Skip to content

Pramodrai Shamaldas Bhavsar Vs. Life Insurance Corporation of India - Court Judgment

LegalCrystal Citation
CourtMumbai High Court
Decided On
Case NumberSpl. Civil Appln. No. 353 of 1967
Reported inAIR1969Bom337; (1969)71BOMLR286; 1969MhLJ559
ActsConstitution of India - Articles 12, 226, 227 and 311; Life Insurance Corporation Act, 1956 - Sections 22
AppellantPramodrai Shamaldas Bhavsar
RespondentLife Insurance Corporation of India
Appellant AdvocateR.S. Kulkarni, Adv.
Respondent AdvocateR.M. Mathalone and ;D.G. Rege, Advs.
.....petition whether can lie against corporation--zonal manager of l.i.c. whether tribunal--life insurance corporation of india (staff) regulations, 1960, reg. 30.;a writ petition cannot lie against the life insurance corporation of india constituted under the life insurance corporation act, 1956.;the life insurance corporation of india does not fall within the definition of the words ' the state ' in article 12 of the constitution of india.;ram babu v. divl. manager, l.i.c. [1961] a.i.r. all. 502, agreed with.;electricity board, rajasthan v. mohan lal [1967] a.i.r. s.c. 1857, shrinivas ganesh v. union of india (1956) 58 bom. l.r. 673, s.r. tewari v. dist. board, agra [1964] a.i.r. s.c. 1680 and life insc. corporation v. sunil kumar [1964] a.i.r. s.c. 847, referred to.;the zonal..........of the state. after the constitution of the board. the respondents were permanent employees of the state government and after the constitution of the board, their services were placed at the disposal of the board by government notification. the board was expected to frame regulations regarding the conditions of service and options were intended to be given to these employees to choose whether they would accept the new regulations or the older ones. no such regulations were frames. one of the employees i.e. respondent no. 1 was deputed to the public works department by an order made by the government. after sometime he was sent back to his parent department and actually sent to the board from the public works department on july 11, 1963 where he was posted as a foreman where he originally.....

Patel, J.

1. By this application the petitioner challenges an order of dismissal passed against him by the Zonal Manager of the Life Insurance Corporation of India on December 11, 1965. The short facts leading to the present application need be stated.

2. The petitioner is an employee of the respondent the Life Insurance Corporation, which is a statutory corporate body created under the Life Insurance Corporation Act, 1956. On April 27, 1965 a charge-sheet was served upon him in respect of six items. Item no 1 was in connection with indiscipline and insubordination under Regulations 21 and 39 (1) of the Staff Regulations Charge No. 2 related to his calling a meeting of the Branch Of Office staff in the of Office premises after 5.30 p.m. without obtaining prior permission of the Branch Manager, Charge No. 3 related to his not accepting a letter dated November 9, 1964 addressed to him by the Branch Manager in relation to the meeting which was the subject-matter of Charge No. 2 Charge No. 4 related to his being in debts and his being unable to liquidate the debts within a reasonable time. The fifth charge was that he did not forward a copy of the Branch Of Office collection to the Divisional Of Office even though the balance of a premium on a particular policy was paid in the Branch Of Office on October 13, 1964. Charge No. 6 related to transfer of proposal of insurance to the name of one J. T. Patel though booked to a different person. An enquiry was held by the Branch Manager on these charges. He forwarded the same along with his report to the Zonal Manager who is the dismissing authority of the petitioner. Thereafter the Zonal Manager issued a show cause notice to the petitioner communicating his tentative findings to show cause why penalty of dismissal from service should not be imposed upon him under Regulation 39 (1) (g) of the Staff made a reply on November 29, 1965 stating that he had not given him the grounds for his findings and the show cause notice, therefore, was illusive, that he had already submitted a detailed statement to the Enquiry Officer and if the contentions and arguments were not acceptable to him, he should have been informed of the reasons thereof. In the absence of these details he would be unable to reply to the letter and state anything more than what was already stated by him in the written statement which he had filed. He further alleged that the enquiry was not an impartial enquiry and that he had not been given reasonable opportunity to defend himself. Thereafter the Zonal Manager on December 11, 1965 finally passed his order dismissing the petitioner from service. The petitioner seeks to challenge this order.

3. The first question that arises in the present case is whether a writ petition could lie against the Life Insurance Corporation, a trading body. The Life Insurance Corporation is constituted under the Life Insurance Corporation Act. 1956. This Act was passed for nationalization of Insurance business by transferring the same to a Corporation established for that purpose and to provide for regulation and control of the business of the Corporation and for connected matters. The Corporation has to consist of fifteen persons or less and one of them is to be the Chairman. Initially a sum of Office crores of rupees is provided by the Central Government to form the capital of the business and power is given under Section 5(2) to reduce the said capital on the recommendation of the Corporation. The Corporation under Section 6 has to carry on business if Life Insurance in and outside India and is to exercise its power under the Act to develop the business to the best advantage of the community. The Corporation is constituted with perpetual succession and a seal and is an autonomous body for the purpose of business which it has to carry on according to the rules. On a perusal of the provisions of the Act it is clear that its activity is only business activity and it possesses no power which in any manner can be exercised to affect the activities of other citizens. Life Insurance business cannot be carried out by any private organization not because of anything that the Corporation could do or would want to do, but by reason of the Act itself which prevents anyone from carrying on any competing business.

4. On behalf of the petitioner Mr. Kulkarni argued that the Corporation must be regarded as an 'authority' within the meaning of Art. 12 of the constitution and a writ could issue in appropriate cases. Article 12 defines the word 'State' for the purposes of Part III to mean the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India and under the control of the Government of India.' Off and on questions have come up before the Court as to whether a particular authority or another falls within the definition of the words 'the State', the question arising substantially in the matter of enforcement of fundamental rights. It is not necessary to wade through all the cases that are decided.

5. The question came for discussion before the Supreme Court in Electricity Board. Rajasthan v. Mohan Lal : (1968)ILLJ257SC under the following circumstances: Prior to the constitution of that Board, electricity was supplied in the State by a Department of the State. After the constitution of the Board. The respondents were permanent employees of the State Government and after the constitution of the Board, their services were placed at the disposal of the Board by Government Notification. The Board was expected to frame regulations regarding the conditions of service and options were intended to be given to these employees to choose whether they would accept the new regulations or the older ones. No such regulations were frames. One of the employees i.e. respondent No. 1 was deputed to the Public Works Department by an order made by the Government. After sometime he was sent back to his parent department and actually sent to the Board from the Public Works Department on July 11, 1963 where he was posted as a foreman where he originally was. In the interval the other ten respondents pendants were promoted as Assistant Engineers. Respondent No. 1 thereafter contended that he ought to be promoted also an Assistant Engineer either under the Board or in any event in the alternative he was entitled o be considered to the said promotion. This request was turned down by the Board as well as by the State. He thereupon filed a writ petition in the High Court under Arts. 226 and 227 of the Constitution. The Board lost the petition in the High Court and it appealed to the Supreme Court. Before the Supreme Court a contention was raised that the Board was not 'the State' within the meaning of Art. 12 as it was a body corporate having separate existence and was constituted primarily for the purpose of carrying on commercial activities. On behalf of the appellant reliance was placed on the decision of the Madras High Court in University of Madras v. Shantha Bai : AIR1954Mad67 , where the general words of the Article 'other authorities within the territory of India or under the control of the Government of India' in Art. 12 were construed 'ejusdem generis' with the previous words. The Supreme Court did not agree with this decision and said that the words 'other authority' have got a larger meaning that the one given by the Madras case. In paragraph 5 Mr. Justice Bhargava speaking on behalf of the majority says:

'The meaning of the word 'authority' given in Webster's Third New International Dictionary, which can be applicable is 'a public administrative agency or Corporation having quasi-Governmental powers and authorised to administer a revenue-producing public enterprise'.' This dictionary meaning of the word 'authority' is clearly wide enough to include all bodies created by statute on which powers are conferred to carry out Governmental or quasi-Governmental functions. The expression 'other authorities' is wide enough to include within it every authority created by a statute and functioning within the territory of India, or under the control of the Government of India, and we do not see any reason to narrow down this meaning in the context in which the words 'other authorities' are used in Art. 12 of the Constitution'.

The learned Judge referred to the observation of Mr. Justice Ayyangar in Smt. Ujjam Bai v. State of Uttar Pradesh : [1963]1SCR778 which is :-

Again Art. 12 winds up the list of authorities falling within the definition by referring to 'other authorities' within the territory of India which cannot obviously be read as ejusdem generis with either the Government and the Legislatures or local authorities. The words are of wide amplitude and capable of comprehending every authority created under a statute and functioning within the territory of India or under the control of the Government of India. There is no characterisation of the nature of the 'authority' in this residuary clause and consequently it must include every type of authority set up under a statute for the purpose of administering laws enacted by the Parliament or by the State including those vested with the duty to make decisions in order to implement those laws.'

He further referred to the decision of the Supreme Court in K. S. Ramamurthy Reddiar v. Chief Commissioner, Pondicherry : [1964]1SCR656 where the observations are as follows:

'Further, all local or other authorities within the territory of India include all authorities within the territory of India whether under the control of the Government of India or the Governments of various States and even autonomous authorities which may not be under the control of the Government at all.'

The learned Judge wound up the discussion by the following observations:

'These decisions of the Court support our view that the expression 'other authorities' in Article 12 will include all constitutional or statutory authorities on whom powers are conferred by law. It is not at all material that some of the powers conferred may be for the purpose of carrying on commercial activities. Under the Constitution, the State is itself envisaged as having the right to carry on trade or business as mentioned in Article 19(1)(g). In Part IV, the State has been given the same meaning as in Article 12 and one of Directive Principles laid down in Art. 46 is that the State shall promote with special care the educational and economic interests of the weaker sections of the people. The State, as defined in Art. 12 is thus comprehended to include bodies created for the purpose of promoting the educational and economic interests of the people. The State, as constituted by our Constitution, is further specifically empowered under Art. 298 to carry on any trade or business.

The circumstance that the Board under the Electricity Supply Act is required to carry on some activities of the nature of trade or commerce does not, therefore, give any indication that the Board must be excluded from the scope of the word 'State' as used in Art. 12.'

The learned Judge then considered the provisions of the Electricity Supply Act which conferred powers on the Board including the one to give directions, the disobedience of which could be punished as a criminal offence and expressed the opinion that the Board was clearly an authority to which the provisions of Part III of the Constitution were applicable.

6. It is clear from the judgment of Mr. Justice Bhargava that the Supreme Court adopted the test formulated by Mr. Justice Ayyangar in Ujjam Bai's case. : [1963]1SCR778 and held that the Electricity Board was an authority within the meaning of Art. 12. It is not possible to read the judgment to say that 'authority' includes any and every autonomous body merely because it is constituted by a Statute, whatever be its functions and this could not be so. The very fundamental conception of an authority is that there is in it power to command and compel its obedience either by enforcing the same or by punishing disobedience. The Electricity Board had such powers while administering the law framed by the Parliament and therefore, the Court held that it fell within the meaning of Art. 12. If the Court intended to hold that merely because it was constituted under a statute of the Parliament or of the State Legislature and thus it fell within Art. 12, the subsequent discussion could not be necessary.

7. Applying the test in the present case, can the Life Insurance Corporation be said to have any authority in the matter of administering any law enacted by Parliament or by the State? Or is it required to make any decision under any such law and to implement those laws? Obviously it is a trading Corporation and is not concerned with implementing any law which affects in Any manner any member of the public. The prohibition for any private agency to do the same business is not by reason of any order that is made by the Life Insurance Corporation but by reason of the statute itself as we have already seen,

8. It is argued by Mr. Kulkarni that under Section 14 of the Life Insurance Corporation Act it has got a right of affecting insurance contracts already effected by any controlled business which has been taken over by the Corporation. This provision is in the nature of a liquidation provision for undoing anything erroneously done in a business house that had to be taken over by the Corporation. Even here, it had no uncontrolled right but it was to be done in accordance with a scheme prepared by the Corporation and approved by the Central Government. From its very nature it was a power of temporary duration until the affairs of the business that was taken over were settled. Under the scheme of the Act, all the life insurance business done by any company stood transferred to and vested in the Corporation and by Section 15 in respect of transactions done within five years before January 19, 1956 the Legislature enabled the Corporation to apply for relief to a Tribunal. This does not contain any power in the Corporation at all except that of an ordinary litigant who is required to go before a Tribunal. So far as Section 21 is concerned, there is no power in the Corporation at all. In policy matters it is to be guided by the directions given by the Central Government. This again does not vest any powers in the Corporation at all. Similarly neither Section 30 nor Section 42 gives any powers to the Corporation. In our view, the Corporation is purely autonomous business body as any other private company except that the initial capital of five crores of rupees is supplied by the Central Government. It employs servants as any private house does and enforces discipline amongst its servants as that house. It is, therefore, impossible by any stretch of language to regard the Corporation as State.

9. Article 311 has, therefore, no application and that is conceded. It is true that Art 226 does not speak of a State. The High Court can give direction to any person for any purpose. That, however, does not mean that any litigant can apply to the High Court for relief against any other person. The High Court will and can issue such writs and orders against such authorities are usually issued from times immemorial. In appropriate cases such writs could be issued against any authority to keep it within the bound of its jurisdiction or prevent abuse of its powers. Since the Corporation cannot be regarded as an authority i.e. the State, no writ ought to issue.

10. Mr. Mathalone has invited our attention to a decision of the Allahabad High Court in Ram Babu v. divisional Manager, LIC : AIR1961All502 which was also a case of a dismissed employee of the Corporation. An application was filed under Article 226 of the Constitution for issue of a writ quashing the dismissal order and for the issue of a further mandamus directing the Corporation to treat him as if in service and calling upon the Corporation to pay all the arrears of salary. The learned Judge after referring to the decision in Dr. S. Dutta v. University of Delhi, : [1959]1SCR1236 and the decision in Parshotam Lal Dhingra v. Union of India, : (1958)ILLJ544SC and other decisions, which it is not necessary to refer to observed:

'In other words, the general law of master and servant to the effect that the servant is at the pleasure of the master will stand in every case except in those where the same has been abrogated either by a statutory provision or by special contract. In the case of Government servants, to whom Art, 311 of the Constitution is applicable and in those cases where the provisions of the Industrial Disputes Act are applicable the general law that a servant is at the pleasure of the master stands abrogated to the extent to which the provisions of the Constitution or the Industrial Disputes Act provided.'

He further observed:

'.......... Neither there is any statutory provision nor a contract which curtails, modifies or takes away the power of the Corporation to dismiss the petitioner at pleasure and the petitioner cannot claim for himself a tenure of 'good behaviour'. For there reasons I am of the opinion that no writ of mandamus can be issued in the circumstances of the present case. ' The petition was held as not maintainable on the ground that Art, 311 of the Constitution was not attracted as Life Insurance Corporation was not a department of Government; that except as provided by Art, 311 of the Constitution in the case of Government servants and by the Industrial and by the Industrial law in the case of industrial workers the ordinary law of master and servant should prevail and the Court would not be entitled to force the service of an employee upon the master as laid down by Section 21. Clause (b) of Specific Relief Act, 1877, and that the petitioner had available to him an alternative remedy. Same principle was laid down by this Court in Shriniwas Ganesh v. Union of India : (1957)IILLJ189Bom . We are with respect in entire agreement with the conclusions of the learned Judge.

11. In S. R. Tewari v. Dist. Board, Agra : (1964)ILLJ1SC in connection with the question as to whether a declaration could be made that the termination of employment by the District Board was ultra vires or illegal or void, the Allahabad case was cited before the Supreme Court in support of the contention that such a declaration could not be made. Mr. Justice Shah speaking for the Court said:-

'In Ram Babu Rathaur's case : AIR1961All502 the Court had to consider the question whether an employee of the Life Insurance Corporation whose employment was terminated could claim a writ of mandamus restoring him to the service of the Corporation, or a writ of certiorari quashing the proceeding of the Corporation,

The Corporation is an autonomous body and is not a department of the State, and the relation between the Corporation and its employees is governed by contract, and no statutory obligation is imposed upon the Corporation in that behalf. The Court was, therefore, right in holding that the relationship between the employees and the Corporation had to be determined, in the absence of any statutory provision or a special contract, by the general law of master and servant.'

12. An alternative remedy is available to the petitioner. In a properly constituted suit the Court may have to consider the regulations framed by the Corporation, their effect and all other aspects of the matter in order to decide what relief the petitioner would be entitled to. It would have to consider the effect particularly of regulation No. 18 which provides for three months' notice for termination of service on either side. Even if the Court had discretion, if any, to make a declaration in his favour regarding the invalidity of the dismissal, it would consider all circumstances of the case to decide whether it should make a declaration. Surely writ jurisdiction of the High Court cannot be regarded as a proper forum for making all those enquiries.

13. There is one case to which particular reference must be made and that is, Life Insurance Corporation v. Sunil Kumar. : (1964)ILLJ442SC . It is argued that in this case employment of certain officers of the Life Insurance Corporation was terminated and the High Court at Calcutta had interfered under Art. 226 of the Constitution and this was finally affirmed by the Supreme Court. In this case the question as to whether a writ should be issued to a business house even if a creature of a statute was not canvassed. The decision, therefore, cannot have the force of authority laying down that such a writ could be issued to a business house. Again the decision of the Allahabad High Court in Ram Babu's case : AIR1961All502 was approved and distinguished in S. R. Tewari's case, : (1964)ILLJ1SC by the Supreme Court. We have decided the question as it is raised before us.

14. It is argued that the decision of the Zonal Manager should be regarded as that of a Tribunal and we should take to ourselves the jurisdiction to interfere with his decision under the provisions of Arts. 226 and 227 of the Constitution. the Zonal Manager himself is a servant of the Corporation and does not hold any official position in the hierarchy of public officers of the Government, He is in the position of a private tribunal agreed upon between the parties by the rules and regulations governing them. He cannot, therefore, be regarded as a Tribunal. The decision in support of this contention cited in Tata Chemicals Ltd v. Kailash C. Adhvaryu, : (1965)ILLJ54Guj does not apply.

15. Under the circumstances, therefore, we discharge the rule. Having regard to the circumstances we direct that there should be no order as to costs.

16. Rule discharged.

Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //