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NON-REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.4820 OF 2016

(Arising out of SLP (C) No.14209 of 2014) UCO BANK      APPELLANT           

                               VERSUS SAUMYENDRA ROY CHOUDHURY & ORS.    RESPONDENTS

J U D G M E N T                 R.F.NARIMAN,J.

1. Leave granted. 2. The matter arises out of a decision by the nomination  committee set up under an RBI Circular dated 24th May, 2013, in  which  it  has  decided,  having  regard  to  the  fact  that  the  respondent no.1 before us is over aged, i.e. above 65 years,  and the fact that he has already served for a period of two  terms  as  Director  of  the  Appellant  Bank  is  disqualified  therefore from standing for any further election as Director  of the said Bank. 3. The said decision was challenged before the High Court in  Civil Suit No. 212 of 2013.  By an interim order dated 29th  

November, 2013, the learned trial Judge allowed the interim  prayer of the respondent no.1 before us, namely, Prayer (e),  by which an interim mandatory injunction was ordered to deem  the  said  Director  as  having  been  elected  as  a  shareholder  director  notwithstanding the impugned order dated 24th May,  2013.  This was for the reason that prima facie the learned  Single  Judge  held  that  the  Government  of  India  Guidelines

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dated  10th December,  2007,  which  alone  contained  the  twin  disqualifications of being above age as well as having stood  for election as a Director twice, could not apply to persons  who  are  elected  Directors  as  opposed  to  non-official  Directors,  who  are  only  the  Directors  nominated  under  a  Statutory Scheme under Section 9(3) of the Banking Companies  (Acquisition and Transfer of Undertaking) Act, 1970.  It was  further held that the RBI Guidelines dated 1st November, 2007,  issued pursuant to the Statutory Power contained in Section 9  (3AA)  of  the  said  Act,  alone  governed  the  facts  of  these  cases, and that no other criteria de hors the criteria in  these guidelines could possibly be taken into account.

4. The appeal from the aforesaid judgment met with the same  fate,  as  the  Division  Bench,  by  the  impugned  Judgment  and  Order  dated  15th May,  2014,  reiterated  the  findings  of  the  learned Single Judge and granted the same relief based on the  same view taken of the respective guidelines issued by the  Government of India and by the Reserve Bank of India.

5. Considering that the Suit is yet to be decided, and that  we are only confronted with an interim order passed by the  High Court, we do not propose to go into the merits of the  contentions raised by learned counsel on either side.  Suffice  it  to  say  that,  prima  facie,  the  RBI  Guidelines  dated  1st  

November, 2007 framed under Section 9 (3AA) of the said Act  would apply to the facts of the case.  What is important under

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the Section itself is to determine the fit and proper status  of a person who wishes to be elected as a Director in the  appellant-Bank based on track record, integrity and such other  criteria as the RBI notifies from time to time in this regard.  The  RBI,  in  the  Guidelines  dated  1st November,  2007  has  expressly stated that in determining the fit and proper status  of  an  existing  elected  Director/proposed  candidate,  the  nomination  committee  should  determine  his  educational  qualification, his experience and field of expertise, track  record and integrity. What is important to note is that the  aforesaid list, as stated by the said Guidelines,  is only  illustrative and not exhaustive.  Further, what is important  is that the committee should see whether non adherence to any  of the aforesaid criteria would hamper the existence of the  elected  Director/proposed  candidate  from  discharging  his  duties as Director on the Board of the bank. 6. We have been shown a letter dated 3rd September, 2013,  written  by  the  Under  Secretary,  Ministry  of  Finance,  Department of Financial Services, to the appellant-bank.  This  letter is set out by us hereinbelow:

“ As  you  are  aware,  the  election  of  shareholder  director in Public Sector Banks is administered by  RBI  guidelines  no.  DBOD  No.  BC  NO.  471/29.39.001/2007-08 dated 01.11.2007 as per which  the Nomination Committee of the Bank's Board is to  undertake a process of due diligence to determine the  `fit  and  proper'  status  of  persons  to  be  elected  under Section 9(3)(i) of the Banking Companies Act,  1970/80.   These  guidelines  are  broad,  illustrative  and largely indicative. 2. Therefore, I am directed to state that in order  to ensure that the candidates elected  as  shareholder  director  discharge  their  duties  as

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director on the Board with greatest transparency and  in public interest, it is desirable that Government  guidelines dated 01.06.2011 regarding appointment of  part-time non-official director also be kept in mind  while carrying out determination of `fit and proper'  status of the candidates.  You are requested to advice  the board of your bank accordingly. 3. This issues with approval of S(FS).”

7. We are prima facie of the view that this letter applies  to cases like the present.  This being the case, we are of the  view  that  the  present  case  should  be  remanded  to  the  nomination  committee  so  that  the  committee  takes  a  fresh  decision as to whether the respondent No.1 is fit and proper  for election as a Director of the appellant-bank.  This is for  the reason that in the impugned order dated 24th May, 2013  before the High Court, the said committee took into account  only the fact that the respondent No.1 was over age and the  fact that he had already been Director in the appellant-bank  for more than two terms.  We, therefore, remit the matter to  the  nomination  committee  to  decide  this  case  after  a  consideration  of  all  the  criteria  laid  down  in  the  RBI  Circular dated 1st November, 2007 and the Guidelines dated 10th  

December, 2007 issued by the Ministry of Finance, Government  of India.  Needless to add, all these criteria will be taken  into account without giving any one or more criteria undue  weightage,  the  idea  being  that  ultimately  the  nomination  committee has to decide, in accordance with Section 9 (3AA) of  the  Act,  whether  the  respondent  No.1  is  a  fit  and  proper  person to be elected as a Director of the appellant-bank.  8. We, therefore, set aside the order of the learned Single

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Judge and Division Bench of the High Court of Calcutta and  remit the matter to the committee as aforesaid.  The committee  will decide in accordance with what is stated in our judgment  within a period of four weeks from receiving our order.  We  request a Single Judge of the High Court to take up Civil Suit  No. 212/2013 for hearing within a period of eight weeks from  today.  We expect that the learned Single Judge will decide  the said suit finally within six months from today. 10. With the above observations, the aforesaid civil appeal  is disposed of.

 .....................J.   [KURIAN JOSEPH]  

 ....................J.   [ROHINTON FALI NARIMAN

NEW DELHI; MAY 05, 2016