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Shyam Lal Sharma Vs. Life Insurance Corporation of India and anr. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtAllahabad High Court
Decided On
Case NumberCivil Misc. Writ No. 4531 of 1966
Judge
Reported in[1970]40CompCas611(All); [1971(21)FLR357]; (1970)IILLJ393All
ActsLife Insurance Corporation Act, 1956 - Sections 49; Life Insurance Corporation Regulation - Regulation 25(1) and 25(4); Constitution of India - Articles 9(1), 12, 13 and 226
AppellantShyam Lal Sharma
RespondentLife Insurance Corporation of India and anr.
DispositionPetition partly allowed
Excerpt:
- - it shall be the general duty of the corporation to carry on life insurance business in such a manner that life insurance business is developed to the best advantage of the community. clause (1) of the regulation does not permit the petitioner to enjoy the fundamental rights conferred on him by sub-clauses (b) and (c) of clause (1) of article 19 of the constitution. jagdish swarup contended that if the petitioner does not like regulation no. the petitioner is, therefore, entitled to enjoy all the rights conferred on citizens by article 19 of the constitution. this dictionary meaning of the word 'authority 'is clearly wide enough to include all bodies created by a statute on which powers are conferred to carry out governmental or quasi-governmental functions. the circumstance that.....v.g. oak, c.j.1. by this petition under article 226 of the constitution a certain regulation framed by the life insurance corporation of india (hereafter referred to as the ' corporation ') has been challenged. shyam lal sharma is the petitioner. the corporation is respondent no. 1. the chairman of the corporation is respondent no. 2.2. the corporation was established under the life insurance corporation act, 1956 (hereafter referred to as 'the act') with effect from the 1st of september, 1956. the petitioner is an employee of the corporation. section 49 of the act has conferred on the corporation power to make regulations. by virtue of that authority, the corporation has made a number of regulations. regulation no. 25 prohibits employees of the corporation from participating in politics.....
Judgment:

V.G. Oak, C.J.

1. By this petition under Article 226 of the Constitution a certain regulation framed by the Life Insurance Corporation of India (hereafter referred to as the ' Corporation ') has been challenged. Shyam Lal Sharma is the petitioner. The Corporation is respondent No. 1. The chairman of the Corporation is respondent No. 2.

2. The Corporation was established under the Life Insurance Corporation Act, 1956 (hereafter referred to as 'the Act') with effect from the 1st of September, 1956. The petitioner is an employee of the Corporation. Section 49 of the Act has conferred on the Corporation power to make regulations. By virtue of that authority, the Corporation has made a number of regulations. Regulation No. 25 prohibits employees of the Corporation from participating in politics and standing for elections. According to the petitioner, regulation No. 25 violates a number of fundamental rights conferred on him by Article 19 of the Constitution, and is, therefore, void. The petitioner applied to the respondents for permission to offer himself as a candidate for a seat in the U.P. Vidhan Sabha. Permission was refused. The petitioner has, therefore, prayed that regulation No. 25 be declared void in so far as it prohibits the petitioner from taking ,part in the normal political activity and seeking nomination and election for membership of the U.P. Vidhan Sabha.

3. The petition has been opposed by the respondents. According to the respondents, regulation No. 25 is valid.

4. The petition was filed in this court on December 15, 1966. In paragraph 14 of the petition it was stated that the petitioner is not a member of any political party. Nor did he wish to offer himself as a candidate representing any political party. The petition was later amended. In Clause (m) of paragraph 22 of the petition it was stated that the petitioner wishes to associate himself and be a member of one of the political parties in opposition to the Indian National Congress party, and desires to take part in and subscribe in, aid and assist the political movement and the activities of the party. Initially, Clause 1 of the prayer stood thus:

'To declare that regulation 25.....in so far as it prohibits thepetitioner from seeking nomination and election for membership of the U.P. Vidhan Sabha is void. '

5. As a result of the amendment allowed on December 19, 1969, the following words have been added in the first clause of the prayer :

' or taking part in the normal political activity and in the elections. '

6. In order to appreciate the rival contentions of the parties, it will be convenient to set forth the material provisions of the Act. The preamble of the Act runs thus:

' An Act to provide for the nationalisation of life insurance business in India by transferring all such business 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. '

7. Section 4 of the Act provides for constitution of the Corporation. The Corporation shall consist of a number of persons and a chairman to be appointed by the Central Government. Under Section 5 of the Act the original capital of the Corporation amounting to five crores of rupees was provided by the Central Government. Section 6 deals with functions of the Corporation. It shall be the general duty of the Corporation to carry on life insurance business in such a manner that life insurance business is developed to the best advantage of the community. Section 30 gives the Corporation monopoly of carrying on life insurance business. Section 49 of the Act gives the Corporation power to make regulations.

By virtue of power conferred by Section 49 of the Act, the Corporation has framed regulations. Regulation No. 25 has four clauses. Clause (1) of regulation No. 25 is in these terms :

' No employee shall be a member of, or be otherwise associated with, any political party or any organisation which takes part in politics, nor shall he take part in, subscribe in aid of or assist in any other manner, any political movement or activity. '

According to Clause (2), an employee must prevent members of his family from taking part in certain activities. According to Clause (3), if any question arises whether any activity falls within the scope of the regulation, the decision of the Corporation shall be final. Clause (4) of regulation 25 runs thus :

' No employee shall canvass or otherwise interfere or use his influence in connection with or take part in an election to any legislature or local authority:

Provided that-

(i) an employee qualified to vote at such election may exercise his right to vote...... '

For purposes of the present case, it is not necessary to discuss the validity of Clauses (2) and (3) of the regulation. It will be sufficient to discuss the validity of Clauses (1) and (4) of regulation No. 25.

According to the petitioner, regulation No. 25 violates Article 19 of the Constitution. Article 19 of the Constitution is:

' (1) All citizens shall have the right-

(a) to freedom of speech and expression ;

(b) to assemble peaceably and without arms ;

(c) to form associations or unions ;......'

The petitioner's contention is that regulation No. 25 seeks to take away fundamental rights conferred on the petitioner by Sub-clauses (a), (b) and (c) of Clause (1) of Article 19 of the Constitution. These Sub-clauses are subject to certain exceptions mentioned in Clauses (2), (3) and (4) of Article 19. Mr. Jagdish Swarup appearing for the respondents did not seriously suggest that the regulation is saved by the exceptions mentioned in Clauses (2), (3) and (4) of Article 19.

8. As already mentioned, Clause (1) of regulation No. 25 is in these terms:

' No employee shall be a member of, or be otherwise associated with,any political party or any organisation which takes part in politics, norshall he take part in, subscribe in aid of or assist in any other manner, anypolitical movement or activity. '

It will be seen that Clause (1) prevents the petitioner from joining any organisation which takes part in politics. He cannot be a member of any political organisation, association or union. He cannot attend any political meeting. Clause (1) of the regulation prevents the petitioner from assembling peaceably and without arms and forming associations or unions. Clause (1) of the regulation does not permit the petitioner to enjoy the fundamental rights conferred on him by Sub-clauses (b) and (c) of Clause (1) of Article 19 of the Constitution.

9. In Gopalan v. State of Madras : 1950CriLJ1383 Kania C. J. observed on page 35 :

' If there is a legislation directly attempting to control a citizen's freedom of speech or expression, or his right to assemble peaceably and without arms, etc., the question whether that legislation is saved by the relevant saving clause of Article 19 will arise. If, however, the legislation is not directly in respect of any of these subjects, but as a result of the operation of other legislation, for instance for punitive or preventive detention, his right under any of these Sub-clauses is abridged, the question of the application of Article 19 does not arise. '

In the instant case Clause (1) of regulation 25 directly interferes with the petitioner's fundamental rights under Sub-clauses (b) and (c) of Article 19(1) of the Constitution.

10. In Kameshwar Prasad v. State of Bihar : (1962)ILLJ294SC it was held that there is no fundamental right to resort to strike. A rule prohibiting any form of demonstration for the redress of grievance of Government servants is violative of fundamental rights guaranteed by Sub-clauses (a) and (b) of Article 19(1) of the Constitution.

11. In O.K. Ghosh v. E.X. Joseph, : (1962)IILLJ615SC it was held that fundamental rights guaranteed by Article 19 can be claimed by Government servants. It 'follows that fundamental rights can be claimed by employees of the Corporation.

12. In P.D. Shamdasani v. Central Bank of India : [1952]1SCR391 Shamdasani filed a petition under Article 32 of the Constitution against the Central Bank of India. It was held that the petition was not maintainable. Neither Article 19 nor Article 31 was intended to prevent wrongful individual acts or to provide protection against private conduct. In that case the petition was directed against a private commercial organisation. In the present case the petition is directed against a corporation established by a statute.

13. Mr. Jagdish Swarup contended that if the petitioner does not like regulation No. 25, he is at liberty to resign. He cannot be heard to say that the regulation interferes with his fundamental rights. In support of this contention, reliance was placed upon Lachman Das v. State of Punjab : [1963]2SCR353 their Lordships noticed the argument that when operation of law is attracted by reason of a contract, inhibition under Article 19 has no application. Their Lordships did not pronounce on this question.

14. In Railway Board, New Delhi v. Niranjan Singh : (1969)IILLJ743SC it was held that contents of the freedoms guaranteed under Sub-clauses (a), (b) and (c) of Article 19(1) do not include the right to exercise them in the properties belonging to others. Relying upon that decision, Mr. Jagdish Swarup contended that it was open to the Corporation to prohibit political activity during office hours and on the premises of the Corporation. It may, however, be pointed out that Clause (1) of regulation No. 25 is not so limited. There is no limitation of time or place in Clause (I) of regulation 25.

15. In Miscellaneous Petition No. 232 of 1963 (Insurance Corporation Employees' Union, Bombay v. Life Insurance Corporation of India) the petitioner challenged the validity of regulation No. 25. It was declared by a single judge of the Bombay High Court that Clause (1) of regulation No. 25 violates Sub-clauses (a), (b) and (c) of Article 19(1) of the Constitution, and is, therefore, void and inoperative. The Corporation took up the matter in appeal. The appeal was dismissed by a Division Bench on April 19, 1967. The Division Bench agreed with the single judge that Clause (1) of regulation No. 25 infringes Sub-clauses (b) and (c) of Article 19(1) of the Constitution. I respectfully agree with the view taken by the Bombay High Court.

16. Next we have to examine the validity of Clause (4) of regulation No. 25. Clause (4) of regulation No. 25 is :

' No employee shall canvass or otherwise interfere or use his influence in connection with or take part in an election to any legislature or local authority...... '

Clause (4) consists of two parts. The first part prohibits an employee 'from canvassing or using his influence in connection with an election. The simplest method of canvassing or using influence is by oral persuasion. Prohibition against such canvassing prevents employees of the Corporation from enjoying freedom of speech and expression. The first part of Clause (4) violates the fundamental right conferred on the petitioner by Article 19(l)(a) of the Constitution. In paragraph 1 of the petition it is stated that the petitioner is a citizen of India. This position has not been disputed in the counter-affidavit. The petitioner is, therefore, entitled to enjoy all the rights conferred on citizens by Article 19 of the Constitution.

17. The second part of Clause (4) prevents employees from taking part in an election to any legislature or local authority. Apparently, the petitioner is not seeking election to any local authority. It is not, therefore, necessary to discuss the question whether the petitioner has a right to seek election to local authority. The present discussion may be confined to election to any legislature.

18. Mr. V. K. S. Chaudhry appearing for the petitioner conceded that the right to seek election to legislature is not a fundamental right. Mr. Chaudhry, however, maintained that the petitioner has a right to seek election to U.P. Vidhan Sabha.

19. Article 191 of the Constitution contains a list of disqualifications for membership of a State Legislature. According to Sub-clause (e) of Clause (1) of Article 191, a person shall be disqualified for being chosen as a member of a Legislative Assembly, if he is so disqualified by or under any law made by Parliament. Life Insurance Corporation Act, 1956, is an Act of Parliament. The Act has permitted the Corporation to make regulations. It was, therefore, open to the Corporation to make a regulation laying down that employees of the Corporation shall be disqualified for election to a Legislative Assembly. The second part of Clause (4) of regulation 25 is valid. According to the petitioner, regulation 25 is void, because it takes away or abridges the petitioner's fundamental rights. He relies on clause (2) of Article 13 of the Constitution. Article 13(2) states :

' The State shall not make any law which takes away or abridges the the rights conferred by this part and any law made in contravention of this clause shall, to the extent of the contravention, be void. '

20. The expression 'the State' has been defined in Article 12 of the Constitution:

' In this part, unless the context otherwise requires, ' the State' includes 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 or under the control of the Government of India. '

According to the petitioner, the Corporation is a body falling within 'the description ' other authorities' within the meaning of Article 12. The term ' law ' has been defined in Sub-clause (a) of Clause (3) of Article 13 :

' ' law ' includes any Ordinance, order, bye-law, rule, regulation, notification, custom or usage having in the territory of India the force of law.'

In order to bring the present case under Article 13(2) of the Constitution, the petitioner has to establish two points. Firstly, the Corporation is an authority within the meaning of Article 12. Secondly, regulation 25 has the force of law.

21. In University of Madras v. Shantha Bai, : AIR1954Mad67 it was held by the Madras High Court that the University of Madras is not a ' State ' as defined in Article 12 of the Constitution.

22. In Karlick Chcmdra Nandi v. West Bengal Small Industries Corporation, A.I.R. 1957 Cal. 231 it was held that the West Bengal Small Industries Corporation was not a ' State ' within the meaning of Article 12.

23. In Ujjam Bai v. State of U. P., A.I.R. 1962 S.C. 1621 Ayyangar J. observed on page 1678 thus:

'Article 12 winds up the list of authorities falling within the definition by referring to ' other authorities ' within the territory of India. The words are of wide amplitude arid capable of comprehending every authority created under a statute and functioning within the territory of India. '

In Bramadathan Nambooripad v. Cochin Devaswom Board, A.I.R. 1956 Trav. Coch. 19 (F.B.) it was held by a Full Bench of the Travancore-Cochin High Court that in its literal sense the word 'authority' means a body exercising power, and in the context of Article 12 that power must be considered as the power to issue rules, bye-laws or regulations having the force of law.

24. In Mohan Lal v. State, it was held by the Rajasthan High Court that the expression 'other authorities ' includes all public authorities, that is, authorities created by a statute and armed with powers and functions in a given field of activity and for the control thereof, and having the power to make their own rules and regulations, having the force of law. Consequently, the Rajasthan State Electricity Board is ' other authority ' within the meaning of Article 12.

25. This decision of the Rajasthan High Court was upheld in appeal by the Supreme Court. The decision is reported as Rajasthan State Electricity Board v. Mohan Lal : (1968)ILLJ257SC . The majority judgment was delivered by Bhargava J. He observed on page 1862 of the report thus:

' 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 a 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 Article 12 of the Constitution.

26. In Smt. Ujjam Bai v. State of Uttar Pradesh, : [1963]1SCR778 Ayyangar J., interpreting the words ' other authorities ' in Article 12, held:

'Again, Article 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 Parliament or by the State including those vested with the duty to make decisions in order to implement those laws.

27. In K. S. Ramamurtky Reddiar v. Chief Commissioner, Pondicherry : [1964]1SCR656 , this court, dealing with Article 12, held:

'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.'

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(l)(g). In Part IV, the State has been given the same meaning as in Article 12 and one of the directive principles laid down in Article 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 Article 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 Article 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 Article 12. On the other hand, there are provisions in the Electricity Supply Act which clearly show that the powers conferred on the Board include power to give directions, the disobedience of which is punishable as a criminal offence. In these circumstances we do not consider it at all necessary to examine the cases cited by Mr. Desai to urge before us that the Board cannot be held to be an agent or instrument of the Government. The Board was clearly an authority to which the provisions of Part III of the Constitution were applicable.'

28. Mr. Justice Shah delivered a separate judgment. In paragraph 10 he observed:

' I am unable, however, to agree that every constitutional or statutory authority on whom powers are conferred by law is ' other authority ' within the meaning of Article 12.'

29. This observation shows that according to the majority decision, every constitutional or statutory authority on which powers are conferred by law is 'other authority' as contemplated by Article 12. Mr. Justice Shah concluded thus:

' In my judgment, authorities constitutional or statutory invested with power by law not sharing the sovereign power do not fall within the expression ' State' as defined in Article 12. Those authorities which are invested with sovereign power, i.e., power to make rules or regulations and to administer or enforce them to the detriment of citizens and others fall within the definition of ' State' in Article 12, and constitutional or statutory bodies which do not share that sovereign power of the State are not, in my judgment, ' State ' within the meaning of Article 12 of the Constitution.'

30. It will be seen that according to Mr. Justice Shah, a body cannot claim to be 'State' under Article 12, unless the body exercises sovereign power. But according to the majority decision, such a body need not exercise sovereign power. It is sufficient that the body should have been created by statute, and should have powers to carry out governmental or quasi-governmental functions. Under Article 141 of the Constitution, the majority decision of the Supreme Court is binding on this court.

31. In Mohinder Singh v. Union of India, A.I.R. 1969 Delhi 171 it was held that a society registered under the Societies Registration Act is ' authority ' within the meaning of Article 12.

32. In Pramodrai v. Life Insurance Corporation of India, : AIR1969Bom337 it was held that the Life Insurance Corporation of India does not fall within the expression ' other authorities ' in Article 12, and is not 'State' within the meaning 'of Article 12. In view of the decision of the Supreme Court in Rajasthan State Electricity Board v. Mohan Lal : (1968)ILLJ257SC , it is not possible to accept the view taken by the Bombay High Court.

33. According to the Supreme Court, the expression 'other authorities' is wide enough to include within it every authority created by a statute and functioning within the territory of India. 'The State' as denned in Article 12 includes bodies created for the purpose of promoting the educational and economic interests of the people. The Life Insurance Corporation of India has been established by the Life Insurance Corporation Act, 1956. The Corporation consists of persons nominated by the Central Government. The original capital of the Corporation was supplied by the Central Government. The function of the Corporation is to develop life insurance business to the best advantage of the community. The Corporation has been empowered to make regulations. In view of all these circumstances, it must be held that the Corporation answers the description ' other authorities ' mentioned in Article 12. The Corporation, therefore, constitutes ' the State ' as contemplated by Article 12.

34. The next question for consideration is whether regulation No. 25 has the force of law. In Dwarka Nath v. Bihar State, A.I.R. 1959 S.C. 249 it was held that Article 182 of the Bihar Education Code has no greater sanction than an administrative order or rule. It has not the force of law.

35. In Executive Committee of U.P. State Warehousing Corporation Ltd. v. Chandra Kiran Tyagi (Civil Appeal No. 552 of 1967 decided on 9th September, 1969) the Supreme Court had to consider the nature of a regulation made by the U.P. State Warehousing Corporation. An employee of the Corporation was dismissed from service. He challenged the order of dismissal on the ground that the order of dismissal violated a certain regulation framed by the Corporation under Section 54 of the Agricultural Produce (Development and Warehousing) Corporation Act, 1956 (Act No. 28 of 1956). This court was satisfied that the plaintiff's contention was correct. This court, therefore, granted a declaration that the order of dismissal was null and void. The Warehousing Corporation appealed to the Supreme Court. The appeal was allowed, and the decree of this court was set aside. Their Lordships of the Supreme Court observed in the penultimate paragraph of the judgment thus:

' ......the regulations are made under the power reserved to theCorporation under Section 54 of the Act. No doubt they lay down the terms and conditions of relationship between the Corporation and its employees. An order made in breach of the regulations would be contrary to such terms and conditions, but would not be in breach of any statutory obligation......In the instant case, a breach has been committed by the appellant of regulation 16(3) when passing the said order of dismissal, inasmuch as the procedure indicated therein has not been followed. The Act does not guarantee any statutory status to the respondent, nor does it impose any obligation on the appellant in such matters......It is not in dispute that, inthis case, the authority who can. pass an order of dismissal has passed the same. Under those circumstances a violation of regulation 16(3)......canonly result in the order of dismissal being held to be wrongful and, in consequence, making the appellant liable for damages.'

These observations lend support to Mr. Jagdish Swarup's contention that regulations of this kind have not the force of law.

36. The power conferred on the Life Insurance Corporation of India by Section 49 of the Life Insurance Corporation Act, 1956, is similar to thepower conferred on the Warehousing Corporation by Section 54 of Act No. 28 of 1956. We may, therefore, assume with the respondents that regulation No. 25 made by respondent No. I has not got the force of law. It is not, therefore, ' law ' as denned in Sub-clause (a) of Clause (3) of Article 13 of the Constitution.

37. On the one hand, the Corporation is a ' State ' as contemplated by Article s 12 and 13 of the Constitution. On the other hand, the impugned regulation is not ' law ' within the meaning of Article 13. The result is that the petitioner can derive little assistance from Clause (2) of Article 13 of the Constitution.

38. However, the petition need not fail on the short ground that the petitioner is unable to press Article 13(2) into service. The petitioner has established his case that regulation 25 takes a way or abridges certain fundamental rights conferred on him by Article 19 of the Constitution. Article 226 of the Constitution has conferred very wide powers upon High Courts in India. If a petitioner satisfies the court that the State has framed a regulation which takes away or abridges his fundamental rights, there is a case for intervention by the court.

39. In Maharashtra State Electricity Board Engineers' Association v. Maharashtra State Electricity Board, A.I.R. 1968 Born. 65 it was held that the Maharashtra State Electricity Board is 'State' within the meaning of, Article 12, and is bound by the provisions of Part III of the Constitution. Actions of the Board can be subjected to judicial review if challenged as violative of fundamental rights guaranteed by the Constitution.

40. The petitioner has established the position that the effect of Clause (1) of regulation 25 and the first part of Clause (4) of the regulation is to deprive him of a number of fundamental rights. The Corporation should not be permitted to enforce these invalid parts of theregulation.

41. In my opinion, the petition should be partly allowed. The respondents should be directed not to enforce against the petitioner Clause (1) of regulation 25 and the following words appearing in Clause (4) of regulation 25 : ''canvass or otherwise interfere or use his influence in connection with or.' Since the petition partly succeeds and partly fails, parties may be left to bear their own costs.

T.P. Mukerjee, J.

42. I agree.

BY THE COURT

43. The petition is partly allowed. Respondents are directed not to enforce against the petitioner Clause (1) of regulation No. 25 and the following words appearing in Clause (4) of regulation No. 25 :

' canvass or otherwise interfere or use his influence in connection with or.'

44. Since the petition partly succeeds and partly fails, parties are left to bear their own costs.


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