Explained: Public Utility Service

Reading time: 8-10 minutes.

The Union Ministry of Labor and Employment and the Department of Financial Services vide circular dated 20th April 2020 declared the banking industry as Public Utility Service. This decision comes in effect from 21st April 2020 till 21st October 2020. This is not a novel order as the banking industry falls under the public sector category under the Industrial Disputes Act, 1947. It has been a few decades where such orders are sporadically announced by the concerned ministry.

Such orders, according to the provisions laid down in section 2(n) of the Industrial Disputes Act, should not exceed 6 months. However, it may be extended by another order if the need emerges. This decision of the government comes on the anticipation of possible strikes by the bank employees. This may provoke chaos and result in escalating the already present struggles of the country’s economy.

What is a Public Utility Service (PUS)?

According to R. G. Hawtrey, PUS may be defined as “a service in which a tendency to a local monopoly needs an intervention of a public authority to defend the interests of the consumers.”

The fundamental characteristics of the public utility service are:

  • Supply of indispensable necessities
  • Consistent and non-transferable demand
  • Monopoly
  • Massive capital investments
  • Numerous powers of regulation and control for social advantage

Discussing the forms of the PUS, there are three main ones:

  • Public Authority
  • A private company (with complete or limited monopoly)
  • Public & Private company (Joint ownership)

Which banks will come under the PUS now?

There are many employees and unions in the banking sector. Their main aim is to negotiate wages every three years with the Indian Banks’ Association (IBA). All banks that are members of IBA will come under this latest order including:

  • All public sector banks,
  • Old generation private banks like HDFC Bank, ICICI Bank, Axis Bank & Federal Bank,
  • Some of the oldest foreign banks like HSBC, StanChart, and Citibank.

New generation private lenders like Kotak Bank, IndusInd Bank, and Yes Bank are outside the purview of IBA norms.

Significance of this development

Keeping in hindsight the impacts of the novel coronavirus which every country in the world is facing and suffering from, the Indian government came up with its latest decision of declaring banks as PUS. India is no exception to the sufferings meted out by this pandemic. It was essential to cure or at least allow the supply chain to recover from its ill-effects. A robust banking system plays an important role in such a scenario and might act as a bridge between two basic problems of economic recession and social welfare.

Banks around the globe will play a critical role in these times. This is because they act as “systemic stabilizers for their employees, their customers, and for the economies at large”. Banks provide multiple essential services such as cash and deposit services, credit extension, payment facilitation, and market-making among others. Thus, they need to be careful in their approach towards their workforce, the services they provide, and risk exposure.

This step by the government will ensure that such a bridge will form where banks can act not only as a relief provider for our economy but also for the people. The need for essential banking services through these trying times will continue.

A majority of households and businesses will be negatively affected by the unprecedented nature and extent of the current health crisis. The financial impact of quarantine measures will further stress those who are already in debt. Among businesses, the impact will vary from sector to sector. Industries including travel and tourism, entertainment, automotive, and oil and gas among others are most affected due to disruptions in the demand and supply chain. Small businesses that cannot shift to remote work and online delivery and those catering to the most vulnerable sectors are also likely to be severely affected. Those sectors are in immediate need of money supply which can only be ensured by banks.

Thus, the government’s decision will prove as a stimulus and provide the needed stability in the banking sector. This will help the country fight the pandemic. In such a situation, any form of inconvenience caused to the banking sector in forms of strikes and lockouts can impede the functioning of the banks.

In India, there is a fundamental right to protest under Article 19 of the Constitution but there is no such fundamental right for strikes. The right to strike is a legal right and comes with restrictions as laid down under the provisions of the Industrial Disputes Act. In All India Bank Employees Association v National Industrial Tribunal & Others (1962 AIR 171), the Hon’ble Supreme Court held that “the right to strike or right to declare lockout may be controlled or restricted by appropriate industrial legislation and the validity of such legislation would have to be tested not with reference to the criteria laid down in clause (4) of Article 19 of the Constitution but by totally different considerations.” Therefore, legislation can and does restrict the right to strike by deeming certain strikes illegal. If the strike is not as per the grounds laid down in sections 22, 23, 24, 10(3) and 10A (4A) of the Industrial Dispute Act, it will be considered illegal.

A person employed in PUS is not allowed to go on a strike if the requisites provided under the relevant sections are fulfilled. Thus, the government by declaring banks as PUS will ensure that the various unions in the banking sector are unable to call for a strike. There were disagreements all over the sector regarding the merging of banks. This step comes in the backdrop of the COVID-19 pandemic and previous disagreements. During this chaotic time, when the economy of the country is already struggling due to the spread of the highly contagious disease, the last thing the government would aspire for is a strike by the bank unions.

What is PUS under the Act?

Public Utility Service is defined under section 2(n) of the Industrial Disputes Act, 1947. This definition circumscribes six major industries and services that meet the regular exigencies of people. These are:

  • Railway service (for the carriage of passengers or goods),
  • Any service related to the working in a major dock or a port,
  • Any section of an industrial establishment upon which the safety of the workmen depends,
  • Any telegraph, telephone or postal service,
  • Any power, light, and water supplying industry, and
  • Any other industry specified in the First Schedule of the Industrial Disputes Act.

There are about 27 industries mentioned under the first schedule that may be transformed into a public utility service by the order of the appropriate government under section 2(n) (vi) of the Act. These industries include transport (other than railways) for the carriage of passengers or goods, banking, cement, coal, and iron and steel industry among others. They can be declared as PUS according to the urgency of the situations faced by the government. Thus, the government can transform any industry as PUS whenever the demand by the public at large rockets or according to any other such emergency.

Relevant provisions

As mentioned earlier, a public service utility is defined under section 2(n) of the ID Act. The provisions prohibiting strikes in PUS are laid down under sections 22, 23, 24, 25, and 26 of the Act.

The foremost rationale of the government’s present order is to prevent strikes by the bank unions and employees. The term ‘strike’ is defined under section 2(q) of the ID Act as “a cessation of work by a body of persons employed in any industry acting in combination or a concerted refusal, or a refusal under a common understanding, of any number of persons who are or have been so employed to continue to work or to accept employment”. Section 22 of this Act is of paramount significance as it discusses the prohibition of strikes and lock-outs. It prevents both the employers and the employees of public utility service from calling for a strike and a lock-out respectively. If a strike or a lock-out has to be called, it must be according to the provisions of this section. The pre-requisites for going on a strike are as follows:

  • The employee must give notice to the employer at least 6 weeks before going on a strike.
  • A strike cannot be permitted within 14 days of the abovementioned notice.
  • An employee cannot go on a strike before the expiry of the date of that strike.
  • A strike will not be authorized during the pendency of conciliation proceedings or 7 days after the conclusion of such a proceeding.

Similar provisions are in place for the lock-outs as well. Thus, it becomes clear that the employees of PUS are not barred from going on a strike. They, however, have to follow certain conditions. Section 23 of the Act lays down the provisions for the general prohibition of strikes and lock-outs.

Since the government has declared banks as a public utility, the banks’ employees have to follow the conditions as specified in section 22 in addition to section 23 of the ID Act. Thus, if those conditions are not met, the strikes would be considered as illegal strikes.

Section 24 defines illegal strikes and lock-outs. It states that any strike or lock-out will be illegal if it is in contravention of sections 22, 23, or contravention of an order made under sections 10(3), or section 10A(4A).

Moreover, section 25 prohibits financial aid to illegal strikes or lock-outs.

Critical analysis

Banks were included in the first schedule of the ID Act in 2001. It is not the first time that an order declaring banks as PUS is has been made. This has been a routine work for the government for the last few decades. Whenever the government introduces some reforms and there is an apprehension that there would be resentment from banking unions, the government makes such an order. This is done to prevent any disruptions that can be caused to the people and the nation’s economy due to the strikes or lock-outs.

The major reasons for a strike in an industry are working conditions, reduction in salaries, dismissal of workmen, and dissatisfaction with government policies among others. Recently, there was dissatisfaction in the banking sector about the merging of various banks. Considering the present situation where the nation has to put up a fight against the COVD-19 pandemic, the government found it essential to declare banks as a PSU. This step was taken under the provisions of the Industrial Disputes Act to prevent any disorder and confusion that might arise.

This order was necessary as the economy of the country is already suffering. Banks are the spine of an economy. They can impact economic growth, GDP, economic stabilization, as well as employment generation in direct and indirect ways. They also help to develop many other sectors of the economy. Thus, it was an essential step as it will not only curb the strikes but also protect the interests of the customers now. However, it cannot be ignored that a benefit to the economy and the people has come at the cost of curbing the voices of the unions in the banking sector.

The employees and officers of various banks have their unions, who negotiate for wage settlements with the IBA, every three years. There are also various decisions of the government to which these bank unions might not agree. Thus, the declaration of banks as PUS might have adverse impacts on the banks’ employees.

Conclusion

Recently, the Union Government declared banks as public utility services. This order will remain in effect for six months starting from 21 April 2020 till 21 October 2020. This notification was issued by the Labor Ministry on April 17 against the backdrop of the coronavirus pandemic. The main purpose of this order is to prevent the banking sector from going on strikes starting from 21st April. It will further help to bring stabilization in a dwindling economy and allow the government to look after the interests of the customers.

Author: Mansanwalpreet  from Rajiv Gandhi National University of law and Alisha Singh from Lloyd Law College, Greater Noida.

Editor: Arya Mittal from Hidayatullah National Law University, Raipur.

Transfer of judges

Reading time: 6-8 minutes.

“When justice has to triumph, it will triumph…Be with the truth—Justice will be done.” These were the words of Justice S. Muralidhar, the third most senior judge of the Delhi High Court, as he delivered his farewell speech to a large gathering of his colleagues from the Bench and the Bar.

On the night of February 26, when a part of Delhi was still burning, the Central Government notified the transfer of Justice Muralidhar to the Punjab & Haryana High Court. The next morning saw the social media flooded with posts questioning the intention behind the transfer. Many media outlets questioned it too and Justice Muralidhar became the judge who was transferred for reprimanding the police over their inaction. This was the birth of controversy and the Centre was in the middle of it.

The controversy

In his own words, February 26 was the longest day of Justice Muralidhar’s career. It marked the fourth day of the Delhi riots. At 12.30 am Justice Muralidhar sat down to deal with a Public Interest Litigation (PIL) filed by Rahul Roy that sought safe passage of ambulances carrying the riot victims. Later, on the same day, he along with Justice Talwant Singh heard another PIL from the Chief Justice’s board.

It was while hearing this PIL that Justice Muralidhar stated that the city won’t see a repeat of the 1984 anti-Sikh riots, at least not under the watch of the court. He reprimanded the police over their inaction and directed them to register FIRs against leaders including Anurag Thakur, Parvesh Verma, Abhay Verma and Kapil Sharma for alleged hate speech that led to violence in Northeast Delhi. He also directed for the constitution of a Special Investigation Team (SIT), deployment of army and compensation to the injured and the dead among other things.

His stance filled the people with hope which was soon taken away when close to midnight the Central Government issued the notification of the transfer of Justice Muralidhar to the Punjab & Haryana High Court. It was not taken to be a routine transfer because of its hurried manner and was instead being called a punitive action for speaking against the leaders of BJP, who is in power at the Centre.

Ravi Shankar Prasad, the Law Minister of India defended the midnight transfer order and stated that it was a decision that had already taken place two weeks back. This controversial notification came in furtherance of the recommendation made by the Supreme Court Collegium headed by the Chief Justice of India, S A Bobde which on February 12 had recommended the transfer of Justice Muralidhar along with two other judges. The collegium did not specify any reason for the transfers, as has been the practice.

This transfer recommendation was condemned by the Delhi High Court Bar Association, which not only abstained from work for a day as a mark of their protest but also demanded the collegium to revisit its decision and recall it. Justice Muralidhar—who is known for deciding cases such as the Sajjan Kumar case, Naz Foundation case, and Hashimpura massacre case, clarified that his opinion was sought by the SC collegium concerning his transfer and that he had no issues with it. He has since then taken charge at the Punjab & Haryana High Court and is the second most senior judge there.

Procedure for transfer of judges in India

The procedure for transfer of judges from one High Court to another in India is governed by the Supreme Court collegium headed by the Chief Justice of India. Apart from the CJI, the collegium consists of the Chief Justice of the High Court from which the judge is to be transferred, the Chief Justice of the High Court to which he would be transferred, and one or more senior-most Supreme Court Judges.

The collegium headed by the CJI makes the recommendation for the transfer which is referred to the Government of India along with the views of all the judges involved in making the recommendation. This recommendation is then submitted by the Union Law Minister to the Prime Minister who then advises the President on the transfer of the concerned High Court Judge. Once the transfer is approved by the President, the transfer is announced and then notified in the Gazette.

Legal/Constitutional provisions

The provisions of Article 222 of the Constitution of India govern the procedure of transfer of a judge from one High Court to another.

This article has an absence of guidelines concerning the transfer of judges and has been a part of many judicial interpretations over the years. In Union of India v Sankalchand H. Sheth [(1976) 17 Guj LR107], the transfer of Justice Sheth was challenged because such transfer had taken place without the consent of the Judge and without consulting the CJI. In this case, it was held that the transfer of judges cannot be made without consulting the CJI and must be made only in public interest..

The decision of the Sankalchand H. Sheth case was followed in S. P. Gupta v Union of India [(1982) 2 SCR 365] which is also known as “the First Judges case”. The decision, in this case, gave the primacy to the Executive and not the CJI in matters of appointments and transfers.

The Supreme Court Advocates-On-Record Association v Union of India [AIR 1994 SC 268], commonly known as “the Second Judges Case”, overruled the decision of the First Judges Case. It gave back the primacy to the Judiciary in matters of appointments and transfers. The Hon’ble Supreme Court also established that the CJI will form his opinion by taking into account the views of two senior-most judges of the Supreme Court. It was also held that the opinion of the CJI was also determinative in mattes of transfers.

It was in 1998 that the then President K. R. Narayanan sought the opinion of the Supreme Court concerning judicial appointments and transfers. The Supreme Court thus laid down that the sole recommendation of Chief Justice of India does not constitute “consultation” to fall within the meaning of Article 222. The recommendation for appointments and transfers must be made by the CJI in consultation with four senior-most judges of the Supreme Court. 

Criticism of the system

The transfer of Justice Muralidhar is not a sole case of a transfer that was met with controversy. Similar cases have erupted in the past as well and have forced some questions to be raised on the Supreme Court Collegium.

The transfer of a judge from one High Court to another can be made only in the name of public interest and for better administration of justice. However, on more than one occasion, the transfer orders of High Court Judges have left the people wondering as to what manner of public interest is being fulfilled by such transfers. There are rarely any explanations or reasons given behind the recommendations; the people are merely expected to have faith in the working of the said collegium, even though it has promoted opaqueness rather than transparency.

The 1970s saw the supersession of many senior Supreme Court judges for appointment for the office of Chief Justice of India. Similar was the issue in transfers of High Court Judges. There was a lot of arbitrariness and bias that reeked out of these decisions. It was only in the later years that the Hon’ble Supreme Court through its decisions put a check on executive arbitrariness by giving a primacy to the judiciary in matters relating to appointments and transfers of judges. It also stated that “the plurality of judges in the formation of the opinion of the Chief Justice of India” will act as an in-built check on any further bias or arbitrariness.

The Second Judges case and the Third Judges case laid down guidelines and norms that were supposed to stop the erosion of independence of judiciary. And yet, there are instances of transfers of Justice Rajiv Shakdher of Delhi High Court, Justice Jayant Patel of Gujarat High Court, and more recently the transfer of Madras High Court Chief Justice V K Tahilramani which force out the question — has the judiciary become complacent about its own independence?

Scope of improvement

History is proof that the power of transfer of High Court Judges has been abused. Despite the Supreme Court’s decisions on this subject which clearly state that a transfer cannot be a punitive measure, the feeling of a judge’s transfer being an act of punishment persists. Time and again the transfers of High Court Judges from Justice Jayant Patel to Justice Muralidhar are met with controversy and the lack of explanation on the part of the collegium fuels it further. Merely making the recommendations of transfer public is not an act towards transparency.

Judicial reforms are the need of the hour to maintain the faith of a common citizen in the Courts of law. The Supreme Court has in many decisions established the importance of a “reasoned decision”. It has stated that recording of reasons is “the heartbeat of every conclusion” and “the lifeblood of judicial decision making”. It is, thus, time for the Apex Court to revisit its reasoning. After all, when the law of the land is the same for everyone, then, why should the case of transfer of judges be not treated with the same principles of a reasoned decision?

Conclusion

Justice Muralidhar was transferred amid protests. His transfer was already marred with controversy as the SC collegium did not state any reason for making such a recommendation of the transfer. The non-stating of reasons has been a practice of the collegium and has on more than one occasion raised questions. The controversy was further fueled when the transfer was notified at around midnight. A routine transfer was suddenly shrouded with clouds of doubts and suspicions.

Even though the recommendation was made two weeks before, it was not welcomed by the legal fraternity. The government’s hurried and abrupt notification sowed the seeds of mistrust and a disappearing faith in the minds of the common people. A lack of reasoning and explanation led way to more conjectures.

The Judiciary needs to remain independent to ensure the delivery of justice. And in doing so, it is also the responsibility of the Judiciary to ensure that the faith of the people is not lost in the Courts of law. Transfer of Judges must be without any speck of bias or arbitrariness. Stating reasons behind the transfers can go a long way in ensuring the transparency of the process

Author: Shalu Bhati from Campus Law Centre, Faculty of Law, University of Delhi.

Editor: Ismat Hena from Faculty of Law, Jamia Millia Islamia.