,57,778. In the Directors Report for the year
ended 31st December 1959, it has been stated that they had decided to
write off Rs. 10,640 as a pre-partition bad debt and Rs. 26,786 as loss on
pre-partition banking investments, and that the profit of Rs. 25,423 was thereby
converted into a net loss of Rs. 12,003. In the Directors Report for the year
1960, it is stated that the working of the bank for the year had resulted in a

56

4.106. This bank is a non-scheduled bank established in the year 1912.

As shown by the Statistical Tables its paid-up capital for the years 1959 and
1960 was Rs. 17,82,000, its reserves for the year 1959 were Rs. 9,000 and
for the year 1960 were Rs. 10,000 and its deposits for the year 1959 were Rs.
23,92,000 which have gone down in the year 1960 to Rs. 14,88,000. It had
four offices in the year 1959 including the head office. In the year 1960, it had
five offices including the head office. Out of the five offices, three of them are
situated in Delhi, one is situated at Shrinagar and the other at Jammu. The
provisions of the Industrial Disputes Act, 1947, are not applicable to the
State of Jammu and Kashmir and hence the workmen employed by this
bank at Shrinagar and Jammu would not be covered by the Reference. The
only workmen employed at the three offices at Delhi would be covered by the
Reference.

BE

4.102. If Class D is abolished, this bank will be in need of some relief

before it falls in line with other banks of its class and it is but fair that it should
get such relief.

4.104. This bank has four branches including the head office, but excluding
purely administrative offices. This bank has not declared any dividends for 7
years. This bank was under moratorium for some time. The moratorium,
however, has been lifted. This bank is in the private sector and it is continuing
its existence without any distribution of dividends to the shareholders.

4.101. It is a non-scheduled bank established in the year 1933 having a

paid-up capital of Rs. 3,85,000. As shown by the Statistical Tables, its reserves
for the year 1959 amounted to Rs. 2,13,000 and for the year 1960 amounted
to Rs. 2,30,000 and its total deposits for the year 1959 were Rs. 74,01,000
and for the year 1960 were Rs. 66,08,000. Its working funds as on 31st
December 1960 and 1961 as given by the bank were Rs. 79,96,000 and Rs.
67,76,000 respectively. Its net profits have been Rs. 66,000 in 1957, Rs.
63,000 in 1958, Rs. 79,000 in 1959 and Rs. 84,000 in 1960. It declared a
dividend of 3 per cent free of income tax in 1957, of 4 per cent free of income
tax in 1958, of 5 per cent taxable in the year 1959 and of 6 per cent taxable
in the year 1960. This bank has seven offices, out of which 2 are in Area II, 1
in Area III and 4 in Area IV. Out of these 7 offices, six of them are in Kerala
State and only one office is in Madras State, at Salem. It voluntarily gave
effect to the provisions of the Sastry Award as modified in the exempted area
from 1st July 1954. This bank has been included in the reference because
one of its branch offices happens to fall within the Madras State.

4.107. This bank is working under a scheme of arrangement sanctioned

by the Punjab High Court as finally amended on 14th March 1955. In the year
1958, the transactions of the bank in the New Fund resulted in a profit of
Rs. 8,171. During the year 1959 the transactions in the New Fund resulted in
a net profit of Rs. 10,208. In the year 1960, the bank incurred a loss of Rs.
5,732 in respect of the transactions in the New Fund. This bank has not
declared any dividend for some time past.
4.108. This bank is a small bank and needs to be placed in the Excepted
List, if Class D is abolished.
(10) Ganesh Bank of Kurundwad Limited
4.109. This bank was not before the Sastry Tribunal. It is a non-scheduled
bank and was established in 1920 at Kurundwad. It has in all two offices, one
at Kurundwad with a population of 9,744 according to the 1951 census in the
Maharashtra State and the other at Kagwad with a population of 5,846
according to that census. Kagwad is a village at a distance of 10 miles from
Kurundwad. The Kagwad branch was started in May 1958. This bank is a
small bank, employing a few employees. As shown in the Statistical Tables,

57

the paid-up capital of this bank for the years 1959 and 1960 was Rs. 38,000,
its reserves for the said years were Rs. 88,000 and its total deposits for the
year 1959 were Rs. 8,33,000 and for the year 1960 were Rs. 9,49.000. The
working funds of the bank as on 31st December 1960 and 3lst December
1961 as given by the bank were Rs. 11,11,895 and Rs. 11,22,323 respectively.
It made a profit of Rs. 15,000 in the year 1957, Rs. 11,000 in the year 1958,
Rs. 13,000 in the year 1959 and Rs. 15,000 in the year 1960. In the years
1957 and 1958, it declared a dividend of 8 per cent income tax free. In the
year 1959, it declared a dividend of 11 per cent taxable and in the year I960,
it declared a taxable dividend of 10 per cent. Out of the 12 persons employed
by this bank in the year I960, I belong to subordinate staff. It gives a basic
pay of Rs. 122 to its accountant with Rs. 25 as dearness allowance and Rs.
15 as special allowance making in all Rs. 162. In view of the smallness of its
resources and the smallness of the staff this bank needs to be placed in the
Excepted List of banks if Class D is to be abolished.

BE

4.110. This bank was not before the Sastry Tribunal. This scheduled
Bank was established in the year 1929. As shown in the Statistical Tables
its paid-up capital for the years 1959 and 1960 was Rs. 6,00,000, its reserves
for the aforesaid years were Rs, 6,20,000 and its deposits for the year 1959
were Rs. 80,35.000 and for the year 1960, were Rs. 82,66,000. Its workingfunds as on 31st December 1961, as shown by the bank, amounted to Rs.
95,00,000.

Where a dispute concerning any establishment or establishments has

been *** referred to *** a National Tribunal under this section and the appropriate
Government is of opinion, whether on an application made to it in this behalf
or otherwise, that the dispute is of such a nature that any other establishment,
group or class of establishments of a similar nature is likely to be interested
in, or affected by, such dispute, the appropriate Government may, at the time
of making the reference or any time thereafter but before the submission of
the award, include in that reference such establishment, group or class of
establishments, whether or not at the time of such inclusion any dispute
exists or is apprehended in that establishment group or class of
establishments.

(11) The Miraj State Bank Limited

head office at Miraj, the provisions whereof had been subsequently extended
by a similar agreement to other branches of the bank. It was urged that this
settlement which was entered into and registered under the Bombay Industrial
Relations Act, 1946 was to remain in force and was binding on the parties
until it was terminated by two months notices by either party, and that as
such notice had not been served by the workmen on the Bank the said
agreement was legally binding on the workmen and there was no industrial
dispute so far as the bank was concerned and therefore, the Central
Government was not competent to make the reference. It is not necessary to
deal with this argument at any length. It is sufficient to point out that in any
view of the matter it is open to the Central Government to make a reference
even where no dispute actually exists between any particular bank and its
employees under the provisions contained in section 10(1)(5) which runs as
under :

AI

4.111. This bank has 8 branches. It has 3 branches in Area IV and 5

branches in Area III. This bank paid a dividend of 7 per cent free of tax for
the year 1958 and it distributed a dividend of 8.88 per cent subject to tax for
the year 1959 and a similar dividend for the year 1960. As a result of the reorganisation of States, Laxmeshwar where the bank has a branch now is
included in the State of Mysore. The rest of the branches are in the State of
Maharashtra. The total number of workmen employed in the year 1959
consisted of 23 members of the subordinate staff and 29 members of the
clerical staff.
4.112. This bank has contended that this Tribunal has no jurisdiction to
entertain the reference in so far as it relates to the bank and its employees.
The Bank contended that it was governed by the Bombay Industrial Relations
Act, (18 of 1946) and not by the Industrial Disputes Act, (14 of 1947), on the
ground that prior to the year 1956, all the offices of the bank were situated in
the former composite State of Bombay. There is no substance in this plea.
At the date when the reference was made, the bank had its branches in more
than one State and was a banking company within the meaning of the Industrial
Disputes Act, 1947. It has further contended that this Tribunal has no
jurisdiction on the ground that on 25th June 1952, an agreement was arrived
at before the Government Labour Officer, Kolhapur, applicable to the banks

58

The provisions of this section cover this bank.

4.113. In its written statement, the bank has claimed that it should be
exempted from the provisions of the award. In the alternative, the bank has
submitted that it could not afford the scales of pay and dearness allowance
as well as the terms and conditions of employment prescribed by Sastry
Award as modified by the Report of Gajendragadkar Commission, and that it
should be placed in a class of its own which may be called E Class. There is
no cast made out for creating a new class for this bank or exempting it from
the operation of the award.
4.114. It appears to be a well-managed bank. In view of the fact that if
Class D is abolished, it will have to pay remuneration to workmen as a C
Class bank, it is entitled to some relief before it falls in line with other C Class
banks.
(12) Nadar Mercantile Bank Limited.
4.115. This bank was not before the Sastry Tribunal. This non-scheduled
bank was established in 1947. It has only two offices - one at Trivandrum in
Kerala and the other at Martandam. As a result of the re-organisation of the
States, Martandam fell within the territorial limits of Madras State and thus

59

this bank became one of the banks having branches in more than one State
and has come up before this Tribunal. Trivandrum is in Area II and Martandam
is in Area IV.

4.117. If Class D is abolished, this bank will be required to be placed in

the Excepled List of banks.
(13) The Union Bank of Bijapur and Sholapur Limited

AI

BE

4.118. This bank was not before the Sastry Tribunal: This bank was
established in the year 1908. As shown in the Statistical Tables it had a
paid-up capital of Rs. 1,99,000/- in 1957 which rose in the year 1960 to
Rs. 3.86000/-, its reserves were Rs. 1,19,000/- in 1957 which have gonedown to Rs 96.000/- in 1960, its total deposits for the year I960 were Rs.
43.39.000/ . Its working funds as on 31st December 1961 have been shown
by the Bank at Rs. 49,52,000. It made a net profit of Rs. 24.000/- in 1957,
Rs. 25.000/- in 1958, Rs. 18.000/- in 1959 and Rs. 35,000/- in 1960.

4.116. As shown in the Statistical Tables the paid-up capital of the bank
for the year 1959 was Rs. 1,32,000 and for the year 1960 was Rs. 1,40,000,
its reserves for the year 1959 were Rs. 9,000 and for the year 1960 were Rs.
10 000/- and its total deposits for the year 1959 were Rs. l,99,000/- which
came down to Rs. 1,85,000/- in the year 1960. Its working funds as on 31st
December, 1961 as given by the bank were Rs. 3,29,999/-. It made a net
profit of Rs. 4,229/- in the year 1957, of Rs. 718/- in the year 1958, of Rs.
3.149/- in the year 1959 and of Rs. 10.601/- in the year 1960. It has not
declared any dividend for the years 1958 to 1960. Its staff consists of 11
members excluding three officers. Its Secretary draws a salary of Rs. 110/-,
its agent at Martandam draws Rs. 105/- and its agent at Trivandrum draws
Rs. 85/-. Its senior clerk gets Rs. 95/- and the lowest clerk gets Rs. 65/-.

4.120. Having carefully considered the various demands of the employees,

the replies of the banks, the arguments advanced before me and the various
exhibits relating to the subject, I have reached the conclusion that it is not
desirable to have a separate class for the nine banks which are before me
with working funds below rupees one crore. If the position of these nine banks
is compared inter se, there are some banks which are extremely small and
cannot be compared with some of the other banks. For instance, the Ambat
Bank Ltd., the Ganesh Bank of Kurundwad Limited or the Nadar Mercantile
Bank Limited, cannot be compared with the Miraj State Bank Limited. The
case of the Miraj State Bank Limited, the Indian Insurance and Banking
Corporation Limited, and the Bharatha Lakshmi Bank Limited may be looked
at differently from the case of the other six banks which would otherwise fall
in Class D. Even after the Sastry Tribunal for the first time constituted a
separate class for banks having working funds below rupees one crore, the
Labour Appellate Tribunal and the bank Award Commission did not consider
that such a class should permanently subsist. The Labour Appellate Tribunal
placed the life of that class at five years, whilst the Bank Award Commission
considered it proper that the case of these banks should be separtely examined
by a commission at the end of this period of five years. The number of banks
which would otherwise fall in this class has considerably dwindled. Some of
such banks would bear the burden of Class C if some relief is given to them
for some time. There are six banks, viz., the Ambat Bank Limited, the Ganesh
Bank of Kurundwad Limited, the Nadar Mercantile Bank Limited, the Narang
Bank of India Limited, the Punjab and Kashmir Bank Limited, and the Union
Bank of Bijapur and Sholapur Limited which may not be able to bear the
burden of a C Class bank under this award within a measurable distance of
time. It is quite possible that even out of these banks, some of them may get
amalgamated with other banks. In order that there may be created a separate
class of banks, it is requisite that there should be some degree of permanency
attached to that class and that the class should comprise a fair number of
banks. It seems to me to be desirable that instead of creating a separate
class for the aforesaid six banks, they should be placed in a separate list
called the Excepted List, so that their position may be individually watched
and considered as and when occasion arises. Having regard to the low paying
capacity of these six banks, it is necessary that there should be separate
scales of pay provided for these banks and I am providing for the same in
other parts of my award. Save as otherwise expressly provided in this award,
these banks in the Excepted List will be governed by the same terms and
conditions of service as other banks within Class C.

In 1957, it declared a dividend of 4 per cent free of tax. In 1958, it declared

a dividend of 1.5 percent free of tax and in 1959, it declared a dividend of 1.5
per cent taxable. It has not declared any dividend in 1960. This bank has in
all six offices of which five are situated in the Mysore State and is situated at
Sholapur in the Maharashtra State. It has one branch in Area II, two branches
in Area III and three branches in Area IV. In the year 1959, the strength of its
staff was 61 out of whom 10 were officers, 39 were clerks and 12 were
members of subordinate staff. Its A grade staff which includes officers receives
Rs. 100/-going upto Rs. 210/- with dearness allowance of Rs. 40/- and grade
allowance of Rs. 10/-. Its B grade staff is in the scales of Rs. 60 to Rs. 150
with dearness allowance of Rs. 40/- and grade allowance of Rs. 5/-. Its clerical
scale is Rs. 44/- to Rs. 114/- with dearness allowance of Rs. 40/-. Its peons
grade is Rs. 25/- to Rs. 35/- with dearness allowance of Rs. 30/-. This bank
has come up before this Tribunal because it has one branch in Maharashtra
State.
4.119. This bank is required to be put in the Excepted List of banks if
Class D is to be abolished.

60

4.121. As regards the Bharatha Lakshmi Bank Ltd., the Indian Insurance
and Banking Corporation Ltd. and the Miraj State Bank Limited, they will be
going to Class C under my award. In my view, they are able or should be able
to bear the burden of my award as applicable to C Class banks. In order that
the change-over may be smooth, I am providing for some relief to these

61

banks in other parts of my award.

the Reserve Bank of India to that effect. I give the same directions in connections
with the banking companies and corporations which are before me.

4.127. A number of banks which were before me have been amalgamated

with other banks and the process of amalgamation is being increasingly
adopted or enforced. Amalgamations conducted on proper lines have obvious
advantages such as the economics resulting from large scale organization,
the spreading of risks, the weeding out of unhealthy competition in banking
business and the improvement in the standard of bank management. In view
of the present economic conditions in the country and in view of the special
needs of the banking industry, it is desirable that this process of amalgamation
should be encouraged. It may happen that as a result of amalgamation, the
working funds of a bank may put the bank in a class higher than the one it
occupied before amalgamation. This may operate as a deterrent to some
banks in amalgamating with other banks. It is desirable that for some time at
least the amalgamated bank should not be put to the burden of paying higher
wages to its employees by reason of being put in a higher class only by
reason of the amalgamation. In order to provide for such a contingency, both
the Sen and Sastry Tribunals have provided that on amalgamation the resultant
bank should for a period of three years from the date of amalgamation be
deemed to belong to the highest class to which any of the amalgamating
banks belonged before the amalgamation and that thereafter when it became
necessary to apply the scales of pay appropriate to the class to which the
bank belonged as per the classification made in the award the procedure laid
down regarding adjustment should be followed. I give similar directions as
regards banks which are before me.

AI

BE

4:123. This brings me to the question as to what should constitute working

funds. The Sastry Tribunal in paragraph 65 has laid down that the expression
working funds would mean paid-up capital, reserves and the average of the
deposits for the 52 weeks of each year for which weekly returns of deposits
were submitted to the Reserve Bank of India under the provisions of the
Reserve Bank of India Act. The principle laid down by the Sastry Tribunal in
this connection has not been interferred with by the Labour Appellate Tribunal
or by the Bank Award Commission. The Indian Overseas Bank Employees
Union, Madras has claimed that the expression working funds should include
paid-up capital, all reserves deposits, unpaid dividends, bank borrowings,
margins on letter of credits, guarantees, bills purchased and sundry creditors.
It has been pointed out on behalf of the banks that the borrowings of banks
may be for various purposes and may be incurred even to meet a capital
liability. It has been urged that they do not constitute a constant item of
resources, that they are subject to wide fluctuations and are resorted to by
banks only in cases of emergency and that owing to the high rate of interest
on such borrowings, the funds so realised are not in most cases utilised for
the purpose of advancing them at a higher rate of interest in order to make
profits. In my view, no case is made out for changing the present content of
the expression working funds.

4.126. As regards the change in the classification of a particular bank in

view of its working funds having risen above or gone below the limit prescribed
for the class in which such bank is placed, the Sen Tribunal in paragraph 48
of its award, had recommended that if in future it should so happen that the
working fund of a particular bank has been below the lower limit or has been
higher than the upper limit set for its class continuously for a period of two
years, it should then be deemed to have passed into the next lower or the
next higher class, as the case may be, provided that the directions made in
this award are still being followed by the bank at that date, and provided
further that such change will not adversely affect the existing employees.
The Sastry Tribunal gave a similar direction and further directed that relevant
date for calculating the working funds would be 31st December of each year.
On behalf of a number of employees it was contended that the aforesaid
period of two years should be reduced to a period of 52 weeks for the purpose
of effecting a change. I consider that the rule of two years is a salutary rule.
I give directions similar to those given by the Sastry Tribunal.

4.122. As regards the Chaldean Syrian Bank Ltd., the Gadodia Bank
Limited, the Jaya Lakshmi Bank Limited, and the Pangal Nayak Bank Ltd.,
as they have to bear the burden of a bank in the higher class, they are
entitled to some relief for some time before they fall in line with other banks
falling within Class C under my award and I am providing for such relief in
other parts of this award.

4.124. In considering the question what should be regarded as deposits,

the Sastry Tribunal has provided for an average of the deposits for the 52
weeks of each year for which weekly returns of deposits are submitted to the
Reserve Bank of India under the provisions of the Reserve Bank of India Act.
I consider that to be a fair measure for calculating the extent of the deposits
for the purpose of calculating the same under the heading working funds.
For the purpose of classifying banks, under this award the expression working
funds will mean paid-up capital, reserves and the average of the deposits for
the 52 weeks of each year for which weekly returns of deposits are submitted
to the Reserve Bank of India under the provisions of the Reserve Bank of India
Act.
4.125. By a further direction given by the Sastry Tribunal the banks,
which were parties before that Tribunal, were directed to publish and exhibit
a statement showing such average of the weekly returns of deposits in the
first month of the next succeeding calendar year together with a certificate
from its auditors as to the correctness of the statement or a certificate from

62

4.128. Under this award banks have been classified into 3 classes (1)
Class A : banks with working funds amounting to Rs. 25 crores and above
and all Exchange Banks.

63

(2) Class B : banks with working funds amounting to Rs. 7 crores and
above but less than Rs. 25 crores and (3) Class C : banks with working funds
below Rs. 7 crores.

(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)

Classes A and B under this award are the same as Classes A and B
under the Sastry Award. As regards Class C under this award, the same
comprises banks falling within Class C and Class D under the Sastry Award.
It is necessary for me to classify banks which are at present effectively
before me. In order to maintain continuity, I have, out of the banks which are
before me, included in Class A, Class B and Class C such banks as at
present would fall within Class A, Class B and Class C respectively under
the Sastry Award. I direct that for the purpose of considering hereafter whether
a bank has gone to a higher class or to a lower class the working funds of the
bank calculated on the basis aforesaid as on 31st December, 1960 should
also be taken into consideration.

Class C will comprise the following 26 banks and the 6 banks in the
Excepted List:

BE

The Allahabad Bank Limited,

The Bank of Baroda Limited,
The Bank of India Limited,
The Canara Bank Limited,
The Central Bank of India Limited,
The Devkaran Nanjee Banking Company Limited,
The Indian Bank Limited,
The Indian Overseas Bank Ltd.,
The Punjab National Bank Limited,
The State Bank of India,
The Union Bank of India Limited,
The United Bank of India Limited,
The United Commercial Bank Limited,
The American Express Co. Inc.,
The Bank of China,
The Chartered Bank,
Comptoir National DEscompte de Paris,
The Eastern Bank Limited,
The First National City Bank of New York,
The Hongkong and Shanghai Banking Corporation,
The Mercantile Bank Ltd.,
The National and Grindlays Bank Ltd. and
The Netherlands Trading Society.

AI

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(23)

Class B will comprise the following 13 banks :

(1)
(2)
(3)

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(23)
(24)
(25)
(26)

The Andhra Bank Limited,

The Bank of Maharashtra Limited,
The Canara Banking Corporation Limited,

64

The Bank of Behar Limited,

The Bank of Rajasthan Limited,
The Bharatha Lakshmi Bank Limited,
The Catholic Syrian Bank Limited,
The Chaldean Syrian Bank Limited,
The Cochin Commercial Bank Limited,
The Gadodia Bank Limited,
The Hindustan Mercantile Bank Limited,
The Indian Insurance and Banking Corporation Limited,
The Jaya Laxmi Bank Limited,
The Karnataka Bank Limited,
The Laxshmi Commercial Bank Limited,
The Miraj State Bank Limited,
The National Bank of Lahore Limited,
The Nedungadi Bank Limited,
The New Bank of India Limited,
The Oriental Bank of Commerce Limited,
The Pandyan Bank Limited,
The Pangal Nayak Bank Limited,
The Punjab Co-operative Bank Limited,
The Punjab and Sind Bank Limited,
The Sangli Bank Limited,
The South Indian Bank Limited,
The United Industrial Bank Limited,
The Vijaya Bank Limited,
The Vysya Bank Limited,

4.129. I classify the banks which are before me as under :

Class A will comprise the following 23 banks :

The Canara Industrial and Banking Syndicate Limited,

The Hindustan Commercial Bank Limited,
The State Bank of Bikaner,
The State Bank of Hyderabad,
The State Bank of Indore.
The State Bank of Jaipur,
The State Bank of Mysore,
The State Bank of Patiala,
The State Bank of Saurashtra, and
The State Bank of Travancore.

Banks in the Excepted List

(1)
(2)
(3)
(4)

The Ambat Bank Limited,

The Ganesh Bank of Kurundwad Limited,
The Nadar Mercantile Bank Limited,
The Narang Bank of India Limited,

65

(5)
(6)

The Punjab and Kashmir Bank Limited,

The Union Bank of Bijapur and Sholapur Limited.
(ii) Categorisation of Areas

It is bad enough that statistics have led us to classify Madras in the

Class II area xx.
4.133. The Sastry Tribunal observed that the head offices and branches
of the banks were situated in different parts in India, that the cost of living
varied in different areas of this sub-continent, that it would not be right to have
the same scale of emoluments for the employees in all these places, that it
was possible to have a uniform basic pay supplemented by local allowances
for different localities on a graded scale according to the cost of living, but it
was not easy to prepare a graded scale of local allowances for each of the
places on the basis of conditions peculiar to each of them, that the attempt
must be to have a smaller number of classified areas as (1) specially costly
cities. (2) urban areas and (3) semi-urban and rural areas. It further observed
that this three-fold classification would provide the largest scope for uniformity
and at the same time would take notes of the pronounced differences in the
cost of living between one place and another.

AI

BE

4.130. In connection with all-India adjudications it has been found requisite

to fix the scales of pay for workmen having regard to the variations in the
prices of commodities prevailing in many parts of the country and the
differences in the standards of living found in different parts of the country. A
need-based wage must take into account the needs of the workmen having
regard to the place where they are required to work. There is considerable
difference in the cost of living and the standards of living among people living
in places like Bombay, Delhi and Calcutta and people living in other urban,
and in semiurban and rural areas. The variations in prices at various places
differ to a considerable extent. Even the percentage of rise or fall in respect of
the same or similar class of commodities over a period of years is not found
to be the same in various parts of the country. The all-India average working
class consumer price index No. (base shifted to 1949 = 100) is based on the
indices for 27 centres in the country. The indices for various centres show
that between 1951-52 and 1960-61 the index number as regards Ludhiana
(Punjab) rose from 100 to 103, Ahmedabad (Gujarat) from 104 to 120, Bombay
(Maharashtra) from 107 to 136, Bangalore (Mysore) from 115 to 147 and
Madras City (Madras) from 104 to 146 and Delhi from 108 to 121. The wide
fluctuations both in the prices of commodities at various places and in the
rise therein from time to time render difficult the task of fixing wages on an allIndia basis. The standards of living, the type of diet, the type of clothing, the
type of other amenities enjoyed vary from place to place, having regard to the
geographical and climatic conditions at different places, the different types of
crops grown in different parts of the country, the availability of transport, the
proximity to urban places and the habits of the people. By and large there is
a marked difference in the pattern of consumption and the standard of living
of the members of the subordinate staff and the members of the clerical staff.
Apart from the needs of the workmen, the needs of the industry, the need to
open branches in semiurban and rural areas, the needs of the people of
those areas and the needs of national planning and development have to be
taken into account.

4.132. As a result of this classification, Madras fell within Class II area.

Shri N. Chandrashekhra Aiyar, a member of .the Sen Tribunal, was not very
happy about this state of affairs and has expressed his unhappiness about
the situation created thereby in his Minute of Dissent in connection with the
award of house rent allowance as follows :

4.131. The Sen Tribunal divided the country into three areas for the
purpose, of fixing wages in the banking industry. In Class I area it included
the City of Calcutta including Howrah, Barrackpore, Behala, Alipore, Cossi
pore, Garden Reach, Baranagore, Tollygunge, the South Suburban Municipal
area and Dum Dum, Bombay including the areas covered by Greater Bombay,
the Cities of Delhi and Ahmedabad. In Class II area it included all towns and
cities (other than those included in Class I area) shown in the census report
of 1941 as possessing populations of 50,000 or more in the Punjab and
1,00,000 or more elsewhere and in Class III area it included all places not
included in areas of classes I and II.

66

4.134. The Sastry Tribunal after considering the classification adopted

by the Sen Tribunal took the view that cities with a population of 12 lakhs and
above should be in a class .by themselves. It stated that the two important
reasons for including Delhi in Class I area were (i) that the population of Delhi
was very nearly 12 lakhs and there was no other city which like Delhi was
almost in the region of 12 lakhs and (ii) that Delhi as the capital of our republic
had got a special importance which was growing every day. The Sastry
Tribunal, therefore, placed in Class I area, Bombay, including Greater Bombay,
Calcutta including Howrah, Barrackpore, Behala, Alipore, Cossipur, Garden
Reach, Baranagore, Tolly gunge, South Suburban Municipal Area and Dum
Dum, Delhi which would include New and Old Delhi and Delhi Shahadara,
Madras and Ahmedabad. Madras City was put in Class 1 area as its popultion
had risen by that time to 14,16,056. As regards Ahmedabad. though its
population would not have justified its inclusion in Class I area., it was placed
in that area for reasons based on past awards and in view of the fact that no
claim was pressed by banks for its exclusion from Class I area. Class II
under the Sastry Award comprised all towns and cities other than those
included in Class I area, which according to the census report of 1951,
possessed a population of one lakh and more and Class III area comprised
all places not already included in Class I and Class II areas.
4.135. In his minute of dissent Shri Tannan has taken an exception to
the inclusion of Madras and Ahmedabad in Class I area, stating that they
should not be treated on par with Bombay, Calcutta and Delhi. In his view, the

67

employees in Madras spent comparatively less on their clothing, foot wear

and rent which were important elements of the cost of living.

4.137. Government by its order, dated 24th August 1954 directed that
instead of the classification of the country into three areas as adopted in the
Sastry Award, it should be divided into four areas. Class I area and Class II
area were the same as provided by the Sastry Award. Class III area as to
comprise all towns and cities not included in Class I and Class II areas and
which according to the Census Report of 1951 contained a population of
more than thirty thousand. Class IV area was for the first time created
comprising all places not already included in Class I, Class II and Class III
areas. Even out of this Class IV area were carved out for special treatment
areas situated in the former Indian States i.e. in Part B States and in Part C
States, other than Delhi, Ajmer and Coorg which have been referred to by the
Bank Award Commission as Class V area.

BE

4.138. In considering the problem relating to Class IV area the Bank

Award Commission has prefaced its remarks with the words following ;

4.136. There was no appeal before the Labour Appellate Tribunal in

connection with this part of the Sastry Award. The Labour Appellate Tribunal
proceeded on the basis of the country being divided into three areas.

under the Labour Appellate Tribunal decision, it would be found that 220
offices may probably be converted into losing offices out of a total of 2,317
profit-earning offices at the end of 1956 and of them, 50 would be in area 4
and 26 in area 5. It has observed that viewed against the background of the
net reduction in the number of offices in the post-war period, the number of
offices (220) that may have to be closed by the end of 1956 (assuming that
all the offices converted thereby into loss-incurring offices would necessarily
be closed) did not appear to be so large as to cause any alarm. It has further
stated that from the information collected from banks regarding individual
offices that may have to be closed during the next 3 years as a result of the
burden imposed by the Labour Appellate Tribunal decision, it would appear
that in all 47 places were expected to be deprived of banking facilities. Of
these as many as 24 were in area 4 and 18 in area 5 and that while a majority
of the offices in area 4 were served by B and C Classes of banks, all offices
in area 5 were served by B and C Classes of banks alone. The Commission
further stated that prima facie there appeared to be a case for providing a
relief in the provisions of the Labour Appellate Tribunal decision as far as they
applied to these areas. The Commission observed that the major importance
of developing these smaller areas could hardly be exaggerated. In paragraph
146 of the report of the Bank Award Commission, it is stated that since in our
country the number of places with a population of less than 25,000
predominates, the need for further development of banking in smaller places
is apparent. In the same paragraph the Commission has observed as follows:-

AI

In considering this problem, it would be material to bear In mind the

relevant terms of reference. The object of creating area 4 was to
promote development of banking in the country in general and in rural
areas in particular. That is why, in considering the propriety or validity
of the creation of area 4, the terms of reference require that I should
bear in mind the importance of the development of banking in the
country generally and in rural areas in particular. I likewise the
consideration of this problem should take into account the desirability
of avoiding widespread closures of banking companies or their
branches; that is the second consideration which has to be borne in
mind. The third consideration which the terms of reference correlate
with the decision of this point is in respect of the possibilities of effecting
economies in the expenses of banking companies, and as I have
already indicated in construing the terms of reference in an earlier
chapter, this term of reference by necessary implication requires me
to consider legitimate sources for adding to the income of banking
companies.
In paragraph 144 it has been stated by the Bank Award Commission
that the D Class banks had the highest proportion of offices running at loss
and that the number of such offices in areas 4 and 5 was 115 and 59
respectively for the half-year ended the 30th June 1954 and constituted 25.33
per cent and 23.14 per cent respectively of the total number of offices in each
of those areas. It further observed that if the establishment expenditure was
to be calculated according to the scales of pay and allowances prescribed

68

In this connection, it may be observed that bigger banks rely more on

larger towns for their business while smaller ones comprising a majority
of non-scheduled banks favour smaller towns. Thus out of 2,685 offices
of scheduled banks in the Indian Union in 1953 * * * only 798 offices or
29.72 per cent of the total were at places with population upto 25,000;
the corresponding number for non-scheduled banks, however, was 699
constituting 55.13 per cent of the total number of their offices.

A reference has been made by the Commission to the findings of the Rural
Banking Enquiry Committee appointed by the Government of India in 1949
and to the All India Rural Credit Survey during the years 1951 - 1953 conducted
by the Reserve Bank of India and also to the recommendations of the Rural
Banking Enquiry Committee for the exclusion of semi-urban and rural offices
of banks in towns having a population of less than 50,000 from the operation
of the Shops and Establishments Act and the awards of Industrial Tribunals.
Reference has also been made to the recommendation of the Rural Banking
Enquiry Committee as regards the special role played by the Imperial Bank
of India in connection with the opening of offices at semi-urban and rural
centres in Part A and Part C States and the role to be played by the Cooperative banks in this connection, and the statement made by the Imperial
Bank in May 1954 to the Reserve Bank that if the Labour Appellate Tribunal
decision was given effect to, the Imperial Bank would find it extremely difficult

69

to implement the expansion programme.

area 5 for a maximum period of two years from the date of the announcement
of the Governments final decision on the report of a special commission
which was recommended to be appointed for dealing with the special problems
of banks situated in Travancore Cochin State. The Government did appoint a
special commission as recommended by the Bank Award Commission to
examine the problems of banks situated in Travancore Cochin State. The
said Commission has made its report. Now there is no exempted area like
area 5 in which the award of the Sastry Tribunal as modified does not operate.

4.139. It has been observed in paragraph 156 of the report of the Bank
Award Commission that out of 56,106 workmen (both clerks and subordinates)
of the reporting banks in all classes, 4,092 or 7.29 per cent were accounted
for by offices in area IV. The Bank Award Commission in its report has observed
at the end of paragraph 159 as follows :

BE

In paragraph 160 it has stated that even on the merits much could be
said in favour of the creation of area 4. It is further observed that the division
of the country into three banking areas has apparently resulted in the anomaly
of including in area 3 places which cannot claim to be similar in material
particulars. The Commission apprehended that it would not be unreasonable
to assume that the cost of living in places where the population was 30,000
or less would not be the same as in places where the population was a lakh
or above 30,000. After examining the difficulty in drawing a line somewhere,
the Commission has observed as follows :

4.141. The All India Bank Employees Association has strongly contended
that the areawise classification should be completely abolished. It contends
that there is no scientific basis for holding that the cost of living varies according
to the size of the population in a given area. It referred to several places
situated in lower areas where the prices of essential commodities like food
and clothing were higher than those in places situated in higher areas. It has
urged that there is no remarkable difference in prices prevailing at places
which are situated in lower areas and at other places which fall within higher
areas; that as a matter of fact the prices of cloth were higher at places far
away from the place of manufacture than in cities where cloth was
manufactured; that in some of the project areas the cost of housing and
transport was high and that in less populated places where cheaper houses
were available, the accomodation was substandard.

If, by creating area 4 and fixing for this area a lower wage structure,
commercial banks are likely to spread out in rural areas, it would, I
think, be worthwhile giving commercial banks the necessary facilities
in that behalf. That is one aspect of the matter.

...by and large it appears to me to be reasonable to divide the area

which is described as area 3 in the awards into two areas. Area 3
should consist of places where the population is between 30,000
and a lakh, and all places where the population is 30,000 or less
should be constituted into a separate area.

AI

In this connection, reference has been made to the argument advanced

in support of the creation of this additional area that bankmen who worked in
branches situated in such places were not wholly dependent on their salaries
for maintenance because usually they had some other source to supplement
their income. It has been stated by the Bank Award Commission that even
on strictly economic grounds it would be difficult to resist the creation of area
4 and that it was very likely that the creation of area 4 might facilitate the
spread of banking business into smaller places and that was not a minor
consideration. The Bank Award Commission came to the conclusion that
Government was justified in creating area 4 .and in prescribing for that area a
less onerous wage structure.
4.140. As regards area 5 the Bank Award Commission observed in
paragraph 163 as follows :
.... I cannot help coming to the conclusion that the creation of area 5
and the granting of complete exemption to this area was unjustified.
As regards the banks situated in Travancore-Cochin State, the Bank
Award Commission stated that such banks with the exception of the Travancore
Bank should continue to have the benefit of complete exemption in respect of

70

4.142. As regards food, it has been pointed out that rural areas are not
Self-sufficient areas so that food may be available at cheap rates. It is pleaded
that the classification of areas based on population of or fixing scales of
wages was irrational and unscientific and gave rise to many anomalies,that
this classification was only of recent origin, that it was not based on any
scientific data that the Central Government, the State Governments, the postal
authorities, the Railway authorities, the Reserve Bank of India and the Life
Insurance Corporation do not have different scales of pay for their employees
according to the areas in which they are employed, that even so far as banks
themselves are concerned, the non-workmen staff, etc., do not have scales
of pay based on areawise classification and that there was no justification in
prescribing different scales of pay in the same institution in its different offices
for the same category of employees. It is pointed out that costlier places
where large amounts were required to be spent on housing and transport and
other conveniences can be suitably dealt with by providing for local allowances
and house rent allowances.
4.143. The All India Bank Employees Federation has also equally been
critical of the present classification and has opposed it. It has pleaded that
on account of rapid rise in the cost of living throughout the country, the
differences in the cost of living in different areas have been substantially
eliminated, that the cost of living does not merely depend, on the population
of different centres but it also depends on the vicinity of the places and many
other factors like scarcity and non-availability of the daily requirements and

71

4.144. The Vadodra Rajya Bank Nokar Sangh and the Surat Bank
Employees Union, Surat have made a similar demand. The All India State
Bank of India Staff Federation has pleaded that prior to the Sen-Award there
were uniform wage scales with additional house rent allowance for Bombay,
Calcutta and Delhi, that the areawise classification of branches had created
a source of deep discontent among the employees and that the area-wise
classification was not just or legal or proper or otherwise expedient and that
the said classification should be abolished as being opposed to Article 37(2)
of the Constitution providing for equal pay for equal work. The State Bank of
India Staff Union, Andhra Pradesh, Vijayawada, and Madras Circle have made
a similar demand.

4.147. The Indian Banks Association has supported the areawise

classification. It has submitted that while it was true that in an all-India service
a uniform scale of basic pay was usually applied, it seemed to have been
overlooked that an employee in an all-India service was liable to be transferred
from one place to another unlike an employee in a bank who could at most
be transferred from one place to another in the same State. It has denied that
different scales for different areas were in any way illogical, unscientific, unjust
and unwarranted. It has pleaded that the very fact that the All India Bank
Employees Association had made a claim for local allowances to meet the
needs of employees of costlier places, only showed how justified the Sastry
Tribunal was in classifying areas for fixing the pay scales of bank employees.
It has further stated that the Census Reports published by the Government of
India should alone be the basis for such classification and that population
figures from non-governmental or non-official authorities should not be looked
at for the purpose. It contends that Area IV should consist of places with a
population of 50,000 and below and not places with 30,000 and below.

AI

BE

4.145. The State Bank of India Employees Association (Bengal Circle)

has pleaded that the classification of areas should be abolished and a uniform
scale of pay in the State Bank throughout India should be introduced on the
grounds that even before any adjudication the scales of pay were more or
less the same throughout India except in the City of Calcutta, Bombay and
Madras, that after R. Guptas Award the Bank itself voluntarily introduced a
uniform scale throughout India, that the services in the State Bank are
transferable, that the existence of different scales in difference places causes
immense inconvenience and hardship to the employees, that the existence
of different scales is a tool in the hands of the employer as a measure of
punishment and is a constant cause of industrial dispute, that the officers
and supervising staff who are not governed by the award have a uniform scale
of wage throughout India, that there is no rational basis on which the cost of
living of a particular area can be determined and therefore division into areas
cannot be made on any rational basis, that the fixation of areas in accordance
with population is wholly irrational and arbitrary and that such unjust and
discriminatory classification breeds frustration and serious dissatisfaction.
The State Bank of India Employees Association (Delhi Circle) is opposed to
the classification of areas, as it is unjust, harsh, discriminatory and against
natural justice.

Association, Cochin, Allahabad Bank Employees Union, Calcutta and the

Staff of the Central Bank of India Ltd., Khatauli (U.P.) have also opposed the
classification of areas for the purpose of this adjudication.

transport difficulties, etc. and that the principle of equal pay for equal work
should be accepted in case of the banking industry since the nature of work
of their employees is substantially the same irrespective of the size of the
banks or the place where they are situated. It has submitted that the scales
of pay to be prescribed for the banks should be uniform for all banks in all
areas and a difference, if any, on account of special features of any particular
place or places should be compensated by means of special allowances.

4.146. The All India Bank of Baroda Employees Federation, South Gujarat
Bank of Baroda Employees Union, Indian Overseas Bank Employees Union,
Madras, Employees Association of the Union Bank of Bijapur and Sholapur,
Behar Provincial Central Bank of India Employees Association, United
Commercial Bank Employees Association, Agartala, Central Bank of India
Employees Association, Patna; Cochin Commercial Bank Employees

72

4.148. The Bombay Exchange Banks Association has sought to retain

the existing areawise classification. It has denied that in all-India services
uniform basic scale applied . It has pointed out that the legislature was
compelled to make statutory provisions for extending credit facilities to rural
and semi-urban areas inasmuch as no banks run on profit motive basis could
afford to open branches in such areas. It also submitted that the areawise
classification of banks under the Sastry Award as modified should be changed
only if the official census figures warranted a change and such change should
be effective only from the date of publication of the Census figures in the
Gazette of India and that it would be unrealistic to do away with areawise
fixation of wages.
4.149. The State Bank of India has pleaded that the demand for a uniform
scale of pay in the State Bank througout India was unreasonable, out moded
and unjustified, that the previous Award was based on proper consideration
of all the circumstances and the reasons inducing the Sastry Tribunal to
make its award on this point have not changed, that the Sastry Award as
modified took note of the possibility and necessity of transfer of bank employees
and prescribed sufficient safeguards, that the reference to uniform scales in
respect of officers and supervising staff was irrelevant because such staff
was not recruited for or from any particular locality and was attracted to the
State Banks service as the terms of employment were suitable and attractive,
that the analogy of Central Government employees in this connection was
not helpful, inasmuch as so far as the State Bank employees were concerned,
the Sen and the Sastry Tribunals considered the question of uniform scales
in respect, inter alia, of the Imperial Bank of India and adopted the present

73

set up, that any attempt to evolve a uniform scale of pay would involve a
complete revision entailing bringing down the higher to a lower base, that it
was denied that the fixation of areas in accordance with population was
irrational or arbitrary or that the classification was unjust or discriminatory or
bred frustration or dissatisfaction. The State Bank of India denied that the
classification was a device to deprive employees of any dues. The State
Bank of India has also pleaded that the areawise classification was a realistic
one. It has submitted that Article 37 of the Constitution had no application
and, that in any event, the areawise classification did not run counter to the
provisions of such Article and was reasonable and correct.

Area 2 Cities having population of more than 5 lakhs but less than 10
lakhs.
Area 3 Places having population of 1 lakh and above but less than 5
lakhs.
Area 4 Places having population of 30,000 and above but less than 1
lakh.
Area 5 Rural areas having population of less than 30,000.
The Miraj State Bank Ltd. has pleaded that as far as the areawise division is
concerned, the places with populations of less than one lac should be subdivided into two classes, and places with a population of 20,000 should be
placed in a separate class. The Travancore Cochin Bankers Association,
the Kerala Bankers Association, the Catholic Syrian Bank Ltd., the Gadodia
Bank Ltd. and the Jaya Laxmi Bank Ltd. have also opposed the demand of
the workmen for the abolition of areawise classification.
4.153. Shri Sule, the learned Advocate on behalf of the All India Bank
Employees Association, in the course of the hearing, very strongly urged
that there should not be a division of banks on the basis of areas and demanded
the abolition of the concept of areas. He stated that prior to all-India adjudication
of the disputes in the Banking industry the question of dividing the banks into
different areas never arose and the banks of their own accord were giving
more or less uniform wages wherever they were stationed, and that the State
Industrial Tribunals had prescribed uniform scales of pay by their awards for
all places. He submitted that the rise in prices in the cities and what are
called country side areas was such that now very little difference existed in
the prices of necessary commodities, that population has nothing to do with
the cost of living as the prices of commodities depend on the availability of
market and facility of transport and that a large number of what are known as
rural areas or countryside areas are being speedily urbanised because of the
development of the Community Projects. He has pointed out that, there is an
increase in railway milage as a result of new lines being put, that inland
transport by the State Transport authorities is being developed, that
industrialisation is taking place very speedily and that the expansion of
branches of the State Bank and its Subsidiaries had itself added to the
urbanisation of the countryside. Shri Sule submitted that in rural areas the
rise in prices was much more than in the cities due to urbanisation, that the
city price fluctuations were reflected in such areas and that the self-sufficiency
in the economy of villages has gone away.

AI

BE

4.151. The Northern India Banks Association has pleaded that under
the Sastry Award, the classification of areas was rightly decided upon in view
of the fact that in smaller towns prices of food stuffs, house accommodation
and other expenses were much below those obtaining in bigger towns; moreover
the problem of transportation in such places did not exist. The Association
has further pleaded that as banking still needed to be extended to smaller
towns in the country, it would be desirable both in the interest of the country
and bank employees themselves, to accept lower scale of emoluments for
smaller towns so that industry may continue to expand and develop that
fixing a uniform basic pay would deprive smaller towns of banking facilities
and also reduce the total employment potential in the industry and that areas
according to the population as per the Sastry Award as modified should
continue to be classed into I II, III and IV as the programme of the expansion
of banks could be successfully carried out only on the basis of paying capacity
of each branch working in a particular area.

4.150. The eight Subsidiary banks of the State Bank of India supported
the present areawise classification. The State Bank of Patiala denied that
the areawise classification was discriminatory or that it was equitable, fair or
reasonable to have one uniform grade in all areas with compensatory local
allowance for big cities.

4.152. The National Bank of Lahore Ltd. has characterised the demand
made in this connection by the All India Bank Employees Association as a
baseless demand and has stated that the demand that a bank employee
working in a rural area where the cost of living is radically lower than that of
the metropolis or big Presidency towns should be paid at the same rate as
his counterpart in such big towns, was unreasonable, illogical, unjust and
unwarranted. It has stated that the classification of areas was necessary in
the very nature of the industry. The Bharatha Lakshmi Bank has stated that
rural banking was being developed by small banks only till recently and that
this could best be done by small D class banks and has suggested the
following classification of areas :
Area 1 Large cities like Bombay, Calcutta, Delhi, Madras with
population of 10 lakhs and over.

74

4.154. Shri Dudhia, the learned Advocate on behalf of the All India Bank
Employees Federation, supported Shri Sule and added that population was
not the only test for classification of areas, but nearness to the industrial
towns or cities should also be considered as a factor which would affect the
cost of living of the other neighbouring places. He cited the example of Thana
and Kalyan and stated that they were as highly expensive as Bombay. He

75

submitted that the areawise classification for scales of pay was anomalous
and unjust.

We ourselves are of the opinion that the conditions existing today

would not justify the view that the cost of living differs very much from
area to area.

That Tribunal has quoted the views of the first Central Pay Commission
which were cited with approval by the Dearness Allowance Committee, known
as the Gadgil Committee. The views of the first Central Pay Commission
were as follows :

AI

BE

4.156. Shri Jyoti Ghosh, who appeared on behalf of the State Bank of
India Employees Association (Bengal Circle), drew a lurid picture of the various
hardships which were undergone by persons when they were transferred to
lower areas. He said that medicines, like pennicilin and other antibiotics
which have become an essential part of the modern medical treatment
were not available, that there were no hospital facilities and that there were
no proper markets where they could buy goods. There were no educational
facilities and the employees have often to leave their families when they were
asked to do the work of the nation when branches of the State Bank of India
were opened in some urban, rural and project areas. He pointed out that
branches have been opened by the State Bank of India at Durgapur, Asansol,
Burnpur, Bhilai and Rourkela. Durgapur is in Area IV and this place is now
called the Ruhr of India. As regards Durgapur, Asansol and Burnpur, he
stated that these places have become mining centres and centres of steel
projects, that there were other factories situated there which were
manufacturing glass, cycles, cables etc. and that these places have become
extremely costly places. He complained that the transfer of the staff to these
new areas has become an instrument of punishment in the hands of the
employers. The employees, apart from their objection to the areawise
classification, were opposed to the principle of such classification, on the
ground that it offened against the principle of equal pay for equal work. He
further contended that the work in the branches was of a pioneering nature,
that the strength of the staff was limited, that they had to do work of various
types and had to put longer hours of work and that there was no reason why
they should be paid less at more disagreeable places of work. He emphasised
that the concept of cheaper living in villages was a myth and stated that the
suggestion that workmen in the rural areas should be paid less because they

4.157. Arguments to a more or less similar effect were advanced by

various representatives of workmen. Strong reliance was placed by workmen
on a passage in the Report of the Central Wage Board for the Cement Industry,
published in the year 1959. At page 37, paragraph 6.27 it has been stated
that the family budget calculations seem to indicate that there were not great
variations in the cost of living as between different regions in India and that
the same was in accord with the views of Committees and Tribunals. The All
India Industrial Tribunal (Colliery Disputes) stated in its Award as under :

4.155. A strong case was sought to be made out by the All India State
Bank of India Staff Federation and the State Bank of India Staff Union, Andhra
Pradesh, for abolition of areawise classification. It was urged that the State
Bank of India belonged to the public sector, that 92 per cent of its shares
were held by the Reserve Bank of India in respect of whose employees there
was no areawise classification, in respect of other Corporations in the public
sector like the Life Insurance Corporation of India, that in the Central
Government service including Railways and Posts and Telegraphs there was
no such areawise classification, that the transfer of an employee from a
higher area to a lower area was itself a hardship inasmuch as there were no
comparable educational facilities and amenities available in lower areas and
that further hardship should not be inflicted on the employees in the shape of
reduced emoluments. They further pointed out that so far as the members of
the supervisory staff were concerned, there was no such areawise
classification.

have other resources to fall back upon, was in theory untenable and in practice
unsound. It was pointed out that when new branches of the bank were opened,
experienced hands were required to be sent for the purpose of opening such
branches and carry on the work so as to gather the confidence of the public
and win its support and induce it to make deposits at such newly opened
branches, there was no reason why they should be prejudicially affected by
reason of such transfer.

76

Whatever might have been the position in the past, conditions existing
today do not justify the view that the cost of living differs very much
between one part of India and another, apart from particular cities.
But it seems to be true that by a continued tradition, standards of
living are much lower in certain parts of the country than elsewhere.

4.158. Several exhibits were filed before me in order to show that the
prices at same places in lower areas were higher than the prices prevailing in
other places in higher areas.
4.159. As against these arguments, it was urged by Shri Phadke on
behalf of the Indian Banks Association that since the date of the Sastry
Award as modified no material change in circumstances had taken place
which would warrant making any change therein as regards areawise
classification. It was urged that the legislature of the land itself had thought it
fit to give a statutory recognition to the fourfold areawise classification and to
provide for its continuance for a period of five years and that unless a very
strong case was made out for a change therein, no ground existed for disturbing
the same.
4.160. In the case of Burn and Company Ltd. and their employees,
reported in 1957 (1) Labour Law Journal page 226 the Supreme Court has
considered the argument advanced in that case that the Appellate Tribunal In

77

78

S.
No.

79

39

29
3

11

2
1

17

24

13

4
2

105

11

15

17

1
1
1

1
1

12

15
10

1
1

1
6
2
1
5
2
1

9
7
7
1
3
3
2
1
4
2
1
2
1
1
1

2
4

13
Total

2
8
14
1
3
5
46
1
2
2
13
2
8
7
1
7
1
7

Central Bank of India

Punjab National Bank
Bank of India
United Commercial Bank
Bank of Baroda
United Bank of India (Established in 1950)
Allahabad Bank
Indian Bank
Devkaran Nanjee Banking Co.
Union Bank of India
Indian Overseas Bank
Canara Bank
1
2
3
4
5
6
7
8
9
10
11
12

Number of branches closed

Number of branches opened
1954 1955 1956 1957 1958 1959 1960 Total 1954 1955 1956 1957 1958 1959 1960 Total

12
16
33

1
1
2

8
Total

Name of the Bank

49
4
3
9
6
24
114
4
28

1
1
2

1
1

1
1
7
2
2

13

1
4
2
2
1

2
1
1

2
24
4
4
12
22

1
2
3
4
5
6
7
8
9
10
11
12

Central Bank of India

Punjab National Bank
Bank of India
United Commercial Bank
Bank of Baroda
United Bank of India (Established in 1950)
Allahabad Bank
Indian Bank
Devkaran Nanjee Banking Co.
Union Bank of India
Indian Overseas Bank
Canara Bank

4
1

1
1

5
2

6
2
2
2
3

2
25
1
1
5
2
2
14
2
4
4
1

11
68
1
10
3
1
6
2
6

Number of branches closed

Number of branches opened
1947 1948 1949 1950 1951 1952 1953 Total 1947 1948 1949 1950 1951 1952 1953 Total
Name of the Bank
S.
No.

AI

BE

Are we to hold that an award given on a matter in controversy between

the parties after full hearing ceases to have any force in either of them
repudiates it under s. 19(6) and that the Tribunal has no option, when
the matter is again referred to it for adjudication, but it proceed to try
it de novo, traverse the entire ground once again, and come to a
fresh decision. That would be contrary to the well recognized principle
that a decision once rendered by a competent authority on a matter
in issue between the parties after a full enquiry should not be permitted
to be reagitated. It is on this principle that the rule of res judicata
enacted in s. 11 of the Civil Procedure Code is based. That section is,
no doubt, in terms in applicable to the present matters, but the principle
underlying it, expressed in the maxim interest rei publicae ut sit
finis litium is founded on sound public policy and is of universal
application (Vide Brooms Legal Maxims, 10th Edn. page 218). The
rule of res Judicata is dictated observed Sir Lawrence Jenkins C. J.
in Sheo-parsan Singh v. Ramnandan Prasad Singh [1916 L.R. 43 I.A.
91; (1916) Indian Law Reporter 43 Calcutta 694] by a wisdom which
is for all time. And there are good reasons why this principle should
be applicable to decisions of industrial tribunals also. Legislation
regulating the relation between capital and labour has two objects in
view. It seeks to ensure to the workmen who have not the capacity to
treat with capital on equal terms, fair returns for their labour. It also
seeks to prevent disputes between employer and employees, so that
production might not be adversely affected and the larger interests of
the society might not suffer. Now, if we are to hold that an adjudication
loses its force when it is repudiated under s.19(6) and that the whole
controversy is at large, then the result would be that far from reconciling
themselves to the award and settling down to work it, either party will
treat it as a mere stage in the prosecution of a prolonged struggle,
and far from being industrial peace, the awards would turn out to be
but truces giving the parties breathing time before resuming hostile
action with renewed vigour. On the other hand, if we are to regard
them as intended to have long-term operation and at the same time
hold that they are liable to be modified by change in the circumstances
on which they were based, both the purposes of the legislature would

Statement showing the number of branches opened and closed in area IV by 12 A Class banks during 1947 to I953 and 1954 to 1960.

that case was in error in brushing aside the previous award and in deciding
the matter afresh, as if it arose for the first time for determination. It has also
considered the argument that when once a dispute was referred to a Tribunal
and had resulted in an adjudication, such adjudication must be taken as
binding on the parties thereto, unless there was a change of circumstances.
The Appellate Tribunal in that case had considered that the rule that a previous
adjudication was binding on the parties unless there was a change of
circumstances was a rule of prudence and not of law. The Supreme Court in
that case has expressed itself at page 230 in terms following :-

be served. That is the view taken by the tribunals themselves in

the Army and Navy Stores Ltd., Bombay v. their workmen [1951
(II), Labour Law Journal, 31] and Ford Motor Company of India
Ltd. vs. their workmen [1951 (II) Labour Law Journal, 231] and we are
of opinion that they lay down the correct principle, and that there were
no grounds for the Appellate Tribunal for not following them.

employer from which to pay, the tempo of work in lower areas affecting the
rate of wages and the character of the work in lower areas whether it is
intermittent and seasonal involving less strain. He emphasized that if existing
arrangement was to be scrapped, then the only alternative appeared to be
the industry-cum-region basis with different grades of pay, different rates of
dearness allowance and different emoluments in different regions. He
submitted that the existing arrangements were fair and more reliable.

4.161. In the case of the Indian General Navigation and Railway Company
Ltd. and others and their workmen reported in 1960(1) Labour Law journal at
page 561, the Supreme Court has observed at page 562 as under:

4.164. There are wide variations in the type of diet taken in various parts
of the country. There is a wide divergence in the type of clothing that is worn.
The consumption pattern throughout the country is not the same. The nature
and quality of work at all places is not the same. The tempo of work is
different at different places and is different at different times of the year. The
question that has really to be considered is whether there is any principle
better than the one laid down by the previous Tribunals for the purpose of
classification.
4.165 In paragraph 25 of its report, the Bank Award Commission has
observed that in the awards of all-India Tribunals there was a considerable
degree of similarity in approach to the problems involved in or arising from the
subject matter of adjudication though there have been differences in detail. It
has further observed that as regards the basic approach to the problems it
was agreed that the existing pattern of banking structure in the country did
not permit of the fixation of a single scale of pay for employees of all banks
and, therefore, a classification of banks according to their resources (inasmuch
as this factor was Indicative of concerns capacity to pay) was essential and
that the differences in the cost of living in various parts of the country
necessitated its division into certain specified areas as it would not be correct
to suggest the same scale of emoluments for expensive places like Bombay
or Calcutta as for comparatively cheaper centres.

AI

BE

4.162. So far as the areawise classification is concerned, the previous

adjudication relates to the classification of places in the country only into
three areas. The fourth area has come into existence as a result of the
decision of the Government supported by the findings of the Bank Award
Commission and the will of the legislature as expressed in the Industrial
Disputes (Banking Companies) Decision Act, 1955. The report of the Bank
Award Commission, though a fairly exhaustive one given by a very eminent
person after hearing all persons affected thereby, is made within the ambit of
the terms of the reference and cannot be equated with a judicial determination
by an Industrial Tribunal for the purpose of the application of the principles
founded on res judicata. Neither the action of the Government nor the will of
the legislature as expressed by parliamentary legislation can be regarded as
being operative in the same manner. The Parliament itself has by legislation
provided a period of 5 years for the operation of the Labour Appellate Tribunals
decision as modified by the Act itself. There may be very weighty
considerations which may have moved the Government and the Parliament
to make these modifications. There are many reasons given by the Bank
Award Commission in support of the creation of this new area. These reasons
will have to be examined. When a new classification has been adopted, the
question how that classification has worked in practice and whether it has
resulted in the creation of anomalies and the imposition of unnecessary
hardships and whether in fact it has worked unjustly will have to be considered.

Apart from the fact that s. 19(6) of the Industrial Disputes Act itself
contemplates that the award cannot be binding after it is terminated
and therefore the principle of res Judicata should be applied with
caution in industrial disputes which relate to such matters as wages
and dearness allowance, there can be no doubt that if circumstances
have changed there is a good case for a change in the award.

4.163. It is urged by Shri Phadke that there exists, in fact, a substantial

difference in the prices of commodities and the standards of living in different
parts of the country. He urges that what may be taken into account for the
purpose of classifying areas and should form the basis of such classification
would be the cost of living, the paying capacity of the employer in the area
concerned, or in the alternative the areas capacity to earn money for the

80

4.166. Apart from the abolition of areas, no alternative basis has been
suggested for the purpose of classification of different places in the country.
The principle of industry-cum-region basis which has usually been applied by
Industrial Tribunals is not one which could be applied to an industry like
banking where most of the large banks have branches throughout the country.
The region-wise approach was considered and dropped by previous Tribunals
in dealing with the industry of banking. Being left with no better formula and
being faced with the differences in the cost of living and standards of living in
different parts of the country, the previous Tribunals had no other alternative
left to them but to resort to the classification of areas according to the
population. The same difficulty again presents itself before me.
4.167. I will first consider whether there is any case made out for a
complete abolition of the areawise classification. The existence of anomalies
to which pointed reference has been made by various representatives of the
employees, do not by themselves create a case for abolition of this

81

covered by Hyderabad includes the areas failing within Hyderabad Municipal

Corporation limits, Secunderabad, Secunderabad Cantonment and outlying
urban units being University Area. Malkajgiri, Alwal, Zamistapur, Attapur,
Fathenagar, Bowenpalli Lalaguda, Kandikal and Machabolirum. I see no reason
why these areas should not be included for the purpose of considering the
population of Hyderabad for the purpose of determining the area in which that
City should fall. The provisional official 1961 Census population figure for that
City is 12,52,337. Hyderabad is now the capital of the enlarged State of
Andhra Pradesh and has acquired a special significance by reason thereof.
In my view, Hyderabad including the places mentioned above should be placed
in Area I and I direct accordingly.

4.169. A claim has been made that the City of Bangalore should also be
included in Area I. It was pointed out that the population of Metropolitan
Bangalore, comprising (a) areas falling within the Bangalore Corporation limits
(b) area notified under the Bangalore City Improvement Trust Board Act,
excluding Satellite townships and (c) Satellite towns within the Trust Board
area, is already above 12 lakhs according to the provisional official population
figures of 1961 Census. Bangalore is now the capital of the enlarged State of
Mysore. It is a highly developed industrial area and it would be in the fitness
of things if the City of Bangalore including the areas mentioned above is also
included in Area I, and I direct accordingly. The case of other places having a
population of less than 12 lakhs for inclusion in this area has been separately
dealt with later.

AI

BE

classification, unless the anomalies pointed out are found to be in existence

on a large scale. As against the anomalies pointed out on behalf of the
employees showing that the cost of living in several places in Class IV area
or Class III area is higher than the cost of living in places falling within the
higher areas, there would be greater anomalies which could be pointed out if
the area-wise classification was abolished and one common standard of
wages was fixed. Even as regards cities, nobody, for instance, can say that
the cost of living and the standard of living at Rajkot is the same as the
standard of living and the cost of living at Bombay or Calcutta or that the cost
of living or the standard of living in a large number of towns in South India is
the same as in North India. By and large, the classification of the country into
areas has resulted in producing fewer anomalies than those it is intended to
avoid. When in the application of a rule anomalies exist, these anomolies, to
the extent that it is possible, should be removed and exceptions to the rule
may be provided for. The anomalies pointed out on behalf of the employees
relate mainly to the capitals of the newly-formed States, the newly developed
industrial towns and townships, hill stations, summer resorts, places within
the project areas and places very near to large cities which are well-connected
by road and rail to such large cities. In respect of these places, the situation
can well be met by upgrading these places and putting them in a higher
category, places in which there is scarcity of housing may be provided for by
a special house rent allowance; places where there is scarcity of water may
be provided for by a water scarcity allowance, places which are extremely
cold may be provided for by an allowance in the shape of fuel allowance and
hill stations may be provided for by a hill allowance. If from this angle, the
matter is tackled then in the present situation of the country and in the
present state of availability of evidence on the subject, the best solution to
the problem which has been forcefully brought to my notice can be found. As
regards the industry of banking, I am really concerned only with those places
where banks have branches or where they may be expected to open branches.
There are about 1,200 places where the banks which are effectively before
me have their branches. No reliable material was available in connection with
these places which could be placed before me and which would have enabled
me to classify these places having regard to the cost of living and the standard
of living and the pattern of consumption at these places. In fact, I desired the
parties more than once to place such material before me, but no agreed
material could be secured and no reliable material could be produced. If such
material had been available, the matter could have been dealt with differently
than by what is sometimes called a blind application of an abstract formula.
The application of such formula could then have been confined only to places
where branches may be opened by banks in future.
4.168. As regards Area I, it includes cities with a population of 12 lakhs
and more. No serious attempt has been made for the exclusion of any city at
present falling in this area. It was strongly urged that the City of Hyderabad
should be included in Area I. For the purpose of the current Census the area

82

4.170. As regards Area II. it would comprise all cities and towns other
than those included in Area I, having a population of one lakh and above but
below 12 lakhs according to the 1961 population Census figures. The case of
some places with a population of less than one lakh for inclusion in this Area
has been separately dealt with later.
4.171. Then comes the important question relating to Area III. Arguments
at considerable length have been advanced in respect of the limits of
population for this area. Under the award of the Sastry Tribunal, all places
other than those comprised in Class I area and Class II area have been
included in Area III. Government desired that out of this Area III should be
carved out Area IV comprising places with a population of 30,000 and under.
In fact, the Central Government made an application before the Labour
Appellate Tribunal for being joined as a party and for being heard in support of
the application that banks in rural and semi-urban areas having a population
of and below 30,000 should be excluded from the scope of the award for a
period of two years in the case of existing branches and offices and for a
period of four years in the case of new ones. Government relied upon the
report of the Rural Banking Enquiry Committee, which had recommended an
exemption of places having a population of 50,000 and below from the operation
of the awards of Industrial Tribunals. On a preliminary objection being raised
by the counsel for the employees that such an application did not lie as none

83

4.174. So far as the commercial banks (other than the State Bank of
India and its Subsidiaries) are concerned, there is no case for retention of
Area IV. The number of employees in branches in Area IV is comparatively
small. The Indian Banks Association has filed a statement showing the number
of banking offices (including Head Office) and the number of employees
(clerical and subordinate staff) employed therein areawise of its member
banks as on 31st December 1959. It shows that its 37 member banks had
451 offices in Area I, 641 offices in Area II,.623 offices in Area III and 703
offices in Area IV. The 703 offices in Area IV consisted of 320 offices of A
Class banks, 262 offices of B Class banks and 121 offices of C class banks.
The statement further shows that out of 49,962 employees employed in all
areas, 5,924 employees (3322 clerks and 2,602 members of the subordinate
staff) were employed in Area IV. The amount of saving made by commercial
banks by paying less to their employees in these branches in Area IV is not
such as would induce them to open more branches in this area. When new
branches have to be opened, experienced employees have to be sent for the
purpose of manning those branches. There is considerable discontent among
the employees of the banks in connection with the economic detriment which
they suffer when they are transferred to branches in lower areas. A strong
complaint has been made that apart from the hardship which they have to
undergo by reason of such transfers owing to inadequate social amenities
and inadequate educational and medical facilities etc., they have to suffer an
economic deteriment and that this gives rise to a feeling that these transfers
operate by way of penalty. The workmen as a rule have been opposed to
such transfers and the State Bank of India had to provide additional benefits
to supplement the provisions of the Sastry Award as modified in order to
minimise the hardships inherent in the scheme of transfer from a higher to a
lower area.

AI

BE

4.172. I shall first proceed to consider whether it is necessary to retain

Area IV. No doubt, there are a large number of places in the country with a
population of 30,000 and below, but the commercial banks by and large do
not operate in a majority of these places. The commercial banks run their
business primarily from the profit motive. It is sometimes felt that the smaller
banks would play a useful role in catering to these smaller areas. I have
whilst dealing with the question of classification of banks dealt with the
handicaps under which the small banks suffer. The Rural Banking Enquiry
Committee in its report recommended that banks functioning in places with a
population of less than 50,000 should be exempted from the operation of all
awards as also from the provisions of the Shops and Establishments Act. It
was soon realised that the development of rural banking could not be left to
pure private enterprise. When Area IV was created, it was done with a view to
provide an incentive to banks to operate in this area. When one looks, however,
to the number of branches which have been opened by the commercial banks
in Area IV (other than the State Bank of India and its Subsidiaries) before this
incentive was offered and after the offering of this incentive, one finds that
there is hardly any market improvement in the percentage of branches opened
by large commercial banks in this area. The Indian Banks Association has
filed statements before me showing the branches opened and closed by 12
A Class banks whom the Association represents between the years 1947 to
1953 and the years 1954 to 1960. Between 1947 to 1953, these 12 banks
opened in all 114 branches and closed 49 branches in Area IV, whilst between
1954 to 1960 (upto November 1960) the number of branches opened by them
were 105 and the number of branches closed by them during that period were
39. These figures show that the inducement offered by the creation of Area IV
and the lower scales fixed for workmen for this area have not resulted in
furnishing any appreciable incentive to these large commercial banks in
opening branches in Area IV and that the expectations entertained at the
time of the creation of Area IV have not been realised. The pariculars in
connection with these banks years-wise are as under :

opened 35 branches in all and closed 4 branches. There might be various

factors which might have contributed to the opening of branches in Area IV
by these banks but even if the only factor which has caused these banks to
open branches in Area IV after the creation of that Area by the modifications
made by Government was the inducement provided by the lower scale of
wages, even then there has been no such appreciable change as would
warrant the retention of Area IV because of any inducement which lower
wages for this area might offer to the banks to operate in this area. This
position has been increasingly realised by the Government and the main
burden of opening branches in Area IV is now being shouldered by the State
Bank of India and its Subsidiaries. I shall consider the case of these banks
separately in connection with the retention of Area IV. As regards D Class
banks the basic wages and dearness allowance payable to members of the
clerical staff and the subordinate staff in Area IV are the same as in Area III.

of the banks had raised the issue directly by their appeals, the application
was not entertained for technical reasons. Government thereafter issued the
modification order dated 24th August 1954.

4.173. As regards the banks in Class B represented by the Indian Banks

Association other than the 8 Subsidiaries of the State Bank of India, the
figures show that three such banks opened in all between 1947 and 1953. 27
branches in Area IV and closed 17 branches in Area IV during that period.
Between 1954 and 1960 these three banks opened in all 30 branches in Area
IV. As regards 12 C Class banks represented by the Indian Banks Association
between 1947 and 1953 these banks opened 21 branches in Area IV and
closed 23 branches during that period. The largest number of banks have
been closed by the Hindustan Commercial Bank Limited which accounted
for the closure of 14 such branches. Between 1954 and 1960 these banks

84

4.175. One of the grounds urged in support of the creation of Area IV

was that those who were recruited from that area were persons who had

85

other sources from which they could supplement their income. I do not think
that it is right that the other sources of income of persons who may be
employed in a bank should be taken into account when a Tribunal is called
upon to fix the scales of pay for employees of banks.

purpose of opening of new branches and running them in a manner as would

inspire-confidence, it is necessary that some old experienced hands must
be sent for the purpose of starting and running these branches. It would not
be fair to such old employees who have considerable experience of the
business of banking that they should suffer economic detriment apart from
the other inconveniences and hardships which they may have to undergo on
being transferred to such areas. The economic stagnation for a number of
years gives rise to discontent. To meet the realities of the situation the State
Bank had voluntarily to give certain additional benefits to the workmen.

4.177. Having considered all aspects of the matter, in my view there is

no necessity for the retention of Area IV so far as the commercial banks
other than the State Bank of India and its Subsidiaries are concerned.

(1) losses in excess of such yearly sum as may be agreed upon between
the Reserve Bank and the State Bank and attributable to the branches
established in pursuance of sub-section (5) of section 16, which
lays down that not less than 400 new branches were required to be
opened by the State Bank within five years of the date when the Act
came into force or such extended period as the Central Government
may specify in that behalf.

AI

BE

4.178. I shall next deal with the case of the State Bank of India and its
subsidiaries in this connection. Shri Sachin Chaudhary, who appeared for
the State Bank of India made a forceful submission for the retention of Area
IV. He stated that the State Bank of India was charged within the function of
opening new branches and that it had taken upon itself the burden of opening
not less than 400 branches within a period of 5 years. On 31st December,
1959 it had in the clerical grade 4,039 employees employed in 37 branches
in Area I, 4,008 employees employed in 105 branches in Area II, 3,214
employees employed in 201 branches in Area III and 2,517 employees
employed in 480 branches in Area IV making in all 13,778 employees in 823
branches. On the same day in the subordinate grade it had 1,442 employees
in Area I, 1,729 employees in Area II, 1,832 employees in Area III and 1,748
employees in Area IV making a total of 6,751. Thus out of a total number of
20,529 employees, 4,265 were employed in Area IV. Between 1st July 1955
and 30th June 1960 the State Bank of India has opened 327 branches in
Area IV and 75 branches in Area III. As on 30th September 1961, the State
Bank of India had 34 branches in Area I, 100 branches in Area II, 194 branches
in Area III and 461 branches in Area IV. According to the State Bank of India,
298 branches in Area IV and 55 branches in Area III opened as aforesaid upto
30th June, 1960 were working at a loss. There is no doubt that the State
Bank of India has a large number of employees employed in Area IV and is
doing considerable pioneering work. It has to fulfil the national policy for the
development of banking in semi-urban and rural areas as other commercial
banks were not able to satisfy that want. The major burden in this connection
has fallen on the State Bank of India and its Subsidiaries and on the Cooperative banks.
The question that I have to consider is whether this
pioneering work should be done at the expense of the workmen. For the

4.179 Section 36 of the State Bank .of India Act, 1955, provides for the
creation of the Integration and Development Fund. The said fund is made up
of the dividends payable to the Reserve Bank on such shares of the State
Bank held by it as do not exceed fiftyfive per cent of the total issued capital
and such contribution as the Reserve Bank or the Central Government may
make from time to time. The said Fund is required to be applied exclusively
for meeting:

4.176. On behalf of the Exchange Banks it was submitted that almost

the overwhelming bulk of their business was in Area I, that they had very little
business in Area II and had negligible business in Area III. A statement was
submitted on behalf of these banks which shows that only one Exchange
Bank has a branch at Gandhidham (Area IV) which has been upgraded to
Area III. Thus these banks have no problem so far as Area IV is concerned.
There are several C and D Class banks which have branches in Area IV. The
extent of their operation is not very large and the number of employees
employed in this area is not large. A large number of the branches of these
banks at places in Area IV existed before Area IV was demarcated.

86

(2) subsidies granted by the State Bank to a subsidiary bank with the
approval of the Reserve Bank, and
(3) such other losses or expenditure as may be approved by the Central
Government in consultation with the Reserve Bank.

Inspite of the opening of numerous new branches by the State Bank of

India, this Integration and Development Fund is swelling up. The position of
the Integration and Development Fund as at 30th November, 1960 as given
by the State Bank of India is as under:
Year

1956
1957
1958
1959
1960

...
...
...
...
...
TOTAL

Amount
credited
Rs.
24,75,000
49,50,000
74,25,000
55,68,750
61,87,500

Amount
withdrawn
Rs.

35,31,909
32,94,654

Balance.
Rs.
24,75,000
74,25,000
1,48,50,000
1,68,86,841
1,97,79,687

2,66,06,250

68,26,563

1,97,79,687

The whole of this Integration Fund has been built up out of the dividend
income. The only amounts withdrawn from this fund were Rs. 35,31.909 in

87

branches mostly in the rural and semi-urban areas of the country.

The total deposits at these branches have increased from Rs. 29.32
crores in 1959 to Rs. 37.03 crores in I960; and the average deposits
per new branch have risen from Rs. 8.17 lakh to Rs. 8.63 lakhs. I
feel, however, that there is still considerable scope for increasing
bank deposits in these areas.

It is found from the statement furnished by the State Bank of India itself
that out of 8 new branches opened by it in Area I during 1st July 1955 to 30th
June, 1960, 5 have made losses and 3 only have made profits that out of 6
branches opened during the said period in Area II, 5 have made losses and
only 1 has made profit, that out of the 75 branches opened during this period
in Area III, 55 branches have made losses and only 20 have made profits and
that out of 327 branches opened in Area IV, 298 branches have made losses
and only 29 branches have made profits.

There is no evidence led before me to show that the branches in Area IV are
perenially to make losses. When these uneconomic branches are opened in
the larger interests of the national economy of the country during the five year
plan periods, the workmens interests have also to be looked at. The Directive
Principles of State Policy require that the wages of workmen cannot be very
low. The State Bank of India is yielding enormous profits and special areas
cannot be maintained for long where it can pay low wages. The creation of
Area IV has given rise to considerable discontent and has agitated the minds
of workmen to a considerable extent. The workmen of the State Bank of India
even at the interim relief stage sought the abolition of Area IV by way of what
they termed interim relief. In my view, it is necessary in the larger interests
of the country for securing peace in the industry and doing justice to the
claims of the workmen, that Area IV should not be retained so far as the
State Bank of India is concerned.

AI

BE

4.180. When branches have been newly opened, they may incur losses
for some time. What may be considered is whether after the branches get
established for some time they are likely to make profits or losses. The State
Bank of India has opened several new branches at places where the
Government had previously pay offices and treasury pay offices. The non
workmen staff of the State Bank of India is not paid any lower salary by
reason of the fact that such staff is employed in a lower area. The lesser
scales of pay are claimed only in respect of workmen employed in the lower
area. Inspite of the opening of numerous branches and the losses sustained
therein the State Bank of India has been making progressively larger profits
year by year. Its net profits for the year 1955 amounted to Rs.1,35,93,000/for the year 195 6 amounted to Rs. 1,56,18,000/- for the year 1957, amounted
to Rs. 1,87,56,000/-, for the year 1958 amounted to Rs.1,90,14,000 /- for the
year 1959 amounted to Rs. 1,87,10,000/- and for the year 1960 amounted to
Rs. 2,17,59,000/-. In view of the sound financial condition of the bank, there
is no reason why the bank should pay law wages in Area IV. The new branches
have been opened inter alia with a view to facilitate Government business,
with a view to providing banking facilities to fast developing areas, with a view
to develop rural economy and with a view to secure deposits and to mop up
the resources or the country side in the larger interest of the nation. The
Chairman of the State Bank of India in his speech at the 6th annual general
meeting of the shareholders held at Bombay has in connection with the
policy underlying the opening of branches stated as under :

the year 1959 in respect of the losses incurred for the year 1957 amounting
to Rs. 8,94,821 and the losses incurred for the year 1958 amounting to Rs.
26,37,088 and the sum of Rs. 32,94,654 in the year 1960 in respect of the
losses incurred for the year 1959 on account of new branches. The State
Bank of India has tried to show that various branches in Area IV have incurred
losses.

The banking system must continuously play an active role in the

overall mobilisation of resources. For this purpose it is necessary
that new techniques be employed from time to time. Hitherto banks
have depended more on urban areas and industrial and commercial
centres for collection of deposits. I feel that the possibilities of
securing more deposits from rural and semi-urban areas should now
be explored with vigour. Upto the end of 1960, we have opened 429

88

4.181. As regards the eight Subsidiaries of the State Bank of India, they have
a large number of offices in Area IV. Out of the 506 offices of these banks,
325 are in Area IV, 79 are in Area III, 77 are in Area II and 25 are in Area I, as
at the end of 30th June 1961. There is no area-wise classification so far as
the State Bank of Saurashtra and the State Bank of Patiala are concerned
and the same scales of pay etc. are applicable to employees at places
falling in Area III and in Area IV. As regards the State Bank of Bikaner, as a
result of an agreement arrived at with the employees representatives before
the Bank Award Commission, the dearness allowance paid to the employees
in Area IV is at the same rate as in Area III. Four of its branches situated at
Abohar, Ratangarh, Sardarshahr and Sujangarh which fall in Area IV have
been upgraded to Area III. As regards the State Bank of Mysore, in the case
of clerical staff (inclusive of cash department staff) in Area III and IV basic pay
scale of Area II has been extended, while deamess allowance to clerical staff
in Areas I, II and III is being paid in terms of the Award, separate scales of
dearness allowance have been provided for them in Area IV. The State Bank
of Indore also has granted certain improvements to employees in class IV
Areas. According to the recommendations of the Sub-Committee for the
expansion of branches appointed by the State Bank of India, the Subsidiary
banks have to join the State Bank of India in opening 300 new branches at
places to be selected from rural and semi-urban areas. Out of the 325 branches
of the Subsidiaries of the State Bank of India in Area IV, 44 branches have
been opened in the year 1960. Some of these branches are likely to make
losses. It is difficult to provide for the development of banking in rural areas at

89

years 1958, 1959 and 1960 were Rs. 8,54,000, Rs. 9,13,000 and Rs. 10,51,803
respectively. The bank made a net profit of Rs. 10,24,000 for the year 1958,
Rs. 9,95,000 for the year 1959 and Rs. 13,53,364 for the year 1960. On
shares of the State Bank of Mysore and 75:84 per cent shares of the State
Bank of Hyderabad, the State Bank of Patiala and the State Bank of Saurashtra,
96.70 per cent shares of the State Bank of Bikaner, 82.82 per cent shares of
the State Bank of Indore, 88.11 per cent shares of the State Bank of Jaipur,
62.27 per cent shares of the State Bank of Mysore and 75.84 per cent shares
of the State Bank of Travancore. In connection with some of these banks the
percentage is likely to be reduced as claims from all the shareholders of the
pre-existing corresponding banks had not been received.
4.182. The Subsidiaries of the Stale Bank of India can bear the additional
burden imposed by the abolition of Area IV. The Government has very wisely
constituted the Integration and Development Fund for meeting the losses
which these banks may suffer in opening branches in semi-urban and rural
areas in the larger interest of the nation. The State Bank of Hyderabad is
even at present conferring larger benefits than those provided In the Sastry
Award to employees who are transferred from a higher area to a lower area.
Whereas the award provides that in case of transfer from a higher area to a
lower area basic pay of the employee concerned should be protected, but
allowances such as dearness. and house rent should be reduced in accordance
with the scale applicable to the lower area, the management agreed to protect
the basic salary and all allowances drawn by the employees while at higher
area, for the first 12 months of their posting to lower area and thereafter to
pay compensatory allowance to cover the difference until it is wiped off in due
course by the increments earned in future.

AI

BE

the expense of the workmen. According to the calculations made by the

State Bank Subsidiaries regarding the estimated extra annual burden, if Area
IV is upgraded to Area III, in respect of the employees employed on 30th
April 1961, the State Bank of Indore would be required to pay an extra sum of
Rs. 13,416, the State Bank of Jaipur would be required to pay an extra sum
of Rs. 38,772, the State Bank of Mysore would be required to pay an extra
sum of Rs. 42,060, the State Bank of Travancore would be required to pay an
extra sum of Rs. 14,964 and the State Bank of Hyderabad would be required
to pay an extra sum of Rs. 1,89,876 apart from the consequential increases
in the retirement benefits and overtime. These figures have been arrived at on
calculations which may not be very strictly accurate. I am, however, proceeding
on the basis that they are correct. The establishment charges of the State
Bank of Hyderabad were Rs. 32,20,000 in the year 1958, Rs. 38,91.000 in
the year 1959 and Rs. 41,34,000 in the year 1960. The net profits of the bank
were Rs. 3,50,000 for the year 1958, Rs. 5,00,000 for the year 1959 and Rs.
9,14,719 for the year 1960. As regards the State Bank of Bikaner, the
establishment charges of the bank for the years 1958, 1959 and 1960 were
respectively Rs. 26,86,000, Rs. 38,61,000 and Rs. 31,19,000. For the year
1958 the Bank made a net profit of Rs. 9,02,000. For the year 1959 there was
a net loss of Rs. 2,96,000 having regard to the fact that provision of Rs.
8,50,000 had been made out of the profits for gratuity to the staff. For the
year 1960, there was a net profit of Rs. 2,11,647. As regards the State Bank
of Indore its establishment charges for the year 1958 were Rs. 10,93,000, for
the year 1959 were Rs, 13,00,000 and for the year 1960 were Rs. 13,48,681.
Its net profits for the years 1958, 1959 and 1960 were Rs. 4,95,000, Rs.
5,27,000 and Rs. 7,12,560 respectively. As regards the State Bank of Jaipur,
its establishment charges for the years 1958, 1959 and 1960 were Rs.
19,22,000, Rs. 20,49,000 and Rs. 22,62,464 respectively. Its net profits for
the year 1958 were Rs. 7,67,000. In the year 1959, the bank made a net loss
of Rs. 10,48,000 and in the year 1960 the bank made a net profit of Rs.
99,841. As regards the State Bank of Mysore, its establishment charges for
the years 1958, 1959 and 1960 were Rs. 24,57,000, Rs. 27,40,000 and Rs.
24,16,040 respectively. Its net profit for the year 1958 was Rs. 22,58,000, for
the year 1959 was Rs. 23,65,000 and for the year I960 was Rs. 28,05,442.
As regards the State Bank of Patiala its establishment charges were Rs.
14,74,000 in the year 1958, Rs. 15,25,000 in the year 1959 and Rs. 11,82,783
in the year I960. Its net profits for the year 1958 were Rs. 10,00,000 for the
year 1959 were Rs. 7,96,000 and for the year 1960 were Rs. 2,91,819 (for 9
months only I.e. 1-4-1960 to 31-12-1960). As regards the State Bank of
Saurashtra, its establishment charges for the years 1958, 1959 and 1960
were Rs. 14,89,000 Rs. 16,61,000 and Rs. 12,14,905 respectively. In the
year 1958, the Bank made a net profit of Rs. 16,29,000 in the year 1959, the
bank made a net profit of Rs. 17,83,000 and in the year 1960 the bank made
a net profit of Rs. 9,76,381 (for 8 months 1-5-1960 to 31-12 1960). As regards
the State Bank of Travancore, the establishment charges of the Bank for the

90

4.183. Some of the reasons given for the abolition of Area IV in connection
with the State Bank of India equally apply to its Subsidiaries. Taking
every circumstance into account, I am of the view that these banks should
also fall in line with the remaining banks in the country in connection with
Area IV. In my view, Area IV needs to be abolished.
4.184. The difference in the total remuneration payable by A, B, and C
Class banks under the Sastry Award as modified to the clerical staff and the
members of the subordinate staff in Area III and in Area IV is very large. At
the all-India working class consumer price index No. 123 (Base 1949 = 100)
an A Class bank pays in the 1st year of service to a member of the clerical
staff in Area III Rs. 127.25, whilst in Area IV it pays Rs. 99.90. The
corresponding figures for a B Class bank are in Area III Rs. 120.25 and Area
IV Rs. 90.90. The corresponding figures for a C Class bank are in Area III Rs.
114.25 and in Area IV Rs. 87.90. As regards members of the subordinate
staff the corresponding figures for A Class banks are in Area III Rs. 80.87 and
in Area IV Rs. 65.25; for B Class banks are in Area III Rs. 75.75 and in Area
IV Rs. 57; and for C Class banks are in Area I I I Rs. 70.62 and in Area IV Rs.
42.50. The difference will be further accentuated if the total remuneration

91

payable under my award in Area III is considered. If Area IV is abolished at

once there will be a sudden steep increase in the total remuneration of workmen
at present employed in Area IV. It is desirable that the change should be
gradual. It is further desirable that in the same place the total remuneration
payable to a workman should not differ having regard to the fact whether a
bank has opened a branch after my award on before my award comes into
force. Accordingly I am providing for a short transitional period during which
progressively higher wages will be paid in Area IV until they come in level
with those paid in Area III and Area IV will cease to exist.

4.187. There are two places in Area III which it is claimed, should be
placed in Area I. They are Kalyan and Thana. According to the latest census
figures, the population of Thana has crossed the limit of one lac and would,
apart from any other circumstance, be regarded as falling in Area II. Both
Kalyan and Thana are on the outskirts of Greater Bombay. Local trains run
frequently from Bombay to Thana and Bombay to Kalyan. Both are industrial
centres. The State Bank of India has treated these places as if they fell in
Area I. Having regard to the peculiar circumstances in connection with these
two places, it is but just that these two places should be regarded as falling
within Area I, and I direct accordingly.

4.188. There are various places in Area III which, by reason of the peculiar
position occupied by those places, are required by workmen to be upgraded
as if those places fell in Area II. A claim has been made that Chandigarh,
Chandernagore, Chinsurah, Cochin, Ferozepore, Kakinada, Nasik,
Pondicherry, Raipur, Shillong, Tirunelveli, Tuticorin should be deemed to fall
within Area II. Kakinada, Nasik, Raipur and Tuticorin have, according to the
latest provisional official Census figures, a population exceeding one lac and
would fall within Area II. The State Bank of India has treated all these places,
barring Chandigarh, as falling within Area II. Chandigarh is the capital of the
East Punjab State. The Punjab National Bank Limited has treated Chandigarh
as if it fell within Area II. Having regard to the peculiar conditions prevailing at
each of these places, it is but fair that all these places should be regarded as
falling within Area II and I directly accordingly.

AI

BE

4.185. I will next consider whether any place which would by reason of
its population fall in a lower area should, by reason of the peculiar conditions
prevailing in that place, be upgraded so as to be deemed to fall in a higher
area. It is urged that the cost of living and the standard of life prevailing in
places which are State capitals, hill stations, summer resorts, project areas,
newly developed industrial townships and places in the vicinity of large cities
are very much higher than at other places falling in the same Area. It is urged
that if the areawise classification is to be retained then these places need to
be upgraded. The aforesaid argument applied to a number of places which
fall within the present Area IV and some of these places would be required to
be upgraded if Area IV was to be the normal feature of the wage structure. As
I have already pointed out, there has been a considerable difference in the
total remuneration at present drawn by workmen in Area IV and by workmen
in Area III. It is this largeness of the difference which has contributed to the
great depth of feeling behind the arguments advanced in this connection. On
the aboltion of Area IV, all places falling within Area IV will get upgraded and
would fall in Area III though in view of the great disparity in the remuneration,
a short time will elapse before the remuneration payable in Area III will apply.
There are however some places in Area IV which It is claimed should be
upgraded even above the level of Area III.There is a place called Uttarpara
which is about six miles from Calcutta. The same falls within the Calcutta
industrial belt. The United Bank of India Limited and the United Commercial
Bank Limited have treated this place as if it fell within Area I. Having regard to
the location of this place and other circumstances, it is but fair that this place
should be regarded as falling within Area I, and I direct accordingly.

treated as falling within Area II, and I direct accordingly.

4.186. There was a demand made that Bhivandi, Dombivli and Pimpri
which are at present in Area IV, should be upgraded to Area II, having regard
to the local conditions prevailing at Bhivandi, Dombivli and Pimpri. Bhivandi is
on the Bombay Agra road and is not far away from either Kalyan or Thana
whose cases I am going to deal with separately. The State Bank of India has
treated Bhivandi as if it fell within Area II. Dombivli is a few miles away from
Kalyan. The Canara Bank Limited has treated Dombivli as if it fell in Area II.
Pimpri is an industrial centre near Poona and the United Commercial Bank
Limited has treated this place as if it fell within Area II. It is but fair that all
these three places, having regard to their special circumstances, should be

92

4.189. Under this award (I) Area I will comprise (1) City of Bombay
including Greater Bombay, (2) City of Calcutta including Howrah, Barrack
pore, Behala Alipore, Cossipur, Garden Reach, Baranagore, Tollygunge, South
Suburban Municipal Area and Dum Dum, (3) City of Delhi including New and
Old Delhi and Delhi Shahdra (4) city of Madras, (5) City of Ahmedabad, (6)
City of Hyderabad comprising areas falling within the Hyderabad Municipal
Corporation limits, Secunderabad, Secunderabad Cantonment and outlaying
urban units being University Area, Malkajgiri, Alwal, Zamistapur, Attapur,
Fathenagar, Bowenpalli, Lalaguda, Kandikal and Machabolirum. (7)
Bangalore comprising areas falling within the Bangalore Corporation limits,
area notified under the Bangalore City Improvement Trust Board Act, excluding
satellite townships and satellite towns within the Trust Board area, (8) Kalyan,
(9) Thana, and (10) Uttarpara and all places which may have a population of
more than twelve lacs.
(II) Area II will comprise all cities other than those included in Area I
which have a population of one lac or more, and Bhivandi, Chandernagore,
Chandigarh, Chinsurah, Cochin; Dombivli, Ferozepore, Kakinada, Nasik,
Pimpri, Pondicherry, Raipur, Shillong, Tirunelveli and Tuticorin.
(III) Area III will comprise all places not already included in Area I and

93

Area II.
4.190. For the purpose of the classification of areas, only the latest
available all India Census figures should be taken into account. A similar
direction was given by the previous Tribunals and it seems to me to be a
salutary direction. Until the final official population figures of the latest 1961
census are available, provisional figures as officially published should be
adopted.

CHAPTER V
Item No. 2 :

SCALES OF PAY; METHOD OF ADJUSTMENT IN THE

SCALES OF PAY;
AND

Item No. 3 : DEARNESS ALLOWANCE WITH PARTICULAR

REFERENCE TO THE QUESTION WHETHER ANY PART
OF THE EXISTING DEARNESS ALLOWANCE SHOULD BE
ABSORBED IN THE BASIC PAY.
Scales of pay
(i) General

AI

BE

5.1 The Sen Tribunal considered it desirable that the basic pay should
represent as large a part of the total emoluments as possible and should be
fixed at a point below which the cost of living is not expected to fall in the near
or foreseeable future and that at the lowest level, the basic wage should be
supplemented by dearness allowance ensuring a fair degree of neutralisation
of the increase in the cost of living. For this purpose, the Sen Tribunal selected
1944 as the base year. The Sen Tribunal saw great merit in adopting that
year as the base year Inter alia because the Central Government was then
publishing the cost of living index series for 15 towns in different parts of India
treating 1944 as the base year and as for the seven towns of Bombay,
Ahmedabad, Sholapur, Jalgaon, Kanpur, Nagpur and Madras it had been
publishing an index series with August 1939 as the base which could without
difficulty be converted to the base year 1944. The Sen Tribunal relied upon
the results of Shri Subramaniams investigations into the budgets of the middle
class employees of the Central Government for the period November 1945 to
August 1946 while considering the question of (1) consumption units, (2) the
difference in cost of living in different areas and (3) the minimum requirements
of a lower middle class family. It came to the conclusion that the figures of
actual expenditure given by Shri Subramaniam could be used as a basis for
arriving at the subsistence level of wages. The monthly requirements of a
lower middle class employee for Bombay, Calcutta and Delhi were worked
out at Rs. 40 per consumption unit or Rs. 90 for 2.25 consumption units in
1946. The requirements of a lower middle class employee in Class II areas
represented by Sholapur, Kanpur, Nagpur and Jamshedpur, were worked out
at Rs. 34 per consumption unit and Rs. 77 for 2.25 consumption units in
1946. About Class III areas the Sen Tribunal observed that they comprised
very large tracts and since calculations similar to those made in case of
Areas I and II were not likely to yield satisfactory results, it assumed a
minimum of Rs. 65 per month as representing the requirements of a clerk in
such Areas for the year 1946. The Tribunal started with the requirements of
2.25 consumption units in the first year of service of an employee, and went
up to the requirements of 4 consumption units in the 25th year of service, in

94

95

arriving at the figures of minimum requirements of a clerk in 1946. After reducing

these to the level of 1944, it concluded that the following were the figures of
monthly requirements of a clerk in a C Class bank (working funds below 7
crores) in 1944 :
Class of Area

First Year

25th Year

Class I Areas

-----

-----

86

265

Class II Areas

-----

-----

73

225

Class III Areas

-----

-----

62

191

AI

BE

Working on the basis of these figures as the foundation and using the
differentials which were fixed by it the wage scales for A, B and C Classes of
banks in Areas I, II and III were ultimately built up by the Sen Tribunal after
observing the principles that increments should normally show a rising trend
and that a time scale should provide for a saving wage after the fifteenth year
of service. The peculiarity of Sen Tribunals wage scales is that there is a
base year i.e. 1944 and the dearness allowance is linked to the local indices
converted to 1944 = 100. It was due to this linking of dearness allowance with
local indices, that appreciable differences in pay of the clerks in various
places subsequently became apparent and resulted in considerable
dissatisfaction amongst the bank employees. In connection with wage scales
of the subordinate staff, the Sen Tribunal relied mainly upon the figures in
Shri Deshpandes reports which were in respect of family budgets of industrial
workers in different parts of India and came to the conclusion that the minimum
requirements per month for a new entrant on the basis of 2.25 consumption
units in Class C banks in Class I area would come to Rs. 52, in Class II area
would come to Rs. 43 and in Class III area would come to Rs. 35. As regards
Class B banks the requirements in Class I, Class II and Class III areas were
found to be Rs. 56, Rs. 46 and Rs. 38 respectively. As regards Class A
banks the requirements in Class I, Class II and. Class III areas were found to
be Rs. 60, Rs. 49 and Rs. 40 respectively.

consumption units at the initial start and that at the 10th year of his service,
it should be regarded that a person has a family consisting of a wife and two
children, making a total of 3 consumption units. Dealing more elaborately
with the problem of a proper co-efficient, i.e. ratio of the relative costs of living
of working class and the middle class employees, it has held that this coefficient was not more than 66-2/3 per cent as against the co-efficient of 80
per cent originally arrived at by Justice Rajadhyaksha in his award regarding
the Posts and Telegraphs Departments of the Central Government. The
Sastry Tribunal then considered various other factors relating to wage fixation
such as (i) the productivity of labour, (ii) the prevailing rates of wages in the
same or similar occupations in the same or neighbouring localities, (iii) the
level of national income and its distribution and (iv) the place of the industry in
the economy of the country. It made its observations as regards the relevancy
or otherwise of those concepts in the context of the peculiar conditions
prevailing in the banking industry. It then considered the wage scales awarded
by various Tribunals in the past in relation to employees of banks in various
States, made a comparative study of the wage scales prevalent at that time
in the establishments under the Central and the State Governments, it also
took a cross-section of the wage map of India for clerical staff and compared
the prevailing rates in a mixed bag consisting of industrial concerns,
municipalities, insurance companies, Government departments, port-trusts
and the Reserve Bank of India. It also studied the prevailing rates of wages in
certain industries which were the result of industrial awards. In conjunction
with this the recommendations of the various committees which had anything
to do with the fixation of wages were also taken into account and a detailed
survey of the-banking industry and its capacity to pay higher wages was
made by making an examination of the profit margins, net returns, provision
for reserves, etc., having been fully conscious of the fact that all wages and
costs must in the last analysis come out of the gross yield of the industry
and that the scales were to be adjusted subject to a minimum, to the capacity
to pay. It devised 12 scales being the scales in A, B, C and D Classes of
banks in Areas I, II, III. The basic pay under these scales was less than the
basic pay in the Sen scales of pay and three more scales of pay were added
due to the creation of D Class banks in view of the recommendations of the
Rural Banking Enquiry Committee and the nature of the work in rural areas.

5.2 The Sastry Tribunal reviewed the approach of the Sen Tribunal in
Connection with the fixation of wage scales and came to the conclusion that
it should devise a more direct approach, a simpler method and a more
acceptable technique, keeping clear of all data which was not statistically
established beyond doubt and keeping also in mind the Labour Appellate
Tribunal's criticism of Shri Subramaniams Report and cognate matters. The
Sastry Tribunal considered the various aspects of Shri Subramaniams Report and expressed its doubts about its utility for the purpose of wage fixation
for which it was never intended as the objective of the report was to provide a
basis for middle class cost of living indices. In its view it was not quite safe to
accept that report as representing an accurate picture of the economic
conditions and modes of living of the bank workmen. In connection with the
question as to what should be the size of a family, the Sastry Tribunal observed
that the size of the family of a workman should be taken as consisting of 1.8

96

5.3. The Sastry Tribunal has considered in detail the position of the
Index Numbers which were being published in the country at the time of its
deliberations and decided that in the circumstances prevailing at that time,
the fixed percentage method with a minimum was eminently suitable for the
fixation of dearness allowance in the banking industry for the members of the
clerical staff and that the flat rate system was suitable for a similar purpose
for members of the subordinate staff. As regards the adjustment of the dearness
allowance for future half years commencing from July 1953 to December
1953 onwards the Tribunal considered it proper to link the dearness allowance

97

was limited to towns and cities not included in Class I and Class II which had
a population of more than 30,000, and Class IV area was created comprising
places not included in Class I, Class II and Class III areas. It also created
what is called Class V area comprising places in Class IV area situated in
the former Part B and Part C States other than Delhi, Ajmer and Coorg. It laid
down scales of pay for all classes of banks in Area IV and completely exempted
places in area V from the operation of the Award. The dearness allowance
scheme awarded by the Labour Appellate Tribunal in respect of the clerical
staff was also modified and the rates of dearness allowance for A, B, C and
D Classes of banks for clerks were introduced, which were the same as
those prescribed by the Sastry Tribunal. As regards the subordinate staff
instead of the dearness allowance as prescribed by the Labour Appellate
Tribunal for A, B and C classes of banks and for Areas I, II and III, the dearness
allowance for subordinate staff as fixed by the Sastry Award was prescribed.

5.5. The Bank Award Commission enquired into and ascertained the
effects on emoluments which the employees were in receipt of prior to August
1954 (a) of the Labour Apellate Tribunal without modification and (b) of the
Labour Appellate Tribunal as modified by Government order No. S.R.O. 2732
dated 24th August 1954. This Commission after an elaborate inquiry gave its
recommendations which were accepted in toto by Government and were
enforced by the enactment of the Industrial Disputes (Banking Companies)
Decision Act, 1955. Subsequently, as regards the banks incorporated in
Travancore Cochin State, except the Travancore Bank, the Travancore-Cochin
Banking Inquiry Commission made enquiries to ascertain whether the terms
and conditions of service of workmen of the banks (except the Travancore
Bank) incorporated in the Travancore Cochin State, to which the provisions of
the Industrial Disputes (Banking Companies) Decision Act, 1955 applied
should be modified and if so, in what respect, having regard inter alia to the
effects which the terms and conditions of service that may be recommended
by the Commission, were likely to have on the general economy of the area.
The recommendations of this Commission resulted in the enactment of the
Industrial Disputes (Banking Companies) Decision Amendment Act, 1957.
Broadly speaking, as a result of the recommendations of these two
Commissions, Area IV along with the wage scales and dearness allowance
for that area prescribed by the said Government modification order for the
various classes of banks, came to be retained, but the exempted area,
generally known as Area V was abolished; C Class of banks were divided
into two further classes viz., C-l Class of banks i.e. banks which were capable
of paying the dearness allowance according to the Labour Appellate Tribunal
decision, and C-2 Class of banks i.e. banks which were not in a position to
pay the dearness allowance in accordance with the decision of the Labour
Appellate Tribunal and which would be paying dearness allowance at a lesser
rate. The provision that D Class banks automatically step up to C Class as
from 1st April 1959 gave place to the recommendation of the Bank Award
Commission that the position of these banks should be reexamined at the

AI

BE

to the rise or fall in the all-India working class cost of living index figure 144
(base 1944 = 100). The Labour Appellate Tribunal felt that no bank clerk
should receive less than a wage which would not only provide him with bare
necessities of life but also give him at least a small measure of comfort, and
considered it a basic principle, well established, that fair wages must have
priority over profits. It also held the view that at least in the case of bigger
banks the Sastry Tribunal ought to have fixed appropriate wages and not a
minimum wage it appeared to have done. The Labour Appellate Tribunal agreed
with the views of the Sastry Tribunal as regards the report of Shri Subramaniam
in connection with fixation of wage scales but it did not agree with its findings
in respect of the size of the family and the co-efficient and regarded that the
basis of 2.25 consumption unit was a reasonable basis for calculating the
measure of a young mans responsibility at the start and that in the absence
of any definite investigation or statistics, the 1.80 co-efficient should be
maintained. The Labour Appellate Tribunal has been influenced, while devising
its wage structure, by another consideration, namely, that the clerk in an A
class bank in Class I area should receive as his starting total emolument
something midway between Rs. 130 (which the Central Government gives to
its clerk) and the wages of higher commercial firms, excluding the oil
companies to avoid possible contentions. The scales of wages which the
Labour Appellate Tribunal finally) devised while modifying the Sastry Award,
closely followed the pattern of wage scales of the Sastry Tribunal but with a
little higher minimum and maximum, except in A Class banks in area-1
where the same minimum and maximum were kept. It retained the Sastry
scales of wages for D Class banks with the proviso that they were to remain
in force till 31st March 1959 and that thereafter all D Class banks were to
step into C Class. It, however, raised the rates of dearness allowance
considerably for A, B and C Class banks in order that the total emoluments
may be increased and may reach the required level in view of the abovementioned consideration. About the pay scales of the subordinate staff, the
Labour Appellate Tribunal has said that as far as practicable it has considered
the same against the background and on the principles discussed by it in
connection with the clerical staff. After considering the pay-scales of the
Sastry Tribunal and the total emoluments paid by the commercial concerns
in Bombay and Calcutta and by the Central Government in Bombay to the
members of the subordinate staff, it ultimately decided to retain the wage
scales of the subordinate staff awarded by the Sastry Tribunal but increased
the dearness allowance payable by A, B and C Class banks in Areas I, II and
III. As regards the subordinate staff of D Class banks, the scales of pay and
dearness allowance given by the Sastry Tribunal were allowed to remain in
operation for five years from 1st April 1954 after which period the scales of
the C Class banks were to be applicable to them.
5.4. The Government modified the decision of the Labour Appellate Tribunal
by its Order No. S.R.O. 2732, dated 24th August 1954, and Class III area

98

99

end of five years from 1st April 1954 with a view to considering the structure
of wages and allowance for their employees. The Labour Appellate Tribunals
formula of adjustment of dearness allowance was revised, but in this respect
the Commission was keen to see that whatever alternate formula was devised
should have the merit of interfering as little as possible with the Labour Appellate
Tribunals wage structure and of ensuring results not significantly different
from those achieved by the Labour Appellate Tribunals formula. In the exercise
of the powers cornferred upon it by sub-section (5) of section 3 of the Industrial
Disputes (Banking Companies) Decision Act, 1955, the Central Government
has on 13th February 1960 made an adjustment in the dearness allowance
formula.

9191EB9236
III

-----

-----

Rs. 66369485510061127
14081649182EB9227

IV

-----

-----

Rs. 57369485510061127
1408156EB81649200
Class C Banks (Including C-2)

-----

-----

Rs. 694855100611271408
1649191EB9236

II

-----

-----

Rs. 63369485510061127
14081649173EB9218

III

-----

-----

Rs. 60369485510061127
1408164EB9209

IV

-----

-----

Rs. 54369485510061127
1408148EB81649191

The present wage scales and dearness allowance in the banking industry
are, therefore, the result of (a) the Sastry Award, (b) the modifications made
in the Sastry Award by the Labour Appellate Tribunals decision, (c) the
modifications made by the Government modification Order No. SRO-2732
dated 24th August 1954 (d) the part restoration of the Labour Appellate
Tribunals decision after the incorporation of the recommendations of the
Bank Award Commission in the Industrial Disputes (Banking Companies)
Decision Act, 1955 (e) the further restoration of the Labour Appellate Tribunals
decision in respect of the banks in the State which is now known as Kerla
State by reason of the recommendations of the Travancore-Cochin Banking
Enquiry Commission whose recommendations were incorporated in the
Industrial Disputes (Banking Companies) Decision Amendment Act, 1957
and (f) the modification made by the Government in the dearness allowance
adjustment formula on 13th February I960. The wage scales and the scheme
of dearness allowance which have thus emerged are given below :

Area
I

Area
I

-----

-----

Rs. 573694855100611271408156EB81649200

II

-----

-----

Rs. 543694855100611271408148EB81649191

-----

Rs. 51369485510061127-

BE

AI

CLERICAL STAFF

III & IV

140EB81649182
SUBORDINATE STAFF

Class 'A' Banks

Area
I

-----

-----

Rs. 8551006112714081649
227EB92451026515280

II

-----

-----

Rs. 774855100611271408
1649209EB924510255

III

-----

-----

Rs. 734855100611271408164
9200EB9245

IV

-----

-----

Rs. 66369485510061127140
81649182EB9227

Class A Banks
Area
I
----II
III & IV

---------

-----

-----

Rs. 774855100611271408
1649209EB924510255

II

-----

-----

Rs. 69495100611271408164

100

Rs. 40254170272
Rs. 36254169
Rs. 34254168
Class B Banks

Area
I
----II
----III & IV

-------------

Class B Banks
Area

Claas D Banks

Rs. 36254169
Rs. 34254168
Rs. 32254167
Class C Banks (including C-2)

Area
I
----II
----III & IV

-------------

Rs. 34254168
Rs. 32254167
Rs. 30254166

101

Class D Banks
Area
I
----II
----III & IV -----

-------------

If the average all-India cost of living index for any quarter after the 31st
March, 1959 should rise or fall by more than five points as compared to 144
(1944 = 100), the dearness allowance payable for the succeeding quarter
shall be raised or lowered, in the case of clerical staff by one-fourteenth, and
in the case of subordinate staff by one-twentieth, of the dearness allowance
admissible at the index level of 144 for each variation of five points.

Rs. 32254167
Rs. 30254166
Rs. 28254165

5.6 The Scheme of dearness allowance in the banking industry is as

under:

Explanation : quarter means the period of three months ending on

the last day of March, June, September or December.

DEARNESS ALLOWANCE
Clerical Staff
(a) For A, B and C-l Class of banks
Maximum

Rs. 50

-----

First Slab of Rs. 100

Second Slab of Rs. 100
Thereafter

-------------

-------------

50%
40%
35%

Area II

Rs. 45

-----

First Slab of Rs. 100

Second Slab of Rs. 100
Thereafter

---------

---------

45%
35%
30%

Area III

Rs. 40

-----

First Slab of Rs. 100

Second Slab of Rs. 100
Thereafter

-------------

-------------

40%
30%
25%

Area IV

Rs. 25

-----

33-1/3% of pay (basic pay, special

allowance and officiating allowance)
with a maximum of Rs. 40.
Rate

Area I
Area II
Areas III and IV

33-1/3%

AI

(b) For C-2 and D Class of Banks

BE

Area I

Minimum
Rs.
35
30
25

Maximum
Rs.
70
60
40

Subordinate Staff

For A, B, C-1, C-2 and D Class of Banks,

A Class Banks
B Class Banks
C-1 Class Banks
C-2 Class Banks
D Class Banks

Minimum

Area I
Rs.

Area II
Rs.

Area III
Rs.

Area IV
Rs.

42/50
40/37/50
15/13/-

40/37/50
35/12/12/-

37/50
35/32/50
10/10/-

25/20/10/10/10/-

Dearness Allowance Adjustment Formula.

102

5.7. The All India Bank Employees Association has made demands for
higher wage scales etc., on the basis that during the period of operation of
the aforesaid scales of wages and dearness allowance, radical changes have,
taken place. It has, referred to (1) important changes in the national economy,
(2) the fast deterioration in the living conditions, and (3) the change in the
wage concept. It has pointed out that a clerk in a D Class bank in the first
year of his service (working capital upto one crore) in class I area (CalcuttaBombay) draws at the cost of living index figure of 170(1944 = 100) Rs.
112.50 per month as against a member of the subordinate staff similarly
situated who draws Rs. 56/- per month. In Class IV area the respective
amounts drawn are Rs. 86.25 and Rs. 40.50 per month. It is urged that a
good number of the bank employees in different parts of the country were
drawing much less than their counterparts working in any comparable
concerns in those parts. The Association further states that the wage structure
applicable to banking industry at present was determined on a basis which
has changed. It has submitted that the entire economy situation in the country
has undergone a radical change that two successful Five Year Plans had
been launched and executed; that the industrial potential had gone up; that
the prices were soaring, particularly of the foodstuffs and other consumer
goods; that there was a sharp decline in the purchasing power of the common
man; that the living conditions of today stood no comparison with those of
the earlier period that the norms of a need based wage stood crystalised as
a result of the resolution passed by the 15th Tripartite Labour Conference;
that the wages fixed in the year 1953 were wholly out of date and unreal and
that an immediate upward revision of the wage structure of bank employees
in the light of the changed circumstances had become necessary.

5.8. In connection with principles and basis of wage fixation the

Association has relied upon the expected increase in the national income by
25 per cent by the end of the Second Five Year Plan, the unanimous resolution
of the Lok Sabha towards the end of 1954 for the establishment of a Socialistic
Pattern of Society, the views of the Planning Commission, the directive
principles in the Constitution and the concept of minimum wage and fair
wage as given by the Committee on Fair Wages. The Association has
submitted that in order to ascertain the requirements of a worker for the
purpose of wage fixation, it is imperative to take a particular cost of living
figure as the basis of calculation which should be such that below it the cost

103

of living is not expected to go down in the foreseeable future, and that the
basic wage should represent as large a part of the total emoluments as
possible. The Association has submitted that the all India working class
consumer price index number 105 for the year 1956 in the series 1949 = 100
should be taken as the base. It considers the norms laid down by the 15th
Labour Conference as inadequate. According to the Association even on the
footing of these norms a minimum of Rs. 140/- was payable to any bank
workman in any part of the country on the 1956 average prices at the working
class consumer price index No. 105 (1949=100). Applying the 80 per
cent co-efficient to Rs. 140/-, the Association contends that a middle
class employee will need Rs. 252/- for the satisfaction of his minimum needs,
and that the minimum wage payable to a clerk in any bank in any part of the
country at the working class consumer price index number of 105 (1949-100)
would be Rs. 252/-.

5.11. In the Statement of claim filed by the State Bank of India Staff
Union, Andhra Pradesh, Vijayawada, it is pointed out that in April 1950 the
Prime Minister had made a statement in the Parliament to the effect that
Government was committed to the principles of fair wages as recommended
by the Fair Wages Committee. It has pleaded for the fixation of a minimum
wage on the basis of pre-war prices because as stated by it prices have been
fluctuating during and after the war, with the result that it was not easy to get
reliable figures for ascertaining the cost of the minimum requirements of
workmen and that the more, reliable figures of prices of food, clothing, rent,
etc., before the war would be a better basis for calculation of the minimum
wage. According to the union the resolution of the 15th Indian Labour
Conference was a compromise where the Labour was made to sacrifice heavily
for the sake of unanimity and the only benefit conferred was that in the future
wage fixation, workers would not have to cover the whole ground once again
but to start with the guaranted minimum, though the minimum was very law
and unsatisfactory in several ways. The union has however calculated the
minimum needs of workmen on the basis of the formula laid down by the
15th Labour Conference taking the consumer price index number 360 in
1939 = 100 series, and has arrived at the minimum wage of Rs. 127.87 per
mensem but has claimed a minimum wage of Rs. 125/- for the lowest paid
employee in the State Bank of India. Applying the 1.80 co-efficient it has
demanded a minimum of Rs. 220/- for a clerk in The State Bank. The All
India State Bank of India State Federation has closely followed the logic and
conclusions of the State Bank of India Staff Union, Andhra Pradesh. The
State Bank of Patiala (All Cadres) Employees Association has pleaded that
since this bank has been re-constituted as a subsidiary of the Stale Bank of
India, it should be completely merged with the State Bank of India ,or in the
alternative pay scales and service conditions and other benefits enjoyed by
the employees of the State Bank of India should be enforced also for the
employees of the State Bank of Patiala.

AI

BE

(1) The banking industry as a whole has immensely prospered and

tremendously expanded.
(2) Cost of living has substantially gone up throughout India.
(3) National income under the First and the Second Five Year Plans
has considerably increased.
(4) Prevailing rates of wages in other industries have also considerably
gone up during the last five years due to settlement and awards.
(5) Unanimously agreed norms of minimum subsistence wage have
been evolved at the 15th Indian Labour Conference and the Central
Wage Boards have been appointed to fix the need based wage
subject to the capacity of the industry, some of which have made
their recommendations which are being implemented.
(6) The wage scales according to the modified Sastry Award were not
at all adequate to ensure minimum subsistence wage for the clerical
and subordinate staff, having regard to the high cost of living prevailing
all over the country.
(7) Not only the rise in the cost of living should be fully neutralised but
there should be improvement in the real standard of living of the
employees.
(8) The nature of work in the banking industry requires greater skill,
accuracy, responsibility and hard labour than that required in other
industries.

5.10. Some other unions and associations of employees have also

advanced similar arguments in justification of their demand for revised and
higher scales of pay for the bank employees.

5.9. The All India Bank Employees Federation holds the view that
circumstances have materially changed since the modified Sastry Award
came into force and it advances the following grounds in support of its
contention :

employees is 80 per cent more than that of the working class employee, and
having regard to other relevant factors and the revision of pay and allowances
of the officers staff in the banks during the last five years, a revision of scales
of pay is fully justified.

The Federation states that on the basis of the norms laid down at the
15th Indian Labour Conference, the national minimum subsistence wage for
the lowest paid unskilled worker comes to about Rs.150/- per month, and
taking the generally accepted view that the cost of living of the middle class

104

5.12. The scales of pay demanded by the various Associations and

Unions of bank employees for the various classes of banks in respect of the
clerical staff and subordinate staff are set out in the table below :
S. Name of the
Wage Scales demanded for various Classes of banks
No. EmployeesAsso(Clerks and Subordinates),
ciation or Union

105

A
1.

All India Bank

Employees
Association.

Clerks
Rs. 22010240
12 1/229015
365-20-42525
-550
Rs. 125-5155
-6-185-7192
-8-232-9250

Rs. 19010240
121/2i29015
365-20425-25
-475.

Subordinate
Rs. 112-4-120
-5-155-6-185
-7-192-8-224

4.

Rs. 17010-240
121/2-29015
36520425.

Subordinate
Rs.75-4-95-120-6150

Rs. 100-4-120
-5-155-6-185
-7-192-8-200

5.

Clerks
All India Bank
Employees
Federation.

Rs. 1501025015400-20500

Clerks
All India State Rs. 22010240
Bank of India
121/229015365Staff Federation 20-425-25-550
Sub-Accountants and Head Cashiers.
Rs. 500-20-700
Subordinate
Rs. 125-5155-6185-7-1928
2329250

Rs. 105-5-160-7-230

The Vadodra
Rajya Bank
Nokar Sangh.

Rs. 70 -3-85-4-105
130-6160

AI

3.

6.

BE

Subordinates
Rs. 75-390-4-11051355165

Subordinates
Rs. 65-3-80-4-1005125

Rs.125-10-22515375-20-475.

Stenographers and Steno Typists.

Rs. 200-1535030Rs. 175-1532520
45025550
425-25-525
Drivers
Rs. 1105-135-6-165
8265.

Clerks
State Bank of
Rs.150-10-200-15-350
Patiala (All Cadres)
Employees
Association.

2.

The State Bank

Clerks
of India Staff
Rs. 1601028015400
Association
(Delhi Circle).

Drivers
Rs. 100-3-115-4135-5-160
Clerks
Rs. 150-10-200 Rs.120-10-200
1227520
-12-275-2037525500
375-25-425

Rs. 10010200
-12-275-20375

Subordinates
Rs. 8551006
112-7-140-8164-9-245

Rs. 73-4855
100-6-1127
140-8164-9-218

Rs. 77-4855
100-6-112-7
140-8-164-9-227
Clerks

7.

The Indian
Rs. 225-10-275Overseas Bank 15-350-20-550
Employees
Union, Madras.
Subordinates
Rs. 1255-165-6-183
8215

Other categories (Drivers,

Compositors, Distributors
Pressmen).
Rs. 1755-205-623572428
2829300

Clerks
8.

The Cochin
Commercial
Bank
Employees
Association.

Rs. 705-906
11471428
1749210

Subordinates
Rs. 35-2-651-70

106

107

9.

5.13 The State Bank of India Staff Union, Vijayawada, The State Bank of
India Employees Association (Bengal Circle), The All India Bank of Baroda
Employees Federation, the South Gujarat Bank of Baroda Employees Union,
have all demanded wage scales for the members of the clerical staff and the
subordinate staff which are the same as those demanded by the All India
Bank Employees Association for A Class banks.

Clerks
Rs. 15010250- Rs. 125-10-225
15-400
15-375

The Central
Bank of India
Employees
Association,
Patna.

10. The Central Bank

of India Employees
Association,
Muzaffarpur.
Subordinates
Rs. 75390411051356
165

Rs. 703854
10551306160

11. Bihar Provincial

Central Bank of
India Employees
Association,
Muzaffarpur.

Subordinates
Rs. 753-904110-4-135-6-165

Rs. 125-5-1556-185-7-192-8
-232-9-250

5.15. The All India Bank Employees Association has stated that by
providing a minimum of Rs. 220/- in the pay-scale in A Class banks it did not
mean that the junior-most clerk in A group of banks would be getting a fair
wage on the 1956 price level and that it was not even half the fair wage.

Rs.170-10-240
-12 -290-15365-20425

AI

Clerks
13. The Allahabad Rs.220-10-260
Rs.190-10-260
Bank Emplo1535020
-15-335-20yees, Union,
45025-550
435-25-485
Calcutta.

BE

Clerks
12. The Central
Rs. 15010250
Bank of India, 15400
Employees Association,
Amritsar.

Subordinates
Rs.112-4-120
-51556-185
7-192-8-224

Clerks
14. Employees
Rs. 17010240
Association of 12-29015
the Union Bank 365-20-425
of Bijapur and
Sholapur.
Subordinates
Rs. 10041205
155-6185-71928-200.

108

5.14. In the above table the expression A class, B class and C class will
have different meanings attached to them having regard to the demands made
by various unions and associations of workmen. Most of the all-India Unions
have indicated that they have framed the pay scales demanded by them on
the basis of the norms laid down by the 15th Indian Labour Conference
Resolution. As has been indicated earlier, the All India Bank Employees
Association has given the indication that its pay scales are in relation to the
base year 1956 when the average all-India index number was 105 in 1949=100
series. Some unions of workmen in the State Bank of India have framed their
demands on the all-India consumer price index No. 360 with base 1939 =
100. Several unions have not mentioned the consumer price index level at
which they have framed their pay scales. A large number of unions have
however adopted the All India Bank Employees Associations scales.

Rs.100-4-1205-155-6-1857-192-8-200

5.16. The banks have, in general, denied the allegations made by the
employees in their various statements of claim and have refuted the
contentions raised by them in favour of a revision in the existing wage structure.
It is denied that any radical changes have taken place. It is their contention
that the present basic pay and dearness allowance in the banking industry
have been laid down after elaborate enquiry and after taking into consideration
all factors and circumstances appropriate for wage fixation, including the
principles laid down by the Fair Wages Committee. A reference has been
made to the observations of the Bank Award Commission in paragraph 49 of
its report where the Commission has observed that the wages given to
employees in A class banks border on the higher level of a fair wage and
those given to employees in B class banks border on the lower level of a fair
wage. It is stated that if the principles laid down by the Fair Wages Committee
were taken into consideration, it would be clear that the present rates of
emoluments of the bank employees were fair and even generous. It is pleaded
that the demand for wage increase should be Examined, bearing in mind,
inter alia, the economic policy and the economic situation in the country.
5.17. In regard to the understanding reached at the 15th Tripartite Labour
Conference at which the norms of the need based wage were laid down
some of the banks point out that the resolution related to industrial workmen,
that the resolution did not apply to banks, that no representatives of banks

109

shift in the pattern of national income distribution and that the need of the
country today was the ploughing back of a substantial portion of the national
income into the various projects for the development of the country. It is
submitted that in case a consolidation of dearness allowance with the basic
pay is envisaged, its overall effect on provident fund, gratuity, pension etc.,
must be considered before arriving at any conclusion.
5.18. On behalf of the State Bank of India and its Subsidiaries, the
peculiar position and the special features of these banks and their functions
and obligations are required to be kept in view. It is urged that these banks
are now in the public sector and that the emoluments of their employees
should not be out of step with the emoluments paid to other employees in the
public sector.

5.19. On behalf of the State Bank of Patiala in reply to the statement of

claim of the State Bank of Patiala (All Cadres) Employees Association the
peculiar position of the existing wage structure has been explained in the
following manner:

AI

BE

were present, that the problems of banks were not examined by Conference
and that what was sought to be achieved by the resolution of that conference
was an ideal which was impossible of attainment within of reasonable period
of time. The correctness of the various components of the resolution which
deal with consumption units and minimum requirements of food, clothing,
etc. has been disputed. The use of 80 per cent coefficient while fixing the
wage scales of the clerical staff from the wage scales of the subordinate
staff, is also not accepted. The banks by and large have pleaded their inability
to pay wages according to the estimates of need based wage made by the
employees. The Exchange Banks and the State Bank of India do not plead
incapacity to pay reasonable wages but they deny that they can afford to pay
or could reasonably be called upon to pay the need based wage of the order
calculated by the workmen. The correctness and soundness or relevance of
taking the year 1956 as the base year for the fixation of wage scales has not
been accepted. It is urged that the mere fact that the Second Five Year Plan
was undertaken in 1956 is not a ground for taking the year 1956 as the base
year. It is denied that there was no chance of the cost of living going down
below the level existing in the year 1956. On the other hand, it is considered
that in the near future projects undertaken during the First and the Second
Five Year Plans should begin to yield results with every possibility of the
prices being kept under control. The contention of the employees that there
has been a tremendous rise in the cost of living resulting in sharp decline in
the purchasing power of the common man is not accepted. It is stated that
the average rise of five points a year during the last three years in the all India
working class consumer price index was due to the failure of crops and easy
money conditions, and that for the removal of these Conditions the Government
was taking steps. The other reasons given on account of which some of the
bankers consider that the prices of essential commodities will be coming
under control are that with the recent agreements made by India with foreign
Governments, more and more food would find its way into the country on
easy payment basis, that as a result of the emphasis on improvement in
agriculture in the Third Five Year Plan food production will increase, bringing
down the food prices and that more consumer goods will be rolled out on
account of the investment in heavy industries during the First and the Second
Five Year Plans. Some of the banks recognise the necessity of taking a
particular cost of living figures for the purpose of wage fixation, but they
consider that the said figure will always remain a matter of conjecture as it
was difficult to determine the level below which the cost of living was not
expected to fall in the near future. It is submitted that in demanding a wage
fixation at the index No. of 105 the intention of the employees was to have as
large a part of the dearness allowance consolidated in the basic pay as
possible. In connection with the contention of the employees that the national
income has increased and therefore they should have a share of it, some of
the banks urge that the question of augmenting of national income is quite
distinct from the question of distribution of national income, that there is a

110

With reference to the resume of service conditions contained in the

Employees Associations Statement of claim, it is submitted that
prior to 1st April 1960 the Bank of Patiala (the predecessor of the
present bank) was run as Department of the State Government and
was neither a banking company nor a banking corporation and as
such, was not covered by any Reference or Award, including the
Sastry Award. The banks staff was governed by the State Regulations
upto 1954, when Staff Rules were framed under the Bank of Patiala
Regulation and Management Order, 1954. The pay scales and other
benefits for the employees of the Bank were initially laid down more
or less on the same basis as in the case of the employees of the
State Government working in the Secretariat. Revision of grades
were, however, made in 1957 and 1958 and these were not in any
manner based on any revision that may have been effected by the
State Government in the pay scales of their employees. The
Employees Associations contention that the grades and service
conditions of employees prior to 31st March 1960 were at par with
employees of the State Government is therefore, not correct. In 1957,
on the employees of the Bank putting forth demands for revision of
their pay scales etc., the Banks Board of Directors offered new pay
scales etc. generally on the lines of the Sastry Award, as modified,
to the members of the clerical and subordinate staff, giving an option
to such members of the staff as wanted to retain the old grades etc.,
do so. These revised grades were not implemented in the case of
the clerical staff as the vast majority of that staff opted for the old
grades of pay etc.

5.20. It is submitted that when bringing this bank within the ambit of the

111

common award for the banking industry :

(a) there should be no retrospective effect given to any award or pay
scales or allowances or other benefits and
(b) the banks workmen should be given the option to choose between
the new pay scales, allowances, benefits etc., and the existing
pay scales, allowances, benefits, etc., in their totality and not on
the basis of picking and choosing the best from each set.

5.23. The Northern India Banks Association has pleaded that the Sastry
Tribunal was of the view that the paying capacity of D Class banks, most of
whom had migrated following the partition of the country from the territories
now forming the part of West Pakistan, was very low and that the same was
the reason why the scales of pay fixed by the Sastry Award for such class of
banks were upheld by the Labour Appellate Tribunal decision, by the
Government modification order and finally by the Bank Award Commission.
The Association has expressed itself in favour of taking the base year of
1949 = 100 The Association considers that the existing minimum and
maximum of the scales are fair and reasonable, but in case the Tribunal
found it necessary to change the scales of pay the Association has proposed
the following scales of pay applicable to clerical and subordinate staff in C
class banks

AI

BE

As regards the employees associations demand that the bank should be

entirely merged with the State Bank of India, or that in the alternative, pay
scales and service conditions applicable to the workmen employed in the
State Bank of India should be extended to the employees of the bank, It is
submitted that the constitution of the Subsidiary banks is under an Act of
Parliament, namely, the State Bank of India (Subsidiary Banks) Act, I959,
that under it each Subsidiary bank was a separate entity although controlled
by the State Bank, the Reserve Bank and the Central Government and that
Subsidiary banks were expected to stand on their own feet. It is stated that
the State Bank of India assisted them by way of subsidies only for the purpose
of meeting the cost of any specific programme of development undertaken
with the approval of the State Bank of India and such losses or expenditure
as might be approved by the State Bank of India with the consent of the
Reserve Bank, it being one of the objectives of constituting Subsidiary banks
to make possible the extension of banking and credit facilities to rural and
semi-urban areas in former part B States and to provide finance for small
scale industries and co-operatives. It is further stated that even with the
present pay structure it was uneconomical for the Subsdiary banks to open
branches and operate in small areas where no avenues of making profit were
available but that the same had to be done by reason of statutory obligations
and in the larger national interests. It is submitted that if the pay structure
etc., of a Class A bank was imposed on the State Bank of Patiala or any
other Subsidiary bank, they would not be in a position to carry out their
obligations without being a burden on the public exchequer.

to the Sastry Award as modified. In connection with the principles and basis
of wage fixation on which the workmen have placed reliance in connection
with revision of their wage scales, the Association submits that they can
only be applied in advanced countries like the United Kingdom or the United
States of America where the per capita national income is high and that in an
under-developed country like India where the standard of living is much lower
the level of wages will have to depend upon the capacity of the industry to
pay and should have relation to the level of wages in other industries depending
upon the area of operation and other relevant matters. The Association is
against the merger of a part of the dearness allowance with the basic wage
as it considers that the totality of the burden would become heavy.

5.21. The Kerala Bankers Association has invited attention to the peculiar
feature of Kerala which is advancing money on landed property. It has also
invited attention to the majority report of the non-satutory committee appointed
by the Government of Kerala to go into the question of fixation of salaries and
allowances of employees of the non-award banks, consisting of four
representatives of the Bankers Association and four representatives of the
Kerala Employees Union under the Chairmanship of Shri K. T. Ninan Koshi.
This committee has by a majority made recommendations about the salaries
and other allowances of employees in the non-award banks.

5.22. The Travancore-Cochin Bankers Association, Kottayam, has

pointed out that its four member banks (1) Palai Central Bank, (2) Travancore
Forward Bank, (3) Indian Insurance and Banking Corporation Limited and (4)
South Indian Bank Limited were making payments to employees according

112

Area I
Area II
Area III
Area IV.

Clerks
Rs.. 705105614771968252 EB9315.
Rs. 655100614271918247EB9310.
Rs. 60595613771868242EB9305.
Rs. 55590613271818237EB9300
Peons

Areas I to IV Rs. 522102.

5.24. The National Bank of Lahore which is a member bank of the Northern
India Banks Association has by a separate statement pleaded that the wage
structure should be such as to be within the capacity of the industry to bear
in the light not only of its present position but also its future possibilities and
responsibilities. It has pointed out that the National Bank of Lahore, is paying
(a) profit basic wage to its employees, (b) a dearness allowance much above
the one fixed by the Awards which are enforced,(c)Provident Fund benefit
much above the one fixed by the award, (d) gratuity and bonus, (e) medical
aid and it is pleaded that there should be no change in the wage structure of
its employees. The bank has expressed itself against the merger of dearness
allowance with basic wage. The bank is not prepared to accept the view that
there is no chance of the cost of living going down below the level that existed

113

in the year 1956 and considers that the whole economy of the country was
being so worked and planned that the cost of living should come down steeply
to the level which existed in pre-war days as under the Third Five Year Plan,
complete self-sufficiency in food and cloth is envisaged, free compulsory
education at certain standards has been promised, deficit financing has been
abandoned as a method of future finance, complete check on inflation is in
view, and heavy taxes are in the offing.

months notice by either party, that such notice had not been served by
workmen on the bank and that the said agreement was legally binding on the
workmen. On merits, the bank opposes the demand of the employees about
the pay scales and considers that the pay scales and dearness allowance
under the above mentioned agreement were adequate and no further increase
or improvement in them was called for either from the point of view of the
capacity of the bank to pay or from the point of view of the needs of the
workmen.

For Clerical Staff

Rs. 51-3-69-4-85-5-100-6-112-7-140-8-164-9-182.
Rs. 54-3-69-4-85-5-100-6-112-7-140-8-164-9-191.
Rs. 57-3-69-4-85-5-100-6-112-7-140-8-164-9-200.

Area 5 and 4 :
Area 3 and 2 :
Area 1 :

For Subordinate Staff

Rs. 28-2-54-1-65.
Rs. 30-2-54-1-66.
Rs. 32-2-54-1-67.

BE

Areas 5 and 4 :
Areas 3 and 2 :
Area 1 :

AI

5.26. The Gadodia Bank, while referring to the change of circumstances

pointed out by the workmen for a revision in their wage scales, states that
the Sastry Award as modified provides for a compact link for the present and
future adjustment in case of changes that take place and that the wage
scales are wedded to the cost of living index and as and when there is any
rise in cost of living index, the employees are being compensated within the
frame work of the recommendations. Another point which this bank has
raised is that the standard of recruitment of clerks and other employees is
different in A Class banks and D Class banks. The bank is against the merger
of dearness allowance with the basic wage. According to the bank, a minimum
wage under the Minimum Wages Act is the accepted standard by which the
wage structure could be built. The Jaya Laxmi Bank does not consider the
fixation of a uniform minimum wage for all areas based on living index figures
obtaining in big cities as proper. The wage scales demanded by workmen
have been considered as beyond the capacity of small banks and a plea has
been made for the retention of the present wage structure. The Miraj State
Bank has taken the point of jurisdiction on the ground that the bank is still
governed by the Bombay Industrial Relations Act, 1946, that the agreement
reached in conciliation proceedings on 25th June, 1952, under the said Act
was applicable to all branches of the bank, that under section 116 of the said
Act an agreement or settlement which has been entered into and registered
remained in force and binding on the parties until it was terminated by two

114

5.27. The scheme of basic wages and the scheme of dearness allowance
in force at present are the result of the working of many minds at various
levels and provide a pattern which is unique. The wage structure differs
according to the class of banks and according to the area which the banking
establishments are situate. At the all-India working class consumer price
index No. 123 in the series 1949 = 100 an employee in the clerical grade in
the first year of his service in Area I is paid by A Class banks Rs. 85 as basic
pay and Rs. 67.85 as dearness allowance, by B Class banks Rs. 77 as
basic pay and Rs. 67.85 as dearness allowance, by C-l Class banks Rs. 69
as basic pay and Rs. 67.85 as dearness allowance, by C-2 Class banks Rs.
69 as basic pay and Rs. 47.50 as dearness allowance and by D Class banks
Rs. 57 as basic pay and Rs. 47.50 as dearness allowance. As regards a
member of the subordinate staff in the first year of his service, the picture is
somewhat different. In Area I and at the same index figure of 123, A Class
banks pay Rs. 40 as basic pay and Rs. 53.13 as dearness allowance, B
Class banks pay Rs. 36 as basic pay and Rs. 50 as dearness allowance, Cl Class banks pay Rs. 34 as basic pay and Rs. 46.87 as dearness allowance,
C-2 Class banks pay Rs. 34 as basic pay and Rs. 18.75 as dearness allowance
and D Class banks pay Rs. 32 as basic pay and Rs. 16.25 as dearness
allowance.

5.25. The Bharatha Lakshmi Bank admits the principle of pay according
to capacity and suggests the creation of 5 areas on the basis of population,
the respective figure being (1) 10 lacs and over, (2) more than 5 lacs but less
than 10 lacs, (3) one lac and above but less than 5 lacs, (4) 30,000 and above
but less 1 lac and (5) less than 30,000. The scales of pay for the five areas in
respect of Class D banks with working funds of less than rupees one crore as
suggested by the bank are as under :

5.28. In Area II, at the same index number of 123 in the series 1949=100
a member of the Clerical staff in the first year of his service is paid by A Class
banks a basic pay of Rs. 77 and dearness allowance of Rs. 61.05, by B
Class banks a basic pay of Rs. 69 and dearness allowance of Rs. 61.05, by
C-l Class banks a basic pay of Rs. 63 and dearness allowance of Rs. 61.05,
by C-2 Class banks a basic pay of Rs. 63 and dearness allowance of Rs.
40.70 and by D Class banks a basic pay of Rs. 54 and dearness allowance
of Rs. 40.70.
5.29. In Area II a member of the subordinate staff in the First year of his
service is paid at the same index No. 123 by A Class banks a basic pay of
Rs. 36 and dearness allowance of Rs. 50, by B Class banks a basic pay of
Rs. 34 and dearness allowance of Rs. 46.87, by C-l Class banks a basic pay
of Rs. 32 and dearness allowance of Rs. 43.75, by C-2 Class banks a basic
pay of Rs. 32 and dearness allowance of Rs. 15 and by D Class banks a
basic pay of Rs. 30 and dearness allowance of Rs. 15.

115

Area IV

57.00

42.50

BE

5.31. In Area IV at the aforementioned index figure a member of the

clerical staff in the first year of his service gets Rs. 66 as basic pay and Rs.
33.90 as dearness allowance in A Class banks, Rs. 57 as basic pay and Rs.
33.90 as dearness allowance in B Class banks, Rs. 54 as basic pay and Rs.
33.90 as dearness allowance both in C-l Class banks as well as in C-2 Class
banks and Rs. 51 as basic pay and Rs. 33.90 as dearness allowance in D
Class banks. A member of the subordinate staff in this Area under similar
circumstances is paid Rs. 34 as basic pay and Rs. 31.25 as dearness
allowance by A Class banks, Rs. 32 as basic pay and Rs. 25 as dearness
allowance by B Class banks, Rs. 30 as basic pay and Rs. 12.50 as dearness
allowance by both C-l and C-2 Class banks and Rs. 28 as basic pay and Rs.
12.50 as dearness allowance by D Class banks.

65.25

AI

5.32. The total emoluments payable under the Sastry Award as modified
at the all-India working class consumer price index No. 123 base 1949 =100,
to all members of the clerical and subordinate staff in the first year of service
in various classes of banks and in various areas are as under :
Total emoluments in various Classes of banks
Areas
A Class

Area I
Area II
Area III
Area IV

152.85
138.05
127.25
99.90

Area I
Area II
Area III

93.13
86.00
80.87

B Class

C Class
--------------------------------------------- D Class
C-l
C-2

Clerks
144.85
130.05
120.25
90.90
Subordinate
86.00
80.87
75.75

136.85
124.05
114.25
87.90

116.50
103.70
93.90
87.90

104.50
94.70
84.90
84.90

80.87
75.75
70.62

52.75
47.00
42.50

48.25
45.00
40.50

116

42.50

40.50

5.33. It will be seen from the above that the total emoluments (i.e. basic
wage plus dearness allowance) payable by A, B and C-l class of banks in
Area I, in Area II and in Area III are fairly correlated. The differences in the
amounts payable by D Class banks by C-l Class banks in Area I, Area II and
Area III are large. The differences in the amounts payable in Area IV and
payable in Area III by A, B, and C-l Classes of banks are also large. There is
a considerable gulf between the emoluments payable in Areas I, II and III by
C-l Class banks and by C-2 Class banks though all of them fall within one
common class regard being had to the working funds. Anomalous situations
arise when, banks get upgraded from Class D to Class C-l by reason of their
working funds touching or crossing, the limit of Rs 1crore for the requisite
period and when by reason of the increase in population or as a result of any
voluntary action of a bank, or as a result of any agreement or award, a place
in Area IV is upgraded to Area III. When a B Class bank gets upgraded and
becomes an A Class bank, the emoluments payable to the members of the
clerical staff in Area I in the first year of service increase from Rs. 144.85 to
Rs. 152.85, the percentage of increase being 5.52. When a C-l Class bank
gets upgraded to B Class, the emoluments of a similar employee increase
from Rs. 136.85 to Rs. 144.85 the percentage of increase being 5.84. When,
however, a D Class bank gets upgraded to C-l Class under the terms of the
Sastry Award as modified on its working funds reaching or crossing the limit
of one crore for the requisite period, on such upgradation a member of the
clerical staff in the first year of service who is drawing Rs. 104.50 will receive
Rs. 136.85, the percentage of the increase being 30.8. A C-2 Class bank
whose working funds might be very much more than those of such newly
upgraded bank will pay Rs. 116.50 only as against Rs. 136.85 payable by
such newly upgraded bank. On similar upgradation of a D Class bank to Cl Class the percentage of increase in the emoluments of a member of the
clerical staff in the first year of service in Areas II and III would be 30 and 34.5
respectively. As regards a member of the subordinate staff in the first year of
his service the percentages of such increase in Areas I, II and III on such
upgradation of a bank from Class D to Class C-l will be 67.6, 68 and 74
respectively as against only 6.3, 6.7 and 7.2 percentages of increase on
upgradation of a bank from Class C-l to Class B in Areas I, II and III respectively
and 8.3, 6.3 and 6.7 percentages of increase on upgradation of a bank from
Class B to Class A in Areas I, II and III respectively. When a place in Area IV
is upgraded to Area III, a C-l Class bank will have to give to an employee in
the clerical grade in the first year of his service an increase from Rs. 87.90 to
Rs. 114.25, a B Class bank would have to give an increase from Rs. 90.90 to
Rs. 120.25 and an A Class bank would have to give an increase from Rs.
99.90 to Rs. 127.25. When, however, a place in Area III is upgraded to Area
II or a place in Area II is upgraded to Area I the incidence of increase is very
much less. Similar anomalies will be found in respect of the emoluments

5.30. In Area III at the same index number a member of the clerical staff
in the first year of his service is paid by A Class banks a basic pay of Rs. 73
and dearness allowance of Rs. 54.25, by B Class banks a basic pay of Rs.
66 and dearness allowance of Rs. 54.25, by C-l Class banks a basic pay of
Rs. 60 and dearness allowance of Rs. 54.25, by C-2 Class banks a basic
pay of Rs. 60 and dearness allowance of Rs. 33.90 and by D Class banks a
basic pay of Rs. 51 and dearness allowance of Rs. 33.90. The wage picture
as regards the subordinate staff in Area III, at the same index number, is that
under similar circumstances A Class banks pay a basic pay of Rs. 34 and
dearness allowance of Rs. 46.87, B Class banks pay a basic pay of Rs. 32
and dearness allowance of Rs. 43.75, C-l Class banks pay a basic pay of
Rs. 30 and dearness allowance of Rs. 40.62, C-2 Class banks pay a basic
pay of Rs. 30 and dearness allowance of Rs. 12.50 and D Classes banks
pay a Basic pay of Rs. 28 and dearness allowance of Rs. 12.50.

117

payable to the members of the subordinate staff when a place in Area IV is

upgraded to Area III. Similar anomalies can be pointed out in respect of
employees who have put in various periods of service.

parties must make their own contracts. The Courts reach their limit of power
when they enforce contracts which the parties have made. An Industrial
Tribunal is not so fettered and may create new obligations or modify contracts
in the interest of industrial peace, to protect legitimate trade union activities
and to prevent unfair practice or victimisation. It has been so held by the
Supreme Court in Rohtas Industries Ltd. v. Brijnandan Pande and others,
1956 Supreme Court Report 800, 1956 (II) Labour Law Journal 444 at page
449. As observed by Ludwig Teller in Labour Disputes and Collective
Bargaining, Vol. I at page 536 :

5.34. Before I consider the various demands made on behalf of the

workmen and the submissions of the banks, I shall first consider the general
principles of wage fixation.
(ii) Principles of Wage Fixation

Industrial arbitration may involve the extension of an existing agreement,

or the making of a new one, or in general the creation of new obligations or
modifications of old ones, while commercial arbitration generally concerns
itself with interpretation of existing obligations and disputes relating to existing
agreements.

The Federal Court in the case of Western India Automobile Association

Ltd. v. Industrial Tribunal and others, 1949 Federal Court Report 321 at page
345, 1949 Labour Law Journal 245, has observed that the above statement
by Ludwig Teller was a true statement about the functions of an Industrial
Tribunal in Labour disputes. The relations between employers and employees
are no longer left to the free play of economic forces. The concept of social
and economic justice as embodied in the Directive Principles of State Policy
comes into play. The needs of the industry have to be harmonised with the
needs of the workmen and the dignity of the individuals. To secure a living
wage is the objective of State Policy. Before a living wage can be secured to
workmen various factors have to be considered. The industry concerned must
have the capacity to bear the burden of a living wage to workmen.

BE

5.35. This Tribunal has been constituted under the Industrial Disputes
Act, 1947. The preamble to the Act indicates that the said Act was enacted
to make provision for the investigation and settlement of industrial disputes,
and for certain other purposes appearing in the said Act. Under section 7B,
the Central Government is empowered to constitute one or more National
Industrial Tribunals for the adjudication of the industrial disputes which, in
the.opinion of the Central Government, involve questions of a national
importance or for the adjudication of industrial disputes which are of such a
nature that industrial establishments situated in more than one State are
likely to be interested in, or affected by, such disputes. In considering disputes
the adjudication whereof involves questions of a national importance it would
not be out of place to refer to the following words of the Preamble to the
Constitution of India which express the will of the people of India :
We, the People of India, having solemnly resolved............to secure
to all its citizens : Justice, social, economic and political; ............
Equality of status and of opportunity; and to promote among them all
Fraternity assuring the dignity of the individual..................... give to
ourselves this Constitution.

AI

By the Directive Principles of State Policy embodied in Article 43 of the

Constitution it is provided that the State shall endeavour to secure, by suitable
legislation or economic organisation or in any other way to all workers,
agricultural, industrial or otherwise, work, a living wage, conditions of work
ensuring a decent standard of life and full enjoyment of leisure and social and
cultural opportunities.

5.36. On 21st December 1954 the Lok Sabha adopted a resolution by

which the establishment of a socialistic pattern of society has been accepted
as the objective of State Policy with the consent and concurrence of all the
political parties in the country. The adjudication in respect of the matters
referred to the Tribunal has to be done in the background of the statement in
the Preamble to the Constitution, the Directive Principles of State Policy and
the resolution unanimously adopted by the Lok Sabha.
5.37. The jurisdiction of a National Industrial Tribunal in determining
matters which come before it is in certain respects wider than the jurisdiction
of an ordinary Court of law. An ordinary Court of law proceeds on the footing
that no power exists in the Courts to make contracts for persons and that the

118

5.38.Wages have been considered under three different heads :

(1) Living Wage,
(2) Fair Wage, and
(3) Minimum Wage.

These concepts have been fairly dealt with in the report of the Committee
on Fair Wages. A large part of its conclusions has been accepted by the
Supreme Court in the case of Express Newspapers (Private) Ltd. and another
v. The Union of India, 1959 Supreme Court Report 12, 1961(1) Labour Law
Journal 339. The most expressive definition of a living wage is that given by
Justice Higgins of the Australian Commonwealth Court of Conciliation in the
Harvester case. A living wage is defined by Justice Higgins as one appropriate
for the normal needs of the average employee, regarded as a human being
living in a civilised community. This cryptic pronouncement has been explained
by Justice Higgins by saying that a living wage must provide not merely for
absolute essentials such as food, shelter and clothing but for a condition of
frugal comfort estimated by current human standards.It must be a wage
sufficient to insure the workman food, shelter, clothing, frugal comfort, provision

119

for evil days, etc. as well as regard for the special skill of an artisan if he is
one. In a subsequent case he observed that treating marriage as the usual
fate of adult men, a wage which does not allow of the matrimonial condition
and the maintenance of about five persons in a home would not be treated as
a living wage In the Report of the Committee on Fair Wages it is stated in
paragraph 7 as under :

because their contents are elastic and they are bound to vary from
time to time and from country to country....................................
What is a subsistence wage in one country may appear to be much
below the subsistence level in another; the same is true about a fair
wage and a living wage; what is a fair wage in one country may be
treated as a living wage in another, whereas what may be regarded
as a living wage in one country may be no more than a fair wage in
another.

5.39. A reference may be made to the following observations of Mr.

Philip Snowden at pages 1 and 6 of The Living Wage in connection with the
concept of a living wage and the problem of converting the concept into
monetary terms :

AI

The amount of the living wage in money terms will vary as between
trade and trade, between locality and locality. But the.idea is that
every workman shall have a wage which will maintain him in the
highest state of industrial efficiency, which will enable him to provide
his family with all the material things which are needed for their health
and physical well being, enough to enable him to qualify to discharge
his duties as a citizen.

The Supreme Court in the case of Standard Vaccum Refining Company of

India Ltd., v. Its workmen (including clerical staff) and another (Petroleum
Refineries Employees Sabha) reported in 1961(1) Labour Law Journal page
227 at page 234 has observed that it is in the aforesaid broad and idealistic
sense that a reference has been made in Article 43 of the Constitution to the
living wage. The concept of a Living Wage is not a static concept. In
connection with the concept of basic minimum wage, fair wage and living
wage, the Supreme Court has in the aforesaid case observed at page 233 as
under:
the concepts of these wages cannot be described in definite words

120

5.40. In connection with the concept of a minimum wage, it has been

observed by the Committee on Fair Wages that a minimum wage must provide
not merely for the bare sustenance of life but for the preservation of the
efficiency of the worker by providing for some measure of education, medical
requirements and amenities. It has been further observed that the minimun
wage must be paid irrespective of the capacity of the industry to pay the
same. In connection with the concept of minimum wage a reference is
necessary to the resolution passed at the 15th Labour Conference held at
New Delhi on 11th and 12th July, 1957 wherein certain norms have been laid
down. The same have been considered at some length in another part of this
award.

BE

It may be possible to give a precise or satisfactory definition of a

living wage, but it expresses an idea, a belief, a conviction, a demand.
The idea of a living wage seems to come from the fountain of justice
which no man has ever seen, which no man has ever explained, but
which we all know is an instinct divinely implanted in the human
heart. A living wage is something far greater than the figures of a
wage schedule. It is at the same time a condemnation of unmerited
and unnecessary poverty and a demand for some measure of justice.

It has further observed at page 239 that under the living wage a workman
would be entitled to claim an optimum diet as prescribed by Dr. Aykroyd.
Similarly the requirements as to clothing and residence which have been
recognised in the tripartite resolution, though appropriate in reference to a
need based minimum wage would have to be widened in relation to a living
wage. Besides, in determining the money value of the living wage it would be
necessary to take into account the requirements of good education for
children, some amusement, and some expenditure for self development.

there is general agreement that the living wage should enable the
male earner to provide for himself and his family not merely the bare
essential of food, clothing and shelter but a measure of frugal comfort
including education for the children, protection against ill-health,
requirements of essential social needs, and a measure of insurance
against the more important misfortunes including old age.

5.41. In connection with the fair wage, it is observed by the Committee

on Fair Wages that there was complete unanimity of opinion that the fair
wage should on no account be less than the minimum wage. The Supreme
Court in the case of the Express Newspapers (Private) Ltd. has observed at
page 364 that the fair wage is a mean between the living wage and the
minimum wage. As observed by the Committee on Fair Wages while the
lower limit of the fair wage must obviously be the minimum wage, the upper
limit is equally set by what may broadly be called capacity of industry to pay.
Between these two limits the actual wages will depend on :
(1)
(2)
(3)
(4)

the productivity of labour;

the prevailing rates of wages in the same or similar occupations in
the same or neighbouring localities;
the level of the national income and its distribution; and
the place of the industry in the economy of the country.

According to the Report of the Committee on Fair Wages in determining

the capacity of an industry to pay, it would be wrong to take the capacity of

121

a particular unit or the capacity of all industries in the country. The relevant
criterion should be the capacity of a particular industry in a specified region
to be ascertained by taking a fair cross section of that industry. The Supreme
Court in the case of the Express Newspapers (Private) Ltd. at page 366 has
observed that:

investigation into the elasticity of supply of capital and organising

ability in that particular trade, and thus an inquiry into the rate of
profits in other industries, the ease with which transferences might
be made, the possibility of similar wage regulation extending to
other trades, and the probability of the export of capital and
organizing ability, etc.

The capacity of an industry to pay should be gauged on an industrycum-region basis after taking a fair cross-section of that industry.
In a given case it may be even permissible to divide the industry
into appropriate classes and then deal with the capacity of the
industry to pay classwise.

5.44. In the First Five Year Plan the authors thereof have observed at
page 584 as follows :
2 (a) All wage adjustments should conform to the broad principles of
social policy and disparities of income have to be reduced to the
utmost extent. The worker must obtain his due share in the national
income.

5.45. The principles of industrial adjudication have been well set out in
the decision of the Supreme Court in the case of M/s. Crown Aluminium
Works v. Their Workmen, reported in 1958 (1) Labour Law Journal page 1 at
page 6 in words following which may well be reproduced here :

BE

The main consideration which is to be borne in mind is that the

industry should be able to maintain production with efficiency and
the fixation of rates of wages should be such that there are no
movements from one industry to another owing to wide disparities
and employment at existing levels is not only maintained but if
possible increased.

(b) The claims of labour should be dealt with liberally in proportion to

the distance which the wages of different categories of workers
have to cover before attaining the living wage standard.

5.42. The level of wages should be so fixed as to enable the industry to

maintain production with efficiency. The fair wages fixed should not be so out
of tune with wages in other industries in the region as to cause movement of
labour and consequent industrial unrest. The Supreme Court in the case of
Express Newspapers (Private) Ltd. has observed at page 336 as follow:-

5.43. E. M. Burns in the book Wages and the States has at page 387
referred to various considerations which have to be borne in mind when fixing
wages.

AI

It would be necessary to inquire inter alia into the elasticity of

demand for the product, for on this depends the extent to which
employers could transfer the burden of the increased wage to
consumers. It would also be necessary to inquire how far the
enforced payment of a higher wage would lead employers to tighten
up organisation and so pay the higher wage without difficulty.

Similarly it frequently happens that an enhanced wage increases

the efficiency of the lowest paid workers : the resulting increase in
production should be considered in conjunction with the elasticity
of demand for the commodity before the ability of a trade to pay
can fairly be judged.

Again unless what the trade can bear be held to imply that in no
circumstances should the existing rate of profit be reduced, there
is no reason why attempts should not be made to discover how far
it is possible to force employers to bear the burden of an increased
rate without driving them out of business. This would involve an

122

Though social and economic justice is the ultimate ideal of

industrial adjudication, its immediate objective in an industrial dispute
as to the wage structure is to settle the dispute by constituting
such a wage structure as would do justice to the interests of both
labour and capital, would establish harmony between them and
lead to their genuine and wholehearted co-operation in the task of
production. ** In achieving this immediate objective industrial
adjudication takes into account several principles such as for
instance, the principle of comparable wages, productivity of the
trade or industry, cost of living and ability of the industry to pay. **
** In deciding industrial disputes in regard to wage structure one of
the primary objectives is and has to be the restoration of peace
and good will in the industry itself on a fair and just basis to be
determined in the light of all relevant considerations.

5.46. This Tribunal will have to keep in mind these principles to the
extent that they are applicable in the circumstances of the case.
5.47. The problem of wage determination cannot be considered in isolation
from the larger economic and social background obtaining in the country. A
delicate balance has to be struck between fair wages to workers and officers
fair profits to the shareholders and fair service at reasonable rates to the
community, after taking into account the share of the Government in profits
in the shape of taxes and after considering the amounts of reserves and
depreciation necessary for the stability and healthy functioning of the industry.
From the purely economic point of view the wage policy has to take into

123

account the inflationary pressures. It is necessary to provide for wage

differentials based on job evaluation as the economic structure in India is not
founded on the principle : to each according to his needs and from each
according to his capacity.
(iii) The 15th Indian Labour Conference

(a)
(b)
(c)
(d)

5.50. While agreeing to these guide lines for fixation of the minimum
wage for industrial workers throughout the country, the Committee recognised
the existence of instances where difflculies might be experienced in
implementing these recommendations. Wherever the minimum wage fixed
went below the recommendations, it would be incumbent on the authorities
concerned to justify the circumstances which prevented them from the
adherence to the norms laid down.

BE

5.49. The Planning Commission set up an official Study Group to examine

the data and information available in the country in connection with framing
suitable guide-lines for the settlement of wage demands. The Study Group
held a series of meetings between June and October, 1956 and considered
various issues affecting the question of wages. It then appointed a Sub-Group
to prepare material which could be presented in the form of a Report. This SubGroup recommended to the Study Group that rather than drawing up a formal
report, it would be better if notes were prepared on different aspects of wage
problems and sent to the wage fixing machinery. This plan was approved by
the Study Group and the following four notes were drawn up :-

5.48. The Second Five Year Plan at page 579 refers to one important
aspect of wage policy, namely, the laying down of principles to bring wages
into conformity with the expectations of the working class in the future pattern
of society.

accepted the following norms and recommended that they should

guide all wage fixing authorities, including minimum wage
committees, wage boards, adjudicators, etc :
(i) In calculating the minimum wage the standard working class family
should be taken to consist of 3 consumption units for one earner;
the earnings of women, children and adolescents should be
disregarded.
(ii) Minimum food requirements should be calculated on the basis of a
net intake of 2,700 calories, as recommended by Dr. Aykroyd for
an average Indian adult of moderate activity.
(iii) Clothing requirements should be estimated at a per capita
consumption of 18 yards per annum which would give for the average
workers family of four, a total of 72 yards.
(iv) In respect of housing the norm should be the minimum rent charged
by Government in any area for houses provided under the Subsidised
Industrial Housing Scheme for low income groups.
(v) Fuel, lighting and other miscellaneous item of expenditure should
constitute 20 per cent of the total minimum wage.

Some general principles in the determination of industrial wages in

India.
Principles of Wage Fixation. (A Study of Industrial Awards).
Determination of Minimum Wages, and
Share of Wages in Factory output.

AI

These notes were circulated with a view that the 15th Indian Labour Conference
may discuss them and reach conclusions in the light of which the notes
could be modified and sent to the wage fixing authorities as conclusions of
the Indian Labour Conference. At the meeting of the 15th Indian Labour
Conference, which was held in the month of July 1957, a committee was
appointed to deal inter alia, with an item on the agenda relating to the wage
policy during the Second Five Year Plan. The committee considered the four
notes placed before it and felt that they would be useful as background material
for wage fixation. It took note of the difficulties in assessing quantitatively the
individual importance of various factors affecting wage fixation, such as,
productivity, cost of living and relation of wages to national income and
discussed the wage policy with specific reference to minimum wages and
fair wages. The recommendations of this commitee were adopted with certain
modifications by the 15th Indian Labour Conference. The Resolution of the
15th Indian Labour Conference on the subject provides as under :
With regard to the minimum wage fixation it was agreed that the
minimum wage was need based and should ensure the minimum
human needs of the industrial worker, irrespective of any other
considerations. To calculate the minimum wage, the Committee

124

5.51. Strong reliance was placed on behalf of the workmen on this

resolution passed at this Conference. It was a Conference at which amongst
the distinguished persons present were Shri G. L. Nanda, the then Union
Minister for Labour and Employment and Planning, Shri Morarji Desai, the
then Union Minister for Commerce and Industry, Shri Jagjivan Ram, the then
Union Minister for Railways, Shri Lal Bahadur Sastri, the then Union Minister
for Transport and Communications, Sardar Swaran Singh, the then Union
Minister for Steel, Mines and Fuel, Shri K. C. Reddy, the then Union Minister
for Works, Housing and Supply, Shri Abid Ali, the then Union Deputy Minister
for Labour and Employment and Shri L. N. Misra, the then Parliamentary
Secretary to the Union Minister for Labour and Employment. Various State
Governments were also represented at the Conference. The Employers
Federation of India, the All India Organisation of Industrial Employers and the
All India Manufacturers Organisation were represented at this Conference.
On the workers side, there were representatives of the Indian National Trade
Union Congress, the All India Trade Union Congress, the Hind Mazdoor Sabha
and the United Trade Union Congress.
5.52. It was contended before me that this resolution was binding on

125

this Tribunal and that this Tribunal was under an obligation to act in accordance
therewith. It was further urged that if the Tribunal could not award a minimum
wage in accordance with the principles laid down in the said resolution it was
Incumbent on the Tribunal to justify the circumstances which prevented it
from the adherence to the said norms. The words of the resolution on which
this submission is founded run as follows :

authorities concerned to justify the circumstances which prevented

them from adherence to those norms. If possible, it may be clarified
whether this clause contemplates departures from the general
standard only for exceptional reasons in particular cases, or also
on general considerations, such as the present level of national
income, stage of economic development, requirements of
developmental planning etc.

Wherever the minimum wage fixed went below the

recommendations, it would be incumbent on the authorities
concerned to justify the circumstances which prevented them from
the adherence to the norms laid down.

......The Government desire me to make it clear that the

recommendations of the Labour Conference should not be regarded
as decisions of Government and have not been formally ratified by
the Central Government. They should be regarded as what they
are namely, the recommendations of the Indian Labour Conference
which is tripartite in character. Government have, at no time,
committed themselves to taking executive action to enforce the
recommendations.

The recommendations of this Conference have not been made applicable

to employees in the public sector. So far as the banks which are parties to
the dispute before me are concerned, by no stretch of imagination it can be
said that these banks had expressly or by implication agreed to be bound by
the recommendations of the 15th Indian Labour Conference. There is no
merit in the contention that there is an agreement arrived at between the
banks, which are before me and their employees which makes the resolution
binding.

BE

The resolution represents the views of the 15th Indian Labour Conference
and is in the main recommendatory. A Labour Conference is not entitled to
give any directions to a Tribunal like the National Industrial Tribunal or to use
the language of dictation or command in connection with such a Tribunal and
it could not possibly have been the intention of the Conference to do so. As
stated in the summary of the proceedings of the 15th Indian Labour Conference,
Shri Shantilal Shah, Minister for Labour and Law of the then State of Bombay
suggested that the Committees Report might be sent only to wage boards
set up by an executive authority and not to those set up by the judicial
authority, It is stated in the summary of the proceedings that the Chairman
explained that Government would have to devise some means to implement
the principles on an agreed basis and to ensure their observance as courts
could not be forced to follow them. The 15th Labour Conference is not a
statutory body. However eminent may be the persons who attended the
Conference, the resolutions passed at the Conference have no binding force.

A reply was sent thereto towards the end of April 1958 by the Secretary
to the Government of India. Department of Expenditure, Ministry of Finance,
explaining the Governments position in the following words :

AI

5.53. It was then urged that this resolution should be regarded as binding,
as it constituted an agreement arrived at between all employers in industry,
including Government, on the one hand, and all the employees in industry on
the other. The resolution passed at this Conference has not been ratified by
any of the Governments concerned, or by the employers Federation and
Organisations. No evidence has been led before me to show that it has been
ratified by workmens organisations.
5.54. The Second Commission of Enquiry on Emoluments and Conditions
of Service of Central Government Employees addressed a letter on 14th
March. 1938 to the Central Government in terms followings :
The Commission wish to know whether the Central Government
now stand committed to the adoption, during the current Five Year
Plan, of a policy of need-based minimum wage, or pay determined
by the norms laid down by the Labour Conference; and if so, whether
the policy applied to the Central Governments own employees, as
well as to others, ** ** ** One of the Clauses of the resolution of the
Conference provides that wherever the minimum wage fixed was
below the norms recommended, it would be incumbent on the

126

5.55. Apart from its binding character, this resolution which has been
unanimously passed by men occupying high responsible positions and
status, is entitled to great weight. For the first time in India, norms have been
crystalised for the purpose of fixation of a need based minimum wage in a
Conference where the participants were drawn from the ranks of Government,
industry and labour. These recommendations represent a landmark in the
struggle of labour for fixation of a minimum wage in accordance with the
needs of the workmen. The resolution lays down what a minimum wage
should be. It recognises that the minimum wage was need-based. It is a
resolution passed in connection with the needs of an industrial worker. The
norms laid down by it are standardized norms applicable to all industrial
workers whatever may be their age and whatever may be the number of years
of service they may have put in. The standard of a working class family has
been laid as comprising 3 consumption units for one earner, the earnings of
women, children and adolescents being disregarded. These three consumption
units are intended to provide for one adult male, one adult female and two
children. This norm has been laid down for the purpose of fixing a minimum

127

wage at all stages in the life of a workman. The norm would be 3 consumption
units at a time when a workman may be unmarried and may have no children
and dependents. This norm is equally applicable at a time when a workman
may have more than two children and other dependants to maintain. This
norm is laid down even when a worker may have an earning wife. It is a
standardized norm representing the average need of a workman having due
regard to various stages in his life. The minimum food requirement on the
basis of a net intake of 2700 calories has been laid down even though human
metabolism is such that after middle age lesser calories would be required
than during the earlier period. The norm in respect of the minimum food
requirements is a norm not based on the actual quantity of food consumed
by workmen in India, but represents the needs of the workmen in connection
with what Dr. Aykroyd considered .was required to be consumed.

5.57. The minimum need-based wage has been differently calculated by

different organisations of workmen appearing before me. The All India Bank
Employees Association has filed a statement showing what according to the
Association would be the amount of minimum wage calculated in accordance
with the resolution of the 15th Labour Conference. The amount calculated
under the item of food comes to Rs. 143.96, the amount calculated under the
item of clothing comes to 11.02 and the amount calculated on account of
house rent comes to Rs. 27. The total amount of the aforesaid 3 items comes
to Rs. 181.98. The amount in respect of the miscellaneous items being equal
to 25 per cent of the above three items comes to Rs. 45.50 the overall total
amount comes to Rs. 227.47.
5.58. On behalf of the All India Bank Employees Federation a statement
has been filed showing that the amount payable in accordance with the
resolution of the 15th Labour Conference in connection with food would come
to 165.96, in connection with clothing would come to Rs. 11.54, in connection
with house rent would come to Rs. 30.50 and in respect of the miscellaneous
items would come to Rs. 52 making a total Rs. 260.

AI

BE

5.56. It is urged on behalf of the employees that the resolution of the

15th Labour Conference provides a formula which by simple process of
mathematical calculation short-circuits laborious steps which would otherwise
have to be taken in order to discover the prevailing need-based wage. The
matter is not so simple as is sought to be made out. When one looks at the
resolution passed at the Conference, it is not clear whether it has
recommended a diet according to Table II (Balanced Diet) to be found in Dr.
Aykroyds Health Bulletin No. 23 or according to Table IV (Improved Diet)
mentioned in Bulletin. It is further not clear whether the diet to be taken into
account is vegetarian diet or non-vegetarian diet. The 2700 calories of food
recommended by Dr. Aykroyd are made up of diverse calories to be derived
from various items of diet listed by him. The intake of calories recommended
by him under different items of food can be obtained from various articles, the
cost and the nutritive value whereof vary. The cost would depend upon the
quality and the quantity of the articles consumed. 14 ounces of cereals
recommended by Dr. Aykroyd can be made up of rice alone or wheat alone
or millets alone or a combination of one with the other or of all in various
proportions. The cost of the diet would vary with the selection of the articles.
As regards clothing, the quality of clothing is not mentioned. Under the
resolution fuel, lighting and other miscellaneous items of expenditure account
for 20 per cent of the total minimum wage. In other words; this expenditure is
equal to 25 per cent of the total expenditure on the three items of food,
clothing and housing. The actual amount to be provided for fuel, lighting and
other miscellaneous expenses would vary according to the size of the
expenditure on the items representing food, clothing and housing, the norms
in respect whereof are not very clearly specified. In connection with this
resolution it has been observed at page 91 of the Third Five Year Plan a
draft outline published by the Planning Commission as under :

been reviewed in the light of certain questions which had arisen

and it has been agreed that the nutritional requirements of a working
class family may be re-examined on the basis of the most
authoritative scientific data on the subject.

On the basis of agreement between the parties, the Indian Labour

Conference had indicated the content of the need-based minimum
wage for guidance in the settlement of wage disputes. This has

128

5.59. The All India State Bank of India Staff Federation has calculated
the amount payable in accordance with the norms fixed by the 15th Labour
Conference at the working class consumer price Index No. 360 in the Series
1939 = 100, as under :
5.60. Rs. 81 for food, Rs. 9 for clothing, Rs. 12.50 for house rent and Rs.
25.37 in connection with fuel, lighting and miscellaneous expenditure totalling
in all Rs. 127.87.
5.61. The Second Pay Commission has dealt at length with the norms
laid down by the 15th Labour Conference in Chapter VII of its report. In
paragraph 10 it has observed as follows :
Thus it seems to us that more important than the fact of quantitative
definition of minimum remuneration is the content of what is defined;
and an examination of the content and its monetary value shows
(a) that the minimum remuneration worked out according to the
recommended formula may be of the order of Rs. 125 as compared
with Rs. 52.50 which, with some exceptions, is the upper limit of
minimum wages fixed under the law; (b) that it would be about 70
to 80 per cent higher than the rates generally prevailing in the
organised sectors of industry where wages are fixed either by
collective bargaining or through conciliation and adjudication
proceedings; and (c) that it would be well above the highest wages
i.e. Rs. 112 (in cotton textiles industry in Bombay average for

129

Conference, the fair wage would be very much higher. The total remuneration
paid at present to the member of the subordinate staff by D Class Banks in
area IV amounts to Rs. 40.50 in the first year of service and Rs. 77.50 in the
25th year of service at the working class consumer price index No. 123
(1949=100). A Class banks in area I pay by way of basic wage and dearness
allowance and House Rent Rs. 101 to the members of the subordinate staff
in the first year of service and Rs. 133 in the 25th year of service at the
working class consumer price index No. 123 (1949=100).

562. The clerical-staff in banks and the members of the supervisory staff
who are workmen cannot be regarded as being covered by these
recommendations which are applicable to industrial workers. These norms
may at best be applied in connection with the members of the subordinate
staff. The wages in the Banking industry are based on graded scales intended
to provide for the growing needs of the workmen as they advance in service.
The present scales of wages are intended to provide for less than 3
consumption units in the beginning and for larger consumption units in later
years of service.
5.63. The recommendations of this Conference require an enquiry to be
made by wage fixing authorities about the prices of various articles of food
and clothing. As regards Tribunals which have to adjudicate upon disputes
relating to wages for workmen employed in various parts of the country, in
order to arrive at a just conclusion, it would be necessary for them to have
reliable evidence about the prices of various articles of food and clothing,
prevailing at various places at various times of the year for some years before
proper averages could be worked out for the country or for the areas in which
the country may be divided for the purpose of fixation of wages. It would
considerably strain the resources of a party to secure reliable data and lead
evidence about the same which could stand the test of scrutiny.......... .

BE

1958) which any considerable number of unskilled workers are at

present getting in the country. Whether right or wrong, this
undoubtedly is a new concept of minimum remuneration. We have
considered if a minimum remuneration of this size is at all feasible
at the present level of our economic development. The per capita
income at current prices has varied during the nine years ending
1957-58 between Rs. 246.90 and Rs. 291.50. Taking a standard
family as consisting of four members of whom only one is an earner
(this is the standard which the Labour Conference, and others
concerned with wages have generally adopted), the average income
of a family at the highest figure during the nine years would work
out to Rs. 1,166 per annum, or about Rs. 97 per mensem. The
minimum wage cannot be of the order of Rs. 125, when on the
basis of the national income the average for a family works out only
to Rs. 97 per mensem. It is not that the entire national income is
available for current distribution; a good percentage of it must go
towards building up of capital assets, without under-going
distribution. A minimum wage pitched above the level of per capita
income, and intended for very wide application is obviously one
beyond the countrys capacity; in ignoring the vital need for savings
and investment, such a wage gives no thought to the future; and a
wage that exceeds the highest level, and far exceeds the general
level in the organised industries is obviously not one needed for
protecting those whose living standards are sub-average.

AI

The Second Pay Commission has thereafter proceeded to consider the norm
of 2700 calories and after having had the benefit of expert opinion on the
subject, came to the conclusion that a considerably less number of calories
is adequate. In paragraph 16 the Second Pay Commission observes as
under:

In the preceding paragraphs we have considered whether a

minimum wage of the size implied in the fifteenth Labour Conference
recommendations is feasible economically and financially, and we
have reached the conclusion that it is not. There is, however, a
wide gap between the present minimum remuneration of a Central
Government employee (Rs. 75) and the minimum in terms of the
Labour Conference recommendations which would be of the order
of Rs. 125 per mensem.

The minimum remuneration of the order of Rs. 125 stated therein is for the
year 1958. It would be very much more today when the working class
consumer price index has risen from 116 (1949=100) for the year 1958 to
about 126 for the year 1961. Assuming that the figure of Rs. 125 arrived at by
the Second Pay Commission for the year 1958 is correct, the amount of
minimum wage at the present index figure of 128 would be Rs. 138. If this be
the minimum wage contemplated for industrial workers by the 15th Labour

130

So far as I am concerned, I have not before me evidence or data on

which reliance can be placed for the purpose of considering what would be
the minimum wage calculated in accordance with the 15th Indian Labour
Conference formula, for the country as a whole or for the areas in which
places in the country are grouped for the purpose of fixation of wages.
(iv) Index Number
5.64. One objection strongly urged against the present scales of wages
in the Banking industry is that they are not linked up to any particular base
year. The question of base year is intimately connected with the question of
the availability of any machinery for gauging the subsequent rise or fall in the
cost of living for the purpose of adjusting the wages fixed with regard to a
particular year in the fight of changes taking place in subsequent years. In
this connection I shall first deal with the question relating to index numbers.
5.65. It is necessary to have a proper consumer price index number in
order to ascertain the rise in the cost of living of any particular class of

131

AI

BE

5.66. It is urged that the consumption pattern of the middle class

population is somewhat different from the consumption pattern of workers in
factories and that the application of the working class consumer price index
number whilst considering the rise in the cost of living of the middle class
does not seem to be proper. It is urged that even the consumption pattern of
labour employed in factories has not remained stationary since the time
when various family budget enquiries were made in connection with the
aforesaid index series. It is urged that since the constitution of the all-India
index series, several new areas have developed under the successive Five
Year Plans, that the pattern of the cost of living at those places has completely
changed, that the consumer price index number has not been constructed
after conducting family budget enquiries at a large number of places which
have now assumed importance, that in the process of averaging, some of the
important factors have been omitted and that the all-India consumer price
index is on the lower side of the actual price level. The Indian Banks
Association on the other hand has submitted that while fixing any wage
structure it is not possible to arrive at any mathematical accuracies and that
the all-India working class consumer price index is the only index available
for adjustment of wages on an all-India basis. It has further submitted that
the all-India index is the one to which the dearness allowance payable to
employees could or should be linked. It denies that the all-India price index
is on the lower side of the actual price level. During the hearing Shri Phadke
criticised this index series and urged that this series cannot furnish adequate
material for the purpose of using it as an exact instrument which could be
pressed into service for the determination of a wage or change in the wage
scales. He urged that the consumption pattern cannot be uniform and that
in connection with an all-India index it was assumed that if the same
commodities of the same quality and the same quantity were consumed
today as they were being consumed during the base year of the series, the
difference in the cost would be indicated by the index number existing today.
He pointed out that in order that index numbers may be of any use it was
necessary that the base year should be as close to the relevant period as
possible.

index numbers should be revised at least once in ten years on the basis of
fresh family budget enquiries. By this standard every one of the series included
in the all-India cost of living index is out-moded and requires to be replaced.
This series was primarily concerned with the needs of labour employed in
factories. The centres included in the series do not by any means form
representative samples of urban areas. The former State of Bombay is
represented by four centres. Uttar Pradesh and Madras are represented by
one centre each. The weighting system adopted is not entirely satisfactory.
It is based mainly on factory labour employed in various centres. The State
average tends to be based in favour of the larger industrial centres. The
weighting pattern is based on the constitution of the provinces as in 1949.
Since then there has been a reorganisation of the State without any alteration
being made in the weighting system. The constitutent series of the all-India
index are complied by different organisations some by the Central
Government and some by the State Governments and the methods adopted
in the compilation of the indices are not always the same. The number of
items covered also varies from centre to centre, but the variations do not
seem to be based on any uniform principles. Housing groups is particularly
deficient in all the available indices and miscellaneous group of items has
considerable variation. The consumption patterns have not remained stationary
since the time, the various family budget inquiries were made in connection
with the aforesaid series.

people. The present all-India working class consumer price index number is
prepared only from the point of view of labour employed in factories. There is
no similar all-India index for the middle class from whose ranks the members
of the clerical staff in the banking industry are principally drawn.

5.67. As pointed out by the Second Pay Commission, the component

series of the all-India index have varying base periods spread over nearly two
decades. The indices for many of the important centres have pre-war bases,
ranging from 1926-27 to 1939. The others have war-time bases viz. 1944 or
1943-44. The all-India index is, thus, an average of index numbers which
have War-time or pre-War bases. The International Conference of Labour
Statisticians has recommended that the weighting diagrams of cost of living

132

5.68. Shri Phadke, however, is unable to point out any substitute for the
series for the purpose of linking the dearness allowance with the rise in the
cost of living. The Second Pay Commission has found it necessary to conclude
that despite the limitations pointed out by it, the all-India working class
consumer price index, currently published is perhaps the only convenient
and suitable tool available for wage adjustments at the national level. The
Labour Appellate Tribunal also in paragraph 106 of its decision has remarked
that the all-India consumer price index provides a suitable anchor for the
movements of future dearness allowance and can be usefully applied for that
purpose As regards the applicability of this index series to the middle class
from which most of the members of the clerical staff are drawn, the Second
Pay Commission has observed that the closeness of the series for the working
class and middle class population in Calcutta compiled by the State
Government suggested that the effect of the difference in the consumption
pattern on the price index is perhaps not as great as is sometimes made out
to be.
5.69. The all-India working class consumer price index is the only available
barometer for the measurement of the pressure of price changes in the country
on an all-India level. It is easy to criticise it but there is no available substitute
for it. It has served a useful purpose in the past and will have to render service
for the present.
(v) Base Year

133

more than 100% neutralisation was implicit in these demands, Shri Sule
expressed himself in favour of fixing the year 1949 as the base year instead
of the year 1956. The All India Bank Employees Federation by its statement
of claim has submitted that the cost of living was not likely to go down to prewar level nor even to 1944 price level. Some of the organisations of workmen
employed in the State Bank of India claimed that basic pay of the employees
should be fixed at the cost of living index number 360 in the series 1939 =
100 when the corresponding number was 101 in the series 1949 = 100.

5.73. These claims of the employees have been strongly opposed by

almost all the banks. They urge that the fixation of pay-scales with reference
to the all-India working class consumer price index No. 105 which was the
average for the year 1956 in 1949 = 100 series would be thoroughly unreal,
and that the aim of the employees was to have as large a part of the dearness allowance absorbed in the basic pay as possible so that they might
secure other benefits in connection with provident fund and gratuity, which
were linked up with the basic pay. The Indian Banks Association has in its
written statement, in reply to the plea that in order to ascertain the requirements
of a worker for the purpose of wage fixation it is imperative to take a particular
cost of living figure as the basis of calculation, stated as under:

AI

BE

5.70. The important question that arises for consideration in connection

with the fixation of wage scales in the banking industry is the question of
fixing the basic wage with reference to a suitable year as the base year. The
Sen Tribunal adopted 1944 as the base year for the purpose of devising the
pay-scales. The Sen Tribunal saw great merit in adopting that year as the
base year because the Central Government was publishing the cost of living
index series for fifteen towns in different parts of India with 1944 as the base
year and because for seven towns of Bombay, Ahmedabad, Sholapur, Jalgaon,
Kanpur, Nagpur and Madras the respective Governments were publishing the
index series with August 1939 as the base, and it was not difficult to convert
those series to the base year 1944. Another advantage that the Sen Tribunal
saw in adopting 1944 as the base year was that by that date owing to the
different rates of increase in the index figures in different parts of India, there
was a closer approximation in the actual cost of living than before, so that the
differences in dearness allowance at different places, when calculated on the
subsequent index figures were not likely to be so marked as they would be if
an earlier year was taken as the base year. The Sastry Tribunal did not link
its pay scales with any base year. The Labour Appellate Tribunal having
noticed this has pointed out that the Sastry Award did not indicate to which
years cost of living it had allied its wage structure and had given no indication
as to the point in the cost of living index is relation to which it had fixed its
wage scales, that it had not even indicated the percentage of neutralisation
provided in giving the dearness allowance and that the Labour Appellate Tribunal
had just to consider the total emoluments to enable it to examine the
correctness or otherwise of the wage structure devised by the Sastry Tribunal.
The Labour Apellate Tribunal itself, has not given any indication in its report
of the point of time and the level of the index to which its wage structure was
allied. The existing wage structure in the banking industry is not linked to
any base year.
5.71. It is urged on behalf of the employees that the basic wage should
be linked to some base year and that the subsequent changes in the cost of
living should be fully neutralised. The All India Bank Employees Association
has claimed that as large a part of the dearness allowance as possible should
be merged with the basic pay and that the year 1956 should be the base year
when the average all-India working class consumer price index stood at 105
in the series 1949 = 100. In support of this claim, it is contended that owing
to the deficit financing for the Five Year Plans and owing to the large credit
expansion and high tempo of development expenditure there was no-chance
of the cost of living going down below the level that existed in the year 1956
and that there had been a steady rise in prices since the year 1956.
5.72. The All India Bank Employees Association has also claimed that
not merely the workmen should have their basic pay fixed at the level of index
number 105 but that they should be given 1% of the basic pay for every rise
of one point over 105. When at the time of the hearing it was pointed out that

134

" * * * it is true that for the purpose of wage fixation a particular cost
of living figure has to be taken as the basis of calculation but what
this figure should be must always remain to some extent a matter
of conjecture.

Amongst the numerous written statements filed on behalf of banks there is

one written statement in which it is pleaded that 1949 should be taken as the
base year for which the all-India working class consumer price index number
was 100.
5.74. In fixing the base year various factors have to be borne in mind. It
must be a year in which the cost of living must have reached a point below
which, as far as it is permissible to speculate, it was not expected to fall in
the near or foreseeable future. It must be a year with reference to which basic
wage could be fixed with convenience. On an examination of the trends of
variation in the yearly all-India working class consumer price index number, I
find that except for the year 1955, when the all India consumer price index
number in the 1949 series had gone down to 96 in view of the special conditions
prevailing during that year, it has registered a continuous increase. The figure
for the month of August 1961 has been 128 and has continued to remain
steady since then. When prices fell in 1955, the Government intervened to
reverse the down-ward trend and measures were adopted, including revision
of export duty in order to support the agricultural prices. It may not be unsafe
to assume that in the interest of national economy and the well-being of the
people the Government in future also may not permit the prices to fall below
that level. In view of the position of the currency, in view of the large expenditure

135

envisaged in the fulfilment of the Five Year Plans and the system of deficit
financing, it is not expected in the near or foreseeable future that the all-India
consumer price index number in this series 1949 = 100 will descend to a
level below 100. If a situation does arise when there is such a steep fall in the
cost of living that the index number goes below 100, it may be open to the
parties to ask for a revision of the wage structure.

5.79. The Labour Appellate Tribunal strongly criticised the Sastry

Tribunals approach and the conclusion in this connection. In paragraph 63 of
its decision it has stated as under :

AI

BE

5.75. While fixing the basic wage in relation to the year 1944, the Sen
Tribunal was guided by the Prime consideration that basic pay should
represent as large a part of the total emoluments as possible. At the time
when the Sen Tribunal was busy devising a wage structure for the bank
employees, the index series which were available were mostly those which
were linked to the year 1944 or there were series which were being published
with base year 1939 which could easily be converted to the base year 1944.
At present the Central Government is publishing the all-India working class
consumer price index series which has the year 1949 as its base. It has
discontinued publication of the series with the year 1944 as its base as the
same was considered to be unsuitable as a permanent basis in view of the
abnormal conditions prevailing during that year. If, therefore, a base year has
to be devised, it cannot be the year 1944. The year 1939 cannot serve as a
base now in view of its distance from the present. All factors favour the
acceptance of the year 1949 as the most suitable year for adopting as a
base year for the purpose of wage fixation and I adopt the same. This will
result in a larger basic pay and a smaller dearness allowance, and the wage
structure will present a more realistic picture. The question relating to the
desirability of merger of a part of the dearness allowance with the basic pay
has been separately dealt with by me later. The objection of the banks to the
merger of any part of the dearness allowance with the basic wage on the
ground of the increase in the burden that may take place in connection with
provident fund and gratuity can be met by suitable provisions which may
prevent increases therein except to the extent intended.

provide for reasonable increments for the growing needs of himself and his
family including children that are likely to be born. Calculating in accordance
with the Lusk co-efficient, the Sastry Tribunal took the view that the
consumption units should be taken at 1.8 at the initial start. The Sastry
Tribunal said that if the generally accepted view that under the Indian conditions
a person has in the 8th year of service a wife and two children should prevail
the consumption units in the 8th year of service will come to 3 but in view of
the statistics placed before it with reference to the employees of certain
banks and the figures which appeared in the census reports it was stated
that quite an appreciable number of people remained unmarried even in the
age group 25 to 30 and that it was only in the age group 30 to 35 that single
man were rare. The Sastry Tribunal considered it more appropriate to take
the 10th year of service as the proper stage in which 3 consumption units
should be allowed.

(vi) Consumption Units

5.76. The question of pay scales is intimately connected with the question
relating to the number of consumption units for which provision is to be
made thereby.

5.77. Without intending to lay down a rule or formulate a definite principle,

the Sen Tribunal believed that it was not likely to be much mistaken if the
requirements of an employee in the first year of his service were taken as
corresponding to 2.25 consumption units. The Sen Tribunal also considered
that in the 8th year of his service an employee has to maintain three
consumption units and that towards the end of his service he would have to
maintain four consumption units.
5.78. The Sastry Tribunal, however, held the view that the proper method
was to provide for an employee and his wife at the initial start and then

136

We have to take a common sense view of these matters. * * *

Wages are necessarily fixed in accordance with the normal
expectations of family life even though a particular workman may
never marry nor have any dependants. The Sastry Tribunal seems
to take the view that only 1.8 consumption units should be provided
for at the start, that is, a family of 2 persons, namely, the employee
and his present or future wife, and that is less than what has been
accepted by the Special Benches of the Labour Appellate Tribunal.
We consider the Tribunals approach to the subject as too narrow
in the context of the middle class social and economic conditions
of our country whatever may be the circumstances in other parts of
the world where family life is less cohesive.

The Labour Appellate Tribunal also observed that if 3 consumption units

were to be taken as the mean, 2.25 consumption units would be a satisfactory
start. It decided that privision for 2.25 consumption units was a reasonable
method of calculating the measure of a young mans responsibility at the
start. The Bank Award Commission has considered the criticism levelled by
the Labour Appellate Tribunal against the views expressed by the Sastry
Tribunal on the question of consumption units as fully justified.
5.80. On behalf of workmen it was contended that wages should be so
fixed that a provision was made at the start for 3 consumption units. In support
of it reliance was placed on (i) the norms laid down by the 15th Indian Labour
Conference, (ii) the size of the family of members of the working class taken
by the various enquiry committees, (iii) the recommendation of the Committee
on Fair Wages and (iv) consumption units as revealed by the various family
budget enquiries conducted by Shri S. R. Deshpande in 1944. Reliance was

137

cost of living Index figure was 155 whereas in 1938-39 it was 104.
According to these index numbers the cost of living of the same
family would be

103 104
= Rs. 69 in 1938-39. The lowest
155

income group in the middle class budget enquiry consisted of

3.29.consumption units. Therefore, for an average family of 3
consumption units, the expenditure required in 1938-39 would have
been

= Rs. 63.

According to the findings of the Rau

Court of Enquiry a working class family consisting of 3 consumption

units required Rs. 35 for minimum subsistence. It follows therefore
that the proportion of the relative cost of living of a working class
family to that of a middle class family of 3 consumption units is
35.63, i.e. the cost of living of a middle class family is about 80 per
cent higher than that of a working class family.

The family budget enquiry which constitutes one of the pillars on which
this co-efficient rests was started in July 1922 and was completed in August
1924. The total number of family budgets collected was 2000. In addition,
125 single mens budgets were also collected. Out of the 2000 family budgets,
252 were rejected owing to their incompleteness and doubtful accuracy. Only
1748 budgets were accepted for final tabulation. This enquiry was conducted
69 3 by the Labour Office Bombay. It was restricted to middle class persons
having fixed and ascertainable incomes. The enquiry was confined to families
3.29 with an income of not less than Rs. 50 and not more than Rs. 700 per month.
When the tabulation of the data, was, however undertaken, it was found that
the number of budgets in the lower (i.e. below Rs. 75 per mensem) and the
higher (i.e. above Rs. 225 per mensem) income classes were comparatively
few and so in order to make the sample more homogeneous and the results
more representative, it was thought better to deal in the report with the budgets
falling within the income classes of Rs. 75 to Rs. 225 per mensem. Accordingly
1325 out of the 1748 budgets were considered for the purpose of that report.
The classification of these budgets by income classes was as follows :

AI

BE

also placed on certain enquiries conducted by private agencies in respect of

the living conditions of middle class employees in certain places in the Cities
of Bombay and Baroda. A statement has also been submitted in connection
with the average size of a working class family in various centres in India in
the pre-war period. Shri Phadke, has submitted that workmens needs must
be stabilised at 1.6 consumption unit at the start and in no case it should be
taken as more than 1.8 consumption units at this stage of the service of a
workman. He traced the genesis of the theory of 2.25 consumption units at
the start to the Sen Award and strongly criticised the material on which this
decision was taken by the Sen Tribunal. The banks have tried to collect
some material on this subject. The material place before me, though it may
throw some light on the problem is not sufficient and cannot be relied upon
for the purpose of deciding the size of the average family of a workman in the
banking industry at the start. The Committee on Fair Wages decided that if
the standard family was reckoned as one requiring three consumption units
and providing one earner, the decision would be in accord with the results of
the family budget inquiries. The 15th Indian Labour Conference has also
provided the norm of 3 consumption units. I have already stated earlier while
dealing with the resolution of the 15th Labour Conference that this norm is
the standardized norm for calculating the wages of an employee throughout
the period of his service. Where incremental scales of wages have been
provided, and the growing needs of a workman at various stages of his service
have to be considered the standardized form which represents the average
need of a life time cannot be made the starting point when the need is less.
In the absence of sufficient evidence on the subject, I see no reason to differ
from the decision of the Labour Appellate Tribunal that 2.25 consumption
units would be a satisfactory starting point for an employee for whom it is
intended to devise a pay scale.
(vii) Co-Efficient

5.81. Another question of importance in connection with scales of pay

relates to the extent of the difference in the cost of living between the members
of the subordinate staff and the members of the clerical staff. The 80% coefficient is sometimes applied for determining the remuneration payable to
members of the clerical staff after determining the amount of remuneration
payable to members of the subordinate staff. The genesis of the 80% coefficient can be traced to the award of Justice Rajadhyaksha in the dispute
between the Posts and Telegraphs Department and its non-gazetted
employees. The way in which Justice Rajadhyaksha arrived at the co-efficient
is stated in para 148 of his award as follows :
In 1922-24 there was a middle class family budget enquiry in
Bombay and it was found that a family consisting of 4.58 persons
spent Rs. 138-5-0 per month. *But the average expenditure of the
middle class family in the lowest income group (having incomes
between Rs. 75 and 125) per month was Rs. 103-4-0. In 1923 the

138

Monthly income of family

Rs. 75 and below Rs. 125
Rs. 125 and below Rs. 175
Rs. 175 and below Rs. 225
All incomes

-------------

No. of
families
524
508
293
1325

Percentage
to total
39.6
38.3
22.1
100.0

The group percentage expenditure of the Bombay Middle Class was

found as follows :
Groups

Percentage expenditure
on each group

139

43.4
5.5
10.4

to buttress the principle by an appeal to figures at which working

class budgets balance did not succeed, for budgets very nearly
balance even above or below the limits so chosen and we do not
know where to draw the line for budget balancing or how to provide
for the very human tendency to over-estimate expenditure and underestimate expenditure.

2.5
14.8

5.83. In paragraph 218 it has been further observed as follows :

23.4
100.0

From this enquiry conducted in a place like Bombay in the year 1922 24 on the one hand and the Report of the Rau Court of Inquiry appointed in
the year 1940 confined to the staff of the G. I. P. Railway in relation to
investigation concerning the question of dearness allowance on the other, is
built up the co-efficient which is sought to be applied by Industrial Tribunals
in respect of all-India adjudications. Justice Rajadhyaksha himself was
conscious of the difficulties which he was experiencing. In paragraph 148 of
his report, he has stated as follows :

5.84. In dealing with this matter the Labour Appellate Tribunal in paragraph
68 of its decision has observed as follows :

BE

So far as the middle classes are concerned the difficulty is very

considerable. There have been no official family budget enquiries
with respect to lower middle classes and the non-official enquiries
have not arrived at any particular figure as representing the present
day cost of living for the lower middle classes.

The Central Pay Commission fixed Rs. 90 per mensem as the minimum
wage for middle class employees and Rs. 55 for the subordinate staff. The
co-efficient would work out at about 64 per cent. * * * * It is common knowledge
that the gap between lower middle class and the working class is narrower
now-a-days. In these circumstances, it is proper to hold that the co-efficient
may well be taken to be not more than 66 2/3 per cent. We must, however,
frankly concede that this is merely an approximation by us and we cannot
claim for it a scientific justification on the basis of reliable statistics for the
reason that such statistics are not available."

Food
------------Fuel and lighting
---------Clothing (excludes bedding)
Bedding and household necessaries (includes
beddings, cooking utencils, etc.) ------House Rent
---------Miscellaneous
(including remittances to dependants).
----

5.82. In the Sen Award, it has been stated at page 30 as follows :

AI

It seems to us very likely, particularly in view of the increase in the

income of the working classes in most towns since 1939 that the
co-efficient applicable today is appreciably less than 80%.
The Sastry Tribunal in dealing with the co-efficient has observed in
paragraph 216 of its award as follows :

Mr. Seervai urged that the co-efficient method was erroneous, that
though the patterns of living keep on changing in both the classes
they do not change in the same direction or to the same extent
and no constant co-efficient would be disclosed by different budget
enquiries. We certainly cannot take the 80% co-efficient as proved
or established because it is derived from a so-called casual relation
between the expenditure of a working class family and the
expenditure of a middle class family as disclosed by family budget
enquiries. It is but a single incident and we cannot say whether the
relationship is casual or a mere co-incidence, a chance
correspondence between two sets of figures. In Mr. Seervais view
with no subsequent enquiries to confirm or it may be to contradict
we cannot accept the 80 per cent co-efficient as established. Thus
the principle of the co-efficient threatened to become more and
more vague and more and more of a guess-work. Even the attempt

140

"It occurs to us that if in fact the gap between the income of the
lower middle class on the one hand and the working class on the
other has been narrowed by increases in the laters wages the
more appropriate inference would be that the wages of the lower
middle class have not received increases to which they were entitled.
In so far as the basic wages are concerned, in the case of many
commercial firms the co-efficient is a good deal higher than 1.80;
and even if we take the total emoluments in the major industries in
Bombay or Calcutta the co-efficient would be found generally to be
not less than 1.80. The Central Pay Commission too seems to
have accepted the 1.80 co-efficient; for while it gave to the
subordinate staff a starting basic salary of Rs. 30 it fixed the wages
of the clerk at the initial stage at Rs. 55 which means a co-efficient
of 1.80. It was therefore unwise of the Sastry Tribunal in the absence
of statistics to negative a co-efficient which has been so generally
accepted ** we are clearly for the view that in the absence of any
definite investigation or statistics the 1.80 co-efficient should be
maintained; for it has been an accepted co-efficient adopted after
deliberation and has not been displaced by any organized enquiries.

5.85. The Second Pay Commission in paragraph 13 of Chapter X of its

report has, in connection with any co-efficient observed as follows :
We have considered whether there should be any direct, rigid,
relativity between manual and clerical staffs, and we have come to
the conclusion that the acceptance of any such relativity will be
incompatible with the principles for determination of remuneration

141

of Government servants which we have adopted. * * * * in the United

Kingdom while the clerical officer had an increase of about 63 per
cent between 1939 and 1954-55, the messanger had an increase
of 90 per cent during the same period. But as against that, during
the last 2 years the wages of clerks have risen more than those of
manual workers. We have not, therefore, sought to determine the
pay of clerical and other similar staffs with reference to that of
manual workers, but have considered independently what, in the
present conditions, would be fair remuneration for each.

5.88. The Indian Banks Association has submitted that the co-efficient
method was erroneous in that though the pattern of living kept on changing in
both classes they did not change in the same direction or to the same extent
and there could be no constant co-efficient. It denied that for middle class
employees the co-efficient could not be less than 120% and also disputed
the correctness of 80% as a proper co-efficient.

5.89. The Bombay Exchange Banks Association has pleaded that the
very concept of co-efficient should disappear. It also denied that it had now
been universally accepted that considerable co-efficient had to be added in
the case of middle class employees to the cost of living calculated for the
industrial worker. The State Bank of India has submitted that it would be an
extremely illusory and incorrect method to arrive at the wages of middle
class employees by a process of arithmatical calculation, viz. by applying a
co-efficient. The Northern India Banks Association has submitted that no
mechanical formula such as that of 80% or 120% co-efficient would satisfy
the test of either equity or practicability. It agreed that there should be some
difference between the wages of unskilled workers in the banks such as
peons and those belonging to clerical cadre. It has stated that the only way
of equitably determining the difference was to compare the total emoluments
of these two classes with those of corresponding workers in other comparable
establishments in the same areas.

BE

5.86. The All India Bank Employees Association has pleaded that it did
not accept the Rajadhyaksha co-efficient of 80% as adequate and that it was
of the opinion that for middle class employees the co-efficient cannot be less
than 120%. It has further added that even if 80% per cent was accepted as a
proper co-efficient the bare minimum wage for a middle class employee would
be higher by this percentage. The Association has stated that it has been
admitted by all the adjudicators that the minimum wage of a middle class
employee should be substantially higher than that of a subordinate employee.
It has pleaded that this difference was mainly to account for the cost of
education, skill acquired, the multifarious social obligations and the
characteristic ways of living of a middle class employee that a middle class
employee was called upon to meet along with higher responsibilty, obligations
which an industrial worker was usually never called upon to meet and that it
has been now universally accepted that a considerable co-efficient has to be
added in the case of middle class employee to the cost of living calculated
for the industrial worker.

The All India Bank of Baroda Employees Federation has pleaded that the
need of a clerical employee has been estimated according to all expert opinions
at varying degrees and the Federation felt that 70% higher wages should be
fixed for a clerk than those of a subordinate.

AI

5.87. The All India State Bank of India Staff Federation and the State
Bank of India Staff Union, Andhra Pradesh, have pleaded that the minimum
cost of living of a middle class family is much higher than that of a working
class family, that the cost of education has risen to abnormal proportion and
parents have to expend considerably on the education higher secondary and
college of their children, that the expenditure on clothing by employees
recruited to the ministerial and skilled cadres is far higher than that in a
working class family, as such employees are required to appear neatly dressed
in the office and maintain decency and decorum in dealing with the public,
that the miscellaneous expenditure in the family budget of middle class
employees is considerable and is far in excess of that in a working class
family and that the minimum wage for a clerk was to be obtained by multiplying
the minimum wage of the lowest paid worker by the Co-efficient of 1.80. The
South Gujarat Bank of Baroda Employees Union has stated as under :
To find out the minimum requirements of a middle class employee
on the above basis, we have to put them approximately @ 70%
above the standard of a worker. It has been admitted by several
authorities that this difference should be 80% but we felt to scale
down the difference and to put it at 70%.

142

5.90. Shri Phadke has strongly criticised this 80 per cent co-efficient
and the foundation thereof. This formula rests on the findings of the Rau
Court of Enquiry constituted in the year 1940 in connection with a working
class family of 3 consumption units requiring Rs. 35 in Bombay City by way
of minimum subsistence. In paragraph 75 of the report of the Rau Court of
Enquiry itself, a note of caution has been sounded in the following terms :
..... in order to determine what classes of employees should be
granted a dearness allowance, it is necessary for us to draw, roughly
and with the aid of such materials as may be readily available,
what has been called a poverty line, between incomes that are
above subsistence level and incomes that are not. For this limited
purpose, no great precision is required : the amount of the dearness
allowance we propose to recommend is comparatively small and
even if we are in drawing the line, whether on one side or the other,
the error is not likely to cause grave inconveniences. We shall, of
course, endeavour to do our best with the materials at our disposal;
but further materials may show that our estimates are too high or
too low. We only wish to emphasize that these estimates,

143

class of persons whose case is being considered.

necessarily diffident are for the limited purpose of deciding at what

level of income a war dearness allowance should be given at the
present time and our references in this report to the poverty line
or the subsistence level or, the efficiency level are not to be
construed in any larger sense.

5.94. When emphasis is being placed on a need-based wage and when

the needs in respect of food are correlated not to the quantum of food actually
consumed or the actual patern of such consumption, but on the food which
ought to be consumed, having regard to the physical needs of the individual
the special needs of the middle class in connection with not merely food but
all other articles of consumption require to be investigated and norms are
required to be envolved which would satisfy the social and economic needs
of the middle class. I am in the unfortunate position of not having such material
before me.

In the absence of any better material, some of the subsequent Tribunals

do not seem to have paid any heed to this caution.

index numbers the cost of living of the same family would be

103 104
=
155

BE

Rs. 69 in 1938-39. The index figures viz. 155 and 104 have been taken from
two different index number series. The figure of 155 is taken from the series
which was started with the year 1914 as the base year. The other figure viz.
104 has been taken from the series started in 1933-34.

5.95 Where proper inquiries have been conducted into the needs of both
the working class and the middle class, it does not become necessary to
resort to any co-efficient. It is only when material exists about one class and
not the other, that it becomes necessary to resort to a co-efficient. In the
present state of the record, I am unable to arrive at any co-efficient myself
and cannot see my way to effect any changes in the existing co-efficients
which may be regarded as substantial whilst considering the total emoluments
of different classes of workmen employed in A, B and C Classes of banks in
Areas I, II and III under this award.

5.91. This co-efficient is also founded on the middle class family budget
enquiry held in the year 1922/24. In order to correlate the findings of different
inquiries held at different times in connection with different classes of men
the figure of Rs. 103-4-0 being the average expenditure of a middle class
family in the lowest income group having income between Rs. 75 and Rs.
125 per month in the years 1922/24 has been projected to the year 1938-39.
It is stated in the Rajadhyaksha award that the cost of living index figure in
1923 was 155 whereas in 1938-39 it was 104 and that according to these

AI

5.92. Shri Phadke has criticised the accuracy of this method of conversion
stating that to arrive at the correct results, it would be necessary not merely
to have the same basket of commodities, but the same pattern of consumption,
that in fact, the quantities for the two series were not the same, that the
pattern of consumption for the base year had changed and that the 1914
series was a series prior to the first world war while the 1933-34 series had
been formulated after the great depression which had occurred in the thirties.
He submitted that the comparison of these figures could not possibly yield
any intelligible results. He pointed out that while the Labour Appellate Tribunal
decision laid down that the co-efficient should be 80% while fixing wage
scales for the subordinate staff and the clerical staff this co-efficient of 80%
was not adhered to. Statements have been filed before me showing that the
co-efficient varies from stage to stage, from class to class and from area to
area.
5.93. In the year of grace 1962 this Tribunal is in no better position than
the earlier Tribunals who have dealt with the matter. The inherent infirmities in
this co-efficient have been pointedly referred to before me. I am not at all
certain whether I would be very much wiser by an enquiry which may be
conducted at present. Expenditure is conditioned by the income received by
the class of persons whose expenditure is being considered. By and large,
over a period of time, expenditure cannot exceed the income. The only pattern
which such inquiry may reveal may be a pattern based on the income of the

144

5.96. The ingredients of a pay scale generally are its minimum and
maximum, the span, that is the period of time requisite to reach the maximum,
the increments provided and the efficiency bar where imposed.
(viii) Ratio between the Minimum and Maximum In Pay Scales

5.97. It is nobodys case that there should be a uniform pay for the
workmen employed in banks from the commencement till the conclusion of
their service. There, is however, a controversy as regards the ratio which
should subsist between the minimum in the scale and the maximum thereof.
5.98. In the Sen Award the difference between the minimum and the
maximum basic wage for clerical staff may be taken to be about 1:3 while for
subordinate staff it may be taken to be about 1:1.5.
5.99. In the Sastry Award as modified the ratio of minimum basic pay
and maximum basic pay for clerks in A Class banks in Area I is 1:3.3. In
other classes of banks also it is by about the same. As regards the subordinate
staff the ratio for A Class banks in Area 1 is 1:1.8 and for other classes of
banks it is about 1:2.
5.100. The All India Bank Employees Association has claimed that so
far as the clerical staff is concerned the difference between the minimum
and maximum in the same grade should be approximately 2 times. In the
case of the subordinate staff from the pay scales demanded it appears that
the ratio between the minimum and the maximum is required to be 1:2. The
Indian Banks Association has contended that there is no cogent reason
given why the difference between the minimum and the maximum in the

145

same grade should be approximately 2 times for the celrical staff. The
Bombay Exchange Banks Association has also taken the same stand as
the Indian Banks Association.

(ix) Span
5.103. I shall next deal with the question of Span.

BE

5.102. Having regard to the method adopted by me in constructing wage

scales which will appear later, it is not necessary for the purpose of this
award to decide what theoretically should be the difference between the
minimum and the maximum of the wage scales in an industry like banking.

5.109. The Northern India Banks Association has stated that ordinarily
a bank clerk starts his career at the age of 18 to 21 and as the retirement age
for him has been fixed, under the existing Award, at 58, the scales framed
should extend for a period of at least 35 years, for if the maximum is reached
earlier, a sense of discontent and dissatisfaction is needlessly produced at a
time when the employee has yet to go many years.

5.101. There is no uniform rule so far established in connection with the

difference between the minimum and the maximum in connection with scales
of pay. There are various factors which may affect the same. An incremental
pay Scale is intended fo provide for the growing needs of a workman as he
advances in age. It is intended to provide for his increased knowledge,
experience and efficiency acquired in the course of his service and also to
provide him with a saving wage in the later years of his service. The capacity
of the industry and the wages in comparable concerns have a part to play. No
scientific or logical reason is given for the suggested differences between the
minimum and the miximum of the scales of pay for the clerical staff and the
subordinate staff. The demands made by the All India Bank Employees
Federation reveal the difference of 1:3.3 between the minimum and miximum
so far as clerical staff in A Class of banks is concerned. Similar ratio for B
Class banks is 1:3.8.

in them functions mainly of a managerial or administrative nature as such

employees would not be workmen within the meaning of the Industrial
Disputes Act and would hence be outside the present adjudication. The
Bombay Exchange Banks Association has contended that the claim made
by the All India Bank Employees Association is untenable and should be
rejected. It says that the whole scale should span at least 25 to 30 years. It
is further pleaded that the 20 years span demanded by the workmen for the
clerical and subordinate grades would mean that an employee joining at the
age of 18 would reach the top of the scale at the age of 38 and that if he were
to retire as demanded at the age of 60 years, then he would receive no
increment for the last 22 years of his service and realisation of this fact would
mean that the employee would not strive to improve his efficiency or take
interest in his work.

AI

5.104. The span of incremental scales of pay fixed by the Sen Award
was 25 years. The span provided by the Sastry Award is also 25 years for
both the clerical and the subordinate staff.

5.105. The All India Bank Employees Association has demanded that
the span should be 20 years for both the clerical and subordinate staff. It has
demanded separate scales of pay for workmen discharging duties of a
supervisory nature with a span of 9 years.

5.110. The banks on the whole, have opposed the employees demand
in this connection.
5.111. In support of the contention that the span should be 20 years,
reliance has been placed on behalf of the employees on some of the awards
where the span has been 20 years, and on the award in Burma Shell Refineries,
where the span has been reduced from 20 years to 16 years (Industrial Court
Reporter, October 1958 issue page 1067). It was also stated that there were
cases where the span was still shorter.

5.107. A more or less similar demands has been made by other

organisations of workmen.

5.112. In the course of the hearing it was argued on behalf of workmen

that if a workman reaches his maximum at the 20th year of service, he would
derive other incidental benefits. The amount to the credit of his provident fund
which constitutes his saving would increase. It was argued that between the
ages of 42 and 50 a mans responsibilities were the heaviest. His son may be
going to college and his daughter may have to be married. It was urged that
it was necessary that during this period he should enjoy the maximum salary
in the scale. It was also argued that during the peak years of his service a
man should get increments more often.

5.108. The Indian Banks Association has in its reply, stated that 25
years is the normal span of incremental scales for employees in the country
and that the same should be retained. It has submitted that this Tribunal has
no jurisdiction to lay down any term or conditions of service including scales
of emoluments for those employed in a supervisory capacity who draw
emoluments exceeding Rs. 500 per mensem or who exercise either by the
nature of the duties attached to the office or by reason of the powers vested

5.113. Shri Phadke on behalf of the Indian Banks Association urged that
if the maximum in the scale of pay was reached at an early stage, it would
cause a sense of frustration among the workmen for number of years of their
lives when they stagnate having reached the maximum in the span and that
it would result in loss of efficiency and indifference to work. He urged that if a
workman after joining service had to remain in service for 35 years, he would,
for over 15 years, not receive any increment at all and that 15 years was an

5.106. The All India Bank of Baroda Employees Federation has claimed
that in every class of bank for each category of employees there should be a
graded scale of pay with a span of 20 years.

146

147

efficiency of the workman that comes with length of service in the

industry and the desirability of a provision for a saving wage, if
possible, after a fairly long period of service are recognised to be
good reasons for having a time scale with increments. Besides,
there is a valuable psychological effect on the mind of the employee
when he is assured that for normal increments he is no longer
dependant on the whims of his superior officers, which perhaps
would be the case if there were no regular scale.
The Sastry Tribunal in paragraph 85 of its Award directed as follows :

AI

5.114 There is considerable force in some of the arguments advanced

by Shri Phadke. A reduction in the span would lead to an increase in the
wage bill and have its repercussions on the provident fund contribution to be
made by banks. Workmen who have reached the maximum in the scale
would stagnate for a longer period, the efficiency bar would be crossed earlier
and the incentive to continue to remain efficient would be less. A span of 25
years in a service which may last upto 58 years is not unduly long.

5.115. Having considered all aspects of the matter, I do not consider it

proper to accede to the demand of the workmen to reduce the span from 25
years to 20 years either for the members of the clerical staff or for the members
of the subordinate staff.
5.116. As regards workmen supervisors, I am not providing separate
scales of pay for them as stated later and it is not necessary to consider the
question of providing a separate span for them.

Increments should normally be given and stoppage of increments

by managements should be only by way of punishment for proved
misconduct or gross inefficiency. As a working rule, if in the previous
year there are three adverse remarks in the service register of the
workman entered against him as a result of the managements
enquiry into his conduct and after consideration of any explanation
given by him, it may be taken as a prima facie case for stopping
the increment at the next stage and for the next year. If an
employees increment is to be withheld, it should only be done
after a proper charge-sheet has been framed against him and he
has been given adequate opportunity to defend himself. The order
in writing withholding the increment should also mention whether it
will have the effect of postponing future increments.

BE

unduly long period of time during which an employee should get no increments
at all. The number of years during which he might not receive any increment
may even be greater where a workman joins early and superannuates at the
age of 58. He further urged that the reduction in span would increase the
establishment charges of banks, as the provident fund contribution would be
proportionately higher. He urged that the basic wage structure was one
integrated whole and every aspect of it whether visible or not on the face of it
was inextricably connected with the other and that the real value of the wage
structure depended upon the total effect of these inter-acting aspects so that
any material change in one was liable to lead to a change in the whole. He
stated that the Sastry Tribunal and the Labour Appellate Tribunal had in mind
a 25 years scale and the liabilities to be imposed on the bankers included a
25 years span as a salient feature of the scale. He summed up his argument
by saying that with the result of the reduction of the span, the cost to the
banks would be higher, the return to the banks by way of efficiency in work
may be lesser and there was bound to be some element of discontentment
in the minds of senior employees for want of increments. He filed a statement
showing the financial implications of shortening the span of a scale of pay
from 25 years to 20 years on the footing that the existing minimum and the
maximum would continue unchanged. The statement shows that it would
result in an increase of total emoluments by 7.2 per cent.

5.118. In connection with the general withholding of increments of one

and all employees during any particular year due to exceptional circumstances,
such as dwindling of profits and the substantial diminishing of prospects of
good business, the following directions were given by the Sastry Tribunal :Annual increments for any particular year may be stopped at the
discretion of the bank if the ratio of its gross profits to the working
funds during the previous year is less than 75 per cent of the average
of similar ratios for the four years immediately preceding that previous
year provided however,
(1)

no discrimination is made amongst the employees of the bank

in the matter of withholding the annual increment and that
withholding of the increment applies to the entire staff of the
bank consisting of all its officers and the clerical staff
(subordinate staff being excluded).

(2)

there shall not be any withholding of increments more than

once in any consecutive period of four years.

(x) Increments
5.117. While considering the pay scales the Sen Tribunal observed that
increments should normally show a rising trend. The Sastry Tribunal has
stated the following in respect of increments :
"A time scale of wages with annual increments is now recognised
to be the normal pattern of a wage scale. It is no longer necessary
to give elaborate reasons in justification of this system. The growing
needs of the workmens family, the greater experience and improved

148

The Labour Apellate Tribunal slightly altered this direction of the Sastry Tribunal
by directing that the general stoppage may only be allowed if the ratio of
gross profits to working funds of the previous year is less than 50 percent of
the average of similar ratios in the four immediately preceding years.

149

5.119. The All India Bank Employees Association submitted that the
increments in the grades should be automatic and that part-time employees
should also be granted 50 per cent of the rate of increment annually as
demanded for a full time incumbent. The banks have in general opposed
these demands. The Northern India Banks Association has replied by saying
that the grant of increments should not be automatic but should rest on the
record of the work done by the employees during the year and the management
should have the right to withhold the increment if the work of the employee
falls below a certain standard. The Jaya Laxmi Bank is against automatic
grant of increments in the grade scales and considers that should depend
upon the efficiency of the employee concerned and the management must
have a right to review the work of each employee while the question of annual
increment is being considered.

5.123. The next question that arises for consideration is that relating to
efficiency bar.
(xi) Efficiency Bar
5.124 The Sen Award in paragraph 112 provided for one efficiency bar at
a fairly late stage in an employees career. It directed than an efficiency bar
should be placed between the seventeenth and the eighteenth year of service
in the case of all employees. It observed that efficiency bars existed in
government service and had been inserted in nearly all awards relating to
scales of pay made by Industrial Courts and Tribunals.
5.125. In the Sastry Award an efficiency bar has been placed at the 20th
year of service of an employee both in the clerical grade and the subordinate
grade. In the opinion of the Sastry Tribunal it was sufficient to have one
efficiency bar in an employees career.

5.126. The matter in relation to efficiency bars has been discussed at

considerable length in the Labour Appellate Tribunals decision. In connection
with the imposition of an efficiency bar, the Labour Appellate Tribunal has
observed in paragraph 174 that the imposition of one or more efficiency bars
in a running time scale of wages had been considered a necessity since the
date of the Islington Commission (Report of the Central Pay Commission,
para. 60) and that it was a well recognized adjunct to a wage structure, and
has been adopted by the government and also by quasi-government and
industrial establishments and had been applied by Industrial Tribunals. It has
quoted with approval the remarks of the First Pay Commission, where it has
been observed as follows :

AI

BE

5.120. In the course of the hearing, a reference was made to the

statements which appear at pages 36 to 38 in the Report of the First Pay
Commission about the system of time-scales with increments. The First
Pay Commission has observed that one of the objects of increments being
the provision of means to enable an employee to meet his increasing
responsibilities and expenditure as he grows in age, the problem would be
simpler if the scheme of providing childrens allowance and other special
allowances asked for by some associations could be adopted. Later on the
Commission has stated that the granting of increments has a two-fold
significance, one from the point of view of the employee, viz., that as he
grows in age he has greater responsibilities to meet and another from the
employers point of view, viz., that even when a man continues in the same
grade his work improves in quality and his efficiency also incrases as a result
of his experience. Employees have filed statement showing the rates of
increments provided for the members of the subordinate staff and the clerical
staff in certain commercial concerns. Shri Phadke argued that increments
should be small to begin with, progressively increasing in quantum and
becoming largest at the end. This method was not followed in the case of
subordinate staff in the banks as there were increments of Rs. 2 in the
beginning and Re. 1 in the end, owing to considerable difficulties involved in
adjustment, if this system was reversed. He also urged that the banks should
have the power to withhold increments in certain circumstances either in a
given case or as a whole.

Appellate Tribunal.

5.121. The directions given by the Sastry Tribunal are fair. They have
also been considered by the Labour Appellate Tribunal and apart from the
amendment already referred to they have been retained.
5.122. I have considered the total emoluments received by workman
throughout the span period and in fixing pay scales and providing increments
I have taken all relevant factors into consideration. As regards the granting
stoppage and the withholding of increments I give the same directions as
those given by the Sastry Tribunal as modified by the decision of the Labour

150

We are not prepared to ignore the fact that right down from the
time of the Islington Commission, all responsible authorities have
regarded the principle of the efficiency bar as an indispensable part
of the time-scale system, if it is to work satisfactorily .......

In the Labour Appellate Tribunals decision arguments advanced against the

imposition of efficiency bars have been fully dealt with. In order to allay
apprehensions in the minds of the workmen, the Labour Appellate Tribunal
has laid down the following conditions in connection therewith in paragraph
177 of its decision :
(a) The efficiency bar shall be at the end of the normal 20th year
stage in each scale.
(b) The efficiency bar shall be applied very sparingly. The general test
should be whether the employees work has fallen below that
standard of efficiency normally expected of him at that particular
stage of his career when the efficiency at the start has been
reinforced by the experience from which he should have profited.
(c) The circumstances necessitating the proposed imposition of the

151

(d)

(e)

bar shall be communicated to the employee and the employee

shall be given an opportunity to submit an explanation which shall
be duly considered.
An efficiency bar once imposed shall be reviewed every year and
before it is continued the employee shall be given an opportunity to
make such representation as he desires. Reasons for continuation
of the bar shall be recorded.
If the workman held up at the efficiency bar improves, he may be
allowed to cross the bar and at the discretion of the management
may even be placed, at such stage in the running time scale as he
would have attained if he had not been held up. In such case the
workman shall not be entitled to claim any arrears on the basis as
if there had been no bar.

5.130. The Bombay Exchange Banks Association has pleaded that the
question of a workmans needs and the question of his efficiency were entirely
different concepts. It has pleaded that if the workmen was lulled into the
belief that he need not worry about his efficiency being tested and assessed
throughout his career and that he would continue to the end of his scale
irrespective of his efficiency, a bank would not have a good employee in him.
It is submitted that so far as a bank is concerned, in the absence of an
efficiency bar, in the event of the bank coming to the conclusion that the
workman was inefficient, it would have no option but to dispense with his
service whereas if there was an efficiency bar, the workman may be kept at
the stage of the bar until his efficiency improved rather than have his service
dispensed with. It is further submitted that there should be two efficiency
bars in both the clerical and subordinate grades, one in the earlier part of the
scale (say, 5th or 10th year), and the other in the second or later part of the
scale (say, 15th or 20th year.)

BE

5.127. The Second Pay Commission has provided for two efficiency
bars. The Second Pay Commission in imposing the efficiency bars has
observed that it was ordinarily through efficiency bars that a practical
discrimination between satisfactory and unsatisfactory workers could be made
and that they had, therefore, usually provided an efficiency bar somewhere
about the 10th year in scales which were to run for more than 15 years or so
and a second efficiency bar at a later stage in scales which were to run for 20
years or longer.

The Labour Appellate Tribunal saw no reason to exclude the members of the
subordinate staff from the operation of the efficiency bar.

pleaded that in normal circumstances the management is able to find out

whether a particular clerk will turn out to be good within a period of about the
first five years and it is suggested that the first efficiency bar should be
placed at the 5th year of service. It is further submitted that such a course
would be advantageous not only to the employer but also to the employee,
because he could have a chance to reconsider whether he had taken up the
right occupation and could easily switch over to some other walk in life whilst
he was still young if the efficiency bar was applied to him at an early stage in
his career. It is further suggested that a second efficiency bar should be
placed at the 10th year of service so as to discourage the employee from
lapsing into inefficiency and a third efficiency bar should be applied at the
15th year of service. It is submitted that having only one efficiency bar and
that too at a late stage in the scales works as a damper to a really efficient
employee because he has no inducement to turn out better work, feeling that
he would be treated on a par with his colleagues in the matter of increments
irrespective of higher efficiency or superior capacity to turn out better quality
of work.

AI

5.128. On behalf of the workmen a claim has been made that increments
in the grades should be automatic and that there should not be any efficiency
bars whatsoever. It is contended that the scales are formulated on the basis
of needs of the employees, that the needs grow with the passing of time and
that with the passing of time the employees skill and intelligence grow to
the advantage of the employer. It is submitted that the efficiency bar was
unnecessary in view of the fact that the employees after putting in considerable
length of service gain both experience and efficiency and that the efficiency
bar laid down at the end of 21 years of service in the last awarded scale was
of no use, as at the end of so many years, no question of efficiency could
justifiably arise. It is also stated that efficiency bar might be used to the
detriment of the employees. It was therefore, submitted that no efficiency bar
at any stage be put.

5.129. The Indian Banks Association has submitted that it was erroneous
to assume that the skill and intelligence of employees grew to the advantage
of the employer with passage of time. It has further pleaded that the
management should have the right to see that the workmen keep up the
normal standard of efficiency and not lapse into indifference and inefficiency
because of the assured prospect of an incremental scale. It is further pleaded
that the provision in the Sastry Award for only one efficiency bar at the end of
the 20th year of service had been found to be inadequate and ineffective. It is

152

5.131. The State Bank of India has pleaded that it would be a retrograde
step to abolish efficiency bars as the existence of such bars was in the
interest of both the employer and the employees.
5.132. The Northern India Banks Association has submitted that the
efficiency bar as prescribed under the existing award was absolutely necessary
to ensure continued efficiency and that the management should have the
right to withhold increments if the work of the employee fell below a certain
standard.
5.133. The Catholic Syrian Bank Ltd. has submitted that in the ordinary
course of events efficiency was sure to deteriorate when the remuneration
was beyond the control of the management.

153

5.134. In the course of the hearing Shri Phadke on behalf of the Indian
Banks Association emphasised the need for an efficiency bar at the early
stages of an employees career and stated that if an efficiency bar was kept
at an early stage, then there was a possibility of securing improvement in the
work of an employee.

The principles which emerge from the above discussion are :

(1) that in the fixation of rates of wages which include within its compass
the fixation of scales of wages also, the capacity of the industry to
pay is one of the essential circumstances to be taken into
consideration except in cases of bare subsistence or minimum
wage where the employer is bound to pay the same irrespective of
such capacity;
(2) that the capacity of the industry to pay is to be considered on an
industry-cum-region basis after taking a fair cross section of the
industry; and
(3) that the proper measure for gauging the capacity of the industry to
pay should take into account the elasticity of demand for the product,
the possibility of tightening up the organisation so that the industry
could pay higher wages without difficulty and the possibility of
increase in the efficiency of the lowest paid workers resulting in
increase in production considered in conjunction with the elasticity
of demand for the product no doubt against the ultimate background
that the burden of the increased rate should not be such as to drive
the employer out of business.

BE

5.135. There may be something to be said in favour of the contention

urged on behalf of the banks that there should be an efficiency bar in the
early years of an employees career as that would enable a bank to mark out
efficient from the efficient after a few years of service of an employee, An
employee found to be inefficient may thereafter be more vigilent and improve
in efficiency with a view to secure higher increments in the scale of pay.
There is, however, no evidence before me about the resultant inefficiency
workmen employed as ordinary clerks and as members of the subordinate
staff when no such bar is imposed. The banks when engaging employees
have ordinarily a number of persons to choose from. In the absence of any
evidence showing the adverse effects of the non-imposition of such a bar in
the early years of an employees career, I see no reason to differ from the
views of the earlier Tribunals. As regards the imposition of an efficiency bar at
the 20th year of service there seems to be good reason for imposing such a
bar Where workmen after 20 years of experience and service is found to be
inefficient or has degenerated into inefficiency it is necessary that a bank
should have a right to prevent him from reaching the maximum in the scale of
pay. An employee ordinarily remains in service for a number of years after he
has completed 20 years of service. It is but right that an inefficient employee
should not draw for all these years the same salary as an efficient employee.
This bar is a salutary bar and there is no reason to remove it.

in the country to pay. After considering the various aspects of the matter, the
Supreme Court has, at pages 92 and 93 of the aforesaid report, observed as
follows :

AI

5.136. In the result of an efficiency bar at the 20th year of service in

respect of all categories of workmen for whom scales of pay have been provided
under this award is imposed subject to conditions similar to those laid down
by the Labour Appellate Tribunal in paragraph 177 of its decision quoted
above.
(xii) Capacity of the Industry to Pay

5.137. Whilst considering the question of wages in the banking industry,

it will be necessary to consider the question of the capacity of the industry to
pay wages above the bare minimum wage and the place of the industry in the
economy of the country. The question concerning the capacity of an industry
to pay wages has been dealt with at some length by the Supreme Court in
the case of Express News Papers (Private) Ltd., and another v. The Union of
India and others, reported in (1959) Supreme Court Reports, page 12 at
pages 89 to 93. As the Supreme Court has observed in that case, the capacity
of industry to pay can mean one of the three things, viz., (i) capacity of a
particular unit, (marginal, representative or average) to pay, (ii) the capacity
of a particular industry as a whole to pay, or (iii) the capacity of all industries

154

The Supreme Court has observed in an earlier paragraph that in a given case
it may be even permissible to divide the industry into appropriate classes and
then deal with the capacity of the industry to pay class-wise. The industry of
banking, in cases where the banks have branches in more States than one,
has been dealt with class-wise, and the capacity of the industry which, so far
as the banks before me are concerned, has to be determined class wise.
Having regard to the principles enunciated by the Supreme Court, the capacity
of the industry considered class-wise will have to be determined after taking
a fair cross section of each class. As observed by the Sastry Tribunal the
wage structure should be such as to be within the capacity of the Industry to
bear in the light not apply of its present position, but of its future possibilities
also.
5.138. The industry of banking does not produce goods but produces
services. It is an extremely important service which is rendered by banks and
on the continued and efficient functioning of banks depends the smooth
functioning of a large number of other industries in the country. In order that
the economy of the country may develop and other industries may function
smoothly, it is necessary that the industry of banking should also develop to
meet the growing needs of the country. Banking has to be regarded as a
public service and its activity to a certain extent is being regulated in the
public interest. There are various provisions in the Banking Companies Act,
1949, and in the Reserve Bank of India Act relating to the regulation and

155

5.142. Having regard to these factors, wage scales have to be fixed in

connection with each class of banks before me, so that the burden ultimately
imposed may not be such as may drive any bank managed with reasonable
efficiency, out of business. The wage structure should be such that it should
not be unduly below the paying capacity of the bank at the top of the class,
nor unduly above the paying capacity of the bank at the bottom of the
class, which is reasonably well-managed. One does sometimes come across
banks in the private sector which continue to function for a number of years
without distributing a naya paisa by way of dividend, which do not show any
substantial profits or which show even losses for a number of years without
any special reason, when other banks functioning in the same region with
smaller working funds and reserves make considerable profits. Such banks
which continue to exist for various reasons peculiar to those who run the
banks cannot be taken into account to depress the wages of the class in
which such banks fall. It would be putting a premium on the existence of
unhealthy banks if they are encouraged to continue their activities by the
incentive of lower wages.

BE

5.139. The stability of the industry depends upon the over-riding factor of
credit. The banks are very often described as delicate instruments of credit.
The failure of the bank has its repercussions on the other banks and on the
deposits made with other banks. Great care is required to inspire the
confidence of the public. Deposits received by the banks constitute, to a very
large extent, the raw material for providing advances to persons needing the
same. A bank unlike a manufacturing concern obtains a very large proportion
of its working funds from the depositors and only a small proportion from its
shareholders. In considering the claims of employees, the claims of the
depositors and other constituents of the bank have also to be kept in mind.

insurance policies and various other documents. They advance moneys on

securities and issue letters of credit and travellers cheques to customers.
The functions which the bankers discharge are numerous and varied. The
transactions on the Stock Exchange may be affected by the policy adopted
by banks in connection with the advance on shares and securities.
Transactions of purchase and sale of various commodities may be affected
by the policy adopted by banks in connection with the advance on such
goods. Expansion or retraction of credit may affect financing of various
transactions. The smooth functioning of banks is necessary for the economic
growth and welfare of the country. Peace in this industry is requisite for the
economic progress of the country at the pace set by the Third Five Year
Plan.

control of the industry in the larger interest of the country. Banks have to
work in a more or less rigid framework set by law. The depositing and investing
public always plays for safety for its deposits and stability for its investments.
Prudent banker not merely provide for what are sometimes known as secret
or undisclosed reserves but provide for easy liquidity of some of its assets in
order to meet any emergency. They also consider the advisibility of following
the policy of maintaining stable dividends. Every effort has to be made to
gather the confidence of the public and the depositors so that the working
funds and operations of the banks may grow.

5.140. In considering the capacity of the industry of banking to bear the

burden of increased wages which may be required to be paid having regard to
the workmens claims based on social justice, it is necessary to bear in
mind the claim of the shareholders to a fair return on the capital invested by
them.

AI

5.141. Banking is one of the key industries in the country. The successful
implementation of the Third Five Year Plan depends to a considerable extent
on the successful operation of banking in the country. It is requisite that the
available resources of the country should be harnessed for the successful
implementation of the Third Five Year Plan. Banks have an important role to
play in moblising the resources of the country and canalizing them to
productive purposes. It is necessary that the banking habit should spread
throughout the length and breadth of the country so that the unused wealth of
the country is not merely gathered but is put to effective use. The dependence
of commerce upon banking has in modern times become exceedingly great
and matters have reached a stage where the cessation for some length of
time of banking activity may paralyse to some extent the economic life of the
nation. Bankers issue credit. Large transactions are effected by means of
cheques rather than by the exchange of currency. Banks assist the industrial
undertakings by underwriting their debentures and shares and occasionally
finance the purchase of real property. Banks serve as custodians of stocks
and shares and other valuables. Imports into and exports out of the country
are financed by banks and documents relating to the goods so imported and
exported pass through the hands of the bankers. They have to deal with
warehouse warrants, bills of leading, railway receipts, bills of exchange, marine

156

5.143. There are various restrictive provisions contained in the Banking

Companies Act. By Section 17 it is made obligatory on a banking company
incorporated in India to create a reserve fund. A banking company is under
an obligation out of the balance of profit of each year as disclosed in the
profit and loss account prepared under section 29 and before any dividend is
declared to transfer to the reserve fund a sum equivalent to not less than 20
per cent of such profit until the amount of such reserve fund together with the
amount in the shares, premium account, equals the amount of the paid-up
capital of the company.
5.144. The All India Bank Employees Association has contended that
the banking industry today has stabilised its position firmly, that its growth
during the second Five Year Plan period guarantees a tremendous progress
the 3rd Five Year Plan period, that in view of the high tempo of the industrial
development in this country and fulfilment of the various plan targets there
would be a steady flow of deposits in the banks at a more rapid pace than

157

stagnation which was broken in the year 1955 from which year onwards
deposits began to rise progressively and between 1949 and 1958 the volume
of total deposits had nearly doubled. They further submit that the ratio of
bank credit to industry in India rose from 34.7 per cent of the total credits in
June 1953 to 46.2 per cent in April 1959. As regards the State Bank of India,
they have submitted that the State Bank of India occupied a unique place in
the Indian banking industry, that by its age, its resources, its size, its business
and its reputation it enjoyed an unrivalled position in the banking system of
the country, that the total deposits of the State Bank of India which stood at
Rs. 188.0 crores in June 1955 had steadily risen to Rs. 615.0 crores in April
1960 and formed 31.9 per cent of the total deposits of all scheduled banks in
India as compared to 19.1 per cent in June 1955, that the banks advances
(including bills) which amounted to Rs. 110.00 crores in June 1955, steadily
went up to Rs. 185.3 crores in June 1959, that in April 1960 the banks
advances had risen to the record level of Rs. 211.9 crores, when they formed
18.8 per cent of the total advances of all scheduled banks as compared to
18.9 per cent at the end of the busy season of 1954-55 and that the banks
investments in Government securities rose from Rs. 87.0 crores in June
1955 to Rs. 297.4 crores in June 1959. They have further submitted that the
future of the banking industry was very bright.

AI

BE

during the 2nd Plan period, that the progress from 1954 in the banking industry
was tremendous, that there was no reason to consider that this progress
would not be maintained in future that during these five years the banks
earnings as well as profits had almost doubled, that from 1956 to 1959
expansion in banks credit was of the magnitude of about fifty percent that
the pattern of planned development to which the Indian economy was
committed would enable the banks to earn more deposits and consequently
more profits, that the average of the big banks dividends for the last five
years amounted to 14 per cent, that some of the banks had issued bonus
shares- out of the reserves, that the deposits of all banks in India in 1954
were Rs. 960.37 crores, in 1955 were Rs. 1043.80 crores, in 1956 were Rs.
1125.10 crores, in 1957 were Rs. 1346.60 crores, in 1958 were Rs. 1562.20
crores and in 1959 were Rs. 1815.35 crores, that the ratio of establishment
charges to gross earnings had decreased, that under the Banking Companies
Act the banks had been given the right to show income after making provision
for bad and doubtful debts and other usual and necessary provisions and as
such it was not possible for anyone to ascertain exactly what their actual
earnings were, that it was possible for the banking industry to pay to the
employees what was demanded in the Charter of Demands submitted by the
All India Bank Employees Association and at the same time, to make profits,
pay dividend and build up reserves, both open and secret, that whatever
difficulties if any, the banking industry was facing, were due to
mismanagement of the vested interests controlling the banks and that the
remedy for such difficulties was to put more restrictions on the activities of
banks management and ultimately to nationalise the whole of the banking
industry in the interest of the countrys economy. The All India Bank Employees
Federation has submitted that the financial position of the banks as a whole
was extremely sound.

5.145. The All India State Bank of India Staff Federation and the State
Bank of India Staff Union, Andhra Pradesh, in their statement of claim have
pleaded that the resources of the Indian Banking system were expanding at
a fast rate, making it a dynamic instrument for financing the development of
the economy of the country, that this development has emerged from the
phase of inflation which the country has been witnessing for some years,
that price inflation had been an element in accelerating capital formation and
the expansion of banking system, which in turn, was aided by the process of
inflation as an important factor in financing economic development, that an
important index of the healthy growth of the banking system and of the steadily
increasing banking habit was the ratio of bank deposits to the currency in
circulation and that Indias ratio improved between 1950 and 1959 from 0.70
to 1.03. As regards deposits, they submit that there were three noteworthy
trends. There was a sudden fall in the volume of deposits from the year 1948
to 1949, the contraction in the total deposits being of the order of approximately
Rs. 100 crores; from 1949 to 1954 the volume of deposits was in a state of

158

5.146. The South Gujarat Bank of Baroda Employees Union has

submitted that the Bank of Baroda has made a commendable progress and
has built up large reserves and has expanded its banking activities in various
parts of India as well as in foreign lands and that it has paid to its shareholders
exorbitant dividends and has made huge profits.
5.147. The Indian Banks Association in its reply has observed that the
state of the banking industry and its capacity to pay were matters of vital
importance and that these matters would have to be investigated before any
fresh burdens could be placed upon the industry. It has referred to the various
directives issued by the Reserve Bank of India since 1956 restricting the
activities of banks. It has referred to the various legal restrictions which act
as a brake upon the earning capacity of the banks. These restrictions have
been imposed for the stability of banking and in the general interest of the
economy of the country, and they have to be taken into account in assessing
the paying capacity of the industry.
5.148. The Indian Banks Association has further submitted that the
capacity to pay of the banking industry as a whole has been fully stretched
and there is no scope to call on banks to bear any further financial burdens,
both in the interest of the industry and the national economy, that if the
productivity of labour, the place of industry in the economy of the country and
the capacity of the industry to pay were taken into account, it would be clear
to the Tribunal that the present rates of emoluments of bank employees were
fair and even generous, and that somewhat exaggerated ideas had been
formed by the employees about the prosperity of the banking industry. It has

159

denied that during the period of five years the banks represented by it have
doubled their earnings and profits. It has stated that the employees have
attempted to paint a very rosy picture and have suggested an era of huge
bank profits by merely referring to figures of bank deposits ignoring other
relevant factors and materials which alone could present a true and complete
picture in its proper perspective. It has pointed out that 67% of the Indian
Scheduled Banks have not been able to strengthen their position considering
that they have reserves which are less than their paid up capital, 40% of the
said banks having reserves less than even 50% of such capital. It has further
stated that it was misleading to state that the dividends to the shareholders
of the banks are at the rate of 14%. It has also submitted that a mere rise in
profits of the banks was no justification for granting higher emoluments to the
employees since the need to make proper allocations out of such profits in
the interest of stability and safety of the industry could not be ignored.

5.150. The Northern India Banks Association has pleaded that banking
industry is subject to numerous well-known risks, such as losses arising
from depression in Trade and Industry, fluctuations in the value of Government
and other Stock Exchange securities and losses due to frauds on the part of
the borrowers, clients and members of the staff. It has further stated that the
fact that investors in industries have generally reaped much large profits than
investors in bank shares, not only in India but all over the world, shows that
real banking profits bear no comparison to profits in industry, if the relative
investment of capital is taken as a basis for the measurement of profits. It
has pointed out that as a result of the partition of the country banks which
had activities in areas now forming part of West Pakistan, suffered very heavy
losses, with the result that some of them had to write off not only the reserves
but also the major part of their capital (varying from 50 per cent to 100 per
cent) apart from losses which they had to transfer to their depositors. The
Association submits that the banking industry was not a productive industry
but only a conservative industry and by the very nature of its activities,
being the core of the financial system, it had invest a large percentage of its
funds in Government securities which investment had resulted in lot of
depreciation as borne out by the experience of the past years. It further
points out that banking is an industry for the conservation of the nations
resources and it is subject to upheavals caused by war pestilence and
Government deficit financing to an extent unknown to productive units of
industry. The banks had also to keep their investments diversified and thus in
working out the real paying capacity of the banking industry, large sums had
to be earmarked as provision for losses caused by change in money rates
and by political or natural calamities which might occur at long intervals. The
Association has submitted that the banking industry as a whole could not
bear any further increase in the wage bill and that it would be difficult for the
banks to meet their rapidly increasing establishment charges based on the
automatic operation of the time scale of increments in the existing award and
the consequent increase in the dearness allowance, house allowance,
provident fund contributions, bonus, gratuity, etc. It has observed that there
was no doubt that since 1954 the deposits of the banks have increased as
also their gross earnings. It has pointed out that the increase in the net
earnings, owing to a rapid increase in establishment charges and other items
of expenditure had not however been such, as to enable the banks, after
making provisions which prudence dictates and which the law wisely
envisages, to step up the dividends substantially. It further says that heavy
establishment charges were one of the very important contributing factors to

AI

BE

5.149. The Bombay Exchange Banks Association has stated that the
Exchange Banks did not plead incapacity to pay reasonable wages. It points
out that banking is a labour intensive occupation, establishment costs forming
the major part of working expenses. It has denied that the progress from
1954 to date has been tremendous. It has further stated that the profits
made up to date were moderate, that it would be unrealistic merely to refer to
earnings and profits without at the same time considering the increase in
cost and expenses particularly establishment charges and that the
establishment expenses of the foreign scheduled banks have risen at a much
faster pace than their profits. It has pointed out that banks have to maintain
large reserves to ensure that the depositors interest are safeguarded and to
avoid the possibility of a serious monetary crisis and that statutory provisions
had been enacted in respect of reserve funds and of compulsory deposits
with the Reserve Bank of India mainly for these purposes. It further points out
that if a healthy dividend was not maintained, it would be reflected in the
market price of the shares and would affect the depositors confidence with
serious repercussions on the banks resulting in fall of deposits and contraction
of business with consequential effect on employment. It has submitted that
the claim made by the workmen that the future of the banking industry and
at least the picture of the coming five to seven years can be foretold, was
extraordinary, naive, optimistic and incorrect. It further points out that overall
level of bank deposits depends primarily on the volume and velocity of currency
in circulation which is determined by the Governments economic, monetary
and fiscal policies. It further states that there was no doubt that the spread
of the banking habit had led to a higher level of deposits, but in the ultimate
analysis, over a long period, the growth must depend on the factors outlined
above. It has submitted that with greater and greater control by the Reserve
Bank of India, it was impossible to postulate what the profit position would be
in the near future and that it was not correct to merely take into account the
rise in profits ignoring the rise in working expenses. It denied that if the

Charter of Demands of the All India Bank Employees Association were

implemented by the banks, it would still be possible for banks to make profit,
pay reasonable dividends and build up adequate reserves. It denied the
allegations of mismanagement and stated that as regards the question of
nationalisation, that was a matter best left to the legislature.

160

161

AI

BE

5.151. The State Bank of India in its reply, has stated that its major
shareholder is the Reserve Bank of India which ploughed back a major portion
of the dividends payable to it particularly to finance the State Bank in meeting
a portion of the losses incurred by the new branches opened by the State
Bank as also by those opened or to be opened by the State Banks
Subsidiaries in rural and semi-urban areas. The State Bank denied that the
finances of the State Bank would not be affected even if all the demands of
workmen were conceded in full. It stated that if the demands were met fully,
it would involve the State Bank in an additional expenditure of Rupees five
crores or thereabouts per annum only in respect of its workmen staff in India.

(a) The large number of small banks.

(b) The keen competition between the small units operating here and
the bigger units who had opened branches here.
(c) The high rates of interest, the small units had to pay for their
deposits.
(d) The absence of marketable securities for utilisation of funds in
these banks.
(e) The high proportion of time deposits when compared to the rest of
India.
(f) Low proportion of demand deposits in the absence of large scale
industries operating in the area.
(g) The restrictions or directions imposed by the Reserve Bank of India
in regard to unsecured advances or advances against real estate.
(h) Higher costs in obtaining deposits from a net work of rural branches.
(i) The absence of Small Scale Industries or Large Scale Industries in
the area to afford utilisation of Banks funds or acquiring deposits
at lower cost.
(j) Competition from bigger banks operating in this area.
(k) The small size of the banks-operation of the Banking Companies
Act.
(l) High rates of taxation.
(m) Difficulties of banks to increase capital.
(n) Difficulties on account of delays in Courts for realising the amounts
sued for.
(o) The difficulties the banks may have to face on the passing of the
several legislations which are awaiting assent of the President of
India.
(p) . The peculiarities of the area where the banks are operating, in
reference to the economical background of the population and the
agricultural economy.

the inability of the banks to give satisfaction to the shareholders and that in
the case of many of the member banks, the handicap of losses, resulting
solely from the partition of the country, had been such as to have made a
distribution of any dividend impossible since 1947. It points out that out of 35
banks adversely affected on account of displacement from West Pakistan,
only 14 had been able to survive and out of these, only 3 had been able to pay
dividends and these too, after missing the same for several years. It further
submits that the really important thing was not the increase in bank deposits,
but the effect that the increase has in net earnings of banking institutions,
and judging from the increase in reserves and distribution of dividends, this
increase could not be deemed, by any test, as exceptional. It points out that
the net profits of most banks had not been enough to enable them, over the
years, to raise their statutory reserves to the level of their paid-up capital, and
that some of the banks had not been able even to write off depreciation in
their investment in Government and other stock exchange securities. It refers
to the absence of any provision or wholly inadequate provision by most banks
in respect of the accumulated liability on account of gratuity and/or the
retirement benefits due to the employees even under the existing award.

5.152. The State Bank has submitted that if the Tribunal took the view
that the employees had established a case of changed circumstances, it
should also be borne in mind that the State Bank was by Statute required to
do what other commercial banks would not think it advisable to do, namely,
opening branches in rural and semi-rural areas, that the State Bank, in the
national interest, has to encourage and support small scale industries, cooperative institutions, etc., by providing cheaper finance and that the State
Bank through a network of its branches has also to take over Government
treasuries and sub-treasuries and deal with Government transactions as agent
of the Reserve Bank.

After pointing out these, the Association states that although the deposits of
the banks may show a rise, the earning capacity had fallen, and that during
the last four years, its member banks had not made any more progress so
as to enable them to meet any additional burden, but on the contrary, their
earning capacity had been reduced. The Association has submitted that the
problems of the banks in Kerala State would have to be treated on a special
basis as they could not be put on par with banks operating in the rest of
India.

5.153. The Travancore-Cochin Bankers Association, representing the

Palai Central Bank Ltd., the Travancore Forward Bank Ltd., the South Indian
Bank Ltd.. the Indian Insurance & Banking Corporation Ltd., the Marthandam
Commercial Bank Ltd., the Trivendrum Permanent Bank Ltd. and the Nadar
Mercantile Bank Ltd., has referred to the following peculiar problems and
features relating to banking in Kerala State :

5.154. The Kerala Bankers Association, representing the Catholic Syrian

Bank Ltd., the Cochin Commercial Bank Ltd. and 5 other banks which are
not before me points out that the banks in Kerala had been advancing upto
eighty per cent of the total deposits and that it was because these banks
were keeping up the higher percentage of advance that they were able to
show profit, that the Reserve Bank was insisting on all banks that the above

162

163

ratio should not exceed sixty per cent and that on compliance with the same
there would be a substantial reduction in the profits. It further points out that
the Reserve Bank had required that the security on landed property should
not exceed twenty per cent of the total advance of sixty per cent and that the
same would result in reduction of profits and that any additional financial
burden at this stage was sure to upset the working of the banks.

Hindustan Commercial Bank Limited has submitted that the bank was not in
a position to shoulder larger financial burden in the shape of increased
emoluments to the workmen of the bank and prayed that no additional burden
be imposed on the bank.
5.157. In connection with the question of banks capacity to pay
reasonable wages, the Bombay Exchange Banks Association on behalf of
its 12 member banks reached an understanding on 18th August 1960 with
the All India Bank Employees Association in Miscellaneous Application No.
10 of 1960 made by the All India Bank Employees Association for directions
for production of certain documents. A reference to the said understanding
has been made in words following :
The All India Bank Employees Association do not press their
above application for production of documents, etc., against the
various Exchange Banks concerned in the reference ***** on the
understanding that the Exchange Banks do not plead incapacity
to pay reasonable wages as may be awarded by the Tribunal.

A similar understanding was reached between the Bombay Exchange

Banks Association and the All India Bank Employees Federation on the
same day in connection with Miscellaneous Application No. 25 of 1960 filed
by the All India Bank Employees Federation for directions for production of
certain documents.

AI

BE

5.156. The National Bank of Lahore has submitted that the picture painted
by the All India Bank Employees Association of the prosperity of the banking
industry was more or less an illusory one. It has submitted that any further
increase in the wage bill would result in the imposition of an unbearable
burden on the industry. The Bharatha Lakshmi Bank Limited has submitted
that the bank had not been able to pay dividend for the last 11 years as its
profits were insufficient and any greater burden placed on it would surely
result in depletion of capital. It has submitted that any increase in salary
disproportionate to the resources and the capacity of banks would spell ruin
of small banks. In connection with the statement that from 1954 onwards the
banking industry has made tremendous progress in all directions and
increased their earnings and profits, the bank has submitted that this was
one phase; that a large number of banks had gone out of existence during
that period was the other phase of development in the banking industry and
that it was unwise to consider one phase and ignore the other. The Gadodia
Bank has referred to the grave circumstances and acute problems which
banks had to face on account of growing legislative control and the rising
cost of operation without any corresponding increase in income or
improvement in productivity. The bank has submitted that the Indian banking
in its role as resource mobiliser and credit purveyor for the economy of the
country, could best play its part only when it was not saddled with more
expenses than what it had to pay in the present circumstances and that the
banks capacity to pay more was out of question. It has further submitted
that the grades which were fixed by the Sastry Award were the maximum
that were warranted by the capacity of banks to pay or even by the economic
condition of the country. The Vijaya Bank has submitted that it would be
impossible for it to bear any additional burden on account of increase in the
salary or on account of increase in the dearness allowance or other allowances
to be paid to its employees. The Miraj State Bank has submitted that the
financial position of the bank was very weak and that the bank did not have
capacity to pay any higher wages or to afford any better conditions of work
than those that were now made available to the workmen by the bank. The

5.155. It has been pleaded on behalf of the eight Subsidiaries of the

State Bank of India that the special position and the special features of these
banks and the obligations which they had to discharge and the restrictions
that had been imposed on them should be taken into consideration when
adjudicating upon the disputes between the Subsidiary banks and their
workmen.

164

5.158. There are numerous statements which have been filed on behalf
of the employers and the employees in connection with the paying capacity
of the banks on various footings.
5.159. The Indian Banks Association at the time of the hearing pointed
out that the banks would be required to pay a considerable amount by way of
premia to the Deposit Insurance Corporation in connection with the scheme
of insurance in respect of deposits made by depositors. A statement has
been filed by the Indian Banks Association showing that its A Class member
banks would have to pay insurance premia varying from Rs. 1,40,632/- to Rs.
9,78,108/- its B Class member banks would have to pay premia varying from
Rs. 41,366 to Rs. 98,084 and its C Class member banks would have to pay
premia varying from Rs. 6,560/- to Rs. 34,561/-. The State Bank of India has
filed a statement showing that at the provisional rate of 5 N.P. per Rs. 100/per annum the State Bank of India would have to pay approximately a premium
of Rs. 13.86 lacs.
5.160. The Balance Sheets and Profit and Loss accounts of banks have
been filed before me. A statement has also been filed showing the effect on
the profits of a number of banks if a 10 per cent overall increase in emoluments
takes place. The Indian Banks Association has exhibited a letter, dated 17th
June, 1961 written by the Deputy Economic Adviser of the Reserve Bank of
India to the Indian Banks Association containing certain proposals made by
the Reserve Bank of India for strengthening the capital funds of banks and

165

raising cash reserves and liquidity requirements of banks. In the course of

the letter, the trends in paid-up capital and reserves of commercial banks in
general have been discussed and the same contains a fair assessment of
the progress of the banking industry. It would not be out of place to set out in
extenso the following extract therefrom :

166

1047 crores
1186 crores
1318 crores
1474 ,crores
1566 crores.

AI

It is also stated in the said letter that the further fast pace of expansion
in deposits, advances, etc., during recent years as well as the changing
pattern of bank lending make it desirable now to prescribe higher standards
in regard to paid-up capital and reserves. This statement shows the great
expansion of banking industry during recent years with only a small increase
in the paid-up capital and reserves to the extent known. The total deposits of
scheduled banks in the last 5 years excluding the P.L. 480 figures are as
follows :

Rs.
Rs.
Rs.
Rs.
Rs.

5.161. As regards the general economic conditions of the country, it

may suffice to make a reference to the report of the Central Board of Directors
of the Reserve Bank of India for the year 1st July, 1960 to 30th June, 1961. It
is stated in this report that during the accounting year ended June 30, 1961
which broadly corresponds with the final year of the Second Five Year
Plan the favourable developments in the Indian economy were a rise in
aggregate investment, an encouraging advance in agricultural output and a
record rate of increase in industrial production; that the expansion in bank
credit to the private sector and to Government led to a further sharp increase
in money supply during the year; while the expansion in the former was
larger than last year, that in the latter was smaller and that the wide spread
boom in economic activity was also reflected in the ebullience of stock and
capital markets and unusual activity in the new issue market for the greater
part of the year. In connection with monetary situation and banking trends,
it was observed as follows :

BE

In the course of the last decade, the Indian banking system has
passed through a phase of vigorous business expansion following
the increasing economic activity under the stimulus of the First
and the Second Five Year Plans. Reflecting the substantial rise in
the developmental expenditure and the level of economic activity,
particularly since 1955, deposits of Indian commercial banks
(excluding P. L. 480 deposits) have nearly doubled while, during
the same period, bank credit has risen by two and a half times and
the ratio of credit to deposits has risen from 49 per cent as at the
end of December, 1950 to 69 per cent at the end of December,
1960. There has also been a change in the distribution of bank
credits; credit to industry, which in December, 1950 constituted 32
per cent of the total credit, accounted for 51 per cent of the total as
on October 30, 1960. Further, a few of the commercial banks have
been venturing into new lines of activity such as term lending to
industry, underwriting of new issues with the concomitant risk of
having to hold unsold shares, guaranteeing of deferred credit
payments, etc. The profits of the Indian scheduled banks have
doubled between 1950 and 1960. In contrast, the growth in capital
and reserves has been very slow, particularly in relation to the growth
of deposits. The total paid-up capital and reserves of Indian
scheduled banks increased between 1950 and 1960 by only Rs. 9
crores to Rs. 68 crores. The increase in paid-up capital component
during the period was only Rs. 2.3 crores. The ratio of paid-up
capital and reserves to deposits has, therefore, been steadily
declining from 13 per cent in 1939 to 9 per cent in 1950 and further
to 5 per cent in 1960 excluding P.L. 480 deposits). As at the end of
January, 1961, the ratio of paid-up capital and reserves to deposits
was below 5 per cent in the case of 23 banks of which 9 were large
banks (having deposits above Rs. 25 crores). The ratio of only paidup capital to deposits was below 3 per cent in the case of 23 banks
of which 10 were big banks.

1956
1957
1958
1959
1960

In the monetary sphere, reflecting the continuing high tempo of

economic activity both money supply with the public and scheduled
bank credit showed a larger expansion than in the preceding year.
Money supply with the public rose by Rs. 204 crores (adjusted for
withdrawals of special currency from Kuwait, referred to below) or
7.5 per cent, as compared to Rs. 171 crores or 6.8 per cent in
1959-60. As in the previous year, the bulk of the expansion in
1960-61 also occurred under currency with the public, which
accounts for more than two-thirds of total money supply. The growth
in money supply in the Second Plan period (end-March 1956 to
end-March 1961) was significantly larger than in the First Plan period,
the aggregate net expansion amounting to Rs. 722 crores or 33.1
per cent as compared to Rs. 199 crores or 10.1 per cent in the
First Plan.

In connection with the scheduled bank credit, it has been observed that
the scheduled bank credit, which had expanded by Rs. 139 crores in 195960, rose further by Rs. 163 crores (to Rs. 1288 crores) during the said year
under review. It is further observed as follows :
The expansion in 1960-61 occurred together with a decline in deposit
resources (inclusive of P.L. 480 funds) of Rs. 35 crores; in contrast,
the expansion in 1959-60 took place alongside a rise of Rs. 228
crores in deposit resources (inclusive of P.L. 480 funds). Exclusive
of P.L. 480 funds, as explained earlier, deposit liabilities showed a

167

stagnant, net invisible income was rapidly on the decline, and

balance of payments deficit widened considerably resulting in a fall
of Rs. 600 crores in foreign exchange reserves, which was thrice
the figure originally estimated notwithstanding the fact that foreign
aid was far in excess of the original provision. The pressure of
aggregate demand in the economy was intensified and largely
contributed to the rise of about 30 per cent in the price level over
the five-year period. On balance there has been over the Plan
period a definite advance in terms of aggregates but the net
improvement as measured by increase in per capita national income
has been modest owing to the growth in population.
In connection with the Third Five Year Plan it has been observed in the
said report as follows :

The achievements of the Second Five Year Plan have been summed up in
the report in the following words :

AI

The achievement of the Second Five Year Plan which has just
ended remains impressive, despite the foreign exchange crisis early
in its course, the vicissitudes of natures bounty and a steady rise
in prices throughout the period. It is true that not all targets have
been fulfilled, but commandable advance on a wide front has been
attained in production and standards of living and welfare services
and in preparing the groundwork for further advance in the Third
Plan. In spite of the vagaries of the monsoon and the inadequacies
of organisation, agricultural production went up by 16 per cent over
the Plan period and the output of foodgrains by 20 per cent, though
the output of 1960-61 is expected to fall short of the target of 80
million tons by 2 million tons. Industrial production made an
impressive advance of 40 per cent. National income at constant
prices is estimated to have risen by 19.6 per cent, as against a
rise of 18.4 per cent over the First Plan period. Plan outlay at Rs
4,600 crores was Rs. 100 crores higher than the revised target,
though Rs. 200 crores below the original target; allowing for the
rise in prices, investment in real terms shows a greater shortfall in
relation to the target. On the other side of the medal, exports were

168

The Third Plan envisages over the five years an aggregate investment
of Rs.10,400 crores, an increase in the ratio of investment to national
income from 11 per cent in the Second Plan to 14.15 per cent in
the Third Plan, an increase in the ratio of savings to national income
from about 8.5 per cent to nearly 11.5 percent, a substantial rise in
agricultural and industrial production and and increase in national
income of about 30 per cent. With additional taxation of Rs. 1,710
crores and the combined total of market borrowings an small savings
at Rs. 1,400 crores, the deficit financing required has been reduced
to the level of Rs. 550 crores, which is expected to be noninflationary, if the output targets are realised.

BE

rise of Rs. 130 crores in 1960-61 as compared to Rs. 163 crores in

1959-60. On the basis of the annual average figures, the rise in
bank credit during the year as compared to the previous year was
sharper still being Rs. 185 crores as compared to a rise of Rs.
99 crores, on the average in 1959-60. The comparatively smaller
slack season contraction was a major factor contributing to the
larger credit expansion in 1960-61. As against a decline of Rs.
118 crores in the 1958 slack season and of Rs. 79 crores in the
1959 slack season, the contraction in the 1960 slack season was
barely Rs. 20 crores; a decline in advances against seasonal
commodities was mostly offset by increased credits against
industrial goods. The expansion in the 1960-61 busy season, on
the other hand, exceeded the previous busy seasons record level
of Rs. 189 crores by Rs. 10 crores. The credit-deposit ratio rose
sharply from 57.2 per cent at end-June 1960 to 71.1 per cent by
end-March 1961 and stood at 66.7 per cent at end-June 1961;
excluding P.L. 480 funds, the ratio worked out to 72.9 per cent at
the end of June 1961 as compared to 68.8 per cent a year before.
It may be noted that credit expansion in the Second Plan period
proceeded at a much faster rate than in the First Plan, the aggregate
net rise in the period 1956-61 being of the order of Rs. 575 crores
or 76 per cent as compared to about Rs. 200 crores or only 35 per
cent during the period 1951-56.

In the Trend and Progress of Banking in India during the year 1960 published
by the Reserve Bank of India it is stated in paragraph 80 and 81 as under:
Indian banking achieved significant progress in all aspects of its
business during the years 1956-60, and thus responded satisfactorily
the requirements of the Second Plan. The growth of deposits was
substantial; it was of the order of 85 per cent for the scheduled
banks. The number of bank accounts, which is an important
indicator of the spread of banking habit, also rose markedly by
about 55 per cent as compared to only 13 per cent in the First Plan
period. The bulk of the increase was in the savings and fixed deposit
accounts of small men, though this meant a rise in the cost of
service of banks. The loan accounts increased by 83 per cent,
almost by the same rate as in the First Plan period. Equally
impressive was the rise in the volume of other services of banks
such as issue of drafts and telegraphic transfers and collection
and negotiation of bills, both inland and foreign.

Gratifying as the progress has been so far, the banking system

has to gear itself to meet the challenge of the Third Plan, the

169

investment target of which is about 50 per cent higher than of the

Second Plan. The indications are that the volume of work to be
handled by the banking system might well be nearly doubled in the
Third Plan period.

which the banks would otherwise have to pay under the Income Tax Act.
Under the Scheme of the Indian Income Tax Act prevailing for some time the
taxes payable by a company in respect of the taxable income of the company
amount to 45 per cent thereof. A further 5 per cent increase is envisaged in
the new budget as presented to Parliament. In the result, any increase in the
establishment charges will be offset by reduction of taxes to the extent of
about 50 per cent of such increase.

Reliance has been placed upon a speech delivered by Shri H. V. R.

lyengar, Governor of the Reserve Bank of India, as President of the Indian
Institute of Bankers at the annual general meeting held on 10th August,
1961. In the course of his speech he has observed that it was refreshing to
recall that a phase of stagnation of bank shares in recent years had also
been followed during the last year by an impressive advance, the index of
bank shares having risen over the year upto July 15 from 185.9 to 225.3 as
against a modest increase in the general index of variable dividend securities
from 176.4 to 182.6.

5.166. I have before me material from which to judge the paying capacity
is considered having regard to the paying capacity of a fair cross section
considered classwise and if the industry is considered unitwise. As regard
the banks falling in Class A, the Exchange Banks do not plead incapacity to
pay reasonable wages. Whether one looks at a fair cross section of the
banks falling in Class A or considers the individual units in the Class, these
banks without any difficulty, would be in a position to bear the burden of the
increase in remuneration and of the increase in the other benefits and amenities
provided under this award.

BE

5.162. On behalf of the employees of the State Bank of India, Bengal

Circle, reliance has been placed on a speech delivered by Shri P. C. Bhattacharya, Chairman of the State Bank of India, at the 6th Annual General
Meeting of the shareholders held at Bombay, wherein he has referred to the
net profits of the bank after the usual and necessary provisions had been
made and which showed an increase from Rs. 1.87 crores to Rs. 2.18 crores
during the year 1960. In his speech he has stated that the bank has been
able thereby not only to strengthen its reserve fund and other funds to a
greater extent than last year but also to declare a dividend of Rs. 22.75 per
share for the year, thus restoring practically the net dividend that was previously
available to the shareholders.

5.165. As far as it is humanly possible to foresee the future, apart from

any major calamities that may occur, the future of banking and of banks,
except of a few small units, is bright.

AI

5.163. On an application made by the All India Bank Employees

Federation and 2 other unions I passed an order on 20th January 1961, in
connection with 62 banks under the provisions contained in section 34A(2) of
the Banking Companies Act, requiring the Reserve Bank of India to furnish to
me a certificate in respect of each of the said banks as provided by the said
section after taking into consideration the principles of sound banking and all
relevant circumstances concerning the said banks, stating whether I should
not take into account any amount as such reserves and provisions of the
banking company concerned or may take them into account specifying the
extent of the amount to which only I may so take them into account in
determining the paying capacity of the banks in connection with any financial
burden that may be imposed upon them as a result of my award. The Reserve
Bank has furnished to me the requisite certificates and in making my award,
I have duly considered the same.

5.164. In considering the burden which the banking companies would

have to bear by reason of an increase in the establishment charges, one
cannot lose sight of the fact that such increase would result in the dimunition
of the taxable income of the companies concerned. Such reduction in the
taxable income would also result in the reduction in the amount of taxes

170

5.167. As regards the banks falling in Class B, whether the paying

capacity is considered having regard to the paying capacity of a fair cross
section of the class or even of the individual units, they would be able to bear
the burden of the increase in remuneration and of the increase in benefits and
amenities provided under this award. I have in the chapter relating to the
classification of banks and areas dealt with individually the case of the
Subsidiaries of the State Bank of India which constitute a major part of banks
falling in this class.
5.168. As regards the banks falling within Class C, if a fair cross section
of this class is taken, they would be in a position to bear the burden of the
increase in remuneration and of the increase in benefits and amenities provided
under this award. I have also taken care to examine the case of several
banks falling within this class unitwise while dealing with the question relating
to classification of banks. Some of the weaker units which may find it difficult
to bear the burden of this award applicable to Class C banks have been
separately listed and put in the Excepted List.
5.169. As regards the banks shown in the Excepted List, I have
considered their case unitwise and I have provided for workmen employed in
those banks what I regard as the minimum wage. In my view, they would or
should be able to bear the burden imposed under this award.
5.170. To the extent that I found that a sudden change of service conditions
might lead to a precipitous increase in the burden on some of the banks. I
have provided the necessary relief.

171

(xiii) The National Income

for them full or adequate neutralisation in respect of the rise in the cost of
living and that consequently erosion has taken place in their total emoluments
in terms of purchasing power. It is the contention of the workmen that money
has its value in terms of its purchasing power, that when prices of goods
consumed by the workmen increase, the workmen with the same amount of
money can buy less quantity of those goods and that consequently there
results a reduction in their real wages. They plead that if there had been a
direct and visible cut in their wages they would have resisted the same but in
the case of such indirect cuts they suffer the same in misery. The Sastry
Tribunal by linking the dearness allowance with the consumer price index
numbers has provided relief to a certain extent but it is claimed that the relief
is not full.

5.171. Another factor to be taken into consideration is the national income and its distribution. The net national output at factor cost i.e. the national
income at current prices and at 1948-49 prices and the per capita net output
at current prices and at 1948-49 prices for the years 1951-52 to 1959-60 were
as follows :National income

1951- 1952- 1953- 1954- 1955- 1956- 1957- 1958- 195952

53
54
55
56
57
58
59
60

At current prices in
Rs 100 crores

99.7

98.2 104.8

At 1048-49 prices in
Rs. 100 crores

91.0

94.6 100.3 102.8 104.8 110.0 108.9 116.5 117.6

96.1

99.8 113.1 113.9 126.0 128.4

At current prices in
Rupees

274.0 266.4 280.7 254.2 260.6 291.5 298.8 316.5 318.4

At 1948-49 prices in
Rupees
250.1 256.6 268.7 271.9 273.6 283.5 277.1 292.6 291.6

(xiv) Productivity of Labour

BE

The 1959-60 level of national income according to preliminary estimates

represented a rise of about 12 per cent over the 1955-56 level. Under the
heading organised banking and insurance the output at current prices for
1959-60 according to preliminary estimates was Rs. 1.4 abja (100 crores) as
against Rs. 0.9 abja (100 crores) for the year 1955-56.

Per capita net output

AI

5.172. One of the factors to be taken into account in fixing wage Scales is
the productivity of labour. As observed by the Sastry Tribunal, the awards of
industrial tribunals and courts make no more than a passing reference to the
productivity of labour. In banking industry, it is very difficult to fix standards of
work by means of time and motion studies, by piece rate method or by
incentive method of wage payment. The industry of banking is not concerned
with the production of goods. The Bank Award Commission has observed
that banking is not a productive business from the ordinary common sense
point of view so that the first out of the four principles laid down by the Committee
on Fair Wages, viz., the productivity of labour, cannot so much apply to the
industry of banking. The efficiency of workmen in the banking industry does
play a part in inspiring and establishing confidence of the public in banks, but
there are hardly any standards by which to measure the productivity of labour
in banks in terms of the services rendered by the banks or the profits made
by the banks.
(xv) Erosion.
5.173. The workmen have strongly urged that their present wages are
inadequate, that the present formula of dearness allowance does not provide

172

5.174. The following table indicates what has been termed the arithmetical
erosion in the emoluments (excluding house rent allowance) of the bank
employees in the various classes of banks in Area I at the all-India Working
class consumer price index number 169, base 1944=100, equivalent to 123
base 1949 = 100, on the hypothetical basis that the emoluments prescribed
by the Sastry Award as modified were prescribed at the all-India working
class consumer price index number 144 (base 1944=100).

Year of

Service

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.

Erosion in Emoluments of Employees in Banks.

(In Rupees and Naye Paise)
A Class

B Class

C Class

Clerks Subordinates Clerks Subordinates

5.58
6.45
7.32
8.19
8.80
9.40
10.11
10.81
11.51
12.21
13.00
13.80
14.59
15.48
16.42
17.30
18.19
19.20
20.16
21.17

3.69
4.04
4.39
4.73
5.08
5.43
5.77
6.12
6.30
6.47
6.64
6.82
6.99
7.17
7.34
7.51
7.69
7.86
8.03
8.21

4.19
4.89
5.58
6.45
7.32
8.19
8.80
9.40
10.11
10.81
11.51
12.21
13.00
13.80
14.59
15.48
16.42
17.30
18.19
19.20

173

3.19
3.54
3.89
4.24
4.58
4.93
5.28
5.62
5.97
6.32
6.49
6.67
6.84
7.01
7.19
7.36
7.53
7.70
7.88
8.06

Clerks Subordinate
2.81
3.50
4.19
4.89
5.58
6.45
7.32
8.19
8.80
9.40
10.22
10.81
11.51
12.21
13.01
13.80
14.59
15.48
16.42
17.30

3.04
3.39
3.74
4.08
4.43
4.78
5.13
5.47
5.82
6.17
6.51
6.69
6.86
7.03
7.21
7.38
7.56
7.73
7.90
8.08

21.
22.
23.
24.
25.

22.13
23.14
24.23
25.33
26.94

8.38
8.55
8.73
8.90
8.07

20.16
21.17
22.13
23.14
24.23

8.23
8.40
8.58
8.75
8.92

18.19
19.21
20.16
21.17
22.13

concerns, the Labour Appellate Tribunal in paragraph 102 of its decision

observed as follows :

8.25
8.43
8.60
8.77
8.94

In our view the clerk in an A class bank in class I area should

receive as his starting total emolument something midway between
Rs. 130 (which the Central Government gives to its clerk) and the
wages of the higher commercial firms (excluding the oil companies
to avoid possible contentions).

5.175. The Workmens claim for revision on the basis of erosion has
been opposed by the banks. Apart from the question whether full neutralisation
should be allowed or not, that the demands as made by the workmen are not
warranted by the limited extent of the erosion.

In the course of its decision it has further stated as follows :

(xvi) Prevailing Rates of Wages in Comparable Concerns

AI

BE

5.177. The Sastry Tribunal in considering the prevailing rates of wages

has observed that helpful comparisons could be made between wages in
major banks and those in small banks, between banks on the one hand and
certain industries on the other, between the bank awards and the awards in
insurance companies, oil companies and textile companies and that the
rates of pay in certain departments of Government such as the Posts and
Telegraphs and in State Governments would also furnish material for the
construction of a pay scale for the bank workmen. It also referred to the
report of the First Pay Commission and stated that there were several affinities
between bank workmen and Government clerks, bank subordinates and
Government menials. The Sastry Tribunal has set out the scale of pay for
clerks in the service of the various State Governments and also in the service
of the Central Government. In paragraph 260 of its award it has observed as
follows :

5.176. One of the important factors to be taken into account in fixing

wage scale is the prevailing rates of wages in the same or similar occupations
in the same or neighbouring localities.

Or again we may take a cross section of the wage map of India for
clerical staff and compare the prevailing rates in a mixed bag
consisting of industrial concerns, municipalities, insurance
companies, government departments, Port Trust and Reserve Bank
of India.
The Sastry Tribunal has then set out the emoluments received at the
initial start by members of the clerical staff of various concerns in this mixed
bag. It has also given a summary of the emoluments given to clerks under
the more important award relating to various concerns.

5.178. The Labour Appellate Tribunal after referring to the fact that the
Sastry Tribunal had set out in its award the total emoluments of a mixed
batch of industries and Government and quasi-Government institutions stated
that it had collected other material also. The Labour Appellate Tribunal has
thereafter set out the total emoluments payable to a clerk at the initial start in
28 different concerns. After considering the emoluments payable in these

174

It is true that quite a number of the concerns whose total

emoluments we have given are industries but as we have said before
a clerk is no less a clerk whether he is in an industrial concern or
in a bank; his duties are in the main clerical even though the nature
of such clerical duties may vary from concern to concern. There
are however in the list a number of concerns which are in the main
commercial although some of them may have allied industrial units.
Bearing in mind the principal considerations already enunciated
and taking a conservative view, we are satisfied that the minimum
total emoluments of a clerk in an A class bank in class I area
should be raised to something between Rs. 140 and Rs. 145 and
suitable variations will have to be made for other classes of bank
employees in the different areas.

Since the date of the decision of the Labour Apellate Tribunal the Second
Pay Commission has made its report and there has been an upward revision
of the total emoluments payable to employees in the Central Government.
The total emoluments payable to a lower division clerk at Bombay at the
initial start have gone up from Rs. 130 inclusive of compensatory allowance
and house rent to Rs. 156 inclusive of compensatory allowance and house
rent. As regards the concerns referred to by the Labour Appellate Tribunal
there has been a considerable upward revision in the total remuneration of
employees. The following is a comparative statement showing the changes
that have taken place since the date of the Labour Appellate Tribunal decision
in the total emoluments payable to a clerk at the initial start by a large
number of concerns referred to by the Labour Appellate Tribunal :
Concerns mentioned in

Total minimum

Total minimum Remarks

paragraph 100 of the

Labour Appellate
Tribunal Decision

emoluments as
shown in the
Labour
Appellate
Tribunal
decision
at page 66

emoluments
when the allIndia index
number was
123 (Base
1949=100)

Bombay

175

195.00
190.00
170.00
154.56
161.69
195.00

224.65
224.65

192.32
225.00

174.87

220.00

154.56
135.00
154.56

178.65
183.60
193.50

13.
14.
15.
16.
17.
18.
19.

Swastik Oil Mills ---- ---Larsen & Toubro

---Grahams Trading Co. ---Imperial Chemicals
---Tata Industries
Associated Cements ...
Oriental Assurance ...

149.56
161.12
154.56
139.00
120.00
138.00
124.50

179.75
190.86
168.54
176.00

169.00
154.39

20. Reserve Bank of India

21. British Insulated Calenders
Cables Ltd. (Indian Cables)
22. Bombay Gas Co.
23. Fortes, Forbes Campbell

142.50
138.00

178.00

125.00
151.00

161.25

Closed down
Closed down

(Under appeal in
Supreme Court)

Not available
Now part of Life
Insurance Corporation
Under adjudication

Not available

AI

Note :- Existing dearness allowance in the concerns in Bombay is calculated

on Bombay consumer price index slab (411-420) for February 1961
at 420 Bombay index number when the corresponding all-India
consumer price index with base as 1949, was 123.

If the method adopted by the Labour Appellate Tribunal for the purpose
of fixing the total emoluments of a clerk in an A Class bank in Area I is
adopted, there is a good case made out for revision of the emoluments of
workmen in the banking industry.
(xvii) New Scales of Pay
5 179. There is considerable material placed before me to show that as
a result of the awards of adjudicators and wage boards and agreements
arrived at between employers and employees, there has been a considerable
increase in the level of total emoluments paid by various concerns. Some of
these are comparable and some are not. By and large, they show that there
is an upward trend in wages payable both to the members of the clerical staff
and members of the subordinate staff.

5.180. It has been strongly urged on behalf of the banks that the Sastry

176

Award as modified having linked the dearness allowance with the consumer
price index number has provided for an increase in the amount of wages
having regard to the increase in the cost of living and that no case exists for
any further increase in the remuneration payable to workmen. There is no
doubt that workmen are being paid more today than what they were receiving
at the time when the Labour Appellate Tribunals decision was implemented.
The workmen, however, contend that there is no increase in their real wages
and that, on the contrary, there is considerable erosion in their real wages
having regard to the increase in the cost of living and the reduction in the
purchasing power of money. The arithmetical erosion that has taken place
has already been set out earlier in this chapter. A member of the clerical staff
employed by an A Class Bank in Area I in the first year of his service receives
at the Index No. 123 (1949=100) by way of basic pay and dearness allowance
Rs. 152.85 and Rs. 8 as house rent allowance if he is employed at Bombay
and Calcutta and Rs. 6 as house rent allowance if he is employed at other
places with population over 7 lakhs. The question that arises for consideration
is whether what is being given under the Sastry Award as modified is sufficient
having regard to the changes in the circumstances that have taken place.

Burmah Shell
---- ---Standard - Vacuum ---General Motors ---- ---Ford Motors
---- ---Glaxo Laboratories ---Imperial Tobacco ---- ---Hindustan Vanaspati Hindustan
Lever Brothers -- LIvers
United Traders
Tata Oil Mills
---- ---Volkart Brothers (Voltas)
Greaves Cotton ---- ----

5.181. Having considered all aspects of the matter, I am of the view that
to the extent that prevailing rates of wages in similar occupations in the
same localities play a part in the fixation of wages, the workmen have made
out a case for an upward revision of their emoluments.

BE

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

5.182. For the purpose of constructing the pay scales one of the important
factors to be considered is the need of the workmen at various stages of their
lives whilst they are in service. For this purpose workmen may be divided
broadly in two categories, namely, those who are members of the clerical
staff and those who are members of the subordinate staff. The case of the
members of the supervisory staff is being separately considered by me. It
would be necessary to consider what would be the minimum wage and what
would be a fair wage. In order that a proper wage structure may be constructed
in an all-India industry like banking with banks having branches spread all
over the country, widely differing in size and earning capacity and situated in
places which are not similar to one another, it would be necessary to have an
enquiry made as regards the needs of the workmen in various areas, having
regard to the class of society from which they generally hail, having regard to
the conditions prevailing at the places where they are working and having
regard to the social and economic conditions prevailing in the country. The
pattern of consumption, the prices of essential commodities and the needs
of the workmen vary in different parts of the country. Even at the same place
the needs of the workmen differ having regard to the strata or class of society
from which they are drawn and having regard to the various stages in their
lives.
5.183. Decisions of Tribunals given in the past have been very strongly
criticised before me as having been given without adequate data. Even the

177

norms adopted have been questioned. The data before me which may be
considered reliable and on which a decision could be based in connection
with the needs of the members of the clerical staff and the members of the
subordinate staff in various areas in the country in which the offices of banks
are situated, at various stages of their lives is meagre. Even as regards the
prices of necessities like food, clothing and housing in various parts ofthe
country, there is hardly any reliable evidence. When wage scales have to be
constructed with reference to a base year it would be proper to consider the
needs of the workmen having regard to that base year and having regard to
the type of wage intended to be provided. After fixing such pay scales a
formula for payment of the dearness allowance would have to be evolved to
provide against the changes in the cost of living above the level prevailing in
the base year. Unfortunately, there is no material before me from which I
could build up wage scales with reference to the needs of workmen in terms
of money for the base year referred to by me.

SCALES OF PAY
A Class Banks
In Rupees
Area
140-6-182-11-281-13-307-15-322-E.B.-15-337-16-369-18-405
I:
(1-7
9
2
1
1
2
2) year
II :

130-5-140-6-182-11-281-13-294-E.B.-13-307-15-337-16-369
(1-2
7
9
1
1
2
2) years

III :

120-5-140-6-182-11-270-E.B.-11-281-13-307-15-337
(1-4
7
8
1
2
2) years

AI

BE

5.185. In the absence of such material, the best thing that I can do
under the circumstances is to consider what generally should be given by
way of total emoluments consisting of basic pay and dearness allowance to
workmen in different classes of banks in different areas having regard to all
the available material before me and having regard to the various factors
which play a part in the fixation thereof. In order to construct pay scale with
reference to the base year 1949, it would be necessary to consider what
should be provided with reference to that base year having regard to the
scheme of dearness allowance which would yield what is generally intended
to be given at the index level at which it is intended to be given. For the
purpose of constructing such pay scales, I have adopted the following
conversion formula : For every decrease of one point in the all India working
class consumer price index number base 1949=100 below the aforesaid
level there should be, in the case of the members of the clerical staff a three
fourth per cent decrease in such total emoluments, i.e. the rate of the notional
neutralisation to be taken into account should be 75 per cent. As regards the
members of the subordinate staff, I have considered that for every decrease
of one point from such level there should be one per cent decrease in such
total emoluments, the rate of neutralisation in their case being 100 per cent.
The question of neutralisation has been dealt with in detail in the chapter
relating to dearness allowance.

5.187. Having very carefully considered every aspect of the matter, I fix
the following pay scales for workmen other than those belonging to the
subordinate staff with reference to the base year 1949.

5.184. From the very nature of the proceedings before me it is not open
to me to carry on any independent inquiry or investigation of my own for the
purpose of gathering material from which such scales could be built up.

pay scales for workmen employed in banks in the Excepted List keeping in
view the limited paying capacity of those banks. I have provided for them total
emoluments consisting of basic pay and dearness allowance which I consider
to be the minimum.

5.186 In constructiong the Pay scales for workmen employed in A Class

banks B Class banks and C Class banks excluding banks in the Excepted
List in Area I, Area II and Area III I have provided a combined running scale
which would facilitate further adjustments when a bank is upgraded to a
higher class or a place is upgraded to a higher Area. I have constructed the

178

B Class Banks

Area
I:

130-5-140-6-182-11-281-13-294- E.B.-13-307-15-337-16-369
(1-2
7
9
1
1
2
2) years

II :

120-5-140-6-182-11-270-E.B.-11-281-13-307-15.337
(1-4
7
8
1
2
2) years

III :

112-4-120-5-140-6-182-11-248-E.B.-11-281-13-307
(1-2
4
7
6
3
2) years
C Class Banks except Banks in the Excepted List

Area
I:

120-5-140-6-182-11-270-E.B.-11-281-13-307- 15-337
(1-4
7
8
1
2
2) years

II:

112-4-120-5-140-6-182-11-248-E.B.-11-281- 13-307
(1-2
4 7
6
3
2) years

III :

104-4-120-5-140-6-182-11-226-E.B.-11-281.
(1-4
4
7
4
5) years
(The combined running scale will therefore be as follows:
104-108-112-116-120-125-130-135-140-146-152-158-164-170-176-182-

193-204-215-226-237-248-259-270-281-294-307-322-337-353-369-387-405).
Banks in the Excepted List
Area

179

I:

96-4-120-5-140-6-182-11-204-E.B.-11-259
(1-6
4 7 2
5) years

I:

50-1-69-E.B.-1-74
(1-19
5) years.

II:

88-4-120-5-140-6-182-E.B.-11-237
(1-8
4
7
5) years

II :

46-2-50-1-67-E.B.-1-72
(1-2
17
5) years.

III :

80-4-120-5-140-6-170-E.B.-6-182-11-215
(1-10
4
5
2
3) years.

III :

42-2-50-1-65-E.B.-1-70
(1-4
15
5) years.

5 188. Having very carefully considered every aspect of the matter, I

fix the following pay scales for members of the subordinate staff with reference
to the base year 1949.

(xviii) Poddars, Money-Testers, Collecting Sircars and Gollass

A Class Banks
86-1-105-E.B.-1-108-2-112
(1-19
3
2) years.

II :

80-2-86-1-102-E.B.-1-107
(1-3 16
5) years.

Ill:

74-2-86-1-99-E.B.-1-104
(1-6 13
5) years.
B Class Banks

Area
80-2-86-1-102-E.B.-1-107
(1-3
16
5) years.

II:

74-2-86-1-99-E.B.-1-104
(1-6
13
5) years.

III:

68-2-86-1-96-E.B.-1-101
(1-9
10
5) years.

5.190. I give directions similar to those contained in paragraph 121 (5) of

the Sastry Award. That paragraph runs as follows :

AI

I:

C Class Banks except Banks in the Excepted List

Area
I:

74-2-86-1-99-E.B.-1-104
(1-6
13
5) years.

II :

68-2-86-1-96-E.B.-1-101
(1-9
10
5) years.

IIl:

62-2-86-1-93-E.B.-1-98
(1-12 7
5) years.

Once these persons have been employed in the clerical grade, there is
no particular reason pointed out to me why they should have a lower maxima
provided for them. Taking everything into consideration I think it is desirable
that this limit upon the maxima should be removed and that these employees
should be treated like other employees in the same grade and I direct
accordingly.

BE

I:

Area

5.189 Under the Sastry Award it is provided that persons known as

poddars, money-testers, collecting sircars and gollas should be classed as
clerks but it is provided that in their case the maximum will be the pay at the
end of the twentieth year of service. There is a small number of such persons
still employed in the State Bank of India and in a few other banks. In some
banks these persons are already treated as clerks, in all respects. On behalf
of the workmen it has been claimed that poddars, money-testers, collecting
sircars and gollas should be treated on the same footing as the employees in
the clerical grade in all respects.

(The combined running scale will therefore be as follows:

62-64-66-68-70-72 74-76-78-80-82-84-86-87-88 89-90-91 -92-93-94-9596-97-98-99-100-101-102-103-104-105-106-107-108-110-112.)
Banks in the Excepted List
Area

180

No employee shall have his basic pay reduced by being transferred

to an area where a lesser pay scale applies even though such
basic pay may be more than the maximum of the scale fixed for
the new station, and he will continue to have the usual increments
as from such basic pay onwards. An employee who is transferred
to a place where a higher pay scales applies shall have the benefit
of such higher scale of that area, i.e. his basic pay should be
refixed in the higher scale according to the length of service rendered
by him, together with the benefits of any special increment and
subject to the deduction of any increment withheld. If, however,
such an employee is reverted back from a higher area to a lower
area he will thereafter be governed by the pay scale of that area
provided however he has not completed a total service of one year
in the higher area.
(xix) Part-time Employees

5.191. The Sastry Tribunal in paragraph 123 of its award has observed
that part-time employees cannot expect payment at the full rates provided by
it. It fixed for them a minimum of one-third of the appropriate rate of pay and

181

(xxii) Cooks and Domestic Servants

5.194. It sometimes happens that banks pay for persons who are
employed as cooks and domestic servants to do the work exclusively for
officers of the bank at the residence of such officers. By reason of the fact
that they have been employed by the bank, they may be liable to be regarded
as workmen. In paragraph 334 of its award the Sastry Tribunal has held that
domestic sevants who are appointed and paid by the bank are workmen.
Some of them may be provided with a place of residence free of charge and
some of them may be provided with free food. I have not before me the exact
terms and conditions under which they work. Even if they were workmen I am
unable to lay down any scales of pay for them in the absence of any material
on which the same could be laid down. The scales of pay herein provided are
not intended to apply to them. The banks will be at liberty to fix such
emoluments for them as they consider reasonable and just.

(xx) Apprentices

down by me will apply to the probationers also.

5.192. About apprentices the Sastry Tribunal in paragraph 124 of its

award has stated as follows :

AI

As regards apprentices, those who are unpaid will not be workmen

within the definition of the term. Such of them as are paid will, no
doubt, satisfy the terms of the definition. It is not possible for us to
lay down a general pay scale etc. for them. That will depend upon
the nature and quantity of work that is entrusted to them. As this is
a variable element a uniform rule is not possible. It must be left to
the discretion of the banks to decide which apprentices should be
paid and if so, how much.
The scales of pay provided by me are not intended to apply to
apprentices and I give directions in connection with them similar to
those quoted above from the Sastry Award.
(xxi) Probationers

5.193. The All India Bank Employees Association, the All India Bank
Employees Federation, the All India State Bank of India Staff Federation and
other workmens organisations have demanded that the service conditions
pay and allowances applicable to permanent workmen should also be
applicable to probationers. This demand has been opposed by some of the
banks. No case has been made out for modifying the provisions of the Sastry
Award in this connection, and I give a direction similar to the one in the
Sastry Award that the probationers should be paid the same emoluments as
have been fixed for confirmed workmen and that the above pay scales laid

182

5.195. Cases of employees have been brought to my notice where they

are attached to establishments of banks situated in a higher area but are
posted for work in places situated in a lower area where the bank has no
establishment. This often happens in the case of godown keepers. In such
cases I direct that the employees will draw wages applicable to the
establishments to which they are attached.

BE

dearness allowance of full time employees if such part-time employees worked

for not less than 7 hours per week. That Tribunal did not think it appropriate to
lay down a more detailed graduated scale in accordance with the hours of
work. The All India Bank Employees Association has claimed that there
should be no part-time employees except sweepers and cleaners and that
part-time employees who are required to work for not more than three hours
a day should at least be granted 50 per cent of the scales demanded for full
time employees. Demands have also been made by the All India Bank
Employees Federation, the All India State Bank of India Staff Federation and
the State Bank of India Staff Union, Andhra Pradesh, and others with a view
to achieving improvements in the present conditions of service of this category
of employees. These claims made on behalf of the workmen have been
opposed by the banks. There does not appear to be any cogent reason for
acceding to the demands of the workmen in this connection. In the present
state of the record it is not possible for me to give any directions other than
those given under the Sastry Award. I direct that a minimum of one-third of
the appropriate rate of pay and dearness allowance should be given to parttime employees if such part-time employees work for not less than 7 hours
per week, this being the minimum prescribed for them.

(xxiii) Supervisory Staff

5.196. The Sastry Tribunal has provided special allowances for

supervisors, superintendents, sub-accountants, departmental in-charges and
employees in charge of treasury pay offices employed in A, B, C and D
Classes of banks, the amounts provided being Rs. 50, Rs. 45, Rs. 40 and
Rs. 35 respectively.
5.197. The All India Bank Employees Association has by its statement
of claim demanded separate scales of pay for workmen doing supervisory
nature of duties for the different classes of banks. The scales demanded for
them are as under :
A Class Banks
B Class Banks
C Class Banks

Supervisory Grade II
: Rs. 4002552530645.
: Rs. 340204002552530555.
: Rs. 3002040025500.

A Class Banks
B Class Banks
C Class Banks

Supervisory Grade I
: Rs. 500255253067535780.
: Rs. 450255253067535710.
: Rs. 4002552530645.

It has not in its statement of claim specified the categories of persons

who should be put in supervisory grade II and the categories of persons who
should be placed in supervisory grade I. The only thing that has been stated

183

is as under :

C : Rs. 3502545030600

Workmen doing supervisory work in ditlerent banks and designated

as Assistant Managers, Accountants, Sub-Accountants, Joint
Accountants, Assistant Accountants, Junior and Senior Assistants,
Junior and Senior Officers, Supervisors, Probationary Assistants,
Departmental Incharges, persons performing supervisory work like
Head Cashiers, Cash Key Holders, Cashiers-in-charge of cash,
Treasurer Representatives, Head Clerks, Custodian Safe Deposit
Valuts, Section Officers, Passing Officers, Tellers, Checkers etc.
should all be placed in appropriate supervisory grades.

Supervisory Grade II :
A : Rs.3502545030600
B : Rs. 300203802545530515
C : Rs. 2602035025475
4. South Gujarat Bank of
Baroda, Employees
Union, Surat.

Rs. 500255253067535780

Supervisory Grade II : Rs. 4002552530645

5. Allahabad Bank
Employees Union,
Calcutta.

A : Rs. 450255253067535780
B : Rs. 400255253067535710
C : Rs. 3502547530655

6. Central Bank of
India Employees
Association, Amritsar.

Rs. 2501540025650

In paragraph 59 of its statement of claim the Association has stated that

the above list is not exhaustive and that the Association will submit at the
time of the hearing various other nomenclatures and the duties performed by
these catgories of workmen to enable this Tribunal to place them in the
proper supervisory grades.

The letters A, B and C represent the class of banks.

5.201. The All India Bank of Baroda Employees Federation has made
the same demand as the All India Bank Employees Association. The Central
Bank of India Employees Associations at Patna and Muzaffarpur and the
Behar Provincial Central Bank of India Employees Association, Muzaffarpur
have followed the All India Bank Employees Federation in making their
demands. The Vadodra Rajya Bank Nokar Sangh has included Assistant
Managers, Sub-Managers, Sub-Agents, Superintendents, Accountants and/
or Officer Grade I in Supervisory Grade I, and in Supervisory Grade II, It has
included Assistant Accountants, Supervisors, and/or Officers Grade II,
Departmental in charge, Sub-Accountants, Junior Officers, Probationary
Assistants, Clerks in charge, Cashiers in charge, Officers in charge, Head
Cashiers. Senior Assistants, Junior Assistants, Tellers, Godown Inspectors,
Inspectors, Auditors, Treasurers, Representatives, Head Clerks, Chief Clerks,
Assistants, Caretakers and Caterers etc. The State Bank of Patiala (All
cadres) Employees Association has pointed out that the following grades
were introduced by the bank for the supervisory staff from 1st October
1958 :

AI

BE

5.198. The All India Bank Employees Federation has asked for a grade
of Rs. 250-15-400-25-650 for banks in group A which according to its charter
of demands is to consist of banks with working funds of Rs. 15 crores and
more and a grade of Rs. 200-15-350-20-550 for banks in group B which is to
consist of banks with working funds of less than Rs. 15 crores for the
supervisory staff viz., Assistant Managers, Sub-Managers, Sub-Agents,
Superintendents, Accountants and/or Officer Grade I, Additional or Assistant
Accountants, Supervisors and/or Officers Grade II, Departmental Incharges,
Sub-Accountants, Junior Officers, Probationer Assistants, Clerks Incharges,
Cashier Incharges, Officer Incharges, Head Cashiers, Senior Assistants,
Junior Assistants, Tellers, Godown Inspectors, Inspectors Auditors,
Treasurers Representatives, Head Clerks, Chief Clerks, Assistants,
Caretakers and Caterers etc.

Supervisory Grade I :

5.199. The All India State Bank of India Staff Federation has claimed a
special grade of Rs. 50020700 for Sub-Accountants and Head Cashiers.
5.200. Some more unions have made claims in respect of the Supervisory
Staff and the grades as claimed by them are given below :
1. State Bank of Patiala
Supervisory Grade I : Rs. 3752552530675 35815
(ALL Cadres)
Employees Association. Supervisory Grade II : Rs. 280204002552530645
2. Indian Overseas Bank Supervisory Staff
Employees Union,
Madras.
3. Vadodra Rajya Bank
Nokar Sangh.

: Rs. 4002552530675

Supervisory Grade I :
A : Rs. 4503057035745
B : Rs. 400255003059035650

184

Grade I : Rs. 340 20500EB25550EB30730.

Grade II: Rs. 17515220EB20320EB20440EB20500.
Grade III :Rs. 13012 1/2155EB15200EB15290EB20
310.
The Association has submitted that besides Accountants and Assistant
Accountants who are at present designated as B and C Class Managers, the
Senior assistants, stenographers and head cashiers, should be placed in
Supervisory grade II.
5.202. The All India Bank of Baroda Employees Federation has, by a

185

AI

BE

5.203. The Indian Banks Association has in its written statement

contended that the Tribunal has no jurisdiction to lay down any terms or
conditions of service including scales of emoluments for those employed in a
supervisory capacity who draw emoluments exceeding Rs. 500 per mensem
or who exercise either by the nature of the duties attached to the office or by
reason of the powers vested in them functions mainly of a managerial or
administrative nature, as such employees would not be workmen within the
meaning of the Industrial Disputes Act and would be outside the present
adjudication. Without prejudice to the said contention, it has submitted that
there is no scope or justification for laying down separate scales for
supervisory grades and in any event, the scales demanded are very much on
the high side. It has further submitted that mere designation or nomenclature
cannot decide the grade which is solely determined by the nature of duties
performed and the responsibilities undertaken by the individual employee
concerned. The Bombay Exchange Banks Association has contended that
the present reference covered only those employees who fell within the
definition of workman contained in the Industrial Disputes Act, 1947. It has
submitted that the Tribunal should not prescribe pay scales for the supervisory
cadre as it will not be possible, with a fluctuating dearness allowance scheme,
to postulate at what stage an employee performing supervisory duties ceases
to be a workman. The State Bank of India, in reply to the statement of claim
of the All India State Bank of India Staff Federation, in connection with its
demand for a grade for sub-accountants and head cashiers, has submitted
that all employees exercising supervisory duties and drawing emoluments
over Rs. 500 per month are not workmen within the meaning of the Industrial
Disputes Act and are not covered by this adjudication and that in particular
the sub-accountants and head cashiers of the banks are not workmen. The
State Bank of Patiala has opposed the demand that senior assistants and
stenographers should be placed in the Supervisory Grade II and has stated
that the senior assistants performing the same duties as junior assistants
except for a few who have been entrusted with restricted checking and passing
powers and that it would be unreasonable to place them in the Supervisory
Grade. It is urged that this Tribunal has no jurisdiction to deal with employees
who do not all within the defenition of workman contained in the Industrial
Disputes Act, 1947 and that even in the case of employees exercising
supervisory powers and drawing wages below Rs. 500, this Tribunal should

not attempt to fix a wage scale as it could not be postulated, at what stage in
the scale such an employee would be drawing by way of wages as defined in
the Act an amount over Rs. 500. It is also submitted that this Tribunal has no
jurisdiction to deal with employees exercising managerial functions or with
supervisory staff carrying out administrative functions and duties. The Kerala
Bankers Association objects to any claim as regards a scale of pay for the
supervisory staff. The Northern India Banks Association has submitted that
considering the nature of work performed by employees in the supervisory
grades, the existing allowances payable to them are adequate, that in view of
the peculiar nature of banking business and the need for entrusting to officers,
at each branch office, responsible jobs, involving the grant of powers of attorney,
all members of the supervisory staff holding a power of attorney should be
classed with the managers and officers entrusted with administrative duties
and should be taken out of the category of workmen. The National Bank of
Lahore has contested the demands of the employees about pay scales to
the supervisory staff and has submitted that there is no justification for
introducing separate scales of pay for workmen discharging duties alloted to
them and that mere designation associated to the duties performed by a
workman cannot entitle him to any higher wage. The Bharatha Lakshmi Bank
has submitted that there should be no supervisory Grades I and II for D Class
banks. It has pointed out that the supervisory Grade II suggested, by the
employees for C Class banks is even costlier than the grade of Agents of
this bank which is Rs. 14010240 besides dearness allowance and rent
free quarters or rent in lieu thereof and that the highest point in this grade is
less than the starting point in the grade suggested by the employees. The
Jaya Laxmi Bank considers the grades demanded for Supervisory Grade II
and Supervisory Grade I as beyond the capacity of small banks and suggests
that there should be no supervisory grades. The Miraj State Bank has submitted
that on any showing the bank is bound to be classified in D Class, that the
demand made by the All India Bank Employees Association so far as the
grade of the supervisory staff is concerned, is not applicable to the Miraj
State Bank as there was no demand in respect of Supervisory staff of D
Class banks and that if any such demand was made the bank should be
permitted to file its written statement. It has, however, submitted that the
demand made against the C Class banks in respect of the supervisory staff
is high and that the same should be rejected.

supplementary statement, pointed out that all employees who are promoted
by the Bank of Baroda to the Assistants Grade have to sign an agreement
which, it is alleged, is completely one-sided and did not give adequate
protection to employees who signed it. The Federation has therefore demanded
that in connection with the emoluments payable to the employees working in
the supervisory cadre, the Bank of Baroda should be specifically directed to
discontinue the practice of requiring the Assistant to sign the agreement
referred to above.

186

5.204. In connection with the supplementary statement of claim of the

All India Bank of Baroda Employees Federation relating to service conditions
of employees in the supervisory cadre designated as assistants in the bank,
the Bank of Baroda has submitted that these assistants cannot be equated
with the supervisors in the clerical grade who get a special allowance as
prescribed under the Sastry Award, that these officers have a very wide scope
to rise high according to their merits and can go up to the highest executive
position in the bank, that their emoluments in the earlier years of service may

187

5.208. The question about the jurisdiction of the Tribunal to make an

award in connection with members of the supervisory staff has been argued
by both the sides at considerable length. The expression workman has
been defined by section 2(s) of the Industrial Disputes Act, 1947, as under :

BE

5.205. On behalf of the All India Bank Employees Association, it was

stated at the hearing that supervisory grade II had been demanded for the
supervisors who are now receiving a supervisory allowance under the Sastry
Award and that supervisory grade I was demanded for bona fide supervisors,
in the sense in which that expression was used in America in the Fair Labour
Standard Act.

workmen and that the wage structure as a whole would be rendered bad in
law even if a part of it was bad in law as the Supreme Court had clearly
indicated in the Express Newspapers case that the wage structure was an
integrated whole. It was submitted that in so far as the supervisory staff could
be dealt with under an award there should be an overriding clause to the
effect that at no stage and in no case the monthly wages should exceed the
upper limit of Rs. 500. It was submitted that in respect of those workmen who
were doing supervisory work only as a part of their duties (sometimes called
Sastry supervisors) the directions given by the Sastry Tribunal about special
allowance in paragraph 164(b) of its Award should be retained, that some
such provision should be made for those supervisors who came within the
ambit of the extended definition of workman under the Industrial Disputes
(Amendment) Act, 1956 and that option should be given to them for choosing
between the special allowance awarded by the Tribunal and the pay scales
which may be in force in banks,.

not be high but they form the junior executive cadre and are the potential
senior executives. It has, therefore, submitted that these persons form a
separate class whose terms and conditions of service must by the nature of
things be left to the bank and that the Tribunal should refuse to lay down any
service conditions for them. It further states that it has taken good care of
these officers and that they could not be benefited by the Tribunal laying
down any hard and fast rules about their terms and conditions of service, and
that the bank is the best judge of the merits of these officers and therefore a
request is made that no directions be given on this issue. The Bank further
submits that if the Tribunal lays down terms and conditions of service of the
supervisory staff and holds that the assistants in the bank drawing a total
emolument of less than Rs. 500 are covered by this reference, then an option
be given to such assistants to choose between the totality of the terms and
conditions of service as prescribed by this Tribunal and the conditions of
service that might be in force from time to time in the bank, and that the
assistants who opt for the conditions under the award would not have to sign
the agreement and therefore a direction on the point of agreement to be
signed by the assistants will not be necessary.

AI

5.206. At the hearing Shri Sule submitted (1) that workmen under the
Industrial Disputes Act can raise an industrial dispute for themselves and for
a section of them at any level; (2) that persons who are at present workmen
can raise an industrial dispute as regards their service conditions, not only at
all stages when they continue to be workmen but also when having regard to
a future possibility they cease to be workmen and continue in service of the
same employer; (3) that workmen can raise an industial dispute for employees
in the same establishment who are non-workmen right from the start, provided
they have a direct or substantial interest in the dispute of those non-workmen
and have a community of interest with them. It was urged that workmen were
entitled to raise a dispute about the scales of pay and other service conditions
of the members of the supervisory staff irrespective of the amount of wages
payable to them.

5.207. Oh behalf of a number of banks it was denied that there was any
community of interest between the supervisory staff and the clerical and
subordinate staff or that the clerical and subordinate staff were directly or
substantially interested in the terms of employment of the members of the
supervisory staff. It was stated that no demand relating to the supervisory
staff had been made and presented to the banks. It was submitted that the
Tribunal had no jurisdiction to provide wage scales for persons who were not

188

Workman means any person (including an apprentice) employed

in any industry to do any skilled or unskilled manual, supervisory,
technical or clerical work for hire or reward, whether the terms of
employment be expressed or implied, and for the purposes of any
proceeding under this Act in relation to an industrial dispute, includes
any such person who has been dismissed, discharged, or retrenched
in connection with, or as a consequence of, that dispute, or whose
dismissal, discharge or retrenchment has led to that dispute, but
does not include any such person
(i) who is subject to the Army Act, 1950, or the Air Force Act, 1950,
or the Navy (Discipline) Act, 1934; or
(ii) who is employed in the police service or as an officer or other
employee of a prison, or
(iii) who is employed mainly in a managerial or administrative capacity;
or
(iv) who, being employed in a supervisory capacity, draws wages
exceeding five hundred rupees per mensem or exercises, either by
the nature of the duties attached to the office or by reason of the
powers vested in him, functions mainly of a managerial nature.

This definition shows that except for the persons specified in clauses (i),
(ii), (iii) and (iv) the expression workman, inter alia, means any person
employed in any industry to do any supervisory work for hire or reward, whether
the terms of employment be expressed or implied. Even if a person has been
employed in any industry to do any supervisory work for hire or reward, he is
not liable to be considered to be a workman if he is employed mainly in a

189

managerial or administrative capacity or who exercises, either by the nature

of the duties attached to the office or by reason of the powers vested in him,
functions mainly of a managerial nature. Another exception provided is in the
case of persons employed in a supervisory capacity, who draw wages
exceeding Rs. 500 per mensem. The moment such persons draw wages
exceeding Rs. 500 per mensem they would cease to be workmen. The
expression wages has been defined by section 2(rr) of the Industrial Disputes
Act, 1947, to mean all remuneration capable of being expressed in terms of
money, which would, if the terms of employment, express or implied, were
fulfilled, be payable to a workman in respect of his employment or of work
done in such employment, and includes

The Act is primarily meant for regulating the relations of employers

and workmen past, present and future. It draws a distinction
between workmen as such and the managerial or supervisory
staff and confers benefit on the former only.

(i)

The Supreme Court has further stated that it seemed fairly obvious that
if the expression any person was given, its ordinary meaning, then the
defition clause would be so wide as to become inconsistent not merely, with
the objects and other provisions of the Act, but also with the other parts of
that very clause. It is also stated that the dispute between the employers and
workmen must be a real dispute capable of settlement or adjudication by
directing one of the parties to the dispute to give the necessary relief to the
other and that it is also obvious that the parties to the dispute must be
directly or substantially interested therein, so that if workmen raise a dispute,
it must relate to the establishment or part of the establishment in which they
are employed. As observed by the Supreme Court; the expression any
person in the definition clause means a person in whose employment or non
employment or terms of employment, or conditions of labour, the workmen
as a class have a direct or substantial interest, with whom they have, under
the scheme of the Act, a community of interest.

BE

such allowances (including dearness allowance) as the workman

is for the time being entitled to;
(ii) the value of any house accomodation, or of supply of light, water,
medical attendance or other amenity or of any service or of any
concessional supply of foodgrains or other articles;
(iii) any travelling concession; but does not include
(a) any bonus;
(b) any contribution paid or payable by the employer to any
pension fund or provident fund or for the benefit of the workman
under any law for the time being in force;
(c) any gratuity payable on the termination of his service.

Labour Law Journal at page 500 (same as 1958 Supreme Court Reports,
Page 1156) had occasion to consider the meaning of the expression any
person. In dealing with the question whether a dispute in relation to a person
who is not a workman falls within the scope of the definition of industrial
dispute given in section 2(k), the Supreme Court has observed that the
expression any person cannot mean anybody and everybody in this wide
world, that a person in respect of whom the employer-employee relation
never existed or can never possibly exist cannot be the subject matter of a
dispute between employers and workmen and that the definition clause must
be read in the context of the subject-matter and scheme of the Act and
consistently with the objects and other provisions of the Act. In dealing with
the provisions as they stood prior to the enlargement of the definition of the
term workman by the Industrial Disputes (Amendment) Act, 1956, the
Supreme Court has observed as follows :

AI

5.209. The All India Bank Employees Association has claimed wages
which in numerous cases exceed Rs. 500 per mensem for persons employed
in the banking industry to do supervisory work for hire or reward. It seeks to
justify the claim on the ground that workmen having regard to the definition of
the expression industrial dispute, were entitled to raise a dispute in connection
with the terms of employment of any person. The expression industrial
dispute has been defined by section 2(k) of the Industrial Disputes Act as
under :
Industrial dispute means any dispute or difference between
employers and employers, or between employers and workmen,
or between workmen and workmen, which is connected, with the
employment or non-employment or the term of employment or with
the conditions of labour, of any person.

It was submitted on behalf of the employees that they had a right to raise a
dispute not merely in connection with the terms of employment of any
workman, but also in connection with the terms of employment of a person
who did not fall within the definition of the expression workman.
5.210. The definition of the expression industrial dispute has come up
for consideration on several occasions before Tribunals and Courts of Law.
The Supreme Court, in the case of Workmen of Dimakuchi Tea Estate (Assam
Chah Karmachari Sangh) and Dimakuchi Tea Estate, reported in 1958 (1)

190

5.211. In dealing with the question of persons belonging to the supervisory

staff, having regard to the definition of the term workman as it then stood,
the Supreme Court, at page 509, has expressed itself in the words following:Can it be said that workmen as a class are directly or substantially
interested in the employment, non-employment, terms of
employment or conditions of labour of persons who belong to the
supervisory staff and are, under provisions of the Act, non-workmen
on whom the Act has conferred no benefit, who cannot by
themselves be parties to an industrial dispute and for whose
representation the Act makes no particular provision ? We venture

191

to think that the answer must be in the negative.

Tribunal for adjudication. Before the Central Government can refer a matter, it
must relate to any matter specified in the Second or the Third Schedule. The
Second Schedule deals with matters which ordinarily fall within the jurisdiction
of Labour Courts. Item 6 in the Second Schedule refers to all matters other
than those specified in the Third Schedule. This item cannot cover a dispute
relating to the fixation of wages of any class of persons. Section 7 of the Act
says that the appropriate Government may, by notification in the Official
Gazette, constitute one or more Labour Courts for the adjudication of industrial
disputes relating to any matter specified in the second Schedule. From the
scheme of the Act, it is clear that the Labour Courts cannot deal with
questions relating to fixation of scales of pay or wages of any class of persons.
5.214. When we come to the Third Schedule the only item which may
have a bearing on the subject is item 1. Item 1 relates to wages, including
the period and mode of payment. Having regard to the definition of the
expression wages given in section 2(rr), this item can only refer to
remuneration payable to a workman. There is no other item under which
fixation of scales of pay is liable to fall, with the result that under the provisions
of section 10(1A) it is not open to the Central Government to make any
reference of an industrial dispute concerning scales of pay of or the
remuneration payable to a non-workman to a National Tribunal for adjudication.
In the order of reference, dated 21st March 1960, the Central Government
has referred the dispute between banking companies and corporations
specified therein on the one hand, and their workmen on the other, in respect
of matters specified in the Second Schedule to the order of reference. The
Second Schedule Inter alia refers to scales of pay; method of adjustment
in the scales of pay. This item in the light of the powers of the Central
Government to make a reference would not cover the fixation of scales of pay
for non-workmen or payment of remuneration to non-workmen.

BE

5.212. On behalf of- the employees it is contended in the present case

that they have a direct and substantial interest in the dispute relating to the
members of the supervisory staff, even if some of them may not be workmen
within the meaning of the definition given in the Act. They contend that a
person who is employed in a supervisory capacity, who is drawing wages
which do not exceed Rs. 500 and who is a workman within the meaning of
the amended definition of that expression is interested in receiving wages in
excess of Rs. 500 and in demanding a scale of wages which would take him
beyond Rs. 500 and that he is entitled to raise such a dispute even though
when he receives wages in excess of Rs. 500 he would cease to be a
workman. In such circumstances, all persons belonging to this class would
have a direct and substantial interest in asking for a scale of pay which would
take them beyond Rs. 500. This, however, would not justify the making of a
claim for a scale which, at the very commencement, provides them with
wages as defined in section 2(rr) in excess of Rs. 500. In that event, whoever
is fitted in that scale would not be a workman at any stage in that scale and
the mere fact that some workmen may, by way of promotion or otherwise be
fitted into that scale, would not give the workmen as a class that community
of interest which is necessary for the purpose of raising an industrial dispute
in connection with such non-workmen.

At page 510 the Supreme Court has observed as under :

It is the community of interest of the class as a whole class of
employers or class of workmen which furnishes the real nexus
between the dispute and the parties to the dispute.

AI

5.213. Even though by reason of the community of interest, workmen

may be entitled, having regard to the definition of the expression industrial
dispute to raise a dispute in connection with the terms of employment of
themselves when they become non-workmen by reason of their wages
exceeding the limit of Rs. 500, there is another objection in connection with
the adjudication of such a dispute by a National Industrial Tribunal. A National
Industrial Tribunal is constituted under the provisions of section 7B of the
Industrial Disputes Act, 1947, for the adjudication of industrial disputes, which,
in the opinion of the Central Government, involve questions of national
importance or are of such.a nature that industrial establishments situated in
more than one State are likely to be interested in, or affected by, such dispute.
Under the provisions of section 10(1 A) the Central Government is empowered,
where it is of opinion that any industrial dispute exists or is apprehended and
the dispute involves any question of national importance or is of such a nature
that industrial establishments situated in more than one State are likely to
be interested in, or affected by, such dispute and that the dispute should be
adjudicated by a National Tribunal, to refer the dispute or any matter appearing
to be connected with, or relevant to, the dispute, whether it relates to any
matter specified in the Second Schedule or the Third Schedule, to a National

192

5.215. Apart from any other consideration, non-workmen are not before
me, and even if I had otherwise the jurisdiction to fix scales of pay for them,
I would not be justified in doing so in their absence and without hearing what
they may have to say in the matter.
5.216. The demand for different scales of pay for supervisory staff is
made on behalf of persons, some of whom are workmen and some of whom
are non-workmen. There is no standardised nomenclature adopted by banks
in connection with persons employed to do supervisory work. There is no
Standardisation of duties either. A person under the same designation may
in one bank be performing duties and discharging functions different from
those which a person bearing the same designation may be performing and
discharging in other banks. As regards the supervisory staff not covered by
the Sastry Award, the scales of pay are different in different banks. I have not
even been supplied with a list showing the designation of persons who are at
present drawing the supervisory allowance of Rs. 50 in all the banks which
are before me. It would be difficult to describe persons employed to do

193

supervisory work by their designations and fit them into different scales of
pay.

(xxiv) Special Allowances

5.220. Under the scheme of the Sastry Award separate scales of pay
have been provided for members of the clerical staff and members of the
subordinate staff. Among the members of the clerical staff and of the
subordinate staff there are various categories of workmen. Wage differentials
have been provided for different categories of workmen falling within the
aforesaid two broad classes by special allowances. In paragraph 162 of its
award the Sastry Tribunal has observed that it was but right that persons with
special qualifications or skill required for discharging work carrying with it
greater responsibility than routine work should have higher emoluments than
an ordinary workman. The Sastry Tribunal further proceeded to observe that
there were three ways by which this extra payment may be provided for: (1)
the employee may be given additional increments in the same scale; (2) he
may be paid a lump sum allowance in addition to his other emoluments or (3)
he may be given a higher scale leading up to a higher maximum. The Sastry
Tribunal considered that on the whole it was better to adopt either the first or
the second method or sometimes even a combination of both. Before the
Sastry Tribunal the workmen were opposed to the idea of having more than
one scale while the banks preferred two scales of pay, but had no objection
to one scale. The Sastry Tribunal observed that though primarily its inclination
was to provide a different and higher scale, it considered it simpler on the
whole to solve the problem by providing for a lump sum allowance called
special allowance in each of such cases where it considered the same was
called for except in the case of graduates and banking diploma holders for
whom additional increments were provided. The Sastry Tribunal was at pains
to point out that what it was providing was only a minimum, and that in the
case of big banks and particularly in their important offices it may be proper
and desirable that the incumbents of such offices should be allowed more
than what had been prescribed. The Sastry Tribunal stated that it was not
feasible to provide for diverse conditions obtaining in various branches of the
banks where the volume of work differed to a considerable extent.

BE

5.217. It was suggested that if two scales are fixed, one scale may be
applied to those who are drawing the supervisory allowance under the Sastry
Award and the other scale may be reserved for those who have been subsequently brought within the definition of workman who, before the amendment
of 1956, did not fall within the definition of workman. I asked the representatives
of workmen to describe to me, by reference to the designations of persons or
by reference to duties, the persons who have been included in the definition
of workman by virtue of the amendment who were not prior thereto so
included, but they were unable to do so. There is no evidence before me
about the extent of the duties of a supervisory nature discharged by various
persons in various banks. Some persons employed to supervisory work may
discharge supervisory functions only for a small period of the day. Various
types of functions are combined in a number of banks. I have made every
effort to impress upon the parties before me, especially the workmen, the
necessity of placing sufficient material before me which would enable me to
do justice to the case of the members of the supervisory staff and which
would enable me, to the extent that I have the jurisdiction to provide proper
scale or scales of wages for persons employed in a supervisory capacity. In
the present state of the record, it is impossible to fix any scale or scales of
pay in which persons who are employed to do supervisory work could be
fitted.

bank in providing a higher allowance or a separate grade or grades for members

of the supervisory staff, if they so desire, or to operate by way of substitution
of any existing grade or grades meant for persons who would otherwise be
entitled to draw a supervisory allowance under the terms of this award, provided
the total wages paid thereunder are not less than what is provided under this
award.

AI

5.218. Having carefully considered all aspects of the matter and having
considered all the evidence placed before me, I am left with no alternative
except only to fix special allowances for workmen employed in a supervisory
capacity, as was done by the Sastry Tribunal after applying to them the
scales of pay provided for the clerical staff. Having regard to the scheme
relating to the scales of pay adopted by me, I have fixed suitable special
allowances for supervisors in A Class banks, in B Class banks and in C
Class banks, including banks in the Excepted List. I am conscious of the
fact that It is not a very satisfactory way of dealing with the matter. The
nature of duties performed by persons who would draw the allowance, the
amount of responsibility involved in the performance of the task allotted to
such persons and the period of time during which such duties have to be
performed may vary from bank to bank and from area to area. In deciding
whether a workman is entitled to supervisory allowance, the designation of
the workman would not be decisive. In order to entitle a workman to such
allowances what would be determinative would be the nature of the duties
and functions, assigned to him, as has been laid down by the Supreme Court
in the case of Lloyds Bank Limited Vs. Pannalal Gupta and others reported
in 1961 (I) Labour Law Journal, page 18.

5.221. The Sastry Tribunal provided special allowances for the below
mentioned categories of workmen employed in various classes of banks as
under :
Categories of employee

Class of Banks

5.219. The provision made by this award in connection with giving a

special allowance to supervisors is not intended to fetter the discretion of the

194

195

A.

B.

C.

D.

Rs.

Rs.

Rs.

Rs.

1.

Comptists

10

10

10

10

2.

Head Clerks and Stenographers ...

20

20

15

10

3.

Head Cashiers : Units of 5 clerks and

above

20

15

10

Head Cashiers : Units of 4 clerks and

below

15

11

Assistant Cashiers (above the level of

routine clerks):Units of 5 clerks
and above

16

14

6.

7.
8.

9.

Assistant Cashiers (above the level of

routine clerks) :Units of 4 clerks and
below

12

10

Cashiers in charge of cash in pay

offices

15

15

12

10

Cashiers in charge of cash in treasury

pay offices employees in charge of pay
officer or sub offices

25

25

20

15

Supervisory, superintendents, sub-accountants, departmental in charges, employees in charge of treasury pay offices

50

Head cash mazdoors (coolies)

Watchmen, chowkidars or cash durwans
Armed guards
... ...
Daftries
... ...
Havaldars, jamdars, dafadars, naiks
and head peons
...
Drivers and head messengers

C.
D.
Rs.
Rs.
3 280
3
3
8
7
8
7

45
30

12
25

10
20

8
18

The Sastry Tribunal has stated that the general observations made by it in
the case of staff would ordinarily apply to these persons also.

45

40

35

AI

The aforesaid provisions were not to govern head cashiers and sub accountants
in the Imperial Bank of India. The Sastry Tribunal has made it clear that the
aforesaid allowances were applicable to incumbents of such of these posts
who were workmen. It further provided that when an employee came within
more than one category, he would be entitled to the highest rate applicable
to him. For the purpose of these allowances the Sastry Tribunal made no
distinction as between one Area and another. As regards graduates and
holders of banking diplomas like C.A.I.I.B., and C.A.I. B., the Sastry Tribunal
provided for them additional increments in the basic scales of pay, two
increments provided for graduation and one increment for completing Part I of
the examination for the diploma, and another for completing Part II of the
examination for the diploma, a person having both the qualifications being
entitled to claim the benefit of both the sets of increments. The Sastry Tribunal
considered that it was better to provide for such increments rather than give
to the employees who had or acquired such qualifications a special allowance.
The Sastry Tribunal has observed that with regard to others, it did not think
that any compulsory directions need be given and that it would be for the
banks if they were so pleased to consider the matter.
5.222. As regards members of the subordinate staff the Sastry Tribunal
Provided for special allowances for the following categories of workmen
employed in various classes of banks :

196

B.
Rs.
4
4
9
9

5.223. The Labour Appellate Tribunal did not disturb the scheme of the
Sastry Tribunal in connection with special allowances. In the course of its
decision it has observed that the circumstances determining the extent of
responsibility of a special post differ not merely from bank to bank and area
to area, but also from branch to branch of the same bank and that it was
convenient therefore to indicate a minimum and leave it to the bank to fix on
a consideration of circumstances of each case what the actual special
allowance should be. The Labour Appellate Tribunal directed that electricians
should receive a special allowance at the same rate as the one prescribed by
the Sastry Tribunal for drivers. The Labour Appllate Tribunal recorded an
agreement whereunder it was provided that At each local Head office of the
Imperial Bank of India (viz. at Calcutta, Bombay and Madras) there will be
one member of the subordinate staff (i.e. Jamadar, Naik, or Dafadar) who will
rank as Head Messenger and will be entitled to the allowance of Rs. 30.
***No post in any of the Branches or sub offices will qualify for this Head
Messengers allowance.

5.

Class of Banks
A.
Rs.
5
5
10
10

BE

4.

Categories of employees

5.224. On behalf of the workmen a claim has been made for a special
allowance for a very large number of categories of workmen. Between the All
India Bank Employees Association and the All India Bank Employees
Federation a demand has been made for special grades or special allowances
for no less than 58 different categories of workmen in the clerical and
supervisory grade and for special allowances for 25 different categories of
workmen in the subordinate grade. There are some other categories also for
whom demands have been made by other workmens organisations. The
demand is for the same amount of special allowance for the same category
of workmen irrespective of the class of bank in which they may be employed.
It is pleaded that the existing special allowances were not adequate.
5.225. The Indian Banks Association has pleaded for the continuation of
the present special allowances and for payment of a special allowance of Rs.
15 per month to the accounting machine operators. Save as aforesaid it has
opposed the demands made on behalf of workmen. It has claimed that

197

5.230. In theory it would be desirable to have standardisation of

nomenclature and standardisation of duties attached to a designated post.
When I tried to explore the possibility of such standardisation, considerable
difficulties were experienced. All efforts to evolve a standardised nomenclature
and to have a standardisation of duties have failed. Enough evidence has not
been led before me which would enable me to evolve such standardised
nomenclature with standardised duties for different categories of workmen.
Such standardisation would not even fall within the ambit of the terms of the
reference to this Tribunal.
5.231. The Sastry Award has been in operation for a long time and as a
result of decisions given by tribunals or otherwise the categories of persons
entitled to special allowances under the Sastry Award as modified can now
be regarded as fairly settled.

BE

5.226. The Bombay Exchange Banks Association has submitted that

designations were no criteria but the nature of duties would determine the
category of workmen. It has stated that it was strongly felt that the introduction
of special allowances had created an atmosphere of considerable
misunderstanding, doubts and disputes and as such they called for a special
review and that the absence of any indication in the present award defining
clearly the duties that should be performed by a workman for being eligible
for the grant of the particular special allowance had resulted in disputes
being raised claiming special allowance for isolated duties such as using an
adding machine, lifting a cash box, bundling vouchers, changing electric
bulbs, etc. although each such operation may form only a very small portion
of the days work. It has pleaded that special allowance should only be paid
to (1) stenographers (2) head clerks (3) head cashiers controlling 5 clerks
and above (4) head cashiers controlling 4 clerks and above and (5) accounting
machine operators as distinguished from the users of adding or calculating
machines and from amongst the subordinate staff to (1) watchmen and
chowkidars (2) armed guards and sentries (3) daftries (4) havaldars jamadars,
dafadars and naiks (entrusted with responsibility for other members of the
subordinate staff) (5) cash peons.

Sastry Award has not specified the nature of work to be done and the duties
which are required to be performed by the various persons who are entitled to
receive special allowances. It is further contended that some banks adopt
different nomenclatures in order to avoid payment of these allowances. They
have claimed that the nature of work of each category should be taken into
account for the grant of special allowances, irrespective of the designation of
the employee concerned.

employees who are employed to do specified kinds of jobs for the whole
time only would be eligible to special allowances.

AI

5.227. The State Bank of India has denied that there is or can be any
category of workmen in the State Bank who could be classified either as
highly skilled or even skilled. It has submitted that designations were illusive
and deceptive and that Tribunals have always taken the view that only the
duties and work involved mattered. It has opposed the demands of the
workmen. Other banks have also opposed the demands of workmen.

5.228. It has been urged on behalf of the employees that the special
allowances granted by the Sastry Tribunal are not based on any rational and
scientific wage differentials looking to the nature of the work and responsibility
of the position occupied by the workman concerned and that the same have
been fixed on an ad hoc basis, without assigning any reason for such fixation.
If special allowances are given based on wage differentials properly calculated
after taking into account (1) the degree of skill, (2) the strain of work, (3) the
experience involved, (4) the training required, (5) the responsibility undertaken,
(6) the mental and physical requirements, (7) the disagreeableness of the
task, (8) the hazard attendant on the work and (9) the fatigue involved, they
would be more scientific and more satisfactory. The criticism levelled against
the Sastry scheme of allowances however is of a negative character. The
workmen themselves have not adduced any evidence which would enable
me to arrive at such wage differentials. The demands of the workmen for
special allowances are also made on an ad hoc basis.
5.229. A complaint has been made on behalf of the workmen that the

198

5.232. As held by the Supreme Court in Lloyds Bank Limited vs. Pannalal
Gupta reported in 1961 (1) LLJ. page 18 in deciding the status of an employee
the designation of the employee is not decisive; what determines the status
is a consideration of the nature and duties of the function assigned to the
employee concerned.
5.233. The special allowances payable at present workmen other than
those belonging to the subordinate staff need to be enhanced to a certain
extent in view of the changes made in the scheme of basic pay and dearness
allowance under this award.
Graduates and Holders of National Diploma in Commerce
5.234. The All India Bank Employees Association has demanded for
graduates and holders of National Diploma in Commerce a special allowance
of Rs. 25 per month, while the All India Bank Employees Federation has
demanded for graduates only two increments with a minimum of Rs. 35 per
month. Most of the unions have followed the All India Bank Employees
Association in making a demand in this respect. Some have followed the
Federation. A Union has demanded only two increments while another has
demanded a special allowance of Rs. 25 for graduates or equivalent diploma
holders'. The All India Bank of Baroda Employees Federation by its
supplementary statement has asked for a special allowance of Rs. 25 for
each graduation and for the holding of the diploma. The State Bank of Patiala
(All Cadres) Employees Association has pleaded for the grant of two
increments to graduates. This Association has also pleaded for grant of three

199

has demanded a special allowance of Rs. 10 on passing the first part of the
examination and a special allowance of Rs. 25 on passing both parts of the
examination. The All India Bank Employees Federation has demanded for
those who pass the first part of the aforesaid examinations one increment in
the scale with a minimum of Rs. 10 and on passing the second part of the
examination two increments in the scale with a minimum of Rs. 25 and also
Rs. 10 extra for employees having both the diplomas. Other unions have
made demands following the All India Bank Employees Association or the
All India Bank Employees Federation. The All India Bank of Baroda Employees
Federation has asked for cash awards of Rs. 150 and Rs. 250 to employees
who pass Part I and Part II, respectively of these examinations. The State
Bank of Patiala (All Cadres) Employees Association has asked for one
increment for Part I and two increments for Part I I in the scale. The All India
State Bank of India Staff Federation and the State Bank of India Employees
Association (Delhi Circle) have demanded one increment on completion of
the first part and one increment on completion of the second part of the
examinations.
5.238. The Banks in general are opposed to these demands. The Bombay
Exchange Banks Association considers the C.A.I.I.B. and C.A.I.B. diplomas
as valuless unless the employee can apply in practice the knowledge gained.
It has stated that all banks would wish to encourage the employees to pass
these banking examinations by making ex gratia payments not exceeding
Rs. 100 on passing Part I and not exceeding Rs. 200 on passing Part I I of
these examinations. The State Bank of India has suggested lump sum
payments for passing the examinations without specifying any amounts.
The Northern India Banks Association has expressed itself in favour of granting
two increments for passing Part I of the Banking diploma examination and
two increments for passing Part I I of this examination. The Jaya Laxmi Bank
is against providing additional increments to the banking diploma holders
and considers it desirable to award a cash prize in lump sum when the
employees complete Part I and Part I I of the banking diploma examination.

BE

5.235. The banks in general are opposed to the demands. The Bombay
Exchange Banks Association is against the grant of special increments to
graduates as it contends that in itself a University degree is of no value to the
bank and it does not mean that a graduate can successfully apply this
additional education for the benefit of the bank. The State Bank of India is
against the grant of any allowance and in case any revision is made it has
submitted that special increments should be discontinued and only a
reasonable lump-sum payment should be directed to be paid on the
acquisition of the qualifications and recognition thereof. The Bank of Baroda
opposes the demand of All India Bank of Baroda Employees Federation for
payment of a special allowance of Rs. 25 for each graduation and for holders
of a diploma. The Jaya Laxmi Bank has submitted that graduates should not
be provided with additional increments. The Indian Banks Association at the
time of the hearing has submitted that in case a special allowance was
awarded to graduates or holders of National Diplomas in Commerce, the
additional increments received by the employees under the provisions of the
Sastry Award should be deducted from the existing basic pay for purposes of
adjustment into the new scales of basic pay, if any, and the special allowances
prescribed by this Tribunal for such qualifications should then be paid in
addition to the basic pay or new basic pay arrived at as above.

increments to double graduates and one increment to intermediates.

AI

5.236. Under the Sastry Award, graduates are given two extra increments
in the grade. There is no provision made for holders of the National Diploma in
Commerce. The provision in the Sastry Award in terms of money operates
differently for different persons depending upon the class of bank in which
they are employed and depending upon the stage reached in the incremental
scale. It is desirable that there should be a uniform provision made for persons
who graduate or hold such diploma whether they have graduated or held
such diploma before they joined service or at any subsequent stage. This
uniformity can only be attained by providing a special allowance for them. I
accordingly direct that a special allowance of Rs. 10 per month be paid by all
classes of banks to graduates and to those who hold the National Diploma in
Commerce. This provision will apply only to those who join a bank or who
graduate or who obtain the National Diploma in Commerce on or after 1st
January 1962. No adjustment as desired by some of the banks will be
necessary in view of this direction. A person who is a graduate will not be
entitled to receive any additional increment if he graduates over again.
C.A.I.I.B and C.A.I.B. Diploma Examinations
5.237. As regards the Certified Associates of the Indian Institute of
Bankers, and Certified Associates of the Institute of Bankers, the Sastry
Tribunal has provided for one extra increment in the grade on passing Part I of
the aforesaid examinations and another extra increment in the grade on passing
Part II of the aforesaid examination. The All India Bank Employees Association

200

5.239. At the hearing the Indian Banks Association has submitted that
in case special allowances were awarded for passing Parts I and I I of the
Institute of Bankers Examination, the additional increments received by the
holders of these diplomas under the provisions of the Sastry Award should
be deducted from the existing basic pay for purposes of adjustment into the
new scales of basic pay, if any and the special allowances prescribed by this
Tribunal for such qualifications should then be paid in addition to the basic
pay or new basic pay arrived at as above.
5.240. The reasons given for granting a special allowance to graduates
also apply to those who have passed these examinations. I direct that a
special allowance of Rs. 5 per month be paid by all classes of banks to
persons who pass the first part of the aforesaid examinations and a special
allowance of Rs. 5 per month be paid by all classes of banks to persons who

201

Comptists

AI

5.242. The Sastry Tribunal has provided for comptists a uniform special
allowance of Rs. 10 per month in all classes of banks. A uniform special
allowance of Rs. 20 per month has been demanded by almost all workmens
organisations. Statements have been submitted before me showing difference
between the total salary of clerks and that of comptists in some commercial
concerns. In view of the pay scales being fixed with reference to the base
year 1949 a revision in special allowances is also necessary. Having taken
all circumstances into consideration, I provide a special allowance of Rs. 15
per month for comptists in all classes of banks.
Stenographers

There are statements which indicate that there is a considerable difference

between the total emoluments paid to a clerk and a stenographer in various
commercial establishments. The State Bank of Saurashtra had the following
scales for normal clerks and stenographers :

BE

5.241. A graduate or a holder of the National Diploma in Commerce who

passes the first or the second part of the aforesaid examinations will be
entitled to receive a special allowance of Rs. 5 as herein provided in addition
to the benefits received by him as a graduate or as a holder of the National
Diploma in Commerce.

280-20-400-25-525-30-645. It has also demanded an allowance of Rs. 25 per

month for stenographers. The All India Bank Employees Federation had first
claimed a special allowance of Rs. 50 per month for stenographers but
subsequently it amended the statement of claim and demanded a special
grade of Rs. 200-15-350-30-450-25-550 for stenographers when employed
by banks having working funds of Rupees 15 crores and more and a special
grade of Rs. 175-15-325-20-425-525 for those employed by banks having
working funds below Rupees 15 crores. The demands made by the All India
Bank Employees Federation as worked out by the Federation itself require
payment by way of basic pay and dearness allowance to a stenographer at
the all India working class consumer price index number 167 in the series of
1944 = 100 (same as index number 12l in the series 1949 = 100) by a bank
in the first group of Rs. 350 per month in the first year of his service and Rs.
963 per month in the 21st year of his service and by a bank in the second
group of Rs. 306 per month in the first year of his service and Rs. 918 per
month in the 20th year of his service.

pass the second part of the aforesaid examinations. Those who have passed
both the parts will thus receive special allowance of Rs. 10 per month. A
person who has passed the first or the second part of the C.A.I.I.B. examination
will not be entitled to receive any extra special allowance for passing the first
or second part of the C.A.l.B. examination, and vice versa. These provisions
will apply only to those who join a bank or who pass the first part or the
second part of the aforesaid examinations on or after 1st of January 1962. In
view of this provision no direction for adjustment as suggested by some of
the banks will be necessary. A person who has already passed Part I of the
aforesaid examination and has become entitled to receive one increment
under the Sastry Award prior to 1st January 1962 will be fitted into the new
scales of pay on the basis of his being entitled to such increment. For passing
the second part of such examination after the 1st of January 1962 he will
receive the special allowance of Rs. 5 as herein provided.

5.243. Numerous representations have been made to this Tribunal on

behalf of stenographers stating that their present allowance of Rs. 20 per
month in A and B Class banks and Rs. 15 and Rs. 10 per month in C and D
Class banks respectively is very low. The general demand of the employees
is for a special allowance of Rs. 50 per month. There are, however, a few
unions which have demanded less. The Cochin Commercial Bank Employees
Association has claimed a special allowance of Rs. 20 per month, the Vadodra
Rajya Bank Nokar Sangh has claimed a special allowance of Rs. 30 per
month and the Bihar Provincial Central Bank of India Employees Association
and the Central Bank of India Employees Association at Patna, Muzaffarpur
and Amritsar have claimed Rs. 35 per month as special allowance. The
State Bank of Patiala (All Cadres) Employees Association has demanded
that stenographers should be placed in supervisory grade II i.e., grade of Rs.

202

Clerks : Rs. 65-4-85 5-100-6-112-7-140-8-164-9-200-10-250.

Stenographers : Rs. 100-10-160-15-205-EB-15-325.

The Bombay Exchange Banks Association has submitted that a special

allowance of Rs. 20 per month should be prescribed for stenographers. On
behalf of the State Bank of Patiala it has been pointed out that in view of the
fact that stenographers are in the grade of Rs. 100-10-220-EB-10-250, no
question could arise of paying to the stenographers any special allowance.
The Northern India Banks Association which has as its member banks falling
within the present C and D Class has submitted that Rs. 25 per month
should be fixed as special allowance for stenographers. At the time of the
hearing, the Indian Banks Association submitted that in banks, dictation in
shorthand is usually short, that the stenographers duties are not exacting
and that full time stenographers are rare in banks.
5.244. Having considered all aspects of the matter, I direct that
stenographers should be paid a special allowance of Rs. 35 per month in A
and B Class banks and Rs. 25 per month in C Class banks including banks
in the Excepted List. This provision is not intended to fetter in any way the
discretion of banks in giving a larger allowance to them having regard to the
nature and extent of the work to be done by them and having regard to their
proficiency and speed in stenography. I am conscious of the fact that the
provisions herein made may not be adequate for stenographers possessing
high degree of speed and accuracy in connection with their work. I have
provided the minimum amounts that should be paid to persons who are

203

employed to do the work of stenographers by different classes of banks with

liberty to the banks to pay higher remuneration to stenographers according
to their requirements and the ability and the speed to the stenographers. No
case is made out for a separate scale of pay for stenographers and the
demand in connection therewith is rejected.

cashiers : units of 4 clerks and below should get special allowances of Rs.
20, Rs. 15 and Rs. 11 per month in A Class banks, B Class banks and C
Class banks including banks in the Excepted List respectively. No case is
made out for a separate scale of pay for head cashiers and the demand in
connection with the same is rejected.

Head Clerks, Chief Clerks and Passing Officers

Assistant Cashiers

5.245. A supervisory grade has been demanded for this category of

employees. Special allowances are also demanded for them. The demands
for a special allowance for head clerks range from Rs. 50 to Rs. 75 per
month. Only one organisation of workmen has demanded Rs. 20 for head
clerks.

5.250 The All India Bank Employees Federation has demanded a special
allowance of Rs. 25 per month for assistant cashiers. The position at present
is that assistant cashiers (above the level of routine clerks); units of 5 clerks
and above , receive a special allowance of Rs. 16 per month in A Class
banks, Rs. 14 per month in B Class banks, Rs. 9 per month in C Class
banks and Rs. 7 per month in D Class bank and assistant cashiers (above
the level of routine clerks); units of 4 clerks and below, receive a special
allowance of Rs, 12 per month in A Class banks, Rs. 10 per month in B
Class banks, Rs. 7 per month in C Class banks and Rs. 5 per montn in D
Class banks. Special allowance at the uniform rate of Rs. 20 per month has
been demanded for assistant cashiers by the All India Bank Employees
Association.

5.247. In some banks head clerks are known as chief clerks.

5.251. Having regard to the changes in the scheme of basic pay and
dearness allowance I am providing special allowances for assistant cashiers
above the level of routine clerks); units of 5 clerks and above of Rs. 22, Rs.
19 and Rs. 12 per month in A Class banks, B Class banks and C Class
banks including banks in the Excepted List respectively, and for assistant
cashiers (above0 the level of routine clerks); units of 4 clerks and below of
Rs. 16, Rs. 14 and Rs. 10 per month in A Class banks, B Class banks and
C Class banks including banks in the Excepted List respectively. No case
has been made out for prescribing a uniform rate in all classes of banks in
the present circumstances or for higher rates.

Head Cashiers

AI

BE

5.248. The All India Bank Employees Association had made a demand
for treating passing officers on equal footing with head clerks. The Indian
Banks Association while pointing out that passing officers do the work of
comparing and verifying signatures of customers on cheques with the specimen
signatures on the banks record has contended that no special skill or
responsibility is involved in this work. The Bombay Exchange Banks
Association has stated that passing officers who are employed in the National
and Grindlays Bank are paid head clerks special allowance of Rs. 20 per
month. Having considered all aspects of the matter, I am providing special
allowances for head clerks, chief clerks and passing officers of Rs. 27 per
month in A Class banks, Rs. 27 per month in B Class banks and Rs. 20 per
month in C Class banks including banks in the Excepted List. No case is
made out for a separate scale of pay and the demand in connection therewith
is rejected.

5.246. The special allowance at present for head clerks is Rs. 20 per
month in A and B Class banks and Rs. 15 per month in C Class banks and
Rs. 10 per month in D Class banks.

5.249. For head cashiers, supervisory grades have been demanded.

Under the Sastry Award head cashiers : units of 5 clerks and above, get a
special allowance of Rs. 20 per month in A Class banks, Rs. 15 per month in
B Class banks, Rs. 10 per month in C Class banks and Rs. 8 per month in D
Class banks and head cashiers : units of 4 clerks and below, receive a
special allowance of Rs. 15 per month in A Class banks, Rs. 11 per month in
B Class banks, Rs. 8 per month in C Class banks and Rs. 6 per month in D
Class banks. It is necessary to change the amounts in view of the changes
in the scheme of basic pay and dearness allowance. I direct that head
cashiers : units of 5 clerks and above should get special allowances of Rs.
27 Rs. 20 and Rs. 14 per month in A Class banks, B Class banks and C
Class banks including banks in the Excepted List respectively and that head

204

Deputy Head Cashiers and Assistant Head Cashiers

5.252. For deputy head cashiers (above the level of routine clerks), a
special allowance of Rs. 25 per month has been demanded only by the All
India Bank Employees Federation and some unions of which follow the
Federation closely in making their demands.
5.253 No case has been made out for having a separate new category of
this type for the grant of a special allowance. Similar is the case with assistant
head cashiers (above the level of routine clerks) for whom the State Bank
employees have made a demand for a special allowance of Rs. 50 per month
and for whom others have demanded Rs. 20 to 25 per month by way of
special allowance. Those who fall within the categories for which provision
has already been made will get the special allowances which are provided.
Those who do not fall within those categories will not be entitled to receive
any special allowance.

205

Cashiers in Charge of Cash in Pay Offices

Employees in Charge of Pay Offices or Sub Offices and Employees in

Charge of Treasury Pay offices.

5.255. The State Bank of India has submitted that the persent special
allowance is quite adequate. No case has been made out and there is no
necessity for enlarging the present category. In view of the change in the
scheme of basic pay and dearness allowance I am providing Rs. 20, Rs. 20
and Rs. 16 per month for cashiers-in-charge of cash in pay offices in A Class
banks, B class banks and C Class banks including banks in the Excepted
List respectively.
Cashiers-in-Charge of Cash in Treasury Pay Offices

AI

BE

5.256. The present special allowance for this category of employees is

Rs. 25 per month for A and B Class banks, Rs. 20 per month for C Class
banks and Rs. 15 per month for D Class banks. The demand for this category
is the same as the demand for cashiers in charge of cash in pay offices The
position taken up by the State Bank of India in this case also is the same as
in the case of the cashiers-in-charge of cash in pay offices. I find that there
are no treasury pay offices of any bank other than the State Bank of India. In
view of the change in the scheme of basic pay and dearness allowance I am
providing under the circumstances a special allowance of Rs. 35 for cashiersin-charge of cash in treasury pay offices of State of Bank of India.

5.259 The Sastry Tribunal has dealt separately with employees in charge
of pay offices or sub offices and employees in charge of treasury pay offices
and has fixed a special allowance of Rs. 25 per month for A Class banks, Rs.
25 per month for B Class banks, Rs. 20 per month for C Class banks and Rs.
15 per month for D Class banks for employees in charge of pay offices or sub
offices and the special allowance of Rs. 50 per month for A Class banks Rs.
45 per month for B Class banks, Rs. 40 per month for C Class banks and Rs.
35 per month for D Class banks for employees in charge of treasury pay
offices. The All India State Bank of India Staff Federation has demanded a
special allowance of Rs. 100 per month for employees in charge of pay
offices and sub pay offices. For employees in charge of treasury pay offices
a special allowance of Rs, 100 per month was demanded at the hearing.
According to the State Bank of India, the clerks in charge are not workmen
as they are employed in a managerial capacity. There is no legal evidence
before me on which I can adjudicate and determine whether they are workmen
or not Provision has been made for them by the Sastry Tribunal on the
footing that they are workmen. I am making a provision for them on a
similar hypothesis. If they or any of them are found not be workmen these
provisions will not apply to such of them as are not workmen.

5.254. The Sastry Tribunal has provided a special allowance of Rs. 15

per month in A and B Class banks and Rs. 12 per month and Rs. 10 per
month in C and D Class banks respectively for cashiers-in-charge of cash in
pay offices. The All India State Bank of India Staff Federation has demanded
a special allowance of Rs. 50 per month for cashiers-in-charge of cash in pay
offices or sub-offices. The same is the demand of the State Bank of India
Staff Union, Andhra Pradesh. The State Bank of India Employees Association
(Bengal Circle) has however demanded a special allowance of Rs. 60 per
month for cashier in-charge.

Cashier-in-Charge and Receiving and Paying Cashiers.

5.257 The All India Bank Employees Association has made no demand
in respect of this category of employees. The State Bank of Patiala (All
Cadres) Employees Association has demanded a special allowance of Rs.
25 per month for cashiers-in-charge. The Bihar Provincial Central Bank of
India Employees Association and the Central Bank of India Employees
Association, Muzaffarpur, have demanded a special allowance of Rs. 25 for
receiving and paying cashiers. The South Gujarat Bank of Baroda Employees
Union has demanded a special allowance of Rs. 50 per month for receiving
and paying cashiers. The Cochin Commercial Bank Employees Union has
demanded a special allowance of Rs. 15 per month for paying cashiers and
Rs. 10 per month for receiving cashiers.

5.258. No case has been made out for any separate special provision for
these categories of workmen.

206

5.260. As regards employees in charge of pay offices or sub-offices,

they may be divided into two categories : (1) those in charge of pay offices or
sub-offices of banks other than the State Bank of India and (2) those in
charge of pay offices or sub-offices of the State Bank of India. As regards the
former, I am providing special allowances of Rs. 35, Rs. 35 and Rs. 27 per
month for A Class banks, B Class banks and C Class banks including banks
in the Excepted List respectively in view of the changes in the scheme of
basic pay and dearness allowance. As regards the employees in charge of
pay offices or sub-offices of the State Bank of India, their responsibilities are
very much greater and they have to attend to diverse types of work. In view
thereof, I fix for them a special allowance of Rs. 65 per month. As regards the
employees in charge of the treasury pay office, I find that at present there are
no treasury pay offices of any banks other than the State Bank of India. As
regards employees in charge of the treasury pay offices of the State Bank of
India, in view of the special nature of their duties and responsibilities, I am
fixing a special allowance of Rs. 100 per month.
Typists
5.261. A claim has been made on behalf of typists that they should be
paid a special allowance of Rs. 20 per month. Two unions have, however,
demanded a special allowance of Rs. 10 per month. Typists were paid an
allowance of Rs. 5 per month in the Bengal and Delhi Circles of the State
Bank of India upto 1st December 1957, but the typists employed after that

207

Accounting Machine operators, etc.

Adding Machine Operators, Addressographers and Photostat Machine

operators.
5.265. Claims have been made for a special allowance of Rs. 20 per
month for adding machine operators and addressographers and from Rs. 20
per month to Rs. 50 per month for photostat machine operators. The
comparative effort required to learn to operate these machines efficiently is
much less than that required by persons who operate efficiently on a typewriter.
There is no cogent reason for granting an extra allowance to these persons
when no extra allowance has been provided for typists. It has been brought to
my notice that in some banks a special allowance of about Rs. 10 per month
is being paid to the above mentioned operators. In my view no case has been
made out for the grant of any special allowance to these operators. The
clerical grade provided for these operators is adequate. Banks are however at
liberty to pay any special allowance if they so choose.

AI

BE

5.262. Special allowances have been demanded for accounting machine

operators, I.B.M. machine operators, Remington Rand accounting machine
operators, Hollerith machine operators and punch operators. For
accounting machine operators, a special allowance of Rs. 50 per month has
been demanded by the All India Bank Employees Association. For I.B.M.
Machine operators, Remington Rand Accounting machine operators and puch
operators a special allowance of Rs. 20 per month has been demanded by
the All India Bank Employees Federation. The Indian Banks Association is
willing to allow to accounting machine operators, I. B. M. Machine operators,
Remington Rand accounting machine operators and punch operators a special
allowance of Rs. 15 per month. The State Bank of India has submitted that
its punch operators are working under a special arrangement and that in view
thereof no special allowance should be fixed for them.

5.264. The State Bank of India has stated that Remington accounting
machines are used in its Central Accounts Office, Calcutta and in Central
Accounts Sections at Local Head Offices and that the employees who qualify
themselves as machine operators (which qualification is acquired by
undergoing a practical course of a few days) are granted one increment in
their grade pay. The State Bank of India has urged that double benefit of such
increment and of a special allowance should not be granted to them. I provide
that from and after the date when the special allowance hereby provided
becomes payable, the State Bank of India will be entitled to set off the amount
of such increment against the amount of the special allowance payable
hereunder to such operators in the State Bank of India.

date are not being paid any special allowance by the State Bank of India.
Under the Sastry Award as modified no special allowance is provided for
typists. The Sastry Tribunal has taken the view that typists form part of the
regular clerical grade. The question of granting special allowance to typists
was again considered by the Labour Appellate Tribunal on the representation
of the employees. The Labour Appellate Tribunal held that the case of clerks
who were typists did not call for special consideration. The work of the typists
was regarded by the Labour Appellate Tribunal as of a routine character and
the responsibility attaching to such work was not considered to be as great
as the responsibility attaching to the higher grades or work expected of a
routine clerk in the general scale. The scales of pay which I have fixed for the
clerical grade are adequate for typists. In A Class banks in Area I at the all
India index number of 123 (1949=100) a typist in the beginning of his service
will receive a sum of Rs. 164 and a typist who is in the 25th year of service
will receive about Rs. 473. There is no case made out for any special allowance
for typists.

5.263. Instances have been cited before me to show that the allowances
which are being paid at present to accounting machine operators in various
banks vary between Rs. 10 per month to Rs. 25 per month. It has also been
pointed out that the British Bank of Middle East pays a special allowance of
Rs. 50 per month to these operators. The allowance which is paid to the
punch operators in the Associated Cement Company is Rs. 30 per month.
Taking everything into consideration, I am providing that all classes of
banks should give a special allowance of Rs. 20 per month to the accounting
machine operators, I.B.M. Machine operators, Remington Rand accounting
machine operators, Hollerith Machine operators and punch operators. The
punch operators employed by the State Bank of India will, however, be
excluded from these directions in view of the special conditions under which
they are being employed at present.

208

Munshis, opinion Compliers, Credit investigators and Translators

5.266. A claim has been made that a special allowance should be given
to the members of the clerical staff who are working as munshis, opinion
compliers (or opinion clerks) credit investigators and translators and special
allowances ranging from Rs. 20 per month to Rs. 75 per month have been
demanded. No case has been made out for giving any special allowance to
any of them. The clerical grade provided for them is adequate.
Clearing Clerks, court clerks, record keeper clerks, proof readers,
stationery stock keepers and ledger keepers.
5.267. A claim has also been made for a special allowance for the above
categories of workmen. No case is made out for giving any special allowance
to them, and the demand is rejected.
Godown Keepers
5.268. There is a demand by some unions for the grant of a special
allowance to godown-keepers which ranges from Rs. 10 per month to Rs. 20
per month. Actually there is a claim under another item of reference by the
State Bank of India that the pay of the godown keepers in charge of the

209

borrowers godowns should be only slightly above the pay of the members of
the subordinate staff. No case has been made for the grant of a special
allowance to godown keepers and the claim is rejected.

of tellers I am providing a special allowance of Rs. 10 per month for tellers in

all classes of banks. No case is made out for a separate scale of pay for
them.

Godown Inspectors

Audit clerks

5.269. Godown inspectors receive no special allowance at present. The

All India Bank Employees Federation has demanded a supervisory grade for
them. Some unions have demanded a special allowance of Rs. 30 for this
category of employees. The duties given by the Indian Bank Association of
godown inspectors indicate that they inspect godowns containing goods
pledged or hypothecated to a bank and ascertain whether the value, quantity
and quality of goods stored were in accordance with the books of accounts.
There is a higher degree of responsibility attached to the duties of godown
inspectors than to the duties of godown keepers. The inspectors of godowns
should be better paid than ordinary godown keepers. I provide a special
allowance of Rs. 10 per month for godown inspectors in all classes of banks.
No case has been made out for a separate scale of pay for godown inspectors.

5.272. For audit clerks sometimes called auditors, or checkers, a

supervisory grade has been demanded. There is also a demand for a special
allowance of Rs. 50 made by some unions. The Supreme Court had occasion
to consider the case of persons employed in the audit department of the New
Delhi branch of the Lloyds Bank in connection with a claim made for payment
of supervisory allowance. In its judgement dated 18th November I960 in Civil
Appeal No. 415 of 1959, published in 1961 (I), Labour Law Journal page 18
the Supreme Court at pages 22 and 23 has observed as follows :

BE

5.270. No case is made out for any special allowance for any of these
categories of workmen and the demand is rejected.

Accountant holding charge of cash and strong rooms, Caretakers,

caterers, and Telephone operators.

**** before a clerk can claim a special allowance his work must appear
to have some element of supervisory character. The work that is
done by the clerks in the audit department substantially consists
of checking up books of accounts and entries made in them. This
checking up is primarily a process of accounting, and the use of
the word checking cannot be permitted to introduce a consideration
of supervisory nature. The work of checking the authority of the
person passing the voucher or to enquire whether the limit of authority
has been exceeded is also no doubt work of a checking type but
the checking is purely mechanical, and it cannot be said to include
any supervisory function. If we take into account the six classes of
clerks specified in Clause 9, it would suggest that in respect of
each one of them there would normally be some persons working
under the persons falling in that clause; in other words, a person
claiming the status of a supervisor in Clause 9, should normally
have to supervise the work of some others who are in a sense
below him. On the argument urged by Mr. Ramamurthi every clerk
working in the audit department would be a supervisor and as such
would be entitled to draw a monthly special allowance of Rs. 50
though in the general hierarchy of the banks' employees he may
be much below the head clerks or head cashiers who draw Rs. 20
as monthly allowance. The tribunal has characterised the work of
these clerks as internal auditors but that obviously is an
overstatement. Audit in the sense in which the work internal audit
is understood is very different from the work of checking which is
entrusted to the clerks in the audit department. Similarly, when the
tribunal has observed that the clerks in the audit department
supervise the work of almost all the persons in that establishment
that again is obviously an overstatement. It would be ligitimate to
say that the work done in the audit department is important for the
proper and efficient functioning of the bank, but it would be idle to
elevate that work to the status of officers who supervise the work of

Tellers.

AI

5.271. The employees in general have demanded a supervisory grade

for tellers. The State Bank of India Employees Association (Bengal Circle)
and the State Bank of India Employees Association (Delhi Circle) have
demanded a special allowance of Rs. 50 per month for them. The All India
Bank Employees Federation has demanded a special allowance of Rs. 50
for tellers handling cash. The State Bank of Patiala (All Cadres) Employees
Association has demanded a special allowance of Rs. 10 for tellers. This
nomenclature is not prevalent in Exchange Banks. The Indian Banks
Association has pointed out that tellers for whom a supervisory grade had
been demanded by the employees and the tellers handling cash for whom a
special allowance of Rs. 50 per month had been demanded, have duties of
passing and payment of cheques upto a specified limit. The case of Shri M.
R. Sood, a teller in the Kanpur branch of the Punjab National Bank came up
for consideration before the Supreme Court in Civil Appeal No. 476 of 1960. In
its judgement, dated 20th July 1961 reported in 1961 I I Labour Law Journal
at page 162 the Supreme Court after examining duties assigned to this teller,
observed that it is true that he (Shri Sood) does important and responsible
work in that he can pass cheques upto Rs. 1000 but the fact that the work
done by the teller is responsible and onerous is not material in determining
the question as to whether his work is supervisory in character or not. The
claim of Shri Sood for a special allowance as a supervisor under paragraph
164 of the Sastry Award was disallowed. In view of the special responsibility

210

211

everybody concerned with the banks establishment. In our opinion,

therefore, the conclusion drawn by the tribunal as regards the status
of the three workmen by reference to the ninth category specified
in para 164 (b) of the award is manifestly erroneous and cannot be
sustained.

directions to that effect should be given. The Bank of Baroda Ltd. denies that
these employees do any supervisory work as, according to the bank, the
work of signing demand drafts, telegraphic transfers, mail transfers, etc. as
second man given to some cashiers at small branches is not supervisory
work. It has relied upon the agreement reached with the Federation on 29th
October 1960 by which, according to the bank as a measure of interim
arrangement, pending the final decision of this Tribunal, the bank has allowed
the special allowance mentioned above to cashier-clerks under certain
conditions laid down in the agreement. The bank submits that this Tribunal
should hold that the contention of the bank that the work of these employees
is not of supervisory nature is correct and should dismiss the demand of the
Federation. At the hearing a uniform allowance of Rs. 50 was demanded for
this category of workmen.

Having regard to the nature of the duties of audit clerks, after considering
all aspects of the matter I am providing a special allowance of Rs. 10 per
month for audit clerks in all classes of banks. No case has been made out for
a separate scale of pay for them.

5.275. Under this award I have provided a special allowance of Rs. 65

per month for supervisors. If the cashier-clerks perform the duties of supervisors
they will be entitled to receive this allowance. No evidence has been led
before me from which I can determine whether cashier-clerks in fact perform
supervisory functions or not. It is admitted by both the sides that cashierclerks sign demand drafts and telegraphic transfers and other documents. In
case of those cashier-clerks who are not entitled to a supervisory allowance,
I fix a special allowance of Rs. 40 per month having regard to the admitted
duties performed by them and having regard to the scheme of basic pay and
dearness allowance under this award.

Cashier-Clerks

AI

BE

5.273. On behalf of the workmen a special scale of pay has been

demanded for these categories of workmen. I have dealt with the case of
supervisors in an earlier part of this chapter. The same reasoning generally
applies to superintendents, sub-accountants and departmental-in-charges.
Some of the persons who are supervisors, superintendents, sub-accountants
or departmental-in-charges may not be workmen. It is not possible in the
present state of the record to provide a special scale or scales of pay for
such of them who are workmen. The Sastry Tribunal has provided Rs. 50,
Rs. 45, 40 and Rs. 35 by way of special allowances for these categories of
workmen in A Class banks, B Class banks, C Class banks and D Class
banks respectively. In view of the changes in the scheme of basic pay and
dearness allowance it is necessary to make a change in the special allowances
provided for these categories of workmen. I provide special allowances of
Rs. 65, Rs. 60 and Rs. 55 for these categories of workmen in A Class banks,
B Class banks and C Class banks including banks in the Excepted List
respectively.

Supervisors, Superintendents, Sub-Accountants and Departmental-inCharges

5.274. This category of employees is connected with the Bank of

Baroda Ltd. By a supplementary statement of claim, the All India Bank of
Baroda Employees Federation has submitted that in several branches of the
Bank of Baroda Ltd., cashier-clerks, who are in charge of the cash
departments of the banks branches are given supervisory duties, that they
counter-sign demand drafts, mail transfers and also check certain registers
apart from exercising all supervisory powers in respect of the cash department
employees working under them, and that as a result of the Federations
demand made in 1958, without prejudice to their legal contentions, the Bank
and the Federation reached an agreement whereunder these employees
receive an allowance of Rs. 50 in branches where there were no accountants,
and Rs. 30 in branches where there were accountants. It is the submission
of the Federation that without prejudice to its demand in respect of the
emoluments payable to employees working in the supervisory cadre, such
employees should continue to get the benefit of the agreement and that

212

Group-In-Charge
5.276. There is a demand by the All India State Bank of India Staff
Federation that a group-in-charge should be paid a special allowance of Rs.
50 per month as against Rs. 20 per month which is being paid at present by
the State Bank of India. This category of employees are employed by the
State Bank of India in the Central Accounts Office, Calcutta, Government
Accounts Section, Nagpur, and the Central Accounts Sections at four Head
Offices. The State Bank of India has replied that the group-in-charge, have to
group the statements of entries posted for inter-branch transactions in packets
to facilitate balancing that these packets are distributed to clerks for balancing,
that over a group of about seven clerks a senior clerk is posted to perform
checking duties under the overall supervision of a sub-accountant and that
as the duties performed by the group-in-charge are more or less similar to
those of a head clerk, an allowance of Rs. 20 per month is being paid to the
group-in-charge. It appears that this category did not exist at the time of the
Sastry Award. Having regard to the duties performed by them and the scheme
of basic pay and dearness allowance I provide for a special allowance of Rs.
27 for this category of workmen.
Agency Clerks
5.277. By a supplementary statement, the Vadodra Rajya Bank Nokar

213

Sangh has demanded a special allowance of Rs. 20 per month for clerks
working in the Agency Department of the Bank of Baroda Ltd. on account of
the special nature of their work and the responsibilities undertaken by them.
It is alleged that amongst other duties performed by them, they check ledgers,
supervise the work of the branches, ask explanations from the branches in
case of mistake etc. It is alleged that this is a department of the bank
through which the working of the branches is controlled by the head office of
the bank. The Bank of Baroda, by a supplementary statement, has denied
that the work in this department is of any special nature and/or that it entails
any special responsibility on the staff working in that department, or that
there is supervision of any kind done by these clerks and that the claim is
untenable.

A
Rs.

C
Rs.

Graduates or holders of National Diploma in Commerce

---- ---10
Workmen who have passed Part I of CA.I.I.B. or
C.A.I.B. Examination
5

10

10

Workmen who have passed Part II of CA.I.I.B. or

C.A.I.B. Examination
5

4.

Computists

15

15

15

5.

Stenographers

35

35

25

6.

Head clerks, chief clerks and passing officers

27

27

20

7.

Head cashiers, units of 5 clerks and above

27

20

14

8.

Head cashiers, units of 4 clerks and below

20

15

11

9.

Assistant cashiers (above the level of routine

clerks); Units of 5 clerks and above

22

19

12

10. Assistant cashiers (above the level of routine

clerks); units of 4 clerks and below

16

14

10

11. Cashiers-in-charge of cash in pay offices

20

20

16

12. Cashiers-in-charge of cash in treasury

pay offices of the State Bank of India

35

----

----

Offices of banks other than the State

Bank of India

35

35

27

Employees-in-charge of pay offices and

sub-offices of the State Bank of India

65

----

----

100

----

----

15. Accounting Machine operators, I.B.M. machine

operators. Remington Rand Accounting Machine
operators. Hollerith Machine operators and Punch
operators Punch operators of the State Bank of India
are excluded from the operation of this provision
20

20

20

16. Godown Inspectors

10

10

10

17. Tellers and audit clerks

10

10

10

5.282. In view of the directions given the categories of workmen and the
amount of special allowances per month which such categories of workmen
will get in A, B and C Class banks, are given below :

18. Supervisors, superintendents, sub-accountants, departmental-in-charges

65

60

55

19. Cashier-clerks in Bank of Baroda Ltd.

40

----

----

Categories of workmen

20. Group in charge in State Bank of India

27

----

----

Clerks concerned with Government securities, etc.

3.

AI

BE

5.279. By a supplementary statement, the All India Bank of Baroda

Employees Federation has made a demand that clerks entrusted with the
work of carrying Government securities and shares for delivery, transfer and/
or any other purpose should be paid a special allowance of Rs. 25 per month
as the Federation contends that their duties involve more than ordinary
responsibility. The Bank of Baroda Ltd., has submitted that this work does
not involve any extraordinary responsibility as the responsibility in carrying
shares, securities, etc., is normal and is a condition of service. No case is
made out for the grant of any special allowance to this category of workmen
and the demand is rejected.

2.

5.278. No evidence has been led before me which would enable me to

judge between the rival contentions of the parties. The workmen have
failed to make out a case for the grant of a special allowance for this category
of workmen and the demand must fail and is rejected.

1.

B
Rs.

Sub Agents and Assistant Managers

5.280. The Bihar Provincial Central Bank of India Employees Association

and the Central Bank of India Employees Association at Patna, Muzaffarpur
and Amritsar, have demanded a special allowance of Rs. 50. per month for
sub agents and assistant managers. For this category of employees The All
India Bank Employees Association and the All India Bank Employees
Federation, have demanded a supervisory grade.
5.281. No case has been made out for providing a separate sepcial
alloaswance also for these categories of employees some of whom may not
even be workmen. Such of them who are workmen and who perform supervisory
duties will be entitled to the special allowance provided for supervisors.

Class of banks

214

13. Employees-in-charge of pay

(a)
(b)

14. Employees-in-charge of treasury pay offices of the State Bank of India

215

5.283. Head Cashiers and sub-accountants of the State Bank of India

are excluded from the operation of the above provisions.

5.290. Special allowances would continue to be drawn by a permanent

incumbent while on leave.

5.284. Special allowances prescribed for C class banks will also be

payable by the banks in the Excepted List.

5.291. Whenever a bank requires an employee to work in a post carrying

a special allowance it should be done by an order in writing to avoid any
future controversy.

5.285. Special allowances prescribed above would be in supersession

of those prescribed under the Sastry Award as modified.

5.292. The special allowances hereby provided are by way of minimum.

It is open to any bank to provide higher special allowances. It is also open to
a bank to provide a special scale of pay for any category of workmen in lieu
of the scale of pay and special allowance provided by this award provided the
total remuneration consisting of basic pay under such scale and dearness
allowance is not less than what is provided by way of basic pay, special
allowance and dearness allowance under this award.

5.286. Special allowances are payable to employees who are workmen

and who would continue to remain as workmen even after the inclusion of the
amounts of such special allowances in their wages.

5.293. It is not my intention that banks which are at present paying

special allowances to workmen other than those for whom I have provided
special allowances should cease to pay such special allowances. They are
free to continue to pay the same.
The aforesaid general observations will equally apply to members of the
subordinate staff whose case is considered later.
5.294. No further directions seem to me to be necessary.

AI

BE

5.288. It has been urged on behalf of the banks that these special
allowances should be paid to the employees only when they are required to
perform and when they in fact perform the special duties for the performance
whereof these allowances are prescribed and that the special allowances
should cease to be payable when the employees cease to perform the special
duties for any reason. It is further urged that special allowances are payable
when a person is employed whole-time to do specified jobs attracting such
allowances. It is also urged that such allowance should not become payable
when a person is casually or occasionally asked to do some duty of the type
attracting a special allowance. The special allowances which have been
awarded are monthly special allowances. They are intended to compensate
a workman for the performance of certain duties and the discharge of certain
functions which constitute the normal part of the duties performed and the
functions discharged by such person. They are not intended to be paid for
casual or occasional performance of such duties or the casual or occasional
discharge of such functions. It is however not necessary that the person
should continue to perform such duties or discharge such functions wholetime. For instance a person who is doing supervisory work need not do the
work of supervision all the time in order to be entitled to an allowance.

5.287. When an employee falls within more than one category, he would
be entitled to receive the special allowance at the highest rate applicable to
him.

5.289. A person is entitled to a special allowance so long as he is in

charge of such work or the performance of such duties which attract such
allowance. Whether a person can be asked to cease to do such work or
cease to discharge such duties in order that he may not have such allowance
depends upon the terms of his employment. A person who is employed
permanently as a head clerk or as a stenographer cannot be deprived of such
allowance, at the sweet-will and pleasure of a bank by asking him to work as
an ordinary clerk or asking him not work as a stenographer. A person asked
to work temporarily in a post carrying a special allowance would be entitled
to such a special allowance for such period during which he occupies that
post.

216

Special Allowances for Subordinate Staff

5.295. At present the dearness allowance for the subordinate staff is

fixed at a flat rate irrespective of the quantum of the basic salary or of the
special allowance. Having regard to the existing scheme of dearness allowance
applicable to the members of the subordinate staff, no extra amount by
way of dearness allowance becomes payable to any person by reason of any
special allowance provided for him. Under this award, having regard to the
altered scheme of dearness allowance, members of the subordinate staff will
be entitled to receive dearness allowance having regard to their basic pay,
special allowance, if any, and officiating allowance, if any, payable to them
with the result that even if the present special allowances are retained, members
of the subordinate staff will receive a larger benefit than before.
Head Cash Mazdoors
5.296. At present the head cash mazdoors are receiving a special
allowance of Rs. 5 per month in A Class banks, Rs. 4 per month in B Class
banks, Rs. 3 per month in C Class banks and Rs. 2-8-0 per month in D Class
banks. A demand is made for a special allowance of Rs. 10 for members of
the subordinate staff who handle cash and are designated in banks as cash
peons, cash mazdoors, cash coolies and head cash mazdoors in all classess
of banks. According to some of the banks, cash peons working in the cash
department, performing ordinary duties of members of the subordinate staff
and no skill or responsibility is involved in their work. The Bombay Exchange
Banks Association has stated that the cash peons, cash durwans accompany

217

The Sastry Award provides special allowance for head cash mazdoors
and also for cash durwans. In my view no case is made out for giving any
special allowance to any new category of workmen under the designation of
cash peons, cash coolies or cash mazdoors. Having considered all aspects
of the matter I direct that the head cash mazdoors will be entitled to receive
a special allowance of Rs. 5 per month in A Class banks, Rs. 4 per month in
B Class banks and Rs. 3 per month in C Class banks including banks in the
Excepted List. No case is made out for awarding any higher amounts.
Watchmen, Chowkidars and Cash Durwans

5.300. The Bank of Baroda in reply had alleged that the police Ramoshis
were not workmen of the bank and were not covered by the Sastry Award or
by this Reference. On 10th October 1961 the parties have come to a settlement
in connection with this demand and filed it before me with a request to give an
award in terms thereof. I have recorded the settlement arrived at between the
Bank of Baroda on the one side and the All India Bank of Baroda Employees
Federation and the Vadodra Rajya Bank Nokar Sangh on the other and made
an award in terms thereof on 25th December 1961 which has been published
in the Gazette of India, Part II, Section 3(ii), dated 20th January 1962 at
page 271. In view of this settlement, no further directions are necessary.
5.301. Having considered all aspects of the matter I direct that watchmen,
chowkidars and cash durwans will be entitled to receive a special allowance
of Rs. 5 per month in A Class banks, Rs. 4 per month in B Class and Rs. 3
per month in C Class banks including banks in the Excepted List under this
award. No case is made out for giving any higher amounts.

AI

BE

5.297. A special allowance of Rs. 5 per month in A Class banks, Rs. 4

per month in B Class banks, and Rs. 3 per month in C and D Class banks is
now payable to watchmen, chowkidars or cash durwans under the Sastry
Award. A demand has been made before me on behalf of these categories of
workmen and other employees alleged to be doing the same kind of work but
carrying different designations, such as godown chowkidars, godown durwans,
godown guards, durwans, guards, sentries and night watchmen, for special
allowances of Rs. 10 to Rs. 15 per month. All employees who perform the
duties of watchmen, chowkidars or cash durwans will receive the special
allowance fixed for watchmen, chowkidars or cash durwans. I am not providing
for any new category of workmen.

by a supplementary statement, has stated that the Ramoshi watchmen

employed by the Bank of Baroda at its various branches were being employed
at Rs. 60 per month and were not given the benefit of the provisions of the
Sastry Award on the plea that they were not the employees of the bank. It is
submitted that Ramoshis were full time permanent employees of the bank,
and that they should be entitled to the benefit of the award.

banks cashiers when cash is taken to or brought from the Reserve Bank or
State Bank, Treasury, etc., that they take money orders, insured letters
etc., to the post office, buy stamps, and may collect cheques, payments
etc. all within specified limits, that they may also be required to deliver or
collect valuable securities upto certain limits and that for performance of
these duties the Bombay Exchange Bank suggested a special allowance of
Rs. 5 and not for other peons working in cash departments in banks who are
merely employed to carry books, vouchers, etc., to sew note bundles and
carry cash boxes, etc., in the office.

5.298. There is also a demand by the All India Bank Employees

Federation for an allowance of Rs. 10 for warders and Rs. 25 for head or chief
warders. It is stated that this category of employees is employed by the
Punjab National Banks head office and it is alleged that they work as
watchmen. I fix no special allowance separately for these categories of
employees. If their duties are the same as those of watchmen, they would be
entitled to the allowance permissible in the case of watchmen.

5.299. By a supplementary statement the All India Bank of Baroda

Employees Federation submitted that the watchmen called Ramoshis in
the Bank of Baroda are not being given the benefit of all service conditions
applicable to the staff doing similar work. It has demanded that there should
be no difference between the service conditions of Ramoshi watchmen and
other watchmen and that the Ramoshis should be compensated for the loss
of benefits denied to them in the past. The Vadodra Rajya Bank Nokar Sangh,

218

Armed Guards
5.302. Another category for which the Sastry Tribunal has provided special
allowance is that of armed guards. A special allowance of Rs. 10 per month
in A Class banks, Rs. 9 per month in B Class banks, Rs. 8 per month in C
Class banks and Rs. 7 per month in D Class banks has been provided for
armed guards. Demands have been made that armed guards should be paid
a special allowance the amount whereof ranges between Rs. 15 and Rs. 20
per month. The All India State Bank of India Staff Federation has demanded
for Havaldars and Armed guards a special allowance of Rs. 30 per month.
Persons who perform the duties of armed guards will be entitled to receive
the special allowance provided for armed guards whatever their designation.
Having considered all aspects of the matter I direct that armed guards will be
entitled to receive special allowance of Rs. 10 per month in A Class banks,
Rs. 9 per month in B Class banks and Rs. 8 per month in C Class banks,
including banks in the Excepted List. No case has been made for awarding a
higher allowance.
Retainers
5.303. A special allowance of Rs. 15 has been demanded for retainers.
These are persons whose names are entered as nominees of the bank in the
gun licence taken out by the bank, so as to authorise them to carry the gun.
As the retainers normally do not carry arms, no special allowance for retainers
as such is provided. The retainers will however be entitled to receive the

219

special allowance fixed for armed guards under this award when they are
required to carry with them the arms supplied by the banks and perform the
duties of armed guards.

deputy managers of the Bank of Baroda office in Fort, Bombay, (2) managers
and accountants of the branches which are called Managers offices and (3)
branch agents. The Bank of Baroda has opposed the grant of this allowance
as it contends that by attending on the officers mentioned by the Federation,
the work of a peon does not become more responsible as he still does the
work of a peon.

Daftries

Drivers
5.307. The Sastry Tribunal has fixed a special allowance of Rs. 30/- per
month in A Class banks, Rs. 25/- per month in B Class banks, Rs. 20/- per
month in C Class banks and Rs. 18/- per month in D Class banks for drivers.
Demands have been made for the grant of a special allowance to drivers
which vary from Rs. 20/- to Rs. 50/- per month. The All India Bank Employees
Federation had, in the first instance, demanded a special allowance of Rs.
35/- for drivers, but in the course of the hearing the Federation amended its
demand and made a claim for a special pay scale of Rs. 11051356
1658265 for drivers in banks in the Federations group A banks and a
special pay scale of Rs. 10551607230 for drivers .in banks in its
group B banks. The All India State Bank of India Employees Federation has
also demanded a special scale of Rs. 175 520562357242
82829300 for drivers in the State Bank of India. The banks in general
are opposed to any special grade or grades or any increase in the existing
allowance for drivers. The Northern India Banks Association has however
submitted that drivers should be paid a special allowance of Rs. 25/- per
month. The remuneration payable to drivers generally depends upon the ability,
skill and efficiency of the drivers. What has been prescribed by the Sastry
Tribunal is the minimum special allowance payable to any driver employed
by a bank in addition to what he is entitled to get as a member of the
subordinate staff, banks being at liberty to pay a higher special allowance if
they so desire. Having considered this matter I direct that drivers will be
entitled to receive by way of special allowance Rs. 30/- per month in A Class
banks Rs. 25/- per month in B Class banks and Rs. 20/- per month in C
Class banks including banks in the Excepted List. No case has been made
out for the grant of higher special allowances to them or for separate grade or
grades for them.

BE

After considering the whole matter I direct that daftries who are members
of the subordinate staff will be entitled to receive by way of special allowance
Rs. 10/- per month in A Class banks, Rs. 9/- per month in B Class banks and
Rs. 8/- per month in C class banks including banks in the Excepted List. No
case has been made out for granting higher allowances.

5.306. No special reason has been given for a revision of the special
allowances fixed for these categories of employees. Having considered the
matter I direct that havaldars, jamadars, dafadars, naiks and head peons will
be entitled to receive by way of special allowance Rs. 15/- per month in A
Class banks Rs. 12/- per month in B Class banks and Rs. 10/- per month in
C Class banks including banks in the Excepted List.

5.304. According to the Sastry Award as modified, a special allowance

of Rs. 10/- per month in A Class banks, Rs. 9/- per month in B Class banks,
Rs, 8/- per month in C Class banks and Rs 7/- per month in D Class banks
is payable to daftries. The demand generally made is that this allowance
should be increased to Rs. 20/- per month. One union has demanded Rs.15/
per month. Some unions have demanded Rs. 25/- per month. There is one
union which has even demanded a special allowance of Rs. 35/- per month.
The All India Bank Employees Association and some unions have demanded
that daftries performing the job of record keepers, should be classed as
clerks. The All India Bank Employees Federation and some unions have
demanded that daftries doing clerical duties should be placed in the clerical
grade. The nature of the duties of daftries has not changed since the date of
the Sastry Award.

Havaldars, Jamadars, Dafadars, Naiks and Head Peons

AI

5.305. A special allowance of Rs. 15/- per month in A Class banks Rs.
12/- per month in B Class banks, Rs. 10/- per month in C Class banks and
Rs. 8/- per month in D Class banks is payable to havaldars, jamadars,
dafadars, naiks and head peons, under the existing award. The demands
now for special allowances for these categories of employees range between
the minimum and the maximum mentioned below :

Havaldars
Jamadars
Dafadars
Naiks
Head Peons

----------------

----------------

----------------

----------------

----------------

Minimum
per month

Maximum
per month

Rs.

Rs.

20
15
20
20
10

35
40
25
25
25

The Vadodra Rajya Bank Nokar Sangh has demanded Rs. 15/- per month
for Jamadars working at branches and Rs. 20/- per month for Jamadars working
at the head office and other main offices of the banks. The All India Bank of
Baroda Employees Federation by a supplementary statement has demanded
a special allowance of Rs. 20/- per month for havaldars who attend on (1)

220

Head Messengers
5.308 The Sastry Tribunal has fixed for head messengers a special
allowance of Rs. 30/- per month in A Class banks, Rs. 25/- per month in B

221

Electricians

(c)

Tools and instruments for safety device as we work on live wires.

(d)

The present illegal electricians designated by the banks to work

under Authorised Electricians as per Government Rule No. 45 of
the Indian Electricity Act, 1956 directly under Qualified Electricians
(P.W.D. Passed Supervisors) all the time.

At a late stage of the hearing, Shri S. K. Irani, Advocate, appeared on

behalf of electricians in general and for Shri Vajifdar. Shri Irani did not indicate
the actual grade that should be provided for employees with Shri Vajifdars
qualifications. The present special allowance is not intended to provide for
qualified men like Shri Vajifdar. Few banks employ qualified men like Shri
Vajifdar. The present allowance is meant for members of the subordinate
staff. Enough material has not been placed before me to provide for any
special grade for qualified men like Shri Vajifdar. Banks are at liberty to
provide for qualified men like Shri Vajifdar such grades or such allowances as
they think proper. I am providing for electricians belonging to the subordinate
grade, the same allowances as those provided for drivers in different classes
of banks. No case has been made out for providing higher allowances or a
separate grade for them.

Class banks, Rs. 20/- per month in C Class banks and Rs. 18/- per month in
D Class banks. Head messengers are employed by the State Bank and few
other banks. There is now a demand for revision of this special allowance by
raising it to Rs. 40/- by the State Bank of India Employees Association,
Bengal Circle. All other workmens organisations have demanded a special
allowance of Rs. 35/- per month. The special allowances for head messengers
are the same as those for drivers and electricians in banks. No case has
been made out for increasing the quantum of allowance which the head
messengers are now receiving. Having considered the matter I direct that
head messengers will be entitled to receive by way of special allowances of
Rs. 30/- per month in A Class banks, Rs. 25/- per month in B Class banks
and Rs. 20/- per month in C Class banks including banks in the Excepted
List. No case has been made out for the grant of higher special allowances to
them. There is a demand for a special allowance of Rs. 25/-for deputy head
messengers by the State Bank of India Employees Association (Bengal
Circle)and the State Bank of India Employees Association (Delhi Circle). No
case has been made for the grant of a special allowance to this new category
of workmen.

BE

Press Staff of the State Bank of India

AI

5.309. As a result of the modification of the Sastry Award by the Labour

Appellate Tribunal, electricians get a special allowance of Rs. 30/- per month
in A Class banks, Rs. 25/- per month in B Class banks, Rs. 20/- per month
in C Class banks and Rs. 18/- per month in D Class banks. Demands have
been made for the grant of a special allowance which varies between
Rs. 25/- and Rs. 50/- per month. The All India Bank Employees Federation
had originally demanded a special allowance of Rs. 35/- per month, but by an
amendment of its claim it has demanded that electricians should be allowed
the same scale as that provided for clerks.

5.310. Shri Vajifdar, an electrician of the Chartered Bank, Bombay,

submitted that he was a qualified electrician having passed the P.W.D.
Supervisory Examination, that he was taken up in the Chartered Banks
service in 1947 on a starting salary of Rs. 100/- per month plus allowances
with a promise that his salary would be raised substantially, that the bank
gave him for some years double increments in the clerical grade but later on
the bank continued to give him only a single increment in the clerical grade
and that as his demands were not specifically put forth by the All India Bank
Employees Association to which he had made a representation, he had
asked for adjudication of the following demands :
Scale of salary for :

5.311. There is a small printing press in the Calcutta local head Office of
the State Bank of India wherein 2 compositors, 2 press-men, one impositor
cum-distributor and one inker have been employed. The All India State Bank
of India Staff Federation has made a claim for a special scale of pay of Rs.
17552056235724282829300 for compositors,
distributors and press-men. The State Bank of India Employees Association,
Bengal Circle, has demanded a special allowance of Rs. 50 for compositors
and a special allowance of Rs. 40 for impositors and ink-men. The State
Bank of India Employees Association, Delhi Circle, has demanded a special
allowance of Rs. 25 per month for compositors and Rs. 20 per month for
impositors and ink-men. Compositors, press-men, impositor-cum-distributors
and inkers are at present receiving emoluments payable to members of the
subordinate staff under the Sastry Award. No special allowances are granted
to them. Wage scales were first fixed for them by the Gupta Award but when
the Sastry Award came into operation, these employees opted for the scales
of pay, etc., of the Sastry Award as modified. Their position under the Sastry
Award and the Gupta Award is shown below :
Present Pay Scale under Sastry
Award, as modified
Compositor

(a)

Electricians who have passed the Supervisory Diploma Examination

of the P.W.D. may be paid at least Supervisory Grade;

(b)

Insurance,

222

Rs. 40254170272
(E.B. at Rs. 66/-)
Pressman
Do.
Impositor-cum-Distributor
Do.
Inker
Do.

Pay scales under

Gupta Award

223

Rs. 45390
Rs. 30260
Do.
Do.

Dearness allowance at Rs. 53.12 nP. per month is being drawn by the
above employees as against Rs. 25/- per month under the Gupta Award.

Impositor-cum-distributor

The State Bank of India is opposed to the special scale demanded for
compositors, distributors and pressmen. Except the inker (ink-man) the duties
of other employees require substantially higher degree of skill than the skill
required of ordinary members of the subordinate staff and it is but fair that
they should be compensated by special allowances. In the former State of
Bombay under a Notification dated 18th January 1956, the Government had
prescribed minimum wages in respect of similar categories of employees
under the Minimum Wages Act, 1948 as under :
Rs. 95/- per month.

Treadle-Pressmen or Plate men

Rs. 90/- per month.

Distributors

Rs. 8O/- per month.

Helpers

Rs. 45/- per month upto the age of 18.

Rs. 55/- per month between the age of
19 and 21, and

In the Award relating to printing presses and newspapers, Shri Merchant,

Industrial Tribunal at Bombay had prescribed the following scales of wages:
Grade I :Rs. 1205150
Grade II :Rs. 805115
Grade III :Rs. 60480

Distributors

Rs. 45360

Helpers

AI

Compositors

Rs. 30260

These wage scales are effective from 1st July 1948. The dearness allowance
awarded by the Merchant Tribunal was at the following rates :
Upto Rs. 100
Rs. 101 to Rs. 150

Rs. 40/. per month.

Rs 40/- plus 30 per cent of the salary

between Rs. 100/- and Rs. 150/- i.e.
Rs. 55/- on a salary of Rs. 150/-per
month.

The scheme of dearness allowance is also in force from 1st July 1948.
5.312. In view of the smallness of the printing press at the Calcutta local
head office of the State Bank of India and the nature of the duties performed
by them, I direct that compositor, pressman and impositor-cum-distributor
will be entitled to receive the following allowances :
Compositor
Press-men

Rs. 30/- per month.

Rs. 20/- per month.

224

5.313. Workmen in general have demanded a special allowance of Rs.

50/- per month for air condition (machine) operators. The All India Bank of
Baroda Employees Federation has, however, demanded a special allowance
of Rs. 75 for Air Condition Operators-cum-Electricians in the Bank of Baroda.
The All India Bank Employees Federation had first demanded a special
allowance of Rs. 35 but by an amendment of its claim, it has demanded for
the air conditioning machine operators also the same scale as for clerks.
The Indian Banks Association has stated that it is the duty of an air condition
(machine) operator that he should switch on and off the air conditioning room
units and adjust temperature controls and that no special skill or responsibility
is involved in this work . The State Bank of India has stated that the demand
made by the All India State Bank of India Staff Federation in respect of such
person employed by it has since been withdrawn by the Federation. In my
view no case is made out for the grant of any special allowance or a clerical
grade for this category of workmen.

BE

Rs.65/- per month of 22 years and

above.

Air Condition (Machine) Operators

Compositors

Rs. 10/- per month

No special allowance is fixed for the inker (ink-man) as the inker belongs
to the unskilled category of workmen and the emoluments available under
this award for a member of the subordinate staff are considered to be sufficient
remuneration. No case is made out for providing a special scale of pay for
any of these categories of workmen.

Machine Operators
5.314. An allowance of Rs. 35 has been claimed by the All India Bank
Employees Federation and few other unions for machine operators. The
employees have led no evidence about the nature of the work of the machine
operators. The Indian Banks Association has stated that the workmen had
demanded a special allowance for this category of employees before the
Sastry Tribunal also but it was not granted. No case has been made out for
the grant of a special allowance to machine operators in general and the
demand is rejected.
Cyclostyle Machine Operator
5.315. There is a demand for a special allowance of Rs. 10 for the
cyclostyle machine operators or the Gestetner machine operators. Some of
the employees who do this work are being given an allowance of Rs. 5 to Rs.
10 by some banks. Under an agreement with the workmen, the National and
Grindlays Bank Limited is paying Rs. 5 as a special allowance to duplicating
machine operators. Having regard to the nature of the work required to be
done, in my view, it is necessary that a special allowance should be provided
for those who are regularly employed to operate a Gestetner machine or a
cyclostyling machine. I accordingly direct that a cyclostyle machine operator
regularly employed to operate such machine will be entitled to receive a

225

special allowance of Rs. 5 per month in A Class banks, of Rs. 4 per month in
B Class banks and Rs. 3 per month in C Class banks including banks in the
Excepted List.
Typewriter Mechanics
5.316. A special allowance of Rs. 35 was first demanded by the All India
Bank Employees Federation and some unions but by an amendment of the
claim, the Federation has demanded a clerical scale for this category of
employees also. No evidence has been led and no case has been made out
for the grant of a special allowance or a special grade for them and the
demand is rejected.

AI

Guaranteed Peons

BE

5.317. A demand has been made for a special allowance to be paid to

lift-men operating lifts in bank buildings. The minimum amount of special
allowance demanded is Rs. 15 and the maximum is Rs. 25 per month. It is
the submission of the employees that lift-men are performing a technical job
and they have cited instances of concerns where lift-men are provided with a
scale higher than the one provided for the other members of the subordinate
staff. The banks have submitted that this category of employees does not
require any special skill. A demand was made for a special allowance for this
category of workmen before the Sastry Tribunal but it was disallowed. While
rejecting the demand for special allowance for liftmen, the Labour Appellate
Tribunal has observed that the duties of a liftman are largely mechanical and
that he does not require technical knowledge to such an extent as to entitle
him to a special allowance. No case has been made out for the grant of a
special allowance to liftmen and the demand is rejected.

Liftmen

the hundies etc., and to carry intimations, etc., be classed as hundi presenters
and paid a special allowance at the rate of Rs. 10/- per month. The All India
Bank Employees Federation has demanded that employees designated as
hundi presenters should be placed in the clerical grade, but, at the same
time, it has also demanded a special allowance of Rs. 20/- per month for
them. By and large, there is a demand for special allowance varying between
Rs. 10/- and Rs. 20/- per month for hundi presenters. At the time of the
hearing, it was stated that hundi presenters are of two types, (1) hundi
presenters who are clerks, for whom a clerical grade has been demanded
and (2) hundi presenters belonging to the subordinate staff, for whom a special
allowance has been demanded. The All India Bank Employees Association
submitted that under the Sen Award, the hundi presenters and bill collectors
were placed in a scale in between the clerks and the subordinate staff, but
the Sastry Award omitted to prescribe any special allowance for them it is
also stated that in practice, several banks are allowing a special allowance of
Rs. 5/- to Rs. 10/- per mensem to the hundi presenters and bill collectors.
The All India Bank Employees Association has given a list of 23 banks wherein
clerical salaries are being paid to employees designated as hundi presenters
or bill collectors. A list of banks has also been furnished wherein a special
allowance of Rs. 5/- is being paid to hundi presenters and bill collectors. In
the case of Punjab National Bank it has been pointed out that the bank
provides an intermediary pay-scale i.e. the average of the clerks salary and
the peons salary.The New Bank of India pays Rs. 10/-per mensem to hundi
presenters and bill collectors. The All India Bank Employees Federation has
submitted that the hundi presenters for whom a special allowance of
Rs. 20/- had been demanded, present hundies and intimations of bills and
documents to the constituents and secure their acceptance. The Indian Banks
Association has stated that the hundi presenters present bills or cheques
drawn on local parties to them and obtain their acceptance, where necessary,
and normally bills are payable at the banks counter. About bill collectors,
the Association has stated that they collect payment of bills drawn on local
parties and that usually payment of such bills is made by the parties by
cheques. The Association does not think that there is any special skill or
responsibility involved in the work of hundi presenters and bill collectors.
About the hundi presenters and bill collectors the Bombay Exchange Bank
has stated that these are members of the subordinate staff who present bills
of exchange on local parties within certain areas and their work is of the
same nature as that of dak peons. They submit that clerical grade was not
justified for this category of employees. It has stated that normally all bills
are payable by the parties at the bank and in a few cases where it is necessary
to collect payment, the work is generally performed by a clerk.

5.318. The All India Bank Employees Association and several other
workmens organisations have demanded a special allowance of Rs. 10 per
month for guaranteed peons. The Allahabad Bank Employees Union has
demanded a special allowance of Rs. 15 per month for them. The All India
Bank Employees Federation has demanded that they should be placed in
the clerical grade. According to thebanks, guaranteed peons perform the
ordinary duties of a member of the subordinate staff in the cash department
and they are called guaranteed peons because faithful performance of duties
by them is guaranteed by the chief cashiers. No case has been made out for
the grant of a special allowance or a special grade for them, and the demand
is rejected.
Hundi presenters and Bill collectors
5.319. The All India Bank Employees Association has submitted that
persons carrying on the duties of a clerical nature or of the nature of a
cashier, i.e., presenting hundies, bills etc., and receiving cash on behalf of
the banks, be classed as clerks and where nature of job is only to present

226

5.320. Persons who are called hundi presenters and bill collectors do
different work in different banks. There is no standardisation of duties. The
work of some of them involves a greater degree of responsibility than that of

227

Assistant Jamadars

category of workmen and the demand is rejected.

Cleaners, Caretakers and Pressmen attending copying work
5.324. The Vadodra Rajya Bank Nokar Sangh has demanded a special
allowance of Rs. 15 per month for cleaners, caretakers and pressmen who
attend to copying work. No evidence was led in support of this demand. No
case has been made out for the grant of any special allowance to any of
these categories of workmen and the demand is rejected.
Godown Department Peons
5.325. A special allowance of Rs. 10/- per month has been demanded
by the Cochin Commercial Bank Employees Association for godown
department peons. No evidence has been led in support of this demand. No
case has been made out for the grant of any special allowance for this category
of workmen and the demand is rejected.
5.326. I lay down the following minimum special allowances for the
following categories of the members of the subordinate staff :

others. In some banks clerks are employed to do the work of presenting

hundies and documents and recovery of moneys. The work done by clerks is
generally of a more responsible nature. It is not possible to lay down that
only the members of the clerical staff should be employed to do all the work
that is being done by hundi presenters and bill collectors at present or that
any one who is entrusted with the work of presenting hundies or bills should
be put in the clerical cadre. There are many members of the subordinate staff
who do the work in connection with presenting hundies and bills which does
not call for a special allowance. There are, however, some workmen who are
entrusted with such work as would call for a special allowance and in fact
some banks are paying such special allowance. I direct that members of the
subordinate staff who are generally employed to present hundies, bills or
documents and are also authorised to collect money even if it be to a limited
extent will be entitled to receive a special allowance of Rs. 10 per month in A
and B Classes of banks and of Rs. 5 per month in C Class banks including
banks in the Excepted List.

Categories of employees

Class of banks
A
B
C
Rs.
Rs.
Rs.

AI

BE

5.321. An allowance of Rs. 20/- per month has been generally demanded
for assistant jamadars. The State Bank of India Employees Association,
(Bengal Circle), and the State Bank of India Employees Association (Delhi
Circle) have demanded a special allowance of Rs. 25/- per month. Some
banks are paying a special allowance of Rs. 15 per month to assistant
jamadars, assistant havildars and naiks. It is urged that the duties of assistant
jamadars are the same as those of the naiks. No evidence has been led
about the same. If that be so, the category of naiks will cover them. No case
has been made out for providing a special allowance for a new category of
workmen.
Record Suppliers, Sorters in the Stationery Department and those in
charge of Record

5.322. There are demands for special allowances for record-suppliers,

sorters in the stationery department and for those who are in charge of the
record. The allowances demanded are from Rs. 20/- per month to Rs. 50/-per
month in the case of record-suppliers, from Rs. 20/- per month to Rs. 25/- per
month in the case of sorters in the stationery department and Rs. 25/- per
month in the case of those in charge of the record. It may be stated that the
All India Bank Employees Association and the All India Bank Employees
Federation have not made any demand in respect of these categories of
workmen. No case has been made out for the grant of any special allowance
to any of these categories of workmen and the demand is rejected.
Cycle Peons
5.323. There is a demand for a special allowance for cycle peons and
the amount of special allowance demanded ranges from Rs. 7/- to Rs. 15/per month. No case has been made out for a special allowance for this

228

1.
2.
3.
4.
5.

Head cash mazdoors

5
Watchmen, chowkidars and cash durwans
5
Armed guards
10
Daftries
10
Havaldars, Jamadars, dafadars, naiks and head 15
peons
6. Drivers and head messengers
30
7. Electricians
...
30
8. Compositors in the State Bank of India
30
9. Pressmen in the Stale Bank of India
20
10. Impositor-cum-distributor in the State Bank of
India
10
11. Cyclostyle -machine operators, regularly employed to operate such machine
5
12. Hundi presenters and bill collectors who are authorised to collect money
10

4
4
9
9
12

3
3
8
8
10

25
25

20
20

10

The special allowances prescribed above for C Class banks will also be
payable to employees in banks in the Excepted List. The special allowances
prescribed above would be in supersession of those prescribed under the
Sastry Award as modified. When an employee falls within more than one
category, he would be entitled to receive the special allowance at the higher
rate applicable to him. The general observations made in the case of the
other categories of workmen in connection with special allowances will also
apply to the members of the subordinate staff.

229

5.327. There is no other category of workmen for whom a case is made

out for the grant of any special allowance.

point to point basis having regard to the length of service of the employees to
compensate them for the inadequate increments in the past and greater
family responsibilities of senior employees, that a large number of employees
have not been given increments on account of their having reached the
maximum of the grade for a number of years, that they should also be given
special increments and adjusted in the revised grades and that in the revised
scales of pay, in any event efficiency bar should not be applied while adjusting
the salaries of the employees. They have stated that the adjustments granted
in the modified Sastry Award were not adequate, more so for the senior
employees.

5.328. There are a number of categories for which special scales or

grades of pay have been demanded. No case has been made out for providing
such special scales or grades or pay for them. Save as otherwise provided in
this award the demands which have not been specifically dealt with or granted
should be deemed to have been refused.
(xxv) Method of adjustment in the scales of Pay
5.329. The All India Bank Employees Association has submitted that
the existing employees should be fitted into new scales of pay as follows :

5.332. The All India State Bank of India Staff Federation, the State Bank
of India Staff Union, Andhra Pradesh and the All India Bank of Baroda
Employees Federation have made claims in this respect similar to those of
the All India Bank Employees Association.

5.333. The State Bank of India Employees Association (Bengal Circle)

and the State Bank of India Employees Association (Delhi Circle) have claimed
that (a) point to point adjustment should be given, (b) an employees total
emoluments as on 31st March 1959 should not be reduced in any case and
(c) subject to this an employee shall be fitted into the new scales by putting
him at a stage where the total pay and dearness allowance drawn by him
under the present scales at least equals or is next above in the total pay and
dearness allowance under the new scale. They have stated that pay includes
basic pay, special allowance and officiating allowance.

AI

BE

(1) The present salary for the purpose of adjustment shall mean the
salary which an employee would be drawing on the date from which
this Honourable Tribunals award would be made effective;
(2) In no case the present salary of an employee shall be reduced;
(3) As regards the monetary benefits enjoyed by the employees in
any case and at no stage of an employees career should his total
emoluments be less than the totality of such benefits under the
existing scheme, rule or Awards and the subject to this principle a
bank may be allowed to adjust such benefits in the light of the
requirements of this Tribunals Award.
(4) If the salary of an employee will be less than the minimum of the
new scale of pay which would be made applicable to him his present
salary should be brought upto the minimum of the new pay scale in
the first instance.
(5) Then all employees should be fitted in the new scales of pay at a
point corresponding to the number of years of service they have put
in the respective grades.
(6) Where a workman has received an additional increment or
increments in his basic pay at the initial start or by way of special
promotion later on his length of service shall be taken to be the
period which would ordinarilly be necessary to bring the workman
with the usual initial start without additional increments to that basic
pay as on 31st January, 1950 in the then existing scale.

5.330. It has further pleaded that on upgradation of banks salaries of

employees should be readjusted in the scale of pay pertaining to such higher
class by grant of as many increments in the relative scales of pay as necessary
to make up the gap between the starting salary in the scales of pay prescribed
for the class within which the change has occurred.
5.331. The All India Bank Employees Federation and the Vadodra Rajya
Bank Nokar Sangh have submitted that it was well established that appropriate
adjustment of the existing salaries of the employees into the revised scales
of pay should be granted with particular reference to the length of service of
the employees, that the most equitable method of adjustment would be on

230

5.334. The State Bank of Patiala (All Cadres) Employees Association

has claimed that an employee should be adjusted into the new scale of pay
on point to point basis (pay includes basic pay plus dearness pay), that the
total emoluments of an employee which he is drawing on the 31st March
1960 should not be reduced in any case and that he should be adjusted into
the new scale of pay by putting him at a stage where the total pay and
allowances drawn by him under the existing scale at least equals or is next
above in the total of the pay and the allowances under the new scale.
5.335. The South Gujarat Bank of Baroda Employees Union has
submitted that point to point adjustment should be granted to all the employees
irrespective of the length of service, that the employee should be so fitted in
the new awarded scale that where the tolal of pay and dearness allowance
drawn by him under the present scales at least equals or is next above in the
total of pay and the dearness allowance under the new scales, that an
employees total emoluments as on 31st March 1959 should not be reduced
in any case, and that in no case employees reaching the maximum should
be staggered, but they should continue to draw the increments in the
supervisory grade demanded by the Union. It has also submitted that the
special allowances should be added after adjustments have been made.
5.336. The Cochin Commercial Bank Employees Association has inter
alia claimed that any special increments or higher starts or higher basic pay

231

at the. time of recruitment or afterwards should be retained while giving point

to point adjustments.

5.341. The State Bank of Patiala has submitted that the demand for
point to point adjustment was unreasonable and unacceptable, that the
unreasonableness of the demand was accentualed by the further demand
that pay should include basic pay plus dearness pay, latter pay being one of
the peculiar features in the bank. The bank has submitted that in the case of
existing employees, the adjustment granted in 1958 was generous and that
there was no need to grant any more adjustment.

BE

5.338. As regards the claim for adjustment on upgradation of a bank,

the Association has pleaded that when a particular bank moves from a lower
class to a higher class, there was no scope or occasion for making any
adjustments, that in fact neither the Sastry Tribunal nor the Labour Appellate
Tribunal thought it necessary to prescribe for such adjustments and this was
for a very good reason, namely, that the mere increase of working funds
above a particular limit did not necessarily indicate that prosperity which
would justify undertaking a heavy financial liability consequent upon
readjustment in salary scales, that the Sastry Tribunal as modified laid down
one combined running scale for all classes of banks, that the scale was
again split up into different sections to meet the requirements with regard to
each class of banks and each area, that these scales were based on logical
and scientific principles and that they did not need any adjustments being
made when any particular bank moves from one class to another.

5.337. The Indian Banks Association has submitted that the method of
adjustment suggested by the employees showed that what they wanted was
not only point to point adjustment but something more. It has stated that
numerous Industrial Tribunals have time and again rejected the demand for
point to point adjustment. It has further stated that there was no scope whatever
for any adjustment, much less point to point adjustment.

adjustment is not allowed as a rule by Industrial Tribunals, that such a demand

was rejected by the Sastry Tribunal, that the principles on which adjustment
directions are given are well-settled and that applying those principles to the
present case not only is point to point adjustment ruled out but also any
other form of adjustment, except placing an employee in a step in any revised
scale of wages if he is not already in step. It has further submitted that the
demand that an employees total emoluments as on 31st March 1959 should
not be reduced was contradictory to the demand for revised pay scales and
dearness allowance, that for purposes of adjustment into salary scales,
dearness allowance was not taken into account unless a consolidated wage
scale was awarded, that it is the basic wage that has to be adjusted into any
revised scale, the dearness allowance being ignored, that when considering
the fairness or reasonableness of a wage structure, it is well-settled that the
total emoluments and benefits received or receivable by an employee are
most relevant and the similarly for purposes of adjustment, special allowance
and officiating allowance cannot be taken into account unless the Tribunal
merges these allowances into the basic wage.

AI

5.339 The Bombay Exchange Banks Association has pleaded that the
workmen were not only claiming point to point adjustment in the grade but
desire their emoluments in excess of such adjustment to be protected. It has
submitted that there was no case for considering a revision of existing pay
scales and the question of adjustment, therefore, did not arise, that assuming
that the Tribunal was disposed to make some revision in the scale, in view of
the fact that time or incremental scales have been in existence and suitable
adjustments were made by the Sastry Award as modified, no question could
arise of any adjustment and certainly not point to point adjustment in the
grade, and that if there was to be an adjustment at all, it should merely be to
fit the workman in the scale if he was not in a step in the scale on the date
fixed in the Award. It has submitted that Industrial Tribunals grant or refuse to
grant adjustments on certain well-settled principles, that the first principle is
that as a rule, point to point adjustment should not be allowed and the second
principle is that adjustments by way of granting increments should only be
considered if the facts are that there have either been no scales of wages in
existence before and workmen have not received reasonable increments or
the scales are radically revised and the adjudicator is of opinion thal the
workmen have not received a fair deal in the past and that in the present case
none of the above principles can be invoked and therefore in the circumstances
no question arises of adjustment.
5.340. The State Bank of India has submitted that point to point

232

5.342. The Northern India Banks Association has submitted that the
method of adjustment of the salaries as provided under the Sastry Award
was fair and equitable and that no deviation for it be made. It has also submitted
that the wage structure of employees in the banking industry was fixed on
the basis of time scale, that if a new time scale was fixed in accordance with
the suggestion made by them, each employee should be given a basic wage
in the new scale corresponding to his wage at the time of introduction of the
new scale and that in cases when no exact fitting of the employees wage
was possible, he should be entitled to the next higher step in the scale.
5.343. As regards the adjustment on upgradation of a bank the
Association has submitted that movements to the higher class should involve
only the raising of the minimum starting salary applicable to a bank of that
class, that the acceptance of the proposal made by the All India Bank
Employees Association would impose an unconscionably huge burden on
the bank, which would greatly cripple its earning capacity, that this is all the
more so because the movement of a bank to a higher class is nearly in all
cases the result of a programme of expansion and development, which itself
inevitably involves an abnormal increase in expenditure, and that apart from
the individual interest of the bank, it is in the larger national interest that such
a proposal be not accepted, as development or banking would thereby be

233

seriously hampered
5.344. The National Bank of Lahore Ltd. has submitted that the method
of adjustment claimed was too much one-sided, that the application of the
benefits of the award retrospectively was rather not in keeping with good
business and that the method of adjustment should be such which was in
consonance with justice, both to the employer and the employee. The bank
has further submitted that all benefits awarded to the workmen should be
made applicable only prospectively.

In the case of existing workmen, one increment may be allowed

for every completed 5 years of service.

BE

5 346. The Bharatha Lakshmi Bank has submitted that it was willing to
accept items (1) to (4) of the claim presented by the All India Bank Employees
Association. It has further submitted that items (5) and (6) for weightage etc.
should not be made applicable to it. The Jaya Laxmi Bank has submitted
that if an employee at present gets less than the minimum as per the new
award, he should be fitted into the grade without giving any retrospective
effect.

5.345. The Travancore Cochin Bankers Association has submitted that

the present pay scales and emoluments may be allowed to continue and the
question of adjustment in the scales of pay does not arise, that, however, if
any award is made, then in regard to the method of adjustment of the existing
staff, the conditions stipulated in para 292 of the Sastry Award may be
incorporated subject to an amendment that past service may be accounted
in the manner given below :

stage to stage adjustment basis i.e. a workman who was drawing a basic
pay at particular stage in the time scale provided by the Sastry Award as
modified hereinafter called the existing scale will draw the basic pay at the
same stage in the new scale applicable to him provided under this award. A
workman may have reached a particular stage in the existing scale as a
result of years of service put in by him or as a result of any extra or advance
increments that may have been given to him or as result of his progress
being retarded by reason of disciplinary or other action taken against him by
way of stoppage of increments in the past. There may be other circumstances
affecting him which might account for the particular stage in an existing
scale reached by him. Whatever may be the stage which he may have
reached in the existing scale as on 1st January 1962 will be the stage in the
new scale of pay in which he will be fitted. In order to arrive at the basic pay
of a workman as on 1st January 1962 in the new scale of pay the number of
stages which the workman has covered in the existing scale will be deemed
to have been covered by the workman in the new scale of pay e.g. a clerk
employed in an A Class bank in Area I who was entitled on 1st January 1962
to a basic pay of Rs. 140 which is at the 10th stage in the existing scale of
pay viz. Rs. 85-5-100-6-112-7-140-8-164-9-227 E.B.-9 -245-10-265-15-280
will be entitled as on 1st January 1962 to a basic pay of Rs. 204 which is at
the 10th stage in the new scale of pay applicable to him, viz. Rs. 140-6-18211-281-13-307-15-322-E.B.-15-337-16-369-18-405. If by any chance a
workman in the existing scale of pay is drawing by way of basic pay an
amount which does not concide with any particular stage in the existing
scale of pay but it falls between two stages in the scale of pay, then he will
be deemed to have reached the higher stage in the scale of pay.

AI

5.347. I am providing by this award that the provisions herein contained

relating to the scales of pay, dearness allowance, special allowance and
officiating allowance will come into operation from the 1st day of January
1962 and the workmen will have to be fitted in the new scales of pay as from
1st January 1962. For the aforesaid purpose workmen employed in banks
who are before me may be broadly classified into two groups. The first group
consists of workmen who were drawing basic pay on 1st January 1962
according to the scales of pay provided by the Sastry Award as modified
either by virtue of the binding character of the provisions of the Sastry Award
as modified or by reason of the banks concerned having adopted as a result
of agreement or otherwise the scales of pay provided by the Sastry Award as
modified. The second group consists of workmen who on 1st January 1962
were employed in banks which are not governed by the provisions of the
Sastry Award as modified and who were not drawing basic pay on the footing
of the scales of pay provided by the Sastry Award as modified.
5.348. I will first deal with the cases of persons falling within the first
group. Having carefully considered all aspects of the matter including the
method adopted for fixing the new scales of pay, I direct that these workmen
be fitted in the new scales of pay from 1st January 1962 on what I may call

234

5.349. After a workman is fitted as aforesaid, a question will arise about

the time when the increments in the new scale of pay should generally fall
due. For this purpose, I direct that the increments in the new scale will
generally fall due on the same date on which the increments would have
fallen due in the existing scale if the existing scale had been preserved so
that the period of service since the date of the last increment in the existing
scale will be available to the workman for the purpose of calculating the
period for obtaining an increment in the new scale of pay.
5.350. As a result of the provisions of this award, D Class banks will be
deemed to have ceased to exist as from 1st January 1962 and the workmen
who were drawing basic pay on the scales of pay applicable to D Class
banks will be fitted in the new scales of pay applicable to C Class banks
under this Award except where any bank in the D Class has been put in the
Excepted List. The workmen who are drawing pay in accordance with the
existing scales of pay applicable to (i) C-2 and C-l Class banks, (ii) B Class
banks and iiii) A Class banks will be fitted in the new scales of pay applicable
to (i) C Class banks, (ii) B Class banks and (iii) A Class banks respectively
under this award. The workmen who have been employed by D Class banks

235

now falling within the Excepted List of banks will be fitted in the new scales
of pay applicable to banks in the Excepted List.

(iv)

5.351. As a result of the extinction of Area IV and the upgradation of

places falling in various Areas as from 1st January 1962 workmen employed
at places in Area IV and other Areas according to the Sastry Award as
modified will be fitted in the new scales of pay applicable to the areas in
which such places fall under this award.

5.353. As regards the workmen falling in the second group consisting of

persons who on 1st January 1962 were employed in banks which are not
governed by the provisions of the Sastry Award as modified and who were not
drawing basic pay on the footing of the scales of pay provided by the Sastry
Award as modified having considered all aspects of the matter, I give the
following directions.

(v)

Where a workman received an additional increment or

increments in his basic pay either at the initial start or by way
of special promotion later on, his length of service will be taken
to be the period which would ordinarily be necessary to bring
a workman with the usual initial start without special promotion
to that basic pay as on 1st January 1959 in the banks scale
(fractions being rounded off to the nearest integer).
(b) Similarly, where a workmans increment or increments have
been withheld prior to 1st of January 1959, the length of service
in his case will be calculated by substracting the number of
years for which the increments have been withheld.
(c) In the case of former employees of a bank at its branches in
Pakistan re-employed in India the aggregate of actual years
of service in both areas as adjusted under rule (v)(a) or (b), as
the case may be, will be taken to be the length of service.
(vi). The circumstance that a workman has already attained the
maximum of the banks scale and has been at that maximum for
some years, shall not in any way affect his right to have his basic
pay adjusted in accordance with the above directions.

BE

5.354. The workmen will as on 1st January 1962 be first filled in the
appropriate scales of pay provided under the Sastry Award as modified having
regard to the working funds of the banks concerned and having regard to the
places where the workmen were employed. Thus the workmen of the American
Express Co. Inc. employed in its office at Bombay will have to be fitted into
the pay scales applicable to A Class Banks in Area I under the Sastry Award
as modified.

5.352. In all the aforesaid cases the principles of adjustment stated

earlier will apply.

5.355. After the workmen have been notionally so fitted, they will again
be refitted into the new scales of pay provided under this award on the basis
of the provisions applicable to workmen in the first group set out above.

AI

5.356. For the purpose of fitting the workmen into the scales of pay
provided under the Sastry Award as modified I am giving directions similar to
those provided under the Sastry Award as modified subject to certain changes
which I consider to be necessary having regard to the lapse of time after the
coming into force of the provisions of the Sastry Award as modified. For the
aforesaid purpose of fitting the workmen in the scales of pay provided by the
Sastry Award as modified, I give the following directions :
For workmen who entered service of the bank before 1st January 1959.
(i)

The workmans basic pay as on 1st January 1959 shall not be

reduced in any case.
(ii) Subject to rule (i) the adjusted basic pay in the scale provided in
the Sastry Award as modified shall not exceed what point to point
adjustment would give him or the maximum in the scale provided
by the Sastry Award as modified.
(iii) In the matter of adjustment, all efficiency bars, whether in the
previously existing scales or in the scales provided by the Sastry
Award as modified, should be ignored.

236

Subject to rules (i) to (iii) a workmans basic pay in the scale provided
by the Sastry Award as modified shall be fixed in the following
manner :
(a) A workman shall first be fitted into the scale of pay of Sastry
Award as modified by placing him at the stage in the Sastry
Award scale as modified equal to, or next above his basic
pay as on 1st January 1959 in the scale then in force in the
bank concerned (hereinafter called the banks scale).
(b) To the basic pay into which he is fitted under clause (a) annual
increment or increments in scale provided by the Sastry Award
as modified as from that stage onwards should be added at
the rate of one increment for every completed three years of
his service in the same cadre as on 1st January 1959.
(c) Such increments shall not however exceed four in number.
(d) After adjustments are made in accordance with clauses (a),
(b) and (c) supra, two further annual increments in the scale
provided by the Sastry Award as modified will be added thereto
for service for the two years of 1960 and 1961.

(a)

5.357. The provisions contained in the aforesaid clauses (iv) (b) and (iv)
(c) will, however, not apply to the employees of the American Express Co.
Inc. This bank would fall in Class A. Even under the provisions of the Sastry
Award as modified the corresponding provisions were not applicable to banks
falling in Class A. I direct that so far as the employees of the American
Express Co. Inc. are concerned, the following provisions will be substituted

237

for the aforesaid provisions contained in clauses (iv) (b) and (iv) (c) :(4)

To the basic pay into which he is fitted under clause (a) the annual
increment or increments in the scale provided by the Sastry Award
as modified as from that stage onwards should be added at the
rate of one increment for every completed three years of service in
the same cadre as on 1st January 1959 upto a limit of twelve years
service; thereafter one increment, for every four years of service
upto another eight years service, and after that one increment for
every five years of service.

5.358. In future whenever a bank as a result of the increase in its working

funds as provided in this Award is upgraded, the workmen then employed in
the bank will have to be fitted in the scales of pay applicable to the class to
which the bank has been upgraded. For the aforesaid purpose the principles
enunciated above of stage to stage adjustment should be employed.

AI

BE

General rules.
(I) Even after the final adjustment of workmen in the first group and in
the second group in the new scales of pay, the efficiency bar in the
new scale may apply, but only if the stage for applying it has not
been already reached.
(2) Under the provisions of the Sastry Award as modified, two additional
increments in the basic scales of pay have been given for graduation
and one increment for passing Part I of the C.A.I.I.B. and C.A.I.B.
examinations and another for passing Part II of the aforesaid
examinations. The workmen who have not received any such
increments will be entitled to be credited with increments as provided
in the Sastry Award as modified if they have graduated or passed
Part I or Part II of the aforesaid examinations prior to 1st January
1962. Where, however, in any banks scale graduates and/or
persons who have passed the aforesaid examinations have been
started on a higher scale of basic pay, the additional increments
granted for graduation or for passing of such examinations are not
to be credited.
(3) Wherever as a result of the adjustment or adjustments as directed
above the total emoluments under the new scales made up of basic
pay, dearness allowance, special allowance and house rent
allowance fall short of the total emoluments of any workman under
the above heads as on 1st January 1962, the difference shall be
given to him by way of an additional allowance to be called
temporary adjustment allowance until such difference is fully
absorbed by future increments in the new scale of pay. (The right
of any bank to stop annual increments is not to be affected by this

5.359. When a bank gets downgraded as a result of the decrease in its

working funds as provided in this award, then the workmen then employed in
the bank will have to be fitted into the scales of pay applicable to the class in
which the bank will fall. For the purpose of fitting the workmen into such
scales of pay, the aforesaid principles of stage to stage adjustment should
be employed. Following the Sastry Tribunal, I have already provided in
paragraph 4.126 that the change over should not adversely affect the then
existing employees. The Sastry Tribunal has amplified the aforesaid provision
by laying down that the change over should not adversely affect the total
emoluments of the then existing employees drawn by them on the date of
the said change over and that by total emoluments was meant basic pay,
dearness allowance, house rent allowance and such other allowances which
were given in recognition of higher types of work. In order that workmen may
not be so adversely affected I direct that the amount of the difference between
the total emoluments consisting of basic pay, dearness allowance, house
rent allowance and special allowance, if any, immediately before and
immediately after such downgradation should be given to the workman by
way of an additional allowance to be called temporary adjustment allowance"
until such difference is fully absorbed by future increments in the altered
scale of pay (The right of any bank to stop annual increments will not be
affected by this provision).

For workmen who joined the service of the bank on or after Ist January,
1959.
The workman shall be fitted into the scale of pay provided by the
Sastry Award as modified on a point to point basis as though it had
been in force since he joined the service of the bank, provided that
his adjusted basic pay is not less than what it would be under a
point to point adjustment on the corresponding banks scale.

rule).
For the purpose of making the requisite adjustments and making
payments on account thereof, banks shall have a maximum period
of five months time from the date when this award becomes
enforceable under the provisions of section 17A of the Industrial
Disputes Act, 1947.

238

5.360. Provisions similar to those laid down above will apply mutatis
mutandis when a place subsequently falls within a higher or a lower area.
5.361. As regards workmen who have joined service between 1st January
1962 and the date when this award becomes enforceable under the provisions
of section 17A of the Industrial Disputes Act, 1947, they will be fitted into the
new scales of pay on the same principles as those set out above from the
dates when they respectively joined service.
(xxvi) Reliefs
5.362. As a result of the abolition of separate Area IV, if no relief was
granted to banks other than banks in the Excepted List, there would be a
sudden rise in the burden which the banks would have to bear in connection

239

with basic pay and dearness allowance and in connection with provident fund
contribution and other benefits granted to workmen which are dependent on
the amount of basic pay. At the all-India working class consumer price index
No. 123 (1949 = 100), the total emoluments consisting of basic pay and
dearness allowance which would be payable to the members of the clerical
staff and the subordinate staff in Area IV in the first year of service by various
classes of banks under the Sastry Award, as modified are given in the table
below. The total emoluments consisting of basic pay and dearness allowance
that would be payable to those very employees except those employed in
banks in the Excepted List at the same index number under this award, if no
relief was granted, are also indicated in the said table.
Total emoluments under this
award payable in the 1st
year of service in Area III,
if no relief was granted.

CLASS OF BANKS
B

C-1

C-2

Clerical Sttaff
99.90

90.90

87.90

87.90

57.00

42.50

42.50

84.90 138.00 128.80

Subordinate staff
65.25

40.50

BE

88.80

81.60

19.60

74.40

AI

In view of the large difference between the two sets of emoluments, I consider
that the burden should not fall upon the banks all of a sudden but should fall
gradually, so that the banks should be able to adjust themselves to the new
scales of pay and dearness allowance. I accordingly direct that all workmen
who immediately prior to the date when this award becomes enforceable
under the provisions of section 17-A of the Industrial Disputes Act, 1947 were
entitled to receive basic pay according to the scales of pay applicable to
Area IV under the Sastry Award as modified should, after they are fitted in
the new scales of pay applicable to Area III, be paid by way of basic pay and
dearness allowance, (i) from 1st January 1962 till the end of the year 1962,
20 per cent less than what they would otherwise have received but for the
relief hereby granted, (ii) from 1st January 1956 till the end of the year 1963,
15 per cent less than what they would then have been entitled to receive if no
relief had been granted from the very commencement (i.e. from 1st January
1962), (iii) from 1st January 1964 till the end of the year 1964, 10 per cent
less than what they would then have been entitled to receive if no relief had
been granted from the very commencement (i.e. from 1st January 1962), and
(iv) from 1st January 1965 till the end of the year 1965, 5 per cent less than
what they would then have been entitled to re-receive if no relief had been
granted from the very commencement (ie) from 1st January 1962). From and
after 1st January 1966 they will receive the same amount which they would

240

5.363. In order that there may not be any distinction between workmen
who may be newly employed by banks for service at places in erstwhile Area
IV during the aforesaid years 1962,1963, 1964 and 1965 after the date when
this award becomes enforceable and the workmen who were in employment
of banks upto that date, I direct that banks will be entitled to pay to all such
newly recruited workmen working at places in the erstwhile Area IV for the
aforesaid years the same amounts which are directed to be paid to workmen
referred to in the preceding paragraph working at places in erstwhile Area IV.
This relief will also provide an incentive to banks to open branches in erstwhile
Area IV during the Third Five Year Plan period.

Total emoluments under the

Sastry Award as modified
payable in the 1st year of
service in Area IV.

otherwise have received but for the reliefs hereby granted. The reliefs provided
as aforesaid will also be available in respect of workmen to whom the
provisions of the Sastry Award as modified do not apply and who were
employed at places falling within Area IV immediately prior to the date when
this Award becomes enforceable. Notwithstanding anything herein contained
no such workman will be paid a lesser amount by way of total emoluments
consisting of basic pay and dearness allowance than what he would have
received if this award was not made applicable to him. The amount of such
difference will be paid to him by way of special adjustment allowance until
the same is fully absorbed by reason of the increasing amounts becoming
payable to him by way of basic pay and dearness allowance under this
award.

5.364. Lower scales of pay have been provided for workmen employed in
banks in the Excepted List. The reliefs provided in the preceding paragraphs
will not therefore be available to such banks.
5.365. The reliefs provided in the preceding paragraphs will not be available
in respect of workmen who have been transferred from places in higher areas
whose basic pay in accordance with the scales of pay applicable to higher
areas is protected.

5.366. In the chapter relating to the classification of banks, I have stated

that the Bharatha Lakshmi Bank Ltd., the Indian Insurance and Banking
Corporation Ltd., and the Miraj State Bank Ltd., are entitled to some relief. I
have similarly stated that the Chaldean Syrian Bank Ltd, the Gadodia Bank
Ltd., and the Jaya Laxmi Bank Ltd., which have recently emerged from Class
D under the Sastry Award as modified and have gone to the present Class Cl under the Sastry Award as modified, and the Pangal Nayak Bank Ltd.,
which at present is not governed by the Provisions of Sastry Award as modified
are entitled to some relief. These banks will get relief in connection with
certain workmen under the provisions hereinbefore contained. These banks
are entitled to some relief in respect of other workmen also. Taking all
circumstances into consideration, I direct that the aforesaid seven banks will
pay to their workmen other than those in respect of whom relief has already
been provided, by way of basic pay, and dearness allowance (i) from 1st

241

5.369. By the Industrial Disputes (Banking Companies) Decision

Amendment Act of 1957, the name of this bank was added to the list of C
Class banks which were able to bear the burden of the dearness allowances
payable under the Labour Appellate Tribunals decision. This bank has been
paying remuneration to its workmen as a C-l Class bank. In the Written
Statement filed by the Travancore Cochin Bankers Association inter alia
on behalf of this bank, it has been pleaded that the Commission overlooked
the problems relating to this bank and on a general study of the progress
achieved by it during the period, recommended that the bank was in a position
to pay Labour Appellate Tribunal scales of pay and allowances This bank
has pleaded its inability to pay higher wages than what it is paying at present.
Shri Sheshadrinathan stated that this bank has been asked by the Reserve
Bank of India to take over the assets and liabilities of the Catholic Bank of
India Limited, the Venadu Bank Limited and the Anthraper Bank (Private)
Limited and that if these three banks were amalgamated with the South
Indian Bank Limited, considerable adjustments would be required to be made
and that the bank should have sufficient time to absorb the employees of
these banks. He stated that in Area IV this bank has voluntarily paid wages
on the basis of wages payable in Area III and he claimed that for a period of
5 years no further burden should be imposed upon the bank.

AI

BE

5.367. While I am considering the question of granting reliefs, I will deal

with the case of the South Indian Bank Limited, Trichur which has claimed
that no further burden should be imposed upon it for a period of 5 years. At
the request of the bank a special hearing was given to the bank, and Shri
Sheshadrinathan appeared in support of the claim made on behalf of the
bank. This bank was established in the year 1929. Its head office is at Trichur.
Its paid-up capital in the year 1959 was 13.09 lakhs and in the year 1960 was
Rs. 13.41 lakhs. In the year 1959 the banks reserves were Rs. 7.54 lakhs
and in the year 1960 they were Rs. 8.51 lakhs. Its deposits were Rs. 535.34
lakhs in the year 1959 and were Rs. 473.91 lakhs in the year 1960. The
working funds of the bank for the year 1960 and 1961, as given by the bank,
were Rs 5,84,27,000 and Rs. 4,81,62,000, respectively. It declared a dividend
of 11 per cent in the year 1959 and of 9 per cent in the year 1960. As on 30th
September 1961 this bank had 31 offices including the branches taken over
from the Venadu Bank Ltd. Out of these, 2 are in Area I, 8 are in Area II, 8 are
in Area III and 13 are in Area IV. In the year 1929, the bank made a profit of
Rs. 3,730, in the year 1944, its net profit was Rs. 77,701, in the year 1946 it
was Rs. 1,28,752, in the year 1952 it was Rs 2,69,624, in the year 1957 it
was Rs. 3,23,712, in the year 1959 it was Rs. 3,96,553 and in the year 1960
it was Rs. 3,71,632.

bank would not find any difficulty in implementing the Labour Appellate
Tribunals decision with retrospective effect from 1st April 1954.

January 1962 till the end of the year 1962, 6 per cent less than what they
would otherwise have received but for the relief hereby granted, (ii) from 1st
January 1963 till the end of the year 1963, 6 per cent less than what they
would then have been entitled to receive if no relief had been granted from the
very commencement (i.e. from 1st January 1962), (iii) from 1st January 1964
till the end of the year 1964, 4 per cent less than what they would then have
been entitled to receive if no relief had been granted from the very
commencement (i.e from 1st January 1962), (iv) from 1st January 1965 till
the end of the year 1965, 2 per cent less than what they would then have
been entitled to receive if no relief had been granted from the very
commencement (i.e. from 1st January 1962). From and after 1st January
1966 they will receive the same amount which they would otherwise have
received but for the reliefs hereby granted.

5.368. The Travancore Coching Banking Inquiry Commission considered

the financial position of this bank and observed at page 98 of its report that as
regards the banks capacity to implement the Labour Appellate Tribunals
decision with retrospective effect from 1st April 1954, it had build up substantial
reserves, its deposits and working capital trends were satisfactory, its gross
earnings and gross profit had steadily risen and despite higher establishment
charges its net profit had not been substantially affected and it had been able
to maintain the dividend rate at 9 per cent during the previous four years. It
has further observed that the bank had voluntarily extended the provisions of
the Government modified decision to its offices in the exempted area with
effect from 1st October 1954 and that even on a conservative estimate, the

242

5.370 Having carefully considered the case of this bank, in my view no

special case is made out for exempting this bank from the operation of this
award. When other banks amalgamate with it under the terms and conditions
of amalgamation this bank will get certain relief as regards the employees
whose services are taken over by it. This bank will be in a position to bear all
the burdens imposed by this award and no relief is given.
Item 3 : Dearness allowance with particular reference to the question
whether any part of the existing Dearness Allowance should
be absorbed in the Basic Pay.
5.371 The dearness allowance is meant for meeting a rise in the cost of
living which is of a temporary character. The system of payment of dearness
allowance was started during the II world war when the cost of living was
rising rapidly. It was expected that it would fall when normal conditions were
restored but all such expectations have failed to materialise. The First Central
Pay Commission had thought that the prices had reached a high peak in
January 1947 when the average all India index number was 285 (1939 = 100).
It provided for a progressive decrease in the rate of dearness allowance as
the cost of living index came down. The Dearness Allowance Committee
(popularly known as Gadgil Committee) had anticipated that the cost of
living index would not fall below the range of 265 to 284 (1939 =100) and it
made a recommendation for treating 50 per cent of the dearness allowance

243

as pay for Central Government employees who were in receipt of pay not
exceeding Rs. 750 per month for the purpose of retirement benefits, certain
allowances, etc. Subsequent events have proved that the Gadgil Committee
was rather conservative in its estimate. The cost of living has increased to
such an extent that at present all india working class consumer price index
number is 456 with base 1939 = 100.

Areas I, II, III for clerical staff and subordinate staff.

5.372. As observed by the Sastry Tribunal, there are two principal

methods of providing for dearness allowance. The first method is to fix flat
rates or definite percentage of basic salary as dearness allowance varying if
need be with the scale of salaries and with slabs. The second method is to
link dearness allowance with the rise or fall of cost of living index figures. The
first method suffers from two defects : (1) there is an element of arbitrariness
in splitting up the appropriate salary into basic pay and dearness allowance,
and (2) there is no provision for automatic adjustment of dearness allowance
in relation to the rise or fall in the cost of living. The Sen Tribunal adopted
1944 as the base year and provided by way of dearness allowance for the
increase in the cost of living over and above what it was in various places in
1944. Under the Sen scheme dearness allowance for any place was related
to the cost of living index number of such place or the place nearest to it for
which the Central Government published such figures. The then existing series
of the cost of living index figures for Bombay city, Ahmedabad, Sholapur,
Jalgaon, Kanpur, Nagpur and Madras were to be appropriately reduced to the
base of 1944. The Sen Tribunals scheme of dearness allowance is given
below :

Up to Rs. 50
Thereafter up to Rs. 100
Thereafter up to Rs. 150

Bank

Area

Rate

Minimum
per month

Maximum
per month

A, B. C & D ...

33 1/3 per cent of pay

35

70

A, B, C & D ...

II

33 1/3 per cent of pay

30

60

A, B, C & D ...

III

33 1/3 per cent of pay

25

40

Subordinate Staff
Bank

Area I

Area II

Area Ill

Rs. 35 flat per month Rs. 30 flat per month

Rs. 25 flat per month Rs. 22-8-0 flat per month Rs. 20 flat per month

Rs. 15 flat per month Rs. 12 flat per month

Rs. 10 flat per month

Rs. 13 flat per month Rs. 12 flat per month

Rs. 10 flat per month

Rs. 25 flat per month

For the aforesaid purpose pay meant the aggregate of basic pay, special
allowance and officiating allowance, if any.
In order to provide for an automatic adjustment of the rates of dearness
allowance according to the variations in the cost of living in future, the Sastry
Tribunal provided that if the average figure for each half year, i.e. from January
to June and from July to December, of each calender year, should rise or fall
by more than 10 points over 144 the dearness allowance for the succeeding
half year should rise or fall by 7 per cent of the basic pay. For the purpose
of calculating dearness allowance, the figure officially published in the Indian
Labour Gazette was to be taken as the correct index figure.

BE

On every rise of 10 points in the cost

of living index figure above the level
of 1944 (Calculated to the nearest
eight annas and the indices being
converted to the base 1944 =100).

AI

Amount of monthly pay

(a) Clerical Staff

9 3/8 per cent.

5.373. The Labour Appellate Tribunal retained the framework of the above
scheme of dearness allowance but altered the figures with a view to achieve
a fair measure of nutralisation. The dearness allowance under the Labour
Appellate Tribunal scheme was as follows :

8 1/3 per cent.

Clerks

7 1/2 per cent.

Dearness Allowance for A, B and C Class Banks.

Thereafter up to Rs. 200

6 1/4 per cent.

Thereafter

5 per cent.

This scheme in its actual working revealed such great anomalies that both
the banks and the workmen felt dissatisfied with it. The cost of living index
numbers were not available for all the places where bank employees were
working. Often the cost of living index number for the nearest place for which
it was available, did not properly reflect the real cost of living of the place
where the workmen worked. For the whole of Uttar Pradesh for instance the
only index figure available was that for Kanpur. The SastryTribunal awarded
the following rates of dearness allowance for A, B, C and D Class of banks in

244

Minimum

Maximum
First slab of Rs. 100
Second slab of Rs.100
Thereafter

:
:
:

50 per cent
40 per cent.
35 per cent.

Rs. 45/-

First slab of Rs. 100

Second slab of Rs. 100
Thereafter

:
:
:

45 per cent.
35 per cent.
30 per cent.

Rs.40/-

First slab of Rs. 100

Second slab of Rs. 100
Thereafter

:
:
:

40 per cent.
30 per cent.
25 per cent.

Area I

Rs. 50/-

Area II

Area III

245

Dearness allowance for D Class Banks

If the average all-India cost of living index for the half year ending
June or December of any year should rise or fall by more than 10
points as compared to 144 (1944 = 100) the dearness allowance
for the succeeding half year will be raised or lowered by one-tenth
of the dearness allowance admissible at the index level of 144 for
each variation of 10 points.

(Till 31-3-1959 and as for Class C banks thereafter).

Rate

Minimum

Maximum

Area I

33 1/3 per cent.

Rs. 35

Rs. 70

Area II

33 1/3 per cent.

Rs. 30

Rs. 60

Area III

33 1/3 per rent.

Rs. 25

Rs. 40

The rates of dearness allowance with the alterations mentioned above are
still in force, but the adjustment formula of dearness allowance has undergone
a slight change as a result of the Government notification S. O. 400, dated
13th February I960.

Subordinate Staff
Area I

Area II

Area III

Class A Banks

Rs. 42-8-0

Rs. 40-0-0

Rs. 37-8-0

Class B Banks

Rs. 40-0-0

Rs. 37-8-0

Rs. 35-0-0

Class C Banks

Rs. 37-8-0

Rs. 35-0-0

Rs. 32-8-0

5.375. The present scheme of dearness allowance in the banking

industry, as a result of the Sastry Award and all further modifications, is as
under :

Class D Banks

Rs. 13-0-0

Rs. 12-0-0

Rs. 10-0-0

(a) Dearness Allowance Formula for Clerks.

Minimum

AI

5.374. By the Government modification order S.R.O. 2732, dated 24th

August 1954 the dearness allowance awarded by the Labour Appellate Tribunal
was modified and the Sastry scales of dearness allowance for A, B, C and D
Class of banks were restored and it was provided that the dearness allowance
rates in Areas III and IV were to be the same. As a result of the
recommendations of the Bank Award Commission and the Travancore Cochin
Inquiry Commission and the legislative action taken for the implementation of
those recommendations the dearness allowance rates of the Labour Appellate
Tribunal in the A, B and C-l Class banks were restored and in the rest, the
dearness allowance rates under the Government modification order continued
to remain in force. The Bank Award Commission altered the form of the
dearness allowance adjustment formula of the Labour Appellate Tribunal.
The dearness allowance adjustment formula of the Bank Award Commission,
which as a result of legislative action replaced the adjustment formula of the
Labour Appellate Tribunal, is as follows .
Clerical Staff
If the average of all-India cost of living index for the half year ending
June or December of any year should rise or fall by more than 10
points as compared to 144 (1944 = 100) the dearness allowance
for the succeeding half year will be raised or lowered by one-seventh
of the dearness allowance admissible at the index level of 144 for
each variation of 10 points.
Subordinate Staff

246

In C-2 and D Class banks

Maximum

Rate

Minimum

Maximum

Rate

1st slab of Rs. 100

2nd slab of Rs.100
Thereafter ...

50%
40%
35%

Rs.35/-

Rs. 70/-

33 1/3%

Area II ... Rs. 45/-

1st slab of Rs. 100

2nd slab of Rs.100
Thereafter ...

45%
35%
30%

Rs. 30/-

Rs. 60/-

33 1/3%

Area III ... Rs. 40/-

1st slab of Rs. 100

2nd slab of Rs. 100
Thereafter ...

40%
30%
25%

Rs. 25/-

Rs. 40/-

33 1/3%

Area IV... Rs. 25/-

33-1/3% of pay (basic pay

special allowance and
officiating allowance)
with a maximum of Rs. 40/-

Rs. 25/-

Rs. 40/-

33 1/3%

Area I ... Rs. 50/-

BE

The dearness allowance adjustment formula of the Sastry Tribunal was

retained without any modification.

In A, B and C-l Class Banks.

The dearness allowance rates for D Class banks were to remain in

operation for five years from 1st April 1954 and thereafter the dearness
allowance rates for C Class banks were to be applicable.

(b) Dearness Allowance Formula for Subordinates.

Area I

Area II

Area III

Area IV

Rs.

Rs.

Rs.

Rs.

A Class Banks

42/50

40/-

37/50

25/-

B Class Banks

40/-

37/50

35/-

20/-

C 1 Class Banks

37/50

35/-

32/50

10/-

C-2 Class Banks

15/-

12/-

10/-

10/-

D Class Banks

13/-

12/-

10/-

10/-

5.376. The Dearness Allowance Adjustment Formula, which is now in

force according to Government notification No. S.O. 400, dated 13th February

247

1960 issued in exercise of the powers conferred by sub-section (5) of section

3 of the Industrial Disputes (Banking Companies) Decision Act, 1955 (41 of
1955) in lieu of the adjustment formula of the dearness allowance
recommended by the Bank Award Commission, is as under :

price index number of 105, base 1949=100, should be compensated by an

additional payment of dearness allowance at the rate of 1 1/2 per cent made
up of pay, special allowance and officiating allowance for every rise of five
points. The Indian Overseas Bank Employees Union, Madras has claimed
dearness allowance at the rate of 2 per cent of pay for every rise of points
over the cost of living index figure 144 (1944=100). The State Bank of Patiala
(All Cadres) Employees Association has claimed that dearness allowance
be paid to the supervisory staff, clerical staff and the subordinate staff at the
following rates:

If the average all-India cost of living index for any quarter after the
31st March, 1959 should rise or fall by more than five points as
compared to 144 (1944 = 100), the dearness allowance payable for
the succeeding quarter shall be raised or lowered, in the case of
clerical staff by one-fourteenth, and in the case of sub ordinate
staff by one-twentieth, of the dearness allowance admissible at the
index level of 144 for each variation of five points.

Supervisory and Clerical Staff.

Upto Rs.100

5.377. It is not possible to find out the extent of neutralisation which was
sought to be given as neither the Sastry Tribunal nor the Labour Appellate
Tribunal has given any indication about it.

AI

The existing dearness allowance should be revised to 75 per cent with

a minimum of Rs. 60 for all the employees and 75 per cent of the dearness
allowance should be merged with the basic salaries and the remaining
dearness allowance should be linked with the appropriate cost of living index
figures and the upward and downward revision in the dearness allowance
should be on the variation of every two points.

The All India State Bank of India Staff Federation has claimed that the
employees are entitled to full neutralisation and that dearness allowance
should be paid on the basis of such full neutralisation for every rise of one
point above 100 with base 1949=100. The State Bank of India Employees
Association (Bengal Circle) and the State Bank of India Employees
Association (Delhi Circle) have claimed that the all-India cost of living index
should be taken as the basis for calculation of the dearness allowance and
that the dearness allowance should be paid at the rate of 1 1/2 per cent of
pay for every rise of 5 points over the cost of living index figure 360 (1939
=100). The State Bank of India Staff Union, Andhra Pradesh, Vijayawada,
claims that the basic pay of an employee should be fixed at the cost of living
index of 360 (1939=100) and that for every rise of index by a point the rate of
dearness allowance should be Re. 0.35. The All India Bank of Baroda
Employees Federation has claimed that any rise above the all-India consumer

248

... ...

75 per cent (with a minimum of Rs. 75).

From Rs.101 to Rs. 200

50 per cent (l.e., Rs. 75/. plus Rs. 50

= Rs. 125) and so on.

From Rs. 201 to Rs. 300

40 per cent.

From Rs. 301and above

30 per cent.

Upto Rs.100

...

Over Rs. 100

BE

5.378. The All India Bank Employees Association has claimed that the
base year should be the year 1956 when the all India working class consumer
price index in the series 1949 = 100 was 105 and that dearness allowance
should be paid to the employees at the rate of 1 per cent of the basic pay for
every rise of one point over 105. The All India Bank Employees Federation
has made a demand as follows :

...

Explanation : In this notification quarter means the period of three

months ending on the last day of March, June, September or
December.

Subordinate Staff.
... ...

75 per cent with minimum of Rs. 60.

... ...

50 per cent.

The Association has further claimed that in view of the continuous rise in
the cost of living index, the entire amount of dearness allowance payable to
an employee should be merged into his basic pay.
5.379. The Cochin Commercial Bank Employees Association has
demanded the following dearness allowance :
"(a) (1)

Officers

50 per cent of the basic pay with a minimum

of Rs. 50/- and maximum of Rs. 90/-

(2)

Clerical Staff

50 per cent of the basic pay with a minimum

of Rs. 40/- and maximum of Rs. 80/-.

(3)

Subordinate Staff

80 per cent of the basic with minimum of

Rs. 35/- and maximum of Rs. 45/-.

(b) Adjustment of Dearness Allowance.

If the average of the all-India cost of living index for the quarter
ending March, June, September or December of any year should
rise or fall by more than 5 points as compared to 144 (1944 = 100),
the dearness allowance for the succeeding quarter of the year should
be raised or lowered as under :
For officers, clerical and subordinate staff by l/7th of the dearness
allowance admissible at the index level of 144 (1944=100) for each
variation of 5 points.
(c)

Absorption of 50 per cent of the dearness allowance to the basic

249

pay favoured.

then the existing scheme of dearness allowance cannot possibly survive. In

my view, it is within in the basic pay. I have now only to consider what should
be the dearness allowance after absorbing a part of the existing dearness
allowance in the basic pay.

The Allahabad Bank Employees Union (Calcutta) and the South Gujarat Bank
of Baroda Employees Union (Surat) have demanded that dearness allowance
should be paid at the rate of 1 per cent of pay on every rise of 5 points over
the cost of living index figure 360 (1939=100). The Bihar Provincial Central
Bank of India Employees Association (Muzaffarpur), the Central Bank of
India Employees Association at Patna, Amritsar and Muzaffarpur have
demanded a dearness allowance of 75 per cent with a minimum of Rs. 60 to
all the various categories. The Central Bank of India Employees Association
at Patna claims that 50 per cent of the dearness allowance should be merged
with basic pay. The Employees Association of the Union Bank of Bijapur and
Sholapur, has made the same demands for dearness allowance as the All
India Bank Employees Association.

AI

BE

5.381. The Indian Banks Association has claimed that wherever the
dearness allowance is linked with the cost of living index figure, it should be
calculated not on the basis of the immediate previous quarter but on the
figure available for the quarter preceding the last quarter so that numerous
calculations and re-calculations may be avoided. The Exchange Banks
Association has pleaded that it would be convenient to take the all-India
consumer price index number (1949 =100) as published in the Indian Labour
Journal for any of the quarters ending March, June, September and December
of any year for adjustment relating to the succeeding quarters ending
September, December, March and June, respectively. The State Bank of
India has pleaded that if there is a fall in the purchasing power of the rupee,
such fall is common to the entire nation and to every member of the community
and it is wrong in principle and in equity that only a section of the community,
to which the bank employees, should seek relief which must ultimately be at
the cost of the entire community and lead to still further inflation.

5.384 The present scheme of dearness allowance in the banking industry

has been regarded as cumbrous by the workmen. The scheme of dearness
allowance for subordinate staff is different from the scheme of dearness
allowance for the clerical staff. The adjustment formula for increase or decrease
in the dearness allowance is fixed in relation to the all-India cost of living
index figure 144 in the series 1944=100. Difficulties have been experienced
in the calculation of the amount of the dearness allowance in view of the nonavailability of final index figures for a quarter for a considerably long time with
the result that provisional payments have to be made which have to be
subsequently re-adjusted.

5.380. The banks have opposed these demands and want that the present
scheme of dearness allowance should be allowed to continue except for
slight modification of the adjustment formula for the facility of calculation.

5.383 I have already provided scales of pay with the year 1949 as the
base year. These scales of pay are much higher than the previous scales
and a considerable part of the existing dearness allowance has been merged
in the basic pay. I have now only to consider what should be the dearness
allowance taking into account the wage scales provided by me.

5.382. Shri Phadke, the learned counsel on behalf of the Indian Banks
Association, has urged that the third item of reference relates to dearness
allowance with particular Reference to the question whether any part of the
existing dearness allowance should be absorbed in the basic pay, that having
regard to the terms of Reference, it is not open to me to disturb the existing
scheme of dearness allowance and that I have only to consider whether any
part of the existing dearness allowance should be absorbed in the basic pay.
There is no merit in this contention. Item 3 of the reference provides for
adjudication of the dispute in connection with dearness allowance. The mere
particularisation of the question relating to the merger of the existing dearness
allowance does not limit the scope of the dispute relating to dearness
allowance. Apart from any other consideration, if it is ultimately found that a
large part of the dearness allowance should be absorbed in the basic pay,

250

5.385. The present system of dearness allowance has to be changed in

any event in view of the absorption of a large part of the existing dearness
allowance in the basic pay. The basic pay has been fixed by me with reference
to the base year 1949 for which the all-India working class consumer price
index number was 100. The question that I have to consider relates to the
extent of neutralisation that should be given when the cost of living changes
in the case of the lowest categories of employees in banks, namely, the
subordinate staff, and in the case of higher categories of employees, namely
workmen other than those belonging to the subordinate staff.
5.386. The Sastry Tribunal has not indicated the extent of neutralisation
which it had given. The Labour Appellate Tribunal has stated that it had
altered the figures of dearness allowance provided by the Sastry Tribunal
with a view to achieve a fair measure of neutralisation.but has not stated what
in its opinion constituted a fair measure of neutralisation.
5.387. The first Central Pay Commission thought that the employees
who live on the marginal level in normal times should get the benefit of full
neutralisation, and that higher categories of employess should receive a
diminishing but graduated scale of dearness allowance.
5.388. The Committee on Fair Wages in its report has observed that the
evidence received by it was unanimous only on one point viz., that adjustment
should be based on the current cost of living index numbers in the areas
concerned. It has further stated that as regards the extent of compensation
there was a difference of opinion between employers and employees. The
former suggested neutralisation to the extent of 75 to 80 per cent of the

251

252
253

...
...
...

...
...
...
...
...
...
...
...
...

7
8
9

10
20
30
40
50
60
70
80
90

...

...

400

...

...

...

300

...

...

...

200

...

...

...

Rs

100

...

Basic salary

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Rs.

12.00

9.00

6.00

3.00

2.70

2.40

2.10

1.80

1.50

1.20

0.90

0.60

0.30

0.27

0.24

0.21

0.18

0.15

0.12

0.09

0.06

0.03

Rs.

24.00

18.00

12.00

6.00

5.40

4 .80

4 .20

3.60

3.00

2.40

1.80

1.20

0.60

0.54

0.48

0.42

0.36

0.30

0.24

0.18

0.12

0.06

Rs.

36.00

27.00

18.00

9.00

8.10

7.20

6.30

5.40

4.50

3.60

2.70

1.80

0.90

0.81

0.72

0.63

0.54

0.45

48.00

36.00

24.00

12.00

10.80

9.60

8.40

7.20

6.00

4.80

3.60

2.40

1.20

1.08

0.96

0.84

0.72

0.60

0.48

0.36

0.24

0.12

Rs.

0.60

0.45

0.30

0.15

Rs.

0.72

0.54

0.36

0.18

Rs.

60.00

45.00

30.00

15.00

13.50

12.00

10.50

9.00

7.50

6.00

4.50

3.00

1.50

1.35

1.20

1.05

0.90

0.75

72.00

54.00

36.00

18.00

16.20

14.40

12.60

10.80

9.00

7.20

5.40

3.60

1.80

1.62

1.44

1.26

1.08

0.90

0.84

0.63

0.42

0.21

Rs.

2.16

1.92

1.68

1.44

1.20

0.96

0.72

0.48

0.24

Rs.

10

84.00

63.00

42.00

21.00

18.90

16.80

14.70

12.60

10.50

8.40

6.30

4.20

2.10

96.00

72.00

48.00

24.00

21.60

19.20

16.80

14.40

12.00

9.60

7.20

4.80

2.40

1.89

1.68

1.47

1.26

1.05

BE

AI
0.36

0.27

0.18

0.09

Rs.

108.00

81.00

54.00

27.00

24.30

21.60

18.90

16.20

13.50

10.80

8.10

5.40

2.70

2.43

2.16

1.89

1.62

1.35

1.08

0.81

0.54

0.27

Rs.

11

99.00

66.00

33.00

29.70

26.40

23.10

19.80

16.50

13.20

9.90

6.60

3.30

2.97

2.64

2.31

1.98

1.65

1.32

0.99

0.66

0.33

Rs.

13

108.00

72.00

36.00

32.40

28.30

25.20

21.60

18.00

14.40

10.80

7.20

3.60

3.24

2.88

2.52

2.16

1.80

1.44

1.08

0.72

0.36

Rs.

14

120.00 132.00 144.00

90.00

60.00

30.00

27.00

24.00

21.00

18.00

15.00

12,00

9.00

6.00

3.00

2.70

2.40

2.10

1.80

1.50

1.20

0.90

0.60

0.30

Rs.

12

156.00

117.00

78.00

39.00

35.10

31.20

27.30

23.40

19.50

15.60

11.70

7.80

3.90

3.51

3.12

2.73

2.34

1.95

1.56

1.17

0.78

0.39

Rs.

15

Less 104 or 108 or 112 or 116 or 120 or 124 or 128 or 132 or 136 or 140 or 144 or 148 or 152 or
than more
more more
more
more
more more
more
more
more more more
more
104 but less but less but less but less but less but less but less but less but less but less but less but less but less
than
than
than
than
than
than
than
than
than
than
than
than
than
108
112
116
120
124
128
132
136
140
144
148
152
156

Dearness Allowance admissible if the appropriate quarterly average of the index is

Table for calculation of Dearness Allowance for workmen other than those belonging tothe Subordinate Staff
Dearness Allowance @ 3 per cent for every change of 4 points in the quarterly average of the All India Average Consumer
Price Index (General) (Base 1949=100).

254
255

...
...
...
...
...
...
...
...

20
30
40
50
60
70
80
90

...

...

10

150

...

...

...

140

...

...

...

130

...

...

...

120

...

3.

...

...

110

...

...

...

Rs

100

...

Basic salary

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Rs.

6.00

5.60

5.20

4.80

4.40

4.00

3.60

3.20

2.80

2.40

2.00

1.60

1.20

0.80

0.40

0.36

0.32

0.28

0.24

0.20

0.16

0.12

0.08

0.04

Rs.

12.00

11.20

10.40

9.60

8.80

8.00

7.20

6.40

5.60

4.80

4.00

3.20

2.40

1.60

0.80

0.72

0.64

0.56

0.48

0.40

0.32

0.24

0.16

0.08

Rs.

18.00

16.80

15.60

14.40

13.20

12.00

10.80

9.60

8.40

7.20

6.00

4.80

3.60

2.40

1.20

1.08

0.96

0.84

0.72

0.60

24.00

22.40

20.80

19.20

17.60

16.00

14.40

12.80

11.20

9.60

8.00

6.40

4.80

3.20

1.60

1.44

1.28

1.12

0.96

0.80

0.64

0.48

0.32

0.16

Rs.

0.80

0.60

0.40

0.20

Rs.

0.96

0.72

0.48

0.24

Rs.

30.00

28.00

26.00

24.00

22.00

20.00

18.00

16.00

14.00

12.00

10.00

8.00

6.00

4.00

2.00

1.80

1.60

1.40

1.20

1.00

36.00

33.60

31.20

28.80

26.40

24.00

21.60

19.20

16.80

14.40

12.00

9.60

7.20

4.80

2.40

2.16

1.92

1.68

1.44

1.20

1.12

0.84

0.56

0.28

Rs.

2.88

2.56

2.24

1.92

1.60

1.28

0.96

0.64

0.32

Rs.

10

42.00

39.20

36.40

33.60

30.80

28.00

25.20

22.40

19.60

16.80

14.00

11.20

8.40

5.60

2.80

48.00

44.80

41.60

38.40

35.20

32.00

28.80

25.60

22.40

19.20

16.00

12.80

9.60

8.40

3.20

2.52

2.24

1.96

1.68

1.40

BE

AI
0.48

0.36

0.24

0.12

Rs.

54.00

50.40

46.80

43.20

39.60

36.00

32.40

28.80

25.20

21.60

18.00

14.40

10.80

7.20

3.60

3.24

2.88

2.52

2.16

1.80

1.44

1.08

0.72

0.36

Rs.

11

60.00.

56.00

52.00

48.00

44.00

40.00

36.00

32.00

28.00

24.00

20.00

16.00

12.00

8.00

4.00

3.60

3.20

2.80

2.40

2.00

1.60

1.20

0.80

0.40

Rs.

12

66.00

61.60

57.20

52.80

48.40

44.00

39.60

35.20

30.80

26.40

22.00

17.60

13.20

8.80

4.40

3.96

3.52

3.08

2.64

2.20

1.76

1.32

0.88

0.44

Rs.

13

72.00

67.20

62.40

57.60

52.80

48.00

43.20

38.40

33.60

28.80

24.00

19.20

14.40

9.60

4.80

4.32

3.84

3.36

2.88

2.40

1.92

1.44

0.96

0.48

Rs.

14

78.00

72.80

67.60

62.40

57.20

52.00

46.80

41.60

36.40

31.20

26.00

20.80

15.60

10.40

5.20

4.68

4.16

3.64

3.12

2.60

2.08

1.56

1.04

0.52

Rs.

15

Less 104 or 108 or 112 or 116 or 120 or 124 or 128 or 132 or 136 or 140 or 144 or 148 or 152 or
than more
more more
more
more
more more
more
more
more more more
more
104 but less but less but less but less but less but less but less but less but less but less but less but less but less
than
than
than
than
than
than
than
than
than
than
than
than
than
108
112
116
120
124
128
132
136
140
144
148
152
156

Dearners allowance admissible if the appropriate quarterly average of the index is

Table for calculation of Dearness Allowance for Subordinate Staff

Subordinate Staff Dearness Allowance @ 4 per cent for every change of 4 points in the quarterly average of the All India
Average Consumers Price Index (General) (Base 1949=100).

increase in the cost of living and the application of a flat rate for all categories.
The later pressed for 100 per cent compensation for the lower categories
though they would raise no objection to a flat rate allowance. The committee
finally came to the conclusion that for the lowest categories of employees
the target should obviously be compensation to the extent of 100 per cent of
the increase in the cost of living and that a lower rate of compensation should
apply to higher categories but that the amount of compensation must be
based on salary scale or slabs.

intended to give, I have used the aforesaid percentages.

BE

In India itself, sliding scale arrangements, providing generally for a

neutralisation of 70 to 90 per cent and in the case of the textile
industry at its main centres, 100 per cent exist in many organised
industries. The arrangement generally tend to reduce the time lag
which might otherwise occur between rise in the price level and
increase of wages; they reduce the possibilities of industrial conflicts,
and interruption of production, by providing for a simple, orderly,
and more or less, mechanical adjustment; and they give a sense
of security to the workers as regards their real wages. On the other
hand, they may set up or accelerate a wage-price spiral with various
harmful economic and social consequences.

5.389. The Central Wage Board for the cement industry in its report
given in 1959 has provided for 100 per cent neutralisation for the lowest
categories of wage earners and linked the dearness allowance fixed by it to
the all-India working class consumer price index number with base year
1949 The Second Pay Commission in its report at page 96 has observed as
follows :

5.391. I have next to consider the question when changes should take
place in the amount of dearness allowance. If the dearness allowance is to
be increased with every rise of one point in the index figure in the series 1949
= 100, it will similarly have to be decreased on every fall of 1 point with the
result that there will be frequent changes in the total remuneration received
by workmen. It is desirable that the pay packet of workmen should not
fluctuate too often. I accordingly direct that in the case of the clerical staff,
the dearness allowance should be calculated and paid at the rate of
three per cent of the pay (i.e. basic pay provided under this award, special
allowance, if any, and officiating allowance, if any, payable under this award)
for every rise of four points above 100 in the quarterly average of the all-India
average working class consumer price index (general), base 1949 = 100, and
in the case of the subordinate staff, the dearness allowance should be
calculated and paid at the rate of four per cent of the pay (i.e. basic pay
provided under this award, special allowance, if any, and officiating allowance,
if any, payable under this award) for every rise of four points above 100 in the
quarterly average of the all-India average working class consumer price index
(general) base 1949=100. For this purpose quarter will mean the period of
three months ending on the last day of March, June, September or December.
The final index figures as published in the Indian Labour Journal should be
the index figures which should be taken for the purposes of calculation of
dearness allowance. For the purpose of calculating the dearness allowance
for any particular month, the quarterly average for the last quarter for which
final index figures are available on the 15th day of that month should be
taken. If the dearness allowance for the month of December has to be
calculated, the quarterly average for the last quarter for which final index
figures are available on the 15th of December should be taken.

AI

5.390. As regards members of the subordinates staff, in order that their

standard of living may not deteriorate and any hardship caused on account of
the rise in the cost of living may be avoided, it is necessary that they should
be insulated against shocks of rise in the prices of essential commodities.
The scales of pay of members of the subordinate staff employed by banks in
the Excepted List are very low. The larger banks have enough capacity to
bear the burden of increase in wages consequent on the rise in the cost of
living. Banks by and large can better stand the burden of the increase in
wages consequent on the rise in the cost of living than the employees in the
lowest grade can bear the loss consequent on the reduction in their purchasing
power. Taking all circumstances into consideration, including the circumstance
that in the past full neutralisation has not been given, I consider it fair that as
regards the members of the subordinate staff there should be 100 per cent
neutralisation linked with the all-India working class consumer price index
number, base 1949 = 100. In the case of workmen, other than those belonging
to the subordinate staff, keeping in view the trends in organised industries, I
provide a lesser rate of neutralisation and fix it at 75 per cent similarly linked.
In arriving at the scales of wages with 1949 as the base year from the total
remuneration consisting of basic wage and dearness allowance which I

256

5.392 I have provided that the index figures as published in the Indian
Labour Journal should be the figures which are to be taken for the purpose of
calculation of the dearness allowance. I have to do so in the absence of any
earlier official publication of these index figures. I am informed that these
index figures are sometimes ready many days before the date of the publication
of the particular issue of the Indian Labour Journal, in which they appear. If
that be so it would be in the public interest if the all-India consumer price
index numbers are published in the Gazette of India as soon as they are
ready. In the event of the final all-India working class consumer price index
numbers being officially published before they appear in the Indian Labour
Journal, I direct that the figures so officially published should be the figures
which should be taken for the purpose of calculation of the dearness allowance
instead of such figures when they appear in the Indian Labour Journal.
5.393. It is not necessary for me to deal individually with every demand
made. Having taken into consideration all the demands made in connection
with this item of reference, I have given my award in connection therewith.

257

AI

BE

5.394. A table showing the dearness allowance payable to the bank

employees at the various points of the all-India working class consumer price
index number base 1949=100 is given for the convenience of the parties.

258

CHAPTER VI

6.2. The Labour Appellate Tribunal modified the directions given by the
Sastry Tribunal, in so far as the Sastry Tribunal provided a limitation on the
duration of the leave during which house rent allowance was admissible, by
laying down that the employee on leave should continue to get the house
rent allowance even after the period of four months mentioned in the Sastry
Award has expired, provided the employee satisfied the bank that he had
retained the residential accomodation and was actually paying rent for it.

ITEM No. 4.-~ HOUSE RENT AND OTHER ALLOWANCES, INCLUDING

TRAVELLING AND HALTING ALLOWANCES AND LEAVE
FARE CONCESSIONS
(i) House Rent Allowance

Calcutta and Other places

Bombay with population
over 7 lakhs.
Rs. 8

Rs. 6

(b) Where pay exceeds Rs.100 but not Rs. 200

Rs. 12
per month ... ... ...

Rs. 9

(c) Where pay exceeds Rs. 200 per month

Rs. 12

Rs. 16

AI

It further laid down that the expression Pay in this connection included
basic pay, special allowance and officiating allowance. The Sastry Tribunal
in dealing with the question of free arccomodation provided by some banks
especially to the employees of the subordinate cadre, some of whom had
been allowed to sleep on the banks premises laid down that such concessions
or amenities which were voluntarily granted by the banks should not be taken
as conferring a right on the workmen. It observed that this amenity also
served as a kind or arrangement for the safety of the premises and the property
of the banks. It provided that even where such amenities were given, the
house rent allowance also must be given as the employees must have
facilities for housing their families at the places of their employment. It however,
laid down that no house rent allowance would be admissible where residential
quarters were provided and made available by the bank. The Sastry Tribunal
further provided that the house rent allowance must be given during leave
period also, provided that the duration of leave did not exceed four months
and prior to availing himself of leave the workmen had furnished a certificate
that he continued to retain the residential accomodation occupied by him
and that where the leave taken exceeded four months, house rent allowance
might cease at the banks discretion after the period of four months was over.
259

Areas with population of 1 lakh and over

7% of pay minimum Rs.10/-

Areas with population of 5 lakhs and over

but below 10 lakhs ...

10% of pay minimum Rs. 15/...

...

Areas with population of 10 lakhs and over

15%of pay minimum Rs. 20/-

State Capitals and Project areas having

population less than 10 lakhs ...

10% of pay minimum Rs. I5/...

It has further claimed that this allowance should be admissible to all

categories of employees with a maximum of Rs. 50, that for the purpose of
this allowance, the latest municipal population figures of a particular place
should be taken as the basis and should include suburbs and industrial
areas and that the allowance at the same rate should also be payable to the
employees working in offices in the suburbs and industrial areas. It has further
claimed that there should not be any deduction of house rent allowance
whatsoever during the period of leave of an employee. A. similar demand has
been made by the State Bank of India Staff Union, Andhra Pradesh
Vijayawada and the All India Bank of Baroda Employees Federation.

BE

(a) Where pay does not exceed Rs. 100

per month

6.3. The All India Bank Employees Association has alleged that the
amount of house rent taken into consideration while computing the pay
structure was a token amount having no relation to realities, and claimed that
a compensatory House Rent and Local Allowance should be paid to the
employees working at costlier places on the following basis :

6.I. The Sastry Tribunal in dealing with the question of house rent
allowance has observed that the house rent allowance constituted really an
item to be taken into account in fixing the wage scale. It further observed that
normally it would be included in calculating the cost of living, but there were
big cities in the country where housing accommodation was scarce and
rents were normally high notwithstanding the Rent Restriction Acts which
were in, force. It felt the necessity of considering these special cases and
providing for a house rent allowance. The Sastry Tribunal laid down that house
rent allowance should be given monthly to all whole-time workmen on the
following scale :

6.4. The All India Bank Employees Federation has submitted that the
problem of housing in almost all the centres had become more acute than
what it was at the time of the Sastry Award on account of the influx of population
in commercial and industrial centres in India, that there was a substantial
increase in rent of the houses on account of shortage of accomodation, that
the house rent allowance awarded by the Sastry Tribunal was restricted only
to those places where the population was above 7 lacs and that it was the
general experience of all that even in places with population less than 7 lacs
there has been a considerable increase in the house rent. The Federation,
therefore, submitted that the employees should either be provided with suitable
free accomodation or they should be allowed house allowance as under :
For Cities with
population

Supervisory Staff

(i)

10% with a minimum

Below 5 lacs

260

Clerks

Subordinate
Staff

of Rs. 20/(ii) 5 lacs to 10 lacs

15/-

15% with a minimum

of Rs. 30/-

(iii) 10 lacs and above 25% of the basic pay

Rs. 10/-

Rs. 20/-

Rs. 15/-

25% of the
basic pay

25% of the
basic pay.

10% of the basic pay.

The South Gujarat Bank of Baroda Employees Union has submitted
that the rents in cosmopolitan as well as mofussil cities were exorbitant and
it would not be improper if the employees were granted compensatory house
rent and local allowance in areas having a population of one lac and over at
the rate of 7 per cent of the total emoluments with a minimum of Rs. 10 per
month; and in areas having a population of 5 lacs and over but below 10 lacs
(including State capitals and project areas) at the rate of 10 per cent of the
total emoluments with a minimum of Rs. 15 per month.

6.5. The All India State Bank of India Staff Federation has made a demand
in this connection which is similar to the demand made by the All India Bank
Employees Association, with this change that to the project areas and State
capitals it has added hill stations and proprietary towns having population of
less than 10 lacs.

6.10. The State Bank of India Employees Association (Bengal Circle)

has demanded compensatory house rent and local allowance at the rates
following:

6.6. The Vadroda Rajya Bank Nokar Sangh has submitted that
employees should be provided with suitable free accomodation and they
should be allowed allowance as mentioned below :

Subordinate Staff

7% minimum Rs. 10/- per month.

Areas over 1 lac and below

10 lacs (including State Capitals

BE

6.7. The Indian Overseas Bank Employees Union has demanded the
house rent allowance as under :

Areas below 1 lac

Every employee should be paid house rent allowance at the rate of 20

per cent of his monthly salary with a minimum of Rs. 25.

For Clerical and Subordinate Staff

For cities with population of above 5 lacs

...

...

Rs. 15/- flat.

and Project areas)

10% minimum Rs. 15/- per month.

of above 1 lac but below 5 lacs

...

...

Rs. 10/- flat

Areas of 10 lacs and over

15% minimum Rs.20/- per month.

Clerical, Cash Department and Supervisory Staff

For cities with population of above 5 lacs

20% of basic pay with a

minimum of Rs. 45/-.

of above 1 lac but below 5 lacs ...

10% of basic pay with

minimum of Rs. 30/-.

AI

...

6.8. The Employees Association of Union Bank of Bijapur and Sholapur

has stated as under :

While computing our basic pay the amount of house rent has not
been taken into cosideration.A compensatory house rent and local
allowance should be paid to the employees at the rate of 15 per
cent of basic pay or Rs. 20 whichever is more."
6.9. The Bihar Provincial Central Bank of India Employees Association
has stated that the banks should provide suitable free furnished quarters to
all the employees or pay house rent allowance as under:
For Cities with
population.

Supervisory Staff

(i)

10% with minimum Rs. 20 Rs. 15/-

Rs. 10/-

(ii) 5 lacs to 10 lacs 15% with minimum Rs. 30 Rs. 20/-

Rs. 15/-

Below 5 lacs

(iii) Above 10 lacs

Clerks

Subordinate
Staff

A further City Compensatory Allowance at the rate of

261

6.11. The Indian Banks Association has submitted that the house rent
allowance at present payable under the Sastry Award as modified should be
left undisturbed. It has stated that while fixing the basic pay of an employee
house rent has always been laken into consideration as an item and has
submitted that there was no case whatever for paying compensatory house
rent or local allowance. It has stated that under the Sastry Award the banks
have been directed to pay house rent allowance during leave period also,
provided the duration of the leave did not exceed four months. A complaint is
made that no directions are given regarding the kind or nature of leave
contemplated which gave rise to difficulties. It has submitted that where an
employee was on leave without pay he should not be entitled to house rent
allowance. It is pointed out that under paragraph 489 of the Sastry Award, no
pay and allowances were admissible during the period of extraordinary leave
and it is submitted that in order to harmonise the afore said two provisions,
the Tribunal may direct that no house rent allowance would be payable to an
employee during extraordinary leave or leave without pay.
6.12. The Bombay Exchange Banks Association has pleaded that no
case existed for payment of compensatory or house rent allowance over and
above what was being paid under the Sastry Award as modified. Attention
was invited to paragraph 158 of the Sastry Award and it was stated that the
element of house rent was included in basic wages and any rise was covered
by dearness allowance. The Bombay Exchange Banks Association further
262

submitted that no principle had been adduced in support of the demand and
in any event the population basis suggested by the workmen, was wrong and
unjustified. It has submitted that the demand should be rejected,

award Area II comprises all places with a population of 1 lac and more other
than those specified as falling in Area I. The wage scales fixed for Area II
taken into account the general requirement in connection with housing
accommodation in that Area and it is not necessary to specially provide for
all these places once again by a special house rent allowance.

6.13. The State Bank of India has pleaded that under the Sastry Award,
house rent allowance was paid to workmen in larger cities and there was no
basis or justification for the demand made.

6.20. The present house rent allowance generally drawn by the members
of the subordinate staff in Bombay and Calcutta is Rs. 8 and at other places
with a population of 7 lacs and above is Rs. 6. Members of the clerical staff
whose basic pay, special allowances and officiating allowance under the
Sastry Award does not exceed Rs. 100 per month also get the same amount
by way of house rent allowance. The needs of the clerical staff in this
connection cannot be considered to be the same as the needs of the members
of the subordinate staff.

6.14. The Jaya Laxmi Bank Ltd., has pleaded that house rent allowance
should not be made compulsory in areas with a population of less than 5
lacs.

6.16. In the course of the hearing, it was argued on behalf of the

employees that there was scarcity of housing accommodation, that rents
had gone up extremely high, that the cost of raw material and building material
had gone up and, therefore, there was a necessity for raising the house rent.
It was also stated that wherever new houses were constructed, the rents
were fantastic.

6.22. The scales of pay provided by me include a considerable part of

the dearness allowance that was being given under the Sastry Award.A
member of the clerical staff employed by an A class bank in Area I whose
basic pay under the Sastry Award was Rs. 100 will under this award get a
basic pay of Rs. 155 and one whose basic pay under the Sastry Award was
Rs. 200 will now get a basic pay of Rs. 293.Having carefully considered the
whole matter, I award that all wholetime workmen excluding members of the
subordinate staff should be given house rent allowance on the following scale:

AI

BE

6.17. Generally speaking, house rent is one of the items taken into
account in the fixation of wage scales. The element of house rent laken into
account for the purpose of fixing wage scales does not take into account the
requirements in connection with housing in specially expensive places. Those
working in specially expensive places are generally intended to be
compensated by a special house rent allowance. In places like Bombay,
Calcutta and Delhi (including New Delhi) where the housing problem is acute,
house rents are very high. These three places cannot be treated on par with
other cities in the country. So far as Bombay and Calcutta are concerned,
Tribunals in the past have thought it fit to compensate the employees in
these cities with a compensatory house rent allowance. As regard the city of
Delhi (including New Delhi) in recognition of the fact that house rents were
high, Government has by an order classified Delhi as an A Class city for the
purpose of house rent and compensatory allowance for Central Government
employees.

6.21. In my view, having regard to the increase in population in all cities

with a population of 7 lacs and above and in particular in Bombay, Calcutta
and Delhi and the consequent shortage of housing accommodation, it is
necessary to increase the amount of house rent allowance provided under
the Sastry Award.

6.15. The Gadodia Bank Ltd., has stated that the status quo should be
maintained.

6.18. The housing problem in other cities with a population over 7 lacs is
less acute than in Bombay, Calcutta and Delhi but is by and large more
acute than in other cities and towns, and needs to be provided for by the
grant of a house rent allowance. Some provision is also required to be made
for State capitals not included in the aforesaid places and places included in
Area I which are not otherwise provided for by reason of the growing demand
for housing.
6.19. A demand has been made for a special house rent allowance for
places with a population of 1 lac and over. The wage scales have been fixed
having regard to the areawise division of places in the county. Under this
263

At Bombay, At other places with

Calcutta and
a population over
Delhi
7 lacs, other
State capitals and
other places in
Area I
Rs.

Rs.

12

Where pay exceeds Rs. 150 but does not

exceed Rs. 300 per month
16

12

Where pay exceeds Rs. 300 per month

15

Where pay does not exceed

Rs.150 per month

20

The expression pay for this purpose will mean basic pay and will include
special allowance and officiating allowance.
6.23. The house rent allowance payable to all members of the subordinate
staff will be Rs. 9 at Bombay, Calcutta and Delhi and will be Rs. 7 at other
264

6.24. For the purpose of house rent allowance payable to workmen the
expression Bombay will include Greater Bombay; the expression Calcutta
will include Howrah, Barrackpore, Behala, Alipore, Cossipur, Garden Reach,
Baranagore, Tallygunge, South Suburban Municipal Area and Dum Dum and
the expression Delhi will include Old and New Delhi and Delhi Shahadara.
6.25 Where employees occupy residential quarters provided by the bank
they will not be entitled to any house rent allowance.

Hill Allowance

6.29. The Sastry Tribunal has provided for hill stations or towns with a
height of 4,000 feet above sea level, 8'/3 per cent of the pay subject to a
minimum of Rs. 6 per month, and for hill stations or towns above 5,500 feet
above sea level, 12 per cent of the pay, subject to a minimum of Rs. 10 per
month, by way of hill allowance for all workmen.

AI

BE

6.26. Where an employee is on leave of any kind without pay, he will not
be entitled to draw any house rent allowance. Where an employee is on
leave other than leave of any kind without pay, he will be entitled to be paid
house rent allowance provided he satisfies the bank that he has continued to
retain the residential accommodation occupied by him. In cases where
separate residential quarters are not provided by the bank, but an employee
is allowed to sleep on the banks premises he will be entitled to receive
house rent allowance.

subordinate staff washed or in lieu thereof, a washing allowance of Rs. 3 per

month should be paid. Similar demands have been made by other workmens
organisations. The Allahabad Bank Employees Union, Calcutta, has claimed
that arrangement for washing uniforms of subordinate staff should be made
by banks twice in a week, failing which a washing allowance of Rs. 5 per
month should be paid. The Cochin Commercial Bank Employees Union has
demanded washing allowance of Rs. 4 per month. The State Bank of Patiala
(All Cadres) Employees Association has demanded Rs. 2 per month as
washing allowance. The Banks have opposed an increase in the washing
allowance. Taking all circumstances into consideration, I direct that a washing
allowance of Rs. 2.50 nP. be paid in Area I, of Rs. 2 be paid in Area II and of
Rs. 1.50 nP. be paid in Area III by banks which have made no arrangements
for getting the uniforms of the members of the subordinate staff washed. No
such allowance would be payable by a bank where such washing
arrangements have been made by the bank.

places with a population of over 7 lacs and other State capitals and other
places in Area I. Under the provisions contained in the Sastry Award as
modified, drivers, electricians and head messengers employed by A Class
banks in Area I were entitled in the 25th and subsequent years of their service
to receive Rs. 12 by way of house rent allowance at Bombay and Calcutta
and Rs. 9 by way of house rent allowance at other places falling within Area
I by reason of their basic pay and special allowance exceeding Rs. 100. I
direct that drivers, electricians and head messengers employed in A Class
banks in Area I will receive in the 25th and subsequent years of their services
by way of further house rent allowance Rs. 4 at Bombay, Calcutta and Delhi
and Rs. 3 at other places falling within Area I under this award.

6.27. For the purpose of considering the population of a city or other

place the latest available census figures alone should be considered. Where
however census has been held and provisional official figures are available,
but the final official figures have not been published, the provisional official
figures should be considered for the purpose of calculating the population
until the final official figures are published.
(ii) Other Allowances
Washing Allowance

6.28. The Sastry Tribunal has provided that the banks should under take
the responsibility of getting the uniforms of the members of the subordinate
staff washed and where it was not possible to do so it has provided for a
washing allowance at the rate of Rs. 2 per month in Area I, Rs. 1-8-0 per
month in Area II and Re. 1 per month in Area III. The All India Bank Employees
Association has claimed a sum of Rs. 3 per month by way of washing
allowance if no arrangement for washing of the uniforms is made by the
banks. The All India Bank Employees Federation has claimed that the banks
should make satisfactory arrangements for getting the uniforms of the
265

6.30. The All India Bank Employees Association has claimed for the hill
stations having a height between 3,000 to 5,500 feet, 10 per cent of pay with
a minimum of Rs. 15 per month and for hill stations having a height of 5,500
feet and over, 15 per cent of pay with a minimum of Rs. 25 per month. The All
India Bank Employees Federation has claimed, for hill stations with a height
of 3,000 feet above sea level, 10 per cent of pay with a minimum of Rs. 12 per
month and for hill stations with a height of over 3,000 feet, 15 per cent of pay
with a minimum of Rs. 24 per month. A large number of workmens
organisations have made demands similar to those of the All India Bank
Employees Association while a few unions have made demands similar to
the demands of the All India Bank Employees Federation in this respect. The
State Bank of Patiala (All Cadres) Employees Association has claimed, that
the hill allowance should be paid throughout the year and that it should be
paid even when an employee is on leave. The banks are against any change
in the hill allowance. The Bharatha Lakshmi Bank pleads for the exemption
of small banks from the payment of hill allowance.
6.31. The workmen have not only asked for a variation in the basis but
also in the quantum of the hill allowance. The reasons given for higher
allowances are (1) inadequacy of the present allowance, and (2) the high
cost of living at the hill stations where all necessities of life are imported from
outside. It is stated that at hill stations, in summer, due to the influx of
people, and in the rains, due to the communications being cut off, the prices
266

soar high.

level upto 5,500 feet above sea level at the rate of 6 per cent of the basic pay,
and of special allowance and of officiating allowance, if any, subject to a
minimum of Rs. 6 per month and a maximum of Rs. 20 per month, and for hill
stations or towns above 5,500 feet above sea level, 9 per cent of the basic
pay and of special allowance and of officiating allowance, if any, subject to a
minimum of Rs. 10 per month and a maximum of Rs. 20 per month should be
paid, to all employees who are workmen by way of fuel allowance. This
allowance will be payable for the five months of November to March of each
year.

6.32. Having considered all aspects of the matter, including the change
in the scales of pay provided under this award, I direct that for hill stations or
towns with a height of 4,000 feet above sea level, upto 5,500 feet above sea
level, 6 per cent of the basic pay and of special allowance and of officiating
allowance, if any, subject to a minimum of Rs. 6 per month and for hill stations
or towns above 5,500 feet above sea level, 9 per cent of the basic pay and of
special allowance, and of officiating allowance, if any, subject to a minimum
of Rs. 10 per month, should be paid to all employees who are workmen by
way of hill allowance.

Conveyance Allowance

Fuel Allowance

Cycle Peon Allowance

BE

6.34. The demand by most of the workers organisations is for the grant
of a fuel allowance at the same rate as the one demanded for hill allowance
for six months from October to March every year. The All India Bank
Employees Federation, however, demands payment of this allowance
throughout the year. A similar demand has also been made by some unions
such as the Bihar Provincial Central Bank of India Employees Association,
and the Central Bank of India Employees Associations at Patna, Muzaffarpur
and Amritsar which usually follow the pattern of the demands of the All India
Bank Employees Federation.

6.33. The Sastry Tribunal directed the payment of a fuel allowance on

the same basis and at the same rate as hill allowance, subject to a maximum
of Rs. 20 per month for the five months of November to March.

6.39. The Sastry Tribunal has directed that where an employee incurs
expenditure in the performance of banks work, he should be reimbursed to
the extent that the expenditure is fairly and legitimately incurred. The
expenditure incurred for going from the employees residence to office or vice
versa was not covered by this direction as the same was deemed to be
included in the pay scale. The employees have made a demand for conveyance
allowance. I give directions similar to those given by the Sastry Tribunal in
connection with conveyance allowance.

AI

6.35. The State Bank of India Employees Associations, Bengal and

Delhi Circles and the State Bank of Patiala (All Cadres) Employees
Association have demanded that this allowance should be paid even when
employees are on leave during the period during which fuel allowance is
payable.

6.36. The banks do not want the existing provision for fuel allowance to
be disturbed. The State Bank of India considers the change demanded in the
fuel allowance as unreasonable. The Bharalha Lakshmi Bank submits that
the. provision regarding fuel allowance is not applicable to it.

6.37. The demand for a higher fuel allowance is made on account of the
alleged increase in the cost and the difficulties experienced in obtaining fuel.
It is alleged that since the present fuel allowance for only five months did not
wholly cover the winter season it was demanded that the month of October
should also be added to the period. The demand for payment of fuel allowance
throughout the year is unreasonable and is rejected. No case has been made
out for any increase in the period during which this allowance should be paid.
6.38. Having taken all aspects of the matter into consideration, including
the change in the scales of pay under this award, I direct that fuel allowance
should be paid for hill station or towns with a height of 4,000 feet above sea
267

6.40. An allowance of Rs. 10 per month as cycle peon allowance has

been demanded by some of the employees unions. It was pointed out to me
that some banks pay a cycle peon allowance ranging from Rs. 5 to Rs. 15
per month. The National Grindlays Bank is paying Rs. 15 per month as cycle
peon allowance when the peon has to provide his own cycle. When a cycle is
provided by a bank there is no case for a cycle peon allowance. In other,
cases it is not possible to provide for a uniform allowance. The payment of
such allowance where it is warranted must be left to the discretion of the
banks concerned.
Split Duty Allowance
6.41. Rs. 10 per month have been generally demanded for all emplyoees
whose hours of duty in a day are split. The All India Bank of Baroda Employees
Federation has, however, demanded by a supplementary statement under
the heading of split duty allowance that employees who are required to
work in heading of split duty allowance that employees who are required to
work in branches which work in shifts should be paid a special allowance of
Rs. 25 and Rs. 15 per month to clerks and subordinates, respectively. It is
contended that the employees who perform split duty have to remain at the
disposal of the bank for longer hours and cannot usefully utilise the interval of
the break for their domestic needs and that if their residential houses are
situated far away from the place of duty, they incur considerable inconvenience
and expenditure in connection with the journeys several times during the
day. A reference was made in this connection to the recommendations of the
Second Pay Commission in its report at page 401 according to which split
268

duty should not ordinarily be required to be done in more than 3 spells and
when the employees residence is not close to the place of work, seven hours
of split duty .should be treated as equal to 8 hours of normal duty.

Children Allowance

BE

6.43. Before the Sastry Tribunal a demand was made that in such cases
the workmen should be given a conveyance allowance for one trip and there
should be a reduction by one hour in the total number of working hours in
view of the double trip from home to office and back. The Sastry Tribunal did
not give any directions as demanded as it considered that it was possible
and not unlikely that there might be some compensatory advantages in such
cases. It further considered that in any event it was a matter which was
better left to the discretion of the management. Under paragraph 308 of the
Sastry Award, the banks have been given the liberty to fix at their discretion
the actual timing of work provided the provision relating to the maximum
number of hours fixed was observed.

6.42. The banks are against the grant of split duty allowance. They
submit that the management must have freedom to adjust office hours to suit
the exigencies of their business so long as they do not exceed the limit
provided by the award. The Bank of Baroda has stated that some branches of
the Bank, specially in suburbs, work in two sessions, morning and evening
for the convenience of customers in the locality but within the limits of the
total working hours prescribed by the Sastry Award.

such as the districts of Ajmer, Bikaner, Marwar and Jodhpur in Rajasthan,

Gandhi Dham in Kutch, Tiruppur, Udamalpet and Sivakasi in Madras and
Surendar Nagar and Dhrangadhra in Gujarat. It is stated that the State
Governments are in fact paying water scarcity allowance to some of their
employees at various places during certain periods and that there is no reason
why the employees of banks should not get a similar allowance. It is not
possible to lay down in advance the amount of water scarcity allowance and
the period during which such allowance should be given. Having carefully
considered the matter in view of the present state of the record, the only
directions which, I am giving are that water scarcity allowance should be paid
by banks to such of their workmen employees who have actually been working
in the areas for which water scarcity allowance is paid by the Central
Government to its employees, the amount of such allowance and the period
of payment of such allowance being the same as in the case of such
Government employees. For the purpose of calculating the amount of such
water scarcity allowance if the rates have been fixed with reference to the
amount of pay of Government employees the same should be deemed to be
a reference to the amount of basic pay special allowance, if any, and officiating
allowance, if any, payable to a workman under this award.

Water Scarcity Allowance

AI

6.44. The working hours in banks are below the maximum prescribed
under many Shops and Establishments Acts. Owing to climatic reasons or
the convenience of the customers some banks may keep some of their
establishments open only in the mornings and evenings. It is not necessary
to provide any general split duty allowance. In case of any genuine hardship
the matter is best left to the discretion of the bank concerned.

6.45. A demand is made for scarcity allowance of Rs. 10 per month by

most of the employees organisations. The All India Bank Employees
Federation has demanded that adequate scarcity allowance should be
awarded having regard to the facts and circumstances prevailing due to scarcity
of essential commodities and necessities of life. The Vadodra Rajya Bank
Nokar Sangh has submitted that scarcity allowance should be paid to the
employees at the same rates as it is paid by the Central Government or any
other local authorities. At the time of the hearing it was stated by the All
India Bank Employees Association that water scarcity allowance should be
paid in the districts of Ambala, Bhatinda, Rohtak, Mohindergarh, Karnal,
Gurgaon and Hissar in the East Punjab. It was pointed out that as a result of
the decision of the Central Government Industrial Tribunal, Delhi such
allowance is continued to be paid at Ambala, Karnal, Kaithal, Panipat,
Sonepat, Rohtak, Hissar, Riwari, Sirsa, and Hansi. The employees have
pointed out that there are many other places where there is water scarcity
269

6.46. The All India Bank Employees Federation, the State Bank of India
Employees Association, Bengal Circle, the State Bank of India Employees
Association, Delhi Circle, the Bihar Provincial Central Bank of India Employees
Association, the Central Bank of India Association, at Patna, Muzaffarpur
and Amritsar, the Indian Overseas Bank Employees Union, Madras and the
Allahabad Bank Employees Union, Calcutta, have claimed a children
allowance of Rs. 10 per child with a maximum of Rs. 30. The State Bank of
India Employees Association, Bengal Circle and the State Bank of India
Employees Association, Delhi Circle have claimed this allowance as children
and education allowance. The Vadodra Rajya Bank Nokar Sangh has
demanded a children allowance of Rs. 10 per child without fixing a maximum.
The State Bank of Patiala (All Cadres) Employees Association has demanded
a children allowance of Rs. 10 per child with a minimum of Rs. 30 per month.
It has been argued that this allowance is a kind of childrens education
allowance.
6.47. The banks are opposed to the demand for children allowance. It is
pleaded that the workmen are on incremental scales which take care of an
increase in the family.
6.48. The All India Bank Employees Association which had claimed
before the Sastry Tribunal a children allowance of Rs. 10 per month for every
dependent child with a maximum of Rs. 30, has made no such claim before
this Tribunal. While considering this demand of the All India Bank Employees
Association the Sastry Tribunal had observed as follows :
270

We are not prepared to recommend any such allowance at the

present stage of the banking industry. Under the present
circumstances the employees can only look to his increasing
emoluments to cope with his familys responsibilities. The demand
for education or childrens allowance is therefore disallowed.

be given and I am unable to provide any bad climate allowance. The demand
is thereore not granted.

It is true that the Reserve Bank pays this allowance to its employees
under certain conditions, but that is only one isolated example. The grant of
this allowance will impose a considerable burden on banks. I see no necessity
of saddling banks with this additional burden. The claim of the employees for
children allowance is disallowed.

Where a workman officiates for a period of longer than 15 days, he

shall be paid an allowance calculated at the rate of 20 per cent of
his own basic pay or 50 per cent of the difference between his
basic and that of the person for whom he acts, whichever is lower.

Officiating Allowance
6.52. The Sastry Tribunal has in this connection provided as follows :

6.53. The Labour Appellate Tribunal modified this provision and gave the
following directions :
(1) Where the basic pay of the permanent incumbent exceeds the
basic pay of the person officiating, the officiating allowance shall
be 20 per cent of the basic pay or the difference between the two
basic pays, whichever is less, provided that in no case will the
officiating pay be less than 10 per cent of the basic pay of the
person officiating. (2) Where the basic pay of the permanent
incumbent is equal to or less than that of the person officiating, the
officiating pay shall be 10 per cent of the basic pay of the person
officiating.

BE

6.49. The All India Bank Employees Federation and some other unions
have claimed a local allowance of Re. 1 per day on local transfer temporarily
or otherwise from one office to another. The Cochin Commercial Bank
Employees Association has claimed a transfer allowance (local offices only)
of Rs. 2 per day for supervisory staff, Re. 1 per day for clerical staff and 50 nP.
per day for subordinate staff. The All India Bank of Baroda Employees
Federation, by a supplementary statement, has also made a demand under
the heading conveyance allowance stating that when an employee is
transferred from One branch to another situated in the same city but at a
considerable distance from the original branch, he should be reimbursed by
the bank to the extent he is subjected to additional expenses on account of
such transfer. The banks have submitted that this demand is unjustified. No
case has been made out for the grant of this allowance and the same is
disallowed.

Local Allowance

271

272

Bad Climate Allowance

AI

6.51. There are various places in the country where bad climate allowance
is being paid to State Government employees. No evidence has been led
about the climatic conditions of Vyara and the extent of the relief required to

6.54. The workmen generally have demanded that an employee who

officiates in a higher post, should be paid an allowance for the period of
officiation at the rate of 25 per cent of his own pay or 15 per cent of the pay of
the permanent incumbent in that post, whichever is more and that there
should not be any minimum period for any employee to be eligible for an
officiating allowance. The All India Bank Employees Federation has demanded
that where the basic of the permanent incumbent exceeds the basic pay of
the person officiating, the officiating allowance should be 20 per cent of the
basic pay or the difference between the two pays, whichever is more and
where the basic pay of the permanent incumbent is equal to or less than that
of the person officiating, then the officiating allowance should be 15 per cent
of the basic pay of the person officiating. It has also submitted that officiating
allowance should be paid even when a workman officiates as a manager.
Some Associations have made demands which are the same as those made
by this Federation. The State Bank of India Employees Association (Bengal
Circle) has demanded that the employees officiating as sub-accountants
and head cashiers, should be paid for the officiating period at the rate of Rs.
2.50 per diem. The State Bank of India Employees Association (Delhi Circle)
has demanded that Rs. 100 per mensem should be paid to employees who
officiate as sub-accountants and head-cashiers. The Vadodra Rajya Bank
Nokar Sangh has pleaded for the payment of officiating allowance to the
employee officiating at the rate of 50 per cent of the difference of his own
basic pay and that of the person for whom he officiates or 20 per cent of his
own basic pay whichever is higher. The All India Bank of Baroda Employees

6.50. By a supplementary statement, the All India Bank of Baroda

Employees Federation has claimed a monthly allowance of Rs. 25 for clerks
and Rs. 15 for the members of subordinate staff working in the Vyara branch
of the Bank of Baroda on account of the bad climate of Vyara. In support of
this claim it has been pointed out that the employees of the State Government
working in Vyara are paid an allowance for reasons of bad climate. The Bank
of Baroda in reply has stated that the terms and conditions of service of
Government servants are different and therefore a reference to the payment
of bad climate allowance by Government was not relevant in this enquiry. It
states that the bank employees get under the Sastry Award medical aid
which the State Government Employees do not get and this would adequately
cover any expenses for medical attendance and treatment on account of the
alleged bad climate at Vyara. It is further pleaded that the branch of the bank
at Vyara was not economical.

Federation claims 15 per cent of the pay of the person officiating as allowance
for the period he officiates. The State Bank of Patiala (All Cadres) Employees
Association demands payment of officiating allowance at the rate of 15 per
cent of the pay to an employee for the period he officiates in the higher post.

Subordinate Clerical and Supervisory

Cash
Rs.

Rs.

Rs.

1 lac and over but below 5 lacs

10/- flat.

15/- flat.

25/-flat.

5 lacs and over but below 10 lacs

15/- flat.

20/- flat.

50/- flat.

10 lacs and over

20/- flat.

25/- flat.

100/- flat.

Latest municipal figures should be taken into account to arrive at the

population.
No case has been made out for the grant of this allowance and the claim
in connection with the same is disallowed.
Pass Book Writers

6.58. There is a demand made for an allowance of Rs. 20 per month for
pass book writers by the Cochin Commercial Bank Employees Association.
There is no justification for the demand and the same is rejected.
Supplementary Callers
6.59. There is a demand made for an allowance of Rs. 10 per month for
supplementary callers. No case is made out for the grant of any such allowance
and the claim in connection with the same is rejected.

BE

6.55. The banks in general are in favour of the retention of the existing
provisions on the subject of officiating allowance. The Bombay Exchange
Banks Association has stated that no officiating allowance should be payable
to an employee doing the work of another in the same grade. It has however
submitted that if the permanent incumbent of a particular post was drawing a
special allowance his locum tenens who was in a same grade should receive,
provided he works there for atleast 15 consecutive days either the difference
between the higher special allowance of the permanent incumbent and his
own special allowance if he was in receipt of one, or the same special
allowance as drawn by the permanent incumbent and no other allowance
should be paid to the locum tenens. The State Bank of India has opposed
the demand for a fixed quantum of officiating allowance. The Travancore Cochin
Bankers Association has complained that the present rules governing the
officiating allowance have created several anomalies in the sense, that if a
clerk getting a basic pay of Rs. 150 takes leave and a new clerk undertakes
his work ,the banks are compelled to pay officiating allowance. It is pleaded
that the officiating allowance should be made applicable only when (i)
subordinate officiate in place of clerks or (ii) clerks officiate in place of officers.
The Association has however stated that the present method of payment
may be continued.

For cities with population of

AI

6.56. After considering the demands of the workmen and all the
circumstances of the case including the changes made in the pay scales
under this award, I direct that where a workman officiates in a post carrying a
salary higher than his own for a period exceeding 15 days, he should be paid
an allowance for the period during which he officiates on the basis following
:
(1)

Where the basic pay of the permanent incumbent exceeds the

basic pay of the person officiating, the officiating allowance shall
be 15 per cent of the basic pay of the person officiating or the
difference between the two basic pays whichever is less, provided
that in no case will the officiating allowance be less than 7 per
cent of the basic pay of the person officiating;

(2)

where the basic pay of the permanent incumbent is equal to or

less than that of the person officiating, the officiating allowance
shall be 7 per cent of the basic pay of the person officiating.

Hindi Language and Good Conduct Allowance

6.60. By its supplementary statement of claim the Indian Overseas Bank

Employees Union, Madras, has demanded payment of a Hindi language
allowance and the merger of the good conduct allowance in the basic pay.
With regard to the Hindi language allowance, the Union has stated that this
allowance was being given to employees at the Bombay and Calcutta branches
of the bank till 1956. The same was stopped afterwards for employees who
had been appointed at or transferred to those centres. Subsequently the said
allowance was not given to certain employees who were in service even
before 1956. The Union demands that all the employees should be paid this
allowance with retrospective effect. About the good conduct allowance the
Union has submitted that the said allowance was being paid to employees
serving at certain branches like Bombay, Delhi and Calcutta who did not
absent themselves for more than 4 days in a month with the object of preventing
the employees from availing themselves of leave to their credit. The Union
now prays that the good conduct allowance should be merged with the basic
pay by granting two increments.

6.57. Besides the house rent allowance, the Indian Overseas Bank Employees
Union, Madras, has demanded a city compensatory allowance at the following
rates :

6.61. The Indian Overseas Bank, in reply, has stated that the Hindi
language allowance was granted in May 1949 as an incentive for the South
Indian members of the staff working in Bombay and Calcutta to acquire
knowledge of that language which was even then gaining importance in the
North India centres. This allowance was granted at the rate of Rs. 15 per
mensem for clerical staff and at the rate of Rs. 25 per mensem for supervisory

273

274

City Compensatory Allowance

(iii) Travelling Allowance

6.65. In connection with travelling allowance, the Sastry Award, as
modified, has provided as under :
Employees on Transfer
An employee who is not a member of the subordinate staff transferred
from one station to another shall be paid his travelling allowance on the
following basis :
(1)

AI

6.63. With regard to the Hindi allowance and good conduct allowance,
Shri Sowani, in rejoinder has stated that these allowances should be continued
in cases of employees who are actually receiving them or else they may be
merged in their basic pay. No case has been made out for the grant of any of
the reliefs claimed by the workmen. The continuation of these allowances
rests entirely with the management and I give no direction in connection
therewith.

One and a half second class fares by rail or steamer for himself
and further second class fares for his family, if taken.

(2)

Third class fare by rail or steamer for one servant, if taken.

(3)

The cost actually incurred in transferring his personal effects in

Bengal maunds at goods rates as follows :

BE

6.62. The bank has also made a reference to a key allowance and has
stated that under the provisions of the Sastry Award members of the cash
department staff were not eligible for any special allowance if the requisite
number of clerks was not working under them; but this point was raised by
the Indian Overseas Bank Employees Union before the Regional Labour
Commissioner at Madras and as a gesture of goodwill, the bank agreed to
pay a key allowance of Rs. 15 to the cash department staff who are in joint
custody of cash at the various centres. The Bank has pleaded that when the
scales of salary and special allowances that may be granted by this Tribunal
come into force, these allowances would have to be withdrawn even from
those who are now drawing such allowances, that the bank should be at
liberty to do this as there was no statutory obligation on the bank to continue
the same, that the present recipients of these allowances could not claim
the salary and allowances that may be granted by this Tribunal and at the
same time insist on payment of these allowances and if the employees so
choose, they may be given the choice to opt in toto for the privileges and
benefits they are now enjoying and should not be allowed to get the better of
the two sets of scales of pay and allowances.

keys. It is submitted that such allowance is not a special allowance and that
shroffs attending to cash duties must also hold the joint custody of safe keys
and that this allowance should be dropped. I give no directions regarding the
grant or stoppage of this allowance. The matter is left entirely to the discretion
of the management to take such decision in connection therewith as it deems
fit.

staff belonging to South Indian communities and working in any of those

centres where the knowledge of Hindi was contributing to efficient service to
the banks constituents. It is further stated that with the Hindi language
becoming the national language under the Constitution of India which by
itself would constitute requisite incentive for the members of the South Indian
communities to learn the language, this language allowance was withdrawn
by the bank as from January 1957, but the recipients of this special allowance
as on that date continue to get this allowance. In respect of the good conduct
allowance the bank has explained that a good conduct and regular attendance
allowance of Rs. 15 per mensem to non-graduates and Rs. 25 per mensem
to graduate members of the clerical staff was being paid from 1st April 1949
at Bombay, Mandvi and Calcutta on certain terms and conditions at a time
when the salary conditions of the banks staff in general were not satisfactory
as an incentive to the banks clerical staff who put in regular attendance and
efficient service. This allowance was continued at those centres, although
the Sastry Award had granted adequate benefits by way of increased salary
and allowances to the workmen of banks.

(4)

Range of total emoluments including pay,

dearness allowance, special allowance and
house rent allowance.
Married

Unmarried

Rs. 200 and above

20

15

Below Rs. 200

15

12

Any other expenditure unavoidably incurred such as packing,

crating, tonga, cooly hire, etc., established to the satisfaction of
the sanctioning authority and subject to any rules made by the
bank in this behalf.

An employee who is a member of the subordinate staff shall for similar

journeys be paid as follows :
(1)

One and a half third class fares by rail or steamer for himself and
further third class fares for his family, if taken.

(2) The cost actually incurred in transferring his personal property upto
a miximum of ten Bengal maunds at goods rates in the case of a
married employee and five Bengal maunds in other cases.
(3)

Actual expenses incurred on cartage, ghari, mazdoor hire, etc.,

established to the satisfaction of the sanctioning authority.

6.64. By its written statement, the Andhra Bank has stated that it is at
present allowing a key allowance to shroffs holding joint custody of safe

Where the place to which or from which an employee is transferred is

not connected or partly connected by railway or steamer he shall be entitled
to get for himself and his family road mileage at the rate of two annas a mile.
The rate is fixed per head both for the clerical and subordinate class.

275

276

In respect of personal property carried up to the limits specified above to

and from the place of transfer, the employee shall be entitled to the actual
expenses incurred by him in transporting the same through an out-agency if
available. In other cases he shall be entitled to the actual cost of transporting
the same through an authorised transport company.

thirty days.

NOTES :

(3)

The actual cost, if any, of freight of his personal belongings.

(4)

Any other expenditure unavoidably incurred such as tonga, cooly

hire, etc. established to the satisfaction of the sanctioning authority
and subject to any rules made by the bank in this behalf.

(1)

Family means an employees wife and children ordinarily residing

with and wholly dependent on him

An employee of the subordinate staff shall be entitled to one third class

fare to and fro for himself by rail or steamer. Clauses (3) and (4) supra would
equally apply to him also.

(2)

When, for any reason, the family of an employee does not travel
with him but joins with him within a period of six months from the
date of his transfer, an employee shall be entitled to draw the further
fares and the cost of transporting luggage payable for the family,
subject to the limits fixed in the preceeding paragraphs.

In respect of journeys performed between places not connected or partly

connected by railway or steamer an employee shall be entitled to claim road
mileage at the rate of two annas a mile whether he is a member of the
subordinate or non-subordinate staff.

(3)

Where the family in consequence of transfer travels from a place

other than that from which an employee is transferred an employee
may draw the actual travelling expenses incurred by his family to
join the employee at the new station but the amount so drawn shall
not exceed the travelling allowance admissible to the employee
were the employees family stationed at the place where the
employee was transferred.

(5)

An employee shall be entitled to draw the actual expenditure

incurred by him for transporting his personal property irrespective
of the mode of conveyance engaged by him provided he does not
exceed the maximum amount admissible to him for the transport
of personal property by goods train except where it is otherwise
provided for in this paragraph.

Employees on Tour
In the case of journeys by rail or steamer other than on transfer, where
an employee has to travel for inspection or other duty in the interests of the
bank an employee who is not a member of the subordinate staff shall be paid
his travelling expenses on the following basis :
(1)

One second class fare to and fro for himself by rail or steamer.

(2)

One third class fare by rail or steamer to and fro for his servant, if
taken, where the period of stay away from headquaters exceeds
277

Where an employee travel by a class lower than the one allowed to

him he shall be entitled to claim travelling allowance only at the
rate actually paid. The banks may, however, pay on the scale allowed
where they are satisfied that travel by a lower class is unavoidable
and due to circumstances beyond the control of the employee.

(1)

BE

If the family of an employee in consequence of transfer travel to a

station other than that to which the employee is transferred an
employee may draw travelling allowance expenses for his family
but subject to the condition that the amount so drawn shall not
exceed the travelling allowance admissible to the employee had
the family proceeded to the station to which the employee was
transferred.

AI

(4)

General

(2)

All claims should be supported by a certificate from the employee

concerned.

(3)

The claim for journeys can ordinarily be only for the shortest route
The All India Bank Employees Association has claimed that an
employee on transfer or on tour on official duty or on deputation
outside the permanent station should be paid travelling allowance
at the following rate :
(a)

A member of the subordinate staff should be paid 1 times

class Two fare for himself and his family including parents,
dependent brothers and dependent sisters.

(b)

A member of clerical and supervisory staff should be paid 1

times class One fare for himself and his family including
parents, dependent brothers and dependent sisters.

All categories of employees should get road mileage at 12 nP. per mile
for routes not connected by rail or steamer. All categories of employees
should be paid actual expenses incurred on luggage, conveyance, cooly
hire, packing, crating, etc., in course of journey. In addition to the above a
member of the clerical or supervisory staff should be paid a Second class
fare by rail or steamer for his servant if taken.
6.66. The All India Bank Employees Federation has claimed that travelling
allowance should be awarded as follows :
Supervisory
Staff
278

Clerks

Subordinate
Staff

(i)

Fare by rail or steamer for

the employees
13/4 1st Class 1 1st Class 1 2nd Class

claimed it, but it has added that travelling allowance to subordinate staff
should also be paid while he is on deputation outside his permanent station.

For family members

1 1st Class

1 1st Class

1 2nd Class

For I servent if taken

3rd Class

3rd Class

Nil

6.69. The banks generally submit that the existing provisions should
continue and oppose the demands made by the employees in excess thereof.
The Northern India Banks Association has submitted that when two stations
are not connected by rail or sea but are connected by road and there is a bus
arrangement the actual bus fare should be paid to the employees travelling
on banks business. The Travancore Cochin Bankers Association has taken
objection to the demand for 12 nP. per mile for routes not connected by rail or
steamer as it contends that bus fares are generally much less. The Bharatha
Lakshmi Bank submits that only third class fares should be allowed to its
clerks and peons. The Jaya Lakshmi Bank submits that the family of workmen
to be provided in connection with the travelling allowance should be employee,
his wife and two children. The Miraj State Bank states that it has adequate
rules governing travelling allowance which have given rise to no disputes in
the past.

(ii) The costs actually incurred in transferring personal effects should be

paid at passenger rates.
(iii) Actual expenses on packing, tonga or taxi hire, coolie hire, etc., should
be paid

6.67. The other workmens organisations have made more or less similar
demands. Some of them have followed the pattern of demands of the All India
Bank Employees Association and some the All India Bank Employees
Federation.

6.70. At the time when the Sastry Tribunal gave its award, a passenger
travelling by train could generally travel, apart from the air-conditioned class,
by first class, second class, inter class and third class. A passenger travelling
by second class when he travelled at night, was entitled to sleeping
accomodation and to have a full berth reserved for the night journey. At present
a person can travel generally, apart from the air-conditioned class, by first
class, second class and third class. A person, at present travelling by second
class, is only entitled to a seat for the journey during the night and is not
entitled to sleeping accomodation or to have a berth reserved for himself for
the night journey. It is desirable that members of the clerical staff when they
travel by train should have sleeping accomodation at night. It is therefore
necessary to modify the provisions of the Sastry Award, and I do so by
providing that whenever a workman, who is not a member of the subordinate
staff, is transferred from one station to another or has to travel for inspection
or other duty in the interests of the bank and in the course of such journey,
has to travel by train by night, he shall be paid, in addition to what is provided
under the Sastry Award as modified, reproduced above, a further amount
equivalent to the difference between one second class fare by train and one
first class fare by train for the full journey for himself provided he has travelled
throughout the journey in the first class. When he is transferred from one
station to another and is entitled to claim travelling allowance for his family
and the family has to travel by night he will be entitled to be paid the difference
between the second class fare and first class fare for the members of his
family also provided they have actually travelled in the first class. The
expression travel by night for the purpose of this provision will include journey
for a period of six or more hours between the hours of 7-00 p.m. on one day
and 7-00 a.m. on the next day.

AI

BE

6.68. The All India State Bank of India Staff Federation and the State
Bank of India State Union, Andhra Pradesh, have not demanded travelling
and halting allowance for supervisory staff and while the former has demanded
road mileage at 12 nP. per mile subject to minimum of 37 nP. for routes not
connected by rail or steamer the latter has claimed road mileage at 20 nP.
per mile subject to minimum of 37 nP. for routes not connected by rail or
steamer. The State Bank of India Employees Association (Bengal circle),
and the State Bank of India Employees Association (Delhi Circle), have
demanded actual expenses for routes not connected by rail or steamer: The
State Bank of India Employees Association (Bengal Circle) has demanded
the actual cost incurred in transferring personal effects and luggage upto a
maximum of 20 Bengal maunds for clerical staff and without any limit for the
subordinate staff. The State Bank of India Employees Association (Delhi
Circle) has demanded the actual cost incurred in transferring personal effects
and luggage upto a maximum of 25 maunds for clerical staff and of 20 maunds
for married and of 15 maunds for unmarried members of the subordinate staff.
The Vadodra Rajya Bank Nokar Sangh has claimed travelling allowance for
the employee and his family whenever he proceeds on privilege leave. The
State Bank of Patiala (All Cadres) Employees Association has claimed road
mileage at the rate of 13 nP. per mile and the payment of actual cost in
transferring personal effects with the limits following :

(Iv) Employees on transfer should also be paid travelling expenses of all

their dependents.

Category of Employee

Married

Unmarried

Clerical and supervisory

30 Bengal maunds

15 Bengal maunds

Subordinate

20 Bengal maunds

15 Bengal maunds

The All India Bank of Baroda Employees Federation, by its supplementary

statement of claim, has demanded travelling allowance for subordinate staff
at the same rate at which the All India Bank Employees Association has
279

6.71. In case of journeys performed on the railway lines on which there

280

is no second class provided, an employee and his family who are ordinarily
entitled to travel by second class would be entitled to travel by first class and
would be entitled to claim the first class fare for such travel.

Halting Allowance
6.77. The Sastry Tribunal accepted the definition of the expression halting
allowance given in the Reserve Bank of India Staff Regulations, namely, as
a payment made to an employee in addition to other emoluments for any
day during which an employee is absent from headquarters on duty and is
inteded to cover the ordinary daily expenses incurred by him in consequence
of such absence. The Sastry Tribunal gave the following directions in respect
of halting allowance for each day :

6.72. As a result of the modifications made by the Labour Appellate

Tribunal travelling allowance at a uniform rate of 1 second class fare by rail
or steamer is provided for employees who are not members ot the subordinate
staff on transfer irrespective of the amount of emoluments drawn by them. It
is not necessary to make any distinction when considering the extent of
personal effects which may be carried by such persons at the cost of the
bank. The measures of weight have also changed. I modify the existing
provisions by providing that an employee who is not a member of the
subordinate staff, on transfer, shall be paid the cost actually incurred in
transferring his personal effects at goods rate weighing as follows :
760 Kilos or 7.6 Quintals

For unmarried persons.

570 Kilos or 5.7 Quintals

In respect of halt in Area

I

AI

6.74. The Sastry Tribunal in connection with employees on transfer or

on tour has provided for road mileage at the rate of 2 annas a mile where a
place is not connected or partly connected by railway or steamer. I modify
the aforesaid provisions by substituting a eight naye Paise per kilometer for
two annas a mile.
6.75. A claim has been made that on transfer, an amount equivalent to
one months salary should be paid in order to cover breakages and other
incidental expenses and to enable the workman to settle down in the new
place of employment. Whenever goods have to be transferred from one place
to another there is a possibility of breakage or of damage to goods. On
transfer, often expenses have to be incurred which would not otherwise have
to be incurred. In order to compensate an employee for such losses and
expenses, I direct that on transfer a sum of Rs. 25 in lump should be paid to
all workmen other than those belonging to the subordinate staff and a sum of
Rs. 15 in lump should be paid to the members of the subordinate staff.
6.76. I make an award in connection with travelling allowance in terms of
the provisions of the Sastry Award as modified set out above with the further
modifications and additions hereinbefore mentioned. No case has been made
out for further or other additions or modifications.
281

II

Rs. As. P.
Subordinate staff

III

Rs. As. P.

Rs. As. P.

Under Rs. 100

Rs. 100 to Rs. 149(inclusive)

Rs. 150 to Rs. 199 (inclusive)

Employees who are not members of

subordinate staff drawing a pay of :

BE

6.73. The Sastry Tribunal has provided that a member of the subordinate
staff when travelling on tansfer shall be paid the cost actually incurred in
transferring his personal property upto a maximum of 10 Bengal maunds at
goods rate in the case of a married employee and 5 Bengal maunds in other
cases. I modify the aforesaid provisions by providing 380 kilograms or 3.80
Quintals in place of 10 Bengal maunds in the case of a married employee
and 190 Kilograms or 1.9 Quintals in place of 5 Bengal maunds in other
cases.

For Banks A and B

For married persons

(1) Scale of halting allowance shall be as follows :

Rs. 200 and above (inclusive)

For Bank C and D

In respect of halt in Area
I

II

Rs. As. P.

Subordinate staff

III

Rs. As. P.

Rs. As. P.

12 0

12 0

Under Rs 100 - -

Rs. 100 to Rs. 149 (inclusive)... ...

Rs. 150 to Rs. 199 (inclusive) ... ...

Rs. 200 and above (inclusive) ... ...

Employees who are not members of

subordinate staff drawing a pay of :

Pay means basic pay, officiating and special allowances, if any

(2)

For the purpose of halting allowance a day shall mean each period
of 24 hours or any part thereof reckoned from the time the employee
leaves his headquarters, provided the duration of absence from
headquarters covers at least one night.

(3)

Halting allowance is payable in addition to the class of fare to and

fro to which the employee is entitled for travel as on tour.

(4)

Journeys completed in the same day where the work entrusted to

282

an employee of the clerical grade is such that it does not involve

night stay and enables him to return to headquarters the same
day, the employee shall be entitled (a) to a single second class
fare to and fro for himself. An employee of the subordinate cadre
shall get only third class fare to and fro, and (b) the employee shall
in addition be entitled to get batta at one-half of the rates fixed
above (see clause 1 supra) according as he belongs to the clerical
or subordinate staff.

halting allowance an employee who is not a member of the subordinate staff

drawing a pay of less than Rs. 205 should be paid Rs. 8 per day, an employee
drawing a pay of Rs. 205 and above should be paid Rs. 10 per day and
employees who are members of the subordinate staff should be paid Rs. 5
per day.
6.82. Demands more or less of a similar nature have been made by
some other workmens organisations. The All India Bank of Baroda Employees
Federation has, by a supplementary statement, claimed halting allowance at
the same rate at which the All India Bank Employees Association has claimed
it but it has also demanded halting allowance for all employees who are
required to leave their headquarters on temporary transfers as also for the
godown keepers who are required to be in charge of godowns situated at a
considerable distance from the branches to which they are attached.

Subordinate staff ...

...

...

Rs.6/- per diem.

Clerk

...

...

...

Rs. 8/- per diem.

Supervisor

...

...

...

Rs. 10/- per diem.

BE

It has further claimed that halting allowance should be paid to all employees
who are deputed out-stations on temporary transfer, that half days halting
allowance should be admissible when the journey is completed on the same
day and that if the stay outside the headquarters exceeds twenty-four hours,
a day should mean each period of twenty-four hours or any part thereof.
6.79. The All India Bank Employees Federation has claimed halting
allowance at the rates following :
Halting allowance in
Supervisory
Staff

Clerks

Subordinate
Staff

AI

Cities having population

below 20 lacs
Rs.14 per day Rs.10 per day Rs. 6 per day
Over 10 lacs

Rs.16 per day Rs.12 per day Rs. 8 per day

6.80. The All India State Bank of India Staff Federation has claimed
halting allowance when an employee is required to be absent from
headquarters on duty. For subordinate staff it has claimed a halting allowance
for cities with population of less than 10 lakhs at the rate of Rs. 6 per diem
and at Rs. 8 per diem for cities with population of 10 lakhs and above. For
clerical staff halting allowance at the rate of Rs. 10 per diem for cities with
population of less than 10 lakhs and at the rate of Rs. 12 per diem for cities
with population of 10 lakhs and above has been claimed. It has also claimed
that halting allowance should be paid to all employees who are deputed to
out stations on temporary transfers, that half days halting allowance should
be admissible when journey is completed on the same day and that if the
stay outside headquarters exceeds twenty-four hours a day should mean
each period of twenty-four hours or any part thereof.
6.81. The Vadodra Rajya Bank Nokar Sangh has claimed that by way of
283

6.83. The banks in general are opposed to a change in the present

provisions of the Sastry Award regarding halting allowance as they consider
them to be adequate. The Bombay Exchange Banks Association has
submitted that it is contrary to principle to pay halting allowance in the case
of temporary transfer and that halting allowance should only be admissible
when an employee is required to stay overnight outside the headquarters.
The Bank of Baroda, in reply to the demand of the All India Bank of Baroda
Employees Federation in connection with halting allowance to godown
keepers, has stated that when an employee takes up employment as a
godown keeper he knows that he will be posted at godowns which are gnerally
located near factories and outside residential areas,, that the work of a godown
keeper must, by the very nature of the job involve his posting at godowns at
some distance from the branch where he is posted and that the wages fixed
for him have already taken such things into account. The bank is, therefore,
opposed to the grant of halting allowance to godown keepers.

6.78. The All India Bank Employees Association has claimed halting
allowance for all employees who are required to be absent from headquarters
on duty at the rates following;

6.84. Halting allowance is intended to cover the ordinary daily expenses

incurred by an employee when an employee is absent from headquarters on
duty. It is not intended to yield any profit. The expenses incurred by employees
when absent from headquarters on duty do not vary according to the working
funds of the banks in which they are employed and it is desirable that all
classes of banks should pay halting allowance at the same rate in the same
area. Having considered all aspects of the matter I give the following directions
in respect of halting allowance for each day payable to employees employed
in all classes of banks including banks in the Excepted List :
(1)

The new scale of halting allowance will be as follows :

In respect of halt in area
I
Rs. nP.

Subordinate staff

...

284

00

II

IIII

Rs. nP.
2

50

Rs. nP.
2

00

Employees who are not member of subordinate

staff, drawing a pay of
Under Rs. 150/-

00

00

00

Rs. 130/- in Rs. 199 (inclusive)

...

00

00

00

Rs. 200/- and above ...

00

00

00

...

the industry. The Sastry Tribunal has observed that the employees are
generally recruited from and work in their home towns or at places not very
far off and that the demand had not found favour in any adjudication known to
the Sastry Tribunal.
6.88. The All India Bank Employees Association has claimed that an
employee while proceeding on leave for not less than thirty days at a time
should be paid railway fare for self and family to and fro from his native place
or to any other place of change upto 1,000 miles once in three years.

Pay means basic pay, special allowance, if any, and officiating

allowance if any.

(3)

Halting allowance is payable in addition to the class of fare to and

fro to which the employee is entitled for travel as on tour.

(4)

Journeys completed in the same day : Where the work entrusted

to a workman is such that it does not involve night stay and enables
him to return to headquarters the same day, he shall be entitled if
he is not a member of the subordinate staff (a) to a single second
class fare to and fro for himself and (b) to batta at one half the rates
set out in clause I above applicable to him and if he is a member of
the subordinate staff (a) to a single third class fare to and fro for
himself and (b) to batta at one half the rates set out on clause I
above applicable to him.
(iv) Joining Time on Transfer

6.89. The All India Bank Employees Federation has claimed that when
an employee proceeds on leave he should be granted leave fare concession
for himself and his family to meet the cost of travelling etc. at the rate following
:(i)

AI

6.85. The All India Bank Employees Association has demanded that an
employee on transfer or on deputation outside his permanent station shall
have at least 10 days joining time, excluding the actual period involved in the
journey and that the joining time should not count as a part of the earned
leave of the employee same is the demand of the All India State Bank of India
Staff Federation and the State Bank of India Staff Union, Andhra Pradesh,
Vijayawada. The State Bank of India Employees Association (Bengal Circle)
and the State Bank of India Employees Association (Delhi Circle), have
demanded a grant of at least one weeks leave as joining time.
6.86. The question of joining time is not covered by the item of reference
under consideration which relates to house rent and other allowances including
travelling and halting allowances and leave fare concessions. The question of
transfer and the matters incidental to it have not been referred to me and I
give no direction in connection with the same.
(v) Leave Fare Concessions
6.87. The Sastry Tribunal in paragraph 474 of its award has turned down
the demand for leave fare concession on the ground that extra burden of such
leave fare concession should not be cast on the banks at the then stage of
285

(ii)

Fare by rail, road or sea upto a distance of 1,000 miles once in two
years for the employee and his family.
The stipulated mileage to be waived in the case of those who have
to travel to their native places.

For the purpose of calculating halting allowance a day and shall

mean each period of 24 hours of any part thereof reckoned from the
time, the employee leaves his headquarters, provided the duration
of absence from headquarters covers at least one night.

6.90. The All India State Bank of India Staff Federation, the State Bank
of India Staff Union, Andhra Pradesh, Vijayawada, the All India Bank of Baroda
Employees Federation, and the Employees Association of the Union Bank
of Bijapur and Sholapur, have claimed the same leave fare concession as the
All India Bank Employees Association, The Bihar Provincial Central Bank of
India Employees Association. The Central Bank of India Employees
Association, Patna, Muzaffarpur, and Amritsar and the Vadodra Rajya Bank
Nokar Sangh have made a demand in respect of leave fare concessions
similar to that of the All India Bank Employees Federation. The Indian
Overseas Bank Employees Union, Madras has demanded first class fare by
rail, road or sea upto a distance of 900 miles once in a year for the employee
and his family and has submitted that the stipulation of mileage should be
waived when he is going to native place. The State Bank of India Employees
Associations (Bengal Circle), and the State Bank of India Employees
Association (Delhi Circle), have demanded that while an employee proceeds
on leave he should be paid railway fares for self and his family to and from his
native place or to any other place of change upto 900 miles once in two
years.

BE

(2)

The Cochin Commercial Bank Employees Association has demanded

the following leave fare concession :
(i) Employees proceeding on Annual Leave (Privilege Leave) or sick
leave to their native places, health resorts on medical grounds
Travelling allowance to and fro to be paid.
(ii) Delegates attending Annual conferences of Registered Trade Unions
of the particular Bank or of Federations to which the Union is affiliated
fare concessions as above.
6.91. Banks in general are opposed to the demand for leave fare
286

expressed its willingness before the Labour Appellate Tribunal to extend the
same to the workmen.
6.94. One of the grounds on which the Sastry Tribunal turned down this
demand was the extra burden which the granting of the demand would have
imposed on banks at the then stage of the industry. That ground, in my view,
is not available to A Class banks. They are well able to bear the burden of
such concession. I direct that A Class banks should give to the workmen
employed by them leave fare concession once in every three years when
they go on leave for not less than thirty days as follows :

(2)

If a place is accessible by both the aforesaid means of transport,

the cheapest means of transport is to be provided for.

(3)

The class of fare to which the workmen and the members of his
family would be entitled would be the same to which the workman
is entitled while he travels on duty.

AI

6.92. The Sen Tribunal, while it did not give any directions in this
connection, had recommended in paragraph 333 of its award the adoption of
a rule by at least the bigger banks under which facilities of the kind suggested
by the Central Pay Commission even if some what restricted (e.g. payment
of half the expenses in question or once in two years) may be available to at
least such of their employees, as have their homes at a considerable distance
from the place where they have to serve their employers.

Actual return railway fare or steamer fare incurred by the employee

for himself and members of his family consisting of wife and children
wholly dependent upon him for travel from the place of work to the
place of his domicile, if situate within India, or from the place of
work to any place not more than 800 kilometres distant from the
place of work for rest and recuperation.

(1)

BE

concession. The Bombay Exchange Banks Association has stated that even
in cases where the home towns of bank employees are situated at a
considerable distance from their places of work they have nevertheless
normally been recruited at these offices on their own applications which implied
that they themselves had chosen to settle down in those places. The Northern
India Banks Association submits that the demand of the employees for leave
fare concessions will cause a heavy burden unnecessarily on the banks of
the class represented by it. The National Bank of Lahore submits that "the
employee who cares to avail of his leave at a distant place should be able to
save from his own earnings and that the bank should not be burdened with
leave fare concession which even the officers of the bank were not getting.
The Travancore-Cochin Bankers Association has stated that the employees
are almost local people and that there is no necessity for them to travel 1,000
miles as per their claim. The Bharatha Lakshmi Bank pleads that leave fare
concession should not be made applicable to banks. The Miraj State Bank
has stated that the question of granting leave fare concession to employees
did not arise in the case of that bank as the workmen employed in the bank
do not travel any considerable distance for the purpose of availing themselves
of their leave and that the bank could not also afford the luxury of granting
any leave fare to its workmen.

6.93. In the Reserve Bank of India leave fare concession is available to

the place of domicile or upto 750 miles (1,208 kilometers) and back to all
employees including officers and their families once in three years provided
the minimum period of leave other than casual leave and extraordinary leave
is one month. Leave fare concession is also provided in several commercial
concerns.The Labour Appellate Tribunal of India in the case of Rallies India
Ltd. and Their Staff reported in 1952 (II) LLJ. at page 441, set aside the
order of the adjudicator refusing the claim for such leave fare concession and
directed that railway fare should be paid to the employees to enable them to
go to their homes for their holiday and directed that the company at its
discretion should either pay them the cost of a ticket or provide them with a
ticket to go to their homes within Madras State or its borders and that when
the employee returned after his leave he should be entitled to receive from
the company the return fare of the journey. The Labour Appellate Tribunal
further directed that the employee should be given the fare of the class to
which he would be entitled if he were proceeding on duty. In that case the
company was in fact giving such allowance in Bombay and Calcutta and had
287

288

CHAPTER VII
(7)

Item No. 5 :PROVIDENT FUND, INCLUDING THE RATE OF

CONTRIBUTION AND THE RATE OF INTEREST
7.1. Provident fund is mainly a retiring benefit.To some extent it forms
part of the current wage structure.It differs from other retiring benefits, like
gratuity or pension in as much as the fund is made up of contributions by an
employee from his pay and similar contributions made by the bank. The
main idea behind this retiring benefit is to provide for the employee and his
family an adequate amount by way of compulsory saving augmented by a
substantial contribution made by an employer.

(9)

(10)

AI

BE

7.2. The .Sastry Tribunal took the view that the provisions relating to
provident fund have to be taken into consideration in fixing the wage structure
and directed that the banks should have provident fund schemes on the lines
indicated below :
(1) The provident fund should obtain recognition under the Indian Incometax Act 1922 and for this purpose the rules under the provident fund
should not be contrary to any rules laid down under the Indian
Income-tax Act. Where a bank for reasons of its own does not
choose to get the provident fund recognised under the provisions of
the Indian Income-tax Act the burden of the income-tax to the extent
to which the employees would not have to bear if the fund were a
recognised fund must be borne by the banks and not passed on to
the employees.
(2) All whole-time employees of the bank other than personal or
domestic servants, if any, should be allowed the benefit of the fund
as and from the date of confirmation in service.
(3) There should be no minimum amount of salary or remuneration
fixed for any employee to become eligible to join the provident
fund.
(4) Every eligible employee shall be required to subscribe to the fund
on accordance with the rules.
(5) The rules should provide for every subscriber to the fund nominating
a person or persons either belonging to the subscribers family or
dependant on him to receive the amount that may stand to the
credit of his fund in the event of his death occuring before the amount
has become payable.
(6) Each subscriber shall be given a pass book in which shall be
entered the amounts to his credit, made up of his contribution and
the banks contribution and the interest earned on the total moneys
in his account. The advances taken, if any, and the repayments
made should also be entered therein. The subscription due from

(8)

289

each subscriber shall be realised by monthly deductions from his

emoluments.
Every subscriber shall subscribe monthly to the fund when on duty.
The payment of subscription during leave shall be optional. The
amount of subscription shall be 8 1/3 per cent of the monthly pay
in case of banks in groups A and B and 6 1/4 per cent, in case of
banks in C and D groups. Pay means basic pay, special allowances
and officiating allowance, if any.
The bank shall make a monthly contribution to the account of each
subscriber equal to the amount subscribed by the workman and
such contribution shall be credited to the fund not later than fifteen
days after the subscription is deducted from his emoluments.
The fund shall be administered by a Board of Trustees on which
the workmen also should have representation to the extent of l/4th
of the total strength of the Board.
Moneys of the fund not immediately required for purposes of the
fund and held in a Bank account shall be invested by the Board in
any securities for the time being authorised under the Indian Incometax Act, 1922 and the Trusts Act, 1882 and the rules made
thereunder in respect of the investments of moneys of the Provident
Fund recognised under the Indian Income-tax Act, 1922. Compound
interest with half yearly rests will be allowed. Interest earned on
the moneys of the Fund shall be credited to the account of the
individual subscriber. The banks, however, shall have the liberty to
contribute other amounts at their discretion.
Withdrawals by workmen and repayments by them shall be
governed by the rules relating to such matters framed under the
Indian Income-tax Act, 1922, as conditions for recognition of
Provident Funds under Section 58 (c) of the Act.
If a subscriber dies or for other reasons ceases to be a subscriber
the amount standing to his credit in the Fund including interest
upto date shall become payable to him or his nominee, subject to
any withdrawal made under rule 11.
No claim shall be entertainable against the Fund if made more
than three years after the date on which the amount due became
payable.
Any amount due from the Fund shall cease to bear interest after
three months from the date on which the amount became payable.
Payments under rule 12 to the employee or his nominees in the
event of his death, shall be made within one month of the date on
which they fall due. In the case of death of an employee who has
no subsisting nomination it shall be competent for the Board to
pay the amount due to the natural heir or heirs of the deceased

(11)

(12)

(13)

(14)
(15)

290

had not enjoyed the benefit of a provident fund or who had not been allowed to
join an existing provident fund after confirmation.
7.4. The Sastry Tribunal left it to the banks concerned to devise a proper
machinery either by convention or by rules so as to provide for the
representation of workmen to the extent of th of the total strength of the
Board of Trustees.
7.5. As regards the provident fund in the Imperial Bank of India which
was governed by the provisions of the Provident Fund Act, XIX of 1925, the
Sastry Tribunal directed the alteration of the rules of its provident fund to
provide for a contribution at the rate of 8-1/3 per cent, as in the case of the
major Indian Banks. It also directed that in case there was any difficulty in
carrying out the alteration in the rules until the rules were so altered a special
monthly allowance called provident fund excess contribution allowance
should be given to the workmen to cover the difference between the then
existing rate of five per cent and the rate of 8-1/3 per cent, fixed by the
Tribunal.

employee provided the Board is satisfied as to the heirship of the

claimant or claimants.
(16) (i) Subject to the provisions of sub-rule (ii) no deduction shall be
made from the amount standing to the credit of a subscriber when
final payment is made to him or his nominees except as otherwise
provided for in this scheme.
(ii) (a) A subscriber who has put in ten years of service and over
shall be paid the full amount of the banks contribution with interest.
(b) Those who have served five years and more but Iess than ten
years shall be entitled to the banks contribution at the rate of ten
per cent of such contribution with interest for each completed year
of service.
(c) Those who have served for less than five years shall not be
entitled to any portion of the banks contribution or interest on it.
(17) There shall be no forfeiture of any amount due to a workman under
this scheme excepting in the case where he is dismissed for
misconduct causing financial loss to the employer, and in such
cases, limited only to the extent of such financial loss.

AI

BE

7.3. The Sastry Tribunal directed the banks to have an appropriate of

provident fund on the above lines and gave liberty to the banks to such other
provisions as were necessary and not repugnant to the aforesaid provisions
and left it to the discretion of banks to give more favourable terms.It further
laid down that the Indian Banks whose existing provident fund schemes
provided for higher rates, should have the liberty to adopt the new rates fixed
by the Sastry Tribunal with effect from 1st April, 1953. It further stated that if
for any reason there should be any technical difficulty in modifying any existing
schemes of provident fund, the banks should start a new provident fund, the
then existing employees being allowed to join the new fund in addition to
their membership of the existing fund, the employees having to contribute to
the new fund only the difference, if any, between the rate of contribution fixed
under the scheme laid down in the award and the rate prevailing under the
pre-existing scheme. It further directed that until the existing provident fund
scheme was suitably amended or new fund or funds were suitably framed so
as to provide for the benefit of the increased contribution as fixed by the
Sastry Tribunal, the banks should pay monthly to each of the workmen a
special allowance called the provident fund excess contribution allowance
so calculated as to make up the difference between the amount then allowed
to be contributed and the higher amount fixed as per directions given in the
award, and that such allowance should be paid till the regular provident fund
scheme, as contemplated in the award or with the alterations suggested in
the award came into existence. The banks which had no provident fund
schemes were directed to bring into existence within four months from the
publication of the award, a fund on the lines indicated above. The Sastry
Tribunal directed the payment of an additional gratuity to those workmen who

7.6. As regards the Exchange Banks which were before the Sastry
Tribunal, it laid down that in their case also the minimum rate of contribution
should be 8-1/3 per cent, and that the Exchange Banks which were having
higher rates of contribution were not to reduce them. In case of the Exchange
Banks wherein the rate of contribution was less than 8-1/3 per cent, the
Tribunal directed that the workmen should be paid a special provident fund
excess contribution allowance made up of the difference between the existing
rate and the rate fixed under its award wherever the existing rate was less. In
view of the difficulties that might be experienced, the Exchange Banks were
exempted from the relevant provisions in the general scheme laid down by it
for the representation of the workmen.

291

7.7. The Labour Appellate Tribunal, in dealing with the demand that bank
employees with a period of service of less than five years should not be
deprived of the banks contribution, stated that it did not see how it could
alter the directions of the Sastry Tribunal on the point as the same did not
involve any question of law. It, however, observed that the same was unfortunate
as the directions given did have certain undesirable features and expressed
the view that its refusal to interfere with the directions of the Sastry Tribunal
must not be understood to be an approval of the directions on the merits.
7.8. In connection with the directions given by the Sastry Tribunal that
wherever the Exchange Banks were making a contribution to the provident
fund in excess of that prescribed by the Sastry Tribunal, they should continue
to do so, the Labour Appellate Tribunal altered the directions as regards the
Hong kong and Shanghai Banking Corporation which under its rules had
provided for contribution at the rate of 20 per cent of the basic pay as against
5 per cent contribution by the workmen. The Labour Appellate Tribunal applied
the general scheme of provident fund as given by the Sastry Award to this
292

bank.The National City Bank of New York which was contributing 10 per cent
of basic pay as provident fund as against the employees contribution of 5 per
cent had not appealed against the decision of the Sastry Tribunal and hence
the Labour Appellate Tribunal did not feel itself called upon to vary the award
as regards that bank.

workmen.
7.12. The All India Bank Employees Federation has demanded that
contribution by both the banks and the employees should be at the rate of 12
per cent of the total emoluments, that lapsed and/or unclaimed fund
should be distributed pro-rata amongst the members of the fund every year,
that there should be equal representations of workmen in the Board of
Trustees, that benefits of the fund should be allowed to all the employees
including part-time permanent employees, that full provident fund should be
paid after five years of service and that in case of death or resignation as a
result of illness or disability, full provident fund should be paid even before five
years of service.

AI

BE

7.10. The Labour Appellate Tribunal rejected the demand of the workmen
that they should have at least one-half representation on the Board of Trustees,
observing that the provident funds of the banks were not confined to workmen
alone, that officers of the banks were also permitted to be members of the
fund, that prima facie, it was fair that officers should have equal representation
with the workmen and that the banks as parties making contributions equal
to those made by the workmen and officers together should have
representation to the same extent as officers and workmen combined. In
connection with the choosing of the representatives of the workmen, it observed
that the banks should, however, be able to devise a method by which someone
stationed at that place where the accounts of the fund were maintained) and
likely to command confidence of workmen members of the fund can be
appointed as their trustee-representative.

7.13. The All India State Bank of India Staff Federation has claimed that
all permanent employees including part-time employees should be made
members of the provident fund scheme, that the rate of contribution should
be ten per cent of pay and the bank should contribute an equal amount every
month, that interest at the rate of five per cent per annum with six monthly
rests on the total contribution by the employees and the bank should be
allowed, that unclaimed amounts in the fund should be distributed pro-rata
every three years amongst the existing members of the fund, that full benefits
of the fund should be permitted to an employee on completion of one years
service, that on Ihe Board of Provident Fund Trust, the workmen and employers
should have equal number of representatives, that workmens representatives
should be elected by themselves by simple majority of votes, that re-election
of the workmens representatives should be held after every three years unless
necessitated earlier by death or resignation or recall by a majority of workmen.

7.9. As regards the directions given by the Sastry Tribunal in connection

with payment of the provident fund excess contribution allowance the Labour
Appellate Tribunal took the view that the direction was one which was contrary
to principle inasmuch as it provided for an immediate cash payment to the
workmen whereas the provident fund scheme was devised for giving the
employees a retiring benefit. It therefore directed that instead of the amount
of the provident fund excess contribution allowance being paid in cash to
the employees, the same should be held by the bank for the employees
concerned in a deposit account to be ultimately paid to the employees as a
retiring benefit.

7.11. The All India Bank Employees Association submitted that all
permanent employees including the part-time employees should be made
members of the provident fund that the rate of contribution by the employees
should be 9-3/8 per cent of the total monthly emoluments made up of basic
pay, dearness allowance, special allowance, and officiating allowance, if any,
that the bank should contribute an equal amount every month that interest at
the rate of 6 per cent per annum with six monthly rests should be paid on the
total contribution by the employee and the bank, that unclaimed amounts in
the fund should be distributed pro-rata every three years amongst the existing
members of the fund and that full benefits of the fund should be permitted to
an employee on completion of one years service. It also claims that on the
Board of Provident Fund Trust, the workmen and employers should have
equal number of representatives, that workmens representatives should be
elected by themselves by simple majority of votes and that re-election of the
workmens representatives should be held after every three years unless
necessitated earlier by death or resignation or re-call by a majority of the
293

7.14. The Vadodra Rajya Bank Nokar Sangh has claimed lhat the rate of
contribution should not be less than 10 per cent of total emoluments of the
employee i.e. basic pay, dearness allowance and special allowance and that
like amount should be contributed by Ihe bank, and that interest on the same
should be paid at the rate of five per cent, that an employee should be entitled
to full amount contributed including the banks contribution after five years of
service, that in the case of resignation or retirement an employee should be
entitled to the full amount of contribution including the banks contribution
after five years of service, that in the case of termination of service of an
employee by the bank or on retrenchment or on death or mental or physical
disability of an employee to continue further in service he should be entitled
to full contribution of the bank, irrespective of the length of service, that fifty
per cent of the Trustees of the provident fund Trust should be elected by the
employees and that part-time employees also should be made members of
the provident fund and that a certified copy of the Provident Fund Rules and
the yearly balance-sheet of the Fund should be given to each member of the
fund by the bank.
7.15. The State Bank of India Staff Union, Andhra Pradesh, and the All
294

7.16. The Bihar Provincial Central Bank of India Employees Association

and the Central Bank of India Employees Associations at Patna, Mazaffarpur
and Amritsar have made the same demands as the All India Bank Employees
Federation. Some of them also claim in addition 6% interest on provident
fund accumulations and want that the workmen should be allowed payment
of regular insurance premia from the provident fund without prejudice to the
grant of loans from it.

BE

7.17. The Indian Banks Association, while opposing the demands of the
workmen, has submitted that the Tribunal should lay down that the
representative of workmen, once appointed, should hold office for at least a
period of five years unless he vacated the same by reason of the rules of the
provident fund or on his transfer from the place where the fund was being
administered to another branch of the bank or on his being promoted from
clerical grade to an officers grade.It is claimed that liberty should be given to
the banks to give to the employees either Pass Books or Statements of
Account in respect of their provident fund account. It is submitted that when
an employee, instead of being dismissed, was discharged or allowed to resign
by the management in order that no stigma might attach to him a provision
should be made that the employers contribution to the provident fund would
be liable to forfeiture provided such termination was the result of misconduct
causing financial loss to the employer. It is contended that the demands
regarding distribution of unclaimed amount and about representation on the
Board of Trustees were outside the jurisdiction of the Tribunal as they did not
constitute industrial disputes within the meaning of the Industrial Disputes
Act.

the provident fund should be reduced, that in order to avoid discrimination the
banks which are at present making a higher contribution than that prescribed
for other banks should be permitted to alter their rate of contribution so as to
conform to the general practice. As regards the demand for fixed interest on
the total amount of contributions, it has submitted that it is not within the
powers of the bank to determine the interest earned on the investments of
the provident fund, as a recognised provident fund such as the banks is
required by statute to be invested in specific securities and the Board of
Trustees in whom the fund is vested as required under the Indian Income-tax
Act, is the only competent authority to determine the rate of interest on the
basis of the yields of the various securities. As regards the distribution of
unclaimed amounts it is stated that the same were credited to the lapse and
forfeiture fund, that the disposal of money in the fund was governed by the
relevant rules of the provident fund concerned and that the previous permission
of the Commissioner of Income Tax would be necessary for making any
alteration therein. It is further submitted that the demands in respect of interest
and the distribution of unclaimed amounts and the representation on the
Board of Trustees did not constitute industrial disputes within the meaning of
section 2(k) of the Industrial Disputes Act, 1947. It has demanded that
paragraph 368(17) of the Sastry Award should be amended so as to read as
under :

India Bank of Baroda Employees Federation have made the same demands
as the All India Banks Employees Association. Other Unions of the Bank
employees have also made demands which are more or less similar to the
demands of the All India Bank Employees Association with some difference
in the rate of contribution and the rate of interest and the length of service
after which full amount of the provident fund should become payable. The
State Bank of Patiala (All Cadres) Employees Association wants that all the
permanent and temporary (whole-time workers) should be members of the
provident fund.

Contributions made by the employer may in his discretion be

forfeited in cases of dismissal, termination of service or resignation
resulting from gross misconduct or dishonesty or fraud or attempt
thereat.

295

296

AI

7.18. The Bombay Exchange Banks Association has submitted that

there has been no change in the circumstances necessitating any revision of
the scheme formulated under the Sastry Award as modified. About the parttime employees, it has pointed out that they take up part-time jobs in order
to supplement their main source of income and not with a view to making a
career, that actual hours of work may differ from employee to employee and
that it is unreasonable that such part-time employees should be entitled to
any benefits intended for permanent employees. It has further submitted that
if it is decided to have a higher wage structure or a part of the dearness
allowance is consolidated with the basic pay, then the rate of contribution to

7.19. The State Bank of India points out that in so far as the provident
fund is concerned, there are two sets of employees: (1) those who had been
in employment of its predecessors, the Imperial Bank of India, and (2) those
who had been employed on and after the State Bank of India came into
being, that as regards the first class of employees provision is made for their
provident fund, pension and other superannuation benefits by section 7(2)
read with section 50 of the State Bank of India Act, 1955, that in so far as the
second class of employees is concerned the provisions of section 33 read
with section 50 of the said Act apply and that in view of these statutory
provisions, any rules to be framed or any regulations to be introduced were
required to have the previous sanction of the Central Government. It has
submitted that the State Bank has no power and should not be asked to
make any alterations in the conditions, regulations, rules or quantum of any
benefits in either the provident fund of the Imperial Bank of India or in that of
the State Bank of India. It has further submitted that the Tribunal had no
jurisdiction in any way to revise the terms, conditions, rules and regulations
of either of the said provident funds or to direct introduction of any other
superannuation or pension benefits. It has further submitted that the demands
made (i) about rate of interest, (ii) about the distribution of unclaimed fund

and the amount in the Provident Fund Forfeiture Account pro-rata amongst
the existing employees, (iii) about full benefits of the fund being given on
completion of 5 years of service and (iv) about an equal number of employees
representatives being on the Board of Trustees, were not industrial disputes
under the Industrial Disputes Act, 1947. It has pleaded that under section 8
of the State Bank of India Act, it is the Central Government which has to
specify the Trustees and the Tribunal has no jurisdiction to do so. It has
opposed the demands made by the employees of the State Bank.
7.20 The Indian Banks Association on behalf of the Subsidiaries of the
State Bank of India has also made submissions similar to those of the State
Bank of India mentioned above after giving reference to the sections 11 (2),
and 63(2) (o) of the State Bank of India (Subsidiary Banks) Act, 1959.

BE

7.21. It has pleaded that the right to substitute or appoint trustees has
been conferred by enactment on the State Bank of India and that it would
amount to re-writing the Act if directions are given on this point. It has further
pleaded that the demands in respect of interest, distribution of unclaimed
amounts and the representation on the Board of Trustees could not be regarded
as industrial disputes within the meaning of section 2(k) of the Industrial
Disputes Act, 1947.

of a considerable part of dearness allowance with the basic pay. The

remuneration payable to workmen has also been increased. The basic pay
under this award is materially different from the basic pay under the Sastry
Award as modified. If the basic pay under this award is substituted for the
basic pay under the Sastry Award for the purpose of provident fund contribution,
very large amounts will have to be contributed by most of the employees and
the banks by way of provident fund. The employees have claimed that there
should be a larger contribution to the provident fund both by the employees
and the banks. The employees have referred to commercial concerns wherein
for the purpose of provident fund contribution dearness allowance is also
taken into account. In making my award in connection with provident fund, I
have to bear in mind the paying capacity of the banks and the overall effect of
the various provisions made in my award on banks. Having carefully considered
all aspects of the matter, I direct that the contribution to be made by workmen
under this award to the provident fund shall be 8-1/3 per cent of the monthly
pay as hereinafter defined in respect of employees of A and B classes of
banks, and 6'/4 per cent of such pay for employees of C Class banks including
banks in the Expected List. The expression pay for the purpose of provident
fund contribution shall in the case of members of the subordinate staff employed
by A, B and C Classes of banks excluding banks in the Expected List mean
(i) 75 per cent of the basic pay payable under this award,(ii) full amount of
special allowance if any payable under this award and (iii) the full amount of
officiating allowance, if any, payable under this award, and in case of other
workmen employed by A, B and C Classes of banks but excluding the banks
in the excepted list, mean (i) 80 per cent of the basic pay payable under this
award, (ii) full amount of special allowance, if any, payable under this award
and (iii) the full amount of officiating allowance, if any, payable under this
award.

AI

7.22. On behalf of the State Bank of Patiala, it is stated that the employees
of the bank who were given in 1958 revised grades by the bank, enjoyed the
benefit of ten per cent contribution towards the provident fund based on basic
pay plus dearness pay which was fifty per cent of the dearness allowance,
that such employees were also entitled to interest at the rate of five per cent
per annum with half-yearly rests and were entitled to the benefit of insurance
rebate. It has adopted the other contentions raised by the Indian Banks
Association on behalf of its member banks.
7.23. The Northern India Banks Association opposes the demands of
the employees and says that its member banks are already contributing 8-1/
3 per cent of the workmens salary towards the provident fund as against 6
per cent under the Sastry Award. The Miraj State Bank has submitted that
its present scheme of provident fund provides for contribution of 8-1/3 per
cent of the basic pay and that as the fund is vested in Trustees who are not
parties to the present Reference, this Tribunal has no jurisdiction to entertain
the demand about provident fund in the Miraj State Bank.
7.24. Under the provisions of the Sastry Award as modified, the rate of
subscription to the provident fund by workmen is 8-1/3 per cent of the monthly
pay in the case of employees of A and B classes of banks, and 6 per cent
of the monthly pay in the case of employees of C and D classes of banks,
the expression pay being defined to mean basic pay, special allowance and
officiating allowance, if any. The banks have to make a contribution of an
equal amount.Under this award, the scheme relating to wage scales and
dearness allowance has undergone considerable change owing to the merger
297

7.25 As regards members of the subordinate staff employed by the bank

in the excepted list, the expression pay for the purpose of provident fund
contribution, shall mean (i) the full amount of basic pay payable under this
award, (ii) the full amount of special allowance, if any, payable under this
award and (iii) the full amount of officiating allowance, if any, payable under
this award.
7.26. As regards workmen other than those belonging to the subordinate
staff employed by banks in the excepted list, the expression pay for the
purpose of provident fund contribution shall mean (i) 90% of the amount of
basic pay payable under this award, (ii) the full amount of special allowance.
If any, payable under this award and (iii) the full amount of officiating allowance,
if any, payable under this award.
7.27. The banks concerned will be under an obligation to make a
contribution of the like amount.
7.28. As a result of the aforesaid provisions, banks will have to bear a
298

larger burden in connection with provident fund than at present.

the provision of the Sastry Award confining the representation of workmen to

one-fourth of the total number of trustees still holds good. Apart from the
question of jurisdiction, no change is required to be made in this connection.
The Exchange Banks have been rightly exempted from this provision and no
change is required bo be made in connection therewith.

7.29. As regards any bank which is at present making a contribution

higher than the contribution provided under this award, it is left to the discretion
of the bank either to continue its present scheme or bring it in line with the
provisions herein contained.

BE

7.31. In connection with the demand that part time employees should
be allowed the benefit of provident fund, there is not much material placed
before me regarding the hours of work and the conditions of service of such
part-time employees. It was contended that part-time employees take up
service in order to supplement their main source of income. There is no
evidence before me as regards the degree of their attachment to the banks
concerned. In the present state of the regard, it is not possible for me to
make any provision relating to provident fund in connection with part-time
employees.

7.35. The Indian Banks Association has made a request for a direction
laying down that a representative of workmen once appointed, shall hold
office for at least a period of five years unless he vacates the same by reason
of the rules of the provident fund or on his transfer from the place where the
fund was being administered to another branch to the bank, or on his being
promoted from the clerical grade to the officers grade. On behalf of workmen,
a claim has been made that workmens representatives should be elected by
the workmen by a simple majority of votes and that the re-election of the
workers representative should be held after every three years unless
necessitated earlier by death or resignation or by recall by a majority of
workmen.Whilst providing that the workmens representation on the Board of
Trustees should be to the extent of one-fourth of the total strength of the
Board, the Sastry Tribunal did not lay down any procedure by which workmens
represenative could be taken on the Board of Trustees.The Labour Appellate
Tribunal noted the absence of this provision and left it to the banks to devise
a method by which some persons stationed at the place where the accounts
of the fund were kept and who were likely to command the confidence of the
workmen, could be appointed trustees. A question has been raised whether
any dispute in connection with the constitution of the Board of Trustees is an
industrial dispute and reliance has been placed upon a decision of the Labour
Appellate Tribunal in the case of Muzaffarpur Electricity Supply Company
Ltd.. reported in 1957 (II) Labour Law Journal, Page 542. It is, however, not
necessary for me to deal with this point as I am not giving any directions in
connection with the demand made both on behalf of the banks and the workmen
in connection with the constitution of the Board of Trustees. The present
scheme has, by and large, been working smoothly and no serious difficulties
of any kind have been brought to my notice. If any directions have to be given,
It is necessary that there should be a proper scheme framed for the election
of trustees. No such scheme has even been placed before me. There may be
some technical difficulties in giving effect to such scheme when formulated.
Taking all the circumstances into account, I do not see any necessity of
acceding to the demand made in this connection on behalf of the banks or on
behalf of the workmen.

7.30. The Miraj State Bank has contended that it has a provident fund
and that the contribution made by its employees and by the bank is at the
rate of 8-1/3 per cent of the basic pay, even though it is a bank liable to be
regarded as a D Class bank. This bank provides only one retiring benefit in
the shape of provident fund. There is no reason why this bank should not fall
in line with other banks and provide two retiring benefits. The provisions relating
to provident fund contained in this award will apply to this bank.

AI

7.32. The Labour Appellate Tribunal has referred to certain undesirable

features in connection with the provisions contained in the Sastry Award
laying down that those who had served the bank for less than five years
would not be entitled to any portion of the banks contribution or interest
thereon. Where an employee dies before the completion of the period of five
years or where he is retrenched by the employer within the aforesaid period,
or where his services are terminated on account of illness or physical disability
or for reasons beyond his control, it is but fair that he or his heirs or legal
representatives or nominees should receive the full amount standing to his
credit in the provident fund including the employers contribution therein with
interest thereon, and I direct accordingly. Except to the extent indicated
above, provision relating to five years service is not required to be altered.

7.33. As regards the claim that fixed amount of interest be paid on the
total contributions made to the provident fund both by the employers and the
employees, apart from the question of jurisdiction, it is not possible to give
any directions to that effect. A provident fund, in order to be a recognised
provident fund under the Income-tax Act is required to be vested in two or
more trustees or in the Official Trustee under trust which shall not be revocable
save with the consent of all beneficiaries. It is the earnings of the fund which
will determine the rate of interest.
7.34. As regards the number of representatives of workmen on the Board
of Trustees, the reason given by the Labour Appellate Tribunal for retaining

7.36. A demand has been made that unclaimed amounts in the fund
should be distributed pro-rata every three years amongst the existing
members of the fund. Apart from the question whether such a demand
constitutes an industrial dispute and apart from the question whether such
dispute could be adjudicated in the absence of other contributories to the
fund or in the absence of the Trustees, no case has been made out for such

299

300

distribution. A provident fund has to be administered in accordance with the

terms of the scheme governing the same. No case has been made out for
giving any directions making it obligatory on any bank or any trustees of the
provident fund to distribute any unclaimed amounts amongst persons, who
are actually in service, during the period of their service. I cannot accede to
the demand made in this connection.

7.38. Some of the banks have pleaded that inconvenience is caused to

them on account of the provision in the Sastry Award relating to the furnishing
of pass books to employees in connection with the provident fund account.
The banks want liberty to supply statements of account instead. I direct that
the banks will supply to each workman either a pass book or an annual
Statement of Account in connection with the workmans provident fund account.

7.37. A demand has been made on behalf of some of the banks that
where an employee has been guilty of misconduct causing financial loss to
the bank, the bank should be permitted to imburse such loss to the extent of
the contributions made to the provident fund by the bank concerned and
interest which has accrued due on the amounts so contributed in cases
where the employers, instead of inflicting the punishment of dismissal, is
content to inflict the punishment of discharge or is content to allow the
employee to resign. The demand as made appears to be reasonable. There
is no reason why in the case of misconduct of an employee which has caused
a loss to the employer, the employer should not be permitted to reimburse
the amount of the loss as aforesaid merely because the employer is desirous
of being a little lenient in dealing with his employee. There are, however,
other considerations which have to be borne in mind in dealing with this
demand. The provident fund scheme is based on the footing that the provident
fund should be a recognised provident fund within the meaning of the Incometax Act so as to attract its beneficient provisions in connection with provident
fund and the contributions made to it. The Income-tax Act, 1961, provides in
Part A of the Fourth Schedule for rules in connection with a recognised
provident fund. One of the aforesaid rules runs as under :

7.39. A claim has been made on behalf of workmen that a certified copy
of the Provident Fund Rules should be supplied to each workman. It is fair
that every employee who is subscribing to a provident fund should be supplied
with a copy of the Provident Fund Rules by the bank concerned, and I direct
accordingly.

BE

4.

7.40. A demand has been made on behalf of some workmen that moneys
standing to the credit of a workman in his provident fund account should be
allowed to be utilised for payment of insurance premia on policies taken out
by the workman. It was pointed out that the Punjab National Bank Ltd. already
provides for such facility. My attention was also invited to the rules contained
in the Employees Provident Fund Scheme, 1952, which permits withdrawals
to be made from the provident fund for payment of premia in respect of
insurance policies. Under this Scheme, such withdrawals are subject to certain
conditions and are controlled by the Commissioner for Employees Provident
Fund. There is no general demand for such facility, and I do not wish to make
it obligatory on all banks to provide this facility. I leave it to the discretion of
the individual banks concerned to provide such facility to the employees
under such conditions as may be prescribed by the rules relating to provident
fund.

In order that a provident fund may receive and retain recognition, it

shall, subject to the provisions of rule 5, satisfy the conditions set
out below and any other conditions which the Board may, by rules
specify

301

302

*
(f)

AI

In view of the aforesaid provision, it is not possible for me to accede to

the banks demand in this connection.

7.41. The State Bank of India and its Subsidiaries have contended that
I have no jurisdiction to make any award in connection with provident fund so
far as the State Bank of India and its Subsidiaries are concerned. Section 7
of the State Bank of India Act, 1955 relates Inter alia to provident fund
applicable to the employees of the Imperial Bank whose services have been
transferred to the State Bank of India. The provision relating to provident fund
of the Imperial Bank continue to apply to them until the same are duly altered
by the State Bank of India. The powers of the State Bank of India in connection
with provident fund are governed by the provisions of Section 50 of the Act
which lays down that the Central Board, after consultation with the Reserve
Bank and with the previous sanction of the Central Government may make
regulations to provide for the establishment and maintenance of provident
fund for the benefit of the employees of the State Bank of India. As regards
the Subsidiaries of the State Bank, Section 11 of the State Bank of India
(Subsidiary Banks) Act, 1959 deals with the question of provident fund in
respect of employees of the then existing banks whose services were
transferred to the Subsidiaries of the State Bank. Section 63 of the said Act
provides that the State Bank may, with the approval of the Reserve Bank
make in respect of Subsidiary banks regulations not inconsistent with the

the employer shall not be entitled to recover any sum whatsoever

from the fund, save in cases where the employee is dismissed for
misconduct or voluntarily leaves his employment otherwise than
on account of ill-health or other unavoidable cause before the
expiration of the term of service specified in this behalf in the
regulations of the fund :

Provided that in such cases the recoveries made by the employer

shall be limited to the contributions made by him to the individual
account of the employee, and to interest credited in respect of
such contributions in accordance with the regulations of the fund
and the accumulations thereof.

Act and the rules made thereunder providing for the establishment and
maintenance of provident fund and the persons or authorities who shall
administer such fund. The aforesaid provisions present difficulties in my giving
any directions to the State Bank of India and its Subsidiaries in connection
with provident fund. But for technical difficulties coming in my way, I would
have given directions in connection with the State Bank of India and its
Subsidiaries similar to those given by me in connection with other banks as
regards provident fund.

AI

BE

7.42. I am conscious of the fact that the trustees of the provident fund of
various banks are not before me and the subscribers other than the workmen
subscribing to the provident fund of banks are also not before me. To the
extent that there exists any legal bar to my giving any directions which are
mandatory, the directions which I have given should be regarded as merely
recommendatory. If any of the banks other than the State Bank of India and
its Subsidiaries is, for any reason, unable to give effect to the provisions
herein contained relating to provident fund within a period of six months from
the date of publication of this award, it will be under an obligation to start a
new provident fund containing the aforesaid benefits or alternatively, a
supplementary provident fund which together with any existing provident fund
secures such benefits. It is intended that the provisions herein contained
relating to provident fund should become operative from the date when the
employees become entitled to receive remuneration on the basis of the new
scales of pay under this award. Until a provident fund scheme is framed by a
bank in accordance with what is contained herein or the existing provident
fund scheme is altered so as to fall in line with the provisions herein contained,
a bank shall be entitled to deduct from the remuneration payable to a workman
provident fund subscription at the rate herein provided and will be under an
obligation to contribute an equal amount and to the extent that such
subscription and contribution are not paid over to the trustees of a provident
fund, the same shall be held by the bank for the employee concerned in a
suspense deposit account to be ultimately paid over to the employee as a
retiring benefit. As observed by the Labour Appellate Tribunal, this may take
one of several forms; it may be found possible to deposit the moneys into the
account of the employee in the existing provident fund or it may be necessary
to institute a new provident fund in which the deposit can be made, or the
workmans employment may terminate before either of these alternatives is
available, in which case, the moneys will be paid over to him or his
representative direct. The Labour Appellate Tribunal permitted the banks to
follow the appropriate alternative. I give similar direction in this award.

now be a reference to the Income Tax Act, 1961 and the corresponding
provisions contained therein. The aforesaid provisions will not apply to the
State Bank of India and its Subsidiares.

7.43. The provisions of Sastry Award hereinbefore stated modified by

the Labour Appellate Tribunal decision and as further modified by me, will
apply to banks before me and their workmen except to the extent stated by
me. Any reference to the Indian Income Tax Act 1922, and its provisions will

303

304

Gratuity is payable at the rate specified for banks in group A, the

maximum being limited to 6 months pay.

CHAPTER VIII
Item No. 6 : PENSION AND GRATUITY
(1) Gratuity

V.

Where a workman has put in service of over 30 years he should be

paid an extra amount at the rate of additional half a months pay for
each completed year of service beyond 30 years. To that extent
the maximum provided in his case will be increased.

VI.

Length of service shall be calculated as the total period from the

day of the initial appointment (whether permanent, temporary or on
probation) in the bank to the day of retirement from banks service.
In cases where employees formerly employed in areas now known
as Pakistan are re-employed in India after 15th August, 1947, even
after a break in service, the aggregate of their total services in both
areas must be taken as the total period of service.

8.1. I shall first deal with Gratuity.

8.3. The Sastry Award as modified, provides as follows :

Banks in Group A.

(1)

On the death of an employee while in service of the bank, one

months pay for each completed year of service subject to a
maximum of 15 months pay to be paid to his heirs, executors,
assignees or nominees.

AI

I.

(2)

On an employee becoming physically or mentally incapable of

further service or on termination of his service by the employer
gratuity at the same rate as above.

(3)

On voluntary retirement or resignation of an employee after 10 years

continuous service, gratuity at the same rate as above.

II.

Banks in Group B.
Gratuity is payable at the rate set out above as applicable to A
group banks, the maximum being 12 months pay.

III.

VIl. The pay, for purposes of calculating the gratuity, shall be the average
of the basic pay and special allowance and officiating allowance
payable during the 12 months next preceding death, disability,
retirement, resignation, or termination of services, as the case may
be. A bank will have the liberty to grant gratuity in excess of the
scale set out above in its discretion.

BE

8.2. As observed by the Sen Tribunal it is an elementary principle that

an employee who has served an institution during the best part of his life
should not, on his retirement, have to face the prospects of starvation, and
indebtedness or dire poverty and it should also be expected that even when
an employee dies while in service or shortly after his retirement, his family
should have some provision to fall back upon, at least for a time; in old days
many an employee even in a humble situation, could hope to save something
against a rainy day, but in these days of high cost of living the chances of
saving anything substantially are dwindling greatly, if not disappearing, for a
great many employees of the lower middle class. The Sastry Tribunal agreed
with above observations and took the view that in the banking industry a
compulsory gratuity scheme should be provided. It accordingly directed that
except where there was a scheme for a non-contributory pension and an
employee was actually allowed a pension under such a scheme, a gratuity
should be paid to each employee who was covered by the award. It laid down
that at least one such benefit namely gratuity or pension must be given to a
workman in addition to the benefit of a provident fund scheme, subject however
to certain exceptions laid down by it.

Banks in Group C.
Gratuity is payable at the rate specified for banks in A group,
maximum being limited to 9 months pay.

IV. Banks in Group D.

305

VIII. Wherever a scheme of gratuity now in existence in a bank is more

favourable to the employee than the one laid down by us (the Sastry
Tribunal), the benefits of such a scheme shall continue to be enjoyed
by its employees.
IX.

Gratuity should be paid to a workman even if he enters service of

another bank, notwithstanding any condition to the contrary in any
existing scheme of gratuity and there should be no such condition
in any new scheme.

X.

Income-tax and super-tax, if any, payable on gratuity granted to a

workman shall be borne by the bank.

8.4. The Sastry Tribunal further directed that there should be no forefeiture of gratuity even for dismissal on account of misconduct except in
cases where such misconduct caused financial loss to the company, and
even in that case, limited the provision relating to forfeiture only to the extent
of such loss. The Labour Appellate Tribunal set aside the decision of the
Sastry Tribunal on this point and directed that an employee who was dismissed
for misconduct, shall not be entitled to gratuity.
8.5. The All India Bank Employees Association has claimed that gratuity
should be payable to an employee on retirement, termination of service,
retrenchment or workmans mental or physical disability to continue further
in service, at the rate of one months pay plus dearness allowance on the
basis of the salary last payable for every year of service or a major fraction
thereof, without any ceiling, that in case of death of an employee, his heirs
306

should be paid gratuity at the rate of two months pay plus dearness allowance
for each year of service or a major fraction thereof, that gratuity should also
be paid on voluntary retirement or resignation after completion of five years of
service, that any income-tax payable on such gratuity should be borne by
the bank and that where in any bank, provident fund scheme was introduced
late, the employees affected should be compensated for such a period, by
payment of additional gratuity at the usual rate in addition to the gratuity
normally admissible.

(ii)

On an employee becoming at any time physically or mentally

disabled to continue further in service or on grounds other than
retrenchment after five years total service (instead of ten years as
it exists now) gratuity at the same rate as above should be paid.
(iii) On voluntary retirement or resignation of an employee after five
years continuous service (instead of ten years) gratuity at the same
rate should be paid. Any income-tax payable on such gratuity should
be borne by the bank.

AI

BE

8.7. The All India State Bank of India Staff Federation has made the
following demands : (1) Gratuity should be payable to an employee on
retirement, resignation, termination of service, retrenchment or mental or
physical disability to continue further in service at the rate of one months
pay plus dearness allowance (on the salary last payable) for every year of
service or a major fraction thereof, without any ceiling provided he has
completed five years of service. (2) In case of death of an employee, his heirs
or successors, should be paid gratuity at the rate of two months pay plus
dearness allowance for each year of service or a major fraction thereof if the
family of the deceased employee is not entitled to pension as demanded.
(3) Any income-tax payable on such gratuity should be borne by the bank.
(4) Where provident fund scheme was introduced late for any category of
employees, the employees affected should be compensated for such a period,
by payment of additional gratuity at the usual rate.

8.10. The Vadodra Rajya Bank Nokar Sangh has submitted that in addition
to the provident fund, employees should also have the benefit of adequate
pension and gratuity to enable them to have sufficient funds at the time of
retirement, resignation, death or termination of services, as the case may
be. It has made a demand for uniform rules for gratuity including the rate of
gratuity, irrespective of the size of the banks and it has claimed one months
wages for every year of service without any ceiling from the date of appointment,
on the basis of the pay last drawn, full gratuity being payable after five years
of service. It has further claimed that full gratuity should be paid without any
service restrictions to employees physically or mentally disabled to continue
further in service, or in cases of retrenchment or termination of services.

8.6. The All India Bank Employees Federation has claimed (1) one
months wages for every year of service without any ceiling calculated from
the date of appointment on the basis of the last pay drawn; (2) full gratuity
to be paid after five years of service; (3) full gratuity to be paid without any
service restriction to employees becoming physically or mentally disabled to
continue further in service, or in cases of retrenchment and termination of
services.

8.8. The State Bank of India Employees Association (Bengal Circle)

has made the following claims :
(a) One months pay plus dearness allowance (on the basis of salary
last drawn for every year of service without any ceiling as at present).
(b) Full gratuity to be paid on completion of 5 years of service.
(c) Gratuity to be paid on voluntary retirement or resignation.
(d) Any Income-tax payable on such gratuity should be borne by the
bank.

8.9 The State Bank of India Employees Association (Delhi Circle) has
made the following claims :
(i) The existing rules for payment of gratuity should remain (i.e. one
months pay for each completed year of service without any ceiling)
but it should be calculated from the date of appointment.
307

8.11. The Indian Overseas Bank Employees Union has claimed that the
rate of gratuity should be one months pay (pay being last drawn pay) plus
dearness allowance for each completed year of service without any ceiling,
and that the period of service should be calculated from the date of appointment
and that full gratuity should be paid on the completion of five years of service,
except in cases of retrenchment or termination of service of an employee
where no such limitation should be placed.
8.12.The State Bank of India Staff Union (Andhra Pradesh), the All India
Bank of Baroda Employees' Federation, the State Bank of Patiala (All Cadres)
Employees Association and the Allahabad Bank Employees' Union (Calcutta)
have made demands in respect of gratuity more or less similar to the demands
made by the All India Bank Employees Association. The State Bank of Patiala
(All Cadres) Employees' Association desires to have the dearness allowance
and dearness pay and other alowances included in the monthly pay for the
calculation of gratuity.
8.13.The Central Bank of Indian Employees Association, Patna, the
Central Bank of India Employees' Association, Muzaffarpur, and Amritsar
and the Bihar Provincial Central Bank of India Employees Association at
Muzaffarpur have made demands in respect of gratuity similar to the demands
of the All India Bank Employees' Federation.
8.14.The Cochin Commercial Bank Employees Association has made
the following demands in connection with gratuity :On the death of an employee while in the service of the banks :308

"One month's pay with dearness allowance for each year of service
subject to a maximum of 20 months' pay to be paid to the heirs,
executors, assignees or nominees.

quite adequate. It has claimed by way of clarification that the method of

calculating additional gratuity of employees who had been denied the benefit
of provident fund on confirmation should be the same as that for late
introduction of provident fund, the length of service to be counted being from
the date of confirmation to the date of the commencement of provident fund
contribution.

BE

On termination of his service by the Bank : after 5 years continuous

service one month's pay for each year of service. Where an
employee has put in a service of over 30 years, he shall be paid an
extra amount at the rate of an additional half a month's pay for
each completed year of service beyond 30 years. To that extent
the maximum provided in his case to be increased. Length of
service shall be calculated as the total period from the day of initial
appointment whether permanent, temporary or on probation in the
bank to the day of retirement from the bank's service. The pay for
the purpose of calculating the gratuity shall be the basic pay with
dearness allowance and special allowance and officiating allowance
on the basis of the salary last drawn. Full gratuity to be paid on
completion of 5 years of service except in cases of retrenchment
or termination of services of the employee.

8.17.The State Bank of India has contended that this Tribunal has no
jurisdiction to entertain the demands for gratuity against it. Without prejudice
to this contention, it has stated that gratuity rules as applied to the State
Bank employees were the result of Tribunal's awards and did not impose a
ceiling on gratuity, and that the rules were excessively generous and much
better than those applicable in other banks. It has further stated that the
gratuity rules as framed by the Sastry Tribunal and modified by the Labour
Appellate Tribunal were unduly onerous inasmuch as they did not provide
(except in the case of voluntary resignation) for a minimum period of service
for entitlement of gratuity. It has contended that it was contrary to principle to
pay gratuity for short service and that a demand for a full or any gratuity on
voluntary retirement or resignation or cessation of service even for misconduct
after five years service or after any period of service was unjustified. It has
further pleaded that it was contrary to principle that the State Bank or any
employer should be called upon to bear income-tax payable on any gratuity
paid to an employee.

On an employee at any time becoming incapable (physically or

mentally) of further service, gratuity shall be paid at the same rate
as above. On voluntary retirement or resignation of an employee
after 5 years continuous service, gratuity shall be paid at the rate
of one month's pay for each year of service subject to a maximum
of 20 months' pay.

The Bank will be at liberty to grant gratuity in excess of the scales set
out above, in its discretion."

AI

8.15.The Indian Banks Association has opposed the demands of the

workmen and submitted that the scheme of gratuity at present in force was
fair and reasonable and should not be disturbed, except for one modification
sought by it, namely, that gratuity should also stand forfeited in case an
employee was discharged or allowed to resign instead of being dismissed
consequent upon misconduct.

8.16.The Bombay Exchange Banks Association has opposed the

demands of the workmen and has submitted that as gratuity was paid for
long and faithful service, it was contrary to principle that gratuity should be
paid to an employee on voluntary retirement or resignation after completion
of five years of service. It has further submitted that it was contrary to principle
that any income-tax payable on gratuity should be paid by the banks. It has
submitted that the question of compensation for the late introduction of the
provident fund or the employees not being permitted to join the provident fund
on confirmation was thoroughly investigated by the Sastry Tribunal which
laid down additional gratuity by way of compensation and the quantum provided
namely, half a month's salary for every completed year of service for which an
emplyee did not enjoy the benefits of provident fund after confirmation was
309

8.18 It has sumbitted that this Tribunal should put a ceiling on gratuity
and gratuity should be payable after a proper and reasonable period of faithful
service and only if the employment terminates for reasons beyond the control
of the employee and in no case of misconduct of the employee.
8.19.The Subsidiaries of the State Bank of India have also taken the
above point of jurisdiction. Without prejudice to this contention they have
pleaded that in the case of those Subsidiary banks where there is a pension
scheme it would not be right to introduce a gratuity scheme as that would
amount to granting of three retirement benefits. while opposing the demands
of workmen it has been submitted that gratuity should be payable on voluntary
retirement or resignation of an employee only after 15 years service provided
the retirement or resignation was for causes beyond the employees' control.
It has further been submitted that it was contrary to principle that any incometax payable on gratuity should be paid by the employer.
8.20. The Bharatha Lakshmi Bank Ltd., the Gadodia Bank Ltd. and the
Jaya Laxmi Bank Ltd. submit that the present scheme of gratuity should
continue.
8.21. The Miraj State Bank does not have at present a gratuity scheme
and says that it is beyond its capacity to institute such a scheme. It has
pleaded that where a provident fund was already in existence, the institution
of a fresh scheme of gratuity in the form of additional retirement benefit would
310

(o)

depend entirely on the financial position of the industry, and has submitted
that the financial position of the industry did not warrant any additional
imposition in the form of a gratuity scheme.
8.22. It has been contended that this Tribunal has no jurisdiction to
make an award in connection with gratuity so far as it concerns the State
Bank of India in view of the provisions contained in sections 7 and 50 of the
State Bank of India Act, 1955. Section 50 of the aforesaid Act, to the extent
that it is relevant, provides as under :

**
(u)

50. (1) The Central Board may, after consultation with the Reserve Bank
and with the previous sanction of the Central Government make
regulations, not inconsistent with this Act and the rules made
thereunder, to provide for all matters for which provision is expedient
for the purpose of giving effect to the provisions of this Act.
**

**

**

the establishment and maintenance of superannuation, pension,

provident or other funds for the benefit of the employees of the
State Bank or of the dependants of such employees or for the
purposes of the State Bank, and the granting of superannuation
allowances, annuities and pensions payable out of any such fund.

**

**

AI

Clause (o) relate to those cases where a fund is sought to be established or

maintained. No directions are being given by me for constituting a gratuity
fund. Section 7 relates to the employees of the Imperial Bank of India whose
services were transferred to the State Bank of India. It provides that such
employees shall hold their service with the same rights and privileges as to
pension and gratuity which they enjoyed before the transfer until the same
are duly altered by the State Bank. To the extent that a legal bar, if any,
exists to the making of any award in connection with any persons relating to
gratuity the provisions herein contained should be deemed to be
recommendatory and not mandatory.
8.23. A similar point has been raised on behalf of the Subsidiaries of the
State Bank of India relying upon the provisions contained in sections 11 and
63 of the State Bank of India (Subsidiary Banks) Act, 1959. Section 63, to
the extent that it is relevant, provides as under :
63. (1) The State Bank may, with the approval of the Reserve Bank,
make in respect of a subsidiary bank regulations, not inconsistent
with this Act and the rules made thereunder, to provide for all matters
for which provision is necessary or expedient for the purpose of
giving effect to the provisions of this Act.
(2)

In particular, and without prejudice to the generality of the foregoing

power, such regulations may provide for
**

**

**
311

**

**

**

Clauses (o) and (u) are inapplicable where no fund is sought to be constituted.
Section 11 deals with those employees of the then existing banks whose
services have been transferred to the subsidiary banks. It provides that such
employees shall hold their service with the same rights and privileges as to
pension and gratuity which they enjoyed before the transfer until the same
were altered in pursuance of any law or in accordance with any provision
which for the time being governs his (their) services. To the extent, however,
that a legal bar, if any, exists to the making of any award in connection with
any person relating to gratuity the provisions herein contained should be
deemed to be recommendatory and not mandatory.

BE

(o)

**

**

the persons or authorities who shall administer any pension,

provident or other fund constituted for the benefit of the officers or
employees of the subsidiary bank or their dependants or for the
purposes of that bank ;
**

In particular, ** ** ** such regulations may provide for :

**

2)

the establishment and maintenance of superannuation, pension,

provident or other funds for the benefit of the officers or employees
of the subsidiary bank or of the dependants of such officers or
employees or for the purposes of the subsidiary bank, and the
granting of superannuation allowances, annuities and pensions
payable out of any such fund;

8.24. Under the provisions of the Sastry Award as modified, the scheme
for payment of gratuity is linked up with pay, the expression pay being
defined as being the average of the basic pay and special allowance and
officiating allowance payable during the twelve months next preceding death,
disability, retirement, resignation or termination of service, as the case may
be. It is contended that gratuity should be paid not on the basis of such
average but on the basis of the last pay drawn by the employee concerned.
In my view, the provision contained in the Sastry Award is less susceptible to
abuse than the provision which is demanded. In my view, there is no necessity
for making any change as demanded. Under this award, the scales of pay
and the scheme of dearness allowance have been altered and the amounts
of basic pay and special allowances payable to workmen have been increased.
In order that an unduly large burden may not be imposed upon banks and the
burden imposed may remain within the limits of the banks capacity to pay,
I direct that for the purpose of calculation of gratuity, basic pay for all classes
of banks under this award, except the banks in the Excepted List, shall be
deemed to be 80 per cent of that provided under this award so far as workmen
other than those belonging to the subordinate staff are concerned, and shall
be deemed to be 75 per cent of that provided under this award so far as
members of the subodinate staff are concerned. As regards the banks in the
Excepted List, for the purpose of calculating gratuity for workmen other than
312

those belonging to the subordinate staff, the basic pay shall be deemed to be
90 per cent of that provided under this award and for members of the subordinate
staff, the basic pay shall be the same as is provided under this award. For
the purpose of calculating gratuity, the special allowance and officiating
allowance for workmen employed in all banks shall be the same as provided
under this award.

8.29. It is submitted on behalf of some of the banks that the directions

contained in the Sastry Award relating to payment by banks of income-tax
and supertax, if any, on the amount of gratuity are contrary to principle and
contrary to law. My attention was drawn to the provisions regarding the
prohibition of tax-free payments contained in section 200 of the Companies
Act, 1956, which lays down as under :
200. Prohibition of tax-free payments. (1) No company shall pay
to any officer or employee thereof, whether in his capacity as such
or otherwise, remuneration free of any tax, or otherwise calculated
by reference to, or varying with, any tax payable by him, or the rate
or standard rate of any such tax, or the amount thereof.

BE

8.25. It is next contended that there should be a uniform provision in

connection with gratuity applicable to all classes of banks. It is urged that
different scales of pay have been provided for different classes of banks and
that there is no necessity for providing for different maxima for the different
classes of banks. The Sastry Tribunal has provided different maxima for
different classes of banks, taking into account the paying capacity of the
banks, in connection with a second retiring benefit which it was providing. As
a result of the provisions which I am making under this award, the burden on
banks on account of gratuity will considerably increase.Keeping in view the
burden which I am imposing upon the banks, I am providing the same maxima
for banks falling within A, B and C Classes under this award as were provided
by the Sastry Award for A, B and C Class banks under its Award. As Banks
falling within original Class D will now be included in Class C the maximum
provided in their case will automatically stand increased. Banks in the
Excepted List for this purpose are treated as falling in Class C.

misconduct. This demand has been opposed by the employees. The

punishment of discharge may be inflicted upon a person where a bank does
not seek to impose the extreme penality of dismissal. Similarly, a person is
allowed to resign in cases where a bank does not wish to inflict the highest
penality. Deprivation of gratuity is an extreme step and a workman should be
deprived of his gratuity only in extreme cases where the proper punishment
to be inflicted is nothing short of dismissal. Having considered all aspects of
the matter, in my view, no case is made out for an increase in the number of
circumstances under which a workman may not be paid gratuity. I am unable
to accede to this demand.

Explanation. In this sub-section, the expression tax comprises

any kind of income-tax including super-tax.
(2)

Where by virtue of any provision in force immediately before the

commencement of this Act, whether contained in the companys
articles, or in any contract made with the company, or in any
resolution passed by the company in general meeting or by the
companys Board of directors, any officer or employee of the
company holding any office at the commencement of this Act is
entitled to remuneration in any of the modes prohibited by subsection (1), such provision shall have effect during the residue of
the term for which he is entitled to hold such office at such
commencement, as if it provided instead for the payment of a gross
sum subject to the tax in question, which, after deducting such
tax, would yield the net sum actually specified in such provision.

(3)

This section shall not apply to any remuneration

AI

8.26. The State Bank of India has contended that it should not be under
any obligation to pay gratuity without a ceiling thereon. The State Bank of
India has been placed in Class A. It cannot be treated for the purpose of
payment of gratuity in a manner different from the banks falling within that
class. It is, however, open to any bank to pay a larger sum by way of gratuity
than is provided under this award. The State Bank will be at liberty, but will
not be compellable, to pay gratuity larger than the one provided under this
award save and except in such cases, if any, where the bank may be under
a statutory obligation to pay the same.

8.27. A claim has been made that gratuity should be payable on voluntary
retirement or resignation of an employee only after fifteen years service, and
that too if the retirement or resignation was for causes beyond the employees
control. The employees, on the other hand, have urged that the provision
contained in the Sastry Award that gratuity should become payable on
voluntary retirement or resignation of an employee after ten years continuous
service should be altered so as to reduce the period of ten years to five years.
In my view, no case has been made out for any change by any of the parties.

(a)

Which fell due before the commencement of this Act, or

(b)

which may fall due after the commencement of this Act, in

respect of any period before such commencement.

8.28. On behalf of some of the banks it has been claimed that the amount
of gratuity should not become payable in cases where an employee is
discharged consequent upon his misconduct or is allowed to resign instead
of being dismissed consequent upon misconduct. This right has been claimed
only in case of those persons who are otherwise liable to be dismissed for

Reference was made in this connection to a decision of the Supreme

Court in the case of the State Bank of India and others and their workmen,
reported in 1959 (II), Labour Law Journal, page 205 where the expression

313

314

remuneration as used in the then existing section 10 of the Banking

Companies Act came up for consideration and the Supreme Court observed
that the word remuneration was used in that section in the widest sense.
Reliance was also placed on the provisions of section 7 of the Indian Incometax Act, 1922, whereunder the head salary has been shown to include any
pension or gratuity. My attention was also called to the provisions of the
Income-tax Act 1961, wherein it is, interalia, provided as under :

C Class bank including a bank in the Excepted List the amount of gratuity
shall be equal to one months pay for each completed year of service subject
to a maximum of nine months pay. Where, however, a workman employed in
any of the aforesaid banks has put in the service of over thirty years, an extra
amount by way of additional gratuity will become payable at the rate of
additional half months pay for each completed year of service beyond thirty
years. To that extent the maximum provided under the aforesaid clauses will
stand increased.

10. In computing the total income of a previous year of any person, any
income falling within any of the following clauses shall not be
included ** ** :

8.34. The pay for the purpose of calculating gratuity shall be the average
of the basic pay and special allowance and officiating allowance payable
during twelve months next preceding death, disability, retirement, resignation
or termination of service, as the case may be.

AI

BE

The expression salary in this section is not confined to basic wages. A

question has been debated as to whether gratuity should be regarded as
constituting remuneration within the meaning of section 200 of the Companies
Act, 1956. Having regard to the view which I am taking it is not necessary for
the purpose of this reference to decide this point. Having regard to the policy
of the legislature underlying the aforesaid section 200 and considering the
fact that under the Income-tax Act, 1961, payment of gratuity to the extent
specified in section 10 is not liable to be taken into account in computing the
income of a person and taking all circumstances into consideration, I am of
the view that the provisions of the Sastry Award in this connection are not
warranted. I accordingly direct that the banks will not be under an obligation
to bear the amount of income-tax or super-tax, if any, payable on the amount
of gratuity payable, in connection with a workman.

(10) ** ** ** ** or any other gratuity not exceeding one-half months

salary for each year of completed service, calculated on the basis
of the average salary for the three years immediately preceding the
year in which the gratuity is paid, subject to a maximum of twentyfour thousand rupees or fifteen months salary so calculated,
whichever is less.

8.33. The length of service shall be calculated as the total period from
the day of initial appointment (whether permanent, temporary or on probation)
in the bank to the day of cessation of the banks service. In cases where
employees formerly employed in areas now forming part of Pakistan have
been re-employed in India after 15th August 1947, even though there might
be a break in their service the aggregate of the period of service in both areas
should be taken as the total period of service.

8.30. I accordingly make an award in connection with gratuity as under:

8.31. Gratuity shall become payable (i) on the death of an employee

whilst in service of the bank, the amount of gratuity being payable to the
heirs, executors, administrators or assigns of the employee or, in case he
has executed a nomination paper in the form prescribed by the bank to the
nominee of the employee; (ii) on an employee becoming physically or mentally
incapable of further service or on termination of his service by the employer;
(iii) on voluntary retirement or resignation, after ten years continuous service.
8.32. In connection with an employee serving in a A Class bank the
amount of gratuity shall be equal to one months pay for each completed
year of service subject to a maximum of fifteen months pay. In connection
with an employee serving in a B Class bank the amount of gratuity shall be
equal to one months pay for each completed year of service subject to a
maximum of twelve months pay. In connection with an employee serving in a
315

8.35. For the purpose of calculation of gratuity basic pay for all classes
of banks under this award, except the banks in the Excepted List. shall be
deemed to be 80 per cent of that provided under this award so far as workmen
other than those belonging to the subordinate staff are concerned, and shall
be deemed to be 75 per cent of that provided under this award so far as
members of the subordinate staff are concerned. As regards the banks in the
Excepted List, for the purpose of calculating gratuity for workmen other than
those belonging to the subordinate staff the basic pay shall be deemed to be
90 per cent of that provided under this award and for the members of the
subordinate staff the basic pay shall be the same as is provided under this
award. For the purpose of calculating gratuity, the special allowance and
officiating allowance for workmen employed in all banks shall be the same as
provided under this award.
8.36. Gratuity should be paid to a workman even if he enters the service
of another bank, notwithstanding any condition to the contrary in any scheme.
8.37. The banks will be at liberty to pay gratuity in excess of what is
herein provided.
8.38. Income-tax and super-tax, if any, payable on the amount of gratuity
will not be borne by the bank.
8.39. Where there is a pension scheme in existence the workmen will
have to choose between the scheme of gratuity under this award and the
banks pension scheme unless any bank desires to give the benefit of both to
the workmen. It is not the intention of this Tribunal to replace a more favourable
316

pension schemes wherever it exists by the scheme of gratuity under this

award or provide compulsory gratuity in addition to pension as a third retiring
benefit.

8.43. Most of the banks before me have no pension schemes. Various

exchange banks have pension schemes which are applicable to all their
workmen not only in India but also elsewhere. The Sastry Tribunal has observed
that its object in making the gratuity scheme also applicable to such banks
was only to ensure that so much at least of a retiring benefit either by way of
gratuity or by way of participation in a pension, should be available to the
workmen as a minimum. It stated that it was to be distinctly understood that
a person who was awarded a pension and elected to get it, could not claim
the benefit of payment by way of gratuity.
8.44. In connection with the Imperial Bank of India whose pension scheme
provided for a compulsory contribution of five per cent of pay by workmen, the
Sastry Award as modified provided as under :

AI

BE

8.41. Under the provisions relating to provident fund, I have directed that
those banks which have not established any provident fund, should do so
within a period of six months from the date of the publication of this award.
There may be workmen who may have put in several years of service before
they become entitled to receive the benefit of the provident fund, and their
case requires special consideration. The Sastry Tribunal had to deal with a
similar situation and the remedy found by the Sastry Tribunal was to provide
for additional gratuity for such persons. I direct that where there has been no
provident fund scheme in existence prior to the date of this award an additional
gratuity calculated at the rates mentioned in this chapter should be paid to
workmen and that for this purpose, their length of service should be computed
at half the number of full years of completed service from the day of initial
appointment (whether permanent, temporary or on probation) in the banks
concerned, till the date of introduction of the provident fund scheme.

(ii) Pension Scheme

8.40. The Bombay Exchange Banks Association has submitted that I

should not give any directions as regards the Exchange Banks regarding
pension and gratuity save that at the time of retirement an employee shall
have the right to opt for the banks pension or retiring allowance scheme or
the award prescribed gratuity. I direct that so far as Exchange Banks are
concerned, an employee will have the right to opt for the banks pension or
retiring allowance scheme or the gratuity prescribed under this award at the
time of cessation of his employment with the bank. As regards banks other
than the Exchange Banks which have pension or retiring allowance scheme,
an employee will have a right to exercise the option in accordance with such
rules as may be provided by the bank concerned and in the absence of any
rules at the time of the cessation of employment. In the case of the death of
an employee the option will be liable to be exercised by his legal
representatives,

Niren De from Calcutta who argued the matter for and on behalf of the
employees. This contribution was made by the employees many years back
under a contributory pension scheme.Apart from the question of my jurisdiction
to deal with the demand, in my view, the employees are not entitled to any of
the reliefs claimed in connection therewith.

8.42. In a case where there is an existing provident fund but a work man
has not been allowed to join such fund after his confirmation, he should be
given an additional gratuity at the rate mentioned in this chapter for the period
commencing from the date of his confirmation to the date of his joining the
fund, the length of service being calculated for this purpose to the nearest full
year.The State Bank of India Employees Association (Bengal Circle) has
made a claim for the refund of five per cent contribution to the pension fund
made by the employees of the bank before such contribution was discontinued
as a rsult of the directions given under the Sastry Award. In the alternative, it
has claimed that a special gratuity may be paid equivalent to the amount
standing to the credit of an employee in the said pension fund. The State
Bank of India has opposed this demand. A similar claim was made before
the Sastry Tribunal, but it appears that the same was not pressed by Mr.
317

The contribution of 5 per cent by the workmen to the Pension

Fund shall cease, and the Bank is directed to take the steps
necessary to ensure this. The employees shall receive the existing
pension benefits without payment of any contribution. If any
contribution is realised from any workman employee towards the
Fund after the pronouncement of our Decision, the Bank is directed
to pay to the workman or his representative on the termination of
his employment a special gratuity equal to this contribution and
the interest thereon standing to his credit in the accounts of the
Fund at the date of the termination of his service.

The Imperial Bank, and, thereafter its successor, the State Bank of India,
is not claiming now this five per cent contribution from the workmen.
8.45. The workmen have demanded pension in addition to provident fund
and gratuity.
8.46. The All India Bank Employees Association has claimed that the
normal pensionable age should be 60 years, that maximum pension should
be Rs. 750 per mensem, that pensionable service of an employee should be
counted from the date of his appointment, that the minimum age limit for the
purpose should be 18 years, that in calculating pension, the pay last payable
to an employee should be the basis, that the amount of pension should be
calculated on number of years of service divided by 50 multiplied by pay last
payable (inclusive of special allowance and officiating allowance), and that
the benefit of pension must be guaranteed for five years, i.e., if a pensioner
dies before drawing pension for less than five years, his heirs, assignees or
318

nominees should draw the same pension until completion of five years, with
the exception that if an employee retired on grounds of health before reaching
the age of 60, he should be eligible to proportionate pension provided he had
served for at least 10 years. It has further claimed that in case of an employees
death while in service, his legal heirs should be paid pension at the rates
prescribed above for the period indicated below :
(a)
(b)
(c)
(d)

Length of service
Period for which payable
10 years
2 years
Exceeding 10 years but below 15 years
3 years
Exceeding 15 years but below 20 years
4 years
Exceeding 20 years
5 years

The age for compulsory retirement would be 60 years.

3.

For the purpose of pension service of an employee should be

counted from the date of his appointment, irrespective of age and
should not be taken at 21 years as at present. In calculating pension
the pay last payable to an employee should be the basis.

4.

The benefit of pension must be guaranteed for a minimum period of

5 years, i.e., if a pensioner dies before drawing pension for less
than 5 years his heirs or successors or nominee will draw the
same pension until completion of 5 years.

5.

Commutation of pension should be according to Government rules.

Refund of Contribution to the Pension Fund made by the Employees

The amount so far contributed by each employee to the pension fund
should be refunded as the pension is now non-contributory or alternately a
special gratuity be granted and paid equivalent to the amount standing at the
credit of the said Pension Fund, i.e., Imperial Bank of India Employees Pension
Fund Account of the respective employees at the time of their retirement.

It has claimed that a pensioner should have the right to commute any part of
his pension and has demanded that dearness allowance at the prescribed
rates should be paid on pensions.

Death while in service

Pension-Quantum to be calculated on the basis as above, i.e., 1/50Xyears
of service Xtotal salary last drawn, payable to legal representatives as under:

BE

8.47. The All India Bank Employees Federation has claimed that all
permanent employees, including part-time employees, should be eligible for
pension, that pensionable service of an employee should be counted from
the date of his appointment, that in calculating pension last wages drawn by
an employee be taken into consideration, that the amount of pension be
calculated on number of years of service divided by 50 and multiplied by the
last total salary drawn, that pension benefit must be granted for a minimum
period of five years, that commutation of pension be allowed as per Central
Government Rules and that pensioners should be allowed to accept reemployment after retirement.

2.

AI

8.48. The All India State Bank of India Staff Federation has claimed a
pension scheme similar to the one demanded by the All India Bank Employees
Association but without mentioning the minimum pension of Rs. 750. This
Federation has also claimed that a pensioner shall have the right to commute
his pension as per rules applicable to the Central Government employees,
and that dearness allowance should be paid on pensions at the rate of 25 per
cent with a minimum of Rs. 40 to the clerical staff, etc., and Rs. 25 to the
subordinate staff.
8.49. The State Bank of India Employees Association (Bengal Circle)
has made the following demands :
1.

(a)

(b)

For all permanent staff non-contributory pension is to be paid.

Pension is to be calculated at half of the pay per month last
drawn by an employee retiring on completion of 25 years of
service, i.e., the number of years of service divided by 50
multiplied by pay last payable (including special allowance
and officiating allowances).
An employee shall at his option be entitled to retire after 20
years service at proportionate pension.
319

Length of service

Period for which

Pension payable
110 years
2 years
Over 10 years and below 15 years
3 years
Exceeding 15 years but not more than 20 years
4 years
Exceeding 20 years
5 years

8.50. A more or less similar scheme has been suggested by the State
Bank of India Employees Association(Delhi Circle).
8.51. The Cochin Commercial Bank Employees Association has
submitted the following pension scheme.
(i)

All permanent employees to be made eligible for pension,

(ii)

Normal pensionable age 60 years.

(iii) Maximum pension Rs. 200.

(iv) Quantum of pension per month (a) Full pension (for service of 25
years and over) 1/60 X number of years of service X total salary,(b)
Proportionate pension (for service of 10 years and over but less than 25
years).
(Years of service x full pension calculated as above)
25
Provided the retirement is not before reaching the age of 60.
320

Exception If an employee has to retire on grounds of health before

reaching the age of 60, he will be eligible for proportionate pension provided
he has service for atleast 10 years.

for the employees of the Exchange Banks, save that at the time of retirement
an employee shall have a right to opt for the banks pension or retiring
allowance scheme or the award prescribed gratuity. It is further pleaded that
pension or retiring allowance schemes of the Exchange Banks have been
laid down by their head-offices abroad, and that the same should not be
disturbed.

(v) death while in service : Pension Quantum to be calculated as in (iv)

above payable to legal representative as under :
Length of service
(a)
(b)
(c)
(d)

(vi)

Period for which

payable
10 years
2 years
Exceeding 10 years but not exceeding 15 years
3 years
Exceeding 15 years but not exceeding 20 years
4 years
Exceeding 20 years
5 years

Death within 5 years from the date of retirement.

BE

8.52. The State Bank of India Staff Union, Andhra Pradesh, Vijayawada,
the State Bank of Patiala (All Cadres) Employees Association, the Employees
Association of the Union Bank of Bijapur and Sholapur Ltd., the Indian Overseas
Bank Employees Union, Madras, the All India Bank of Baroda Employees
Federation and the Allahabad Bank Employees Union, Calcutta have made a
demand for a pension scheme which is more or less similar to the pension
scheme demanded by the All India Bank Employees Association.

Payment of pension, which a deceased pensioner would have received

to be made payable to his legal representatives, such payments to continue
until the expiry of 5 years from the date of retirement of deceased pensioner

8.57. The State Bank of India has referred to the provisions of section
7(2) read with sections 33 and 50 of the State Bank of India Act, 1955, and
has submitted that in view of these statutory provisions any rules to be framed
or any regulations to be introduced in connection with any pension scheme
require the previous sanction of the Central Government and that the State
Bank had no powers and should not be directed to make any alterations in
the conditions, regulations, rules or quantum of any benefits in either the
pension fund of the Imperial Bank of India or in that of the State Bank of India.
It has also pleaded that this Tribunal has no jurisdiction to revise the terms,
conditions, rules and regulations in connection with the pension funds or to
direct the introduction of any other superannuation fund or benefits. On the
merits, it has contended that the State Banks pension scheme was more
generous than was justified in the light of superannuation schemes prevalent
in comparable employment and has pleaded as follows :

AI

8.53. The Central Bank of India Employees Association, Patna, the

Central Bank of India Employees Association, Muzaffarpur and the Central
Bank of India Employees Association, Punjab at Amritsar as also the Bihar
Provincial Central Bank Employees Association at Muzaffarpur have asked
for a pension scheme which is the same as the scheme demanded by the All
India Bank Employees Federation, except that the said Association at Patna
and Muzaffarpur have in case of death of an employee claimed pension for a
minimum period of 12 months.

8.54. The Vadodra Rajya Bank Nokar Sangh has given no particular
pension scheme but it would also like to have one as it considers that the
banking industry is now well-established and financially more sound and is in
a position to give both pension and gratuity.

8.55. The Indian Banks Association has strongly opposed the introduction
of any pension scheme where no such scheme is in existence. It has
submitted that no case has been made out for a third retiring benefit and has
pleaded that if three retiring benefits were given, the burden on the resources
of banks would be crushing.
8.56. The Bombay Exchange Banks Association has characterised the
demand of the workmen as extravagant and unjustified and submitted that
the Tribunal should not lay down any directions regarding pension and gratuity
321

Normally pension payable is limited to a maximum of 50 per cent

of the average pay, irrespective of the total service beyond 30 years.
In the State Banks Scheme, there is no such limit and, as a large
majority of employees join service at an early age (though according
to rules they can join the Pension Fund only on atttaining the age
of 21 years) and enjoy the concession granted by the Sastry
Tribunal to continue in service till the completion of 58 years of
age, according to the Banks present Pension Rules, they become
entitled to pension at 37/60 of the average pay and thus derive an
unintended and fortuitous benefit. It may be stated that the provident
fund and pension benefit extended by the State Bank to an employee
amount to 18-1/3 per cent of the employees salary, exclusive of a
further adhoc contribution which the State Bank has to make of
about 7 per cent, from general funds to the Pension Fund to make
good the shortfall in the Fund, although based on the last actuarial
valuation made in 1953. Such contribution should not exceed 5 per
cent. Originally, having regard to the existence of a Provident Fund
to which employers and employees contributed equally, the Imperial
Bank of India had a contributory Pension Scheme, but by the
directions of the Sastry Tribunal, it was made obligatory on the
bank to make the Pension Scheme non-contributory and the
implementation of this direction has placed a great and unjustified
strain on the State Bank. It has pleaded that in view of the high
cost of the existing superannuation benefits, there was no case for
322

8.63. When any such change is being effected, a question may arise
regarding the extent to which such change is warranted having regard to the
changes made in the wage scales. As I have altered the wage scales, it
would be but fair both to the banks and the workmen, that I should indicate
the extent of the change that I would consider reasonable, in view of the
change in the wage scales. The new scales of wages fixed by me provide not
merely for a merger of considerable part of the dearness allowance but also
provide for an increase in original basic wage received by workmen. Having
taken all the circumstances into account, I should consider that for the purpose
of calculation of pension of workmen other than those belonging to the
subordinate staff basic pay may be taken to be 80 per cent of the basic pay
provided in this award, and so far as the members of the subordinate staff are
concerned the basic pay may be taken to be 75 per cent of the basic pay
provided under this award, from the date that the new scales of wages come
into force. I would regard a change effected to this extent in the pension or
retiring allowance schemes to be reasonable. No change in respect of special
allowance or officiating allowance payable under this award would be
necessary.

BE

8.59. The Bharatha Lakshmi Bank has pleaded that smaller banks will
not be able to provide pensions to their employees. The Jaya Laxmi Bank
has pleaded that in view of the existence of provident fund, and in view of the
contemplated increase in the wage structure, the question of payment of
pension should not be considered. The Miraj State Bank has submitted that
it is beyond its capacity to institute a pension scheme.

necessary for some of these banks to make suitable changes in their pension
or retiring allowance schemes having regard to the new scales of pay provided
by me which materially differ from the old scales of pay.

any demand for further increases.

8.58. On behalf of the Subsidiaries of the Stale Bank of India, it is pleaded
that as regards the Subsidiary Banks to which the provisions of the Sastry
Award relating to gratuity were applicable it would not be right to direct the
introduction of a pension scheme as that would amount to granting of three
retiring benefits. It is pleaded that the pension scheme that may be existing
should not be disturbed save to the extent of fixing a ceiling of one half of the
average basic pay in the event of an increase in the present age of
superannuation. On behalf of the State Bank of Patiala in particular it has
been pointed out that there are only three cases of employees who are drawing
pension as otherwise there was no provision for pension in the bank. It has
stated that it was not proposed to introduce such a scheme as the benefits
of provident fund and gratuity scheme were to be extended. The Allahabad
Bank Ltd. which is one of the banks in which there is a pension scheme, has
pointed out that this scheme has worked satisfactorily in the past 39 years
and any change or variation in it will tend to disrupt Ihe system which is stood
the test of time.

AI

8.60. The demand for the conferment of three retiring benefits is not
justified, having regard to all the facts and circumstances of the case. The
workmen are entitled either to have gratuity or in the alternative pension or
retiring allowance. Where there is not already in existence any pension
scheme, no directions are given for the purpose of providing one. In cases
where pension schemes or retiring allowance schemes are already in existence
a workman will have the option to choose whether he will receive gratuity or
opt for the pension scheme or retiring allowance.

8.61. I shall next consider whether any direction should be given in

connection with pension schemes. So far as Exchange Banks are concerned,
their pension schemes or retiring allowance schemes are formulated abroad.
As regards the State Bank of India and its subsidiaries the formidable question
of the jurisdiction and powers of this Tribunal arises. Having regard to all the
facts and circumstances, I give no direction in connection with any scheme
of pension.
8.62. The existing pension or retiring allowance schemes have been
provided only by A or B Class banks. The pension or retiring allowance schemes
are generally correlated to basic pay. In the case of an employee who will be
governed by the scales of pay laid down in this award and who, on retirement,
chooses to receive pension under the banks pension scheme, it may become
323

324

(6) Gazetted holidays (that is Bank holidays under the Negotiable

Instruments Act) other than Sundays shall not be prefixed or affixed to any
leave without the sanction of the competent authority having been first obtained.
An employee who overstays his leave (except under circumstances beyond
his control for which he must tender a satisfactory explanation) shall not be
paid his pay and allowances (other than house rent allowance based on pay,
i.e. basic pay, officiating and special allowances, if any. last drawn) for the
period he overstays and shall further render himself liable to such disciplinary
action as the management may think fit to impose.

CHAPTER IX
Item No. 7 : LEAVE RULES
9.1. The Sastry Tribunal after carefully considering the needs of the
workmen and the capacity of the banks has laid down detailed rules in
connection with leave. The directions so given with the modifications made
therein by the Labour Appellate Tribunal, provide as under :
(i) Existing Leave Rules
General

(8) Unless he is permitted to do so by the authority which granted his

leave, an employee on leave may not return to duty more than fourteen days
before the expiry of the period of leave granted to him.

(1) An employee who desires to obtain leave of absence, other than

casual leave, shall apply in writing to the manager or any other officer appointed
for the purpose. Such application for leave shall be made not less than one
month before the date from which the leave is to commence, except in urgent
cases or unforeseen circumstances including illness when it is not possible
to do so. The Manager or the officer empowered by him in this behalf shall
issue orders on such application as soon as practicable and in cases of an
urgent nature immediately. If the leave asked for is granted, an order showing
the date of commencement of the leave and the date on which the employee
will have to resume duty shall be issued to the employee.

(7) Leave earned by an employee lapses on the date on which he

ceases to be in service. Where an employees services are terminated owing
to retrenchment he shall be paid his pay and allowances for the period of
privilege leave at his credit.

BE

(9) The first day of employees leave is the working day succeeding
that upon which he makes over charge. The last day of an employees leave
is the working day preceding that upon which he reports his return to duty.

AI

(2) If an employee after proceeding on leave desires an extension

thereof, he shall make an application in writing to the Manager or other officer
appointed for the purpose. Such application shall state the full postal and
telegraphic address of the employee and shall be made in sufficient time to
enable the management to consider the application and send a reply to him
before the expiry of the leave desired to be extended. A written reply either of
the grant or refusal of extension shall be sent to the employee at the address
given by him if such reply is likely to reach him before the expiry of the leave
originally granted to him.
(3) If leave is refused or postponed, the reason for the refusal, or
postponement, as the case may be, shall be mentioned in the order, and a
copy of the order given to the applicant.

(4) No leave or extension of leave shall be deemed to have been granted

unless an order to that effect is passed and communicated to the employee
concerned.
(5) Leave of all kinds cannot be claimed as of right. When the exigencies
of the service so require, discretion to refuse or revoke leave of any description
is reserved to the authority granting it, and an employee already on leave
may be recalled by that authority when it considers this necessary in the
interest of the service. When an employee is called back from leave, the
bank will pay his travelling expenses to and from the place where he was
spending his holiday; this does not include the travelling expenses of his
family.
325

(10) An employee shall, before proceeding on leave, intimate to the

competent authority his address while on leave, and shall keep the said
authority informed of any change in the address previously furnished.
(11) An employee on leave shall, unless otherwise instructed to the
contrary, return for duty to the place at which he was last stationed.
(12) The competent authority may require an employee who has availed
himself of leave for reasons of health to produce a medical certificate of
fitness before he resumes duty even though such leave was not actually
granted on a medical certificate.
(13) Leave may not be granted to an employee under suspension or
against whom proceedings are pending.
(14) Employees on privilege, sick, maternity, or quarantine leave shall
be entitled to allowances.
(ii) Privilege Leave
(1) The amount of privilege leave earned shall be one month for
completed service of 11 months for banks in Classes A and B and 3/4 of a
month for completed service of 11 months in the case of banks in Classes
C and D. Privilege leave will be cumulative upto a maximum of three months.
(2) If leave applied for by a workman has been refused, such work man
will be entitled to accumulate leave in excess of the maximum of three months
prescribed upto the date from which leave has been applied for or by the date
on which the bank is in a position to grant him leave, whichever is earlier._
326

(3) The privilege leave due to an employee is the period which he has
earned diminished by the period of leave actually taken.

a period of five years he may, if he so requests, be permitted to

avail himself of sick leave on full pay up to a maximum period of six
months during the full period of his service, such leave on full pay
being entered as twice the amount of leave taken in his sick leave
account.

Leave Salary
An employee on privilege leave shall draw a leave pay equal to his average
pay i.e. the average monthly pay (earned while on duty) during the twelve
calendar months immediately preceding that in which the employee proceeds
on leave.Pay means the aggregate of basic pay, dearness allowance,
officiating allowance and special allowance,if any.

(7) Extraordinary leave : Extraordinary leave may be granted to

an employee when no ordinary leave is due to him. Except in exceptional
circumstances, the duration of extraordinary leave shall not exceed three
months on any one occasion and twelve months during the entire period of
an employees service.

Casual, Quarantine, Sick, Extraordinary and Maternity Leave

(9) No pay and allowances are admissible during the period of

extraordinary leave and the period spent on such leave shall not count for
increments :
Provided that, in cases where the sanctioning authority is satisfied that
the leave was taken on account of illness or for any other cause beyond the
employees control, it may direct that the period of extraordinary leave may
count for increments.

BE

(2) Casual leave shall be non-cumulative Ordinarily the previous

permission of the sanctioning authority shall be obtained before taking such
leave. When this is not possible the said authority shall as soon as practicable
be informed in writing or if writing is not possible orally or through any person
of the employees absence from work, reason thereof and of the probable
duration of such absence. A workman on Casual leave shall be entitled to
pay and allowances as if he was on duty.

(8) A competent authority may grant extraordinary leave in combination

with, or in continuation of leave of any other kind admissible to the employee.

(1) Casual leave An employee shall be entitled to casual leave

upto a maximum of twelve days in each calendar year provided that not more
than four days may be taken continuously and provided that gazetted and
public holidays and Sundays may not be combined with such leave in such
a way as to increase the absence at any one time beyond six days but if
extended beyond these limits it shall be treated as privilege leave in respect
of the entire period. Casual leave may not be granted in combination with any
other leave.

AI

(3) Casual leave is only intended to meet special or unforeseen

circumstances for which provision cannot be made by exact rules. Gazetted
and public holidays except Saturdays and Sundays shall not be prefixed or
suffixed to casual leave without the previous permission of the officer granting
such leave.
(4) Quarantine leave In case an employee is absent from duty on
account of quarantine, the bank may, at the request of the employee, treat
such absence up to a maximum of three months as privilege or sick leave if
such leave is otherwise permissible.
(5) Sick leave During the full period of his service an employee
shall be granted sick leave on medical certificate at the rate of one month for
each year of service for a period not exceeding twelve months, and the
manager or other officer appointed for the purpose may grant additional sick
leave, if considered advisable in the banks interest, in special cases. The
medical certificate should be from one acceptable to the bank.
(6) Sick leave shall be on half average pay which shall be reduced to
one quarter of average pay after twelve months :
Provided that where an employee has served the bank for at least
327

(10) Maternity leave Maternity leave which shall be on average pay

shall be granted to a female employee of the bank for a period not exceeding
three months on any one occasion and twelve months during the entire period
of an employees service.
(11) A competent authority may grant leave of any other kind admissible
to the employee in combination with, or in continuation of maternity leave if
the request for its grant is supported by sufficient medical certificate.
9.2. On behalf of the workmen, various demands have been made in
connection with leave by associations, federations and unions of workmen.
The main demands are as under :
General
Leave applied for should be deemed to have been sanctioned unless
the employee is advised otherwise in writing by the management.
Rules regarding all types of leave should be uniform in all banks
All leave should be a matter of right.
Privilege leave
Privilege leave at the rate of one day for every eleven days service.
There are also demands made for privilege leave at the rate of one day for
every 10 days service and one month for every 11 months service. Employees
should be allowed to accumulate privilege leave up to three months. There
are also demands for accumulation of this leave up to 4 months and 6 months.
An employee whose leave is refused should have the right to accumulate
328

leave in excess of the maximum of three months. Leave should accure due
even when an employee is on leave. Privilege leave should not be refused for
exigencies of work or otherwise. No employee should be recalled back from
leave. If an employee is called for duty before the expiry of his leave, he
should be allowed travelling allowance and be paid wages in lieu of due leave
which is refused or such leave should be allowed to be accumulated beyond
other limits. Ten days notice should be required for grant of privilege leave
except in urgent cases and the bank should inform the employee in writing 7
days before the commencement of his leave.

should be counted for the grant of increments in cases of illness or other

causes beyond the employees control.
Maternity Leave
This leave should be granted to female employees on full pay and
allowances at the rate of three months on every confinement.
Special Leave
Special leave should be allowed on full pay and allowances to the union
representatives and office bearers of various unions, associations and
federations and/or their constituent units to enable them to attend meetings
and conferences of the unions and their central organisations and to participate
in tribunals and conciliation proceedings. A similar demand has been made
for participation in proceedings before labour courts and enquiry commissions
and for attending meetings with representatives of management or for any
other bona fide purposes.

The Vadodra Rajya Bank Nokar Sangh has made the following demand:-

Casual Leave
Fifteen days casual leave in a calendar year. Six days casual leave
may be availed at a stretch which, with prefixing or suffixing,, of Sundays
and holidays, may extend up to 10 days.

BE

"Sundays and other public holidays falling within a period of casual leave
should not be counted as part of the casual leave.
There is one association which has asked for casual leave of 20 days in
a calendar year.There is another association which has asked for 10 days
casual leave at a stretch excluding Sundays and holidays.
Quarantine Leave

Representatives of the union and/or of the federation should be given 30

days special leave with full pay and allowances in a year for the trade union
activities.
Foreign Services Facilities" to the chief executive office-bearers of the
Union at request should be granted.
Leave preparatory to retirement

AI

Quarantine leave should be granted on full pay and allowances on medical

advise, apart from sick or privilege leave. One union has demanded this type
of leave when a family member of the employee is suffering from any infectious
disease.
Sick Leave

The All India Bank Employees Federation has made a demand that the
office bearers and representatives of the Federation and its affiliated units be
allowed one months special leave to attend meetings, conferences and
delegations, etc, in a year.

In the event of termination, retrenchment, or closing of a branch or

discharge without any fault on the part of the employee he shall be
paid cash proportionately in lieu of privilege leave in proportion to
the period he has served.

All categories of workmen should be granted thirty days sick leave for
every year of service with full pay and allowances with a maximum of 12
months during the service period. In case of prolonged illness further sick
leave on half pay and full allowance should be allowed up to six months.
Service period should be counted from 1950 for the purpose of earning sick
leave. There is also a demand for one months sick leave for every year of
service with full pay, with a right to accumulate it up to 24 months.
Extraordinary Leave
When no leave is due to a workman, extraordinary leave on grounds of
continued illness should be granted on loss of pay up to a period of six
months. There is also a demand that Extraordinary leave should be given up
to one year on loss of pay when no leave is due and that the period of leave
329

Employees should be allowed to avail themselves of their due privilege

leave prior to retirement. On refusal of leave they should be paid salaries and
allowances for the leave period. A demand has been made that 3 months
leave over and above the leave at credit should be allowed before retirement.
All employees should be granted a furlough leave, of six months with full
salary and allowances prior to retirement.
Study Leave
An employee may be granted study leave to pursue higher studies up to
two years in every special circumstances.
Leave Salary
Leave salary shall be paid on the basis of the salary payable immediately
before going on leave. Leave should be on full pay and not on average pay. No
special allowance attached to the salary like dearness allowance or house
rent allowance or special allowance or local allowance should be deducted
during the period of privilege leave, sick leave, casual leave or any type of
leave.

330

(a)

For persons with service up to 5 years

2 weeks a year.

(b)

For persons with service up to 10 years

3 weeks a year.

(c)

For persons with over 10 years service

4 weeks a year.

It is further submitted that it should be provided that privilege leave could only
be accumulated over a period of two years whereafter there should be no
further accumulation, that privilege leave should not be availed of by any
employee on more than two occasions in any year, that it should be open to
the management to call upon any employee to go on privilege leave at any
time in its discretion to suit the exigencies of service and that an employee
wishing to curtail leave sanctioned to him may do so only with the prior
approval of the management. It is further submitted that in order to obviate
the chances of a dispute arising, it should be made explicit that no privilege
leave or sick leave shall accrue to an employee in respect of leave other than
casual leave availed of by him. As regards sick leave, the Bombay Exchange
Banks Association submits that it should be at half pay only and should
accrue at the rate of 30 days for every year of active service after confirmation
subject to a maximum of 9 months or 270 days, that commutation of sick
leave on the basis of full pay should not ordinarily be permitted, that
management may, however, at its sole discretion, permit commutation in
cases of definite hardship, proved to its satisfaction that applications for sick
leave should invariably be accompanied by a certificate from a registered
medical practitioner and that where there was an authorised doctor appointed
by the bank, applications for sick leave must be recommended by him. It is
submitted that the demand of the workmen for retroactive effect from 1950 for
computing service for the purpose of earning sick leave was unreasonable. In
connection with maternity leave, the Bombay Exchange Banks Association
submit that the award of such leave would discourage employment of women
and should not be granted, that the matter should be left to the discretion of
the management and that, in any event, such leave should be on half pay
only. In connection with the demand for special leave it is submitted that it is
not, an industrial dispute and must be left to the discretion of the management.
It is further submitted that unauthorised absence from duty by an employee
should automatically result in the forfeiture of all benefits accruing under the
terms and conditions of service during the period of such absence.

AI

BE

9.4 The Indian Banks Association has suggested that no employee can
take privilege leave on the ground of illness whenever sick leave is available.
Under the Sastry Award as modified privilege leave of 1 month will be earned
by an employee in A and B Class banks after he has put in eleven months
of service. The Indian Banks Association submits that for calculating 11
months service all leave taken, other than casual leave, should be excluded.
The Sastry Award contains a provision that where a person on casual leave
combines with such leave any gazetted and public holidays and Sundays so
as to increase the absence at any one time beyond six days, the entire
period should be treated as a period of privilege leave. The Indian Banks
Association contends that this provision enables the employee to have privilege
leave without following the requisite procedure for obtaining the same and
results in the splitting up of privilege leave into small bits which was not
desirable both from the point of view of the employees and of the banks. It
has claimed that if casual leave was extended beyond six days, then the
entire period should be treated as unauthorised absence and the employee
should not be entitled to any emoluments for such period. The Indian Banks
Association has alleged that employees have come to look upon casual
leave as something which they must take, whether the circumstances justify
taking such leave or not, and that in applications for casual leave, reasons
are given which are very vague. They have therefore sought directions to the
effect that every employee who wants to avail himself of casual leave must in
his application state clearly the reasons why casual leave is wanted, and in
case of emergency where casual leave is availed of before taking prior
permission, an employee must, after returning to duty, give an explanation
immediately stating the reasons why casual leave was taken, and that if on
scrutiny of the reasons given, the management came to the conclusion that
the grounds on which such leave was taken were unjustified, the management
should be allowed to treat such absence as unauthorised absence for which
the employee concerned will not be entitled to receive any emoluments. The
Indian Banks Association has under item No. 20 claimed that leave rules
should be more restricted in rural areas than those prescribed to urban aeas
so that leave entitlements in branches in rural areas may be three-fourths of
those which may be prescribed in other areas.

generous. In connection with casual leave the Association has stated that
considering the low number of working hours of bank employees and the
tendency of the employees to treat casual leave as a matter of right and
thereby abuse it, the total number of days casual leave that may be granted
to an employee should not exceed 6 in a year. As regards privilege leave, it
is submitted that the same should be on a graduated basis as follows :

9.3 The demands made by the employees have been generally opposed
by banks. Some of the banks have contended that the leave rules prescribed
by the Sastry Tribunal were on very liberal scales and that although the
banks feel that leave entitlements should be curtailed having regard to the
present needs of the nation and the industry, the banks were prepared not to
insist on any curtailment as they were of the view that the basic structure of
the Sastry Award should be left unchanged. They have suggested that certain
directions should be given in order to prevent abuses.

9.5 The Bombay Exchange Banks Association has contended that the
leave benefits available to employees under the existing award were over-

9.6 The State Bank of India has contended that the demand in connection
with casual leave disregarded the very nature and purpose of the leave and
the principles behind granting such leave, that casual leave could not be

331

332

(8)

Unless he is permitted to do so by the authority which granted him

leave, an employee will not be entitled to return to duty before the
expiry of the period of leave granted to him.

9.9. The Sastry Award provides that an employee already on leave may
be recalled when the authority granting the leave considers this to be
necessary in the interests of the service. The workmen have demanded that
no employee should be recalled back from leave. The Labour Appellate Tribunal
has mitigated the hardship incidental to such recall by providing that when an
employee is recalled, the travelling expenses of the workman to and from the
place where the workman was spending his holiday should be provided by
the bank. This would not cover the travelling expenses of the members of the
family of such workman. An employee when going on leave may have taken
the members of his family also with him and they may have to come back
with him. It is but fair that when his leave is cut short in the interests of the
work of the bank, the expenses incurred by him for taking his wife and his
children ordinarily residing with and wholly dependent upon him from the
place of work to the place where he might have gone and of bringing them
back should be provided by the bank. I accordingly direct that when a workman
who has gone on leave is recalled back from leave, the bank should pay to
him the actual travelling expenses incurred by him on account of himself, his
wife, and his children ordinarily residing with and wholly dependent on him for
going from the place of work to the place where he and members of his family
may be at the time of the recall and for coming back from such place to the
place of work. A workman will be entitled to claim travelling expenses of his
wife and children provided they have accompanied him whilst going to such
place or have gone to such place within a week of his going there and have
accompanied him whilst returning back from such place or have returned to
the place of work within a week of his return to that place. In my view no other
changes are required to be made in the aforesaid general rules provided by
the Sastry Award as modified.

BE

9.7. The Miraj State Bank has submitted that its leave rules are governed
by an agreement with workers which provide generous conditions of service
in respect of privilege leave, casual leave and sick leave and no further alteration
in that agreement was called for on the merits or was permissible in law. The
bank is also against the grant of any other form of leave apart from privilege
leave, casual leave and sick leave.

general rules set out above will therefore be substituted by the following
clause :

taken as a matter of right and was meant to be taken in emergent and

unforeseen circumstances, that it was contrary to principle to grant six days
casual leave at a stretch and that it was the State Banks experience that a
great deal of difficulty was caused by employees availing themselves of casual
leave without prior sanction. It is submitted that there should be no increase
of the quantum of casual leave, that the workmen need to be impressed
about the true nature and purpose of such leave and should avail of it only in
emergent and unforeseen circumstances and that directions should be given
that any habitual deviation from this principle would amount to misconduct. It
has submitted that privilege leave should not be taken more than twice a year
and after an interval of not less than three months between the leaves. In
connection with maternity leave, it has submitted that social and economic
conditions in the country demanded that there should be a restriction on the
number of occasions on which such leave was granted. In connection with
special leave, it is submitted that the demand in connection therewith did not
constitute an industrial dispute and that an Industrial Tribunal could not direct
granting of such special leave.

AI

9.8. The Sastry Tribunal has provided that when an employee has gone
on leave, unless he was permitted to do so by the authority which granted his
leave, he may not return to duty more than fourteen days before the expiry of
the period of leave granted to him. In effect, this provision confers a right upon
an employee to return to duty at his sweet will and pleasure without any
permission before the expiry of the period of leave granted to him, provided he
returns not more than fourteen days before the expiry of such leave. When an
employee goes on fairly long leave, arrangements may have to be made by
the bank concerned for the disposal of work during his absence. An employee,
by returning to duty at any time within 14 days prior to the expiry of the period
of leave without prior permission, may disturb the arrangement made by the
bank for the period of leave taken by the employee. He cannot therefore have
an unfettered right to return back to duty. It is possible that the bank might
not have sanctioned the leave if it had been asked for a shorter period than
the one for which leave was actually demanded. Under the provisions of the
Award, as it stands, a workman may be enabled to convert a long leave into
a short one. In a proper case, a bank may, having regard to the circumstances
under which a workman may seek to return earlier, permit a workman to
return before the expiry of the period of his leave, but there should be no
provision which should confer upon a workman a right so to return. The
provisions of the Sastry Award therefore need to be modified.Clause 8 of the
333

(ii) Privilege Leave

9.10. Under the Sastry Award as modified employees in A Class and B
Class banks earn privilege leave of one month for completed service of 11
months. Employees in C Class and D Class banks earn privilege leave of
3/4 of a month for completed service of 11 months. It is claimed that the
period during which privilege leave is enjoyed should also be counted for the
purpose of calculating the period of eleven months in the case of employees
of A Class and B class banks and of 11 months in the case of employees
of C Class and D class banks. There is no merit in this claim. In my view the
intention of making the aforesaid provisions was not to lay down that if a
person employed in an A Class bank or a B Class bank has enjoyed one
334

9.15. A demand has been made on behalf of workmen that Sundays and
other public holidays falling within the period of casual leave should not be
counted as part of the casual leave.In support of this demand a reference has
been made to the recommendation of the Second Pay Commission at page
48 of its report which is as under :

BE

9.11. The banks have claimed that as privilege leave is intended for rest
and recuperation, it should not be taken in more than two instalments in a
year.This demand seems to be reasonable.Banks having numerous
employees may have to arrange the leave programme of the employees so
as not to disturb the work of the bank. If privilege leave is taken in driblets, it
will not serve the purpose for which it is intended to be taken. I therefore
direct that workmen will not be entitled to take privilege leave on more than
two occasions in a year. This will not include the occasion when a workman
has gone on privilege leave but has been recalled.In special circumstances
an application may be made for the grant of such leave on more than two
occasions in a year and it will then be in the absolute discretion of the bank
concerned whether to grant such leave or not.

enjoyed without any prior intimation for reasons which cannot justify the
taking of such leave.This leave is really intended to cover special, emergent
or unforeseen circumstances and cannot be taken on the footing that it is the
right of the workmen to take the same upto the maximum limit provided,
whether such circumstances exist or not. It cannot be regarded as an accrued
unconditional benefit which has to be enjoyed whether the conditions provided
for its enjoyment exist or not.Any absence from duty without satisfying the
requisite conditions under which such leave may be taken would justify any
bank in not treating the employee as on casual leave but as being absent
without leave.Even where leave has been applied for and granted and the
reasons given for such leave have been subsequently found to have been
falsely given, a bank would be at liberty after giving the workman an opportunity
of being heard in the matterto treat the workman as if the workman had
been granted leave without pay. This will be without prejudice to any other
action which the bank may, under the circumstances, be entitled to take
against the workman.

months privilege leave and has thereafter served for 10 months he should
become entitled to enjoy further privilege leave of 1 month. It was similarly
not the intention that a person employed in a C Class bank or a D Class bank
who has enjoyed privilege leave for 3/4 of a month and has thereafter put in
10 months of service should become entitled to enjoy another of a month
of privilege leave. In any event, that is not my intention and I direct that in
calculating the period of eleven months of completed service by workmen in
A and B Class banks under this award and for the purpose of calculating the
period of 11 months service by workmen in the case of C Class banks
under this award including banks in the Excepted List, the period of privilege
leave enjoyed should not be counted.

AI

9.12. The provision of the Sastry Award relating to accumulation of

privilege leave beyond 3 months in cases where leave applied for by a work
man has been refused require to be modified. In substitution of clause (2)
under the heading Privilege Leave set out earlier I provide as under :
If leave applied for by a workman has been refused, such workman
will be entitled to accumulate leave in excess of the maximum of
three months prescribed until such time when the bank is in a
position to grant him leave.

9.13. In my view no further modifications are required to be made in

connection with the provisions relating to privilege leave. The provisions about
leave applicable to A Class and B Class banks under the Sastry Award as
modified will apply to A Class and B Class banks under this award. The
provisions about leave applicable to C Class banks under the Sastry Award
as modified will apply to C Class banks under this Award including banks in
the Excepted List.

Under the existing orders, public holidays and weekly offs falling
within a period of casual leave are included in the casual leave.
There appears to be no valid reason why it should be so, and we
recommend that such public holidays and weekly offs should not
be treated as part of the casual leave.

This recommendation of the Pay Commission has been accepted by

Government and the Government employees are enjoying this facility. This
provision seems to me to be fair. I direct that public holidays and weekly
falling within the period of casual leave should not be treated as part of casual
leave.
9.16. The provision of the Sastry Award in connection with casual leave
are well considered and fairly liberal and except as stated above it is not
necessary to make any changes therein.
(iv) Sick Leave

9.14. In connection with casual leave, the Sastry Tribunal has already
laid down that it is only intended to meet special or unforseen circumstances
for which provision cannot be made by exact rules.Some of the banks have
shown that such leave has sometimes been lightly applied for or has been

9.17. In connection with sick leave, the Sastry Tribunal has laid down
that "where an employee has served the bank for at least a period of five
years, he may, if he so requests, be permitted to avail himself of sick leave
on full pay upto a maximum period of six months during the full period of his
service, such leave on full pay being entered as twice the amount of leave
taken in his sick leave account. At the hearing the workmen desired that the
word may should be altered to shall. In order to avoid any possible dispute
on the question of construction, I direct that a change be made by substituting

335

336

(iii) Casual Leave

the word shall for may in the aforesaid clause. Save as aforesaid, there
does not appear to be any case made out for a change in the conditions laid
down in the Sastry Award relating to sick leave.

and committee members of three Unions of its employees a maximum of

seven days special casual leave in a calendar year for the purpose of attending
the annual conference of the Staff Federation and an additional leave of five
days for attending the annual conference of the Circle Unions.

(v) Quarantine Leave, Extraordinary Leave and Maternity Leave

9.23. The Second Pay Commission has at page 418 of its report referred
to the facilities enjoyed by the staff under the Ministries of Railways and
Defence and the Department of Posts and Telegraphs, and observed as
follows:

9.18. No case has been made out for any change in the existing provisions
of the Sastry Award in connection with quarantine leave, extraordinary leave
and maternity leave.
(vi) Special Casual Leave

In the Railways, representatives of recognised unions etc., can be

granted special casual leave without any limit (a) for meeting the
representatives of the Administration and (b) for attending the annual
general meetings of their respective unions.

(ii) In the Posts and Telegraphs Department, special casual leave may
be granted for upto 20 days in a year, for (a) waiting on deputation
on the Minister, heads of Departments etc., (b) for attending in a
representative capacity, all-India conference and meetings of
recognised associations and unions, and (c) to office bearers and
members of executive councils of all-India unions also for attending
their circle conferences General Secretaries of all India unions may
be allowed special casual leave upto 25 days.

BE

.........it is unnecessary to give any direction as ordinarily the court

or tribunal would be in a position to give appropriate directions in
respect of this demand as and when necessary."

(i)

9.19. A demand was made before the Sastry Tribunal for the grant of
special leave for office-bearers of unions and association to carry out their
trade union functions, duties and activities. It was then stated that some of
the trade union officials have to attend proceedings of labour courts and
tribunals and take part in the conference of trade unions. The Sastry Tribunal
held that no case had been made out for the grant of special leave and
observed that legitimate trade union activity should be conducted out of office
hours and without detriment to the interests of the bank. As regards leave for
attending labour courts or tribunals, the Sastry Tribunal observed as follows:

AI

9.20. The above observation regarding special leave for attending Labour
Courts and Tribunals had been made, before the Supreme Court gave its
decision in the case of Rohtas Sugar Ltd. and others vs. Mazdoor Seva
Sangh and others, reported in 1960 (I) Labour Law Journal, 567. In that case,
the Supreme Court set aside the directions which had been given to the
effect that workmen attending the proceedings before the Industrial Tribunal
should be treated as on special leave with pay for the period of such
attendance.

9.21. In connection with the demand made by the employees for special
leave, it is contended by the banks that this Tribunal has no jurisdiction to
deal with the matter. The aforesaid decision of the Supreme Court which is
relied upon was given in a case where an Industrial Tribunal sought to give
directions to a party appearing before it to grant to other parties before it,
namely, workmen then appearing before it, special leave with pay for the
period during which such workmen appeared before the Tribunal. That decision
has no bearing on the question of the jurisdiction or the powers of an Industrial
Tribunal when a dispute has been referred to it for adjudication relating to
leave rules which would include rules relating to various kinds of leave,
including special leave which may be given to workmen. In my view, I have
jurisdiction to consider and decide on merits the issue whether special leave
should be granted to workmen or not.
9.22. The State Bank of India is actually allowing to the office bearers
337

(iii) Representatives of recognised unions under the Ministry of Defence

may be given special casual leave of upto 20 days in a year (a) to
attend all-India meetings, and (b) to attend other meetings to which
they are invited by the Ministry of Defence or other authorities under
the Ministry.
(iv) In other cases no special casual leave is ordinarily granted and
employees who are office-bearers of recognised unions, etc., are
expected to take ordinary casual leave for work connected with
their union or association activities.
9.24 The Commission has further observed as under :
The facilities allowed to recognised associations etc., of civil
servants in the United Kingdom are far more restricted than those
allowed to representatives of associations etc., under the Ministries
of Railways and Defence, and the Department of Posts and
Telegraphs. Special leave, or time off, with pay is usually given
without restriction only for attendances at joint meetings of the two
sides of the National Whitley Council or its Committees. Even for
attendance at joint meetings of the Departmental Whitley Councils
or of their Committees, the cost of any special arrangements that
may have to be made to cover the leave or time-off given to the
employee is to be borne by the employee himself, or by his
organisation. Similarly, where full days special leave is given for
other business of a staff association a deduction is made from the
338

full pay. Though a special leave upto a maximum of 30 days may

be granted in a year, the absent officer does not receive his normal
pay, but only the difference between the normal pay and actual or
assumed expenditure on the arrangement necessary during his
absence. Members of deputations are not allowed leave with pay
except when it is agreed that the deputation will be regarded as
taking the place of a special meeting of the Whitley Council.

with this demand, the Sastry Tribunal observed that the provisions for leave
granted by it would cover all the just and reasonable needs of the workmen
and that the workmen could, in such cases, utilise the ordinary leave
accumulated by them upto three months. It however added that if the banks
were not able to grant such leave owing to exigencies of the bank work, the
workmen should be paid on retirement the pay and allowances for such
period for which the leave was withheld. No case has been made out before
me for a change in the above provisions in the Sastry Award as modified, and
I give similar directions in this award. The aforesaid observations will equally
apply to the demand of furlough leave

9.25 The Commission considered that the facilities already allowed were
generous and recommended that facilities broadly modelled on those provided
by the Department of Post and Telegraphs or the Ministry of Defence to their
civilian employees, may be extended to other employees representing
recognised service organisations.

9.30. By a supplementary statement, the All India Bank of Baroda

Employees Federation has demanded that employees should be entitled to
avail of leave at their credit during the period of notice of resignation, that an
employee should also be entitled to receive salary and allowances etc., in
lieu of the leave at his credit on termination of his employment, that the bank
should not be entitled to require any employee to extend the period of notice
of his resignation on the ground that he had availed of leave during the notice
period and that an employee should be entitled to set off his leave against the
notice period of resignation.

AI

BE

9.26 Having regard to the fact that workmen in the banking industry have
been organised on an all-India basis and there are all-India organisations to
which various unions of workmen employed in banks have been affiliated, I
consider it in the interests of the industry that special casual leave should be
granted to the office-bearers and Executive Committee members of the
organisations hereinafter mentioned in order to enable them to attend meetings
and conferences. I accordingly direct that the office bearers and the Executive
Committee members of the All India Bank Employees Association, the All
India Bank Employees Federation and the All India State Bank of India Staff
Federation, who are workmen employed in banks governed by the award
should be given by the respective banks special casual leave upto 7 days in
a calendar year for the purpose of attending meetings and conferences of
their respective organisations. The Stale Bank of India and some other banks
are giving special leave to office bearers and committee members of various
unions. It is not intended by this award that these facilities when they are in
excess of what is hereby provided should in any way be discontinued or
curtailed. In this award, having regard to the limited quantity of evidence
available on the subject, facilities only of a limited nature have been directed
to be provided.

9.29. No case has been made out by the Indian Banks Association for
reducing the leave entitlement in branches in rural areas to three-fourths of
those presribed for other areas.

(vii) Study Leave

9.27. There was a demand made before the Sastry Tribunal for special
leave, for employees who appear for examinations conducted by universities
and by the various institutes of bankers. The Sastry Tribunal, in dealing with
this matter, stated that it could not grant this leave as part of its leave rules
and observed that it had no doubt that the banks would sympathetically deal
with individual cases on their special merits. I will only repeat what the Sastry
Tribunal has said in connection with the demand of the workmen before me
for the grant of study leave.
(viii) Leave Preparatory to Retirement
9.28. There was a demand made before the Sastry Tribunal for six months
leave with full pay and allowances preparatory to retirement. While dealing
339

9.31. In reply to the above demand, the Bank of Baroda has submitted
that permanent employee has to give a months notice before leaving the
service of the bank, that an employee other than a permanent employee or a
probationer has to give 14 days notice that the obligation of giving notice on
the bank and the employee is reciprocal, and that if an employee is allowed
to avail of his leave during the period of such notice, the very purpose of
notice will be defeated. The other supplementary demands are also opposed.
The question relating to accumulated leave on termination of employment
has already been dealt with to the extent that the termination has been
brought about by the retirement of the employee. Except to the extent already
provided no case has been made out in connection with these demands and
the same are rejected.
9.32. Save as provided in this award, no demands made by the workmen
or the banks in connection with leave rules have been granted.
9.33. I make an award in connection with leave rules terms of the Sastry
Award as modified by the Labour Appellate Tribunals decision set out earlier,
with the alterations, modifications and additions made by me as set out
above. Wherever the provisions of any law applicable to any place are in
conflict with the provisions herein contained, the provisions of law should be
applied.

340

directions must give place to the statutory provisions.

CHAPTER X

The banks were given liberty by the Sastry Tribunal to fix at their discretion
the actual timing of work provided the maximum number of hours of work
flxed by the award were observed. The Sastry Tribunal felt that many types of
work in a bank could not be carried within a system of fixed hours, say,
between 9 A.M. to 5 P.M. For instance, the work of cash book writers, day
book writers, supplementary book writers, internal audit, pass-book writing,
etc. could conveniently be attended to only at different times. Despatchers
will have to take up work in connection with posting of letters only after they
are signed by officers. Sweeping and cleaning of bank premises or opening
and locking of safe vaults may have to be done even before or after such
prescribed working hours. Workmen in charge of safe vaults may have to
remain beyond such hours to suit the convenience of customers. Godown
deliveries may have to be made outside such hours even as desired by the
borrowers. The Sastry Tribunal has in this connection observed as follows:

Item No. 8 : HOURS OF WORK AND OVERTIME

AI

BE

10.1. As observed by the Sastry Tribunal, the nature of the work in

banks differs in some important respects from the usual type of work in
government offices and other commercial concerns. In banks it is necessary
that a days work should be finished in the course of the day itself with
respect to most of the transactions. A good part of the business cannot be
left over to be done leisurely in the succeeding days. The accounts of the
constituents should be posted, checked and verified before the next days
work commences. Similarly, cash balances have to be checked and verified
at the end of the day. Parties have to be intimated promptly with notices of
returned cheques received from the Clearing House. These and allied matters
necessitate that the days work should be finished before the clerks are
permitted to leave office. It is necessary to see that the clerical staff do not
down their pens immediately on the close of the actual hours of work fixed
when the days work in respect of the above matters is not over. In dealing
with the hours of work and overtime in banks these considerations must be
kept in view. The Sastry Tribunal has prescribed that for the clerical staff the
actual hours of work exclusive of recess period on week days (excluding
Saturdays) shall not exceed 6 hours a day and 4 hours on Saturday; that
there shall be a recess for lunch which shall not be less than half an hour and
not more than an hour for week days (excluding Saturdays) subject, however,
to the requirements of any statutory closoure like Shops and Commercial
Establishments Acts; that primarily it would be for the workmen to decide
the actual length of the recess within the limits fixed above and that majority
decision of the workmen in any branch or establishment was to be adopted
in case of difference of opinion with the management. These directions also
applied to the subordinate staff with the modification that they would be
required to attend duty half an hour earlier and stay an hour later than the
normal working hours fixed for the clerical staff. The part-time employees, as
well as watch and ward staff, bank employees engaged in domestic service,
gardners, sweepers, godown-keepers engaged solely for that work were
excluded from the scope of these directions. The Sastry Tribunal further
provided as follows :

(i) Hours of Work

The provisions of the local Shops and Establishment Acts in force

in various States which are or may be made applicable to banks
subject to such exemptions as have been provided for therein shall,
of course, govern the parties to this reference. If the above directions
as given by us come into conflict with any such provisions or are
repugnant to the same, then to the extent of such repugnancy or
inconsistency with statutory provisions and to that extent only these
341

To lay down a general rule fixing the actual timing of office hours
as distinct from the total number of hours for a days work would be
to ignore the realities of the situation and the exigencies of bank
work of various types. It is, therefore, necessary to recognise the
right of bank managements to relax the rigidity in the observance
of the usual hours of work wherever it is necessary or convenient or
desirable to do so.

10.2. The Labour Appellate Tribunal modified the Sastry Award by laying
down that where godown-keepers were required to remain in attendance at
the bank during the office hours, the directions regarding office hours and
overtime were to apply to them as to other employees of the bank and that in
cases where a chokidar has been employed to guard the banks premises
and he is one of the several chokidars and is kept on duty for a period of time
generally about 8 hours, the hours of work should not exceed a shift of 8
hours in 24 hours.
10.3. On behalf of a large number of employees it is pleaded that a
period of 6 hours of work on week days (other than Saturdays) and 3
hours of work on Saturdays excluding the recess period should be prescribed
for all categories of workmen including the watch and ward staff and godownkeepers and that for employees working on accounting machines the working
hours should be 4 hours on week days (other than Saturdays) and 2 hours
on Saturdays. There are, however, some unions which appear to be satisfied
with the present hours of work which are 6 hours on week days (other than
Saturdays) and 4 hours on Saturdays. There is one union which demands
only 2 hours work for the accounting machine operators on Saturdays.
10.4. The Indian Banks Association is in favour of retention of the existing
provisions of the Sastry Award. It has, however, suggested that provision
should be made for a recess period also on Saturdays leaving the actual
342

hours of work as they were prescribed by the Sastry Award. It has pleaded
that as regards the members of the supervisory staff drawing monthly
emoluments up to Rs. 500 who, by reason of the amended definition of the
term workman have been included in the expression workman directions
may be given that the actual hours of work exclusive of recess period on
week days (exclusive of Saturdays) should not exceed 8 hours a day and on
Saturdays should not exceed 5 hours a day. It contends that there is no
justification for the demand for lesser hours of work for accounting machine
operators. It has pleaded that the accounting machines were provided to help
the employees to avoid mental fatigue caused by routine calculations and
that the operation of the accounting machines did not involve effort greater
than that involved in other work done by other employees so as to warrant the
reduction of hours of work.

10.8. Shri Sule, the learned advocate on behalf of the All India Banks
Employees Association, has pleaded that Saturday is regarded as half day
and if the employees are made to work for four hours on that day, it would be
more than half a day. His demand is that on Saturdays the employees should
work for three and a half hours which by itself is more than half the time
provided under the Sastry Award, for week days other than Saturdays. In
connection with this demand Shri Phadke, the learned advocate on behalf of
the Indian Banks Association, has pointed out that it was not possible to
have a clearing on Saturdays with only three and a half hours of work and that
this difficulty was brought to the notice of the Sastry Tribunal which raised
the working hours to four hours.

AI

BE

10.5. The Bombay Exchange Banks Association has submitted that

the hours of work are inadequate especially when viewed in comparison with
those prevailing in other eastern countries. It has submitted that inasmuch
as the Shops and Establishment Act enacted by the various State
Governments provided for a much longer duration of work daily and weekly
and as the provisions contained therein were binding on the banks as on
other establishments, there was no reason why a different set of rules should
apply to banks in respect of hours of work. It has claimed that the hours of
work and recess for lunch in respect of maximum limits should be the same
as provided in the Shops and Establishments Act applicable at the various
centres. It has submitted that if the Tribunal was to lay down the hours of
work on an All-India basis, they should be 8 hours per week day (excluding
lunch recess) and four hours per Saturday (without a lunch recess) with a
minimum of 48 hours per week before becoming eligible for overtime. It opposes
the demand made by the employees on behalf of the watch and ward staff,
the godown-keepers, the subordinate staff and the accounting machine
operators.

watch and ward staff, godown-keepers and subordinate staff should work for
smaller number of hours. The Bharatha Lakshmi Bank submits that the hours
of work as demanded by the employees do not suit smaller banks and that
the hours of work prescribed under the Shops and Establishments Acts
should be made applicable to D Class banks. The Jaya Laxmi Bank desires
that the working hours should be raised to 8 hours on week days and 6 hours
on Saturdays excluding the recess interval. On behalf of the Miraj State
Bank it has been pointed out that its working hours are 11-30 A.M. to 3-30
P.M. and 4-30 P.M. to 7-30 P.M on week days (excluding Saturdays) and 1130 A.M. to 2-30 P.M. and 3-30 P. M. to 4-30 P.M. on Saturdays making a
total of 39 hours weekly. The bank is opposed to any change in its present
working hours.

10.6. The State Bank of India has submitted that the members of the
subordinate staff are required to attend office a little earlier and to leave a little
later than the members of the clerical staff in almost all organisations and
that there was no difference in principle so far as banks were concerned. As
regards the watch and ward staff, it says that by their very nature of duties,
the limitation of hours demanded by the union was unreasonable and without
precedent and that as a rule the local Shops and Establishments Act exempt
watch and ward staff in respect of working hours provided they were given a
weekly off day. It has pleaded that a similar rule should apply to the watch
and ward staff of the bank.

10.9. The working hours permissible under some of the local Shops.and
Establishments Acts are 48 per week and not more than nine hours per day.
The working hours prescribed for the clerical staff in the banking industry
under the Sastry Award, as modified are 36 per week. Under the Sen
Award the working hours oh Saturdays were fixed at 3 hours and the Sastry
Tribunal raised them to 4 hours after considering the special circumstances
shown by the banks for such a change. The daily and weekly limits perscribed
by the Sastry Tribunal are far below the level of the statutory limits under the
various Shops and Establishments Acts. The convenience of the public has
also to be considered. No case has been made out for reducing the hours of
work.

10.7. On behalf of the Subsidiaries of the State Bank of India, it has

been pointed out that the hours of work prescribed by the Sastry Award were
inadequate in case of these banks as they have to conduct Government
business. These banks have also opposed the demands of the workmen that

10.10. There is not much merit in the demand that the hours of work
should be the same both for clerical staff and the subordinate staff, having
regard to the nature of the work of the members of the subordinate staff and
having regard to the fact that the presence of some of them, in any event, is
necessary before the members of the other staff arrive at the premises of the
bank and after the members of the other staff leave the bank. The total number
of hours of work put in by the members of the subordinate staff do not compare
unfavourably with the hours of work put in by similar category of employees
in other industries and no case is made out for making any change in their
hours of work.

343

344

10.11. In connection with the item regarding the need for the development
of the banking industry including banking facilties in rural areas (item No. 20)
the Indian Banks Association has pleaded that the hours of work which may
be found appropriate for urban areas would not fit in with the environments
and the nature of work in the rural areas and has claimed that the hours of
work should be eight per day including Saturdays or 208 hours per month, on
the lines of hours prescribed by the Shops and Establishments Acts in various
States.

10.18. The demand of some of the banks for provision for recess on
Saturdays has been opposed by the workmen. A provision for lunch recess
on Saturdays would entail the workmen remaining on the premises of the
bank beyond the time when they would otherwise leave the premises of the
bank. A recess is intended primarily for the benefit of those to whom it is
granted. Workmen being opposed to a recess on Saturdays, no case has
been made out for providing the same against the wishes of the workmen.

BE

10.13. No evidence has been placed before me to show that ordinary the
present hours of work are insufficient or that the present hours of work in rural
establishments have caused such inconvenience as would warrant different
hours of work being fixed for the rural areas. I am unable to accede to the
demands of the banks in this connection.

10.12. The State Bank of India and its Subsidiaries while dealing with
item No. 21 regarding special needs of the State Bank of India and its
subsidiaries in respect of any of the preceding items (items 1 to 20 appearing
in Schedule II to the order of reference), have claimed that the present working
hours in branches and offices dealing with Government business should not
be retained and that it should be left to them to fix working hours in consultation
with the State Governments concerned.

of the supervisory staff drawing less than Rs. 500 who came to be included
within the category of workmen by reason of the Industrial Disputes
(Amendment) Act, 1956, should be more than those for members of the
clerical staff. By reason of the amendment of the definition of workmen in
the Industrial Disputes Act, 1947, some persons who otherwise were not
workmen have now become workmen. Such employees do not form a distinct
class by themselves who could be easily distinguished from other members
of the clerical staff drawing a supervisory allowance under the Sastry Award,
for whom hours of work have been prescribed under the Sastry Award. In
practice it would be extremely difficult to draw a line and distinguish the one
from the other. In banks there is no standardised nomenclature for employees.
A person bearing the same nomenclature may be performing different duties
and discharging different functions in different banks. In small banks or at
branches of banks at small centres one person may be performing the
functions of several persons bearing different designations working in a large
bank or in a large city. It is not practically feasible to provide for separate
working hours for the employees under consideration and it is not necessary
to do so.

AI

10.14. The Bombay Exchange Banks Association and others have made
a claim for an increase in the hours of work of the bank employees to bring
them in line with the maximum hours of work laid down in the Shops and
Establishments Acts. No evidence has been led to show that the present
hours of work are insufficient for coping with the work ordinarily done by
banks every day. There does not appear to me to be any necessity to change
the hours of work prescribed by the Sastry Tribunal.
10.15. As regards the members of the watch and ward staff and godownkeepers their case has been fully considered by the previous Tribunals. Having
regard to the nature of the duties which they have to perform and the expense
involved in making other arrangements, it is difficult to improve upon the
provisions made with regard to them under the award of the Sastry Tribunal
as modified by the Labour Appellate Tribunals decision.

10.16. There is a claim made for reducing the hours of work for employees
working on accounting machines. The accounting machines have been
introduced by the banks to help the workmen by reducing the amount of
labour and fatigue involved in routine type of calculations. No evidence has
been led to show that the use of these machines involves such labour or the
wearing out of either the body or the mind to such an extent as would warrant
the reduction in the hours of work for them. A special allowance has been
provided for those workmen who work on these machines.. There is no case
made out for reducing their hours of work.
10.17. The banks have claimed that the hours of work for the members
345

10.19. Shri H. K. Sowani, the learned advocate on behalf of the All India
State Bank of India Staff Federation, contended that duty hours not exceeding
eight hours should be fixed for drivers, domestic servants and malis, Drivers
are not exempted from the provisions of the Sastry Award regarding hours of
work unless it could be said that they are engaged in domestic service. As
regards others, the work performed by a large number of these employees is
not of a continuous nature and does not lend itself to standardisation. Their
cases have been duly considered by the previous Tribunals. In the present
state of the record before me, I cannot see my way to lay down fixed duty
hours for them.
10.20. In the result, all the provisions of the Sastry Award as modified in
connection with hours of work will remain unaltered and will be applicable to
all the banks which are before me and their workmen. The directions regarding
Ihe working hours shall be subject to the provisions of Shops and
Establishments Acts and of any other enactments in this connection
applicable to banks.
(ii) Overtime
10.21. The Sastry Tribunal by paragraph 304 of its award provided that
346

on the ground that his own mistake had necessitated overtime work he must
be given an opportunity at a suitable time to explain his lapse and to show
cause why an order depriving him of overtime should not be passed against
him.
10.25. The All India Bank Employees Association has claimed that no
employee should be called upon to work overtime for more than two hours
beyond his working hours on any working day, with the maximum of 60 hours
in a year, that overtime payment should be made at double the rates of
wages calculated on hourly basis, that Sundays and other holidays should
be excluded for the purpose of calculating hourly rate of wages, that there
should be no cushioning period to be deducted for calculating the hours of
overtime work, that no employee should be asked to work overtime on Sundays
and holidays except with his consent, that any workman, including a member
of the watch and ward staff working overtime on Sundays and holidays, should
be given a day off in the subsequent week in addition to the usual overtime
payment, and that all employees including the watch and ward staff and
godown-keepers should be allowed to enjoy all holidays under the Negotiable
Instruments Act. The All India Bank Employees Federation as also the
Vadodra Rajya Bank Nokar Sangh have demanded that the rate of overtime
should be increased, the employees should only be asked to work overtime
in case of an emergency, that overtime work should not exceed two hours on
any working day and it should not exceed 72 hours in any calendar year, that
there should be no cushioning period and no overtime work on holidays except
for half-yearly closing days, that there should be no overtime work in the
case of weekly off days and that the basis of calculation should be double
the rate of one-day wage arrived at by excluding Sundays and holidays in a
month.

AI

BE

banks could ask the workmen to do overtime work beyond the hours stated
by it in the award but subject to a maximum of 90 hours in any calendar year,
which may extend with the consent of the workmen, to 120 hours. It further
provided that normally such period of overtime work shall not exceed 2 hours
on any working day without the written consent of the workmen except in
cases falling under clause (6) of that paragraph relating to work done during
public holidays declared as such for half-yearly or yearly closing of bank
accounts and work done on other holidays. It is also laid down that for the
first half an hour of overtime work, there would be no payment, that for every
completed period of fifteen minutes work thereafter the workmen should be
paid for the first four quarter hours at the rate of 1 times the emoluments
made up of basic pay, special allowances provided for higher or special types
of work, officiating allowance and dearness allowance and that for overtime
work beyond the first four quarter hours after the initial half hour cushioning
period, they should be paid, for every quarter hour at the rate of 1 time of
the emoluments together with an additional twenty per cent for work during
such extra period. For the purpose of calculating payment for overtime work,
it was directed that each working day should be taken as a distinct unit by
itself. As regards the work done during a public holiday declared as such for
half-yearly or yearly closing of bank accounts, over time payment, if any,
was to be made only for hours of actual work exceeding 6 hours if it was a
week day or 4 hours if it was a Saturday, but for other holidays during which
overtime work was required to be done, payment was to be made for the
whole period of such work. The Sastry Tribunal excluded from the scope of
its directions relating to overtime, part-time employees as well as watch and
ward staff, bank employees engaged in domestic service, gardeners, sweepers
and godown-keepers engaged solely for that work.
10.22. The Sastry Tribunal has provided in this respect also that the
provisions of the local Shops and Establishment Acts in force in various
States which were or might be made applicable to banks, subject to such
exemptions as had been provided therein, would govern the parties before it
and that if the directions given by it came into conflict with any provisions of
such Acts or were repugnant to the same, then to the extent of such
repugnancy or inconsistency with statutory provisions and to that extent
only the directions given by it would give place to the statutory provisions.

10.24. The Labour Appellate Tribunal modified the directions of the Sastry
Award by deleting the provisions relating to the cushioning period for the
subordinate staff and by making the directions regarding overtime applicable
to cases where godown-keepers were required to remain in attendance at
the bank during office hours. The Labour Appellate Tribunal further directed
that before an order refusing to pay overtime can be passed against a workman

10.26. The employees of the State Bank of India through their various
organisations have made more or less the same demands as the All India
Bank Employees Association except that the State Bank of India Employees
Association (Bengal Circle) says that there should be no overtime and no
overtime payment and only as an exception and in very special cases and on
a few occasions in particular places where overtime cannot be avoided for
unavoidable reasons, it is in favour of conditional overtime work. The Indian
Overseas Bank Employees Union, the All India Bank of Baroda Employees
Federation, the South Gujarat Bank of Baroda Employees Union Surat, the
Allahabad Bank Employees Union, Calcutta, the Cochin Commercial Bank
Employees Association, the State Bank of Patiala (All Cadres) Employees
Association and the Employees Association of the Union Bank of Bijapur
and Sholapur have also made demands in connection with overtime payment
which are more or less similar to those made by the All India Bank Employees
Association. The few differences are that the Indian Overseas Bank
Employees Union is against any ex gratia payment in lieu of overtime work
done by an employee, the Allahabad Bank Employees Union, Calcutta does

347

348

10.23. The Sastry Tribunal directed that a workman who makes mistakes
which necessitate overtime work on his part cannot claim the benefit of payment
for such overtime work.

not object to 90 hours overtime work in a year and the State Bank of Patiala
(All Cadres) Employees Association says that the maximum hours of overtime
work should not exceed 160 hours. The Bihar Provincial Central Bank
Employees Association at Muzaffarpur, says that overtime work should be
discouraged and banks should employ sufficient hands to cope with the work
and the employees should be asked to work overtime in case of emergency
only. The Association does not want overtime work exceeding a maximum of
72 hours in a calendar year.

facilitate quick calculation and disbursement of the amount of overtime due

2 x basic pay x 12

to workmen, the formula suggested being

It is

further submitted that no overtime payments should be made when the

employee works on a Sunday or on a weekly holiday if he is given a substituted
holiday in accordance with the provisions of the local Staff and Establishment
Act or otherwise, and that there should be no overtime payment for a closed
day or a holiday not declared at least 48 hours before the commencement of
business on that day.
10.29. The State Bank of India has opposed the demands of its
employees about overtime and has submitted that limitations on the hours of
work and overtime have considerably affected the State Banks capacity to
discharge its duty to the public efficiently, that the Sastry Tribunal has
constituted bank employees a privileged class as no such restrictions were
placed in other industries, that it was not uncommon in the larger office of the
State Bank for employees to exhaust the 90 hours limit of overtime during
the first few months of the year, thus making the State Bank dependent on
arbitrary pleasure of the employees to work further overtime, that such
limitations have no basis even in equity and very seriously handicap the bank
invariably at the time when the books were to be closed and accounts
balanced, which were very essential operations in a bank, that these limitations
prove particularly onerous and heavy in connection with the State Banks
conduct of government business, that as agent of the Reserve Bank, the
State Bank was under an obligation to conduct government business such
as remittances, exchange facilities, acceptance of applications for government
loans, receipt of taxes, payment of salary and pension bills and other grants
on behalf of government etc., and that the overtime limitations caused genuine
difficulty to the State Bank as also to the public and the government
departments. It has prayed that all restrictions on hours of overtime work and
the surcharge on overtime payment should be removed. It has submitted that
the demand that Sundays and holidays should be excluded for the purpose
of calculation of hourly rate of wages was unreasonable and unjustified
inasmuch as the State Banks employees were all monthly rated and were
paid for all days in a month, that the State Bank does not call upon its
employees to work on holidays except when urgency of work or the nature of
government business required this to be done and that if the matter was
subject to the employees consent it would cause grave difficulties and
embarrassment to the bank.

AI

BE

10.27. The Indian Banks Association has stated that the ceilings in
respect of overtime work were fixed without any reliable materials on record,
that in actual practice the ceilings could not be observed in spite of the best
efforts on the part of the banks and directions were necessary for raising the
ceiling to 300 hours in a calendar year without any condition of workmans
consent and as a consequent change the daily limit of 2 hours should be
raised to 3 hours, and that restriction of three hours per day should not apply
to work done on the last day of each quarter, when the work was heavier than
on other normal working days. In connection with the calculations to be
made with regard to payment for overtime work, it has submitted that instead
of each working day being taken as a unit under clause 5 of paragraph 304 of
the Sastry Award, each week should be taken as a distinct unit. Since the
award has not in terms laid down any method by which the emoluments per
hour could be calculated, it has submitted that the rate of overtime payment
should be calculated on the basis of the number of days in a month less
Sundays. A direction is sought clarifying that public holidays declared for
half-yearly or yearly closing of bank accounts should be treated as normal
working days for all employees of the banks, whether they are connected
with the work of closing of accounts or not. It is submitted that directions
should be given to the effect that when an employee is sent on outstation
duty, he would be entitled to overtime only for actual work of the bank done
beyond the normal hours of work and the cushioning period, and that refusal
to do obligatory overtime work within the prescribed limits would be treated
as gross misconduct on the part of an employee, attracting disciplinary
action. In connection with the statement appearing in paragraph 309 of the
Sastry Award that It will not be right for the banks to allot to workmen more
work than could legitimately be done in the normal way during the prescribed
hours of work, a clarification is sought to the effect that normal work does not
necessarily mean, work done by employees regularly every day but it is
such work as is normally done by an employee in the discharge of his duties
either daily or at periodical intervals.

48hours per week x 52weeks

10.28. The Bombay Exchange Banks Association regards the demands

of workmen on the question of overtime as most unreasonable. While opposing
the demands it has submitted that in view of the peculiar nature of the work in
banks, there should be no restriction on overtime except to the extent required
by statutes. It is submitted that a simplified formula should be prescribed to
349

10.30. The Subsidiaries of the State Bank of India have made submissions
more or less on the lines of the above statement of the State Bank of India.
On behalf of the State Bank of Patiala, it has been pointed out that prior to
the coming into force of the Punjab Shops and Commercial Establishments
Act, 1958, no allowance in respect of overtime was being paid to the workmen
350

at the time of the closing of the financial year; when bills relating to grants
and other sanctioned expenditure have to be disbursed at the latest on 31st
of March of each year when taxes have to be deposited by 31st March for
inclusion in the government revenue for the particular financial year and when
remittances have to be made by taxpayers by particular dates, occasions
arise for requiring employees to work overtime. There are other occasions
when work may be required to be done overtime. The very nature of the work
is such that there is pressure of work only on certain days or at certain
times. It is a work of a sporadic nature and does not last so long as would
warrant the employment of permanent hands. On most of the occasions
when the work is being done, temporary employees cannot be employed for
the purpose of carrying out the same, or may not be readily available. The
period during which such work is required to be done is short.

and that on the coming into force of that Act, the provisions thereof were
being followed. The National Bank of Lahore has submitted that overtime
due should be conditioned upon the employee having completed his days
work, that is, the work allotted to him or such amount of work as in the
opinion of his immediate superiors is sufficient out-turn on the part of the
employee. The Bharatha Lakshmi Bank Ltd. desires that the overtime as
prescribed under the Shops and Establishments Act should be made
applicable to D Class banks. The Jaya Laxmi Bank has made the following
demands :

10.31. The Miraj State Bank is paying at present for overtime work beyond
39 hours a week at the rate of 1 times the ordinary rate of pay including
dearness allowance and desires that there should be no change in this rate.

BE

10.32. The State Bank of India and its Subsidiaries while dealing with
item No. 21 in Schedule II to the order of reference has pleaded that the
present overtime restriction should not be retained and that it should be left
to them to pay overtime for work in excess of hours of work fixed in consultation
with the Governments concerned and that the rate for overtime should be
fixed similarly. They have further claimed that the employees who are
employed as watchmen and armed guards and who are permitted to live and
sleep on the premises of the bank should not be entitled to overtime.

10.34. The Sastry Tribunal has put a ceiling on overtime by providing

that the total hours of such work should not exceed 90 without the consent of
the employees and with his consent should not exceed 120. The Indian
Banks Association has desired that the ceiling should be raised to 300 hours
whilst the Bombay Exchange Banks Association and the State Bank of India
have submitted that the ceiling should be removed altogether. Evidence has
been led before me to show that at times some of the best banks have not
been able to adhere to the ceiling fixed by the Sastry Tribunal. When ceilings
are fixed, they should take into account the needs of banks. The imposition
of too low a ceiling very often leads to abuse or to evasion or breach of the
provisions of awards in that connection. In my view, the ceilings of 90 hours
and 120 hours which have been fixed are low and need to be revised. Having
regard to the nature of the work done by the banks and the requirements of
banks, I consider that a ceiling of 150 working hours without the consent of
the employees would be a fair one to be fixed. In connection with the overtime
work which can be done with the consent of the employee concerned there
seems to me to be no necessity to fix any ceiling, apart from the ceiling to
which the workman may be subject under any statutes. The work to be done
by the employees of the banks does not involve such physical and mental
strain and fatigue as would require the imposition of a ban on such work
beyond certain hours so that in spite of the willingness of workmen to do
such work they should be prevented from doing so by the dictates of the
social conscience working through a Tribunal. The legislatures of various
States have granted sufficient protection to workmen in general in connection
with overtime under the various Shops and Establishments Acts.The workmen
in the banking industry are sufficiently advanced, sufficiently intelligent and
sufficiently organised so as not to need any further special protection.

No overtime should be allowed as in the Shops and Establishments.

Present method is confusing and cumbersome. Fixed rate should
be provided for additional work. Half an hour cushioning period
should be allowed after office hours

AI

10.33. The nature of the work in banks is such that overtime work is
required to be done. Both the Sen and the Sastry Tribunals recognised the
need of such work being done. There are various occasions when banks
require overtime work to be done. When there is a need to locate mistakes
on the very same day as, for instance, mistakes in the ledger; when an
unusually large number of applications for casual leave on a given day are
received and more than the usual number of persons take such casual leave
when there are two continuous holidays resulting in considerable accumulation
of work which needs to be disposed of on the day immediately following such
holidays; when banks have to prepare monthly balances during the last two
days of the month and the first day of the subsequent month, when on 30th
of June and 31st of December, the half yearly and yearly closing of the
accounts has to be done; when there is rush of business due to changes in
market conditions, when the work of collection or distribution of dividends on
behalf of constituents is to be done within a short period; when there is a
fresh or new capital issued or a government loan is issued and the work is to
be completed within a short period; when there is inspection of banks to be
done by the Reserve Bank of India and preparations have to be made for this
purpose; when a large amount of government business is required to be done
351

10.35. In connection with the provision in the Award of the Sastry Tribunal
that the maximum hours of overtime work should not exceed 2 hours a day
except with the written consent of the workmen, a demand has been made
for removing the ceiling or increasing the number of hours. Having carefully
considered the matter, I am of the view that normally no workman should
352

without his consent be asked to do work on any day whether it be a Sunday

or other holiday or a Saturday or other week day exceeding 9 hours inclusive
of the cushioning period but excluding the recess in the case of workmen
other than those belonging to the subordinate staff and 9 hours excluding
the recess in the case of members of the subordinate staff. In an emergency
of which a responsible officer of the bank will be the sole judge, or when in the
case of the State Bank of India and its subsidiaries the exigency of government
work at the close of the financial year so require, a workman may be required
to work for a longer period without his consent. In no case, however, there
should by any infringment of the provisions of any law relating the ceiling on
hours of work or overtime applicable to the establishment concerned.

10.39. Rate of payment.The employees desire that they should be

paid for overtime work done by them at double the rate of wages calculated
on an hourly basis. They have relied upon the provisions of some of the
Shops and Establishments Acts. Under the provisions of the said Acts the
normal hours of work are much larger than those provided under the Sastry
Award. The said Acts cannot be looked at merely for the purpose of the rate
of overtime without taking into account the number of hours for which work is
required to be done without extra payment. No case has been made out for a
change in the present rate of payment for overtime work . On behalf of some
of the banks it has been contended that the provision for 20 per cent, surcharge
in respect of work done beyond the first four quarter hours after the initial half
an hour cushioning period is unusual, without precedent and should cease. It
is a way of providing for higher rate of remuneration for such work, and I see
no reason to differ from the Sastry Tribunal in this connection. It offers an
inducement to the workmen to do overtime work willingly and for a longer
time.

BE

10.36. There is a provision under the Sastry Award as modified for a

cushioning period of half an hour for members of the clerical staff. For work
done during this period no overtime payment is required to be made. On
behalf of the workmen it is urged that the cushioning period should be
abolished. The hours of work fixed by the Sastry Award are considerably
less than the hours of work under the various Shops and Establishments
Acts passed by State legislatures in connection with commercial
establishments. The Sastry scheme relating to the hours of work takes into
account this cushioning period. The Sastry Tribunal has given good reason
for providing this cushioning period and it is not necessary to repeat them
here. No evidence has been led to establish that work in excess of the fixed
number of hours has become a regular feature of the work in banks which
would warrant a change in the provisions relating to the cushioning period
which form an integral part of the Sastry Award relating to hours of work and
overtime. No case has been made out for abolishing the cushioning period.

a holiday, an employee is already compensated by payment of overtime at a

rate far in excess of the rate at which he otherwise receives payment. The
demand of the workmen for an extra holiday which would involve payment
without work for that day is opposed by the banks. The demand for an extra
holiday in addition to payment at higher rates for work done on a holiday is
not justified in the banking industry and cannot be acceded to.

10.38. A claim has been made on behalf of workmen that for doing
overtime work on Sundays and holidays they should be given a day off in the
subsequent week, in addition to the usual overtime payment. For working on

10.40. In the past some difficulties have been experienced in connection

with the calculation of the hourly rate of overtime work. Workmen are being
paid wages per month. A question has arisen whether Sundays and holidays
occurring in a month should or should not be taken into account for the
purpose of arriving at an average hourly rate of wages. The number of working
days in a month varies with the month and with the holidays occurring in the
month which again vary in different States. The result is that the number of
working hours in all the months are not uniform . It was stated that in the year
1961 for Bombay, the total number of working hours were 129 for the month
of March and 156 for the month of July. For Calcutta the variation was even
greater. The total number of working hours during the year 1961 for Calcutta
for the month of October were 107, while the same for the month of May were
159.Most of the banks and all the associations and unions of employees
appearing before me have accepted the suggestion made on behalf of the
Indian Banks Association that for the purpose of calculation of overtime wages,
a uniform standard of a month being equivalent to 150 hours should be adopted
for the purpose of calculation of overtime both for members of the subordinate
staff and for other workmen. This suggestion was made and was accepted
after taking into account the fact that the number of working hours for members
of the subordinate staff were to be more than those for other workmen. In fact
Shri Sowani on behalf of the State Bank of India Staff Federation accepted
the suggestion only on the footing that the number of hours for the members

353

354

AI

10.37. According to the Sastry scheme of payment for overtime, for

every completed 15 minutes work done over and above the half an hour
cushioning period, the members of the clerical staff have to be paid overtime
wages. On behalf of the workmen it has been urged that the effect of this
provision is that for 44 minutes of work done beyond the usual working hours,
no payment is being made by the banks. The result of the present provision
is that not merely the cushioning period of 30 minutes does not attract any
extra remuneration, but even the further 14 minutes beyond the cushioning
period do not attract any extra remuneration if no further work beyond these
44 minutes is required to be done. In my view, if the workmen other than
members of the subordinate staff are required to put in work beyond the
cushioning period of half an hour it is but fair that they should be paid therefor.
I am giving a direction that for calculating overtime, any work done for less
than one quarter hour should be counted as if the work had been done for one
quarter hour.

is on outstation duty he cannot be regarded as working all the time when he

is away from headquarters for the purpose of claiming over time payment.
There is, however, no reason why a workman who works when on outstation
duty for a period in excess of the normal working hours together with the
cushioning period if any, should not be paid for such overtime work. A workman,
when on outstation duty, would be entitled to claim overtime payment for the
period during which he has to work in excess of the usual hours of work and
the cushioning period, if any.

10.41. The Indian Banks Association has stated that it is the contention
of some employees that the provisions of the Sastry Award in connection
with work on 30th June and 31st December were applicable only to those
employees who were connected with the work of closing of accounts and
that others who worked on those days should be paid overtime on the footing
that they have worked on holidays. It is also pointed out that there was no
half yearly closing of accounts in the State Bank of India on the 30th of June.
These two days have been declared as holidays for the facility of banks work
in connection with the half yearly and yearly closing of accounts. It has been
done with a view to closing the banks doors to the public and not with a view
to giving a holiday to the staff.These two days should be treated as normal
working days for all the employees of all banks whether they are connected
with the closing of accounts or not.

10.45. The Indian Banks Association has asked for some clarification in
connection with the time for which overtime payment is claimable by persons
who have been posted for outstation duty. It is stated that claims have been
made by such persons of the footing that barring the normal hours of work
plus the cushioning period, the rest of the time when they are away from
headquarters should be treated as constituting overtime work. When a person

10.46 I give the following general directions in connection with hours of

work and overtime :
(1) For workmen other than members of the subordinate staff, the actual
hours of work exclusive of the recess period on week days (excluding
Saturdays) shall not exceed 6 hours a day. The actual hours of
work on Saturdays shall not exceed 4 hours.
(2) For the members of the subordinate staff, the working hours specified
in clause (1) stand modified to the extent that they will be required
to attend duty half an hour earlier and stay half an hour later than
the normal working hours fixed for the other workmen.
(3) There shall be a recess for lunch which shall not be less than half
an hour and not more than one hour for week days (excluding
Saturdays), subject, however, to the requirements of any statutory
provisions like the Shops and Commercial Establishments Acts.
Primarily it will be for the workmen to decide the actual length of
recess within the limit fixed as aforesaid and the majority decision
of the workmen in any branch or establishment shall be adopted in
case of difference of opinion with the management.
(4) The banks will be at liberty to fix at their discretion the actual timing
for work provided the maximum number of hours of work fixed by
this award are being observed.
(5) Part-time employees as well as members of the watch and ward
staff, bank employees engaged in domestic service, gardeners,
sweepers, godown-keepers engaged solely for that work other than
those required to remain in attendance at the bank during office
hours, are excluded from the scope of the aforesaid directions. The
provisions contained in clause 9 below equally not to apply to them.
(6) The hours of work for the persons excluded as above will be governed
by the provisions, if any, of any enactments in connection with
hours of work applicable to the banks concerned.
(7) As regard a chowkidar employed to guard the banks premises,
when he is one of several chowkidars and is kept on duty only for a
period of time (generally about 8 hours). the hours of work however
should not exceed a shift of 8 hours in 24 hours.
(8) The banks can require a workman to do work called overtime work

355

356

BE

of the subordinate staff were to be larger than those for other workmen. This
method of calculation is advantageous to the members of the subordinate
staff. Their remuneration, however, is comparatively less. This method of
calculation seems to me on the whole to be fair and easy of application. In
view of the large measure of agreement in this connection and in view of the
desirability of having a simple method for the calculation of overtime wages,
and taking into account all the other circumstances of this case, I accept
this basis for the calculation of overtime for all banks and their workmen.

AI

10.42. A claim has also been made on behalf of the workmen that no
workman should be asked to work on Sundays or on holidays without his
consent. It is only where there is real pressure of work and the work has to be
cleared within a fixed time that banks would normally call the workmen
concerned on those days and pay them overtime at fairly high rates. I do not
think it proper to impose a further burden on banks of securing the consent of
the workmen concerned.
10.43. The Indian Banks Association has claimed that if any workman
refused to do overtime work, which he was under an obligation to do, it should
be regarded as gross misconduct. The Sastry Tribunal has defined gross
misconduct to include willful insubordination or disobedience of any lawful
and reasonable order of the management or of a superior. Apart from the
question of my jurisdiction to deal with such a demand, I see no reason to
give any special directions in connection therewith.
10.44. There is no necessity to give any directions in connection with
any other demands.

(11)

(12)

(13)

(14)

BE

(10)

shall be at the rate of 1.70 per cent of such emoluments. In those

cases where payment for overtime is required to be made under
any enactment at a higher rate, it shall be paid at such higher rate
for the period for which it is obligatory to pay the same at such
higher rate.
(15) For the purpose of calculating the amount payable for overtime
work, every month shall be deemed to consist of 150 working hours
so that the ordinary emoluments payable per hour will be deemed
to be l/150th of the monthly emoluments for all workmen.
(16) A workman who is guilty of any mistake which has resulted in his
doing overtime work will not be entitled to receive payment for such
overtime work. Before, however, a workman is held not to be so
entitled, he must be given an opportunity at a suitable time to
explain his lapse and to show cause why he should not be
considered to be disentitled lo receive such payment.
(17) The directions. hereinbefore given shall be subject to the provisions
made by or under any enactment applicabe to the establishment
concerned.

AI

(9)

beyond the aforesaid hours of work prescribed for him without the
consent of the workman, subject to a maximum of 150 hours in
any calendar year. With the consent of the workman he can be
asked to do overtime work in any calendar year in excess of 150
hours.
Normally, the total period of work including overtime shall not without
the consent of the workman concerned, on any day, exceed, in the
case of workmen other than members of the subordinate staff, 9
hours inclusive of the cushioning period, and in the case of the
members of the subordinate staff, 9 hours, the period of recess
not being regarded as period of work. In the case of an emergency,
of which a responsible officer of the bank concerned shall be the
sole Judge, or when in the case of the State Bank of India and its
Subsidiaries the exigency of government work at the close of the
financial year so require a workman can be required to work without
his consent in excess of the aforesaid hours. In no case however
there should be any infringement of the provisions of any law relating
to the ceiling on the hours of work or overtime applicable to the
establishment concerned.
The 30th of June and 31st of December, when declared as such to
be holidays for half yearly and yearly closing of accounts, shall be
deemed to be normal working days for all workmen employed in all
banks.
For the first half an hour of overtime work( hereinafter called the
cushioning period) on any working day there shall be no payment
for workmen other than members of the subordinate staff. There
will be no such cushioning period for work done on Sundays and
holidays. There will be no such cushioning period for members of
the subordinate staff.
For every quarter of an hours overtime work done, which shall be
beyond any cushioning period where any such period is provided,
all workmen shall be paid at the rates hereinafter mentioned.
For the purpose of calculation of overtime, work done for less than
one full quarter of an hour shall be deemed to be work done for
quarter of an hour.
Payment in respect of overtime work done shall be made at the
rate of I times the emoluments made up of basic pay, special
allowance, if any, officiating allowance, if any, and dearness
allowance, for every quarter of an hour of overtime work done for
which payment has to be made. Payment in respect of overtime for
work done for every quarter hour beyond the first four quarter hours
which have to be paid for, shall however be at the aforesaid rate of
1 times the emoluments with an additional 20 per cent., i.e., it
357

358

of his choice as stated above.

CHAPTER XI

(8)

Expenses properly incurred by the workman shall be paid by the

bank within six weeks of the production of bills and certificates by
him.

(9)

All bills submitted for payment shall be accompanied by a certificate

from the doctor concerned for the treatment.

Item No. 9 : MEDICAL AID AND EXPENSES

(1) Medical facilities should be availed of only by the workman. Members

of his family are not entitled to the same.
Wherever existing facilities in any bank or banks are superior to
the provisions hereinafter made, such facilities should be continued.

(3)

Wherever possible, banks should appoint or nominate a whole time

or part-time medical practioner (hereinafter called authorised
doctor) who shall be available for consultation and for treatment at
stated hours either in his dispensary or in the premises made
available to him by the bank.

Class of Banks

BE

(2)

(10) The total expenses from January to December of each calendar

year on account of medical attendance and treatment payable by
a bank to a workman shall not exceed the following limits :

An employee claiming the benefit of these facilities shall go to an

authorised doctor or such other doctor as he may recommend in
writing, provided that where there is no such authorised doctor
appointed by the bank for any place, the employee can choose
any registered medical practitioner practising in the locality or
nearby.

(5)

Except where an authorised doctor treats the workman, all medical

bills shall, in the first instance, be paid by the workman. He can
thereafter recover whatever amounts are permissible from the bank.
Bill of authorised doctor shall be paid by the bank itself.

AI

(4)

(6)

Banks are at liberty to have the bills for treatment submitted by

other medical practitioners where authorised doctors are not
available for scrutiny and approval by the banks doctors and only
the amounts so recommended by them need be paid.

(7)

Every workman shall during illness (whether he is on duty or on

leave) be entitled, free of charge and up to the limits in clause 10
infra, to attendance and treatment by the banks authorised doctor
or where there is no such doctor, by a registered medical practioner
359

Class of Areas
I

II

III

Rs.

Rs.

Rs.

90

60

50

B
C

75
60

50
40

40
30

30

20

15

11.1. The Sastry Tribunal has observed that a bank is directly interested
in maintaining the health of its workmen, that the banks had realised it and
that the same was evident from the commendable practice obtaining in some
of the major banks where without any obligation imposed by any award ample
medical facilities had been provided for employees.The Sastry Tribunal
expressed the view that the facilities provided by the banks could only be
limited in the nature of things. After considering the numerous demands of
the employees which, to use the language of the Sastry Tribunal, covered a
wide ground and range all the way from ordinary mixtures to specialized
treatment, from consultation to hospitalization, from change of doctors to
change of climate, and the various arguments placed before it, the Sastry
Tribunal in paragraph 450 of its award gave the following directions :

We are not defining the extent and nature of medical treatment in

view of the monetary limits fixed by us. Such facilities however
need not include supply of dentures, spectacles, hearing and other
aids.

11.2. The Sastry Tribunal further observed as follows :

As we have not before us full details as regards the financial
implications of the provision for medical relief, we have been obliged
to take only a cautious step forward. However, after experience of
the working of the scheme for three years an upward revision of the
extent of relief may be possible. In that connection a ceiling for the
total expenditure under this head calculated at an appropriate figure
for each workman may perhaps be fixed, and subject thereto, the
limits which we have prescribed for each individual may be enhanced
appropriately.

11.3. The Labour Appellate Tribunal after having duly considered all
aspects of the matter, including the medical facilities available to government
employees, has observed as follows :
With reference to the government employees the Government
occupies a double roleone as an employer, and the other as the
State having responsibility for the health of the people.
The Government has at its disposal medical services, dispensaries
and hospitals, and the Government is able to provide liberal facilities
to its employees without much extra cost.
Assuming that Government employees enjoy more liberal medical
360

relief, we are not inclined to compel the banks to provide their

employees with similar facilities, although we must make it clear
that those banks which have a more liberal schemes of medical
assistance shall continue such benefits.
(3)

(4)

(5)

BE

11.4. The Labour Appellate Tribunal has further observed that a healthy
wage structure provides for medical treatment, that the workmen could not
justly claim the entire cost of treatment, that medical aid was an amenity
which depended quite a lot on the resources of the employers and that in a
rural area, the cost of consultation was expected to be less than that in an
urban area and much less than the cost in cities and that those facts accounted
for the variation found in the Sastry Award according to the resources of the
banks and according to areas. The Labour Appellate Tribunal did not therefore
see its way to alter the figures relating to expenses on account of medical
attendance and treatment fixed by the Sastry Tribunal. It, however, laid down
that in order to ensure that the amounts which were small might be of real
assistance, the amounts should be accumulated to such figures as did not
exceed three times the amounts and that any workman who had not exhausted
the maximum amount available to him in any particular year on account of
medical assistance should be entitled to have the unexhausted portion carried
over from year to year, so that the total amount available to him at any time
did not exceed three times the maximum amount allowed to him by the
award in a year. The Sastry Award stood modified to that extent.
11.5 The Bank Award Commission in dealing with the above modification
made by the Labour Appellate Tribunal observed as follows :

AI

though on paper and in theory the provision appears to impose a

somewhat heavey burden on banks, in practice and in fact the
provision may not mean much benefit to employees themselves.

It came to the conclusion that the provision for accumulation of medical relief
which had been introduced by the Labour Appellate Tribunal in its decision
should be set aside. Parliament ultimately gave effect to the aforesaid
recommendation of the Bank Award Commission with the result that the
provisions of the Sastry Award in connection with medical aid and expenses
became effective without any alteration therein.

the bank should pay the entire amount of actual expenses incurred
for treatment and recovery.
Arrangement should be made with the hospital for free medical
treatment of the employees and their dependants in case of
prolonged and/or serious illness or accidents.
Banks in big cities should pool together unavailed medical fund
and out of such pooled fund, should start hospitals for the benefit of
the employees. Alternatively special beds should be reserved for
the employees in good and reputed hospitals and/or nursing homes.
Banks should, on the suggestion of employees, in different areas
or localities in every town where there are branches, appoint an
adequate number of medical practitioners practising allopathy,
homeopathy, Ayurvedic or Unani systems of medicine. Employees
should be allowed to take treatment from any Registered Medical
Practitioner dealing in Allopathy, Homeopathy and/or Ayurvedic
system of medicines.
Banks should make adequate arrangements for supply of prescribed
medicines promptly to the employees. If in case the bank is not in
a position to supply medicines, the amounts of all bills in connection
therewith should be paid to the employees direct within a weeks
time.
All bills for professional calls should be paid to the authorised
doctors direct by the bank, but where there is no such authorised
doctor the bills should be paid to the employees within a weeks
time from their submission.
Bills relating to sickness during periods when an employee is on
long leave should be paid to the employee upon scrutiny.
Spectacles, dentures, hearing aids are to be included in the aid.
The bank should create a fund of Rs. 150 per workman at the
beginning of every calendar year and the balance remaining after
payment of medical bills on this account should be utilised for
reservation of beds in good hospitals and/or nursing homes,
wherever possible.

(6)

(7)
(8)
(9)

11.6 On behalf of the workmen the main demands made before me were
the following:
(1) Medical facilities should be extended to the members of a workmans
family besides himself.
Medical aid benefits should be extended to the dependants of the
employees.
(2) Every workman should be granted medical aid not less than
Rs. 150 per year with a right to accumulate it upto three years In
cases of diseases like tuberculosis,cancer and such other serious
illness or accidents, requiring prolonged and expensive treatment,

11.7. The Indian Banks Association has submitted that the provisions
relating to medical aid and expenses as prescribed under the Sastry Award
should be left untouched except to the extent of the modifications sought by
it as indicated below :

361

362

(i)

Paragraph 450 of the Sastry Award provides that wherever the

existing facilities in any bank or banks are superior to the provisions
made under the award, such facilities should be continued. It is
alleged that disputes and differences arise between the
management and the employees in connection with the concept
about what facilities were superior and what were inferior and it is

By clause (6) of paragraph 450 of the Sastry Award, banks have

been given liberty to have medical bills scrutinised and approved
by banks' doctors. It is alleged that when the bills are submitted it
is sometimes found difficult to ascertain the genuineness of the
claim put forward and in some cases it also becomes difficult for
the banks doctors to satisfy themselves about the bills for want of
necessary particulars. It is submitted that the Tribunal should direct
that all bills submitted should specify the nature of the illness, the
diagnosis, the treatment prescribed, the duration of the sickness
and such further and other details and information as may enable
banks or the banks' doctors to verify the bills and that the banks
may also be given liberty to call for such information and particulars
as may be desired and that the employees should be under an
obligation to furnish the same and that in the absence of these
particulars and information, the banks would be justified in refusing
payment.

11.8. The Bombay Exchange Banks Association has submitted that

the present practice under the Sastry Award has led to a lot of difficulties,
that it was unreasonable to demand that the existing medical facilities should
be extended to workmens families, that even the Employees State Insurance
Scheme did not cover workers families, that, the demand that the banks
should pool together unavailed medical funds and start hospitals or reserve
beds did not amount to an industrial dispute, that most of the demands made
were unreasonable and unjustified, that the banks should be allowed in cases
where they provide the services of a doctor and/or like facilities, to deduct the
cost of such facilities from the amount sanctioned under the award by way of
medical benefits, that its member banks were willing to consider the
introduction of a reputable medical insurance scheme on the basis of those
being offered by some of the private insurance companies on the strict
understanding that the benefits thereunder were strictly for the employees
themselves and the premia payable for such insurance were deductible from
the quantum of medical aid sanctioned under the award and that any extra
excess premia were to be on account of the employees, and that the banks
should be at liberty to enforce the provisions of the award as regards medical
benefits, irrespective of their past practice.

BE

(ii)

expenses on a pro-rata basis, i.e., in proportion to the service already

put in or total service such employees are expected to put in the
course of their employment.

submitted that in order to avoid such controversy in future, The

Tribunal should direct that employees should collectively make an
irrevocable choice whether they will have existing facilities or those
provided by the award.

AI

(iii) By clause (8) of paragraph 450 of the Sastry Award, banks have
been directed to pay expenses within six weeks of the production
of bills and certificates by the employee concerned. It is stated
that after such bills and certificates are produced, the banks have
to make their own enquiries and the banks doctors have to
scrutinise the bills and that vagueness and incompleteness of the
particulars give rise to difficulties. It is contended that the period of
six weeks from the dale of the production of the bills and certificates
was found to be inadequate and it is submitted that for making
payment of expenses properly incurred the period of six weeks
should be computed from the date the employee furnishes all bills
and certificates and information and details referred to above, that
an obligation should be placed upon the employees to -submit the
bills promptly, that the employees should be directed to submit
the medical bills and certificates within such time as may seem
reasonable to the Tribunal and that the failure to do so should be
made a valid ground for the banks to refuse payment.
(iv)

In paragraph 450 (10) of the Sastry Award, certain scales of medical

expenses have been laid down. It is submitted that these scales
are for permanent employees because they are stated to be for
each calendar year. It is alleged that temporary employees employed
to do a particular job and employed as substitutes were also making
claims for the full amount of the total expenses prescribed and it is
submitted that temporary employees should be granted medical
363

11.9. The State Bank of India, in its reply, has stated that as a gesture of
goodwill, it had permitted accumulation of monetary benefits to the extent of
a maximum of three years benefit, in spite of the fact the provision had been
struck down. I state that the aforesaid concession has largely contributed to
fraud and abuse, that the quantum fixed under the Sastry Award was very
reasonable and fair and that there was no case for an increase. It has submitted
that any direction given should make it clear that in the event of the Employees
State Insurance Scheme or similar scheme being introduced for the State
Banks employees, the directions and the present practice should cease to
be in force .
11.10. The Indian Banks Association has on behalf of the State Bank of
Patiala, stated that there was no specific provision for medical aid for the
banks employees who did not opt for the 1957 terms, but medical aid was
given in deserving cases from the staff welfare fund which at present was
being managed by a committee appointed by the State Bank of India consisting
of the General Manager of the bank, one officer and one workman.

11.11. The benefits given under the Sastry Award so far as medical aid
and expenses are concerned, are reasonable in the present circumstances.
Workmen have claimed that medical facilities should be extended to the
members of workmens family. Both the Sastry Tribunal and the Labour
Appellate Tribunal considered this matter and could not see their way to
grant this demand. It was considered that the health of the family was primarily
364

a charge on the pay and emoluments of an employee and not on the bank.
No such change in the circumstances has taken place which would warrant
the grant of this facility. This demand may be covered when the Employees
State Insurance Scheme is made applicable to the workmen in the banking
industry.

A sum of Rs. 90 is the maximum provided for medical attendance and

treatment in connection with workmen employed in Area I by A Class banks.
It would not suffice to cover the costs of a prolonged or serious illness.
Prolonged and serious illnesses may not occur often in a workmans lifetime.
If there is a provision for accumulation it might help the workman in getting
proper attendance and treatment when he suffers from a serious or prolonged
illness needing greater expenditure of money on account of medical attendance
and treatment. This provision for accumulation would, no doubt, impose a
larger burden upon banks. The State Bank of India has voluntarily taken that
burden upon itself. So far as A and B Class banks are concerned, they
should experience no difficulty in bearing this extra burden. As regards C
Class banks, some of the banks falling in that class will be burdened more
than the banks in A and B Class by reason of the other provisions contained
in this award I do not therefore wish to impose this extra burden upon them.
11.16. I accordingly direct that so far as the workmen in A and B Class
banks are concerned, the amount of total expenses provided on account of
medical attendance and treatment from January to December of each calendar
year should be allowed to accumulate so as not to exceed at any time three
times the maximum amount provided under this award.

AI

BE

11.13. When a workman falls ill, the expenses which he has to incur in
connection with his illness do not depend upon the class of bank in which he
is employed. In the same area his need is the same, whether he is employed
by an A Class or a B Class or a C Class bank. If the need of the workman
was to be the sole criterion for fixing the amount of expenses to be incurred
by a bank on account of medical attendance and treatment there would be
no warrant for providing varying amounts in a descending order in the same
area, having regard to the class of bank in which the workman is employed.
The need of a workman employed in a bank falling in a lower class is in fact
greater than the need of a workman employed in a bank falling in a higher
class, as in the same area a person employed in a higher class bank would
be in receipt of a larger amount by way of emoluments than a person employed
in a lower class bank. In providing separately for expenses on account of
medical attendance and treatment the capacity of the bank has to be taken
into account. Some of the banks which will now fall in C Class under this
award will have to bear a much larger burden than banks in A and B Class by
reason of the abolition of Class D under the Sastry Award. A further burden
will have to be borne by all banks which have at present branches in Area IV
as under this award the separate classification of Area IV is being done away
with. This award further provides for an increase in the total remuneration
payable by banks and imposes an increased burden on banks under several
heads.

11.12. No evidence has been led to show that the provision made by the
Sastry Award as regards the total expenses on account of medical attendance
and treatment payable by a bank to a workman has in practice been found to
be insufficient or that a considerable number of workmen have not been able
to obtain medical relief during illness from the bank on account of the
insufficiency of the provision made by the Sastry Tribunal therefor.

11.14. Taking all factors into consideration, I cannot see my way to

provide for a uniform rate of expenses for medical attendance and treatment
to workmen. The provisions of the Sastry Award will remain unaltered except
to this extent that the provision therein contained relating to C Class banks
will also apply to C Class banks including banks in the Excepted List under
this award.
11.15. The claim of workmen for accumulation of the monetary benefits
upto three years requires consideration. Though the State Bank of India has
contended that the concession made by them in this connection has largely
contributed to fraud and abuse, it has led no evidence in connection therewith.
365

11.17. It was urged that the provisions relating to medical aid and expenses
should be available not merely when a workman falls ill but also when he
meets with any accident. In order to avoid any controversy on the subject, I
direct that the provisions of this award in connection with medical aid and
expenses will extend to cases where a workman meets with an accident and
is in need of medical aid.
11.18. The workmen claim that they should be entitled at their choice to
receive treatment in accordance with the homeopathic, ayurvedic or unani
systems of medicine. No directions are given which would oblige any bank to
make any provision for such treatment. Any bank however will be at liberty, if
it so choses to allow the expenditure incurred on such treatment to be paid
out of the amount of expenses for medical attendance and treatment provided
herein.
11.19 The Sastry Award provides as under :
Wherever existing facilities in any bank or banks are superior to
the provisions hereinafter made, such facilities should be continued.
Some of the banks have claimed that the employees should collectively
make an irrevocable choice whether they will have existing facilities or those
provided by the award. The provisions of the Sastry Award have been in
operation for a long time. No outstanding dispute in this connection is pointed
out to me, and no provision in this connection is necessary.
11.20. Having considered all the demands and having considered all
aspects of the matter, no further change in the provisions relating to medical
366

aid and expenses is called for. I make an award in terms of the provisions
contained in paragraph 450 of the Sastry Award set out above with the
modifications and additions herein before mentioned. The same will apply to
all banks covered by this award.

Chapter XII
Item No. 10 :CASH DEPOSITS FIDELITY BONDS AND OTHER
SECURITIES TO BE FURNISHED BY THE STAFF

AI

BE

12.1. The Sastry Tribunal, after referring to the then existing practice
prevailing in banks, observed that the practice revealed the need felt by banks
to have some sort of security to cover financial loss that may be caused by
any fraud or negligence by embezzlement of monies by workmen engaged in
cash department and by those handling cash, valuable securities and other
possessions. It further observed that where facilities for dishonest practice
likely to involve the bank in loss exist there should be adequate safeguards
for banks. It held that on principle the need for deposits or other securities to
be provided by such staff had been made out. It laid down that only the
clerical staff in the cash department, ledger keepers and godown keepers in
charge of stocks should be called upon to give individual securities of their
own. After considering the various forms in which security may be taken, it
obeserved that the only alternatives available to the banks were that of a
cash deposit or a fidelity bond. It was unable to agree with the contention
that the cash deposit should not be insisted upon in any case. As regards
the payment of premium on a fidelity bond it could see no objection to the
workman being asked to bear burden where he did not find it convenient to
make a cash deposit for reasons of his own. It observed that if deposit or
security in some form or other was incidental to that kind of employment in
the bank it was not unjust or improper that the incidental burden of expenses
in connection with it should fall upon the employee. It did not accept the
contention urged on behalf of the workmen that premium should necessarily
be borne by the banks in such cases. It further observed that the amounts,
for which such security may be taken, would naturally vary with the kind of
work that was allotted to the various categories of workmen. The Sastry
Tribunal did not lay down any directions under this head and made a general
observation that as a general rule the banks should not fix very high amounts
but should as far as possible take such minimum amount only as was proper
in each case. It further directed that where security was required to be given,
failure to furnish the necessary security should ordinarily operate as a bar to
confirmation, unless the management otherwise directed for special reasons
and that where the workman was not able to give the necessary security, the
banks should, if possible, transfer him to a post in which no security need be
furnished and in such an event his confirmation, if otherwise warranted should
not be withheld or postponed.
12.2 The Labour Appellate Tribunal in dealing with the provisions of the
Sastry Award has observed that the Sastry Award merely determined three
classes of employees from whom alone, to the exclusion of others, security
may be asked for. The Labour Appelate Tribunal directed that in cases where

367

368

individual security had been taken from employees other than employees
belonging to the aforesaid three categories specified by the Sastry Tribunal,
the security bonds would be deemed to be cancelled and the banks would
refund the unutilised portion of the security, and where the security was in
cash together with simple interest thereon at 4 per cent per annum from 1st
April 1954.

omission and commission by the cash department employees and it was

essential that all cashiers must be under his control. It has submitted that
the demand that no cash deposit etc., should be taken from any employee
even by the head cashier, who undertook responsibility of the employees
acts was unjustified and unreasonable.

12.3. On behalf of the employees claims to the following effect have

been made :

All existing cash deposits or securities should be returned with

interest to the concerned employees. Existing employees who have
been compelled to take fidelity insurance policies at their own
expenses should be allowed to discontinue the same from the
date of enforcement of the award of this Tribunal.

12.8. The Northern India Banks Association has stated that the
arrangement provided under the Sastry Award was fair and equitable and
should be continued.

BE

The existing practice prevailing in certain banks, known as

Guarantee Treasurers System, Contractor Cashier System, Chief
Cashiers System, in terms of which the employees in cash and
some other departments are appointed under the guarantee and
on recommendation of the said Guarantee Treasurers, Contractor
Cashiers, Chief Cashiers, etc. as the case may be, should be
abolished.

No employees should be called upon to submit cash deposits,

fidelity bond or any other form of security as a condition of his
employment. In case it is considered necessary to have any sort
of fidelity for any employee, the premium therefor should be borne
by the bank.

12.7. The Miraj State Bank Limited has stated that the bank has a
system of taking security deposits from clerks including cashiers and other
employees of the bank including members of the supervisory staff, that the
usual practice is that a security deposit not exceeding Rs. 1,000 is taken
from a clerk or cashier by very easy monthly instalments of Rs. 5 or Rs. 10
according to the stage in the scales of pay at which a workman might arrived
and that having regard to the method of taking security deposits and having
regard to the nature of the work that workmen in the employment of the bank
have to perform it was essential that the bank should be permitted to take
such security deposits as it might consider proper in the circumstances of
each case.

AI

12.4. The Indian Banks Association has submitted that the provisions
made in Chapter XXI of the Sastry Award in this connection have worked
satisfactorily and that they should be continued.

12.5. The Bombay Exchange Banks Association has stated that bearing
in mind the nature of banking business, the demand was totally unjustified
and unreasonable. It claimed that the demands related to matters concerning
the functions of management and should not form the subject of adjudication,
that if the bank decided that in all cases or in some a cash deposit, fidelity
bond, and/or other security was desirable it became a contract of service. It
pleaded that it was unreasonable that the bank should be required to pay any
premium of fidelity insurance taken out by or for an employee. It further stated
that the existing practices were salutary and of long standing and should not
be abolished or interfered with bearing in mind the nature of banking business.

12.6. The State Bank of India has stated that the system of furnishing
cash security by cashiers arose out of the nature of the duties the employees
were expected to carry out and was in conformity with the practice in the
banking industry, that the head cashier was part of the administrative structure
of the bank and the head cashier was responsible to the bank for all acts of
369

12.9. The State Bank of Patiala has pleaded that now that the bank was
a subsidiary of the State Bank of India and was required to handle government
business and government treasure the bank would perforce have to call upon
the assistant cashiers and head cashier to furnish more cash securities and
the position would have to be reviewed from time to time and that the bank
should be vested with discretion to decide whether an employee should furnish
security and the extent and nature of such security. It adopted the written
statement filed by the Indian Banks Association on behalf of its other members
on this issue.
12.10. The Sastry Tribunal has dealt with the necessity of the banks
taking some sort of security to cover financial loss that may be caused by
any fraud or negligence or by embezzlement of monies by workmen engaged
in the cash department and by those handling cash, valuable securities and
other possessions. No case has been made out for the abolition of the system
of taking cash deposits, fidelity bonds or other forms of security as a condition
of employment for the categories of employees stated in the Sastry Award
from whom the same could be taken. The Sastry Tribunal has also dealt with
the claim about the premium in connection with fidelity bonds being borne by
the bank. I agree with the observations made by the Sastry Tribunal in this
connection. No case has been made out for directing any bank to pay the
premia in connection therewith.
12.11. I accordingly direct that a bank will be at liberty to demand security
from (i) workmen employed in the cash department other than members of
the subordinate staff, (ii) ledger-keepers and (iii) godown-keepers in charge
370

of stocks and from no other workmen.

the Punjab National Bank Limited is suitable

(23) Method of recruitment, terms and conditions of service......
There is no item like the method of recruitment and terms and conditions
of service in general in the items of dispute referred to this Tribunal. The
aforesaid systems which are sought to be abolished, relate to the method of
recruitment, the conditions of recruitment and the conditions of continuance
in service of certain classes of workmen. Under these systems security is
furnished by the workmen concerned to the Guarantee Treasurer, Contractor
Cashier or the Chief Cashier. These systems prevail only in certain banks.
There are certain undesirable features in connection with the aforesaid
systems which have forcefully been brought to my notice. The dispute sought
to be raised is not covered by any of the items referred to me for adjudication
and I have no jurisdiction to entertain the same. All the parties affected by
these systems are not even before me. I give no directions in connection
therewith.

BE

12.12. In connection with the claim made that all existing cash deposits
or securities should be returned with interest to the employees concerned,
the Labour Appellate Tribunal in connection with a similar demand had given
a direction that where individual security had been taken from employees
other than the employees belonging to the three categories specified by the
Sastry Tribunal, the security bond would be deemed to be cancelled and the
banks should refund the unutilised portion of the security. It also directed the
return of the security in cash together with interest. There are some banks
before me which were not parties to the proceedings before the Sastry Tribunal.
I direct that where any bank has taken security from workmen other than
those from whom they are entitled to take security under this award, the
security bonds should be cancelled and where the security consists of cash,
the banks should refund the unutilised portion of the security within four
months from the date of the coming into force of this award. In the event of
such refund not being made within the time aforesaid, the banks will be liable
to pay interest to the persons concerned at the rate of four per cent per
annum on the amount directed to be refunded from the date of the expiry of
the aforesaid period of four months till the date of payment.

AI

12.13. Workmen have complained that some banks demand securities

from workmen by resorting to the devise of employing them in composite
capacities so as to include one of the aforesaid capacities which would enable
them to demand security without giving to the employees actual work in the
capacity in connection wherewith security could be demanded. In order to
avoid the possibility of such abuse, I direct that security could only be
demanded by banks where the performance of the duties attached to the
office in connection wherewith security could be demanded constitutes a
substantial part of the duty of such workman.
12.14 As regards the abolition of what is called the Guarantee Treasurers
System, Contractor Cashier System and Chief Cashier's System it has
been strongly urged on behalf of the banks that the question relating to the
abolition of any such system does not constitute the subject-matter of the
Reference and that I have no jurisdication to deal with the demand. It is urged
that the items of dispute referred to the Sastry Tribunal were somewhat different
from the items of dispute referred to this Tribunal. Items 21 and 23 referred to
the Sastry Tribunal ran as under:
(21) Cash deposits, fidelty bonds and other securities to be furnished
by staff including the question :
(a) whether failure to furnish such security should operate as a
bank on confirmation,
and
(b) whether the scheme of security and guarantee introduced by
371

372

year. It has claimed that in cold areas warm overcoat should also be supplied
to watchmen every two years and that employees on outdoor duty should
also be supplied with rain coats. By its supplementary statement of claim,
the Federation has claimed that every member of the subordinate staff should
be supplied with an umbrella during the monsoon every year. The Federation
has also submitted that the practice of supplying three sets of uniforms to
subordinate staff members who do outdoor work should be continued.

CHAPTER XIII
Item No. 11 : UNIFORMS AND LIVERIES
13.1. The dispute in connection with this item was not the subject matter
of adjudication by the Sastry Tribunal.
13.2. The All India Bank Employees Association has claimed that all
members of the subordinate staff should be supplied with two full sets of
summer uniforms every year and one set of winter uniform every alternate
year, that the uniform should include a pair of shoes and four pairs of socks
every year, that in cold areas, warm overcoats should also be provided to
watchmen after every two years and that the employees on out-door duties
should also be supplied with rain-coats.

13.8. The Indian Banks Association has, in reply to the statement of

claim made by the All India Bank Employees Association, opposed the
demand for the supply of socks, shoes, over-coats, rain-coats, etc..

13.9. The Bombay Exchange Banks Association has submitted that

the existing practice in banks should be continued, and that the demand
made was extravagant and unjustified. It has further submitted that shoes,
socks and rain coats cannot be claimed as part of uniforms or liveries.
13.10. The State Bank of India has stated in reply that some of the.
items demanded, such as shirts, footwear, belt and socks do not constitute
uniforms or liveries, that rain coats and umbrellas are not items of uniforms
and liveries and that in any event, the demand for such items was unreasonable.

BE

13.3. The All India Bank Employees Federation and the Vadodra Rajya
Bank Nokar Sangh have stated that though generally uniforms are supplied
to the subordinate staff of banks, definite rules should be laid down in
connection therewith. They demand three sets of uniforms each consisting
of coat, pair of pants or dhoties, one shirt, one cap or turban, pair of socks,
one pair of sandles or shoes. For winter they demand warm clothing and for
the monsoon monsoon equipment such as rain coat, umbrella and gumboot every year. They have demanded that the employees on night duty
should be supplied with over-coats and blankets.

13.7. The Indian Overseas Bank Employees Union has made a demand
similar to the demand made by the All India Bank Employees Association,
except that it has demanded that umbrellas should also be supplied.

AI

13.4. The All India State Bank of India Staff Federation and the State
Bank of India Staff Union, Andhra Pradesh, have demanded for all members
of the subordinate staff, four full sets of summer uniforms every year and one
set of winter uniform every alternate year. They have claimed that the uniform
should include a pair of shoes and four pairs of socks every year and that in
cold areas a warm over coat should also be provided to every watchman after
every two years, and employees on out-door duty should be supplied with
rain -coat.

13.5. The State Bank of India Employees Association (Bengal Circle)

has claimed that all members of the subordinate staff be provided with two
full sets of summer uniforms every year consisting of (a) coat, (b) trousers,
(c) shirt, (d) headgear, (e) footwear, (f) belt and (g) socks. It has claimed that
one set of warm clothing including socks, etc., should be provided to the
subordinate staff and workmen who work in cold climate and in the hill stations
every two years and that a warm overcoat should be provided every three
years. It has further claimed that employees on outdoor duties should also
be supplied with rain coats and umbrellas.

13.11. The State Bank of Patiala has stated that apart from what it was
already providing, no further directions were called for. It has further stated
that it was supplying cold weather uniforms every three years, same in the
case of those with service of less than one year, and two hot weather uniforms
every alternate year, same in the case of those with service of less than three
months, to Jamadars, gunretainers, peons, record-lifters, daftries, sweepers,
drivers, gardeners and kahar working at the head office.
13.12. The Bharatha Lakshmi Bank Limited has submitted that it would
be enough if two sets of uniforms made of cotton were supplied to members
of the subordinate staff.
13.13. The Miraj State Bank has stated that according to the present
practicethe bank supplied to its sepoys and peons Khaki uniforms
consisting of a coat and a pant, that the number of sets of uniforms to be
supplied was not determined and that uniforms were supplied from time to
time when it became necessary to do so. It has further stated that umbrellas
were being supplied as and when necessary.

13.6. The All India Bank of Baroda Employees Federation has claimed
that all members of the subordinate staff should be supplied with two full sets
of summer uniform every year and one set of winter uniform every alternate
year, the uniform to include a pair of shoes and four pairs of socks every

13.14. In reply to the supplementary statement of claim filed by the All

India Bank of Baroda Employees Federation, the Bank of Baroda has
submitted that the demand for supply of umbrellas was unreasonable, that
umbrellas are not a part of uniform, that peons who have to do out-door work
are being given umbrellas and that the claim for umbrellas for all peons was

373

374

unreasonable.
13.15. The Northern India Banks Association has pleaded that the banks
are already providing uniforms to the subordinate staff to ensure efficiency
and cleanliness and felt that there was hardly any need for a provision on this
point and that the arrangements already in existence should continue.

Item No. 12:NEED FOR THE MAINTENANCE OF SENIORITY LISTS

14.1. On behalf of the workmen the following demands have been
made :Every bank should maintain a category-wise list of seniority of its
employees in the following manner for the purpose of promotion :
(i)

In respect of subordinate staff such list should be prepared and

maintained strictly in terms of the length of service on town-wise
basis for the purpose of promotions within the subordinate cadre.

(ii)

In respect of clerks, lists of seniority should be prepared and

maintained for the purpose of promotions in terms of the length of
service with additional notional weightage of one years service for
graduates and one year for each part of C.A.I.I.B. and C.A.I.B.
Diploma holders. Such lists should be prepared on State-wise basis
in respect of every bank and made known to the employees.

13.16. The practice of banks relating to the supply of uniforms is not

uniform. The type of uniform supplied also varies in different banks. Having
considered all the aspects of the matter, I think it desirable to give only
certain general directions in connection wiih the supply of uniforms to the
members of the subordinate staff without specifying what the uniform should
consist of, it being left to the banks to decide about the type of uniform to be
supplied and the quality of material to be used in connection therewith. I
direct that at least two sets of cotton uniforms should be supplied by banks
to the members of the subordinate staff in the permanent employment of the
banks every year, and one set of woollen uniform should be supplied to them
by the banks once in three years. I do not consider it necessary to give any
other directions.

CHAPTER XIV

AI

BE

(iii) On the basis of the lists maintained promotions to the different

categories should be effected.
"Banks should maintain the seniority lists of the employees for the
purposes of promotion, re-employment, etc., and the same should
be put on the Notice Board or circulated amongst the employees
in order to prevent abuses by the Banks.
Seniority lists be maintained for retrenched for temporary
employees.
Seniority lists (in the State Bank of India) should be prepared after
consultation with the [State Bank of India Employees' Association,
(Bengal Circle) ].
Seniority list should be maintained (by the Indian Overseas Bank)
taking the Indian Overseas Bank as a single Unit.
The Bank of Baroda should maintain the list of seniority of all
categories of employees.

14.2. The All India State Bank of India Staff Federation in its statement
of claim as originally filed on 20th September 1960 had demanded that in
respect of subordinate staff a seniority list should be prepared and maintained
strictly in terms of the length of service on town-wise basis for the purpose of
promotions within the subordinate cadre and in respect of clerks and cashiers
the same should be prepared and maintained on State-wise basis. On 23rd
August 1961 it applied for an amendment in terms following :
In respect of subordinate staff such list should be prepared and
maintained strictly in terms of length of service on branch-wise
375

376

basis for the purposes of promotion within the subordinate cadre.

establishment and that Act provided that in cases of retrenchment, normally

retrenchment should be effected of a workman who was last employed in the
category concerned in the esablishment. The demand of the workmen is
opposed by the Bombay Exchange Banks Association.

In respect of clerks and cashiers list of seniority should be prepared

and maintained for the purpose of promotions to a higher grade in
terms of length of service with additional notional weightage of one
years service for gradutes and one year for each part of C.A.I.I.B.
and C.A.I.B. diploma holders. Such lists should be prepared on
circle-wise basis and made known to employees.

14.6. The State Bank of India has contended that it maintains branch
wise seniority lists, that those were adequate and that no case was made
out for maintaining seniority lists on any other basis.

This amendment has been granted and demand of the aforesaid Federation
which requires consideration is the revised demand.

14.7. On behalf of the State Bank of Patiala it is stated that the bank
was maintaining a seniority list of employees in all cadres. The bank, however,
stated that this demand was intimately linked up with promotion policy which
was a management function.

14.9. Item No. 12 relates merely to the need for maintenance of seniority
lists. Under this head the question relating to the conditions under which
promotions should be granted cannot be agitated.
14.10. Seniority lists are required to be maintained generally for the
purpose of retrenchment and promotion. As regards retrenchment, section
25 G of the Industrial Disputes Act, 1947, provides that where any workman
in an industrial establishment, who is a citizen of India, is to be retrenched
and he belongs to a particular category of workmen in that establishment, in
the absence of any agreement between the employer and the workman in
this behalf, the employer shall ordinarily retrench the workman who was the
last person to be employed in that category, unless for reasons to be recorded
the employer retrenches any other workman. Rule 77 of the Industrial Disputes
(Central) Rules, 1957, provides as under :

AI

BE

14.4. The Indian Banks Association has submitted that the item relating
to the need for maintenance of seniority lists does not relate to an industrial
dispute and that this Tribunal has no jurisdiction to adjudicate upon the same.
It has further submitted that the question of seniority list arises when
considering promotions and termination of employment in case general
retrenchment takes place in an establishment. It states that as regards
promotions all Tribunals have recognised that there could be no hard and fast
rules and that the ultimate decision must rest with the management, and
that it was apparent that by an indirect method the employees wanted the
question of promotion to be regulated by hidebound rules. It further says that
in case of retrenchment, section 25G of the Industrial Disputes Act had
made ample provisions to protect the interests of the employees by recognising
the principle of last come first go and that the Industrial Disputes (Central)
Rules, 1957, dealt with minor details connected with retrenchment and
according to Rule 77 of the said Rules an employer has prepared a list of
workmen from which retrenchment is contemplated, arranged according to
the seniority of service and cause a copy thereof to be posted on the notice
board at least seven days before the actual date of retrenchment. It submits
that in view of this statutory requirement, no directions are either necessary
or called for. It further submits that no employee either in the clerical grade or
belonging to the subordinate staff can claim promotion as a matter of right
and that in the matter of recruitment the management has always been and
has to be given a free hand and the employees cannot claim to dictate to the
employers as to how any particular vacancy was to be filled in.

14.8. The Miraj State Bank has stated that the bank so far had not come
across any problems arising out of this question and submitted that there
was no need to make any elaborate provision as far as the question of seniority
and promotions was concerned.

143. In addition to the aforesaid claims, various demands have been

made on behalf of the employees in connection with promotions to higher
grade and in connection with recruitment.

14.5. The Bombay Exchange Banks Association has stated that the
question of promotion was one which was essentially a management function
depending as it did on the managements assessment of an employees
merit and suitability for promotion and that if any directions were made calling
for maintenance of seniority lists, it would lead to disputes and would affect
the smooth running of business. It further states that under the scheme of
the Industrial Disputes Act, 1947, the emphasis was on an industrial
377

The employer shall prepare a list of all workmen in the particular

category from which retrenchment is contemplated arranged
according to the seniority of their service in that category and cause
a copy thereof to be posted on a notice board in a conspicuous
place in the premises of the industrial establishment at least seven
days before the actual date of retrenchment.
For retrenchment purposes, these provisions are sufficient and there is no
necessity for giving any directions in connection therewith.
14.11. The real necessity for seniority lists as claimed by the workmen
arises in connection with matters mainly concerning promotions. The questions
relating to the principles on which promotions should be granted does not
arise for determination by me. In considering the need for maintenance of
seniority lists, I can only consider the promotion policy as is found to be in
existence in banks. In this connection, it would not be out of place to refer to
378

the provisions of the Sastry Award. In paragraph 529 of the Sastry Award it is
stated as follows :

14.12. On behalf of a large number of workmen it has been claimed that

in respect of the members of the subordinate staff seniority list should be
prepared and maintained on town-wise basis and in connection with the clerical
staff it should be prepared on State-wise basis. In order that any such list
may be of any use, one has to consider (i) the question of transferability of
the services of an employee and (ii) the policy regarding promotion viz. whether
for the purposes of promotion employees are to be considered establishmentwise,area-wise,circle-wise, state-wise or throughout the country. As regards
the policy regarding transfers, the Sastry Tribunal in paragraph 536 has laid
down as under:
We direct that in general the policy should be to limit the transfers
to the minimum consistent with banking needs and efficiency. So
far as members of the subordinate establishment are concerned
there should be no transfers ordinarily and if there are any transfers
at all they should not be beyond the language area of the person
so transferred. We further direct that even in the case of workmen
not belonging to the subordinate staff, as far as possible there
should be no transfer outside the State or the language areas in
which an employee has been serving except of course, with his
consent. In all cases the number of transfers to which a workman
is subject should be strictly limited and normally it should not be
more than once in a year................

AI

BE

We do not think that any hard and fast rules can be laid down
inconnection with promotions. We are definitely opposed to the
suggestion that employees unions should be consulted in
connection with promotions. It cannot be supported on principle.
We do not think that such consultation is likely to be helpful either.
While there is no doubt that seniority in service should be one of
the most important factors to be taken into account for the purpose,
we are unable to agree that mere length of service alone irrespective
of efficiency, educational qualifications, character and nature of
responsibility required in connection with the vacancies to be filled
in should be the sole or even the main criterion for promation.
Promation is certainly not a matter which could be made automatic
and a great deal of discretion by its very nature must rest with the
management in this connection. It is not only difficult but very
undesirable to lay down any one single principle for the exercise of
this discretion. In our opinion there must be cases of employees in
the banking industry, as elsewhere in which efficiency of some
employees does not necessarily improve with mere length of service.
Nor do all employees in all cases show capacity for work involving
higher responsibilities. The apprehension of the employees
underlying the demand for length of service to be the sole governing
factor for promotion may be due to apprehensions of nepotism and
victimization of employees who take active interest in the trade
union movement. No substantial proof in support of this apprehension
has been laid before us and such cases, if any, can only be dealt
with in other ways or as provided by law. We however, direct that
even when direct recruitment to particular posts is decided on,
deserving men already in service who come up to the required
educational qualifications should also be enable to compete for
such recruitment by a reasonable relaxation of the rules relating to
age and other restrictions if any. We further direct that in the case
of employees who are not found fit for promotion the decision should
be borne out by service records of the employees, and that when a
person senior in service is superseded it should be for good and
cogent reasons. We recommend that such an employee should
have the right to appeal to the General Manager or the Managing
Director who should consider the appeal with an open mind and
revise the decision if necessary, and that such appeal should not
be treated as an act of indiscipline on the part of the employee by
the officers under whom he may be working.

to be considered in connection with promotion, is one of the

important factors which has to be taken into account. The provisions
of the Sastry Award contemplate the existence even of an appeal
by the person senior in service who has been superseded.

These provisions however do not govern all banks appearing before me.
The question relating to the policy regarding transfers does not arise for
determination by me. At present there are no hard and fast rules in connection
with promotions. I cannot in this reference lay down whether for the purpose
of promotions, employees should be considered establishment-wise, areawise, circle-wise state-wise or in the country as a whole. A seniority list to be
useful must be co-related to the totality of persons from whom a choice is to
be made for the purpose of promotions. It is not possible for me to direct any
list to be prepared on any particular basis which would be of practical use.
Under the circumstances, having regard to the limited scope of the Reference,
though I recognise the need for the maintenance of seniority lists, I am unable
to give any directions making it obligatory on the banks to maintain seniority
lists on any particular basis. I may in passing, observe that having regard to
the limited scope of the reference, this matter has not been fully dealt with
before me.

These provisions, however, do not apply to all banks who are

appearing before me. Seniority in service, though not the only factor
379

380

any change.
CHAPTER XV

15.6. The Miraj State Bank Limited has submitted that the bank was
governed by the provisions of the standing orders as settled by the
Commissioner of Labour, that the standing orders of the bank including the
clause relating to retirement were framed by the Commissioner of Labour on
securing the agreement of the bank as well as the representative Union of its
workmen and therefore, no change in the present rule relating to the age of
retirement was called for.

ITEM NO. 13 AGE OF RETIREMENT

15.1. The Sastry Tribunal provided that after a workman has reached the
age of 55 years, he may be retired after giving him two months notice in
writing in case his efficiency is found by the employer to have been impaired.
It further provided that subject to this rule and also subject to any rule under
an existing pension fund the workman should not be compelled to retirement
before he is 58 years old.

15.8. The Jaya Lakshmi Bank Limited, in reply has stated as under :
Age of retirement shall be on completion of 55 years. It is observed
that after the age of 55 the efficiency of the workman is impaired.

15.9. The Supreme Court, in the case of Guest Keen Williams (Private)
Ltd. vs. Sterling (P.J.) and others, reported in 1959 (II) Labour Law Journal,
page 405, in the course of its judgment, has observed that in fixing the age of
superannuation Industrial Tribunals have to take into account several relevant
factors. The factors enumerated by it are the following :-what is the nature
of the work assigned to the employees in the course of their employment ?
What is the nature of the wage structure paid to them ? What are the retirement
benefits and other amenities available to them ? What is the character of the
climate where the employees work and what is the age of superannuation
fixed in comparable industries in the same region ? What is generally the
practice prevailing in the industry in the past in the matter of retiring its
employees ? The Supreme Court has laid down that these and other relevant
facts have to be weighed by the Tribunal in every case when it is called upon
to fix an age of superannuation in an industrial dispute. In the case of Imperial
Chemical Industries (India) (Private) Ltd., Bombay and its workmen, reported
in 1960 (II) Labour Law Journal, page 716, the Supreme Court has observed
that in fixing the age of retirement no hard and fast rule could be laid down
and that the decision on the question would always depend on a proper
assessment of relevant factors and might conceivably vary from case to case.

BE

15.2. The All India Bank Employees Association has claimed that for all
categories of employees, the age of retirement should be fixed at 60. A
similar demand has been made by the All India Bank Employees Federation,
the All India State Bank of India Staff Federation and other Associations and
Unions of workmen. The Indian Overseas Bank Employees Union has claimed
that the retirement age should be 55 and if the employee so desired, extension
should be granted upto a maximum period of 3 years. The State Bank of
India Employees' Association (Bengal Circle) has pleaded that the age for
compulsory retirement should be 58 years and an employee should, at his
option, be entitled to retire after 20 years of service. The Employees
Association of Union Bank of Bijapur and Sholapur has claimed that for all
categories of employees the age of retirement should be fixed at 60 and that
an employee may have an option to retire after his age of 55.

15.7. The Bharatha Lakshmi Bank Limited has submitted that the age of
retirement may be fixed at 55 years with option to banks to extend it by not
more than 5 years.

AI

15.3. The Indian Banks Association has opposed the demand and has
stated that the present demand of the employees runs counter to the demand
made on behalf of the employees before the Sastry Tribunal. Before the
Sastry Ttibunal the All India Bank Employees Association had contended
that all employees should be compulsorily retired on the completion of 30
years of service or 55 years of age, whichever was earlier, whilst the Imperial
Bank Staff Association had suggested that no workman should be retired
unless he completed 58 years of age. The Bombay Exchange Banks
Association, in reply, submitted that the question about the age of retirement
would have to be decided by the Tribunal in the light of the principles laid
down by the Supreme Court in the cast of Guest Keen Williams Private
Limited vs. Sterling (P.J.) and others reported in 1959 (II) Labour Law Journal,
page 405. It submitted that on an application of those principles to banks and
especially in view of the existence of pension schemes in several banks,
there was no case for an increase in the retirement age.

15.4. The State Bank of India has stated that the age of retirement in the
State Bank, as prescribed by the Sastry Tribunal, was 58 years and that the
demand that an employee should be entitled to retire, after 20 years service
was not reasonable.
15.5. On behalf of the State Bank of Patiala, it has been stated that the
present age of retirement was 55 years and that there was no justification for
381

15.10. In the course of the hearing it was argued on behalf of the

employees that generally speaking officers of the banks were not retired
earlier than the age of 60, that in Exchange Banks even at present generally
the employees were allowed to continue in service till the age of 60 years,
that in view of the judgment of the Supreme Court in the case of the Imperial
Chemical Industries (India) (Private) Ltd., and its workmen, reported in 1960
(II) Labour Law Journal, page 716, the proper age of retirement should be
fixed at 60, that there was a tendency now to raise the age of retirement and
that the Norms Committee appointed by the then Government of Bombay
had also recommended that the age of retirement should be 60.
382

Item No. 14 : CATEGORIES OF WORKMEN TO WHOM THE AWARD

OF THE TRIBUNAL SHOULD BE APPLICABLE
16.1 The All India Bank Employees Association has submitted that award
of this Tribunal should apply to all categories of workman in the banks for
whom demands have been put forward by the Association. It further submits
that in all categories, the award should apply also to probationers, temporary
employees, part-time employees, permanent employees and apprentices.
The All India State Bank of India Staff Federation and the State Bank of India
Staff Union, Andhra Pradesh, Vijayawada, have made similar demands.
16.2.The All India Bank Employees Federation and Vadodra Rajya Bank
Nokar Sangh have submitted that all workmen as defined in the Industrial
Disputes Act, including permanent, temporary, casual and part time
workmen, probationers, apprentices, etc., should be covered by the award
and that all should be entitled to all the benefits of the award.
16.3. The Cochin Commercial Bank Employees Association has claimed
that in case of such officers who are not treated as workmen by the Bank
they should be given the option to the classification of their choice. The
Allahabad Bank Employees Union. Calcutta, has demanded that the entire
supervisory, clerical and subordinate staff whether full time or part-time should
be governed by the award of the Tribunal. The State Bank of Patiala (All
Cadres) Employees Association wants the award to be made applicable to
all the categories of employees (subordinate staff, clerical staff and supervisory
staff etc.) whose case has been pleaded by the Association. The All India
Bank of Baroda Employees Federation has pleaded as under :The
Federation submits that the terms of Reference is a misnomer since the
award of this Honourable Tribunal will apply to the categories of the workmen
in the Banking Industry for whom demands had been put forward by the
Federation.

AI

BE

15.12. 1 have to consider the question on an all India footing and it is

desirable to lay down a uniform provision applicable to all classes of banks
who are before me. In the Reserve Bank of India, which is the central banking
institution in the country, the age of retirement is 55 years at present. No
demand has been made by Class II and Class III of its employees for increasing
the age of retirement, even though various other demands have been made
on their behalf which constitute the subject matter of Reference No. 2 of 1960
which is pending before me. Class IV employees of the Reserve Bank have,
however, made a demand for raising the age of retirement to 60 years. A few
exhibits have been filed before me showing that in several concerns the age
of retirement is 60 years. There are a few banks which have pension schemes
in operation. The banks in general are opposed to raising the age of retirement.
It would be inflicting some hardship on some of the banks which have pension
schemes, if the age of retirement is further raised.

CHAPTER XVI

15.11. On the other hand, it was contended on behalf of the banks that
the directions given by the Sastry Tribunal had not been found to be unduly
harsh or improper, that there should be no alteration in the age of retirement
as that would directly affect the pension, and that all that had been pointed
out by the other side was that in several concerns in Bombay the age of
retirement was 60. It was argued on behalf of the State Bank of India that
there would be additional burden on the State Bank if the age of retirement
was extended by two years, that there would be difficulty in giving promotions,
that there was a fair pension scheme obtaining in the State Bank, that the
Supreme Court had observed in the case of the Imperial Chemical Industries
(India) (Private) Ltd., Bombay reported in 1960 (II) Labour Law Journal, page
716 that a fair and reasonable pension scheme played an important part in
fixing the age of retirement at a comparatively earlier stage that the bank
today recruited employees on the basis that some will retire in a particular
year at the age of 58 and that if the retirement age was raised, this programme
would be upset.

15.13. Taking every relevant factor into consideration, I am inclined to

take the view that the provisions contained in the Sastry Award are reasonable
and that at present no change is called for. I accordingly direct that after a
workman has reached the age of 55 years, he may be retired after giving him
two months notice in writing in case his efficiency is found by the employer
to have been impaired. Subject to this rule and also subject to any rule under
an existing pension fund, a workman should not be compelled to retire before
he is 58 years old. Banks, however, will be at liberty, wherever they consider
fit, to make rules providing for a higher age of retirement.

383

16.4. The Indian Banks Association has submitted that according to the
definition of workmen given in section 2(s) of the Industrial Disputes Act
1947, a person employed mainly in a managerial or administrative capacity
or in a supervisory capacity drawing wages exceeding Rs. 500 per month,
was not a workman, that the Tribunal would have no jurisdiction to lay down
emoluments for such employees beyond Rs. 500 per month, that the Tribunal
should give option from the date the award comes into force to such employees
in supervisory grade either to opt for the totality of the benefits under the
award to be given by the Tribunal or to opt for such terms and conditions as
might be available under the contract between the employees concerned and
the bank, and that such option should be made available to employee in the
supervisory grade now employed, or those who might enter such grade after
the publication of the award of the Tribunal. The demand of the workmen that
384

the award should be made applicable to apprentices has been opposed.

16.7. Item 14 itself postulates that the categories of persons to whom

this award should be applicable must be workmen. Having regard to the
amended definition of the expression workman given in section 2(s) of the
Industrial Disputes Act, 1947, the question as regards the persons who fall
within the definition has been considered by me earlier. This award will apply
only to employees who are workmen within the meaning of the said definition
so long as they remain workmen. It will not apply to any employee who is not
a workman. The question that remains to be considered is whether this award
should apply to all categories of persons who are workmen or to some of
them, and if so, to which of them. The question relating to the supervisory
staff has been separately dealt with by me in Chapter V, paragraph 5.196
onwards under the heading Supervisory Staff and I need not repeat what is
stated therein.

AI

BE

(1) Apprentices, probations, temporary employees and part-time

employees.
(2) Liftmen and drivers.
(3) Cooks dhobis and other servants doing domestic work.
(4) Gardeners.
(5) Caretakers.
(6) Air conditioning operators.
(7) Electricians, mechanics and maintenance staff.
(8) Sweepers and cleaners.
(9) Godown keepers.
(10) Chowkidars and/or watch and ward staff.

Bank did not have any occasion to employ any part-time workmen the question
of making the provisions of the award applicable to part-time employees, so
far as the Miraj State Bank is concerned, did not arise. The Jaya Laxmi Bank
has submitted that the award of this Tribunal should be made applicable to
confirmed clerical staff and subordinate staff and that it should not be made
applicable to officers (managers, assistant managers, agents, assistant
agents, accountants, supervisory staff) part-time workers, probationers,
apprentices and temporary appointments. The Bharata Lakshmi Bank has
submitted that the award should be made applicable to clerks and the
subordinate staff only.

16.5. The Bombay Exchange Banks, Association has submitted that

the award should be made applicable only to the clerical and the subordinate
staff drawing scales of pay and allowances according to the award of the
Tribunal provided they are on the banks permanent and regular establishment
and working full time, that members of the supervisory staff who are presently
covered by the definition of workmen whose grade or scales or emoluments
are fixed by the Board of Directors or by the managements and are voluntarily
accepted by them either at the time of entry into service or by way of promotion
from the clerical cadre during the course of their service and whose basic
and/or terminal pay according to that scale or grade is higher than that of a
member of the clerical cadre having the same length or service, should be
excluded from the provisions of the award in all respect. It has further been
submitted that the award should not be made applicable to the following
categories, whose recruitment and terms and conditions of service should be
in the entire discretion of banks :

16.6. The State Bank of India has submitted that the award of this Tribunal
should not apply to persons who are attached whole-time to bungalows and
staff quarters, to part-time employees, casual and temporary employees and
jobs workers. It is further submitted that the award should also not apply to
clerks-in-charge of the banks treasury pay offices and sub-pay offices,
assuming that they were held to be workmen. Similar submission is made
on behalf of subsidiaries of the State Bank of India. The Miraj State Bank has
submitted that having regard to the peculiar character of the banking industry
and the nature of the banking business, application of the provisions of the
award should be restricted only to permanent workmen and probationers in
the employment of the bank excluding supervisory staff who may technically
be workmen within the definition of the term and that the provisions of the
award should also not be made applicable to temporary workmen, part-time
workmen and apprentices. The bank further submits that the application of
the provisions of the award to a temporary employee would be anomalous
and can create an embarrassing situation, that the provisions of the award
should not be made applicable to the apprentices and that as the Miraj State
385

16.8. As regards apprentices, I have already stated, in paragraph 5.192

of this award that scales of pay provided under this award are not applicable
to them. On behalf of the banks it is contended that apprentices should be
wholly excluded from the operation of this award. Various questions affecting
apprentices have been raised under items 19 and 22 with which I will deal
with later. Some directions will be required to be given in connection with
apprentices who are workmen.
16.9. The State Bank of India has claimed that casual workers and job
workers should be excluded from the operation of this award. I have made no
provision in any part of this award in connection with them and persons who
are casual employees or who are employed to do job work are excluded from
the operation of this award.
16.10. As regards cooks and domestic servants who are employed to
do the work exclusively for officers of the bank at the residence of such
officers, I have stated in paragraph 5.194 that the scales of pay provided in
this award are not applicable to them. A demand has been made that they
should be excluded from the operation of this award. There is no evidence led
before me about conditions under which they work and I am unable to make
any provision of this award applicable to them. None of the provisions of this
award will apply to them.
386

16.11. As regards the other categories of workmen, wherever any provision

of the award is not intended to be applicable to them, the same has been
specified at the proper place. Save as herein provided; I am unable to accede
to the demand for the exclusion of other categories of workmen from the
operation of this award.

CHAPTER XVII
Item No. 15 SUBSISTENCE ALLOWANCE DURING PERIOD OF
SUSPENSION
.17.1. By paragraph 557 of its award the Sastry Tribunal directed that
subsistence allowance during the period of suspension should be granted to
an employee on the following scales :
(1) For the first three months one-third of the pay and allowances which
the workman would have got but for the suspension;
(2) Thereafter, (i) where the enquiry is departmental by the bank, onehalf of the pay and allowances for the succeeding months;

(ii) where the enquiry is by an out side agency, one-third of the

pay and allowances for the next three months and thereafter onehalf for the succeeding months until the enquiry is over.

It appeared to the Sastry Tribunal that whatever might be the legal position
under the ordinary law, some allowance should be given to workmen under
suspension as they should not be left to starve during the period of suspension.

AI

BE

17.2. The Labour Appellate Tribunal, after considering the matter, did
not make any change in the aforesaid general provisions. In connection with
the Imperial Bank of India it observed that the workmen of the Bengal Circle
were in fact paid full salary and allowances for the period of suspension and
that out of 11,000 and odd employees of the said bank, 7000 employees
were in the Bengal Circle. It gave its decision in connection with the employees,
of the Imperial Bank in terms following: We do not propose to lay down
any general principle; but on the special facts here, when the benefit has
been extended to the majority of the workmen, we consider it right to direct
that the same benefit shall be made available to the workmen of the other
circles. We direct accordingly.
17.3. On behalf of the workmen, the following claims were made :

That there should be no suspension except where an employee was

involved in an offence for which he was liable to conviction and sentence
under the provisions of the criminal law, that suspension allowance at the
rate of three-fourths of the total emoluments should be paid for the first three
months and thereafter full salary and allowance should be paid. Ordinarily
employees should not be suspended, and that during suspension in special
circumstances, workmen should be entitled to full pay and allowances and
all other benefits for the suspension period.
17.4. On behalf of the employees of the State Bank of India, it was
submitted that there should be no suspension except where an employee
was involved in an offence for which he was liable to conviction and sentence
under the provisions of criminal law and that pay for the suspension period

387

388

should be paid according to the existing rules.

suspension may depend upon various circumstances affecting the time taken
in connection with an enquiry by the bank or by an outside agency. Under
the law of contract, when an employee is suspended, the contract of
employment itself is under suspension. It is only with a view to prevent great
hardship upon the employees that Tribunals have made provision for the
grant of subsistence allowance during the period of suspension which, under
the law of contract, they would otherwise not have obtained.

17.5. It is pleaded by the State Bank of India Employees Association

(Bengal Circle), that the period of suspension should in no case exceed two
months where the enquiry was departmental.
17.6. Most of the banks have pleaded that suitable and satisfactory
provision has been made for subsistence allowance under the Sastry Award
and that no change is required to be made.

17.12. The matter concerning subsistence allowance during the period

of suspension has been carefully considered by the Sastry Tribunal. Having
carefully considered all aspects of the matter, I do not see any necessity for
making any change therein.

17.7. The Bombay Exchange Banks Association has claimed that any
subsistence allowance in the case of employees who are prosecuted in criminal
court should entirely cease after a period of six months from the date of
suspension.

17.13. The State Bank of India is at present giving full salary and
allowances during the period of suspension. There is no reason for treating
the State Bank of India or any particular bank differently from other banks in
an all-India adjudication.
17.14. I make an award in connection with this item in terms similar to
those contained in paragraph 557 of the Sastry Award quoted above.
17.15. The State Bank of India and other banks will be free to give such
salary and allowances as they deem fit to a workman during the period of
suspension so long as the amount of such salary and allowances is at a rate
not less than what is provided under this award and I direct accordingly.

BE

17.8. The State Bank of India has stated that the demands made were
unreasonable and unjustified, that as a matter of fact, due to the practice
followed by the Imperial Bank of India, under the circumstances then existing
of providing for payment of full pay during suspension, the State Bank had
been required to grant full pay during the period of suspension which was
absolutely unreasonable and unsustainable on principle. The State Bank
submitted that the Tribunal should direct the State Bank to pay the same
rate of subsistence allowance which the Tribunal prescribes for other banks
and should further direct that if an employee was suspended because of
criminal prosecution, payment of subsistence allowance should cease six
months after the date of suspension and that an employee who was
prosecuted for an offence, not connected with the banks work and was
suspended by the bank should not be granted any subsistence allowance.

AI

17.9. The State Bank of Patiala has stated that a workman under
suspension being paid by the bank subsistence allowance at the rate of half
the employees substantive pay plus dearness allowance. It adopted the
written statement filed by the Indian Banks Association on behalf of its member
banks on this issue.

17.10. I have to deal under this item with the question of subsistence
allowance during period of suspension.Demands have been made under this
item that a person should not ordinarily be suspended or should be suspended
only when he is involved in an offence for which he was liable to be convicted
and sentenced under the ordinary criminal law. These demands cannot strictly
speaking be said to be covered by this item.Apart from any other consideration,
in my view, there is no merit in this demand. There is no reason why a bank
should not be in a position to suspend a workman who is charged with gross
misconduct not amounting to an offence under the ordinary criminal law.
17.11. As regards the demand for limiting the period of suspension and
for placing a limit on the time during which subsistence allowance should be
paid, no hard and fast rule can be laid down. It may happen that in some
cases, the period of suspension is fairly long. The duration of the period of
389

390

18.6. The All India Bank Employees Federation has made the following
demands :

CHAPTER XVIII
Item No. 16 PROCEDURE FOR TERMINATION OF EMPLOYMENT

(i)

Services of an employee should not be terminated except when he

is found guilty of embazzlement or misconduct or when there is a
case for bona fide retrenchment.

(ii)

If an employee wants to leave service, notice for one week or one

weeks pay in lieu thereof should be treated sufficient.

AND TAKING OTHER DISCIPLINARY ACTION

18.1. On behalf of the All India Bank employees Association, it is submitted that the procedure for taking disciplinary action and termination of
employment as laid down in paragraphs 520 and 521 of the Sastry Award
should be maintained as judicially interpreted from time to time excepting
the provisions under paragraph 522(1) which should be deleted. Para 522(i)
of the Sastry Award runs as under :

Misconduct

The provisions of the Sastry Award in this respect should be changed in

the following manner :

BE

Clause (6) of Paragraph 522 refers to cases of contemplated closing

down of an establishment or of retrenchment of more than five
employees.

A co-ordination committee of the elected members of workers and

the management at all levels should be immediately formed. The
committee should be re-formed after fresh election once after every
three years, the outgoing members being eligible, for the same. No
action against any employee be taken without the consent of such
a committee. Standing rules be framed in consultation with the
Federation.

In cases not involving disciplinary action for misconduct and subject

to clause (6) below, the employment of a permanent employee
may be terminated by three months notice or on payment of three
months pay and allowances in lieu of notice. The services of a
probationer may be terminated by one months notice or on payment
of a months pay and allowances in lieu of notice

Disciplinary Action

Clauses (a) to (d) set out the activities and/or behaviour which should
not be considered as misconduct.

18.2. A similar demand has been made by the All India State Bank of
India Staff Federation and the State Bank of India Staff Union, Andhra Pradesh.

(e)

18.3. The State Bank of India Employees Association, Bengal Circle,

has in respect of this item, made a claim in terms following:

disorderly and indecent behaviour should be considered as minor

misconduct.

(f)

When an employee gets acquitted from a competent court of an

offence upon prosecution, the management should not be allowed
to hold departmental enquiries again for the same offence and the
employment of the workman concerned should continue unhindered.

(g)

If after conducting a departmental enquiry on charges other than

those of which he has been acquitted, no charge has been
established against the workman concerned, he shall be reinstated
in his original post and full emoluments with retrospective effect be
paid.

(h)

When it is decided to take disciplinary action against an employee,

such decision should be communicated to him within 7 days from
the date of cause of action and the employees should be served
with a charge-sheet clearly stating therein the nature of the lapses
with copy of the evidence on which the charges rest. Without prior
service of charge sheet and reply thereto received and examined,
no employee should be suspended prior to this all. In all enquiry
proceedings, the employee concerned should have the right to call
for production of any relevant documents that are in the possession
of banks and to cross-examine any witness of the bank. The

AI

Reasonable standing orders should be framed and approved by

the Court to regulate the conduct and relationship of bank employees
including cases of disciplinary action. For this purpose a joint
committee should be formed at each circle with equal number of
representatives from employees and employers with a chairman
elected by each section at alternate meetings.
18.4. The Indian Overseas Bank Employees Union has claimed as
under:

A committee consisting of representatives of the Union and the

management at all levels should be immediately formed. No action
against any employee be taken without proper consideration of
such a committee.
18.5. The All India Bank of Baroda Employees Federation has submitted
as follows :
Services of an employee should not be terminated unless he is
punished by a Court of law on a charge of moral turpitude. In case
it is decided to take any disciplinary action against any employee
the proper enquiry proceedings should be conducted.
391

392

employees required to participate in an enquiry either as

representatives or as witnesses should be treated as on special
leave or duty. The employees should have the right to appeal to the
highest authority in the management or to any other competent
authority within 45 days if an employee is not satisfied with the
decision of the enquiry officer. No employee should be dismissed
pending such appeal.

18.9. The Bombay Exchange Banks Association has submitted that

the procedure laid down in paragraph 521 of the Sastry Award was very
cumbrous and involved and that the said paragraph should be replaced by
the procedure and provisions contained in the Model Standing Orders framed
under the Industrial Employment (Standing Orders) Act, 1946, which were
applied in other industries with suitable additions to acts of misconduct and
other matters peculiar to the banking industry. It has also submitted that the
workmens demand that clause (1) of paragraph 522 of the Sastry Award
should be deleted, was unreasonable and unjustified.

Grievances of employees lodged with the management against the

conduct of any officer of the bank should be enquired into within 15
days of such report and in such enquiry the aggrieved employee
concerned should have a right to be present along with his
representative. Officers found guilty upon such enquiry should be
given appropriate punishment.

(j)

In every case the officer holding the enquiry in any proceedings

should be above the rank of the officer who will issue the chargesheet.

(k)

The employees should have access to their service record book

and/ or file on demand.

18.11. The Northern India Banks Association has claimed that a specific
power of discharge should vest in the management,

AI

BE

18.7. In making its demands the Vadodra Rajya Bank Nokar Sangh has
followed the same pattern as the All India Bank Employees Federation with
some variations. It has claimed that the services of an employee should not
be terminated except when he is involved in an offence meriting dismissal or
when there is a case for bona fide retrenchment. It has claimed that certain
further acts should not constitute misconduct. It has further claimed that
after the employees are held innocent by the enquiry officer and reinstated
they should be paid full salary of the suspension period and this should not
be left at the discretion of the management.

18.10. The State Bank of India has opposed the demands of the workmen
for constitution of joint committees. It has submitted that paragraph 521 of
the Sastry Award should be replaced by a set of rules similar to those contained
in Model Standing Orders framed by the Central Government under the
Industrial Employment (Standing Orders) Act, 1946, with suitable Additions
to the list of acts of misconduct to bring in features special to the banking
industry.

(i)

list of items set out in para 521(6) of the Sastry Award.

18 .8. The Indian Banks Association has submitted that the provisions
contained in paragraph 522(1) of the Sastry Award relating to procedure for
termination of employment and disciplinary action do not require any
substantial alteration. It has sought certain modifications therein stating that
the procedure was found to be cumbrous and tending to delay the disposal of
cases requiring prompt action. It has submitted that this Tribunal should
direct that the granting of adjournment or adjournments of hearing in connection
with disciplinary proceedings should be discretionary with the management,
that such adjournments should not be for more than seven days in the
aggregate during the entire course of proceedings on applications of an
employee and that an employee against whom disciplinary proceedings are
being taken may be represented by any colleague in the same department
and not by a union representative. It has sought the inclusion of twenty-three
more items in the list of acts and omissions set out in paragraph 521(4) of
the Sastry Award as constituting gross misconduct, and he has asked for
the inclusion of eight further items as constituing minor misconduct, in the
393

18.12. The Indian Overseas Bank Ltd., has in its written statement stated
as follows :
The provisions of the Sastry Award in this behalf in toto should be
allowed to continue in force as we find in actual practice that the
provisions do really safeguard the interests of the workmen in full
measure and that there should not be any variation thereto.

18.13. Other banks have opposed some of the demands of the workmen.

18.14. Item 16 in Schedule II to the Order of Reference dated the 21st

March 1960 has led to considerable controversy as regards matters embraced
by it. Several banks have made a claim under this item for enlarging the
definition of the terms gross misconduct and minor misconduct" as given
in the Sastry Award and to include therein various acts and omissions which,
according to them, should be regarded as constituting gross misconduct or
minor misconduct. On behalf of some of the workmens organisations a claim
has been made under this item that certain activities and/or behaviour should
not be regarded as misconduct.
18.15. What I have to consider is whether under this item such claims
could be entertained. The words used in the Order of Reference are Procedure
for termination of employment and taking other disciplinary action." The
word procedure is the key word in this item. What is referred to is the
procedure for termination of employment and taking other disciplinary action.
The constitution of certain acts or ommissions into gross misconduct or
minor misconduct cannot be regarded as a matter of procedure, and I cannot
394

see my way, whatever may be the merit of the claims, to entertain the
demands made by some of the banks and workmens organisations in this
connection.

representatives of the union and the management and the demand that no
action against an employee should be taken without proper consideration by
such a committee, I am unable to accede to the same in the circumstances
prevailing at present in the banking industry or in the country as a whole. It is
not necessary to interfere with the right of the management to take disciplinary
action in the banking industry.

18.16. On behalf of some of the workmens organisations demands are

made under this item relating to the grounds which would justify the termination
of a workmans employment. The said demands do not relate to procedure
and would equally not be covered by this item.

The procedure laid down in the Sastry Award in connection with taking
disciplinary action will be found along with other matters in paragraphs 520
and 521. The said paragraphs provide as under :

520. Under the subject of disciplinary action we deal with dismissal,

suspension, warning or censure, fine, the making of adverse remarks and the
stoppage of an increment.
521. A person against whom disciplinary action is proposed or likely to
be taken should, in the first instance, be informed of the particulars of the
charge against him; he should have a proper opportunity to give his explanation
as to such particulars. Final orders should be passed after due consideration
of all the relevant facts and circumstances. With this object in view we give
the following directions :

AI

BE

18.17. On behalf of some of the workmens organisations, it is claimed

that the directions given by the Sastry Tribunal in paragraph 522(1) of the
Award relating to termination of employment in cases not involving disciplinary
action, for misconduct, should be deleted. It is urged that the words procedure
for termination of employment are wide enough to cover the demand made
under this head. The words procedure for termination of employment do not
stand by themselves. They have been followed by the words and taking
other disciplinary action. The words other disciplinary action clearly indicate
that the termination of employment referred to in this item is by way of
disciplinary action. Regarding this item as a whole, I am of the view that any
dispute relating to the termination of employment otherwise than by way of
disciplinary action is not covered by this item.Apart from what is stated above,
what can be dealt with under this item is the procedure for termination of
employment, which postulates that the procedure may ultimately in a given
case result in the termination of employment. The workmens claim, as
amplified before me, was to the effect that there should be no termination of
employment at all otherwise then by way of disciplinary action. Such a claim
is not a claim relating to procedure for termination of employment, even if the
words termination of employment were wide enough in the context in which
they are used, to cover cases of termination of employment otherwise than
by way of disciplinary action, contrary to what I have held above, A claim has
been made relating to notice to be given by a workman when he wants to
terminate his employment. The same is not covered by this item. Thus a
number of demands made on behalf of the workmen as well as the banks do
not fall within the ambit of this item and cannot be dealt with by me.

18.20. On behalf of some banks it is submitted that the procedure laid

down in the Sastry Award is found to be cumbrous and that it tends to delay
the disposal of cases requiring prompt action.

18.18. As regards the claim by the All India Bank of Baroda Employees
Federation that services of an employee should not be terminated unless he
was punished by a court of law on a charge of moral turpitude, apart from
any other consideration, there is no merit in the demand. A workman may be
guilty of gross misconduct even without committing an offence punishable in
a court of law. Moral turpitude is not of the essence of such misconduct in
connection with bank employees. There is no reason why the banks should
be under an obligation to retain in service persons who are guilty of gross
misconduct even though they may not have committed an offence involving
moral turpitude.
18.19. As regards the demand for constituting a committee of
395

(1)

By the expression offence shall be meant any offence involving

moral turpitude for which an employee is liable to conviction and
sentence under any provision of Law.

(2)

(a)

When in the opinion of the management an employee has

committed an offence, unless he be otherwise prosecuted,
the bank may take steps to prosecute him or get him
prosecuted; and in such a case he may also be suspended.

(b)

If he be convicted he may be dismissed with effect from the

date of his conviction or be given any lesser form of punishment
as mentioned in sub-paragraph (5) below.

(c)

If he be acquitted, it shall be open to the management to

proceed against him under the provisions set out below in
sub-paragraphs (9) and (10) Infra relating to discharges.
However, in the event of the management deciding after enquiry
not to continue him in service, he shall be liable only for
termination of service with three months pay and allowances
in lieu of notice.And he shall be deemed to have been on duty
during the period of suspension, if any, and shall be entitled
to the full pay and allowances minus such subsistence
allowance as he has drawn and to all other privileges for the
period of suspension; provided that if he be acquitted by being
396

(d)

If after steps have been taken to prosecute an employee, or

to get him prosecuted, for an offence he is not put on trial
within a year of the commission of the offence, the management
may then deal with him as if he had committed an act of
gross misconduct or of minor misconduct, as defined below;
provided that if the authority which was to start prosecution
proceedings refuses to do so or comes to the conclusion that
there is no case for prosecution it shall be open to the
management to proceed against the employee under the
provisions set out below in sub-paragraphs 9 and 10 infra
relating to discharge, but he shall be deemed to have been on
duty during the period of suspension, if any, and shall be
entitled to the full wages and allowances and to all other
privileges for such period. In the event of the management
deciding, after enquiry, not to continue him in service, he shall
be liable only for termination with three months pay and
allowances in lieu of notice as directed in sub-paragraph (2)
supra. If within the pendency of the proceedings thus instituted
he is put on trial such proceedings shall be stayed pending
the completion of the trial, after which the provisions mentioned
in sub-paragraph (2) above shall apply.

AI

BE

(3)

If he prefers an appeal or revision application against his

conviction and is acquitted, in case he had already been dealt
with as above, and he applies to the management for
reconsideration of his case, the management shall review his
case and may either reinstate him or proceed against him
under the provisions set out below in sub-paragraphs 9 and
10 infra relating to. discharge, and the provisions set out
above as to pay, allowances and the period of suspension will
apply, the period upto-date for which full pay and allowances
have not been drawn being treated as one of suspension. In
the event of the management deciding, after enquiry not to
continue him in service, the employee shall be liable only for
termination with three months pay and allowances in lieu of
notice, as directed above.

(4)

By the expression gross misconduct shall be meant any of the

following acts and omissions on the part of an employee :
(a)

engaging in any trade or business outside the scope of his

duties except with the permission of the bank,
397

(b)

unauthorised disclosure of information regarding the affairs of

the bank or any of its customers or any other person connected
with the business of the bank which is confidential or the
disclosure of which is likely to be prejudicial to the interests
of the bank,

(c)

drunkenness or riotous or disorderly or indecent behaviour on

the premises of the bank,

(d)

wilful damage or attempt to cause damage to the property of

the bank or any of its customers;

e)

wilful insubordination or disobedience of any lawful and

reasonable order of the management or of a superior;

(f)

habitual doing of any act which amounts to minor misconduct

as defined below, habitual meaning a course of action taken
or persisted in notwithstanding that at least on three previous
occasions censures or warnings have been administered or
an adverse remark has been entered against him;

given the benefit of doubt he may be paid such portion of such

pay and allowances as the management may deem proper,
and the period of his absence shall not be treated as a period
spent on duty unless the management so direct.

(5)

(6)

(g)

wilful slowing down in performance of work;

(h)

gambling or betting on the premises of the bank;

(i)

speculation in stocks, shares, securities or any commodity.

whether on his account or that of any other persons;

(j)

doing any act prejudicial to the interests of the bank, or gross

negligence or negligence involving or likely to involve the bank
in serious loss; .

k)

giving or taking a bribe or illegal gratification from a customer

or an employee of the bank;

(l)

abetment or instigation of any of the acts or omissions

abovementioned;

An employee found guilty of gross misconduct may :

(a)

be dismissed without notice, or

(b)

be warned or censured, or have an adverse remark entered

against him;

(c)

be fined; or

(d)

have his increment stopped; or

(e)

have his misconduct condoned and be merely discharged.

By the expression minor misconduct shall be meant any of the

following acts and omissions on the part of an employee :
(a)

absence without leave or overstaying sanctioned leave with

out sufficient grounds;

(b)

unpunctual or irregular attendance;

398

(8)

breach of any rule of business of the bank or instruction for

the running of any department;

(e)

committing nuisance on the premises of the bank;

(f)

entering or leaving the premises of the bank except by an

entrance provided for the purpose;
attempt to collect or collecting monies within the premises of
the bank without the previous permission of the management
or except as allowed by any rule or law for the time being in
force;

(h)

holding or attempting to hold or attending any meeting on the

premises of the bank without the previous permission of the
management or except in accordance with the provisions of
any rule or law for the time being in force;

(i)

canvassing for union membership or collection of union dues

or subscriptions within the premises of the bank without the
previous permission of the management or except in
accordance with the provisions of any rule or law for the time
being in force;

(j)

failing to show proper consideration courtesy or attention

towards officers, customers or other employees of the bank:
unseemly or unsatisfactory behaviour while on duty;

(k)

marked disregard of ordinary requirements of decency and

cleanliness in person or dress;

(l)

incurring debts to an extent considered by the management

as excessive;

When it is decided to take any disciplinary action against an

employee such decision shall be communicated to him within three
days thereof.

(10) The procedure in such cases shall be as follows :

(a)

BE

(g)

the officer who holds them.

(9)

(b)

Pending such inquiry he may be suspended, but if on the

conclusion of the enquiry it is decided to take no action against
him he shall be deemed to have been on duty and shall be
entitled to the full wages and allowances and to all other
privileges for the period of suspension; and if some punishment
other than dismissal is inflicted the whole or a part of the
period of suspension, may, at the discretion of the
management, be treated as on duty with the right to a
corresponding portion of the wages, allowances, etc.

(c)

In awarding punishment by way of disciplinary action the

authority concerned shall take into account the gravity of the
misconduct, the previous record, if any, of the employee and
any other aggravating or extenuating circumstances that may
exist. Where sufficiently extenuating circumstances exist the
misconduct may be condoned and in case such misconduct
is of the gross type he may be merely discharged, with or
without notice or on payment of a months pay and allowances,
in lieu of notice. Such discharge may also be given where the
evidence is found to be insufficient to sustain the charge and
where the bank does not, for some reason or other, think it
expedient to retain the employee in question any longer in
service. Discharge in such cases shall not be deemed to
amount to disciplinary action.

An employee found guilty of minor misconduct may:

(a)

be warned or censured ; or

(b)

have an adverse remark entered against him; or

(c)

have his increment stopped for a period not longer than six
months.

In all cases in which action under paragraphs (3), (5) or (7) may be
taken, the proceedings held shall be entered in a book kept specially
for the purpose, in which the date on which the proceedings are
held, the name of the employee proceeded against, the charge or
charges, the evidence on which they are based, the explanation
and the evidence, if any, tendered, by the said employee, the finding
or findings with the grounds on which they are based and the order
passed shall be recorded with sufficient fullness, as clearly as
possible, and such record of the proceedings shall be signed by
399

An employee against whom disciplinary action is proposed

or likely to be taken shall be given a charge-sheet clearly
setting fourth the circumstances appearing against him and a
date shall be fixed for enquiry, sufficient time being given to
him to enable him to prepare and give his explanation as also
to produce any evidence that he may wish to tender in his
defence. He shall be permitted to appear before the Officer
conducting the enquiry, to cross examine any witness on
whose evidence the charge rests and to examine witness
and produce other evidence in his defence. He shall also be
permitted to be defended by a representative of a registered
union of bank employees, or, with the banks permission, by
lawyer. He shall also be given a hearing as regards the nature
of the proposed punishment in case any charge is established
against him.

neglect of work, negligence in performing duties;

(d)

AI

(7)

(c)

400

(11) Where the directions given above conflict with the procedure or
rules, in force in any bank regarding disciplinary action they shall
prevail over the latter. There may, in such procedure or rules exist
certain provisions outside the scope of the directions given by us
above enabling the bank to dismiss, warn, censure, fine an employee
or have his increment stopped or have an adverse remark entered
against him. In all such cases also we think that the provisions set
out in clauses (8) and (9) should apply, and we direct accordingly.

18.23. A demand has been made on behalf of the Bombay Exchange

Banks Association and on behalf of the State Bank of India that these
provisions should be replaced by a set of rules similar to those contained in
the Model Standing Orders framed by the Central Government under the
Industrial Employment (Standing Orders) Act, 1946. The Sastry Tribunal has
provided for most of the matters appearing in the Model Standing Orders
relating to the procedure for disciplinary action and it is neither necessary
nor expedient to replace the same.

18.24. It was pointed out to me that it may some times happen that an
employee on whom a notice, order, charge-sheet, communication or intimation
in connection with disciplinary proceedings when it is sought to be served
declines to receive the same and proceedings are some times held up by
reason thereof. It is necessary to provide for such a situation. I direct that if a
workman refuses to accept any notice, order, charge-sheet, written
communication or written intimation in connection with disciplinary proceeding
when it is sought to be served upon him, such refusal shall be deemed to be
a good service upon him, provided such refusal takes place on the presence
of at least two persons including the person who goes to effect service upon
him. Where such notice, order, charge-sheet, communication or intimation
is sent by registered post with acknowledgement due, the same shall, at the
discretion of the officer of the bank concerned, be deemed to have been duly
served upon the workman, if the same has been refused by the workman.

BE

(12) It also seems to us necessary that a bank should decide which

officer shall be empowered to take disciplinary action in the case
of each office or establishment and that it should also make provision
for appeals against orders passed in disciplinary matters to an
officer or a body not lower in status than the manager, who shall if
the employee concerned so desirous in a case of dismissal hear
him or his representative before disposing of the appeal. We direct
accordingly and further direct that the names of the officers or the
body who are empowered to pass the original orders or hear the
appeal shall from time to time be published on the banks notice
boards, that an appeal .shall be disposed of as early as possible,
and that the period within which an appeal can be referred shall be
forty-five days from the date on which the original order has been
communicated in writing to the employee concerned.

alteration. The workmen have, by and large, claimed its retention. There
does not appear to me to be any case for making any substantial changes in
the procedure so laid down.

18.21. Paragraphs 518 and 519 of the Sastry Award provide Inter alia as
under :

AI

518. Service Certificate Every employee who is dismissed or

discharged shall without avoidable delay be given a service
certificate.

519. Issue of notices and orders.Any notice, order, charge-sheet,

communication or intimation which is meant for an individual
employee, shall be in a language understood by the employee
concerned. In the case of an absent employee notice shall be
sent to him by registered post with acknowledgement due.

18.22. The Sastry Tribunal has, after careful consideration, made detailed
provisions relating to the procedure for taking disciplinary action. It was urged
at the hearing that the enquiry before a domestic Tribunal should be as simple
as possible consistent with the observance of the principles of natural justice.
As a general proposition, that statement has considerable force. Where,
however, detailed provisions have been laid down and parties have been following
such procedure for a number of years, it does not seem to me to be right to
scrap the procedure has led to gross abuse or has defeated the purpose for
which it was laid down. There is no such evidence led before me. As a matter
of fact, the Indian Banks Association has submitted that the provisions relating
to procedure for taking disciplinary action do not require any substantial
401

18.25. A complaint has been made in connection with adjournment of

disciplinary proceedings. It is submitted that adjournment of such proceedings
should not be for more than seven days in the aggregate during the entire
course of the proceedings on application of the employee. However much it
may be desirable, both in the interest of the employers and the employees,
that disciplinary proceedings should be expeditiously taken and disposed of,
it is not possible to prescribe any such period. One cannot contemplate all
exigencies and provide a fixed period in advance. However laudable may be
the object behind this demand, the same cannot be granted.
18.26. On behalf of some of the banks it is claimed that in disciplinary
proceedings workmen should not be allowed to be represented by a union
representative. The Sastry Tribunal has in terms stated that he (workman)
shall also be permitted to be defended by a representative of a registered
union of bank employees. There is no necessity for making any change in
this provision.
18.27. Having considered all the demands, in my view, no other changes
are necessary.
18.28. I accordingly make an award in connection with item 16 prescribing
402

the same procedure as the one laid down by the Sastry Tribunal for termination
of employment and taking other disciplinary action in paragraphs 520 and
521 and in paragraphs 518 and 519 to the extent quoted above subject to the
modifications indicated above as regards banks governed by this award.

CHAPTER XIX.
Item No. 17. DATE OF EFFECT OF THE NEW AWARD AND OPTION, IF
ANY, TO BE GIVEN TO THE
EXISTING EMPLOYEES TO RETAIN THEIR PRESENT TERMS AND
CONDITIONS OF SERVICE.

AI

BE

19.1. The All India Bank Employees Association has submitted that the
new award should apply to all categories of workmen with effect from 1st
April, 1959. It has further submitted that the right of option should only be
given in respect of pay-scales, dearness allowance and house rent and
compensatory local allowance, taken together and that the date of option
should also be from 1st April 1959".It has submitted that in no case,existing
rights and privileges of the employees should be curtailed in any manner.The
only demand made by the All India Bank Employees Federation and by the
Vadodra Rajya Bank Nokar Sangh, under this head is that in no case and at
no stage the existing rights, benefits and privileges of the employees should
be adversely affected by the new award. The All India State Bank of India
Staff Federation and the State Bank of India staff Union, Andhra Pradesh,
have made demands similar to those of the All India Bank Employees
Association, save and except that they have not expressly raised any plea
about the date of option being from 1st April 1959. The State Bank of India
Employees Association, Bengal Circle, has pleaded that the award should
be given effect to from 1st April 1959. It has further demanded that the
present employees will have the option to continue under the existing
conditions or to adopt the award that may be given herein. The Bank of
Baroda Employees Federation has submitted that the award should apply to
all categories of workmen with effect from 1st April 1959, and that the date of
option, if any, should also be from 1st April 1959. The only demand made
under this head by the Indian Overseas Bank Employees Union, Madras is
that the award should have retrospective effect from 1st April 1959.

403

19.2. The State Bank of Patiala (All Cadres) Employees Association

has pleaded that the award should be made applicable from 1st April 1959
and that no rights, benefits and privileges enjoyed by an employee of the
bank as on 31st March I960 should be altered to the prejudice of the employee
concerned. The Allahabad Bank Employees Union has submitted that the
new award should have retrospective effect as from 1st April 1959, that no
rights, benefits and privileges enjoyed by the employees under the previous
award should be curtailed or altered to the prejudice of the employee and that
provisions for option for any employee to retain the present terms and
conditions of service should be made in the award. The Cochin Commercial
Bank Employees Association has submitted that the award should be given
retrospective effect from 1st April 1959 and that all employees be given the
option to continue any existing benefits which they are enjoying under the
404

AI

BE

19.3. The Indian Banks Association has submitted that the appropriate
date for the new award to come into operation should be the date on which
such award becomes enforceable under the law and that there is no scope
for giving retrospective effect thereto. The Bombay Exchange Banks
Association has submitted that no question arises of giving retrospective
effect to the new award as unless a specific demand for a specific date on
which the award should be effective was referred to the Tribunal, the Tribunal
had no jurisdiction to direct that the award should come into effect
retrospectively, and that the Tribunal had also no jurisdiction in terms of
section 10 (4) of the Industrial Disputes Act, 1947, to direct the award
becoming effective retrospectively. It is further submitted that having regard
to the well- established principles of industrial law on the subject of giving
retrospective effect, there was no case for giving any retrospective effect to
the new award and that the Supreme Court had laid down that if the demands
made were so excessive that no employer could reasonably be expected to
concede the same, it would be wrong to give retrospective effect from the
date of the presentation of the demands, and that the said rule was fully
applicable to the present case. It has further submitted that no option should
be given to the existing employees on any of the matters referred to the
Tribunal as it was contrary to principle to make the banks maintain two sets
of service conditions simultaneously, that the workmen having made demands
must abide by the decision on those demands. The State Bank of India has
also taken more or less a similar stand. The Indian Banks Association, on
behalf of the State Bank of Patiala, has submitted, that the bank has never
been subjected to any award, that the new award should not be made
applicable retrospectively and that the bank has no objection to the present
employees being given the option to retain their present pay, dearness
allowance and other allowances and benefits in their totality. It has also
submitted that no option should be given to pick and choose the best from
each of the sets of service rules.

working under negotiated mutual agreements between the employees and

the management of the bank, the last of which expired on 31st December
1959, which has brought the service conditions of the employees nearer to
the service conditions under the Sastry Award as applicable to D Class
banks. It has further submitted that if the new award is made applicable with
retrospective effect, it might lead to hardship for the bank, and that therefore
the new award should be made applicable from the date of its publication.
The Jaya Laxmi Bank has pleaded for the application of the award from the
date of its announcement or publication in the Gazette and that any changes
which are going to be made should not have retrospective effect. The Miraj
State Bank has pleaded that the award that may be made applicable to it
should be made so applicable only from the date of its publication in the
Official Gazette as required by the provisions of section 17 of the Industrial
Disputes Act, 1947, and that any earlier date fixed in this connection would
cause serious hardship to the bank and should not, therefore, be so fixed.
The Andhra Bank has submitted as under : Stenographers were ranked
with Accountants, when our pay scales were low and this was followed under
our Agreement with the Union. As the nature of work they do is purely clerical,
they should be placed on Award clerical scales. The existing employees
should have the option either to continue under the present service conditions
or to be categorised as clerks. They will not be eligible to any future revision
that may be made in the Accountants cadre. We have already given notice of
change of service conditions to our Union on the above lines. The option
should not have retrospective effect.We have Head Cashiers who are placed
in the pay scales of Accountants. They are in charge of cash and attend to
development work in addition to getting credit reports, etc. They must have
the option either to be categorised as clerks under the Award benefits or as
officers in Accountants scale prescribed by the management and in the
latter case they will not be treated as workmen.The date of option will not
have retrospective effect.

present bank award or under any rules made by the bank management or
under any other laws or part thereof. The Employees Association of the
Union Bank of Bijapur and Sholapur has submitted that the new award should
apply to all categories of employees with effect from the date of its first
representation of grievances for revision of pay scales.

19.4. The Northern India Banks Association has pleaded that the new
Award should apply to workmen from the date of the order of the Award and
not from any prior date. The Travancore-Cochin Bankers Association has
pleaded that its member banks may be allowed to continue to pay the present
emoluments and that the award should be made applicable only from the
date of its publication. The National Bank of Lahore has in this respect left
the decision of the contended matters to this Tribunal and has prayed for an
award being given keeping in view the rights of the employer and the employee.
The Bharatha Lakshmi Bank has submitted that since the year 1953, it is
405

19.5. The Indian Overseas Bank has pointed out that in that bank there
are three new types of allowances namely, (l) Hindi Language Allowance, (2)
Good Conduct and Regular Attendance Allowance and (3) Key Allowance
which are being paid to certain employees and it has pleaded that when the
scales of salary and special allowances granted by this Tribunal come into
force, the bank should be at liberty to withdraw these allowances even from
those employees who are now drawing those allowances as it is contended
that the present recipients of these allowances cannot claim the scales of
salary and allowances that may be granted by this Tribunal and at the same
time insist on payment of the aforementioned allowances and it is urged that
if the employees so choose they may be given the choice to opt in toto for
the privileges and benefits they are now enjoying and they should not be
allowed to get the better of the two sets of pay and allowances.
(i) Date of Effect of the New Award
406

19.6. On behalf of the workmen a claim has been made that the new
award should come into operation from 1st April 1959. On the other hand, it
is contended on behalf of the banks that the new award should come into
operation from the date on which award becomes enforceable under the law.
In this connection, a reference may be made to the provisions contained in
section 17A of the Industrial Disputes Act, 1947. Section 17A, to the extent
that it is relevant, provides as under :

on the date when the award becomes enforceable under the provisions of the
said section. I have to consider the date from which the new award should
come into operation.
*

(3)

(4)

if the Central Government is of opinion, in any case where the

award has been given by a National Tribunal, that it will be
inexpedient on public grounds affecting national economy or
social justice to give effect to the whole or any part of the
award, the appropriate Government, or as the case may be,
the Central Government may, by notification in the Official
Gazette, declare that the award shall not become enforceable
on the expiry of the said period of thirty days.

In that case, the Labour Appellate Tribunal had agreed with the decision of
the Industrial Tribunal that the award should be given effect to from the date of
the reference.

BE

(b)

* *

Where any declaration has been made in relation to an award under

the proviso to sub-section (1), * * * the Central Government may,
within ninety days from the date of publication of the award under
section 17, make an order rejecting or modifying the award, and
shall, on the first available opportunity, lay the award together with
a copy of the order before * * * Parliament * * *

AI

(2)

There is no vested right in any party as to from what particular

date the award should be given effect to. It is on a consideration of
the totality of circumstances, such as, how long the previous award
has been in force, whether the demand of the workmen was
exaggerated or reasonable the conduct of the parties in the course
of the dispute and so many other factors, that the date from which
the award is to be given effect to is fixed by the tribunal. The annual
financial burden which the award is likely to cast upon the concern
is also one of the relevant consideration.

Provided that
*

19.7. Shri Dudhia, the learned advocate who appeared on behalf of the
All India Bank Employees Federation, drew my attention to a decision of the
Labour Appellate Tribunal of India in the case of Nellimarla Jute Mills Company
Ltd. and Staff Union, Nellimarla Jute Mills, reported in 1955 I.L.I.J. page 167,
wherein the Labour Appellate Tribunal has laid down, at page 176, as under:

17A. (1) An Award (including an arbitration award) shall become

enforceable on the expiry of thirty days from the date of its
publication under section 17:
*

Where any award as rejected or modified by an order made under

sub-section (2) is laid before * * * Parliament, such award shall
become enforceable on the expiry of fifteen days from the date on
which it is so laid;, and where no order under sub section (2) is
made in pursuance of a declaration under the proviso to sub-section
(1), the award shall become enforceable on the expiry of the period
of ninety days referred to in sub section (2).
Subject to the provisions of sub-section (1) and sub-section (3)
regarding the enforceability of an award, the award shall come into
operation with effect from such date as may be specified there in,
but where no date is so specified, it shall come into operation on
the date when the award becomes enforceable under sub-section
(1) or sub-section (3), as the case may be.

Under the provisions contained in sub-section (4) of section 17A therefore an

award will come into operation with effect from such date as may be specified
in the award and where no date was so specified, it would come into operation
407

19.8. It was strongly urged on behalf of the banks that the Tribunal had
no jurisdiction to make this award operative from a date prior to the date of
the Order of Reference. It was urged that unless there was an industrial
dispute raised as regards the date from which relief should be given by means
of an award and unless such a dispute was referred to the Tribunal, it would
have no jurisdiction to make the award operative with retrospective effect
from a date prior to the date of the reference. There is considerable force in
this contention.
19.9. The banks also contend that most of the disputes now raised were
the subject matter of enquiry by various Tribunals and the Bank Award
Commission, that the Sastry Tribunal itself had visualised the possibility of
the all India working class consumer price index number rising above the
level at which it had fixed the rates of dearness allowance and had made
provision in case of such a rise and that the conditions of service being wellregulated and well-considered, there was no case for giving retrospective
effect to any award that I might make. On behalf of the banks, very strong
reliance was placed on the decision of the Supreme Court in the case of
Linton Ltd. and another and their employees, reported in 1959 (1) LLJ. p,
431. At page 445 of that report the Supreme Court, in dealing with the
question of giving retrospective effect to an award has expressed itself in
terms following:
The only other point which requires consideration is the question
408

been made even on behalf of persons who are not workmen within the
meaning of the definition of the term workman under the Industrial Disputes
Act, 1947. To indicate the extreme nature of the demands, I may refer to the
statement filed by the All India Bank Employees Federation showing the
total remuneration demanded by it on behalf of stenographers employed in
banks falling within its A and B groups. As regards banks in group A, the
total remuneration demanded by way of salary and dearness allowance for a
stenographer at the all India working class consumer price Index No. 167 in
the series 1944=100, is Rs. 350 in the first year of service and Rs. 963 in the
21st year of service and as regards banks in group B it is Rs. 306.25 in the
first year of service and Rs. 918.75 in the 20th year of service. This represents
a demand only under a single head apart from the other benefits sought to be
claimed under various heads including triple retiring benefits consisting of
provident fund, gratuity and pension. The demands made by the All India
Bank Employees Association include a demand for abolition of areas, and
the grant of three retiring benefits. In the reply filed by the Bombay Exchange
Banks Association it has been stated that the approximate percentage
increase that would result if the demands made by the All India Bank Employees
Association were granted would be 53.3 per cent so far as the four Exchange
Banks for which calculations were made. It is further stated that the actual
percentage increase will be higher if the various factors excluded in estimating
the cost of the demands are included as also the adjustments made in the
case of employees drawing more than the maximum under the award scales.
The percentage is likely to be in the neighbourhood of say 60 per cent. In
respect of the demands of the employees of the State Bank of India presented
by the State Bank of India Employees Association (Bengal Circle), the State
Bank has estimated that if all the demands were granted in relation to the
award staff, the burden would increase by Rs. 7,25,36,000.

of the date from which the new scales of pay should come into
effect. The industrial tribunal fixed 1st January 1954, on the ground
that the union had presented its charter of demands to the appellant
for the first time towards the end of December 1953. We are unable
to agree with the tribunals below that the circumstance that a charter
of demands was presented in December 1953 is a good ground for
giving retrospective effect to the new scales of pay. The charter of
demands presented by the union consisted of 20 items and in the
matter of the wage scale what the union demanded was in some
cases more than 50 to 75 per cent increase on the existing scales
of pay. Obviously, the demands were exhorbitant and the
management was justified in refusing to accept the demands in
toto. We are therefore, unable to agree that retrospective effect
should be given to the new scales of pay from 1st January 1954.
The award was made on 18th August 1955, and it was published
on 6th October 1955. With think that it will be more just to bring the
new scales of pay with effect from 1st November 1955, and we
direct accordingly.

AI

BE

It is urged on behalf of the banks that the observations of the Supreme Court
in that case are applicable with even greater force to the facts of the present
case. In the present case, the charter of demands was submitted by the All
India Bank Employees Association in the month of April 1959. The All India
Bank Employees Federation, the All India State Bank of India Staff Federation
and several unions, associations and federations have submitted demands
on behalf of the workmen employed in banks. The Indian Banks Association
has filed a statement showing the financial burden for the year 1959 if the
demands of the All India Bank Employees Association were to be granted,
without including the additional burden which might result from enhanced
rates of overtime wages, officiating allowance, leave concessions, interest
on the provident fund, liberal provisions for leave, reduced hours of work,
special gratuity, risk insurance, etc. It is shown that if the demands of the
Association were granted in regard to the clerical staff the percentage of
increase in the financial burden for 11 A Class banks would vary between
102.01 per cent and 168.81 per cent for 6 B Class banks it would vary
between 114.69 per cent and 149.22 per cent and for 4 C Class banks it
would vary between 152.33 per cent and 211.40 per cent. As regards the
subordinate staff, it is shown that the percentage of increase, for the aforesaid
A Class, varies between 145.II per cent and 200.92 per cent, for B Class
banks it varies between 111.71 per cent and 171.98 per cent and for C
Class banks it varies between 162.14 per cent and 238.53 per cent. The
demands of the All India Bank Employees Federation are still more
extravagent. I have set out the demands made by various workmens
organisations under various heads in other parts of this award. Some of the
demands were not even warranted by the terms of reference. Demands have
409

19.10 The demands made cannot but be characterised as exhorbitant,

and the banks would be justified in refusing to accept the demands in toto.
19.11. The hearing before me in this Reference was concluded in the
month of October 1961. I thereafter took up the hearing of Reference No. 2 of
1960 in connection with the dispute between the Reserve Bank of India and
its workmen being Class II and Class III staff and also in connection with the
dispute between the Reserve Bank of India and its workmen being Class IV
staff, which took some time. I thereafter heard Reference No. 3 of 1960 in
connection with bonus.
19.12 The financial year of banks commences from 1st of January of
each year.
19.13. Having considered very carefully all aspects of the matter in my
view it would be fair and just if I direct that the 1st of January 1962 is the date
from which effect should be given to this award as regards the matters
hereinafter mentioned, save as otherwise expressly provided in this award. l
410

accordingly direct that, save as otherwise expressly provided, this award

shall come into operation with effect from 1st January 1962 in respect of the
matters following :

(vi)

Categorisation of banks and areas,

Scales of pay,
Method of adjustment in the scales of pay,
Dearness allowance,
Special allowances, house rent allowance, officiating allowance,
hill allowance and fuel allowance,
Provident fund, pension and gratuity.

BE

19.14. In respect of all other matters,this award will come into operation
on the date when the award becomes enforceable under the provisions
section17A of the Industrial Disputes Act, 1947.As regards all matters in
respect whereof this award will come into operation with effect from the date
when it becomes enforceable as aforesaid, all the existing provisions will
continue to operate, notwithstanding anything herein contained, until this
award comes into operation in respect of all such matters, for instance, for
the purpose of calculation and payment of overtime, the existing provisions
will continue to apply from 1st January 1962 till the date when the award
becomes enforceable under the provisions of section 17A, notwithstanding
the fact that the new scales of pay, dearness allowance etc. have come into
operation in the meantime.

19.16. The Labour Appellate Tribunal, observed that with certain minor
exceptions, the option should cover the totality of those conditions of service
which have a financial aspect. It permitted the option to be exercised in
respect of (1) pay, dearness allowance, house rent allowance, special
allowance and officiating allowance, and added to the list other allowances
like hill allowance and fuel allowance and the special increments given to
graduates and holders of banking diplomas, (2) provident fund, (3) gratuity
and pension, (4) leave rules, (5) working hours and overtime and (6) payment
of taxes by banks on behalf of employees. The Labour Appellate Tribunal
allowed each individual employee an option to elect for his existing conditions
of service in respect of the aforesaid items and directed that the election
must be made within five months of the date of the pronouncement of Labour
Appellate Tribunals decision and that the same should be made in writing
and presented to the head of the office or the branch in which the employees
concerned was working and that in case of a failure to make an election as
aforesaid, it was to be deemed that the employee had elected for the new
conditions of service. It further provided that during the period intervening
between the date of his election and the date on which the Labour Appellate
Tribunals decision become enforceable, the employee should be treated as
governed by the conditions of service prescribed by the Labour Appellate
Tribunal and in the event of his electing the old conditions, necessary
adjustments were to be made after his election. The Labour Appellate Tribunals
also preserved the options given under the Sastry Award on specified topics.

(i)
(ii)
(iii)
(iv)
(v)

to apply to him for his future service in the bank. It stated that the intention
of the Tribunal was that the award should not in any way diminish the existing
pay, dearness allowance and special house rent and officiating allowances
of workmen and that to the extent to which the aggregate of pay and the
aforesaid allowances, as awarded fell short of such aggregate of pay and the
aforesaid allowances as on 31st January 1950 the difference should be kept
up; and should be continued as a temporary adjustment allowance until the
same is absorbed by further annual increments in the scale awarded.

(ii) Option if any, to be given to the existing employees lo retain

their present terms and conditions of service

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)

AI

19.15. In dealing with the question of option the Sastry Tribunal grouped
matters as follows :
Pay, dearness allowance, special allowance, house rent allowance
and officiating allowance.
Provident fund.
Gratuity and pension
Bonus.
Leave rules
Working hours and overtime.
Conditions of service other than working hours and overtime and
Amenities, e.g. canteen, club-house, payment of taxes, etc.

It laid down that no option should be given in respect of leave rules, working
hours and overtime, conditions of service other than working hours and overtime
and amenities except as otherwise provided for in its Award. It took the view
that there would be no choice in respect of other allowances and medical
relief, except as otherwise provided for in its award, and directed that in
these matters the awarded terms would apply to all workmen. The Sastry
Tribunal further laid down that no option should be given to a workman to
choose the pre-existing scales of pay and allowances in so far as they continue

19.17. A demand has been made before me that in no case and at no

stage, the existing rights and privileges of the employees should be adversely
affected by this award. A demand of a similar nature was made before the
Sastry Tribunal and before the Labour Appellate Tribunal, in appeal and the
same was negatived by both the Tribunals. As observed by the Labour
Appellate Tribunal a provision on these lines would have the extraordinary
effect of keeping alive two sets of scales and allowing the employee to jump
from one scale to the other and back again, according as one scale or the
other with the lapse of time becomes favourable to him; that is to say the
workman is given an option which remains alive throughout his service and
may be exercised repeatedly. The demand cannot be regarded as reasonable
and the same is rejected. The option given can only be an individual option to
be exercised once and for all. The option should extend only to the totality of

411

412

the service conditions under the heads under which the option is given.

who were governed by the provisions of Sastry Award, as modified or to

whom provisions similar thereto were applicable or who were employed in
banks falling within Class C under this award including banks in the Excepted
List, will be provisionally governed by the provisions of this award and that
other workmen, will be provisionally governed by the existing provisions. On
their exercising the option or on their failure to exercise the option as aforesaid,
the necessary adjustments should be made. The right of option given in this
chapter is not in derogation of the right of option provided in any part of this
award.

19.18. As regards members of the clerical staff and the subordinate staff
employed in banks which are governed by the provisions of the Sastry Award
as modified or provisions similar thereto, the provisions contained in this
award are, by and large, very favourable to them. There are only few changes
which may not be favourable to them. The question of option can really arise
only in the case of those employees whose service conditions are considered
better than those provided under this award. For the exercise of option, the
matters in respect whereof such option should be exercised are grouped as
under :

(2)
(3)

Scales of pay, dearness allowance, special allowance, house rent

allowance, officiating allowance, hill allowance, fuel allowance and
provident fund.
Leave rules.
Gratuity and Pension.

As regards workmen employed in the State Bank of India and its

Subsidiaries group 1 will consist of all items mentioned therein except provident
fund.

BE

19.19. As regards group 3, I have already made the requisite provision in

other parts of this award.

(1)

19.20. As regards matters set out in group 1, the option will have to be
exercised in respect of the totality of the provisions in connection with the
said matters existing immediately prior to 1st January 1962 and the totality
of the provisions contained in this award in connection with those matters.

AI

19.21. As regards matters in group 2, the option will have to be exercised

in respect of the totality of the provisions in connection with the same existing
immediately prior to the date when this award becomes enforceable under
section 17A of the Industrial Disputes Act, 1947 and the totality of the provisions
contained in this award in connection with the same.

19.22. I direct that all workmen employed in banks on the date when
this award becomes enforceable under the provisions of section 17A of the
Industrial Disputes Act 1947 will have the right to exercise the option in
respect of the matters set out in each of the aforesaid groups within four
months from the said date. The option shall be exercised in writing which
shall be delivered to the head of the office or the branch in which the employee
concerned may be working. On failure to exercise the option in respect of
any group of matters in the manner aforsaid within the time specified, the
workman concerned would be deemed to have chosen the totality of the
provisions contained in this award in connection with such group of matters.
During the period intervening between the date of the exercise of such option
and the respective dates on which the provisions of this award in respect of
the aforesaid groups of matters come into effect. I direct that the workmen,
413

414

CHAPTER XX

CHAPTER XXI

Item No. 18 : NEED FOR INTERIM RELIEF

Item No. 19: DIFFICULTIES AND ANOMALIES IN THE OPERATION OF

20.1. Before the main hearing of the reference commenced, various applica
tions were made on behalf of workmen claiming interim relief. All these
applications have been referred to in the Introductory chapter. On 14th
December 1960 I have given my award in connection with the aforesaid
applications. The said award forms part of Appendix C. In view thereof, it is
not necessary to deal with this item at this stage.

THE EXISTING AWARD

21.1. The All India Bank Employees Association has submitted that
the above term of reference is not a valid industrial dispute perse in so far as
it is in conflict with different Schedules of the Industrial Disputes Act under
which this reference has been made, that the Sastry Award has expired and
that the question of removing difficulties or anomalies in the operation of the
Sastry Award does not arise for determination. It has made no claims under
this item. The All India Bank Employees Federation has submitted that the
banks had abused the discretion given to them under the Sastry Award and
had taken undue advantage of the vagueness or ambiguity in certain directions
given under the Sastry Award.In this connection it has referred to the following
19 instances :

AI

BE

(1) Apprentices (Unpaid or Paid) : The discretion left to the Banks

under Paras 124 and 497 of the Sastry Award is grossly abused by
the Banks. Banks appoint unpaid apprentices against permanent
vacancies and extract independent duties. Further from paid
apprentices banks take normal work and utilise their services
independently against permanent vacancies and/or leave
arrangements without paying the wages of full-fledged clerks and
that too for an indefinite period. Banking industry should not be
allowed to appoint apprentices. Employees with similar qualifications
without any previous experience or training are directly taken as
probationers and others as apprentices.

415

(2)

Utilisation of services of confirmed hands against permanent

higher posts and question of confirmation, after regular
working as such beyond 6 months.Para 495 of Sastry Award
only deals with confirmation of Probationers (new appointees) and
is silent in the above cases and so the Banks are exploiting to the
maximum by utilising the confirmed employees services in
permanent higher costs for an indefinite period. Such employees
at the time of filling up the permanent vacancies are reverted back
and other persons are promoted.

(3)

Officiating against higher posts.In case of officiating, the Banks

ask the employees to officiate in permanent vacancies for an
indefinite period and deny them the right to be confirmed as such.
Those employees in the Supervisory cadre who are within the perview
of definition of Workman are not allowed officiating allowance under
the Award whenever they are called upon to officiate as Manager,
etc. The Banks pay, if at all, according to their own discretion on
416

the ground that they cease to be workmen while officiating as

Managers etc.

year for only 11 months service put in by him. Paras 479 to 481 of
the Sastry Award are not properly interpreted by the banks in this
behalf. Further directions in regard to pay for sick leave on half pay
as given in Para 487 read with Para 478(14) of the Sastry Award
are doubtful. The employers have abused the definition of 'Pay as
defined in Paras, 151, 158, 368(7) of the Sastry Award is not taken
into consideration while making payment for sick leave on half-pay
basis.

Further, banks ask the employees to officiate for 15 days or less

and then show the break of a day or so and again ask them to
officiate against the same or give the officiating chance to some
other employee, simply to avoid payment of Officiating Allowance.
Further officiating chances against higher posts are given by the
banks to employees of their own choice without caring for the
seniority. Paras, 178 and 158 of the Sastry and the L.A.T. Awards
respectively have been abused by the banks in the manner stated
above.

Medical Aid.Very often the Banks Medical Officers charge

visiting fees when they visit the employees homes and these charges
are deducted from their Medical Aid given under the Award, although
such Doctors are salaried employees of the Banks (Part-time or
permanent).Thus the employees stand to lose since they could
otherwise go to other competent Registered Medical practitioners
nearby or to those Doctors who practise in the vicinity and who
would charge less visiting fee than the Banks own appointed
Medical Officers.Very often, because of long distance where the
Banks Medical Officer practises, employees have to incure large
conveyance expenses to go to him.In such cases employees should
be allowed to have medical aid etc. from their own doctors practising
nearby. Further the banks very often insist on the certificates (for
sick leave purposes) given by the local Registered Medical
Practitioners other than those appointed by the banks to get the
same verified from Banks appointed Medical Officers which put
the employees to unncessary hardships and expenses.Moreover
the Banks deny the employees medical expenses if they use
Ayurvedic or Homoeopathic medicines. Para 450 of the Sastry
Award has grossly been abused by the Banks.

(6)

Leave rules.The banks do not give one months previlage leave

after 11 months, service,but give proportionate leave during the
417

Direct Recruitment and Promotions.In case of direct

recruitment for higher posts, whether for Workmen or Nonworkmen, the banks do not provide equal opportunities to the
existing employees, irrespective of cadres, nor do they circularise
the number of future vacancies to be filled up by direct recruitment
or by promotions from within,amongst the existing employees nor
intimate to them the relaxations which they will enjoy in rules
regarding age, educational qualifications, experience, etc. over the
direct outside recruits.

AI

(5)

Disciplinary action.In case of disciplinary action even when

the banks fail to prove any misconduct against the employees
concerned, they have a free hand to discharge the workmen from
the service by giving one months notice pay which should not be
permitted.Secondly in some cases the complainants and the
Enquiry Officers are the same for conducting the enquiry against
an employee which is also not proper. Thirdly the discretionary
powers given vide Para 521 (b) of the Sastry Award to Banks to
pay for the suspension period are very often abused since the
directions contained there are not clear.

BE

(4)

(7)

Further the system of giving works by different banks is arbitrary

and is abused while giving promotion to higher posts in the absence
of any clear directions in Paras 529 and 530 of the Sastry Award.
Further officiating chances against permanent vacancies are given
to juniors without disclosing any good and cogent reasons to the
employees concerned.
Employees are taken direct but employees working inside in
subordinate cadres are not given preference over such direct recruits
as Para 530 does not give clear directions. The banks do not give
out duty lists for different categories of employees and very often
ask the employees in the lower grade to perform duties of a higher
cadre without adequate compensation nor are they confirmed against
such higher permanent posts for which their services are utilised
for more than 6 months. For instance, Peons, Daftries and/or HundiPresenters, etc, are asked to do the work of Daftries, clerks and/or
of cashiers respectively, but are not given any allowance nor they
are promoted to the higher posts despite their actually working in
such posts satisfactorily.

(8)

Transfers.In cases of transfers very often the banks transfer the

staff on the ground that they are surplus without any justification
and irrespective of length of service of the employee and without
following the principle of last come first go.

(9)

Part-time employees.In case of Part-time employees (Para.

123 of Sastry Award) doing work for more than 7 hours a week the
banks pay inadequate amount since the Award is silent in this
connection.
418

(10) Daily-wage or temporary employees.Further in case of Dailyrated or Temporary employees the Banks deprive them of the pay
for the Off Day and Other Public Holidays falling in between and
interrupt their service by showing a break for a day or so and again
re-appoint such persons on daily wages as Para 508(c) of the Sastry
Award is not clear and as such banks are abusing the same.

employees while implementing the Awards, the banks commuted

even the higher (better) start and/or special increments given to the
workmen into number of years of service by dividing the same with
the scale prevailing before the Award instead of dividing the same
by the scale which was being drawn by the workman concerned at
the time he was given such special benefits. The directions of para
292(4) (a) and (5) (a) of Sastry Award being not clear banks put
their own interpretations as a result of which senior hands either
become juniors or at par with those who joined afterwards.

(11) Temporary employees.Very often banks employ Godownkeepers, Cashiers, Clerks, Godown Chowkidars, Godown Durvans,
etc. on temporary basis against permanent vacancies and are given
extension each month by giving appointment letters or extension
letters, although the work is of a permanent nature. The banks
deny these employees, whether part-time, daily-rated or temporary,
the benefits of leave (casual, privilege or sick), medical-aid, Provident
Fund, Gratuity etc. despite the directions contained in Paras 496
and 524 of the Sastry Award.

(19) Change of service conditions.Very often the banks change

the service conditions of employees appointed against permanent
posts by stopping them payment of special allowance attached
with such posts after say 6 months or 1 or 2 years service which
adversely affects the service conditions of the workers in the manner
of reducing Provident Fund, Dearness Allowance, Bonus, etc. etc.

BE

(12) Provident Fund.Some banks while calculating the amount of

banks' contribution to which the employees are entitled, take into
consideration the date of starting the provident fund deduction by
the banks and not the date of joining of the employees because of
indefinite directions contained in Para 368(2). Further, permanent
Part-time employees putting more than 7 hours a week are denied
the benefit of Provident Fund.

(18) Non-payment of proper allowances to employees working in

outstation godowns.The Godown-keepers and Godown
Chowkidars, Durvans or Peons posted at Out-posts attached to an
office of a Bank in a particular area are not being paid the
emoluments according to the emoluments paid in the office
concerned.

(13) Seniority.For the purposes of seniority the banks treat the date
of confirmation instead of date of joining of the employees.

AI

(14) Non-payment of proper allowances.Very often the banks ask

the members of clerical and subordinate staff to do the work of
higher type. The banks do not pay at all or pay only the minimum
special allowance and not the highest for the duty performed.
(15) Extraction of securities.Further the banks wrongly demand
security deposits from employees by changing their original
designations and/or assigning to the workmen multi-designations,
such as Clerks-cum-Cashiers, Clerk-cum-godown-keepers, Peonscum-Cash Peons, Peons-cum-Hundi-presenters, etc.

(16) Overtime.Banks are abusing the discretion given to them in

Para 304 of the Sastry Award in regard to half an hours cushioning
period and make it a daily routine and get half an hour extra work
without paying overtime. Further very often banks deny payment of
overtime to Chowkidars and others who are asked to stay in the
bank premises during night for guarding the premises over and
above their normal 8 hours duty and only pay a nominal amount
under the name of Sleeping Allowance and exploit the employees.
(17) Adjustments.:At the lime of adjustments of the salaries of
419

21.2. The All India State Bank of India Staff Federation and the State
Bank of India Staff Union, Andhra Pradesh in their statements of claim have
merely craved leave to make submissions in this connection at the time of
the hearing. The All India Bank of Baroda Employees Federation has sought
clarification about this item and has craved leave to make its submissions
after such clarification. The Vadodra Rajya Bank Nokar Sangh has complained
of the improper implementation of the Sastry Award by banks, but has not
given any instances in support of its statement. It has submitted that a
permanent suitable machinery should be established where all anomalies
and difficulties could be thrashed out.
21.3. The Indian Overseas Bank Employees Union, Madras, has made
the following demands :
(a) Recruitment of staff :
(1)

No probationers should be appointed on pay less than grade pay.

There should be no apprentices or part-time employees in the Bank.

(2)

There should be no combined designations of employees (e.g.

Typist-cum-Clerk, Shroff-cum-Bill Collector, Cashier-cum-Clerk,
Godown-keeper-cum-CIerk, etc.).

(3)

No employee should be, appointed on daily wages basis and such

temporary employees should be paid the grade pay.

(4)

All employees serving a total period of three months should be

420

confirmed in the permanent service.

(b)

Transfers :

(1)

Office bearers of the Union should not be transferred.

(2)

As far as possible transfers should be made with the consent of

the employee, but under no circumstances shall a member of the
subordinate staff be transferred without his consent.

(3)

The practice of forcible transfer of employees even on the plea of

exigencies of service should be discontinued.

(4)

Permanent transfer allowance :

(f)

In filling up the vacancies of Godown-keepers, Bill-collectors,

Despatch clerks, Pass Book writers, Filing clerks etc.,
preference should be given to subordinate staff according to
seniority. In the case of new branches where the vacancies in
these categories arise, those senior subordinates in other
places who are willing to go on promotion have to be accorded
the same.

(g)

There should be no direct recruitment to the officers cadre.

(b)

Rs. 50 per mensem for clerical and cash department staff.

(g)

(c)

Rs. 30 per mensem for subordinate staff should be paid for a

minimum period of three months.

Compilation of Cost of Living Indices. The present method

should be reviewed and a more rational basis evolved,

(h)

Staff Guarantee Fund.- Collecting subscriptions for this fund

should be discontinued forthwith and the amount already collected
should be refunded.

Insurance against risks.Cashiers, godown-keepers, bill

collectors, drivers, arm-guards and watchmen should be adequately
insured by the Bank against possible risk on their lives or injury.

(i)

BE

(d)

Rs.100 per mensem for Supervisory Staff.

Amenities for recreation etc., should be provided to employees at

all branches.

All employees should be entitled for compensation in case of

accident involving in death or injury while on duty and the rate of
compensation should be on the lines of Workmens Compensation
Act.

Service Record.A copy of the service record of an employee

with all the remarks incorporated therein in respect of his service
should be provided to the employee concerned. No adverse remarks
should be entered in such records without intimating the same to
the employees concerned and before proper enquiries.

AI

(f)

Those members of the subordinates who are sufficiently literate

have to be given preference in filling up vacancies in the clerical
grade.

(a)

(c)

(e)

(e)

Promotions.The following should be the basis for promotions:

(a)

Every year of service have to be counted as one point.

(b)

Additional points have to be counted for the following

qualifications :
(i) Graduates 2 points.
(ii) Part I CAIIB 1 point.
(iii) Part II CAIIB 1 point.

(c)
(d)

Those who possess the maximum points should be considered

for promotion according to their seniority.
Those members of subordinate staff who have passed
matriculation or equivalent examination be elevated to the
clerical grade in the first available vacancy.
421

Misconduct. The following activities should not be considered

as misconduct:
(1)

Canvassing for Union membership or collection of Union

subscriptions of dues within the premises of the bank.

(2)

Incurring debts to an extent considered by the Management

as excessive.

21.4. The Cochin Commercial Bank Employees Association has made

the following demands in connection with this item of Reference :
(1)

Service for all purposes such as gratuity, provident fund, leave, etc.
should be counted from the date of joining.

(2)

All annual adjustments such as increments, leave, etc., should be

made as on 31st day of March every year.

(3)

Adjustment of dearness allowance according to the rise or fall of

the cost of living index number should be made every quarter and
once adjusted it should not be raised or lowered till the official
figures for the next quarter is published.

21.5. The Allahabad Bank Employees Union (Calcutta) has stated that
the provisions relating to recruitment, transfer, training and promotions
contained a good number of anomalies in the present award and that they
should be clearly defined so as not to leave any further anomalies.
21.6. On behalf of a number of banks it is denied that this term of reference
dealing with difficulties and anomalies in the operation of the existing award
did not relate to an industrial dispute. The Bombay Exchange Banks
Association has pointed out that the termination of the Sastry Award only
signified that the workmen were free to make fresh demands and nothing
422

(2)

Utilisation of services of confirmed hands against permanent

higher posts, etc. No evidence has been led in support of what
is stated and no specific demands have been made. Moreover, the
promotion policy of banks does not fall within the ambit of this
reference. No directions are given in connection with what is stated
under this head.

(3)

Officiating against higher posts. No evidence has been led in

support of what is stated and no specific demands have been made.
As regards the non-payment of officiating allowance to a person
who is called upon to officiate as a manager, the matter falls outside
the jurisdiction of this Tribunal as the employee who officiates as a
manager cannot be regarded as a workman during the time that he
so officiates.Some of the complaints relate to the promotion policy
of banks which does not fall within the ambit of the terms of the
reference. The provisions regarding payment of officiating allowance
to a person who officiates for a period exceeding 15 days is
reasonable. No directions are given in connection with these
complaints.

BE

21.7. It has been contended on behalf of some of the employees that

this item does not relate to any industrial dispute, in so far as it is in conflict
with different Schedules of the Industrial Disputes Act, 1947. This head is
intended to cover claims for removal of the difficulties experienced in the
working of the Sastry Award, as modified and for removal of anomalies
experienced in its actual operation. It is not specified in what way this item of
reference conflicts with any of the Schedules of the Industrial Dispute Act,
1947. In fact, under this head workmen represented by various organisations
have sought relief in respect of numerous matters. There does not appear to
be any substance in this plea.

Association has made demands in connection with apprentices

under item No. 22. The matter will be dealt with under item No. 22
in chapter XXIII.

more, and that the Sastry Award as modified still continued in the sense that
the rights and obligations flowing therefrom still continued and that this term
of reference was in order. The Indian Banks Association has set out various
anomalies in the operation of the existing award and have claimed their
removal. The Exchange Banks Association has stated that at the time of
hearing, it will make its submissions on the difficulties and anomalies
encountered in the operation of the Sastry Award as modified. The State
Bank of India has also set out certain difficulties and anomalies encountered
in the operation of the present award. The difficulties and anomalies pointed
out by the banks will be dealt with after the demands of the employees have
been considered.

(4)

Disciplinary action. Matters in connection with disciplinary

action have been dealt with in chapter XVIII. The dispute in
connection with the right of a bank to discharge a workman otherwise
than by way of disciplinary action does not strictly fall within the
ambit of this term of reference. There is no evidence led about any
improper action or abuse of the discretionary powers set out in
para 521(10) (b) of the Sastry Award. No directions are given in
connection with these complaints made under this head.

21.9. In connection with the claims made under this item, I may in general
observe that this item is not intended to cover any case of non-Implementation
of the Sastry Award, as modified. ,

(5)

21.10. Some of the claims made on behalf of the employees under this
item of reference have already been considered under the specific items of
reference under which they really fall.

Medical Aid. The matters concerning medical aid have been

dealt with in Chapter XI. I have made the necessary provisions in
connection with medical aid in other parts of this award and no
further directions are given.

(6)

Leave Rules. The matters in connection with leave rules have

been dealt with in chapter IX. No further directions are given.

21.11. There is hardly any material placed before me in support of the

allegations made against banks.

(7)

Direct Recruitment and Promotions. No evidence has been

led about any alleged abuse.The recruitment or promotion policy of
banks does not fall within the ambit of the terms of reference. The
question of duty lists and allowances has been dealt with in other
parts of this award.No further directions are given in connection
with what is stated under this head.

AI

21.8. It is further contended that the Sastry Award has expired and that
the question of removing any difficulties experienced or any anomalies found
in the operation of the said award does not arise. The provisions of the Sastry
Award, as modified have not ceased to operate and the rights and obligations
flowing therefrom still continue until the same have been duly modified. If the
position had been otherwise, the banks would have been free to deal with
their employees in such manner as they liked until a new award came into
force.

21.12. I shall first deal with the matters raised by the All India Bank
Employees' Federation :
(1)

Apprentices. The All India Bank Employees Federation has

made demands in connection with apprentices under item No. 19
as well as under item No. 22. The All India Bank Employees
423

(8) to (14) Transfers, etc. No evidence has been led in support of the
424

statements made under the heads transfers, part-time

employees, daily-wage or temporary employees, temporary
employees, provident fund, seniority, and non-payment of proper
allowances. The question relating to the non-implementation or
improper implementation of the award cannot be considered under
this item of reference. The questions relating to the policy of banks
in connection with recruitment and transfers do not fall within the
ambit of the terms of reference.Save as otherwise provided in other
parts of the award, no directions are given in connection with any of
the aforesaid matters.

are given.
21.16. The difficulties and anomalies referred to by the Indian Banks
Association in the operation of the existing award are dealt with below :
(a)

(15) Extraction of securities. The matter has been dealt with under
chapter XII.

(17) Adjustments. No evidence has been led in connection with the

statements made under this head. No directions are given in respect
of what is stated under this head.

21.17. The Sastry Tribunal has directed that in case of persons whose
work was not found to be quite satisfactory during the period of probation but
who were likely to improve and give satisfaction if a further opportunity was
given to them, the period of probation might be extended by three months
provided due notice in writing was given to them and their consent in writing
was obtained before the extension of their period of probation and that in all
other cases probationers, after the expiry of the period of six months, should
be deemed to have been confirmed, unless their services were dispensed
with on or before the expiry of the period of probation.

BE

(18) Non-payment of proper allowances to employees in outstation

godowns. The requisite directions have been given in paragraph
5.195 of this award.

(16) Overtime. No evidence has been led in support of the statements

made under this head. The matter concerning overtime has been
dealt with in chapter X. No further relief is granted.

Consent for extension of probationary period. It is pointed

out that according to paragraph 495 of Sastry Award the period of
probation is 6 months in ordinary cases which can be extended by
3 months on two conditions.One of the two conditions is that consent
in writing of the probationer should be obtained before the extension
of the period of probation. It is stated that this condition is causing
difficulties as the employee concerned does not readily give his
consent in writing and adopts evasive methods which result either
in the termination of his employment or in some cases the period
is found to have elapsed already. The Association suggests that
this condition should be dispensed with and the banks should be
required only to give due notice in writing to the probationer if his
probationary period is to be extended.

(19) Change of service conditions.The matter in connection with

special allowances has been dealt with in chapter V. No further
directions are given.

AI

21.13. A claim has been made by the Vadodra Rajya Bank Nokar Sangh
for the establishment of a permanent suitable machinery for thrashing out all
anomalies and difficulties in the operation of the existing award. No indication
has been given about the type of machinery which was sought to be
constituted. No relief is given in connection with this demand.

21.14. In connection with the demands made by the Indian Overseas

Bank Employees Union, Madras I find that some of the demands made do
not relate to difficulties and anomalies in the operation of the existing award
and cannot be dealt with under this head. Some of the demands are in the
nature of substantive demands relating to matters not referred to this Tribunal.
Some of the matters have been dealt with in other parts of this award. Some
of the matters will be dealt with under item 22. Having considered each one of
the demands made by the Indian Overseas Bank Employees Union, Madras,
save as otherwise provided under this award, no other directions are given.
21.15. As regards the demands made by the Cochin Commercial Bank
Employees Association, the same cannot be considered under this item of
reference. Some of the matters have already been dealt with in other parts of
this award, Save as otherwise provided under this award no other directions
425

21.18. There is considerable force in the argument advanced on behalf

of the banks that where the period of probation is sought to be extended by
three months, it should be sufficient for the bank to give a notice in writing to
the employee to that effect. If an employee does not desire to continue in the
employment of the bank as a probationer for the further period, he is at liberty
not to continue further and leave the service of the bank. I do not see any
necessity for a provision to the effect that he must consent in writing before
his period of probation can be extended for a further period of three months
as provided in the Sastry Award. I direct that in the case of a person whose
work was not found to be quite satisfactory and whose period of probation, in
the opinion of the bank, should be extended for a further period of 3 months in
order to afford to him an opportunity to improve and give satisfaction to the
bank, it would be open to the bank before the expiry of his period of probation
to extend the period of probation for a further period of 3 months by giving
notice in writing to him to that effect. If he does not desire to continue as a
probationer for such further period, it would be open to him to intimate to the
bank to that effect and leave the service of the bank.
Employment of part-time employees for certain types of clerical work
426

who may be on leave. The aforesaid position is some what anomalous and
the definition needs to be modified. The Indian Banks Association has not
confined its demand to this anomalous position. It has also claimed an
amendment of the definition in order to include a workman appointed in a
temporary vacancy of a probationer.A probationer is appointed so that he
may ultimately be absorbed in a permanent vacancy. The very object of
employing a probationer is to train a person for filling in a permanent vacancy.
The object of having probationers is not to provide Supplementary staff for the
purpose of doing the regular work of the bank, so that wherever a vacancy
occurs in such supplementary staff, even temporarily such vacancy should
be filled in.I direct that for the purpose of this award the expression Temporary
Employee will mean an employee who has been appointed for a limited
period for work which is of an essentially temporary nature, or who is employed
temporarily as an additional employee in connection with a temporary increase
in work of a permanent nature, and includes an employee other than a
permanent employee who is appointed in a temporary vacancy of a permanent
workman.
Transfer of staff to lower areas and adjustment into salary scales

21.21. Under the provisions of the Sastry Award as modified it has been
provided by paragraph 121(5) that no employee shall have his basic pay
reduced by being transferred to an area where a lesser pay scale applies
even though such basic pay may be more than the maximum of the scale
fixed for the new station, and he will continue to have the usual inccrements
as from such basic pay onwards.Directions to a similar effect have been
given by me under this award in paragraph 5.190. The Indian Banks Association
has stated that many employees ask for transfers from higher areas to lower
areas to suit their own convenience or for domestic reasons and that when
such transfers are granted banks have to pay to such employees a higher
basic pay. It is suggested that whenever an employee is transferred from a
higher area to a lower area at his own request, he should draw basic pay
according to the rates applicable to the area to which he is so transferred. By
an amendment made on 19th September 1961, the Indian Banks Association
has further pleaded that the emoluments of an employee who has been
transferred from a lower area to a higher area should be adjusted in accordance
with the provisions of para 292 of the Sastry Award and not in accordance
with the provisions of para 121(5) thereof." The matter relating to the method
of adjustment on the transfer of an employee from a higher area to a lower
area and vice versa has been dealt with by me in other parts of this award.
In my view, the provisions complained of do not give rise to any difficulties or
anomalies. Even on merits the claims made are rejected.

AI

BE

21.19. The Indian Banks Association has submitted that the direction in
the Sastry Award that the banks cannot employ part-time workers for ordinary
clerical work except for writing pass books in banks in which such practice
prevailed has caused great hardship and difficulties to various banks,
particularly in the branches in rural areas where it is stated that the volume of
work in the nature of things is limited, uncertain and dependent upon seasonal
necessities: It is further stated that in small towns, the work of pass book
writing is so limited that it becomes uneconomic for a bank (where such
practice did not prevail) to employ a full-time pass book writer and that in
several small branches, the banks must either employ a full-time employee
who may remain idle for the rest of the time during working hours, or resort to
overtime work by entrusting that work to existing full-time employees. It is
further stated that certain type of work has to be done only periodically such
as submission of statements to the Reserve Bank and the preparation of
periodical returns.It has been suggested that in order to remove these
difficulties and hardships, liberty should be given to banks to engage parttime workers to the extent of 25 per cent of the total complement.It is somewhat
invidious that banks, which at the time when Sastry Award came into force,
were engaging part-time employees to write pass books, could alone employ
part-time employees for the purpose whilst banks which did not have parttime employees then could not thereafter employ such employees for that
purpose.The remedy however does not consist in having a right to engage
part-time workers to the extent of 25 per cent of the total complement. It
seems that the intention of the Sastry Tribunal was not to extend such practice.
There is no other item of reference whereunder this demand could be
considered by me. This matter has been dealt with by the Sastry Tribunal
under a term of reference headed "Method of recruitment terms and conditions
of service and procedure for termination of employment or for taking other
disciplinary action. On behalf of the employees, an exception is taken to
this demand. The employees are against the employment of part-time workmen
except sweepers and cleaners. In view of the terms of reference, I do not
think it would be proper for me to deal with this claim about the right of the
banks to engage part-time workers to the extent of 25 per cent of the total
complement under item 19. I give no directions in connection with this demand.
(c) Classification of workmen
21.20. The Sastry Tribunal, has defined the expression Temporary
employee to mean an employee who has been appointed for a limited period
for work which is of an essentially temporary nature, or who is employed
temporarily as an additional employee in connection with a temporary increase
in work of a permanent nature.The Indian Banks Association has made a
demand that this definition should be enlarged so as to include a workman
who is appointed in a temporary vacancy of a permanent workman or
probationer. It is pleaded that under the present provision banks cannot
employ a temporary employee as a substitute for a permanent employee
427

21.22. I will now deal with the difficulties and anomalies pointed out by
the State Bank of India.It is pleaded that under the Sastry Award as modified,
the directions relating to hours of work and overtime are not applicable to
certain named categories which do not, however, included categories whose
428

21.27. It is further pleaded that it is anomalous that in respect of travelling

allowances, road mileage should be admissible when the two stations involved
(not connected by rail) are connected by public transport, such as bus or
ferry and that in such circumstances no road mileage should be admissible,
but only fare for such transport should be paid. I have considered this question
while dealing with travelling allowance. Considering all the circumstances, I
am unable to accede to this demand.
21.28. It is further pleaded that it is anomalous that payment of halting
allowance should be made to an employee deputed for training to a place
outside his headquarters. The provision regarding halting allowance is that
the same is payable when an employee is absent from headquarters on duty.
There is no evidence led before me about the period during which an employee
is usually deputed for training. In the present state of the record, it is not
possible for me to give any directions other than those which have already
been given.

BE

21.23. It is pleaded that the State Bank of India has been compelled to
pay to godown-keepers, engaged in connection with borrowers godowns, on
the clerical scale, notwithstanding that the qualifications expected of them
are lesser than those expected of clerks and that this category should be
paid on a scale slightly above that of subordinate staff, but not on the same
scale as clerks. No evidence has been led in support of this demand and no
case is made out for providing separate scales for this category of workmen
and no such directions are given.

21.26. It is further pleaded that it is anomalous that an employee

convicted for an offence involving moral turpitude unconnected with the banks
work and consequently dismissed or discharged by the bank, and who is
subsequently acquitted by a higher Court, should be eligible for subsistence
allowance on his acquittal. I have considered the matter relating to
subsistence allowance in an earlier part of this award. I am not giving any
special directions in connection with the matter raised.

work is intermittent (such as drivers), maintenance staff other than sweepers

(such as Bhishties, Farrashes, Electricians, etc.) and inspection staff (clerktypist, etc). It is pleaded that by the very nature of their duties, it is difficult
and anomalous to apply those directions to them and that they should be
included in the exempted categories.I have already dealt with the question
relating to the persons to whom provisions relating to the hours of work and
overtime should apply under this award. Under paragraph 10.46 of this award,
part-time employees as well as the members of the watch and ward staff,
bank employees engaged in domestic service, gardeners, sweepers and
godown-keepers engaged solely for that work other than those required to
remain in attendance at the bank during office hours, have been excluded
from the operation of the provisions relating to the hours of work.As regards
the other categories of workmen which are sought to be excluded under this
head, no evidence has been led in support of the demand. Sufficient materials
have not been placed before me which would enable me to enlarge the
categories of workmen which are to be excluded from the operation of the
award relating to hours of work. Save as provided in this award no further
directions are given in connection with this demand.

AI

21.24. It is further pleaded that a difficult and anomalous position arises

where a workman whose normal duties do not call for any special allowance
under the directions makes a claim for special allowance even for a short
period during which he is called upon to perform duties for which a special
allowance has been directed and that it should be made clear that if an
employee, who normally is not entitled to the special allowance, performs
duties for which an allowance is prescribed for less than fifteen days he
would not be entitled to the special allowance or a portion thereof. This matter
has been dealt with by me in paragraph 5.288 of this award and no further or
other directions are given.

21.29. It is also pleaded that a difficulty is created in the case of branches

of the State Bank entrusted with Government business in the matter of the
directions regarding working hours and overtime, in that due to lapsing of
Government grants after 31st March every year, there is a clamour from both
the public and Government departments for longer hours being worked on
certain days, particularly on 31st March, and that an anomalous situation
is also created in connection with ihe direction with regarding to working
hours and overtime where a State Government in exercise of its powers
directs a branch or branches of the State Bank to work on a holiday or
holidays, and that in both these cases there is friction between the State
Bank and its employees and between the State Bank and Government
Departments or the public. This matter has been considered by me in other
parts of my award.

21.25. It is further pleaded that difficulties have arisen where an employee,

whose duties entitle him to a special allowance, ceases to do such duties
but nevertheless insist that the special allowance should continue and that
there should be clarification of the true position, namely, that where specific
duties for which a special allowance is prescribed cease to be performed by
an employee, he will not be entitled to the special allowance directed for
such duties. This matter has already been dealt with by me in other parts of
this award.
429

430

Item No. 21 :

BE

22.1 In connection with the aforesaid two items, on behalf of workmen it

is submitted that these items do not constitute a valid industrial dispute.
On behalf of the All India Bank Employees Association it is submitted that
the Association has never contested the need of expanding the banking
facilities in the country. It is further pleaded that it has always been the
contention of the Association that the present policy of bank managements
was not conducive and helpful to the growth and development of sound banking
facilities in the country, particularly in rural areas, which were starved of the
same. It is further submitted that the nature of the work, the responsibility
and the development role of the State Bank of India and its Subsidiaries were
the same and that the pay-scales and other conditions of service of the
employees of the Subsidiary banks should be the same as those for the
employees of the State Bank of India.

22.5. In regard to the special needs of the State Bank of India and its
subsidiaries, the State Bank of Patiala (All Cadres) Employees Association
has stated that the State Bank of India has clearly laid out its policy of
helping the small scale and cottage industries and small business in order to
give impetus to the Five Year Plans, that the State Bank of Patiala which is
a subsidiary of the State Bank of India was also bound to follow the policy of
the State Bank of India in respect of financing the small scale and cottage
industries and small business, that like the State Bank of India, the State
Bank of Patiala would also be called upon to do the treasury business on
behalf of the Government of India and State Government and to act as the
agent of the Government and to do other business on behalf of the Government
and that the State Bank of Patiala had a very important role to play as an
agent of the Government in the area of its operation.

Item No. 20 :

development including the First and Second Five Year Plans have laid great
emphasis on the all round development of our rural areas, that India was
predominantly an agricultural country and our development plans would not
make much headway if we did not give top priority to the rural areas, that
finance was the backbone of all economic development plans, that availability
of cheap finance for our rural industries and agriculture was very essential
and that the banking industry could play a very important role in this behalf
by financing agriculture and cottage industries in the villages.

CHAPTER XXII
THE NEED FOR THE DEVELOPMENT OF THE BANKING
INDUSTRY INCLUDING BANKING FACILITIES IN RURAL
AREAS;
AND
SPECIAL NEEDS OF THE STATE BANK OF INDIA AND
ITS SUBSIDIARIES IN RESPECT OF ANY OF THE FOREGOING ITEMS(ITEMS 1 TO 20 APPEARING IN SCHEDULE
II TO THE ORDER OF REFERENCE) HAVING REGARD
TO THEIR RESPONSIBILITY FOR THE CONDUCT OF
GOVERNMENT BUSINESS.

22.4. The Cochin Commercial Bank Employees Association has pleaded

that no special concessions should be allowed for development of banks in
rural areas.The State Bank of Patiala(All Cadres)Employees Association
has pleaded that the development of commerce, trade agriculture, cottage
industries and small scale industries was closely linked with the development
of banking industry, that India has set itself on the road of all-round and
comprehensive economic developent through planned efforts, that the village
was the unit of our economic development, that all our plans for economic

22.6. The Indian Banks Association has denied that any of the above
items did not constitute a valid industrial dispute and has stated that it cannot
be gainsaid that banking facilities should be extended to rural areas and that
the banks must be encouraged to open branches in semi-urban and rural
centres. It has submitted that such branches could be run only if they could
be made into economic and self-supporting units, if not immediately, then in
the near future and that, with this end in view it was necessary to have certain
amount of flexibility and informality as, in the absence thereof it would be
difficult to run branches and popularise banking with the rural population. It
has further submitted that the nature of the work at branches of banks in rural
areas was of an intermittent character because mostly the trade was seasonal
and that it was essential that Class D and Area IV should be retained. It has
stated that the hours of work which may be found appropriate for urban areas
would not fit in with the environments and the nature of work in rural areas
and has submitted that the hours of work should be eight per day including
Saturdays or 208 hours per month on the lines of hours prescribed by the
Shops and Establishments Acts in the various State, that the employees
may be required to do overtime not exceeding three hours a week, that leave
rules should be more restricted than those prescribed for urban areas, so
that leave entitlements in branches in rural areas may be three-fourths of
those which may be prescribed in other areas, and that banks should be at
liberty to employ such number of part-time hands as may be thought
necessary to meet the requirements of branches in rural areas according to

431

432

AI

22.2. The All India Bank Employees Federation has stated that it wants
the expansion of banking industry in every nook and corner of the country. It
has submitted that the banks should extend the same terms and conditions
of service to the employees in rural areas as those prevailing in other areas
when new branches are opened by the banks in those areas. It has also
submitted that the employees of the State Bank subsidiaries should get the
same benefits as the State Bank of Indias employees.
22.3. The All India Bank of Baroda Employees Federation has supported
the claims made in this connection by the All India Bank Employees
Association in respect of item No. 20.

the exigencies of the case. It has further pleaded that places having a
population of 50000 or less should be deemed to be in rural areas and that
Area IV should be redefined as comprising all towns and cities having
population of 50,000 or less.

bank is the following :

Currency chests are established at most of the branches and the
custody of these chests involves the State Bank undertaking all
reasonable precautions for their safety.The measures taken by the
State Bank in this regard include the appointment of watchmen or
armed guards to maintain constant vigil inasmuch as very large
amounts in cash have to be maintained to meet the requirements
not only of the State Bank in the discharge of its duties in connection
with Government business, but also those of other banks,
neighbouring treasuries or sub-treasuries. Further, the State Bank
has to accept surplus cash of other banks, sub-treasuries and
various Government Departments and has also to determine which
pieces of currency notes and coins are unfit for being re-issued
and should be withdrawn from circulation.

22.7. The Bombay Exchange Banks Association has stated that it was
difficult to reconcile the demands made on behalf of the All India Bank
Employees Association for expansion of banking facilities, particularly in
rural areas, with the demand for eliminating area-wise wage structure. It has
further submitted that if commercial banks were required to extend threir
operations to rural area, it should be ensured that these would not involve the
banks in uneconomic ventures the more so as for security reasons the banks
would require to have more staff than would be usual in the case of other
industries in small areas. They have drawn attention to the fact that work in
rural areas would be seasonal and on the whole, intermittent.

In connection with conduct of Government business, the State Bank has

stated as under :

AI

BE

22.8. The State Bank of India has pleaded that item 20 was of particular
significance in the case of the State Bank of India as a statutory obligation
was cast upon the State Bank of India to open during the first five years at
least 400 new branches in smaller centres to transact Government business
to provide cheaper finance to small scale industries, co-operative institutions,
etc., and to extend banking facilities to rural and semi-urban areas, that the
State Bank had carried out its statutory obligation and that out of 416 branches
opened upto 30th June 1960, over 353 branches were running at a loss, that
the existing pay structure in the remote places in the interior where the State
Bank in public interest has to operate cast an unduly heavy and onerous
burden, especially as in the case of banks for security and other reasons a
larger staff had to be maintained even in smaller places than would be the
case in respect of other concerns. It has submitted that the present wage
structure should not be revised upwards and that there should be no attempt
to abolish the present Class IV area.
22.9. After referring to the reasons for establishing the State Bank of
India, it points out that when it came into being it took over from its predecessor,
the Imperial Bank of India, 14,462 employees working in 239 branches and
234 sub-offices, that since then, it has employed about 10,000 employees in
addition to providing replacements for retirement, resignation, etc., and had
increased the number of branches to 652 and had sub offices in 233 places.
It has pleaded that one of the obligations and duties of the State Bank was to
act as the agent of the Reserve Bank and that in that capacity the State
Bank had to undertake the following functions :
(a)
(b)
(c)
(d)

Custody of currency chests;

Conduct of Government business;
Currency exchange facilities; and
Remittance facilities.

As regards custody of currency chests, it has stated that the work of the
433

This work involves receipts and payments on behalf of Government

and, in conducting this business, the State Bank has to act in
close collaboration with the local treasury. This business also
involves the State Bank accepting subscriptions in respect of various
loans floated by Central and State Governments and receipts and
payments on account of Railways, Post Offices, Defence Services
etc. The cash work relating to Government business has the following
features. All bills relating to lapsable grants and other sanctioned
expenditure have to be disbursed at the latest on the 31st March of
every year, that being the date fixed for the annual closing of
Government accounts. Taxes also have to be deposited by that
date for inclusion in the Government Revenues for the particular
financial year. The work relating to payment of Government bills
and Government receipts is dependent upon the passing of the
bills by the appropriate departmental authorities and Treasury
Officers, and remittance by the tax payers, which are factors over
which the Bank has absolutely no control.It is an usual occurrence
for Treasury Officers to pass bills for payment even on the 31st
March till late in the evening. As the bills lapse if they are not paid
and accounted for in the banks books on that day, the State Bank
in the interest of the public, has necessarily to receive all the bills
passed by the Treasury on the closing day effect payment.This
results in the Banks branches having to work even up to midnight.
Moreover, the volume of work to be handled particularly on the 31st
March is such that it can neither be avoided nor staggered. The
banks branches are adequately staffed and eqipped to handle the
normal working transactions and-also to handle additional work
which is expected on the first few days of the month arising out of
434

That the present overtime restriction should also not be retained

and that it should be left to the State Bank to pay overtime for work
in excess of hours of work fixed in consultation with the Government
concerned.The rate for overtime should be fixed similarly.
(6) That privilege leave should not be availed of more than twice during
a year and at intervals of not less than three months.
(7) That casual leave should be permissible only in emergent
circumstances.
(8) That the benefits of the award should not be made applicable to
temporary or casual employees.
(9) That the employees who are employed as watchmen and armed
guards and who are permitted to live and sleep on the premises
should not be entitled to overtime.
(10) That such employees should be enjoined in the interest of the
protection of the Government treasure to desist from participating
in sporadic strikes without giving at least 14 days notice to enable
the State Bank to make alternative security arrangements.
(11) That the bank should be at liberty to engage part-time godown
keepers or godown-watchmen and that working hours and salary
to be paid should be left at the discretion of the bank according to
the local needs and circumstances.

BE

22.10. In connection with currency exchange facilities, the bank has

stated that the work in this connection relates to the exchange of notes and
coins which the bank has to undertake on behalf of Governments, from other
institutions, banks and the general public.

(5)

Goverment disbursements and also towards the beginning and end

of every quarter when various taxes are to be received. It has been
the State Banks experience that the volume of work which has to
be handled on the 31st March every year is far in excess of the
normal volume of work handled by a branch on any day. Further, all
payments have to be effected, all receipts accounted for and branch
cash and books balanced, before the branches open for bussiness
on the next working day. In this connection, it may be mentioned
that the State Governments are also authorised to instruct the
State Bank to keep a branch or an office open even on a holiday to
transact public business [vide (a) subsidiary Rule No. 350 of the
West Bengal Treasury Rules. Volume 1, Rule No. 449 of the Bihar
Treasury Code, Volume 1]. The State Banks branches often receive
requests from the District Collectors and Treasury Officers to extend
the business hours on the last working day of the financial year in
order to cope with the large number of bills which are to be passed
and paid that day.

22.11. In connection with remittance facilities, the bank states that its
work is as under :

AI

Under the Reserve Banks Remittance Facilities Scheme, the Bank

is expected to extend to other banks and to the general public
facilities for the remittance of funds at certain specified rates. Under
the scheme, scheduled and co-operative banks are entitled to free
remittance facilities thrice a week, and this work involves
considerable time and, when the rush is heavy, it is necessary on
such occasions for the staff to work longer hours.

It has pleaded that if the above functions were to be discharged by the State
Bank to the entire satisfaction of the Governments concerned, the Reserve
Bank and particularly the public, directions should be given to meet the special
needs of the State Bank to the following effect :
(1)
(2)
(3)
(4)

Area-wise classification should be maintained,

The existing system of classification of branches according to
population should also be maintained.
The present pay structure and deamess allowance in class IV Areas
should not be disturbed.
The present working hours in branches and offices dealing with
Government business should not be retained and it should be left
to the State Bank to fix working hours in consultation with the
State Government concerned.
435

22.12. On behalf of the eight Subsidiaries of the State Bank of India it is

submitteed that these banks were required to open new branches in smaller
centres to transact Government business by providing finances to small scale
industries, co-operative institutions etc. and to extend banking facilities in
rural and semi-urban areas, particularly in the former Part B States, that
since October 1959, the subsidiary banks had opened 36 branches, that a
large number of them were running at a loss, that the present wage structure
should not be revised upwards and that no attempt should be made to abolish
the present Class IV Area, and that the emoluments paid to the employees
of the subsidiary banks should not be out of line with those paid to the
employees of the State Governments concerned. After referring to the reasons
for the setting up of the Subsidiary banks and the objective of establishing
them, they point out that the Subsidiary banks are required to act as agents
of the State Bank and in that capacity a Subsidiary bank has Intra alia, to
undertake the following functions :
(a)
(b)
(c)
(d)

Custody of currency chests;

Conduct of Government business;
Currency exchange facilities; and
Remittance facilities.

The nature of the business under these heads is similar to the nature of
the business under the same heads referred to by the State Bank of India. It
is pointed out on behalf of the Subsidiary banks that the State Governments
are authorised to instruct the Subsidiary bank to keep branches or offices
436

22.15. Under the provisions of section 10(1A) of the Act, it is open to the
Central Government to refer any matter appearing to be connected with or
relevant to any industrial dispute which exists or is apprehended whether it
relates to any matter specified in the Second Schedule or the Third Schedule.
An industrial dispute exists in connection with the various items under
reference. Items 20 and 21 are relevant to matters in respect whereof industrial
disputes exist. The Central Government appears to have specified these
items so that the aspects of the matter set out in items 20 and 21 may not be
lost sight of, and very probably, so that the attention of the Tribunal may be
specifically focussed on these aspects of the matter. Normally, where parties
interested are duly represented and the representatives discharge their duties
properly, all aspects of the matter relevant to the dispute are brought to the
notice of the Tribunal. The mere fact that the referring authority has thought it
fit to focus the attention of the Tribunal as well as of the parties to particular
aspects of a matter relevant to the disputes would not in any manner aftect
the reference or render the Reference in connection with such items beyond
the powers of the referring authority.

AI

BE

22.13. The Northern India Banks Association has submitted that it was
common knowledge that India was yet not equipped with banking facilities
appropriate to the size of the country, that if banking habit was to be extended
to the whole nation in the interest of the maximum mobilisation of reserves
for national development, special provision would have to be made for either
exempting the banking officers in certain categories of towns from the operation
of the Award or fixing the scale of emoluments for such places in conformity
with the cost of living in such places and that this was all the more necessary
as the earning capacity of such offices was bound to be low.The Travancore
Cochin Bankers Association has submitted that banks incorporated in Kerala
presented peculiar problems of their own while occupying at the same time a
very important place in the rural economy of that part of the country.It has
submitted that the Tribunal should accept the view that industries should be
established, that they should function, that they should progress and become
large units and that at a time when the banks are consolidating their position
their progress should not be crippled by casting on them unbearable burdens.
The Association has prayed that its members banks should be allowed
sufflcient time to grow and become bigger and sound units. The Bharatha
Lakshmi Bank Limited has submitted that most of the rural areas were not
served by any banking institutions, that the mobilisation of the resources
available in the rural areas, could best be done only by smaller banks as their
operative costs were always lower, that the rural areas could not be saddled
with heavy expenditure of bank management, that small banks with their
local Directors and Local Advisory Boards in rural areas would be able to
know the rural people better and that they were, therefore, best suited to
develop rural bankings.

and bank-workmen, nor were these items connected with the employment or
non-employment or the terms of employment or with the conditions of labour
of any person. It was further submitted that the State Bank of India had not at
any time posed this issue so as to constitute it into an industrial dispute, nor
was it capable of being constituted as in industrial dispute. It was further
submitted that the Order of Reference in so far as items 20 and 21 were
concerned, was invalid and ultra vires the powers of the Central Government
under sub-section (IA) of section 10 of the Industrial Disputes Act, 1947. It
was submitted that section 10(1A) permitted the reference to a National
Tribunal of any matter specified in the Second Schedule or the Third Schedule
of the Industrial Disputes Act, if the Central Government was of the opinion
that any industrial dispute existed or was apprehended in respect of such
matters. It was urged that items 20 and 21 were not covered by either the
second or the third schedule that they did not constitute the subject matter
of any existing or apprehended industrial dispute and that they could not be
the subject matter of a valid Order of Reference and therefore could not be
the subject matter of adjudication by this Tribunal.

open even on holiday to transact Government business (Rule 499 of the

Bihar Treasury Code, Volume 1) and that the Subsidiary banks branches
may and do receive requests from the District Collectors and Treasury Officers
to extend business hours on the last working day of the financial year in
order to cope with the large number of bills which are passed and paid that
day. Under the Reserve Bank of Indias Remittance Facilities Scheme, the
Subsidiary banks are also expected to extend to other banks and to the
general public facilities for the remittance of funds at certain specified rates.
It has been pleaded that if the above functions were to be discharged by the
Subsidiary Banks to the entire satisfaction of the Governments concerned,
the Reserve Bank of India and particularly the public, directions similar to the
directions sought by the State Bank should be given in respect of the
subsidiary banks.

22.14. It has been contended that items 20 and 21 do not and could not
form the subject matter of an industrial dispute within the meaning of the
Industrial Disputes Act.It was submitted that these two items of reference
were not the subject matter of any dispute or difference between bankers and
bankers, Or between bankers and bank-workmen or between bank-workmen

22.16. No party appearing before me has disputed the need for

development of the banking industry, including banking facilities in rural areas.
The objects of extension of banking facilities in rural areas inter alia are to
stimulate and mobilise rural savings in order to help Governments antiinflationary programme, as well as to provide financial resources for the national
development to the maximum extent possible, and to promote industry and
agriculture in rural areas and to facilitate the marketing and processing of
goods. The functions which the State Bank of India and its Subsidiaries are
discharging are also not in dispute. The State Bank of India was established
on July 1, 1955, by taking over the establishment of the Imperial Bank of

437

438

India, in pursuance of the recommendations of the Committee of Direction of

the All India Rural Credit Survey. The following two quotations from the Report
of the Committee would give an indication of the role that the Committee had
envisaged for the bank in the integrated rural credit structure recommended
by it :
......object is the creation of one strong, integrated. State-sponsored
State-partnered commercial banking institution with an effective
machinery of branches spread over the whole country which, by
further expansion(including further, but minor amalgamation where
necessary), can be put in a position to take over cash work from
non-banking treasuries and sub-treasuries, provide, vastly extended
remittance facilities for co-operative and other banks thus stimulating
the further establishment of such banks and, generally, in their
loan operations, in so far as they have a bearing on rural credit,
follow a policy which, while not deviating from the cannons of sound
business, will be in effective consonance with national policies as
expressed through the Central Government and the Reseve Bank
(General Report, Vol. II, page 404).

would be encouraged to increase their finance to rural areas, where banking

facilities are not adequate.
22.17. The State Bank of India is fulfilling some of the objects for which
it was established by its branch extension programme. The Bank has between
1st July 1955 to 31st December I960, opened 427 branches. Considerations
which have actuated the State Bank in selecting the centres were as stated
by it, the existence of Government treasury or sub-treasury, turnover of the
treasury, extent of existing banking facilities, availability of warehousing
accommodation, present as well as prospective. Out of nearly 400 centres
at which new branches were opened, at 64 centres no other banking facilities
were available when the bank opened its branches. According to the bank,
77 places were placed with a population below 10,000, 209 were places with
a population between 10,000 and 25,000 and 90 were places with a population
between 25,000 and 50,000.

439

440

AI

BE

For its part, State Bank of India should endeavour to be responsive

to the needs of co-operative institutions connected with credit, and
especially, marketing and processing. (It is of course the Reserve
Bank,primarily, which will continue to lend to state cooperative banks
and through them to central co-operative banks etc.). The branch
extension of the State Bank of India should be co-ordinated and,
wherever possible, positively associated with the development of
co-operative credit, from the point of view especially of the provision
of cheap remittance facilities. (General Report Vol. II, page 413).

Availability of facilities for quick and cheap remittance of funds is of great

importance to the development of banking. Remittance facilities help banks
to correct temporary disequilibria in the supply of and demand for funds so
that the available resources are put to the best use. Thus unless free or
cheap remittance facilities are available on a large scale, branches cannot
be profitably operated either at predominantly deposit-centres or advancecentres. The existence of a State Bank of Indias branch at these centres
enables commercial and co-operative banks to make fuller use of their funds
with the help of the remittance facilities offered by the bank. Apart from
remittance facilities, the branches of scheduled banks at various centres can
and do avail themselves of overdraft facilities from the State Bank of India
against authorised securities which enable them to supplement their
resources. The State Bank has been, as the Imperial Bank, had been acting
as an Intermediate central bank and these credit arrangements have been
of a great help to other banks. The strong room of the State Bank of India is
also available to the banks for keeping their valuables etc. The State Bank is
thus source of strength to the commercial and co-operative banks which

22.18. In connection with remittance facilities, the Reserve Bank of India

is offering remittance facilities to commercial and co-operative banks under
the Reserve Bank of India Remittance Facilities Scheme and the State
Bank, as an agent of the Reserve Bank, enables these banks to make free
remittance of funds thrice a week from their branches to their headquarters.
Additional remittance can be put through at premium according to the rates
fixed under the scheme. One of the objects of the expansion programme of
the State Bank of India was to make available these facilities at a large
number of centres situated particularly in the rural and semi-urban areas of
the country. The State Bank has stated that with the widening of the banks
net-work of branches, the volume of funds so remitted has increased very
considerably. Central and apex Cooperative banks are granted by the State
Bank free remittance facilities once a week to remit funds from their
headquarters to their branches in addition to the remittance facilities available
under the Reserve Bank of India Remittance Facilities Scheme. The State
Bank has stated that the aforesaid step was taken by it on its own initiative
in pursuance of its policy of being responsive to the need of the co-operative
sector. It has further stated that from its inception it has been following a
policy of being responsive to the requirements of co-operative institutions.
The role of the State Bank of India in the field of rural credit, particularly shortterm finance for agriculture, is only of a supplementary nature. The Reserve
Bank of India Act places upon the Reserve Bank special responsibility for
agricultural finance and the Reserve Bank has been providing funds required
by co-operative credit sector for financing seasonal agricultural operations
and marketing of crops, through State and Central Cooperative banks.
According to the State Bank, the co-operatives do require additional finance
which the State Bank has been providing. The State Bank has been extending
various facilities to co-operative banks, marketing and processing societies,
land mortgage banks and industrial cooperatives at concessional rates. The
fact that the State Bank of India has a wide net-work of branches spread all

over the country would enable the co-operative institutions situated in any
part of the country to have banking transactions with institutions situated in
any other part of the country. The State Bank has stated that it has played a
pioneering role by being the first commercial bank in India to evolve a suitable
procedure for making advances against warehouse receipts. The State Bank
is playing an important role in the development of the banking industry,
including banking facilities in rural areas.

CHAPTER XXIII
Item No 22 : ANY OTHER QUESTION CONNECTED WITH, OR ARISING
OUT OF, THE FOREGOING MATTERS, (ITEMS NOS. I TO
21 IN SCHEDULE II TO THE ORDER OF REFERENCE.)
23.1. Under this item the following claims have been made on behalf of
the employees.

22.19. I am informed that the State Bank and its Subsidiaries have a
plan for opening 300 branches for the five year period from 1st July 1960 to
31st July 1965, at centres to be selected from rural and semi-urban areas.

(2) Risk Insurance

Cash staff including cashiers, cash durwans and tellers, drivers, armed
guards, godown-keepers, godown chowkidars or watchmen, chowkidars or
watchmen, gun retainers, godown durwans, liftmen, and air conditioning plant
operators etc., who are subject to hazards from anti-social elements in the
discharge of their daily routine duties should be suitably covered by insurance
against risk of life or injury at the cost of the bank.

AI

BE

22.21. The only demand which has not been dealt with under other heads is
the demand made on behalf of the State Bank and its Subsidiaries that the
watchmen and armed guards who are part of security staff should be enjoyed
by this Tribunal in the interest of the protection of the Government treasure to
desist from participating in sporadic strikes without giving at least 14 days
notice to enable the State Bank and its Subsidiaries to make alternative
security arrangements. It is necessary that Government treasure should be
fully protected during all hours and it is requisite that persons employed to
guard such treasure should not participate in sporadic strikes without giving
sufficient notice to the State Bank of India and its Subsidiaries to make
alternative security arrangements. The question about the circumstances
and conditions under which workmen can go on strike does not arise for
determination by me in this Reference and I refrain from giving any directions
in connection therewith.

All employees should be entitled to payment of special gratuity or

compensation in the case of accidents involving death or injury while on duty.
The rate of such special gratuity or compensation should not be less than
what is provided in the Workmens Compensation Act.

22. 20 In making my award under other items of reference, I have borne

in mind the functions and taken into account the needs of the State Bank
and its Subsidiaries and the need for the development of banking industry
including banking facilities in the rural areas and it is not necessary for me
under items 20 and 21 to repeat what has been already considered and dealt
with under other heads.

(1) Special Gratuity or Compensation

441

(3) Classification of Workmen

Workmen employed by the banks should be classified as hereunder:
(i) Permanent workmen.
(ii) Probationers.
(iii) Temporary workmen (including daily rated).
(iv) Part-time workmen.

Each one of the aforesaid categories of workmen should be properly

defined. Whilst seeking to define these terms the All India Bank employees
Association has adopted the wording of the definitions given in paragraph
508 of the Sastry Award in connection with permanent employee,
probationer, temporary employee and part-time employee. The All India
Bank Employees Association has pleaded that there should not be any parttime workman in any category except sweepers and cleaners. The All India
Bank Employees Federation has demanded that there should not be any
part-time workman in any category and that part time employees working for
more than 3 hours a day should be treated as full-time ones. It has also
made a demand that a probationer should mean an employee who is
provisionally employed to fill a vacancy or a post and has not been made
permanent or confirmed in service or employment. The All India State Bank
of India Staff Federation and the State Bank of India Staff Union, Andhra
Pradesh, Vijayawada have sought to define a permanent employee as an
employee who has been appointed as such by the Bank or has served the
Bank continuously for a period of six months.
442

(4) Service conditions of Temporary employees (including daily

rated) Probationers and Part-time employees

(v)

The service conditions, pay and allowances applicable to permanent

workmen should also be applicable to temporary employees (including daily
rated) probationers and part-time employees.

Godown-keepers, godown peons, godown chowkidars, godown watchmen

or godown durwans should be made permanent on the completion of six
months continuous service or of a total period of one years service, irrespective
of the fact whether their services are utilised for a specific godown or various
godowns.

The probationary period of a workman should not normally exceed three

months. However, a probationer if he has completed a period of six months
service in the bank, shall be deemed to have been automatically confirmed in
the permanent service of the bank.

(7) Combined Designations

(8) Transfers

Officers of the Union should not be transferred. If at all any transfers are
essential the number should be limited and that too should be effected only
with the consent of the employee concerned within the State or language
area (language means official language of the place).

BE

In respect of an employee whether whole time or part-time, daily rated,

temporary or probationary, the bank shall give him a written order specifying
the kind of appointment, the period of appointment, and the pay and allowances
which he would be entitled to.

No recruitment should be permitted to the Banks on combined

designations at any of its establishments. There is a demand by the All India
Bank of Baroda Employees Federation that the Bank of Baroda should be
prohibited from giving multiple designations to employees and at least in the
bigger branches of this bank this practice should be prohibited. The banks
should not be allowed to extract cash security by giving such designations
without their doing duties calling for cash security. There should be periodical
rotation of duties of all employees.

Where daily rated and/or temporary hands remain in employment for an

aggregate period of 3 months during any 12 consecutive months they shall
be deemed to be probationers and shall be so covered and absorbed against
permanent vacancies.
There is also a demand that all employees working for 3 months or more
should be deemed as confirmed.

No bank should appoint any person as unpaid apprentice.

(6) Godown-keepers, Godown Peons, etc.

(5) Apprentices

AI

No appointment of apprentices at all should be permissible to banks. If

banks are permitted to have apprentices it should be subject to the following
directions :
(i) No bank may have at any time at any of its establishment a number
of apprentices which exceeds 3% of the total complement of that
establishment. Some organisations have demanded that they
should not exceed 2% instead of 3% of the total complement.
(ii) Workmen categorised as apprentices who have already been in
the service of the bank for a total period of six months should be
deemed to be permanent employees of the bank. The All India
Bank Employees Federation has demanded that apprentices who
have already been in the service of a bank for a total period of 2
months should be deemed as probationers and confirmed
accordingly. The apprenticeship period should not exceed 2 months
during which period the apprentice should receive training from a
permanent incumbent.
(iii) All workmen categorised as apprentices should be entitled to wages
as claimed, casual leave, medical expenses and hours of work
and overtime and all other benefits in a manner applicable to
permanent employees.
(iv) The services of apprentices during apprenticeship period should
not be utilised against any temporary, leave or permanent vacancy,
without payment of usual wages.
443

No transfers of any member of the subordinate staff should be effected

without his express written consent.
Employees on transfer should be provided with housing accommodation
or additional allowance to compensate the extra expense incurred by the
employees.The emoluments of an employee should not be reduced on transfer.
One months additional salary should be paid to an employee under transfer
to enable him to settle down in the new place upon transfer.
Any member of the staff on transfer should be allowed seven days period
as preparatory leave before his joining the office in addition to the period
required for his joining.
(9) Recruitment
At the time of recruitment a notice giving therein the actual number of
vacancies, the requisite qualification etc. and inviting applications is to be
hung upon the notice board in the respective offices at least a fort-night ago.
Other conditions being equal first preference is to be given to the employees
relatives. Relatives of employees be given preference subject to requisite
qualification, in the employment of the Banks service, in the same office with
them and the present system of not employing the relatives of the employees
in the same office despite their requisite qualifications, be discontinued.
There should be no direct recruitment in supervisory cadre.
444

(10) Promotion

other workmen.

Promotion to Supervisory Grade Seniority-cum-Education-cum-Merit 60

per cent should be reserved for seniority and 40 per cent for education. (The
weightage should be given to each of the above factors). There is also a
demand that there should be no direct recruitment in the supervisory cadre.

(15) Standing Orders

All standing orders should be framed in consultation with the union
representatives.
(16) Service Record

Promotion to supervisory grade II should be made on the basis of the

seniority of service giving one year of weightage, while counting service, to
graduates and C.A.I.I.B. or C.A.I.B. diploma holders. There should be no age
restriction for promotion.

All employees should have access to their Service Record/Book/File

on demand.
(17) Service Certificate

Those members of the Subordinate staff who have passed Matriculation

or equivalent examination be elevated to the clerical grade. Those members
of the subordinate staff who are sufficiently literate and intelligent should be
given preference second in order of priority.

Every employee who leaves service or retires or is dismissed or discharged shall without avoidable delay be given a service certificate, as provided
in the Sastry Award.

(11) Retrenchment

Service Bonds should not be made compulsory as condition for employ

ment If such a bond is executed by any employee, it should be treated as
cancelled. The cost of such bond should be refunded to the employees
concerned.

(19) Definition of duties

(12) Reinstatement of Workers

AI

BE

If retrenchment is inevitable and justified, the junior-most employee shall

be retrenched first. The retrenched employee shall be paid retrenchment
compensation at the rate of one month of salary and allowances for each
completed year of service. The justification of retrenching unless agreed by
the union, should receive a sanction of the Tribunal appointed under Industrial
Dispute Act, 1947, or any other authority in this behalf by appropriate
Government, after hearing both the sides. It is further claimed that the
retrenched employee shall have a perior right on the bank in the event of new
employees being appointed and that such employee should be given three
months pay and all other allowances in lieu of notice. It is pleaded that the
closing down of a branch or the termination of the services by the bank
should also be included in the term "retrenchment".

(18) Service Bonds

The reinstated employees service should be taken as continued one

from the date of joining the banks service including the period of suspension,
victimisation, discharge, dismissal, etc. All emoluments normally due to him
otherwise should be paid to him even for a period of suspension etc. Such
employee should be given all the advantages of any settlement arrived at on
the basis of these demands.
(13) Increase in the strength of the staff
In order to cope wiih the increasing routine work in the banks and in
order to avoid undue hardship to the employees due to overwork, the bankers
should make an increase of at least 10% in the strength of the staff in all
categories.

The Bank of Baroda should assign, in writing, specific duties to employees

on their appointment and the duties so assigned should flow strictly from
their designations. The bank should discontinue the practice of requiring
clerks to work as godown-keepers or telephone-operators.
(20) Advance fixation in pay
The qualified employees may be given the following additional benefits
in the form of advance fixation of pay :
(i)
(ii)
(iii)
(iv)
(v)

IntermediateOne increment.
GraduatesTwo increments.
Double GraduatesThree increments.
C.A.I.I.B, (Part I)One increment.
C.A.I.I.B. (Part II)Two increments.

(21) Insurance Rebate

Insurance rebate at present paid to the employees @ l/6th of the total
emoluments may continue to be paid in future also:
(22) Welfare Fund

(14) Weekly offs and holidays to Armed Guards and Chowkidars

l/10th of the total annual profits earned by the banks should be allocated
towards Staff Welfare Fund which shall be administered by a Board of Trustees
to be created for this purpose. The Management and the workers shall have
equal number of representatives on this Board.

Armed Guards, Chowkidars and all other members of Watch and Ward
Staff should be allowed weekly off, National and other Gazetted holidays like

The bank management should be directed to constitute a special fund

for the provision of amenities to the workmen such as sports, recreation,

445

446

entertainments, etc., and such funds should be replenished every year by

contribution from the management by way of allocations from the net profits.
The management of such funds should be entrusted to the coordination
committees.

Employees Association.
Elected representatives of the employees should be taken on all
the committees dealing with staff matters,
For the settlement of all disputes arising from time to time, a suitable
machinery should be evolved in consultation with the Union
representative, the management and the Labour Commissioner.

(23) Dearness allowance to pensioners

Dearness allowance at the rate of 25 per cent of the amount of pension
with a minimum of Rs. 35 be paid to all pensioners as against the 20 per
cent with a minimum of Rs. 20 which is being paid at present by the State
Bank of India.

Bank management should be directed to constitute co-ordination

Committees for the Bank as a whole with representatives of the
Management and of the Employees Union in equal numbers and
where there is no Union, representatives elected by the Employees.
Such Committees should he costituted at the Branch level also.
All disputes. matters and problems relating to the staff including
review of the staff position from time to time and recruitment of
Clerical and Subordinate staff and their promotion should be
entrusted to these co-ordination Committees

(24) Canteens
The banks should arrange to provide well furnished canteen and Tiffin
Rooms at all their offices.
The Bank should provide employees with quarters on subsidized basis.
(26) Bonus

(25) Quarters for the employees

(30) Redress of Grievances

(27) Facilities to participate in domestic enquiries.

AI

Representatives of the All India Bank of Baroda Employees Federation

who may be required to participate in domestic enquiries held by the Bank,
should be given leave on duty for the period they are away from their places
of work in connection with the enquiry. The Federation submits that such
representatives should be paid travelling and halting allowances when they
are required to leave their places of work, in connection with the enquiry. The
rate of travelling and halting allowances shall be the same as demanded
under issue No. 4.
(28) Substitutes to be provided by certain categories of employees.

No employee should be compelled by the Bank to provide a substitute

whenever he is on leave,
(29) Machinery for settlement of disputes

The following demands and suggestions have been made in connection

with this matter :
A permanent machinery for settling the disputes arising out of the
award and for proper implementation and interpretation etc. of the
same should be evolved.
For the settlement of all disputes cropping up from time to time, a
suitable machinery should be evolved in consultation with the
Association which is recognised by the Management as a
representative body of the employees of the State Bank of Patiala.
The Association referred to is the State Bank of Patiala (All Cadres)
447

An employee desirous of the redress of a grievance relating to unfair

treatment or wrongful exaction on the part of bank or a superior shall either
himself, or through a representative of registered unions submit a complaint
to the manager or any officer appointed by the manager in this behalf. The
employee shall also have the right to endorse a copy direct to the head of the
department for information.

BE

Four months salary including allowances be paid as bonus to all the

employees including temporary and part-time employees,

(31) Extention of Award privileges in toto to employees of banks with

registered offices outside the State, to their employees working in
their offices situated in Jammu and Kashmir State.
The Tribunal is requested to direct all such banks whose registered
offices are outside the State of Jammu and Kashmir to treat their employees
completely at par with those working in offices outside the State of Jammu
and Kashmir.
All Bank employees in Jammu and Kashmir State should be entitled to
all benefits of any final agreement arrived at with the Bankers and the
Government or the award of the Tribunal and they should be treated completely
at par with employees in any other part of the country. Further the provisions
of the Industrial Disputes Act should be applicable to the State forthwith.
(32) Recognition of Union
The All-India Bank Employees Federation, with all its constituent Units
be accorded recognition.
The Tribunal should direct the employers to recognise those unions to
which majority of the members belong. The unions recognised by the
employers should have the right to negotiate, correspond and do all such
acts incidental to and necessary for the purpose of conducting the Trade
448

Union activities. The Bank should provide facilities for all the recognised Unions
for collection of subscriptions posting of their notices and such other matters
approved by the appropriate Governments. It is claimed that a representative
of the union employed in the bank should be given leave when he is required
to attend some special work in connection with the trade union conferences
and committees.

(33) Retention of existing rights and benefits

23.6. The All India Bank Employees Association has sought to connect
this demand with item No. 6, viz., pension and gratuity. The demand for
compensation in the case of injury resulting from an accident while on duty
cannot with any propriety be called gratuity which is a retiring benefit. The
demand has been opposed by banks. Even if I had the jurisdiction to deal
with the matter, on the present state of the record, I am not in a position to
give any specific directions in connection with the same. It is a matter which,
in my view, can be more suitably dealt with by the legislature than by a
Tribunal. I give no directions in connection with this demand.

23.7. (2) Risk Insurance. Under this head insurance is demanded

against the risk of life or injury at the hands of anti-social elements for various
categories of workmen whilst discharging daily routine duties. The All India
Bank Employees Association has sought to connect this demand with item
No. 10 viz., cash deposits, fidelity bonds and other securities to be furnished
by the staff. By no stretch of imagination this demand can be connected
with that item.
23.8. This demand has been opposed by the Bombay Exchange Banks
Association and the State Bank of India on the ground that it does not arise
under item 22 of the reference and also on the merits. The demand has also
been opposed by other banks. The Sastry Tribunal did not give any specific
directions in connection with such a demand even when it had jurisdiction to
do so. No directions are given in connection with this demand.

BE

All Employees Unions satisfying the criteria for recognition of Trade

Unions as adopted by the 16th Indian Labour Conference should be given
recognition by the Managements. All recognised Unions should be given the
following facilities
(i) Office accomodation and facilities for collection of subscriptions
and other dues from members as well as holding of Meeting in the
Bank premises after office hours without hindrance to the normal
working of the Bank Offices.
(ii) Duty leave facilities for authorised representatives and office bearers
of recognised Unions for bonafide Trade Union activities.
(iii) Display of Unions name board and notice board in the Bank
premises.
(iv) Opening of accounts in the name of the Union with respective Banks
and deduction of the dues to the Union at the time of salary
disbursement by the Bank and crediting the same to the Unions
Account under proper letter of authority from the concerned
Employees.

23.5. The Bombay Exchange Banks Association has submitted that

such a demand cannot validity arise under item 22 of the reference.

AI

No Rights, benefits and privileges as on 31st March of 1959 of any

employee shall be altered to the prejudice of the employee concerned.

23.2 It is not necessarv to set out an extenso the various contentions of

the banks in connection with these demands. Wherever necessary I have
referred to some of the contentions of the banks whilst dealing with these
demands.
23.3. I shall now proceed to deal with the various claims made.

23.9. (3) Classification of workmen. Under this head a demand has

been made that workmen should be classified as permanent workmen, pro
bationers, temporary workmen and part-time workmen and that each one of
the aforesaid categories should be properly defined. This demand has been
linked up by the All India Bank Employees Association with item No. 14 viz.,
categories of workmen to whom the award of the Tribunal should be
applicable.

23.4. (1) Special gratuity or compensation. Under this head the

employees have made a claim for payment of special gratuity or compensation
in the case of accidents involving death or injury while on duty. The Sastry
Tribunal has dealt with the claim for compensation under similar circumstances
in paragraphs 456 to 458 of its award under a term of reference relating to
insurance against old age, sickness, death or injury from accident in the
course of the discharge of duties. After fully considering the matter the Sastry
Tribunal came to the conclusion that it could not lay down any compulsory
directions in the matter. lt only recommended that all banks should provide
adequate compensation in such cases. The Labour Appellate Tribunal
observed that it was not possible for it to give any directions in connection
with the matter.

23.10. The Sastry Tribunal has classified bank employees as permanent

employees, probationers, temporary employees and part-time employees
and has defined them as under :
(a) permanent employee means an employee who has been appointed
as such by the bank,
(b) probationer means an employee who is provisional employed to
fill a permanent vacancy or post and has not been made permanent
or confirmed in service,
(c) temporary employee means an employee who has been appointed
for a limited period for work which is of an essentially temporary
nature, or who is employed temporarily as an additional employee
in connection with a temporary increase in work of a permanent

449

450

(d)

nature,
part-time employee means an employee who does not or is not
required to work for the full period for which an employee is ordinarily
required to work and who is paid on the basis that he is or may be
engaged in doing work elsewhere.

right to operate its business to the best advantage, bearing in mind the special
circumstances existing in rural areas and in particular the seasonal character
of banking business in those areas. The State Bank of India has taken a
stand similar to that of Bombay Exchange Banks Association.
23.15. For the purpose of this award, it would not be out of place to
classify workman and to define the various classes in which workmen fall.
Having considered all the demands made both by workmen and the banks. I
direct that workmen, for the purpose of this award be generally classified as
(a) permanent employees, (b) probationers, (c) temporary employees, and
(d) part-time employees. These expressions will have the following meanings
for the purpose of this award :

23.11. The All India Bank Employees Federation has sought to amend
the aforesaid definition of a probationer by substituting the words who is
provisionally employed to fill a vacancy or a post for the word who is
provisionally employed to fill a permanent vacancy or post.

AI

23.13. The Indian Banks Association has pleaded that the present
classification as laid down in the Sastry Award should be maintained subject
to the modification suggested by it. The Indian Banks Association had under
item 19 claimed that the definition of the expression temporary employee
as given in the Sastry Award should be amended by adding the words and
includes a workman who is appointed in a temporary vacancy of a permanent
workman or probationer at the end of the definition. Whilst dealing with the
said demand I have directed that the definition of temporary employee as
given in the Sastry Award should be amended by adding at the end the words
and includes an employee other than a permanent employee who is appointed
in a temporary vacancy of a permanent workman.
23.14. The Bombay Exchange Banks Association has pleaded that the
demand does not arise under item No. 22. Without prejudice to the aforesaid
contention it has suggested the following definitions :
Permanent workman means an employee who has been appointed
as such by the management. A probationer means an employee
who is provisionally employed to fill a permanent vacancy or post
and has not been made permanent or confirmed in service.
Temporary employee means a person who has been appointed for
a temporary period which may be specified. A part-time employee
is one who does not work full time.

Permanent employee means an employee who has been

appointed as such by the bank, (b) probationer means an
employee who is provisionally employed to fill a permanent vacancy
or post and has not been made permanent or confirmed in
service,(c) temporary employee means an employee who has
been appointed for a limited period for work which is of an essentially
temporary nature, or who is employed temporarily as an additional
employee in connection with a temporary increase in work of a
permanent nature and includes an employee other than a permanent
employee who is appointed in a temporary vacancy of a permanent
workman, and (d) part-time employee means an employee who
does not or is not required to work for the full period for which an
employee is ordinarily required to work and who is paid on the
basis that he is or may be engaged in doing work elsewhere. Having
considered all aspects of the matter, the demands that there should
not be any part-time workmen in any category except sweepers
and cleaners, that there should not be any part-time workman at
all in any category and that part-time employees working for more
than 3 hours a day should be treated as full time ones are rejected.

(a)

BE

23.12. The All India State Bank of India Staff Federation and the State
Bank of India Staff Union, Andhra Pradesh, have demanded by way of an
amendment to the definition that a permanent employee should also mean
an employee who has served the bank continuously for a period of six months.
The All India Bank Employees Association has further pleaded that there
should not be any part-time workman in any category except sweepers and
cleaners. The All India Bank Employees Federation has gone a step further
and has demanded that there should not be any part-time workman in any
category whatsoever and has pleaded that part-time employees working for
more than 3 hours a day should be treated as full time ones.

23.16. (4) Service conditions of temporary employees Including

(daily-rated) probationers and part-time employees.No case is made
out for providing the identical service conditions for temporary employees,
probationers and part-time employees as those provided for permanent
workmen. The matter has been dealt with in other parts of the award and no
further directions are given in connection therewith.
23.17. The demand that the probationary period of a workman should
not normally exceed three months is opposed by the Bombay Exchange
Banks Association and by a number of banks. In my view, the demand is not
reasonable and the same is rejected.

It is further pleaded that the demand that there should not be any parttime workmen in any category except sweepers and cleaners was
unreasonable and unjustified and if granted would fetter the managements

23.18. As regards the claim for automatic confirmation of a probationer

if he has completed a period of six months service in the bank, the matter
has been dealt with in other parts of this award and no further or other directions

451

452

are given.

examinations of the Institute of Bankers, should not exceed twelve months.

This direction is a salutory one. I give a direction similar to the one given by
the Sastry Tribunal.

23.19. There is no merit in the demand that where daily rated and/or
temporary hands remain in employment for an aggregate period of 3 months
during any 12 consecutive months they should be deemed to be probationers
and should be so covered and absorbed against permanent vacancies. The
said demand is opposed by the banks and the same is rejected. As regards
the demand that all employees working for 3 months or more should be
deemed as confirmed, save as otherwise provided in this award no directions
are given.

23.24. (6) Godown-keepers, Godown peons, etc. A demand has

been made that godpwn-keepers, godown peons, godown chowkidars, godown
watchmen or godown durvans should be made permanent on the completion
of six months continuous service or of a total period of one years service
irrespective of the fact whether their services are utilised for a specific godown
or various godowns.
23.25. The Bombay Exchange Banks Association has pleaded that this
demand does not arise under this term of reference. The State Bank of India
has raised a similar objection. Before the Sastry Tribunal a demand was
made that godown-keepers should be made permanent after a continuous
service of one year or a total service of two years if there was a break. The
Sastry Tribunal has dealt with the demand in paragraph 499 of its Award
under the terms of reference headed method of recruitment, terms and
conditions of service and procedure for termination of employment or for taking
other disciplinary action. In dealing with the matter, the Sastry Tribunal has
observed as under :

BE

23.20. There is a demand made that banks should give a written order
specifing the kind of appointment, the period of appointment and the pay and
allowances which a person would be entitled to, on his appointment by the
bank as a whole time employee or as a part-time employee or as a temporary
employee or as a probationer. The demand has been opposed by some of
the banks. The Sastry Tribunal in paragraph 495 of its award has provided
that on a candidates appointment as a temporary employee, a probotioner
or a permanent member of the staff, the bank shall give him a written order
specifying the kind of appointment and the pay and allowances to which he
would be entitled and that such a written order shall be given on the
appointment of a part-time employee also. I give directions similar to those
contained in the Sastry Award. I further direct that wherever possible the
banks should, except in the case of permanent employees; specify the period
of employment.

23.23. The demand that an apprentice who has already been in the
service of a bank for a total period of six months should be deemed, to be a
permanent employee of the bank appears to me to be unreasonable, so also
the demand that apprentices who have already been in the service of a bank
for a total period of two months should be deemed as probationers and
confirmed accordingly. I have carefully considered all the demands made in
connection with apprentices.Save as otherwise expressly provided in this
award.I do not give any further or other directions in connection with
apprentices.

AI

23.21. (5) Apprentices. A demand has been made that banks should
not be permitted to appoint any apprentices at all. This demand is connected
by the All India Bank Employees Association with item No. 14, namely
categories of workmen to whom the award of the Tribunal should be
applicable. The All India Bank Employees Federation has raised the question
relating to apprentices under this item as well as under item No. 19 namely
difficulties and anomalies in the operation of the existing award. The Bombay
Exchange Banks Association has pleaded that this demand does not arise
under item 22. There is no merit in this demand. Various persons join a bank
as apprentices even for the purpose of passing the C.A.I.I.B. and C.A.I.B.
examinations. On the footing that I have jurisdiction to deal with the matter,
the demand is rejected. Various demands have been made in connection
with aprentices. I have only jurisdiction to give directions in connection with
apprentices who are workmen. I have already given certain directions in
connection with apprentices in paragraph 5.192 of this award.
23.22. Serious allegations have been made against banks in connection
with the engagement of apprentices which have been denied. There is not
much evidence in support of these allegations. The Sastry Tribunal in paragraph
497 of its award has directed that the period of apprenticeship, except in the
case of those who work in banks so as to qualify themselves for the
453

We understand that godown keepers can be classified into two

categories : (1) those in charge of godowns maintained by banks
generally in large cities for storing goods belonging to several parties
to whom advances are made, (2) those who are required to look
after one or more godowns belonging generally to one party to
whom advances are made ordinarily for short periods against goods
stored in the borrowers, godowns, such as in the case of godowns
of sugar mills, ginning factories, grain merchants etc. In the case
of godown keepers coming under the first category we direct that
the period of temporary service should not exceed one year, after
the expiry of which they should be placed on the permanent list
unless the vacancy itself is a temporary one. In the case of persons
coming under the second category whose work is of a temporary
nature and whose salary and allowances are generally borne by
the parties who are owners of the goods in the godowns, we do not
454

think it proper to insist upon their confirmation even after the expiry
of any definite period, particularly as we understand that their
emoluments and service conditions in actual practice are not
generally different from those of the permanent employees. We
however recommend that as far as possible such godowns keepers
whose work is found to be satisfactory and whose services can be
utilized to look after other godowns in the same place or a place
nearby or in the clerical establishment of the banks should be
made permanent after the expiry of one year.

in connection therewith. Save as otherwise provided in other parts of this

award, I give no further or other directions in respect of the demands made
under this head.

The claim made before me does not fall within any of the items covered by
the reference. Ever, if I had the jurisdiction, the demand as made does not
appear to me to be reasonable and I am not giving any directions as claimed.

23.29. (11) Retrenchment.The Vadodra Rajya Bank Nokar Sangh

has made various demands under the head retrenchment. Questions relating
to retrenchment policy or how retrenchment should be effected are not covered
by the terms of reference and I have no jurisdiction to deal with the same.
There are various other demands made in connection with retrenchment like
retrenchment compensation, re-employment of retrenched employees etc.,
Which have been dealt with under the provisions of the Industrial Disputes
Act, 1947, and no directions are required to be given in connection therewith.
I give no directions in connection with the demands made under this head.

23.30. (12) Reinstatement of Workers.In connection with the

demands made under this head, save as otherwise provided under this award
no directions are given.

AI

BE

23.26. (7) Combined designations.It is pleaded that no recruitment

should be permitted to the banks on combined designations at any of its
establishments. The Bombay Exchange Banks Association has objected to
the demand on the ground that it does not arise under the terms of reference.
The recruitment policy of banks is not the subject matter of reference before
me and this demand cannot be considered under this head. A demand has
been made that the banks should not be allowed to extract cash security by
giving combined designations without the workmen doing duties calling for
cash security. This matter has been dealt with by me in paragraph 12.13 of
this award. It is further pleaded that there should be periodical rotations of
duties of all employees. This demand has been opposed by the banks. There
is no merit in this demand. The demand that the Bank of Baroda should be
prohibited from giving multiple designations to its employees is equally without
any merit. Save as otherwise expressly provided in this award, no further or
other directions are given in connection with the demands made.

23.28. (9) & (10) Recruitment and Promotion.As regards the

demands made under these heads, it has been pleaded that the claims
made do not fall within item 22. Recruitment and promotion policies of banks
do not fall within the ambit of the terms of reference and I have no jurisdiction
to entertain the demands in connection therewith. No directions are given in
connection with these demands.

23.27. (8) TransfersVarious demands have been made under the

heading transfers. The All India Bank Employees Association has sought to
link this demand with item No. 4 namely house rent and other allowances,
including travelling and halting allowances and leave fare concessions. The
Bombay Exchange Banks Association and the State Bank of India have
pleaded that the demands in connection with transfers cannot be made under
this item of reference. The demand that officers of the union should not be
transferred or that the number of transfers should be limited and should be
effected only with the consent of the employee concerned cannot in any
sense be connected with item No. 4. I have no jurisdiction to deal with said
demands and no directions are given in connection therewith. Similarly the
demands that transfers should only be effected within the State or language
area and that no transfer of any member of the subordinate staff should be
effected without his express written consent do not fall within the ambit of the
terms of the refrence and no directions are given in connection therewith. As
regards the claims made in connection with what should be provided for an
employee on transfer, I have, in other parts of this award, given certain directions
455

23.31.

(13)
(15)
(16)
(18)

Increase in the strength of the staff,

Standing Orders.
Service record, and
Service bonds.

The demands made in connection with the increase in the strength of

the staff, standing orders, service record and service bonds do not fall within
the ambit of the terms of reference and no directions are given in connection
therewith.
23.32. (14) Weekly offs and holidays to Armed Guards and
chowkidars.Demands have been made in connection with weekly offs
and holidays to armed guards and Chowkidars. I have in dealing with the
question of hours of work and overtime by paragraph 1046 of this award
provided that members of the watch and ward staff are excluded from the
provisions relating to the hours of work and overtime. Save as otherwise
expressly provided in this award, I give no directions in connection with these
demands.
23.33. (17) Service Certificates.There is a demand made that every
employee who leaves or retires or is dismissed or discharged shall without
avoidable delay be given a service certificate, as provided in the Sastry Award,
I have in chapter 18 given the requisite directions where a person is dismissed
or discharged by way of disciplinary action. Except to the extent aforesaid,
456

the matter cannot be dealt with by me under the present terms of reference.
Save as otherwise provided in other parts of this award, no directions are
given in connection with the demands made under this head.

to be given in respect of what is stated under this head. I give no directions in

connection therewith.
23.41. (31) Extension of Award privileges in toto to employees of
banks with registered offices outside the State, to their employees
working in their offices situated in Jammu and Kashmir State.The
provisions of the Industrial Disputes Act, 1947, do not apply to the State of
Jammu and Kashmir except to the extent to which the provisions of the Act
relate to industrial disputes concerning workmen employed under the
Government of India. The matter falls outside the jurisdiction of this Tribunal
and no directions are given in connection therewith.

23.34. (19) Definition of duties.Demands have been made in

connection with definition of duties. I have dealt with the matter relating to the
standardization of duties and nomenclature in other parts of this award and
no directions are given in connection therewith. A demand has been made on
behalf of the All India Bank of Baroda Employees Federation that the Bank of
Baroda should discontinue the practice of requiring clerks to work as godown
keepers and telephone operators. The Bank of Baroda has opposed this
demand. I do not consider it proper to give any such directions and no such
directions are given.

23.43. (33) Retention of existing rights and benefits.A demand

has been made under this head that no rights, benefits and privileges as on
31st March 1959 of any employee should be altered to the prejudice of the
employee concerned. The demand has been opposed by banks. No such
inalienable right can be conferred on the employees and no directions are
given as demanded.

BE

23.36. (21), (23), (24), (25), & (26) Insurance rebate, Welfare fund,
Dearness allowance to pensioners, Canteens, Quarters for the
employees and bonusDemands made under the above heads do not fall
within the ambit of the terms of reference and no directions are given in
connection therewith.

23.35. (20) Advance fixation in pay.Demands have been made under

this head for additional benefits to certain employees. The matter has been
dealt with in other parts of this award.

23.42. (32) Recognition of Union.Various demands have been made

under this head. Most of the demands do not fall, within the ambit of the
terms of reference. Demands have been made in connection with leave to be
given to the representatives of the unions who attend some special work in
connection with the trade union conferences and committees. The matter
has been dealt with by me in the chapter relating to leave rules. Save as
otherwise provided in other parts of the award; I give no directions in connection
with the demands made under this head.

AI

23.37.(27) Facilities to participate in domestic enquiries.A demand

has been made by the All India Bank of Baroda Employees Federation that
its representatives who may be required to participate in domestic enquiries
held by the bank should be given leave on duty for the period they are away
from their places of work in connection with the enquiry. A further demand
has been made that such representatives should be paid travelling allowance
and halting allowance. The demands is opposed by the bank. Having
considered the matter I do not give any directions as demanded and the
matter is left to the good sense of the bank.
23.38. (28) Substitutes to be provided by certain categories of
employees.

Under this head a demand has been made that no employee should be
compelled by a bank to provide a substitute whenever he is on leave. This
matter does not fall within the ambit of the terms of reference -and no
connections are given in connection therewith.

23.39 (29) Machinery for settlement of disputes.Demands have

been made for the setting up of a permanent machinery for settling the disputes
arising out of the award and for the proper implementation and interpretation
of the same. The object of this demand is very laudable. The demand, however,
does not fall within the ambit of the terms of reference and I give no directions
in connection with the same.

23.44. (34) Employees of the State Bank of Saurashtra who were

first in Government service.At the hearing of this reference it was pointed
out that the State Bank of Saurashtra has about 36 clerks and 35 members
of the subordinate staff in its service, who were first in Government service
but whose services were subsequently transferred to the bank. These
employees are entitled to receive retirement benefits in accordance with the
rules applicable to State Government servants. It is stated on behalf of the
bank that it has been paying pension contribution to Government at rates
fixed by the Accountant General. It is also stated that any revision of
emoluments in the case of these employees will require Government sanction.
The provisions contained in this award to the extent that they are applicable
to the aforesaid employees will be subject to the sanction of the appropriate
Government to the extent that the same is necessary.

23.40. (30) Redress of grievances.No specific directions are required

457

458

CHAPTER XXIV
COSTS

CHAPTER XXV
ACKNOWLEDGEMENTS

24.1. Applications were made by various workmens organisations for

payment of costs incurred by them in connection with this Reference. This
Reference has gone on before me for a considerable length of time and
considerable material has been placed before me. A number of workmens'
organisations were represented by advocates. Considerable costs have been
incurred by parties appearing before me in connection with this Reference.
The ordinary principle applied by courts in connection with costs is that the
costs follow the event. The part which succeeds gets the general costs of
proceeding and the costs of all the issues on which it succeeds and pays to
the opposite party the costs of the issues on which it looses. This principle is
generally not followed in connection with industrial adjudications, very probably
in the interest of the employees and the order usually made is that each
party should bear its own costs. There cannot however be any hard and fast
rule to that effect.

25.1. In the end, I wish to acknowledge the great help and assistance
received by me at the hearing of the Reference from counsel, solicitors and
advocates and the representatives of the parties appearing before me. I am
thankful to them for the dignity and decorum with which the proceedings
were conducted and for the high intellectual level that was maintained
throughout the proceedings. All of them worked hard and for long to place the
respective points of view of the parties before me. But for their help and
assistance I would not have been able to do full justice to the matter.

AI

BE

24.2. As a result of a suggestion made by me,a large number of banks

appearing before me have, without prejudice to their legal rights and contention
and in the interests of peace and goodwill in the industry, agreed to meet a
part of the expenses incurred by a number of workmens organisations in
connection with these proceedings, which they considered reasonable, bearing
in mind the length of the proceedings and the all-India nature of the same,
without such action being treated as a precedent. Such workmens
organisations have already received payment of the same. Quite a large
number of representatives of workmen have, in the course of the hearing,
also been paid travelling allowance for attending the proceedings of the Tribunal
and for halting in Bombay in connection with the proceedings before the
Tribunal. There may, however, be left out some persons on the workmens
side who may not have received any sum by way of costs or otherwise on
account of the expenses incurred by them. Having taken everything into
consideration, I direct that there will be no order as to costs.

25.2. I express my gratitude to the Honourable Shri Justice H. K. Chainani,

Chief Justice of the High Court of Judicature at Bombay, for making available
to me, in the main High Court building a chamber for my use and a large
room for the office of this Tribunal, and for making available a very extensive
hall in the High Court Annexe for holding the sittings of the Tribunal. I am also
grateful to him for making available to me the services of Shri S. G. Kulkarni,
B.A. (Hons.), L.L.B. who worked as my Private Secretary, Shri B. D. Divekar
who worked as sheristedar, several clerks, a chobdar and some peons from
the members of the High Court staff. I am also thankful to the Government of
Maharashtra for allowing me to have the services of Shri Nizamuddin Ahmed,
B.sc. L.L.M., Assistant Commissioner of Labour, as the Secretary of the
Tribunal, I am also grateful to Shri M. R. Meher, I.C.S. (Retd.). President of
the Industrial Court at Bombay for making available to me the services of Shri
B. D. Upasani, a very able member on the staff of his office. I am also grateful
to the Accountant General, Bombay, for making available to me the services
of Shri A. B. Kanakgiri, a senior clerk in his office, to work as accountant in
the Tribunals office.

459

25.3. I also acknowledge the services rendered by Shri Nizamuddin

Ahmed, Secretary of the Tribunal, who during the time that the award was
being drafted, worked hard and for long hours on all days including Sundays,
and holidays, Shri S. G. Kulkarni who worked as my Private Secretary, who
took notes of the proceedings which were conducted before me for several
days, and who took considerable pains in analysing all the arguments advanced
by various parties and in preparing a summary thereof and rendered
considerable help whilst I was drafting the award, Shri B. D. Upasani who
worked as the Office Superintendent of the Tribunal and has borne the brunt
of the office work of the Tribunal and who has been of considerable assistance
whilst I was drafting the award, Shri B. N Dholakia, my stenographer, to
whom I dictated a considerable part of the award and who rendered useful
service to me, Shri B. D. Divekar for the meticulous care with which he
maintained the heavy record of the Tribunal and Shri A. K. Kanakgiri for
efficiently looking after the accounts work of the Tribunals office. I am thankful
460

to all the members of the staff who worked hard during the time the award
was being written and who did not avail themselves of a number of Sundays
and holidays.

APPENDIX A
GOVERNMENT OF INDIA

KANTILAL T. DESAI,
Presiding Officer,
Naoon 1 Industrial Tribunal
(Bank Disputes)

MINISTRY OF LABOUR AND EMPLOYMENT

New Delhi, the 21st March, 1960.
ORDER
S. O. 705.Whereas the Central Government is of opinion that an
industrial dispute exists or is apprehended between the banking companies
and corporations specified in Schedule I hereto annexed and their workmen
in respect of the matters specified in Schedule II hereto annexed which are
either matters in dispute or matters connected with or relevant to the said
dispute and that the dispute involves questions of national importance and
also is of such a nature that industrial establishments situated in more than
one state are likely to be interested in, or affected by, such dispute.

BOMBAY;
7th, June, 1962.

AND whereas the Central Government is of opinion that the dispute

should be adjudicated by a National Tribunal;

AI

BE

NOW, therefore, in exercise of the powers conferred by Sub-Section

l(A) of Section 10 of the Industrial Disputes Act, 1947 (14 of 1947) the Central
Government hereby refers the said dispute to the National Tribunal constituted
by the notification of the Government of India in the Ministry of Labour and
Employment No. S. O. 704 dated the 21st March, 1960 for adjudication.

461

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.

SCHEDULE I
Allahabad Bank Limited.
Ambat Bank Limited:
Bank of Baroda Limited.
Bank of India Limited.
Bank of China.
Bank of Behar Limited.
Bank of Maharashtra Limited.
Bank of Rajasthan Limited.
Bharatha Lakshmi Bank Limited.
Canara Bank Limited.
Canara Banking Corporation Limited,
Canara Industrial and Banking Syndicate Limited.
Catholic Syrian Bank Limited.
Central Bank of India Limited.
Chaldean Syrian Bank Limited.
Chartered Bank.
Cochin Commercial Bank Limited.
Comptoir National DEscompte de Paris.
Devkaran Nanjee Banking Company Limited.
Eastern Bank Limited.
First National City Bank of New York.
462

67. Vysya Bank Limited.

SCHEDULE II
1.
2.
3.

4.
5.

463

Categorisation of banks and areas for the purposes of this

adjudication.
Scales of pay; method of adjustment in the scales of pay.
Dearness allowance with particular reference to the question whether
any part of the existing dearness allowance should be absorbed in
the basic pay.
House rent and other allowance, including travelling and halting
allowances and leave fare concessions.
Provident fund, including the rate of contribution and the rate of
interest.
Pension and gratuity.
Leave Rules.
Hours of work and overtime.
Medical aid and expenses.
Cash deposits, fidelity bonds and other securities to be furnished
by the staff.
Uniforms and liveries.
Need for maintenance of seniority lists.
Age of retirement.
Categories of workman to whom the award of the Tribunal should
be applicable.
Subsistence allowance during period of suspension.
Procedure for termination of employment and taking other disciplinary
action.
Date of effect of the new award and option, if any, to be given to the
existing employees to retain their present terms and conditions of
service.
Need for interim relief.
Difficulties and anomalies in the operation of the existing award.
The need for the development of the banking industry including
banking facilities in rural areas.
Special needs of the State Bank of India and its subsidiaries, in
respect of any of the foregoing items, having regard to their
responsibility for the conduct of Government business.
Any other question connected with, or arising out of, the foregoing
matters.

6.
7.
8.
9.
10.

BE

Gododia Bank Limited.

Hindustan Commercial Bank Limited.
Hindustan Mercantile Bank Limited.
Hongkong and Shanghai Banking Corporation.
Indian Bank Limited.
Indian Insurance and Banking Corporation Limited.
Indian Overseas Bank Limited.
Jaya Laxmi Bank Limited.
Jodhpur Commercial Bank Limited.
Karnataka Bank Limited.
Lakshmi Commercial Bank Limited.
Laxmi Bank Limited.
Llyods Bank Limited.
Mercantile Bank Limited.
Narang Bank of India Limited.
National Bank of Lahore Limited.
National & Grindlays Bank Limited.
Nedungadi Bank Limited.
Netherlands Trading Society.
New Bank of India Limited.
New Citizen Bank of India Limited.
Oriental Bank of Commerce Limited.
Palai Central Bank Limited.
Pandyan Bank Limited.
Punjab Co-operative Bank Limited.
Punjab and Kashmir Bank Limited.
Punjab National Bank Limited.
Punjab and Sind Bank Limited.
Safe Bank Limited.
Salem Bank Limited.
State Bank of Bikaner.
State Bank of Hyderabad.
State Bank of India.
State Bank of Indore.
State Bank of Jaipur.
State Bank of Mysore.
State Bank of Travancore.
South Indian Bank Limited.
Thomcos Bank Limited.
Travancore Forward Bank Limited.
Union Bank of India Limited.
United Bank of India Limited.
United Industrial Bank Limited.
United Commercial Bank Limited.
Vijaya Bank Limited.

AI

22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.

11.
12.
13.
14.
15.
16.
17.

18.
19.
20.
21.

22.

(sd) P. M. MENON, 21-3-60

Secretary.
[LR-II-11 (48) /6/II.]

464

Copy forwarded to :

SCHEDULE

* Regd. Post Ack, due.

(sd.) TEJA SINGH SAHNI, 21-3-60

Deputy Secretary.

AI

GOVERNMENT OF INDIA
MINISTRY OF LABOUR AND EMPLOYMENT
New Delhi, the 4th June, 1960

Andhra Bank Limited.

American Express Company Inc.
Bank of Nagpur Limited.
Bank of Tokyo Limited.
Belgaum Bank Limited.
Ganesh Bank of Kurundwad Limited.
Indo Commercial Bank Limited.
Martandam Commercial Bank Limited.
Miraj State Bank Limited.
Nadar Mercantile Bank Limited.
Pangal Nayak Bank Limited.
Rayalaseema Bank Limited.
Sangli Bank Limited.
State Bank of Patiala.
State Bank of Saurashtra.
Trivandrum Permanent Bank Limited.
Union Bank of Bijapur and Sholapur.

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.

BE

All banks.
The Secretary, Indian Banks' Association, Devkaran Nanjee
Building, 17 Horniman Circle, Fort, Bombay-1.
3. The Chairman, Bombay Exchange Banks Association, c/o
Chartered Bank, Box No. 558, Bombay-1.
*4. The General Secretary, All India Bank Employees Association,
Katra Shahanshai, Chandni Chowk, Delhi.
*5. The General Secretary, All India Bank Employees Federation, 26/
104, Birhana Road, Kanpur.
*6, The Secretary, All India State Bank of India Staff Federation, State
Bank Building, Fort, Bombay-1.
*7. The General Secretary, State Bank of India Employees Association,
Bengal Circle, 3 Commercial Buildings, 23, Netaji Subhas Road,
Calcutta- 1.
8. All State Governments.
*9. Shri Justice K. T. Desai, Judge, High Court, Bombay.
10. Ministry of Finance (Deptt. of E.A.), New Delhi (5 copies).
11. C. L. C.. New Delhi (20 copies).
12. All R. L. C.s.

Now, therefore, in exercise of the powers conferred by Sub-section (5) of

Section 10 aforesaid, the Central Government hereby includes in the said
reference the banking companies and corporations specified in the schedule
hereto annexed.

*I.
2.

(Sd.) S. N. TULSIANI,
Under Secretary.
[10 (48) 60LP-II]

Copy forwarded to Shri Justice K. T. Desai, Presiding Officer, National

Tribunal (Bank Disputes) High Court, Bombay.

ORDER

S.O. 1449. Whereas in the Order of the Government of India, Ministry

of Labour and Employment, No. S. O. 705, dated the 21st March, 1960, the
Central Government has made a reference (hereinafter referred to as the said
reference) under Sub-Section (1A) of Section 10 of the Industrial Disputes
Act, 1947 (14 of 1947) to the National Tribunal constituted by the notification
of the Government of India in the Ministry of Labour and Employment No. S.
O. 704, dated the 21st March, 1960, for the adjudication of an industrial
dispute between the banking companies and corporations specified in
Schedule I to the said reference;
AND WHEREAS the Central Government is of opinion that the said
dispute is of such a nature that the establishments in the banking companies
and corporations specified in the Schedule hereto annexed are likely to be
interested in, or affected by, such dispute;
465

(Sd.) S. N. TULSIANI,
Under Secretary.
GOVERNMENT OF INDIA
MINISTRY OF LABOUR AND EMPLOYMENT
New Delhi, the 21 March, 1960
NOTIFICATION
S. O. 704.In exercise of the powers conferred by Section 7B of the
Industrial Disputes Act, 1947, (14 of 1947) the Central Government hereby
constitutes a National Industrial Tribunal with headquarters at Bombay and
appoints Shri Justice Kantilal Thakordas Desai, Judge, Bombay High Court,
as the Presiding Officer of that Tribunal.
(Sd.)P. M. MENON,
Secretary
[IR. II. 10(48)/60-I]
466

GOVERNMENT OF INDIA
MINISTRY OF LABOUR AND EMPLOYMENT
New Delhi, the 21st March, 1960

APPENDIX B
GOVERNMENT OF INDIA
MINISTRY OF LABOUR AND EMPLOYMENT

ORDER

List of persons who appeared before the National Industrial Tribunal

(Banks Disputes) at Bombay.

S. O. 706.Whereas by an order of Government of India in the Ministry

of Labour and Employment No. S. O. 705 dated the 21st March 1960, an
industrial dispute between the employers in relation to certain banking
companies and corporations including the State Bank of India and their
workmen has been referred to a National Tribunal for adjudication. Now,
therefore, in exercise of the powers conferred by Sub-Section (3) of Section
10 of the Industrial Disputes Act, 1947 (14 of 1947) the Central Government
hereby prohibits the continuance of the strike in existence in the State Bank
of India.

(1)

Sarvashree R. J. Kolah (for sometime), N. V. Phadke and K.

H.Bhabha, Craw ford Bayley & Co. Solicitors, Bombay, for the
Bombay Exchange Messrs. Mulla & Mulla Gragie Blunt Caroc,
Solicitors. Bombay, for the Indian Banks Association, representing
28 Banks.

(2)

Shri N. A. Palkhiwala, Counsel, instructed by Shri R. Setlur of

Messrs. Craw ford Bayley Co., Solicitors, Bombay, for the Bombay
Exchange Banks Association, representing 11 Banks.

(Sd.)P. M. MENON,
Secretary.
[IR. II-10(48)-60-III.]

FOR BANKS

AI

BE

(3)

Sarvashree Sachin Chaudhary and P. P. Khambata, Counsel,

instructed by Shri R. Setlur of Messrs. Crawford Bayley & Co.
Solicitors, Bombay, for the State Bank of India.

(4)

Sarvashree Sachin Chaudhary & S. D. Vimadalal, Counsel,

instructed by Shri R. Setlur of Messrs. Crawford Bayley Co.
Solicitors, Bombay, for the 8 Subsidiary Banks of the State Bank
of India.

(5)

Sarvashree S. P. Sawhney, R. P. Talwar and B. L. Seth

representatives, for the Northern India Banks Association,
representing 6 banks.

(6)

Shri A. S. Asayekar, Advocate, for the Travancore Cochin Bankers

Association (For sometime).

(7)

Shri D. B. Tilak, Advocate, for the (1) Bharatha Lakshmi Bank Ltd.,
(2) The Bank of Nagpur Ltd., (afterwards merged with the Bank of
Maharashtra Ltd), (3) The Union Bank of Bijapur and Sholapur and
(4) The Chaldean Syrian Bank Ltd.

(8)

Shri L. C. R. lyyunni (since deceased) (for sometime) and Shri J.

V. Manzil, Advocate, for the Catholic Syrian Bank Ltd.

(a)

Sarvashree N. K. Petigara and J. P. Thacker of Messrs. Mulla and

Mulla & Cragie Blunt & Caroe, Solicitors, Bombay, for the Miraj
State Bank Ltd.

(10) Shri S. Narayaniah, Advocate, for the Salem Bank Ltd.

(11) Shri Rajaratnam, Advocate, for the Nadar Mercantile Bank Ltd.
(12) Shri R. Balkrishna Kini, representative, for the Pandyan Bank Ltd.
(13) Shri Raman Kutti, representative for the Gododia Bank Ltd.
467

468

(14) Shri K. N. Seshadri Nath, representative, for the South Indian Bank
Ltd.

sekharan, Assistant General Secretary, for the Indian Overseas

Bank Employees Union.

FOR WORKMEN
Sarvashree K. T. Sule and D. S. Nargolkar, Advocates, instructed
by Sarvashree, (1) A. C. Kakar, President (ii) G. N. Trikannad and
P. R. Bhata, Vice-president, (iii) Prabhat Kar, M. P., General
Secretary, (iv) H. L. Parwana, Tarakeswar Chakraborly, K. J. Joseph,
B. K. Porwal, and K. K. Mundol, Assistant Secretaries, for the All
India Bank Employees' Association.
Shri C. L. Dudhia, Advocate, Shri V. B. Gandhi and Shri G. D.
Ambekar (for sometime) instructed by Sarvashree (i) C. L.
Bharadwaj, Vice-President (ii) V. N. Sekhari, General Secretary,
(iii) S. K. Biswas, Organising Secretary and (iv) O. P. Nigam, Joint
Secretary, for the All India Bank Employees Federation.

(3)

Sarvashree S. S. Kavlekar (For sometime) and H. K. Sowani,

Advocates, instructed by Sarvashree (i) C. Coutto, Secretary (ii)
Mohan Muzumdar, Council Member for the All India State Bank of
India Staff Federation.

(4)

Shri Jyoti Ghose, General Secretary for the State Bank of India
Employees' Association (Bengal Circle).

(5)

Shri Kidar Nath Malhotra, General Secretary, for the Slate Bank of
India Employees Association. (Delhi Circle).

(6)

Shri S Lakshmi Narasimham, President and Shri D. S. Nargolkar

Advocate, instructed by Sarvashree P.V.Raju, General Secretary,
(ii) V. Soloman Raj & V. Srec-Niwasrao, Joint Secretaries, for the
the State Bank of India Staff Union, Andhra Pradesh Vijayawada.

(7)

Shri S. Lakshmi Narasimham, President and Shri D. S. Nargolkar,

Advocate, instructed by Sarvashree V. S. Ekambaram and M.
Muthukrishnan, Joint Secretaries, for the State Bank of India Staff
Union (Madras Circle).

(8)

Shri C. L. Dudhia, Advocate, instructed by Shri K. A. Pandya.

General Secretary, for the Vadodra Rajya Bank Nokar Sangh,
Baroda.

(9)

Shri C. L. Dudhia, Advocate, instructed by Shri N. P. Desai, General

Secretary for the Surat Bank Employees Union.

AI

BE

(2)

No appearance on behalf of the following banks :

(1) The Ambat Bank Ltd.
(2) The Jaya Laxmi Bank Ltd.
(3) The Punjab Co-operative Bank Ltd.,
(4) The Punjab and Kashmir Bank Ltd.,
(5) The Safe Bank Ltd.(stopped its Banking business),
(6) The Thomcos Bank Ltd. (taken over by the Bank of Mudurai Ltd.),
(7) The Ganesh Bank of Kurundwad Ltd.,
(8) The Vijaya Bank Ltd.,
(9) The Pangal Nayak Bank Ltd.,
(10) The Rayalseema Bank Ltd. (Amalgamated with Indian Bank Ltd.)
(11) The Laxmi Bank Ltd. (in liquidation),
(12) The Cochin-Commercial Bank Ltd.,
(13) The Palai Central Bank Ltd., (In liquidation).

(1)

(13) Shri S. K. Irani, Advocate, for Shri Vazifdar, Electrician of the

Chartered Bank.

(10) Shri G. L. Dudhia, Advocate, instructed by Sarvashree (i) Warpal

Singh Sodhi Chairman (ii) Inderjit Batta, General Secretary, for the
State Bank of Patalia (all Cadres) Employees Association.
(11) Shri H. K. Sowani, Advocate, instructed by Shri Rajgopal, General
Secretary, for the All India Bank of Baroda Employees Federation.
(12) Shri H. K. Sowani, Advocate, instructed by Shri C. R. Chandra469

470

versus
APPENDIX C

The state Bank of India ... ...

BEFORE THE NATIONAL INDUSTRIAL TRIBUNAL (BANK DISPUTES).

AT BOMBAY

The state Bank of India

The All India State Bank of India Staff Federation, State

Bank Building, Fort, Bombay-1 ...

Opponents

The state Bank of India

Opponent.

(7) Miscellaneous Application No. 9 of I960,

dated 8th June 1960

BE

The Vadodra Rajya Bank Nokar Sangh, Majoor Mahajan,

Raopura, Baroda

AI

Applicant

Opponents

(3) Miscellaneous Application No. 7 of I960,

dated 1st June 1960

Applicant

(1)
(2)
(3)
(4)
(5)
(6)

Applicant,

versus

The Bank of Baroda Ltd.,

The Central Bank of India Ltd.
The United Commercial Bank Ltd.,
M/s. Devkaran Nanjee Banking Co. Ltd.
The State Bank of Bikaner,
The Punjab National Bank Ltd.

Opponent.

(8) Miscellaneous Application No. 8 of I960,

dated 9th June 1969
The Surat Bank Employees Union, Gumasta Maha Mandal
Office, Nanavat, Surat ... ... ...
Applicant

versus
The Banking Companies and Corporations specified in
Schedule I to the Order No. S.O. 705, dated the 21st March
1960 of the Government of India in the Ministry of Labour and
Employment, New Delhi ...
Opponents.

versus
(1) United Commercial Bank Ltd.,
(2) Punjab National Bank Ltd.,
(3) Central Bank of India Ltd.

Opponent

(9) MlsceAaneons Application No. 4 of I960,

(4) Miscellaneous Application No. 5 of I960,

dated 25th May 1960
The State Bank of India Employees Association, Bengal
Circle, 3, Commercial Building, Calcutta-1

Applicant

versus

(2) Miscellaneous Application No. 24 of I960,

dated 21st June 1960

The All India Bank Employees Federation, C/o Shri

C. L. Dhudia, Advocate, Vithal Sadan, Vithalbhai Patel
Road, Bombay-4.

Opponent

The Banking Companies and Corporations specified in

Schedule I to the Order No. S.O. 705, dated the 21st March
1960 of the Government of India in the Ministry of Labour
and Employment, New Delhi

Applicant

(6) Miscellaneous Application No. 293 of 1960,

datd 19th September 1960

Applicant

versus

471

Opponents

versus

The All India Bank Employees Association, Camp:

Khandelwal Bhuwan, Dr. Dadabhai Naoroji Road,
Fort, Bombay-1.

The Banking Companies and Corporations specified in

Schedule to the Order, dated 4th June 1960 of the
Government of India, in the Ministry of Labour and
Employment, New Delhi

...

The State Bank of India Staff Union. Andhra Pradesh,

Vijayawada

Miscellaneous Application No. 2 of I960,

dated 24th May 1960

versus

...

(5) Miscellaneous Application No. 14 of 1960,

dated 14th June 1960

IN REFERENCE NO. 1 OF 1960

The All India Bank Employees' Association, Camp:

Khandelwal Bhuwan, Dr. Dadabhai Naoroji Road,
Fort, Bombay-1

...

dated 25th May 1960

New Citizen Bank of India Supervisory Staff Union, Bombay
Applicant

versus
472

Applicant

The New Citizen Bank of India Ltd.

Opponents

For the Opponents

(10) Miscellaneous Application No. 28 of I960,

dated 16th June 1960

(1)

Sarvashree R. J. Kolha, N. V. Phadke and K. H. Bhabha, Counsel

instructed by Sarvashree N. K. Petigara and J. P. Thacker of Messrs.
Mulla and Mulla and Cragie Blunt and Caroe, Solicitors for the
Indian Banks Association. (For 29 member Banks).

(2)

Sarvashree Sachin Chaudhary and S. D. Vimadalal, Counsel

instructed by Shri R. Setlur of Messrs, Crawford Bayley & Co.,
Solicitors for the Eight Subsidiary Banks of the State Bank of India
who are members of the Indian Banks Association.

(3)

Shri N. A. Palkhiwalla, Counsel instructed by Shri R. Setlur of

Crawford.Bayley Co., Solicitors for the Bombay Exchange Banks'
Association (For 12 member Banks).

Applicant

(4)

Shri S. P. Sawhnay for the Northern India Banks Association. (for

6 member Banks).

Opponent.

(5)

Shri A. S. Asayekar, Advocate, for the Travancore Cochin Bankers

Association. (For 5 member Banks).

The State Bank of Patiala Employees Association (All Cadres),

Head Office, 27-B, Model Town, Patiala...
Applicant
versus
The State Bank of Patiala

Opponent

(11) Miscellaneous Application No. 301 of 1960,

dated 12th August 1960
The Pandyan Bank Employees' Union,
C/o Madras State Bank Employees' Federation,
12/13, Angappa Naick Street, Madras-1
The Pandyan Bank Ltd.

PRESENT :

The Honourable Shri Justice K. T. Desai, Presiding Officer, National

Industrial Tribunal (Bank Disputes), Bombay-1.

AI

APPEARANCES:
For the Applicants:

(6) Sarvashree Sachin Chaudhary and P. P. Khambatta, Counsel

instructed by Shri R. Setlur of Messrs. Crawford Bayley & Co.,
Solicitors for the State Bank of India.

BE

IN THE MATTER OF APPLICATIONS REGARDING GRANT OF

INTERIM RELIEF

versus

(7)

Shri D. B. Tilak, Advocate, for the Bharata Lakxmi Bank Ltd., the
Bank of Nagpur, the Union Bank of Bijapur and Sholapur and the
Chaldean Syrian Bank Ltd., (Four Banks).

(8)

Sarvashree N. K. Petigara and J. P. Thacker of Messrs. Mulla and

Mulla and Cragie Blunt and Caroe, Solicitor for the Miraj State
Bank Ltd.
Shri C. R. lyyunni for the Catholic Syrian Bank Ltd.

(1)

Shri D. S. Nargolkar, Advocate, in Miscellaneous Application Nos.

2 of 1960 and 24 of I960.

(9)

(2)

Shri C. L. Dhudia, Advocate, in Miscellaneous Application Nos. 7

of 1960, 9 of I960, 8 of I960, and 28 of 1960.

(11) Shri Raman Kutti for the Gadodia Bank Ltd.

(3)

Shri Jyoti Ghosh in Miscellaneous Application No. 5 of 1960.

(4)

Shri S. Laxmi Narshinham, Advocate, in Miscellaneous Application

No. 14 of 1960.

(5)

Shri S. S. Kavlekar, Advocate, in Miscellaneous Application No.

293 of 1960.

(6)

Shri Madan Phadnis, Advocate, in Miscellaneous Application No.

4. of 1960.

(7)

Shri K. K. Mandal in Miscellaneous Application No. 301 of 1960.

(8)

Shri H. K. Sowani for the All India Bank of Baroda Employees'

Federation

473

(10) Shri S. Narayaniah, Advocate, for the Salem Bank Lid.

(12) Shri R. Balkrishna Kini for the Pandyan Bank Ltd.
(13) Shri S. E. Engineer, Advocate, for the New Citizen Bank of India
Ltd., in Miscellaneous Application No. 4 of 1960.
(14) No appearance on behalf of the following Banks :
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)

The Ambat Bank Ltd.

The Jaya Lakxmi Bank Ltd.
The Punjab Co-operative Bank Ltd.
The Punjab & Kashmir Bank Ltd.
The Safe Bank Ltd.
The Thomcos Bank Ltd.
The Ganesh Bank of Kurundwad Ltd.
The Vijaya Bank Ltd.
474

(9)
(10)
(11)
(12)
(13)
(14)

The Nadar Mercantile Bank Ltd.

The Pangal Nayak Bank Ltd.
The Rayalaseema Bank Ltd.
The Cochin Commercial Bank Ltd.
The Laxmi Bank Ltd. (in liquidation).
The Palai Central Bank Ltd.(in liquidation).

as the Sastry Tribunal) constituted by the Central Government by its notification

S.R.O. 35, dated 5th January 1952 as modified by the Labour Appellate
Tribunal of India (Special Bench Banks) and the recommendations of the
Bank Award Commission. The All India State Bank of India Staff Federation
has claimed by way of interim relief the following :

INDUSTRY ; BANKING
Bombay, 14th Dec. 1960.
INTERIM AWARD
The workmen represented by the various Associations, Federations and
Unions have applied for grant of interim relief pending the hearing and final
disposal of the above Reference and the coming into force of the award to be
given in the above Reference.

Abolition of Class IV Area.

with retrospective effect

(2)

Rs. 25 per month to every worker.

from 1-4-1959.

(3)

Refund of strike wages which has aready been cut.

(4)

Making good the loss due to the non-implementation of the Award

as enumerated in the annexure attached.

The Vadodra Rajya Bank Nokar Sangh, Baroda, has claimed interim relief at
25 per cent of the basic wages with a minimum of Rs. 25 per month for all
the employees with effect from 1st April 1959. The Surat Bank Employees
Union, Surat has claimed interim relief at 25 per cent of the basic wages
with a minimum of Rs. 25 per month for all employees with effect from 1st
April 1959. The New Citizen Bank of India Supervisory Staff Union, Bombay,
has claimed interim relief at the rate of 25 per cent of the basic salary with a
minimum of Rs. 25 per month.The State Bank of Patiala (All
Cadres)Employees Association, Patiala, has claimed by way of immediate
relief 25 per cent of wages with a minmum of Rs. 25. The Pandyan Bank
Employees Union, has prayed that the application made by the All India
Bank Employees' Association for interim relief may be treated as an application
filed by the Pandyan Bank Employees Union, Madras, on behalf of the
workmen of Pandyan Bank Ltd. and has further prayed that the Tribunal
should direct the Pandyan Bank Ltd., to implement the scales of pay and
other allowances in accordance with the Sastry Award in relation to C Class
Banks at least as from 16th April 1959.

BE

The All India Bank Employees Association has claimed as and by way
of interim relief 25 per cent of wages with a minimum of Rs. 25 per month for
all workmen employed in all the Banks covered by the above Reference. The
All India Bank Employees Federation have demanded 25 per cent of the
wages as and by way of interim relief for all workmen. The State Bank of
India Employees Association, Bengal Circle has claimed a sum of Rs. 25
per month by way of interim relief for the workmen of the Bengal Circle of the
State Bank of India with retrospective effect from such date as the Tribunal
may deem fit and proper. The State Bank of India Staff Union, Andhra Pradesh,
Vijayawada, has claimed the following by way of interim relief :

(1)

What all has been granted to the Award Staff under the Award
should be secured to them as a first measure of interim relief.

(ii)

The standard of living which was sought to be secured to the award

staff by the Award but which has been subject to heavy erosions
on account of the phenomenal rise in prices should be restored to
them as a second measure of interim relief,

AI

(i)

(iii) The State Bank has been responsible to produce and develop the
21 days strike of State Bank Employees in March I960 culminating
in the constitution of this Tribunal. The responsibility of the State
Bank therefore may be assessed and the Bank directed to pay the
employees their wages for the strike period as a third measure of
interim relief.
(iv)

In defiance of the principles of the award the State Bank has been
resorting to illegal and unfair labour practices, even involving the
Bank in illegal payments and consequent expenditure and loss.
Such illegal and unfair practices may be forbidden and status quo
ordered to be restored as a fourth measure of interim relief.

By the expression Award the State Bank of India Staff Union, Andhra
Pradesh, Vijayawada, mean the Award of the Tribunal (referred to for brevity
475

The All India Bank of Baroda Employees Federation supported the

Application for Interim Relief made by the All India Bank Employees
Association.
By mutual consent, the claim against Vysya Bank Ltd. for interim relief
was given up.
The All India Bank Employees Association was the first in the field in
making the Application for interim relief on 24th May 1960. The All India
State Bank of India Staff Federation made its application for interim relief on
19th September 1960. These applications were pressed and heard at a time
when the main Reference itself was on Board for hearing and final disposal.
These applications were argued at some length before me and the hearing
was concluded on 17th November 1960.
These applications have been streneously contested on behalf of the
various Banks appearing before me.

476

On hearing the parties, I find that the very basis on which the present
wage structure rests has been challenged on behalf of the workmen as well
as the Banks, though they pull in different directions. Some of the principle
taken into account in framing the existing wage structure are disputed. Some
banks who are parties to the Reference are not governed by the provisions of
the Sastry Award as modified by the decision of the Labour Appellate Tribunal
and as further modified by the Industrial Disputes (Banking Companies)
Decisions Act, 1955 (XLI of 1955). There is hardly any data which has been
accepted or agreed upon by both the workmen and employers which could
be relied upon for the purpose of granting Interim relief in the present case.

Enough material has not been placed before me to warrant the grant of
interim relief.After the matters have been heard fully, if the case warrants, a
provision can be made for giving effect to some of the provisions of the Award
from a date earlier than the date of the Award.
I am not discussing at present the various matters which have been
argued at some length before me, but not fully and without adequate materials,
as that may lend to prejudice the main hearing of the Reference before me.
On the materials placed before me, I am unable to give any interim relief.

In the result, no relief by way of interim relief is granted in any of the

above applications.

BE

So far as the Banks governed by the Sastry Award as modified by the

Decision of the Labour Appellate Tribunal and as further modified by the
Industrial Disputes (Banking Companies) Decisions Act, 1955, are concerned,
provisions have been made for incremental scales of basic pay and for a
sliding scale of dearness allowance linked to the All India Average Consumer
Price Index number for the working Class. No doubt, the All India Consumer
Price Index has risen from the year 1953 when it was 146.28 (base 1944 =
100). For the year 1959 the average was 166.98. For the months of April,
May and June 1960, the average was 169,28. The rise has not been consistent.
There have been occasions when the All india Consumer Price Index has
fallen. In October 1959 it was 173.88 whilst in June 1960 it was 169.74. The
sliding scale of dearness allowance does not provide for full neutralisation in
respect of the rise in the cost of living, but it does take into account the rise
or fall in prices of consumer goods and provides for relief in connection
therewith.

The hearing of the main reference has, commenced from 21st November
I960 and is going on from day to day. At the rate at which the matters are at
present progressing, it will not be long before the final award in the main
Reference is given.

The questions raised before me are of considerable importance and require

proper evidence for the due determination thereof. Some of the reliefs claimed
by the State Bank of India Staff Union, Andhra Pradesh, Vijayawada, and the
All India State Bank of India Staff Federation are in reality by way of permanent
relief and not interim relief. Implementation of an existing award cannot be
claimed in the manner in which it is sought to be done.

Some of the Banks have been upgraded since the coming into effect of
the provisions of the Sastry Award as modified by the decision of the Labour
Appellate Tribunal and as further modified by the Industrial Disputes (Banking
Companies) Decisions Act, 1955 (XLI of 1955).

(Sd.) KANTILAL T. DESAI,

Presiding Officer,
National Industrial Tribunal
(Bank Disputes), Bombay.

AI

14th December 1960.

By a Notification issued by the Government on I3th February 1960 In

exercise of the powers conferred by sub-section (5) of section 3 of the
Industrial Disputes (Banking Companies) Decisions Act, 1955, it has been
provided that if the average All India Cost of Living Index for any quarter after
31st March 1959 should rise or fall by more than five points as compared to
144 (1944 = 100), the dearness allowance payable for the succeeding quarter
should be raised or lowered, in the case of clerical staff by one-fourteenth,
and in the case of subordinate staff by one-twentieth, of the dearness allowance
admissible at the index level of 144 for each variation of five points. By an
Explanation, it has been explained that in that Notification quarter meant a
period of three months ending on the last day of March, June, September or
December.

477

478

(5) Miscellaneous Application No. 22 of 1960,

dated 23rd June 1960

APPENDIX D
BEFORE THE NATIONAL INDUSTRIAL TRIBUNAL (BANK DISPUTES),
AT BOMBAY

The State Bank of India Employees Association (Bengal and Delhi Circles)

IN REFERENCE NO. I OF 1960

(1) Miscellaneous Application No. 10 of 1960,
dated 9th June 1960

versus

Applicant
The State Bank of India
(6) Miscellaneous Application No. 218 of 1960,
dated 9th July 1960

The All India Bank Employees Association, Camp: Khandelwal

Bhuwan, Dr. Dadabhai Naoroji Road, Fort, Bombay-1 ...
Applicant

The State Bank of India Staff Union, Andhra Pradesh,

versus

Vijayawada

The Banking Companies and Corporations specified in

Schedule I to the Order No. S.O. 705, dated the 21st
March. 1960 and in the Schedule to the Order, dated
the 4th June 1960, of the Government,of India, in the
Ministry of Labour and Employment, New Delhi

The State Bank of India

(7) Miscellaneous Application No. 294 of 1960,
dated 23rd September 1960

The State Bank of India Staff Union, Andhra Pradesh, Vijayawada

Applicant

Opponents

(3) Miscellaneous Application No. 297/60,

dated 11th October 1960
The All India State Bank of India Staff Federation

Applicant

Opponent

(8) Miscellaneous Application No. 296 of 1960

dated 11th October 1960

(4) Miscellaneous Application No. 295 of 1960,

dated 29th September 1960
The State Bank of India Employees' Association (Bengal and Delhi Circles)
Applicant
versus
Opponent

versus

The State Bank of India

Opponent

(9)Miscellaneous Application No. 217 of 1960

dated 7th July I960
The Yadodra Rajya Bank Nokar Sangh, Majoor Mahajan, Raopura.
Baroda
Applicant
(1)
(2)
(3)
(4)
(5)
(6)

The Bank of Baroda Ltd.,

The Central Bank of India Ltd.,
The United Commercial Bank Ltd.,
Messrs. Devkaran Nanjee Banking Co. Ltd.
The State Bank of Bikaner, Bikaner,
The Punjab National Bank Ltd.

Opponents

(10) Miscellaneous Application No. 298 of I960,

dated 10th October 1960
The Indian Overseas Bank Employees' Union, Madras

479

...Applicant

versus
Opponent

The State Bank of India

versus

The State Bank of India

versus
The State Bank of India

Applicant

The State Bank of India Staff Union (Madras Circle)

AI

The Banking Companies and Corporations specified in

Schedule I to the Order No. S.O. 705, dated the
21st March 1960, and in the Schedule to the Order,
dated the 4th June I960, of the Government of India,
in the Ministry of Labour and Employment, New Delhi

Opponent

Opponents

BE

versus

Applicant
versus

(2) Miscellaneous Application No. 25 of 1960

dated 23rd June 1960
The All India Bank Employees, Federation,
C/o Shri C. L. Dhudia, Advocate, Vithal Sadan,
Vithalbhai Patel Road, Bombay-4

Opponent

480

Applicant

versus
The Indian Overseas Bank Ltd. ...

Opponent

(4)

(11) Miscellaneous Application No. 216 of 1960,

dated 9th July 1960
The All India Bank of Baroda Employees Federation ...

Applicant

(5)
(6)

versus
The Bank of Baroda Ltd.

Opponent

(7)

(12) Miscellaneous Application No. 300 of 1960,

dated 22nd September 1960
The State Bank of Patiala(All Cadres) Employees
Association,H.O.Patiala

(8)
Applicant

versus
Opponents

In the matter of Applications for directions for production of certain Documents.

PRESENT:

BE

The Honourable Shri Justice K. T. Desai,Presiding Officer,National

Industrial Tribunal (Bank Disputes), Bombay.

(9)
(10)
(11)
(12)
(13)

The State Bank of Patiala

APPEARANCES:

AI

For the Applicants :

(1) Shri D. S. Nargolkar, Advocate, in Miscellaneous Application No.
10 of I960.
(2) Shri C. L. Dhudia, Advocate, in Miscellaneous Applications Nos.
25 of 1960, 217 of I960 and 300 of 1960.
(3) Shri Jyoti Ghosh in Miscellaneous Applications Nos. 22 of 1960
and 295 of 1960.
(4) Shri S. Laxmi Narsinham. Advocate, in Miscellaneous Applications
Nos. 294 of I960 and 218 of I960.
(5) Shri S. S. Kavlekar, Advocate, in Miscellaneous Applications No.
297 of 1960 and 296 of 1960.
(6) Shri H.K.Sowami Advocate in Miscellaneous Applications Nos.298
of 1960 and 216 of 1960.

instructed by Shri R. Setlur or Messrs. Crawford Bayley & Co.,

Solicitors for the State Bank of India.
Sarvashree Sachin Chaudhary and S. D. Vimadalal, Counsel
instructed by Shri R. Setlur of Messrs. Crawford Bayley & Co.,
Solicitors for the Eight Subsidiary Banks of the State Bank of India.
Shri S. P. Sawhney for the Northern India Banks Association.
Shri A. S. Asayekar, Advocate, for the Travancore Cochin Bankers
Association.
Shri D. B. Tilak, Advocate, for the Bharat Lakshmi Bank Ltd., the
Bank of Nagpur Ltd., the Union Bank of Bijapur and Sholapur Ltd,
and Chaldean Syrian Bank Ltd.
Sarvashree N. K. Petigara and J. P. Thacker of Messrs. Mulla and
Mulla and Craigie Blunt and Caroe, Solicitors for the Miraj State
Bank Ltd.
Shri C. R. lyyunni for the Catholic Syrian Bank Ltd.
Shri Raman Kutti for the Gododia Bank Ltd.
Shri R. Balkrishna Kini for the Pandyan Bank Ltd.
Shri S. Narayaniah, Advocate, for the Salem Bank Ltd.
No appearance on behalf of the following Banks :
(1) The Ambat Bank Ltd.
(2) The Jaya Laxmi Bank Ltd.
(3) The Punjab Co-operative Bank Ltd.
(4) The Punjab & Kashmir Bank Ltd.
(5) The Safe Bank Ltd.
(6) The Thomcos Bank Ltd.
(7) The Ganesh Bank of Kurundwad Ltd.
(8) The Vijaya Bank Ltd.
(9) The Nadar Mercantile Bank Ltd.
(10) The Pangal Nayak Bank Ltd.
(11) The Rayalaseema Bank Ltd.
(12) The Cochin Commercial Bank Ltd.
(13) The Laxmi Bank Ltd. (in liquidation).
(14) The Palai Central Bank Ltd. (in liquidation).

Bombay, 31st October 1960.

INDUSTRY : BANKING
ORDER

For the Opponents :

(1) Sarvashree R. J. Kolha, N. V. Phadke and K. H. Bhabha, Counsel
instructed by Sarvashree N. K. Petigara and J. P. Thacker of Messrs.
Mulla and Mulla and Craigie Blunt and Caroe, Solicitors for the
India Banks Association.
(2) Shri N. A. Palkhiwalla, Counsel instructed by Shri R. Setlur of
Crawford Bayley & Co., Solicitors for the Bombay Exchange Banks
Association.
(3) Sarvashree Sachin Chaudhary and P. P. Khambata, Counsel

1. The All India Bank Employees Association has filed an application,

dated 9th June 1960 for the production of certain documents by the banks
concerned in the above reference. Amongst the documents so required to be
produced are statements showing the secret reserves in any form of each
bank from the year 1954 upto 31st December 1959, statements showing the
provisions made for bad and doubtful debts for the years 1954 to 1959, other
usual and necessary provisions and their total amounts outstanding in such
items in each such Banks for the said number of years, income-tax
assessment orders and income-tax refund orders for the years 1954 to 1959

481

482

and statements showing the total balance outstanding for refund as on 31st
December 1959 and statements showing the special provisions made, if
any, under any head not shown in the Balance Sheets upto the year 1959
and their total amounts standing at that date. The Indian Banks Association
has filed a reply thereto dated 6th July 1960. The Bombay Exchange Banks'
Association filed its reply on 6th July 1960. There are similar applications
made by the All India Bank Employees' Federation, the State Bank of India
Employees Association, (Bengal and Delhi Circles), the State Bank of India
Staff Union, Vijayawada, the All India State Bank of India Staff Federation,
the State Bank of India Staff Union, Madras Circle, the All India Bank of
Baroda Employees' Federation, the Vadodra Rajya Bank Nokar Sangh, the
Indian Overseas Bank Employees Union and the State Bank of Patiala (All
Cadres) Employees Association.

(3)

For the purposes of this section banking company shall have the
meaning assigned to it in the Industrial disputes Act, 1947.

After the enactment of this new section, numerous banks have claimed that
some of the documents sought to be produced and the information disclosed
thereby were of a confidential nature and that the production or inspection of
such documents and the furnishing or disclosure of such information would
involve the disclosure of information relating to reserves not shown as such
by the banks concerned in their published balance sheets or any particulars
not shown therein in respect of provisions made for bad and doubtful debts
and other usual or necessary provisions.
3. The applicants have challenged the validity of the new section 34A on
the ground that it violates the fundamental rights guaranteed by Article 14 of
the Constitution. Reliance has been placed on Article 13(2) of the Constitution
which lays down that the State shall not make any law which takes away or
abridges the rights conferred by Part III of the Constitution and that any law
made in contravention of that clause shall, to the extent of the contravention,
be void.

BE

2. After the applications were filed by the All India Bank Employees'
Association and the All India Bank Employees' Federation and after the replies
thereto were filed by the Indian Banks Association, and the Bombay
Exchange Banks' Association, a Bill was introduced in Parliament on 30th
July 1960 for amending the Banking Companies Act, 1949, by adding a new
section to that Act, viz., sec. 34A, Thereafter Parliament passed the Banking
Companies (Amendment) Act, 1960. The said Act received the assent of the
President on 26th August 1960. The newly added section 34A provides as
follows :

shall, after taking into account principles of sound banking and all
relevant circumstances concerning the banking company, furnish
to the authority a certificate stating that the authority shall not take
into account any amount as such reserves and provisions of the
banking company or may take them into account only to the extent
of the amount specified by it in the certificate, and the certificate of
the Reserve Bank on such question shall be final and shall not be
called in question in any such proceeding.

AI

34A. (1) Notwithstanding anything contained in section 11 of the

Industrial Disputes Act, 1947, or any other law for the time being in
force, no banking company shall, in any proceeding under the said
Act or in any appeal or other proceeding arising therefrom or
connected therewith, be compelled by any authority before which
such proceeding is pending to produce, or give inspection of, any
of its books of account or other document or furnish or disclose
any statement or information, when the banking company claims
that such document, statement or information is of a confidential
nature and that the production or inspection of such document or
the furnishing or disclosure of such statement or information would
involve disclosure of information relating to
(a)

any reserves not shown as such in its published balance sheet; or

(b)

any particulars not shown therein in respect of provisions made for

bad and doubtful debts and other usual or necessary provisions.

(2)

If, in any such proceeding in relation to any banking company other

than the Reserve Bank of India, any question arises as to whether
any amount out of the reserves or provisions referred to in subsection (1) should be taken into account by the authority before
which such proceeding is pending, the authority, may, if it so thinks
fit, refer the question to the Reserve Bank and the Reserve. Bank
483

4. A preliminary objection has been taken on behalf of a large number of

banks to my deciding the question whether Section 34A is void as aforesaid
on the plea that I have no jurisdiction to do so. It is contended that a National
Tribunal constituted under the Industrial Disputes Act, 1947, is not competent
to decide such a question. It is urged that under the Constitution the High
Courts and the Supreme Court have been charged with the function of enforcing
the fundamental rights guaranteed under the constitution and that it is not for
this Tribunal to consider whether any legislation enacted by Parliament violates
any of the fundamental rights. Reliance in this connection is placed on Article
228 of the Constitution. That Article provides as follows :
228. If the High Court is satisfied that a case pending in a Court
subordinate to it involves a substantial question of law as to the
interpretation of this Constitution the determination of which is
necessary for the disposal of the case, it shall withdraw the case
and may
(a)

either dispose of the case itself, or

(b)

determine the said question of law and return the case to the court
484

AI

BE

Article 228 speaks only of cases pending in a Court subordinate to the High
Court. A National Tribunal is not a Court subordinate to the High Court within
the meaning of article 228 and that article can in no way preclude the Tribunal
from determining the question relating to the validity of an enactment on the
ground that such enactment violates fundamental rights. The constitution
makers have drawn a clear and sharp distinction between Courts and
Tribunals. In the very preceding Article viz Article 227, it has been stated that
every High Court shall have super-intendence over all Courts and Tribunals
throughout the territories in relation to which it exercises judisdiction. If it
was the intention of Ihe Constitution makers that Tribunals should not
determine substantial questions of law as to the interpretation of the
Constitution, they would have stated so and would have provided the machinery
for the determination of such question. No provision anywhere appears in the
Constitution whereunder any case involving a substantial question of law as
to the interpretation of the Constitution pending before a Tribunal is liable to
be withdrawn. There is no provision whereunder such a question in such a
case may be determined by any other authority.In this connection reference
may also be made to Article 136 of the Constitution whereunder also a
distinction has been made between Courts and Tribunals and it is provided
that notwithstanding anything in the Chapter in which that Article appears,
the Supreme Court may, in its discretion, grant special leave to appeal from
any judgment, decree, determination sentence or order in any cause or matter
passed or made by any Court or Tribunal in the territory of India. In SubClause (2) of Article 136 also it is mentioned that nothing in clause (1) shall
apply to any judgment. determination sentence on order passed or made by
any court or tribunal constituted by or under any law relating to the Armed
Forces.

6. In the case of Raleigh Investment Company Limited vs. Governor

General in Council, reported in 74 Indian Appeals at page 50, the Privy
.Council has made observations in connection with the question whether an
authority constituted under the Indian Income-tax Act would have jurisdiction
to determine the question whether any provision of that Act is ultra vires. At
page 63 of the judgement it is stated as follows :

5. Article 13(2)of the Constitution lays down that any law made in
contravention of that clause shall, to the extent of the contravention, be void.
If any enactment is void under the provisions of Article 13, it is void for all
purposes. It cannot be treated as valid for the purpose of deciding matters
which came up for consideration before a National Tribunal. It is the duty of
the Tribunal, if it finds that any provision of any enactment violates any of the
fundamental rights guaranteed under Part III of the Constitution to consider it
to be void and not to proceed on the footing that it is valid.If the Tribunal did
not have the jurisdiction to decide whether any provision of law which violates
fundamental rights is void, then the result would be that the Tribunal may
have to decide questions relating to the rights and obligations of parties
appearing before it on the footing that the provisions of an enactment which
are void, are valid.There appears to be no justification for taking such a view.
485

In their Lordships view it is clear that the income-tax Act, 1922,

as it stood at the relevant date, did give the assessee the right
effectively to raise in relation to an assessment made on him the
question whether or not a provision in the Act was ultra vires
Under S. 30, an assessee whose only ground of complaint was
that effect had been given in the assessment to a provision which
he contended was ultra vires might appeal against the
assessment.If he were dissatisfied with the decision on appeal the
details relating to the procedure are immaterial the assessee could
ask for a case to be stated on any question of law for the opinion of
the High Court and, if his request were refused, he might apply to
the High Court for an order requiring a case to be stated and to be
referred to the High Court. It cannot be doubted that included in the
questions of law which might be raised by a case stated is any
question as to the validity of any taxing provision in the Income-tax
Act to which effect has been given in the assessment under review.
Any decision of the High Court on that question of law can be
reviewed on appeal. Effective and appropriate machinery is therefore
provided by the Act itself for the review on grounds of law of any
assessment.

from which the case has been so withdrawn together with a copy of
its judgment on such question, and the said court shall on receipt
thereof proceed to dispose of the case in conformity with such
judgment.

If a National Tribunal is to be precluded from deciding any question relating:

to the interpretation of the Constitution and relating to the constitutionality of
any enactment, a provision to that effect is required to be made. The exclusion
of jurisdiction must either be explicitly expressed or clearly implied. In the
absence of any such provision, I cannot hold that I have no jurisdiction to
decide such a question.
7. In support of his contention Shri Bhabha, the learned counsel for
some of the banks, relied upon the decision of a Division Bench of the Bombay
High Court in the case of the United Motors (India) Ltd., vs. The State of
Bombay, reported in 55 B.L.R. at p. 246. In that case the question that had
to be considered was whether the provisions of the Bombay Sales Tax Act
(XXIV of 1952) were void in law. In that case, a petition had been filed in the
Bombay High Court for the issue of a Writ of Mandamus against the State of
Bombay and the authorities constituted under the Bombay Sales Tax Act
requiring them to desist from enforcing against the petitioners the provisions
of the Bombay Sales Tax Act, 1952. The grounds for challenging the Act
were that the legislature was not competent to enact this piece of legislation,
that this legislation contravened Art 14 of the Constitution and that it
486

BE

The petitioners are not challenging any assessment. They have

come before us before any assessment could be made, contending
that the authorities under the Act have no right to assess them
because the Act is ultra vires of the Legislature.Therefore the
petitioners are challenging the very authorities who are supposed
to decide the assessment made against them, and it is difficult to
understand how under the machinery provided under the Act it
would be open to the various authorities to decide whether the very
statute of which they are the creatures is valid statute or not.Further,
as already pointed out, there are two other issues involved in this
petition, viz, the contravention of fundamental rights under art.14
and art. 19 which in no view of the case could be decided by the
authorities set up under the Sales Tax Act,The jurisdiction of those
authorities is limited to decide questions regarding the validity of
the assessment, but no jurisdiction has been conferred upon them
to adjudicate upon the validity of the Act on the ground that it
affects the fundamental rights of the petitioners.
Strong reliance has been placed by Shri Bhabha upon this passage.

AI

8. Shri Bhabha also relies upon the full bench case of The Public
Prosecutor vs. V. M. Ramalingam Pillai reported in 1958(2) Madras Law
Journal at page 243. It is a case under the Madras General Sales Tax Act.
The observations in that case relied upon by Shri Bhabha appear at page 254
and run as follows :
When a person is prosecuted under section 16-A of the General Sales
Tax Act it will not be open to him to raise any objection, plea or contention
which he could have raised before the authorities set up under the General
Sales Tax Act, it will be open to him to raise only those pleas, objections
and contentions which those authorities are precluded from entertaining.
One example of such a contention would be that the Act or any particular
provision of it is ultra vires.
9. Another decision relied upon by Shri Bhabha is the one reported in
1955 (2) Supreme Court Reports, p. 603 : The Bengal Immunity Company
Limited vs. The State of Bihar and others. In that case the Bihar Sales
Tax Act, 1947, was challenged on the ground that it violated some of the
fundamental rights guaranteed under the Constitution. Shri Bhabha relies
upon a passage in the dissenting judgment of Shri Justice Venkatarama
Ayyar appearing at page 765, which runs as follows :
487

We are not here concerned with a statute whose vires is not in

question, and which confers jurisdiction on any authority to take
proceedings if certain facts exist and the enquiry directed by the
authority is as to whether those facts exist. The determination in
such a case is incidental to the effective exercise by the aulhority
of its undisputed jurisdiction and if, as a result of that enquiry, it
came to an erroneous conclusion, there is no error of jurisdiction,
and it might well be contented in that case that the remedy of the
party aggrieved was to resort to the machinery provided in the statute
itself by way of appeal or revision, and that a writ of prohibition
would be misconceived. But here, the contention of the appellant
is that the statute itself is void in so far as it authorises the
imposition of a tax on dealers who are not residents within the
State or do not carry on business there, and that, in consequence,
the proceedings taken under section 13 (5) of the Act should be
restrained on the ground of want of jurisdiction. It is no answer to
this contention that the appellant should seek redress through the
channels provided in the Act therefor. Indeed, the contention that
the Act is ultra vires is not one which the Tribunals constituted
under the Act, whether original, appellate, or revisional, could
entertain, their duty being merely to administer the Act.

contravened Art. 19(1) (g) of the Constitution. In answer to the application it

was contended that there was an efficacious alternative remedy available to
the petitioners under the provisions of the Bombay Sales Tax Act itself and
that where such a remedy was available, it would not be proper for the Court
to issue a Writ. At page 254 Chief Justice Chagla in the course of his judgment
observes as follows :

10. Shri Bhabha in all fairness drew my attention to a passage in the

Judgment of Shri Justice Bhagwati in this very case which appears at pages
672 and 673. In dealing with the question relating to the maintainability of this
petition for a Writ under Article 226 the learned Judge observes that the
matter can be disposed of in the words of Chief Justice Mahajan in Himmat
lal Hari lal Mehta vs. The State of Madhya Pradesh and ors., reported in
1954 Supreme Court Reports 1122, at p. 1128. Chief Justice Mahajan in
dealing with an argument based on the principle enunciated by the Privy
Council in the case of the Raleigh Investment Company vs. The Governor
General in Council, referred to by me earlier observes as follows :The contention that because remedy under the impugned Act was
available to the appellant it was disentitled to relief under article
226 stands negatived by the decision of this Court in The State of
Bombay vs. The United Motors (India) Ltd.,(1953 S.C.R. 1069)
above referred to. There it was held that the principle that a court
will not issue a prerogative writ when an adequate alternative remedy
was available could not apply where a party came to the court
within an allegation that his fundamental right had been infringed
and sought relief under article 226.Moreover, the remedy provided
by the Act is of an onerous and burdensome character.Before the
appellant can avail of it he has to deposit the whole amount of the
tax.Such a provision can hardly be described as an adequate
alternative remedy.
488

11. This reasoning proceeds on the basis that the authorities constituted
under the Act would have a.right to decide the question relating to the
constitutionality of the impugned provision of the Act. In all the aforesaid
cases what the Courts had to consider was whether there was any bar to the
issue of a Writ by reason of the existence of an effective alternative remedy
provided by the Act whose validity itself was challenged.

The principal ground urged in support of the contention as to the

invalidity of the Act and/or the notification is founded on Art. 14 of
the Constitution. In Budhan Chaudhary vs. The State of Bihar
[1955 (1) S.C.R. 1045] a Constitution Bench of seven Judges of
this Court at pages 1048-49 explained the true meaning and scope
of Art. 14 as follows :

12. Apart from any other consideration, the observations on which Shri
Bhabha relies, in my view, are not applicable at all to the facts of present
case. What the learned judges have said is that an authority constituted
under an enactment is not competent to decide the validity of the very
enactment under which that authority is constituted. In the present case, the
validity of the appointment of the National Tribunal is not disputed. No provisions
of the Industrial Disputes Act, 1947, under which this Tribunal is constituted,
are in any way challenged. What is challenged is the right of this Tribunal
constituted under the Industrial Disputes Act, 1947, to decide whether a
provision of the Banking Companies Act, 1949, violates any fundamental
right guaranteed under the Constitution. Under the Industrial Disputes Act,
1947, authority has been conferred upon me to determine questions relating
to production of documents. The determination of the question whether the
provisions of section 34A of the Banking Companies Act, 1949, are valid or
not, is incidental to the effective exercise by me of my undisputed jurisdiction
to decide the question whether I should order discovery of particular documents
in this case or not. In my view, there is no merit in the contention that I have
no jurisdiction to decide whether the provisions contained in section 34A are
void on the ground that they offend the fundamental rights guaranteed under
Article 14 of the Constitution.

Companies Act, 1949, are void, on the ground that they violate the fundamental
rights guaranteed under Article 14 of the Constitution. Article 14 of the
Constitution provides that the State shall not deny to any person equality
before the law or the equal protection of the laws within the territory of India.
This Article has come up for consideration before the Supreme Court, on
numerous occasions and the law on the subject has been well-settled. I will
only refer to one recent case on the subject reported in 1959 Supreme Court
Reports p. 279: Shri Ram Krishna Dalmia vs. Shri Justice S. R. Tendolkar
and others. Chief Justice Das in that case observes at pages 296 and 297
as follows :

14. I shall now proceed to deal with the substantial question that has
been raised before me viz. whether the provisions of section 34A of the Banking

The learned Chief Justice thereafter proceeds to state that the decisions of
the Supreme Court further establish Inter alia that it must be presumed that

BE

Clause (1) of Article 132 refers to a substantial question of law as to the

interpretation of the Constitution. These provisions do not govern proceedings
before this Tribunal. The Order relied upon has no application to the present
case and this contention must also fail.

The provisions of Article 14 of the Constitution have come up for

discussion before this Court in a number of cases, namely, Chiranjit
Lal Chaudhri Vs. The Union of India (1950 S.C.R. p. 869), The
State of Bombay vs. F. N. Balsara (1951 S.C.R. 682), The State of
West Bengal vs. Anwar Ali Sarkar (1952 S.C.R. 284), Kathi Raning
Rawat vs. The State of Saurashtra (1952 S.C.R. 435), Lachmandas
Kewalram Ahuja vs. The State of Bombay (1952 S.C.R. 710), Qasim
Razvi vs. The State of Hyderabad (1953 S.C.R. 581) and Habeeb
Mohamad vs. The State of Hyderabad (1953 S.C.R. 661). It is,
therefore, not necessary to enter upon any lengthy discussion as
to the meaning, scope and effect of the article in question. It is now
well established that while article 14 forbids class legislation, it
does not forbid reasonable classification for the purposes of
legislation. In order, however, to pass the test of permissible
classification two conditions must be fulfilled, namely, (i) that the
classification must be founded on an intelligible differentia which
distinguishes persons or things that are grouped together from others
left out of the group and, (ii) that that differentia must have a rational
relation to the object sought to be achieved by the statute in
question. The classification may be founded on different bases,
namely, geographical, or according to objects or occupations or
the like. What is necessary is that there must be a nexus between
the basis of classification and the object of the Act under
consideration. It is also well established by the decisions of this
Court that article 14 condemns discrimination not only by a
substantive law but also by a law of procedure.

AI

13. The next question that has been urged before me is that before I can
proceed to decide the question, notice must be given to the Attorney General
as required by Order 27A r 1 of the Code of Civil Procedure. That rule provides
as follows :
In any suit in which it appears to the Court that any such question
as is referred to in clause 1 of Article 132 read with Article 147 of
the Constitution is involved, the Court shall not proceed to determine
that question until after the notice has been given to the Attorney
General for India, if the question of law concerns the Central
Government and to the Advocate General of the State if the question
of law concerns a State Government.

489

490

to (a) any reserves not shown as such in its published balance sheet or (b)
any particulars not shown therein (i.e. in the published balance sheet) in
respect of provisions made for bad and doubtful debts and other usual or
necessary provisions. The words quoted above in respect of item (b) are
referrable to similar words appearing in Form B in the Third Schedule of the
Banking Companies Act, 1949.
17. By section 34A (2) a provision is made for a certificate from the
Reserve Bank as regards the amount that may be taken into account by the
authority concerned out of the reserves or provisions referred to in sub-section
(1). The certificate of the Reserve Bank on such question is made final. Such
certificate is to be given when such a question arises in relation to a banking
company other than the Reserve Bank. There is no universally recognized
principle that a party to a proceeding pending in a Court or before a Tribunal
or other authority has the right of obtaining discovery and inspection of
documents in the possession of any other party thereto or is entitled to the
disclosure of any information in the possession of the other party. The right of
discovery and inspection and the submission of interogatories is confined
mainly to Civil Courts. No such right exists in Criminal Courts. No such right
exists in connection with proceedings before various authorities constituted
under various enactments. Section 11 of the Industrial Disputes Act by subsection (3) provides that every Board, Court, Labour Court, Tribunal and
National Tribunal shall have the same powers as are vested in a Civil Court
under the Code of Civil Procedure, 1908 when trying a suit, in respect of
compelling the production of documents and material objects. If such a provision
was absent in the Industrial Disputes Act, 1947, it could not have been said
that the Act was invalid to any extent by reason of such absence.It was open
to the legislature to provide that the authorities under the Industrial Disputes
Act, 1947, should have the powers referred to in that section. It was equally
open to that very legislature to put restrictions on such powers, if it felt that it
was expedient to do so.Even where a right is conferred upon parties in
proceedings in Civil Courts to compel production of documents, that right is
not an absolute right. That right is limited by the privilege conferred by the
legislature against such discovery and production in respect of certain
documents.It is open to the legislature to extend that privilege to other
documents.The legislature by enacting section 34A has sought Inter alia to
put a restriction on the right conferred by section 11 of the Industrial Disputes
Act, 1947.

BE

the legislature understands and correctly appreciates the need of its own
people, that its laws are directed to problems made manifest by experience,
that its discriminations are based on adequate grounds and that the legislature
is free to recognise degrees of harm and may confine its restrictions to those
cases where the need is deemed to be the clearest. He further observes that
in determining the question of the validity or otherwise of such a statute the
Court will not strike down the law out of hand only because no classification
appears on its face or because a discretion is given to the Government to
make the selection or classification but will go on to examine and ascertain
if the statute has laid down any principle or policy for the guidance of the
exercise of discretion by the Government in the matter of the selection or
classification. After such scrutiny the Court will strike down the statute if it
does not lay down any principle or policy for guiding the exercise of discretion
by the Government in the matter of selection or classification, on the ground
that the statute provides for the delegation of arbitrary and uncontrolled power
to the Government so as to enable it to discriminate between persons or
things similarly situate and that, therefore, the discrimination is inherent in
the statute itself. In such a case the court will strike down both the law as
well as the executive action taken under such law. He further observes that a
statute may not make a classification of the persons or things for the purpose
of applying its provisions made for bad and doubtful debts and other usual or
necessary provisions to classify the persons or things to whom its provisions
are to apply, but may at the same time lay down a policy or principle for the
guidance of the exercise of discretion by the Government in the matter of
such selection or classification, then the court will uphold the law as
constitutional.

AI

15. I shall now proceed to examine the provisions of section 34A of the
Act wtith a view to see if the well-recognised tests as laid down by the
Supreme Court have been satisfied.

16. Section 34A (1) deals with production of documents, giving inspection
of documents, the furnishing of statements and the disclosure of information
by a banking company. For this purpose the term banking company, by
reason of the provisions of sub-section (3) of section 34A means a company
which transacts the business of banking in India having branches or other
establishments in more than one State and includes the Reserve Bank of
India, the State Bank of India and any subsidiary bank as defined in the State
Bank of India (Subsidiary Banks Act, 1959). It is confined to proceedings
under the Industrial Disputes Act, 1947, or in any Appeal or other proceedings
arising therefrom or connected therewith. It imposes a limitation upon the
powers of the authority before which such proceeding is pending. It comes
into operation when the banking company claims (I) that such document,
statement or information is of a confidential nature and (2) that the production
or inspection of such document, or the furnishing or disclosure of such
statement or information would involve the disclosure of information relating
491

18. It is urged on behalf of the applicants that by this section classifications have been made without the same being founded on any intelligible
differentia which would distinguish persons or things that are grouped together
from others left out of the group. It is urged that a favourable treatment is
given to banking companies as compared to other companies and that even
amongst banking companies, the Reserve Bank is treated differently from
other banks. It is further urged that the authorities constituted under the
492

Industrial Disputes Act are discriminated against as compared to other

authorities under other enactments and Courts. It is further urged that a
discrimination is made between banking companies making such a claim as
therein mentioned and banking companies not making such a claim, and
that the foundation for such discrimination rests on no objective test, but
upon a mere claim being made without there being any provision whatsoever
for verifying or adjudging whether the claim as made is well-founded or
otherwise.

Even if the provisions were confined to authorities constituted under the

Industrial Disputes Act, 1947, it is not possible to say that there does not
exist any intelligent diiterentia having a natural relation to the object sought
to be achieved. It is no doubt true that a banking company cannot claim such
a privilege in proceedings before any Court of law. It cannot claim any such
privilege before the authorities constituted under the Indian Income-tax Act or
other enactments. The case however is one which is covered by the following
observations from the judgement of Chief Justice Das in the aforesaid case:-

19. As regards the contention about difference in treatment between

banking companies and other companies the classification is founded on an
intelligible differentia having a rational relation to the object sought to be
achieved. Banking Companies perform functions which are distinct and different
from those performed by other companies. The legislature has thought it fit to
enact a special Banking Companies Act in order to legislate specially and
specifically for banking companies. The banking companies stand in a group
by themselves and it cannot be said that if a privilege is conferred upon
banking companies, there is no rational basis for the classification so made.
Under this section privilege can be claimed only in respect of documents,
statements or information of a confidential nature when the production or
inspection of such documents or the furnishing or disclosure of such statements
or information would involve disclosure or information relating to any reserves
not shown as such in a banking companys published balance sheet, or any
particulars not shown therein in respect of provisions made for bad and doubtful
debts and other usual or necessary provisions. The question of not showing
such reserves or particulars generally arises in connection only with banking
companies having regard to the provisions contained in section 29 of the
Banking Companies Act, 1949, and form B given in the third Schedule thereto.
In my view, there is no substance in this contention.

......the legislature is free to recognise degrees of harm and may

confine its restrictions to those cases where the need is deemed
to be the clearest.

AI

BE

The legislature may well have thought that in proceedings before the
authorities constituted under the Industrial Disputes Act, 1947, where a banking
company having branches or other establishments in more than one State is
a party, the number of persons appearing may be very large and found it
necessary to prevent the disclosure of certain documents, statements and
information of a confidential nature in the public interest. The legislature may
well have considered the degree of harm caused by such disclosure and
found the need for such restriction to be the clearest and the greatest.

20. As regards the distinction made between the Reserve Bank and
other banking companies in section 34A(2), there is good reason for doing
so. The Reserve Bank itself is constituted the authority to issue the certificates
referred to in that Sub-section and the legislature could well provide that it is
not to issue a certificate about itself. As regards the contention that the
authorities constituted under the Industrial Disputes Act, 1947, are
discriminated against, it is clear from the provisions of that section that the
same are applicable to all authorities before which the proceedings therein
referred to may be pending. The proceedings therein referred to are: (1) any
proceeding under the industrial Disputes Act, 1947, (ii) any appeal arising
therefrom or connected therewith, and (iii) any other proceeding arising
therefrom or connected therewith. There is no provision for any appeal under
the Industrial Disputes Act, 1947. An appeal from the award of any Tribunal
under the Act lies under Article 136 of the Constitution to the Supreme Court.
The provisions of section 34A would be applicable to the Supreme Court even
though it is not an authority constituted under the industrial Disputes Act.
493

21. As regards the next argument based on discrimination arising by

virtue of a claim being made or not made by a Bank, the legislature had to
consider whether to impose an absolute bar on a qualified bar in connection
with such disclosure. What was intended by the legislature was to confer a
privilege and not to impose a disability. If it had provided that such documents
statements or information should under no circumstances be disclosed, it
might have resulted in hardship in several cases. The legislature has thought
it fit to give liberty to a banking company to make such a disclosure if the
company so desired. It cannot be said that merely because an option is
given to a banking company to make a claim or not to make a claim that a
difference in classification results, which is based on no rational foundation.
In my view, it is not possible to attack the provisions of the section on the
ground that the privilege conferred by the section depends upon the making
or the non-making of a claim. There are sound and valid reasons for this
difference.
22. It is next urged that the granting of the privilege rests in the making
of a bare or naked claim. The claim that it required to be made must be of a
two-fold nature: (i) that the document, statement or information is of a
confidential nature, and (ii) that the production or inspection of such document
or the furnishing or disclosure of such statement or information would involve
disclosure of information relating to(a)any reserves not shown as such in its
published balance-sheet; or (b)any particulars not shown therein in respect
of provisions made for bad and doubtful debts and other usual or necessary
provisions.It is true no doubt that no machinery is provided for the purpose of
verifying the correctness of such a claim. No tribunal is empowered to consider
494

whether the claim as made is well founded or not. The claim being a claim in
respect of matters not shown in the published balance sheet, the legislature
may well have considered that the checks provided in the Banking Companies
Act, 1949, in connection therewith may be a sufficient safeguard and may
have considered that the disclosure of such documents, statements or
information for the objective determination by anybody or tribunal may do
more harm than good. As observed by the Supreme Court, it must be
presumed that the legislature understands and correctly appreciates the needs
of its own people and that its laws are directed to problems made manifest
by experience and that its discriminations are based on adequate grounds.In
my view, the provisions of Article 14 cannot be considered to be violated by
reason of the fact that the grant of the privilege under that section rests on a
bare claim being made by a banking company.

person may consider to be a principle of sound banking, another person may

not. It is argued that the words principles of sound banking do not convey a
definite meaning. Banking industry in this country has been established since
a long time. The principles of sound banking are not in a nebulous state.
They are words well understood in the banking world and cannot be regarded
as being so nebulous as to convey no meaning and give no guidance.

AI

BE

23. It is next contended that the provisions contained in the section are
extremely vague.Item (b) in that section refers to particulars not shown in the
published balance sheet in respect of other usual or necessary provisions.It
is urged that the word usual conveys no definite meaning. It may cover what
may not be usual to the banking industry as such, but may be usual to a
particular bank. It is urged that the words necessary provisions are equally
words of uncertain import, inasmuch as the question as to what may be
considered necessary may depend upon the subjective view of the person
preparing the balance sheet. One thing to be borne in mind in this connection
is that the claim that is required to be made must be a claim in respect of a
document, statement or information of a confidential nature. If the particulars
which are not shown in the balance-sheet are not of a confidential nature,
then the privilege is not liable to be claimed in connection therewith. The
language used by the legislature is intended to cover only those matters
which a banking company is entitled to exclude from its published balance
sheet having regard to the provisions contained in section 29 of the Banking
Companies Act. 1949, and the forms prescribed thereunder. The words
provision made during the year for bad and doubtful debts and other usual or
necessary provisions appear in Form B in the Third Schedule to that Act.
Similar words in section 34A bear the same meaning as the words used in
Form B. These words have a definite meaning in the context of the Banking
Companies Act and are not so nebulous as to render the provisions of the
enactment invalid.

25. It is then urged that the Reserve Bank is interested in the disputes
referred to me in this Reference, that it has a bias in favour of the banks and
that it is not a proper entity to be constituted the authority under the Act for
the issue of such certificates. Reliance has been placed in this connection
on the observations of the House of Lords in the case of Dimes vs. Proprietor
of Grand Junction Canal reported in 3 House of Lords Cases, p. 759 at p.
793 and on the observations in the case of Fanagan vs Kernan appearing in
8 Law Reports Ireland p. 44 at page 48, where it has been laid down that no
man should be made a judge in his own cause. Reliance is also placed upon
the decision in the case The King vs. Sussex Justices, reported in 1924 (1)
K.B. p. 256 and the case reported in 1926 Appeal Cases p. 586 Frome
United Breweries Company Limited and another vs. Keepers of the
Peace and Justices for County Borough of Bath. In the last case in the
speech of Viscount Cave at page 590 it has been observed as follows :
My Lords, if there is one principle which forms an integral part of
the English Law, it is that every member of a body engaged in a
judicial proceeding must be able to act judicially; and it has been
held over and over again that, if a member of such a body is subject
to a bias (whether financial or other) in favour of or against either
party to the dispute or is in such a position that a bias must be
assumed, he ought not to take part in the decision or even to sit
upon the tribunal. This rule has been asserted not only in the case
of Courts of Justice and other judicial tribunals but in the case of
authorities which, though in no sense to be called Courts, have to
act as judges of the rights of others.

24. Under sub-section (2) of section 34A the Reserve Bank has been
constituted the authority for the purpose of issuing the certificates therein
mentioned. It is urged that there is no guiding principle laid down to govern
the action of the Reserve Bank in issuing such certificates. The words used
in the section are the Reserve Bank shall, after taking into account principles
of sound banking and all relevant circumstances concerning the banking
company, furnish to the authority a certificate. It is urged tnat the words
principles of sound banking are words of uncertain import and what one

26. Placing reliance on these authorities, it has been strongly urged

before me that the Reserve Bank of India is virtually constituted a judge in its
own cause, inasmuch as the Reserve Bank may be called upon to issue a
certificate in connection with the reserves or previsions referred to in subsection (1) of section 34A in respect of the State Bank of India. Nearly 92 per
cent of the shares of the State Bank of India are held by the Reserve Bank of
India. Various provisions from the State Bank of India Act, 1955, have been
referred to in order to show that the Reserve Bank has an interest in the State
Bank of India. The State Bank of India is the agent of the Reserve Bank of
India at various places where the Reserve Bank of India has not got any
branches. It is urged that the Reserve Bank of India has a strong bias in
favour of the State Bank of India. It is urged that the Reserve Bank of India is
also interested in the subsidiaries of the State Bank of India. It is further

495

496

urged that the Reserve Bank of India is interested in the result of the present
Reference as the decision given in respect of some of the questions in this
reference may have an influence on the decision of the questions which are
to come up for consideration in Reference No. 2 of 1960 in connection with
the dispute between the Reserve Bank of India and its workmen. In answer to
this argument, Shri Bhabha, the learned counsel for some of the Banks
contents that the principle concerning bias is not one which is applicable to
all tribunals and authorities. He referred to a decision of the House of Lords in
Franklin and others vs. Minister of Town and Country Planning, reported
in 1948 Appeal Cases p. 87. In that case Lord Thankerton in the course of his
speech at page 103 observes as follows :

27. The matter is succinctly stated in Halsburys Laws of England.

Third Edition, Vol. I I at page 67, paragraph 123, under the heading bias by
interest as follows :
lt is an elementary principle, that (in the absence of statutory
authority or consensual agreement) no man can be a judge in his own
cause and a reference has been made to Dimes vs Proprietors of
Grand Junction Canal, 3 House of Lords Cases, p. 759 referred to by
me earlier.

28. In the present case, the Reserve Bank has not exercised any judicial
or quasi-judicial function in issuing a certificate.Apart from that, the legislature
has thought it fit to confer authority on the Reserve Bank of India to issue the
certificates in question.The authority conferred upon the Reserve Bank is a
statutory authority and being a statutory authority it is not liable to be
challenged on the ground of bias. In my view, the argument based on the
footing of bias is not sustainable in law. In my view, the classifications that
have been made by the legislature in enacting section 34A are founded on an
intelligible differentia distinguishing the banking companies referred to therein
from other companies and distinguishing the authorities referred to therein
from other authorities.The differentia has a rational relation to the object sought
to be achieved by the statute viz., the non-disclosure in the public interest
and in the interest of the banking system, of the country of the particulars
referred to in section 34A. There is a clear nexus between the basis of
classification and the object of the Act under consideration.The attack upon
the constitutionality of Section 34A based on the ground that it is violative of
the fundamental rights guaranteed under Article 14 of the Constitution must,
therefore, fail.

AI

BE

My Lords, I could wish that the use of the word bias should be
confined to its proper sphere. Its proper significance, in my opinion,
is to denote a departure from the standard of even-handed justice
which the law requires from those who occupy judicial office, or
those who are commonly regarded as holding a quasi-judicial office,
such as an arbitrator. The reason for this clearly is that, having to
adjudicate as between two or more parties, he must come to his
adjudication with an independent mind, without any inclination or
bias towards one side or other in the dispute. As Lord Cranworth L.
C. says in Ranger v. Western Ry. Co. (5 M.L.C. 72, 89) A judge
ought to be and is supposed to be in deferent between the parties.
He has, or is supposed to have, no bias inducing him to lean to the
one side rather than to the other. In ordinary cases it is a just
ground of exception to a judge that he is not indifferent, and the
fact that he is himself a party, or interested as a party, affords the
strongest proof that he cannot be indifferent. To this may be added
the statement by Lord Hewart C. J. in Rex vs. Sussex. Justices.
Ex-parte McCarthy [1924 (1)K.B. 256, 258]: It is said, and no
doubt, truly, that when that gentleman (the deputy clerk) retired in
the unusual way with the justices, taking with him the notes of the
evidence in case the justices might desire to consult him the justices
came to a conclusion without consulting him and that he
scrupulously abstained from referring to the case in any way. But
while that is so, a long line of cases shows that it is not merely of
some importance but is of fundamental importance that justice
should not only be done, but should manifestly and undoubtedly
be seen to be done. The question therefore is not whether in this
case the deputy clerk made any observation or offered any criticism
which he might not properly have made or offered; the question is
whether he was so related to the case in its civil aspect as to be
unfit to act as clerk to the justices in the criminal matter. The
answer to that question depends not upon what actually was done
but upon what might appear to be done. This was followed in Rex

vs. Essex Justices. Ex-parte Perkins [1927(2) K.B. 475]. But, in

the present case, the respondent having no judicial duty, the only
question is what the respondent actually did, that is, whether in
fact he did genuinely consider the report and the objections.

497

29. The next argument that is urged on behalf of the applicants is that
assuming that section 34A of the Act is valid, its provisions are not applicable
to the present proceedings for production of documents, which are pending
before me. It is urged that this piece of legislation must be considered to be
prospective in its operation.It is urged that Reference No. 1 of 1960, which
has been made by the Central Government on 21st March I960, was a reference
made prior to the coming into force of the Banking Companies (Amendment)
Act, 1960, and that the provisions of the amending Act cannot be made
applicable to proceeding which had already commenced prior to the coming
into force of the amendment Reliance. In this connection is placed upon
certain passages from Maxwell on the interpretation of Statutes, 10th Edition,
at p. 221. It has been stated there as follows ;
In general, when the law is altered during the pendency of an action,
498

the rights of the parties are decided according to the law as it

existed when the action was begun, unless the new statute shows
a clear intention to vary such rights.

The principle which their Lordships must apply in dealing with this
matter has been authoritatively enunciating by the Board in the
Colonial Sugar Refining Co. vs. Irving (1905) A.C. 369) where it is in
effect laid down that, while provisions of a statue dealing merely
with matters of procedure may properly, unless that construction
be textually inadmissible, have retrospective effect attributed to
them, provisions which touch a right in existence at the passing of
the statute are not to be applied retrospectively in the absence of
express enactment or necessary intendment. Their Lordships can
have no doubt that provisions which, if applied retrospectively, would
deprive of their existing finality orders which, when the statute came
into force, were final, are provisions which touch existing rights

At page 225, under the heading Retrospective Operation as regards

Procedure it is stated ;
In both of the above cases the construction, though fatal to the
enforcement of a vested right, by shortening the time for enforcing
it, did not in terms take away any such right, and in both it seems
to fall within the general principle that the presumption against a
retrospective construction has no application to enactments which
affect only the procedure and practice of the courts.

32. Another decision to which my attention was drawn is the one reported
in 1957 Supreme Court Reports, p. 488 in the case of Garikapatti Veeraya
vs. N. Subbiah Chaudhary. In the course of his judgement Chief Justice
Das refers to the aforesaid case of Colonial Sugar Refining Company Ltd.,
vs. Irving, and quotes the aforesaid observations of Lord Blanesburgh as
laying down the law on the subject.

BE

But a new procedure would be presumably inapplicable where its

application would prejudice rights established under the old or would
involve a breach of faith between the parties.

In the present case, no orders for production had been passed by me prior to
the coming into force of the Banking Companies (Amendment) Act, I960. No
question of finality of orders, therefore, arises.

It is further stated that no person has a vested right in any course of

procedure. At page 226 it has been observed that the general principle, however,
seems to be that alternations in procedure are retrospective, unless there be
some good reason against it. At pages 227 and 228 it has been stated as
follows:

AI

30. The leading case on the subject is the case of The Colonial Sugar
Refining Company Limited vs. Irving, reported in 1905 Appeal Cases p.
369. In that case it was held that although the right of appeal from the Supreme
Court of Queensland to His Majesty in Council had been taken away by the
Australian Commonwealth Judiciary Act, 1903, yet the Act was not
retrospective and a right of appeal to the King in Council in a suit pending
when the Act was passed and decided by the Supreme Court afterwards was
not taken away. Lord Macnaghten in delivering the judgment of the Privy
Council observes at page 372 as follows :
As regards the general principles applicable to the case, there
was no controversy. On the one hand, it was not disputed that if
the matter in question be a matter of procedure only, the petition is
well founded. On the other hand, if it be more than a matter of
procedure, if it touches a right in existence at the passing of the
Act, it was conceded that, in accordance with a long line of
authorities extending from the time of Lord Coke to the present
day, the appellants would be entitled to succeed.
He held in that case that there was an interference with existing rights.
31. Reference was also made to the decision of the Privy Council in
Delhi Cloth and General Mills Company, Limited vs. Income Tax
Commissioner Delhi and another, reported in 54 Indian Appeals p. 421.
Lord Blanesburgh in delivering the judgement of the Privy Council observes at
page 425 as under :
499

33. The question that I have to consider is whether the Applicants had
any existing vested rights when the amending Act was passed. The law is
now well-settled that no person has a vested right in a particular procedure.
The right which is sought to be claimed is a right to claim production of
documents having regard to the provisions contained in section 11 of the
Industrial Disputes Act. It is urged that the said right to obtain production has
been interferred with during the pendency of the present proceedings. That
right has now been limited so as to exclude discovery of documents,
statements or information of the kind mentioned in section 34A on a claim
being made by a banking company as provided in that section. The right to
claim discovery, inspection and disclosure of information may be a valuable
right but it is a right appertaining to the realm of procedure and not a vested
right. In the absence of any other indication, a legislative provision in that
connection has to be construed as being applicable to proceedings pending
at the date when such provision came into force. It has been strongly urged
by Shri Bhabha, that it is not necessary in this case to resort to any of the
aforesaid canons of construction for the purpose of considering whether the
new section is operative in connection with proceedings which had already
been instituted prior to the coming into force thereof. In his submission, the
language of section 34A is clear and covers proceedings which were pending
at the date when the Banking Companies (Amendment) Act, I960, came into
force. In his submission, the words before which such proceeding is pending
are already intended to cover all pending proceedings, whether instituted
500

the statute are ambiguous or vague that resort may be had to them
for the purpose of arriving at the true intention of the legislature."
In my view, both on the ground of the language used by the legislature and
the ground of the application of the well known canons of construction
provisions of section 34A are applicable to the applications which have been
made before me for production of documents in the present Reference.

35. Shri Nargolkar, the learned counsel for the All India Bank Employees
Association, has strongly relied upon the decision reported in 39 Times Law
Reports p. 128 : in the case of Beadling and others vs. Goll. In that case it
was held that the provision in section 1 of the Gaming Act, 1922, that no
action for the recovery of money under section 2 of the Gaming Act 1835,
shall be entertained in any Court was not retrospective in regard to action
which had been commenced before the passing of the Act and in which
judgment had not been given when the Act came into force. This decision
turned upon the language used by the legislature. He also relied upon the
decision in the case of Bireswar Moral and another vs. Indu Bhushan
Kindu and others, reported in A.I.R. 1943, Ca. 573 at p. 574. In that case,
a Division Bench of the Calcutta High Court held that when the legislature
altered the rights of parties by taking away or conferring any right of action,
its enactments, unless in express terms they apply to pending actions, do
not affect them. They held that there was an exception to this rule, namely,
where enactments merely affected procedure, and did not extend to rights of
action. They further held that if a statute dealt merely with the procedure in
an action, and did not affect the rights of the parties, it will be held to apply
prima facie to all actions, pending as well as future. Whether a person has
a right to recover property is a question of substantive law. But in what Court
he must institute proceedings is a question of procedural law.

BE

before or after the coming into force of the Banking Companies (Amendment)
Act, 1960. Shri Kavlekar has on the other hand, equally strongly urged that
the words before which such proceeding is pending are not really
determinative of the question whether the section is applicable to proceedings
which had been instituted before the commencement of the Banking
Companies (Amendment) Act, 1960 or to the proceedings instituted after
such commencement. He says that whenever a claim is made under the
section, a proceeding must be pending. The very making of the claim in a
proceeding postulates the pendency of a proceeding. He contends that the
section cannot be given a retrospective effect so as to deprive persons of
their existing rights. In my view, the language used by the legislature is such
that having regard to its plain meaning it applies to proceedings which have
been instituted before the coming into force of the Banking Companies
(Amendment) Act, 1960 and to proceedings which may be instituted after
the coming into force thereof. There is nothing to indicate that the legislature
intended to exclude proceedings which had been instituted before the coming
into force of the amending Act. The amendment was made in the public
interest and in the interest of the banking system of the country. If a reference
is made to the statement of objects and reasons in the case of ambiguity,
the intention of the legislature as disclosed therein seems to me to be clear.
It was in order to serve the public interest and the interest of the banking
system of the country that the disclosure was sought to be prevented. The
object would not be fully and eflectively served by restricting the operation of
the Act to proceedings commenced after the coming into force of the Act.

AI

34. A doubt has arisen as to whether it is open to any tribunal in

interpreting the provisions of an Act to refer to the statement of objects and
reasons.Shri Bhabha referred to the decision of the Supreme Court in this
connection reported in 1959 S.C.R. p. 12 : Express Newspapers (Private)
Limited & Another Vs. The Union of India and others : Shri Justice
Bhagwati in the course of his judgement observes at page 140 as follows :-

We do not propose to enter into any elaborate discussion on the

question whether it would be competent to us in arriving at proper
construction of the expression fixing rates, of wages to look into
the Statement of Objects and Reasons attached to the Bill No. 13
of 1955 as introduced in the Rajya Sabha or the circumstances
under which the word minimum came to be deleted from the
provisions of the Bill relating to rates of wages and the Wage
Board and the fact of such deletion when the Act came to be passed
in its present form. There is a consensus of opinion that these are
not aids to the construction of the terms of the Statute which have
of course to be given their plain and grammatical meaning [See :
Ashvini Kumar Ghosh and Anr. V. Arabinda Bose and Anr. (1953
S.C.R. 1)] and Provat Kumar Kar and others vs. William Trevelyan
Curtiez Parkar (A.I.R. 1960 Cal. 116). It is only when the terms of
501

36. Shri Nargolkar relied upon the decision reported in 1909 (1) K.B p.
310 : Smithies vs. National Association of Operative Plasterers and
others and urged that vested rights had accrued in the present case and as
such rights had accrued, those rights cannot be taken away unless the
legislature indicated that the amending act was to be retrospective in operation.
Vaughan Williams L. J. in the aforesaid case observed at page 319 as follows:We are all agreed on this point. It is a proposition founded in common
sense that, where vested rights have already accrued, and legislation
is passed which uses words expressive of futurity, such as shall
or shall not which prima facie would appear to be meant to be
applicable to future cases, it is not to be constructed retrospectively
so as to affect those vested rights, unless terms are used which
clearly compel the Court to give it that construction. This is only to
impute common sense to the Legislature; any reasonable person
would say that clear terms ought to be used, if it is intended to
divest a vested right. It is stated in Maxwell on the Interpretation of
502

Statutes, 3rd ed. p. 333, that, where a statute is in its nature a

declaratory Act, the argument that it must not be construed so as
to take away previous rights is not applicable.

APPENDIX E
BEFORE THE NATIONAL INDUSTRIAL TRIBUNAL (BANK DISPUTES)
AT BOMBAY

In my view, no vested right, in the sense referred to by Lord Vaughan Williams,

had accrued to the applicants when the amending Act came into force.

MISCELLANEOUS APPLICATION NO. 291 OF 1960

IN
REFERENCE NO. 1 OF 1960
The State Bank of India Staff Union, Andhra Pradesh,
Vijayawada .........

Applicant

versus
The State Bank of India ... ...

Opponent.

In the matter of an Application, dated 14th September I960 of the State

Bank of India Staff Union, A.P. Vijayawada for bringing on Record the Reserve
Bank of India as a party to : Reference No, 1 of I960.
PRESENT :

The Honourable Shri Justice K. T. Desai, Presiding Officer, National

Industrial Tribunal (Bank Disputes), Bombay-1

BE

37. There is one more argument which was urged before me. It was
urged that the Banking Companies (Amendment) Act, 1960, is really a
declaratory Act, and reliance was sought to be placed upon what is stated in
the statement of objects and reasons. It is there stated that the new section
was proposed to be inserted to make it clear that information, which according
to the law is not required to be published in the balance sheet or profit and
loss accounts of a banking company need not be disclosed to the various
authorities under the Industrial Disputes Act. It will not be proper for me to
refer to the statement of objects and reasons for the purpose of determining
whether a particular Act is declaratory or not. I asked counsel who were
appearing for the banks to point out any provision of any other law which
conferred this privilege upon the banking companies and which prevented the
production and inspection of such documents and the disclosure of such
statements or information, but so far, my attention has not been drawn to any
such provision. I am not inclined to regard the Act as merely declaratory of
existing rights.

AI

38. It was urged by Shri Nargolkar that by sub-section (2) of section 34A
a change has been effected in the forum as regards the determination of the
question about the amount that may be taken into account out of the reserves
and provisions referred to in section 34A (1) and that the provisions are not
retrospective. In my view, what has been done by the provisions of subsection (2) of section 34A is to provide conclusive evidence of certain matters
without further investigation by the tribunal. The Reserve Bank in issuing a
certificate has not to exercise any judicial or quasijudicial functions. Such
change by the legislature cannot be regarded as constituting a change of
forum during the pendency of any proceedings.

39. In view of what I have stated above, I hold that the Banking companies
are entitled in the present proceedings pending before me to make the claim
referred to in section 34A(1) of the Banking Companies (Amend ment) Act,
1960.
KANTILAL T. DESAl,
Presiding Officer,
National Industrial Tribunal,
(Bank Disputes), Bombay-1

APPEARANCES:
Shri S. Laxminarasinham for the Applicant.

Sarvashree Sachin Chaudhary and P. P. Khambatta, Counsel instructed

by Shri R. Setlur of Ms. Crawford Bayley & Co. Solicitors for the Opponent.
Shri N. A. Palkhiwalla, Counsel instructed by Shri R. Setlur of M/s.
Crawford Bayley & Co., Solicitors, for the Reserve Bank of India.
Shri N. A. Palkhiwalla Counsel instructed by Shri R. Setlur of M/s.
Crawford Bayley & Co., Solicitors, for the Bombay Exchange Banks
Association.
Sarvashree Sachin Choudhary & S. D. Vimadalal, Counsel instructed
by Shri R. Setlur of M/s. Crawford Bayley & Co., Solicitors for 8 Subsidiary
Banks of the State Bank of India.

Sarvashree R. J. Kolha, N. V. Phadke & K. H. Bhabha, Counsel instruc

ted by Sarvashree N. F. Petigara & J. P. Thacker of M/s. Mulla & Mulla and
Craigie Blunt & Coroe Solicitors for Indian Banks Association,
Shri S. P. Sawhney for the Northern India Banks Association. Shri A. S.
Asayakar, Advocate for the Travancore Cochin Bankers Association.
Shri C. R. lyyunni for the Catholic Syrian Bank Ltd.
Shri D. B. Tilak, Advocate, for the Bharatha Lakshmi Bank Ltd., The
Bank of Nagpur Ltd,, The Union Bank of Bijapur & Sholapur Ltd. & Chaldean
Syrian Bank Ltd.
Sarvashree N. K. Petigara & J. P. Thacker of M/s. Mulla & Mulla &

503

504

Craigie Blunt & Caroe, Solicitors, for the Miraj State Bank Ltd.

no case has been made out for adding the Reserve Bank of India as a party
to the Reference.

Shri R. Balkrishna Kini for the Pandyan Bank Ltd.

Shri Raman Kutty for the Gadodia Bank Ltd.
Shri D. S. Nargolkar, Advocate, for the All India Bank Employees
Association and the All India Reserve Bank Employees Association.
Shri C. L. Dudhia, Advocate, for the All India Bank Employees Federation,
the Vadodara Rajya Bank Nokar Sangh,The Surat Bank Employees Union
and the State Bank of Patiala (All Cadres) Employees Association.
Shri Jyoti Ghose for the State Bank of India Employees Association
(Bengal and Delhi Circles).

Shri H. K. Sowani, Advocate, for the All India Bank of Baroda Employees
Federation and for Indian Overseas Bank Employees Union.
No appearance for the All India Reserve Bank D Class Employees
Union
Bombay, 18th November 1960
ORDER

BE

INDUSTRY: BANKING

Shri S. S. Kavlekar, Advocate, for the All India Bank of India Staff
Federation.

AI

1. The State Bank of India Staff Union, Andhra Pradesh, Vijayawada, on

behalf of the workmen of the State Bank of India has filed an application
praying that the Tribunal may bring on record the Reserve Bank of India as a
party to Reference No. 1 of 1960, in relation to the dispute between the State
Bank of India and its workmen. In the application it has been stated that
under the State Bank of India Act, 1955, the Reserve Bank of India is in
reality the proprietor of the State Bank of India. In support of the contention,
it is stated that under the State Bank of India Act, the entire issued capital of
the State Bank on the appointed day, i.e. July 1, 1955 stood allotted to the
Reserve Bank of India. It is further stated that the State Bank of India is only
a pseudonym or as alias for the Reserve Bank of India, and that it was in the
interest of justice that the Reserve Bank of India should formally appear on
the record.
2. The application has been supported by the State Bank of India Staff
Federation and the All India Bank Employees Federation. The application
has been resisted by the State Bank of India and the Reserve Bank of India.
It is also resisted by the Indian Banks Association and some Associations of
workmen.

3. It is urged on behalf of the State Bank of India and the Reserve Bank
of India that the Tribunal has no jurisdiction to add the Reserve Bank of India
as a party to Reference No. 1 of 1960. It is also contended that on the merits
505

4. The State Bank of India is a Corporation constituted under, the State

Bank of India Act, 1955. By section 3 (2) of the said Act it is provided as
follows : The Reserve Bank, together with such other persons as may
from time to time become shareholders in the State Bank in accordance with
the provisions of this Act, shall, so long as they are shareholders in the State
Bank, constitute a body corporate with perpetual succession and a common
seal under the name of the State Bank of India and shall sue and be sued in
that name. By section 5(1) it is provided as follows : The issued capital
of the State Bank shall, on the appointed day, be five crores, sixty-two lacs
and fifty thousand rupees divided into five lacs, sixty-two thousand and five
hundred shares, all of which shall, on the appointed day stand allotted to the
Reserve Bank in lieu of the shares of the Imperial Bank transferred to and
vested in it under section 6. Section 3 (2) itself indicates that there may be
shareholders in the State Bank other than the Reserve Bank. An affidavit has
been made on behalf of the State Bank of India showing that on the date of
Reference, i.e. 21st March 1960 the shareholders in the State Bank were (i)
the Reserve Bank holding 5,18,330 shares and (ii) other persons holding
44,170 shares. On 26th September 1960. the date on which the said affidavit
was made, the Reserve Bank of India held 5,18,380 shares whilst other persons
held 44,120 shares. The Reserve Bank of India has been constituted as a
Corporation under the Reserve Bank of India Act, 1934. It is not possible to
equate the shareholder or shareholders of any Bank, with the Corporation of
which the shares have been held. A Corporation is a separate and distinct
entity from the shareholders, and it is not possible to say that the State Bank
of India is only a pseudonym or an alias for the Reserve Bank of India.
5. Various provisions of the State Bank of India Act, 1955, have been
relied upon by Shri S. Laxminarasinham who appeared on behalf of the
applicant. Section 36 of the Act which has been relied upon provides as
follows :
36. (1)

The State Bank shall maintain a special fund to be known as

the Integration and Development Fund into which shall be
paid-

(a)

the dividends payable to the Reserve Bank on such shares of

the State Bank held by it as do not exceed fifty five per cent of
the total issued capital; and

(b)

such contribution as the Reserve Bank or the Central

Government may make from time to time.

(2)

The amount in the said Fund shall be applied exclusively for

meeting

(a)

losses in excess of such yearly sum as may be agreed upon

506

between the Reserve Bank and the State Bank and attributable
to the branches established in pursuance of sub-section (5)
of section 16;
(aa) subsidies granted by the State Bank to a subsidiary Bank
with the approval of the Reserve Bank; and
(b)

such other losses or expenditure as may be approved by the

Central Government in consultation with the Reserve Bank.

(3)

Subject to the provisions of sub-section (2), the said Fund

shall be the property of the Reserve Bank and no shareholder
of the State Bank or any other person shall have any claim to
the amount held in the said Fund.

(a)

paying, receiving, collecting and remitting money, bullion and

securities on behalf of any Government in India; and

(b)

undertaking and transacting any other business which the

Reserve Bank may from time to time entrust to it.

(2)

The terms and conditions on which any such agency business

shall be carried on by the State Bank on behalf of the Reserve
Bank shall be such as may be agreed upon.

(3)

If no agreement can be reached on any matter referred to in

sub-section (2) or if a dispute arises between the State Bank
and the Reserve Bank as to the interpretation of any agreement
between them, the matter shall be referred to the Central
Government and the decision of the Central Government
thereon shall be final.

(4)

The State Bank may transact any business or perform any

functions entrusted to it under sub-section (1) by itself or
through a subsidiary bank or through an agent approved by
the Reserve Bank.

Reliance has also been placed on sub-sections (3) and (5) of section 16 of
the Act, which provides as follows :
(3)

The State Bank shall maintain as its branches or agencies all

branches or agencies of the Imperial Bank which were in existence
in India immediately before the appointed day, and no such branch
may be closed without the previous approval of the Reserve Bank.

(4)

(5)

Notwithstanding anything contained in sub-section (4), the State

Bank shall establish not less than four hundred branches in addition
to the branches referred to in sub-section (3) within five years of the
appointed day or such extended period as the Central Government
may specify in this behalf, and the places where such additional
branches are to be established shall be determined in accordance
with any such programme as may be drawn up by the Central
Government from time to time in consultation with the Reserve
Bank and the State Bank and no branch so established shall be
closed without the previous approval of the Reserve Bank:

AI

Section 18 of the Act, which has been relied upon, provides that in the
discharge of its functions including those relating to a subsidiary bank, the
State Bank shall be guided by such directions in matters of policy involving
public interest as the Central Government may, in consultation with the
Governor of the Reserve Bank and the Chairman of the State Bank, give to it.
Sections 32 and 50 of the Act, which have also been invoked in support of the
application, provide as follows :
32. (1)

50

BE

16

The State Bank shall, if so required by the Reserve Bank, act

as agent of the Reserve Bank at all places in India where it
has a branch or where there is a branch of a subsidiary bank
and where there is no branch of the banking department of
the Reserve Bank, for
507

(1)

The Central Board may, after consultation with the Reserve

Bank and with the previous sanction of the Central Government
make regulations, not inconsistent with this Act and the rules
made thereunder, to provide for all matters for which provision
is expedient for the purposes of giving effect to the provisions
of this Act.

(2)

In particular, and without prejudice to the generality of the

foregoing power, such regulations may provide for
*

(n)

the duties and conduct of officers, other employees, advisers

and agents of the State Bank.

(o)

the establishment and maintenance of superannuation

pension, provident or other funds for the benefit of the
employees of the State Bank or of the dependents of such
employees or for the purposes of the State Bank, and the
granting of superannuation allowances, annuities and pensions
payable out of any such fund.

6. None of these provisions in any manner establish that the State Bank
of India is the same as the Reserve Bank of India or that the name State
Bank of India is only a pseudonym or an alias for the Reserve Bank of India.
Section 32 itself contains provisions relating to a dispute between the
StateBank and the Reserve Bank. The State Bank is required to act as the
Agent of the Reserve Bank as provided in the said section. The Reserve
Bank no doubt is interested in the State Bank. The Reserve Bank is required
to be consulted in connection with various matters relating to the State Bank.
508

to the proceedings. Under the provisions of Order 1, rule 10 a Court has

power to add as a party to a proceeding a person who may either be a
necessary or a proper party thereto. A person is considered to be a proper
party to a proceeding in a Civil Court where the presence of the party is
necessary to effectually and completely adjudicate upon the dispute before
the Court and to give a complete and final relief. Even under the provisions
contained in Order 1, rule 10 it is not enough if a party is merely interested in
the dispute.
8. In this connection, strong reliance has been placed upon a decision
of the Federal Court reported in A.I.R., 1941 Federal Court, p. 16: United
provinces vs. Mt. Atiga Begum and others. A Full Bench of that Court in
that case held that a person would be a necessary party if he ought to have
been joined, that is to say, in whose absence no effective decree can be
passed at all. He would be a proper party to be impleaded if his presence is
necessary for an effectual or complete adjudication. In the present case, it
cannot be said that the presence of the Reserve Bank is necessary as a
party to Reference No. 1 of 1960. It cannot be said that in the absence of the
Reserve Bank no effective award can be passed at all against the State Bank
of India. It cannot further be said that the Reserve Bank is a summoned to
appear in the proceedings as parties to the dispute, necessarily for an effectual
or complete adjudication. If an award is made against the State Bank of
India, it would be effectual and complete and the workmen of the State Bank
of India would get an effectual and complete relief.

AI

BE

7. In the course of the hearing before me, it was argued that even though
the State Bank and the Reserve Bank may not be the same, yet the Reserve
Bank should be added as a party to the Reference as a proper party to the
same. In this connection, in addition to the aforesaid provisions of the State
Bank of India Act, 1955, reference was made to section 10(1) (b) (iii) of the
Banking Companies Act, 1949, whereunder it is provided that no banking
company shall employ or continue the employment of any person whose
remuneration is, in the opinion of the Reserve Bank, excessive. For the purpose
of showing that the Tribunal has jurisdiction to do so, reliance has been
placed upon the provisions contained in sub-section (3) of section 18 of the
Industrial Disputes Act. By that section it is provided as under :
18 (1) *
* *
(2) *
* *
(3) A settlement arrived at in the course of conciliation proceedings
under this Act or an award of a Labour Court. Tribunal or
National Tribunal which has become enforceable shall be
binding on
(a) all parties to the industrial dispute;
(b) all other parties summoned to appear in the proceedings as
parties to the dispute, unless the Board, Labour Court, Tribunal
or Nationai Tribunal, as the case may be, records the opinion
that they were so summoned without proper cause;
(c) where a party referred to in clause (a) or clause (b) is an
employer, his heirs, successors or assigns in respect of the
establishment to which the dispute relates;
(d) where a party referred to in clause (a) or clause (b) is composed
of workmen, all persons who were employed in the
establishment or part of the establishment, as the case may
be, to which the dispute relates on the date of the dispute and
all persons who subsequently become employed in that
establishment or part
It is urged that sub-section 3(b) refers to persons other than persons named
as parties to the industrial disputes.It is urged that the sub-section 3(b) clearly
indicates that a National Tribunal has jurisdiction to summon a person to
appear in the proceedings as a party to the dispute even though that person
may not have been named in the reference as a party to the same. It is urged
that in connection with adding parties, a National Tribunal has the same
powers as those possessed by a Civil Court under the provisions contained
in Order 1 rule 10 of the Code of Civil Procedure and that the Reserve Bank of
India being vitally interested in the State Bank of India would be a proper
party to Reference No. I of 1960 and should be brought on record as a party

That, however, does not in any sense mean that the Reserve Bank and the
State Bank are the same. They are distinct and separate entities constituted
under different enactments.

509

9. Reliance has been placed by Shri Laxminarasinham on a decision

reported in A.I.R. 1929 Madras 443 : The Secretary of State and another
vs. Murugesa Mudaliar and others. In that case, a suit had been filed by
the plaintiff in the Munsifs Court for a declaration that he was a duly elected
member of the Chingleput District Board. He impleaded as defendants the
district Board of Chingleput and the President of that Board. He prayed not
only for a declaration as stated above but also for the issue of a mandatory
injunction directing the defendants to recognise him as a duly elected member
of the District Board. The Government applied to the lower Court for being
added as a party. That application was refused by the District Munsif and a
civil revision petition was filed against that order by the Government. In that
case, Mr. Justice Venkatasubba Rao set aside the order of the District Munsif
and directed the Government to be made a party to the proceedings. In the
course of his judgment the learned Judge observed that there were several
sections in the Madras Local Boards Act (1920) vesting in the Government
power of control over the local boards and empowering the local Government
to suspend by order in writing, the execution of any resolution of any Local
Board. He thereafter refers to the distinction which existed between (i) persons
who ought to have been joined and (ii) persons whose presence was necessary
to enable the Court to completely and effectively adjudicate upon and settle
all the questions involved in the suit. He held in the facts of that case that the
510

presence of the Government was necessary to enable the Court to completely

and effectively adjudicate upon and settle all the questions involved in the
suit and directed the Government to be added as a party. This decision only
re-affirms the principle that person whose presence is necessary to enable
the Court effectually and completely to adjudicate upon and settle all the
questions involved in the suit could be joined as a proper party to the
proceedings. On the facts of the present case, the presence of the Reserve
Bank is not necessary to enable this National Tribunal to effectually and
completely adjudicate upon and settle all the questions involved in the
proceedings. No case has been made out for adding the Reserve Bank as a
party to the Reference and the application is in any event liable to be dismissed.

12. Reliance was placed upon a decision reported in 55 B.L.R. at page

334: Sitaram Hirachand Birla Vs Yograj singh Shankar Singh Parihar,
where a Division Bench of the Bombay High Court consisting of Chief Justice
Chagla and Shri Justice Dixit held in connection with a matter arising under
the Representation of the People Act that the Election Tribunal had power to
the election petition under section 90(2) of that Act. That section provides as
under ;

Subject to the provision of this Act and of any rules made thereunder,
every election petition shall be tried by the Tribunal, as nearly as
may be, in accordance with the procedure applicable under the
Code of Civil Procedure, to the trial of suits."

After considering the meaning of the expression shall be tried by the Tribunal,
having regard to the wording used in that sub-section, the Court held that the
Election Tribunal had power to add parties to the election petition. That decision
turns upon the provisions contained in section 90 (2) of the Representation of
the People Act and does not give much guidance in determining the question
raised before me.

AI

BE

10. It has been strongly urged before me that the provisions of Order 1,
rule 10 are not applicable to the proceedings before me and that I have no
jurisdiction to make an order of the nature asked for by the applicant, in
answer to this argument Shri S. Laximinarasinham strongly relied upon two
decisions of the Madras High Court. The first decision relied upon by him is
the one reported in 1954 I. L.L.J. 295 : Radhakrishna Mills Ltd. vs. Industrial
Tribunal, Madras and others. In that case Mr. Justice P. Govinda Menon
held that section 18(b) of the Act necessarily implied that parties other than
the original parties to an industrial dispute could be summoned as parties to
the proceeding. He held that, therefore, by necessary implication there was
vested in the Industrial Tribunal a power to add any person or establishment
whose presence was necessary, or proper for the due and just adjudication
of the disputes and make them parties to the proceeding He further held that
clause (b) of sect ion 18 when it spoke of all other parties summoned to
appear in the proceedings as parties to the dispute, necessarily implied
some persons other than the original parties to the dispute or persons whom
the State Government had subsequently added under section10(5) summoned
to appear in order that the award may become enforceable and binding on
those parties also. He held that section 18(b) is similar to order 1 rule 10(2)
of the Civil Procedure Code.

mean persons who are affected by or interested in the dispute i.e. necessary
or proper parties. They have observed that section 18(b) though apparently
wide in terms was intended to take only necessary or proper parties and
would not include parties against whom no relief was claimed or whose
presence was not necessary for adjudicating the dispute between the parties.

11. This decision followed an earlier decision given by a Division Bench

of the Madras High Court in the case of P. G. Brookes vs. The Industrial
Tribunal Madras, and others reported in 1953 II LL.J. p. 1. A Division Bench
of the Madras High Court in that case held that while section I8(a) of the
Industrial Disputes Act dealt with all parties (to the reference) to the industrial
dispute, section 18(b) referred to all other parties summoned to appear as
parties in the dispute. The judges held that this necessarily implied that
parties other than the original parties to an industrial dispute could be
summoned as parties to the proceeding and that such parties could be
summoned at the instance of a party or suo motu by the Tribunal by issuing
notice to them.According to them, section 18 (b) by necessary implication
gave power to the Tribunal to add parties. They further held that the expression
other parties summoned to appear as parties in the dispute could only
511

13. It has been strongly urged on behalf of the State Bank of India and
the Reserve Bank of India that the National Tribunal has not the same powers
as regards addition of parties which a Civil Court has under the provisions
contained in Order 1, rule 10 of the Code of Civil Procedure. My attention has
been drawn to the provisions contained in section 11(3) of the Industrial
Disputes Act where the legislature has in express terms provided that a
National Tribunal would have the same powers as are vested in a Civil Court
under Code of Civil Procedure, 1908, when trying a suit in respect of the
matters therein set out. Addition of parties is not one of the matters set out in
that sub-section. The question raised before me, however, is whether such a
power can be said to have been conferred by necessary implication having
regard to the language used in section 18 of the Industrial Disputes Act
1947. Sub-section (3) of section 18 refers to four different categories of persons
who would be bound by the award of a National Tribunal. Sub-section (b)
refers to all other parties summoned to appear in the proceedings as parties
to the dispute. This expression must of necessity refer to parties other than
the parties referred to in sub-section (a). From this it must follow by necessary
implication that a National Tribunal would have power to summon a person to
appear as a party to the dispute even though that person may not be a party
to the industrial dispute mentioned in the reference. Such a person would be
bound by the Award made by the National Tribunal unless the National Tribunal
512

APPENDIX F
BEFORE THE NATIONAL INDUSTRIAL TRIBUNAL (BANK
DISPUTES) AT BOMBAY
Miscellaneous Application No. 1 of 1961
in
Reference No, 1 of I960
(1) The State Bank of India Staff Union, Andhra Pradesh, Vijayawada.
(2) The State Bank of India Staff Union,Madras Circle, Madras ...
Petitioners
versus

The State Bank of India, Bombay

Respondent
In the matter of an application dated 2nd January 1961 for the issue of
summons for production of documents.

PRESENT :
The Honourable Shri Justice Kantilal T. Desai, Presiding Officer, National
Industrial Tribunal (Bank Disputes), Bombay.

BE

recorded the opinion that such a person was summoned without proper cause.
The question would still survive whether a National Tribunal has the same
powers which a Civil Court has in connection with the addition of parties
under the provisions contained in Order 1, rule 10 of the Code of Civil
Procedure. It is urged that there are two distinctive features which distinguish
a suit from a proceeding before a National Tribunal. The proceedings in a Civil
Court can be instituted at the volition of a party. The proceedings before a
National Tribunal can only be instituted on a reference made by the Central
Government. When a matter is instituted in a Court of law, it is instituted
ordinarily for the adjudication of existing rights and obligations between the
parties. The dispute that may be referred to a National Tribunal may or may
not relate to the enforcement of existing rights and obligations. A dispute
may be referred to a National Tribunal for the purpose of laying down fresh
terms of employment between an employer and his employees. Under the
provisions of the Industrial Disputes Act, 1947 a National Tribunal has power
by its award to lay down terms and conditions which would bind the employers
and employees and to create new rights and obligations. It is not necessary
for the purpose of the present proceedings to decide whether the power is
similar to the power exercised by a Civil Court under the Code of Civil
Procedure. Suffice it to say that there is no power in the National Tribunal to
add a person as a party to the dispute merely because that party is in some
way interested in the dispute.
14. In the result, the application fails and is dismissed.

AI

KANTILAL T. DESAI
Presiding Officer,
National Industrial Tribunal,
(Bank Disputes), Bombay-1.

APPEARANCES:
Shri Laxminarsinham for the Petitioners.
Shri P. P. Khamtala instructed by Shri R. Setlur of Messrs. Crawford Bayley
& Company, Solicitors, for the Respondent.
INDUSTRY : BANKING.

Bombay, dated 16th January 1961.

ORDER

1. The State Bank of India Staff Union, Andhra Pradesh, and the State
Bank of India Staff Union, Madras Circle, have filed an application before me
for the issue of summons to the Reserve Bank of India, Bombay, directing
the Reserve Bank of India to produce through any of its employees the returns
submitted by the State Bank of India to the Reserve Bank of India under
sections 25 and 27 of the Banking Companies Act during the years 1955 to
1960. It is stated that the said documents are relevant and essential for the
decision of the dispute between the State Bank of India and its workmen
pending before this Tribunal.
2. Section 25 (2) of the Banking Companies Act lays down that every
banking company shall, within one month from the end of every quarter submit
to the Reserve Bank a return in the prescribed form and manner of the assets
and liabilities referred to in sub-section (1) as at the close of business or the
last Friday of the previous quarter, or, if that Friday is a public holiday under
the Negotiable Instruments Act. 1881 (26 of 1881), at the close of business
on the preceding working day. Sub-section (1) of section 25 provides as

513

514

under :

Reserve Bank of India to the effect that it did not consent to the Reserve
Bank of India producing the said returns and that it had claimed and claims
privilege in connection with the production, disclosure and furnishing of the
said returns.

The assets in India of every banking company at the close of

business on the last Friday of every quarter or, if that Friday is a
public holiday under the Negotiable Instruments Act, 1881 (26 of
1881) at the close of the business on the preceding working day,
shall not be less than seventy-five per cent, of its demand and time
liabilities.

5. I directed notice of the application to be given to the State Bank of

India as the State Bank of India is vitally interested in the production of the
documents referred to in the application. The petitioners, when they filed an
application for discovery of documents in the possession of the State Bank
of India did not apply for the production of the copies of such returns submitted
by the State Bank of India even though the returns were relevant to the matter
under adjudication. Under the provisions contained in section 34-A of the Act
as the State Bank claims privilege in connecton with such returns in the
terms laid down in that section, the State Bank is not compellable to produce
copies of such returns. This application has been made with a view to
circumvent the provisions of section 34-A and get the original returns produced
when copies thereof in the possession of the State Bank of India could not
otherwise be got produced. I considered that it was just and proper to hear
the State Bank of India in connection with the present application and I have
heard counsel for the State Bank in connection therewith.

BE

By sub-section 3 (b) of section 25 it is provided that the expression

liabilities in India for the purpose of that section will not include the paid-up
capital or the reserves or any credit balance in the profit and loss account of
the banking company. Section 27 of the Act provides that every banking
company shall before the close of the month succeeding that to which it
relates submit to the Reserve Bank a return in the prescribed form and manner
showing its assets and liabilities in India as at the close of business on the
last Friday of every month or if that Friday is a public holiday under the
Negotiable Instruments Act, 1881, at the close of business on the preceding
working day. Sub-section (2) of that section provides that the Reserve Bank
may at any time direct a banking company to furnish it within such time as
may be specified by the Reserve Bank, with such statements and information
relating to the business or affairs of the banking company (including any
business or affairs with which such banking company is concerned) as the
Reserve Bank may consider necessary or expedient to obtain for the purposes
of the Act, and without prejudice to the generality of the foregoing power may
call for information every half-year regarding the industry.

4. The petitioners have filed an affidavit in rejoinder in which it has been

contended that the returns submitted to the Reserve Bank of India become
the documents of the Reserve Bank of India and cannot any longer be the
documents of the State Bank of India, though they may relate to the State
Bank of India. It is further contended that the privilege conferred under section
34-A of the Banking Companies Act does not extend to documents belonging
to a third party summoned to produce the same as a witness. It is further
contended that the production of the documents referred to in the application
was a matter between the petitioners and the Tribunal and that the State
Bank of India was not entitled to be heard in connection therewith.

AI

3. Notice of this application was given to the State Bank of India. The
State Bank of India has resisted this application contending that the returns
submitted by the State Bank of India to the Reserve Bank of India under
sections 25 and 27 of the Banking Companies Act are the documents of the
State Bank of India and that they were confidential in nature. The State Bank
of India has further claimed that the production and disclosure of such returns
would involve disclosure of information relating to reserves not shown as
such in the State Banks and its predecessors published Balance Sheets
and particulars not shown in the State Banks and its predecessors Balance
Sheets in respect of provisions made for bad and doubtful debts and other
usual or necessary provisions by the bank. It is further stated that if the said
returns were compared with the published balance sheets of the State Bank
of India and its predecessors, it would disclose information relating to reserves
not shown as such in the State Banks and its predecessors published balance
sheets and particulars not shown in the State Banks and its predecessors
balance sheets in respect of provisions made for bad and doubtful debts and
other usual or necessary provisions made by the Bank. On behalf of the
State Bank of India privilege was claimed from production and disclosure of
the said returns, whether through the hands of the Reserve Bank of India or
otherwise. It is further stated that the State Bank of India was writing to the
515

6. It is urged on behalf of the petitioners that section 34-A of the Banking

Companies Act, 1949, merely provides that no banking company can be
compelled by the Tribunal to produce, or give inspection of, any of its books
of account or other document or furnish or disclose any statement or
information, when the banking company claims that such document,
statement or information is of a confidential nature and that the production or
inspection of such document or the furnishing or disclosure of such statement
or information would involve disclosure of information relating to (a) any reserves
not shown as such in its published balance sheet, or (b) any particulars not
shown therein in respect of provisions made for bad and doubtful debts and
other usual or necessary provisions. It is urged that this section does not
prevent any evidence being given by any other person in connection with the
documents, statements or information referred to in that section. The legislature
has not laid down by that section that no evidence could be led in connection
with such documents, statements or information. The legislature has confined
516

10. In the result, the application fails and is dismissed.

BE

7. Strong reliance has been placed on behalf of the State Bank of India
on the provisions contained in section 28 of the Banking Companies Act,
1949. That section provides that the Reserve Bank, if it considers it in the
public interest so to do, may publish any information obtained by it under the
Banking Companies Act in such consolidated form as it thinks fit. Under the
Banking Companies Act itself, having regard to the provisions contained in
section 29 of that Act and form B in Schedule III, it is open to a bank not to
show in its profit and loss account any provisions made during the year for
bad and doubtful debts and other usual or necessary provisions. When returns
are filed under sections 25 and 27 of the Act, which would lead to the disclosure
of any reserves not shown as such in the published balance sheet or any
particulars not shown therein in respect of provisions made for bad and doubtful
debts and other usual or necessary provisions, the legislature has provided
the necessary safeguards by section 28. The Reserve Bank is given liberty
to publish information so obtained only in the manner set out in the said
section 28, viz. in such consolidated form as it thought fit, and that too if the
Reserve Bank considered it in the public interest so to do. This section
postulates that information so derived could only be published in a
consolidated form in the interest of the public. If follows therefrom that the
Reserve Bank is not at liberty to publish such information obtained by it in
any other form and except in the public interest. The information so furnished
is information of a confidential nature.The production of the returns by the
Reserve Bank would be contrary to the intendment of the Act.In my view the
petitioners are not entitled to have the said documents produced by the
Reserve Bank of India.

Evidence Act. He contends that under the provisions of section 162 of the
Indian Evidence Act, a witness summoned to produce a document is bound,
if it is in his possession or power, to bring it to Court, notwithstanding any
objection which there may be to its production or to its admissibility and that
the validity of any such objection is then to be decided on by the Court. It is
not necessary for the purpose of the present application to determine whether
a Tribunal is a Court within the meaning of the Indian Evidence Act, 1872.
Section 162 applies after a witness is summoned to produce a document, it
is then the duty of the witness to produce it in Court, even though that witness
may have an objection to its production or to its admissibility. I am at present
considering the question before the issue of a summons to the Reserve Bank
of India to produce the returns. That section has no application to the facts of
the present case. Before issuing a summons to a witness to produce any
document, I have to consider whether I should in the exercise of my power
issue such a summons to the witness or not. Having regard to the facts and
circumstances of the case, I do not consider it either just or proper to issue
a summons to the Reserve Bank of India to produce the documents mentioned
in the application.

the operation of the section to the banking company concerned being

compelled in connection with the production or the giving of inspection of its
books of account or other documents or the furnishing or disclosure by such
banking company of any statement or information of the kind set out in the
section. In my view, there is nothing in that section which by itself would
preclude evidence being given by other persons in connection with such
documents, statements or information.

AI

KANTILAL T. DESAI,
Presiding Officer,
National Industrial Tribunal
(Bank Disputes), Bombay

8. It is urged by Shri Laxminarsinham that once statements are furnished

under sections 25 and 27 of the Act by the State Bank of India to the Reserve
Bank of India, they cease to be the property of Ihe State Bank of India and
become the property of the Reserve Bank of India. Shri Khambata contests
this proposition. It is not necessary for the purpose of the present application
to determine whether the documents cease to be the property of the State
Bank on the same being furnished to the Reserve Bank of India. Whether the
documents constitute the property of the State Bank or of the Reserve Bank,
in my view, they are not liable to be produced.
9. Shri Laxminarsinham has further contended that the Tribunal is a
Court within the meaning of the Indian Evidence Act, 1872, and has relied
upon the definition of the expression Court given in section 3 of the Indian
517

518

PRESENT:

APPENDIX G
BEFORE THE NATIONAL INDUSTRIAL TRIBUNAL (BANK DISPUTES)
AT BOMBAY

The Honourable Shri Justice Kantilal T. Desai, Presiding Officer, National

Industrial Tribunal (Bank Disputes), Bombay.

Miscellaneous Application No. 2 of 1961

with
Miscellaneous Application Nos. 3 and 4 of 1961
in
Reference No. 1/60.
Miscellaneous Application No. 2 of 1961,
dated 19th January 1961
The All India Bank Employees Federation,
C/o Shri C. L. Dudhia, Advocate, Vithal Sadan,
Vithalbhai Patel Road, Bombay-4

Applicant

BE

versus
The Banking Companies and Corporations specified in
Schedule No. I to the Order No. S.O. 705, dated the
21st March 1960 and in the Schedule to the Order,
dated 4th June 1960 of the Government of India in the
Ministry of Labour and Employment, New Delhi

Opponents

Miscellaneous Application No. 3 of 1961,

dated 20th January 1961

Applicant

versus
The Bank of Baroda Ltd., and other Banking Companies and
Corporations covered by the Reference ...

Opponents

AI

All India Bank of Baroda Employees Federation, Bombay ...

Miscellaneous Application No. 4 of 1961,

dated 20th January 1961
Indian Overseas Bank Employees Union, Madras

Applicant

versus
The Indian Overseas Bank Ltd., and Banking Companies and
Corporations covered by the Reference
Opponents
In the matter of Application for furnishing the certificates by the Reserve
Bank of India under Section 34-A of the Banking Companies Act, 1949
519

APPEARANCES:
(1) Shri C. L. Dudhia, Advocate, for the applicant in Miscellaneous
Application No. 2 of 1961.
(2) Shri H. K. Sowani, Advocate, for the applicants in Miscellaneous
Application Nos. 3 and 4 of 1961.
(3) Shri K. T. Sule, Advocate, for the All India Bank Employees
Association.
(4) Shri Nagarkatti for the All India State Bank of India Staff Federation.
(5) Shri Jyoti Ghose for the State Bank of India Employees Association.
(Bengal and Delhi Circles).
(6) Shri Ekambaran for the State Bank of India Staff Union, Andhra
Pradesh, Vijayawada, and Madras Circle.
(7) Sarvashree N. V. Phadke and K. H. Bhabha, Councel, instructed
by Sarvashree N. K. Petigara and J. P. Thacker of Messrs. Mulla
and Mulla and Craigie Blunt and Caroe, Solicitors, for the Indian
Banks Association.
(8) Shri R. Setlur, of Messrs. Crawford Boyley & Co., Solicitors, for
the 8 subsidiary banks of the State Bank of India.
(9) Shri P. P. Khambata, Counsel, instructed by Shri R. Setlur of
Messrs. Crawford Bayley & Co., Solicitors, for the State Bank of
India.
(10) Shri D. B. Tilak, Advocate, Supreme Court of India, for the Bharat
Lakshmi Bank Ltd., the Bank of Nagpur Ltd., the Union Bank of
Bijapur and Sholapur Ltd., and the Chaldean Syrian Bank Ltd.
(11) Shri A. S. Asayekar, Advocate, for the Travancore Cochin Bankers
Association.
INDUSTRY : BANKING
Bombay, 20th January 1961.
ORDER
1. The All India Bank Employees Federation has made an application
for the furnishing of certificates by the Reserve Bank of India under section
34-A of the Banking Companies Act, 1949. It is stated in the application that
the same was made without prejudice to the rights and contentions of the
Federation in connection with the validiiy of the Banking Companies
(Amendment) Act, 1960, whereby section 34-A was inserted in the Banking
Companies Act, 1949. It is stated in the application that a question has
arisen in the present proceedings for judging the financial capacity of each
bank to bear any increased financial burden that may be imposed upon it as
a result of the award that may be made and that I should direct the Reserve
Bank of India to furnish to me in respect of each bank specified in the scheduled
520

are the categorisation of Banks and areas for the purposes of the present
adjudication scales of pay, the method of adjustment in the scales of pay
and dearness allowance with particular reference to the question whether
any part of the existing dearness allowance should be absorbed in the basic
pay. The item relating to categorisation of banks is an item in which all the
banks are interested. The banks have in the past been classified in various
categories and different scales of pay have been provided in respect of banks
according to their categorisation in different classes. All the banks falling
within one class have the same scales of pay provided for them. In order to fix
the scales of pay for different classes of Banks, it is necessary to consider
the paying capacity of the banks falling within different classes.
The employees of all the banks falling within one particular class would
be interested in the scales of pay that may be fixed for that class and are
further interested in showing the paying capacity of the banks falling within
that class. They are also interested in the scales of pay in respect of Banks
falling within other classes in so far as such scales of pay may have a bearing
on the fixation of the scales of pay in respect of the class of the banks in
which they are employed. They have a right to make the present application
not merely in respect of the banks of which they are the employees but in
respect of other banks also. In my view, there is no substance in the contention
that the All India Bank Employees Federation is not entitled to maintain the
application in respect of the State Bank of India. In my view, all the applicants
are entitled to maintain their respective applications in connection with the
State Bank of India.

annexed to the application, a certificate as contemplated by the provisions of

section 34-A of the Banking Companies Act, 1949. A similar application has
been made by the All India Bank of Baroda Employees Federation and by
the Indian Overseas Bank Employees Union, Madras.
2. The application is supported by the Surat Bank Employees Union,
the Vadodra Rajya Bank Nokar Sangh and the State Bank of Patiala (All
Cadres)Employees Association. The application is opposed by the All India
Bank Employees Association, the State Bank of India Employees Association
(Bengal and Delhi Circles), the State Bank of India Staff Union, Andhra
Pradesh, Vijayawada, and the State Bank of India Staff Union, Madras Circle.
The All India State Bank of India Staff Federation, the State Bank of India and
its subsidiaries and the Indian Banks Association have submitted to the
orders of this National Tribunal. Shri Tilak and Shri Asaykar on behalf of the
banks represented by them respectively have no objection to the application
being granted.

AI

BE

3. The All India Bank Employees Association has contended that the
Reserve Bank is an interested party, that the Reserve Bank is opposed to
any wage increase in connection with its own staff and that of other banks,
that its certificates were likely to be on the lines on which the individual
banks would like to have them, that once the certificates are issued they are
bound to influence this National Tribunal, that the Association intended tp
challenge the validity of Section 34A of the Banking Companies Act at a later
stage and did not want to compromise this issue in any manner and that it
could not support the application. It is not necessary to set out the other
grounds urged by Shri Sule on behalf of the All India Bank Employees
Association. The State Bank of India Staff Union, Andhra Pradesh,
Vijayawada, and the State Bank of India Staff Union, Madras Circle, have
also contented that section 34-A of the Banking Companies Act is invalid in
law, that the Reserve Bank of India is a body deeply baised against the
workmen of the banks and that it was not open to the All India Bank
Employees Federation or any ration or any other Organisation not representing
the workmen of the State Bank of India to ask for such a certification in
relation to the State Bank of India. They have submitted that I should not
refer the question at least so far as the State Bank of India is concerned to
the Reserve bank, Shri Ghose for the State Bank of India Employees'
Association (Bangel and Delhi Circles) opposed the application Inter alia on
the grounds that the Reserve Bank was biased.
4. I have already held in Miscellaneous Application No. 10 of I960 and
other Miscellaneous Applications by my order dated on 31st October I960
that Section 34A does not violate the fundamental rights guaranteed under
Article 14 of the Constitution of India and that it is valid.
5. By the order of Reference dated 21st March 1960 the Central
Government has referred the disputes in respect of matters specified in the
Second Schedule thereto for adjudication. Among the matters so referred
521

6. The question of the paying capacity of banks has been in issue before
me. All the banks except the Exchange Banks have pleaded their inability to
meet the demands of the workmen as made and it is necessary for me to
determine the paying capacity of the banks in connection with any financial
burden that may be imposed upon them. A large number of banking companies
have claimed the protection afforded by section 34-A(l) of the Banking
Companies Act, 1949. As a question has arisen as to whether any amount
out of the reserves or provisions referred to in sub-section(1) of Section 34A
should be taken into account by me in considering the financial capacity of
the banks concerned to bear any increased burden that may be imposed
upon them by reason of the award that I might make, I refer that question to
the Reserve Bank of India in exercise of the powers conferred on me under
sub-section (2) of Section 34A of the Banking Companies Act in connection
with the 62 banks mentioned in the annexure to the aforesaid applications.The
Reserve Bank should, after taking into consideration the principles of sound
banking and all relevant circumstances concerning the aforesaid banking
companies furnish to me a certificate in respect of each of the aforesaid
banks as provided by sec. 34A(2) stating whether I should not take into
account any amount as such reserved and provisions of the banking company
522

concerned or may take them into account specifying the extent of the amount
to which only I may so take them into account. A list of the Banks in respect
where of the aforesaid certificates are required is hereto annexed and marked
A.
7. I am informed on behalf of the Reserve Bank of India that it will take
about two months time to furnish the requisite certificates.

BE

ANNEXURE A.
Allahabad Bank Limited.
Ambat Bank Limited.
Bank of Baroda Limited.
Bank of India Limited.
Bank of Behar Limited.
Bank of Maharashtra Limited.
Bank of Rajasthan Limited.
Bharatha Lakshmi Bank Limited.
Canara Bank Limited.
Canara Banking Corporation Limited.
Canara Industrial and Banking Syndicate Limited.
Catholic Syrian Bank Limited.
Central Bank of India Ltd.
Chaldean Syrian Bank Limited.
Cochin Commercial Bank Limited.
Devkaran Nanjee Banking Company Limited.
Gadodia Bank Limited.
Hindustan Commercial Bank Limited.
Hindustan Mercantile Bank Limited.
Indian Bank Limited.
Indian Insurance and Banking Corporation Limited.
Indian Overseas Bank Limited.
Jaya Laxmi Bank Limited.
Jodhpur Commercial Bank Limited.
Karnataka Bank Limited.
Lakshmi Commercial Bank Limited.
Narang Bank of India Limited.
National Bank of Lahore Limited.
Nedungadi Bank Limited.
New Bank of India Limited.
Oriental Bank of Commerce Limited.
Pandyan Bank Limited.

AI

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17
18.
19
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.

523

Punjab Cooperative Bank Limited.

Punjab and Kashmir Bank Limited.
Punjab National Bank Limited.
Punjab and Sind Bank Limited.
Safe Bank Limited.
State Bank of Bikaner.
State Bank of Hyderabad
State Bank of India.
State Bank of Indore.
State Bank of Jaipur.
State Bank of Mysore.
State Bank of Travancore.
South Indian Bank Limited.
Union Bank of India Limited.
United Bank of India Limited.
United Industrial Bank Limited.
United Commercial Bank Limited.
Vijaya Bank Limited.
Vysya Bank Limited.
Andhra Bank Limited.
Ganesh Bank of Kurundwad Limited.
Miraj State Bank Limited.
Nadar Mercantile Bank Limited
Pangal Nayak Bank Limited.
Rayal Aseema Bank Limited.
State Bank of Patiala.
State Bank of Saurashtra.
Trivandrum Permanent Bank Limited.
Union Bank of Bijapur and Sholapur Limited.

KANTILAL T. DESAI,
Presiding Officer,
National Industrial Tribunal
(Bank Disputes),
Bombay-1.

33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.

[No. 56 (6)/62-LRIV],
P. M. MENON ,Secy.

524