LIC of India Vs. R. Suresh
 INSC 469 (14 March 2008)
S.B. Sinha & V.S.
Civil Appeal No. 2004 of
2008 (Arising out of Slp(C) No. 13230 of 2006) S.B. Sinha, J :
1. Whether jurisdiction of the Industrial Courts are ousted in regard to an
order of dismissal passed by the Life Insurance Corporation of India, a
Corporation constituted and incorporated under the Life Insurance Corporation
Act, 1956, is the question involved in this appeal which arises out of a
judgment and order dated 3.2.2006 passed by a Division Bench of the Kerala High
Court at Ernakulam.
2. Respondent herein was appointed as a Development Officer of the
appellant. Departmental proceeding were initiated against him. Articles of
Charges were framed; fifth of it being, forgery of a signature on a proposal.
According to the Enquiry Officer, the respondent was negligent in the performance
of his duties as he did not personally verify the details of the person
concerned and relied wholly upon the representation of the agent.
The Enquiry Officer found him guilty of the first four charges, but
exonerated him on the fifth one. He was dismissed from service by the
disciplinary authority by an order dated 19.4.1989.
3. An industrial dispute was raised by him. The appropriate Government
referred the following dispute for adjudication of the Industrial Tribunal:
"Whether the action of the Management of the Life Insurance Corporation
of India, Thiruvananthapuram in removing from service of Sh. R. Suresh,
Development officer with effect from 19.04.1989 is justified? If not what
relief is the workman entitled to."
4. By an Award dated 6.2.1993, while holding that the principles of natural
justice have been followed in the matter of holding the domestic enquiry
against the respondent, in respect of charges 1 to 4, but having regard to the
nature of charges vis-`-vis the admission of the respondent, it was held:
"IV. Admittedly there was no monetary loss to the management and no
monetary gain to the workman by the issuance of a policy in the name of a dead
person. It is pertinent to note that senior branch manager of the Punalur
Branch office of the management has deposed before Enquiry Officer "that
the workman has not deliberately secured the proposal knowing that the party as
dead. But he has been careless in not verifying the correct facts that is why
it is said his work habit is unsatisfactory". The above statement makes it
clear that the workman deliberately not secured the policy but everything
happened due to his carelessness. As per Regulation Nos. 21 and 24 mentioned
above every employee of the management corporation shall serve the corporation
honestly and faithfully and shall maintain absolute, integrity and devotion to
duty etc., and as per Regulation 39(1) the management is empowered to impose
punishment for committing breach of the Regulations of the Corporation and the
punishment included dismissal as well. But as deposed by the senior Branch
Manager the workman was careless in securing the proposal which resulted in the
issuance of the policy in the name of a dead person. It may be recalled that he
had only two years service with the management and there was no other complaint
against him during that period except the other complaint against him during
that period except the present charge. But the misconduct happened due to his
carelessness on as admitted by the senior Branch Manager. On an anxious
consideration of all these aspects I am of the view that the punishment of
dismissal is too harsh to be sustained. The management failed to consider these
aspects and failed to award a lesser punishment. However, the workman cannot be
let off without any punishment for the misconducts proved against him. The
anguish and pain suffered by him due to the loss of his job and denial of
backwages and all other monetary benefits would be adequate punishment
according to me for the misconducts now proved against him. Subject to that he
is ordered to be reinstated in service."
5. A Writ Petition was filed by the appellant before the High Court. A
contention inter alia was raised therein that the Industrial Tribunal had no
jurisdiction in the matter. Before the High Court, a decision of this Court in
Machilipatnam, A.P. and Another [(1994) 2 SCC 323], was cited.
The High Court opined that the said decision has no application in the fact
of the present case, stating:
"..It was also held that once Section 2(cc) is not attracted, there is
no question of application of Section 25-F on the basis of which the
termination of the service of the probationer can be held to be invalid. It was
therefore that the Court found that the proceedings before the Tribunal were
not justified. There again the reasoning is that in the case of conflict
between the provisions in the Staff Regulation and the provisions of the
Industrial Disputes Act, the former would prevail."
Chandra and another [AIR 1984 SC 1462], it was held;
".After considering the terms and conditions relating to appointment of
Development Officers, it was found that the Development Officer, a whole time
employee of the L.I.C. with liability for transfer is expected to assist and
inspire the agents while exercising no administrative control over them. The
agents are not his subordinates. In the circumstances, he is not a person in
administrative or managerial cadre and as such was held to be a workman within
the meaning of Section 2(s) of the Industrial Disputes Act.."
In regard to the question as to whether the Industrial Tribunal was
justified in interfering with the quantum of punishment, it was opined;
"19. The above findings were made in a case where the Management
alleged that four of its employees committed breach of trust and
misappropriated, two amounts of Rs.
24,239.97 and Rs. 19,884.06 during the period 1977-78.
The charges were established based on shortage of goods notices on stock
verification. When there is a charge of misappropriation proved, there is
certainly no justification for interfering with the punishment of dismissal
imposed by the Management. But, in the instant case, there is no allegation of
misappropriation. As already mentioned, there was no wrongful loss to the
Corporation nor any wrongful gain to the 2nd Respondent. All that was proved
was negligence. The case of breach of trust and forgery alleged in Charge No. 5
was already found against and only the minor charges arising from carelessness
stood proved. In such a case, the observations of the Apex Court made in the
aforesaid case cannot be justly applied."
6. On an intra-court appeal, having been preferred thereagainst, a Division
Bench of the High Court affirmed the said view.
7. Mr. K. Ramamurthy, the learned senior counsel appearing on behalf of the
appellant would submit:- (i) In view of the provisions of the 1956 Act, as
amended in the year 1981, the provisions of the Industrial Disputes Act, 1947
(for short "1947 Act") would have no application.
(ii) The respondent, in any event, being a Development Officer, was not a
workman and, thus, the Tribunal could not have interfered with the quantum of
punishment awarded by the management.
8. Mr. G. Prakash, learned counsel appearing on behalf of the respondent, on
the other hand, urged:- (i) The jurisdiction of the Tribunal would be ousted
only in regard to the terms and conditions of service and not in a case of this
(ii) There are various decisions of this Court, where an industrial dispute
against LIC has been entertained.
(iii) Charge No. 5 being the main charge and the respondent having been
exonerated therefrom, the Tribunal cannot be said to have committed any
illegality in interfering with the quantum of punishment in exercise of its
jurisdiction under Section 11A of the 1947 Act.
9. The 1956 Act was enacted to provide for the nationalization of life
insurance businesses in India by transferring all such businesses to a
Corporation established for the purpose and to provide for the regulation and
control of the business of the Corporation and for matters connected therewith
or incidental thereto.
Section 3 provides for the establishment and incorporation of the Life
Insurance Corporation of India. Section 4 provides for the constitution of the
Corporation. Section 6 occurring in Chapter III of the Act enumerates the
functions of the Corporation inter alia to carry on business in insurance and
to carry on any other business which may seem to the Corporation to be capable
of being conveniently carried on.
Section 48 of the Act empowers the Central Government to make rules.
Sub-Section (2) of Section 48 enumerates the power in respect whereof the
Central Government can make rules in particular and without prejudice to the
generality of the power conferred upon it under Section 1 thereof. Clause (cc)
of sub-Section (2) of Section 48 reads as under:- "(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;"
Sub-section (2B) of Section 48 of the Act elucidates as to what would be the
matters which would be covered by clause (cc) of sub-Section (2) in the
"(i) the power to give retrospective effect to such rules; and (ii) the
power to amend by way of addition, variation or repeal, the regulations and
other provisions referred to in sub-section (2A), with retrospective effect,
10. By way of a validating statute, sub-section (2C) was also enacted,
giving retrospective effect to any Rule which have been made in terms of
sub-Section (2B) of Section 48 of the Act.
11. LIC is a "State" within the meaning of Article 12 of the
Constitution of India. Its duties and functions are provided for under the 1956
Act. The same by itself, however, having regard to the definition of
"Industry" as contained in Section 2(j) of the Industrial
Disputes Act, 1947 cannot take within its umbrage the functions of the Life
Insurance Corporation outside its purview.
12. Under the industrial law, and in particular the 1947 Act, the
authorities specified therein, the appropriate governments and the industrial
courts have various functions to perform. Terms and conditions can be laid down
thereunder. Violations of the terms and conditions of service are also
justiciable. Safeguards have been provided under the Act to see that services
of a workman are not unjustly terminated. The 1947 Act provides for a wider
definition of termination of service. Conditions precedent for termination of
service have been provided for thereunder. A decision taken by the Disciplinary
Authority under the 1956 Act ordinarily could have been a subject matter of
suit. The Civil Court, however, exercises a limited jurisdiction. If however,
the concerned employee is a 'workman' within the meaning of the provisions of
the 1947 Act, his remedy apart from the common law remedies may also lie before
an industrial court. When a right accrues under two statutes vis-`-vis the common
law right, the concerned employee will have an option to chose his forum.
Section 48 provides for a rule making power. Clause (cc) of sub- Section (2)
whereof only empowers the Central Government to lay down the terms and
conditions of service of the employees and agents of the Corporation. The Act
does not contain any provision in terms whereof the jurisdiction of the Civil
Court and/or Industrial Court is taken away. It is now a well settled principle
of law that any provision taking away the jurisdiction of a Court shall be
strictly construed. A presumption arises against the ouster of jurisdiction.
Having regard to the provisions contained in Section 9 of the Code of Civil
Procedure and as also the provisions of the 1947 Act, an endeavour should be made
to construe the provisions in such a manner so as to retain the jurisdiction
subject, however, to the ouster of jurisdiction either expressly or by
SCC 220], it was stated:- "22. The dispute between the parties was
eminently a civil dispute and not a dispute under the provisions of the
Companies Act. Section 9 of the Code of Civil Procedure confers jurisdiction
upon the civil courts to determine all dispute of civil nature unless the same
is barred under a statute either expressly or by necessary implication. Bar of
jurisdiction of a civil court is not to be readily inferred. A provision
seeking to bar jurisdiction of civil court requires strict interpretation. The
court, it is well-settled, would normally lean in favour of construction, which
would uphold retention of jurisdiction of the civil court..."
13. We have noticed hereinbefore that the 1956 Act does not contain any
provision ousting the jurisdiction of the Civil Court or the Industrial Court.
The question, therefore, would be as to whether the jurisdiction is ousted
by necessary implication. For the said purpose, construction of clause (cc) of
sub-Section (2) of Section 48 of the Act is necessary. It is one thing to say
that rules may provide for the terms and conditions of service of the employees
but it is another thing to say that a person is entitled to avail his human
right of access to justice to get his grievances adjudicated before an
independent fora. Access to justice as is well known is a valuable right.
Construing the text of G.P. Singh, Principles of Statutory Interpretation,
11th Ed., pg. 707;
"There is a strong presumption that civil courts have jurisdiction to
decide all questions of civil nature. The exclusion of jurisdiction of civil
courts is therefore not to be readily inferred and such exclusion must either
be "explicitly expressed or clearly implied."
So construed, and applying the aforementioned principle of interpretation to
a case of this nature, the jurisdiction of the Industrial Court must be held to
be ousted only when the remedy sought for by the workman is premised on a right
under the industrial laws which is in conflict with the right granted to an
employee, an agent or LIC.
Reliance has been placed by Mr. K. Ramamurthy on A.V. Nachane therein was
concerned with the validity of Section 48(2C) of the Act. It was held that the
appellant therein had not been able to bring on records sufficient materials to
attract the wrath of Article 14 of the Constitution of India.
14. The question came up for consideration in M. Venugopal (supra), wherein
again the issue was as to whether retrenchment of an employee must precede
compliance of the statutory requirements under Section 25 F of the Act,
although there exists a statutory power on the authorities under the Act to
effect such termination. It was held that 1956 Act shall prevail over the 1947
"14. The amendments introduced in Section 48 of the Corporation Act
have clearly excluded the provisions of the Industrial
Disputes Act so far as they are in conflict with the rules framed under
If, therefore, the Rules made under the 1956 Act are not in conflict with
the jurisdiction of an Industrial Tribunal to go into the question of validity
or legality of an order of termination of service, we fail to see how the
jurisdiction of the Industrial Court stood ousted. Reliance has also been
Palitana Sugar Mill (P) Ltd. and Others [(2003) 2 SCC 111] and Dipak Each of the
aforementioned decisions reiterate the aforementioned principles only and in
the fact situation obtaining therein, the Rules made under the 1956 Act were
held to be applicable.
15. A Development Officer has been held to be a "workman" in S.K.
We, however, are not unmindful of a decision of a three Judges Bench Others
[(2004) 8 SCC 387], wherein one of us (Sinha, J.) was a member, where the
question was as to whether an apprentice would be a workman within the meaning
of the provisions of Section 2(s) of the 1947 Act. It is not a case where case
of an apprentice is involved.
[(2005) 9 SCC 548], also this Court was dealing with a case of an employee
whose services had been wrongly terminated and he prayed for a reference under
Section 10 of the Act.
An Industrial Court in terms of Section 11A of the Act exercises a
discretionary jurisdiction. Indisputably, discretion must be exercised
judiciously. It cannot be based on whims or caprice.
Indisputably again, the jurisdiction must be exercised having regard to all
relevant factors in mind. In exercising such jurisdiction, the nature of the
misconducts alleged, the conduct of the parties, the manner in which the
enquiry proceeding had been conducted may be held to be a relevant factor.
A misconduct committed with an intention deserves the maximum punishment.
Each case must be decided on its own facts. In given cases, even the doctrine
of proportionality may be invoked.
1979 SC 1022] opined that negligence by itself may not be held to be a
misconduct. The Court stated;
"11It is however, difficult to believe that lack of efficiency or
attainment of highest standards in discharge of duty attached to public office
would ipso facto constitute misconduct. There may be negligence in performance
of duty and a lapse in performance of duty or error of judgment in evaluating
the developing situation may be negligence in discharge of duty but would not
constitute misconduct unless the consequences directly attributable to
negligence would be such as to be irreparable or the resultant damage would be
so heavy that the degree of culpability would be very high. An error can be
indicative of negligence and the degree of culpability may indicate the
grossness of the negligence.
Carelessness can often be productive of more harm than deliberate wickedness
This Court in ITC Ltd., Monghyr, Bihar v. Presiding Officer, Labour Court,
Patna (Bihar), (1978) 3 SCC 504, opined that negligence by itself cannot be
held to constitute misconduct stating:- "Mr. Pai submitted that even
neglect of work simpliciter can be a misconduct within the meaning of
Sub-clause (1) of Clause (ii) of Standing Order 20 apart from its being a fault
within the meaning of Sub-clause (b) of Clause (i) of the said Standing Order
as the word 'habitual' in the former merely qualifies the word 'negligence' and
not the expression 'neglect of work'. This argument has to be stated merely to
Mere neglect of work cannot be both. If it is so, it is a fault. If it is
habitual that is, if it is repeated several times then only it is misconduct.
It may well be that fault of one kind or the other as enumerated in Sub-clauses
(a) to (g) of Standing Order 20(i) if repeated more than once may be habitual
within the meaning of Standing Order 20(ii)(1), and especially in the light of
the fourth fault being a misconduct within the meaning of Standing Order 20(a),
but on the facts of this case, there was no charge against respondent No. 3
that he was guilty of habitual neglect of work.
Moreover the Labour Court found that the negligence of the workman was not
of a serious kind. Some others in the factory also contributed to it. We,
therefore, reject point No. 2."
The jurisdiction of the Industrial Court being wide and it having been
conferred with the power to interfere with the quantum of punishment, it could
go into the nature of charges, so as to arrive at a conclusion as to whether
the respondent had misused his position or his acts are in breach of trust
conferred upon him by his employer.
18. It may be true that quantum of loss may not be of much relevance as 10
SCC 572], but there again a question arose as to whether he was in the position
of a trust or not.
19. Furthermore, however, the respondent is out of service since 1987.
He has already suffered a lot being out of service for more than 20 years.
All the courts have held in his favour. We, thus, do not think that it would
be a fit case where we should exercise our discretionary jurisdiction under
Article 136 of the Constitution of India. This appeal is dismissed. No costs.
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