Lawyers' Right To Be Considered For Empanelment In Nationalised Banks Is Fundamental Right, Time To Review Existing Procedures: Madras High Court

Justice SM Subramaniam said that the existing procedures are not in consonance with the established procedure and are against the constitutional mandate. The court added that the prevailing procedures enable the banks to empanel lawyers as per their whims and fancies, thus depriving opportunity for rightful candidates.

"Right to be considered for appointment / empanelment in a Bank is a Fundamental Right of a citizen. Large number of eligible lawyers are aspiring and longing to secure an opportunity and their basic right cannot be denied. Thus, the prevailing procedures are depriving the rightful candidates to participate in the process of empanelment of Lawyers in the Nationalised Banks and Public Sector Banks."

The court also added that absence of a definite procedure will lead to corruption, favouritism and nepotism. The court observed that while those lawyers, who had God Fathers could solicit the authorities and seek empanelment, the other lawyers, would lose out on opportunities thus affecting their fundamental rights.

The choice if given to the authorities in the absence of transparency and definite procedure for equal opportunity will lead to corruption, favouritism and nepotism. The Lawyers, who have god fathers are capable of soliciting the competent authorities and they alone would get opportunity for empanelment in the Banks. Such a situation now prevailing is not only unconstitutional but infringing the Fundamental Rights of the citizen, who all are the legal practitioners.

The court was hearing the plea of K Marimuthu, challenging a circular issued by the Reserve Bank of India (RBI) which in effect withdrew an earlier circular prescribing the procedure to be followed in empanelment of lawyers.

On January 4, 1991, the RBI issued a circular addressing all Public Sector Banks specifying guidelines for empanelment of lawyers in the banks. The circular stated that special endeavour should be made by banks to encourage advocates belonging to the SC / ST /OBC by enrolling them in the panels and allocating the work to them.

However, on December 18 2006, the RBI issued another circular withdrawing its earlier circular. The RBI cited change in banking scenario and the necessity to provide autonomy to banks as the reason for such withdrawal. This was challenged in the present proceedings.

The petitioner contended that the withdrawal was irrelevant, unreasonable, arbitrary and violative of Art. 14, 15, 16 (1) and (4) of the Constitution of India. He submitted that there was no nexus between empanelment of lawyers belonging to SC/ST/OBC communities and change in the banking scenario.

Further, he submitted that even while withdrawing the earlier circular, the RBI had specified that if the banks find some instructions in the circular to be relevant to them, they could follow the same. Thus, it was submitted that the withdrawal did not intend to give a free hand to choose lawyers but intended the banks to themselves follow a suitable procedure.

Though the locus standi of the petitioner was challenged and the banks claimed that they were adopting proper procedures, the court opined that there was a need to relook the existing procedures.

The court observed that though the present procedure may seem to be transparent, they do not comply with the equality clause enunciated in the Constitution. 

"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."

Thus, the court directed the Nationalised/Public Sector Banks to review their existing procedures and to suitably amend/alter the same in compliance with the constitutional mandate within a period of four weeks. The court further directed the banks to submit the compliance report to the Registrar (Judicial) of the Madras High Court.

Case Title: K Marimuthu v. The Secretary to Government and others

Citation: 2023 LiveLaw (Mad) 111