The Hindu Business Line : Banks legally bound to make temporary hands permanent: HC

Chennai March 16 Though nationalised banks are institutions under Union Government, they did not cease to be establishments for purpose of definition of term "industrial establishment" under the TN Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981, the Madras High Court has ruled.

Hearing writ appeals by temporary sub-staff of State Bank of India challenging order of single judge holding that nationalised banks were exempted from operation of TN Shops & Establishments Act and hence they were not governed by Permanent Status Act, the First Bench, comprising Chief Justice Mr A.P. Shah and Mr Justice K. Chandru, held that the Permanent Status Act would apply to banks, including nationalised ones.

Setting aside the order of single judge, the Bench directed the single judge to decide afresh the issue of permanency in accordance with law.

Mr V. Elayaperumal and others were temporary employees in subordinate cadres in various branches in Tiruchi zone during July 1, 1975 to December 31, 1987.

Aggrieved by the bank's refusal to absorb them on permanent roll as per settlement, they went to the Inspector of Labour, Tiruchi seeking justice.

The Inspector of Labour ordered that appellants were entitled to permanent status.

The bank filed a write in the High Court to set aside order of Inspector of Labour. The single judge allowed the petition. Hence, the present appeals by employees.

The employees contended that they had been working in the bank for over 480 days in a period of 24 calendar months, and hence, they were entitled to permanency under Permanent Status Act.

The bank in its order dated January 31, 1997 rejected their contention on the grounds that it being a Central Government establishment, it was exempt from TN Shops & Establishments Act. Consequently, the Permanent Status Act was also not applicable to it.

The First Bench said in the present case, definition of establishment was virtually lifted from Shops Act and had been incorporated in Permanent Status Act.

Hence, the provisions of clause of sub-section (1) of Section 4 of Shops Act, which exempted Central Government establishments, was of no consequence, as Permanent Status Act would continue to apply to such establishments unless and until exemption had been obtained from State Government under Section 9 of Permanent Status Act.

"We hold that provisions of Permanent Status Act will apply to banks, including nationalised banks".

The Bench said set aside the order of the single judge. The matter was remitted back to single judge for deciding issue of permanency in accordance with law, within 3 months.

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