Ajoy Kumar Banerjee & Ors Vs.
Union of India & Ors [1984] INSC 63 (21 March 1984)
MUKHARJI, SABYASACHI (J) MUKHARJI, SABYASACHI
(J) CHANDRACHUD, Y.V. ((CJ) PATHAK, R.S.
CITATION: 1984 AIR 1130 1984 SCR (3) 252 1984
SCC (3) 127 1984 SCALE (1)539
CITATOR INFO :
RF 1990 SC 104 (8) RF 1992 SC 81 (37)
ACT:
Constitution of India 1950 Articles 14 19(1)
(g) Article 31B & Insurance Business (Nationalisation) Act 1972 Sec. 16,
Right of Central Government frame schemes under the Act-Whether affects
fundamental rights of employees companies constituted under the Act.
Inclusion of an Act in the Ninth Schedule
does not protect order or notifications issued under the said Act.
Scheme notified under Sec. 16(1) whether
protected.
Introduction of reform through legislation-Law
need not have universal application-Piecemeal method of introducing
reforms-Whether permissible-Statutory provision whether could be struck down on
vice of under inclusion.
Industrial Disputes Act 1947-Whether
applicable to general insurance companies.
General Insurance Business (Nationalisation)
Act 197 Sec. 16(1)(g).
General Insurance (Nationalisation and
Revision of Pa!.
Scales And other Conditions of Service of
Supervisory Clerical and Subordinate Staff) Second Amendment Scheme of
1980-Scheme of 1980 relating for revision of pay scales and other terms and
conditions of service-Whether ultra vires Sec. 16(2) and invalid- Whether
suffers from vice of excessive delegation of legislative power.
Administrative Law-Delegated
legislation-Principles of- Scope of subordinate legislation .
Interpretation of Statutes-Conflict between
the statutes-one special other general-Which to prevail-Tests for determination
of.
Interpretation of statutes-Not mere exercise
in semantics-Provisions conferring or delegation power- Construction.
253
HEADNOTE:
Prior to 1972, there were over 100 Insurance
Companies- Indian and A, foreign. The conditions of service of the employees of
these companies were governed by the respective contracts of service between
the companies and the employees. On 13th May 1971, the Government of India
assumed management of these general insurance companies under the General
Insurance (Emergency Provisions) Act, 1971. The General Insurance Business
(Nationalisation) Act, 1972 nationalised general insurance business.
Four merger schemes were framed in 1973 by
the Central Government in exercise of the powers contained in s. 16(1) of the
Act and four companies; oriental Fire and General Insurance Company, National
Insurance Company New India Assurance Company and United India Insurance
Company Ltd., were merged into and they alone were allowed to carry on the
business of general insurance. These companies started functioning from Ist
January, 1973 and the process of merger was completed by Ist January, 1974'
when the aforesaid four schemes came into force.
The Government of India by a notification
dated 27th May, 1974, framed a 'scheme' called the General Insurance
(Rationalisation and Revision of Pay Scales and other Conditions of Service of
Supervisory, Clerical and Subordinate Staff) Scheme, 1974 in exercise of the
powers conferred by s. 16(1)(g) of the Act. This scheme provided for the
rationalisation and revision of pay scales and other terms and conditions of
service of employees working in supervisory, clerical and subordinate positions
and governed the pay scales, dearness allowance, other allowances and other
terms and conditions of the general insurance employees. Paragraph 23 of the
Scheme provided that the new 'scales of pay' shall remain in force till
December 31, 1976 and thereafter shall continue to be in force unless modified
by the Central Government.
In 1976, the Board of Directors approved a
policy for promotion. On Ist June, 1976 another scheme by which amendments were
made with regard to Provident Fund, was introduced. On 30th July 1977, a Scheme
amending provisions regarding sick leave was also introduced. ' F The employees
submitted a memorandum objecting to the revision of pay scales and other
conditions of service and wanted a reference to the Industrial Tribunal. The
class III and IV employees however did not accept the revision of Service
Conditions, pay scales dearness allowance, etc. and raised industrial dispute.
There were conciliation proceedings and there was failure to bring about
amicable settlement of disputes.
In 1980, the Government introduced the
General Insurance (Rationalisation and Revision of Pay Scales and other
conditions of Service of Supervisory, Clerical and Subordinate Staff) Second
Amendment Scheme, 1980. This Scheme which was introduced by a notification
dated September 30, 1980 made detailed provisions as to how the adjustment
allowance is to be dealt With so far as Dearness Allowance, overtime Allowance,
Contribution to Provident Fund and other retirement benefits were concerned.
Paragraph 7 which dealt with 'retirement' stipulated that an employee who was
in service of the Corporation before the 254 commencement of the Scheme of 1980
should retire from service when he attains the age of 60 years, but an
employee, who joins the service of the Corporation after the commencement of
the Scheme would retire on attaining the age of 58 years. The Fourth Schedule
to the Scheme indicated tho revised scales of pay.
The petitioners in their writ petitions to
this Court contended that the terms and conditions of service enunciated in
1974 being a result of bilateral agreement could not be changed unilaterally to
the detriment of the employees and that the notification deprived the rights of
the employees to receive dearness allowance etc. with the rise in the cost of
living index. It was further contended that the Scheme was violative of s.
16(2) of the Act and ultra vires Articles 14,19(1)(g) and Article 31(2) of the
Constitution, and that the Constitution 44th amendment deleting Articles 31 and
19 cannot save the Scheme, since the amendment came into force only 20th June,
1979, whereas the impugned notification affecting the rights of the employees
to emoluments took effect from 1st January, 1979.
The respondents contested the writ petitions
on the ground that s. 16(6) authorised the Central Government by notification,
to add, to amend or to vary any scheme framed under s. 16 and consequently
rationalisation or revision of pay scales was permissible by the 1980 scheme.
Moreover in comparison With other employees in governmental or public sector,
the employees of the general insurance, companies were 'High-wage islanders'
and it was consequently necessary to put a ceiling on their emoluments and
other amenities in order to facilitate better functioning of the insurance
companies as well as to subserve the object and purpose of the nationalisation
policy.
Allowing the writ petitions,
HELD: 1. (a) The impugned scheme of 1980 is
bad as being beyond the scope of the authority of the Central Government, under
the General Insurance Business (Nationalisation) Act, 1972, and therefore
quashed. This, however, will not prevent the Government, if it is so advised,
to frame any appropriate legislation or make any appropriate amendment giving
power to the Central Government to frame any scheme as it considers fit and
proper. [290G;
291A-B]
1. (b) The scheme of 1980 so far as it is not
related to the amalgamation or merger of insurance companies, is not warranted
by sub-s. (1) of section 16. The scheme is therefore bad and beyond authority.
[278D] A.V. Nachane & Another v. Union of India & Another [1982] 2
S.C.R p. 246, Madan Mohan Pathak v. Union of India
Corporation of India v. D.J. Bahadur &
Ors. [1981] 1 S.C.R.
p. 1083. referred to.
2. The duty of the Court in interpreting or
construing a provision is to read the section, and understand its meaning in
the context interpretation of a provision or statute is not a mere exercise in
semantics but an attempt to find out the meaning of the legislation from the
words used, understand the context and 255 the purpose of the expressions used
and then to construct the expressions sensibly. [275C-D] 3 (a) The scheme is an
exercise or delegated authority.
The scope and ambit of such delegated
authority must be so construed, if possible, as not to make it bad because of
the vice of excessive delegation of legislative power. In order to make the
power valid, s.16 of the Act should be so construed in such manner that it does
not suffer from the vice of delegation of excessive legislative authority.
[275E]
3. (b) Unlimited right of delegation is not
inherent in the legislative power. [275 F] Gwalior Rayon Silk Mfg. (Wvg.) Co.
Ltd. v. The Asst. Commissioner of Sales Tax & Ors., [1974] 2 S.C.R. p. 879,
referred to.
4. The growth of legislative power of the
executive is a significant development of the 20th century. The theory of
laissez-faire has been given a go-by and large and comprehensive powers are being
assumed by the State with a view to improve social and economic well being of
the people. Most of the modern socioeconomic legislations passed by the
legislature lay down the guiding principles of the legislative policy. The
legislatures, because of limitation imposed upon them and the time factor,
hardly can go into the matters in detail. The practice of empowering the
executive to make subordinate legislation within the prescribed sphere has
evolved out or practical necessity and pragmatic needs of the modern welfare
State. [275G-276A]
5. Regarding delegated legislation, the
principle which has been well-established is that the legislature must lay down
the guidelines, the principles of policy for the authority to whom power to
make subordinate legislation is entrusted. The legitimacy of delegated
legislation depend upon its being used as ancillary which the legislature
considers to be necessary for the purpose of exercising i s legislative power
effectively and completely. The legislature must retain it its own hand the
essential legislative function which consists in declaring the legislative
policy and lay down the standard which is to be enacted into a rule of p law,
and what can be delegated is the task of subordinate legislation which by its
very nature is ancillary to the statute which delegates the power to make it
effective provided the legislative policy is enunciated with sufficient
clearness or a standard laid down The courts cannot and do not interfere on the
discretion and that undoubtedly rests with the legislature itself in
determining the extent of the delegated power in a particular case. [276B-D]
6. The authority and scope for subordinate
legislation can be read in either of the two ways; namely one which creates
wider delegation and one which restricts that delegation. [277E] In the instant
case, the Act must be read in conjunction with the Memorandum in Clause No. 16
of the Bill which introduced the Act in question. But above all, it must be
read in conjunction with sub-section 2 of section 16 of the Act which clearly
indicated the object of framing the scheme under s. 16(1) of the Act. [277D]
256
7. In view of the language of sub-s. (2) of
section 16 and the memorandum to the Bill, the one which restricts the
delegation must be preferred to the other. So read, the authority given under
s. 16 under the different clauses of sub-section (I) must be to subserve the
object as envisaged in sub-section (2) of section 16 of the Act, and if it is
so read then framing of a scheme for purposes mentioned in different clauses of
sub-section (1) of section 16 must be related to the amalgamation or merger of
the insurance companies as envisaged both in the memorandum on delegated
legislation as well as sub-section (2) of section 16. [277F- G]
8. Sometimes there have been rise in
emoluments with the rise in the cost of indeed in certain public sector
corporations. The legislature however is free to recognise the degree of harm
or evil and to make provisions for the same. In making dissimilar provisions
for one group of public sector undertakings does not per se make a law
discriminatory as such. Courts will not sit as super- legislature and strike
down a particular classification on the ground that any under-inclusion namely
that some others have been left untouched so long as there is no violation of
constitutional restraints. [285D-E]
9. Piece-meal approach to a general problem
permitted by under-inclusive classifications, is sometimes justified when it is
considered that legislatures deal with such problem, usually on an experimental
basis. It is impossible to tell how successful a particular approach might be,
what dislocation might occur, and situation might develop and what new evil
mights be generated in the attempt.
Administrative expedients must be forged and
tested.
Legislators recognizing these factors might
wish to proceed cautiously, and courts must allow to do so. [286B-C] Special
Courts Bill [1978] 2 S.C.R. p. 476 at pages 540-541, State of Gujarat and Anr.
v. Shri Ambica Mills Limited Ahmedabad etc. [1974] 3 S.C.R. p. 760 and R.K.
Garg etc. v. Union of India & Ors. etc., [1982] I S.C.R. p. 947, referred
to.
In the instant case, as there was no
industrial dispute pending, the ground that the petitioners have been chosen
out of a vast body of workmen to be discriminated against and excluded from the
operation of the Industrial Disputes Act, is no ground that there has been no
violation of Article 14 of the Constitution. [286D]
10. Differentiation is not always
discriminatory. If there is a rational nexus on the basis of which
differentiation has been made with the object sought to be achieved by
particular provision, then such differentiation is not discriminatory and does
not violate the principles of Article 14 of the Constitution. There is
intelligible basis for differentiation. Whether the same result or better
result could have been achieved and better basis of differentiation evolved is
within the domain of legislature and must be left to the wisdom of the
legislature. [288H- 289B]
11. Article 14 does not prevent the
Legislature from introducing a reform i.e. by applying the legislation to some
institutions or objects or areas only according to the exigency of the
situation and further classification of selection can be sustained on historical
reasons or reasons of administrative exigency or 257 piece-meal method of
introducing reforms. The law need not apply to all the A persons in the sense
of having a universal application to all persons. A law can be sustained if it
clears equally with the people of well-defined class- employees of Insurance
Companies as such, and such a law is not open to the charge of denial of equal
protection on the ground that it had not application to other persons. [290E-
F] State of Karnataka & Anr. etc. v. Ranganatha Reddy, & Anr. etc.
[1978] I S.C.R. p. 641 at pages 672, 676 & 691, referred to.
In the instant case, for the purpose of
rationalisation, the insurance companies wanted to curtail the emoluments of
class Ill and class IV employees on a small scale. It cannot therefore be said
that there are no distinguishing factors and that fol choosing a particular
group for experiment, the respondents should be found guilty of treating people
differently while they are alike in all material respects [288G]
12. The object of the General Insurance
Business (Nationalisation) Act 1972 is to run the business efficiently so that
the funds available might be utilised for socially viable and core projects of
national importance. The Nationalised Banks and the Insurance Companies for the
purposes of applicability or otherwise of the provisions of the Industrial
Disputes Act cannot be treated as belonging to one class. Historical reasons
provide an intelligible differential distinguishing Nationalised Insurance
Companies from the Nationalised Banks. The financial resources, structures and
functions of the Banks are different from those of the Insurance Companies.
[288A-E]
13. The general rule to be followed in case
of conflict between two statutes is that the later abrogates the easier one. A
prior social law would yield to a later General law if either of these two
conditions are satisfied:
(i) The two ale inconsistent with each other
and (ii) there is some express reference in the later to the earlier enactment.
[282D-F]
14. (i) The Legislature has the undoubted
right to alter a law already promulgated through subsequent legislation, (ii) A
special law may be altered, abrogated or repealed by a later general law by an
express provision, (iii) A later general law will override a prior special law
if the two are so repugnant to each other that they cannot co-exist even though
no express provision in that behalf is found in the general law, and (iv) It is
only in the absence of a provision to the contrary and of a clear inconsistency
that a special law will remain wholly unaffected by a later general law.
[282G-H] Maxwell-"Interpretation of Statutes Twelfth Edition pp.
196-198, referred to.
J.K. Cotton Spinning & Weaving Mills Co.
Ltd. v. State of U.P. & Ors. [1961] 3 S.C.R,. p. 185 and U.P. State
Electricity Board & Ors. v. Hari Shanker Jain and Ors.
[1979] 1 S.C R. p. 355, referred to.
15. The General Insurance Business
(Nationalisation) Ac; was put in the Ninth Schedule of the Constitution as Item
95 on loth August 1975. If any of the rights of the petitioners had been
affected by the scheme of 1980 then these rights would not enjoy immunity from
being scrutinised simply because the Act under which the scheme was framed had
been put in the Ninth Schedule. In any event any right which accrued to the
persons concerned prior to the placement of the Act in the Ninth Schedule cannot
be retrospectively.
affected by the impugned provisions. [284E-G]
Prag Ice & Oil Mills & Anr. etc. v. Union of India, [1978] 3 S.C.R. p.
293, referred to In the instant case, empowering the Government to frame
schemes for carrying out the purposes of the Act does not in any way affect or
abridge the fundamental rights of the petitioners and would not attract Article
19(1)(g). [284H;
285A] & ORIGINAL JURISDICTION: Writ
Petition Nos. 5370-74 of 1980 (Under Art. 32 of the Constitution) M. K.
Ramamurthi, J. Ramamurthi and Miss R. Vaigai for the petitioners in WPs.
5370-74 R. K. Garg and V. J. Francis J. P. Cama & Mukul Mudgal for
Intervener in WPs. 5370- 74.
K. Parasaran, Attorney General, M. K.
Banerjee, Additional Solicitor General, Miss A. Subhashini and C. V. Subba Rao,
for the respondent (Union of India) P. R. Mridul, O. C. Mathur, S. Sukumaran,
D. N. Mishra & Miss Meera Mathur for respondent no. 2 in WPs. 5370-74 &
5434.
Hemant Sharma & Indu Sharma for the
respondent in WPs.
5370-74. r. Vineet Kumar, Lalit Bhasin, Vinay
Bhasin & Miss Arshi singh?, for Respondent Nos. 3 to 6 in WPs. 5434 &
5370-74.
Ambrish Kumar for Intervener in WP. 5370.
Chandidus Sinha Intervener-in-person in WPs.
5370-74.
The Judgment of the Court was delivered by
259 SABYASACHI MUKHARJI J. These petitions under Article 32 of the Constitution
are filed by the employees of the General Insurance Companies and the All India
Insurance Employees Association. The respondents are, Union of India, the
General Insurance Corporation of India and four General Insurance companies.
The petitioners challenge the Notification
dated 30th September, 1980 of the Ministry of Finance (Department of Economic
Affairs) (Insurance) introducing what is called General Insurance
(Rationalization and Revision of Pay Scales and other Conditions of Service of
Supervisory, Clerical and Subordinate Staff) Second Amendment Scheme, 1980 as
being illegal and violative of their fundamental rights under Articles 14,
19(1)(g) and 31 of the Constitution of India.
Prior to 1972, there were 106 General
Insurance companies Indian and foreign. Conditions of service of these
employees were D, governed by the respective contracts of service between the
companies and the employees. On 13th May, 1971, the Government of India assumed
management of the general insurance companies under the General Insurance
(Emergency Provisions) Act, 1972. The general insurance business was
nationalised by the General Insurance Business (Nationalisation) Act, 1972 (Act
57 of 1972). The preamble of the Act explains the purpose of the Act as to
provide for the acquisition and transfer of shares of Indian insurance
companies and undertakings of other insurers in order to serve better the needs
of economy in securing development of general insurance business in the best
interest of the community and to ensure that the operation of the economic
system does not result in the concentration of wealth to the common detriment,
for the regulation and control of such business and for matters connected therewith
or incidental thereto.
Act 57 of 1972, by Section 2, declared that
it was for giving effect to the policy of the State towards securing the
principles specified in clause (c) of Article 39 of the Constitution. Under
Section 3(a) of the Act, 'acquiring company' has been defined as any Indian
insurance company and, where a scheme had been framed involving the merger of
one or more insurance companies in another or amalgamation of two or more such
companies, means the Indian insurance company in which any other company has
260 been merged or the company which has been framed as a result of . the
amalgamation.
Section 4 provides that on the appointed day
all the shares in the capital of every Indian insurance company shall be
transferred to and vested in the Central Government free of all trusts,
liabilities and encumbrances-affecting these.
Section S provides for transfer of the
undertakings of other existing insurers. Section 6 provides for the effect of
transfer of undertakings. Section 8 provides for the Provident Fund,
superannuation, welfare or any other fund existing. Section 9 stipulates that
Central Government shall form a Government company in accordance with the
provisions of the Companies Act, to be known as the General Insurance Corporation
of India for the purpose of superintending, controlling and carrying on the
business of general insurance. Section 10 stipulates that all shares in the
capital of every Indian insurance company which shall stand transferred to and
vested in the Central Government by virtue of Section 4 shall immediately after
such vesting, stand transferred to and vested in to Corporation .
Chapter IV deals with the amounts to be paid
for acquisition and as such we are not concerned in this case with that chapter
in view of the controversy involved.
Chapter V of the aforesaid Act deals with
"Scheme for reorganisation of general insurance business" Section 16
and 17 of the Act in this chapter are as follows:
"16. (1) If the Central Government is of
opinion that for the more efficient carrying on of general insurance business
it is necessary so to do, it may, by notification, frame one or more schemes
providing for all or any of the following matters:
(a) the merger in one Indian insurance
company of any other Indian insurance company, or the formation of a new
company by the amalgamation of two or more . Indian insurance companies;
(b) the transfer to and vesting in the
acquiring company of the undertaking (including all its business, properties,
261 assets and liabilities) of any Indian insurance company which ceases to
exist by reason of the scheme;
(c) the constitution, name and registered
office and the capital structure of the acquiring company and the issue and
allotment of shares;
(d) the constitution of a board of management
by what ever name called for the management of the acquiring company;
(e) the alteration of the memorandum and
articles of association of the acquiring company for such purposes as may be
necessary to give effect to the scheme, (f) the continuance in the acquiring
company of the services of all officers and other employees of the Indian
insurance company which has ceased to exist by reason of the scheme, on the
same terms and conditions which they were getting or, as the case may be, by
which they were governed immediately before the commencement of the scheme;
(g) the rationalisation or revision of pay
scales and other terms and conditions of service of officers and other
employees wherever necessary;
(h) the transfer to the acquiring company of
the provident, superannuation, welfare and other funds relating to the officers
and other employees of the Indian insurance company which has ceased to exist
by reason of the scheme;
(i) the continuance by or against the
acquiring company of legal proceedings pending by or against any Indian
insurance company which has ceased to exist by reason of the scheme, and the
initiation of such legal proceedings, civil or criminal, as the Indian
insurance company might have initiated if it had not ceased to exist;
(j) such incidental, consequential and
supplemental matters as are necessary to give full effect to the scheme.
262 (2) In framing schemes under sub-section
(1), the object of the Central Government shall be to ensure that ultimately
there are only four companies (excluding the Corporation) in existence and that
they are so situate as to render their combined services effective in all parts
of India.
(3) Where a scheme under sub-section (1)
provides for the transfer of any property or liabilities, than, by virtue of
the scheme, the property shall stand transferred to and vested in, and those
liabilities shall be transferred to and become the liabilities of the acquiring
company.
(4) If the rationalization or revision of any
pay scales or other terms and conditions of service under any scheme is not
acceptable to any officer or other employee, the acquiring company may
terminate his employment by giving him compensation equivalent to three months
remuneration, unless the contract of service with such employee provides for a
shorter notice of termination.
Explanation.-The compensation payable to an
officer or other employee under this sub-section shall be in addition to, and
shall not affect, any pension, gratuity, provident fund of other benefit to which
the employee may be entitled under his contract of service.
(5) Notwithstanding anything contained in the
Industrial Disputes Act, 1947 or in any other law for the time being in force,
the transfer of the services of any officer or other employee of an Indian
insurance company to the acquiring company shall not entitle any such officer
or other employee to any compensation under that Act or other law, and no such
claim, shall be entertained. by any court, tribunal or other authority.
(6) The Central Government may, by
notification add to, amend or vary any scheme framed under this section.
(7) The provisions of this section and of any
scheme. framed under it shall have effect notwithstanding anything to the
contrary contained in any other law or any agreement, award or other instrument
for the time being in force.
17. A copy of every scheme and every
amendment , thereto framed under section 16 shall be laid, as soon as may be after
it is made, before each house of Parliament." The object of any scheme
under this chapter, according to the petitioners, was clear from the main part
of Section 16(1) of the said Act, i.e. a scheme made under this chapter was
only for the purpose of providing for the merger of Indian insurance companies,
and this was made clear by Section 16(2) of the Act. Section 16(4) of the said
Act, it was contend on behalf of the petitioners, implied that any scheme of
rationalization or revision of pay scales and other terms could only be in the
context of merger and amalgamation of a one or more of the companies. In this
connection mention was made in the petition of the "Memorandum regarding
delegated legislation" submitted to the Parliament along with the General
Insurance Business (Nationalisation) Bill, 1972 (Bill No. 60 of 1972), which
later became the aforesaid Act. It was made explicit, according to the
petitioners, that clause 16 of the Bill, later Section 16 of the Act
"empowers the Central Government to frame one or more schemes for them
merger of one Indian insurance company with another or for the amalgamation of
the two or more Indian insurance companies and for matter consequential to such
merger or amalgamation, as the case might be." It was in the aforesaid
context of merger of companies that Section 16(1)(g) provided for
rationalisation and revision of pay scales and other terms and conditions of
service of officers and other employees wherever necessary.
In exercise of the powers contained in the
aforesaid Section ] 6(1) of the said Act, four merger schemes were framed in
1973 by the Central Government and the four companies, oriental Fire and
General Insurance Company Ltd., National Insurance Company Ltd., New India
Assurance Company Ltd., and United India Insurance Company Ltd., into one or
the other of which several general insurance companies in the country were
merged, were alone allowed to carry on the business of general insurance. The
preamble of the scheme, called the New India Assurance Company Limited (Merger)
Scheme, 1973, had stated that the Central Government was of the opinion that
for the more efficient carrying on of the general insurance business, it was
necessary to frame scheme for the merger of certain Indian Insurance companies
in the New India Assurance Company Limited. The preambles of the merger schemes
in respect of the other three companies were on similar 264 lines. These four
companies are subsidiaries of the General Insurance Corporation of India. The
companies started functioning from 1st January, 1973 and the process of merger
of the various companies into one of the other four companies was completed by
I st January, 1974, when the said four schemes came into force. The said
schemes provided for the transfer of officers and employees of the merged
companies to the transferee Company. The memorandum and the articles of
association of the four Companies were also suitably altered by the said
schemes. Thereafter there had been no merger or amalgamation of any insurance company.
The petitioners stated that there had been no reorganisation of general
insurance business either. This position is not in dispute.
By a notification dated 27th May, 1974, the
Ministry of Finance (Department of Revenue and Insurance Government of India,
framed a 'scheme' called the General Insurance (Nationalisation and Revision of
Pay Scales and other Conditions of Service of Supervisory, Clerical and
Subordinate Staff) Scheme, }974, and the preamble of the scheme stated that
"whereas the Central Government is of the opinion that for the more
efficient carrying on general insurance business, it is necessary to do",
therefore, in exercise of the powers conferred by Section 16(1)(g) of the
aforesaid Act, the Central Government framed the 'scheme' to provide for the
rationalisation and revision of pay scales and other terms and condition of
service of employees working in supervisory, clerical and subordinate position
under the insurers. The said scheme governed the pay scales, dearness
allowance, other allowances and other terms. and conditions of the general
insurance employees.
It dealt, inter alia, with nature and hours
of work, fixation, retirement, provident fund and gratuity. Paragraph 23 of the
1974. scheme provided that the 'New scales of pay' shall remain in force
initially upto and inclusive of 31st December, 1976 and thereafter. shall
continue to be in force unless modified by the Central Government. The scheme
was framed after negotiations with the parties concerned. The petitioners
further state that the scheme was purported to have been made under Section
1611)(g) of the said Act and it was treated as one made under Section 16(1) as
part of the four merger schemes. The petitioners state that otherwise, it would
have been invalid.
The petitioners further state that the
employees of the insurance companies serving throughout the country were,
however, subsequently not satisfied with the pay scales, dearness allowance,
other terms and conditions available to them on account of several. factors.
Through their associations, they submitted their charters of demands to the
General Insurance Corporation of India in 1977 for the revision of terms and
conditions of their service.
Negotiations were held between the management
and the unions for the upward revision but according to the petitioners,
nothing happened. Industrial dispute was raised between the management of
General Insurance Corporation of India and the class III and IV employees. On
the demand of revision of pay scales, dearness allowance and other allowances
and service conditions. The Chief Labour Commissioner (Central), Government of
India, Ministry of Labour, issued conciliation notice dated 11th September,
1980 under the Industrial Disputes Act, 1947 to the Chairman of the General
Insurance Corporation and the general secretaries of the employees'
associations. There were several meetings. It was decided, according to the
petitioners, that in the meanwhile until the talks were resumed the employees
would not resort to strike. There was representation to the respondents not to
change the conditions of service pending the conciliation proceedings. It is
not necessary to refer in detail to all these, which have been set out in the
petition. But nothing fruitful happened. The Labour Commissioner in the
circumstances sent a failure report under the Industrial Disputes Act, 1947 to
the Secretary, Government of India, Ministry of Labour, stating that there was
failure to bring about amicable settlement of disputes. The petitioners contend
that no further action was taken and according to them the conciliation
proceedings were still pending. This, however, is not accepted by the
respondents, according to whom there was failure report and the conciliation
proceedings ended thereafter. The scheme mentioned hereinbefore, which is under
challenge was issued thereafter. We will have to deal with the scheme in great
detail as the same is the subject matter of challenge is these petitions under
Article 32 of the Constitution.
After the 1974 scheme, in 1976, the Board of
Directors approved of promotion policy. On 1st June, 1976 another scheme by
which there were amendments with regard to Provident Fund, was introduced. As
mentioned before in 1977, major unions submitted charters of demands to the
respondent No. 2, seeking revision in the terms and conditions of service of
the employees with retrospective 266 effect. Between 10th March, 1977 to 30th
March, 1977, memorandum was addressed by the employees of all India Association
to the Union Finance Minister.
In the memorandum addressed, it was stated
that in the normal circumstances on the expiry of the prescribed period of
operation of an agreement, settlement of award, the unions usually submitted
charters of demands and the said charters of demands were settled either
through mutual negotiations or as a result of award of an industrial tribunal,
built as the pay scales and other conditions of service of the employees in
general insurance industry were, however, governed by a scheme or scheme to be
formulated by the Central Government and it was the Central Government which
could amend these, the unions submitted that there was justification for making
upward revision the scheme and shifting the base years from 1960 to 1970-71 for
the purpose of prescribing pay scales. This point was stressed by counsel
appearing for the General Insurance Company, in order to emphasis that the
unions always accepted the position prior to the present petitioner that the
government had the power to amend or make further schemes under the provisions
of the Nationalisation Act. On 30 July, 1977 scheme amending the provisions
regarding sick leave was introduced. In . 1978 Promotion Policy was revised by
General Insurance Company. Between 1979-80 there were discussions between the
management of the Corporation and the representatives of the Trade Unions which
were held on 8th, 9th, 10th October, 1979, 7th, 8th, 9th, April, 1980, 12th and
13th June and 1st August 1980. The management of the Corporation after several
rounds of discussions with the Unions sought to narrow down the area of
differences and submitted to the Government the demands made by the Unions and
the managements recommendations. The General Insurance Corporation submitted
before us that the Central Government after finally considering the demands and
recommendations of the management of the Corporation framed and notified the
scheme under challenge on 30th September, 1980.
It was contended on behalf of the petitioners
that the said notification had been issued by the Government suddenly and
unilaterally, without any notice to the parties concerned. The employees were
taken unawares. It was contended that from the provisions of the said
notification the service conditions of the employees including the petitioners
employees, particularly with regard 267 to dearness allowance, stagnation
increments, retirement age and other increments had become worse than before
and detrimental to the employees. While the employees were eagerly awaiting improvement
in their service conditions, this notification had unilaterally altered the
service conditions to their prejudice petitioners in their petitions had
alleged certain facts by certain illustrations, which according to them,
indicated that employees had been affected adversely, inter alia, in gross
starting salary of different group of employees, salary on confirmation of
assistants who are graduates etc. It was further stated that retirement age was
60 years for all the employees under the 1974 scheme. But under the new scheme,
retirement age was reduced to 58 years for employees joining on or after I st
January, 1979. Clause 7 of the impugned notification prescribed different ages
of retirement, though the employees were of the same class and similarly
situated according to the petitioners. Para 12(1) of the impugned scheme -
provided that an employee who was in service before the commencement of the
said scheme would retire at the age of 60 years but provided that an employee
joining the service on or after the commencement of the said scheme would
retire from service on attaining the age of 58 years.
This was discriminatory, according to the
petitioners, being violative of Article 14 of the Constitution.
lt was further alleged that stagnation increments
that is increments after reaching the maximum of the grade to all cadres up to
maximum of 3 for every two years of service were given before, but now under
the present notification clause S substituted paragraph 7 and provided for no
stagnation increment except only one increment for two years to the employees
in record clerk cadre. Previously, there was no maximum limit on salary. Now
maximum limit was fixed at Rs. 2750. Earlier, according to the petitioners,
House Rent Allowance was given to all employees irrespective of Having official
accommodation, under the new scheme, house rent ; allowance was withdrawn for
employees having official accommodation. Earned leave earlier could have been
accumulated upto 180 days, but the new scheme limited the accumulation of
earned leave upto 180 days tor the employees retiring at the age of 58 years
and 120 days for the employees retiring at the age of 60 years. It was stated
in the petitions that this had substantially reduced the emoluments of the
general insurance employees, and it had adversely affected the employees
throughout the country.
268 The main ground of the challenge is that
the impugned notification is illegal as the Central Government has no power to
issue it under Section 16 of the said Act and such as the notification framing
the present "scheme" is ultra vires Section 16(1) of the General
Insurance Business (Nationalisation) Act 1972. According to the petitioners,
once the merger of the insurance companies took place and the process of
reorganisation was complete on 1st January, 1974 as mentioned before by forming
the four insurance companies by the four schemes already framed in 1973, there
could be no further schemes except in connection with further reorganisation of
general insurance business and the merger of more. insurance companies as
mentioned in sub- section (1) of Section 16 of the said Act. By the present
alleged scheme there was no merger or reorganisation contemplated, unlike 1974
scheme, according to the petitioners. The petitioners contend that merely
making amendment to the terms and conditions of service of the employees
unconnected with or not necessitated by the reorganisation of the. business or
merger or amalgamation of the companies would not fall within Section 16(1)(g)
of the Act. According to the petitioners, the only properly called schemes
sanctioned under Section 16(1) are those four merger schemes of 1973 as would
be evident from the preamble to the Act.
The petitioners further contend that under
the life Insurance Corporation Act, Banking Companies Act. etc. there were
power to frame regulations independently of reorganisation. But there is no
such power, according to the petitioners, under the General Insurance Business (Nationalisation)
Act, 1972. The said notification therefore is without the authority of law. It
is, further, submitted.
that the present service conditions of the
employees unrelated to reorganisation of general insurance business merger or
amalgamation of insurance companies, could not form part of any scheme or
notification under section 16 of the aforesaid Act. Section 16(7) of the Act
would not come into play and the provisions or the Industrial disputes Act,
1947 including section 94 were applicable to the general insurance industry.
Therefore if the companies wanted to change the service condition of their
employees affecting them adversely, they should have given, the petitioners
contend, notice of changes under section 9A of the Industrial Disputes Act,
1947, negotiated with the employees and arrived at some settlement or had the
dispute adjudicated upon under the said Act. Since. this has not been done,
particularly when the conciliation proceed- 269 ings were still pending in the
absence of Government's acknowledgement of failure report of the conciliation
officer, the action of the Government in issuing the unilateral notification is
bad in law. It is submitted further that impugned notification is ultra vires
being violative of Article 14 of the Constitution because it discriminated
between employees similarly situated, particularly in the matter of dearness
allowance and retirement age.
The petitioners contend that under the Sick
Textile Undertakings (Nationalisation) Act, 1974, the Coking Coal Mines
(Nationalisation) Act, 1972 etc., separate companies had been formed on
nationalisation. The employees of those companies were entitled to have their
service conditions regulated under Industrial Disputes Act, 1947. In the
present case, the employees have been deprived of the existing benefits without
following the procedures prescribed under the Industrial Disputes Act, 1947.
Therefore. there was discrimination and
violation of article 14 of the Constitution. The petitioners therefore contend
that the terms and conditions of service enunciated in 1974 being as a result
of bilateral agreement, could not be changed unilaterally, to the detriment of
the employees' fundamental rights to carry on their employment for gain and as
such violative of article 19(1) (g) of the Constitution.
It is stated that the notification was
illegal, being ultra vires section 16 of the Act. Since, according to the
petitioners, such notification deprived the rights of the employees to receive
dearness allowance etc. with the rise in the cost of living index without any
limit, it is deprivation of property without providing for compensation and is
thus also violative of article 31(2) of the Constitution. The petitioners,
further, contend that the Constitution 44th amendment deleting 1 Articles 31
and 19(1) (f) cannot save the scheme since that Amendment came into force only
on 20th June, 1979, whereas the impugned notification affecting the rights of the
employees to emoluments takes effect from 1st January, 1979. It was further
urged that the protection of article 31 read with Ninth Schedule of the
Constitution was not available to any scheme or notification much less the
present one, The present notification, according to the petitioners,
disregarded the directive principles enunciated in Article 43 of the
Constitution. The petitioners therefore ask for quashing the said notification
by these petitions under Article 32 of the Constitution.
The second batch of Writ applications (Writ
Petition Nos. 5434-37 of 1980) are on behalf of the employees as well as the
270 General Insurance Employees All India Association challenge the - scheme of
1980 more or less on the same though not identical grounds mentioned in Writ
Petition Nos. 5370-74 of 1980. Interim order was passed in the said application
regarding payment of dearness allowance as would appear from the Court's order
dated 25.8.1981. In the said order, directions were given for payment of
dearness allowance payable under the old scheme from the beginning of 1981 with
quarter April, as well as quarter beginning from July, 1981 within certain time
mentioned in the said order. lt was further, directed that subsequent dearness
allowances will be paid in accordance with the directions to be given at the
time of disposal of these writ applications.
In the Writ Petitions Nos. 5370-74 of 1980,
there is a petition on behalf of All India National General Insurance Employees
Association for intervention. It represents a Trade Union of workmen working in
the offices of General Insurance Corporation of India, Bombay as well as its
subsidiaries. They, inter alia, allege that the main petitions have challenged
the scheme of 1980 on purely technical grounds and though it would be correct
to say that the scheme of 1980 does not meet the aspirations of the workers
wholly as reflected in the various charters of demands submitted to the
management, they are of the opinion that the same is not completely bereft of
any merit so that the same may be quashed by this Court. They mentioned certain
additional benefits available in the said scheme of 1980 in paragraphs 15, 16,
17, 18 and 19 of the said application. . They therefore claim right to
intervene in the said Writ application Nos. 5370-74 of 1980. There is also an
application by Senior Assistants of the New India Assurance Company Ltd. and
National Confederation of General Insurance Employees, represented by its
Vice-president under order XLVII Rule 6 of the Supreme Court Rules of 1966
praying, for permission to intervene in these petitions.
Upon this an interim order was passed on
24.10.1580 staying the operation of the scheme (operation of the Notification
dated 30th September, 1980) and notice was issued in the stay application.
All these will be disposed of by this
judgment.
It will, therefore, be necessary, before we
examine the contentions raised in these petitions, to briefly consider the
scheme of 1980. As mentioned before, this scheme is called the General
Insurance 271 (Rationalisation and Revision of Pay Scales and other Conditions
of Service of Supervisory, Clerical and Subordinate Staff) Second Amendment
Scheme, 1980. Some new definitions have been provided by paragraph 2 of 1980
scheme which included the meaning of the 'Company' and under the scheme it
mentioned that the 'Company' would mean the four nationalised companies,
National Insurance Company Limited, the New India Assurance Company Limited,
the oriental Fire and General Insurance Company Limited and the United India
Insurance Company Limited. Sub paragraph (ii) of paragraph 2 of the said scheme
defines 'Net monthly emoluments'. By sub- paragraph (ii), the amended
definition of 'Revised terms', (Revised Scales of Pay) was inserted. By
paragraph 3, adjustment of pay was stipulated on the coming into effect of
operation of 1980 scheme. How the basic pay is to be fixed is provided by 1980
scheme. lt also makes detailed provisions as to how the adjustment allowance is
to be dealt with so far as Dearness Allowance, overtime allowance, Contribution
to Provident Fund and other retirement benefits are concerned. Paragraph 5
deals with the 'Increments.
Paragraph 6 deals with Earned Leave and other
Encasement of leave at the time of retirement and death. Paragraph 7 deals with
'Retirement' and' stipulates that an employee who was in service of the
Corporation before the commencement of the scheme of 1980 should retire from
service when he attains the age of 60 years. But an employee, who joins the
service of the Corporation after the commencements of the scheme will retire on
his attaining the age of 58 years. It further stipulates that an employee would
retire on the afternoon of the last day of the month in which he attains the
age of 60 years or 58 years as the case might be. Clause 8 deals with
'Gratuity'. Clause 10 provides the duration of revised terms and stipulates
that the revised terms should be continued to be in force unless modified by
the Central Government. Then the Second Schedule of 1974 scheme which dealt
with Travelling Allowance category, Travel by Road and different allowances for
the same, transfer grant were amended and the new Fourth Schedule included
scales of pay to be fixed, on the revised scales of pay indicated therein.
It is not necessary to set out further
details of the actual provisions of 1980 scheme. While on behalf of the
petitioners, it was contended that the revised scales of pay and the terms
included therein were highly detrimental to the employees concerned, on the
other hand, it was contended on behalf of the Union of India as well 272 as the
General Insurance Company that on the whole, the revised scales of pay provided
for better pay and allowances and better opportunities to the employees
concerned. One of the intervener unions also states that the 1980 scheme is not
completely devoid of Merit. Parties have taken us through in detail by help of
charts and other figures in support of the respective cases and contentions. It
is not necessary, in view of the nature of the contentions raised before us, to
express any opinion on the merits or demerits of the rival contentions of the
parties in respect of the details of either or both the schemes. It may,
however, be stated that there has been a ceiling on increase of pay automatically
with the increase of the rise in the cost of index. The respondents, namely,
the union of India as well as the General Insurance Company, contended that in
comparison with other employees is governmental sectors or public sectors, the
employees of the general insurance companies were 'High wage islanders' and it
was necessary to put a ceiling on the emoluments and other amenities in order
to facilitate better functioning of the insurance companies concerned as well
as subserve the object and purpose of the nationalisation policy. The various
detailed items of the scheme of 1974 and 1980 have to be viewed in this
background.
The-basic and, in our opinion, the main
questions are- has the Government and the respondents power in law to introduce
the 1980 scheme and if they have that power, have they exercised that power in
any arbitrary and whimsical manner to deny to the petitioners any of the
fundamental rights and whether the petitioners have been discriminated against?
These, therefore, are the questions and it is not necessary, in our opinion, to
detain ourselves with lengthy extracts from the scheme of 1974 and 1980 to
examine which is better or which is detrimental and if so, to what extent.
On these, there will be and are divergent
views.
The scheme of 1980 has been framed by the
Central Government under the authority given to it by the Act under General
Insurance Business (Nationalisation) Act, 1972. The scope of that authority has,
therefore, to be found under Chapter V containing Sections 16 & 17 of the
Act. We have set out hereinbefore the terms of Sections 16 & 17. Sub-
section (1) of Section 16 authorises the Central Government, if it is of the
opinion that "for the more efficient carrying on of general insurance
business, it is necessary to do so, may, by notification, frame one or more
schemes" provide in for 273 all or any of the matters enumerated in the
different clauses of Section 16(1) of the said Act, and the matters have been
set out in the different clauses of the said sub- section. For the present
purpose, clause (g) is relevant, which gives authority to the Central
Government to frame scheme for rationalisation or revision of pay scales and
other terms and conditions of service of officers and other employees wherever
necessary. Clause (j) of the said sub- section gives authority to the Central
Government also to frame scheme for such incidental, consequential and
supplemental matters as are necessary to give full effect to the scheme.
Therefore, the question that is necessary for this purpose to determine, is,
whether the power given to the Central Government by clause (g) for the
rationalisation or revision of pay scales and other terms and conditions of
service a of officers and other employees, wherever necessary can be said to
authorise the Central Government to frame the present scheme under
consideration. This must be judged in conjunction with sub-section (6) of
Section-16 which authorises the Central Government, by notification, to add, to
amend or to vary any scheme framed under section 16.
The point at issue, is, whether
rationalisation or revision of pay scales and other terms and conditions of
service of officers and other employees wherever necessary can authorise the
Central Government to frame scheme like the scheme of 1980, which is
unconnected with or unrelated to the merger of one Indian insurance company
with another insurance company or the formation of a new company by the
amalgamation of two or more Indian insurance companies. In order to find that
out, it is necessary to read the provisions of this Act as a whole. Primarily,
if the words are intelligible and can be given full meaning, we should.
not cut down their amplitude. Secondly, the
purpose or object of the conferment of the power must be borne in mind.
The first indication of the said object in
this case, as is often in similar statutes, can be gathered from the preamble
to the Act. We have noticed the preamble of the present Act.
This preamble has also to be read in the
light of sub- section (2) of Section 16 which provides that the object of the
Central Government in framing the schemes under sub- section (1) was to give
authority to the Central Government to frame schemes, to ensure that ultimately
there are only four insurance companies (excluding the Corporation) in
existence and that they are so situate as to render their combined services
effective in all parts of India. Sub- section (2), therefore, to a large extent
circumscribes the amplitude of the power given under sub-section (1) of Section
16 of the Act As framing of the scheme is an exercise of the delegated 274
authority by the Central Government, the memorandum regarding delegated
legislation submitted to the Parliament along with the General insurance
Business (Nationalisation) Bill, 1972 will provide. some guidance also. As we
have noticed that clause 16 of the said Bill which later on became Section 16
of the Act explained the need for delegated authority and stated the object as
'to frame one or more scheme for the merger of one Indian insurance company
with another or for the amalgamation of the two or more insurance companies and
for matters consequential to such merger or amalgamation as the case might be'.
Bearing in mind that this is a delegated legislation and keeping in mind that
the authority to frame the scheme must be found within the object of the power
given under Chapter V of the Act and reading the entire connected provisions
together, it appears to us, that the only authority or power to frame scheme
given was for the purpose of merger of one Indian insurance company with
another for amalgamation of two or more Indian insurance companies and for
matters consequential to such merger or amalgamation as the case might be. Any
scheme though, it might come within the wide expressions used in sub-section
(6) or Section 16 as well as clause (g) or clause (j) of sub-section (1) of
Section 16 which is unrelated to or unconnected with the amalgamation of the
insurance companies or merger consequent upon nationalisation would be beyond
the authority of the Central Government. This has to be so if read in
conjunction with sub-section (2) of Section 16 of the Act. It is evident from
the scheme of 1980 that it is not connected with or is not for the purpose to
ensure that ultimately there are only four insurance companies existing and
they are so situate as to render combined services effective in all parts of
India.
It is true that subsequent to the merger of
the four insurance companies, scheme as indicated herein-before, dealing with
Provident Fund, Gratuity etc. have been framed but these, in our opinion, are
irrelevant when judging the question of the authority to frame a particular
scheme which is impugned. It is also true that the scheme of 1974 so far as pay
scale was concerned as indicated in the scheme as we have set out herein-before
provided that the scheme would remain in force initially for a period upto 31st
December, 1976 and thereafter shall continue to be in force unless modified by
the Central Government. It is also true that the employees themselves, as
indicated herein-before, wanted revision of pay scales and claimed through
their numerous charters of demands amending or framing of a fresh scheme by the
Government on the basis that the Central Government alone had the authority to
frame the scheme under the Act.
Certain amount of revision of pay scale and
other terms and 275 conditions become inevitable from time to time in all
running business or administrations. Clause (g) of sub- section (1) of Section
16 authorises the Central Government to frame scheme for rationalisation and
revision of pay scales and other terms and conditions of services of officers
and other employees wherever necessary. But it is evident that the scheme of
1980 impugned in these petitions is not related to the object envisaged in
sub-section (2) of Section 16 of the Act. In order to be warranted by the
object of delegated Legislation as explained in the memorandum to the Bill
which incorporated Section 16 of the Act, read with the preamble of the Act,
unless it can be said that the scheme is related to sub-section (2) of Section
16 of the Act, it would be an exercise of power beyond delegation. The duty of
the Court in interpreting or construing a provision is to read the section, and
understand its meaning in the context. Interpretation of a provision or statute
is not a mere exercise in semantics but an attempt to find out the meaning of
the legislation from the words used, understand the context and the purpose of
the expressions used and then to construe the expressions sensibly.
There is another aspect which has to be kept
in mind.
The scheme is an exercise of delegated
authority. The scope and ambit of such delegated authority must be so
construed, if possible, as not to make it bad because of the vice of excessive
delegation of legislative power. In order to make the power valid, we should so
construe the power, if possible, given under Section 16 of the Act in such
manner that is does not suffer from the vice of delegation of excessive
legislative authority.
It is well-settled that unlimited right of
delegation is not inherent in the legislative power itself. This Court has
reiterated the aforesaid principle in Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd.
v. The Asstt. Commissioner of Sales Tax & Ors. The growth of Legislative
power of the executive is a significant development of the 20th century. The
theory is iaissez-faire has been given a go-by and large and comprehensive
powers are being assumed by the State with a view of improve social and
economic well-being of the people. Most of the modern socioeconomic
legislations passed by the legislature lay down the guiding principles of the
Legislative policy. The legislatures, because of limitation imposed upon them
276 and the time factor, hardly can go into the matters in detail. The practice
of empowering the executive to make subordinate legislation within he
prescribed sphere has evolved out of practical necessity and pragmatic needs of
the modern welfare State.
Regarding delegated legislation, the
principle which has been well-established is that legislature must lay down the
guidelines, the principles of policy for the authority to whom power to make
subordinate legislation is entrusted.
The legitimacy of delegated legislation
depends upon its being used as ancillary which the legislature considers to be
necessary for the purpose of exercising its legislature power effectively and
completely. The legislature must retain in its own hand the essential
legislative function which consists in declaring the legislative policy and lay
down the standard which is to be enacted into a rule of law, and what can be
delegated is the task of subordinate legislation which by very nature is ancillary
to the statute which delegates the power to make it effective provided the
legislative policy is enunciated with sufficient clearness a standard laid
down. The courts cannot and do not interfere on the discretion that undoubtedly
rests with the legislature itself in determining the extent of the delegated
power in a particular case. lt is true that in this case under Section
16(1)(g), rationalisation or revision of pay scales and other terms and
conditions of service of officers and other employees wherever necessary is one
of the purpose for which scheme can be, framed under Section 16(1) of the Act.
It is also true that incidental, consequential and supplementary matters as are
necessary to give full effect to the scheme are also authorised under clause (j)
of sub-section (1) of Section 16. It has also to be borne in mind that scheme
and every amendment to a scheme framed under section 16 shall be laid as soon
as may be after it is made before each House of Parliament. The last provision
is indicative of the power of superintendence that the legislature maintains
over the subordinate legislation of scheme framed by the delegate under the
authority given under the Act. From that point of view, it is possible to
consider as indeed it was argued on behalf of the respondents in this case,
that having regard to the fact that one of the objects of the Preamble is
regulation and control of general insurance business and other matters
connected therewith or incidental thereto and having regard to the fact that rationalisation
and revision of pay scales whenever necessary was one of the objects envisaged
under sub-section (1) along with clause (j) of sub-section (1) of Section 16 of
Section 16 read with the safeguards of section 277 17 as we have set out
herein-before in case of revision and rationalisation of pay scales whenever it
becomes necessary as in this case, according to the respondents, it had become
necessary, the scheme of 1980 was permissible within the delegated authority.
But we must bear in mind the observations of Mukherjea, J. in The Delhi Laws
case to the following effect:
"The essential legislative function
consists in the determination or choosing of the legislative policy and of
enacting that policy into a binding rule of conduct. It is open to the
legislature to formulate the policy as broadly and with as little or as much
details as it thinks proper and it may delegate the rest of the legislative
work to a subordinate authority who will work out of the details within the
framework of that policy".
But as explained before the Act must be read
as a whole. The Act must be read in conjunction with the preamble to the Act
and in conjunction with the memorandum in Clause No. 16 of the Bill which
introduced the Act in question. But above all it must be read in conjunction
with sub-section (2) of Section 16 of the Act which clearly indicated the
object of framing the scheme under Section 16(1) of the Act.
The authority and scope for subordinate
legislation can be read in either of the two ways; namely one which creates
wider delegation and one which restricts that delegation. In our opinion, in
vies of the language of sub-section (2) of Section 16 and the memorandum to the
Bill in the peculiar facts of this case the one which restricts the delegation
must be preferred to the other. So read, in our opinion, the authority under
Section 16 under the different clause of sub-section (1) must be to subserve
the object as envisaged in sub-section (2) of Section 16 of the Act, and if it
is so read than framing of a scheme for purposes mentioned in different clause
of sub-section (1) of Section 16 must be related to the amalgamation or merger
of the insurance companies as envisaged both in the memorandum on delegated
legislation as well as sub-section (2) of Section 16. We may mention in this
connection that in the case of A.V. Nachane & Another v. Union of India
& Another, this contention of delegated legislation was adverted to. In
that case the Court was concerned with Life 278 Insurance Corporation (Amendment)
Act, 1981 where the policy of the Act as stated in the preamble of the
Amendment Act was that "for securing the interests of the Life Insurance
Corporation of India and its policy-holders and to control the cost of
administration, it is necessary that revision of the terms and condition of
service applicable to the employees and agents of the Corporation should be
undertaken expendiously. That was the object of the Act in question.
Unfortunately that is not the object
indicated as the object of the power to frame scheme under Section 16 of the
present Act. In view of that object mentioned in the said decision and for
other reasons in the case of A.V. Nachane & Another v. Union of India &
Another (supra), this Court held that the Act in question did not suffer from
the vice of excessive delegation. In view of what we have stated herein-
before, the scheme of 1980 so far as it is not related to the amalgamation or
merger of insurance companies, it is not warranted by sub-section (1) of
Section 16. If that be so, the scheme must be held to be bad and beyond
authority.
This being the position, it is not necessary
to examine the various other contentions raised in this case. Various
contentions have been made. Both sides relied on various decisions in support
of their respective contentions. Both sides relied on the decisions dealing
with the employees of the Life Insurance Corporation and the Acts and the
amendments in connection with their terms of employment. We will just note the
decisions. Reliance was placed on the decision in the case of Madan Mohan
Pathak v. Union of India & Ors, Etc. The question in that decision was that
the validity of Section 3 of the Life Insurance Corporation (Modification of
Settlement) Act, 1976. The questions involved in that decision, in the view. we
have taken as well as in the facts of the instant case, are not relevant.
In last mentioned case there was a writ
petition which was allowed by the learned single Judge of the High Court and
appeal was preferred from that decision. During the pendency of the appeal,
there was an amendment to the Act namely, the Life Insurance Corporation
(Modification of Settlement) Act, 1976. In the Letters Patent Appeal, the
Corporation stated that in view of the impugned Act, there was no necessity for
proceeding with the appeal and the Division Bench of Calcutta High Court made
no order on the said appeal. This 279 Court held among other things that the
rights of the parties had crystalized in the judgment and became the basis of a
Mandamus of the High Court and it could not be taken away by indirect fashion
proposed by the Act under challenge before this Court.
Chandrachud, J., as the learned Chief Justice
then was, speaking for himself and Fazal Ali and Shinghal, JJ. concurred with
the majority view on the basis that the impugned Act violated Article 31(2) of
the Constitution and was therefore void. Bhagwati, J. speaking for himself and
on behalf' of Iyer & Desai, JJ. was of the view that irrespective of
whether the impugned Act was constitutionally valid or not, the Corporation was
bound to obey the writ of Mandamus issued by the High Court and to pay the
bonus for the year 1975-76 to class III and Class IV employees. The said
learned judges held that writ of Mandamus was not touched by the impugned Act.
The other observations of the said Judges as well as the other learned Judges
are not relevant in the view we have taken. In instant case before us we do not
have any case of settlement which was the subject matter there between the
workers and the employers and the rights flowing therefrom.
Reliance was also placed on the decision in
the case of The Life Insurance Corporation of India v. D.J. Bahadur & Ors
as well as the decision in the case of A.V. Nachane Another v. Union of India
& Another (supra). In the view we have taken, it is not necessary to
examine these decisions in detail. In those cases, the question under
consideration was the Life Insurance Corporation Act, 1956 and the subsequent
amendments thereto as well as certain orders in respect of the same.
The basis upon which the aforesaid two
decisions proceeded were (a) a right had crystalized by the directions in D.J.
Bahadur's case (supra) and this could not be altered or taken away except by a
fresh industrial settlement or award or by relevant legislation and (b) the
relevant legislation which was the subject matter of challenge in A.
V. Nachane's case (supra) cannot take away
the rights which had accrued to the employees with retrospective effect. As is
evident from the facts of the case before us, the situation is entirely
different. We are concerned here with the question primarily whether the scheme
is authorised by the Act and if it is so authporis- 280 ed, the question is
whether the Act in question is constitutionally valid in the sense it had taken
away any rights which had crystalized or whether it infringed Article 14 of the
Constitution. These decisions also deal with the question whether a special
legislation would supersede a general legislation and which legislation could
be considered to be a special legislation. It may be noted that we are not
concerned with any settlement or award. In that view of the matter, it is not
necessary to detain ourselves with the said decisions. and the various aspect
dealt with in the said decisions.
Another aspect that was canvassed before us
was whether Section 16 of the 1972 Act with which we are concerned in any way
affected any industrial dispute and whether the provisions of sub-section (5)
of Section 16 or sub-section (7) of Section 16 in any way curtailed any right.
in respect of any industrial dispute and if so whether the General Insurance
Business (Nationalisation) Act, 1972 is a special legislation or whether the Industrial
Disputes Act, 1947 is a special legislation in respect of adjudication of
rights between the employees and the employer.
If we had held that the scheme of 1980 was
permissible within the power delegated under Section 16 of the General Insurance
Business (Nationalisation) Act, 1972, it would have been necessary for us to
discuss whether there is any conflict between the provisions of the said Act and
the Industrial Disputes Act, 1947 and if so, which would prevail. Section 16(5)
of the 1972 Act, as we have noticed earlier, stipulates that notwithstanding
anything contained in the Industrial Disputes Act, 1947 or in any other law for
the time being in force, the transfer af the services of any officer other
employee of an Indian insurance company to the acquiring company shall not
entitle any such officer or other employee to any compensation under that Act
or other law, and no such claim shall be entertained by any court, tribunal or
other authority. This, to a certain extent, clearly excludes the operation of
the Industrial Disputes Act, 1947 in respect of disputes arising on the
transfer of the business of general insurance. There is no such question before
us. Had it been possible to hold that the scheme of 1980 was valid in proper
exercise of the authority under Section 16 of the Act, a question would have
arisen as to whether the ceiling and other conditions on emoluments could be
imposed on the employees in the manner proposed to be done under the scheme of
1980 without reference to the procedure for adjudication of these matters under
the 281 Industrial Disputes Act, 1947. Then the question had to be judged h by
reference to sub-section (5) and sub-section (7) of Section 16 of the 1972 Act.
Section 16 empowered the Government by notification to add to, amend or very
any scheme framed under Section 16(1) Sub-section (7) provides that the
provisions of this section, namely Section 16 of the 1972 Act and of any scheme
under it shall have effect notwithstanding anything to the contrary contained
in any other law or any agreement, award or other instrument for the time being
in force.
We have noticed the scheme of 1980. That
scheme puts certain new conditions about retirement, about emoluments and other
benefits of the employees. It may be noted that the application of Industrial
Disputes Act as such in general is not abrogated by the provisions of 1972 Act,
nor made wholly inapplicable in respect of matters not covered by any
provisions of the scheme. This aspect is important and must be borne mind.
Wrongful dismissal, other disciplinary
proceedings, unfair labour practices, victimization etc. would still remain
unaffected by any scheme or any provision of the Act.
The only relevant and material question that
would have arisen, is, whether in case where a statutory ceiling which one of
the counsel for the petitioners tried to describe as "statutory
gherao" on rise of increase in emoluments and other benefits with the rise
in the cost of index of prices" affected the position under the Industrial
Disputes Act, 1947. It may be noted as we have noted before that this is not a
case where any dispute was pending before any tribunal or before any authority
under the Industrial Disputes Act, 1947 between the workmen concerned and he
insurance companies. Though there was conciliation proceedings, the
Conciliation proceedings could' not reach to any successful solution and the
conciliation officer has made a report failure of conciliation. The Government
had the report.
Thereafter the Government has not referred
the dispute to any industrial tribunal hut has framed a scheme which is the
subject matter of challenge before us. It cannot, in our opinion, be said that
conciliation proceedings or any proceeding under the Industrial Disputes Act
were pending and therefore in the middle of the proceedings under the Industrial
Disputes Act, the Government had acted and framed the scheme and as such the
same was bad and illegal. There were no proceedings pending under the Industrial
Disputes Act, 1947. With the finding of the Conciliation officer, the
Government 282 had two options, either reaching a settlement or framing a
scheme on the one hand or to make a reference to the tribunal of the dispute
regarding the points mentioned in the demands of the workmen. There is one
factual dispute which, in our opinion, is not very material. According to the
petitioners, the Government had not acknowledged the receipt of the failure
report of the Conciliation officer.
According to the respondents, the receipt was
acknowledged;
the failure of the conciliation proceedings,
however, is admitted. No further steps or proceedings were required as such.
The Government had to assess on the failure of tile conciliation proceedings
either to refer the matter to the tribunal or to take such steps as it
considered necessary.
If the Government had not taken any of the
steps, then it was open, if the employees concerned were in any way aggrieved,
to take appropriate proceedings against the Government for doing so. As
mentioned hereinbefore if the scheme was held to be valid, then the question
what is the general law and what is the special law and which law in case of
conflict would prevail would have arisen and that would have necessitated the
application of the principle .
"Gener alia specialibus non
derogant". The general rule to be followed in case of conflict between two
statutes is that the later abrogates the earlier one. In other words, a prior
special law would yield to a later general law, if either of the two following
conditions is satisfied.
(i) The two are inconsistent with each other.
(ii) There is some express reference in the
later to the earlier enactment.
If either of these two conditions is
fulfilled, the later law, even though general, would prevail.
From the text and the decisions, four tests
are deducible and these are: (i) The legislature has the undoubted right to
alter a law already promulgated through subsequent legislation, (ii) A special
law may be altergated or repealed by a later general law by an express
provision, (iii) A later general law will override a prior special law if the
two are so repugnant to each other that they cannot co-exist even though no
express provision in that behalf is found in the general law, and (iv) It is
only in the absence of a provision to the contrary and of a clear inconsistency
that a special law will remain wholly unaffected by a later general law. See in
this connection., 283 Maxwell on "The Interpretation of Statutes"
Twelfth Edition, pages 196-198.
The question was posed in the case of The
Life Insurance Corporation of India v. D.J. Bahadur & Ors.
(supra) where at page 1125, Krishna Iyer, J.
has dealt with the aspect of the question. There the learned Judge posed the
question whether the LTC Act was a special legislation or a general
legislation. Reference in this connection may also be made on Craies on
"Statute Law" Seventh Edition (1971) paras 377-382, but it has to be
brone in mind that primary intention has to be given effect to. Normally two
aspects of the question would have demanded answers, if the scheme of 1980 was
held to be valid on the first ground as we have discussed, one is whether the General
Insurance Business (Nationalisation) Act, 1972 is a special statute and the Industrial
Disputes Act, 1947 is a general Act or vice versa, and secondly whether there
is any express provision in the General Insurance Business (Nationalisation)
Act, 1972 which deals with the subject.
Now in this case we have categorical
reference to the Industrial Disputes Act, 1947 in sub-section (5) and sub-
section (7) of Section 16 of the General Insurance Business (Nationalisation)
Act, 1972. There is, however, one aspect w here it would have been necessary
had we held the scheme to be valid otherwise, if there had been no General
insurance Business (Nationalisation) Act, 1972, then the employees would have
been entitled to raise a dispute on the question of increase of emoluments and
revision of pay scale with rise in the cost of index of the prices under the Industrial
Disputes Act, 1947. In such a situation, the Government, after conciliation
proceedings, was empowered to make a reference if it considered so necessary
having regard to the nature of the disputes raised. Though it cannot be said
that reference was a matter of right but it was within the realm of power of
the Government and the Government has a duty to act with discretion on relevant
considerations to make or not to make a reference taking into consideration the
facts and circumstances of each case. To that limited extent it could have been
said That this right or power has been curtailed by the General Insurance
Business (Nationalisation) Act, 1972, if the scheme was otherwise valid Having
regard to the context in which the question now arises before us, in our
opinion, there is no question as to whether the provisions of Industrial
Disputes Act would prevail over the provi- 284 sions of General Insurance
Business (Nationalisation) Act.
There is no industrial dispute pending as
such. The General Insurance Business (Nationalisation) Act, 1972 has not
abrogated the Industrial Disputes Act, 1957 as such.
The question of the application of the
principle of "Generalia specialibus non derogant" has been dealt with
in the case of J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. State of
U.P. & Ors. Some of these aspects were also discussed in the case of U.P.
State Electricity Board & Ors. v. Hari Shanker Jain and Ors.
Had it been possible to uphold the scheme of
1980 as being within the power of 1972 Act, it would have been also necessary
for us to consider whether such a scheme or Act would have been
constitutionally valid in the context of fundamental rights under Article 14,
article 19(1)(g) and article 31 of the Constitution and the effect of the
repeal of article 31 by the 44th amendment of the Constitution. The General
Insurance Business (Nationalisation) Act was put in the Nineth Schedule of the
Constitution as item 95 on 10th August, 1975. The effect of putting a
particular provision in the Nineth Schedule at a particular time has been
considered by this Court in the case of Prag Ice & Oil Mills & Anr.
Etc. v. Union of India. It was held by the learned Chief Justice in the said
decision that on a plain reading of article 31A, it could not be said that the
protective umbrella of the Nineth Schedule took in not only the. acts and
regulations specified therein but also orders and notifications issued under
those acts and regulations.
Therefore if any rights of the petitioners
had been affected by the scheme of 1980 then those rights would not enjoy immunity
from being scrutinised simply because the Act under which the scheme was framed
has been put in the Ninth Schedule. In any event any right which accrued to the
persons concerned prior to the placement of the Act in the Nineth Schedule
cannot be retrospectively affected by the impugned provisions.
It was contended that the rights of the
petitions under article 19(1)(g) have been affected by the impugned legislation
and the scheme framed thereunder. Empowering the Government to frame schemes
for carrying out the purpose of the Act, does not, in our 285 opinion, in the
facts and circumstances of the case, in any way, affect or abridge the
fundamental rights of the petitioners and would not attract article 19(1)(g).
The other aspect which was canvassed before
us was whether the Act and the scheme in question violated article 14 of the
Constitution. This question has to be understood from two aspects, namely
whether making a provision for salary and emoluments of the petitioners who are
the employees of the General Insurance Corporation specifically and differently
from the employees of other public section undertakings is discriminatory in
any manner or not and the other question, is, whether making a provision for
the employees of General Insurance Corporation for settlement of their dues by
schemes and not leaving the question open to the general provisions of Industrial
Disputes Act, 1947 is discriminatory and violative of the rights of the
employees.
It is true that sometimes there have been
rise in emoluments with the rise in the cost of index in certain public sector
corporations. The legislature however is free to recognise the degree of harm
or evil and to make provisions for the same. In making dissimilar provisions
for one group of public sector undertakings does not per se make a law
discriminatory as such. It is well-settled that courts will not sit as
super-legislature and strike down a particular classification on the ground
that any under- inclusion namely that some others have been left untouched so
long as there is no violation of constitutional restraints. It was contended
that the application of the Industrial Disputes Act not having been excluded
from the Nationalised Textile Mills, Nationalised Coal and Coking Coal Mines
and Nationalised Banks but if and is so far as it excluded the application of
the Industrial Disputes Act, in case of general insurance companies, the same
is arbitrary and bad. In this connection reliance may be placed on the
observations of the learned Chief Justice in the case of 'Special Courts Bill
1978'. The same principle was reiterated by this Court in the case of State of
Gujarat and Anr. v. Shri Ambica Mills Limited, Ahmedabad etc. In that case,
this Court was of the view that in the matter of economic legislation or
reform, a provision would not be struck down on the vice of underinclusion,
inter alia, for the reasons that the legislature could not be 286 required to
impose upon administrative agencies task which could not be carried out or
which must be carried out on a large scale at a single stroke. It was further
reiterated that piecemeal approach to a general problem permitted by
under-inclusive classifications, is sometimes justified when it is considered
that legislatures deal with such problems usually on an experimental basis. It
is impossible to tell how successful a particular approach might be, what
dislocation might occur, and what situation might develop and what new evil
might be generated in the attempt.
Administrative expedients must be forged and
tested.
Legislators recognizing these factors might
wish to proceed cautiously, and courts must allow them to do so. This principle
was again reiterated in the Constitution Bench decision of this Court in the
case of R. K. Garg etc. v. Union of India & Ors. etc As there was no
industrial dispute pending, we are of the opinion that on the ground that the
petitioners have been chosen out of a vast body of workmen to be discriminated
against aud excluding them from the operation of Industrial Disputes Act, there
has been no violation of Article 14 of the Constitution. This question,
however, it must be emphasised again, does not really arise in the view we have
taken.
Before us it was contended that sick mills
which have been nationalised have been treated differently than general
insurance employees under 1972 Act in Section 16(5) and Section 16(7) and in
the scheme framed under the General Insurance Business (Nationalisation) Act,
1972. The object and purpose of the Sick Textile Undertakings (Nationalisation)
Act, 1974, was "reorganising and rehabilitating such sick textile
undertakings so as to subserve the interests of general public by augmentation
of the products and distribution at fair prices of different varieties of cloth
and yarn". The basic objective of the said Act was rehabilitation of the
sick textile mills. That was different from the purpose of the present Act. The
sick textile units had under them the bulk of their employees as workmen those
who came under the provisions of Industrial Disputes Act. Section 14 of the
said Act statutorily recognises the special position of the workmen as contra-
distinguished from the other employees by enacting separate provisions in this
respect thereon. Further-more it has to be borne in mind that the aforesaid 287
Act was concerned with the ensuring; augmentation of production and
distribution of certain cloth and yarn which are commodities essential to the
national economy being important consumer items Therefore the case of the
employees of sick textile undertakings which has been mentioned by the
petitioners and argued before us cannot be compared on similar lines in respect
of this aspect with the present petitioners. We would have rejected this
submission on behalf of the petitioners, had it been necessary for us to do so
but in the view that has been taken, it is not necessary.
Another item mentioned before us was the
employees or Coking Coal Mines Nationalisation Act, 1972. lt has to be borne in
mind that the object covered by the scheme of the Act was entirely different
from the General Insurance Business (Nationalisation) Act, 1972. The Coking
Coal Mines (Nationalisation) Act, 1972 was enacted to provide for the transfer
of the interest of the owners of such mines and also the transfer of the
interest of owners of coke oven plants with a view to "reorganising and
re-constructing such coal mines and plants for the purpose of protecting,
serving and permitting scientific development of resources of coking coal
needed to meet the growing requirement of iron & steel industry".
According to the normal prevalent view, the workmen of Coking Coal Mines were
sweated labour. These workmen constituted very large percentage of the employees.
The act in question namely the Coking Coal
Mines (Nationalisation) Act recognised the independent existence of the said
workmen as a class. It has also to be kept in mind that coking coal is a
commodity very vital to the national economy and prime raw materials of iron
& steel industry which is a basic industry. The workmen employed in the
coal mines were also sweated labour. Their special position was also
statutorily recognised in the said Act.
Coal is also one of the basic materials
required to sustain growth. The provisions of Coking Coal Mines (Nationalisation)
Act have been considered in detail and the special feature has been taken note
of in the case of Tara Prasad Singh etc. v. Union of India & Ors. According
to the respondents, Class III and Class IV employees of the General Insurance
Company are high wage earners. They are islanders by themselves-according to
the respondents. It is true that judges should not bring their personal
knowledge into action in deciding the controversy before the Courts but if
common knowledge is any guide, then undoubtedly these 288 employees are very
highly paid in comparison to many others.
The object of the General Insurance Business (Nationalisation)
Act, 1972 is to run the business efficiently so that the funds available might
be utilised for socially viable and core projects of national importance. From
one point of view the Nationalised Banks and the Insurance Companies for the
purpose of applicability or otherwise of the provisions of the Industrial
Disputes Act cannot be treated as belonging to one class. Historical reasons
provide an intelligible differentia distinguishing Nationalised Insurance
Companies from the Nationalised Banks. The reason suggested by the respondents
was that prior to Banks Nationalisation, Industrial disputes between workmen
and the Banks were treated since 1950 on All India basis with the totality of
the banks being involved therein.
Several awards have been made treating them
as such like Shastri Award, 1953. Shastri Award Tribunal was constituted with a
view to settle the disputes of the workmen of the Banks with all commercial
Banks (excluding Co-operative Banks etc.) on the one hand and the employees on
the other.
Desai Award, 1962 bipartite settlement
between Indian Banks Association and the Exchange Banks Association on the one
hand and All India Bank Employees Association and All India Bank employees
Federation on the other, are some of the examples. As against this, prior to
the Act in question before us, disputes between insurance companies and their
workmen were settled on independent company basis with no All India projections
involved. It may also be noted that unlike the case of some banks, there is no
existing award or settlement with the petitioners employees of the general
insurance companies and the four insurance companies. The financial resources,
structures and functions of the Banks are different from those of the insurance
companies. It may also be noted as was pointed out to us on behalf of the
respondents that Bank's Class III and IV employees are about 4,58,000 in 1982
as compared to insurance companies which employ about 25,000 Class Ill and
Class IV employees.
Therefore for the purpose of rationalisation,
the insurance companies wanted to curtail their emoluments on a small scale. It
cannot be said that there are no distinguishing factors and that for choosing a
particular group for experiment, the respondents should be found guilty of
treating people differently while they are alike in all material respects
Differentiation is not always discriminatory. If there is a rational nexus on
the basis of which differentiation has been made with the object sought to be
achieved by particular provision, then such differentiation is not
discriminatory and does not 289 violate the principles of article-14 of the
Constitution.
This principle is too well-settled now to be
reiterated by reference to cases. There is intelligible basis for
differentiation. Whether the same result or better result could have been
achieved and better basis of differentiation evolved is within the domain of
legislature and must be left to the wisdom of the legislature. Had it been held
that the scheme of 1980 was within the authority given by the Act, we would
have rejected the challenge to the Act and the scheme under article 14 of the
Constitution.
It was also urged before us on behalf of the
respondents that the petitioners being employees of public sector undertakings,
and these are economic instrumentalities of the State and having regard to the
contents and contour of the concept of public employment as developed in the
Indian legal system, an employee in a public sector can be approximated with
and treated as a government servant. Having regard to the principles which
govern the employer and employee relationship in the governmental sectors, the
conditions of service of employees in public employment should be exclusively
governed by the statute and by the rules and regulations framed thereunder.
Predication of such power would necessarily
exclude the provisions of Industrial Disputes Act and the principles of
collective bargaining just as these would exclude the principles of contractual
relationship in such matters. The point is interesting. However,, in the view
we have taken, we need not discuss this aspect any further.
It was further submitted on behalf of the
respondent that the rationale justification and the genesis of the law of
nationalisation being the creation of economic instrumentalities to subserve
the constitutional and administrative goals of governance in a social welfare
society, the running of public sector undertakings is neither for profit
earning of the management nor for sharing such profits with the workmen alone
but to utilise the investible funds available as a result of such ventures and
undertakings for socially-oriented goals laid down by the governmental policies
operating on the said sectors. In this connection reference was made before us
to the decision in the case of State of Karnataka & Anr. etc. v. Ranganatha
Reddy & Anr. etc 290 Employment is the public sector undertakings enjoys a
statuh. It was submitted that both historically as well as a matter of law, the
public sector undertakings being the economic instrumentalities of the State
and discharging the obligations which the State have, the employees of such
undertakings in principle cannot be distinguished. from the employees in the government
services. In this connection our attention was drawn to the case of Sukhdev
Singh & Ors. v. Bhagat Ram Sardar Singh Raghuvanshi & Anr. It was urged
that in all constitutional democracies. the relationship between the government
and the civil service is exclusively governed by the statutory provisions with
the power in the Government to unilaterally alter the conditions of service of
the government employees. Reference was made to "The Law of Civil Service
" by Kaplan. It was further submitted that in India the law is that origin
of the Government service might be. Contractual but once appointed to a post
under the Government, the government servant acquires a status and the rights
and obligations are no longer dependent on the consent of both the parties but
by statute.
We would have considered these aspects had it
been necessary for us to do so but it is not necessary in the view taken. We
may reiterate that article 14 does not prevent legislature from introducing a
reform i.e. by applying the legislation to some institutions or objects or
areas only according to the exigency of the situation and further
classification of selection can be sustained on historical reasons for reasons
of administrative exigency or piece-meal method of introducing reforms. The law
need not apply to all the persons. in the sense of having a universal
application to all persons. A law can be sustained if it deals equally with the
people of well-defined class- employees of insurance companies as such and such
a law is not open to the charge of denial of equal protection on the ground
that it had not application to other persons.
In the view we have taken of the matter,
these applications succeed and the impugned scheme of 1980 must be held to be
bad as beyond the scope of the authority of the Central Government under the General
Insurance Business (Nationalisation) Act, 1972. The operation of the scheme has
been restrained by the order passed as inter in order in these cases. The
impugned scheme is therefore quashed, and will not be given effect to. The
parties will be at 291 liberty to adjust their rights as if the scheme had not
been framed. The application for intervention is allowed. Let appropriate writs
be issued quashing the scheme of 1980.
This, however, will not prevent the
Government, if it so advised, to frame any appropriate legislation or make any
appropriate amendment giving power to Central Government to frame any scheme as
it considers fit and proper. In the facts and circumstances of these cases and especially
in view of the fact that petitioners had themselves at one point of time wanted
that new scheme be framed by the Central Government, we direct that parties
will pay and bear their own costs in all these matters. The rules are made
absolute to the extent indicated above.
N.V.K. Petitions allowed.
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