Madras High Court directs nationalised banks to revise process of empanelling lawyers, give equal opportunity to SC/ST, OBC candidates

The Madras High Court recently held that the current system for empanelment of lawyers to nationalised banks is unconstitutional. .In a judgement passed on March 31, Justice SM Subramaniam said that at present, each bank followed its own procedure for empanelling lawyers and such procedure was not transparent and favoured those with "godfathers."Since nationalised banks fall within the definition of 'State' under Article 12 of the Constitution, they cannot shirk their responsibility of implementing the "mandatory principles of equal opportunity enunciated under the Indian Constitution," the Court said.Hence, the single-judge directed all 28 nationalised and public sector banks in the country to revise the procedure within four months ensuring that the new procedure provides equal opportunity to candidates belonging to Scheduled Castes/ Scheduled Tribes (SC/ST) and Other Backward Classes (OBCs) candidates ."In view of the facts and circumstances, the respondents 7 to 34 herein are directed to review the existing procedure of their respective Banks for empanelment of Lawyers and suitably alter / amend / frame new rules / procedures in consonance and in compliance with the Constitutional mandates and based on the established principles to be adopted for appointment / empanelment. The said exercise is directed to be completed within a period of four (4) months from the date of receipt of a copy of this order," the Court ordered. The Court was hearing a petition filed by one K Marimuthu praying that the Reserve Bank of India (RBI) be directed to restore a previous circular that directed all banks to encourage and provide equal employment opportunities to lawyers from the SC/ST/OBC community for empanelment. The said circular had been issued by the RBI in 1991 and withdrawn in 2006. In December 2006, the RBI had withdrawn a set of 41 circulars issued between January 1991 and June 2004 keeping in mind the changes that the banking sector's operational matters had gone through post liberalisation.However, the petitioner argued that the circular on giving equal opportunities to SC/ST candidates had nothing to do with changes in operational matters, and therefore, should not have been withdrawn. He also told the Court that there are 19 nationalised banks and 6 banks in nationalised State Bank of India Group public sector banks and 3 other public sector banks. By not providing equal opportunities to SC/ST/OBC candidates, they were robbing them of massive employment opportunities, it was contended..The RBI, however, argued that the petitioner had no locus standi to file the petition and that courts must not interfere with the banks' internal operations. The Court, however, said that leaving the empanelment process to the whims and fancies of senior officials of each bank breached the fundamental rights of eligible candidates. "Going through the procedures now being adopted by the Nationalised Banks and Public Sector Banks, this Court could able to form an opinion that equal opportunity for empanelment has been denied to the eligible and meritorious candidates. The procedures though seem to be transparent, but not in compliance with the equality clause enunciated under the Constitution of India. Equal opportunity in public employment is the Constitutional mandate. No doubt, empanelment of Lawyer cannot be construed as an appointment into the service of the Nationalised Banks and Public Sector Banks. Lawyers are engaged on contract basis for a particular tenure on terms and conditions and by fixing remuneration. However, the Nationalised Banks and Public Sector Banks are public institutions are ‘State’ within the meaning of Article 12 of the Constitution of India. Therefore, they cannot shirk their responsibility from complying with the mandatory principles of equal opportunity enunciated under the Indian Constitution," the High Court held. The petiitoner K Marimuthu appeared in person. Senior Panel Counsel M Arvind Kumar appeared for the respondent Union of India. .[Read Judgment]