Salary denial for not opening Salary a/c with employers bank is illegal

FULL TEXT OF THE HIGH COURT  JUDGMENT

8 employees of the Malabar Cancer Centre (‘MCC’ for short) -the 1st respondent, have filed this writ petition challenging Exts.P3 to P10 letters by which they were requested to open their savings account in IDBI (Industrial Development Bank of India), the official bank of the 1st respondent, for disbursement of salary. By these letters they were also informed that they can retain their existing bank account giving a request to the IDBI bank to transfer their salary to the existing bank account. The petitioners submit that they are not paid their salary since they did not oblige to the request/demand of 1st respondent.

2. The MCC had issued Ext.P12 circular on 3.6.2013 informing that its banking transactions had been shifted to the IDBI, Thalassery and accordingly salary accounts of all the staff need be maintained with the new bank. All permanent staff members were requested to fill up the application form for starting new account and to submit the duly filled forms on or before 12.6.2013. On coming to know about the circular, the staff association of the 1st respondent, of which the petitioners are also members, protested against the same and submitted Ext.P1 1 mass representation saying that the 1st respondent had taken a unilateral decision without having any discussion with the members of the staff.

3. According to the petitioners, they did neither shift their account to the IDBI bank nor open new account with it. Therefore, their salary was being paid in cash. While so, they received Exts.P3 to P10 letters dated 19.08.20 16 from the 3rd respondent asking them to open the account with the IDBI bank immediately. It was stated that the statutory auditors of the 1st respondent had in their interim report for the year 20 14-15 raised objections to the effect that few permanent staff members were yet to open their savings account through the official bank (IDBI bank) for salary disbursal. In those circumstances, the administrative officer of the 1st respondent informed the petitioners that in view of the objections raised in the audit, salary can be disbursed only through bank account and not by any other means. The petitioners were therefore requested to start their account immediately after obtaining the application from the Help Desk of IDBI at MCC. They were informed that they will be free to retain their existing bank account and they can request the IDBI bank to transfer their entire salary or the amount they wish to transfer to the existing bank account. The petitioners, while challenging these letters allege that they have not received salary from August, 2016 onwards and they did not get the festival (Onam advance and other) allowances. According to the petitioners, the 1st respondent continues to have their several transactions like payment of tax through SBI, Thalassery itself and therefore, the 1st respondent cannot insist the petitioners to change their bank account to IDBI. According to them it is their right to decide the Bank in which they should open an account. It is also their case that being a public sector bank it is possible for them to avail loans from the SBI. It is also stated that earlier, financial transactions of the 1st respondent were through Corporation Bank, which was later shifted to State Bank of India.

4. Thus the petitioners insist that they should get salary through the existing account with the SBI itself without insisting them to open accounts with the IDBI.

5. The 1st respondent has filed a counter affidavit explaining the circumstances under which they had to shift their financial transactions to the IDBI, Thalassery branch, which has opened a counter at MCC itself. The circumstances are explained in paragraphs 6 and 12 of the counter affidavit which read as follows:

“6. It is submitted that in addition to the Treasury Savings Bank Account Malabar Cancer Centre (MCC) was also operating a Savings Bank Account in the State Bank of India, Thalassery Branch. The Institute found that the banking services rendered by the SBI Thalassery Branch, was totally unsatisfactory and the same cannot be continued in the best interests of the functioning of the Institute. I may be permitted to submit that the services rendered by the SBI Thalassery Branch was found to be non friendly and unsatisfactory essentially for the following reasons:-

(A) In spite of repeated requests having been made by the Institute to the SBI Branch, the Bank refused to consider the proposal of the Institute to start an Extension Counter and an ATM in the Institute premises, even though all Official transactions of Malabar Cancer Centre (MCC) were being handled by the SBI. It is submitted that an Extension Counter of the Bank in the Institute was suggested because every day one staff from the Malabar Cancer Centre (MCC) had to carry huge amount of Cash to the Bank which is located 6 Kilometers from the Malabar Cancer Centre (MCC), for remittance. The above procedure involves a lot of risk and additional expenditure. It is submitted that an extension counter would have helped the staff to avoid to go to the State Bank of India for every transaction which lead to loss of manpower, and the same would adversely affect the smooth functioning of the Institution which is a Cancer Hospital.

(B) The request of the Institute to the SBI to waive the Demand Draft Commission was never considered by the Bank.

(C) For opening a letter of credit for purchase of major equipments, the Senior Officials of the Bank including the Director, had to travel nearly 30 Kilometers to reach theKannur Branch of SBIwherein the transactions has to take place. The Director of the Institute who is the Chief Surgeon on the Institute found it extremely difficult to make frequent visits to the SBI Bank at Kannur, at the risk of his function as the Surgeon.

(D) The proposal of the Institute for improving the facilities in the Clinical Laboratory by submitting a project to the SBI for consideration under the Corporate Social Responsibility Scheme did not receive any positive response from the Bank.

(E) The request made by the Institute for starting an ATM Counter in the Campus of Malabar Cancer Centre (MCC) to cater to the needs of the patients and staff for availing basic banking services did not receive any positive response from the Bank.

xxxxx xxxxx xxxxx xxxxx xxxxxx xxxxx

12. I take leave to bring to the notice of this Hon’ble Court that the Executive Committee of the Institute has also evaluated the various benefits which will be available to the staff of the Institute in the event of opening an Account in the IDBI Thalassery Branch. The following are some of the benefits which will be available to the staff of the Institute.

(a) There are attractive benefits extended to the staff members of the Institute for taking Home loan, and Vehicle loan from the Bank (with maximum 0.5% reduction) this is a Special benefit extended to the employees of the Institute alone by the IDBI extension counter, which is not available in the other Branches of the Bank.

(b) Personal loan and salary over draft of 3 months net salary for salary account holders with additional discount or normal rates with a maximum of 0.5% reduction. Personal loan and over draft facility without security is extended to the Malabar Cancer Centre (MCC) staff only.

(c) Quick processing of such loans is carried out in the extension counter for the convenience of the staff.

(d) Employees are permitted to start zero . …”

They have further stated that several benefits are also available to the staff like the petitioners on opening their accounts with the IDBI, Thalassery branch. According to the 1st respondent, it is on account of the practical difficulties faced by them, since the SBI bank was not co-operating with it, that it had to shift the account to the IDBI. It is also stated that the 1st respondent had never requested the petitioners to close their account with the SBI, Thalassery and it is possible for the petitioners to open a zero balance account with the IDBI and get those amounts transferred to the bank in which they are having account. Sri. Nandkumara Menon, the learned Senior Counsel for the respondents asserted that petitioners do not deserve any relief from this court under Article 226 of the Constitution of India. It is also pointed out that all the staff except the petitioners have opened the account with IDBI and the circular was issued as early as in 2013. It is also pointed out that the IDBI is also having the status of a nationalised bank.

6. According to Ms. Aruna the learned counsel appearing for the petitioners, it is for the petitioners to decide the bank in which they should have account. She points out that the customers having salary account are given several benefits and they are not prepared to give up those benefits available from a nationalised bank by opening their salary account with the IDBI as requested in Exts.P3 to P10. It is also their case that IDBI is not a nationalised bank and at any rate petitioners are getting more benefits from SBI.

7. According to the learned counsel for the petitioners, the 1st respondent which is a public undertaking within the meaning of State as defined under Article 12 of the Constitution of India cannot act arbitrarily like a private employer.

8. Having considered the rival contentions on either side, it would appear that all these objections initially arose on the ground that there was no discussion held with the employees’ association regarding the shifting to the new official bank, as seen from Ext.P1 1. Therefore, it was a matter which could have been resolved at the end of the 1st respondent itself and the matter has reached this court as a result of the ego which played between the petitioners as well as those who are at the helm of affairs of the 1st respondent.

9. As far as the drawal of salary through a bank account is concerned, it will not be necessary that each of the employees should have the salary account with official bank itself. The official bank can very well transfer the salary of the petitioners to their accounts existing in SBI, on a request/standing instruction from the accounts wing of the 1st respondent. For such transfers, the 1st respondent need not compel the petitioners to open zero balance account or salary account with IDBI, in case they do not want to have any transaction with the IDBI. The audit objection raised against making payment in cash could have been rectified by placing proper instructions to the official bank of the 1st respondent having the financial transactions including salary of the staff of the 1st respondent to transfer the salary due to the petitioners to their account. As soon as the account number and other details of the petitioners are furnished to the official Bank, it is quite possible that the amounts due to each of the employee are credited to their account. Thereby the 1st respondent will get the services of the IDBI also as explained by them in the counter affidavit even without insisting the petitioners to have accounts with the IDBI. Such trivial matters could have been solved at the end of the 1st respondent itself. Therefore, denial of salary to the petitioners on the ground that they did not open account with IDBI bank is illegal.

Under the above circumstances, 1st respondent is directed to take appropriate action to see that the pay and allowances and all the monetary benefits due to the petitioners are credited to their account from the IDBI bank to the respective existing salary accounts of the petitioners in SBI, along with arrears if any without any further delay and at any rate within a period of two weeks from the date of receipt of a copy of the judgment.

The writ petition is disposed of accordingly.