Skip to content


Ratnakar Vishwanath Joshi and ors. Vs. Life Insurance Corporation and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtDelhi High Court
Decided On
Judge
Reported in(1975)ILLJ501Del
AppellantRatnakar Vishwanath Joshi and ors.
RespondentLife Insurance Corporation and ors.
Cases ReferredUnion of India v. Indo
Excerpt:
- - ' it is well-established that the extraordinary remedies given by article 226 are not available against a private person but only against an -authority''the dictionary meaning of the word 'authority' is a person or body exercising power or having a legal right to command and be obeyed. as staled in the well-known 'text book of jurisprudence' by paton, 4th edition, page 433-'rights are created either by consent or by the direct gift of the law. 11. as both the regulations 1959 and the staff regulations, 1960 made by the corporation are 'laws' the petitioners would be on good ground if they could support their claim to the benefit of the scheme of 31-7-1971 by these regulations or by the act of 1956. the corporation is a creature of the statute. such conditions of service include.....v.s. deshpande, j.1. under article 226 of the constitution, this court can order the enforcement of certain public law rights (as distinguished from private law rights, e.g., rights based on contracts). can such a right arise out of an administrative scheme or instructions (as distinguished from 'law' or orders having the force of law) issued by the life insurance corporation of india (as contrasted with the government) with respect to a class of its employees can this court review administrative action by the chairman of the corporation withdrawing such scheme or instructions without authority these would appear to be the ultimate issues arising in this writ petition in the back-ground of the following facts and law.2. the corporation (respondent 1) was established by the life insurance.....
Judgment:

V.S. Deshpande, J.

1. Under Article 226 of the Constitution, this Court can order the enforcement of certain public law rights (as distinguished from private law rights, e.g., rights based on contracts). Can such a right arise out of an administrative scheme or instructions (as distinguished from 'law' or orders having the force of law) issued by the Life Insurance Corporation of India (as contrasted with the Government) with respect to a class of its employees Can this Court review administrative action by the Chairman of the Corporation withdrawing such scheme or instructions without authority These would appear to be the ultimate issues arising in this writ petition in the back-ground of the following facts and law.

2. The Corporation (respondent 1) was established by the Life Insurance Corporation Act, 1956 to carry on the business of life insurance as a monopoly on business principles (Section 6). It can act itself Section 4 or through committees Section 19. It has power to appoint its staff Section 23. Under Section 49 of the Act, the Corporation may, with the previous approval of the Central Government, by notification in the Gazette of India, make regulations not inconsistent with the Act or the rules made by the Central Government under S 48 there of to provide for the purpose of giving effect to the provisions of the Act. It has made two sets of regulations, namely, (1) The Regulations, 1959; and (2) Staff Regulations, 1960. Regulation 32(a) authorises the Chairman to exercise all the powers of the Corporation or the committees, Regulation 33 authorises the Chairman to exercise all the powers of the Corporation in emergency. Staff Regulation 59 as amended with effect from. 7-8-1971 empowers the Corporation to sanction 'Merit awards and payments to employees in accordance with such schemes as it may approve from time to time.'

3. Actuaries play an important role in insurance business. The number of Actuaries in India has been rapidly diminishing in recent years. With a view toencourage its employees to qualify themselves as Actuaries, the Corporation approved a scheme in the form of administrative instructions. The scheme was issued by the Chairman of the Corporation, purporting to act under Regulation 4 of the Staff Regulations which enables the Chairman to issue instructions or directions to carry out the provisions of Staff Regulations. On 31-7-71 a circular was addressed to all the offices of the Corporation by its Executive Director and the scheme was annexed to the said circular. Briefly a person has to pass examinations in various Subjects to qualify as an associate or a fellow of the Institute of Actuaries. An employee of the Corporation passing an examination in any of these Subjects was given a special, pay as a reward for passing each of these examinations. The scheme was brought into force from 1-9-1970 and was to last for five years. The petitioners are among those Class I Officers of the Corporation who benefited by the scheme. The Association of Class I Officers, however, (respondent 5) pro. tested against the scheme with the Chairman (respondent 4). On 6-3-72, thereforee, the Chairman purported to enter into an agreement with the Association of the Class I Officers and thereby withdrew the scheme of 31-7-1971.

4. The petitioners contend that: (1) The scheme of 31-7-1971 created a legal right in the petitioners to avail themselves of its benefits and (2) That the Chairman had no power to withdraw this scheme, at any rate before the expiry of five years. The petitioners, thereforee, pray that:

(1) It be declared that the scheme of 31-7-1971 cannot be withdrawn except in accordance with law; and

(2) The action of the Chairman withdrawing the scheme on 6-3-1972 be quashed.

5. The Corporation, its Zonal Manager, Delhi (respondent 2) and its Chairman (respondent 4) resisted the writ petition. The Association of its Class I employees also filed a separate counter-affidavit. The Corporation pointed out that the scheme of 31-74971 consisted only of administrative instructions which did not create any enforceable right in the petitioners. The Chairman of the Corporation was entitled to withdraw the scheme. At any rate the writ petition was not competent by the petitioners praying that the withdrawal of the scheme be quashed, Shri D. S. Dang for respondent 5 made an additional point that the benefit o{ additional emoluments for the passing of the examinations given by the scheme of 31-7-1971 did not amount to 'special pay' within the meaning of Staff Regulation 3(k).

6. It is first necessary to consider whether the right claimed by the petitioners is enforceable under Article 226 of the Constitution. It is true that Article 226 is worded widely. It gives the High Court the power 'to issue to any person or authority....directions, orders or writs ...for the enforcement of any of the rights conferred by Part III and for any other purpose.' These wide words have, however, to be construed in their historical context. As was observed by the Supreme Court in Election Commission v. Saka Venkata Subarao : [1953]4SCR1144 , 'The makers of the Constitution conferred powers on the High Courts of issuing directions, orders or writs primarily for the enforcement of fundamental rights, the power to issue such directions, etc., for any other purpose being also included with a view apparently to place all the High Courts in this country in somewhat the same position as the Court of King's Bench in England.' It is well-established that the extraordinary remedies given by Article 226 are not available against a private person but only against an -'authority''. The dictionary meaning of the word 'authority' is a person or body exercising power or having a legal right to command and be obeyed. Article 226 is, thereforee, concerned with such a person or authority which exercises power lover others, that is to say, over other persons or people at large. The exercise of such power in relation to the public makes the authority a public authority. It is difficult to conceive of an authority in the above sense which would not be a public authority. If an authority exercises powers over the public, it ordinarily bound to be regarded as a public authority, Amir-Jamia and Ors. v. Dashrath Raj, . It would follow, thereforee, that it is only those rights which are the subject-matter of public law, such as, constitutional and statutory rights, which would be enforceable against a public authority. Contrasted with such rights are those rights which arise only in the sphere of private law. For instance a right arising out of a contract between two parties is not a constitutional or statutory right. It is a contractual right based on the consent of parties. A person may have a locusstandi to file a writ petition because his contractual right is affected by a legislation. But the right which be justiciable is not the contractual right but the illegal deprivation. of it by the statute which is attacked as unconstitutional, Calcutta Gas Company v. The State of West Bengal, : (1961)IILLJ431SC . But a breach of contract alleged to have been committed by a contracting party (be it the Government of a public authority) cannot furnish a cause at action for a writ petition under Article 226 of the Constitution. Achutan v. State of Kerala (1959) Supp. 1 S.C.R. 787, and Lekhraj v. Deputy Custodian : [1966]1SCR120 . The decision of the Supreme Court in D.F.O. South Kheri v. Ram Sartehi Singh : AIR1973SC205 , is not an authority to the contrary. As made clear by their Lordships in para 4 of the report:

But in the present case the order is passed by a public authority modifying the order or proceeding of a subordinate forest authority...In view of the judgment of this Court in K.N. Guruswamy's case : [1955]1SCR305 there can be no doubt that the petition was maintainable, even if the right to relief arose out of an alleged breach of contract, where the action challenged was a public authority invested with statutory power.

It is clear, thereforee, that their Lordships did not treat the case as one relating to the enforcement of a merely contractual right.

7. Any doubt that might have been entertained on this question has been dispelled by the Supreme Court in their latest observations in Union of India v. Raman Iron Foundry Civil Appeal No. 1310 of 1973 decided on March 12, 1974. An interim injunction had been issued in that case by Avadh Behari, J., of this Court acting under Section 41(b) of the Arbitration Act restraining the Government from appropriating the amount due to the respondent under another contract against the claim by the Government in the contract in which the dispute had arisen before the arbitrator. It was contended for the Government that such an 'injunction virtually amounted to an order to the Government to pay to the respondent the amount due to the respondent under another contract which was not a subject-matter of the dispute before the arbitrator. The Court clarified that the said injunction would h are no such effect. To quote the following observation of the Court-

The Court obviously could not, thereforee, make an interim order which, though ostensibly in form, an order of interim injunction, in substance amounted to a direction to the appellant to pay the amounts due to the respondent under the other contracts....The appellant can still refuse to pay such amounts if it thinks it has a valid defense and if the appellant does so, the only remedy open to the respondent would be to take measures in an appropriate forum for recovery of such amounts, where it would be decided whether the appellant is liable to pay such amounts to the respondent or not,

If the remedy by way of a writ petition is not available even against the Government to enforce a contractual claim, a fortiori, it is not available against a Corporation.

8. It is necessary for the petitioners to show that their claim to the benefit of the scheme of 31-7-1971 is based on a right which arises not merely out of contract but from law. As staled in the well-known 'Text book of Jurisprudence' by Paton, 4th Edition, page 433-'Rights are created either by consent or by the direct gift of the law.' 'Rights created by agreement are contractual rights which are not ordinarily enforceable under Article 226. Rights created by law against a public authority are eminently the subject-matter of a writ petition under Article 226. The crucial question is whether the benefit of the scheme of 31-7-1971 was available to the petitioners only as a term of their contracts of service with the Corporation or whether it became available to them by law. It is necessary to enquire, thereforee, whether the scheme of 31-7-1971 was in the nature of a contract of service or whether it was law or had the force of law. In dealing with a contract of service we have first to draw a distinction between employment under the Government and employment under other authorities and persons. Employment under the Government, though initially contractual, becomes a matter of status Roshan Lal Tandon v. Union of India : (1968)ILLJ576SC . The reasons for this transformation of a contract into status may be summed up as follows.

9. Under Article 310 of the Constitution an employee under the Government holds his office during the pleasure of the President or the Governor. Under the proviso to Article 309, the President or the Governor may frame rules governing the conditions of service of the Government servants. A Government servant has, thereforee, in theory no security of tenure and no equality of position as a contracting party. On the other hand, constitutional obligations are cast on the Government by Article 311 of the Constitution. This is why a contract of service under the Government is regarded a status under the Constitution. A corollary of the above position is that even if no rules are framed under Article 309, the Government may determine the conditions of service of its employees by executive action. The executive power of the Union may be exercised by the President under Articles 53 and 73 and by thegovernor under Articles 154 and 162. The contractual conditions of service could be changed by the mere exercise of such executive power as was held in Roshan Lal Tandon's case (supra). If the Government does not act against its employees under a contract of service, it would follow that the employees of the Government do not act against the Government under a contract of service. This is why even administrative instructions issued by the Government governing the terms of service of its employees are regarded as giving rise to rights and obligations of a public nature as distinguished from those of a contractual or private nature. The enforcement of these rights and obligations, thereforee, falls in the domain of public law and is a subject-matter of Art.226, Union of India v. K.P. Joseph : [1973]2SCR752 relying upon Sant Ram Sharma v. State of Rajasthan (1968) 1 S.C.R. 3, and Union of India v. Indo-Afghan Agencies : [1968]2SCR366 .

10. On the contrary the relationship between the petitioners and the Corporation is primarily contractual except in so far as the contract of service has been transformed into law by the framing of regulations by the Corporation. Shri G. B. Pai for the Corporation urged that a distraction should be made between a governmental corporation and a commercial corporation. He submitted that it is only regulations made by the former which would be 'law'. On the other hand, according to him, regulations made by the latter would not be 'law'. He relied on the decisions of the Supreme Court the Executive Committee of U.P. State Warehousing Corporation v. Chander Kiran Tyagi : (1970)ILLJ32SC : 1973 2 S.C.R 250 and Indian Airlines Corporation v. Sukhdeo Rai : (1971)ILLJ496SC : (1971) 2 S.C.R. 192 for the proposition that the regulations framed by statutory corporations of a commercial nature laying down the conditions of service and their employees did not impose any statutory obligations on the corporations which could be enforced by way of writ petitions. With respect, we may point out that the subsequent decision by a larger bench of the Supreme Court in Sirsi Municipality v. Cecelia Kom Francis Tellis, : (1973)ILLJ226SC , paragraph 24 treated the provisions of statutes or orders or schemes made under a statute regulating the conditions of service of employees of all statutory authorities and bodies as being on the same footing, No distinction was recognised between the regulations made by corporation and rules made by the Government regarding the conditions of their respective employees. A Full Bench of this Court in Indian Institute of Technology v. Mangat Singh, I.L.R. (1973) 2 Delhi 6, discussed all he Supreme Court decisions on the subject and concluded that regulations made by corporations stand on the same footing as rules made by the Government regulating the conditions of service of their respective employees. At page 22 of the report, the distinction between commercial and noncommercial corporations suggested by the Full Bench only as a possible way to reconcile the Supreme Court decisions in U.P. State Warehousing Corporation and Indian Airlines Corporation with its decision in Sirsi Municipality ; but in the absence of any further Supreme Court decision it is not possible to say that regulations made by commercial corporations regarding the service conditions of their employees are not 'law'. On the contrary, the Rajasthan State Electricity Board was a commercial statutory body which was held to be entitled to make 'laws' in State Electricity Board, Rajasthan v. MohanLal A.I.R. 67 S.C. 1857. Another reason why we cannot accept Shri Pai's contention that the regulations framed by the Corporation under Section 49 of the Act are not 'law' is that such a contention is contrary to Section 3(51) of the General Clauses Act, 1897. It is not disputed by Shri Pai that rule framed by the Central Government under Section 48 of the Act -are laws, Section 3(51) of the General Clauses Act defines 'rule' to mean a rule made in exercise of a power conferred by any enactment and to include a regulation made as a rule under any enactment. The regulations made under Section 49 and the rules made under Section 48 are, thereforee, both rules under Section 3(51) of the General Clauses Act. No distinction can be, made between them. We cannot accept the argument of Shri Pai that rules are laws but regulations are not laws in the face of Section 3(51) of the General Clauses Act.

11. As both the Regulations 1959 and the Staff Regulations, 1960 made by the Corporation are 'laws' the petitioners would be on good ground if they could support their claim to the benefit of the scheme of 31-7-1971 by these regulations or by the Act of 1956. The Corporation is a creature of the statute. It can act only under the statute and under the rules and regulations made there under. It is as much bound by the Act as by the rules made by the Government or by the regulations made by itself. It is essential for the petitioners, thereforee, to show that there is a statutory obligation imposed on the Corporation either by the Act or by the rules or by the regulations to give to the petitioners the benefit of the scheme of 31-7-1971. Such a statutory obligation has to be spelt out from the language of the statute, the rules or the regulations. In reading them, it has to be borne in mind that there is a distinction between the exercise of executive power by the Corporation and the exercise of legislative power by it. Executive action by the Corporation is taken under Section 6 to carry on the business of life insurance and under Section 23 to appoint the staff. The Corporation need not wait for the framing of the rules and regulations before it can start working under the Act. But, carrying on business, and appointment of staff is merely executive action; contrasted with it is the power conferred on the Corporation by Section 49 to make regulations. The power given by Section 49 is legislative power because it enables the Corporation to make laws. It is necessary to distinguish between the exercise of executive power by the Corporation and the exercise of legislative power by it. For, the Corporation acts in the field of private law of contracts when it deals with its employees in exercise of its executive power, namely, to carry on business under Section 6, to appoint staff under Section 23, and to fix the salaries and emoluments of the staff under Regulation 27(b) If the scheme of 31-7-1971 is framed by the Corporation only in exerciseof its administrative power, then it could be viewed as one of the following two things. If it is remuneration payable to the employees for work done by them, then the employees can enforce payment of the remuneration as a part of the contract of service State of Bihar v. AbdulMajid 1954 S.C.R. 786 in a suit. The scheme purports to offer payment of special pay, to such employees as would qualify for ii But, what is 'special pay' has been defined by Staff Regulations 3(k) as follows:

Special pay' means an addition of the nature of pay to the emoluments of a post or of an employee in consideration of:

(i) The specially arduous nature of duties; or.

(ii) A specific addition to the work of responsibility.

A perusal of the scheme shows that the 'special pay' there under is not an addition of the nature of pay to the emoluments of any post. For, there is no such post as the post of an Actuary and the payment under the scheme is not an addition to the pay of the post of an Actuary. The payment is made to certain employees who merely pass the examinations of the Institute of Actuaries but it is not made because of the arduous nature of the duties of these employees nor is it made because of the addition of some responsibility to the work of any of these employees. The expression 'special pay' used in the scheme does not, thereforee, mean an addition to the pay of a post or to the pay of an employee. It, thereforee, seems to fall into another category. An employer may unilaterally offer a benefit to the employee at his own sweet will. Such an offer is a matter of grace. The benefits so offered cannot be claimed be the employees as a matter of right. K. V. Rajalakahtniah Sethy andAnr. v. The State of Mysore and Anr. (1967) 2 S.C.R 75, State of Madhya Pradesh v. G. C. Mandawar : (1954)IILLJ673SC and Chairman, RG.S.S.B Sangha Ltd. v. State of Mysore decided by Supreme Court on 5-4-1974,

12. The administrative action or administrative instructions which may be taken or issued by the Corporation regarding its employees stand on a footing very different from the administrative action and administrative instructions taken or issued by the Government in dealing with Government servants. The latter are governed by status but the former are still in the realm of contract. The reason is that unlike Articles 309, 310, 311, 53 and 73 of the Constitution, there are no provisions in the Act of 1956 or in the rules and regulations framed there under which transform the relationship between the Corporation and its employees into status as distinguished from contract. The result is that the relationship between the petitioners and 'the Corporation is governed either by the service contract with the Corporation (or the unilateral benefit which Corporation may give as a matter of grace) or the regulations governing certain conditions of service framed under Section 49. It is only those conditions of service which are governed by the regulations that have become a matter of statutory rights and obligations between the petitioners and the Corporation. The rest of the conditions of service are not a statutory right or obligation enforceable by a writ petition under Article 226 Ved Prakash Malhotra v. State Bank of India I.L.R. (1974) 1 Delhi 660

13. From the above discussion it would appear that the relations in between the Corporation and its employees is two-fold, namely, (a) partly based on the statutory regulations, and (b) rest of it purely contractual. Shri G. B. Pai, however, advanced another argument to show that the relationship between the Corporation and its employees is wholly contractual and no part of it is statutory. He drew a distinction between statutory corporations including the Life Insurance Corporation of India which are mentioned in Section 2(a)(i) of the Industrial Disputes Act, 1947 and which are, thereforee, 'industry' within the meaning of Section 2(j) of the said Act and others which may not be regarded as 'industry'. An Industrial Tribunal is entitled to vary the conditions of service of the 'workmen' employed in an industry. Such conditions of service include even those which are contained in the Standing Orders framed under the Industrial Employment (Standing Orders) Act, 1946. If, however, the regulations framed by such a corporation are to be regarded as 'laws', then the Industrial Tribunal would not be able to modify them The object of the Legislature in including the Life Insurance and other statutory Corporations which carry on trade or business in Section 2(a)(i) would be defeated to a large extent if these statutory Corporations are enabled to put the conditions of service of their employees beyond the jurisdiction of the Industrial Tribunal by including them in the regulations which are framed by them under the authority of a statute.

14. It seems to us, however, that by including several statutory Corporations in Section 2(a)(i) of the Industrial Disputes Act, 1946 the Legislature has only enabled them to make laws relating to the conditions of service of their employees. It is up to the particular Corporations to decide whether they would act upon such enabling provisions. While the Life Insurance Corporation of India have embodied some of the conditions of service of their employees in the regulations framed by t h e m under the authority of the statute, some of the other statutory Corporations may not have done so. It is only in so far as the conditions of service of the employees of statutory Corporations remain contractual and do not become statutory that the Industrial Tribunals will have jurisdiction to modify them. It is not possible for us to infer from Section 2(a)(i) of the Industrial Disputes Act, 1947 that the statutory regulations made by the statutory Corporations included therein can in no circumstances be regarded as ''laws'.

15. On the other hand, we would like to point out that in the definition of 'employer' in Section 2(g) of the Industrial Disputes Act, 1947, the Central Government, the State Governments as also a local authority are all included. The reason, is that some of the work done by the Government or by the local authority may be in the nature of trade or business and the doing of that work may amount to 'industry'. The employees of the Government or of the local authority engaged in that part of the work which is 'industry' would be governed by the Industrial Disputes Act, 1947. But here also the Government as well as the local authority would have the power to make laws governing the conditions of service not only of the employees which are engaged in Government or official work but also of employees who are engaged in such work as amounts to 'industry'. If a Government or a local authority are to embody the conditions of service of their employees engaged in 'industry' in statutory rules or regulations then to that extent they would be excluded from the jurisdiction of the Industrial Tribunals. It would appear, thereforee, that the Legislature contemplated that wherever a statute gives power either to a Government or a local authority or a statutory Corporation to make rules or regulations embodying the conditions of service of their employees engaged in an 'industry', such terms and conditions of service shall not be liable to be varied by the Industrial Tribunals. Since this result was within the contemplation of the Legislature, it cannot be argued that the regulations framed by the statutory Corporations under the authority of a statute should not he regarded as laws merely to ensure that the jurisdiction of the Industrial Tribunals is not taken away thereby. On the other hand, it stands to reason that a Government or a local authority or a statutory Corporation should be on a better footing in this respect as compared to a private employer or a private corporation or a company. The former are enabled to ensure that the conditions of their employees are not liable to be varied by the Industrial Tribunals while the latter have not been given any such power.

16. It is necessary, thereforee, for the petitioners to show that the scheme of 31-7-1971 was either law or that it had the force of law and that it was not a mere administrative order but was supported by the Act or the regulations. It would help understanding to note the differences among these three categories: (1) Law, (2) Orders having the force of law, and (3) Administrative instructions. The definitions of 'law' in Article 13(3)(a) of the Constitution, of 'existing law' in Article 366(10) of the Constitution and of 'Indian law' in Section 3(29) of the General Clauses Act, 1897 would help us to determine the essential characteristics of a 'law' and of an order having the force of law. Whatever is not included in them would have to be relegated to the category of administrative instructions.

17. It appears to us that there are three essentials which go to make a 'law'. Firstly, the maker of law must be authorised not merely to do something but specifically to make law in the sense of legislation as distinguished from merely taking administrative action. Most statutes creating statutory bodies and corporations consist of two kinds of provisions, namely, (i) provisions authorising administrative action, e. g., Section 6 and 23 of the Act; and (ii) provisions empowering the Central Government to make rules and the corporations or other bodies to make regulations, e.g., Sections 48 and 49. The exercise of the former authority results in administrative action or instructions. It is only the exercise of the latter power which results in the making of legislation or subordinate legislation,

18. As Section 49 expressly authorises the making of regulations, they would be 'law'. But, Shri Pai argues that Section 49 does not authorise the Corporation to further delegate Its authority. While the delegated legislations i.e., the regulations may be 'law', sub-delegated legislation, i.e., the scheme would not be 'law'. For, the parent Act does not contemplate sub-delegated legislation. As a question of pure principle, Shri Pai is on good ground and we may point out that his stand finds support in the following observation of Sir Carlton Kemp Allen in his 'law and Orders', Third Edition, at pages 177-178:

It is very remarkable that our Courts have never expressly decided whether the maxim delegatus non potest delegate applies to subordinate legislation. With regard to executive functions, it is clear, on the one hand, that any administrator, whether of Ministerial degree or below it must be allowed a reasonable amount of delegation In ordinary routine duties; but, on the other hand, if certain specific executive functions are committed to him, he cannot, without authority entrust them to a deputy of his own choice. In respect of legislative functions, however, the position is not so clear. The case of R. v. Burah, 5IA, 178, which concerned the scope of an Indian statute, and which is sometimes cited in this connection, is not really relevant to the general question. On principle, it would seem that a legislative delegate who, without express authority, puts another in his place, is acting ultra vires, but in the absence of judicial decision it is impossible to speak with confidence.

The same learned author, however, modifies this extreme stand at page 180 in the following words:

The maxim delegatus non potest delegare is not one of the more technical 'terms of art' of the laws; it is really a matter of plain common sense and common experience. If I ask a friend to exercise a power of attorney on my behalf, I do so because I have confidence in him, and he would frustrate my purpose if, without any authority, he appointed some body else to act for ma. On the other hand, I should not expect him to attend to every routine detail himself and I could not complain if he employed typists, secretaries, brokers, bankers and the like in the ordinary way of business for common transactions. This is the doctrine as applied to the commercial law of agency-in so far as the principal relies on the personal qualifications of the agent, duties cannot be delegated, but in matters to which there is no such condition precedent reasonable sub-delegation is not only permissible but usual.

19. We are not aware of any judicial decision in our country holding that sub-delegated legislation is ultra virus merely because it was not contemplated by the parent Act. On the contrary, in State of Madhya Pradesh v. G, C. Mandawar : (1954)IILLJ673SC , the Supreme Court considered the resolution passed by the State Government under Fundamental Rule 41 and accepted the contention of the counsel that it was law as defined in Article 13(3)(a) of the Constitution. It is true that the specific reasoning whether sub-delegation is permissible without being contemplated by the parent Act was not considered by the Supreme Court. But even without such consideration, the Court did pot find any difficulty in holding sub-delegation as law. It is too late in the day, thereforee, for us to hold that sub-delegation not contemplated by the parent Act is not permissible. We are of the view, thereforee, that this initial objection of Shri Pai cannot be upheld.

20. Let us consider whether the sub-delegation by the amended Staff Regulation 59 was reasonable in the circumstances so that it would be permissible in the light of Allen's opinion cited above. Staff Regulation 59 like any other general legislation can provide only general rules. It cannot be expected to provide details. The amendment of Staff Regulation 59, thereforee, contemplated that details should be worked out in a separate scheme. Such scheme was also to be approved by the Corporation itself. thereforee, it was reasonable for the Corporation not to include the scheme in the regulation itself but promulgate it separately. Further, the author of the Staff Regulation 59 as also of the scheme is the Corporation, The power to frame regulations is given by the parent Act to the Corporation. In one sense, thereforee, the scheme would not be sub-delegation at all. As pointed out by Allen.

There are two ways in which sub-delegation may be effected. The Minister, or other authority, may constitute himself his own delegations...The second method of sub-delegation is that the deputy appoints a deputy to himself, so that the authority which eventually exercises the powers is at two or three removes from the original legislative authority,

The amendment of Staff Regulation 59 did not sub-delegate the power to make the scheme to any authority other than the Corporation itself which itself was the author of regulation. The scheme, is, thereforee, only a child of the parent Act just as the Staff Regulation 59 is. It is not a grand-child in the sense of being fathered not by the Corporation but by a child of the Corporation. If, thereforee, the scheme had been made by the Corporation under the authority of the amended Staff Regulation 59, it could not have been regarded as invalid on the ground that such sub-delegation was not contemplated by the parent Act. This objection of Shri Pai is not, thereforee, sustainable.

21. Shri Pai then contended that the Staff Regulation 59 was amended with effect from August 7, 1971; The amendment was not in force on July 31, 1971 when the scheme was promulgated. The scheme could not, thereforee, be regarded as having been made under the amended Staff Regulation 59. According to the very first test of a 'law' recognised by us above, the Corporation did not possess authority to make such a scheme as a law when it promulgated the scheme on July 31, 1971. The very first essential of a 'law' dus being not satisfied, the scheme cannot be regarded as a 'law'. We shall, thereforee, consider whether the subsequent authority conferred on the Corporation to make such a scheme from August 7, 1971, onwards resulted in the revival of the scheme so as to make it 'law' with effect from August 7. 1971 if not from July 31,1971. Under Article 13of the Constitution, the Supreme Court had occasion to consider whether a law which is made without legislative competence when it was made, can be revived if legislative competence is subsequently conferred on the law-making authority, This answer given to this question was in the negative by the Supreme Court in M.P. V. Sundararamier & Co. v. State of Andhra Pradesh : [1958]1SCR1422 . This observation was obiter but is binding on us. This observation was referred to with apparent approval by a seven Judges' Bench in Jagannath y. Authorised Officer : [1972]1SCR1055 . The observations of the Supreme Court apply to the scheme of July 31, 1971 because the scheme as a whole lacked legislative competence. We are of the view, thereforee, that the scheme could not be said to have been made under the amended staff Regulation 59 and could not, thereforee, be a valid piece of subordinate legislation there under. As already pointed out above, there is no other provision in the Act or the Regulations which enables the Corporation to make such a scheme as a piece of subordinate legislation. While the Corporation can make payments to the staff under General Regulation 27(b) or even under Section 23 of the Act, that would be only administrative action but not the making of a law. We are unable, thereforee, to find any power in the Corporation to make the subordinate legislation in the nature of such a scheme outside the amended Staff Regulation 59.

22 We would like to point out that the mere name 'scheme' does not imply that it would always be administrative and never legislative. For instance, Section 68C of the Motor Vehicles Act, 1939, authorises the Making of a scheme Such a scheme was held to be ''law' in H.C. Narayanappa v. Sate of Mysore : [1960]3SCR742 , within the meaning of Article I3(3)(a) of the Constitution even though the word 'scheme' is not used in Article 13(2)(a). It is not the mere name but the source of power, the manner of making and the nature and content of the instrument or the scheme which will determine whether it is legislative or merely administrative. The scheme of July 31, 1971 is not 'law' firstly because the Corporation did not have the authority to make such a law on July 31, 1971.

23. The second essential characteristic of a 'law' is the manner and the procedure by which the subordinate legislation is made. The authority making rules or regulations usually specifies the source of its law-making power by some such words as follows:

In exercise of the power conferred by Section 48 or 49, the Central Government or the Corporation makes the following rules or regulations, etc.

The scheme of 31-7-1971 does not purport to be made in exercise of any specific law-making power given by Staff Regulations 59 or Section 49. On the other hand, it is annexed to a circular issued by the Executive Director of the Corporation to the departments of the Corporation.

24. The third characteristic of a 'law' is its nature and contents. The earmark of a 'law' is that it is a rule of general applicability as distinguished from administrative action which is directed against particular persons Raj Kumar Narsing Pratap Singh Deo v. State of Orissa : [1964]7SCR112 . The nature and the contents of any instrument would have to be examined in each case for determination as to whether it is legislative or administrative in character. It is difficult to lay down a priori the points of distinction between a law and an administrative order. This is why in England Regulation 2(1) of the Statutory Instruments Regulations, 1947 made by the treasury with the concurrence of the Lord Chancellor and the Speaker of the House of Commons under Section 8 of the Statutory Instruments Act, 1946 defines a 'statutory rule' under Section 1(2) of the principal Apt as ''every instrument being of a legislative and not an executive character', etc. In the body of the scheme itself it is called 'these instructions' at several places. It applies only to certain employees of the Corporation who pass the examinations of the Institute of Actuaries. There can be no doubt, thereforee, that the scheme consists of administrative instructions and is not itself a law or a regulation made by the Corporation.

25. If not a law, is the scheme an order having the force of law? An order having the force of law stands mid-way between a law and a purely administrative order. The Legislature sometimes authorises a statutory authority to issue orders or directions which will be binding on those to whom they are issued. They are not themselves law, but are still made binding by law. thereforee, they may be said to have the force of law. Examples of such orders are:

(1) A notification issued under Article 253(1) of the Constitution Jayanti Lal v. F.N. Rana : [1964]5SCR294 .

(2) An order issued under Section 5(8) of the Income-tax Act, 1922 corresponding to Section 119 of the Income-tax Act, 1961. Ellerman Lines v. Commissioner of Income-tax : [1971]82ITR913(SC) .

If, thereforee, the scheme had been issued after August 7, 1971 under the amended Staff Regulations 59, it could have been regarded as an order having the force of law even though it may not be itself law inasmuch as it is expressly called 'instructions'. Unfortunately, it was not so issued and cannot, thereforee, be called an order having the force of law.

26. The scheme, thereforee, falls in the last category, namely, administrative instructions which are not laws and which are directions having the force of law. The Corporation could issue such administrative instructions with the authority of law in the sense that the Corporation was authorised to appoint the staff and make payment of emoluments to the staff under Section 23 of the Act and under Regulation 27(b). But, this authority of law was only to take action administratively. It was not an authority to make law. The scheme may, thereforee, be said to have the authority of law but it will still not have the force of law according to the distinction made by Wanchoo, J. in the minority judgment in Jayanti Lal's case at pages 333 and 334 of the report. These administrative instructions may, thereforee, be legal administrative action in the sense that the Corporation did not commit any illegality in issuing them. But, they are not law and do not have the force of law so as to create a right in the petitioners which can be enforced in a writ petition against the Corporation.

27. Shri P.N. Lekhi for the petitioners then argued that even as administrative instructions the scheme was enforceable inasmuch as it created rights in the petitoners. He relied on the Supreme Court decision in Union of India v. K.P. Joseph, referred to above. As pointed out by us above, however, the decision related to administrative instructions issued by the Government in dealing with the employees of the Government. As the relationship between the Government and its employees is a matter of status, the claim of a Government employee to the benefit of such administrative instructions made in a writ petition could not be rejected on the ground that the Government employee was trying to enforce a contractual right. The enforceability of such administrative instructions is a peculiarity of the constitutional relationship between the Government and its employees. It may be pointed out that administrative instructions issued by the Government on a subject which is outside its relationship with its employees, but are merely internal administrative action taken by the Government are also not enforceable in law. The provisions of the Public Works Department Code of the Government of Mysore were held to be for the guidance of the department of the Government. They could not create an enforceable right in a third person entering into a contract with the Government G.J. Fernandaz v. State of Mysore and Ors. : [1967]3SCR636 . It is to be noted that the P.W.D. Code was not issued under the authority of any statute. It was, thereforee, purely administrative. On the other hand, the Export Promotion Scheme in Union of India v. Indo-Afghan Agencies Ltd. referred to above, could be regarded as having been issued Under Section 3 of the Imports & Exports Control Act, 1947. At page 376 of the report, the Supreme Court observed that orders which the Central Government may issue in exercise of the power conferred by Section 3 of the said Act may be executive or legislative. At page 377 of the report, the Court observed that Section 3 authorises the Government to make executive or administrative instructions as well as legislative directions. The Export Promotion Scheme though executive in its character, could thus be regarded as having the force of law inasmuch as it was issued under Section 3 which specifically authorises the Government to issue orders. This is to be distinguished from purely administrative orders the issue of which is not authorised specifically by a provision of any statute or regulation. The scheme of 31-7-1971 was not specifically authorised either by Section 23 or by Regulation 27(b). It, thereforee, remains a purely administrative scheme which did not have the force of law.

28. In view of the above legal position, the question whether the Corporation is a 'State' within the meaning of Article 12 of the Constitution does not arise. For, it would be relevant only if any fundamental right of the petitioners can be said to have been infringed. The withdrawal of the scheme cannot be said to have been contrary to Articles 14 and 16 of the Constitution. The scheme was a unilateral offer to confer a gratuitous benefit on employees like the petitioners. It is the respondent No. 5 who complained of discrimination. The withdrawal of the scheme did not discriminate against the petitioners because it did not favor illegally other employees of the Corporation to the detriment of the petitioners. Further, even if the Corporation is to be regarded as 'State' within the meaning of Article 12, it would not become the Government for that reason. It is only the employees of the Government which have a constitutional status. The employees of a Corporation who is a 'State' only for the purpose of Article 12 of the Constitution do not obtain the constitutional status of Government employees inasmuch as they would not be governed by Articles 309, 310, 311,53 and 73 of the Constitution Shri Lekhi, thereforee, did not argue in favor of the Corporation, being a 'State' under Article 12 of the Constitution. The learned Counsel also did not argue about the alleged mala fides of the Corporation or of its Chairman in withdrawing the scheme of 31-7-1971. No contention other than those discussed above was advanced by the learned Counsel on either side.

29. We agree, however, with the petitioners that the scheme which was approved by the Corporation could be withdrawn only by the Corporation and not by the Chairman. The scheme of the Act of 1956, particularly, of Section 19 thereof, is that the Corporation acts either as a Corporation constituted under Section 4 of the Act or through its committee. The Corporation cannot act by its Chairman alone. The Chairman is only a member of the Corporation. It may be that in practice it may be necessary for the Chairman to act in an emergency and to obtain the ratification of his action by the Corporation subsequently. But, the Chairman cannot ordinarily act for the Corporation without either its previous or subsequent approval. Regulation 32(a) purports to authorise the Chairman to exercise the powers of the Corporation or its committees. Surely, the Chairman cannot by-pass the Corporation and the committees and assume to himself all their powers. He may perhaps do so in an emergency as contemplated in Regulation 33. Such an emergency would arise when the meeting of the Corporation or of any of its committees cannot take place for some good reason and it is necessary for the Chairman to act immediately. But, there is nothing to show that the withdrawal of the scheme was, due to any such emergency. Withdrawal by the Chairman appears, thereforee, to be invalid. But, under Article 226 of the Constitution, we cannot enter into the discussion of the validity of the internal administration of the Corporation, Since the scheme of 31-7-1971 was itself an act of internal administration, we cannot enquire whether the withdrawal of the scheme was valid or invalid. For, we cannot grant relief of quashing of the withdrawal inasmuch as it is also a matter of internal administration. We cannot correct the mistakes of internal administration in disposing of a writ petition.

30. We, thereforee, conclude that the petitioners do not have a legal right enforceable under Article 226 of the Constitution either for a declaration that the scheme of July 31, 1971 cannot be withdrawn except in accordance with law or for an order that the action of the Chairman withdrawing the scheme on March 6, 1972 be quashed. For, the said scheme was neither law nor did it have the force of law. It consisted only of administrative instructions which offered some benefit to certain employees of the Corporation as a grace and not as a right. The withdrawal of the scheme was a matter relating to the internal administration of the Corporation which, even if contrary to regulations, cannot be challenged by way of a writ petition inasmuch as the scheme itself was not capable of being made the subject-matter of the writ petition. The withdrawal of the scheme could not, thereforee, stand on a footing higher than the scheme itself.

31. The writ petition is, thereforee, dismissed but in the circumstances without any order as to costs.


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