Life
Insurance Corporation of India & ANR V. S.S. Srivastava & Ors [1987] INSC
151 (5 May 1987)
VENKATARAMIAH,
E.S. (J) VENKATARAMIAH, E.S. (J) SINGH, K.N. (J) CITATION: 1987 AIR 1527 1987
SCR (3) 180 1988 SCC Supl. 1 JT 1987 (2) 529 1987 SCALE (1)975
CITATOR
INFO : F 1987 SC1706 (16)
ACT:
Life
Insurance Corporation of India (Staff) Regulations 1960-Retirement of Class I
and Class II Employees appointed on or after September 1, 1956 at 58
years--Whether valid and legal.
Life
Insurance Corporation Act, 1956---Section 11(2)--Fixation of 60 years as age of
superannuation for transferred employees-Whether unreasonable.
Constitution
of India, 1950--Articles 14 and 16--Different ages of retirement for Class I
and II Officers--Classification of employees into two categories for fixing of
age of superannuation depending on dates of entry into service--Whether valid
and legal.
HEADNOTE:
The
Life Insurance Corporation was established on September 1, 1956 under the Life
Insurance Act of 1956 (Act 31 of 1956) by amalgamating about 200 insurers
carrying on life insurance business in the country. It had no employees of its
own to carry on the vast business which had been taken over and the nature of
the work was such that the Corporation required the services of employees with
experience and expertise in running life insurance business. In order to meet
the above need, Section 11 of the Act came to be enacted. Sub-section (1)
provided that with effect from September 1, 1956, every whole time employee of
the erstwhile insurers would become an employee of the Corporation and hold
office therein by the same tenure, at the same remuneration, and upon the same
terms and conditions and with the same rights and privileges as to pension and
gratuity and other matters as he would have held on September 1, 1956, had the
Act not been passed.
The
conditions of service of the employees whose services were transferred to the
Corporation under Section 11(1) were not uniform. The conditions governing the
retirement of those employees were also diverse and different. In some cases
the age of retirement had been fixed at 55 years, in some at 58 years and in
some others at 60 years. In many cases, the insurers had permitted their
employees to continue in 181 their services even beyond 60 years depending upon
their efficiency and physical capacity.
For
the purposes of rationalising the pay scales of the transferred employees,
under sub-section (2) of Section 11 the Central Government was empowered to
alter the terms of service of the employees as to their remuneration in such
manner as it thought fit. The sub-section was amended by Acts 17 and 36 01'
1957.
Clause
(bb) of sub-section (2) 01' Section 49 conferred power on the Corporation to make
regulations with the previous approval of the Central Government as regards
'the terms and conditions of service of persons who had become employees of the
Corporation under subsection (1) 01' Section 11'.
Under
clauses (b) and (bb) of Section 49(2) 01' the Act, Regulations were framed
prescribing the ages of retirement of the employees of the Corporation
belonging to different categories with the previous approval of the Central
Government and were incorporated in the Life Insurance Corporation of India
(Staff) Regulations, 1960 made by the Corporation which came into effect on
July, 1960.
Under
Regulation 19(1), all transferred employees were entitled to remain in service
till they completed 60 years of age but the appointing authority was empowered
to retire any such transferred employee on completion of 55 years of age or at
any time thereafter, if his efficiency was found to have been impaired. Under
Regulation 19(2) employees appointed to the service of the Corporation on or
after September, 1956, were required to retire on completion of 58 years of age
but the appointing authority was empowered to retire any such employee on
completion of 55 years of age or thereafter if his efficiency was found to have
been impaired.
In
the case of the transferred employees this regulation was made in conformity
with the 'standardisation order' passed in respect of Class III and Class IV
transferred employees. in whose case the age of retirement was fixed at 60
years.. The result was that the regulation made a clear and distinct
classification 01' all the employees of the Corporation belonging to all
classes into two groups---transferred employees and the employees appointed
after September 1, 1956 for purposes of the age of retirement having regard to
the historical reasons.
182
Consequent upon the settlement arrived at, upon an industrial dispute which
arose between Class III and Class IV employees who were appointed subsequent to
September 1, 1956 in the Corporation. Regulation 19 of the Life Insurance
Corporation of India (Staff) Regulations 1960 which came into force w.e.f. July
1, 1960 was amended and the employees of the Corporation were divided both
longitudinally and latitudinally insofar as the age of retirement was
concerned. Longitudinally, all the transferred employees belonging to Class I
and II became entitled to continue in service till they attained the age of 60
years, the Corporation being empowered to retire any of them prematurely on
completion of 55 years of age if his efficiency was found to have been
impaired, and all the Class I and Class II officers appointed to the service of
the Corporation on or after September 1, 1956 had to retire on completion of 58
years of age subject again to the power of the Corporation to retire any such
employee on completion of 55 years of age or at any time thereafter if his
efficiency was found to have been impaired. Latitudinally, the employees were
divided into two groups and all the employees belonging to Class III and Class
IV, irrespective of the tact whether they were transferred employees or
employees appointed after September 1, 1956 were entitled to continue in
service till 60 years of age, but the employees belonging to Class I and Class
II who were appointed to the service of the Corporation on or after September
1, 1956 had to retire on the completion of 58 years of age subject to the usual
clause relating to premature retirement.
Sub-regulation
(2) of Regulation 19 was modified empowering the appointing authority to extend
at its discretion of service of any employee of the Corporation belonging to
Class I or Class II categories appointed to service on or after September 1,
1956 for one year at a time upto 60 years of age. The power to extend the
service of employees belonging to Class I and Class II appointed on or after
September 1, 1956 beyond 58 years or' age was withdrawn from January 21, 1977
and the Corporation was permitted to retire an employee on completion of 50
years of age.
The
first respondent joined the Corporation as a Class III employee on March 22, 1957.
Subsequently, he was promoted to a Class I post and ultimately as Assistant
Divisional Manager. Since he was born in the month of June, 1926, notice was
issued to him in February, 1984 of his retirement which was due on June 30,
1984 on his completing the age of 58 years. Before the date of his retirement,
he instituted a writ petition in the High Court questioning the validity of
Regulation 19(2) of the (Staff) Regulations, 1960, as it stood then and prayed
for the issue 183 of writ of mandamus directing the Corporation not to retire
him before he attained the age of 60 years.
It
was contended by the first respondent before the High Court that there was no
justification to prescribe two different ages of retirement one for the
transferred employees belonging to Class I and Class II categories and the
other for the employees who joined the service of the Corporation alter
September 1, 1956 and who also belonged to Class I and Class II categories, and
that in regard to those who joined the service after being appointed to Class
III post after September 1, 1956, there could not be any reduction of age of
retirement from 60 to 58 years on their being promoted to a Class I or Class II
post. Since he had the right to continue in service if he had remained in Class
III only till he attained the age of 60 years as a Class III employee, age of
retirement could not be reduced to 58 years only because he had been promoted
to a Class I post.
It
was urged on behalf of the Corporation and the Union of India that the
transferred employees and the employees who joined the service after September
1, 1956 belonged to two distinct and separate classes which had been treated
differently throughout for valid reasons. Since there was no uniformity in the
establishments in which the transferred employees were working prior to
nationalisation of the life insurance business, it became necessary to fix the
age of retirement of the transferred employees on a lair, equitable and just
basis. In the circumstances, the classification of the employees into two categories,
namely, transferred employees and others who joined on or after September 1,
1956 for the purposes of age of superannuation was a valid classification and
Articles 14 and 16 of the Constitution had not been violated. It was further
submitted that the discrimination made between the employees belonging to Class
I and Class II on the one hand and the employees belonging to Class III and
Class IV on the other in the matter of the age of superannuation was not
invalid since they belonged to two different categories of employees who were
governed by different conditions of service as regards pay, perquisites,
allowances, administrative powers etc.
The
High Court did not find any unconstitutionality in a rule or regulation
providing the age of retirement at 60 years of employees who had been absorbed
from the service of the erstwhile insurers and to that extent it held that the
grouping being reasonable the Court might not travel into the domain of
legislative policy. It, however, found that when once a transferred employee
belonging to Class III and an employee appointed after 1st September, 1956 by
the Corporation to a Class III post is promoted to Class I, the distinction of
the transferred employee and direct appointee could not be maintained, as on promotion
they became persons belonging to the same category of employees enjoying the
same conditions of service. Hence the age of retirement should be the same in
the case of both such promotees. It accordingly held that the first respondent
was entitled to continue till he attained the age of 60 years as other Class I
employees belonging to the category of transferred employees. The Writ Petition
was allowed and Regulation 19(2) was struck down as being violative of Articles
14 and 16 of the Constitution of India and the Corporation was directed not to
retire the first respondent before he attained the age of 60 years.
Allowing
the appeals, by special leave, of the Life Insurance Corporation of India and
the Union of India, this Court,
HELD:
1.1 The decision taken by the Corporation and the Central Government as regards
the ages of retirement of the different classes of the employees of the
Corporation is a bona fide one and cannot be characterised as unreasonable and
it is not, therefore, liable to be upset by a decision of the Court. [222G]
1.2
In the instant case, the High Court erred in striking down Regulation 19(2) of
the L.I.C. (Staff) Regulations 1960 as amended in the year 1977 and in
directing the Corporation to continue the first respondent in its service till
he completed the age of 60 years. [223A]
2.1
Classification of employees into two categories for purposes of fixing the age
of superannuation depending upon the date of entry into service is not
something which is unusual, and such classification becomes necessary on account
of historical facts and the need for treating the employees in a fair and just
way. [220G]
2.2
Merely because the pay, allowances and other perquisites drawn by the
transferred employees and by the employees appointed after September 1, 1956 by
the Corporation are the same, it cannot be said that the transferred employees
and the other employees had been integrated so as to form one cadre. So far as
the age of retirement is concerned, they are being treated differently right
from the date on which the Corporation was established. [221G]
2.3
In the instant case, since the classification of the employees for the purpose
of age of retirement into two categories is reasonable 185 and not arbitrary
and there is a reasonable nexus between the classification and the object to be
attained thereby, it is not possible to ho1d that Regulation 19(2) is violative
of Articles 14 and 16 of the Constitution. [222C]
3.
The Act itself made a distinction between the transferred employees and the
employees recruited to the service of the Corporation after September 1, 1956
by making amendments in Section 11 and in clauses (b) and (bb) of subsection
(2) of Section 49 of the Act. In the (Staff) Regulations, 1956 and the (Staff)
Regulations, 1960 there was again a distinction made between the transferred
employees and the employees recruited alter September 1, 1956. The distinction
between the two classes Is recognised by Parliament even as late as 1981 which
it amended Section 49 of the Act by deleting clause (bb) of sub-section (2)
thereof and by amending Section 48. of the Act by introducing clause (cc) in
sub-section (2) and the new sub-section (2A) in it.
At
no point of time the transferred employees were integrated into one cadre along
with employees appointed after September 1, 1956 as such and the transferred
employees have retained their birth-marks throughout. The tact that the pay,
allowances and other conditions or services have been made the same in respect
of both the transferred employees and the employees of the Corporation
recruited after September 1, 1956 has not brought about the integration of the
two Classes of employees into one single cadre. [214GH;
215A:
E-F]
4.1
The determination of 58 years as age of superannuation, in the case of the
employees, who entered service after September 1, 1956 by itself cannot be
considered to be arbitrary since in almost all the public sector corporations,
Central services and the State services, 58 years age is considered to be a
reasonable age at which officers can be directed to retire from their service. [212C]
4.2
Regarding the discrimination in the age or' retirement between employees
belonging to Class I and Class II on the one hand and Class III and Class IV on
the other, it is true that originally employees belonging to Class III and
Class IV categories amongst the transferred employees were given the benefit of
retirement at the age of 60 years, but the employees belonging to Class III and
Class IV categories after 1st September, 1956 were required to retire on the
completion of 58 years of age. Pursuant to the settlement arrived at between
the Management and the Class III and IV employees recruited after September 1,
1956. this discrimination was removed and Regulation 19 was amended w.e.f. June
19, 1965. [212D-F] 186
4.3
Having regard to the lower emoluments and other benefits which the employees
belonging to Class III and Class IV are entitled to get from the Corporation
and the higher emoluments and other benefits to which officers belonging to
Class I and Class II are entitled to and also the nature of their work and the
powers enjoyed by them, fixation of different ages of retirement to the
different classes of employees could not by itself be violative of Articles 14
and 16 of the Constitution. [212F-G]
5.
Having regard to different conditions of service that were prevailing in the
various establishments whose business was taken over by the Corporation,
fixation of age of superannuation is one of the essential parts or' the process
of transfer and integration to which sub-section (2) of Section 11 of the Act
is applicable. The fixation of 60 years as the age of superannuation in the
case of transferred employees cannot be considered to be unreasonable in view
of the history of this case. [208C-D]
6.
The transferred employees who are treated favourably belong to a vanishing
group and, perhaps, within a period of two years none of them would be in the
service of the Corporation. Thereafter, only one class of employees would be in
the service of the Corporation, namely, those appointed subsequent to September
1, 1956 by the Corporation in respect of whom the Corporation has fixed the age
of retirement as 58 years which corresponds to the age or' retirement in almost
all the public sector establishments, the Central Government services and the
State Government services.
[221C-E]
7.
The High Court was right in holding that it was not discriminatory to extend
the benefit of the age of 60 years to the transferred employees. However, it
was not correct in holding that on promotion from Class III to Class I, the
transferred employees and the directly recruited employees would lose their
birth-marks. The intention of Parliament was that even as late as in 1981 the
two groups of employees, namely, the transferred employees and employees recruited
after September 1, 1956 in the Corporation should be kept separate. In these
circumstances, the High Court was in the error in holding that when employees
are recruited to a lower grade from two sources, no favourable treatment should
be extended to recruits from one source on their promotion to the higher grade.
The fact that an employee had entered the service of the Corporation after
September 1, 1956 in a Class III post and is later on promoted to a Class I
post does not make any difference. [216E-H; 217D] 187 8. In the instant case,
when the first respondent was promoted to the Class I post in 1963 the age of
retirement of officers in the Class I post had been fixed at 58 years and was
not different from the age of retirement of Class III employees. It was only in
1965 under the settlement, the age of retirement of employees in Class III and
Class IV who joined service after September 1, 1956 was raised to 60 years. If
he felt that the conditions of service ill' Class I officers were likely to be
prejudicial to him, he could have refused the promotion offered to him. Having
accepted the promotion along with the higher benefits flowing from it he cannot
contend after several years that he had been prejudicially affected by the
condition relating to the age of retirement applicable to Class I officers
appointed after September 1, 1956. That apart, the higher emoluments and other
perquisites to which Class I employees may be entitled to and the better
conditions of work which are enjoyed by them substantially compensate the
effect of the lowering of the age of retirement from 60 years to 58 years.
[213E-G] Christopher Pimenta and Others v. Life Insurance Corporation of India,
A.I.R. 1958 Bombay 451; Life Insurance Corporation of India v. D.J. Bahadur
& Ors., [1981] 1 S.C.R. 1083; Ram Lal Wadhwa & ANR v. The State of
Haryana & 0rs.,[1973] 1 S.C.R. 608; State of Punjab v. Joginder Singh,
[1963] Supp. 2 S.C.R. 169; Tejinder Singh and Another v. Bharat Petroleum
Corporation Ltd. and ANR., [1986] 4 S.C.C. 237; Roshan Lal Tandon v. Union of
India, [1968] 1 S.C.11. 185; Miss Lena Khan v. Union of India and Ors., Jt.
[1987] 2 S.C. 19; Railway Board v. A. Pitchumani, [1972] 2 S.C.R. 187; Manindra
Chandra Sen v. Union of India & Ors., A.I.R.
1973
CAL. 385; M/s British Paints (India) Ltd. v. The Workmen, [1966] 2 S.C.R. 523;
Mohammad Shujat Ali & Ors. etc. v. Union of India & Ors. etc. [1975] 1
S.C.R. 449; Workmen of the Bharat Petroleum Corporation Ltd. (Refining
Division) Bombay v. Bharat Petroleum Corporation Ltd. and Another, [1984] 1
S.C.R. 251; Tamil Nadu Education Department Ministerial & General
Subordinate Service Association v. State of Tamil Nadu & ANR., [1980] 1
S.C.R. 1026, referred to.
Civil
Appellate Jurisdiction: Civil Appeal No. 10761077 of 1987.
From
the Judgment and Order dated 17.8.1985 of the Allahabad High Court in C.M. Writ
No. 6849 of 1984.
K.
Parasaran, B. Datta, P.P. Rao, K.L. Hathi, Anil Nauriya, S.R. Aggarwal, Y.
Ramachandran, U.J. Rana, R.P. Srivastava, Hemant Sharma, P. Parmeshwaran, Ms.
Sushma Suri and C.V. Subba Rao for the Appellants.
M.K.
Ramamurthy, C.S. Vaidyanathan, S. Ravindra Bhatt, Mohan, S.R. Setia and Probir
Choudhary for the Respondents.
The
Judgment of the Court was delivered by VENKATARAMIAH J. The question involved
in these appeals by special leave which are filed against the judgment dated
August 17, 1985 of the High Court of Allahabad in Civil Miscellaneous Writ No.
6849 of 1984 relates to the constitutional validity of regulation 19(2) of the
Life Insurance Corporation of India (Staff) Regulations, 1960 (hereinafter
referred to as 'the (Staff) Regulations, 1960'), as amended on 21.1. 1977 by
the Life Insurance Corporation of India (hereinafter referred to as 'the
Corporation') which provides that an employee belonging to Class I or Class II
appointed to the service of the Corporation on or after 1st September, 1956
shall retire on completion of 58 years of age but the competent authority may,
if it is of the opinion that it is in the interest of the Corporation to do so,
direct such employee to retire on completion of 50 years of age and at any time
thereafter on giving him three months' notice or salary in lieu thereof.
Prior
to January,. 1955 there were more than 200 insurers carrying on life insurance
business in India. As it came to the notice of the Government that the Indian
life insurers, with a few exceptions, were virtually controlled by few
individuals who were utilising the funds of those companies to the detriment of
the industry and the policyholders, the Government decided to nationalise the
life insurance business. Pursuant to the said decision, the President of India
promulgated the Life Insurance (Emergency Provisions) Ordinance, 1956 on January
19, 1956 providing for the vesting of the management of the life insurance
business (which was called the controlled business under the Ordinance) which
was being carried on by any insurer in India on that day in the Central
Government and providing for its management. On the passing of the said
Ordinance the management of the controlled business of all the insurers in
India thus vested in the Central Government and pending the appointment of the
custodians for the controlled business of any insurer the person in charge of
the management of such business immediately before the passing of the Ordinance
was required to be in charge of the management of the business for and on
behalf of the Central Government. The Ordinance contained detailed provisions
for the carrying on of the life insurance business by 189 the Government for
the time being. The Ordinance was replaced by the Life Insurance (Emergency
Provisions) Act, 1956 which was published on 21st of March, 1956. The said Act
was followed by the Life Insurance Corporation Act, 1956 (Act 31 of 1956)
(hereinafter referred to as 'the Act') which was published in the Gazette on 18th
June, 1956. The Act, however, came into force on 1st July, 1956. The Act
provided for the establishment and incorporation of the Corporation. The
Corporation was accordingly established on 1st September, 1956. Under the Act
the expression 'appointed day' is defined as the date on which the Corporation
is established.
The
appointed day for the purposes of the Act is, therefore, September 1. 1956. By
virtue of section 7 of the Act on the appointed day all the assets and
liabilities appertaining to the controlled business of all insurers, the
management of which it had been taken over earlier by the Central Government,
stood transferred to and vested in the Corporation.
When
the Corporation thus came into existence it had no employees of its own to
carry on the vast business of the large number of insurers which had been taken
over by it.
It,
therefore, became necessary to transfer the services of the existing employees
of the insurers to the Corporation because without the services of those
employees it was almost impossible for the Corporation to run the life
insurance business in India which involved management of the various offices
situated in different parts of India, servicing of lakhs of insurance policies,
the administration of the assets taken over from the insurers and several other
activities connected with the life insurance business. The nature of the work
of the Corporation was such that it required the services of the employees with
sufficient experience and expertise in running the life insurance business. In
order to meet the above need section 11 of the Act came to be enacted. Section
11 of the Act originally stood as follows:
"11.
Transfer of service of existing employees of insurers to the Corporation-(1)
Every whole-time employee of an insurer whose controlled business has been
transferred to and vested in the Corporation and who was employed by the
insurer wholly or mainly in connection with his controlled business immediately
before the appointed day shall, on and from the appointed day, become an
employee of the Corporation, and shall hold his office therein by the same
tenure, at the same remuneration and upon the same terms and conditions and
with the same rights and privileges as to pension and gratuity and other
matters as he would have held the same on the appointed day if this Act had not
been passed, and shall continue to do so unless and until his employment in the
Corporation is terminated or until his remuneration, terms and conditions are
duly altered by the Corporation:
Provided
that nothing contained in this sub-section shall apply to any such employee who
has, by notice in writing given to the Central Government prior to the appointed
day, intimated his intention of not becoming an employee of the Corporation.
(2)
Notwithstanding anything contained in sub-section (1) or in any contract of
service, the Central Government may, for the purposes of rationalising the pay
scales of employees of insurers whose controlled business has been transferred
to and vested in it or for the purpose of reducing the remuneration payable to
employees in cases where in the interest of the Corporation and its policyholders
a reduction is called for, alter the terms of service of the employees as to
their remuneration in such manner as it thinks fit; and if the alteration is
not acceptable to any employee the Corporation may terminate his employment on
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 employee under this sub-section shall be in
addition to and shall not affect any pension, gratuity, provident fund money or
any other benefit to which the employee may be entitled under his contract of
service.
(3)
If any question arises as to whether any person was a whole-time employee of an
insurer or as to whether any employee was employed wholly or mainly in
connection with the controlled business of an insurer immediately before the
appointed day the question shall be referred to the Central Government whose
decision shall be final.
(4)
Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of
1947), or in any other 191 law for the time being in force, the transfer of the
services of any employee of an insurer to the Corporation shall not entitle any
such employee to any compensation under that Act or other law, and no such
claim shall be entertained by any Court, tribunal or other authority."
Sub-section (1) of section 11 of the Act provided that every whole-time
employee of an insurer whose controlled business had been transferred to and
vested in the Corporation and who was employed by the insurer wholly or mainly
in connection with the controlled business immediately before the appointed
day, i.e., September 1, 1956, would on and from the appointed day become an
employee of the Corporation, and would hold his office therein by the same
tenure, at the same remuneration and upon the same terms and conditions and
with the same rights and privileges as to pension and gratuity and other
matters as he would have held the same on the appointed day if the Act had not
been passed, and would continue to do so unless and until his employment in the
Corporation was terminated and until his remuneration, terms and conditions were
duly altered by the Corporation. The proviso to that sub-section provided that nothing
contained in sub-section (1) of section 11 of the Act would apply to any such
employee who had by notice in writing given to the Central Government prior to
September 1, 1956 intimated his intention of not becoming an employee of the
Corporation. The whole-time employees of the erstwhile insurers whose services
were thus transferred to the Corporation are hereinafter referred to as 'the
transferred employees' of the Corporation. As mentioned earlier, there were
more than 200 insurers whose controlled business had been taken over by the
Corporation and we are informed that there were about 27,000 whole-time
employees working in them. The conditions of service of these transferred
employees of the Corporation whose services were transferred to the Corporation
under section 11(1) of the Act were not uniform. It was naturally difficult to
continue after the establishment of the Corporation in the cases of all the
transferred employees, the conditions of service enjoyed by them when they were
in the employment of the former insurers. The conditions governing the
retirement of those officials with which we are concerned in these appeals were
also diverse and different. In some cases the age of retirement had been fixed
at 55 years, in some at 58 years and in some others at 60 years. In many cases
the insurers had permitted their employees to continue in their service even
beyond 60 years depending upon their efficiency and physical capacity.
The
conditions of service of employees and in particular the terms of remuneration
prevalent in some of the former 192 insurance organisations were also
disadvantageous to the policyholders. It, therefore became necessary to bring
about uniformity in the conditions of service of the transferred employees.
Parliament therefore, enacted sub-section (2) of section 11 of the Act which
provided that notwithstanding anything contained in sub-section (1) of section
11 or in any contract of service, the Central Government might for the purposes
of rationalising the pay scales of employees of insurers whose controlled
business had been transferred to and vested in it or for the purposes of
reducing the remuneration payable to those employees in cases where in the
interest of the Corporation and its policyholders a reduction was called for,
alter the terms of service of the employees as to their remuneration in such
manner as it thought fit and if the alteration was not acceptable to any
employee the Corporation might terminate his employment on giving him
compensation equivalent to three months' remuneration unless the contract of
service with such employee provided for a shorter notice of termination. Doubts
arose as regards the meaning of sub-section (2) of section of the Act. In
Christopher Pimenta and Others v. Life Insurance Corporation of India, A.I.R.
1958 Bombay 451 the High Court of Bombay opined that under section 11(2) of the
Act the Central Government could alter the terms and conditions of service of
the employees only as to the remuneration and that the said sub-section had no
reference to the other terms and conditions of the service. The above decision
of the Bombay High Court was delivered on 16.4.1957. It is stated that there
were cases pending in other courts also questioning the scope and ambit of
sub-section (2) of section 11 of the Act as it stood originally. Hence in order
to remove all doubts the President of India promulgated an ordinance (which was
replaced by Act 17/1957) substituting a new sub-section in the place of the
original sub-section (2) of section II of the Act making it more comprehensive
and thus enabling the Central Government to alter suitably all conditions of
service of the transferred employees. The new sub-section (2) of section 11 of
the Act was further modified by Act 36 of 1957. Thereafter sub-section (2) of
section 11 of the Act read as follows:
"(2)
Where the Central Government is satisfied that for the purpose of securing
uniformity in the scales of remuneration and the other terms and conditions of
service applicable to employees of insurers whose controlled business has been
transferred to, and vested in the Corporation, it is necessary so to do, or
that, in the interest of the Corporation and its policy-holders, a reduction in
the remuneration payable, or a revision of the other terms and 193 conditions
of service applicable, to employees or any class of them is called for, the
Central Government may, not with standing anything contained in sub-section
(1), or in the Industrial Disputes Act, 1947, or in any other law for the time
being in force, or in any award, settlement or agreement for the time being in
force, alter (whether by way of reduction or otherwise) the remuneration and
the other terms and conditions of service to such extent and in such manner as
it thinks fit, and if the alteration. is not acceptable to any employee, the
Corporation 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 employee under this sub-section shall be in addition
to, and shall not affect, any pension, gratuity, provident fund money or any
other benefit to which the employee may be entitled under his contract of service."
Section 49(1) of the Act conferred powers on the Corporation to make with the
previous approval of the Central Government regulations not inconsistent with
the Act and the rules made there under. It provided for making regulations to
provide for all matters for which provision was expedient for the purposes of
giving effect to the provisions of the Act. Clause (b) of sub-section (2) of
section 49 of the Act in particular conferred power on the Corporation to make
regulations as regards the method of recruitment of employees and agents of the
Corporation and the terms and conditions of such employees or agents. It was
felt that clause (b) of section 49(2) of the Act was not in terms applicable to
the transferred employees who became the employees of the Corporation under
sub-section (1) of section 11 of the Act but only referred to the employees and
agents of the Corporation who were employed after the Corporation was established,
that is, after 1st September 1956. To remove the above doubt by Act 17 of 1957
section 49 of the Act was amended by introducing clause (bb) in sub-section (2)
of section 49 of the Act which expressly conferred power on the Corporation to
make regulations with the previous approval of the Central Government as
regards 'the terms and conditions of service of persons who have become
employees of the Corporation under sub-section (1) of section 11'. The above
clause was introduced into the Act with retrospective effect along with the new
sub194 section (2) of section 11 of the Act. It is this to be seen that the
conditions of service of the transferred employees were to be regulated by the
provisions of the Act, by an order made by the Central Government under section
11(2) of the Act and the regulations made under clause (bb) of section 49(2) of
the Act. Even before clause (bb) was actually introduced into the Act with
retrospective effect by Act 17 of 1957 the Corporation had promulgated the Life
Insurance Corporation of India (Staff) Regulations, 1956 (hereinafter referred
to as 'the (Staff) Regulations, 1956'). Under regulation 21 of the (Staff)
Regulations, 1956 provision was made regarding superannuation and retirement of
the employees of the Corporation. Regulation 21 reads as follows:
"21.
An employee shall retire at fifty-five years of age provided that the
appointing authority may at its discretion extend the service every year upto
60 years of age.
Provided,
however, that in respect of some of the employees of insurers who are allowed
to continue in service beyond age 60 because of the terms and conditions of
employment having not 'been favourable in the past, the Executive Committee may
at its discretion extend their service every year upto age 65.
Provided
further that during the three years, beginning from 1st September, 1956, the
Executive Committee may, at its discretion, extend the service of a class I
employee, who has completed sixty years of age for such period as may be
specified but not exceeding one year at a time if such extension is considered
necessary in the interest of the Corporation.
Explanation--Notwithstanding
anything contained in this Regulation, where an employee has privilege leave
earned but not availed of as on the date of retirement as prescribed in the
above Regulation he may be permitted to avail of the leave and in that case the
employee will be deemed to retire from service at the expiry of the
leave." The above regulation fixed the age of retirement of an employee at
55 years while empowering the authority to extend the service of an employee, at
its discretion, every year upto 60 years of age. The first proviso to
regulation 21 of the (Staff) Regulations, 1956, however, 195 authorised the
Corporation to allow some of the employees of insurers who were allowed to
continue in service beyond the age of 60 years for the reasons mentioned
therein. The above regulation thus made a distinction between an employee who
entered the service of the Corporation after it was established, i.e., after
1st September, 1956 and the transferred employees insofar as the age of
retirement was concerned.
Pursuant
to the power conferred on it under sub-section (2) of section 11 of the Act the
Central Government issued an order on 1.6.1957 called the Life Insurance
Corporation of India (Alteration of Remuneration and other Terms &
Conditions of Service of Employees) Order, 1957 which came into force
retrospectively from 1st September, 1956. This order is called the
'standardisation order'. This Order applied to all transferred employees who
had become employees of the Corporation under section 11(1) of the Act and who
were in supervisory, clerical and subordinate grades (now classified as Class
III and Class IV employees) of the erstwhile insurers on 31st August, 1956.
Clause 13 of the above Order, which related to the age of superannuation read
as follows:
"13.
Retirement:
The
normal age of retirement shall be 60. But the Corporation may require any
employee who has attained the age of 55 to retire if his efficiency is found to
have been impaired." Clause 13 of the above Order, therefore, modified
regulation 21 of the (Staff) Regulations, 1956 to the extent indicated therein
with effect from the commencement of the Corporation. After the promulgation of
the Order the transferred employees to whom it applied were entitled to
continue in the service of the Corporation till they attained the age of 60
years subject to the Corporation exercising its powers to retire a transferred
employee on his attaining the age of 55 years if his efficiency was found to
have been impaired. In the case of the other employees who joined service
subsequent to 1st September, 1956 regulation 21 of the (Staff) Regulations,
1956, which prescribed the age of retirement at 55 years subject to the
appointing authority at its discretion extend the age of retirement to 60 years
as provided therein, continued to apply. This Order applied to the members of
the staff of the Corporation belonging to Class III and Class IV categories. As
regards the transferred officers belonging to the Class II category, 196 namely,
the Field Officers, a standardisation order was made under sub-section (2) of
section 11 of the Act on 30th December, 1957. Clause 6 of that order originally
read as follows:
"6.
Leave and retirement--In the matter of leave and retirement, Field Officers
shall be governed by the same regulations as are applicable to Class I officers
of the Corporation." The above clause 6 was substituted by a new clause on
25.11.1962 which read as follows:
"6.
Leave and retirement--In the matter of leave and retirement, Development
Officers shall be governed by the Life Insurance Corporation of India (Staff)
Regulations, 1960, as amended from time to time." It may be noted that the
Field Officers referred to in the former clause 6 had been redesignated as the
Development Officers before it was substituted by the later clause 6 of the
standardisation order. Insofar as the transferred officers belonging to Class I
were concerned, the question of determination of their age of superannuation
was taken up for consideration by the Services and Budget Committee of the
Corporation on 20th November, 1959. Para 9 of the office note circulated
amongst the members of that committee gave a true picture of the conditions
prevailing then. It read thus:
"9.
As regards retirement, the Government has mentioned that the Department of
Expenditure has objected to raising the date of superannuation to 58 years of
age on the ground that other statutory Corporations are also demanding the same
benefit on the analogy of the Life Insurance Corporation's proposal.
Standardisation Order provides that an employee shall retire at 60 years of
age, but the competent authority may require an employee to retire at any time
after 55 years of age if his efficiency is found to have been impaired. In the amended
Regulations approved by the Board, this provision of the Standardisation Order
was incorporated as far as employees in Classes III & IV are concerned but
in the case of transferred officers and Field Officers, the retirement age was
fixed at 55 extensible to 58 with a further proviso that in special
circumstances only the competent authority may extend the services 197 beyond
age 58 and upto 60 years of age. The Board has also decided that administratively
we shall grant extension upto 60 liberally till the end of 1963. Most of the
insurers permitted their officers to continue in service upto 60 years of age
and even beyond, depending upon their efficiency. There is no reason why there
should be distinction between officers and staff in this matter as both of them
had similar privileges with regard to retirement in the past. There is thus a
strong case for extending the provisions of the Standardisation Order regarding
retirement to the transferred officers also. As regards new recruits, it was
thought that there was no justification to bring down the retirement age from
60 to 55 all of a sudden nor was it considered necessary to maintain any
distinction between officers and staff. All the employees have often
represented that the age of retirement should be raised to 60. A compromise
was, therefore, struck by fixing the age at 58. In the light of the above it is
suggested that the provisions of the Standardisation Order may be extended to
transferred officers and the retirement age may be retained at 58 for persons
recruited on or after 1st January 1959. It may be added that this would mean a
modification of the earlier decision of the Board in this matter." After
the matter was duly considered by the Services and the Budget Committee and by
the Corporation, regulations were framed under clauses (b) and (bb) of section
49(2) of the Act prescribing the ages of retirement of the employees of the
Corporation belonging to different categories with the previous approval of the
Central Government and were incorporated in the (Staff) Regulations, 1960 made
by the Corporation which came into effect on July 1, 1960. Regulation 19 of the
(Staff) Regulations, 1960 dealt with the subject of superannuation and
retirement of the employees of the Corporation. It reads thus:
"Super
annution and Retirement:
19(1).
A transferred employee shall retire on completion of age 60; but the appointing
authority may direct such employee to retire on completion of 55 years of age
or at any time thereafter, if his efficiency is found to have been impaired.
(2)
An employee appointed to the service of the 198 Corporation on or after 1st
September, 1956 shall retire on completion of 58 years of age; but the
appointing authority may direct such employee to retire on completion of 55 years
of age or at any time thereafter, if his efficiency is found to have been
impaired.
........................................
It
is seen from the above regulation that the cases of all transferred employees
were dealt with by sub-regulation (1) of regulation 19 and the cases of
employees appointed to the service of the Corporation that year after 1st
September, 1956 were dealt with by sub-regulation (2) of regulation 19. All the
transferred employees were entitled to remain in service till they completed 60
years of age but the appointing authority was empowered to retire any such
transferred employee on completion of 55 years of age or at any time thereafter
if his efficiency was found to have been impaired. All employees appointed to
the service of the Corporation on or after 1st September, 1956 were required to
retire on completion of 58 years of age but the appointing authority was
empowered to retire any such employee on completion of 55 years of age or at
any time thereafter if his efficiency was found to have been impaired. This
regulation was made in supersession of all other earlier regulations. In the
case of the transferred employees the regulation was in conformity with the
standardisation order passed in respect of Class III and Class IV transferred
employees in whose case the age of retirement was fixed at 60 years.
The
result was that the regulation made a clear and distinct classification of all
the employees of the Corporation belonging to all classes into two
groups--transferred employees and the employees appointed after 1st September,
1956, for purposes of the age of retirement having regard to the historical
reasons. It would appear that an industrial dispute arose between the Class III
and Class IV employees who entered the service of the Corporation on or after
1st September, 1956 and the Corporation and one of the points of dispute
related to the age of retirement. These employees demanded that their age of
retirement should also be fixed at 60 years as in the case of Class III and Class
IV employees belonging to the category of transferred employees. The dispute
ultimately ended in a settlement which was incorporated in the Memorandum of
Settlement arrived at under section 2(p) and section 18(1) of the Industrial
Disputes Act, 1947 and rule 58 of the Industrial (Central) Disputes Rules, 1957
dated 29th January, 1965. The relevant part of the settlement arrived at
between the parties to the said industrial dispute as regards the age of
retirement of class III and class IV employees who entered the service of the
Corporation on or after 1st September, 1956 read as follows:
"1.
Retirement age for new employees:
There
will be no distinction between Class 111 and Class IV 'transferred employees'
and Class III and Class IV employees who entered the service of the Corporation
on or after 1.9.1956 in regard to retirement age which shall be 60" After
the above settlement was arrived at regulation 19 of the (Staff) Regulations,
1960, which had been brought into force with effect from July 1, 1960, was
suitably amended to bring it in conformity with the settlement. The relevant
part of the amended regulation 19 which was notified on 19.6.1965 read thus:
"19(1).
An employee belonging to Class III or Class IV and a transferred employee
belonging to Class I or Class II shall retire on completion of age 60; but the
appointing authority may direct such employee to retire on completion of 55
years of age or at any time thereafter, if his efficiency is found to have been
impaired.
(2)
An employee belonging to Class I or Class II appointed to the service of the
Corporation on or after 1st September, 1956 shall retire on completion of 58
years of age, but the appointing authority may direct such employee to retire
on completion of 55 years of age or at any time thereafter, if his efficiency
is found to have been impaired.
(2A)
Notwithstanding what is stated in sub-regulations (1) and (2) above, an
employee may be permitted to retire at any time after he has completed age 55.
.........................."
On account of the settlement arrived at between Class III and Class IV
employees, who were appointed subsequent to 1st September, 1956 and the
Corporation, which was followed up by the amendment of the (Staff) Regulations
with effect from 19.6.1965, the employees of the Corporation were divided both
longitudinally and latitudinally insofar as the age of superannuation was
concerned. The longitudinal division of the employees was as follows. All the
transfer200 red employees belonging to Class I and Class II became entitled to
continue in service till they attained the age of 60 years subject of course to
the power of the Corporation to retire any of them prematurely on completion of
55 years of age if his efficiency was found to have been impaired and all the
Class I and Class II officers appointed to the service of the Corporation on or
after 1st September, 1956 had to retire on completion of 58 years of age
subject again to the power of the Corporation to retire any such employee on
completion of 55 years of age or at any time thereafter if his efficiency was
found to have been impaired. The employees of the Corporation were divided
latitudinally into two groups. All the employees belonging to Class III and
Class IV irrespective of the fact whether they were transferred employees or
employees appointed after 1st September, 1956 were entitled to continue in
service till 60 years of age, but the employees belonging to Class I and Class
II, who were appointed to the service of the Corporation on or after 1st
September, 1956 had to retire on the completion of 58 years of age subject to
the usual clause relating to premature retirement. Sub-regulation (2) of
regulation 19 which affected the employees belonging to Class I and Class II
appointed to the service of the Corporation on or after 1st September, 1956 was
substituted by a new sub-regulation which was notified on September 3, 1966.
This
new sub-regulation (2) of regulation 19 read as follows:
"(2).
An employee belonging to the Class I or Class II appointed to the service of
the Corporation on or' after 1st September, 1956 shall retire on completion of
58 years of age, but the appointing authority may at its discretion, extend his
service for one year at a time upto 60 years of age. The appointing authority
may, however, direct an employee to retire on completion of 55 years of age or
at any time thereafter if his efficiency is found to have been impaired."
The modification made by the new sub-regulation (2) of regulation 19 empowered
the appointing authority to extend at its discretion the service of any
employee of the Corporation belonging to the Class I or Class II categories
appointed to the service of the Corporation on or after 1st September, 1956 for
one year at a time upto 60 years of age.
Since
the Corporation found that the discretion conferred on the appointing authority
to extend the services of Class I or Class II officers beyond 58 years of age
at its discretion was not being exercised satisfactory but very often abused,
sub-regulation (2) was again amended on 21.1.1977 withdrawing the power to
extend the service of 201 employees belonging to Class I and Class 11 appointed
to the service of the Corporation on or after 1st September, 1956 beyond 58
years of age. It also provided that in the interest of the Corporation, the
Corporation could retire an employee after completion of 50 years of age. The
relevant part of regulation 19 amended on 21.1.1977 reader thus:
"19(1).
An employee belonging to Class III or Class IV and a transferred employee
belonging to Class I or Class II shall retire on completion of age 60; but the
competent authority may, if it is of the opinion that it is in the interest of
the Corporation to do so, direct such employee to retire on completion of 55
years of age or at any time thereafter, on giving him three months' notice or
salary in lieu thereof.
(2).
An employee belonging to Class I or Class II appointed to the service of the
Corporation on or after 1st September, 1956 shall retire on completion of 58
years of age, but the competent authority may, if it is of the opinion that it
is in the interest of the Corporation to do so, direct such employee to retire
on completion of 50 years of age or at any time thereafter on giving him three
months' notice or salary in lieu thereof." The 1st Respondent S.S.
Srivastava entered the service of the Corporation as a Class III employee on
22.3.1957 on which date he was appointed as an Assistant in the Corporation.
From the said Class III post he was promoted to the Class I post (since there
was no necessity to pass through a Class II post before entering a Class I
post) on 8.10.1963 and was appointed as Assistant Branch Manager (Admn.). From
the post of Assistant Administrative Officer he was promoted to the post of
Administrative Officer in June, 1971 and was further promoted as Assistant
Divisional Manager on 18.7.1978. Since he was born in the month of June, 1926,
notice was issued in February, 1984 to Respondent No. 1 of his retirement which
was due on 30th June, 1984 on his completing the age of 58 years. Before the
date of his retirement, he instituted a writ petition out of which these
appeals arise in Civil Miscellaneous Writ No. 6849 of 1984 on the file of the
High Court of Allahabad questioning the validity of regulation 19(2) of the
(Staff) Regulations, 1960 as it stood then and praying for the issue of a writ
in the nature of mandamus to the Corporation not to retire him before he
completed the age of 60 years. The High Court 202 issued 'an interim order of
stay of his retirement on May 22, 1984. Hence, he was not retired on the 30th
June, 1984 as originally notified and allowed to continue in service.
The
Writ Petition was allowed striking down regulation 19(2) as being violative of
Articles 14 and 16 of the Constitution of India and the Corporation was
directed not to retire the 1st Respondent before he attained the-age of 60
years. By virtue of the judgment of the High Court, the 1st Respondent
continued in the service of the Corporation till he completed 60 years of age.
He was retired from service on 30th of June, 1986 during the pendency of these
appeals.
In
the Writ Petition filed by the 1st Respondent it was contended that there was
no justification to prescribe two different ages of retirement one for the
transferred employees belonging to Class I and Class II categories and the
other for the employees who joined the service of the Corporation after 1st
September, 1956 and who also belonged to Class I and Class II categories. It
was also contended that whatever may be the position in respect of persons who
were appointed directly to any post belonging to Class I or Class II category
after 1st September, 1956, as regards those who joined the service of the
Corporation on being appointed to a Class III post after 1st September, 1956
there could not be any reduction of the age of retirement from 60 years to 58
years on their being promoted to a Class I post or Class II post. In other
words the contention of the 1st Respondent before the High Court was that since
he had the fight to continue in service if he had remained in Class III only
till he attained the age of 60 years as a Class III employee by virtue of the
settlement and the amendment of the regulation 19 in the year 1965, the age of
retirement in his case could not be reduced to 58 years only because he had
been promoted to a Class I post. The Writ Petition was contested by the
Corporation and the Union of India. It was urged on behalf of the Corporation
and the Union of India that the transferred employees and the employees who
joined the service after 1st September, 1956 belonged to two distinct and
separate classes which had been treated differently throughout for valid
reasons. It was pleaded by them that on the establishment of the Corporation
under the Act it became necessary to continue the services of the employees of
the erstwhile insurers whose life insurance business was taken over by the
Corporation to run the business of the Corporation because the Corporation had
no employees of its own in the month of September, 1956 when it was
established. Since as regards the age of retirement there was no uniformity in
the establishments in which the transferred employees were working prior to the
nationalisation of the life insurance business 203 and as in some cases the age
of retirement had been fixed at 55 years, in some other cases it was 58 years,
in few other cases at 60 years and in many cases there was no age of retirement
and the employees could continue as long as they were found to be physically
and mentally fit, it became necessary to fix the age of retirement of the
transferred employees on a fair, equitable and just basis. The Central
Government and the Corporation felt that 60 years of age could be a proper age
of retirement in the circumstances in respect of the transferred employees and
that was the reason why by regulation 19 and the standardisation order issued
earlier in the case of certain classes of transferred employees under section
11(2) of the Act the retirement age was fixed at 60 years and this was done
with a view to retaining the services of the experienced employees of the
erstwhile insurers. It was pleaded on behalf of the Corporation and the Union
of India that in the circumstances the classification of the employees into two
categories, namely, transferred employees and others who joined the service of
the Corporation on or after 1st September, 1956 for the purposes of the age of
superannuation was a valid classification and Articles 14 and 16 of the
Constitution of India had not been violated. It was further pleaded that the
discrimination made between the employees belonging to Class I and Class II on
the one hand and the employees belonging to Class III and Class IV on the other
in the matter of the age of superannuation was not invalid since they belonged
to two distinct categories of employees who were governed by different
conditions of service as regards pay, perquisites, allowances, administrative
powers etc. After heating the arguments of both the sides the learned Judges of
the High Court allowed the Writ Petition. The High Court did not find any
unconstitutionality in a rule or regulation providing the age of retirement at
60 years of employees who had been absorbed from the service of the erstwhile
insurers and to that extent it observed that one could say that the grouping
being reasonable the Court might not travel into the domain of legislative
policy. It, however, found that when once a transferred employee belonging to
Class III and an employee appointed after 1st September, 1956 by the
Corporation to a Class III post are promoted to Class I the distinction of
transferred employee and direct appointee could not be maintained as on
promotion they became persons belonging to the same category of employees
enjoying the same conditions of service. Hence the age of retirement should be
the same in the case of both such promoters. It accordingly held that the 1st
Respondent was entitled to continue till he attained the age of 60 years as
other Class I employees belonging to the category of transferred employees.
Aggrieved by the judgment of 204 the High Court the Corporation and the Union
of India have filed these appeals by special leave.
It
should be stated at the outset that some of the questions raised before us are
already covered by pronouncements made by this Court. The object of enacting
section 11 of the Act is dealt with in. detail by this Court in the Life
Insurance Corporation of India v. D.J. Bahadur & Ors., [1981] 1 S.C.R. 1083
which unfortunately was not brought to the notice of the High Court. Krishna
Iyer, J. at pages 1098-1099 has observed in the course of the said decision
thus:
"The
Corporation, to begin with, had to take over the staff of the private insurers
lest they should be thrown out of employment on nationalisation. These private
companies had no homogenous policy regarding conditions of service for their
personnel, but when these heterogenous crowds under the same management (the
Corporation) divergent emoluments and other terms of service could not survive
and broad uniformity became a necessity. Thus, the statutory transfer of
service from former employers and standardization of scales of remuneration and
other conditions of employment had to be and were taken care of by s. 11 of the
Life Insurance Corporation Act, 1956 (for short, the LIC Act). The obvious
purpose of this provision was to enable the Corporation initially to absorb the
motley multitudes from many companies who carried with them varying incidents
of service so as to fit them into a fair pattern, regardless of their
antecedent contracts of employment or industrial settlements or awards. It was
elementary that the Corporation could not perpetuate incongruous features of
service of parent insurers, and statutory power had to be vested to vary,
modify or supersede these contracts, geared to fair, equitable and, as far as
possible, uniform treatment of the transferred staff.
Unless
there be unmistakable expression of such intention, the ID Act will continue to
apply to the Corporation employees. The office of s. 11 of the LIC Act was to
provide for a smooth take-over and to promote some common conditions of service
in a situation where a jungle of divergent contracts of employment and
industrial awards or settlements confronted the State. Unless such
rationalisation and standardization were evolved the ensuing chaos would itself
have spelt confusion, conflicts and difficulties. The functional focus of s. 11
205 of the LIC Act will dispel scope for interpretative exercises unrelated to
the natural setting in which the problem occurs." Pathak, J. (as he then
was) in his judgment in the same case observed at pages 1134 to 1136 thus:
"The
first question is whether the new clause (9) of the Standardisation Order
succeeds in defeating the claim of the workmen. To determine that, s. 11 of the
Corporation Act must be examined. Sub-s. (1) guarantees to the transferred
employee the same tenure, at the same remuneration and upon the same terms and
conditions on the transfer to the Corporation as he enjoyed on the appointed
day under the insurer, and he is entitled to them until they are duly altered
by the Corporation or his employment in the Corporation is terminated. The
sub-section envisages alteration by the Corporation.
Sub-s.
(2) of s. 11, by its first limb, confers power on the Central Government to
alter the scales of remuneration and other terms and conditions of service
applicable to transferred employees. Predictably, when the transferred
employees of different insurers were brought together in common employment
under the Corporation they would have been enjoying different scales of
remuneration and other terms and conditions of service. The power under this
part of sub-s. (2) is intended for the purpose of securing uniformity among
them. The second limb of sub-s.
(2)
is the source of controversy before us. It empowers the Central Government to
reduce the remuneration payable or revise the other terms and conditions of
service. That power is to be exercised when the Central Government is satisfied
that the interests of the Corporation and its Policy holders require such
reduction of revision. The question is whether the provision is confined to
transferred employees only or extends to all employees generally. In my
opinion, it is confined to transferred employees. The provision is a part of
the scheme enacted in Chapter IV providing for the transfer of existing life
insurance business from the insurers to the Corporation, and the attendant
concomitants of that process. There is provision for the transfer of the assets
and liabilities pertaining to the business, of provident funds, 206
superannuation and other like funds, of the services of existing employees of
insurers to the Corporation and also of the services of existing employees of
chief agents of the insurers to the Corporation, and finally for the payment of
compensation to the insurers for the transfer of the business to the
Corporation. They are all provisions relating to the process of transfer.
Sub-s. (2) of s. 11 is a part of that process, involving as it does the
integration of the Corporation's staff and labour force. While the first limb
of the sub-section provides for securing uniformity among the transferred
employees in regard to the scales of remuneration and other terms and
conditions of service, the second limb provides that if after such uniformity
has been secured, or even in the process of securing such uniformity, the
Central Government finds that the interests of the Corporation and its policy
holders require a reduction in the remuneration payable or revision of the
other terms and conditions of service applicable to those employees, it may
make an order accordingly. It is true that the words "employees or any
class of them" in the second limb are not prefaced by the qualifying word
"transferred" or "such". But that was hardly necessary when
regard is had to the mosaic of sections in which the provision is located.
Admittedly, the first limb of sub-s. (2) relates to transferred employees only,
and it must be held that so does the second limb.
Both
provisions are intended to constitute a composite process for rationalising the
scales of remuneration and other terms and conditions of service of transferred
employees with a view not only to effecting a standardisation between the
transferred employees but also to revising their scales of remuneration, and
terms and conditions of service to a pattern which will enable the newly
established Corporation to become a viable and commercially successful
enterprise. The standpoint of the second limb of the sub-section, as its
language plainly indicates, is provided by the interests of the Corporation and
its policy holders. For that reason, it is open to the Central Government under
subsection to ignore the guarantee contained in sub-section (1) of s. 11 in
favour of the employees, or anything contained in the Industrial Disputes Act,
1947, or any other law for the time being in force or any award, settlement or
agreement for the time being in force. Benefits conferred thereunder on the
employees must yield 207 to the need for ensuring that the Corporation and its
policy holders do not suffer unreasonably from the burden of such benefits. The
need for such a provision arises because it is a burden by which the
Corporation finds itself saddled upon the transfer a burden not of its own
making. Unless the statute provided for such relief, the weight of that burden
could conceivably cripple the successful working of the Corporation from its
inception as a business organisation.
It
is a situation to be distinguished from what happens when the Corporation,
launched on its normal course, voluntarily assumes, in the course of its
working, obligation in respect of its employees or becomes subject to such
obligations by reason of subsequent industrial adjudication. Like any other
employer, the Corporation is then open to the normal play of industrial
relations in contemporary or future time. That the two provisions of sub-s. (2)
are linked with the process of transfer and integration is further indicated by
the circumstances that the power there under is vested in the Central
Government. The scheme of the sections in Chapter IV indicates generally that Parliament
has appointed the Central Government as the effective and direct
instrumentality for bringing about the transfer and integration in the
different sectors of that process.
There
is no danger of an order made by the Central Government under the second limb
of sub-section (2) in respect of transferred employees being struck down on the
ground that it violates the equality provisions of Part 111 of the Constitution
because similar action has not been taken in respect of newly recruited
employees. So long as such order is confined to what is necessitated by the
process of transfer and integration, the transferred employees constitute a
reasonably defined class in themselves and form no common basis with newly
recruited employees." (underlining by us) emphasis supplied Pathak, J.
also observed at Page 1136 thus:
"Another
point is whether the power under the second limb of sub-s. (2) of s. 11 can be
exercised more than once. Clearly, the answer must be in the affirmative.
To
effectuate the transfer appropriately and completely it may be necessary to
pass through different stages, and at each 208 stage to make a definite order.
So long as the complex of orders so made is necessarily linked with the process
of transfer and integration, it is immaterial that a succession of orders is
made. I am not impressed by the circumstances that the original Bill moved in
Parliament for amending sub-s. (2) of s. 11 contained the words "from time
to time" and that these words were subsequently deleted when enactment
took place. The intent of the legislative provision must be discovered
primarily from the legislation itself." We have given extracts from the
above decisions which are fairly long since they relate to the identical provisions
of law and also cover a large part of the arguments urged before us.
Having
regard to the different conditions of service that were prevailing in the
various establishments whose business was taken over by the Corporation it can
hardly be disputed that the fixation of age of superannuation is one of the
essential parts of the process of transfer and integration to which sub-section
(2) of section 11 of the Act is applicable. The fixation of 60 years as the age
of superannuation in the case of transferred employees cannot be considered to
be unreasonable in view of the history of this case. The observation made by
Pathak, J. in the course of his judgment that "there is no danger of an
order made by the Central Government under the second limb of sub-section (2)
in respect of transferred employees. being struck down on the ground that it
violates the equality provisions of Part III of the Constitution because
similar action has not been taken in respect of newly recruited employees"
is significant. A discrimination made by a State between the employees who are
directly recruited to the service of the State and the employees whose services
are taken over by the State on the taking over of the institutions where they
were working has been held to be not unconstitutional by this Court in Ram Lal
Wadhwa & ANR. v. The State of Haryana & Ors., [1973] 1 S.C.R. 608. The
facts of that case were these. There were some schools run by municipal boards
and district boards in the then State of Punjab which were taken over by the
Punjab Government with effect from October 1, 1957. The teachers then employed
in those schools, thus became State employees.
Those
teachers called 'provincialised' teachers were to be given the same grades of
pay and other allowances as were given to their counterparts in Government
employment. The teachers in Government employment were governed by the Punjab
Educational Service Class III School Cadre Rules, 1955. On February 13, 1961,
the Punjab Government promulgated under the proviso to Article 309 of 209 the
Constitution, the Punjab Educational Service (Provincialised Cadre) Class III
Rules, giving them retrospective effect from October 1, 1957. By these Rules
the provincialised teachers were treated as failing under a Cadre separate and
distinct from teachers in the-State Cadre governed by the 1955 Rules. The
'provincialised' Cadre was to be a diminishing cadre to become extinct in
course of time. There was to be no further recruitment to that cadre and all
vacancies arising in that cadre were to be replenished by direct recruitment to
the State cadre. The transfer of such posts to the State cadre was to be done
by splitting up such vacant posts into blocks of 7 and 6 by rotation.
Consequently, the selection grade of 15% in the State cadre progressively
increased in strength which was determined by the total cadre strength while
the selection grade in the provincialised cadre progressively decreased. Thus
those recruited to the State cadre had a progressively larger chance of getting
into the selection grade. In State of Punjab v.Joginder Singh, [1963] Supp. 2
S.C.R. 169 this Court upheld the validity of the 196 1 Rules repelling
challenge under Articles 14 and 16 of the Constitution. In the view of the
majority in that case the two cadres started as independent services, they were
never integrated into one service and, therefore, the dissimilarity of the
treatment by the Rules was not a denial Of equal opportunity. But, the Punjab
Government never implemented the Rules at any time. On the reorganisation of
the erstwhile Punjab State into Punjab and Haryana on November 1, 1966, the
Haryana Government put the 1961 Rules into operation. The petitioners in the
above case, i.e., Ram Lal Wadhwa & ANR. v. The State of Haryana & Ors.,
(supra) appointed in the local bodies Schools before 'provincialisation',
challenged the validity of the 1961 Rules. Their complaint was that the Rules
created, without any valid justification, two cadres, the State cadre and the
provincialised cadre, the former including not only the Government School
teachers but also those recruited after October 1, 1957 and posted in the
provincialised schools;
that
by reason of having two cadres and providing for both a uniform 15 per cent for
selection grade posts, coupled with making the provincialised cadre a
diminishing one, the result had been that teachers deemed to have been
appointed to the State cadre with effect from October 1, 1957 and even those
recruited thereafter had been promoted to the selection grade, while those in
the provincialised cadre, though senior in service and performed identical
duties and had identical scales of pay, remained in the ordinary grade.
According
to the petitioners in that case these Rules and their implementation contravened
Articles 14 and 16 of the Constitution. The petitioners in that petition
contended that the earlier decision of this Court in State of Punjab v.
Joginder Singh, (supra) required reconsideration. In the 210 course of its
decision this Court while rejecting the contention of the petitioners observed
thus at pages 635-636:
"The
principles on which discrimination and breach of Arts. 14 and 16 can be said to
result have been by now so well settled that we do not think it necessary to
repeat them here once again. As already seen, ever since 1937 and even before,
the two categories of teachers have always remained distinct, governed by
different sets of rules, recruited by different authorities and having,
otherwise than in the matter of pay scales and qualifications, different
conditions of service. This position remained as late as February 13, 1961. On
that day whereas the State cadre teachers were governed by 1955-Rules, rules
had yet to be framed for the provincialised cadre a diminishing one and bringing
about ultimately through that principle one cadre only in the field in a phased
manner. If through historical reasons the teachers had remained in two separate
categories, the classification of the provincialised teachers into a separate
cadre could not be said to infringe Art. 14 and Art. 16. It was also not
incumbent on the Government to frame the 1961-Rules uniformly applicable to
both the categories of teachers, firstly, because a rule framing authority need
not legislate for all the categories and can select for which category to
legislate, (see Sakhawat Ali v. State of Orissa, [1955] 1 S.C.R. 1004;
Madhubhai Amathalal Gandhi v. The Union of India, [1961] 1 S.C.R. 191 and
Vivian Joseph Ferreria v. The Municipal Corporation of Greater Bombay, [1972] 1
S.C.R. 70, and secondly, because it had already come to a decision of gradually
diminishing the provincialised cadre so that ultimately only the state cadre
would remain in the service. That was one way of solving the intricate
difficulty of inter se seniority. There can be no doubt that if there are two
categories of employees, it is within Government's power to recruit in one
(and) not recruit in the other. There is no right in a government employee to
compel it to make fresh appointments in the cadre to which he belongs. It cannot
also be disputed that government had the power to make rules with retrospective
effect and therefore, could provide therein that appointments made between
October 1, 1957 and February 13, 1961 shall be treated as appointments in the
State cadre. That had to be done for the simple reason that 211 the
provincialised cadre was already frozen even before October 1, 1957 and
Government had decided not to make fresh appointments in that cadre since that
cadre was to be a diminishing one." It has to be observed in the case
before us also that the transferred employees belong to a diminishing cadre.
When
the Corporation was established they were about 27,000 in number and we are
informed today that there are only about 22% of those employees in service.
Already 30 years have elapsed from the date of the establishment of the
Corporation. All the transferred employees who have already retired have
retired only after completion 60 years. The remaining transferred employees are
likely to go out of office within a short period. Thereafter only the employees
who are directly recruited by the Corporation who are about 54,000 in number
would continue to remain in its service.
The
observation made by this Court in Ram Lal Wadhwa & ANR. v The State of
Haryana & Ors., (supra) clearly applies to the case before us also.
As
this stage we should refer to another aspect of the case presented before us
which relates to 16 persons who were appointed as the employees of the
Corporation by virtue of an Order dated March 15, 1966. There was a department
in existence in the year 1963 called Department of Insurance.
The
Government and the Corporation felt that the services 16 persons who were
working in the Department of Insurance were required by the Corporation.
Accordingly, the President of India agreed to release 16 persons from the
service of the Government of India to enable the Corporation to appoint them in
its service by the Order of the Central Government dated 25th February, 1964.
The resignation of those 16 persons from the service of the Government of India
was accepted on 15th March, 1966 and from that date those persons became the
employees of the Corporation. Out of those 16, 13 have already retired from
service on attaining the age of 60 years. Only three of them are now in the
service of the Corporation. One of them is no longer an employee of the
Corporation since he is holding the post of the Chairman of the Corporation.
The second of them is due to retire within 2/3 months and only one of them
would continue in the service of the Corporation for about a period of two
years more. In the case of those 16 people the Corporation passed a separate
order fixing their age of retirement as 60 years having regard to the
negotiations which had taken place between the Corporation and the Government
before the taking over of their services by the Corporation. They again belong
to a different category altogether and 212 the fixation of the age of
retirement in their case at 60 years cannot be challenged by those who were
directly recruited by the Corporation after September 1, 1956 as there is no
similarity between them and the said 16 officers.
The
next question for consideration is whether the fixation of 58 years as the age
of superannuation in the case of the employees who entered the service after
1st September, 1956 is unreasonable. While dealing with this question, the
Court can take judicial notice of the different ages of retirement prevailing
in the several services in India. In almost all the public sector corporations,
Central services and State services 58 years age is considered to be a
reasonable age at which officers can be directed to retire from their service.
So, the determination of 58 years as the age of superannuation by itself cannot
be considered to be arbitrary.
We
do not also find much substance in the contention of the 1st Respondent that
there cannot be any discrimination as regards the age of retirement between the
employees belonging to Class I and Class II on the one hand and Class III and
Class IV on the other. It is true that originally employees belonging to Class
III and Class IV categories amongst the transferred employees were given the
benefit of retirement at the age of 60 years but the employees belonging to
Class III and Class IV categories recruited after 1st September, 1956 were
required to retire on the completion of 58 years of age. In the Settlement
which was arrived at between the management and the Class III and Class IV employees
recruited after 1st September, 1956 it was agreed that there should be no
discrimination as regards the age of retirement between the employees belonging
to Class III and Class IV categories amongst the transferred employees and the
Class III and Class IV employees recruited after 1st September, 1956. It was
pursuant to the said settlement that regulation 19 was amended with effect from
19.6.1965. Having regard to the lower emoluments and other benefits which the
employees belonging to Class III and Class IV are entitled to get from the
Corporation and the higher emoluments and other benefits to which officers
belonging to Class I and Class II are entitled and also the nature of their
work and the powers enjoyed by them we are of the view that fixation of
different ages of retirement to the different classes of employees would not by
itself be violative of Articles 14 and 16 of the Constitution. In Tejinder
Singh and Another v. Bharat Petroleum Corporation Ltd. and ANR., [1986] 4
S.C.C.
237
this Court has observed at page 239 thus: 213 "This Court in Workmen v.
Bharat Petroleum Corpn. Ltd., directed the retirement age of the clerical staff
of the Refinery Division of respondent 1 to be fixed at 60 years.
Petitioners
have contended that the disparity in the age of retirement between two groups
of employees gives rise to discriminatory treatment. This stand is not tenable
for more than one reason. Clerical staff and officers of the management staff
belong to separate classifications and no argument is necessary in support of
it. Petitioners have not contended and perhaps could not legitimately contend,
that the two classes of officers stand at par. In the Workmen case itself, this
Court did not extend the benefit of superannuation at the age of 60 to all
clerical staff but limited the same to that category of employees working in
the Refinery Division, Bombay. Classification on the basis of reasonable
differentia is a well known basis and we are of the view that the petitioners
are not entitled in the facts of the case to seek support from Article 14 for
their claim." It was, however, contended on behalf of the 1st Respondent
that since he had been recruited originally into the Class III post and he
would have had the benefit of retirement at the age of 60 years if he had
remained in that Class, the said benefit cannot be denied to him on his
promotion to the Class I category. We do not find any merit in this contention
too. When the 1st Respondent was promoted to the Class I post in 1963 the age
of retirement of officers in the Class I post had been fixed at 58 years and
was not different from the age of retirement of Class III employees. It was
only in 1965 under the settlement the age of retirement of employees in Class
III and Class IV who joined service after September 1, 1956 was raised to 60
years. If he felt that the conditions of service of Class I officers were
likely to be prejudicial to him he could have refused the promotion offered to
him. Having accepted the promotion along with the higher benefits flowing from
it he cannot contend after several years that he had been prejudicially
affected by the condition relating to the age of retirement applicable to Class
I officers appointed after September 1, 1956. That apart the higher emoluments
and other perquisites to which Class I employees may be entitled to and the
better conditions of work which are enjoyed by them substantially compensate
the effect of the lowering of the age of retirement from 60 years to 58 years.
We do not find any substance in the argument urged on behalf of the 1st
Respondent relying upon the judgment of this Court in Roshan Lal Tandon v.
Union of India, [1968] 1 S.C.R. 185 which lays down that when employees are 214
recruited to a lower grade from two sources no favourable treatment should be
extended to recruits from one source on their promotion to the higher grade. In
the decision, referred to above, the facts were these. Vacancies in grade 'D'
of Train Examiners were filled by (a) direct recruits, i.e., apprentice train
examiners who had completed the prescribed period of training, and (b)
promoters from skilled artisans Promotion from grade 'D' to 'C' was on the
basis of seniority cum suitability. In October, 1965 the Railway Board issued a
notification by which it was provided that eighty percent of the vacancies in
grade 'C' were to be filled up from apprentice train examiners recruitment. or
after April 1, 1966 and the remaining twenty per cent by train examiners from
grade 'D'. The notification further provided that apprentice train examiners
who had already been absorbed in grade 'D' before April, 1966 should en bloc be
accommodated in grade 'C' in the eighty per cent of the vacancies without
undergoing any selection and with regard to twenty per cent of the vacancies,
reserved for the other class promotion was to be on selection basis and not on
the basis of seniority-cum-suitability. The petitioner in the said case who
entered Railway service in 1954 as a skilled artisan and was selected and
confirmed in grade 'D' challenged that part of the notification which gave
favourable treatment to apprentice train examiners who had already been
absorbed in grade 'D' as arbitrary and discriminatory anti violative of Article
14 and 16 of the Constitution. This Court held that when once the direct
recruits and promoters were absorbed in one cadre they formed one class and
they could not be distinguished again for the purpose of further promotion to
the higher grade 'C'The Court further observed that before the impugned
notification was issued there was only one rule of promotion applicable to both
direct recruits and promoters but by the impugned notification discriminatory
treatment was made in favour of the apprentice train examiners who had already
been absorbed in grade 'D'. The Court, therefore, held that the notification
was discriminatory. This decision has no relevance to the present case although
the High Court has relied on it in deciding this case. We have already shown
that the Act itself made a distinction between the transferred employees and
the employees recruited to the service of the Corporation after 1st September,
1956 by making amendments in section II and in clauses (b) and (bb) of
sub-section (2) of section 49 of the Act. In the (Staff) Regulations, 1956 and
the (Staff) Regulations, 1960 there was again a distinction made between the
transferred employees and employees recruited after 1st September, 1956. We
find that the distinction between the two classes is recognised by Parliament
even as late as 1981 when it amended section 49 of the Act by deleting clause
(bb) of sub-section (2) thereof and by 215 amending section 48 of the Act by
introducing clause (cc) in subsection (2) and the new sub-section (2A) in it.
After the amendment, the relevant part of section 48 reads thus:
"48.
(2) ...................................
(cc).
The terms and conditions of service of the employees and agents of the
Corporation, including those who became employees and agents of the Corporation
on the appointed day under this Act, ....................................
(2A).
The regulations and other provisions as in force immediately before the
commencement of the Life Insurance Corporation (Amendment) Act, 1981, with
respect to the terms and conditions of service of employees and agents of the
Corporation including those who became employees and agents of the Corporation
on the appointed day under this Act, shall be deemed to be rules made under
clause (cc) of sub-section (2) and shall, subject to the other provisions of
this section, have effect accordingly." (underlining by us) emphasis
supplied Clause (cc) of section 48(2) of the Act, however, has been given
retrospective effect from 20th June, 1979. Subsection (2A) of section 48 has
given statutory recognition to the (Staff) Regulations of 1960 and in
particular to Regulation 19(2) as amended in 1977 which is impugned in these
proceedings. It is thus seen that at no point of time the transferred employees
were integrated into one cadre along with the employees appointed after
September 1, 1956 as such and the transferred employees have retained their
birth-marks throughout. The fact that the pay, allowances and other conditions
of service have been made the same in respect of both the transferred employees
and the employees of the Corporation recruited after 1st September, 1956 has
not brought about the integration of the two classes of employees into one
single cadre. Even the High Court in the instant case accepts that it was just
and proper to extend the benefit of the higher age of retirement to the transferred
employees but it has held that when once a transferred employee is promoted he
would lose the right to a special treatment as regards the age of
superannuation. The relevant portion of the judgment of the High Court reads
thus:
"A
reasonable classification which prevents a Court from dissecting it is one
which includes all persons who are similarly situated with respect to the
purpose of law or 216 objective which the rule or section seeks to achieve. The
apparent or inherent intention sought to be achieved by the regulation 19
framed by Corporation was to continue upto age of sixty years the employees of
insurers as the age of superannuation in some of the companies was sixty and to
derive benefit from expertise and experience of employees who had worked with insurers.
May be laudable, reasonable and proper. But is it like that? Obviously not. An
employee in Class III of insurer could be continued upto sixty. But what
happens when he climbs the ladder of promotion and reaches Class I. Does he
still carry the stamp of experience and expertise of having worked with insurer?
Once a transferred employee of Class III and a direct appointee in (that) class
are promoted to Class I obviously on merit, efficiency and seniority then how
can the distinction of 'transferred' and 'direct' be maintained. So long
employees are in Class III they can be said to constitute two different classes
of transferred and direct appointees but once they are promoted they become
similarly situated and the distinction stands obliterated. They on promotion
form one integrated cadre of Class I officers.
To
segregate them here for purposes of retirement is invidious when their pay,
responsibility and benefits are same." While we agree with the first part
of the observations made in the above extract from the judgment of the High
Court, namely, that it was not discriminatory to extend the benefit of the age
of 60 years to the transferred employees, we do not agree with the latter part
of the observations made therein which suggests that on promotion from Class
III to Class I the transferred employees and the directly recruited employees
would lose their birth-marks. Pathak, J., as he then was, has observed in D.J.
Bahadur's case (supra) that it is open to the Government to make an order
trader section 11(2) of the Act from time to time in respect of the transferred
employees and that power is not exhausted when it is exercised once. It
suggests that the transferred employees are always amenable for separate
treatment and they do not lose their identity. It appears to be the intention
of Parliament that even as late as in 1981 that the two categories of
employees, namely, the transferred employees and employees recruited after 1st
September, 1956 in the Corporation should be kept separate. In these circumstances
the High Court was in error in relying upon the judgment of this Court in
Roshan Lal Tandon's case (supra).
217
In O.P. No. 5295 of 1985 and connected cases on the file of the High Court of
Kerala which was decided on 4.2. 1987 the claim of the employees of the
Corporation belonging to class I but appointed after 1st September, 1956 to
continue in service till they attained the age of 60 years arose for
consideration. The High Court has negative it. In the course of its judgment it
has referred to the judgment under appeal in this case but has only
distinguished it. The High Court of Kerala was right in not following the
decision of the High Court of Allahabad which is now under appeal. It, however,
distinguished it on the ground that the employees in question had not been
promoted from Class III to Class I as it was the case here but the petitioners
before it had continued in Class I or Class 11 right from the commencement. We,
however, approve of the reasons given by the High Court of Kerala in holding that
the employees of the Corporation belonging to Class I and Class II who had
entered service of the Corporation after 1st September, 1956 were not entitled
to continue in service beyond the age of 58 years. In our view the fact that an
employee had entered the service of the Corporation after September 1, 1956 in
a Class III post and is later on promoted to a Class I post does not make any
difference in so far as the question which arises for decision before us. The
High Court of Delhi has rejected two petitions in which the very question
raised in this case arose for consideration, namely, N.L. Aneja v. Union of
India and Others, (Civil Writ No. 1911 of 1986) and H.S. Kochar v. L.I.C. of
lndia & Ors., (C.W. No. 1660 of 1986) at the stage of admission itself
giving reasons, though short, for its orders. The two decisions, referred to
above, have been rendered by two different Division Benches.
We
may also refer to one decision of the Madras High Court and another decision of
the Calcutta High Court which arose trader the provisions of the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970 (Act 5 to 1970)
where again the claim of employees of the banks in question who joined their
service after nationalisation to the benefit of the conditions prescribed in
the case of employees of the former banking companies whose services were taken
over on nationalisation as regards the age of retirement arose for
consideration. The scheme of section 12(2) of the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1970 and the scheme of section 11(1) of the
Act, which is trader consideration before us, were the same. In Govindarajulu
v. The Management of Union Bank of India & Ors., (Writ Petition No. 5486 of
1980) the High Court of Madras rejected the said claim by its judgment dated
21.11. 1986. In Dr. Nikhil Bhushan Chandra v. Union of India & Ors., (Civil
Order 218 No. 13958 (W) of 1980) decided on December 21, 1982 the High Court of
Calcutta has rejected a similar claim. We may at this stage refer to a recent
decision of this Court in Miss Lena Khan v. Union of India and Ors., J.T. 1987
2 S.C. 19 decided on 30.3. 1987 in which the validity of the continuation of
some foreign Air Hostesses beyond the prescribed age of retirement came up for
consideration. The Court rejected the petition stating that the management of
Air India having taken a decision "to phase out U.K. incumbents when they
attain the age of 45", it was not discriminatory to Air Hostesses of
Indian origin who were to retire at the age of 35 years and was not
unconstitutional. The principle enunciated in this case can be applied to the
cases of three officers who belong to the Department of Insurance who joined
the service of the Corporation after resigning their posts in the Government of
India in the year 1965, there being no chance of any addition to their class.
Classification
of employees into two categories for purposes of fixing the age of
superannuation depending upon their dates of entry into service when the
necessity for doing so arises on account of certain historical reasons is not
unknown. This Court had to deal with a case involving a similar situation in
Railway Board v. A. Pitchumani, [1972] 2 S.C.R. 187. Several railway companies
which were running their own railways in different parts of India were amalagamated
with the Indian Railway Administration in 1947. On such amalagamation servants
of the railway companies, whose railways were taken over, became the employees
of the Indian Railway Administration. On the absorption of the services of the
servants of the previous railway companies it became necessary for the Indian
Railway Administration to frame rules with regard to their conditions of
service including the determination of the age of retirement of those railway
employees. Accordingly, rule 2046 (F.R. 56) of the Indian Railway Fundamental
Rules had to be modified. That rule was, therefore, substituted by a new rule
on January 11, 1967.
The
new rule read as follows:
"2046.
(FR. 56)--(a) Except as otherwise provided in this rule, every railway servant
shall retire on the day he attains the age of fifty-eight years.
(b).
A ministerial railway servant who entered Government service on or before the
31st March, 1938 and held on that date-(i) a lien or a suspended lien on a
permanent post, or 219 (ii) a permanent post in a provisional substantive
capacity under Clause (d) of Rule 2008 and continued to hold the same without
interruption until he was confirmed in that post, shall be retained in service
till the day he attains the age of sixty years.
NOTE:
For the purpose of this Clause, the expression "Government Service"
includes service rendered in ex-company, and ex-State Railways, and in a former
provincial Government." In the above new rule every railway servant, whose
case did not fall under clause (b) of that rule was required to retire on the
date he attained the age of 58 years. Clause (b), however, provided that every
ministerial railway servant who had entered the Government service on or before
31st March, 1938 and who satisfied the conditions mentioned either in
sub-clause (i) or sub-clause (ii) thereof was entitled to continue in service
till he attained the age of 60 years. As may be seen from that rule, the
classification of the employees was made on the basis of the date of entry into
the service of the Government. That clause (b) of the said rule applied also to
the employees of ex-companies and ex-State railways which were taken over by
the Indian Railway Administration is clear from the note attached to clause (b)
of rule 2046 which provided that for the purpose of that clause the expression
'Government Service' included service rendered in ex-company and ex-State
railways and in a former provincial Government. On December 27, 1967 the Indian
Railway Administration substituted the note attached to clause (b) of rule 2046
by the new note which read thus:
"For
the purpose of this clause the expression 'Government Service' includes service
rendered in a former provincial government and in ex-company and ex State
Railways, if the rules of the Company or the State had a provision similar to
Clause (b) above." The effect of the new note was that an employee who
satisfied the condition in sub-section (i) or sub clause (ii) of clause (b) was
entitled to continue upto 60 years after December 23, 1967 only if the rules of
the company in which he was formerly working had a provision similar to clause
(b) of rule 2046 which fixed the age of retirement at 60 years.
220
The Respondent in that case, that is, A. Pitchumani while he was entitled
before December 23, 1967 to continue in service till he attained the age of 60
years as he had joined the service of the Madras and Southern Mahratta Railway
Company on August 16, 1927, i.e., prior to March 31, 1938 and satisfied the
other conditions mentioned in clause (b) of rule 2046 could not have the
benefit of that clause on and after December 23, 1967 since in the Madras and
Southern Mahratta Railway Company where he was formerly working there was no
rule similar to clause (b) as regards the age of retirement.
He
was asked to retire from service on April 14, 1968 on which date he was
completing the age of 58 years. The Respondent, A. Pitchumani questioned before
the High Court of Mysore (Karnataka) the validity of the note substituted by
the Order dated December 23, 1967 which took away his right to continue in
service till he attained the age of 60 years which he otherwise possessed
before the introduction of the said note. The High Court of Mysore struck down
a part of the new note only on the ground that it was discriminatory and
directed that the Respondent, A. Pitchumani should be allowed to continue in
the service till he completed the age of 60 years. On appeal, the judgment of
the High Court was affirmed by this Court in Railway Board v. A. Pitchumani
(supra). This Court did not find fault with the classification that had been
made between the persons falling under clause (a) and persons falling under
clause (b) on the basis of the date of entry into service since clauses (a) and
(b) of rule 2046 had uniform application to all the employees of the Indian
Railway Administration who came within the respective clauses. It, however,
agreeing with the High Court found fault with the classification of the employees
falling under clause (b) into two categories, namely, those employees belonging
to a company where there was a rule similar to clause (b) as regards the age of
superannuation and those employees who came from companies where there was no
rule similar to clause (b) as regards the age of superannuation.
In
Manindra Chandra Sen v. Union of India & Ors. A.I.R. 1973 CAL. 385
Sabyasachi Mukharji J., has upheld the said classification of railway employees
into two categories viz. those who joined on or before 31.3. 1938 and those who
joined after 31.3. 1938 for purposes of fixing the age of superannuation on the
basis of same historical facts which are set out in detail in that judgment.
Such classification for purposes of fixing the age of superannuation depending
upon the date of entry into services is not, therefore, something which is
unusual and such classification becomes necessary on account of historical
facts and the need for treating the employees in a fair and just way.
221
On behalf of the 1st Respondent reliance is placed on the decision of this
Court in M/s. British Paints (India) Ltd. v. The Workmen, [1966] 2 S.C.R. 523
in support of his case that there should be no discrimination amongst the
employees of an establishment with regard to the age of superannuation. That
decision was rendered in an appeal against an award passed by an Industrial
Tribunal. In that decision this Court has, no doubt, observed that generally
speaking there should not be any difference in the age of retirement of existing
workmen and others to be employed in future unless there are special
circumstances justifying such difference. By making the above observation this
Court has virtually accepted the position that when there are special
circumstances justifying the difference, it is open to fix different ages of
retirement for the employees of an establishment in appropriate cases. We have
already explained earlier the reason for treating the transferred employees
differently from the employees appointed after 1st September, 1956 by the
Corporation. The transferred employees who are treated favorably belong to a
vanishing group and, perhaps, within a period of few years none of them would
be in the service of the Corporation. Thereafter only one class of employees
would be in the service of the Corporation, namely, those appointed subsequent
to 1st September, 1956 by the Corporation in respect of whom the Corporation
has fixed the age of retirement as 58 years which corresponds to the age of
retirement in almost all the public sector establishments, the Central
Government services and the State Government services.
The
1st Respondent cannot derive any assistance from the decision of this Court in
Mohammad Shujat Ali & Ors. etc. v. Union of India & Ors. etc., [1975] 1
S.C.R. 449 in support of his case before us. In the above decision this Court
was concerned with reservation of posts for graduate Supervisors in the cadre
of Assistant Engineers giving them a preferential treatment over non-graduate
Supervisors who were also eligible to be promoted along with the graduate
Supervisors to the cadre to Assistant Engineers after the graduates and
non-graduates had been integrated into one cadre of Supervisors. Merely because
the pay, allowances and other perquisites drawn by the transferred employees
and by the employees appointed after 1st September, 1956 by the Corporation are
the same it cannot be said that the transferred employees and the other
employees had been integrated so as to form one cadre. So far as the age of
retirement is concerned as it is already shown they are being treated
differently right from the date on which the Corporation was established.
The
decision of this Court in Workmen of the Bharat Petroleum 222 Corporation Ltd.
(Refining Division) Bombay v. Bharat Petroleum Corporation Ltd. and Another,
[1984] 1 S.C.R. 251 no doubt lays down that under the modern conditions there
is a general trend in favour of raising the age of retirement in the case of
employees in industrial establishments. It may be so. We are not concerned in
this case with the question whether the age of retirement of employees who have
joined the service of the Corporation after 1st September, 1956 should be
raised to 60 years. That is a matter of policy which has got to be decided by
the Corporation and the Central Government. We are only concerned with the
question whether the employees appointed after 1st September, 1956 have been
subjected to any hostile discrimination while fixing the age of retirement
contrary to Article 14 and Article 16 of the Constitution. Since the
classification of the employees for the purpose of age of retirement into two
categories in this case appears to us to be reasonable and not arbitrary and
that there is a reasonable nexus between the classification and the object to
be attained thereby, it is not possible to hold that regulation 19(2) is
violative of Article 14 and 16 of the Constitution.
We
may at this stage refer to the following passage in Tamil Nadu Education
Department Ministerial & General Subordinate Service Association v. State
of Tamil Nadu & Anr., [1980] 1 S.C.R. 1026.
"In
Service Jurisprudence integration is a complicated administrative problem
where, in doing broad justice to many, some bruise to a few cannot be ruled
out. Some play in the joints, even some wobbing, must be left to Government
without fussy forensic monitoring, since the administration has been entrusted
by the Constitution to the Executive, not to the Court. All life, including
administrative life, involves experiment, trial and error, but within the
leading strings of fundamental rights, and, absent unconstitutional 'excesses',
judicial correction is not right. Under Article 32, this Court is the
constitutional sentinel not the national ombudsman. We need an ombudsman but
the court cannot make-do." (page 1031) The decision taken by the
Corporation and the Central Government as regards the ages of retirement of the
different classes of the employees of the Corporation in the instant case is a
bona fide one and cannot be characterised as unreasonable. It is not,
therefore, liable to be upset by a decision of the Court. On a careful
consideration of all 223 the aspects of the case we feel that the High Court
erred in striking down regulation 19(2) of the (Staff) Regulations, 1960 as amended
in the year 1977, and in directing the Corporation to continue the 1st
Respondent in its service till he completed the age of 60 years. We, therefore,
set aside the judgment of the High Court and dismiss the writ petition filed in
the High Court. The appeals are accordingly allowed. There shall, however, be
no order as to costs.
N.P.V.
Appeals allowed.
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